TIDMPEBB
RNS Number : 5224F
Pebble Group PLC (The)
22 March 2022
22 March 2022
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the retained
EU law version of the Market Abuse Regulations (EU) No. 596/2014
which is part of UK wide law by virtue of the European Union
(withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
THE PEBBLE GROUP PLC
("The Pebble Group", the "Group" or the "Company")
AUDITED FULL YEAR RESULTS 2021
Strong performance in 2021 with further significant growth
opportunities ahead
The Pebble Group, a leading provider of digital commerce,
products and related services to the global promotional products
industry, announces its audited results for the year to 31 December
2021 ("FY 21" or the "Period"), which show a full recovery
exceeding pre-pandemic performance levels and the delivery of
further strong growth in Annual Recurring Revenue ("ARR") by
Facilisgroup.
The differentiated and strong positions occupied by our
businesses within the industry, the quality of our people, and the
further significant growth opportunities in our market, give the
Board confidence in the prospects for the Group in the year ahead
and beyond.
Financials
Adjusted results FY 21 FY 20 FY 19
GBP'm GBP'm GBP'm
Revenue 115.1 82.4 107.2
Gross profit 42.0 31.0 40.1
Gross profit margin 36.5% 37.6% 37.4%
Adjusted EBITDA(1) 15.4 9.8 15.2
Adjusted EBITDA margin 13.4% 11.9% 14.2%
Adjusted operating profit(2) 11.5 6.8 13.0
Adjusted profit before
tax(3) 10.9 6.1 7.6
Adjusted operating cash
flow(4) 5.9 1.1 13.0
Net cash(5) 12.1 7.1 8.9
Adjusted basic earnings
per share(6) 5.14p 2.96p 2.81p
Statutory results FY 21 FY 20 FY 19
Operating profit/(loss) 9.9 5.7 (4.9)
Profit/(loss) before tax 9.3 5.0 (10.3)
Basic profit/(loss) per
share 4.39p 2.44p (12.56)p
Diluted profit/(loss)
per share 4.38p 2.44p (12.56)p
(1) Adjusted EBITDA means operating profit before depreciation,
amortisation, share-based payments charge and exceptional
items
(2) Adjusted operating profit means operating profit before
amortisation of acquired intangible assets, share-based
payments charge and exceptional items
(3) Adjusted profit before tax means profit before tax before
amortisation of acquired intangible assets, share-based
payments charge and exceptional items
(4) Adjusted operating cash flow is calculated as Adjusted EBITDA
less movements in working capital, capital expenditure and
lease payments
*FY 19 includes GBP3.9m funded IPO costs and FY 21 includes
GBP3.2m incremental CAPEX investment compared to FY 19
(5) Net cash is calculated as cash and cash equivalents less
borrowings (excluding lease liabilities)
(6) Adjusted basic Earnings Per Share ("EPS") represents Adjusted
Earnings meaning profit after tax before amortisation of
acquired intangible assets, share-based payments charge
and exceptional items divided by a weighted average number
of shares
Group financial highlights and outlook
-- Strong recovery ahead of pre-pandemic performance levels
with Group Revenue of GBP115.1m (FY 20: GBP82.4m, FY 19:
GBP107.2m) 40% ahead of the prior year and Group EBITDA
of GBP15.4m (FY 20: GBP9.8m, FY 19: GBP15.2m)
-- At Facilisgroup, ARR increased by 40% to USD16.7m (FY 20:
USD11.9m) and delivered excellent EBITDA returns of 60%
(FY 20: 61%), demonstrating the business's ability to both
scale revenue and maintain strong margins
-- At Brand Addition, FY 21 Revenue was 41% ahead of prior
year and 5% ahead of pre-pandemic revenue at GBP102.4m (FY20:
GBP72.6m)
-- Balance sheet remains strong and cash was ahead of expectation
at 31 December 2021, being GBP12.1m (FY 20: GBP7.1m)
-- The new financial year has started well and in line with
our expectations:
- At Facilisgroup, year to date at 18 March 2022, Gross
Merchandise Value ("GMV") was up 57% year on year with Partners
implemented or contracted awaiting implementation totalling
211
- At Brand Addition, year to date at 18 March 2022, the
order intake has been positive and sales invoiced or received
to be invoiced was up 11% year on year. The supply chain
continues to be well controlled
Enquiries:
The Pebble Group plc
Chris Lee, Chief Executive Officer
Claire Thomson, Chief Financial Officer +44 (0) 7385 024855
Grant Thornton UK LLP (Nominated
Adviser)
Samantha Harrison / Harrison Clarke
/ Ciara Donnelly +44 (0) 20 7383 5100
Berenberg (Corporate Broker)
Chris Bowman / Jen Clarke / Arnav
Kapoor +44 (0) 20 3207 7800
Belvedere Communications (Financial
PR) +44 (0) 7715 769 078
Cat Valentine +44 (0) 7967 816 525
Keeley Clarke thepebblegrouppr@belvederepr.com
About The Pebble Group plc - www.thepebblegroup.com
The Pebble Group is a provider of digital commerce, products and
related services to the global promotional products industry,
comprising two differentiated businesses, focused on specific areas
of the promotional products market:
Facilisgroup - www.facilisgroup.com
Facilisgroup focuses on supporting the growth of mid-sized
promotional product businesses in North America by providing a
digital commerce platform, which enables those businesses to
benefit from significant business efficiency and gain meaningful
supply chain advantage from the ability to purchase from quality
suppliers under preferred terms. The value to our clients is
reflected in the very high retention rates of the business.
Brand Addition - www.brandaddition.com
Brand Addition focuses upon providing promotional products and
related services under contract to some of the world's most
recognisable brands. Its largest contracts are valued in the
millions of pounds with the products and services supplied being
used for brand building, customer engagement and employee rewards.
Working in close collaboration with its clients, Brand Addition
designs products and product ranges, hosts client-branded global
web stores and provides international sourcing and distribution
solutions.
We categorise our revenues into two divisions, Corporate
Programmes, that supports our clients' general marketing
activities, and Consumer Promotions, that supports our clients in
driving their own sales volumes.
The Pebble Group aims to act responsibility through effective
management of its Environmental, Social and Governance ("ESG"). To
find out more, read our ESG report - The Pebble Group ESG report
2021 .
CHAIR'S REPORT
I am very pleased to report on the Group's strong performance in
2021, which saw not only a full recovery from the impact of the
pandemic, but an acceleration of strategic progress and new
customer wins at both Facilisgroup, and Brand Addition.
The performance highlights the strength of the Group's leading
position in the promotional products industry, the capability of
its management, the quality of the technology it continues to build
and bring to market, and its sustainability credentials.
The work of our team of talented people over the last year has
significantly increased the Group's capability and long-term future
potential and the Group Board believes that the prospects of The
Pebble Group in the year ahead and beyond are very good.
Strategy and Long-term Vision
The Pebble Group's central tenet is that the global promotional
products industry (estimated value circa USD50bn annually) is ripe
for positive disruption, driven by three principal factors:
- the requirement from users of promotional products and,
in particular, from leading global brands for confidence
in the sustainability and provenance of those products;
- the opportunity to deploy leading edge technology to what
is a mature market to make it operate more sustainably and
efficiently for large global corporations; and
- the global market is very fragmented, the majority of which
is served by owner managed SMEs with a high concentration
in North America. As sustainability standards rise and technology
proliferates, SMEs will be disadvantaged without a platform
like Facilisgroup which addresses both these issues.
The Pebble Group is disrupting this market through its two
complementary but non-competing business units, Facilisgroup and
Brand Addition.
Facilisgroup
Facilisgroup is a Software as a Service (SaaS) business
providing leading digital commerce technology to SME businesses in
North America, which enables them to automate processes and
workflow and will provide ecommerce stores to their own customers,
bringing material efficiency in process to their businesses.
The growth and profitability of Facilisgroup illustrates the
efficacy of its technology with like-for-like growth in Annual
Recurring Revenue (ARR) in the Period of 40% and EBITDA margins of
60%. Facilisgroup grew its total revenue in FY 21 to GBP12.7m and
the strategy of the executive team is to accelerate this rate of
growth through significant ongoing investment in our technology,
sales and marketing, and people.
Brand Addition
Brand Addition, which was impacted by the pandemic in 2020, has
fully recovered with its FY 21 revenue increasing by 41% on the
prior year and 5% ahead of pre-pandemic revenue in FY 19. The
business remains focused on its core strategy to win, grow, and
retain international contracts, often valued in millions of pounds
per year, with many of the world's leading brands. During the year
under review, Brand Addition increased its revenues through
expanding its business with existing key clients, implementing new
contracts won in FY 20, as well as winning major new contracts in
the year, which will benefit FY 22.
The business has a differentiated and, we believe, market
leading position. As a strategic level partner with long-term
contracts, it is able to meet both its own and its clients'
increasing sustainability and ESG targets, and it is able to deploy
differentiated services including technology, product innovation,
inventory control and logistics to maximise the effectiveness of
clients' promotional products strategies.
Environmental, Social and Governance (ESG)
In October 2021, we published our first standalone ESG report in
which we set out our approach to ESG and showcased how we are
integrating ESG into the Group. Our strong ESG credentials already
set Brand Addition apart in its markets and form an important
element of its client relationships. The 2021 report showed the
four ESG cornerstones, which underpin our bespoke ESG framework,
linked to the topics that most impact our business and are of the
greatest importance to our stakeholders. Updates since the launch
of our first report are set out in the Annual Report 2021.
We are committed to a culture of strong corporate governance
and, where appropriate for our business, to go beyond the required
compliance level. We put our Directors' Remuneration Report to a
shareholder vote at our AGMs and have taken initial steps to evolve
our risk framework to align with the Task Force on Climate-related
Financial Disclosure (TCFD). During the year, we reviewed
succession planning and talent pipeline development, and further
enhanced the reporting and flow of information from Facilisgroup
and Brand Addition to the Group Board. We have also worked
internally, and with external experts, to validate our risk
register approach and we are in the process of implementing the
recommendations made.
Team
The Group is led by a Board with a wide diversity of experience,
supported by highly engaged and motivated teams across the
business. It is this combination of leadership that will enable us
to scale the business successfully and profitably.
To provide the opportunity for our teams to share in the value
of the Group they have helped to create, we launched our first
Group Sharesave Plan (SAYE) in September 2021, which was taken up
by 46% of eligible employees.
Summary and outlook
Facilisgroup and Brand Addition performed well in the year under
review, both financially and in building their differentiation in
the market. The strong financial performances strengthened the
Group's balance sheet, which, together with our ongoing cash
generative operations, gives us the ability to continue investing
in, what the Group Board believes to be, high quality strategic
opportunities, with the aim of further establishing its leadership
position in the very large but fragmented global promotional
products market.
The new financial year has started well and in line with our
expectations and the Group Board looks forward to the year ahead
and beyond with confidence.
Richard Law
Chair
22 March 2022
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
We are pleased to report the Group's full year results for the
year ended 31 December 2021 which demonstrate a strong performance
and an immediate and full recovery from the pandemic-driven demand
challenges experienced in 2020.
Group revenue increased by 40% on the prior year to GBP115.1m
(FY 20: GBP82.4m, FY 19: GBP107.2m) and Adjusted EBITDA by 57% to
GBP15.4m (FY 20: GBP9.8m, FY 19: GBP15.2m).
Review of The Pebble Group businesses
Facilisgroup
FY 21 FY 20 FY 19
ARR GBP12.2m GBP9.3m GBP8.2m
Other revenue GBP0.5m GBP0.5m GBP1.1m
---------- --------- -----------
Total revenue GBP12.7m GBP9.8m GBP9.3m
Gross profit GBP12.7m GBP9.8m GBP9.3m
Gross profit margin 100% 100% 100%
Adjusted EBITDA GBP7.6m GBP6.0m GBP5.1m
Operating profit/(loss) GBP5.1m GBP4.6m GBP(9.5)m
Facilisgroup has a highly attractive business model. In FY 21,
the business' uninterrupted revenue growth continued. In USD
(Facilisgroup home currency), ARR was USD16.7m (GBP12.2m),
representing 40% growth over the prior year, as the business
continued to attract new Partners (customers) and create value for
its Preferred Suppliers.
This ARR growth converts very strongly through to profit with
Adjusted EBITDA margins in FY 21 of 60% (FY 20: 61%).
Our FY 21 milestones were met on our internal aspiration to be a
USD50m ARR business by the end of 2024. Partners implemented at 31
December 2021 were 200 (31 December 2020: 175) with a further six
contracted and awaiting implementation. Gross Merchandise Value
(GMV) and spend with our Preferred Suppliers was USD1.15bn (FY 20:
USD1.02bn) and USD0.35bn (FY 20: USD0.26bn) respectively. Growth
across these key indicators heavily influence the fee structures
within the business and result in a very robust and predictable
recurring revenue stream.
We believe the market opportunity for Facilisgroup is very
strong. In the highly fragmented market of the North American
promotional products industry, we have evolved Facilisgroup to be a
digital commerce platform, supporting the growth and efficiency of
distributors and suppliers. Within this platform there are three
components designed to meet the full suite of technology
requirements of entrepreneurial distributors and suppliers across
the industry, as follows:
Syncore is our order workflow product on which we have grown
Facilisgroup to date. Focused on the distributors of more than
USD2m sales, more than 850,000 sales orders were processed through
this technology in FY21, smoothing order friction and supporting
the growth of both our Partners and suppliers. At 98%, the
retention rate of Partners in the Period was very high.
Then, our order workflow product for the many thousands of
smaller distributors with less than USD2m sales is currently in
development. This will significantly increase our addressable
market and our expectation is to launch this product in mid
2023.
Commercio is our ecommerce product that creates online stores
for our Partners and can either stand alone or will integrate into
our order workflow products. The market opportunity for a sector
specific ecommerce solution is significant. We estimate that our
existing Partners host circa 2,000 online stores with the wider
North American market many times more. Our Partner appetite for
this service through Facilisgroup is high. We expect to start
contracting with them from 1 June 2022 and exit the year with a
growing momentum of Partner uptake, as further enhancements are
delivered. The planned revenue model will be a monthly fee based on
the number of stores used, in effect increasing our percentage fee
per USD of GMV.
We are focused on a successful scaling of Facilisgroup and are
investing in our sales and marketing activities to support
this.
Our goals in 2022 are to:
- grow GMV, spend with Preferred Suppliers and total customer
numbers with Syncore and Commercio in line with our internal
aspirations;
- successfully launch Commercio with both our existing Partner
base and into the wider market to materially grow 2023 ARR;
and
- prepare to launch our order workflow product for distributors
with less than USD2m sales in mid 2023.
2022 has started well. Partners implemented, or contracted
awaiting implementation, total 211 at 18 March 2022, with GMV and
spend with Preferred Suppliers respectively being 57% and 66% ahead
of same period last year. In addition, the indication of appetite
from Partners for Commercio has been very positive.
Brand Addition
FY 21 FY 20 FY 19
Revenue GBP102.4m GBP72.6m GBP97.9m
Gross profit GBP29.3m GBP21.2m GBP30.8m
Gross profit margin 28.6% 29.2% 31.5%
Adjusted EBITDA GBP9.9m GBP5.2m GBP10.7m
Operating profit GBP7.1m GBP2.6m GBP9.1m
Brand Addition FY 21 revenue of GBP102.4m (FY 20: GBP72.6m) was
41% ahead of the prior year, representing an immediate recovery
compared to pre-COVID-19 performance of FY 19, where revenue was
GBP97.9m. This revenue increase led to EBITDA of GBP9.9m (FY 20:
GBP5.2m) being 90% ahead of prior year and moving significantly
back towards FY 19 of GBP10.7m.
Working in close collaboration with its clients, Brand Addition
designs products and product ranges, hosts client-branded ecommerce
platforms, and provides international sourcing and distribution
solutions.
We categorise our revenues into two divisions: Consumer
Promotions that supports our clients in driving their own sales
volumes; and Corporate Programmes that supports our clients'
employee engagement and brand building activities. Both divisions
delivered strong growth during the year.
In our Consumer Promotions division (45% FY 21 divisional
revenues), growth was achieved with our existing clients, who,
throughout the pandemic, have continued to use promotional products
as a strategic marketing tool to drive sales across their retail
outlets. Brand Addition has increased its market share with these
clients through consistently meeting expectations regarding
quality, and creativity, alongside sourcing through a visible and
responsible supply chain that meets client ESG expectations.
In our Corporate Programmes division (55% FY 21 divisional
revenues), growth was achieved through a full year contribution of
new contracts won in 2020, and the recovery of sales through
existing clients that were impacted in 2020.
Our client retention has been high and new contracts won in 2021
will positively impact 2022. Additional sales opportunities also
remain from those clients that have not yet returned to
pre-COVID-19 levels.
The impact of the global supply chain disruption, including raw
material price increases, freight capacity issues, freight rate
increases, and Brexit, affected the promotional products industry
like most others. The quality and experience of the established
teams across Brand Addition together with our strong relationships
with our suppliers and clients ensured that the impact of these
complexities on our clients was controlled and minimised. Equally,
our gross margins were only slightly reduced to 28.6% (FY 20:
29.2%). As we look forward, our ability to manage our supply chain
over the last two years, together with current activities, leave us
well-placed to continue to successfully navigate these challenges,
some of which, remain in 2022.
Our goals in 2022 are to:
- build upon the revenue growth of 2021 through the continued
retention of major clients and the successful implementation
of contracts won in 2021;
- attract new contracts with major international brands through
our credentials in ESG, technology and creativity; and
- move our gross margins back towards the 30% target (FY 21:
28.6%)
2022 has started well. Year to date at 18 March 2022, the order
intake has been positive and sales invoiced or received to be
invoiced was up 11% year on year. The supply chain continues to be
well-controlled by our teams.
People and Environmental, Social and Governance
Against an uncertain background, our people have supported our
businesses in achieving its results, demonstrating great dedication
and flexibility. The diversity of our businesses, our people, and
the geographies in which we operate, brings great strength to the
Group and I thank everyone at Facilisgroup, Brand Addition, and The
Pebble Group for their support, thoughtfulness, and ability to
achieve positive outcomes over this very challenging period.
Our ESG strategy has continued to advance in 2021. We have
detailed our approach, targets, and activities within our first
stand-alone ESG report published in October 2021, and then
summarised our progress in our Annual Report 2021.
Our approach is guided by much of the published best practice
materials including the QCA Code and UN Sustainable Development
Goals as well as feedback from our teams, clients, and investors.
Then, we have identified our priorities that balance what is most
practical, and makes the largest positive contribution, before our
dedicated ESG resource ensure we follow through on our initiatives
and embed them into our day-to-day operations. We will continue to
evolve and commit to this approach, knowing its positive
contribution to our long-term success.
Outlook
2022 has started well and in line with our expectations.
At Facilisgroup, we expect to meet our 2022 internal aspirations
for GMV and spend with Preferred Suppliers, and continue to target
the total customer numbers using our expanding digital commerce
offering. To 18 March 2022, GMV is 57% ahead of the prior year
comparative. Partners implemented or contracted awaiting
implementation total 211, plus, the indication of appetite from
Partners for Commercio has been positive.
At Brand Addition, year to date at 18 March 2022, the order
intake has been positive and sales invoiced or received to be
invoiced was up 11% year on year. The supply chain continues to be
well-controlled by our teams.
We have a very motivated management team and remain focused upon
the delivery of our plans. We look forward to further updating
stakeholders on the progress of the Group throughout the year.
Chris Lee
Chief Executive Officer
22 March 2022
CHIEF FINANCIAL OFFICER'S REVIEW
FY 21 FY 20 Variance
GBP'm GBP'm GBP'm
Revenue 115.1 82.4 32.7
Adjusted EBITDA 15.4 9.8 5.6
Adjusted operating cash
flow 5.9 1.1 4.8
Net cash 12.1 7.1 5.0
Adjusted Earnings Per
Share 5.14p 2.96p 2.18p
Overview
The results reflect a successful year for the Group where the
objectives set at the outset for both our businesses have been met.
Revenue of GBP115.1m (FY 20: GBP82.4m) was 40% ahead of FY 20 and
Adjusted EBITDA of GBP15.4m (FY 20: GBP9.8m) was 57% ahead.
Taking each of the businesses in turn:
In March 2021, Facilisgroup set out a medium-term aspiration
targeting USD50m of ARR by the end of 2024. This plan included
short-term milestones signposting the route to delivering this
aspiration, which it successfully met in FY 21. In the year it
continued to grow both revenue and EBITDA, increased Partner
numbers to 200 (FY 20: 175), and, through providing additional
services to preferred suppliers, increased the level of supplier
contributions. In the year, total revenue increased 30% in GBP, 40%
in Facilisgroup's home currency of USD.
Brand Addition's revenue was 41% ahead of the prior year, and
importantly 5% ahead of FY 19, representing a full and complete
recovery ahead of pre-pandemic levels. Sales in our Consumer
Promotions division grew strongly in the year up 62% over FY 20,
supported by improving momentum, and a positive contribution from
new business in the Corporate Programmes division, where sales
increased 28% over FY 20. We expect this momentum to continue in FY
22 with a further positive contribution from additional new
business wins converted during FY 21.
The Group's balance sheet remains strong and its liquidity
position is robust with cash balances of GBP8.5m at 21 March 2022
with no amounts drawn down on the Company's GBP10m committed
revolving credit facility.
Review of the business
The Group chooses to use adjusted measures as key performance
indicators in addition to those reported under IFRS, as they
reflect the underlying performance of the business. These adjusted
measures exclude certain non-operational and exceptional items,
which have been consistently applied in all years presented. The
information presented below should also be considered in
conjunction with the segmental analysis in the Chief Executive's
Review and note 4, which provide further detail on the performance
of the separate businesses within the Group.
2021 2020 Variance
GBP'm GBP'm GBP'm
Revenue 115.1 82.4 32.7
Gross profit 42.0 31.0 11.0
Gross profit margin 36.5% 37.6% (1.1%)
Adjusted EBITDA 15.4 9.8 5.6
Adjusted EBITDA margin 13.4% 11.9% 1.5%
Depreciation and amortisation (4.8) (3.5) (1.3)
Share-based payment charge (0.7) - (0.7)
Exceptional items - (0.6) 0.6
Operating profit 9.9 5.7 4.2
Net finance costs (0.6) (0.7) 0.1
Profit before tax 9.3 5.0 4.3
Tax (2.0) (0.9) (1.1)
Profit for the year 7.3 4.1 3.2
Weighted average number
of shares 167,450,893 167,450,893 -
Adjusted Basic EPS 5.14p 2.96p 2.18p
Basic EPS 4.39p 2.44p 1.95p
Revenue
Revenue for FY 21 was GBP115.1m (FY 20: GBP82.4m), growth of
40%. Facilisgroup total revenue increased by GBP2.9m or 30% (FY 20:
GBP0.5m or 5%). ARR from partner subscriptions for our technology
and supplier contributions made up GBP2.9m of this increase. The
growth arose from a combination of incremental partner numbers, and
additional contributions from suppliers, both from increased
volumes as purchasing patterns normalised, and increased percentage
contributions as suppliers paid more for the additional
efficiencies delivered to them by Facilisgroup. Revenue in Brand
Addition increased by GBP29.8m. A combination of strong growth with
key customers in the Consumer Promotions division of GBP17.7m,
incremental new business delivering GBP8.0m, and the balance being
the recovery of the underlying Corporate Programs business that was
affected by demand challenges in 2020.
Gross profit
Gross profit as a percentage of turnover reduced during the year
by 1.1 p.p.t from 37.6% to 36.5%. This largely reflects the impact
of the increased weighting of Brand Addition sales as a proportion
of the total Group, as revenue recovered from the sales impact of
FY 20. In Brand Addition, there was also a 0.7 p.p.t reduction in
margin as the business navigated a period of increased costs
associated with Brexit, freight rate pricing, and freight capacity
challenges combined with the impact, in the short term, of new
business, which has lower than average initial margins.
Adjusted EBITDA
Adjusted EBITDA was GBP15.4m (FY 20: GBP9.8m). The increase of
GBP5.6m from FY 20 is made up as follows:
-- Facilisgroup GBP1.6m as incremental revenues were delivered
at excellent EBITDA returns of 60% (FY 20: 61%) demonstrating
the business' ability to retain strong margins and scale
revenue.
-- Brand Addition delivered a GBP4.7m increase being the incremental
profit from sales growth less increased costs as contributions
from the UK Job Retention Scheme, and support from our teams
through temporary salary reductions, were not repeated in
2021.
-- Central costs increased by GBP0.7m in the year. GBP0.2m
from temporary salary savings in FY 20, the balance being
incremental costs through the growth of the team and the
Group's investment in ESG.
The Adjusted EBITDA margin increased by 1.5 p.p.t to 13.4% as
revenues in Brand Addition recovered from the demand challenges of
2020.
Depreciation and amortisation
The total charge in the year was GBP4.8m (FY 20: GBP3.5m), of
which GBP2.8m (FY 20: GBP2.0m) related to the amortisation of
intangible assets. In accordance with IAS 38, the Group capitalises
the costs incurred in the development of its software, and the
increase in the year is a result of the Group's continued
investment in its proprietary technology, and specifically in new
product development for Facilisgroup. It is the Group's intention
to continue this investment and it is expected that this charge
will increase further in FY 22.
Exceptional items
Exceptional costs in the year were GBPnil (FY 20: GBP0.6m).
Costs in FY 20 comprised GBP0.4m reorganisation and restructuring
in Brand Addition, as changes were made to headcount to align
people numbers with anticipated sales volumes following the impact
of the pandemic, and GBP0.2m transaction costs relating to the
acquisition of software assets in Facilisgroup.
Share based payments
The total charge for the Period under IFRS 2 "Share-based
payments" was GBP0.7m (FY 20: nil). This charge related to the 2020
and 2021 awards made under the 2019 Long Term Incentive Plan and
Group Sharesave Plan (SAYE).
Operating profit
Operating profit for the year was GBP9.9m (FY 20: GBP5.7m).
Finance costs
Finance costs of GBP0.6m in the year (FY 20: GBP0.7m) include
interest on the utilisation of the Group's committed RCF facility
during the year of GBP0.2m (FY 20: GBP0.3m) and interest costs on
leases capitalised in accordance with IFRS 16 of GBP0.4m (FY 20:
GBP0.4m).
Taxation
The total taxation charge was GBP2.0m (FY 20: GBP0.9m) giving
rise to an effective rate of tax of 21.5% (FY 20: 18.0%). The
effective rate of tax was higher than the UK standard rate of
taxation as the proportion of profit earned by the Group in
overseas jurisdictions where corporation tax rates are higher than
those in the UK increased during the year.
Basic Earnings per share
The earnings per share analysis in note 6 covers both adjusted
earnings per share (profit after tax before amortisation of
acquired intangibles, share-based payments charge and exceptional
items divided by the weighted average number of shares in issue
during the year), and statutory earnings per share (profit
attributable to equity holders divided by the weighted average
number of shares in issue during the year). Adjusted earnings was
GBP8.6m (FY 20: GBP5.0m) an increase in adjusted basic earnings per
share of 2.18 pence. Basic earnings per share was 4.39 pence per
share (FY 20: 2.44 pence per share) an increase of 1.95 pence.
Dividends
On admission to AIM in December 2019, the Group's stated
intention was to make dividend payments of c.30% of profit after
tax. This policy remains in place. However, as we believe the
opportunities ahead of us are significant, particularly investment
in Facilisgroup, we have taken the decision to retain cash in the
business and not to pay a dividend in respect of 2021. The timing
of implementing our stated dividend policy will be considered again
during 2022, and an update provided in the Group's half year
results, scheduled for announcement in September 2022.
Cash flow
The Group had a cash balance of GBP12.1m at 31 December 2021 (FY
20: GBP7.1m).
Cash flow for the year is set out below.
2021 2020 Variance
GBP'm GBP'm GBP'm
Adjusted EBITDA 15.4 9.8 5.6
Movement in working capital (2.8) (1.8) (1.0)
Capital expenditure (5.3) (5.7) 0.4
Leases (1.4) (1.2) (0.2)
-------- -------- ----------
Adjusted operating cash
flow 5.9 1.1 4.8
Tax paid (0.5) (1.3) 0.8
Net finance cash flows (0.6) (0.7) 0.1
Exceptional items - (0.5) 0.5
Exchange loss 0.2 (0.4) 0.6
-------- -------- ----------
Net cash flow 5.0 (1.8) 6.8
Adjusted operating cash flow
Adjusted operating cash flow before tax payments and net finance
costs increased by GBP4.8m in the year to GBP5.9m. This is an
important metric for the Group that is monitored consistently to
ensure it remains strong whilst maintaining the necessary level of
investment in capital expenditure required to support the Group's
medium-term growth plans. The improvement in the year is due to
increased Group profitability with some investment in working
capital to support sales growth in Brand Addition.
Balance Sheet and shareholders' funds
Net assets increased in the year by GBP8.3m, the balance sheet
is summarised below:
2021 2020 Variance
GBP'm GBP'm GBP'm
Non-current assets 63.9 63.6 0.3
Working capital 9.5 6.4 3.1
Cash 12.1 7.1 5.0
Lease liabilities (7.8) (9.0) 1.2
Other net liabilities (3.1) (1.8) (1.3)
-------- -------- ----------
Net assets 74.6 66.3 8.3
Non-current assets
Non-current assets are the most significant balance sheet
category of which GBP35.8m (FY 20: GBP35.8m) is goodwill arising on
previous acquisitions. Non-current assets also include GBP8.6m (FY
20: GBP9.0m) of customer relationship intangible assets, GBP11.3m
(FY 20: GBP9.2m) of software development costs, including GBP3.3m
investment in the year into Facilisgroup technology products and
GBP7.9m (FY 20: GBP9.1m) of Property, Plant and Equipment. Software
development costs arise from ongoing investment in Group
proprietary software and in particular investment into Facilisgroup
products to ensure that existing technology services remain market
leading and differentiated from our competitors alongside the
development of new products that will deliver our medium-term
growth plans. The costs are capitalised in accordance with IAS 38
and amortised over the period which the Group expects to generate
benefit from the development. As the Group continues to accelerate
investment into its digital commerce platform for Facilisgroup, we
expect this level of investment to continue in the short term.
Working capital
Working capital of GBP9.5m is GBP3.1m higher than FY 20. This
increase is due to sales growth, and incremental volume in Brand
Addition where trade receivables have increased over FY 20. The
quality of these receivables remains excellent and our working
capital metrics remain consistent with FY 20 with amounts
outstanding being collected to terms in Q1 22.
Cash
Cash balances at 31 December 2021 were GBP12.1m an increase of
GBP5.0m on 2020.
Lease liabilities
Lease liabilities of GBP7.8m (2019: GBP9.0m) relate to Group
properties capitalised in accordance with IFRS 16. The reduction in
the year is lease payments of GBP1.4m offset by GBP0.5m additions
arising on lease extensions for existing offices and the relocation
of Brand Addition Shanghai.
Other net liabilities
Other net liabilities of GBP3.1m (FY 20: GBP1.8m) are net tax
liabilities of which GBP3.0m (FY 20: GBP2.6m) is deferred tax in
respect of the intangible assets of Facilisgroup. GBP1.6m (FY 20:
GBP1.7m) relates to acquired customer relationships, the balance
and increase in the year arising as a result of accelerated
investments into technology products. These liabilities will
reverse over the period that the assets are amortised. In FY 20 the
balance also included GBP0.8m of recoverable tax payments on
account.
Alternative Performance Measures "APM's"
Throughout the Annual Report and Accounts the Group has used a
number of APM's. These are used to provide additional clarity to
the Group's financial performance and are used internally by
management to monitor business performance, in its budgeting and
forecasting and also for determination of Directors' and senior
management renumeration. These APM's are not defined under IFRS
and, therefore, may not be directly comparable with adjusted
measures presented by other companies. The non-GAAP measures are
not intended to be a substitute for or superior to any IFRS
measures of performance. However, they are considered by management
to be important measures used in the business for assessing
performance.
The following are key non-GAAP measures identified by the Group
and used in the Strategic Review and Financial Statements:
Adjusted EBITDA which means operating profit before
depreciation, amortisation, share-based payments charge and
exceptional items.
Adjusted operating profit which means operating profit before
amortisation of acquired intangible assets, share-based payments
charge and exceptional items.
Adjusted profit before tax which means profit before tax,
amortisation of acquired intangible assets, share-based payments
charge and exceptional items.
Adjusted Earnings which means profit after tax before
amortisation of acquired intangible assets, share-based payments
charge and exceptional items.
Adjusted earnings per share which means Adjusted Earnings
divided by a weighted average number of shares in issue.
Adjusted operating cash flow which is calculated as Adjusted
EBITDA less movements in working capital, capital expenditure and
lease payments.
Claire Thomson
Chief Financial Officer
22 March 2022
Consolidated income statement
For the year ended 31 December 2021
Year ended Year ended
31 December 31 December
Note 2021 2020
----- ------------- -------------
GBP'000 GBP'000
Revenue 4 115,101 82,374
Cost of goods sold (73,128) (51,382)
------------- -------------
Gross profit 41,973 30,992
Operating expenses (32,107) (24,781)
Operating expenses - exceptional - (542)
Total operating expenses (32,107) (25,323)
Operating profit 9,866 5,669
Analysed as:
Adjusted EBITDA(1) 15,378 9,755
Depreciation 8 (1,986) (1,567)
Amortisation 7 (2,811) (1,963)
Share-based payment charge 10 (715) (14)
Exceptional items - (542)
Total operating profit 9,866 5,669
---------------------------------- ----- -------------
Finance expense (549) (700)
------------- -------------
Profit before taxation 9,317 4,969
Income tax expense 5 (1,970) (889)
------------- -------------
Profit for the year 7,347 4,080
------------- -------------
Basic earnings per share 6 4.39p 2.44p
============= =============
Diluted earnings per share 6 4.38p 2.44p
============= =============
Note 1: Adjusted EBITDA, which is defined as operating profit
before depreciation, amortisation, exceptional items, and
share-based payment charge is a non-GAAP metric used by management
and is not an IFRS disclosure.
All results derive from continuing operations.
Consolidated statement of other comprehensive income
For the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
Items that may be subsequently reclassified
to profit and loss
Foreign operations - foreign currency translation
differences 277 (708)
Other comprehensive income/(expense) for the
year 277 (708)
Profit for the year 7,347 4,080
------------- -------------
Total comprehensive income for the year 7,624 3,372
============= =============
Consolidated statement of financial position
As at 31 December 2021
As at 31 As at 31
December December
Note 2021 2020
------- ---------- ----------
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 7 55,674 54,017
Property, plant and equipment 8 7,927 9,102
Deferred tax asset 300 493
Total non-current assets 63,901 63,612
---------- ----------
Current assets
Inventories 10,093 12,109
Trade and other receivables 29,422 20,988
Cash and cash equivalents 12,051 7,066
Current tax asset - 829
Total current assets 51,566 40,992
---------- ----------
TOTAL ASSETS 115,467 104,604
========== ==========
LIABILITIES
Non-current liabilities
Lease liability 9 6,388 7,645
Trade and other payables - 930
Deferred tax liability 3,035 2,637
Total non-current liabilities 9,423 11,212
---------- ----------
Current liabilities
Lease liability 9 1,384 1,334
Trade and other payables 30,065 25,775
Current tax liability 20 -
Total current liabilities 31,469 27,109
---------- ----------
TOTAL LIABILITIES 40,892 38,321
========== ==========
NET ASSETS 74,575 66,283
========== ==========
Equity and reserves
Share capital 1,675 1,800
Share premium 78,451 78,451
Capital reserve 125 -
Merger reserve (103,581) (103,581)
Translation reserve (1,327) (1,604)
Share-based payments reserve 681 13
Retained earnings 98,551 91,204
TOTAL EQUITY 74,575 66,283
========== ==========
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share-based
Share Share Capital Merger Translation payments Retained Total
capital premium reserve reserve reserve reserve earnings equity
---------- -------- --------- --------- ------------- ----------- --------- -------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2020 1,800 78,451 - (103,581) (896) - 87,124 62,898
========== ======== ========= ========= ============= =========== ========= =======
Profit for the year - - - - - - 4,080 4,080
Other comprehensive
expense for the year - - - - (708) - - (708)
---------- -------- --------- --------- ------------- ----------- --------- -------
Total comprehensive
income/(expense) - - - - (708) - 4,080 3,372
---------- -------- --------- --------- ------------- ----------- --------- -------
Employee share schemes
- value of employee
services (note 10) - - - - - 13 - 13
---------- -------- --------- --------- ------------- ----------- --------- -------
Total transactions
with owners recognised
in equity - - - - - 13 - 13
---------- -------- --------- --------- ------------- ----------- --------- -------
At 31 December 2020 1,800 78,451 - (103,581) (1,604) 13 91,204 66,283
---------- -------- --------- --------- ------------- ----------- --------- -------
Profit for the year - - - - - - 7,347 7,347
Other comprehensive
income for the year - - - - 277 - - 277
---------- -------- --------- --------- ------------- ----------- --------- -------
Total comprehensive
income - - - - 277 - 7,347 7,624
---------- -------- --------- --------- ------------- ----------- --------- -------
Purchase of deferred
shares (125) - 125 - - - - -
Employee share schemes
- value of employee
services (note 10) - - - - - 601 - 601
Deferred tax on employee
share schemes - - - - - 67 - 67
---------- -------- --------- --------- ------------- ----------- --------- -------
Total transactions
with owners recognised
in equity (125) - 125 - - 668 - 668
---------- -------- --------- --------- ------------- ----------- --------- -------
At 31 December 2021 1,675 78,451 125 (103,581) (1,327) 681 98,551 74,575
---------- -------- --------- --------- ------------- ----------- --------- -------
Consolidated cash flow statement
For the year ended 31 December 2021
Year ended Year ended
31 December 31 December
Note 2021 2020
----- ------------- -------------
GBP'000 GBP'000
Operating profit 9,866 5,669
Adjustments for:
* Depreciation 13 1,986 1,567
* Amortisation 12 2,811 1,963
* Share-based payments charge 24 715 13
(13) -
* Profit on disposal of fixed assets
Cash flows from operating activities before
changes in working capital 15,365 9,212
* Change in inventories 15 2,016 (4,157)
* Change in trade receivables 16 (8,433) 4,556
* Change in trade payables 19 3,556 (2,146)
Cash flows from operating activities 12,504 7,465
* Income taxes paid (521) (1,313)
------------- -------------
Net cash flows from operating activities 11,983 6,152
------------- -------------
Cash flows from investing activities
* Purchase of property, plant and equipment 13 (680) (806)
* Purchase of intangible assets 12 (4,602) (4,871)
Net cash flows used in investing activities (5,282) (5,677)
------------- -------------
Cash flows from financing activities
* Lease payments (1,360) (1,141)
* Interest paid (549) (700)
Net cash flows used in financing activities (1,909) (1,841)
------------- -------------
NET CASH FLOWS 4,792 (1,366)
============= =============
Cash and cash equivalents at beginning of year 17 7,066 8,861
Effect of exchange rate fluctuations on cash
held 193 (429)
Cash and cash equivalents at end of year 17 12,051 7,066
------------- -------------
Notes to the Group financial statements
1. GENERAL INFORMATION
The principal activity of The Pebble Group plc (the "Company")
is that of a holding company and the principal activity of the
Company and its subsidiaries (the "Group") is the sale of products,
services and technology to the promotional merchandise industry.
The Group has two segments, Brand Addition and Facilisgroup. For
Brand Addition this is the sale of promotional products
internationally, to many of the world's best-known brands, and for
Facilisgroup the provision of technology, consolidated buying power
and community learning and networking events to SME promotional
product distributors in North America, its Partners, through
subscription-based services.
The Company was incorporated on 27 September 2019 in the United
Kingdom and is a public company limited by shares registered in
England and Wales. The registered office of the Company is Broadway
House, Trafford Wharf Road, Trafford Park, Manchester, England M17
1DD. The Company registration number is 12231361.
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Group financial statements have been prepared in accordance
with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The Company financial statements
have been prepared under FRS 102. Both financial statements have
been prepared on the historical cost basis with the exception of
certain items which are measured at fair value as disclosed in the
principal accounting policies set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
The financial information is presented in Sterling and has been
rounded to the nearest thousand (GBP'000).
(b) Going concern
The Group meets its day-to-day working capital requirements
through its own cash balances and committed banking facilities. In
assessing the appropriateness of adopting the going concern basis
in the preparation of these financial statements, the Directors
have prepared cash flow forecasts and projections for the two years
ending 31 December 2023.
The forecasts and projections, which the Directors consider to
be prudent, have been further sensitised by applying reductions to
revenue growth and margin, to consider a severe but plausible
downside. Under both the base and sensitised case the Group is
expected to have headroom against covenants, which are based on
interest cover and net leverage, and a sufficient level of
financial resources available through existing facilities when the
future funding requirements of the Group are compared with the
level of committed available facilities. Based on this, the
Directors are satisfied that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the Group and Company financial statements.
(c) Forward-looking statements
Certain statements in this Annual Report are forward looking
with respect to the operations, strategy, performance, financial
condition and growth opportunities of the Group. The terms
"expect", "anticipate", "should be", "will be", "is likely to" and
similar expressions identify forward-looking statements. Although
the Board believes that the expectations reflected in these
forward-looking statements are reasonable, by their nature these
statements are based on assumptions and are subject to a number of
risks and uncertainties. Actual events could differ materially from
those expressed or implied by these forward-looking statements.
Factors which may cause future outcomes to differ from those
foreseen in forward-looking statements include, without limitation:
general economic conditions and business conditions in the Group's
markets; customers' expectations and behaviours; supply chain
developments; technology changes; the actions of competitors;
exchange rate fluctuations; and legislative, fiscal and regulatory
developments. Information contained in these financial statements
relating to the Group should not be relied upon as a guide to
future performance.
(d) New standards, amendments and interpretations
New and amended standards adopted by the Group
The Group has applied the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2021:
-- Amendments to IFRS 7, IFRS 4 and IFRS 16 Interest rate benchmark reform - Phase 2
The amendment listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2021 reporting
periods and have not been early adopted by the Group. These
standards are not expected to have a material impact on the Group
in the current or future reporting periods and on foreseeable
future transactions.
Judgements made by the Directors in the application of these
accounting policies that have a significant effect on these
financial statements together with estimates with a significant
risk of material adjustment in the next year are discussed in note
3.
(e) Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group and are deconsolidated
from the date control ceases.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
(f) Revenue
Revenue arises from the provision of services through technology
and a global infrastructure that enables the efficient sale and
distribution of products to support corporate marketing activity
and consumer promotions of businesses in Europe, North America and
Asia.
To determine whether to recognise revenue, the Group follows the
5-step process as set out within IFRS 15:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
Revenue is measured at transaction price, stated net of VAT,
rebates and other sales related taxes.
Revenue is recognised either at a point in time, or over-time as
the Group satisfies performance obligations by transferring the
promised goods and services to its customers as described below.
Variable consideration, in the form of rebates, is recognised at a
point in time.
Brand Addition sale of promotional product
Contracts with customers take the form of customer orders under
a framework agreement. There is one distinct performance
obligation, being the design, sourcing and distribution of products
to the customer, for which the transaction price is clearly
identified. Revenue is recognised at a point in time when the Group
satisfies performance obligations by transferring the promised
goods to its customers, i.e. when control has passed from the Group
to the customer. This tends to be on receipt of the product by the
customer.
Customer invoices tend to be raised when the goods are delivered
and the performance obligation is satisfied. These invoices are
shown within trade receivables and payment is usually made within
60 days (being the common payment terms). In cases where the goods
have been delivered and an invoice cannot be raised at that time,
the income is accrued and presented within contract assets on the
statement of financial position. A small number of customers are
invoiced in advance and these amounts are deferred and presented
within contract liabilities.
Facilisgroup provision of technology, consolidated buying power
and community learning through subscription-based services
Services are provided through signed annual partner agreements.
There is one distinct performance obligation, being the provision
of access to the Facilisgroup network. The transaction price is set
on 1 January each year by reference to the previous year sales
volumes and is fixed for the financial year. For new partners, the
transaction price is calculated by reference to forecasted sales
for the year the partner joins. Revenue is recognised over time on
a monthly basis as the partners receive the benefits of being part
of the network. Payments are received on a monthly basis as the
performance obligations are satisfied over time.
(g) EBITDA and Adjusted EBITDA
Earnings before Interest, Taxation, Depreciation and
Amortisation ("EBITDA") and Adjusted EBITDA are non-GAAP measures
used by management to assess the operating performance of the
Group. EBITDA is defined as operating profit before depreciation
and amortisation. Exceptional items and share-based payment charge
are excluded from EBITDA to calculate Adjusted EBITDA.
The Directors primarily use the Adjusted EBITDA measure when
making decisions about the Group's activities. As these are
non-GAAP measures, EBITDA and Adjusted EBITDA measures used by
other entities may not be calculated in the same way and hence are
not directly comparable.
(h) Exceptional items
The Group's income statement separately identifies exceptional
items. Such items are those that in the Directors' judgement are
one-off in nature or non-operating and need to be disclosed
separately by virtue of their size or incidence and may include,
but are not limited to, restructuring costs, professional fees and
other costs directly related to the purchase of businesses, and the
raising of capital. In determining whether an item should be
disclosed as an exceptional item, the Directors consider
quantitative and qualitative factors such as the frequency,
predictability of occurrence and significance. This is consistent
with the way financial performance is measured by management and
reported to the Board.
(i) Taxation
Current tax is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where events or transactions that result in an obligation to pay
more tax in the future, or a right to pay less tax in future, have
occurred at the balance sheet date. Timing differences are
differences between the Group's taxable profits and its results as
stated in the financial statements that arise from the inclusion of
gains and losses in tax assessments in periods different from those
in which they are recognised in the financial statements. Deferred
income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes relate
to the same fiscal authority.
A net deferred tax asset is regarded as recoverable and
therefore recognised only to the extent that, on the basis of all
available evidence, it can be regarded as more likely than not that
there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are
expected to apply in the periods in which the timing differences
are expected to reverse based on tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is measured on a non-discounted basis.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
(j) Intangible assets
All business combinations are accounted for by applying the
purchase method. Goodwill represents the difference between the
cost of the acquisition and the fair value of the net identifiable
assets acquired. Identifiable intangibles are those which can be
sold separately, or which arise from legal or contractual rights
regardless of whether those rights are separable and are initially
recognised at fair value. In cases where the vendors of an acquired
business are required to remain employed by the Group
post-acquisition, the deferred payments are treated as
post-acquisition remuneration and charged to profit and loss.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment. Other intangibles
are stated at cost less accumulated amortisation and accumulated
impairment losses.
All intangible assets are denominated in the functional currency
of the relevant subsidiary company and retranslated into Sterling
at each period end date. Exchange differences are dealt with
through the Consolidated statement of other comprehensive income.
Intangible assets are presented in note 7.
Customer relationships
Customer relationships acquired in a business combination are
recognised at fair value at the date of acquisition. Customer
relationships have a finite life and are subsequently carried at
cost less accumulated amortisation. Amortisation is calculated
using the straight-line method to allocate the cost of these assets
over their estimated useful lives of 20 years.
Development costs
Research costs are charged to the income statement in the year
in which they are incurred and are presented within operating
expenses. Internal development costs that are incurred during the
development of significant and separately identifiable new
technology are capitalised when the following criteria are met:
-- it is technically feasible to complete the technological
development so that it will be available for use;
-- management intends to complete the technological development and use or sell it;
-- it can be demonstrated how the technological development will
develop probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
-- expenditure attributable to the technological product during
its development can be reliably measured.
Capitalised development costs include costs of materials and
direct labour costs. Internal costs that are capitalised are
limited to incremental costs specific to the project.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred and presented within
operating expenses, together with any amortisation which is charged
to the income statement on a straight-line basis over the estimated
useful lives of development intangible assets.
Assets classified as "work in progress" are not amortised as
such assets are not currently available for (or in) use. Once
available for use, assets will be recategorised and amortised at
the rate appropriate to their classification.
Computer software
Computer software purchased separately, that does not form an
integral part of related hardware, is capitalised at cost.
Amortisation is charged to profit or loss on a straight-line
basis over the estimated useful lives of intangible assets unless
such lives are indefinite and is presented within operating
expenses. All intangible assets are amortised from the date they
are available for use. The estimated useful lives are as
follows:
-- Customer relationships - 20 years;
-- Computer software - 3-5 years;
-- Development costs - 3 years.
(k) Impairment losses
The carrying amounts of the Group's assets are tested for
impairment. Assets with an indefinite useful life are not
depreciated or amortised but are tested for impairment at each
reporting date. Assets subject to amortisation/depreciation and
impairment losses are tested for impairment every time events or
circumstances indicate that they may be impaired.
Impairment losses are recognised in the income statement based
on the difference between the carrying amount and the recoverable
amount.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount, which is
the higher of fair value less costs of disposal and value in use.
To determine the value in use, management estimates expected future
cash flows and determines a suitable discount rate in order to
calculate the present value of those cash flows. The data used for
impairment testing procedures are directly linked to the Group's
latest approved budget, adjusted as necessary to exclude the
effects of future reorganisations and asset enhancements. Discount
factors are determined individually for each asset and reflect
current market assessments of the time value of money and
asset-specific risk.
The Group makes use of a simplified approach in accounting for
trade and other receivables as well as contract assets and records
the loss allowance as lifetime expected credit losses. These are
the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses.
The Group assesses impairment of trade receivables on a
collective basis as they possess shared credit risk
characteristics; they have been grouped based on the days past
due.
(l) Foreign currencies
Items included in the financial statements are measured using
the currency of the primary economic environment in which the Group
operates ("the functional currency"). The functional and
presentational currency is Pounds Sterling.
The functional currency of a subsidiary is determined based on
specific primary and secondary factors including the principal
currency of the cash flows and the primary economic environment in
which the subsidiary operates. Once determined, the functional
currency is used and translated for consolidation purposes.
Foreign currency items are translated using the transaction date
exchange rate. Monetary assets and liabilities denominated in
foreign currencies are translated at the closing rate. Foreign
currency differences are taken to the income statement.
Non-monetary assets and liabilities that are measured based on
historical cost in a foreign currency are translated at the
transaction date exchange rate.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated at closing rates. The income and expenses of foreign
operations are translated at the average exchange rate of the year
which approximates to the transaction date exchange rates. Exchange
differences arising on consolidation are presented within other
comprehensive income.
(m) Tangible assets and depreciation
Tangible fixed assets are stated at historical purchase cost
less accumulated depreciation. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use.
Depreciation is calculated so as to write off the cost of an
asset, less its estimated residual value, over the useful economic
life of that asset as follows:
-- Fixtures and fittings - 3 - 15 years;
-- Computer hardware - 5 years.
(n) Leases
The Group applies IFRS 16 to account for leases. At inception of
a contract, the Group assesses whether a contract is, or contains,
a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to restore the underlying asset, less any lease
incentives received. Extension and termination options are included
in a number of property and equipment leases across the Group and
so lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liabilities.
The lease liability is initially measured at the present value
of lease payments that were not paid at the commencement date,
discounted using the Group's incremental borrowing rate, which is
based on the Group's financing facilities, and adjusted where
necessary for the specific terms of the lease.
The lease liability is measured at amortised cost using the
effective interest method. If there is a remeasurement of the lease
liability, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded directly in profit
or loss if the carrying amount of the right-of-use asset is
zero.
The Group presents right-of-use assets within property, plant
and equipment in note 8.
Short-term leases and low value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term lease of machinery that have a
lease term of 12 months or less or leases of low value assets.
These lease payments are expensed on a straight-line basis over the
lease term.
(o) Segmental reporting
The Group reports its business activities in two areas
being:
-- Brand Addition - sale of promotional product through services
provided under framework contracts on an international basis;
and
-- Facilisgroup - provision of technology, consolidated buying
power and community learning and networking events to SME
promotional product distributors in North America through
subscription-based services.
This is reported in a manner consistent with the internal
reporting to the Executive Directors, which has been identified as
the Chief Operating Decision Maker.
(p) Employee benefits
The Group provides a range of benefits to employees, including
annual bonus arrangements, paid holiday arrangements and defined
contribution pension plans.
(i) Short-term benefits
Short-term benefits, including holiday pay and other similar
non-monetary benefits, are recognised as an expense in the period
in which the service is received.
(ii) Defined contribution pension plans
The Group operates a number of country-specific defined
contribution plans for its employees. A defined contribution plan
is a pension plan under which the Group pays fixed contributions
into a separate entity. Once the contributions have been paid, the
Group has no further payment obligations. The contributions are
recognised as an expense when they are due. Amounts not paid are
included in accruals within trade and other payables in the
statement of financial position. The assets of the plans are held
separately from the Group in independently administered funds.
(iii) Share-based payments
Equity-settled awards are valued at the grant date, and the fair
value is charged as an expense in the income statement spread over
the vesting period. Fair value of the awards are measured using an
adjusted form of the Black-Scholes model which includes a Monte
Carlo simulation model. The fair value of the options, appraised at
the grant date, includes the impact of market-based vesting
conditions if applicable.
Share-based remuneration is recognised as an expense in profit
or loss with the credit side of the entry being recorded in
equity.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any adjustment to cumulative share-based compensation
resulting from a revision is recognised in the current period. The
number of vested options ultimately exercised by holders does not
impact the expense recorded in any period.
(q) Government grants
In preparing the financial statements, IAS 20, 'Accounting for
Government Grants and Disclosure of Government Assistance' has been
applied such that grants have been recognised in profit or loss on
a systematic basis over the periods in which we have recognised the
expense for the related costs for which the grants are intended to
compensate. In Germany, a benefit of GBP0.5m has been received and
credited to the income statement in 2021. This relates to Bridging
Assistance for companies that have suffered a decline in revenue as
a result of the pandemic. There are no unfulfilled conditions or
other contingencies attached to this grant.
In 2020, as part of the Coronavirus Job Retention Scheme, a
benefit of GBP1.0 million was credited to the income statement. A
further benefit of $0.9 million had been received in the US and
credited to the income statement against costs incurred, along with
a further GBP0.3m taken in other countries.
3. JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the preparation of the Group financial statements, the
Directors, in applying the accounting policies of the Group, make
some judgements and estimates that affect the reported amounts in
the financial statements. The following are the areas requiring the
use of judgement and estimates that may significantly impact the
financial statements:
(a) Accounting estimates
Information about estimates and assumptions that may have the
most significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided on the following page.
Actual results may be substantially different.
Goodwill impairment
The Group tests goodwill for impairment every year in accordance
with the relevant accounting policies. The recoverable amounts of
cash-generating units are determined by calculating value in use.
These calculations require the use of estimates.
Goodwill relates to the various acquisitions made and amounts to
GBP35,805,000 as at 31 December 2021. The estimates used in the
impairment calculation are set out in note 7. There is no
significant risk of material adjustment to the carrying amount of
the goodwill within the next twelve months.
Valuation of acquired intangibles
IFRS 3 requires separately identifiable intangible assets to be
recognised on acquisitions. The principal estimates used in valuing
the acquired intangible assets are the future cash flows estimated
to be generated from these contracts, expected customer attrition,
growth in revenues and the selection of appropriate discount rates
to apply to the cash flows. The Directors' assessment of these
estimates is based on up-to-date information and evidence available
at the time of finalising the valuation. There is no significant
risk of material adjustment to the carrying amount of the
intangible assets within the next twelve months.
Useful economic lives of intangible assets
The Directors have estimated the useful economic lives of the
acquired customer intangible assets to be 20 years based upon
attrition rates and the Directors' judgement. These lives are
reviewed and updated annually. There is no significant risk of
material adjustment to the carrying amount of the intangible assets
within the next twelve months.
Useful economic lives of property, plant and equipment
Property, plant and equipment is depreciated over the useful
lives of the assets. Useful lives are based on the management's
estimates of the period that the assets will generate revenue,
which are reviewed annually for continued appropriateness. The
carrying values are tested for impairment when there is an
indication that the value of the assets might be impaired. When
carrying out impairment tests these would be based upon future cash
flow forecasts and these forecasts would be based upon management
judgement. Future events could cause the assumptions to change,
therefore, this could have an adverse effect on the future results
of the Group. There is no significant risk of material adjustment
to the carrying amount of the property, plant and equipment within
the next twelve months.
The useful economic lives applied are set out in the accounting
policies and are reviewed annually.
(b) Accounting judgements
The following are the areas requiring the use of judgement that
may significantly impact the Group financial statements:
Capitalisation of internal development costs
Distinguishing the research and development phases of a new
customised project and determining whether the recognition
requirements for the capitalisation of development costs are met
requires judgement. After capitalisation, management monitors
whether the recognition requirements continue to be met and at what
point amortisation should commence, in addition to whether there
are any indicators that capitalised costs may be impaired.
Capitalised development expenditure is analysed further in note
7.
4. SEGMENTAL ANALYSIS
The Chief Operating Decision Maker ("CODM") has been identified
as the Executive Directors. The Directors have determined that the
operating segments, based on these reports, are:
-- Brand Addition - sale of promotional product through complex
services provided under framework contracts on an international
basis; and
-- Facilisgroup - provision of technology, consolidated buying
power and community learning and networking events to SME
promotional product distributors in North America through
subscription-based services.
Segment information about the above businesses is presented on
the following page.
The Executive Directors assess the performance of the operating
segments based on Adjusted EBITDA. Other information provided to
the Directors is measured in a manner consistent with that in the
financial statements. Inter-segment transactions are entered into
under the normal commercial terms and conditions that would also be
available to unrelated third parties. Segment assets exclude
centrally held cash at bank and in hand.
Major customers
In 2021 there were two major customers that individually
accounted for at least 10% of total revenues (2020: two customers).
The revenues relating to these customers in 2021 were GBP33,215,000
(2020: GBP21,079,000) and both related to the Brand Addition
segment.
Analysis of revenue by geographical destination
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
United Kingdom 26,961 22,274
Continental Europe 38,914 24,741
US 31,675 25,332
Rest of World 17,551 10,027
Total revenue 115,101 82,374
============= =============
The geographical revenue information above is based on the
location of the customer.
Included within Rest of World is GBP11,638,000 of revenue from
China.
All the above revenues are generated from contracts with
customers and are recognised at a point in time or over time as
follows:
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
At a point in time 102,916 73,135
Over time 12,185 9,239
------------- -------------
Total revenue 115,101 82,374
============= =============
All non-current assets of the Group reside in the UK, with the
exception of non-current assets with a net book value of
GBP27,111,000 (2020: GBP26,396,000) which were located in North
America and GBP711,000 (2020: GBP760,000) located in other foreign
countries.
Income statement for the year ended 31 December 2021
Year ended
Central 31 December
Brand Addition Facilisgroup operations 2021
--------------- ------------- ------------ -------------
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 102,383 12,718 - 115,101
Cost of goods sold (73,128) - - (73,128)
--------------- ------------- ------------ -------------
Gross profit 29,255 12,718 - 41,973
Operating expenses (22,133) (7,577) (2,397) (32,107)
Total operating expenses (22,133) (7,577) (2,397) (32,107)
Operating profit/(loss) 7,122 5,141 (2,397) 9,866
Analysed as:
Adjusted EBITDA 9,932 7,581 (2,135) 15,378
Depreciation (1,410) (533) (43) (1,986)
Amortisation (1,136) (1,675) - (2,811)
Share-based payment charge (264) (232) (219) (715)
Total operating profit/(loss) 7,122 5,141 (2,397) 9,866
------------------------------- --------------- ------------- ------------
Finance expense (378) (26) (145) (549)
--------------- ------------- ------------ -------------
Profit/(loss) before taxation 6,744 5,115 (2,542) 9,317
Income tax (expense)/income (865) (1,131) 26 (1,970)
--------------- ------------- ------------ -------------
Profit/(loss) for the year 5,879 3,984 (2,516) 7,347
=============== ============= ============ =============
Statement of financial position as at 31 December 2021
As at 31
Central December
Brand Addition Facilisgroup operations 2021
--------------- ------------- ------------ ----------
GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 37,728 17,946 - 55,674
Property, plant and equipment 4,766 3,083 78 7,927
Deferred tax asset 146 58 96 300
Total non-current assets 42,640 21,087 174 63,901
--------------- ------------- ------------ ----------
Current assets
Inventories 10,093 - - 10,093
Trade and other receivables 25,415 3,930 77 29,422
Cash and cash equivalents 10,335 1,230 486 12,051
Total current assets 45,843 5,160 563 51,566
--------------- ------------- ------------ ----------
TOTAL ASSETS 88,483 26,247 737 115,467
=============== ============= ============ ==========
LIABILITIES
Non-current liabilities
Lease liability 4,018 2,349 21 6,388
Deferred tax liability - 3,035 - 3,035
Total non-current liabilities 4,018 5,384 21 9,423
--------------- ------------- ------------ ----------
Current liabilities
Lease liability 985 328 71 1,384
Trade and other payables 26,500 2,752 813 30,065
Current tax liability 28 36 (44) 20
Total current liabilities 27,513 3,116 840 31,469
--------------- ------------- ------------ ----------
TOTAL LIABILITIES 31,531 8,500 861 40,892
=============== ============= ============ ==========
NET ASSETS 56,952 17,747 (124) 74,575
=============== ============= ============ ==========
Income statement for the year ended 31 December 2020
Year ended
Central 31 December
Brand Addition Facilisgroup operations 2021
--------------- ------------- ------------ -------------
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 72,608 9,766 - 82,374
Cost of goods sold (51,382) - - (51,382)
--------------- ------------- ------------ -------------
Gross profit 21,226 9,766 - 30,992
Operating expenses (18,233) (5,077) (1,471) (24,781)
Operating expenses - exceptional (429) (42) (71) (542)
Total operating expenses (18,662) (5,119) (1,542) (25,323)
Operating profit/(loss) 2,564 4,647 (1,542) 5,669
Analysed as:
Adjusted EBITDA 5,209 5,994 (1,448) 9,755
Depreciation (1,316) (242) (9) (1,567)
Amortisation (900) (1,063) - (1,963)
Share-based payment charge - - (14) (14)
Exceptional items (429) (42) (71) (542)
Total operating profit/(loss) 2,564 4,647 (1,542) 5,669
---------------------------------- --------------- ------------- ------------
Finance expense (433) (29) (238) (700)
--------------- ------------- ------------ -------------
Profit/(loss) before taxation 2,131 4,618 (1,780) 4,969
Income tax (expense)/income (176) (1,182) 469 (889)
--------------- ------------- ------------ -------------
Profit/(loss) for the year 1,955 3,436 (1,311) 4,080
=============== ============= ============ =============
Statement of financial position as at 31 December 2020
As at 31
Central December
Brand Addition Facilisgroup operations 2020
--------------- ------------- ------------ ----------
GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 37,839 16,178 - 54,017
Property, plant and equipment 5,558 3,424 120 9,102
Deferred tax asset 23 - 470 493
Total non-current assets 43,420 19,602 590 63,612
--------------- ------------- ------------ ----------
Current assets
Inventories 12,109 - - 12,109
Trade and other receivables 19,353 1,571 64 20,988
Cash and cash equivalents 5,677 538 851 7,066
Current tax asset 310 474 45 829
Total current assets 37,449 2,583 960 40,992
--------------- ------------- ------------ ----------
TOTAL ASSETS 80,869 22,185 1,550 104,604
=============== ============= ============ ==========
LIABILITIES
Non-current liabilities
Lease liability 4,893 2,661 91 7,645
Trade and other payables - 930 - 930
Deferred tax liability - 2,637 - 2,637
Total non-current liabilities 4,893 6,228 91 11,212
--------------- ------------- ------------ ----------
Current liabilities
Lease liability 1,096 218 20 1,334
Trade and other payables 22,995 2,181 599 25,775
Total current liabilities 24,091 2,399 619 27,109
--------------- ------------- ------------ ----------
TOTAL LIABILITIES 28,984 8,627 710 38,321
=============== ============= ============ ==========
NET ASSETS 51,885 13,558 840 66,283
=============== ============= ============ ==========
5. INCOME TAX EXPENSE
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
Current income tax
217 -
* UK corporation tax charge for the year
* Adjustments in respect of prior years (40) (112)
* Foreign tax 1,173 445
Total current income tax 1,350 333
------------- -------------
Deferred tax
* Deferred tax 755 522
* Adjustments in respect of prior years (173) 48
* Impact of rate change 38 (14)
Total deferred tax 620 556
------------- -------------
Total income tax expense 1,970 889
============= =============
Current taxes comprise the income taxes of the Group companies
which posted a taxable profit for the year, while deferred taxes
show changes in deferred tax assets and liabilities which were
recognised by the Group on the temporary differences between the
carrying amount of assets and liabilities and their amount
calculated for tax purposes, and on consolidation adjustments,
calculated using the rates that are expected to apply in the year
these differences will reverse.
Year ended Year ended
Analysis of charge in year 31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
Reconciliation of total tax charge:
Profit before taxes 9,317 4,969
------------- -------------
Profit before taxes multiplied by the rate of corporation
tax in the UK of 19% (2020: 19%) 1,770 944
Effects of:
Adjustments in respect of prior years (213) (64)
Impact of UK rate change 38 (14)
Non-deductible (income)/expenses (24) 90
Differences in tax rates in overseas jurisdictions 382 183
Unrecognised for deferred tax 32 503
Utilisation of unrecognised deferred tax brought
forward (15) (753)
Total income tax expense 1,970 889
============= =============
Factors that may affect future tax charges
The Government made a number of budget announcements on 3 March
2021. These include confirming that the rate of corporation tax
will increase to 25% from 1 April 2023. This new law was
substantively enacted on 24 May 2021. Deferred taxes at the balance
sheet date have been measured using these enacted tax rates and
reflected in these financial statements.
Amounts recognised directly in equity
Aggregate deferred tax arising in the reporting period and not
recognised in net profit or loss or other comprehensive income but
directly credited to equity:
Year ended Year ended
31 December 31 December
2021 2020
--------------- -------------
GBP'000 GBP'000
Deferred tax: credit relating to employee share
schemes - value of employee services 67 2
--------------- -------------
6. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the earnings
attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the year.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive ordinary shares. The Company has potentially
dilutive ordinary shares arising from share options granted to
employees. Options are dilutive under the Group Sharesave Plan
(SAYE), where the exercise price together with the future IFRS 2
charge of the option is less than the average market price of the
Company's ordinary shares during the year. Options under the LTIP
schemes, as defined by IFRS 2, are contingently issuable shares and
are therefore only included within the calculation of diluted EPS
if the performance conditions, as set out in note 10, are satisfied
at the end of the reporting period, irrespective of whether this is
the end of the vesting period or not.
Until 3 June 2021, the Company had 12,564,501 non-redeemable
deferred shares of GBP0.01 in issue with no voting, dividend or
other distribution rights. The stated intention from their creation
upon Admission was that they would be purchased in their entirety
by the Company. As no rights of conversion nor pre-arranged formula
to convert deferred shares into ordinary shares were included in
the Articles of Association, they have never been considered
'convertible securities'. Accordingly, deferred shares have not
been included in the calculation of diluted earnings per share. The
off-market buy-back of the deferred shares completed on 3 June 2021
when the deferred shares were immediately cancelled.
The impact of the potentially dilutive share options issued
under The Pebble Group Plc Long Term Incentive Plan on 21 December
2020 and 8 June 2021 and Group Sharesave Plan (SAYE) on 6 October
2021 as detailed in note 10 is 0.01p for the year ended 31 December
2021. There is no impact on the basic earnings per share for the
year ended 31 December 2020.
The calculation of basic profit per share is based on the
following data:
Statutory EPS
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
Earnings (GBP'000)
Earnings for the purposes of basic and diluted earnings
per share being
profit for the year attributable to equity shareholders 7,347 4,080
------------- -------------
Number of shares
Weighted average number of shares for the purposes
of basic earnings per share 167,450,893 167,450,893
Weighted average dilutive effects of conditional 353,605 -
share awards
Weighted average number of shares for the purposes
of diluted earnings per share 167,804,498 167,450,893
------------- -------------
Earnings per ordinary share (pence)
Basic earnings per ordinary share (pence) 4.39 2.44
Diluted earnings per ordinary share (pence) 4.38 2.44
------------- -------------
Adjusted EPS
The calculation of adjusted earnings per share is based on the
after-tax adjusted operating profit after adding back certain costs
as detailed in the table below. Adjusted earnings per share figures
are given to exclude the effects of amortisation of acquired
intangible assets, share-based payment charge and exceptional
items, all net of taxation, and are considered to show the
underlying performance of the Group.
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
Earnings (GBP'000)
Earnings for the purposes of basic and diluted earnings
per share being adjusted earnings 8,599 4,965
------------- -------------
Number of shares
Weighted average number of shares for the purposes
of adjusted earnings per share 167,450,893 167,450,893
Weighted average dilutive effects of conditional 353,605 -
share awards
Weighted average number of shares for the purposes
of diluted earnings per share 167,804,498 167,450,893
------------- -------------
Adjusted earnings per ordinary share (pence)
Basic adjusted earnings per ordinary share (pence) 5.14 2.96
Diluted adjusted earnings per ordinary share (pence) 5.12 2.96
------------- -------------
The calculation of adjusted earnings per share is based on the
following data:
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
Profit for the year attributable to equity shareholders 7,347 4,080
------------- -------------
Add back/(deduct):
Amortisation charge on acquired intangible assets 894 537
Share-based payment charge 715 14
Exceptional items - 542
Tax effect of the above (357) (208)
------------- -------------
Adjusted earnings 8,599 4,965
============= =============
7. INTANGIBLE ASSETS
Software
Customer and development Work in
Goodwill relationships costs progress Total
--------- --------------- ----------------- ---------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 2020 35,882 10,437 11,156 336 57,811
--------- --------------- ----------------- ---------- --------
Impact of foreign exchange
translation (80) (293) (21) - (394)
Additions - - 5,860 293 6,153
Disposals - - (272) - (272)
Reclassifications - - 407 (407) -
--------- --------------- ----------------- ---------- --------
Balance at 31 December
2020 35,802 10,144 17,130 222 63,298
--------- --------------- ----------------- ---------- --------
Impact of foreign exchange
translation 3 97 100 - 200
Additions - - 3,553 739 4,292
Reclassifications - - 538 (538) -
--------- --------------- ----------------- ---------- --------
Balance at 31 December
2021 35,805 10,241 21,321 423 67,790
--------- --------------- ----------------- ---------- --------
Accumulated amortisation
Balance at 1 January 2020 - 635 7,009 - 7,644
--------- --------------- ----------------- ---------- --------
Impact of foreign exchange
translation - (15) (39) - (54)
Charge for year - 537 1,426 - 1,963
Disposals - - (272) - (272)
--------- --------------- ----------------- ---------- --------
Balance at 31 December
2020 - 1,157 8,124 - 9,281
--------- --------------- ----------------- ---------- --------
Impact of foreign exchange
translation - (13) 37 - 24
Charge for year - 503 2,308 - 2,811
Balance at 31 December
2021 - 1,647 10,469 - 12,116
--------- --------------- ----------------- ---------- --------
Net book value
--------- --------------- ----------------- ---------- --------
At 31 December 2019 35,882 9,802 4,147 336 50,167
--------- --------------- ----------------- ---------- --------
At 31 December 2020 35,802 8,987 9,006 222 54,017
--------- --------------- ----------------- ---------- --------
At 31 December 2021 35,805 8,594 10,852 423 55,674
========= =============== ================= ========== ========
Staff costs of GBP3,667,000 (2020: GBP1,688,000) have been
capitalised as intangible assets.
On 18 December 2020, Facilisgroup acquired software assets and a
license from a US-based software developer, for a total cash
consideration of $5.3m (GBP3.8m), included in Software and
development costs.
The remaining amortisation periods for customer relationships
are between 15 and 17 years (2020: 16 and 18 years) and for
software and development costs are between 1 and 5 years.
Goodwill has been tested for impairment. The method, key
assumptions and results of the impairment review are detailed
below.
Goodwill is attributed to the respective cash-generating units
("CGUs") within the Group (Brand Addition and Facilisgroup).
Goodwill has been tested for impairment by assessing the value in
use of each CGU. The value in use calculations were based on
projected cash flows in perpetuity. For both CGUs, budgeted cash
flows for 2022 to 2026 were used. For Brand Addition, these were
based on a forecast for 2022 with growth rates of 6% applied to
EBITDA. For Facilis, these were based on forecasts for 2022 to
2024, with 20% growth rates applied to EBITDA in 2025 and 2026.
Subsequent years were based on a reduced rate of growth of 2.0%
(2020: 2.0%) into perpetuity. Appropriate adjustments were also
made for changes in working capital and other cash flows to both
CGUs.
These growth rates are based on past experience and market
conditions and discount rates are consistent with external
information. The growth rates shown are the average applied to the
cash flows of the individual CGUs and do not form a basis for
estimating the consolidated profits of the Group in the future.
The Directors used an estimated market weighted average cost of
capital ("WACC") of 8.9% for Brand Addition and 9.3% for
Facilisgroup (2020: 9.0% for Brand Addition and 9.4% for
Facilisgroup) to discount the cash flows used for the CGUs. The
value in use calculations described above, together with
sensitivity analysis using reasonably possible changes in the key
assumptions as set out above, indicate the Group has significant
headroom and therefore do not give rise to impairment concerns.
Having completed the impairment reviews at the date of
transition and at each subsequent balance sheet date, no
impairments were identified.
Goodwill is attributable to the following segments:
As at 31 As at 31
December December
2021 2020
---------- ----------
GBP'000 GBP'000
Brand Addition 33,057 33,057
Facilisgroup 2,748 2,745
---------- ----------
35,805 35,802
========== ==========
The value in use, calculated as described on the previous page
and attributable to each CGU is:
As at 31 As at 31
December December
2021 2020
---------- ----------
GBP'000 GBP'000
Brand Addition 171,111 153,100
Facilisgroup 215,961 63,200
---------- ----------
387,072 216,300
========== ==========
Management considers that no reasonably possible changes would
reduce either CGU's headroom to nil.
8. PROPERTY, PLANT AND EQUIPMENT
Fixtures Computer Right-of-use
and fittings hardware Assets Total
-------------- ---------- ------------- --------
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 2020 3,854 2,275 10,506 16,635
-------------- ---------- ------------- --------
Impact of foreign exchange
translation (33) (13) (27) (73)
Additions 241 565 3,853 4,659
Disposals (349) (119) (1,537) (2,005)
Balance at 31 December 2020 3,713 2,708 12,795 19,216
-------------- ---------- ------------- --------
Impact of foreign exchange
translation 19 (2) 45 62
Additions 160 520 461 1,141
Disposals - - (517) (517)
Balance at 31 December 2021 3,892 3,226 12,784 19,902
-------------- ---------- ------------- --------
Accumulated depreciation
Balance at 1 January 2020 3,144 1,865 5,545 10,554
-------------- ---------- ------------- --------
Impact of foreign exchange
translation (23) (9) 30 (2)
Charge for the year 163 240 1,164 1,567
Disposals (349) (119) (1,537) (2,005)
-------------- ---------- ------------- --------
Balance at 31 December 2020 2,935 1,977 5,202 10,114
-------------- ---------- ------------- --------
Impact of foreign exchange
translation 16 10 20 46
Charge for the year 182 336 1,468 1,986
Disposals - - (171) (171)
-------------- ---------- ------------- --------
Balance at 31 December 2021 3,133 2,323 6,519 11,975
-------------- ---------- ------------- --------
Net book value
-------------- ---------- ------------- --------
Balance at 31 December 2019 710 410 4,961 6,081
-------------- ---------- ------------- --------
Balance at 31 December 2020 778 731 7,593 9,102
-------------- ---------- ------------- --------
Balance at 31 December 2021 759 903 6,265 7,927
-------------- ---------- ------------- --------
Right-of-use assets - net
book value
As at 31 As at 31
December December
2021 2020
---------- ----------
GBP'000 GBP'000
Leasehold property 6,069 7,267
Fixtures and fittings 140 227
Computer hardware 56 99
---------- ----------
Total Right-of-use assets - net book value 6,265 7,593
========== ==========
9. LEASES
As at 31 As at 31
December December
Lease liabilities 2021 2020
---------- ----------
GBP'000 GBP'000
Maturity analysis - contractual undiscounted
cash flows:
Less than one year 1,716 1,761
More than one year, less than two years 1,440 1,703
More than two years, less than three years 1,273 1,403
More than three years, less than four years 1,200 1,204
More than four years, less than five years 1,202 1,185
More than five years 2,338 3,513
---------- ----------
Total undiscounted lease liabilities at year
end 9,169 10,769
Finance costs (1,397) (1,790)
---------- ----------
Total discounted lease liabilities at year
end 7,772 8,979
---------- ----------
Lease liabilities included in the statement
of financial position:
Current 1,384 1,334
Non-current 6,388 7,645
---------- ----------
7,772 8,979
---------- ----------
Amounts recognised in the Consolidated income statement
The Consolidated income statement shows the following amounts
relating to leases:
Year ended Year ended
31 December 31 December
2021 2020
------------- -------------
GBP'000 GBP'000
Depreciation charge - fixtures and fittings 1,424 1,120
Depreciation charge - computer hardware 44 44
------------- -------------
1,468 1,164
Interest expense (within finance expense) 381 433
============= =============
The above leases relate to office space, computer equipment and
motor vehicles. The net book value by category is set out in note
8.
Any expense for short-term and low-value leases is not material
and has not been presented.
10. SHARE-BASED PAYMENTS
In the year ended 31 December 2021 the Group operated
equity-settled share-based payment plans as described below.
The Group recognised total expenses of GBP715,000 (2020:
GBP13,569) in respect of equity-settled share-based payment
transactions in the year ended 31 December 2021.
The Pebble Group Plc Long Term Incentive Plan (the 'LTIP')
Certain employees of the Company, along with other Group
employees, have been granted share options on 21 December 2020 and
8 June 2021 under the LTIP.
Under the LTIP, the Group has made awards over 2,208,570 (2020:
1,248,060) conditional shares to certain Directors and
employees.
The vesting of most of these awards is subject to the Group
achieving certain performance targets under the LTIP, measured over
a three-year period, as set out in the Remuneration Report. The
options are split into two parts with the amount of Part 1 options
that will vest depending on achievement of the Group's Basic
Adjusted EPS ("AEPS") whilst Part 2 depends on absolute total
shareholder return ("TSR") that will vest depending on performance
of the Company's Absolute TSR:
Proportion
of award
Part 1 options - Basic AEPS 70%
Part 2 options - TSR 30%
Details of the maximum total number of ordinary shares which may
be issued in future periods in respect of LTIP awards outstanding
at 31 December 2021 are shown below:
Number of
shares
At 1 January 2021 1,248,060
Granted in the year 960,510
Lapsed in the year (134,324)
----------
At 31 December 2021 2,074,246
----------
The fair value at grant date is independently determined using
an adjusted form of the Black-Scholes model which includes a Monte
Carlo simulation model that takes into account the exercise price,
the term of the option, the share price at grant date and expected
price volatility of the underlying share based on the AIM Price
Index over the past 3 years, and the risk-free interest rate for
the term of the option as shown on the following page.
2020 award 2020 award 2021 award 2021 award
TSR condition AEPS condition TSR condition AEPS condition
Share price at
grant date 105.0p 105.0p 130.0p 130.0p
Exercise price GBPnil GBPnil GBPnil GBPnil
Expected volatility 17.2% - 17.5% -
Expected life 3 years 3 years 3 years 3 years
Expected dividend
yield 0% - 0% -
Risk-free interest
rate 0.53% - 0.53% -
Fair value per
option 22.3p 110.5p 28.2p 153.0p
Performance conditions 2020 award 2021 award
3 years ended 3 years ended
30 June 2023 31 December
2023
70% Cumulative adjusted Threshold (25% of 13.4p 15.4p
EPS maximum vesting) 14.3p 16.3p
Basic adjusted EPS as Mid-range (60% of 15.1p 17.3p
defined in the LTIP maximum vesting)
rules, excludes share-based Maximum (100% of maximum
payment charge, exceptional vesting)
items and amortisation
from acquired intangibles
-------------------------- --------------- ---------------
30% Annualised TSR Threshold (25% maximum 8.0% pa 8.0% pa
Annualised growth in vesting) 11.3% pa 11.3% pa
total shareholder returns Mid-range (60% maximum 15.0% pa 15.0% pa
vesting)
Maximum (100% maximum
vesting)
-------------------------- --------------- ---------------
The Pebble Group Plc Group Sharesave Plan (the 'SAYE')
Certain eligible employees of the Company, along with other
Group employees, have been granted share options on 6 October 2021
under its Sharesave Plan and its sub-plan, the International
Sharesave Plan.
The SAYE provides for an exercise price equal to the quoted
mid-market price of the Company shares on the business day
immediately preceding the date of grant, less a discount of twenty
per cent, of GBP1.22. The vesting period under the scheme is three
years and no performance conditions, other than remaining a Group
employee, are attached to the options.
Under the SAYE, the Group has made awards of 937,223 conditional
shares to certain Directors and employees.
Details of the maximum total number of ordinary shares which may
be issued in future periods in respect of SAYE awards outstanding
at 31 December 2021 are shown below:
Number of
shares
At 1 January 2021 -
Granted in the year 937,223
Lapsed in the year (13,513)
----------
At 31 December 2021 923,710
----------
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END
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(END) Dow Jones Newswires
March 22, 2022 03:00 ET (07:00 GMT)
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