Pebble is rock solid, says board of corporate promotions specialist

Stretford-based corporate promotions specialist Pebble Group reported a 15.3% increase in annual revenues, but recorded a pre-tax loss for the year to December 31, 2019, today.

The business, which floated on the AIM market in December 2019, raising £135m which repaid all its existing debts, revealed its revenues rose from £93m, to £107.2m.

However, it made a pre-tax loss of £10.3m, compared with a pre-tax profit of £1.3m a year ago.

It explained that this included a non-recurring £13.5m deferred consideration payable on its acquisition of Facilisgroup in December 2018, as well as transaction costs linked to its flotation last year of £3.9m, and net finance costs of £5.4m.

The adjusted pre-tax profit was £7.6m, compared with £2.8m the previous year.

Pebble said it achieved organic revenue growth regarding brand additions of 6.1%, primarily driven by increased sales to existing customers in consumer promotions, and a continued track record of successfully retaining major client contracts.

It engaged in new business tender processes that resulted in major new business wins in early 2020 which it expects to begin invoicing in the second half of this year.

Pebble has also successfully integrated Facilisgroup where customer numbers increased to 149 from 127 the previous year – an increase of 17.3%.

Since the financial year end, Pebble said it had a positive start in January and February 2020. However, since the coronavirus pandemic struck it said it has seen major disruption in its corporate programmes, with the value of orders received in the three weeks to April 3, 2020 equating to 28.4% of orders received in the comparable period in 2019.

In consumer promotions and Facilisgroup it has reported minor disruption, to date.

However, it has reported growth in new customer numbers unaffected by pandemic, with nine onboarded in the first quarter, and a further five contracted and awaiting implementation.

The group has utilised government support initiatives to cover operational costs, where appropriate, and has achieved temporary cost reductions of £500,000 per month in areas of the business most severely impacted, effective from April 5. It made a draw down of £7.7m on its committed £10m revolving credit facility on March 26.

Looking ahead, the group said brand addition’s corporate programmes activity is likely to remain severely affected for at least the duration of the lockdown restrictions, while its consumer promotions activity is expected to remain broadly on track, as is Facilisgroup.

Financial performance guidance has been withdrawn for financial years 2020 and 2021, until there is visibility on the lifting of lockdown restrictions.

The board said it believes that Pebble Group is well placed to manage the disruption and to benefit as normal business activity resumes. It has a strong balance sheet and liquidity position with cash balances of £9.9m at April 7, and the board remains confident in the group’s long-term prospects.

In line with the group’s dividend policy set out at the time of December’s flotation, the directors do not intend to declare a dividend in respect of 2019. However, the board will review the decision to pay a dividend in 2020, as the full impact of COVID-19 on the group’s operations becomes clearer, and will provide an update in the company’s half yearly results, scheduled for announcement in September 2020.

Chief executive, Christopher Lee, said: “The group made substantial progress in FY19 and the foundations for growth were firmly put in place with the successful IPO in December.

“Whilst the new financial year started well in all areas of the business, COVID-19 is undoubtedly having a major impact our financial performance which will continue in the weeks ahead until the effects of the disruption start to dissipate.

“We have taken rapid action to support our people and to mitigate the effects of the COVID-19 on our business operations. The group’s balance sheet is strong and our proven growth strategy is unchanged.”

He added: “We remain confident in the long-term prospects for the group and are well-placed to benefit as normal business activity resumes.”