The Pebble Gro. Regulatory News (PEBB)

24 June 2020

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

THE PEBBLE GROUP PLC

("The Pebble Group," the "Company" or the "Group")

(AIM: PEBB)

AGM TRADING UPDATE

The Annual General Meeting ("AGM") of The Pebble Group, its first as a public company, will be held at noon today. As previously announced, in view of the compulsory COVID-19 measures restricting public gatherings, this AGM is being run as a closed meeting. Unfortunately, shareholders will not be able to attend the AGM in person. A quorum will be present to transact the formal business of the meeting, as set out in the notice posted on 30 April 2020.

Ahead of this AGM, the Board is pleased to provide the following trading update.

Highlights:

Brand Addition

Facilisgroup

The Board is confident in the Group's ability to work through the disruption caused by COVID-19 and is in a position to re-emerge positively, as we return towards more normal levels of business activity.

Brand Addition

As previously announced, COVID-19 initially severely impacted Brand Addition's Corporate Programmes sales orders (c.70% of divisional revenue). A significant reduction in the orders received was recorded in March 2020, as lockdown restrictions curtailed activity, reaching a low point in April. The trajectory of sales orders has, however, been steadily increasing.

Consumer Promotion (c.30% of divisional revenue) continues to be relatively unaffected by the disruption with major sales orders in 2020 broadly on track, as clients have continued to plan for H2 activity with confidence.

As at the end of May 2020, Brand Addition had a total of £39.9m orders invoiced or received, compared with £50.6m in the same period in 2019 and £97.9m FY19.

Order intake in the 5 weeks to 19 June 2020 was c. 50% of prior year.

The temporary cost reduction programme, implemented at the beginning of April following the COVID-19 lockdown, is delivering savings of £0.5m per month in Q2 2020, compared to the run rate of costs in Q1. These savings are expected to reduce through H2 2020, as furloughed members of the team begin returning to work.

The team at Brand Addition has adapted to the rapidly changing circumstances with great care and agility, and an unwavering support of our focus on our clients, cash, and culture.

Brand Addition's clients are global businesses, located across Europe, US and Asia and focused in sectors such as Health & Beauty, TMT, Transport, Engineering and Financial Services, which gives us confidence in the re-emergence of sales demand in 2021.

Facilisgroup

Facilisgroup continues to perform well and is on track to deliver the strong growth we expected from the business at the start of the year. The recent performance, under exceptional industry circumstances, reinforces our confidence in this business model and the growth opportunities ahead.

New Partner acquisition has continued through Q2. Partner numbers now total 164 (31 December 2019: 149), with a further five contracted and awaiting implementation.

Sales order values, processed by Partners (customers) through Facilisgroup technology, to 19 June 2020 had increased by 67%, compared to the same period in 2019, as highly entrepreneurial Partners adapted rapidly to the changing COVID-19 environment, moving into the supply of high levels of personal protective equipment ("PPE") and consumables. This has resulted in the rolling 12-month sales value of Partners breaking through $1.0bn for the first time (FY19: $0.8bn). We expect this large percentage gain in sales value over the prior year to reduce as the high level of PPE sales slow.

Management Fees for our subscription-based technology (c.70% divisional revenue) are fixed at the beginning of the year for each Partner, based on their prior year sales values. This delivers a highly predictable revenue stream for the business. Therefore, these higher values in 2020 do not impact on Management Fee revenue expectations for the current year. 

Marketing Fund income (c.20% divisional revenue) is based upon the value of purchases placed by Partners with our Preferred Suppliers in the year. To date, this swing towards PPE product has resulted in a lower percentage but similar value of purchases through these Preferred Suppliers compared to 2019.

Other revenues (c.10% divisional income) are from ancillary services to Partners and remain on track with expectation.

As we move towards H2 2020, we will continue to focus on growth, adding quality Partners, increasing Partner services, and developing technology for early stage businesses.

Since acquisition in December 2018, our team at Facilisgroup has risen to all the challenges presented, managing a great deal of change whilst building a strong platform for an exciting future. We are very pleased with the performance of Facilisgroup in the year to date and are increasingly confident in the prospects for the business.

Cash and liquidity

At 23 June 2020, the Group had cash of £9.4m. This includes a £7.7m drawdown from the Group's £10.0m committed revolving credit facility and is after utilising government support initiatives to defer payments in respect of PAYE, VAT and Corporation Tax.

In line with the normal working capital cycle of the Group, the peak working capital requirement is between June and August, as large Consumer Promotion orders are delivered and invoiced by Brand Addition. The working capital requirement unwinds as cash receipts are received from clients for these orders.

To date, there have been no material changes in expected cash receipts or debtor payment patterns across the Group. Payments to creditors have been maintained.

Stock at Brand Addition, held for call off by our Corporate Programme clients, is being managed closely, with some investment required for the implementation of our two recent business wins.

Investment into capital expenditure (excluding leases capitalised in accordance with IFRS16) in Facilisgroup is being increased, as we seek to further develop the capabilities of this growing and resilient business. This is expected to be c.£1.3m in 2020 (2019: £0.7m). Capital expenditure in Brand Addition is expected to be c.£1.2m in 2020 (2019: £1.4m), as we control spend in the year whilst maintaining our capabilities for the expected return to growth.

Outlook

Overall, we are pleased with the Group's response to the challenges imposed by COVID-19 and the progress made since the early days of lockdown. The Board remains confident in the prospects for the Group as we plan for 2021 and beyond.

Once again, we would like to thank our teams in Europe, North America, and Asia for their commitment during this challenging period. 

Enquiries:

About The Pebble Group plc - www.thepebblegroup.com 

The Pebble Group is a provider of products, services, and technology to the global promotional products industry, comprising two differentiated businesses, focused on specific areas of the promotional products market:

Brand Addition - www.brandaddition.com 

The Group's promotional product merchandise business, Brand Addition, is a leading provider of promotional products to global brands. Brand Addition utilises its global network to source and deliver complex and creative promotional product solutions to support the marketing efforts of its multi-national clients, who operate in sectors which include health & beauty, fast moving consumer goods, transport, technology, banking & finance and charity. Brand Addition's clients primarily comprise major global brands under contract.

Facilisgroup - www.facilisgroup.com

The Group's SaaS business, Facilisgroup, provides subscription-based services to SME promotional product distributors (Partners) in the United States and Canada. Facilisgroup's suite of services includes business intelligence software, buying power and community events. Through its @ease proprietary software, Facilisgroup offers a SaaS technology platform that enables its network of Partners to improve order management, CRM and sales analysis and reporting. Facilisgroup also provides its Partners with access on favourable terms to a selected group of preferred suppliers, by consolidating the purchasing power of its Partners. This attracts rebates from suppliers, who in turn benefit from efficient access to a network of high-quality distributors.