Building brands.
Growing relationships.
Strengthening businesses.
Broadway House
Trafford Wharf Road
Trafford Park
Manchester M17 1DD
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Annual Report 2022
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Stay up to date at
thepebblegroup.com
Building brands.
Growing relationships.
Strengthening businesses.
• Strong performance with
Group revenue at £134.0m
(FY 21: £115.1m) 16% ahead
of the prior year
• Strong balance sheet with
net cash ahead of market
expectations at 31 December
2022 of £15.1m (FY 21:
£12.1m)
• Proposed maiden final
dividend for FY 22 of 0.6
pence per Ordinary Share
Financial Highlights
REVENUE
OPERATING PROFIT
£134m
+16.4%
22
21
20
£134m
£115m
£82m
BASIC ADJUSTED EARNINGS
PER SHARE (EPS)*
5.78p
+12.5%
22
21
20
2.96p
5.78p
5.14p
£10.2m
+3.0%
22
21
20
£5.7m
£10.2m
£9.9m
GROSS PROFIT
£52.7m
+25.5%
22
21
20
£52.7m
£42.0m
£31.0m
NET CASH*
ADJUSTED EBITDA*
£15.1m
+24.8%
22
21
20
£7.1m
£15.1m
£12.1m
£18.0m
+16.9%
22
21
20
£9.8m
£18.0m
£15.4m
* Basic Adjusted Earnings Per Share (EPS), Net Cash and Adjusted EBITDA are each defined in the Chief Financial Officer’s review on page 50.
“ I am pleased to report on another year of
strong performance and growth for The
Pebble Group in 2022 with results for the
year slightly ahead of market expectations.”
Richard Law
Chair
Contents
Strategic report
2 Introduction to the Promotional
Products industry
4 Our businesses
12 Chair’s report
14 Chief Executive Officer’s review
17 Our strategy in action
18 Listening to our stakeholders
20 Our stakeholders
22 Section 172 statement
26 Sustainability
28 2022 highlights
30 Identifying our key material ESG
issues
31 ESG report 2022
44 Key Performance Indicators
47 Chief Financial Officer’s review
51 Risk Management
Our Values
Corporate governance
56 Chair’s Introduction to Governance
58 Our Governance Structure
62 Nomination Committee Report
65 Key Governance Policies
67 Corporate governance statement
74 Board of Directors
76 Senior Executives
77 Audit Committee report
81 Remuneration report
90 Directors’ report
94 Statement of Directors’
Financial statements
95 Independent auditors’ report
100 Consolidated income statement
101 Consolidated statement of
Comprehensive Income
102 Consolidated statement of
financial position
103 Consolidated statement of
changes in equity
104 Consolidated cash flow statement
105 Notes to the Group financial
statements
responsibilities in respect of the
financial statements
132 Company balance sheet
133 Company statement of changes in
equity
134 Notes to the Company financial
statements
139 Financial calendar and Company
information
Our values shape our culture, define who we are, what we do and how we act.
ONE TEAM, DIVERSE
AND UNITED
ENJOYING THE
JOURNEY
AMBITIOUS
POSITIVITY
ALWAYS LEARNING
AND GROWING
CONNECTED TO OUR
STAKEHOLDERS
We are one team using
our diverse skills and
experience to support
each other’s successes
and challenges,
respecting our
differences.
Enjoying the journey in a
culture of integrity,
transparency and
fairness, where we are
proud of our past and
excited by our future.
Ambitious in our
commitment to achieving
positive results with
sustainable impact.
Learning and growing
knowing there is always
progress to be made.
Connected to all our
stakeholders developing
long-term relationships
by engaging to
understand needs and
aspirations.
The Pebble Group plc Annual Report 2022
1
STRATEGIC REPORT
Introduction to the Promotional Products industry
Why are promotional
products used?
Businesses of all sizes, sectors
and geographies use products,
branded with their name or key
message, in order to build
culture, brand awareness and
meaningful connections with
their stakeholders, be it existing
or potential customers,
employees or suppliers.
The right strategy can help businesses
make a long lasting positive emotional
connection with the recipient,
reminding them of an interaction with
a brand each time they use or wear
a product.
Industry growth and
development.
$25.8bn
$16.9bn
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Advertising Specialty Institute (ASI) reported industry sales revenue (North America).
Advertising Specialty Institute (ASI) reported industry sales revenue (North America).
2
The Pebble Group plc Annual Report 2022
The global promotional
products market is worth
c.$50bn., 50% of which is based
in North America.
Promotional products are often a key
component in a business’ marketing
strategy with the cost per impression
or the return on investment being highly
attractive. Businesses are increasingly
choosing to work with distributors who
can develop product strategies that
connect with their target audience
both locally and across the world.
Businesses have become more
considered in their approach, investing
in products to engage with employees
and customers that align with brand
values, are made from more sustainable
materials and are useful, helping to
generate as many brand impressions
as possible.
Developing an effective strategy
Benefits
t u r e d
c
u f a
nsibly m a n
o
p
s
e
R
• Aligned with social
and ethical standards
• Environmental
impact minimised
• Quality assured and
compliant
Gre
a
t p
r
o
d
u
• Desirable, useful, long
c
t
lasting, creative
• Engaging the target
audience
• Sustainable materials
prioritised
• Linked to brand
strategy and values
• Recognisable to
target audience
• Aligned globally
s
e
alu
d w ith brand v
e
n
i g
A l
• Products suitably
packaged
• Using materials to
support a circular
economy
C
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m
aterials
Market Opportunity
GLOBAL INDUSTRY
c.$50bn
VISIBILITY OF SALES OF
PROMOTIONAL PRODUCTS
$1.5bn
SALES THROUGH OUR
TECHNOLOGY
$1.4bn
SALES OF PROMOTIONAL
PRODUCTS
$0.1bn
Brand
loyalty
Stakeholder
engagement
Driving
brand sales
Creating
memorable
brand
connections
The Pebble Group plc Annual Report 2022
3
STRATEGIC REPORT
Our businesses
Our Group comprises two differentiated
businesses in the $50bn promotional
products market.
Our vision
Our vision is to provide
industry leading digital
commerce, products and
related services to the
global promotional products
industry.
Why invest?
A large market
We occupy two differentiated,
focused positions with
significant addressable
markets in a c.$50bn global
industry.
Facilisgroup
Total Addressable
Market (TAM)
$650m with
3%
Market share
Brand Addition.
TAM $5bn with
3%
Market share
Facilisgroup
Our vision is to be the industry leader in
digital commerce providing a combination of
integrated products that offer the full suite
of technology required for entrepreneurial
promotional product distributors to
professionalise and grow.
Brand Addition
Our vision is to be the industry leader in
providing products and related services,
under contract, to the best-known brands in
the world that use promotional products as
a key engagement tool.
Lower risk
Facilisgroup has delivered
uninterrupted growth since
acquisition in 2018.
Brand Addition working
under contract with blue
chip clients, generating
repeat revenues on a flexible
operating model.
Track record of growth
Facilisgroup had a 4-year
revenue CAGR of 20% high
visibility of earnings and
strong cash conversion.
Brand Addition – has
repeat revenues, enduring
customer relationships.
Facilisgroup
EBITDA margins
Facilisgroup
SAAS revenues
+50%.
54% Adjusted EBITDA margin
in FY 22
20%.
4-year CAGR in FY 22
Capability and scale
Strong Balance Sheet to
fund ambitious organic
growth plan.
The Group’s cash generation
is funding significant
investment in Facilisgroup’s
market leading technology
to access full market
opportunity.
Brand Addition centres of
excellence in Europe, the US
and Asia support many of
the world’s best known
brands in engaging their
stakeholders.
4
The Pebble Group plc Annual Report 2022
We provide digital commerce, products and
related services to the global promotional
products industry.
Results
ADJUSTED EBITDA
£9.0 M
ADJUSTED EBITDA
£11.5 M
GROUP REVENUE
GROUP ADJUSTED
EBITDA*
GROUP REVENUE
GROUP ADJUSTED
EBITDA”*
12+
12 %
N44+
88+
88 %
44 %
56+
56 %
*this is excluding EBITDA from
central operations
*this is excluding EBITDA from
central operations
Overview
Facilisgroup provides technology
solutions and a digital commerce
platform to SME promotional product
distributors in the United States and
Canada, that enables them to benefit
from significant business efficiencies
and supply chain advantages.
Services
Software as a Service (SaaS)
technology to power efficiency
and growth
Brand Addition is a leading provider of
promotional products and related
services that help the world’s most
recognisable global brands build
culture, awareness and meaningful
connections. It designs products and
product ranges, utilising its global
network and technology infrastructure
to source and deliver complex,
sustainable, creative promotional
merchandise solutions.
Design corporate ranges and bespoke
products
Source from ethical suppliers
Model
Ecommerce platform for online sales
and processing
Deliver across the globe
Supply chain consolidation for supply
chain advantage
Community events and training
Subscriptions for technology and
online stores
Fees for supply chain management
resulting in recurring annual revenues
Margin on products and services
Read more on page 9.
Read more on page 10.
The Pebble Group plc Annual Report 2022
5
88
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N
12
+
56
+
N
44
+
N
STRATEGIC REPORT
Our businesses
Our global footprint.
EMPLOYEES
568
SITES
10
(Employees number refers to FTEs as at 31 Dec 2022)
6
The Pebble Group plc Annual Report 2022
Key markets
EUROPE
UNITED STATES
GROUP REVENUES
BY DESTINATION
16 %40+
35 % 32 %
17 %
UNITED KINGDOM
REST OF WORLD
The Pebble Group plc Annual Report 2022
7
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+
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Our businesses
Target market:
SME promotional product distributors
in North America
Revenue model:
Subscriptions for technology and
online stores, fees for supply chain
management
Manages:
Over $1.40bn sales (up from $1.15bn in
2021) in the North American promotional
products sector from 217 Partners (up
from 200 in 2021)
Attracts and retains:
“Facilisgroup Partners” through a
combination of highly regarded
technology, consolidation of buying
power and community learning and
networking events
Revenue 2022:
£16.6m
Employees:
101
Facilisgroup provides a digital commerce platform to mid-
size promotional products businesses in North America,
which enables those businesses to benefit from significant
business efficiency through its technology and to gain
meaningful supply chain advantage from the ability to
purchase from quality suppliers under preferred terms.
Our recurring revenues, 93% of FY 22 total revenues (FY 21: 96%), are
derived from subscriptions for technology and a proportion of spend
with our Preferred Suppliers flowing through the platform.
Established in 2004, and acquired by The Pebble Group plc in
December 2018, Facilisgroup provides a SaaS-based platform to
support the operations of SME promotional product distributors based
in the United States and Canada. Facilisgroup has built a community of
over 200 SME promotional product distributors, over 100 Preferred
Suppliers in North America. In the year ended 31 December 2022 the
business processed over $1.40bn of sales (2021: $1.15bn) for its Partners
in the promotional products sector. A typical Facilisgroup Partner
processes between $2million and $20million of annual sales through our
technology.
Facilisgroup attracts and retains Partners through its proprietary
Syncore software, consolidating the buying power of its Partners and
developing its community of Partners and Preferred Suppliers through
learning and networking events. Its ecommerce platform, Commercio,
which was launched in 2021, generates revenue through two main
pillars: subscription revenue from providing technology to its Partners
and income from its suppliers for coordinating the consolidation of
spend. In FY 22, the majority of revenues were generated through
Syncore with Commercio expected to contribute to revenue in FY 23.
Facilisgroup has offices in St. Louis, US and Ottawa, Canada. Its
aspiration is to be the technology leader in the North American
promotional products market.
Learn more at facilisgroup.com
8
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Facilisgroup’s business model
High visibility of recurring revenues with a growing customer base
Order Workflow
Ecommerce Stores
Suppliers
North America
~100 Preferred
Suppliers
Purchases
~$$11..00bn
SME
distributors
GMV
~$$11..44bn
217
Partners
Syncore activity
Brand, End
customer
~$25bn market in
North America
~1,000,000
orders
The Pebble Group plc Annual Report 2022
9
Our businesses
Brand Addition’s business model
Win, grow, retain, repeat
Suppliers
Europe, Asia, North America
Brand Addition
£117m revenues
Creative Services
Ecommerce Platforms
Sourcing & Quality Control
International Logistics.
Working
Capital
Global Account Management
Working
Capital
Supply Chain Compliance
Brand, End customer
Large corporates, under
contract, seeking >£’m p.a.
revenues per contract
Corporate Programmes,
brand support
(~66% FY 22 revenues)
Consumer Promotions,
driving sales
(~34% FY 22 revenues)
10
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Brand Addition provides promotional products and related
services that help the world’s most recognisable brands build
culture, awareness and meaningful connections. We extend
our client’s values in thoughtful, sustainable, conscious ways
to create branded moments that people love.
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 incentives.
Working in close collaboration with its clients, Brand Addition designs
creative and sustainable products and product ranges, hosts client-
branded ecommerce platforms, and provides international sourcing and
distribution solutions throughout Europe, North America and Asia. It
utilises its global network to ethically source and deliver complex and
creative product solutions.
Headquartered in Manchester, it has locations in Europe, the US and Asia.
Revenues are generated by selling product through: Corporate
Programmes that support clients’ general marketing activities through
B2B and B2C stakeholder engagement and Consumer Promotions that
support clients in driving their own sales volumes across all retail channels.
Learn more at brandaddition.com
Target market:
Large global brands
Revenue model:
Margin on products and services
Supporting clients:
Globally and locally with offices in
Europe, the US and Asia
Excellent track record:
of attracting and retaining many of the
world’s leading brands through
intelligent imagination, ethical and
bespoke sourcing, international
distribution and logistics and
technology solutions
Revenue 2022:
£117m
Employees:
455
The Pebble Group plc Annual Report 2022
11
Chair’s report
Another year of strong performance
and growth.
We continued to invest significantly in new product
development, during the year, particularly at Facilisgroup in its
technology and sales and marketing. As a result, the Group
ended 2022 with significantly greater capability, resilience and
opportunity to scale. The Group Board would like to thank our
talented team, once again, for their hard work and commitment.
Strategy and Long-term Vision
The Pebble Group’s central tenet continues to be that the
global promotional products industry 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, provenance and innovative design of
those products;
• the opportunity to deploy leading edge technology to
what is a mature market to make it operate more
sustainably and efficiently; 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 technology
proliferates, SME distributors will be disadvantaged
without the availability of a Digital Commerce platform like
that offered by Facilisgroup which supports their
efficiency and growth.
The Group is approaching this market through its two
complementary but non-competing businesses, 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 provides ecommerce stores to their own customers,
bringing material efficiency to their businesses.
The growth and profitability of Facilisgroup illustrates the
efficacy of its technology with Annual Recurring Revenue (ARR)
in the year of £15.5m (2021: £12.2m) and EBITDA margins of 54%.
Facilisgroup continued to develop and introduce new
functionality to its market leading Syncore platform, as well as
build API integrations for third party software. Syncore is
principally focused on those independent promotional products
businesses with sales greater than USD2.0m.
In June 2022, Facilisgroup launched its new Commercio stores
solution to pre-selected customers for evaluation. Commercio
enables businesses to create their own digital storefronts and is
complementary with Syncore. The evaluation phase for
Commercio completed in December 2022 and customers are
now paying for this product.
Development also continued on Facilisgroup’s Orders platform,
which is a digital commerce solution for smaller promotional
Richard Law
Chair and Independent Non-executive Director
I am pleased to report on another year
of strong performance and growth for
The Pebble Group in 2022 with results
for the year slightly ahead of
market expectations.
12
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT products distributors in North America with sales between
USD0.5m to USD2.0m.
The significance of these investments to Facilisgroup and its
future potential is detailed in the CEO’s Report. In summary,
however, Facilisgroup has taken a significant step forward to
achieving its goal of providing a full service, cloud-based digital
commerce platform for promotional products distributors of all
sizes operating in North America.
Facilisgroup grew its total revenue in FY 22 to £16.6m (FY 21:
£12.7m) and the strategy of the executive team is to continue
this positive trajectory through ongoing investment in
technology, sales and marketing, and the wider team.
Brand Addition
Revenue at Brand Addition increased by 15% on the prior year.
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 and renewing its
business with existing key clients, implementing new contracts
won in 2021 and 2022, as well as winning a number of new
contracts in the year, which will benefit 2023.
The business has a differentiated and, we believe, market
leading position. As a strategic level partner with long-term
contracts with global brands, it can meet both its own and its
clients’ increasing sustainability and ESG targets. It is also able to
deploy differentiated services including technology, product
design innovation, inventory control and logistics to maximise
the effectiveness of its clients’ promotional products strategies.
Dividend
The Pebble Group has now reached an appropriate point to
begin the implementation of its dividend policy, as stated at
IPO. As such, the Group Board is proposing a final dividend of
0.6 pence per share for FY 22, payable in June 2023. As we
look forward, our intention is for this to be a progressive
dividend policy moving, in the medium-term, towards our
stated position at IPO of making dividend payments of circa.
30% of profit after tax.
New trading platform
The Company is in the process of applying for its existing Ordinary
Share capital to be traded in the United States on the OTC
Market’s OTCQX trading platform. This will provide all stakeholders
in the United States with access to trade in the Company’s
Ordinary Shares, in USD, during U.S. market hours. The Company
is not seeking a fundraising in conjunction with this process.
Environmental, Social and Governance (ESG)
The Group’s ESG cornerstones and priority areas, as identified
through its materiality assessment, remain high on the Group
Board’s agenda. We published our second ESG report in
October 2022 to provide a comprehensive review of our
progress, which, we believe, shows the relevant and
meaningful action we are taking in areas in which we can have
the most impact. In the ESG section of our 2022 Report and
Accounts, we update on the environmental work which is
underway to reduce our Scope 1 and Scope 2 carbon
emissions, with Scope 3 in planning stages; and provide
information on the steps we are taking around Diversity, Equity
and Inclusion (DEI), volunteering and community work.
Governance highlights in 2022, of which we are proud, include
the adoption of our Framework on Conduct, Ethics and
Compliance and the integration of TCFD recommendations
into our ESG strategy. We believe this demonstrates how the
Group Board is taking active responsibility through effective
governance.
We are confident in the value of our ESG approach and will
look to develop it further to ensure alignment with best
practice and expectations, as ascertained through active
engagement with our stakeholders.
Team
At The Pebble Group, the Group Board and the Executive
Team believe that the businesses accomplishments are
achieved because of its talented and diverse team. We
actively and effectively engage with our people on an ongoing
basis, through newsletters, surveys, and employee forums. We
also furthered several initiatives to ensure continued
investment in, and development of, our people and to
encourage diversity and engagement.
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
and team that we believe will enable us to continue to grow
the business successfully and profitably.
Summary and outlook
The new financial year has started well and in line with the
Group’s expectations. Our significant investments in 2022
provide the opportunity for further growth during 2023 and
we look forward to the year ahead with confidence.
Richard Law
Chair
21 March 2023
The Pebble Group plc Annual Report 2021
13
Chief Executive Officer’s review
Implementing our strategy for
growth.
People and Environmental, Social and Governance
Fostering trust and long-term relationships with our Partners,
clients and suppliers is the foundation of the success of our
businesses, Facilisgroup and Brand Addition. This stems from
the talent and dedication of our people, many of whom have
built and developed their careers in step with the progress of
the Group. We are a diverse team, spread across multiple
geographies and are stronger for this.
Credit for the results and progress in implementing our
strategy lies with our people and I thank everyone at
Facilisgroup, Brand Addition, and The Pebble Group for
their support, thoughtfulness, and ability to achieve these
positive outcomes.
Our ESG strategy is an embedded part of our business and
we have made good progress against a wide number of
topics during 2022.
Guided by best practice materials including the QCA Code
as well as feedback from our teams, clients, and investors it
has been important for the Group to develop our ESG
initiatives in our own tone of voice. We identified our
priorities in 2021 and published progress against these
through our second standalone ESG report in October 2022
and further details will be included throughout our 2022
Annual Report.
We were delighted to receive the AIM Corporate
Governance Award 2022, which recognises the efforts
made by our businesses and demonstrate effective
corporate governance, ensuring engagement with all
stakeholders, the maintenance of key governance topics and
effective integration of ESG responsibilities.
Our actions around ESG have a positive contribution to our
Group’s long-term success.
Review of The Pebble Group businesses
Facilisgroup: Providing a digital commerce platform for
promotional products businesses in North America
ARR
Other revenue
Total revenue
Gross profit
Gross profit margin
Adjusted EBITDA
Operating profit
FY 22
FY 21
£15.5m
£1.1m
£16.6m
£16.6m
100%
£9.0m
£5.0m
£12.2m
£0.5m
£12.7m
£12.7m
100%
£7.6m
£5.1m
Christopher (Chris) Lee
Chief Executive Officer (CEO)
We are pleased to report the Group’s results for
the year ended 31 December 2022, which
demonstrate a strong performance.
Group revenue increased by 16% on the prior year
to £134.0m (FY 21: £115.1m) and Adjusted EBITDA
increased by 17% to £18.0m (FY 21: £15.4m).
Alongside this financial progress, the Group has
continued to implement its strategy for growth
and gain momentum throughout what has been
a volatile macro-economic backdrop since its
IPO in December 2019.
14
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Our Values in action:
Enjoying the
journey
FY 22 revenue of £16.6m (FY 21: £12.7m) was 31% ahead of
the prior year with Annual Recurring Revenue (ARR) in USD
(Facilisgroup home currency) of USD19.0m (FY 21: USD16.7m),
representing 14% growth over the prior year. This revenue all
derived from our Syncore technology product and the
activities behind this for FY 22 can be summarised as follows:
• Partners totalled 217 (31 December 2021: 200) with a
further eight contracted and awaiting implementation;
• GMV was USD1.40bn (FY 21: USD1.15bn); and
• Spend with our Preferred Suppliers was USD0.46bn (FY 21:
USD0.35bn).
These key indicators heavily influence income from Syncore
and result in a very robust and predictable recurring revenue
stream.
We have continued to deliver strong revenue to profit
conversion with Adjusted EBITDA margins in FY 22 of 54% (FY
21: 60%), while investing in our team, including sales and
marketing to support Partner retention and bringing our new
technology to market.
Operating profit was £5.0m (FY 21: £5.1m), as we have
invested in our ambition to scale the business. During the
year, we invested further in new technology products,
Commercio Stores and Orders, with a FY 22 amortisation
charge of £1.1m (FY 21: £0.4m). Revenue relating to this
investment is expected from FY 23.
Facilisgroup has a highly attractive business model,
consistently producing strong SaaS metrics. To illustrate, at
the end of FY 22:
• 20%, four-year Revenue Compound Annual Growth Rate;
• 54%, Adjusted EBITDA margin;
• 30%, Operating profit margin;
• 110%, Net Retention Rate on Syncore technology
subscription to Partners;
• 96%, Partner Retention Rate; and
• 130 customers for the new technology product
Commercio.
Approach to the market
Facilisgroup provides a combination of technology, supply
chain services and community training and events into the
USD25bn North American promotional products industry.
Our strategy is to scale the revenues of the business, through
three technology products that support the entire distributor
market:
• Syncore: Increasing the number of Partners using our
established order workflow product focused on high
quality, growing SME distributors in North America with
sales of greater than USD2m. We estimate there is a total
addressable market of circa 1,600 businesses for our
Syncore product;
• Commercio: Built specifically to support the needs of the
promotional products industry, Commercio allows
distributors of all sizes to create online stores for their
customers that can either stand alone or integrate into our
order workflow technology. Commercio was launched in
June 2022 and customer uptake is growing. At
31 December 2022, there was a total of 130 Commercio
customers made up from existing Syncore Partners and
new customers, purchasing a Facilisgroup product for the
first time. Our revenue model is to charge a small monthly
fee per customer together with a monthly fee per store
hosted. We continue to develop the functionality for
Commercio and, each month, learn more about the track
record of customer conversion, retention and store
numbers. This is key to understanding how this will
influence revenues through 2023. We estimate there is a
total addressable market of circa 20,000 businesses for
our Commercio product; and
• Orders platform: our order workflow product for the many
thousands of smaller distributors with less than USD2m
sales is in development. Our expectation is to launch this
product in late 2023.
The team at Facilisgroup has undergone much change in the
last three years whilst growing Syncore and bringing
Commercio and Orders to the market. As we enter the sales
phase of this investment, we are excited about the potential
of the business.
Our goals in 2023 are to:
• continue to develop Syncore to maintain high Partner
retention levels and accelerate Partner attraction;
• make progress in establishing Commercio as a marketing
leading product in ecommerce for the promotional
products industry in North America; and
• launch our order workflow product Orders for distributors
with sales of less than USD2m.
Brand Addition: providing promotional products and
related services under contract to many of the world’s most
recognisable brands
Revenue
Gross profit
Gross profit margin
Adjusted EBITDA
Operating profit
FY 22
FY 21
£117.4m
£102.4m
£36.1m
30.7%
£11.5m
£8.0m
£29.3m
28.6%
£9.9m
£7.1m
The Pebble Group plc Annual Report 2022
15
Chief Executive Officer’s review
FY 22 revenue of £117.4m (FY 21: £102.4m) was 15% ahead of
the prior year and 20% ahead FY 19, the last pre-Covid-19
results, of £97.9m.
Through its disciplined approach to only focus upon large
corporates, under contract, Brand Addition has built close,
long-term client and supplier relationships. Brand Addition
works collaboratively with its clients to design creative and
impactful products and product ranges, hosts client-
branded ecommerce platforms, and provide international
sourcing and distribution solutions.
The revenue increase in the year has resulted from
continuing high client retention, a full year contribution from
new clients won in 2021, new clients won in 2022 and
further recovery from those clients that had not yet
returned to pre-COVID-19 levels. In parallel to this revenue
increase, the business grew its gross margins to 30.7% (FY
21: 28.6%) demonstrating its ability to retain gross margins
at its long-term average of circa 30%.
This led to Adjusted EBITDA of £11.5m (FY 21: £9.9m) being
16% ahead of prior year.
The depth of experience of the team has proven invaluable
over the last three years. The business has successfully
grown despite the demand challenges of 2020 and global
supply chain disruption in 2021 and 2022, including raw
material price increases, freight rate increases, Brexit and
inflation. We believe this performance demonstrates the
inherent strength of its approach to the market, its
established relationships and expertise, and the business’s
ability to continue to advance.
Approach to the market
There is a large addressable market for the specialist
services offered by Brand Addition. Large corporates, use
promotional products to engage with their employees,
customers, and wider stakeholders. This includes Consumer
Promotions to support businesses in driving their own sales
volumes and Corporate Programmes to support businesses
employee engagement and brand building activities.
Large corporates outsource these categories of marketing
spend, under contract, because they wish to have control
over:
• thoughtful and creative bespoke products to carry their
brand and engage their stakeholders;
• product quality and supply chain assurances to protect
their brand integrity; and
• a consistent international strategy.
16
The Pebble Group plc Annual Report 2022
Brand Addition is an established business with a reputation
for delivering these large and complex services under
long-term agreements. With strong client retention rates, it
has a proven its ability to grow consistently over the course
of economic cycles. The business has a four-year revenue
CAGR of 6%, despite the major disruption caused by the
COVID-19 pandemic, and its gross margins remain strong.
Brand Addition has a target list of c.800 global
opportunities within this addressable market with currently
70 clients comprising 95% of FY 22 revenue of £117.4m.
Our goals in 2023 are to:
• retain major client contracts together with the successful
implementation of contracts won in 2022;
• attract new contracts with major international brands
through our credentials in ESG, technology and creativity;
and
• maintain our gross margins at the long-term target of 30%
(FY 22: 30.7%).
Outlook
In Facilisgroup and Brand Addition we have two
differentiated and focused businesses with large
addressable markets. We remain disciplined in our growth
strategies and positive in the belief of achieving our
aspirational goals.
Christopher Lee
CEO
21 March 2023
STRATEGIC REPORT Our strategy in action
Making progress
against our goals.
Our Values in action:
Ambitious
positivity
Transforming the promotional products industry through the provision of digital commerce.
Stores
Orders
Strategic
Objective
Order workflow, targeted at
promotional product distributors with
> $2m sales in North America.
Ecommerce platform for use by all
promotional product distributors in
North America.
Order workflow, targeted at promotional
product distributors with < $2m sales in
North America.
Growing annual recurring revenues
(ARR) through the growth of Partner
(customer) sales and the acceleration
of Partner numbers.
Provide online stores solution for the
North American promotional products
industry.
Launch an order workflow product to
smooth order friction between suppliers
and. the many thousands of smaller
promotional product distributors in
North America.
Progress
in Year
We continued to maintain our excellent
retention levels which, combined with
new customer acquisition, delivered
further growth in Partner numbers
(increasing from 200 to 217 in the year).
Uptake is growing with 130 customers
at 31 December 2022.
Investment continued to progress
towards intended launch date in H2 23.
217 Partners
+9%
130 customers
Goals for
2023
Maintain focus on our new Partner
acquisition and accelerate rate of
growth.
Make progress in establishing
Commercio as a market leading
ecommerce solution in North America.
Launch to market in H2 23.
Providing products to support global brands, build culture, awareness and meaningful connections
with their stakeholders.
Strategic
Objective
WIN client contracts with major
brands.
GROW with existing clients across
geographies and brands.
RETAIN major client contracts.
Progress
in Year
The business continued its success in
the acquisition of global contracts.
We experienced growth in the year
from existing clients as working
patterns stabilise in 2022 compared to
2020 and 2021.
Our top 20 clients, historically
representing circa 70% of annual
revenues, remained clients at the end
of FY 22.
For further detail on the impact on revenue from new client wins, growth in revenue of existing clients, and the impact
on the business of revenue by client category, refer to the Key Performance Indicators on page 46.
Goals for
2023
Attract new contracts with major
international brands through our
credentials in ESG, technology and
creativity.
Develop our relationships with existing
clients, maximise their sales with
Brand Addition and successfully build
on implementations from 2022.
Retain our major client contracts by
continuing to engage their
stakeholders and evolve the service we
provide them.
The Pebble Group plc Annual Report 2022
17
Listening to
our stakeholders.
Stakeholder engagement
Investing in, and developing, our stakeholder
relationships are central to our values. We believe
building, and maintaining, effective stakeholder
engagement makes people want to work with,
purchase from, sell to, and invest in us.
Our Values in action:
One team,
diverse and united
This approach is cascaded down through our businesses in
pursuit of the success of the Group. Our stakeholders are key
to our decision-making and are considered by the Board of
Directors of the Group (the “Group Board”) and also by our
senior team as part of the decision-making process.
Our Key Stakeholders
The Group Board has identified the four key stakeholder groups set out below, the issues that are most relevant to each of
them and details how it has, and continues to, engage with, or ensure engagement with, each of them.
Our teams
Why we engage
The sustainable success of
our business depends upon
engagement with our teams.
The Group Board maintains
and develops arrangements
for engagement to promote
the Group’s culture and
cascade its values,
behaviours and
expectations.
The Group Board engages in
this way to create a positive
and inclusive culture,
sensitive to the issues that
affect our people, so they
can thrive and grow.
The Group Board engages
through its Executive
Directors and senior teams
to ensure that the Group
continues to develop and
invest in its highly talented
and dedicated people in the
right way.
How we engage
Key topics of engagement
Impact of engagement
• See Group Board
‘engagement with the
business and teams’ on
page 58.
• Group Board maintains
arrangements via Divisional
Leads and/or HR leads for:
– team surveys
– employee forums
– use of personal
development plans
– enhanced training
opportunities via
Learning Management
Software (LMS)
– management
development
programmes
– regular team newsletters
• Executive Directors have
input into regular team
business performance and
strategy updates by the
senior leadership
• Group Board ensures
access to anonymous
whistleblowing portal
• Group Board operates the
Long Term Incentive Plan
(LTIP) and Group Sharesave
Plan (SAYE)
• Executive Directors host
meetings with teams
across the Group to
update on LTIP progress
• Company vision: strategic
• Teams are informed and
plans including
opportunities for
departmental growth and
advancement
• Hybrid working strategy:
need for a flexible working
environment
• Health and well-being
support for our employees
• Opportunities for growth
and development and
support in reaching full
personal potential
• Embracing diversity, equity
and inclusion (DEI)
• Environmental impact of
our organisation: our work
on ESG and commitments
to sustainability
• Social impact of our
organisation: our
volunteering opportunities
and community initiatives
• Ability of US based team to
invest in the Company
therefore engaged
• Improved transparency of team
preferences at all levels across
Facilisgroup to better inform
decision-making on team
structure and recruitment
• Further focus on Group DEI
policy and approach (See
Nomination Committee activity
on pages 63-64)
• Further focus on talent pipeline
and development of succession
planning aligned with DEI (See
Nomination Committee activity
on pages 63-64)
• More flexible culture and
improvement of work / life
balance
• Promotion of leaders from
within our businesses, alongside
new talent sourced externally
• Implementation of ESG
initiatives and successful social
and community engagement
(See ESG pages 31-41)
• Incentivisation of teams is
aligned with the Group’s
medium to long-term
performance and shareholder
value
• Steps taken to apply for the
Company’s Ordinary Shares to
be traded in the US on the OTC
Market’s OTCQX trading
platform
18
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT
Clients and Partners
Why we engage
How we engage
Key topics of engagement
Impact of engagement
Effective engagement
is key to attracting, and
retaining, a quality
client and Partner base
from which our
businesses can nurture
strong and long-term
relationships.
Our clients’ and
Partners’ success is
driven by the quality of
our products and
services. The Group
Board ensures
continued investment
in the right technology,
services and teams to
enhance the Group’s
relationships and
create long-term value
on both sides.
• See Group Board ‘engagement
with the business and teams’
on page 58.
• Supply chain management
principles and sourcing
strategies
• Ongoing development and
improvement of our
technology, services and
client support
• Collaboration on growth
strategies
• Training to enhance the
benefits of using our
technology with a focus
on ensuring engagement
• Creative Product
Merchandising and
sustainability
• ESG and sustainability:
how we can support and
deliver on clients’ and
Partners’ ESG
commitments, whilst also
achieving our own
• Group Board maintains
arrangements that foster
business relationships with
clients and Partners via its
Divisional Leads in the form of:
– regular client feedback
sessions
– dedicated ‘Partner Success
Managers’ in Facilisgroup
– hosting of regular in-person
events (7-10 Partners) at
Facilisgroup
– Facilisgroup weekly client
newsletter the ‘411’
– monthly virtual education
sessions on key topics for
Facilisgroup Partners
– Quarterly Business Reviews
with key clients at Brand
Addition
– Brand Addition team
presentation to clients on
key topics
– Client and Partner
questionnaires including Net
Promoter Scores (NPS) to
measure client satisfaction
• Tracking the NPS provides an
indication of the value clients place
on us and assists with maintaining
strong retention. We have
introduced as a new key
performance measure for
Facilisgroup and will continue to
monitor progress
• Client retention: Clients and
Partners have shown they value
long-term relationships. In 2022,
Brand Addition secured new
business and retained contracts
with all key clients and Facilisgroup
Partner retention rates were 96%
• Strong referral community: new
prospects for Facilisgroup contact
an average of five current Partners
before making a decision to join.
• Facilisgroup’s community supports
Partner collaboration and growth
• Brand Addition continues to place
sustainability at the centre of its
five-year strategic development
plan ‘ba.ONE sustainability and
growth’
• Further investment into a
Sustainability team in Brand
Addition with the hire of three
sustainability product managers
• Better informed clients with
targeted products to meet their
brand engagement requirements
and sustainability product needs
The Pebble Group plc Annual Report 2022
19
Our stakeholders
Strategic suppliers
Why we engage
The quality of our products
and services is heavily
influenced by the careful
management of our
relationships with our
strategic suppliers.
Facilisgroup’s suppliers are
trusted partners delivering to
a shared customer base.
Supplier engagement is a key
part of the Facilisgroup
business model. Developing
the community between
Preferred Suppliers and
Partners creates additional
opportunities for all.
Ensuring we retain, and
develop, our diverse and
robust supply base is more
important than ever to
manage global supply chain
challenges. Brand Addition’s
collaboration with key
suppliers in Asia, Europe, and
North America develops and
ensures robust long-term
trusted partnerships with
suppliers that conform to
clients’ and Group’s
expectations on ethical
values, ESG, and sustainability
standards.
How we engage
Key topics of engagement
Impact of engagement
• Supply chain impact and risk
• Suppliers value mutually
mitigation from product
sourcing to logistics and
delivery. This relates to both
direct and indirect
production, shipping and
impact on lead times and
costs
• Changing industry trends
and future relationships
• Efficiency strategies, growth
opportunities
• Supporting the Group’s ESG
and sustainability
commitments and goals,
specifically: environmental
impact of product being
supplied, packaging, supply
chain
• How the Group can assist,
influence, and develop its
suppliers’ own ESG and
sustainability plans
supportive relationships and
in both Facilisgroup and
Brand Addition, spend with
Preferred Suppliers grew in
FY 22 vs. FY 21
• Long term relationships with
our suppliers enabled us to
continue to secure products
while supply chains were
challenged
• Demonstration of
compliance criteria
requirements being met and
shared with Brand Addition
team and customers
• Alignment on key supply
chain requirements and
principles to ensure the
safety and security of the
overall supply chain
• See Group Board
‘engagement with the
business and teams’ on
page 58.
• Group Board maintains
arrangements that foster
business relationships with
suppliers, via Divisional
Leads, in the form of:
– use of formal written
contracts, negotiated
transparently and openly
to set clear expectations
– regular face-to-face and
virtual meetings to discuss
performance and provide
feedback
– two-way evaluation
processes to facilitate
business improvement
– formal audit processes to
provide feedback and
opportunities for
development
• Executive Director
participation in supplier
networking events, providing
efficient, easy access to
growth and development
opportunities
20
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT
Shareholders and the wider investment community
Why we engage
How we engage
Key topics of engagement
Impact of engagement
The Group Board seeks
shareholders who are
aligned with its long-
term objectives. Access
to long-term capital
supports its strategy.
The Group Board is
therefore committed to
continually developing
the understanding of
our business model,
strategic objectives and
culture for both existing
and potential investors.
Throughout 2022, the
Group Board has
considerably increased
its engagement with the
investor community
with the aim of ensuring
that the Group’s
operations, financial
performance and
governance are clear
and understood, and to
provide the necessary
information to ensure all
investors can make
informed judgements.
Investors and analysts
require the Group
Board’s engagement on
ESG to guide their
investment stewardship
activities.
• Publication of Annual Report and
ESG report
• Regular and detailed trading updates
to the market
• Group structure and
releasing shareholder
value
• Share liquidity and
• Improved investor knowledge
and understanding of the
Group, its operations and
activities
• Commissioning paid for research with
new dedicated page on the Company’s
website to improve accessibility for all
investors
• Open access investor presentation by
CEO and CFO including live Q&A via a
live webcast (FY 21 and HY 22
webcasts available on the Company’s
website)
• Availability of CEO and CFO to answer
questions around trading updates
throughout the year
valuation
• Business performance
and speed to scale
• Product stack expansion
plans within Facilisgroup
• Business performance
over the medium to
long-term, recovery post
pandemic and ability to
withstand recession
conditions
• Management, leadership,
• One-to-one investor meetings (in
skills and ability
• Global nature of business
and dilution of impact of
UK economy
• The continued value and
use of promotional
products in businesses
with ‘green’/sustainability
strategies
• Group approach to ESG,
climate change and
corporate governance
(see ESG pages 31-41 and
TCFD pages 42-43)
• Group approach to
diversity, equity and
inclusion (see Nomination
Committee activity on
pages 63-64)
person and virtual) with the CEO/CFO
on markets, strategy and progress -
circa. 100 took place in 2022
• One-to-one investor virtual meetings
with the Chair on approach, values
and principles in relation to
governance - five took place in 2022
• Investor stewardship meetings with
Group Senior ESG Officer and Group
General Counsel to discuss ESG
priorities and progress – two took
place in 2022
• Formal independent investor feedback
exercise on our Group ESG strategy
and disclosures was conducted in Q4
2022
• Detailed ‘Investor’ section on the
Company’s website
• Annual General Meetings with advisory
vote on directors’ remuneration
report
• Availability of Chair of the Group
Board and Chair of each Board
Committee at AGM to answer
questions
• Ad-hoc meetings or written responses
as requested by existing and potential
shareholders and analysts
• Investor relations activity and
feedback discussed regularly
at Board meetings and
factored into decision-
making by the Group Board
• Inclusion of new information
in Annual Report. For
example, Introduction to the
Promotional Products
industry on page 2 and Our
global footprint on page 6
• Improved transparency of
Group information with open
access Investor Relations
content available on the
Company’s website
• Group Senior ESG Officer
and General Counsel
increased active support to
the Group Board and
Operating Boards to ensure
the highest standards and
delivery on ESG
commitments
• Improved understanding
from investor ESG feedback
to be factored into future
ESG disclosures and the
development of future ESG
objectives and targets
• Progression of DEI policy and
approach (see page 64)
• Recognition at the AIM
Awards 2022 in the form of a
nomination for the ‘Best
Investor Communications
Award’ and being awarded
the ‘AIM Corporate
Governance Award’
• Steps taken to apply for the
Company’s Ordinary Shares
to be traded in the US on the
OTC Market’s OTCQX trading
platform
The Pebble Group plc Annual Report 2022
21
Section 172(1) statement.
We strive to maintain a
reputation for high standards of
business conduct. At The
Pebble Group our emphasis is
on making decisions with
regard to acting equitably and
for the long-term.
Our Values in action:
Always learning
and growing
22
The Pebble Group plc Annual Report 2022
This section describes how the
Directors had regard to the matters in
Section 172(1) (a) to (f) of the
Companies Act 2006 in Board
discussions and actions, behaviours
and decision-making, when performing
their duty to promote the success of
the Company for the benefit of
shareholders as a whole during 2022.
The Group Board and senior team
know that considering all our
stakeholder relationships, having
proper regard to our stakeholders’
interests and being aware of the
external impact of our activities on the
communities and environments in
which we operate, will ultimately drive
value to our shareholders and secure
our long-term success.
Our Group Board reporting template
includes Section 172(1) guidance and
prompts to ensure each paper explains
which stakeholders are relevant to a
decision, what long-term factors must
be considered in all decision-making,
and that appropriate time is allotted
for open and in-depth discussion.
The next pages describe three
examples of key decisions or initiatives
during 2022 which focused on issues of
importance to the Company’s long-
term success. They describe each
stakeholder group that was relevant to
the decision or initiative and how they,
and other matters set out in Section
172(1), were considered.
STRATEGIC REPORT Example 1
Investor Relations Strategy
The Group Board decided to enhance its investor relations strategy during FY 22 with the objective
of increasing the Group’s profile with existing investors and potential investors. The aim being to
ensure the Group’s operations, financial performance and governance were clear and understood.
c)
d)
One-to-one investor virtual
meetings with the Chair of the
Board on approach, values and
principles in relation to governance
- five meetings took place.
Investor stewardship meetings with
Group Senior ESG Officer and
Group General Counsel to discuss
ESG priorities and progress – two
meetings took place.
e)
f)
Engagement of third party to
conduct an independent investor
feedback exercise and report on
the Group’s ESG strategy and
disclosures.
Taking steps to apply for the
Company’s Ordinary Shares to be
traded in the US on the OTC
Market’s OTCQX trading platform.
How Directors had regard to
other Section 172(1) matters
Reputation
The Directors considered that this
enhanced investor relations strategy
would be likely to build and strengthen
the Group’s reputation in the market,
for meeting targets and having sound
strategy and strong governance.
Long-term impact
The likely long-term benefit of the
strategy for the future success of the
Company, for the benefit of its
shareholders as a whole, was relevant
and taken into account.
This included:
a)
b)
Widening broker coverage and
following, including commissioning
paid for research and the
introduction of a new dedicated
‘analyst coverage’ page on the
Company’s website.
Increased one-to-one investor
meetings (in person and virtual)
with the CEO and CFO on markets,
strategy and progress - circa. 100
meetings took place.
Key stakeholder groups
Our shareholders and the wider
investment community
It is important that the Group Board
fosters strong and transparent avenues
of communication with its
shareholders and provides clear and
accurate information to ensure that all
existing and potential investors can
make informed judgements.
How Directors had regard to
stakeholders’ interests and
engagement output
Identifying the points of interest for our
shareholders and the wider investment
community was completed through
engagement outlined on page 21 and by
working closely with our broker
advisers. This was factored in by
Directors when building this strategy.
The Pebble Group plc Annual Report 2022
23
Section 172(1) statement
Example 2
Adoption of Group Framework on Conduct, Ethics and Compliance
The Audit Committee recommended adoption of the new Framework on Conduct, Ethics and
Compliance. The Framework covers all risk and compliance priorities and aims to cultivate a
culture of strong professional ethics and responsible practices within our businesses, as cascaded
down from the Group Board. The Group Board approved the Framework in Q4 2022.
Key stakeholder groups
Our teams
The ethics and integrity of an
organisation are increasingly important
to employees when making career
decisions. Employees want to work for
companies they are proud of. The
Framework provides visibility and clear
messaging to our teams from the
Group Board about issues that are
important, where it stands in relation
to those issues, and what employees
can expect.
Our clients and Partners
Matters of ethics and compliance are a
priority for clients and Partners when
they choose who to partner with in
their own operations. Our clients
choose Brand Addition as the closest
thing to managing their promotional
products needs in-house and consider
the Brand Addition team as a
continuation of their own. These
customers are large, reputable brands
that demand high standards of
conduct, ethics and compliance. It is
crucial that we can align with them and
demonstrate our professional ethics
and responsible practices through
tone set from the top.
Our shareholders and the wider
investment community
It is important that the Group Board
can demonstrate our culture to the
market through tone set from the top
and our policies and processes, to
provide reassurance to investors in the
context of their responsible investment
and stewardship obligations.
How Directors had regard to
stakeholders’ interests and
engagement output
Understanding of the interests of key
stakeholder groups was obtained and
understood through engagement with
all of our key stakeholder groups as
outlined on pages 18-22. A report to
the Audit Committee and Board set
out the various interests which were
discussed at the relevant meetings.
The Group Board concluded that
achieving a leading position in conduct,
ethics and compliance (as embodied in
the Framework), together with raised
awareness and understating of the
Group’s priority issues, would be
received positively by the stakeholder
groups noted.
How Directors had regard to
other Section 172(1) matters
The following were reported to the
Audit Committee and Board and were
discussed during decision making:
Risk management
How the Framework aimed to improve
awareness of possible risk areas across
the Group and ensure that all
personnel were alert to risks and
aware of action to take in order to
manage and mitigate them.
Culture and reputation
The design of the Framework to ensure
that strong professional ethics and
responsible practices are effectively
and consistently applied. This was
noted as likely to build and perpetuate
a culture of compliance and high
standards within our workforce and a
reputation for strong governance.
Moreover, its implementation could
reduce the likelihood of, and/or
mitigate the impact of, issues arising
which could negatively affect
reputation.
Impact on the environment
How the Framework acknowledges the
importance of the Company’s role and
responsibilities in protecting the
environment and limiting the impact of
climate change. In addition, how it
increases awareness of the Company’s
policies and efforts to reduce impact
on the environment, including
thorough reducing reliance on fossil
fuels and reducing our greenhouse gas
(GHG) emissions.
Impact on the Company’s wider
social responsibilities
How the Framework covers the
Company’s commitments to
responsible business practices, which
benefit society at large. Including
guarding against bribery, corruption,
conflicts of interest, misuse of inside
information, discrimination,
harassment, and tax evasion. In
addition, how the Framework
emphasises the Company’s
requirements for fair/professional
behaviour, respecting health and
well-being, protecting confidential
information/personal data, adherence
to product quality, compliance and
safety, responsible procurement
practices, and promoting diversity,
equity and inclusion.
24
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Example 3
‘The RACE Code’ Exercise
The Nomination Committee identified the value in obtaining an external expert view of the Group’s
DEI strategy and approach. In Q4 2022, the Committee approved the appointment of an external
governance consultant to commence ‘The RACE Code’ exercise to review and advise whether our
strategy and approach is sufficient and appropriate to improve diversity within our businesses and
to provide firm direction on how to progress our DEI efforts, particularly around ethnic diversity.
For more details see pages 36-38 in the ESG section of this report.
Relevant key stakeholder groups
Our teams
DEI issues are increasingly becoming a
priority for employees. It is important
that our employees know the Group
takes meaningful steps to ensure that
its DEI strategy and approach is
creating an inclusive workplace and
culture and there are no barriers to
disadvantage anyone from progression.
Enhanced diversity and equality should
lead to a better workplace for our
entire team.
Our clients and Partners
Our current and potential clients and
Partners display broad diversity. It is
crucial that we are open, relevant and
connected with them. Feedback from
clients provides insight that DEI issues
are increasingly becoming a priority for
them in their own operations, and it is
likely to begin to extend into their choice
of partners. A strong DEI strategy that
shows results can help us win, grow and
retain clients and Partners.
Our shareholders and wider
investment community
The investment community expects
companies to have meaningful
diversity, including at Board and senior
levels, at least consistent with local
market regulatory requirements and
best practices. Institutional
Shareholder Service (ISS) UK voting
guidelines have minimum requirements
for ethnic minority representation on
certain sized company boards.
How Directors had regard to
stakeholders’ interests and
engagement output
Understanding the interests of key
stakeholder groups was obtained and
understood through engagement with
all of our key stakeholder groups as
outlined on pages 18-22. A report to
the Nomination Committee set out the
various interests noted above and
were discussed at a Committee
meeting. The Committee regarded this
exercise in itself as a means of
obtaining valuable insight from
stakeholders on how well the Group
does on DEI issues, which was
extremely important. The Directors
concluded that a tangible DEI plan to
improve diversity was valuable and this
decision would positively impact
attraction and retention of the best
talent to our Group, and the best
quality of clients and suppliers, thereby
enabling the continued successful
growth of our businesses.
How Directors had regard to
other Section 172(1) matters
The following were reported to the
Nomination Committee and Board and
were discussed during decision making:
Culture and reputation
The positive impact on the Company’s
culture of the review itself and the
resulting action plan which would send
a strong message that the Group
spends time and resources to take real
steps to ensure that its DEI strategy
and approach is meaningful and likely
to achieve results.
Wider social responsibilities
The positive impact in the context of
social responsibilities, was relevant and
taken into account.
Long-term impact
The likely long-term benefit of the
review for the future success of the
Company, for the benefit of its
shareholders as a whole, was relevant
and taken into account.
The Pebble Group plc Annual Report 2022
25
STRATEGIC REPORT
Sustainability
Environmental, Social
and Governance (“ESG”).
Stakeholder interests, business needs and
best practice drive our approach to ESG.
By listening to our stakeholders, we focus on the ESG issues
that matter to us and to the sustainability of our business in
the long-term. We challenge ourselves to make
commitments to ESG that are meaningful and to address
ESG demands in a genuine way, with the aim of future
proofing our operations and holding ourselves accountable.
We see ESG reporting and disclosures as an opportunity to
differentiate our Group by sharing the progress we have
made against these commitments.
We aim to act responsibly through effective governance,
managing our direct social and environmental impacts and
risks throughout our operations and striving to drive
positive change throughout our value chain. Our intention is
to be transparent in our approach, in our commitments and
how we measure and deliver against them in terms of clear
targets and aspirations.
26
The Pebble Group plc Annual Report 2022
S
S
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N
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S
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B
S
E
N
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T
S
R
E
N
R
O
C
G
S
E
Y
T
I
V
I
T
C
A
S
S
E
N
I
S
U
B
E
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L
A
V
R
E
D
L
O
H
E
K
A
T
S
Y
E
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How we integrate ESG into our strategy and business activities:
Providing digital commerce,
products and related services
to SME promotional product
distributors
Providing products and services
to large global brands
RESPONSIBLE
BUSINESS
PRACTICES
BOARD
INDEPENDENCE,
ETHICS AND
LEADERSHIP
DIVERSITY,
HEALTH,
WELL‑BEING AND
ENGAGEMENT
IMPACT OF OUR
BUSINESS ON THE
ENVIRONMENT AND
OUR COMMUNITIES
SAAS TECHNOLOGY
To power efficiency and growth
DESIGN
Corporate ranges and bespoke products
SUPPLY CHAIN
For supply chain advantage
COMMUNITY
Events and training
SOURCE
From ethical suppliers
DELIVER
Across the Globe
CLIENTS AND PARTNERS
Trusted suppliers with high
standards, strict ethical
values and responsible
business practices
SHAREHOLDERS AND
INVESTORS
Full top-down engagement
on ESG to ensure long term
value and guide investment
stewardship activities
Open and transparent
engagement with Board/
Directors
Clear Group disclosures
aligned with best practice
Effective risk management
and oversight/controls,
incorporating climate risk
and mitigation
Supply chain transparency
and accountability
Responsibly sourced and
sustainable products
Achievement of our own ESG
targets/transition to a low
carbon economy
Opportunities for
collaboration and growth
Creative, bespoke exciting
products to help brands
connect with their
customers
STRATEGIC SUPPLIERS
Carefully managed
transparent relationships
Accountable for/ability to
demonstrate high standards,
strict ethical values and
responsible business
practices
OUR TEAMS
A positive and inclusive
culture, sensitive to the
issues that affect our
people, so they can thrive
and grow
Development and
investment in our people
Part of a customer
community and access to
networking events to create
growth and development
opportunities
Improved focus on talent
pipeline and development of
succession planning aligned
with DEI
Increased and improved
flexibility in working patterns
The Pebble Group plc Annual Report 2022
27
STRATEGIC REPORT
2022 highlights.
Group carbon emissions
• Established a Group baseline for
Scope 1, Scope 2, and Scope 3
emissions
• Reduced Scope 1 and Scope 2
emissions by 8% from our 2021
base year
• Started to develop a plan to address
Scope 3 emissions
Reduced Scope 1 and
Scope 2 emissions by
8%
Transition to renewable electricity
electricity36+
36 %
of Group sites are now
using renewable
Supplier and Partner engagement
• Partner Summit and Supplier
Showcase brought together 120
distributors and 63 suppliers
• Launch of a ESG steering committee
28
The Pebble Group plc Annual Report 2022
64
+
N
Carbon neutral distribution
• The Group is prioritising the use of
carbon neutral logistics options for all
final mile deliveries, where available
Diversity, Equity and Inclusion (DEI)
• DEI being prioritised through training
and succession planning
• Approval of “The Race Code”
initiative to review and improve our
DEI strategy and approach using an
external governance consultant (to be
undertaken in 2023)
female representation
across our Group-wide
leadership team
female representation
on our Group board
51 %
55+
40+
40 %
Employee well‑being
• Employee wellness programme
expanded to include all Group locations
Volunteering
810hrs
Group volunteering hours donated
in our first year of launching our
volunteering initiative
The Pebble Group plc Annual Report 2022
29
45
+
N
60
+
N
s
r
e
d
l
o
h
e
k
a
t
s
o
t
e
c
n
a
t
r
o
p
m
I
Materiality Assessment
Identifying our key
material ESG issues.
● Impact of our business on the environment and our communities
● Diversity, health, well-being and engagement
● Board independence, ethics and leadership
● Responsible business practices
● Human rights
High
●
Packaging and
waste
●
Energy and
climate change
●
Responsible
sourcing
Data security
and privacy
●
Product integrity
and transparency
●
●
Business ethics
and integrity
●
Economic
performance
●
Governance, accountability
and business culture
●
Diversity,
equity
and inclusion
●
Employee health, safety and well-being
●
Employee recruitment,
retention and development
Very
high
● Risk management
Impact on The Pebble Group’s success (over next five years)
Our ESG priorities continue to be informed by our
materiality assessment, from which we developed
our bespoke framework and four ESG
cornerstones. Our materiality assessment has
enabled us to identify and prioritise the ESG
related topics that are important and relevant to
our business and our stakeholders. The
assessment was internal, drawing from the
experience and insight of our teams at different
levels in the business and incorporating feedback
from past and current dialogue with our
stakeholders. To ensure that the ESG topics
remain relevant the assessment. The assessment is
reviewed by the Group annually incorporating
feedback from internal and external stakeholders
for continued relevance and suitability. For further
details, please refer to pages 17 – 18 in our 2022
ESG report.
30
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT
ESG report 2022.
In October 2022 we published our
second ESG report, evolving and
building upon our initial 2021 report and
providing a detailed, in-depth review
and update on our approach to ESG,
our action taken and progress made
towards our targets during 2022. An
overview is provided in the sections
below and you are encouraged to read
our full ESG report for more detail,
which is available in the ‘Investors’ and
‘ESG’ sections of our website.
Reference tool
Look out for the markers in the report
to guide you to further information
found in our ESG report 2022 available
at thepebblegroup.com
Sustainable Development Goals
Throughout the ESG section of this
report you will see how our priorities
align with the UN sustainable
development goals.
For further details please see pages
19 -20 in our 2022 ESG report.
The Pebble Group plc Annual Report 2022
31
Energy and climate change
Priority
Our aim
UN Sustainable Development Goals
Minimising our impact
on the environment and
our communities
To make a positive long-term difference
to our people and the communities in
which we work, while minimising our
impact on the environment.
Greenhouse gas emissions
The Group is committed to
minimising its impact on the
environment. We see reducing
the emissions of our direct
operations, responsibly
sourcing the products we
supply and driving positive
change throughout our supply
chain with key strategic
suppliers as fundamental to
achieving our aim.
In 2022 we accelerated our efforts to
calculate our Group GHG emissions,
which included the calculation of the
Scope 1 and Scope 2 emissions for all
of the sites operated outside of
Europe and a Scope 3 assessment. The
Scope 3 assessment was undertaken
with the support of a third-party
specialist, Normative.io for our Brand
Addition business and publicly available
carbon calculators, such as the
Greenhouse Gas Protocol Scope 3
evaluator to calculate Facilisgroup’s
Scope 3 emissions.
For details please see pages 26- 32
of the ESG report 2022
Scope 1 and Scope 2 emissions
We continue to make good progress in
reducing our Scope 1 and Scope 2
emissions. In 2022 we transitioned
another of our sites over to renewable
electricity and signed a renewable gas
contract where the gas we use is
matched with 100% renewable gas
32
The Pebble Group plc Annual Report 2022
We have begun to take action to tackle
our Scope 3 emissions in our largest
emission categories.
• In 2022 we engaged with our logistics
partners to utilise carbon neutral
delivery options such as DHL Go
Green, to reduce our carbon
emissions associated with final mile
deliveries to our clients.
• Engagement project with our supply
chain to encourage change and to
understand the current steps
suppliers are taking to measure and
reduce their impact. This project is
aimed at encouraging our suppliers to
start to take meaningful action to
reduce their own emissions, and drive
demand for more sustainable
products and materials.
• Improvements to the granularity of
Scope 3 data has enabled the Group
to improve the accuracy of its
reported emissions. This has involved
improving the categorisation of
products being sold from suppliers,
gaining better visibility of supplier
specific emissions, and improving the
categorisation of transport modes
when transporting and distributing
products. These improvements to
data accuracy and the steps we have
taken, moving to carbon neutral
logistics options has enabled the
Group to reduce its Scope 3
emissions by 2% in 2022.
guarantees of origin (RGGOs) or
Biomethane certificates (BMCs). These
actions have enabled us to reduce our
Scope 1 and Scope 2 emissions by 8%
(market based) against our 2021 base
year and to increase our renewable
electricity to 36% across all Group sites.
In Germany, we have consolidated our
operations into a newly built
warehouse and office facility with LED
lighting and more efficient heating,
which will serve as the European sales
office and distribution hub for our
Brand Addition business. This improves
our business efficiency and further
reduces our carbon footprint.
In 2023 we aim to convert our final
European site over to renewable
electricity and for the remaining sites
that do not currently have access to
renewable energy we will purchase
renewable energy credits (RECs) to
achieve our target of transitioning all of
our sites over to renewable electricity
by the end of 2025.
Scope 3 emissions
Measuring our Scope 3 emissions is just
the start of our journey, and we
recognise the challenges we face
across the Group to reduce our Scope
3 emissions and improve the accuracy
of our emissions figures, moving from
spend based calculations to using
activity-based data. As we gain a
better understanding of our Scope 3
emissions and as we develop our
long-term strategy to reduce our
emissions, we will remain transparent
and explain any changes to our
approach or methodologies.
STRATEGIC REPORT Group Energy and GHG emissions
Energy consumption (MWh)
Gas
Electricity
Transport fuel
GHG emissions (Tonnes CO2e)
Stationary combustion (Gas) - Location based
Scope 1
Stationary combustion (Gas) - Market based
Mobile combustion (Company owned vehicles)
Scope 2
Purchased Electricity (Location based)
Purchased Electricity (Market based)
Purchased goods and services
Fuel-and energy-related activities (not included in scope 1 or scope 2)
Scope 3
Upstream transportation and distribution
Waste generated in operations
Business travel
Employee commuting
Total Scope 1 and Scope 2 emissions (Market‑based)
Total Scope 3 emissions
Offsets purchased
Total emissions (Market‑based)
Total energy consumption
% Renewable electricity
2022
1,246
1,414
160
2022
251
211
34
434
439
2021
Variance
1,342
1,407
117
2021
271
271
26
410
450
-7%
1%
37%
Variance
-7%
-22%
31%
6%
-2%
4%
-3%
40,780
39,044
178
183
8,990
12,036
-25%
1
410
336
684
1
290
265
747
50,695
51,819
825
-
50,554
52,566
2,820
36%
2,866
27%
0%
41%
27%
‑8%
‑2%
-
‑4%
‑2%
9%
GHG emissions have been calculated by each Group
business and combined to provide a Group GHG emissions
figure.
Employee commuting has been calculated using the
relevant 2022 DEFRA (Department for Environment, Food
& Rural Affairs) emissions factors (EFs).
Scope 1 and Scope 2 emissions have been restated to
reflect changes made to our methodology and improve
the accuracy of our reporting as described below.
Market based stationary combustion has been added to reflect
the purchase of biogas in 2022 backed by RGGOs / BMCs.
Purchased electricity figures have been re-stated to
include the AIB (Association of Issuing Bodies) production
mix EFs for location-based figures and residual mix
emission factors for market-based emissions used by the
Normative carbon reporting engine.
Brand Addition
Emissions have been calculated using the Normative
carbon reporting engine unless otherwise stated.
Facilisgroup
Natural gas consumption (stationary combustion) for
Canada has been restated to include more accurate
emission factors as published by Environment and Climate
Change Canada.
Purchased electricity for North America has been
calculated using the EFs reported in the Normative carbon
reporting engine.
Employee commuting has been calculated using the
relevant 2022 DEFRA (Department for Environment, Food
& Rural Affairs) EFs.
Scope 3 emissions have been calculated using the Quantis
Greenhouse Gas Protocol Scope 3 evaluator.
The Pebble Group plc Annual Report 2022
33
Responsible sourcing and business practices
Priority
Our aim
UN Sustainable Development Goals
Responsible sourcing and
business practices
Strive to ensure that the products we
source and the vendors we use
prioritise the use of sustainable
materials and have in place responsible
business practices, respecting
fundamental human rights.
Product sustainability
Across our Group we work with
a large array of clients and
suppliers to fulfil promotional
product requirements. In
Facilisgroup, we connect
Partners (customers) with
Preferred suppliers and in
Brand Addition, we are working
with clients to design, source
and deliver millions of products
to support promotions.
Product sustainability starts with
understanding our clients’ needs. Our
aim, when developing new products or
product ranges, is to select creative
products recognised by our clients’
target audiences that are visually
desirable, of good quality, form a
meaningful connection with the brand
and are items that the recipient will
want to bring home and keep.
When choosing or developing products,
material selection plays a vital role. We
prioritise items that are made from
sustainable materials such as organic
cottons, recycled plastics or materials
that are less resource intensive during
the production process. We always
strive to develop products that are
desirable and useful and that will be
long lasting. We aim to prioritise the use
of materials that can be easily recycled
at the end of their useful life, to
support the circular economy.
34
The Pebble Group plc Annual Report 2022
COFFEE CARBON
EQ U IVALENT TO
THREE CAPSULES
FIVE
RECYCLED
PL AS TIC
BOT TLES
VIRGIN
ACRYLIC
ONE
UP CYCLED
BL ANKE T
STRATEGIC REPORT Responsible sourcing
The Group has a mature vendor management process which
ensures that all suppliers used are validated through a robust
vendor assessment. On-site assessments are mandatory for
any product suppliers located in high-risk countries such as
Turkey, China or other parts of Asia. These assessments are
predominantly undertaken by our own audit team. Our
vendor assessments consider social and ethical business
practices, working conditions and product quality and
compliance obligations. If issues are identified, corrective
action plans are issued and followed-up to ensure
completion. If any critical issues are identified or actions not
completed, the supplier is blacklisted and cannot be used.
Re-assessments are conducted every two years.
In 2022, Brand Addition undertook a total of 213 on-site
vendor assessments of its supplier network. 13 critical
non-conformances were identified and six suppliers were
blacklisted.
Each business has mandatory compliance clauses integrated
into their Third-Party Partner and supplier contracts which
include corporate social responsibility, anti-bribery and
corruption, anti-slavery and human trafficking, trade
restrictions and facilitation of tax evasion. These contracts
include termination rights for non-compliance. In 2022 we
extended and publicised access to our Group whistleblowing
portal to our suppliers as well as Group employees.
For further details or our approach to product sustainability and
responsible sourcing please refer pages 42 - 49 in our ESG report 2022
Packaging and waste
We aim to ensure that all of the packaging we use can be
kerbside recycled and we prioritise the use of recycled
materials in our packaging. Since 2017, we have reduced the
amount of single-use plastic packaging used in our UK
warehouse by 90%. In 2022 we reduced this by a further 6%.
In 2023 we are embarking on a project to further align the
packaging used across each of our warehouse locations and
to select the most appropriate materials to ensure that
packaging can be easily recycled by the end user.
The majority of waste generated across the Group consists of
cardboard and plastic pallet wrap from transit packaging. In
2022, we encouraged employees to take part in ‘litterless
lunches’ and we have undertaken waste audits to highlight
what waste is being disposed of, how this can be reduced,
and how it should be correctly segregated. In 2023, we aim
to work across our warehouse locations to standardise our
approach so that we can more accurately measure and track
our waste.
10+ million units
WITH PL AS TIC FREE AND RECYCL ABLE
PACK AGING SINCE 2020
The Pebble Group plc Annual Report 2022
35
Diversity, health, well‑being and engagement
Priority
Our aim
UN Sustainable Development Goals
Diversity, health,
well‑being and
engagement
To expand, celebrate and embrace
individuality and diversity, providing a
safe environment where we promote
well-being and a healthy work-life
balance.
Diversity, Equity and Inclusion (DEI)
We believe that building a diverse and
inclusive culture will lead to a better
business, a better place to work for our
entire team and, ultimately, will make
the Group more valuable and effective
overall. We therefore value diversity
and are committed to taking steps to
enhance DEI throughout our Group
with the aim of expanding, celebrating,
and embracing individuality and
diversity in our teams.
Our Group DEI policy and our
Succession Planning process sets our
approach to DEI and are how we aim to
embed and enhance our commitment
to diversity further into our businesses.
We see ourselves on a journey to
continuously improve on these matters.
Our DEI policy covers diversity in
ethnicity, gender, age, disability,
education and socio-economic
background, sexual orientation, and the
representation of minority groups. We
also see diversity of personal attributes
having equal importance and our aim is
to build a team that consists of
individuals who have a range of skills
and attributes, and we are therefore
also focused on diversity in cognitive
and personal strengths. Our Succession
Planning process works alongside this.
36
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT FY 22 Group diversity figures
We employ 568 talented individuals across the Group and we
consider our gender balance to be an area of strength. We
are also proud of the broad national representation range of
27 different nationalities represented by our Group
employees and that circa. 36 different languages are spoken
by them.
GENDER SPLIT
DIVERSITY SPLIT
41%
Female (334)
Male (234)
4%
11%
13%
4%
59%
43%
67%
Asian (76)
Black (25)
White (379)
Other ethnically diverse
team member* (24)
Not known or prefer not
to say (64)
*Other ethnically diverse team member incorporates:
Hispanic/Latino, Mixed, Other, Pacific Islander, Native American
GROUPWIDE LEADERSHIP GENDER SPLIT
GROUP BOARD GENDER SPLIT
GROUP EXECUTIVE COMMITTEE GENDER SPLIT
49%
51%
60%
40%
37.5%
62.5%
Female (37)
Male (36)
Female (2)
Male (3)
Female (5)
Male (3)
(Operating Boards, their direct reports
and Group Executive Committee)
The Group Board has a good gender
balance as it comprises three male and
two female Directors.
We also have good gender balance
throughout the senior teams within our
businesses.
(Diversity figures based on numbers of FTEs as at 31 December 2022)
The Pebble Group plc Annual Report 2022
37
Diversity, health, well‑being and engagement
• a new foundation in Facilisgroup to
identify internal talent for
succession purposes; and
• changes to annual performance
review process.
• We have a DEI Executive Sponsor in
each of Facilisgroup and Brand
Addition which meet at least annually
with the Group Chair of the
Nomination Committee to discuss DEI
progress.
The Group’s aim is to continue to
improve diversity. A Nomination
Committee decision was made at the
end of 2022 to focus on ethnic
diversity and embark on an initiative
run by an external governance
consultant, called ‘The RACE Code’
during 2023 and beyond. Please see
page 25. This will provide an
independent view of the Group and
practical guidelines to bring about real
change in the area of race equality in
the workforce. The culmination of the
exercise will provide a credible review
of our DEI progress to date, and a
tangible three-year action plan, with
the aim of working towards a ‘Race
Equality Code’ quality mark
accreditation.
During 2022:
• We conducted an annual Group-wide
Diversity Study and Gender Pay
Assessment. This provided insight to
help monitor our DEI progress and
shape our actions to address areas
for improvement. The teams across
our businesses have been tasked with
attracting a more diverse pool of
talent. The results of the December
2022 diversity study can be found on
the page above and the Gender Pay
Assessment results can be found on
page 56 of the ESG report 2022.
• Our Group actioned a number of
initiatives aimed at delivering our DEI
and succession planning
commitments and embed the right
approach into their culture in a real,
meaningful way. This includes:
• work to improve our recruitment
process;
• working with agencies known for
diverse candidate pools and
diversity job boards;
• implementing DEI training across the
Group using on-line training
• platforms and targeted DEI training
sessions on subjects such as
unconscious bias;
• introduction of a ‘diversity calendar’
to celebrate our differences, create
fun and enhance inclusive culture in
the workplace;
• creation of a ‘Diversity, Health,
Well-being and Engagement’
Committee within Facilisgroup with
responsibility for leadership of DEI
initiatives;
38
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Health, safety and well-being
The Group takes a proactive approach
to the health, safety, and well-being of
its employees. We focus on providing a
safe working environment that
promotes a healthy work-life balance
and demonstrates a positive attitude
towards mental health and well-being.
We strongly believe that by supporting
our employees and helping to ensure
they are in good health, enables
everyone to perform better.
Each site has its own health and safety
team who meet regularly to discuss
any local actions or findings from risk
assessments and health and safety
walkarounds. Health and safety
matters are a standing agenda item at
each Group Board meeting where
summary reports for each business,
including up to date statistics relating
to accidents and incidents that have
occurred since the last report, are
tabled and noted. In FY 22, there was
one health and safety incident in the
UK that was RIDDOR reportable due to
the number of days the employee was
absent from work.
During 2022:
Facilisgroup celebrated mental health
month to raise awareness of the
importance of positive mental health.
All employees were given a year-long
subscription to ‘Calm’, which is a
meditation and mindfulness app.
Facilisgroup also gave an additional
four hours of paid leave to each
employee to be used as “wellness
time” that month, together with four
more hours of “wellness time” to be
used during the remainder of the year.
Brand Addition continued its wellness
campaign which allows employees to
choose from nine subsidised benefits
aimed at promoting physical and
mental health. The flexibility of this
programme acknowledges that
everyone’s health and well-being
needs are different, and gives
employees’ access to a wide range of
different benefits to suit them, which
they can be incorporate into their daily
routines.
In 2023, we will continue to actively
promote positive health and well-
being through targeted campaigns
such as mental health awareness
month. We will also raise awareness of
the wellness benefits offered to all
employees to encourage increased
participation in the schemes.
The Pebble Group plc Annual Report 2022
39
Community Support
Priority
Our aim
UN Sustainable Development Goals
Community Support
To engage locally and make a positive
impact, supporting our communities.
Engagement and volunteering
Facilisgroup annual Partner
summit and supplier showcase.
In June 2022, Facilisgroup hosted its
Annual Partner Summit in Orlando,
Florida, which is dedicated to industry
education, innovation, collaboration,
engagement and encouraging growth. It
also gives an opportunity for interaction
with Facilisgroup’s Preferred Suppliers
and is a means for them to showcase
their businesses and new product lines.
The entire Group Board and certain
Group senior managers attended the
event in person and had the opportunity
for direct face-to-face engagement and
interaction with Facilisgroup’s key
stakeholders, to gain valuable first-hand
insight and feedback.
Facilisgroup has also started to use the
opportunity of these summits to raise
awareness of the impacts of the
promotional products industry on the
environment and, at the summit, it
facilitated an ESG panel discussion, in
which Brand Addition participated.
When hosting an event, Facilisgroup
commits to leaving that local area in a
better place than it was prior to their
arrival. Via FacilisCares, Facilisgroup
supports a local charity initiative during
the time spent in the area. In Orlando,
the summit participants spent an
afternoon volunteering their time to
make 50 blankets for local non-profit
organisations: Harbour House, Vitas
Healthcare, Seniors First and the
Osceola Council on Aging.
810hrs
Group volunteering
hours during 2022
Orlando by numbers
120
DISTRIBUTOR PARTNERS
IN ATTENDANCE
63
SUPPLIER PARTNERS
IN ATTENDANCE
670
TOTAL NUMBER OF
ATTENDEES
100
VOLUNTEERING HOURS
40
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Mustard Tree
Brand Addition Manchester partnered with
Mustard Tree, a local charity which aims to combat
poverty and prevent homelessness by helping
people secure better accommodation and
improve their economic well-being. Each Friday a
member of our team spent the day at Mustard
Tree, supporting either their food club or
community furniture shop.
Park Clean-up
Facilisgroup and Brand Addition collaborated in a
special ‘FacilisCares Day’ where 40 volunteers
from our U.S. and Canada offices dedicated 120
volunteering hours to clean up local parks; Water
Tower Park in St. Louis and Shefford Sports Park
in Ottawa.
In 2023 we will continue our efforts to support local
community projects. Facilsgroup has committed to
continue its partnership with ‘Home Sweet Home’ and
‘United Way’ and at this year’s Annual Partner Summit
the attendees will come together again, to support a
local charity through the FacilisCares initiative.
Aligning our approach and following recognised standards
Ecovadis
Our Brand Addition business retained
its Platinum EcoVadis status for a third
year, positioning the business within the
top 1% of similar companies in its
approach to sustainability.
The assessment reviewed how the
business addresses four key areas
(Environment, Labour and Human Rights,
Ethics and Sustainable Procurement),
including any actions to minimise its
overall impact on the environment.
EcoVadis provides an independent,
trusted, common platform for
evaluating and rating more than 65,000
groups and companies across 200
industries in 160 countries. It uses a
CSR assessment criteria based on
recognised sustainability standards.
Carbon Disclosure Project (CDP)
Brand Addition makes an annual
submission to the Carbon Disclosure
Project (CDP), declaring its annual GHG
emissions and progress against its
reduction targets. Its declaration also
supports the Scope 3 emission tracking
for clients linked to CDP. In the most
recent assessment Brand Addition
maintained its ‘C’ rating.
CDP runs a global environmental
disclosure system and supports
thousands of companies, to measure
and manage their risks and
opportunities on climate change, water
security, and deforestation.
ISO management systems
Across the Group we have effective
management systems in place that are
annually audited by SGS to ensure
continued certification against globally
recognised standards.
Our Brand Addition business holds
ISO9001 certification across its UK sites,
ISO14001 certification at its Manchester
site and ISO50001 certification across
its UK and German sites.
The Pebble Group plc Annual Report 2022
41
Climate related risks and opportunities
Task Force on Climate-related Financial Disclosures (‘TCFD’)
During 2022 we fully implemented all of the
recommendations made by the TCFD to ensure effective
governance of any climate related risks and opportunities
identified across the Group. The table below provides an
overview of the actions we have taken in relation to each of
the TCFD recommendations and where relevant information
can be found in this report and our ESG report.
The results of our climate related risks and opportunities
assessment did not identify any risks likely to have a material
impact on the financial performance of our business over the
short, mid, or long-term. Whilst we do see areas of exposure
related to increased costs of raw materials and the
transportation of goods because we do not directly
manufacture products, we are somewhat shielded from
significant impact. Where risks have been identified, actions
are already in place to address the impact or minimise
exposure. We recognise the importance of ensuring that we
continue to develop and evolve our risk management
framework, and we will ensure that the scenarios we use to
quantify risk factors remain current and continue to evolve to
represent the changing landscape. A detailed evaluation of
the highest scoring climate-related risks and opportunities
(and the information used to undertake our scenario analysis)
can be found on page 91 of our 2022 ESG report.
Recommendation
Response
Disclosure location
Governance
a) Describe the Board’s oversight of
climate-related risks and
opportunities
The Board approves and oversees the Group ESG strategy along with
ensuring that risk (including climate and environmental related risk) is
effectively managed across the Group.
Page 60 in our
Corporate
Governance Section
b) Describe management’s role in
assessing and managing climate-
related risks and opportunities
Strategy
a) Describe the climate-related
risks and opportunities the
organisation has identified over the
short, medium and long-term
The Audit Committee provides oversight of climate related risks as part
of its integrated business risk review.
ESG is a key part of the Board’s annual strategy setting session and the
Board receives a full ESG update at its half year strategy review, so that
progress is assessed every six months.
ESG is a standing agenda item at each Group Executive Committee meeting.
The Senior ESG Officer is responsible for developing and executing the
Group ESG strategy.
Meetings are held (every two months, as a minimum) with the Divisional
Leads of Facilisgroup and Brand Addition who are responsible for
ensuring that progress is being made against agreed objectives and
targets.
Climate related risks and opportunities are periodically monitored as
part of our ESG strategy, as included in our ‘Impact of our business on
the environment and our community’ cornerstone.
The Group identified a number of climate related risks from its
assessment however none of which were seen to be significant and
represented a material financial risk to the business.
Opportunities relate to providing clients with credible sustainable
solutions to support their transition to a low carbon economy.
ESG is a standing agenda item at each Group Executive Committee meeting.
Page 60 in our
Corporate
Governance Section
Pages 51, 52 & 55 in
our Risk Section
Pages 91-95 in our
ESG report 2022
b) Describe the impact of climate-
related risks and opportunities on
the organisation’s businesses,
strategy and financial planning
To date there have not been any climate related risks or opportunities
that have significantly impacted the business. Any future impacts
experienced are likely to be low. Any impacts seen are most likely to
occur under ‘scenario A’ (early and orderly policy action – smooth
transition) over the long-term (6-10 years).
Pages 51, 52 & 55 in
our Risk Section
Pages 91-95 in our
ESG report 2022
42
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Recommendation
Response
Disclosure location
c) Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-
related scenarios, including a 2°C
or lower scenario
Three scenarios were developed in line with data from publicly available
data and reports*.
* The Intergovernmental Panel on Climate Change (IPCC) SR15 report and the Bank of England,
Key elements of the 2021 Biennial Exploratory Scenario: Financial risks from climate change.
The climate related risks identified do not pose a significant risk to the
business over the developed scenarios.
For all identified risks, mitigating actions are in place to ensure the
impact remains as low as possible.
Risk management
a) Describe the organisation’s
processes for identifying and
assessing climate-related risks
b) Describe the organisation’s
processes for managing climate-
related risks
c) Describe how processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overall risk
management framework
Metrics and targets
a) Disclose the metrics used by the
organisation to assess climate-
related risk and opportunities in
line with its strategy and risk
management process
b) Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse
gas emissions and the related risks
Climate related risks are identified by a number of methods, these range
using publicly available data to help develop an understanding of the
climate related risks the business may face, internal brainstorming
exercises and stakeholder discussion. Risks can also be raised through
internal discussions, individual business risk registers, the Group risk
register or the Group Executive Committee. Risks are scored and
assessed following the Group risk management framework to ensure that
priority is given to the highest risk.
Emerging and identified risks are regularly monitored and scored to
represent the risk posed to the business.
All risks are assigned an owner who is responsible for the management
and implementation of any actions.
The Audit Committee formally reviews and approves the risk register
twice yearly.
Our approach to climate-related risks is aligned and integrated into our
Group-wide risk management framework, with oversight from the
Audit Committee.
Group Scope 1 and Scope 2 GHG emissions.
The number of sites that have been converted to renewable electricity.
The GHG emissions table within the ESG section of this report discloses
our Scope 1, Scope 2 and Scope 3 emissions, the number of Group sites
converted to renewable electricity, and our progress compared to our
base-year.
We are still in the process of analysing our Scope 3 emissions and intend
to update our metrics and targets once we have identified our hotspots
and developed a plan to reduce the impact of the categories with the
highest emissions.
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
50% reduction in Scope 1 and Scope 2 emissions by 2030 (8%
reduction achieved in 2022).
100% renewable electricity by the end 2025 (36% of sites using
renewable energy at the end of 2022).
As we gain a better understanding of our Scope 3 emissions, we will aim
to set targets to monitor and reduce our emissions.
Pages 51, 52 & 55 in
our Risk Section
Pages 91-95 in our
ESG report 2022
Pages 51-52 in our
Risk Section
Pages 82-83 in our
ESG report 2022
Pages 51-52 in our
Risk Section
Pages 82-83 in our
ESG report 2022
Pages 51-52 in our
Risk Section
Pages 82-83 in our
ESG report 2022
Pages 32-33 in our
Climate Change
section
Page 26 in our ESG
report 2022
Pages 32-33 in our
Climate Change
section
Pages 32-33 in our
Climate Change
section
Page 26 in our ESG
report 2022
The Pebble Group plc Annual Report 2022
43
Key Performance Indicators
Measuring our
performance.
Group
Our Values in action:
Ambitious
positivity
REVENUE
GROSS PROFIT
ADJUSTED EBITDA1
BASIC ADJUSTED
EARNINGS PER SHARE2
ADJUSTED OPERATING CASH
FLOW CONVERSION
£134m
+16.4%
39.3%
+7.7%
£18m
+16.9%
5.78p
+12.5%
25%
-34.2%
m
0
.
4
3
1
£
m
1
.
5
1
1
£
%
3
.
9
3
%
5
.
6
3
m
8
1
£
m
4
.
5
1
£
p
8
7
.
5
p
4
1
.
5
%
8
3
%
5
2
FY 21
FY 22
FY 21 FY 22
FY 21 FY 22
FY 21 FY 22
2021 2022
Why we measure it
Year-on-year growth in
revenue indicates
progress against both
short-term plans and
long-term strategy.
Comment
The increase in revenue
in FY 22 reflects the
growth in both
Facilisgroup revenue and
Brand Addition success in
retaining existing clients
and winning new
contracts.
Why we measure it
Growth in gross profit
percentage indicates an
improvement in the
quality of our earnings.
Comment
The increase in gross
profit percentage
reflects both the
increased revenue
weighting of Facilisgroup,
our higher margin
business and an
improvement in Brand
Addition gross margins,
as the business returned
to its long-term target of
30%, which was
impacted in H1 21 by
incremental Brexit
related costs and freight
pricing and capacity.
Why we measure it
Year-on-year growth in
Adjusted EBITDA
indicates progress
against both short-term
plans and long-term
strategy. Management
believes this adjusted
measure is appropriate in
understanding the
underlying trading
performance of the
business.
Comment
The increase in Adjusted
EBITDA in 2022 reflects
the revenue growth
across the Group.
Why we measure it
This measure illustrates the
profitability of the Group in
relation to the number of
shares in issue and is
therefore an important
metric in demonstrating
the delivery of value for
our shareholders.
Comment
Adjusted Basic earnings
per share were 5.78p
against 5.14p in 2021,
reflecting the mix of
profitability and increased
amortisation from
investment made into new
products in Facilisgroup.
Why we measure it
This metric measures the
Group’s profit to cash
ratio. It is monitored to
highlight the level of
investment in capital
expenditure and working
capital to support the
Group’s medium-term
growth plans.
Comment
The change in 2022
versus prior year is the
incremental capital
expenditure in
Facilisgroup, combined
with the investment in
working capital in Brand
Addition, in line with
its growth.
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation, share based payments charge and exceptional items
2 Basic adjusted EPS is calculated as 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
44
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Group companies
Facilisgroup
Recurring revenues – High visibility of recurring revenues with a growing customer base
REVENUES £’m
PARTNER NUMBERS
20
15
10
5
0
16.6
12.7
9.3
9.8
7.4
250
200
150
100
50
0
217
200
175
149
127
Partner (Customer) Retention
NPS score
PARTNER RETENTION RATE
%
0
-
+
FY 18
FY 19
FY 20
FY 21
FY 22
2018
2019
2020
2021
2022
Why we measure it
Tracking Facilisgroup revenues
demonstrates the business’ ability to grow
and retain its income from its Partners and
Preferred Suppliers.
Comment
Revenues increased by 31% GBP (17% in
home currency of USD) in FY 22, driven by
the increase in Partner numbers, GMV
growth and spend through Preferred
Suppliers. Recurring revenues comprise
93% of Facilisgroup revenues in FY 22.
Why we measure it
Responsibly increasing Partner numbers whilst
maintaining Partner quality is key to delivery
of the Facilisgroup strategy. The engagement
of existing Partners and the pipeline of
potential new Partners are tracked on a
monthly basis to demonstrate progress
against this target.
Comment
Partners implemented increased to 217, plus
eight awaiting implementation. Investment
has been made in the sales team to continue
to drive this metric forward.
Why we measure it
Understanding attrition and the reasons for it
is key to our Partner growth strategy. We
focus on maximising retention of existing
Partners, in addition to growing new.
Comment
Retention of 96% is considered, by
management, as an excellent performance,
and is key to the success of Facilisgroup.
Partner activity – High quality Partners and long-term relationships
GROSS MERCHANDISE VALUE $’m
PREFERRED SUPPLIER PURCHASES $’m
Partner (Customer) Retention
NPS score
NPS SCORE
#
1,397
1,150
1,017
1500
1200
900
600
730
821
300
0
500
400
300
200
100
0
460
350
0
261
257
227
FY 18
FY 19
FY 20
FY 21
FY 22
FY 18
FY 19
FY 20
FY 21
FY 22
Why we measure it
Tracking the value of sales processed
through our technology sets the pricing of
our services to our Partners and allows the
Group to monitor both the growth in
like-for-like Partner sales, and our growth
in total distributor sales versus the market.
Comment
The sales activity of our Partners resulted
in $1,397m GMV, an increase of $247m on
FY 21, driven by new Partners in addition to
an increase in like-for-like Partner sales.
Why we measure it
Consolidating Partner spend through a
high-quality supply base that provides
excellent service, favourable pricing and
rebates for our Partners generates revenue
for Facilisgroup. The level of spend with our
Preferred Suppliers is tracked monthly to
demonstrate progress against this target.
Comment
Spend through Preferred Suppliers increased
by $110m in FY 22 to $460m, reflecting
growth in GMV in addition to a higher
proportion of spend going through Preferred
Suppliers.
-
+
Why we measure it
Tracking the NPS provides an indication of
the value our Partners place on us and
assists with maintaining strong retention.
Comment
An NPS of 47 is regarded as a positive score
by management. Feedback from Partners
supports the business in setting its priorities
with the aim of maintaining its high
retention record.
The Pebble Group plc Annual Report 2022
45
Key performance indicators
Group companies
Brand Addition
Revenue analysis – Win, Grow, Retain, Repeat
REVENUE £’m
92
98
73
117
102
120
100
80
60
40
20
0
REVENUE BY EXISTING AND
NEW CLIENTS £’m
3
95
12
80
5
68
10
107
11
91
120
100
80
60
40
20
0
FY 18
FY 19
FY 20
FY 21
FY 22
FY 18
FY 19
FY 20
FY 21
FY 22
Why we measure it
Tracking revenue trends is key to
understanding how Brand Addition is
performing against its strategic goals.
Comment
Revenue increased during 2022 driven by
good client retention, combined with growth
in new clients implemented in 2021 and 2022.
Existing clients
New clients (in year and 1st full year contribution)
Why we measure it
Brand Addition has excellent levels of client
retention providing the business with good
visibility of revenues and future performance.
Retaining and growing existing clients, while
successfully implementing new business is
fundamental to its growth strategy.
Comment
Growth in revenue from existing clients
represents continued recovery in existing
clients combined with strong retention. New
business, including significant new clients
contracted in 2022 and a full year
contribution of clients implemented in 2021,
was also strong.
REVENUE BY CLIENT
CONCENTRATION%
41
15
44
34
14
52
27
14
1059
120
100
80
60
40
20
0
23
15
62
17
12
71
FY 18
FY 19
FY 20
FY 21
FY 22
Top 10 clients
11-20 clients
21+ clients
Why we measure it
Brand Addition tracks revenue by client
concentration as continued success of
these larger clients is central to delivering
on our strategy of Win, Grow, Retain,
Repeat. We also recognise the importance
of not being over reliant on a small number
of clients.
Comment
The top 10 clients contributed 62% of total
revenue in 2022 (71% in 2021). Management
believes this concentration is valuable, with
no one client contributing more than 11%
of revenue.
Revenue diversity – Strong sectors across multiple geographies
REVENUE BY CLIENT SECTOR %
REVENUE BY DESTINATION %
25%
22%
15%
22%
4%
9%
4%
8%
9%
FY 22
11%
FY 21
17%
16%
19%
26%
FY 22
FY 21
26%
17%
Engineering
Financial Services
20%
24%
16%
12%
Beauty
FMCG
Technology
Transport
Other
38%
40%
UK
Europe
US
RoW
Why we measure it
Brand Addition works with clients across a wide range of sectors.
This level of diversity provides protection against economic factors
which may impact specific sectors.
Why we measure it
Brand Addition has a global client base and is well diversified across
the world, providing resilience to market conditions that could
affect specific geographies.
Comment
The differences in the year reflects the change of mix of revenues
between existing clients as well as the new clients won in 2021 and 2022.
Comment
Sales into Europe and the US increased relative to 2021, driven by
growth in new clients in these geographies.
46
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Chief Financial Officer’s review
Another year of growth.
Claire Thomson
Chief Financial Officer (CFO)
£’m
Revenue
Gross profit
Gross profit margin
Adjusted EBITDA
Depreciation and amortisation
Share-based payment charge
Operating profit
Net finance costs
Profit before tax
Tax
Profit for the year
2022
134.0
52.7
39.3%
18.0
(6.5)
(1.3)
10.2
(0.5)
9.7
(2.1)
7.6
2021
115.1
42.0
36.5%
15.4
(4.8)
(0.7)
9.9
(0.6)
9.3
(2.0)
7.3
Weighted average number of
shares
Adjusted Basic EPS
Basic EPS
167,450,893 167,450,893
5.14p
5.78p
4.55p
4.39p
Overview
FY 22 was another year of growth for the Group with both of
its businesses trading strongly as we continued to execute on
our stated strategy. Group revenue of £134.0m (FY 21:
£115.1m) was 16% ahead of FY 21 and Adjusted EBITDA of
£18.0m (FY 21: £15.4m) was 17% ahead. Operating profit was
£10.2m (FY 21: £9.9m). The Group Board is pleased to
announce the implementation of its dividend policy and is
proposing a final dividend of 0.6 pence per share for FY 22,
payable in June 2023.
The Group’s balance sheet remains strong and its liquidity
position continues to be robust with cash balances of £6.8m at
20 March 2023 and no amounts drawn down on the Company’s
£10m committed revolving credit facility.
Revenue
Group revenue for FY 22 was £134.0m (FY 21: £115.1m), growth
of 16%. Facilisgroup total revenue was £16.6m (FY 21: £12.7m).
This represents an increase of 31% in GBP and 17% in
Facilisgroup’s home currency of USD. ARR from Partner
subscriptions for our technology and supplier contributions
made up £3.3m of this increase. The growth being a
combination of incremental Partner numbers and additional
contributions from suppliers as both the volume and
proportion of spend with Preferred Suppliers increased.
Revenue in Brand Addition was £117.4m (FY 21: £102.4m) an
increase of £15.0m. £6.8m of this increase comes from the
growth in existing customers as working patterns stabilised
compared with the disrupted years of 2020 and 2021. A
further £8.2m of revenue growth was delivered by new client
contracts won in FY 21 and FY 22.
Gross profit
Gross profit as a percentage of revenue increased during the
year by 2.8 p.p.t to 39.3%. Of the total increase, 2.2 p.p.t
relates the improvement in gross margins at Brand Addition as
the business returned to its long-term target of ~ 30% as it
did not suffer the increased costs associated with Brexit,
freight rate pricing and freight capacity challenges that
impacted the first half of FY 21. The balance of improvement
reflects the increasing proportion of Facilisgroup as part of
overall Group sales. This improvement is expected to continue
as Facilisgroup scales.
The Pebble Group plc Annual Report 2022
47
Chief Financial Officer’s review
Adjusted EBITDA
Adjusted EBITDA for FY 22 was £18.0m (FY 21: £15.4m). The
increase of £2.6m in FY 22 is made up as follows:
• Facilisgroup; £1.4m increase as incremental revenues were
delivered at excellent EBITDA returns of 54%
demonstrating the business’ ability to retain strong margins
and scale revenue.
• Brand Addition; £1.5m increase being the incremental
profit from sales and margin growth less increased costs
of additional headcount to support growth.
• Central costs; £0.3m cost increase in the year, £0.1m from
salary increases and growth in the team, the balance being
incremental travel and advisors’ fees.
Depreciation and amortisation
The total charge in the year was £6.5m (FY 21: £4.8m), of
which £4.2m (FY 21: £2.8m) 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 primarily a result of the
Group’s stated decision to increase capital expenditure in its
proprietary technology at Facilisgroup.
Share based payments
The total charge for the year under IFRS 2 “Share-based
payments” was £1.3m (FY 21: £0.7m). This charge related to the
2020, 2021 and 2022 awards made under the 2019 Long Term
Incentive Plan and Save As You Earn “SAYE” scheme. The
increase over FY 21 arises as we have three awards and the
2021 SAYE in issue for the first time. The charge for the year is
now in line with the expected ongoing run rate.
Operating profit
Operating profit for the year was £10.2m (FY 21: £9.9m) after
charging incremental depreciation and amortisation of £1.7m.
On prior year, the Group did not benefit from any material
income in FY 22 for this investment. There is also an additional
charge under IFRS 2 “share based payments”, as noted above.
Finance costs
Net costs of £0.5m in the year (FY 21: £0.6m) include interest
on the utilisation of the Group’s committed RCF facility during
the year of £0.1m (FY 21: £0.2m) and interest costs on leases
capitalised in accordance with IFRS 16 of £0.4m (FY 21: £0.4m).
Taxation
The total taxation charge was £2.1m (FY 21: £2.0m) giving rise
to an effective rate of tax of 21.6% (FY 21: 21.5%). 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. The Group is subject to
taxes in the UK, Ireland, Germany, Turkey, USA, Canada, China
and Hong Kong.
Earnings per share
The earnings per share analysis in note 10 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 (profit after tax before amortisation of
acquired intangibles, share-based payments charge and
exceptional items) was £9.7m (FY 21: £8.6m) an increase in
adjusted basic earnings per share of 0.64 pence per share.
Basic earnings per share (profit attributable to equity holders
divided by the weighted average number of shares in issue
during the year) was 4.55 pence per share (FY 21: 4.39 pence
per share) an increase of 0.16 pence per share.
Dividends
The Group Board has considered its position on dividend
payments and concluded that the Group has reached an
appropriate point to begin to implement a progressive
dividend policy. In doing so, it is planned that the Group will
move, in the medium-term, towards its stated position at IPO
of making dividend payments of c.30% of profit after tax. As
such, the Group Board is proposing the payment of a final
dividend of 0.6 pence per share for FY 22, a distribution
totalling £1.0m. This will be paid on 2 June 2023, subject to
shareholder approval, to those Shareholders on the register of
members on 28 April 2023. The shares will trade ex-dividend
on 27 April 2023.
48
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT Cash flow
The Group had a cash balance of £15.1m at 31 December
2022 (FY 21: £12.1m).
Non-current assets
Non-current assets are the most significant balance sheet
category and comprise the following:
Cash flow for the year is set out below.
£’m
Adjusted EBITDA
Movement in working capital
Capital expenditure
Leases
Adjusted operating cash flow
Tax paid
Net finance cash flows
Exchange gain
Net cash flow
2022
18.0
(3.4)
(8.4)
(1.7)
4.5
(1.7)
(0.5)
0.7
3.0
2021
15.4
(2.8)
(5.3)
(1.4)
5.9
(0.5)
(0.6)
0.2
5.0
Adjusted operating cash flow
Adjusted operating cash flow before tax payments and net
finance costs reduced by £1.4m in the year to £4.5m. The
reduction is after £2.8m incremental capital expenditure in
the Facilisgroup technology stack as we invest in our
technology to deliver our strategic objectives for this
business. In addition, there is some investment in working
capital to support continued sales growth at Brand
Addition. This remains an important metric for the Group
and is monitored consistently to ensure underlying cash flow
remains sufficiently strong to underpin the short-term
additional investment required to deliver the Group’s
ambitious plans for growth.
Balance Sheet and shareholders’ funds
Net assets increased in the year by £11.3m, the balance
sheet is summarised below:
£’m
Non-current assets
Working capital
Cash
Lease liabilities
Other net liabilities
Net assets
2022
69.8
13.7
15.1
(9.1)
(3.9)
85.6
2021
63.9
9.5
12.1
(7.8)
(3.1)
74.6
£’m
Goodwill
Customer relationships
Software development costs
Property, Plant & Equipment
Deferred Tax assets
Non-current assets
2022
36.1
9.0
14.9
9.5
0.3
69.8
2021
35.8
8.6
11.3
7.9
0.3
63.9
Amounts classified as goodwill and customer relationships
relate to historic acquisitions made by the Group. Software
development costs, which include £5.1m investment in the
year into Facilisgroup technology products arise from
ongoing investment into Group proprietary software and in
particular investment into the Facilisgroup technology stack
to ensure that existing technology remains 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. Property, Plant
and Equipment primarily comprises the costs of Right of
Use assets capitalised in accordance with IFRS 16 “Leases”.
Working capital
Working capital of £13.7m is £4.2m higher than FY 21. The
majority of the increase is due to Brand Addition and
specifically inventory where there has been investment to
support new business implemented during the year and
inventory held at year end for customer specific promotions
delivering in Q1 FY 23.
Lease liabilities
Lease liabilities of £9.1m (2021: £7.8m) relate to Group
properties capitalised in accordance with IFRS 16. The
increase in the year arose as the Group consolidated its
European warehousing at a larger facility in Germany.
The Pebble Group plc Annual Report 2022
49
Chief Financial Officer’s review
Other net liabilities
Other net liabilities of £3.9m (FY 21: £3.1m) are net tax
liabilities of which £2.9m (FY 21: £3.0m) is deferred tax in
respect of the intangible assets of Facilisgroup. £1.7m (FY 21:
£1.6m) relates to acquired customer relationships. The
balance and increase in the year arising as a result of
investments into technology products. These liabilities will
reverse over the period that the assets are amortised.
Alternative Performance Measures “APM’s”
Throughout the Annual Report and related statements the
Group has used a number of APM’s as key performance
indicators in addition to those reported under IFRS. These
are used to provide additional clarity to the Group’s
underlying 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 remuneration. 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. They have been
consistently applied in all years presented.
The following are key non-GAAP measures identified by the
Group and used in the Strategic Review and Financial
Statements. Where these are not reconciled to GAAP
measures elsewhere in the Annual Report, a reconciliation
is provided below.
Adjusted EBITDA which means operating profit before
depreciation, amortisation, share-based payments charge
and exceptional items. The reconciliation is disclosed in the
consolidated income statement.
Adjusted operating profit which means operating profit
before amortisation of acquired intangible assets, share-
based payments charge and exceptional items. See
reconciliation below.
Adjusted profit before tax which means profit before tax,
amortisation of acquired intangible assets, share-based
payments charge and exceptional items. See reconciliation
below.
Adjusted Earnings which means profit after tax before
amortisation of acquired intangible assets, share-based
payments charge and exceptional items. Refer to note 10
for reconciliation.
Adjusted earnings per share which means Adjusted
Earnings divided by a weighted average number of shares in
issue. Refer to note 10 for reconciliation.
Adjusted operating cash flow which is calculated as
Adjusted EBITDA less movements in working capital, capital
expenditure and lease payments. See previous page for
reconciliation.
Operating profit
Add back:
Amortisation charge on acquired
intangible assets
Share-based payment charge
Adjusted operating profit
Profit before tax
Add back:
Amortisation charge on acquired
intangible assets
Share-based payment charge
Adjusted profit before tax
2022
£’000
10,223
1,420
1,253
12,896
2022
£’000
9,703
1,420
1,253
12,376
2021
£’000
9,866
894
715
11,475
2021
£’000
9,317
894
715
10,926
Claire Thomson
Chief Financial Officer
21 March 2023
50
The Pebble Group plc Annual Report 2022
STRATEGIC REPORT
Risk Management
Sound risk
management.
Our Values in action:
Enjoying the
journey
The Group Board is ultimately responsible for
setting and approving risk appetite and ensuring
that the Group maintains a sound risk
management and internal control framework.
Risk management and internal control
framework
The Audit Committee
The Group Board delegates responsibility to the Audit
Committee to review and approve the Group’s risk profile
and risk register twice per year.
The Audit Committee considers the nature and extent of
principal risks to the Group’s achievement of its strategic
objectives any related opportunities and ensures that all
have been identified with appropriate mitigating actions and
controls in place. In 2022 this was formally extended to
cover oversight of climate related risks and opportunities to
align the Group’s risk management processes with TCFD
requirements (see more below).
The Audit Committee also reviews internal controls and
considers reports from the Group’s management on the
effectiveness and integrity of the Group’s internal control
and risk management systems. The Committee is updated
by the Group CFO and the Group Financial Controller on
progress against the Group’s internal audit and risk plan and,
on an annual basis, it considers whether there is a need for
a separate internal audit function.
When satisfied, the Audit Committee approves the Group’s
risk register and internal controls and recommends these to
the Group Board for approval.
Group Executive Committee and Operating Boards
Risk identification and monitoring is an ongoing iterative
process which facilitates the early identification and
escalation of risks. The Group has strong governance and
communication structures in place which ensure that such
risks are actively managed and mitigated.
The Group Executive Committee includes ‘Risk Management
and Compliance’ as a monthly standing agenda item for
discussion between the Executive Directors, the Divisional
Leads of each of Facilisgroup and Brand Addition and the
other senior executives on the Committee. This includes
escalation by the Divisional Leads of any actual or potential
risks that have occurred or been identified since the previous
meeting and a discussion and review of any required
amendments to internal controls. Risk and compliance
related policies and procedures are also reviewed and
discussed in that forum prior to presentation to the Audit
Committee and/or Group Board for annual approval.
The Operating Boards of Facilisgroup and Brand Addition
meet monthly and maintain their own risk registers, which are
reviewed and reconciled against the Group’s risk register
twice per year in advance of review by the Audit Committee,
as described above. In 2022, each were also expanded to
encapsulate climate related risks and opportunities. Each
Operating Board meeting has ‘Risk Management’ as a standing
agenda item, whereby the lead for each key function
addresses the significant risks relevant to their area, including
potential horizon risks and those identified below.
Through this risk management framework, the Group Board
drives effective risk management practices and processes
that, in turn, drive effective decision-making throughout
the Group.
Risk Management Framework
Group Board
Audit
Committee
Group Executive Committee
Operating Board
Facilisgroup
Operating Board
Brand Addition
Risk and Compliance
Operating Risk Register
Group Risk Register
The Pebble Group plc Annual Report 2022
51
Risk Management
Evolution of the risk management framework
and TCFD
Across the Group we continue to review and evolve our risk
management framework to ensure it reflects best practice.
In support of the work performed internally, in 2022 we
obtained external advice to validate the Group’s risk register
approach and have taken steps to implement the
recommendations made.
During 2022, each of Brand Addition and Facilisgroup
implemented annual testing of the risk controls noted in
their respective risk registers to ensure their accurate
implementation and effectiveness.
To align with TCFD requirements, during 2022, the Group
reviewed and evaluated the physical and transitional climate
related risks and opportunities faced over the short,
medium and long-term, considering different climate
related scenarios. This review was integrated into the
Group’s overall risk management framework by: (i) the
extension in scope of the Group’s risk registers to
encapsulate these risks and opportunities and the bi-annual
review thereof; (ii) reflection in the Group’s new
Environmental and Climate Change Policy; and (iii) by
amendment of the Audit Committee’s terms of reference to
reflect that ESG and climate related risks and opportunities
must form part of overall Group risk profile review.
Further information can be found on pages 42-43 in the
ESG section of this report and also in our 2022 ESG report
which can be found on the Company’s website.
Risk Ownership
To ensure effective and accountable management of
individual risks, each risk identified on the Group’s risk
register is assigned to a named risk owner at Director level.
The risk owner has the ultimate responsibility for the
ongoing monitoring, review and mitigation of individual risks.
Either the CEO or the CFO is assigned as the risk owner for
each risk on the Group’s risk register.
Key risks
The items referred to below are regarded as the key risks
for the Group. These are not the only risks that could affect
Group performance but, in the opinion of the Group Board,
are those which are currently the most significant and
specific to the Group’s businesses.
The following heatmap illustrates the Group’s rating of key
risks, relative to one another:
1
d
o
o
h
i
l
e
k
i
L
9
4
5
2
8
6
7
3
Impact Severity
52
The Pebble Group plc Annual Report 2022
Breach of IT security or
cyber-attack
Reliance on IT systems
Pandemic related
disruption
Concentrated client
base
Interruption to
warehouse operations
Macroeconomic
environment
Attracting and retaining
key personnel
Technological change
Climate change
1
2
3
4
5
6
7
8
9
STRATEGIC REPORT Summary of key risks
Risk and potential impacts
Mitigating activities
1. Breach of IT security or cyber‑attack
Breach of IT security or cyber-attack
All Group employees are provided with IT security training.
The incidence and sophistication of cyber security
threats and breaches continues to increase, affecting
businesses across the globe.
IT Security breaches, computer malware and other
cyber-attacks could result in loss or compromise of data,
and significant disruption to operations. In turn, this could
lead to a loss of business for the Group, affecting the
Group’s ability to achieve its financial targets.
Furthermore, such incidents could give rise to a potential
liability through litigation and may damage the Group’s
reputation with clients, resulting in a loss of goodwill.
2. Reliance on IT systems
The Group’s IT platforms and infrastructure are
critical to its effective operation.
A prolonged unavailability or disruption of IT systems
could therefore impact the Group’s ability to deliver
its goods and services, thereby affecting its
reputation and its ability to meet its financial targets.
3. Pandemic related disruption
The impact of the COVID-19 pandemic on the Brand
Addition business was managed well and reduced in
2021 and, further again, in 2022.
Nevertheless, in the longer term, the Group must be
prepared for the potential impact of new pandemic
outbreaks. Such outbreaks pose a risk to demand for
the Group’s products and services, which could
affect the Group’s financial targets.
The Group employs personnel dedicated to IT security within its
businesses. It monitors cybersecurity trends and continuously
identifies and implements new processes, systems and technologies
– including Artificial Intelligence technologies – to mitigate the
likelihood of a successful breach of its IT security.
Disaster recovery plans and crisis management procedures are in
place to enable any IT security incidents to be handled efficiently and
appropriately, to ensure the business is able to recover with limited
interruption.
Change to risk
No change
The Group has an experienced and skilled IT team, who are supported
by external consultants, where necessary. The IT teams constantly
monitor the availability and performance of core IT systems.
Robust disaster recovery and business continuity procedures are
monitored and updated regularly by both the IT and operations teams.
Change to risk
No change
The Group has a proven ability to react swiftly in response to a
pandemic and manage its flexible cost base to remain profitable
and cash generative. The experience and know-how gained in
dealing with such period of disruption has put the business in a
stronger position to handle any future pandemics.
The Group’s differentiated positions in the industry and established
client and Partner relationships position it well to endure a period of
pandemic related disruption and return to growth quickly.
The Group has a strong balance sheet, effective working capital
disciplines, is cash generative and has access to a £10m revolving
credit facility.
Change to risk
No change
4. Concentrated client base
Brand Addition’s core strategy is to win, grow, and
retain multi-country outsourced contracts, as
further detailed on pages 10-11 of this report.
However, Brand Addition has a relatively small
number of key clients and in FY 22 generated 54% of
Group revenue from the top 10 clients.
A loss, or significant reduction, in activity from major
clients could affect the Group’s financial targets.
Facilisgroup’s diversified customer base and 44% share of FY 22
Group Adjusted EBITDA, means that the impact of the loss of a key
Brand Addition client on Group Adjusted EBITDA would be much
reduced.
In addition, delivery of Brand Addition’s strategic objective of
continued growth through new client acquisition would dilute the
impact of the loss of a client on the overall Group Adjusted EBITDA.
Change to risk
No change
The Pebble Group plc Annual Report 2022
53
Risk Management
Risk and potential impacts
Mitigating activities
5. Interruption to warehouse operations
The Group’s warehouses receive, store and dispatch large
volumes of products internationally.
Any significant interruption in the Group’s warehouse
operations (for example, due to fire or other catastrophic
events, workforce disputes or shipping disruptions) could
reduce the Group’s ability to receive and process orders
and provide products to its clients. This could result in loss
or cancellation of sales and a loss of customer loyalty which
could affect the Group’s financial targets.
The Group maintains business interruption and property insurance.
Its warehouse locations span several geographic regions,
reducing the likelihood of multiple warehouses being affected
by the same event simultaneously. The business is also able to
divert supply across its infrastructure should an incident arise
in a single location.
The Group has business continuity and disaster recovery plans in
place for each of its warehouses, which are tested regularly.
Warehousing operations handle approximately 36% of Group
revenues, which diversifies the risk should there be an
interruption to their operation.
Facilisgroup does not have, and its revenues are not reliant on,
warehouse operations.
Change to risk
No change
6. Macroeconomic environment
There remains a degree of macroeconomic uncertainty.
This uncertainty is due to a number of factors, including
the ongoing conflict in Ukraine and the recent rises in
interest rates, raw material prices and energy costs.
Whilst the risk of global economic downturn remains
relatively high, the Group believes that the risk it faces is
now more sector specific than the general sentiment
faced in FY 21. As such, due the Group’s diversity of both
geography and sector, it has reduced its assessment of
overall risk compared with FY 21.
An economic downturn could impact demand for the
Group’s products and services and Brand Addition’s gross
margins, thereby affecting the Group’s ability to meet its
financial targets.
The Group has previously proven its ability to maintain
profitability and cash generation despite reduced demand and
periods of global supply chain disruption.
In the event of an economic downturn, Facilisgroup’s
subscription-based technology platform insulates that
business from any initial shock, and revenues in the year of
impact would be largely unaffected.
The diversification of Brand Addition revenues across
geographies and sectors provides some protection against the
impact of a reduction in demand and the flexibility of the
operating model below gross margin gives the business the
ability to protect profits.
Both businesses are cash generative, with the underlying client
base in Brand Addition resulting in a high-quality balance sheet.
Change to risk
Decreased
7. Retaining and attracting key personnel
Attraction and retention of experienced and skilled
personnel is critical to achieving the organic growth plans set
out on page 17 of this report.
Whilst inflationary pressures on wages remained in FY 22, the
Group experienced improved availability of skilled labour
compared with FY 21.
A failure to attract and retain high quality personnel could
impact on the Group’s ability to service our clients and grow
our businesses. This could also adversely impact on the
workloads and morale of existing staff that remain, leading to
increased resource turnover and reduced productivity and
engagement.
54
The Pebble Group plc Annual Report 2022
We value our people highly.
We continually develop and invest in our highly talented and
dedicated people in order to maintain an engaged workforce, as
explained further in the Stakeholder Engagement section of this
report on pages 18-25.
We offer competitive compensation packages that are reviewed
regularly and we routinely survey our employees to monitor
employee engagement levels and identify opportunities for
further improvement.
Attrition rates across sites and geographies are monitored monthly
to enable mitigating actions to be taken quickly if necessary.
Change to risk
Decreased
STRATEGIC REPORT Risk and potential impacts
Mitigating activities
8. Technological change
As technology changes quickly, there is a risk that the Group’s
current competitors and/or new entrants to the promotional
products market may introduce new technologies, products
or services, which challenge the functionality or capability of
the Group’s offerings.
If the Group is unable to promptly respond to technological
changes, or encounters material delay in introducing new
products or services, it may be at a significant disadvantage to
its key competitors.
This could damage the Group’s reputation with clients and
Partners, resulting in a loss of goodwill, and affect the Group’s
ability to meet its financial targets.
The Group strives to continually enhance its existing products
and services.
The Group maintains strong business relationships with its
clients and Partners, obtaining feedback and continually
enhancing its offerings to meet customer needs and respond
to technological changes.
The Group monitors the market for potential acquisition
targets whilst continuing to invest in its technology and IT
capabilities.
Change to risk
Increased
9. Climate change
Climate change presents a number of risks to the business,
which are further analysed in our annual ESG report (available
on the Company’s website).
Risks of extreme weather events (such as floods, droughts and
storms) could directly affect the Group’s infrastructure,
operations and supply chain.
The transition to a low-carbon economy and increased
compliance and tax regimes could result in increased costs for
the Group. In particular, the Group’s supply chain and suppliers
may be exposed to increased operational costs, product costs
and/or distribution costs arising from mitigation efforts,
increased regulatory compliance and carbon taxes.
Although none of the identified risks have been assessed
as likely to have a direct material financial impact on our
business, the Group accepts its duty to meaningfully
address the challenges of tackling climate change and to
minimise our impact on the environment.
Our actions and commitments are set out in the ESG
section of this report on pages 31-43 and also in our
annual ESG report, which is on the Company’s website.
The risk of supply chain disruption is minimised through
the Group’s diverse supply chain, which allows it to adapt
quickly. The Group also maintains alternative supplier
relationships for each key product category.
Customer preferences and concerns will increase demand for
wider ranges of low-carbon, sustainable products, services
and delivery options that may be difficult to identify and
source. A failure to proactively rise to this challenge could
negatively impact customer demand, retention and the
Group’s ability to meet its financial targets.
Any heightened risk of disruption in Brand Addition’s
direct supply chain due to natural disasters and/or
political or social unrest, would be identified through its
supplier evaluation process. In such an instance, Brand
Addition would select an alternative supplier (with
reduced risk exposure).
Change to risk
No change
The Strategic Report (which includes an introduction to the Promotional Products industry, the Group’s strategy and vision,
our investment case, the business models of each of our businesses, the Chair’s report, the CEO’s review, our strategy in
action, our Employee and Other Stakeholder Engagement, the Section 172(1) Statement, ESG overview, key performance
indicators, the Group’s financial review and risk management) was approved by the Group Board and signed on its behalf by:
Christopher Lee
CEO
21 March 2023
The Pebble Group plc Annual Report 2022
55
Chair’s Introduction to Governance
Maintaining credibility and
accountability.
The Group Board places a high priority on
effective corporate governance. We see
principles of good governance not just as a set of
guidelines, but as a way of establishing our
credibility and accountability. This makes us a
better business with strong internal controls that
deliver medium to long‑term value, whilst
meeting stakeholder expectations around
leadership and oversight. As Chair of the Group
Board, I am responsible for corporate
governance within the Group, and I work with
our Board and Group General Counsel and
Company Secretary to build upon and enhance
our sound corporate governance grounding.
Our Group values reflect our corporate governance strategy
by highlighting our culture of integrity, transparency and
fairness. Focus in our values on learning and growing applies
to our governance approach with our ongoing commitment
to review the continued effective operation of the Group
Board and its Committees and their oversight; and,
updating our governance framework in response to:
(i) changes in our businesses as we grow; (ii) changes in
official standards; (iii) developments in best practice
guidance; and (iv) our stakeholders’ expectations. You can
find more about our values on page 1.
We are focused on ensuring that the governance we
introduce is not only aligned with best practice but reflects
feedback from our stakeholders and is designed in a
meaningful way to fit with our culture and way of working.
We strategically engage with experts where doing so will
enhance our governance approach, for example, through
our ongoing appointment of remuneration advisors in
relation to Executive remuneration, and the consultancy
support sought on DEI policy and approach.
During 2022 time was dedicated to:
• integration of TCFD requirements into our ESG strategy
and risk management framework;
• further adoption of new Group policies including our
Framework on Conduct, Ethics and Compliance seen as an
important tool to cascade the Board’s culture and
expected standards and to empower employees;
• reviewing the quality of contribution, debate and
decision-making at Board and Committee meetings;
Richard Law
Chair and Independent
Non-executive Director
Governance Highlights
• Winner of AIM Corporate Governance
Award 2022
• TCFD recommendations integrated into
ESG strategy
• Group Board attendance at the
Facilisgroup Partner Summit and Supplier
Showcase 2022
• Adoption of Group Framework on
Conduct, Ethics and Compliance
• New Group Policies implemented
• Refresh and update of Share Dealing
processes
• Whistleblowing portal update and
enhancement
Our Values in action:
Always learning
and growing
56
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 • reviewing and developing specific governance initiatives,
for example on share dealing and Market Abuse Regulation
(MAR) compliance, access to our whistleblowing portal and
further development of succession planning;
• reviewing Board structure, size and composition;
• developing testing of risk management controls; and
• updating Board and Committee terms of reference.
The Pebble Group team was delighted to receive the AIM
Corporate Governance Award 2022 which recognised the
efforts made by businesses who go beyond minimum
requirements and demonstrate effective corporate
governance, ensuring engagement with all stakeholders, the
maintenance of key governance topics and effective
integration of ESG responsibilities.
We are proud of the work we have done and continue to do
to enhance our corporate governance to support our
business strategy and medium to long-term goals in a
meaningful way. Our commitment to continuing to evolve in
these matters brings excitement for our future.
Lucy Penfold (Group General Counsel & Company Secretary - third
from right) and Kirsten Motyl (Senior ESG Officer - fourth from right)
collecting the AIM Corporate Governance Award 2022 on behalf of
the Group
Our Group Board members have extensive experience and
are professionally active in roles other than at The Pebble
Group. They are provided with a regular ‘Boardroom
Briefing’ covering a range of corporate governance issues,
such as: reports on corporate culture; recent cases on
directors and their responsibilities; and updates on
executive remuneration, ESG or climate related issues and
disclosure requirements. The Group Board is also given the
opportunity to keep in touch with relevant developments
through appropriate seminars and formal external training
courses to ensure the continued development of
knowledge, skill and capability.
Our Values in action:
Enjoying the
journey
In 2022, the Group Board attended the Facilisgroup Partner
Summit and Supplier Showcase in person in the US, where
the Directors spent time over four days with the team, its
Partners and Preferred Suppliers. This was an opportunity
for the Group Board to develop a deeper knowledge and
understanding of the Group’s businesses and the industry in
which they operate.
As a Board we aim to lead by example, to be authentic,
to embrace our values and to create an open and honest
environment, because we believe this establishes and
evolves effective risk management and decision-making at
all levels of our organisation. The Group Board sees this as a
key differentiator and has observed how this serves to build
trust with our clients and suppliers and allows us to retain
high-performing staff.
In adhering to these principles, the Company has applied
the Corporate Governance Code for Small and Mid-Size
Quoted Companies 2018 published by the Quoted
Companies Alliance (the ‘QCA Code’) and I believe that we
are in full compliance with this, which serves to mitigate and
minimise risk and add value to our businesses.
This section of the Annual Report outlines how we have
applied the principles of the QCA code during the year and
we take this opportunity to share with you the initiatives
and activities that took place during 2022 to ensure a strong
and open dialogue with our shareholders, particularly
around how the Company is performing, to ensure that the
Group Board remains a well-functioning and balanced team
with the right skillset, and to enhance our governance
structures to ensure that they remain fit for purpose and
support good decision-making.
We will continue to review and update our governance
framework and our approach as the Company continues to
grow and will update the Corporate Governance statement
in the AIM rule 26 section of the Company’s website.
Additional information is contained in our Section 172(1)
statement on pages 22-25.
Richard Law
Chair
21 March 2023
57
The Pebble Group plc Annual Report 2022 Our Governance Structure
The Group Board
Structure and composition
The Chair of the Group Board is separate to, and
independent of, the Chief Executive and each has clearly
defined responsibilities. These, along with the terms of
reference for all of the Committees of the Group Board, can
be found in the Investors section of the Company’s website.
The Group Board comprises of five Directors:
GROUP BOARD COMPOSITION
2
1
2
Executive
Independent
Non-executive
Independent
Non-executive
Chair
2 x Executive Directors
3 x Independent
Non-executive Directors
Christopher Lee (Group CEO)
Richard Law (Chair)
Claire Thomson (Group CFO)
Yvonne Monaghan (Senior
Independent Director)
Stuart Warriner
The Group Board believes that this combination ensures a
clear balance of responsibilities between the executive and
the non-executive functions, that no individual (or small
group of individuals) can dominate the Group Board’s
decision-making and that independent challenge is offered
in the process of decision-making.
Board decisions are also supported by independent third
party advice and challenge, where relevant. For example, by
the involvement of our NOMAD, broker and Executive
remuneration consultants.
The Group Board has a good gender balance as it comprises
of three male and two female Directors. In addition, its
extensive range of skills and experience supports delivery of
the Group’s strategy for the benefit of shareholders over
the medium to long-term. Further details can be found in
the biographies on pages 74-75.
58
Both the Chair and Senior Independent Director are
available to speak with shareholders to discuss governance
or any other topic related to the Group that is important to
them. You can send a meeting request to:
investors@thepebblegroup.com to arrange this.
Engagement with the business and teams
The entire Group Board attended the Facilisgroup Partner
Summit and Supplier Showcase in the US in June 2022
where all of the Directors spent time with the Facilisgroup
Operating Board and broader team, its key Partners and its
Preferred Suppliers. Our Directors also had the opportunity
to participate in workshops led by employees, with Partners
on subjects such as client experience, supplier
partnerships, culture, marketing and emerging trends, and
also attended presentations on technology and ESG.
Our Executive Directors’ have regular engagement with the
business and contact/dialogue with the teams and other
key stakeholders. During the year, this included:
• CEO meeting key clients as part of relationship
management on site at Brand Addition
• CEO participation in Brand Addition key client pitch and
client pricing meetings
• CEO attendance at Brand Addition hosted key supplier
event
• CEO involvement in analysis of Facilisgroup Partner survey
results
• CEO attendance at Facilisgroup Partner meetings to
receive first hand Commercio feedback
• CFO approval of all key legal agreements within Brand
Addition
• Executive Directors involvement in Facilisgroup Partner
pricing strategy setting
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 In addition, the Chair spent time with Brand Addition and
Facilisgroup teams in both the UK and US to ensure direct
engagement on key areas.
Board Agenda
Throughout the year, the Board covered a broad range of
topics to ensure that it reviewed and challenged matters of
importance to our stakeholders. In setting the annual
agenda, the Board considered the required number of
Board meetings and the appropriate balance between
strategy setting, financial and operational execution and
governance. The following was felt to create an appropriate
balance:
Standing agenda items at each meeting:
• Minutes/matters arising/minutes for noting
• CEO business trading and operational update
• CEO corporate activities update, including on investor
relations activity
• CFO financial performance update
• Health, safety and well-being report
Additional matters covered during the year:
• Preliminary Announcement, Annual Report and Interim
Report and related work, for example going concern
• ESG report approval
• Annual Strategy setting meeting (to include ESG strategy)
• Half-year strategy review (to include ESG)
• Modern Slavery Statement approval
• Biannual risk register and related work, for example on
internal controls
• AGM matters for example reappointment of auditors and
Directors for re-election
• Annual review of risk and control processes around crisis
management and IT/cyber security
• Board effectiveness review
• Succession planning
• Budget approval
• Group policies approval
• Group insurance approval
• Matters reserved and Committee terms of reference
approval
In 2023, a new Group Board standing agenda item has been
added on, unlocking and delivering shareholder value.
Attendance
Our Group General Counsel and Company Secretary
attends all meetings from a governance perspective and our
Group Financial Controller also attends from a finance
perspective, along with our Senior ESG Officer attending
biannually to present on ESG strategy and provide updates
to the Board.
To facilitate contact between the Board and the business,
members of each business, including each Divisional Lead,
attended meetings and/or presented to the Board during
the year on key topics of interest.
Our nominated advisor (NOMAD) presents to the Board
annually to provide a training update on directors’ duties,
AIM Rules and Market Abuse Regulation.
Our broker attended and presented an overview of market
sentiment and activity and to provide feedback to the
Board on Company analysis.
Operating Boards and Group Executive
Committee
Structure and composition
Each Group business has an established Operating Board
which meets monthly with its own standing agenda that
includes business updates from the heads of all key functions
and risk monitoring. Each Operating Board is led by a
Divisional Lead, being Ashley McCune (President, Facilisgroup)
and Karl Whiteside (Group MD, Brand Addition). For further
details please see their biographies on page 76.
Each Divisional Lead together with other key members of
their Operating Boards formally report to the Group CEO
on trading and performance during Executive Monthly
Meetings, and also through the Divisional Lead’s
membership of the Group Executive Committee.
In 2022, the Group Executive Committee was made up of
the Executive Directors of the Company, the Divisional Lead
for each of Facilisgroup and Brand Addition, the Group
Financial Controller, the Group Senior ESG Officer and the
Group General Counsel and Company Secretary. In 2023,
a new Group Head of Tax joined the Committee. It meets
frequently, has its own terms of reference in place and a
standing agenda to include:
• Minutes/matters arising
• Business updates
• Planned reporting dates and key messages
• Key financials and other deliverables
• Risk management and compliance
59
The Pebble Group plc Annual Report 2022 Our Governance Structure
• ESG updates, which in 2022 covered topics such as
climate risk assessment, Global Reporting Initiative (GRI)
alignment, Gaia ESG Scoring, succession planning, share
dealing procedures, and whistleblowing.
In 2023, feedback from last Group Board/Committee
meeting(s) has been added as a new Group Executive
Committee standing agenda item.
The Committee facilitates the flow of information
throughout the Group to ensure the alignment of culture,
business ethics and standards and consistent good
governance across divisions to deliver value for
shareholders as a whole over the medium to long-term.
Our Governance Structure
Chair of Group Board - Richard Law
Group Board - The Pebble Group plc
Audit
Committee
Remuneration
Committee
Nomination
Committee
CEO
Chris Lee
Facilisgroup
Executive Monthly
Meeting
Group Executive
Committee
Brand Addition
Executive Monthly
Meeting
Divisional Lead
Ashley McCune
Divisional Lead
Karl Whiteside
Operating Board
Facilisgroup
Operating Board
Brand Addition
Environmental, Social, and Governance
Risk and Compliance
Diversity, Equity & Inclusion
60
The Operating Boards typically meet prior to the Group
Executive Committee meetings, which is before the Group
Board meetings. This enables the Executive Directors to
provide the most up to date information possible to the
Group Board.
ESG governance
The Group Board sets and approves Group ESG strategy
and reviews and approves the Group’s ESG report prior to
publication, following consultation with the Group Senior
ESG Officer and Group General Counsel and Company
Secretary. The Group Board reviews progress against ESG
strategy every six months as part of the Group Board’s
strategy review meeting.
The Group Executive Committee includes an ESG update as
a monthly standing agenda item and ensures regular
communication and discussion of ESG strategy and progress
with the Divisional Leads and other members of the
Committee.
Each Operating Board, led by their Divisional Leads,
is responsible for the implementation of the ESG strategy.
Each business has flexibility to develop its own ESG focus,
policies and initiatives, defining their own objectives.
The Senior ESG Officer holds meetings with each business
every two months as a minimum to discuss progress against
agreed non-financial objectives related to energy usage,
carbon emissions and roll-out, training and adherence
to polices.
Through this governance structure, the Group Board
perpetuates an open, honest environment and its view of
the right ethical culture, to drive effective risk management,
governance practices and processes and effective decision-
making at all levels of the Group.
Group Board Committees
The Audit Committee
The Audit Committee, chaired by Yvonne Monaghan, has
primary responsibility for monitoring the integrity of the
financial statements of the Group and the scope, adequacy
and effectiveness of the Group’s internal financial controls
and internal control and risk management systems. This is to
ensure that the financial performance and prospects of the
Group are properly measured and reported on. The Audit
Committee receives reports from the Group’s management
and external auditors, PricewaterhouseCoopers LLP (PwC),
relating to the annual accounts and the accounting and
internal control environment in operation throughout the
Group. The Audit Committee determines and reviews the
Group’s risk profile, including the nature and extent of
significant risks that the Group is willing to take in achieving
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 necessary, external selection consultants in support of this
responsibility. The Nomination Committee reports to the
Group Board on all these matters and typically meets three
times in each financial year. Yvonne Monaghan and Stuart
Warriner are the other members of the Nomination
Committee. Further information can be found in the
Nomination Committee Report on pages 62-64.
its strategic objectives. Additional information on risk profile
can be found on pages 51-55. The Audit Committee also
provides channels of communication between the external
auditors and the Non-executive Directors. It reviews the
performance of the external auditors and makes
recommendations to the Group Board in relation to their
reappointment. The Audit Committee reports to the Group
Board on all these matters and typically meets three times in
each financial year. Richard Law and Stuart Warriner are the
other members of the Audit Committee. Further information
can be found in the Audit Committee Report on pages 77-80.
The Remuneration Committee
The Remuneration Committee, chaired by Stuart Warriner,
has primary responsibility to determine the total individual
remuneration packages of the Executive Directors to ensure
that they are, in a fair and responsible manner, rewarded for
their individual contributions to the Group’s overall
performance. The Remuneration Committee also monitors
and makes recommendations to the Group Board on the
level and structure of senior executive’s remuneration. The
Remuneration Committee will retain, as necessary, external
remuneration consultants in support of its responsibilities.
The Remuneration Committee reports to the Group Board
on all these matters and will meet as and when necessary,
but typically four times in each financial year. In exercising
this role, the members of the Remuneration Committee
have regard to QCA Code recommendations and, where
appropriate, the QCA Remuneration Committee Guide. The
remuneration of Non-executive Directors is a matter for the
Chair and the Executive Directors and no director shall be
involved in any decisions as to his or her own remuneration.
Richard Law and Yvonne Monaghan are the other members
of the Remuneration Committee. Further information can
be found in the Remuneration Committee Report on
pages 81-89.
The Nomination Committee
The Nomination Committee chaired by Richard Law has
responsibility to identify and nominate for the approval of
the Board, candidates to fill Board vacancies as and when
they arise. In respect of new appointments, the Committee
will undertake an evaluation of the balance of skills,
experience, independence and knowledge on the existing
Board and, in light of this evaluation prepare a detailed
description of the role, candidate profile and capabilities
required for the particular appointment. There were no
Board vacancies in 2022. The Committee also reviews the
structure, size, diversity and composition of the Board and
makes recommendations concerning the annual
reappointment of Directors and identification and
nomination of new Directors. The Committee will retain, as
61
The Pebble Group plc Annual Report 2022 Nomination Committee Report
Ensuring a high performing
Group Board.
Dear Shareholder,
I am pleased to present our first standalone Nomination
Committee Report for the year ended 31 December 2022.
Composition and experience of the Nomination
Committee
I am Chair of the Committee which is made up of all three
independent Non-executive Directors (Stuart Warriner,
Yvonne Monaghan and myself) and is supported by Lucy
Penfold as Company Secretary. The Committee meets three
times per year and the meetings are attended by the CEO
and CFO. In 2022 all three meetings had full Committee
attendance.
Responsibilities of the Nomination Committee
Throughout the year, the Committee continued to fulfil its
duties, as applicable, on behalf of the Group Board. It has
an established, structured agenda and the responsibilities of
the Committee are defined by the terms of reference
which can be viewed on the Company’s website. These
include primary responsibility for:
• leading the process for board appointments as and when
they arise and making recommendations to the Group
Board;
• leading on, and being responsible for, the Group’s diversity,
equity and inclusion (DEI) policy, objectives and strategies;
• regular review of the structure, size and composition
(including diversity and the skills, knowledge and
experience) required of the Group Board;
• oversight of succession planning for the Group Board and
senior executives;
• identifying, and nominating for the approval of the Group
Board, candidates to fill Group Board vacancies as and
when they arise;
• before an appointment is made by the Board, evaluating
the diversity, balance of skills, knowledge, experience
(including experience of the AIM Rules for Companies
and/or previous experience of listed companies if
appropriate) and independence on the Board; and
• reviewing annually the time required from Non-executive
Directors.
The Nomination Committee reports to the Group Board on
all these matters.
Richard Law
Nomination Committee Chair
Independent Non-executive Director
62
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Evaluation of the effectiveness of the Nomination
Committee
To ensure that it is operating at maximum effectiveness,
the Committee used output from the formal Group Board
Effectiveness review detailed on page 71 to review and
evaluate its own performance and constitution during
Q4 22. It concluded that the Committee was operating
effectively, and no action or changes were required to be
recommended to the Group Board. The annual review of
the Committee’s Terms of Reference resulted in the
amendment of the terms to formally add responsibility for
the Group’s DEI policy, objectives and strategies. Updated
terms of reference were approved by the Group Board and
are available on the Company’s website.
I am pleased with the progress made over 2022 in all
Committee matters, as follows:
(i) Succession planning and internal talent
management
• Further development of a formal approach and addition of
‘in case of emergency’ cover for each role, alongside
permanent successors
• Ensuring that succession plans were being developed and
maintained
• Reviewing implementation status and making
recommendations for prioritisation and greater emphasis
during 2023, including internal activity aimed at cultivating
a diverse talent pipeline of future leaders; and external
activity around active networking and investing in
relationships with organisations and recruiters with shared
DEI objectives and approach
The Committee satisfied itself that initial stage succession
plans were in place at Operating Board level, in addition to
Group Board and Group senior management. It further
ensured that development programmes and/or coaching for
key Group Senior Executives, remained on the agenda.
(ii) Non-executive Director Skills Matrix
• Evolution of the matrix to show existing and
forward-looking skills coverage at a more granular level
and in more areas on the technology front
This highlighted a potential need for specific technical skills
around ‘Digital technologies and SaaS’ at Board level and
instigated further activity in this area, to assess the need in
more detail and possible actions with external advisors.
(iii) Board Appointment Process
• Minor updates to documented formal Board Appointment
Process
The Committee satisfied itself that the process remained
rigorous and transparent and was designed to work
hand-in-hand with the Group’s DEI policy. In Q1 2023, upon
the Committee’s recommendation, an equivalent process
was documented for Group Senior Executives and
Operating Board level.
(iv) Review of Board Structure, Size, Diversity and
Composition
• Oversight of engagement of short-term Board technology
consultant
• ‘Needs Analysis’ conducted by Committee Chair to seek
stakeholder input on low ‘technical’ skills coverage around
‘Digital technologies and SaaS’ as identified by the
Non-executive Director Skills Matrix
(v) Group Board Effectiveness Review
• Assessment of how the formal review could be developed
or improved
• On process – consideration of options, concluding that the
current process remained appropriate and effective given
the size, nature and complexity of the Board
• On assessment criteria – evaluation of sufficient linkage
with the Group’s needs and objectives and coverage of
stakeholder interests, concluding that the current
assessment evaluation topics and criteria reflected the
right priorities and areas of stakeholder interest
The Committee satisfied itself that the current review format
remained fit for purpose and initiated the review to
commence in Q4 2022. Please see page 71 for further details.
(vi) Non-executive Director re-appointment – The
initial three-year term for each Non-executive Director
expired November 2022.
• Consideration of the independence of character and
judgement of each Non-executive Director
• Review of performance of each Non-executive Director,
having regard to the Skills Matrix and skills required
generally
• Consideration of potential conflicts of interest, external
appointments and time availability, together with possible
‘overboarding’ issues
63
The Pebble Group plc Annual Report 2022 Nomination Committee Report
The Group Board considered the DEI Review by the
Nomination Committee and noted that this, together with
the Board discussion on diversity as part of the Board
Effectiveness Review, amounted to a retrospective look back
over the preceding 12 months to consider how commitment
to DEI had advanced. This resulted in positive steps to
advance DEI further over the coming years being agreed.
(viii) Annual review of Membership of all
Committees / Effectiveness of Committee’s
performance / Terms of Reference
• Review of Group Board and Committee membership and
time requirements of Non-executive Directors. No action
was recommended to the Board
• Review of the Committee’s own performance over 2022
noting high scores in Board Effectiveness Review around
its constitution, performance of its delegated role, and
reporting to Board. No action was recommended to the
Board
• Updates to the Committee’s Terms of Reference to
include reference to DEI oversight and recommendation
to the Board for re-approval
(ix) All Directors to stand for re-election at 2023
AGM
During Q1 23 the Nomination Committee recommended to
the Group Board that all Directors should seek re-election
by the Group’s shareholders at the 2023 AGM.
Richard Law
Chair of the Nomination Committee
21 March 2023
The Committee satisfied itself that each Non-executive
Director remained independent and continued to make an
effective and valuable contribution to the Board,
demonstrate a strong commitment to their role and the
Board, and to the long-term success of the Company. The
Committee recommended to the Board for approval that all
be re-appointed as a Non-executive Director for a further
three-year term. Each Committee member disclosed their
interest in their own evaluation and abstained from
discussion and decision-making in that regard.
(vii) Diversity, Equity and Inclusion Review
• Chair met with DEI Sponsor for each business
• Minor updates and re-adoption of Group DEI Policy
• Annual DEI review covering the Policy’s implementation
and progress on DEI initiatives over 2022, considering
alignment with succession planning, impact since
introduction and indications of desire to embrace diversity
in recognition of the correlation between diversity and
business performance
• Review of how diversity in the Group would continue to
improve
• Decision to seek external advice on measuring diversity
levels and existing minority groups in the context of a
global business, seen as important to ensure internal
confidence in approach, to demonstrate robustness in
reported status, and to enable accurate tracking of
progress on improving diversity in the future
• Decision to engage external governance consultants to
obtain validation of the Group’s DEI strategy and
approach, seeking a tangible DEI action plan with a view to
working towards a quality accreditation mark. Please see
page 38 for further details
The Committee concluded that the Policy continued to
reflect the Group’s approach to DEI in practice.
It acknowledged that change takes time, but activity to date
and close alignment in thinking around succession planning
with DEI, was a positive step. The Committee concluded
that the 2023 priority area for focus was to continue to
promote and achieve ethnic diversity in the Group.
64
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Key Governance Policies
To foster high standards of conduct, ethics and compliance, the Group has
developed a number of key governance policies which are focused upon the
Group Board’s areas of priority.
We have developed Group policies to provide consistency
across our businesses and to cascade down from the Group
Board a shared understanding of the tone and standards
expected from everyone on ethical behaviour and
responsible business practices.
Our policies consider:
• Our legal and regulatory obligations
• Our QCA Code governance obligations
• Best practice recommended by advisors /commentators
• How best to reflect our own businesses and be relevant
and meaningful to all employees
Policies are reviewed and re-approved annually to ensure
alignment with current laws and best practice.
During the year, the team developed and evolved its
governance policy framework further, as follows:
Group Framework on Conduct, Ethics and
Compliance
Approval and adoption of a new Group Framework which is
an umbrella document to cover all Group conduct, ethics
and compliance priorities, and include links to all Group
Policies in one place.
New Group Policies
Approval and adoption of new Group Policies, sitting under
the Framework, as follows:
a) Group Environmental and Climate Change Policy
b) Group Health, Safety and Well-being Policy
c) Group Labour Standards and Human Rights Policy
d) Group Data Protection Policy
e) Group Anti-facilitation of Tax Evasion Policy
Each have the aim of ensuring that, when implemented,
they work and resonate well with everyone across the
Group’s businesses and add value.
In addition, the following policies were reviewed and
re-approved, with amendment where necessary, to ensure
that they remained up to date, consistent with other Group
Policies and fit for purpose:
Anti-bribery and corruption policy
The zero-tolerance approach to bribery and corruption
outlined in this policy reflects the Group’s commitment to
act honestly, professionally, fairly and with integrity in all
business dealings and relationships. This policy is designed
to ensure adherence to the provisions of the Bribery Act
2010 and to take account of “Business Principles for
Countering Bribery” published by Transparency
International. This also covers corporate gifts and
hospitality, and appropriate business ethics. Compliance
with this policy is confirmed annually by the Group’s
management teams.
Whistleblowing policy
This policy supports and encourages employees and
stakeholders to raise issues or concerns in respect of
conduct within the organisation that could fall below
expected standards without fear of recrimination,
victimisation, or suffering a disadvantage of any kind.
It reflects the Group’s commitment to high standards of
honesty, openness, integrity and accountability. This policy
promotes a culture of openness and ensures that everyone
knows how to raise a concern.
During 2022, work was undertaken to enhance our
whistleblowing portal, and to promote the policy and
platform to employees and to the Group’s suppliers to
ensure awareness of it and its intended use.
COMPLIANCE – MORE THAN JUST A SET OF RULES
PAYATTENTION
WHISTLE BLOWING PORTAL
SPEAK UP!
We commit to high standards of honesty,
openness, integrity and accountability.
You are encouraged to raise any issues or concerns you may have
in relation to your role or any activities within our company.
Please do not hesitate to speak up and report any suspicion you
may have of inappropriate, unethical or illegal behaviour.
Our Group’s confi dential Whistleblowing Portal is available to
you if you wish to register a concern anonymously.
https://thepebblegroup.eqs-integrity.org
65
The Pebble Group plc Annual Report 2022 Key Governance Policies
Anti-slavery and human trafficking policy
This policy outlines the responsibilities of our businesses to
implement and enforce effective systems and controls, to
ensure that modern slavery is not taking place anywhere in
our own businesses or in any of our businesses’ supply chains.
This reflects the Group’s zero-tolerance approach to modern
slavery, exploitation and violation of fundamental human
rights. Adherence to these principles is addressed through
staff induction, ongoing training and communications.
Suppliers are required to comply with our policies on these
matters with compliance enforced through robust vendor
audits, supplier visits and ongoing training.
Group wide dealing policy and share dealing code
These policies are designed to ensure that Directors and
employees do not misuse, or place themselves under
suspicion of misusing, information about the Group which is
not public and they support compliance with the applicable
regulatory framework on market abuse.
During 2022, work was completed to enhance
communication around this policy and to introduce a new
reminder process that ensures a current and clear
understanding of the principals of the policy and its
requirements in the minds of our ‘Code Employees’ and
‘PDMRs’.
Diversity Equity & Inclusion (‘DEI’) Policy
As part of the annual DEI Review conducted by the
Nomination Committee, an updated DEI Policy to
standardise and ensure consistency with other Group
policies was reviewed and approved. For more detail please
see page 64.
Responsibilities
Each policy notes which Director of the Board has primary
responsibility for establishing and maintaining proportionate
and effective policies and processes for that area. It also
states that, ultimately, the Group Board has overall
responsibility for ensuring that the policy complies with legal
and ethical obligations, and that it is complied with.
The Group Executive Committee is responsible for
reviewing policies prior to passing up to Group Committee
level (as appropriate), then to Group Board, for approval.
The Group Executive Committee also communicates down
all finalised policies to the senior executives to ensure
consistent messaging and the Divisional Leads are
responsible for implementing the policies, as appropriate
for their business.
Overseeing compliance priorities
Group Board
l Group GC and Co Sec
l Group CEO/Group CFO
l Group Senior ESG Officer and Data Protection Officer
Audit
Committee
Nomination
Committee
Group Executive Committee
Brand Addition
Divisional Lead
Fascilisgroup
Divisional Lead
Group Values
Framework on Conduct, Ethics and
Compliance
Group Policies
Whistleblowing
Our Priorities
66
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Corporate governance statement
Delivering long-term growth.
The Directors believe that the QCA Code which sets out best practice corporate
governance arrangements for small and mid‑sized quoted companies, particularly
those on AIM, remains most appropriate for the Company.
This section of the Annual Report outlines how we have applied the ten principles of the QCA Code
during the year.
Principle 1:
Establish a strategy and
business model which
promotes long-term value
for shareholders.
Principle 2:
Seek to understand and
meet shareholder needs
and expectations.
Commentary
The Group Board has a clear strategy for delivering
shareholder value in the medium to long-term. The Chair and
CEO work closely to ensure the message and direction is
strong and understood.
The Group Board held its annual strategy event over two
days in October 2022 to discuss its ongoing vision for the
Group, its direction and strategic priorities. The output
focused on:
• competition, new business and technology
• driving increased growth and scale
• our people and team structures
• our advisers
• investor relations strategy
• risk management
• succession planning
• accelerating our long-term growth aspirations
Cross-reference
to detail
The Company’s
business model and
strategy are
detailed in the
following sections of this
Report:
• the Group’s strategy on
page 17
• The Group’s vision on
page 4
• The Group’s business
model on pages 4-5
• The Chair’s report on
page 12
• The CEO’s review on
page 14
• Our strategy in action
on page 17
The Executive Directors have primary responsibility for
contact with shareholders and maintain an active and
frequent dialogue. They provide regular Group Board
updates on shareholder meetings and provide the Non-
executive Directors with all reports and feedback issued by
analysts and brokers to support their understanding of the
view of the Group by the investment community.
Throughout 2022 the Group has considerably increased
engagement with the investor community in a number of ways.
The Group Executive Committee discusses shareholder
needs and expectations in the context of upcoming market
announcements and other touchpoints at every monthly
meeting and reviews investor feedback received following
each of those touchpoints.
The 2023 AGM will repeat the arrangements established in
2021 to ensure maximum opportunity for shareholder
engagement in that forum by enabling shareholders to view
the meeting via a live webcast and participate via live Q&A
functionality.
Should you wish to request a meeting or submit a question,
please contact investors@thepebblegroup.com.
Investor
presentations can
be found on the
Company’s website.
How we have
increased
engagement with
shareholders is
detailed in the
Stakeholder engagement
section of this report on
page 21 and also outlined
as a key initiative for
2022 in our Section 172(1)
statement on page 23.
67
The Pebble Group plc Annual Report 2022 Corporate governance statement
Principle 3:
Take into account wider
stakeholder and social
responsibilities and their
implications for
long-term success.
Our values identify the importance of all our stakeholders
and our commitment to social responsibilities,
demonstrating how integral these matters are to the
Group’s culture.
The Group invests in and works consistently to develop and
strengthen the relationships it has with all of its
stakeholders, to understand their needs and requirements.
The Group Board and its Committees have regard to
relevant stakeholder interests in all key decision making and
our report template prompts authors to outline the
consequences of each proposal on the long-term success
of the Company including (where relevant) the impact on
the Company’s wider social responsibilities.
Principle 4:
Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation.
The Group Board uses a considered approach to risk
management and acknowledges the need to accept a
certain level of strategic risk to achieve capital growth for
shareholders.
Risk management is embedded from the Group Board to
the Audit Committee, to the Group Executive Committee,
to the Operating Boards. There is an effective process for
identifying, assessing and managing risks in this framework
and risk registers are held and reviewed on a biannual basis
at Operating Company level, as well as at Group level. The
Audit Committee provides the assurance that the risk
management and related control systems in place are
effective.
Our values are on
page 1.
Information on how
our business model
identifies key resources
and relationships is
contained on pages 5-11.
How the Company
obtains stakeholder
feedback and the
output of that is in the
Stakeholder engagement
section of this report at
page 18-22.
Approach to wider
stakeholder and
social responsibilities is
set out in our
Section 172(1) statement
on page 22-25.
The risk
management
framework is explained,
together with details of
the key risks and
opportunities facing the
Group and related
mitigating actions to
manage these risks, on
pages 51-55.
The Audit
Committee report
on pages 77-80 explains
how it oversees the
effectiveness and
integrity of the internal
control systems.
68
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Principle 5:
Maintain the Board as a
well-functioning,
balanced team led by the
Chair.
Group Board
structure and
composition details are
on page 58.
Detailed
information on
Group Board and
Committee meeting
frequency can be found
in the Group Board of
Directors section on
pages 74 and 75.
For more detail on
Board Agenda
please see page 59.
For full details of
the Annual Group
Board Effectiveness
review 2022 results, see
Principle 7 below.
The Group Board has strong independent representation,
a good balance between the Executive and the
Non-executive Directors and a good gender balance.
Executive Directors dedicate a full-time commitment to the
Company. Non-executive Directors provided a strong time
commitment in 2022, allocating sufficient time to effectively
discharge their responsibilities. This included the
preparation for, attendance at, and dealing with actions
arising from all Group Board and Committee meetings,
which had full attendance.
The Chair and Company Secretary keep Group Board
processes under review to develop and formalise, including
conducting detailed annual planning and agenda setting. This
results in the Group Board and its Committees receiving high
quality, accurate and timely information on a regular basis.
The 2022 Annual Group Board Effectiveness review
highlighted the following as particular areas of strength,
which the Board concluded were an indication that the
Directors were operating very effectively and performing to
a high standard as a unit, in Committees, and also
individually as Directors:
• Board members attendance and active contribution at
meetings
• Independence of character and judgement of Board
members
• Time commitment of Non-executive Directors
• Role of Chair and Role of Senior Independent Director
• Executive Directors and Company Secretary performance
69
The Pebble Group plc Annual Report 2022 Corporate governance statement
Principle 6:
Ensure that between
them the Directors have
the necessary up-to-date
experience, skills and
capabilities.
70
All Directors are professionally active. Each has demonstrated
that they possess the appropriate skills, capabilities and
experience for the roles they perform, including as members of
the Group Board and its Committees. Group Board experience
is extensive and varied, and the mix of personal qualities
(including gender balance) contributes to the Group Board’s
ability as a whole to deliver the Company’s strategic objectives.
The skills and experience of the Group Board are reviewed
annually through use of a forward-looking skills matrix to
ensure that the Board is sufficiently resourced to discharge
its governance obligations on behalf of all stakeholders. The
review in 2022 highlighted a potential need for specific
technical skills around ‘Digital technologies and SaaS’ at
Board level and instigated further activity in this area,
including a ‘Needs Analysis’ to assess the need in more detail
and possible actions with external advisors.
The 2022 Group Board effectiveness review assessed the
performance of the individual Directors and found no issues,
highlighting knowledge and experience of capital market rules
and understanding of obligations of a quoted company as a
particular strength. Further, all Directors were re-elected at
the 2022 AGM and it is the Company’s intention to continue
to subject all Directors to re-election annually.
A Director performance evaluation by the Nomination
Committee in both Q4 22 and Q1 23 concluded that each
Director continued to make an effective and valuable
contribution to the Group Board, and that each Director
demonstrated a strong commitment to their role and to the
long-term success of the Company.
The Company Secretary acts as adviser to the Chair and the
Group Board, with responsibility for ensuring effective Group
Board processes are followed. Monthly ‘Boardroom Briefings’
are circulated to update Directors on topical issues, such as:
corporate culture; Directors and their responsibilities;
executive remuneration, ESG or climate related issues and
disclosure requirements.
The Company’s external auditors, PwC, provides regulatory
updates and briefings to the Group Board twice per year on
relevant corporate reporting developments or similar ‘hot
topics’ for the year under review.
The Company’s NOMAD provides annual Group Board training
and a briefing pack on the AIM Rules, Market Abuse
Regulation, managing price sensitive information and other
regulatory updates.
The Group Board is given the opportunity to keep in touch
with relevant developments through appropriate seminars
and formal external training courses facilitated by the
Company Secretary to ensure continued development of
knowledge, skill and capability.
Fostering a culture of continuous improvement is important
to the Chair, who participated in a series of coaching
sessions at the Company’s expense during 2022, as part of
his own commitment to continued professional development.
The Group Board and Committees use professional advisors
at the Company’s expense when considered necessary.
Director’s skills and
experience are
detailed on pages 74 and
75 and also on the
Company’s website.
Information on how
the Nomination
Committee actively
reviewed Group Board
structure, size and
composition in 2022,
is on page 63.
For full details of
the results of the
2022 Annual Group
Board Effectiveness
review, see Principle 7
below.
For full details of
the Director
performance evaluation
conducted by the
Nomination Committee
in Q4 2022 and Q1 23,
see page 71.
The use of
professional
adviser services
has been set out in the
reports of each of the
Group Board’s
Committees contained
in this Report, where
applicable.
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 • On Board diversity, a lower score
reflected the absence of ethnic
diversity on the Board and need to
develop a more specific action plan,
with measurable targets for achieving
increased diversity. It was agreed
that an external consultant be
engaged to carry out an in-depth
exercise, provide external validation
of the Group’s DEI policy and
approach, and produce a practical
action plan
Details of plans in place to work with an
external DEI consultant are on page 38.
Progress against previous
recommendations
The Group Board has addressed the
areas for development identified in the
2021 performance review as outlined
in the Company’s 2021 Annual Report.
In particular:
• During the year, the Chair attended
five one-to-one virtual investor
meetings on approach, values and
principles in relation to governance
• Enhanced ESG resource was added
to Brand Addition in the form of
further investment into its
sustainability team and the hire of
three sustainability product managers
Principle 7:
Evaluate Board
performance based on
clear and relevant
objectives, seeking
continuous improvement.
The Nomination Committee reviews
the Group Board effectiveness
process annually to enhance and
improve the exercise. The process
followed in 2022 was as per the above,
which was considered to remain
fit-for-purpose given the size, nature
and complexity of the Group Board
and its Committees, current stability of
composition and governance maturity.
The Group Board, led by the Chair,
fosters a culture of continuous
improvement to maximise the
effectiveness of board practices.
It performs an annual formal
assessment of the effectiveness of the
Group Board and its performance as a
unit as well as that of its Committees
and the individual Directors.
The process is conducted internally by
the Group Board and not on an
anonymous basis, to reflect the open
culture and nature of the Group
Board:
• The Chair of the Group Board is
responsible for and leads the process
with assistance from the Company
Secretary to ensure that all Directors
are actively engaged
• Completion of a written
questionnaire by all Directors, covers
‘Composition and Process’ and
‘Behaviours and Activities’
• A written report from the Chair on
the results is tabled for full Board
discussion
• Directors’ evaluation of the results is
facilitated by the Company Secretary
• Actions are included and followed-up
as part of standard Group Board
process
Details of the Nomination Committee
update to its Group Board effectiveness
review criteria in 2022 (to ensure it remained
fit-for-purpose) is on page 63.
Results and recommendations of
the 2022 Review
Particular strengths highlighted
(not already mentioned in
principles above):
• Constitution and performance of
Board Committees
• The integrity of the financial controls
and systems of risk management,
being robust and resilient
• The Board’s demonstration of
stewardship through effective
communication with all of the
company’s stakeholders and taking
account of their interests
• Tone from the top and a performance
culture that drives value creation
without exposing the company to
excessive risk or value destruction
Recommendations:
• On Board mix of skills, experience
and knowledge, a lower score
reflected the Non-executive Director
skills matrix output, which had
highlighted the potential need for
specific technical skills around ‘Digital
technologies and SaaS’ at Board
level. Actions were agreed to take
steps to explore that further
Details of the Nomination Committee
update on the Non-executive Director
skills matrix review is on page 63.
71
The Pebble Group plc Annual Report 2022 Corporate governance statement
Principle 8:
Promote a corporate
culture that is based on
ethical values and
behaviours.
The Group’s values shape our culture,
define who we are, what we do and
how we act. We believe they
demonstrate our commitment to
ethical behaviour.
For details of our values please see
page 1.
For information on how the Company’s
culture is consistent with its objectives,
strategy and business model, please see pages
59-60 under Operating Boards and Group
Executive Committee.
The Group Board also monitors the
state of culture and employee
satisfaction at present by including
minutes of each Brand Addition
employee forum for noting at Group
Board meetings.
Information on monitoring compliance
with certain policies can be found in the
Audit Committee Report on pages 77-80.
The CEO in conjunction with the
Company Secretary or the Group
Senior ESG Officer is responsible for
reviewing the suitability, adequacy and
effectiveness of the policies and for
making improvements, as appropriate.
The Divisional Lead in each business is
responsible for ensuring the
implementation and communication of
policies and ensuring that any Group
policies are reflected in Brand
Addition’s and Facilisgroup’s respective
equivalent local policies.
The Group Board monitors and
promotes an ethical corporate culture
by having documented key governance
policies in place which are reviewed
and re-approved annually to ensure
that they remain up to date and
continue to reflect best practice. It is
extremely important to the Group
Board that policies or practices not
only align with best practice but are
designed in a meaningful way and fit
with our culture and way of working.
For details of the key governance policies
in place across the Group, and
enhancements during 2022, please see
pages 65-66.
Any non-compliance with policies is
reported by the Divisional Leads via
the Group Executive Committee to the
relevant Group Board Committee and
ultimately the Group Board for
monitoring on an ongoing basis.
Annual employee performance
evaluations within Brand Addition
assess alignment with and embodiment
of its core values, including ‘Do the
right thing’. Within Facilisgroup, 50%
of bonus to employees is earned
based on individual performance
which is aligned with embodiment of
core values. Employees that are not
aligned with core values can be
assigned a specific Performance
Improvement Plan and will not be paid
a bonus.
In October 2022, the Company
published its second ESG report in
which it set out its ESG strategy and
the framework which underpins its
approach to ESG.
During 2022, the Group has developed
and enhanced its governance polices
and processes, including adoption of a
new Group Framework on conduct,
ethics and compliance.
Our full ESG report is available in the
‘investors’ section of our website.
For more detail on the new Group
Framework please see page 65.
Our assessment of our principle risks and
uncertainties reflects our ethical culture
and balanced risk appetite. For details, please
see pages 51-55.
The policies assist in embedding a
culture of ethical behaviour for all
employees. In addition, we seek to
work with agents, contractors,
business partners and other third
parties who work with us or on our
behalf, who share our zero-tolerance
approach to certain activities (e.g.,
bribery and corruption), and we
expect them to behave consistently
with the provisions of our relevant
policies.
72
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Principle 9:
Maintain governance
structures and processes
that are fit for purpose
and support good
decision-making by the
Board.
The Group’s governance structures have evolved and
developed so that they fit naturally with our culture and way
of working. They will remain under review during 2023 and
will evolve where required in line with the Company’s
planned growth.
The role of each member of the Group Board is clearly
defined. The Chair is responsible for the operation of the
Group Board and for corporate governance within the
Group. The CEO is responsible for proposing the strategic
direction of the Group Board and implementing the strategy
once approved. The CFO is responsible for all financial
matters and engagement with shareholders.
The Group’s
governance
structures are explained
on pages 58-61.
More detail on the
Group Board roles
and responsibilities can
be found on the
corporate governance
section of the
Company’s website.
The Group Board reviews its formal schedule of matters
reserved for the Group Board and each Committee reviews
its terms of reference on an annual basis to ensure they
remain fit for purpose and support good decision-making.
The roles of the
Group Board’s
Committees are
described in detail on
pages 60-61.
The Group Board and its Committees operate within formal
processes and timetables facilitated by the Company
Secretary. Each meeting has an agenda, a Group Board
reporting template (with Section 172 guidance), appropriate
and timely information is circulated in good time prior to
each meeting, and meetings are planned to ensure that
appropriate time is allotted for open and in-depth
discussion. All actions arising are formally tracked, followed
up by the Company’s management and reported.
The Chair and Company Secretary keep Group Board
processes under review to develop and formalise, including
conducting detailed annual planning and agenda setting
which aligns with the terms of reference. This results in the
Group Board and its Committees receiving high quality,
accurate and timely information on a regular basis which
supports good decision-making by the Directors.
Principle 10:
Communicate how the
Company is governed and
is performing by
maintaining a dialogue
with shareholders and
other relevant stakeholders.
The detailed responses to the principles of the QCA Code in
this section of the Report, in conjunction with the related
information throughout this Report, communicates to
shareholders and other relevant stakeholders how the
Company is governed.
The enhanced investor relations activity during 2022
increased communication with investors on matters of
governance and performance.
In October 2022, the Company published its second ESG
report in which it set out its ESG strategy and the
framework which underpins its approach to ESG.
Shareholders and other relevant stakeholders are free to
engage in dialogue with the Company via
investors@thepebblegroup.com
The schedule of
matters reserved
for the Group Board
and each Committee’s
terms of reference can
be found on the
Company’s website.
For more detail on
Board Agenda,
please see page 59.
See the details
included at
Principle 2 above as to
how the Company
maintains an active
dialogue with its
shareholders on
Company performance
through a planned
programme of investor
relations.
For details on the
increased investor
relations activity during
2022, please see
page 23.
Our full ESG
report is available
in the ‘investors’
section of our website.
A range of Company
information is included
on the Company’s
website.
73
The Pebble Group plc Annual Report 2022 Board of Directors
Leading with experience.
KEY TO COMMITTEE MEMBERSHIP
A Audit Committee
R Remuneration Committee
N Nomination Committee
Committee Chair
74
Richard Law
Chair and Independent
Non-executive Director
Tenure
3 years 4 months
Experience
Richard has broad senior management and
Board experience of business, engineering,
corporate finance, technology and
governance spanning 40 years. Richard
retired as Chief Executive Officer of
AIM-quoted GB Group plc in 2017, having led
the company from a market capitalisation of
£5 million to £500 million. He then took up a
portfolio role investing in and chairing both
public and private companies. As well as
chairing The Pebble Group plc, Richard is
currently the Chairman of Vypr (a product
intelligence and performance accelerator)
and Chairman designate of SmartSearch
(a provider of online compliance solutions).
Skills brought to the Group Board
• Extensive financial expertise
• Extensive and diverse leadership experience
• Sound practical understanding of
corporate governance
• Deep appreciation of investor sentiment
• Strong understanding of ecommerce and
data solutions
External appointments
• Non-executive Director and Chairman at
Vypr Validation Technologies Limited
• Non-executive Director at Gudtouch Limited
• Chairman designate Smart Credit Limited
(t/a SmartSearch) – part time
Committee membership
A R N
Meetings attended in 2022
Board meetings and AGM
Audit Committee meetings
Remuneration Committee meetings
Nomination Committee meetings
9/9
3/3
4/4
3/3
Christopher (Chris) Lee
Chief Executive Officer (CEO)
Tenure
23 years
Experience
Chris led the private equity backed
management buyout of Brand Addition in
2012 and 2017 and the acquisitions of
Gateway CDI and Facilisgroup in 2016 and
2018 and the listing of The Pebble Group plc
onto AIM in 2019.
Skills brought to the Group Board
• Sound, proven leadership skills and a
considered strategic approach, developing
the Group’s capabilities for sustainable
growth
• Detailed understanding of the market and
sector with significant knowledge of
commercial, client and operational
matters
• Successful transaction and M&A
experience
• Client and supplier relationship
management, contracting and negotiations
• A thorough understanding of stakeholder
priorities including the development of the
senior executives and ESG issues
Committee Membership
• Group Executive Committee
Meetings attended in 2022
Board meetings and AGM
9/9
Group Executive Committee Meetings 9/9
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Claire Thomson
Chief Financial Officer (CFO)
Tenure
15 years
Experience
Claire has led the finance, banking, tax, legal
and compliance aspects of the businesses
which now comprise the Group for over
14 years. She took on the role of Chief
Financial Officer following the management
buyout in 2012. Claire is a qualified Chartered
Accountant and prior to joining the Group,
spent 11 years in audit at
PricewaterhouseCoopers, having joined in
1997. Claire has a BA Hons degree in English
and American Literature from the University
of Manchester.
Skills brought to the Group Board
• Extensive finance, financial reporting and
financial management expertise
• Sound, proven leadership skills
• Wide in-depth knowledge of each
business area
• Successful transaction and M&A
experience
• Significant experience of effective risk
management and internal controls
• Investor relations
External appointments
• Director at Cheadle Hulme School
Committee Membership
• Group Executive Committee
Yvonne Monaghan
Independent Non-executive
Director and Senior Independent
Director
Tenure
3 years 4 months
Experience
Yvonne has been the Chief Financial Officer
of Johnson Service Group PLC since 2007.
She played an important role in returning the
company to a growth strategy, managing a
number of acquisitions and disposals. She was
a Non-executive Director of NWF Group plc
from 2013 until she stepped down from this
role in September 2020.
Yvonne is a qualified Chartered Accountant
and spent five years in audit at Deloitte
Haskins & Sells, before joining Johnson Service
Group PLC in 1984. Yvonne has a BSc Honours
degree in Pharmacology and Physiology from
the University of Manchester.
Skills brought to the Group Board
• Extensive financial and financial reporting
expertise
• Sound practical understanding of
corporate governance
Stuart Warriner
Independent Non-executive
Director
Tenure
3 years 4 months
Experience
Stuart has extensive corporate finance
experience with a career in investment
banking and as a Corporate Finance Partner
at PricewaterhouseCoopers. Stuart has an
MA in Economics from the University of
Cambridge and is a qualified Chartered
Accountant.
Skills brought to the Group Board
• Expertise in M&A
• Track record in advising Boards including
on strategy and shareholder value
• Sound practical understanding of
corporate governance
External appointments
• Senior Advisor at Houlihan Lokey
• Non-executive Chair at Blue-I Holdings
Limited
• Non-executive Director of Lodestone
Oxford Limited
• Significant understanding of audit
processes, risk management and controls
Committee membership
A R N
• Deep appreciation of investor sentiment
External appointments
• Chief Financial Officer of Johnson Service
Group PLC
• Elected to the CBI North West Regional
Council with effect from 1 January 2021
Committee membership
A R N
Meetings attended in 2022
Board meetings and AGM
Meetings attended in 2022
Board meetings and AGM
9/9
Group Executive Committee meetings 9/9
Audit Committee meetings
Remuneration Committee meetings
Nomination Committee meetings
Meetings attended in 2022
Board meetings and AGM
Audit Committee meetings
Remuneration Committee meetings
Nomination Committee meetings
9/9
3/3
4/4
3/3
9/9
3/3
4/4
3/3
75
The Pebble Group plc Annual Report 2022 Senior Executives
Divisional Leads
Lucy Penfold
Group General Counsel and
Company Secretary
Tenure
2 years 3 months
Experience
Prior to joining The Pebble Group, Lucy had
13 years’ experience as in-house legal counsel
at AXA UK plc where she specialised in
corporate and commercial law and acted for
the group’s various UK subsidiaries, including
advising on a number of acquisitions, disposals,
re-organisations and corporate integrations.
Whilst at AXA UK, Lucy also gained experience
of company secretarial support, corporate
governance and risk management whilst in her
role as Assistant Company Secretary. Prior to
that, Lucy spent two years practicing
corporate law as an associate at law firm
Olswang LLP, where she also trained for
two years and qualified as a solicitor in 2005.
Lucy has a BA Hons degree in Accountancy &
Law from the University of Manchester.
Skills
• M&A, corporate law and group
re-organisation/integration
• Commercial contract, drafting and
negotiation
• Corporate governance
• Risk management
Committee membership
• Group Executive Committee
Ashley McCune
President, Facilisgroup
Karl Whiteside
Group MD, Brand Addition
Tenure
16 years
Tenure
5 years
Experience
Karl has led the US division of Brand
Addition since 2017. Prior to joining Brand
Addition, Karl led supply chain and logistics
teams throughout North America as well as
inside sales, sourcing, and billing teams for
Staples Promotional Products for 10 years.
Before joining the creative merchandise
industry, Karl spent time in National
Account Sales roles with Newell Brands and
Samsonite. Karl has a BS degree in
marketing from Truman State University.
Skills
• Business strategy planning and execution
• Operational and efficiency management
• Extensive industry and sector knowledge
• Executive leadership and mentoring
• Management of global teams
• Risk management and supply chain
strategy planning
Board and Committee membership
• Group Executive Committee
Experience
Ashley was appointed President of
Facilisgroup in January 2020, following the
acquisition by The Pebble Group in 2019.
Prior to that, she oversaw the finance,
operations and marketing aspects of the
business as a senior leader of Facilisgroup
for over 10 years. Ashley has 19 years of
experience in the promotional products
industry in both the distributor and
technology arenas. She has a business
degree from Southern Illinois University and
in 2022, she completed the Board of
Directors programme with Henley Business
School. Most recently, Ashley has been
inducted into the YPO, a worldwide
leadership committee of 29,000 chief
executives.
Skills
• Strong and extensive industry and sector
knowledge
• Business and senior team leadership
• Strategy development
• Operational management
• Partner relationship management
• Negotiations
• Organisational development
• Experience of organic growth
Board and Committee membership
• Group Executive Committee
Meetings attended in 2022
Group Executive Committee meetings 8/9
Meetings attended in 2022
Group Executive Committee meetings 9/9
Meetings attended in 2022
Group Executive Committee meetings 9/9
76
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Audit Committee report
Monitoring the quality of
internal controls.
Yvonne Monaghan
Audit Committee Chair
Independent Non-executive Director and
Senior Independent Director
Dear shareholder,
I am pleased to present the Audit Committee Report for
the year ended 31 December 2022.
Composition and experience of the Audit Committee
I am Chair of the Committee which is made up of all three
independent Non-executive Directors (Stuart Warriner,
Richard Law and myself) and is supported by Lucy Penfold
as Company Secretary. All three Non-executive Directors
are qualified chartered accountants, with considerable
business experience in senior financial and operational
roles, including knowledge of financial markets, as detailed
in the Group Board biographies on pages 74-75. All
members of the Committee are regarded as having recent
and relevant experience.
The Committee meets three times per year, including once
at the planning stage before the external audit and once
after the external audit at the reporting stage, to facilitate
discussions relating to the financial statements and internal
controls of the Group. The meetings are attended by the
CEO and CFO, as well as the external auditors, PwC. In 2022
all three meetings had full Committee attendance, and PwC
attended two of the three meetings. Additionally, the
Committee meets the external auditors at least once per
year without executive management present, to discuss the
auditors’ remit and any issues arising.
Responsibilities of the Audit Committee
Throughout the year, the Committee continued to fulfil its
duties on behalf of the Group Board. It has an established,
structured agenda closely aligned to the Group’s
reporting cycle.
The responsibilities of the Committee are defined by the
terms of reference which can be viewed on the Company’s
website. These include primary responsibility for:
• reviewing the effectiveness of the Group’s internal
controls, including review of the scope and adequacy of
the Group’s processes and controls in respect of
whistleblowing, anti-bribery and failure to prevent
tax evasion;
77
The Pebble Group plc Annual Report 2022 CORPORATE GOVERNANCE
Audit Committee report
• monitoring and reviewing the effectiveness of the Group’s
internal audit function;
• considering the review of material business risks, including
ESG and climate related risks and opportunities, and
reviewing internal control processes to identify and
monitor risks;
• monitoring the integrity of the Group’s financial statements
and the external announcements of the Group’s results,
including reviewing, and challenging where necessary,
significant financial reporting issues and judgements which
they contain;
The Audit Committee assesses whether suitable accounting
policies have been adopted and whether appropriate
estimates and judgements have been made by
management. The Committee also reviews accounting
papers prepared by management and reviews reports by
the external auditors. The specific areas reviewed by the
Committee during the year were:
• review of the capitalisation of software development
costs;
• appropriateness of the carrying value of goodwill,
intangibles and investments;
• advising on the clarity of disclosures and information
• review of the controls processes over purchase to
contained in the Annual Report and Interim Report and
giving an opinion to the Group Board on whether the
Annual Report and Interim Report are fair, balanced and
understandable;
payment and payroll;
• Alternative Performance Measures; and
• going concern assessment.
• ensuring consistency in application of, and compliance
with, applicable accounting standards; and
• overseeing the relationship with the external auditors
including recommending approval of their appointment
and approving their remuneration, reviewing their reports
and ensuring their independence is maintained.
The Audit Committee reports to the Group Board on all
these matters.
Evaluation of the effectiveness of the Audit
Committee
To ensure that it is operating at maximum effectiveness, the
Committee used output from the formal Group Board
Effectiveness review detailed on page 71 to review and
evaluate its own performance and constitution during
Q4 22. It concluded that the Committee was operating
effectively, and no action or changes were required to be
recommended to the Group Board. The annual review of
the Committee’s terms of reference resulted in the
amendment of the terms to extend the Committee’s duties
regarding business risk, to include the review of ESG and
climate related risks and opportunities. In addition, the
terms were amended to specifically refer to the review of
the Group’s systems and controls for the prevention of
facilitation of tax evasion. Updated terms of reference were
approved by the Group Board to include these
amendments and are available on the Company’s website.
Significant matters considered in relation to the
financial statements
At the request of the Group Board, the Audit Committee
considered whether the 2022 Annual Report was fair,
balanced and understandable and whether they provided
the necessary information for shareholders to assess the
Group’s performance, business model and strategy. The
Committee were satisfied that, taken as a whole, the 2022
Annual Report was fair, balanced and understandable.
Alternative Performance Measures (APM’s)
We refer to a number of APM’s throughout the Annual
Report. These are used by the Group 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 for determination of
Directors’ and senior team’s remuneration.
The Committee is aware that APM’s are non-IFRS measures.
APM’s used by the Group are as follows:
• 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
The Committee considers the APM’s, all of which exclude
the effect of non-recurring items or non-operating events,
provide useful information for Shareholders on the
underlying performance of the Group. The Committee is
satisfied that where APM’s are used, they are presented
with equal prominence to the statutory figures.
78
The Pebble Group plc Annual Report 2022 External audit
The Audit Committee has responsibility for the
recommendation for re-appointment and deciding the
remuneration of the Group’s external auditors and satisfying
itself that they maintain their independence regardless of
any non-audit work performed by them.
The Group has a formal policy in place in relation to the
engagement of the external auditors to supply non-audit
services, which ensures the Group is compliant with the
Financial Reporting Council’s (FRC) Ethical Standards. The
Group has adopted the FRC’s “Whitelist” of permitted
non-audit services, and in relation to the provision of such
services, the Audit Committee is responsible for approving all
non-audit services that are not deemed trivial. The Audit
Committee will apply judgement in making such decisions,
specifically in relation to threats to independence and
objectivity resulting from the provision of such services and
any safeguards in place to eliminate or reduce these threats.
The total fees payable to the Group’s external auditors in
respect of the year under review amount to £310,000 (FY
21: £210,500). No non-audit services were provided in FY 22
(FY 21: £nil).
One of the principal duties of the Audit Committee is to
make recommendations to the Group Board in relation to
the appointment of the external auditors. PwC has been the
Company’s external auditors for many years and in line with
best practice guidance as a listed plc is required to rotate
the Senior Statutory Auditors (audit engagement partner)
responsible for the Group and subsidiary audits every five
years. The Group’s current Senior Statutory Auditors were
identified as such in October 2020.
The respective responsibilities of the Directors and
external auditors in connection with the Group financial
statements are explained in the Statement of Directors’
Responsibilities on page 94 and the Auditors’ Reports on
pages 95-99.
Review of external auditors’ effectiveness
The Committee reviewed the external auditors’
performance and independence, by considering the
qualifications, expertise and resources of PwC and its
objectivity on an ongoing basis throughout the year. This
was done by considering the following:
-
-
the views of the Executive Directors;
responses from PwC to questions from the Committee;
-
-
the audit findings reported to the Committee, including
PwC’s report on internal quality procedures; and
the relationship with PwC as a whole, to confirm there
are no relationships between the external auditors and
the Company other than in the ordinary course of
business which could adversely affect independence and
objectivity.
The Group has in place a formal policy for the appointment
of former employees of the external auditors, which
requires written approval from the Chair, CFO and Head of
the Audit Committee, should the Group wish to hire any
employee who has been involved in the audit within the last
two years. No such appointments have been made during
the year.
Based on the reviews performed, the Committee is satisfied
that the external audit process has operated effectively,
and PwC continued to bring independence and prove
effective in its role as external auditors.
Internal control and risk management
As explained in more detail in the Risk Management section
of the Strategic report on pages 51-55, the Committee
supports the Group Board in reviewing the Group’s risk
management methodology and the effectiveness and
integrity of the Company’s internal control and risk
management systems. Regular internal control updates are
provided to the Committee, which include reviewing and
updating the nature and extent of principal risks and
uncertainties faced by the Group contained in the Group’s
risk register and assessing the mitigating actions in place
and updates to action plans agreed in previous meetings.
In FY 22, this remit was extended to include oversight of
climate related risks and opportunities, and thereby align
the Group’s risk management processes with TCFD
requirements. The Committee discussed and reviewed the
Group’s risk register twice in FY 22; key areas of focus being
cyber security, the macroeconomic environment, employee
retention and climate change. On each occasion it
concluded that all risks and opportunities had been
appropriately identified and recommended the Group’s risk
register to the Group Board for approval.
Whistleblowing
The Committee ensures that the Group has an appropriate
whistleblowing policy and confidential process in place that
is designed to support and encourage employees and other
stakeholders to raise concerns in respect of conduct within
the organisation, without fear of recrimination or suffering a
disadvantage of any kind. The policy reflects the Group’s
commitment to high standards of honesty, integrity and
accountability, and it promotes a culture of openness by
enabling stakeholders to report any misconduct,
malpractice, illegalities, wrongdoing or matters of similar
concern using the Group whistleblowing portal, which is
available 24 hours a day. During the year, the policy was
reviewed and updated by the Committee and re-approved
by the Board to ensure continued compliance with best
practice and alignment with our businesses and ways of
working. In addition:
(i) the Group’s whistleblowing portal was updated and
enhanced to include a new landing page and improved
user experience;
(ii) Supplier contract templates were amended to formally
enable access to, and publicise, the portal to our
Group’s suppliers; and
(iii) Internally, the portal was promoted to our employees
through the display of posters at all sites.
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The Pebble Group plc Annual Report 2022 Audit Committee report
Summaries of any whistleblowing reports and resolutions
are reported to the Committee. Where a matter is raised,
a proportionate investigation is undertaken by independent
management with support and guidance from the
Committee, if necessary. During the year, one matter was
raised via the whistleblowing process and was an employee
related grievance which was escalated to HR and the
relevant local manager for investigation and resolution.
Internal audit
On an annual basis, the Committee considers and approves
the proposed annual internal audit and risk plan for the full
year. The Committee is kept up to date by the CFO and the
Group Financial Controller on progress against the Group’s
internal audit and risk plan.
The Committee considers annually whether there is a need
for a separate internal audit and risk function and makes a
recommendation to the Group Board accordingly. The
Group does not currently have a separate internal audit
function. Targeted reviews and visits to operations are
performed by the Head Office Finance team, which is
independent of the business operations, and which
comprises wholly of qualified accountants. The team is
responsible for reviewing and reporting on the effectiveness
of internal controls and risk management systems. This
approach is considered appropriate and proportionate for
the size of the Group’s operations and does not affect the
work of the external auditors.
Risk and compliance policies
In line with the theme of trust, ethics, transparency and
delivery of good corporate governance, the responsibility of
the Audit Committee in the management and
communication of risks and internal controls extends
beyond matters of financial, operational and strategic risk.
As such, the Audit Committee considers the Company’s
attitude towards areas such as ethics, anti-bribery,
corruption, modern slavery and market abuse prevention
and ensures that the Group has appropriate policies and
processes in place.
The Audit Committee initiated a project to review the
Group’s approach to the corporate offence of failure to
prevent facilitation of tax evasion, introduced by the
Criminal Finances Act 2017. The Group Executive
Committee developed a project plan to refresh the Group’s
risk assessment on this and to ensure that prevention
procedures remained up to date and fit for purpose.
External advisers were engaged in Q1 22 to support this
work, and a new policy and refreshed reasonable prevention
procedures were approved and adopted in August 2022
and centrally co-ordinated training was delivered to all
relevant Group employees.
For full details of our Group polices and work performed in
2022, please see pages 65-66 of this report.
Yvonne Monaghan
Chair of the Audit Committee
21 March 2023
80
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Remuneration report
Aligning the interests of Executive
Directors and shareholders.
Stuart Warriner
Remuneration Committee Chair
Independent Non-executive Director
This report is for the year ended 31 December
2022. It sets out the remuneration policy and the
detailed remuneration for the Executive and
Non-executive Directors of the Company. As an
AIM-quoted company, the information is
disclosed to fulfil the requirements of AIM
Rule 19. The Pebble Group plc is not required to
comply with the Large and Medium-sized
Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013. The information
is unaudited except where stated.
Dear shareholder,
I am pleased to introduce the Directors’ Remuneration
Report for the 2022 financial year. This letter introduces
the report, outlines the major decisions on Directors’
remuneration during the year and explains the context in
which these decisions have been taken.
The Pebble Group plc is committed to high standards of
corporate governance and our policy and disclosures on
Directors’ remuneration are intended to reflect this
approach. Through this report, we aim to provide
shareholders with the necessary information to understand
our remuneration strategy and how it links with Group
performance and we welcome shareholder feedback on
these matters. To reflect our approach to good corporate
governance and to promote engagement between the
Remuneration Committee and our shareholders, we will put
this Directors’ Remuneration Report to an advisory vote at
the 2023 AGM, as we have in previous years. At the 2022
AGM, this resolution was supported by 100% of votes cast.
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The Pebble Group plc Annual Report 2022 Remuneration report
Remuneration policy
The Company’s approach to remuneration is that the overall
package should be sufficiently attractive to recruit,
motivate and retain individuals of a high calibre with
significant technical and strategic expertise. The
remuneration policy ensures that key personnel are
incentivised and rewarded in a way that is aligned to
delivery of the Company’s long-term growth objectives,
which in turn, achieves a Group culture that will support
our strategic goals. I believe the interests of key personnel
are resultingly aligned with those of our shareholders.
The remuneration policy adopted by the Company has four
main elements, base salary, benefits, annual performance
related bonuses and long-term share incentives. Policy in
each area is detailed in this report.
I believe that there is a clear link between variable pay and
operational and financial performance and I consider all
performance metrics used to be stretching and aligned with
our strategy and business model.
In order to ensure that the remuneration policy remains
appropriate and effective, the Committee’s approach is to
review one element of remuneration each year. During
2022, the Committee looked in detail at the structure,
workings and performance conditions applied to Long Term
Incentive Plan (LTIP) awards. Following this review, the
Committee determined to make no major changes to its
LTIP structure, which was concluded to remain relevant,
appropriate and consistent with best practice.
In the 2021 report, I explained that the Committee had
determined not to include specific Environmental, Social
and Governance (ESG) related criteria to determine variable
pay but would keep the matter under review. The
Committee sought external advice and considered this in
more detail during 2022, including looking at our peers and
what specific ESG linked performance measures the
Committee could potentially incorporate. In early 2023, the
Committee decided that meaningful ESG criteria linked to
tangible targets should be incorporated in 2024.
Performance and decisions on remuneration taken
during 2022
Company performance during the year was focussed on
meeting two objectives:
• continuing to invest in, and show progress against, the
medium-term growth plan for Facilisgroup; and
• continuing to grow Brand Addition sales against a volatile
macroeconomic background.
Details of progress against these objectives have been
provided throughout the Strategic Report on pages 2-55.
In the context of these objectives, the following
remuneration decisions were made by the Remuneration
Committee:
• Annual Bonus Plan Awards to Executive Directors for 2022
were approved and granted subject to performance
targets agreed by the Committee based solely on the
Group’s financial results, using the Adjusted EBITDA
performance;
• Bonus payments to Executive Directors for 2021 under the
Annual Bonus Plan Awards granted in 2021 were approved
as follows: Chris Lee £114,750 (being 42.5% of salary) and
Claire Thomson £85,000 (being 42.5% of salary); and
• The annual grant of awards under the LTIP were made on
29 March 2022.
Information on how remuneration will be operated in 2023
is set out at the end of this report.
I hope that you find the report helpful and informative, and
I look forward to receiving feedback from you on the
information presented.
Stuart Warriner
Remuneration Committee Chair
21 March 2023
82
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Composition of Remuneration Committee
The Committee comprises all three independent
Non-executive Directors, Stuart Warriner (Chair), Yvonne
Monaghan and Richard Law and is supported by Lucy
Penfold as Company Secretary. The Committee will normally
meet four times a year to review the remuneration of the
Executive Directors and other Executive Team members.
The views of the Chief Executive Officer are sought in
respect of awards to the other Executive Director and
Executive Team members.
Evaluation of the effectiveness of the
Remuneration Committee
To ensure that it is operating at maximum effectiveness, the
Committee used output of the formal Group Board
Effectiveness review detailed on page 71 to review and
evaluate its own performance, constitution and terms of
reference during Q4 2022. It concluded that the Committee
was operating effectively, and no action or changes were
required to be recommended to the Group Board. The
terms of reference were re-approved by the Group Board
with an amendment recommended by the Committee to
include a specific duty to consider the inclusion of ESG
related criteria to determine Executive’s variable pay.
Remuneration policy
The Committee’s overall approach is focused on ensuring
the Company’s remuneration policy is aligned with
shareholders’ interests whilst also enabling the Company to
attract, retain and motivate high quality executive
management. It is intended that this policy conforms with
best practice standards.
The key objectives of the Company’s remuneration policy
are to:
• align Executive and shareholder interests;
• underpin an effective pay-for-performance culture;
• support retention, motivation and recruitment of talented
people; and
• be clear, consistent and easy to understand.
The Committee aims to achieve an appropriate balance
between fixed and variable remuneration, and between
variable remuneration based on short-term and
longer-term performance. Fixed remuneration includes
base salary and benefits. Variable remuneration includes
annual bonus and awards made under the LTIP. In addition to
this, the Executive Directors are required to build and
maintain a minimum shareholding in the Company’s shares,
details of which are provided in the table below.
The structure of executive remuneration is in line with that
of many established UK quoted companies balancing fixed
remuneration, annual bonus and long-term performance
share awards. Approximately 65% of the potential
remuneration of the Executive Directors in 2022 was
subject to the achievement of performance targets, made
up of a maximum annual bonus opportunity at 100% of
salary and an annual performance share award at 100% of
salary. The link of remuneration outcomes to long-term
performance is primarily through the LTIP which has
stretching three-year targets based on basic adjusted
earnings per share (EPS) and total shareholder return (TSR),
and a two-year post-vesting holding period is applied. The
Committee recognises the risk of target-based plans and
addresses this risk through: (i) careful consideration in the
choice and pitching of performance targets; (ii) the ability
to exercise discretion; (iii) the attachment of malus and
clawback provisions to LTIP awards; and (iv) the application
of a shareholding guideline. In the light of this remuneration
structure and the substantial shareholdings of both the CEO
and CFO, the Committee is satisfied that the Executive
Directors are well aligned with the long-term performance
of the Company.
The Committee will take into account periodic external
comparisons to examine current market trends and practices
at equivalent roles in similar companies. Additionally, in
making its decisions in 2022 the Committee also consulted
external consultants h2glenfern Remuneration Advisory
Limited (H2glenfern), where appropriate, to provide advice
on best practice and market trends. H2glenfern is a member
of the UK Remuneration Consultants Group (RCG) and has
confirmed that it complies with the RCG Code. H2glenfern
has no other relationship with the Company and the
Committee is satisfied that the advice it receives is
independent and objective. H2glenfern advised and assisted
the Committee in respect of the review of its LTIP its
consideration of the inclusion of ESG metrics, (each as
outlined above) during 2022.
This part of the report sets out the remuneration policy
with regard to the Executive Directors. The policy on each
element of remuneration and how it operates is detailed in
the table:
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The Pebble Group plc Annual Report 2022 Remuneration report
Elements of Remuneration
Element
Base Salary
Benefits
To help recruit and
retain high
performing Executive
Directors.
Reflects the
individual’s
experience, role and
importance to the
business.
To help recruit and
retain high
performing Executive
Directors.
To provide market
competitive benefits.
Pension
Annual
Bonus Plan
To help recruit and
retain high
performing Executive
Directors.
To provide market
competitive pensions.
To incentivise and
reward performance.
To align the interests
of the Executives and
shareholders in the
short and medium
term.
84
Link to remuneration
policy/strategy
Operation
Maximum opportunity
Performance metric
Base salary is reviewed
annually as at 1 January with
reference to each Executive
Directors’ performance and
contribution during the year,
company performance, the
scope of the Executive
Directors’ responsibilities and
consideration of competitive
pressures.
There is no prescribed
maximum annual base
salary or salary increase.
The Committee is
guided by the general
increase for the broader
employee population
but has discretion to
decide on a lower or a
higher increase.
The Committee considers
individual and Company
performance when setting
base salary.
Benefits are in line with those
offered to other senior
management employees and
may include medical expenses
cover and life insurance cover.
The CEO and CFO also receive
permanent health insurance
cover and a Company car, the
value of which is equivalent to
5% of base salary per annum.
The Company car is provided
to Executive Directors as an
alternative to an employer’s
pension contribution.
Employer’s pension
contribution or a cash
supplement.
The CEO and CFO have opted
to take a Company car
contribution as an alternative
to an employer’s pension
contribution.
The Annual Bonus is earned by
the achievement of one-year
performance targets set by
the Remuneration Committee.
The parameters, performance
criteria, weightings and
targets are ordinarily set at
the start of each financial
year.
Payments are made in cash
following completion of the
year subject to the
Committee’s assessment of
performance against targets
and other matters it deems
relevant.
Awards are subject to malus
and clawback provisions.
None
No maximum potential
value other than
Company car, the value
of which is capped at
5% of base salary per
annum where provided
as an alternative to an
employer’s pension
contribution.
None
5% of base salary, which
is aligned with the
pension contribution
made by the Company
to its UK workforce.
The maximum bonus
opportunity for the CEO
and CFO is 100% of base
salary.
Performance measures may
include financial,
non-financial, personal and
strategic objectives.
Performance criteria and
weightings may be changed
from year to year.
For 2022, the performance
targets were based on
Adjusted EBITDA. For 2023,
the performance targets
are based on operating
profit which the Committee
now considers to be the
most relevant key financial
performance
indicator for bonus
purposes.
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Link to remuneration
policy/strategy
Operation
Maximum opportunity
Performance metric
Element
Long Term
Incentive
Plan
To incentivise and
reward long-term
performance and
value creation.
To align the interests
of Executive
Directors and
shareholders in the
long-term.
All employee
share plan
Shareholding
requirement
To encourage all
employees to make a
long-term investment
in the Company’s
shares in a tax
efficient way
Encourages Executive
Directors to achieve
the Company’s
long- term strategy
and create
sustainable
stakeholder value
Aligns with
shareholder interests
The annual award to the
CEO and CFO is normally
100% of base salary.
Performance measures may
include financial and total
shareholder return
(TSR)-based targets.
Performance criteria and
weightings may be changed
from year to year.
For awards made in FY 20,
FY 21 and FY 22, 70% of the
award was subject to a
cumulative basic earnings
per share (EPS) target and
30% was subject to an
absolute TSR target.
Details are set out later in
this report.
The maximum
participation level will be
aligned to HMRC limits.
None
Executive Directors are
eligible to receive awards
under the LTIP at the
discretion of the Committee.
Awards are granted as nil-cost
options or conditional awards
which vest after three years
subject to the meeting of
objective performance
conditions specified at award.
Awards are subject to malus
and clawback provisions.
An additional holding period
of two years post vesting is
applied to awards made to the
Executive Directors.
Dividend equivalents may be
added to awards.
The Executive Directors may
participate in the SAYE on the
same terms as other eligible
employees.
200% of salary.
The shareholdings of the CEO
and CFO are currently well in
excess of this guideline.
Non-
executive
Director
remuneration
To provide fees
appropriate to time
commitments and
responsibilities of
each role.
Non-executive Directors are
paid a base fee in cash. Fees
are reviewed periodically. In
addition, reasonable business
expenses may be reimbursed.
The Group Board is
guided by the general
increase for the broader
employee population
and takes into account
relevant market
movements.
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The Pebble Group plc Annual Report 2022 Remuneration report
Malus and clawback
Both Annual Bonus and LTIP awards are subject to malus
and clawback provisions covering two years. Reasons for
malus and clawback being applied would include material
misstatement in audited results, discovery of errors or
inaccuracies in the assessment of any performance
condition, fraud or gross misconduct, events or behaviour
which lead to the censure of the Group by a regulatory
authority or have a significant detrimental impact on the
reputation of the Group.
Remuneration of employees below the Group Board
Employees below the Group Board receive base salary,
benefits, annual bonus, and senior staff are invited to
participate in the LTIP, as well as being eligible to participate
in the SAYE on the same terms as other eligible employees.
Pay and conditions throughout the Group are taken into
consideration when setting remuneration policy. The
Committee does not consult other employees when setting
executive remuneration.
Shareholder consultation
The Committee’s policy is to consult with major
shareholders in respect of significant decisions on executive
remuneration.
The Chair of the Remuneration Committee is available for
contact with investors concerning the Company’s approach
to remuneration. The annual report on remuneration will be
put to an advisory vote at the upcoming AGM in 2023.
Executive Directors’ service contracts and
payments for loss of office
Our Executive Directors have rolling service contracts dated
28 November 2019 with an indefinite term, but a fixed
period of 12 months’ notice of termination. Our approach
to remuneration in each of the circumstances in which an
Executive Director may leave is determined by the
Remuneration Committee in accordance with the rules of
any applicable scheme.
Non-executive Directors’ letters of appointment
The Non-executive Directors do not have service
contracts but instead have letters of appointment. Each
Non-executive Director signed a letter of appointment on
substantially the same terms as their initial engagement for
a second three-year term from 28 November 2022. Each
has a three-month notice period.
Consideration of new Executive Directors or senior
executives
When recruiting or promoting any senior executive, we seek
to apply consistent policies on fixed and variable
remuneration components in line with the remuneration
policy set out above. This helps to ensure that any new
Executive Directors or senior executive is on the same
remuneration footing as existing Executive Directors or
senior executives respectively, while still taking into account
the skill and experience of the individual, the market rate
for a candidate of that experience and the importance of
securing the relevant individual.
Annual report on remuneration
This section sets out details of remuneration in 2022.
2022 Summary of Directors’ total remuneration (audited)
Name
Executive
Christopher Lee
Claire Thomson
Non-executive
Richard Law
Yvonne Monaghan
Stuart Warriner
* car lease and private medical insurance
Salary / Fee
Bonus
Pension
Benefits*
Total
£285,000
£148,770
£210,000
£109,620
£100,000
£45,000
£45,000
-
-
-
-
-
-
-
-
£15,170
£11,787
£448,940
£331,407
-
-
-
£100,000
£45,000
£45,000
86
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 2021 Summary of Directors’ total remuneration (audited)
Name
Executive
Christopher Lee
Claire Thomson
Non-executive
Richard Law
Yvonne Monaghan
Stuart Warriner
Salary / fee
Bonus
Pension
Benefits*
Total
£270,000
£114,750
£200,000
£85,000
£100,000
£45,000
£45,000
-
-
-
-
-
-
-
-
£14,687
£399,437
£11,579
£296,579
-
-
-
£100,000
£45,000
£45,000
* car lease and private medical insurance
2022 Annual Bonus Plan Awards
For 2022, the maximum potential bonus was 100% of base salary. The awards were subject to performance targets set in
January 2022 based solely on the Group’s financial results, using the Adjusted EBITDA performance, which was considered
by the Remuneration Committee at that time to be the Group’s most relevant key performance measure for 2022. No
bonus is payable for below threshold performance but increases on a straight-line basis from 25% pay-out at threshold, to
60% pay-out at target performance, to 100% pay-out at maximum, as follows:
Pay out level
Adjusted EBITDA
25%
60%
100%
52%
threshold
target
maximum
actual
£16.6 million
£18.4 million
£19.3 million
£18.0 million
The Company achieved adjusted EBITDA of £18.0million in FY 22 which corresponded to a pay out at 52% of maximum for
each Executive Director, as shown in the tables above.
Long Term Incentive Plan (LTIP)
LTIP awards were granted to the CEO and CFO on 29 March 2022. The table below summarises all of the awards made to
the Executive Directors under the plan.
These are nil cost awards with performance conditions outstanding as at 31 December 2022.
Name and award date
Christopher Lee
21 December 2020
8 June 2021
29 March 2022
Claire Thomson
21 December 2020
8 June 2021
29 March 2022
Interest at
31 December
2021
Granted
in year*
Vested
Exercised
Lapsed
Interest at
31 December
2022
Performance
period ending
242,152
176,471
179,372
130,719
280,788
206,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242,152
30 June 2023
176,471
31 December 2023
280,788
31 December 2024
179,372
30 June 2023
130,719
31 December 2023
206,897
31 December 2024
* The value at Grant Date was calculated based on the closing share price on 28 March 2022 of 101.5 pence per share. Each of the awards
represents an LTIP award over shares worth 100% of annual salary as at the Grant Date.
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The Pebble Group plc Annual Report 2022 Remuneration report
Performance conditions
70% Cumulative adjusted EPS
Basic adjusted EPS as defined in the LTIP rules,
excludes share-based payment charge,
exceptional items and amortisation from
acquired intangibles
2020 award
3 years ended
30 June
2023
2021 award
3 years ended
31 December
2023
2022 award
3 years ended
31 December
2024
Threshold (25% maximum vesting)
Mid-range (60% maximum vesting)
Maximum (100% maximum vesting)
13.4p
14.3p
15.1p
15.4p
16.3p
17.3p
17.6p
18.8p
19.9p
30% Annualised TSR
Annualised growth in total
shareholder returns
Threshold (25% maximum vesting)
Mid-range (60% maximum vesting)
Maximum (100% maximum vesting)
8.0% pa
11.3% pa
15.0% pa
8.0% pa
11.3% pa
15.0% pa
8.0% pa
11.3% pa
15.0% pa
Performance between these levels is determined on a straight-line basis.
The performance period for the 2020 awards (being the three years ending 30 June 2023) was chosen as the timing of the
2020 awards was deferred to December 2020. The performance period for the 2021 awards (being the three years ending
31 December 2023) was chosen to align back with the financial year. The performance period for the 2022 award (being the
three years ending 31 December 2024) was again chosen to align with the financial year.
The charge for share based payments is detailed in note 23 to the accounts.
Group Sharesave Plan (SAYE) participation
No SAYE was operated in 2022.
Christopher Lee and Claire Thomson elected to participate in the 2021 SAYE launched in September 2021 to the maximum
amount offered to staff under the plan. As such, they were awarded options as detailed below. The exercise price for
these awards is 122 pence per Share, representing a 20% discount to the closing market price of 152.50 pence per Share
on 13 September 2021, being the trading day before the invitation for eligible employees to participate was made.
Name
Christopher Lee
Claire Thomson
Award date
6 Oct 2021
6 Oct 2021
Granted
in year
Exercise
price
Contract
start date
14,754
14,754
122p 1 Dec 2021
122p 1 Dec 2021
Option
exercisable
1 Dec 2024
1 Dec 2024
Directors’ interests in shares
The interests of the Directors as at 31 December 2022 and 31 December 2021 in the shares of the Company were:
31 December 2022
31 December 2021
Number
370,041
6,091,515
2,907,243
55,000
95,000
% of issued
shares
0.22%
3.64%
1.74%
0.03%
0.06%
Number
370,041
6,091,515
2,907,243
55,000
50,000
% of issued
shares
0.22%
3.64%
1.74%
0.03%
0.03%
Name
Richard Law
Christopher Lee
Claire Thomson
Yvonne Monaghan
Stuart Warriner
88
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Directors’ remuneration for the year commencing 1 January 2023
Executive Directors basic pay 2023
In reviewing Executive Director basic pay in Q4 2022, the Committee looked to ensure that Executive remuneration is fair
and competitive. It had regard to the interests of the Group’s wider workforce, its shareholders, the impact of the decision
on the Company’s culture, reputation, and its wider social responsibilities in the context of the current economic
landscape, share price and the Group’s stage on its growth journey. It also noted that executive salary benchmarking
carried out in Q4 2021 indicated that both CEO and CFO base salaries were below market median levels. Following
consideration of the remuneration policy, general remuneration trends across the Group, and the broader context of
Executive Director total remuneration package, the Committee agreed salary increases for each of the CEO and CFO of
5.2%, which was below the average increase in basic pay awarded across the wider Group.
Name
Christopher Lee
Claire Thomson
Role
CEO
CFO
Base salary
2023
Base salary
2022
300,000
221,000
285,000
210,000
2023 Annual Bonus Plan Awards
The annual bonus plan for 2023 will operate in a similar way to 2021 and 2022. However, performance targets will be based
on operating profit rather than EBITDA to reflect the impact on the Group of the significant increase in investment in
technology product development during 2022, and that the Committee considers operating profit to be the most relevant
key performance indicator for bonus purposes for 2023.
Long Term Incentive Plan for 2023
LTIP awards are planned for March 2023 and will operate as set out in the policy table above. Awards will be subject to
three-year performance conditions and a two year holding period for vested awards.
Non-executive Directors
Each Non-executive Director was re-appointed for a second three-year term with effect from 28 November 2022.
Non-executive Director remuneration is a matter for the Chair of the Board and Executive Directors, and no Non-executive
Director was involved in the decision as to their own remuneration. As Non-executive Director fees had remained static for
three years since initial appointment (save for the 40% reduction for six months implemented during 2020 in response to
the COVID-19 pandemic), it was agreed that Non-executive Director fees would increase with effect from 1 January 2023
to align with the financial period.
Name
Role
Committee Chair
Richard Law
Chair of the Group Board
Nomination
Yvonne Monaghan
Non-executive Director
Audit
Stuart Warriner
Non-executive Director
Remuneration
Annual Fee
2023
Annual Fee
2022
£110,000
£100,000
£50,000
£50,000
£45,000
£45,000
89
The Pebble Group plc Annual Report 2022 Directors’ report
For the year ended 31 December 2022
The Directors present their report together with the
audited Group Financial Statements of The Pebble Group
plc (the “Company”) for the year ended 31 December 2022.
Principal Activities and Business Overview
The Company is incorporated and domiciled in the UK with
company number 12231361 and with its registered office
address at Broadway House, Trafford Wharf Road, Trafford
Park, Manchester, United Kingdom M17 1DD. The Company is
a public limited company admitted to trading on the AIM
market of the London Stock Exchange.
The principal activities and business overview of the Group
are set out on pages 4-11 within the Strategic Report which
is incorporated by reference and forms part of this
Directors’ Report.
of its current facilities for a period of at least 12 months
from the date of this Report. Therefore, the Directors
continue to adopt the going concern basis of accounting in
preparing the Group and Company financial statements.
The Group refinanced it’s £10m RCF in January 2023 for a
three year period to January 2026, with the option to
extend for an additional year to January 2027.
Further details on going concern are provided in note 2 of
the Group financial statements which is incorporated by
reference and forms part of this Directors’ Report.
Directors and their interests
The Directors of the Company who were in office during the
year and up to the date of signing the Group financial
statements were:
Business review and future developments
A review of the performance of the Company during the
year, including principal risks and uncertainties, key
performance indicators and comments on likely future
developments in its businesses is given in the Strategic
Report on pages 2-55.
Richard Law
Christopher Lee
Claire Thomson
Yvonne Monaghan
Stuart Warriner
In accordance with the Articles of Association, a third of the
Group Board are required to stand for re-election at the
forthcoming AGM and any Director who has not been
re-elected at one of the two previous AGMs is to be
proposed for re-election. However, to align best practice,
the Group Board has again decided that all Directors would
retire and seek re-election by the Company’s shareholders
at the 2023 AGM. The Directors confirm that having
conducted a performance evaluation, each Director
continues to contribute and demonstrate commitment to
their role.
The Directors who held office during the year and as at
31 December 2022 had the interests in the Ordinary Shares
of the Company as shown in the table on page 88.
In addition to the interest in Ordinary Shares shown in the
table on page 88, the Group operates a Long Term Incentive
Plan (LTIP) for senior executives, under which awards may
be granted over shares in the Company. The maximum
number of Ordinary Shares which could be issued to
Directors in the future under LTIP awards as at 31 December
2022 is shown below:
Name of Director
Christopher Lee
Claire Thomson
Number
699,411
516,988
Results and dividends
The Group recorded revenue in the year of £134.0m (FY 21:
£115.1m) and profit after tax of £7.6m (FY 21: £7.3m). No
interim dividend has been paid in the year (FY 21: £nil).
The Board has considered its position on dividend payments
and concluded that the Group has reached an appropriate
point to begin to implement a progressive dividend policy. In
doing so, it is planned that the Group will move, in the
medium-term, towards its stated position at IPO of making
dividend payments of c.30% of profit after tax. As such, the
Group Board is proposing the payment of a final dividend of
0.6 pence per share for FY 22, a distribution totalling £1m,
payable on 2 June 2023, subject to shareholder approval, to
those Shareholders on the register of members on 28 April
2023. The shares will trade exdividend on 27 April 2023.
Financial risk management
Information relating to the principal risks and uncertainties
of the Group has been included within the Strategic Report
on pages 51-55. Further information relating to the financial
risk of the Group has been included within note 22, financial
risk management.
Going concern
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 2024. Following careful consideration of the
base case forecasts and the application of severe but
plausible downside scenarios to these forecasts, the
Directors have a reasonable expectation that the Group has
adequate resources to continue to operate within the level
90
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Directors’ report
For the year ended 31 December 2022
The Group also operates a Group Sharesave Plan (SAYE) for
all employees which Executive Directors may elect to
participate in. The maximum number of Ordinary Shares
which could be issued to Directors in the future under SAYE
awards as at 31 December 2022 is shown below:
Name of Director
Christopher Lee
Claire Thomson
Number
14,754
14,754
The market price of the Company’s shares at the end of the
financial year was 90p (31 December 2021: 132.50p) and the
range of market prices during the year ended 31 December
2022 was between 78p and 132.50p.
Further details on related party transactions with Directors
are provided in note 24 of the Group financial statements.
Directors’ insurance
The Company maintains Directors’ and Officers’ liability
insurance for the Directors, which was in force during the
full year 2022 and remains in force as at the date of this
report.
Significant shareholdings
As at 20 March 2023, the Company has been advised, in
accordance with the Disclosure and Transparency Rules of
the Financial Conduct Authority of the following notifiable
interests in 3% or more of its voting rights:
Name of Shareholder
Number Percentage
Liontrust Asset Management
BlackRock
Fidelity International
Amati Global Investors
34,485,780
20.6%
23,306,162
13.9%
13,685,217
10,712,614
River and Mercantile Asset Management
9,877,980
Aegon Asset Management UK
Chelverton Asset Management
Janus Henderson Investors
Otus Capital Management
Christopher Lee
Jupiter Asset Management
Columbia Threadneedle
6,764,504
6,750,000
6,307,605
6,252,187
6,091,515
5,519,800
5,165,658
8.2%
6.4%
5.9%
4.0%
4.0%
3.8%
3.7%
3.6%
3.3%
3.1%
Employee Engagement Statement
How the Group Board engages with the Group’s teams as a
key stakeholder, and has regard to their interests in
decision-making can be found within the Strategic Report
on pages 22-25 and in the ‘engagement with the business
and teams’ section on page 58. Those sections are
incorporated by reference and form part of this Directors’
Report.
The activity outlined includes ensuring that arrangements
are in place aimed at providing employees systematically
with information on matters of concern to them and
consulting them or their representatives regularly. so that
their views can be taken into account when making
decisions that are likely to affect their interests. Employee
involvement in the Group is encouraged by the Group
Board, as common goals and awareness of the Group’s
strategy play a major role in delivering its medium to
long-term strategic objectives. Awards under the Group’s
Long Term Incentive Plan (LTIP) were made on 29 March
2022 in which 65 senior staff across the Group
participated. The Executive Directors hosted virtual
meetings with each senior team involved across the Group
to update on LTIP progress and take questions directly,
aimed at achieving a common awareness on the part of
employees of the financial and economic factors affecting
the performance of the Group.
The Group recognises its responsibility to employ disabled
persons in suitable employment and gives full and fair
consideration to such persons, including any employee who
becomes disabled, having regard to their particular
aptitudes and abilities. Where practicable, disabled
employees are treated equally with all other employees in
respect of their eligibility for training, career development
and promotion. For further information on the Group’s DEI
policy please see page 36.
Statement on Engagement with other Stakeholders
Investing in and developing our stakeholder relationships is
central to our Group values. The Group Board believes the
success of its strategy depends on the Group’s ability to
foster effective business relationships with all of our
stakeholders. Their interests are important to the Group
Board and it is committed to ensuring that strong, positive
relationships are maintained with them, built on a
foundation of mutual respect, trust and understanding. The
Directors have had regard to the need to foster the Group’s
business relationships with suppliers and customers and
others. Further information on this engagement can be
found within our Strategic Report on pages 18-22, in the
‘engagement with the business and teams’ section on
page 58 and also in our Section 172(1) statement on
pages 22-25 where we provide details of stakeholder
engagement and the impact of that on the Group Board’s
decision making. Those sections are incorporated by
reference and form part of this Directors’ Report.
Political donations
It is the Company’s policy not to make political donations.
The Directors confirm that no donations for political
purposes were made during the year (2021: nil).
Share capital and voting
The Company has one class of equity share, 1 pence
Ordinary Shares, with full voting, dividend and capital
distribution rights, including on winding up. They are
non-redeemable. The rights and obligations attaching to
these shares are governed by the Companies Act 2006 and
the Company’s Articles of Association.
91
The Pebble Group plc Annual Report 2022 Directors’ report
For the year ended 31 December 2022
As at 31 December 2022, the Company’s issued share
capital comprised: 167,450,893 Ordinary Shares of 1 pence.
Shareholders’ Authority for the Purchase by the
Company of its own Shares
At the 2022 AGM, Shareholders authorised the Company to
make market purchases of up to a maximum number of
Ordinary Shares of 16,745,000, which represented
approximately 10% of the Company’s issued Ordinary share
capital on the latest practicable date prior to publication of
the 2022 Notice of Annual General Meeting. The minimum
price allowed for such purchases is nominal value and the
maximum is 5% above the average of the middle market
quotations for such shares for the five business days
immediately preceding the day of purchase. The Directors
intend to seek renewal of this authority, which is due to
expire at the conclusion of the 2023 AGM. Further details
are given in the 2023 Notice of Annual General Meeting.
Appointment and replacement of Directors and
changes to constitution
Rules governing the appointment and replacement of
Directors and those relating to the amendments of the
Company’s Articles of Association are contained within the
Articles of Association. The Articles of Association are
available on the Company’s website.
Notice of Annual General Meeting
Details of business to be conducted at this year’s AGM, are
contained in the Notice of the Annual General Meeting
which will be communicated to shareholders separately.
It is the opinion of the Directors that the passing of these
resolutions is in the best interest of the shareholders.
Corporate governance
The Company adheres to the Corporate Governance Code
for Small and Mid-Size Quoted Companies 2018 published
by the Quoted Companies Alliance (the ‘QCA Code’). Our
governance structure and the Group’s statement on
corporate governance can be found in the Corporate
Governance section of this report on pages 67-73 which is
incorporated by reference and forms part of this Directors’
Report. It can also be found on the Company’s website.
Forward-looking statements
This Annual Report contains forward-looking statements
that involve risk and uncertainties. The Group’s actual
results could differ materially from those estimated or
anticipated in the forward-looking statements as a result of
many factors. Information contained in this Annual Report
relating to the Company should not be relied upon as a
guide to future performance.
Events after the end of financial year
There were no events occurring after the balance sheet
date that require disclosing in accordance with IAS10,
‘Events after the reporting period’.
Greenhouse Gas emissions and energy use
Under the Companies (Directors’ Report) and Limited
Liabilities Partnerships (Energy & Carbon Report)
Regulations 2019, we are mandated to disclose our UK
energy use and associated greenhouse gas (GHG) emissions.
Specifically, and as a minimum, we are required to report
those GHG emissions relating to natural gas, electricity, and
transport fuel as well as an intensity ratio, under the
Streamlined Energy & Carbon Reporting (SECR) Regulations.
In the table on the following page we have reported the
GHG emissions and energy usage for our UK based
operations, for a full breakdown of our Group GHG
emissions please refer to the table on page 33 of this
report.
Improvements
In 2022, good progress was made in reducing our Scope 1
and Scope 2 carbon emissions in the UK and Europe. We
have been successful in switching two of our energy
contracts over to renewable energy. Our London office was
switched to using renewable electricity in February 2022
and our Manchester site switched to a renewable gas
contract, where the provider purchases 100% renewable
gas matched to the amount that the site uses, backed by
renewable gas guarantees of origin (RGGOs) or Biomethane
certificates (BMCs). Brand Addition’s German operation also
moved into a new fulfilment centre in April 2022,
consolidating the office and warehouse locations into a
single location. Being a newly built building, all of the facility
is furnished with LED lighting and by consolidating our
operations we expect to see future savings of our energy
usage in 2023 when the move is complete.
Methodology
Market based stationary combustion has been added to
reflect the purchase of biogas in 2022 backed by RGGOs /
BMCs. GHG emissions for electricity usage have been
restated to include the AIB (Association of Issuing Bodies)
production mix emission factors for location-based figures
and residual mix emission factors for market-based
emissions used by the Normative carbon reporting engine.
Emissions for business travel have been calculated using the
Normative carbon reporting engine.
92
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Directors’ report
For the year ended 31 December 2022
Intensity measures
The chosen intensity measurement ratio is the total gross emissions in tonnes CO2e per £m revenue (tCO2e/£m) to allow
for emissions normalisation.
UK Streamlined energy and carbon reporting data (SECR)
Unit of measure
2022
2021
Variance
Carbon emissions
Direct (Scope 1) - Stationary combustion – Location based
Direct (Scope 1) - Stationary combustion - Market based
Indirect (Scope 2) - Purchased Electricity – Location based
Indirect (Scope 2) - Purchased Electricity – Market based
Other (Scope 3) - Business travel in employees own vehicles
Energy consumption
Gas consumption
Electricity Consumption
Energy consumption from business travel in
employees own vehicles
Total energy consumption
Total emissions - Location based
Total emissions – Market based
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
MWh
MWh
MWh
MWh
tCO2e
tCO2e
Intensity ratio (tCO2e per £1m of revenue) Location based
Intensity ratio (tCO2e per £1m of revenue) Market-based
tCO2e per £1m of revenue
tCO2e per £1m of revenue
58
17
61
81
8
283
274
33
590
127
106
1.80
1.53
62
62
49
80
3
306
252
14
572
114
145
1.59
2.01
-6%
-73%
24%
1%
167%
-8%
9%
136%
3%
11%
-27%
13%
-24%
Independent auditors
The Group’s external auditors, PwC, have indicated their willingness to continue in office and in accordance with the
recommendation of the Audit Committee, a resolution to reappoint PwC as the external auditors will be proposed at the
upcoming AGM.
By order of the Group Board
Lucy Penfold
Group General Counsel & Company Secretary
21 March 2023
The Pebble Group plc
Broadway House
Trafford Wharf Road
Manchester
M17 1DD
Registered in England and Wales with company number: 12231361
93
The Pebble Group plc Annual Report 2022 Statement of Directors’ responsibilities in respect of the financial statements
The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have prepared the group financial statements in
accordance with UK-adopted international accounting
standards and the company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and applicable
law).
Under company law, directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and
company and of the profit or loss of the group for that
period. In preparing the financial statements, the directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted international
accounting standards have been followed for the group
financial statements and United Kingdom Accounting
Standards, comprising FRS 102 have been followed for the
company financial statements, subject to any material
departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the group
and company will continue in business.
The directors are responsible for safeguarding the assets of
the group and company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the group’s and company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
group and company and enable them to ensure that the
financial statements comply with the Companies Act 2006.
The directors are responsible for the maintenance and
integrity of the company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Directors’ confirmations
In the case of each director in office at the date the
directors’ report is approved:
• so far as the director is aware, there is no relevant audit
information of which the group’s and company’s auditors
are unaware; and
• they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any
relevant audit information and to establish that the group’s
and company’s auditors are aware of that information.
Claire Thomson
CFO
21 March 2023
94
CORPORATE GOVERNANCEThe Pebble Group plc Annual Report 2022 Independent auditors’ report to the members of The Pebble Group plc
Report on the audit of the financial statements
Opinion
In our opinion:
• The Pebble Group plc’s group financial statements and
company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of
the company’s affairs as at 31 December 2022 and of the
group’s profit and the group’s cash flows for the year then
ended;
Our audit approach
Overview
Audit scope
• The Group consists of two operating segments, Brand
Addition and FacilisGroup, which are further split into nine
reporting components of varying size, in the UK, US and
other countries around the world. The Group financial
statements are a consolidation of these components.
• the group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards as applied in accordance with the
provisions of the Companies Act 2006;
• We identified four components which required an audit of
their complete financial information, being The Pebble
Group plc, Brand Addition UK, Brand Addition US and
FacilisGroup US.
• the company financial statements have been properly
• Two further components were also subject to audit
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic of
Ireland”, and applicable law); and
procedures over specific balances due to their
contribution to the Group; this included accruals, other
debtors, property, plant and equipment, and depreciation
expense in Brand Addition Germany, and intangible assets
and amortisation expense in Facilisgroup Canada.
• the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
• As a result of this scoping we obtained coverage over 82%
of Group revenue, 74% of Group profit before tax and
88% of Group Adjusted EBITDA.
We have audited the financial statements, included within
the Annual Report, which comprise: the consolidated
statement of financial position and company balance sheet
as at 31 December 2022; the consolidated income
statement, consolidated statement of other comprehensive
income, consolidated and company statements of changes
in equity and consolidated cash flow statement for the year
then ended; and the notes to the financial statements,
which include a description of the significant accounting
policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in
the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with
the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s
Ethical Standard, as applicable to other listed entities of
public interest, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
We have provided no non-audit services to the company in
the period under audit.
Key audit matters
• Accuracy and existence/occurence of capitalised
development costs (group)
• Risk of impairment of investments in subsidiaries and
amounts owed by group undertakings (parent)
Materiality
• Overall group materiality: £451,050 (2021: £384,000)
based on 2.5% of Adjusted EBITDA.
• Overall company materiality: £405,945 (2021: £345,600)
based on 1% of total assets, restricted to 90% of Group
financial statement materiality.
• Performance materiality: £338,287 (2021: £288,000)
(group) and £304,458 (2021: £259,200) (company).
The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by
the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in
the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
95
The Pebble Group plc Annual Report 2022 Independent auditors’ report to the members of The Pebble Group plc
Risk of impairment of investments in subsidiaries and amounts owed by group undertakings is a new key audit matter this
year. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Accuracy and existence/occurence of capitalised
development costs (group)
Refer to Note 2k, Note 3b and Note 11 of the Notes to the
Group financial statements.
The Group capitalised costs of £6.3 million during the year
ended 31 December 2022, of which £5.8 million relates to
internally generated costs.
There is a risk that capitalised development costs additions
are incorrectly recognised in the closing balance sheet. This
can arise where internally generated costs (such as wages
and salaries) are incorrectly capitalised or inaccurately
recorded.
Risk of impairment of investments in subsidiaries
and amounts owed by group undertakings (parent)
The company has investments in subsidiaries of £113.3m
(2021: £112.3m) and amounts owed by group undertakings of
£80.9m (2021: £80.6m).Given the magnitude of both of
these balances we considered the risk of impairment of
these assets.
Management have considered both of these balances for
impairment and concluded that no impairments are
required.
We assessed and challenged whether the development
costs capitalised met the criteria set within IAS 38
'Intangible assets'. We did not identify any material issues
in our work in this area.
We corroborated a sample of capitalised development
costs to source documentation, and traced through
hours to the taskpoint system, and determined that they
had been recorded accurately and met the criteria for
capitalisation.
We agreed, and challenged, on a sample basis, that the
proportion of internal employee costs capitalised was
appropriate based upon their roles and responsibilities
and contracts of employment.
We evaluated the disclosures included within the
financial statements relating to capitalised development
costs and found them to be appropriate and complete.
In assessing the appropriateness of valuation of investment
in subsidiaries and amounts owed by group undertakings
we have performed the following procedures:
We obtained a schedule of investments in subsidiaries and
ensured this is reconciled to the financial statements;
We compared the overall carrying value of the
investments to the group’s market capitalisation. As this
was a trigger for impairment, we also reviewed
managements discounted cash flow models prepared for
the purposes of testing overall group goodwill for
impairment.
Based on the above procedures we concluded that there
was no impairment to the carrying value of investments.
We performed a reconciliation of the amounts owed by
group undertakings and ensured this agrees with the
counterparty;
We evaluated management’s assessment of the
recoverability of amounts owed by group undertakings
including assessing the ability of other group companies to
settle the intercompany balances; and
We also assessed the adequacy of the disclosure provided
in the company financial statements in relation to the
relevant accounting standards.
We found no exceptions as a result of our procedures and
consider the recoverability of amounts owed by group
undertakings to be appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the
structure of the group and the company, the accounting
processes and controls, and the industry in which they
operate.
The Group is split into two main operating segments, being
Brand Addition and FacilisGroup. These are further split into
thirteen components, which vary in size, and represent
smaller operations in other countries around the world. The
Group financial statements are a consolidation of these
reporting components, as well as central operations.
96
FINANCIAL STATEMENTSThe Pebble Group plc Annual Report 2022 We identified four full scope components based on their
Adjusted EBITDA contribution: The Pebble Group plc, Brand
Addition UK, Brand Addition US and FacilisGroup US.
We also audited material consolidation journals. All audit
work was performed by the Group audit team.
As a result of this scoping we obtained coverage over 82%
of Group revenue, 74% of Group profit before tax and 88%
of Group Adjusted EBITDA.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to
understand the process they have adopted to assess the
extent of the potential impact of climate risk on the group’s
financial statements.
The Group continues to develop its assessment of the
potential impacts of environmental, social and governance
("ESG") related risks, including climate change, as outlined in
the Strategic Report on pages 31 to 43.
The directors have reached the overall conclusion that
there has been no material impact on the financial
statements for the current year from the potential impact
of climate change.
We used our knowledge of the group, with assistance from
our internal climate experts, to challenge management’s
assessment. We particularly considered how climate risk
would impact the assumptions made in the forecasts
prepared by management used in their impairment analyses
and going concern. We also considered the consistency of
the disclosures in relation to climate change (including the
disclosures in the Task Force on Climate-related Financial
Disclosures (TCFD) section) within the Annual Report with
the financial statements and our knowledge obtained from
our audit.
Our procedures did not identify any material impact in the
context of our audit of the financial statements as a whole,
or on our key audit matters for the year ended 31 December
2022.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Financial statements - group
Financial statements - company
£451,050 (2021: £384,000).
£405,945 (2021: £345,600).
2.5% of Adjusted EBITDA
Based on the benchmarks used in the
Annual Report, Adjusted EBITDA is the
primary measure used by the
shareholders in assessing the
performance of the Group, and is a
generally accepted auditing benchmark.
1% of total assets, restricted to 90% of
Group financial statement materiality
The Company is a non-trading holding
Company. The entity's assets relate
solely to their ownership of the
subsidiary trading companies and thus
reflect the Company's purpose.
Company materiality has been restricted
to ensure it is not greater than 90% of
the Group's financial statement
materiality in line with PwC guidance.
For each component in the scope of our group audit, we
allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across
components was between £348,800 and £405,900. Certain
components were audited to a local statutory audit
materiality that was also less than our overall group
materiality.
We use performance materiality to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds
overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the
nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was
75% (2021: 75%) of overall materiality, amounting to
£338,287 (2021: £288,000) for the group financial
statements and £304,458 (2021: £259,200) for the company
financial statements.
In determining the performance materiality, we considered
a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls - and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with those charged with governance that we
would report to them misstatements identified during our
audit above £22,552 (group audit) (2021: £19,200) and
£20,297 (company audit) (2021: £17,280) as well as
misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's
and the company’s ability to continue to adopt the going
concern basis of accounting included:
• obtaining management’s forecasts and information for the
period to December 2024;
• evaluating and assessing the process by which the Group’s
future cash flow forecasts were prepared;
97
The Pebble Group plc Annual Report 2022 Independent auditors’ report to the members of The Pebble Group plc
• agreeing the opening position of the Group’s cash flow
forecasts to the 2022 audited financial statements;
• reviewing the arithmetical accuracy of management’s
forecasts;
• assessing and challenging management’s key assumptions
in the going concern model, including the forecast sales,
margins, capital expenditure and other costs assumptions
over the period to December 2024;
• evaluating the appropriateness of the severe but plausible
cash flow forecast used in management’s determination of
the going concern basis of preparation, which included an
assessment and sensitivity analysis of the key assumptions
underpinning the cash flows throughout the going concern
period;
• obtaining the terms of the Group’s financing facility and
the covenants in place in relation to this facility, and
determining that the Group’s base case and severe but
plausible forecasts show compliance with all covenant
conditions for at least 12 months from the date of the
approval of financial statements;
• gaining an understanding of the potential mitigating actions
that the Directors could implement to meet the
requirements of the covenants; and
• reviewing management’s disclosures in the financial
statements. We are satisfied that they are consistent with
the assessment performed. We also read the disclosures
made in the other information and did not identify any
inconsistencies with the financial statements.
Based on the work we have performed, we have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast
significant doubt on the group's and the company’s ability to
continue as a going concern for a period of at least twelve
months from when the financial statements are authorised
for issue.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is
appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the
group's and the company's ability to continue as a going
concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in
the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible
for the other information. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
98
misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform
procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic report and Directors' Report,
we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report
and Directors' Report for the year ended 31 December
2022 is consistent with the financial statements and has
been prepared in accordance with applicable legal
requirements.
In light of the knowledge and understanding of the group
and company and their environment obtained in the course
of the audit, we did not identify any material misstatements
in the Strategic report and Directors' Report.
Responsibilities for the financial statements and
the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors'
responsibilities in respect of the financial statements, the
directors are responsible for the preparation of the financial
statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
FINANCIAL STATEMENTSThe Pebble Group plc Annual Report 2022 Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with
laws and regulations related to employment legislation, and
we considered the extent to which non-compliance might
have a material effect on the financial statements. We also
considered those laws and regulations that have a direct
impact on the financial statements such as the Companies
Act 2006, AIM listing rules and tax legislation. We evaluated
management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk
of override of controls), and determined that the principal
risks were related to inappropriate journal entries to
increase revenue or EBITDA, and management bias in
accounting estimates. Audit procedures performed by the
engagement team included:
• obtaining an understanding of the legal and regulatory
framework applicable to the Group and how the Group is
complying with that framework;
• discussions with management and the Audit Committee,
including consideration of known or suspected instances
of non-compliance with laws and regulation and fraud;
• reviewing minutes of meetings of those charged with
governance, where available;
accordance with Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is
shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
• we have not obtained all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• the company financial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Jonathan Studholme (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
• incorporating an element of unpredictability into our audit
Chartered Accountants and Statutory Auditors
Manchester
21 March 2023
procedures;
• identifying and testing journal entries, in particular journal
entries posted with unusual account combinations; and
• challenging assumptions and judgements made by
management in their significant accounting estimates.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically involves
selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target
particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from
which the sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for
and only for the company’s members as a body in
99
The Pebble Group plc Annual Report 2022 Consolidated income statement
For the year ended 31 December 2022
Revenue
Cost of goods sold
Gross profit
Operating expenses
Operating profit
Analysed as:
Adjusted EBITDA1
Depreciation
Amortisation
Share-based payment charge
Total operating profit
Finance expense
Profit before taxation
Income tax expense
Profit for the year
Basic earnings per share
Diluted earnings per share
Note
4
5
5
12
11
23
7
9
10
10
2022
£’000
134,025
(81,279)
52,746
(42,523)
10,223
2021
£’000
115,101
(73,128)
41,973
(32,107)
9,866
18,042
15,378
(2,384)
(4,182)
(1,253)
10,223
(520)
9,703
(1,986)
(2,811)
(715)
9,866
(549)
9,317
(2,090)
(1,970)
7,613
4.55p
4.54p
7,347
4.39p
4.38p
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.
100
FINANCIAL STATEMENTSThe Pebble Group plc Annual Report 2022 Consolidated statement of other comprehensive income
For the year ended 31 December 2022
Items that may be subsequently reclassified to profit and loss
Foreign operations – foreign currency translation differences
Other comprehensive income for the year
Profit for the year
Total comprehensive income for the year
2022
£’000
2021
£’000
2,190
2,190
7,613
9,803
277
277
7,347
7,624
101
The Pebble Group plc Annual Report 2022 Consolidated statement of financial position
As at 31 December 2022
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Lease liability
Deferred tax liability
Total non-current liabilities
Current liabilities
Lease liability
Trade and other payables
Current tax liability
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity and reserves
Share capital
Share premium
Capital reserve
Merger reserve
Translation reserve
Share-based payments reserve
Retained earnings
TOTAL EQUITY
Note
2022
£’000
2021
£’000
11
12
13
14
15
16
17, 19
13
18, 19
18
18
20
20
60,002
9,492
292
69,786
15,447
34,693
15,058
65,198
55,674
7,927
300
63,901
10,093
29,422
12,051
51,566
134,984
115,467
7,490
2,860
10,350
1,569
36,413
1,063
39,045
49,395
85,589
1,675
78,451
125
6,388
3,035
9,423
1,384
30,065
20
31,469
40,892
74,575
1,675
78,451
125
(103,581)
(103,581)
863
1,892
106,164
85,589
(1,327)
681
98,551
74,575
The notes on pages 105 to 131 are an integral part of these financial statements.
The financial statements on pages 100 to 131 were approved by the Board of Directors and authorised for issue on
21 March 2023, and were signed on its behalf by:
C Thomson
Director
21 March 2023
102
FINANCIAL STATEMENTSThe Pebble Group plc Annual Report 2022 Consolidated statement of changes in equity
For the year ended 31 December 2022
Share
capital
£’000
Share
premium
£’000
Capital
reserve
£’000
Merger
reserve
£’000
Translation
reserve
£’000
Share-based
payments
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
At 1 January 2021
1,800
78,451
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income
Purchase of deferred
shares
Employee share schemes
– value of employee
services (note 23)
Deferred tax on employee
share schemes
Total transactions with
owners recognised in
equity
-
-
-
(125)
-
-
(125)
-
-
-
-
-
-
-
At 31 December 2021
1,675
78,451
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income
Employee share schemes
– value of employee
services (note 23)
Deferred tax on employee
share schemes
Total transactions with
owners recognised in
equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
125
-
-
125
125
-
-
-
-
-
-
(103,581)
(1,604)
13
91,204
66,283
-
-
-
-
-
-
-
-
277
277
-
-
-
-
(103,581)
(1,327)
-
-
-
-
-
-
-
2,190
2,190
-
-
-
-
-
-
-
601
67
668
681
-
-
-
1,196
15
1,211
7,347
7,347
-
277
7,347
7,624
-
-
-
-
-
601
67
668
98,551
74,575
7,613
7,613
-
2,190
7,613
9,803
-
-
-
1,196
15
1,211
At 31 December 2022
1,675
78,451
125
(103,581)
863
1,892
106,164
85,589
The notes on pages 105 to 131 are an integral part of these financial statements.
103
The Pebble Group plc Annual Report 2022 Consolidated cash flow statement
For the year ended 31 December 2022
Operating profit
Adjustments for:
– Depreciation
– Amortisation
– Share-based payment charge
– Loss/(profit) on disposal of fixed assets
Cash flows from operating activities before changes in working capital
– Change in inventories
– Change in trade and other receivables
– Change in trade and other payables
Cash flows from operating activities
– Income taxes paid
Net cash flows from operating activities
Cash flows from investing activities
– Purchase of property, plant and equipment
– Purchase of intangible assets
Net cash flows used in investing activities
Cash flows from financing activities
– Lease payments
– Interest paid
Net cash flows used in financing activities
NET CASH FLOWS
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year
The notes on pages 105 to 131 are an integral part of these financial statements.
Note
12
11
23
14
15
18
12
11
7
16
16
2022
£’000
10,223
2,384
4,182
1,253
19
18,061
(5,354)
(5,271)
7,263
14,699
(1,712)
12,987
(945)
(7,434)
(8,379)
(1,737)
(520)
(2,257)
2,351
12,051
656
15,058
2021
£’000
9,866
1,986
2,811
715
(13)
15,365
2,016
(8,433)
3,556
12,504
(521)
11,983
(680)
(4,602)
(5,282)
(1,360)
(549)
(1,909)
4,792
7,066
193
12,051
104
FINANCIAL STATEMENTSThe Pebble Group plc Annual Report 2022 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 digital commerce, products and related services
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 digital commerce,
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 (£’000).
(b) Going concern
The Group meets its day-to-day working capital
requirements through its own cash balances and committed
banking facilities. The Group refinanced its £10m RCF in
January 2023 for a three-year period to January 2026, with
the option to extend for an additional year to January 2027.
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 2024.
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 its annual reporting
period commencing 1 January 2022:
• Amendment to IFRS 16, ‘Leases’ – Covid-19 related rent
concessions Extension of the practical expedient; and
• Narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and
some annual improvements on IFRS 1, IFRS 9, IAS 41 and
IFRS 16
The amendments listed above do not have any impact on
the amounts recognised in prior periods and are not
expected to significantly affect 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
2022 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.
105
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
2. Accounting policies (continued)
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
digital commerce 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.
Facilisgroup provision of digital commerce,
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.
Revenue earned from Preferred Suppliers is recognised
over time on a monthly basis in line with orders placed by
Partners with these suppliers. Payments are received
bi-annually.
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
106
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 trade receivables 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.
(g) Supplier rebates
In the Brand Addition segment, amounts due under rebate
agreements are recognised based upon volumes of products
purchased during the period to which the rebates relate at
the relevant rebate rates, per supplier agreements. Amounts
are credited to the cost of purchase of goods for resale and
any accrued income is included in other receivables.
(h) 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.
(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.
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 2. Accounting policies (continued)
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) Finance costs
Finance costs of financial liabilities are recognised in the
income statement over the term of such instruments at a
constant rate on the carrying amount. Foreign exchange
differences on revaluation of foreign currency borrowings
are also presented within finance costs.
(k) 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 11.
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.
(l) 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.
107
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
2. Accounting policies (continued)
The Group makes use of a simplified approach in accounting
for trade and other receivables 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.
(m) Financial instruments
The Group’s policy is to recognise transfers into and out of
fair value hierarchy levels as at the end of the reporting
period.
Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives, and
equity securities) is based on quoted market prices at the
end of the reporting period. The quoted market price used
for financial assets held by the Group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques which
maximise the use of observable market data and rely as
little as possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable,
the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in
level 3. This is the case for unlisted equity securities.
Financial assets
Non-derivative financial assets are classified as either
financial assets at amortised cost, fair value through profit
or loss or fair value through other comprehensive income.
The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash
flows in a transaction in which substantially all of the risks
and rewards of ownership of the financial asset are
transferred. The basis of classification depends on the
Group’s business model and the contractual cash flow
characteristics of the financial asset. The majority of
financial assets of the Group are held at amortised cost.
Financial assets include trade and other receivables and
cash and cash equivalents. Trade and other receivables are
amounts due from customers for services performed in the
ordinary course of business. If collection is expected in one
year or less, they are classified as current assets. If not, they
are presented as non-current assets. Cash and cash
equivalents comprise cash balances held in banks.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Under IFRS 9, the Group elected to use the simplified
approach to measure the loss allowance at an amount equal
108
to lifetime expected credit losses for trade receivables.
A provision for impairment of trade receivables is
established when there is objective evidence that the
Group will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial
difficulties of the counterparty, probability that the
counterparty will enter bankruptcy or financial
reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired.
In addition, IFRS 9 requires the Group to consider forward-
looking information and the probability of default when
calculating expected credit losses. The measurement of
expected credit losses reflects an unbiased and probability
weighted amount that is determined by evaluating the range
of possible outcomes as well as incorporating the time value
of money. The expected loss rates are based on the
payment profiles of sales over the year and the
corresponding historical credit losses experienced within
this period. The historical loss rates are adjusted to reflect
current and forward-looking information on factors
affecting the ability of the customers to settle the
receivables.
The Group considers reasonable and supportable
customer-specific and market information about past
events, current conditions and forecasts of future economic
conditions when measuring expected credit losses. The
amount of the provision is the difference between the
carrying amount and the present value of estimated future
cash flows of the asset, discounted, where material, at the
original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account,
and the amount of the loss is recognised in the income
statement within operating expenses.
When a trade receivable is uncollectable, it is written off
against the allowance account for trade receivables.
Subsequent recoveries of amounts previously written off
are credited against operating expenses in the income
statement. Only when amounts are confirmed irrecoverable,
are they written off to the income statement.
Financial liabilities
Non-derivative financial liabilities are initially recognised at
fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these liabilities are
measured at amortised cost using the effective interest
method. The Group’s borrowings, finance leases, trade, and
most other payables fall into this category of financial
instruments.
The Group derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.
Financial derivatives
The Group uses derivative financial instruments to hedge its
exposure to risks arising from operational activities,
principally foreign exchange risk. In accordance with
treasury policy, the Group does not hold or issue derivative
financial instruments for trading purposes. The Group does
not hedge account for these items. Any gain or loss arising
from derivative financial instruments is based on changes in
fair value, which is determined by direct reference to active
market transactions or using a valuation technique where no
active market exists. At certain times the Group has foreign
currency forward contracts that fall into this category.
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 2. Accounting policies (continued)
(n) 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.
(o) 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.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit
or loss.
Depreciation is calculated using straight-line method 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.
(p) Cash and cash equivalents
Cash and cash equivalents comprise cash balances. Bank
borrowings that are repayable on demand and form an
integral part of the Group’s cash management are included
as a component of cash and cash equivalents for the
purpose only of the statement of cash flows.
(q) Inventories
Inventories are valued at the lower of cost and net realisable
value on a FIFO basis. Cost comprises purchase price plus
associated freight and duty costs for imported goods.
Inventories are regularly assessed for evidence of
impairment. Where such evidence is identified, a provision
is recognised to reduce the value of stock to its selling price
after incurring any future costs to sell.
(r) 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 12.
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.
(s) 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 digital commerce, 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, who have been
identified as the Chief Operating Decision Maker.
109
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
2. Accounting policies (continued)
(t) Employee benefits
The Group provides a range of benefits to employees,
including annual bonus arrangements, paid holiday
arrangements and defined contribution pension plans.
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.
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.
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.
(u) 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 £0.02m has been
received and credited to the income statement in 2022
(2021: £0.5m). 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.
110
(v) Equity, reserves and dividend payments
Share capital
Share capital represents the nominal (par) value of shares
that have been issued.
Share premium
Share premium represents the difference between the
nominal value of shares issued and the fair value of
consideration received. Any transaction costs associated
with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
Capital reserve
The capital reserve was created in 2021 as a result of the
purchase by the Company of all deferred shares in issue.
Merger reserve
The merger reserve was created as a result of the share for
share exchange under which The Pebble Group plc became
the parent undertaking prior to the Initial Public Offering
(“IPO”). Under merger accounting principles, the assets and
liabilities of the subsidiaries were consolidated at book
value in the Group financial statements and the
consolidated reserves of the Group were adjusted to
reflect the statutory share capital, share premium and
other reserves of the Company as if it had always existed,
with the difference presented as the merger reserve.
Translation reserve
The translation reserve includes foreign currency translation
differences arising from the translation of financial
statements of the Group’s foreign entities.
Retained earnings
Retained earnings includes all current and prior period
retained profits and losses.
All transactions with owners of the parent are recorded
separately within equity.
Dividends
Dividends are recognised when approved by the Group’s
shareholders or, in the case of interim dividends, when the
dividend has been paid. No interim dividend has been paid
in the year (2021: £nil). The Directors recommend the
payment of a final dividend for 2022 of £1.0m (2021: £nil).
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.
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 3. Judgements in applying accounting policies
and key sources of estimation uncertainty
(continued)
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. As part of these calculations,
we have considered various sensitivities, explained in
note 11. A 1% increase in the Weighted Average Cost of
Capital (“WACC”) would reduce the value in use by £25.7m.
Goodwill relates to the various acquisitions made and
amounts to £36,139,000 as at 31 December 2022 (2021:
£35,805,000). The estimates used in the impairment
calculation are set out in note 11. There is no significant risk
of material adjustment to the carrying amount of the
goodwill within the next twelve months. The sensitivities
applied are explained in note 11.
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. No reasonable sensitivity performed in relation to
the useful economic lives assumption would result in a
material change in the carrying value of intangible assets.
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. No
reasonable sensitivity performed in relation to the useful
economic lives assumption would result in a material change
in the carrying value of property, plant and equipment.
Share-based payment charge
Fair values used in calculating the amount to be expensed as
a share-based payment is subject to a level of uncertainty.
These fair values are calculated by applying a valuation
model, which is in itself judgmental, and takes into account
certain inherently uncertain assumptions. The basic
assumptions that are used in the calculations are explained
further in note 23. No reasonable sensitivity performed in
relation to the share-based payment assumptions would
result in a material change to the expense in the
consolidated income statement.
(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 11.
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
financial statements, are:
• Brand Addition - sale of promotional product through
complex services provided under framework contracts on
an international basis;
• Facilisgroup - provision of digital commerce, consolidated
buying power and community learning and networking
events to SME promotional product distributors in North
America through subscription-based services; and
• Central operations – certain central activities and costs
that are not directly related to the activities of the
operating segments.
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 2022 there were no major customers that individually
accounted for at least 10% of total revenues (2021: two
customers). In 2021, the revenues relating to these
customers were £33,215,000 and both related to the Brand
Addition segment.
111
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
4. Segmental analysis (continued)
Analysis of revenue by geographical destination
United Kingdom
Continental Europe
US
Rest of World
Total revenue
2022
£’000
22,570
47,236
43,189
21,030
2021
£’000
26,961
38,914
31,675
17,551
134,025
115,101
The geographical revenue information above is based on the location of the customer.
Included within Rest of World is £14,247,000 of revenue from China (2021: £11,638,000).
All the above revenues are generated from contracts with customers and are recognised at a point in time or over time as
follows:
At a point in time
Over time
Total revenue
2022
£’000
118,507
15,518
134,025
2021
£’000
102,916
12,185
115,101
All non-current assets of the Group reside in the UK, with the exception of non-current assets with a net book value of
£31,250,000 (2021: £27,111,000) which were located in North America and £2,451,000 (2021: £711,000) located in other
foreign countries.
Income statement for the year ended 31 December 2022
Brand
Addition
£’000
117,391
(81,279)
Facilisgroup
£’000
16,634
-
36,112
16,634
(28,155)
(11,624)
7,957
5,010
Central
operations
£’000
-
-
-
(2,744)
(2,744)
(2,436)
(39)
-
(269)
2022
£’000
134,025
(81,279)
52,746
(42,523)
10,223
18,042
(2,384)
(4,182)
(1,253)
10,223
(520)
9,703
(2,090)
7,613
11,467
(1,719)
(1,232)
(559)
7,957
(388)
7,569
(1,495)
6,074
9,011
(626)
(2,950)
(425)
5,010
(2,744)
(13)
4,997
(689)
4,308
(119)
(2,863)
94
(2,769)
Revenue
Cost of goods sold
Gross profit
Operating expenses
Operating profit/(loss)
Analysed as:
Adjusted EBITDA
Depreciation
Amortisation
Share-based payment charge
Total operating profit/(loss)
Finance expense
Profit/(loss) before taxation
Income tax (expense)/income
Profit/(loss) for the year
112
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 4. Segmental analysis (continued)
Statement of financial position as at 31 December 2022
Brand
Addition
£’000
Facilisgroup
£’000
Central
operations
£’000
2022
£’000
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Lease liability
Deferred tax liability
Total non-current liabilities
Current liabilities
Lease liability
Trade and other payables
Current tax liability
Total current liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
37,863
6,449
137
22,139
3,004
-
44,449
25,143
15,447
29,989
12,655
58,091
-
4,648
2,265
6,913
102,540
32,056
5,148
-
5,148
1,221
33,543
258
35,022
40,170
62,370
2,315
2,860
5,175
303
2,075
805
3,183
8,358
-
39
155
194
-
56
138
194
388
27
-
27
45
795
-
840
867
23,698
(479)
60,002
9,492
292
69,786
15,447
34,693
15,058
65,198
134,984
7,490
2,860
10,350
1,569
36,413
1,063
39,045
49,395
85,589
113
The Pebble Group plc Annual Report 2022 Brand
Addition
£’000
102,383
(73,128)
29,255
(22,133)
Facilisgroup
£’000
Central
operations
£’000
2021
£’000
115,101
(73,128)
41,973
-
-
-
(2,397)
(32,107)
12,718
-
12,718
(7,577)
7,122
5,141
(2,397)
9,866
9,932
(1,410)
(1,136)
(264)
7,122
(378)
6,744
(865)
5,879
7,581
(533)
(1,675)
(232)
(2,135)
15,378
(43)
-
(219)
(1,986)
(2,811)
(715)
5,141
(2,397)
9,866
(26)
5,115
(1,131)
3,984
(145)
(2,542)
26
(549)
9,317
(1,970)
(2,516)
7,347
Notes to the Group financial statements
(continued)
4. Segmental analysis (continued)
Income statement for the year ended 31 December 2021
Revenue
Cost of goods sold
Gross profit
Operating expenses
Operating profit/(loss)
Analysed as:
Adjusted EBITDA
Depreciation
Amortisation
Share-based payment charge
Total operating profit/(loss)
Finance expense
Profit/(loss) before taxation
Income tax (expense)/income
Profit/(loss) for the year
114
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 4. Segmental analysis (continued)
Statement of financial position as at 31 December 2021
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Lease liability
Deferred tax liability
Total non-current liabilities
Current liabilities
Lease liability
Trade and other payables
Current tax liability/(asset)
Total current liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
Brand
Addition
£’000
Facilisgroup
£’000
Central
operations
£’000
2021
£’000
37,728
4,766
146
17,946
3,083
58
-
78
96
55,674
7,927
300
42,640
21,087
174
63,901
10,093
25,415
10,335
45,843
88,483
4,018
-
4,018
985
26,500
28
27,513
31,531
56,952
-
3,930
1,230
5,160
26,247
2,349
3,035
5,384
328
2,752
36
3,116
8,500
17,747
-
77
486
563
737
21
-
21
71
813
(44)
840
861
10,093
29,422
12,051
51,566
115,467
6,388
3,035
9,423
1,384
30,065
20
31,469
40,892
(124)
74,575
115
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
5. Expenses by nature
Inventory recognised as an expense
Other cost of sales
Total cost of sales
Staff costs (note 6)
Depreciation of property, plant and equipment (note 12)
Amortisation of intangible assets (note 11)
Auditors’ remuneration (note 8)
Share-based payment charge (note 23)
Foreign exchange loss and movement in foreign exchange derivative contracts
Increase in provision for expected credit losses
Other external charges
Total operating expenses
2022
£’000
71,649
9,630
81,279
25,769
2,384
4,182
310
1,253
65
34
8,526
42,523
2021
£’000
60,881
12,247
73,128
20,239
1,986
2,811
211
715
4
13
6,128
32,107
Total cost of sales and operating expenses
123,802
105,235
Depreciation and amortisation are charged to operating expenses in the income statement.
Other external charges include a credit of £24,000 (2021: £500,000) from the use of Government schemes.
Additional staff costs of £5,797,000 (2021: £3,667,000) have been capitalised as intangible assets (see note 11).
2022
£’000
2021
£’000
22,423
2,666
680
25,769
2022
£’000
5,749
31
17
17,676
2,001
562
20,239
2021
£’000
3,615
32
20
5,797
3,667
6. Staff costs
Personnel costs are analysed below:
Staff costs (including Directors) consist of:
Wages and salaries
Social security costs
Other pension costs
Total staff costs
Wages and salaries
Social security costs
Other pension costs
Total staff costs
116
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS Defined contribution scheme
The amount recognised in the income statement as an expense in relation to the Group’s defined contribution schemes is
£680,000 (2021: £562,000). Included within accruals and other creditors is £81,000 (2021: £23,000) for outstanding
contributions to the defined contribution schemes.
During the year, the monthly average number of the Group’s employees (including Executive Directors and temporary
employees) was as follows:
By function:
Management
Sales and distribution
Administration
Total employees
2022
No.
17
287
252
556
2021
No.
17
226
218
461
Key management compensation
Key management of the Group is considered to be the Board of Directors. Details of Directors’ remuneration is disclosed in
the Report of the Remuneration Committee on page 86. Remuneration paid to these individuals on an aggregated basis is
as follows:
Salaries including bonuses and social security costs
Short term benefits
Total remuneration
7. Finance expense
An analysis is set out below:
Other interest
Unwind of discount finance costs on lease liabilities
Total finance expense
8. Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of The Pebble Group plc
Fees payable to the Company’s auditors in respect of:
Audit of the Company’s subsidiaries
Total auditors’ remuneration
2022
£’000
943
27
970
2022
£’000
146
374
520
2022
£’000
105
205
310
2021
£’000
860
26
886
2021
£’000
168
381
549
2021
£’000
75
136
211
117
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
9. Income tax expense
Current income tax
- UK corporation tax charge for the year
- Adjustments in respect of prior years
- Foreign tax
Total current income tax
Deferred tax
- Deferred tax
- Adjustments in respect of prior years
- Impact of rate change
Total deferred tax
Total income tax expense
2022
£’000
2021
£’000
901
(159)
1,822
2,564
(426)
(48)
-
(474)
217
(40)
1,173
1,350
755
(173)
38
620
2,090
1,970
The expected corporation tax charge for the year is calculated at the UK corporation tax rate of 19% (2021: 19%) on the
profit before tax for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions in which the Group operates.
The charge for the year can be reconciled to the profit in the consolidated income statement as follows:
Analysis of charge in year
Reconciliation of total tax charge:
Profit before taxes
Profit before taxes multiplied by the rate of corporation tax in the UK of 19% (2021: 19%)
Effects of:
Adjustments in respect of prior years
Impact of difference in current and deferred tax rates in the UK
Non-deductible expenses/(income)
Differences in tax rates in overseas jurisdictions
Unrecognised for deferred tax
Utilisation of unrecognised deferred tax brought forward
2022
£’000
9,703
1,844
(207)
13
32
286
122
-
2021
£’000
9,317
1,770
(213)
38
(24)
382
32
(15)
Total income tax expense
2,090
1,970
Factors that may affect future tax charges
An increase in the UK corporation tax rate from the current rate of 19% to 25% from 1 April 2023. This change was
substantively enacted on 24 May 2021. The impact of this rate change has been considered when recognising the deferred
tax in relation to the UK companies in the Group. Where the asset or liability is expected to unwind after 1 April 2023 the
deferred tax has been recognised at 25%.
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:
Deferred tax: credit relating to employee share schemes – value of employee services
2022
£’000
15
2021
£’000
67
118
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 10. 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 23, 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 £0.01 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, 8 June 2021, and 30 March 2022 and Group Sharesave Plan (SAYE) on 6 October 2021 as detailed
in note 23 is 0.01p for the year ended 31 December 2022 (2021: 0.01p).
The calculation of basic earnings per share is based on the following data:
Statutory EPS
Earnings (£’000)
Earnings for the purposes of basic and diluted earnings per share being profit for the year
attributable to equity shareholders
Number of shares
Weighted average number of shares for the purposes of basic earnings per share
Weighted average dilutive effects of conditional share awards
Weighted average number of shares for the purposes of diluted earnings per share
Earnings per Ordinary Share (pence)
Basic earnings per Ordinary Share (pence)
Diluted earnings per Ordinary Share (pence)
2022
2021
7,613
7,347
167,450,893 167,450,893
353,605
167,636,517 167,804,498
185,624
4.55
4.54
4.39
4.38
Adjusted EPS
The calculation of adjusted earnings per share is based on the after-tax adjusted profit after adding back certain costs as
detailed in the table on the following page. 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.
Earnings (£’000)
Earnings for the purposes of basic and diluted earnings per share being adjusted earnings
Number of shares
Weighted average number of shares for the purposes of adjusted earnings per share
Weighted average dilutive effects of conditional share awards
Weighted average number of shares for the purposes of diluted earnings per share
Adjusted earnings per Ordinary Share (pence)
Basic adjusted earnings per Ordinary Share (pence)
Diluted adjusted earnings per Ordinary Share (pence)
2022
2021
9,675
8,599
167,450,893 167,450,893
353,605
167,636,517 167,804,498
185,624
5.78
5.77
5.14
5.12
119
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
10. Earnings per share (continued)
The calculation of adjusted earnings per share is based on the following data:
Profit for the year attributable to equity shareholders
Add back/(deduct):
Amortisation charge on acquired intangible assets
Share-based payment charge
Tax effect of the above
Adjusted earnings
11. Intangible assets
2022
£’000
7,613
1,420
1,253
(611)
9,675
2021
£’000
7,347
894
715
(357)
8,599
Goodwill
£’000
Customer
relationships
£’000
Software and
development
costs
£’000
Work in
progress
£’000
Cost
Balance at 1 January 2021
Impact of foreign exchange translation
Additions
Reclassifications
35,802
10,144
17,130
3
-
-
97
-
-
100
3,553
538
Balance at 31 December 2021
35,805
10,241
21,321
Impact of foreign exchange translation
334
1,081
Additions
Disposals
Reclassifications
-
-
-
-
-
-
1,643
2,347
(926)
492
Balance at 31 December 2022
36,139
11,322
24,877
Total
£’000
63,298
200
4,292
-
67,790
3,097
6,462
(926)
-
76,423
9,281
24
2,811
12,116
1,049
4,182
(926)
16,421
222
-
739
(538)
423
39
4,115
-
(492)
4,085
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,157
(13)
503
8,124
37
2,308
1,647
10,469
171
554
-
878
3,628
(926)
2,372
14,049
Accumulated amortisation
Balance at 1 January 2021
Impact of foreign exchange translation
Charge for year
Balance at 31 December 2021
Impact of foreign exchange translation
Charge for year
Disposals
Balance at 31 December 2022
Net book value
At 31 December 2020
At 31 December 2021
At 31 December 2022
35,802
35,805
36,139
8,987
8,594
8,950
9,006
10,852
10,828
222
423
54,017
55,674
4,085
60,002
Staff costs of £5,797,000 (2021: £3,667,000) have been capitalised as intangible assets.
The remaining amortisation periods for customer relationships are between 14 and 16 years (2021: 15 and 17 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
on the following page.
120
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 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 2023 to 2027 were used. For Brand
Addition, these were based on a forecast for 2023 with growth rates of 6% applied to EBITDA each year. For Facilis, these
were based on forecasts for 2023 to 2026, with 10% growth rates applied to EBITDA in 2027. Subsequent years were based
on a reduced rate of growth of 2.0% (2021: 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 12.4% for Brand Addition and 13.6%
for Facilisgroup (2021: 8.9% for Brand Addition and 9.3% for Facilisgroup) to discount the cash flows used for the CGUs.
Sensitivities to revenue and margin, consistent with those used in the going concern analysis, were applied to each CGU.
Additionally, the impact on headroom arising from a 2% increase in the WACC was also considered. 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:
Brand Addition
Facilisgroup
The value in use, calculated as described on the previous page and attributable to each CGU is:
Brand Addition
Facilisgroup
2022
£’000
33,057
3,082
36,139
2022
£’000
102,824
123,798
2021
£’000
33,057
2,748
35,805
2021
£’000
171,111
215,961
226,622
387,072
Management considers that no reasonably possible changes would reduce either CGU’s headroom to £nil and the reduction
from prior year is driven by the increase in WACC.
121
The Pebble Group plc Annual Report 2022 Fixtures and
fittings
£’000
Computer
hardware
£’000
Right-of-use
assets
£’000
Total
£’000
3,713
2,708
12,795
19,216
19
160
-
(2)
520
-
45
461
(517)
62
1,141
(517)
3,892
3,226
12,784
19,902
216
327
(880)
146
618
783
2,471
1,145
3,416
(1,319)
(2,240)
(4,439)
3,555
2,671
13,798
20,024
2,935
1,977
16
182
-
10
336
-
3,133
2,323
154
233
(880)
98
451
5,202
20
1,468
(171)
6,519
339
1,700
10,114
46
1,986
(171)
11,975
591
2,384
(4,418)
(1,300)
(2,238)
2,640
1,572
6,320
10,532
778
759
915
731
903
1,099
7,593
6,265
7,478
2022
£’000
7,362
87
29
7,478
9,102
7,927
9,492
2021
£’000
6,069
140
56
6,265
Notes to the Group financial statements
(continued)
12. Property, plant and equipment
Cost
Balance at 1 January 2021
Impact of foreign exchange translation
Additions
Disposals
Balance at 31 December 2021
Impact of foreign exchange translation
Additions
Disposals
Balance at 31 December 2022
Accumulated depreciation
Balance at 1 January 2021
Impact of foreign exchange translation
Charge for the year
Disposals
Balance at 31 December 2021
Impact of foreign exchange translation
Charge for the year
Disposals
Balance at 31 December 2022
Net book value
Balance at 31 December 2020
Balance at 31 December 2021
Balance at 31 December 2022
Right-of-use assets – net book value
Leasehold property
Fixtures and fittings
Computer hardware
Total Right-of-use assets – net book value
122
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 13. Deferred tax assets and liabilities
Deferred tax assets and liabilities are analysed as follows:
Accelerated
depreciation
£’000
Intangible
fixed assets
£’000
Share options
£’000
Short-term
timing
differences
£’000
Transitional
relief
on IFRS 16
adoption
£’000
Losses and
unused
tax relief
£’000
Total
£’000
Balance at 1 January 2021
(963)
(1,659)
Tax charge in respect of prior
year
Tax credit directly credited to
equity
Foreign exchange translation
(575)
-
(18)
92
-
(20)
Balance at 31 December 2021
(1,556)
(1,587)
Tax credit/(charge) in respect of
current year
Tax credit directly credited to
equity
Foreign exchange translation
(13)
102
-
(127)
-
(195)
Balance at 31 December 2022
(1,696)
(1,680)
3
150
67
-
220
160
15
-
395
8
7
-
-
15
-
-
-
15
-
173
-
-
173
467
(2,144)
(467)
(620)
-
-
-
67
(38)
(2,735)
(34)
259
474
-
-
-
-
15
(322)
139
259
(2,568)
The above are disclosed in the statement of the financial position as a deferred tax asset of £292,000 and a deferred tax
liabilities of £(2,860,000) resulting in a net deferred tax position of £(2,568,000) as analysed above.
The above amounts reflect the differences between the carrying and tax amounts as at each year end.
Of the deferred tax balances at year end, £34,000 (2021: £41,000) of the deferred tax asset and £508,000 (2021:
£660,000) of the deferred tax liability are expected to be utilised within one year.
There are unrecognised deferred tax assets relating to capital losses of £9,900,000 (2021: £9,900,000) and in respect of
trading losses of £657,000 (2021: £535,000). The Directors have assessed at this time that there will not be sufficient
taxable profits available in future periods, for the companies in the Group in which these losses reside, in order to utilise
these losses.
14. Inventories
Finished goods for resale
Total closing inventories
Stocks are stated after provisions for impairment of £292,000 (2021: £209,000).
There is no difference between the replacement cost of stocks and carrying value.
2022
£’000
15,447
15,447
2021
£’000
10,093
10,093
123
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
15. Trade and other receivables
Amounts falling due within one year:
Trade receivables not past due
Trade receivables past due
Provision for trade receivables
Trade receivables net
Other debtors
FX derivative
Prepayments
2022
£’000
2021
£’000
24,440
5,901
(73)
30,268
2,002
-
2,423
34,693
20,241
4,030
(57)
24,214
1,342
266
3,600
29,422
We have identified £780,000 included in contract assets in 2021 that should have been classified as trade receivables not
past due and so have amended the above note by £780,000 to reclassify those balances between contract assets and
trade receivables not past due. The overall trade and other receivables balance has not changed.
Other debtors include amounts relating to other taxes and social security and supplier rebates.
Currency analysis
Sterling
Euro
US Dollar
Chinese Renminbi
Other
Total trade and other receivables
2022
£’000
8,054
10,419
12,234
2,800
1,186
34,693
2021
£’000
4,922
10,579
11,007
2,079
835
29,422
Any fair value difference on trade and other receivables is not material. Trade and other receivables are considered past
due once they have passed their contracted due date. Trade and other receivables are assessed for impairment based
upon the expected credit losses model.
The Group’s customer base is predominantly made up of high-quality organisations with a high credit rating. In order to
manage credit risk, the Directors set limits for customers based on a combination of payment history and third-party
credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The
maturity analysis of financial assets (which comprise trade receivables and other debtors) is analysed below.
Trade and other receivables:
– Not yet due
– Up to 3 months overdue
– 3 to 6 months past due
– Over 6 months past due
Gross
£’000
Provision
£’000
26,442
4,057
1,722
122
32,343
-
-
-
(73)
(73)
2022
Net
£’000
26,442
4,057
1,722
49
Gross
£’000
Provision
£’000
21,583
3,092
700
238
-
-
-
(57)
(57)
2021
Net
£’000
21,583
3,092
700
181
25,556
32,270
25,613
The Group uses objective evidence as well as considering forward-looking information, including macroeconomic factors,
and the probability of default when calculating expected credit losses. No significant changes to estimation techniques or
assumptions were made during the reporting period. The maturity of financial assets is therefore used as an indicator as to
the probability of default. The maximum amount of exposure to credit risk is the total value of unprovided trade and other
receivables as set out above. There are no amounts outstanding on financial assets that were written off during the
reporting period and which are still subject to enforcement activity.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. The Group uses the simplified approach to measure the loss allowance at
an amount equal to lifetime expected credit losses for trade receivables. Trade and other receivables are grouped based
on the days past due. There is limited concentration of credit risk with respect to trade receivables due to the diverse and
unrelated nature of the Group’s customers. Accordingly, the Directors believe that no further credit provision is required in
excess of the provision for impairment of receivables.
124
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 16. Cash and cash equivalents
Cash and cash equivalents
Currency analysis
Sterling
Euro
US Dollar
Other
17. Non-current liabilities
IFRS 16 lease liability (note 19)
Currency analysis
Sterling
Euro
US Dollar
Chinese Renminbi
Other
18. Current liabilities
IFRS 16 lease liability (note 19)
Lease liabilities
Corporation tax
Current tax liabilities
Trade payables
Other taxation and social security
Other payables
FX derivative
Accruals
Contract liabilities
Deferred consideration
Trade and other payables
Total current liabilities
2022
£’000
2021
£’000
15,058
12,051
2022
£’000
3,060
5,045
4,976
1,977
2021
£’000
1,293
5,030
4,310
1,418
15,058
12,051
2022
£’000
7,490
2022
£’000
1,855
1,632
3,923
49
31
7,490
2022
£’000
1,569
1,569
1,063
1,063
22,342
475
765
196
6,621
6,014
-
36,413
39,045
2021
£’000
6,388
2021
£’000
2,167
102
3,911
119
89
6,388
2021
£’000
1,384
1,384
20
20
14,955
989
533
-
6,934
5,682
972
30,065
31,469
Revenues totalling £4,460,000 were recognised in the year ended 31 December 2022 that were included in the contract
liabilities balance as at 31 December 2021 (£2,920,000 recognised in the year ended 31 December 2021 that were included
in the contract liabilities balance as at 31 December 2020).
Deferred consideration in 2021 relates to the final payment for the software asset and license acquisition from a US-based
developer in December 2020.
125
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
18. Current liabilities (continued)
Currency analysis
Sterling
Euro
US Dollar
Chinese Renminbi
Other
Total current liabilities
The fair value of financial liabilities approximates to their carrying value due to short maturities.
19. Leases
Amounts recognised in the Consolidated statement of financial position
The Consolidated statement of financial position shows the following amounts relating to leases:
Right-of-use assets
Balance at 1 January 2021
Impact of foreign exchange translation
New leases recognised in the year
Disposals
Depreciation charge for the year
Balance at 31 December 2021
Impact of foreign exchange translation
New leases recognised in the year
Disposals
Depreciation charge for the year
Balance at 31 December 2022
2022
£’000
16,330
8,903
11,694
1,510
608
39,045
2021
£’000
9,836
11,285
8,600
1,135
613
31,469
£’000
7,593
25
461
(346)
(1,468)
6,265
444
2,471
(2)
(1,700)
7,478
These are included within “Property, plant and equipment” in the Consolidated statement of financial position.
Lease liabilities
Maturity analysis – contractual undiscounted cash flows:
Less than one year
More than one year, less than two years
More than two years, less than three years
More than three years, less than four years
More than four years, less than five years
More than five years
Total undiscounted lease liabilities at year end
Finance costs
Total discounted lease liabilities at year end
Lease liabilities included in the statement of financial position:
Current
Non-current
126
2022
£’000
2021
£’000
1,897
1,726
1,627
1,624
1,091
2,207
10,172
(1,113)
9,059
1,569
7,490
9,059
1,716
1,440
1,273
1,200
1,202
2,338
9,169
(1,397)
7,772
1,384
6,388
7,772
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS Amounts recognised in the Consolidated income statement
The Consolidated income statement shows the following amounts relating to leases:
Depreciation charge – fixtures and fittings
Depreciation charge – computer hardware
Interest expense (within finance expense)
2022
£’000
1,655
45
1,700
374
2021
£’000
1,424
44
1,468
381
The above leases relate to office space, computer equipment and motor vehicles. The net book value by category is set
out in note 12.
Any expense for short-term and low-value leases is not material and has not been presented.
20. Share capital
The authorised, issued and fully paid number of shares are set out below:
Ordinary Shares of 1p each:
At 1 January 2022 and 31 December 2022
Ordinary
Shares
Number
Total share
capital
£
Share
premium
£
167,450,893
1,674,509
78,451,312
The Ordinary Shares have full voting, dividend and capital distribution rights, including on winding up. They are
non-redeemable.
21. Analysis and reconciliation of net cash/(debt)
Cash at bank and in hand
Lease liabilities
Net (debt)/cash
Cash at bank and in hand
Lease liabilities
Net cash
1 January
2021
£’000
7,066
(8,979)
(1,913)
1 January
2022
£’000
12,051
(7,772)
4,279
New leases
£’000
-
(461)
(461)
Lease
disposals
£’000
-
360
360
Cash flow
£’000
4,792
1,360
6,152
New leases
£’000
Lease disposals
£’000
Cash flow
£’000
Foreign
exchange
adjustments
£’000
31 December
2021
£’000
193
(52)
141
12,051
(7,772)
4,279
Foreign
exchange
adjustments
£’000
31 December
2022
£’000
-
(2,471)
(2,471)
-
2
2
2,351
1,737
4,088
656
(555)
101
15,058
(9,059)
5,999
127
The Pebble Group plc Annual Report 2022 Credit risk
The Group’s principal financial assets are cash, trade
receivables and other debtors. The credit risk associated
with cash is limited, as the counterparties have high credit
ratings assigned by international credit rating agencies. The
principal credit risk arises therefore from the Group’s trade
receivables. In order to manage credit risk; the Directors
set limits for customers based on a combination of payment
history and third-party credit references. Credit limits are
reviewed on a regular basis in conjunction with debt ageing
and collection history. The credit losses historically incurred
by the Group have been negligible as referred in note 15.
Liquidity risk
The Group seeks to manage the risk of being unable to
meet its obligations as they fall due by ensuring sufficient
liquidity is available and by closely managing the cash
balance.
The Group policy throughout the year has been to ensure
continuity of funding. Short-term flexibility is achieved by
revolving working capital facilities.
The Group has a cross-guarantee banking arrangement,
which is a revolving credit facility of £10,000,000 The facility
was refinanced in January 2023 for a three-year period to
January 2026, with the option to extend for an additional
year to January 2027. Interest was charged at a rate of
SONIA + 1.9%. As at year end the balance on the facility was
£nil. There is also an overdraft facility of 11,000,000 RMB for
Brand Addition (Shanghai) Trading Co. Limited. At year end,
the balance on the facility was £nil.
Notes to the Group financial statements
(continued)
22. Financial risk management and financial
instruments by category
The Group uses various financial instruments. These include
cash, issued equity instruments and various items, such as
trade receivables and trade payables that arise directly
from its operations. The main purpose of these financial
instruments is to raise finance for the Group’s operations.
The existence of these financial instruments exposes the
Group to a number of financial risks, which are described in
more detail below.
The main risks arising from the Group’s financial instruments
are market risk, credit risk and liquidity risk. The Directors
review and agree policies for managing each of these risks
and they are summarised below.
Market risk
Market risk encompasses three types of risk, being currency
risk, interest rate risk and price risk. In this instance, price
risk has been ignored as it is not considered a material risk
to the business. The Group’s policies for managing interest
rate risk are set out in the subsection entitled “Interest rate
risk” below.
Currency risk
The Group contracts with certain customers and suppliers
in Euros and Dollars and manages this foreign currency risk
using forward foreign exchange contracts. Hedge
accounting is not applied. The Group’s exposure to foreign
currency risk at the end of the reporting period is set out in
notes 15, 16, 17 and 18.
As the Group derives an amount of its earnings from
overseas operations, the Group is affected by movements
in exchange rates. This would affect both the statement of
financial position and the income statement. For a 10%
strengthening in the Sterling exchange rate, operating profit
would reduce by £569,000 (2021: £513,000) and net assets
would decrease by £1,225,000 (2021: £2,452,000). For a
10% weakening of the Sterling, operating profit would
increase by £696,000 (2021: £627,000) and net assets would
increase by £1,496,000 (2021: £2,997,000).
Interest rate risk, including cash flow interest
rate risk
The Group finances its operations through retained profits.
The Group is therefore not susceptible to interest rate risk.
128
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 22. Financial risk management and financial instruments by category (continued)
Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities recognised may also be categorised as follows:
Financial assets
Financial assets measured at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial assets measured at fair value through profit or loss
FX derivative asset
Financial liabilities
Financial liabilities measured at amortised cost
Non-current:
Lease liability
Current:
Lease liability
Trade and other payables
Accruals
Deferred consideration
Financial liabilities measured at fair value through profit or loss
FX derivative liability
Net financial assets and liabilities
2022
£’000
2021
Restated*
£’000
32,270
15,058
47,328
-
47,328
25,556
12,051
37,607
266
37,873
(7,490)
(6,388)
(1,569)
(23,107)
(6,621)
-
(38,787)
(1,384)
(15,488)
(6,934)
(972)
(31,166)
(196)
-
(38,983)
(31,166)
8,345
6,707
The maturity analysis for lease liabilities is presented in note 19. All other financial liabilities have a maturity of less than
12 months (i.e., are all current).
*
We have identified £780,000 included in contract assets in 2021 that should have been classified as trade receivables not past due
and so have amended the above note by £780,000 to reclassify those balances between contract assets and trade receivables not
past due.
Capital management policies and procedures
The Group’s capital management objectives are:
• to ensure the Group’s ability to continue as a going concern; and
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
This is achieved through close management of working capital and regular reviews of pricing. Decisions on whether to raise
funding using debt or equity are made by the Board based on the requirements of the business.
Capital for the reporting period relates to cash and cash equivalents as disclosed above.
The Group is subject to interest cover and net leverage financial covenants over its £10,000,000 revolving credit facility.
The covenants are monitored as part of regular forecasting.
The only derivative financial instruments used by the Group are foreign currency forward contracts that are disclosed in
the table on the previous page. These derivatives are only used for economic hedging purposes and not as speculative
investments. They are classified as “held for trading” for accounting purposes and are accounted for at fair value through
profit or loss. They are presented as current assets or liabilities to the extent they are expected to be settled within
12 months after the end of the reporting period.
The gross value of foreign currency forward contracts held at the end of the reporting period was $7,700,000 and
€13,785,000. The contracts mature within one to eleven months of the year end.
129
The Pebble Group plc Annual Report 2022 Notes to the Group financial statements
(continued)
23. Share-based payments
In the year ended 31 December 2022 the Group operated equity-settled share-based payment plans as described below.
The Group recognised total expenses of £1,253,000 (2021: £715,000) in respect of equity-settled share-based payment
transactions in the year ended 31 December 2022.
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, 8 June 2021, and 30 March 2022 under the LTIP.
Under the LTIP, the Group has made awards over 3,928,556 (2021: 2,208,570) 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:
Part 1 options – Basic AEPS
Part 2 options – TSR
Proportion
of award
70%
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 2022 are shown below:
At 1 January 2021
Granted in the year
Lapsed in the year
At 31 December 2021
Granted in the year
Lapsed in the year
At 31 December 2022
Number of
shares
1,248,060
960,510
(134,324)
2,074,246
1,719,986
(436,702)
3,357,530
The weighted average fair value of options granted under this plan during the year was £0.98 (2021: £0.90). The weighted
average remaining contractual life of the share options outstanding under this plan at 31 December 2022 was 1.3 years
(2021: 1.7 years).
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 below.
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
Fair value per option
2020 award
TSR condition
2020 award
AEPS condition
2021 award
TSR condition
2021 award
AEPS condition
2022 award
TSR condition
2022 award
AEPS condition
105.0p
£nil
17.2%
3 years
0%
0.53%
22.3p
105.0p
£nil
-
3 years
-
-
110.5p
130.0p
£nil
17.5%
3 years
0%
0.53%
28.2p
130.0p
£nil
-
3 years
-
-
153.0p
132.5p
£nil
17.9%
3 years
0%
0.53%
29.6p
132.5p
£nil
-
3 years
-
-
101.5p
130
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 23. Share-based payments (continued)
Performance conditions
70% Cumulative adjusted EPS
Basic adjusted EPS as defined in the LTIP rules,
excludes share-based payment charge,
exceptional items and amortisation from
acquired intangibles
2020 award
3 years ended
30 June
2023
2021 award
3 years ended
31 December
2023
2022 award
3 years ended
31 December
2024
Threshold (25% maximum vesting)
Mid-range (60% maximum vesting)
Maximum (100% maximum vesting)
13.4p
14.3p
15.1p
15.4p
16.3p
17.3p
17.6p
18.8p
19.9p
30% Annualised TSR
Annualised growth in total
shareholder returns
Threshold (25% maximum vesting)
Mid-range (60% maximum vesting)
Maximum (100% maximum vesting)
8.0% pa
11.3% pa
15.0% pa
8.0% pa
11.3% pa
15.0% pa
8.0% pa
11.3% pa
15.0% pa
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 £1.22. The vesting period under the scheme
is three years with no performance conditions, other than remaining a Group employee, are attached to the options.
Under the SAYE, the Group made awards of 937,223 conditional shares to certain Directors and employees in 2021.
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 2022 are shown below:
At 1 January 2021
Granted in the year
Lapsed in the year
At 31 December 2021
Lapsed in the year
At 31 December 2022
Number of
shares
-
937,223
(13,513)
923,710
(181,645)
742,065
The fair value at grant date is independently determined using an adjusted form of the Black-Scholes 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 below.
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
Fair value per option
2021 award
152.5p
122.0p
17.6%
3 years
0%
0.53%
21.0p
24. Related party transactions
The Directors consider there to be no ultimate controlling party. During the current and prior year, related parties include
representatives of major shareholders and parent and intermediate parent entities ultimately owned by the same
shareholders.
Details of key management compensation are given in note 6. There are no other related party transactions to be disclosed
for the current and prior year.
131
The Pebble Group plc Annual Report 2022 Company balance sheet
As at 31 December 2022
Fixed assets
Investments
Current assets
Trade and other receivables (including £81,066,000 (2021: £80,684,000) falling due
after more than one year)
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital reserve
Merger relief reserve
Share-based payment reserve
Retained earnings
Total shareholders’ funds
Note
2022
£’000
2021
£’000
5
6
8
9
10
113,276
112,291
81,122
81,122
81,012
81,012
(288)
(324)
80,834
194,110
194,110
1,675
78,451
125
713
1,842
111,304
80,688
192,979
192,979
1,675
78,451
125
713
681
111,334
194,110
192,979
The Company has taken advantage of the exemption permitted by Section 408 of the Companies Act 2006 not to produce
its own profit and loss account. The loss for the year dealt within the financial statements of the Company was
£30,000 (2021: profit of £6,200,000).
The Company financial statements on pages 132 to 138 were approved by the Board of Directors on 21 March 2023 and
were signed on its behalf by:
C Thomson
Director
21 March 2023
The notes on pages 134 to 138 form part of these Company financial statements.
132
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS
Company statement of changes in equity
for the year ended 31 December 2022
At 1 January 2021
Profit for the year
Total comprehensive income for
the year
Share
capital
£’000
1,800
–
–
Purchase of deferred shares
(125)
Employee share schemes – value
of employee services (note 10)
Deferred tax on employee share
schemes
Total transactions with owners,
recognised in equity
–
–
(125)
Share
premium
account
£’000
78,451
–
–
–
–
–
–
Balance at 31 December 2021
1,675
78,451
Loss for the year
Total comprehensive expense for
the year
Employee share schemes – value
of employee services (note 10)
Deferred tax on employee share
schemes
Total transactions with owners,
recognised in equity
–
–
–
–
–
–
–
–
–
–
Capital
reserve
£’000
–
–
–
125
–
–
125
125
–
–
–
–
–
Merger
relief
reserve
£’000
713
Share-based
payment
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
13
105,134
186,111
–
–
–
–
–
–
713
–
–
–
–
–
–
–
–
601
67
668
681
–
–
1,196
(35)
1,161
6,200
6,200
6,200
6,200
–
–
–
–
–
601
67
668
111,334
192,979
(30)
(30)
–
–
–
(30)
(30)
1,196
(35)
1,161
Balance at 31 December 2022
1,675
78,451
125
713
1,842
111,304
194,110
The notes on pages 134 to 138 form part of these Company financial statements.
133
The Pebble Group plc Annual Report 2022 Notes to the Company financial statements
1. General information
The Pebble Group plc (the “Company”) was incorporated in
the United Kingdom on 27 September 2019 and is a public
company limited by shares, registered and domiciled 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. The Company’s principal activity is that
of a holding company.
2. Accounting policies
(a) Reporting framework
The separate financial statements of the Company have
been prepared in accordance with Financial Reporting
Standard 102, the Financial Reporting Standard applicable in
the UK and Republic of Ireland (“FRS 102”), on the going
concern basis under the historical cost convention, and in
accordance with the Companies Act 2006.
The financial information is presented in Sterling and has
been rounded to the nearest thousand (£’000).
The principal accounting policies, which have been applied
consistently to all the years presented, are set out below.
(b) Financial Reporting Standard 102 – reduced
disclosure exemptions
The following exemptions from the requirements in FRS 102
have been applied in the preparation of these financial
statements:
• the requirements of section 7 Statement of Cash Flows;
• the requirements of section 3 Financial Statement
Presentation, paragraph 3.17(d);
• the requirements of section 11 Financial Instruments,
paragraphs 11.41(b), 11.41(c), 11.41(e). 11.41(f), 11.42, 11.44 to
11.45, 11.48(a)(iii), 11.48(a)(iv),11.48(b) and 11.48(c);
• the requirements of section 12 Other Financial
Instruments, paragraphs 12.26 to 12.27, 12.29(a), 12.29(b)
and 12.w9A; and
• the requirements of section 33 Related Party Disclosures,
paragraph 33.7.
This information is included in the Group financial
statements found earlier in this report.
(c) Company profit and loss account
The Company has not presented its own profit and loss
account as permitted by Section 408 of the Companies Act
2006. The Company’s loss for the year was £30,000 (2021:
profit of £6,200,000). There are no material differences
between the loss in the current year and its historical cost
equivalent. Accordingly, no note of historical cost profits
and losses has been presented.
(d) Going concern
The Company meets its day-to-day working capital
requirements through cash generated from the Group in
which it holds its investment and utilising its overdraft
facility to fund peak seasonal demands. The Directors have
prepared cash flow forecasts and projections for the two
years ending 31 December 2024 for the Group; see the
going concern disclosure within the Group financial
statements. Based on this, the Directors are satisfied that
the Company has adequate resources to continue in
134
operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing the Company financial statements.
(e) Dividend distribution
The distribution of a dividend to the Company’s
shareholders is recognised as a liability in the Company’s
financial statements in the year in which it is approved by
the Company’s shareholders.
Dividends are recognised when approved by the Group’s
shareholders or, in the case of interim dividends, when the
dividend has been paid. No interim dividend has been paid
in the year (2021: £nil). The Directors recommend the
payment of a final dividend for 2022 of £1.0m (2021: £nil).
(f) Investment in subsidiary undertakings
Investments in subsidiaries are stated at cost less
accumulated impairment.
(g) 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
Company’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.
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.
(h) 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
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 2. Accounting policies (continued)
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.
(i) Share capital
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds of
issue.
(j) Share premium
Share premium represents the difference between the
nominal value of shares issued and the fair value of
consideration received. Any transaction costs associated
with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
(k) Capital reserve
The capital reserve was created in 2021 as a result of the
purchase by the Company of all deferred shares in issue.
(l) Merger relief reserve
The merger relief reserve was created during 2019 as a
result of the share-for-share exchange under which The
Pebble Group plc became the parent undertaking prior to
the Initial Public Offering (“IPO”). The merger relief reserve
includes the premium received on the issue of share capital
in the share-for-share exchange.
(m) Retained earnings
Retained earnings includes all current and prior period
retained profits and losses.
All transactions with owners of the parent are recorded
separately within equity.
(n) Cash and cash equivalents
Cash and cash equivalents comprise cash balances.
(o) Financial instruments
The Company has chosen to adopt Sections 11 and 12 of
FRS 102 in respect of financial instruments.
Financial assets
Basic financial assets, including trade and other receivables,
cash and bank balances and investments, are initially
recognised at transaction price, unless the arrangement
constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts
discounted at a market rate of interest. Such assets are
subsequently carried at amortised cost using the effective
interest method.
At the end of each reporting period, financial assets
measured at amortised cost are assessed for objective
evidence of impairment. If an asset is impaired the
impairment loss is the difference between the carrying
amount and the present value of the estimated cash flows
discounted at the asset's original effective interest rate. The
impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an
event occurring after the impairment was recognised, the
impairment is reversed. The reversal is such that the
current carrying amount does not exceed what the carrying
amount would have been had the impairment not previously
been recognised. The impairment reversal is recognised in
profit or loss.
Financial assets are derecognised when (a) the contractual
rights to the cash flows from the asset expire or are settled,
or (b) substantially all the risks and rewards of the ownership
of the asset are transferred to another party or (c) despite
having retained some significant risks and rewards of
ownership, control of the asset has been transferred to
another party who has the practical ability to unilaterally sell
the asset to an unrelated third party without imposing
additional restrictions.
Financial liabilities
Basic financial liabilities, including trade and other payables,
are initially recognised at transaction price.
Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities. Trade payables
are recognised initially at transaction price and
subsequently measured at amortised cost using the
effective interest method.
3. Critical accounting estimates and
judgements
In the preparation of the Company financial statements, the
Directors, in applying the accounting policies of the
Company, 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.
Non-current asset impairment
The Directors are required to assess whether there are any
indicators of impairment at each reporting date. All relevant
potential indicators are considered, including the
performance of the underlying trading Group and the
results of the Group’s impairment reviews performed as at
the same date. The Directors exercise their judgement in
determining whether any such indicators exist. Where an
indicator of impairment is identified in relation to the
Company’s investments or intercompany receivable
balances, a full impairment review is performed.
The Directors performed their assessment and concluded
that no impairment indicators existed at 31 December 2022
and, as such, a full impairment review over the Company’s
investments in subsidiaries and intercompany receivables
was not performed.
135
The Pebble Group plc Annual Report 2022 Notes to the Company financial statements
(continued)
4. Remuneration of directors and auditors
Details of Directors’ remuneration are shown in the Directors’ Remuneration Report on page 86 of the Group financial
statements. Details of auditors’ remuneration are shown in note 8 of the Group financial statements. The Company has no
employees (2021: none).
Emoluments of the Directors were borne by another group company in the previous year. The amount recharged to The
Pebble Group plc during the financial year was £506,000 (2021: £nil). These are disclosed in full in the Group financial
statements.
Highest paid director
The highest paid director’s emoluments recharged to The Pebble Group plc during the financial year were as follows:
Salaries including bonuses and social security costs
Short term benefits
5. Investments
Cost and carrying amount
At 1 January 2021
Movement relating to share options
Redemption of preference shares
At 31 December 2021
Movement relating to share options
At 31 December 2022
2022
£’000
291
15
306
2021
£’000
–
–
–
£’000
126,106
496
(14,311)
112,291
985
113,276
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
The Company directly owns the whole of the issued Ordinary Shares of the following subsidiary undertakings:
Name
Registered address
Principal activity
Class of share
Percentage holding
The Pebble Group (Holdings) Limited Broadway
Project Amber Bidco Limited
Trafford Wharf Road
Manchester
M17 1DD
H.I.G Milan UK Bidco Limited
Brand Addition Limited
Product Plus International Limited
Gearworks Limited
Brand Addition Asia Limited
Brand Addition Ireland Limited
Brand Addition Reklam Urunleri
Dagitim ve Ticaret Limited Sirketi
Brand Addition (Shanghai) Trading
Co., Limited
136
Unit 1605
16th Floor
Tower 3 Enterprise
Square
No. 9 Sheung Yuet Road
Kowloon, Hong Kong
Unit G2
Calmount Business Park
Ballymount, Dublin 12
Buyukdere Caddesi
Meydan Sokak Spring
Giz Plaza Kat:13
Sisli-Istanbul, Turkey
Unit 903-905
T2 Building, VIPARK
500 Xinlong Road
Minhang District
Shanghai, China
Holding company
Holding company
Holding company
Ordinary
Ordinary
Ordinary
Promotional merchandise Ordinary
Non-trading
Non-trading
Ordinary
Ordinary
Promotional merchandise
Ordinary
100%
100%
100%
100%
100%
100%
100%
Promotional merchandise
Ordinary
100%
Promotional merchandise
Ordinary
100%
Promotional merchandise
Ordinary
100%
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS 5. Investments (continued)
Name
Registered address
Principal activity
Class of share
Percentage holding
H.I.G. Milan Germany Bidco GmbH
Brand Addition GmbH
Heydastrasse 13-15
58093 Hagen, Germany
Europastrasse 19a
45888 Gelsenkirchen,
Germany
Holding company
Ordinary
100%
Promotional merchandise
Ordinary
100%
The Pebble Group US Bidco Inc.
Gateway CDI Inc.
Facilisgroup LLC
909 North 20th Street
Saint Louis, MO 63103
Holding company
Ordinary
Promotional merchandise
Ordinary
1600 S Brentwood Blvd.,
Ste 800, Brentwood,
MO 63144
Promotional merchandise
service provider
Ordinary
100%
100%
100%
Facilisgroup Canada Inc.
5320 Canotek Road
Gloucester, ON K1J 9C1
Promotional merchandise
service provider
Ordinary
100%
Other than The Pebble Group (Holdings) Limited and Project Amber Bidco Limited, which are directly held by the parent,
all subsidiaries are indirectly held.
All subsidiaries listed above are included in the consolidated financial statements.
6. Trade and other receivables
Amounts falling due within one year:
Amounts owed by Group undertakings
Prepayments
Amounts falling due after more than one year:
Amounts owed by Group undertakings
Deferred tax asset
2022
£’000
–
56
56
2021
£’000
270
58
328
80,911
80,588
155
81,066
81,122
96
80,684
81,012
Amounts owed by group undertakings due within one year are unsecured, have no fixed date of repayment and are
repayable on demand.
Amounts owed by group undertakings due after more than one year are unsecured, repayable in greater than one year and
bear interest at market rates.
7. Deferred tax assets
Deferred tax assets are analysed as follows:
Other short-term timing differences
2022
£’000
155
2021
£’000
96
The above amounts reflect the differences between the carrying and tax amounts as at each year end.
Of the deferred tax balances at year end, £nil (2021: £nil) of the deferred tax asset is expected to be utilised within
one year.
137
The Pebble Group plc Annual Report 2022 Notes to the Company financial statements
(continued)
7. Deferred tax assets (continued)
Changes during each year are as follows:
Cost and carrying amount
At 1 January 2021
Tax credit in respect of prior year
At 31 December 2021
Tax credit in respect of current year
At 31 December 2022
8. Creditors: amounts falling due within one year
Accruals
£’000
3
93
96
59
155
2022
£’000
288
2021
£’000
324
The Company is party to a Group cross-guarantee banking arrangement, which is a revolving credit facility of £10,000,000.
The facility was refinanced in January 2023 for a three-year period to January 2026, with the option to extend for an
additional year to January 2027. Interest was charged at a rate of SONIA + 1.9%. As at year end the balance on the facility
was £nil. There is also an overdraft facility of 11,000,000 RMB for Brand Addition (Shanghai) Trading Co. Limited, which is
guaranteed by the Company. At year end, the balance on the facility was £nil.
9. Called up share capital
Details of movements in shares are set out in note 20 to the Group financial statements.
10. Share-based payments
Details of share-based payments are set out in note 23 to the Group financial statements.
11. Related party transactions
The Company has taken advantage of the exemption included in Section 33 of FRS 102 “Related Party Disclosures” to not
disclose details of transactions with Group undertakings, on the grounds that it is the parent company of a Group whose
financial statements are publicly available.
Directors’ transactions
Details of the Directors’ interests in the Ordinary Share capital of the Company are provided in the Directors’ Report.
138
The Pebble Group plc Annual Report 2022FINANCIAL STATEMENTS Financial calendar
Financial year end
Preliminary announcement of full-year results
Publication of Annual Report and financial statements
Annual General Meeting
Preliminary announcement of half-year results
Financial year end
Company information
Nominated adviser
Grant Thornton UK LLP
30 Finsbury Square
London EC2A 1AG
Broker
Joh. Berenberg, Gossler & Co. KG, London Branch
60 Threadneedle Street
London EC2R 8HP
Auditors
PricewaterhouseCoopers LLP
1 Hardman Square
Manchester M2 3DE
Legal adviser
Addleshaw Goddard LLP
One St Peter’s Square
Manchester M2 3DE
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Financial PR
Belvedere PR
25 Finsbury Circus
London EC2M 7EE
Registered office
The Pebble Group plc
Broadway House
Trafford Wharf Road
Trafford Park
Manchester M17 1DD
Company number: 12231361
31 December 2022
21 March 2023
21 April 2023
23 May 2023
September 2023
31 December 2023
139
The Pebble Group plc Annual Report 2022 The material used in this report has
been harvested in a responsible
manner from an FSC accredited mill.
Stay up to date at
thepebblegroup.com
Building brands.
Growing relationships.
Strengthening businesses.
• Strong performance with
Group revenue at £134.0m
(FY 21: £115.1m) 16% ahead
of the prior year
• Strong balance sheet with
net cash ahead of market
expectations at 31 December
2022 of £15.1m (FY 21:
£12.1m)
• Proposed maiden final
dividend for FY 22 of 0.6
pence per Ordinary Share
Financial Highlights
REVENUE
OPERATING PROFIT
£134m
+16.4%
22
21
20
£134m
£115m
£82m
BASIC ADJUSTED EARNINGS
PER SHARE (EPS)*
5.78p
+12.5%
22
21
20
2.96p
5.78p
5.14p
£10.2m
+3.0%
22
21
20
£5.7m
£10.2m
£9.9m
GROSS PROFIT
£52.7m
+25.5%
22
21
20
£52.7m
£42.0m
£31.0m
NET CASH*
ADJUSTED EBITDA*
£15.1m
+24.8%
22
21
20
£7.1m
£15.1m
£12.1m
£18.0m
+16.9%
22
21
20
£9.8m
£18.0m
£15.4m
* Basic Adjusted Earnings Per Share (EPS), Net Cash and Adjusted EBITDA are each defined in the Chief Financial Officer’s review on page 50.
Building brands.
Growing relationships.
Strengthening businesses.
Broadway House
Trafford Wharf Road
Trafford Park
Manchester M17 1DD
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