The Pebble Group plc (PEBB) Earnings Call Transcript & Summary

Welcome to the Pebble Group Full Year 2022 Results webinar. [Operator Instructions] This webinar is being recorded. I now hand over to Chris Lee, CEO; and Claire Thomson, CFO. Chris, over to you.

Thank you. Hi, everybody. Thank you very much for your time today and say welcome. This is the Pebble Group's full year results for 2022. Going to give you a sense of what's behind us in terms of our results, but also our strategy, what's in front of us in terms of direction and outlook. So my name is Chris, I'm the Chief Executive of Pebble. I'm very proud to lead the team and do that. I've been with the business for over 20 years in various roles and sort of ownership structures. And -- but trying to say really proud to lead the business, been here a while and then, supported by Claire our CFO.

Hi, I'm Claire, introduce like that? Thank you.

Yes. I'm Claire, CFO. Like Chris said, I'm very proud to be part of this team, and I've been here for 15 years. So it's a big part of my life.

Okay. So we're going to talk you through about 20 minutes of a presentation. I'm very happy to take some questions at the end. But just kind of a bit of background regarding the industry we're in. So we're in the industry of promotional products. It's a really big industry, around about $50 billion worth of promotional products are sold throughout the globe on an annual basis. And why promotional products used very [indiscernible] my Brand Addition water bottle here and that's because people like to -- in businesses of all sizes, all sectors and all geographies, want to engage with their people, their stakeholders and make an emotional connection with them and through the use of product. And so that has led over say, all sectors and all geographies to businesses, proudly putting their brand on a product that they want to engage and kind of take forward with their stakeholders. In terms of using them well and doing it properly, I think we're trying to put in 4 things in there for you to recognize. So first of all, don't spend money on promotional products unless it's going to be a great product that kind of represents your brand properly, and kind of your user or the end audience is kind of very proud to see or proud to take away and remember and reuse time and time again. So, spend the money on something else if it's not about great products that's reused and somebody wants to keep and is useful for them. Then kind of moving around that chart. It's really important that it aligns with your brand values. We're starting the offices here at Berenberg, the big user of promotional merchandise. And it's very important if they stand for a quality business at the top of their industry, then actually the products bearing their brand should be exactly the same. And so great product aligns your brand values as an organization. But then absolutely, if that's at the front end, what's the back end? And it's really important, what materials is that product made of and where does that product come from. And so that combination of those 4 things makes a product a very good one and then kind of what you get out of that, you get sort of stakeholder engagement, brand loyalty and a memorable experience, kind of things that why promotional products are used. In terms of what does that give us as an industry and where does Pebble Group sits in. I talked about $50 billion of products sold on the overall market. Pebble Group has 2 businesses and kind of -- that we represent as Pebble and so that is a facility group. So facility is a platform, a SaaS platform based in North America. And the sales that goes through that technology is about $1.4 billion. So the U.S. market or North American market is around about $25 billion. So we see through our technology, on a day-to-day basis, $1.4 billion or 6% of the U.S. industry is going through our technology. So we see the supply that's from, what product that is, what company that's from and what company and what brand that's going to. It just great visibility of the industry through that technology. And our products business, Brand Addition is where my heritage is, and really proud to be part of that business. And that's $0.1 billion, so $117 million this year went through that business in terms of product sales. And that's some of the largest and best-known companies in the world, which we supply them on a global basis. So in terms of highlights for full year '22, again, another year of growth for business, so kind of a record year in terms of revenue and 16% overall. Cash generation is very important. We have no debt in the businesses at the year-end, $15 million of cash, and that cash comes from 2 really cash-generative businesses in Brand Addition and Facilis. And as we learn an awful lot from speaking to our investors, our advisers and what we've been able to do now, we feel as though we're in a position that we manage our cash really well. We're investing some of that for growth, but also, I think, to show our confidence and to all investors is to say we're happy to put a dividend in there as well. It's not going to change anybody's lives in the short term, but it's a big statement that says, we believe we're a business that give a return on an annual basis to our shareholders, and that should be a growing number going forward. So splitting our growth between our 2 businesses, Facilisgroup, 31% revenue growth in sterling. That's a little bit less because in dollars, which is the base of the business because we had some sort of exchange tailwind, which is -- we still welcome. And you can see that $1.4 billion of GMV going through the system, a real insight into the industry. And Brand Addition, excellent performance of 15% revenue growth coming through that win, grow, retain and repeat that strategy for those large corporates. And what that business has done amazingly well is through very difficult circumstances is manage that business in a very narrow bandwidth for around 30 points over the long term and had great results in 2022 as well. So I think Claire is going to walk us through some of the numbers.

Okay. Thank you. So just sharing with you on a page, the direction of travel for the business. So this is all our key indicators and all moving forward, which is obviously nice to be able to share. So that growing revenue translates into growing EBITDA, and also moving operating profit forward, which we'll come on to talk about it a little bit. But we have been investing in our ambition for Facilis, and we're starting to take some of the amortization on those products. So it's nice to see that operating profit is moving forward as well, translates into a basic EPS is going up. And as Chris said, we've got 2 highly cash-generative businesses and our cash is growing. So, this slide is hopefully quite helpful for you in understanding the different dynamics of the 2 businesses. So we've got -- so the pie on the left-hand side is the revenue within the group. And so we've got our products under Brand Addition and that's a dark blue slices of the pie in that is shared revenue. And then our platform business, Facilis, where we've got SaaS revenues is a much smaller slice of the revenue chart. But when you move across to the right-hand side, and you can see that there'll be EBITDA margins that we generate at Facilisgroup mean that we're kind of roughly split 50-50 in terms of EBITDA across both businesses in the group. And this is the -- our P&L is there for the record. So we said already, our revenue growth was 16%, EBITDA growth was 17%. And so that's coming through growth in the number of customers in our business, both at Brand Addition and at Facilis. And then also, again, we've alluded to it, but Brand Addition has been really successful this year in maintaining its margins in what's been a difficult climate. So when we talk to investors and people who are interested in our business, we always point to a 30% gross profit margin in Brand Addition. And the team have been really successful in achieving that this year. Below EBITDA, I've just alluded to the incremental D&A that's coming through from our investment into new products at Facilis. And you can see our chart has moved forward this year and then we've also got share-based payments. This is the first time that we've had a [indiscernible] up and running. So we're at now at our run rate and the level that we'd expect going forward. Cash flow. That's simple nice and clean. So we kind of got -- the incremental EBITDA, like working capital Brand Addition is a products business, and it does require working capital to support those sales as it grows. So that's proportionate level of investment with the little increases in volumes, but there is some investment in working capital alone. And you can see that on the cash flow statement. And then the CapEx is the other interesting piece of this statement, which is linked to our strategic ambition to scale to this group, and we'll go into that in a little bit more detail as we move through the presentation. Balance sheet. When you look at our group balance sheet, it's really all about Brand Addition. So the working capital that Facilis is there's barely any working capital now, it's highly cash generative and working capital-light model. Our working capital is Brand Addition. Brand Addition is working with some of the best-known brands in the world, if we talk about our customers at Brand Addition then you will recognize [indiscernible] behind the assets on our balance sheet. So we hold stock and our stock list is underwritten by our clients. So if there's a brand change or a contract termination, then our customers buy that stuff back from us. So we don't carry any risk with our inventory. Same with receivables. Those of you who have listened to me before on these presentations, then you all say, if we invoice correctly, then we get paid. And so why start working capital growth with growth in Brand Addition, and it's very high-quality working capital that translates into cash. And Chris and I getting asked the question how we're going to use the cash that we generate in the business. So I've introduced this slide for the first time this year. So just kind of running down the left-hand side, 1 to 5, and it was very deliberately ordered to say this is how we see our priorities. So kind of number one, it's nice to have some cash on the balance sheet. And I think the level of cash that we had at this year-end of $15 million, it feels like a reasonable number for us to be holding, and that feels like a sensible position for the group. Fortunately, a couple of times away, we need some cash to invest in working capital, but that will be proportionate to the level of growth in sales and the teams are very disciplined around maintaining metrics around working capital, but there will be a little bit there. CapEx, I'll come on to in a minute in a little bit more detail, but we are investing to deliver a strategic ambition for Facilis. And number 4, we've implemented a dividend policy for the first time, a dividend payment this time. And it's our intention that, that payment will be progressively increased as we move towards the position we set out at IPO, where we said that we'd look to pay 30% of profit after tax. And I think, again, as Chris has said, it's really important to us to signal our confidence in the business, to demonstrate our ability to manage cash and we're very used to doing that. And so starting on the journey of making a dividend payment hopefully gives that signal to everybody else. And then there are other things that we can look at to after that. But these are our objectives. And what I'm trying to show on the right-hand side is how we are investing in Facilisgroup, in particular at the moment and split the CapEx expenditure that's going on. Conscious that we're at the peak of that investment now, but wanted to also signal very clearly that, that is investment that's associated with a strategic ambition and looking to get us to the $50 million ARR expectation in the next 2 to 3 years at Facilis that we've talked about over the last few years. And also kind of signaling that we don't expect this current level of CapEx investment to be an ongoing number and that as we get to that scale of revenue, then that will come down to a much lower maintenance level.

Okay. Thanks, Claire. So if that's all the Group's numbers, I'll now dive into each of our businesses. But in fact, I'll talk through Facilisgroup and Claire will run you through Brand Addition. And then we'll kind of comes to closing statements. And Facilisgroup's a wonderful business. It's based in North America, and it's a platform that's used by entrepreneurial distributors in the North American promotion products market. And that market overall is about sort of $25 billion in terms of product sales. And Facilisgroup puts a technology platform above that industry to help them manage the order workflow and the efficiencies between the supplier, the distributor and the end brand. And so all our historic numbers based to date from 2022 back are based on Syncore, our order workflow system. So Syncore, here it says that we've got 217 partners, that are businesses, and those businesses average in size about $7.5 million of sales, and that can be between $2 million and sort of $15 million, even up to $30 million in size. And so our partners use our technology to try to help them grow, help them efficient and help them have great visibility over their organizations. And so the activity going through at Syncore, and which turns into our revenues looking back, our 200 partners using 100 preferred suppliers, and that's about sort of 1 million orders producing $1.4 billion of visibility of sales in the industry, that's about 6%, that's kind of a lot of understanding of the industry we have through that number. So if Syncore helps that efficiency at the backend, then we for the first time, investment that Claire's been talking about, we put a product at the frontend an e-commerce platform that helps our customers sell to their customers. And that is literally an e-commerce platform. They might host just one of these stores, but they host most many for their customers, in order to help them trying to get more exclusivity between themselves and their end customer, and actually trying to help them sell on a regular basis. So Commercio links back into Syncore. So it really sort of helps that sort of, again, that efficiency process and helping our clients work efficiently well, so it gives them more time in selling. But also Commercio can be a stand-alone product and really increases our addressable market to a really long tail of promotional products businesses that are in North America. In terms of -- these numbers are, I think, a really impressive and outstanding, it's testament to the team that we're able to produce there. So that first row is about our financial performance on a 5-year basis. And you can see, even through COVID, the business has grown very well, in fact, on a 20% CAGR basis over that -- on revenues over that 4-year period. And think of it all really as recurring revenue. It's probably about 95% of recurring revenue that comes through, which we have really good visibility over. That revenue translates at really high proportions into EBITDA. And so it's 54% in 2022, it's been around sort of 50% up to 60% in the period that was shown here on this slide. But basically, 20% CAGR growth of recurring revenues and then sort of on top of that 50% plus in terms of EBITDA, that's a very powerful business, again, not carrying any working capital. So what we want to do is definitely set a strategy to grow that business. And if we can get it -- it's doubled in the last 4 years, if we get to do that more or the same, it becomes a very powerful organization. So how is that sort of revenue and EBITDA achieved? And sort of the second row is really sort of these are the measures that help grow Syncore revenues. So growing the number of partners. So at the end of the year at 31st we have 217 partners implemented and that [indiscernible] those 8 more had contracted list but yet who're actually to be implemented before the year-end. So again, growing partner numbers makes this a stronger business. This is our flagship product in Syncore and so our quality businesses that are in at 225. And what we'd like to do is grow that again, but also kind of recognizing that the strength of the model is in the quality of those partners and those businesses that we interact with. But of the 225, we think there's a total market of probably 1,600 for this particular type of product Syncore. There's some sort of direct addressable market information in a backlist pack for anybody who'd like to delve a little bit deeper. Those partners as they grow, they grow it individually, but they're also growing in terms of number and that kind of flicks straight on to the GMV. And that goes at [indiscernible] of revenues that we're now seeing. And that's a huge spend in this market that we can have an influence of where the purchases go for that spend. And that's where we work very closely with a quality group of preferred suppliers, where we are trying to help those preferred suppliers and our partners interact together to get great pricing, great service and kind of roll together and support each others organizations. So those 3 charts move in the right direction, kind of are, therefore, results in the revenue going in the right direction. Again, trying to share information, allow investors and people to make informed decisions about the business, you can see our market opportunity, we think is really large, $25 billion of total revenue in terms -- and that's generated by over 20,000 different businesses. So right now, for Syncore, we're kind of focusing on sort of about 1,600 of those businesses. But really in the market, can we deliver the technology to the wider piece, which actually grows -- obviously grows our addressable market and can help us get to our aspirations of $50 million of ARR. Our business has been successful. If we index back in terms of the GMV, and where that's gone through Covid, the industry has now sort of popped above in 2019. But a business with Facilis, and that's again, a strength of our partners, if you're selling 100 in 2018, they're now selling 135 in 2022. So that's a really nice growth. And with the market share we've taken as well, that 100 has actually doubled and Facilis now in market share, which is on the right-hand side of just about 6%. So really nice SaaS metrics underneath there and our subscription technology -- our technology subscription sort of NRR of 110%, meaning without growing customer numbers, we kind of have grown the revenues on technology by 10%. Customer numbers is a 96% retention, which is again very good. And we're sort of very important so that we learn, we get better from feedback from our partners, and kind of have that NPS of 47%, which has a positive score that relates back into that 96%. So some really kind of nice metrics of what the actual business is informing us. And where is our strategy going. So Claire's talked about the investment and use of capital, and we are very much trying to get a strategy that we all believe in, kind of ourselves at Pebble Group, the team at Facilis are very committed to. And we're kind of rightly very proud of a wonderful business. So at the 1st of January 2022, we had one product and a very powerful one of our flagship product, Commercio and that [indiscernible] income stream to invest in that kind of what we believe the market is and would take from us, investing in Commercio, which is our e-commerce product, that allows us to increase our addressable market to the 20,000 different businesses in here. And also taking a very different view -- but what we do is, Syncore is a flagship product for a really growing and strong kind of organizations in North America. There's a long tail of much smaller business to individual entrepreneurs that we believe we can kind of build some technology and offer to them. We're calling out orders, and so we make a phone call to a distributor who was 20,000. We would like to say so we have some technology that we can help your business become more efficient to grow, whether that be the flagship product Syncore, the e-commerce product of Commercio or the order product to the kind of smaller entrepreneur in the North American product market. This is how we're trying to increase our addressable market and increase the number of customers that we can actually interact with. And that's how investment's going in. And I think if this takes us towards that $50 million of ARR, then the investment that Claire has been talking about in the capital expenditure slide becomes extremely good value. But one thing for sure is we're spending the money. Now what we've got to prove to everybody is that we can get there towards that $50 million. And so we were trying to set out how to summarize Facilis while it got 3 goal, keep Syncore growing with a high quality of U.S. business in North America, kind of establishing Commercio is now paid for products in the market, establishing that as a market leader in the promotional product sector in e-commerce, and then successfully bringing orders out by the end of the year as our third product. And it starts sort of snowballing and the acceleration of those 3 products, let's say, which we hope keeps our growth going in a very positive direction. And Claire [indiscernible] through brands.

Okay. So just going back briefly to the business model and the industry model that we talked about, couple of slides back on Facilis. So we've got the brand on the right-hand side, who create the demand for the product, supplies and on the left, here I generally category specific, and that creates a need for the distributor in the middle, and that's what Brand Addition is, a very large distributor that's working solely under contract with some of the best-known brands in the world over a period of time and providing those complex services that are listed there in the middle. So kind of sharing here our 5-year results summary for Brand Addition. So again, we can share the KPIs on Facilis. Brand Addition is also a very -- is a mature and very powerful business. And so you can see like in 2 main products businesses, Brand Addition was factored by COVID. And so the demand for our products did slow down. But you can also see that there's a kind of very quick immediate view and recovery in '21 and '22, the team have moved that on again and grown our business again. At that period of time, we've been able to maintain our gross profit margins at 30%, which is I think I've already said today, that's where we generally point people and what the team managed to achieve. And throughout that period, been very profitable and cash generative. I think I've talked about on the previous slide, I was working with some of the best named brands in the world, and then put the 2 pie charts at the bottom showing the sectors that we're working in. So we're in beauty, FMCG, technology, transport, engineering, these are really nice spread across amazing brands, across all sectors, and across all geographies. And then the right-hand corner is showing the results for the year, which were in a very, very impressive 15% revenue growth at 3% margins and a 10% EBITDA return. And here again, just trying to give you a bit more of a feel for the opportunity, the addressable market for Brand Addition. So we've done a piece of work looking at where we can take this business or looking at businesses across geographies, sectors by a number of people, and coming up with there's a short list of 800 companies that we think would really benefit from working with Brand Addition and taking our services. And what happens when we contract with these people is we've got a great longevity of relationship. So that's averaged 10 years in our top 20, and that includes some that have been with us for 2. So you can see that there's a real range in the length of relationship, but there's a real longevity to that relationship. And again, like a really positive experience when they're working with Brand Addition that we get some really good feedback and high NPS scores. And this chart is kind of just trying to bring together like a lot of questions that we always get on Brand Addition, and I really like to share its performance and the strength of the business model and the quality of the team there. So we always get what happens if there's inflation or what happens if supply chain or what happens if there's a recession. And so we've listed at the end of '19, and you can see along the bottom of that picture in the middle, pretty much everything that could be thrown at Brand Addition has been. But as I'm seeing down the left-hand side, I've got amazing experienced team there, we've got working with the best known brands in the world on a long-term basis. We've got a global proposition that our clients want to engage with, they want us to look after them, across Europe, Asia, North America. And we're doing that from offices at [indiscernible] and we're lead in on ESG and tech in Brand Addition. So when we get in these customers, and they're staying with us. So what we've managed to achieve since IPO and all these things have been happening, we've grown our revenues 20%, we've done that at a consistent 30% profit margin, and we've added GBP 17 million of new business. And then sort of wrapping up for what's our forecast is for 2023 with Brand Addition model is a contracted business. So we want to hold on to those clients, they're very precious to us. So kind of win, grow, retain, repeat is the mantra. So let's keep all of our -- the clients that we're working with, let's hold on to them, successfully win some new contracts, as I've said, leading through our ESG credentials, technology and creativity. And then make sure that we hang on to those margins and keep working at that 30 points that we've managed to achieve over the historic period.

Right. And so just touching on ESG, and then we'll kind of take you through the outlook and go to some questions. So ESG, we kind of put out our second ESG report, which can be found on our website. A kind of a lot of detail goes into that, a lot of hard work goes into that. And kind of making it a day-to-day part of our business as something is important to the start. So it's kind of not something that we've had to sort of work hard and to take sort of starting -- I don't feel as though starting from the ground. I feel as though certainly through Brand Addition works is one of the best-known brands in the world. Where a product comes from, what sustainability [indiscernible] has been a big part of Brand Addition selling properties for a long time. And so that neatly now fits ESG, but actually, it's something that the business has been doing forever. So doing it properly and making it our own tone of voice and kind of been brave enough to say, actually, this is important to our business. This doesn't touch our business, so let's not -- actually let's leave that bit alone. I think it's has been very important and so do this properly, you do so for over the long term, I've got no doubt it'll makes us a better business and gives us a great guidance for how we should be running it. And so there's some detail here, under the different ESG sections, but I'd say the best way to understand our commitments and how we involve this in our day-to-day business is to go through our report and accounts, go through our ESG reports and always happy to receive feedback on there. But we have people who walk across the threshold of the door in the business every day, and ESG is kind of what they're thinking about and what they're kind of making sure it's implemented correctly into our organization. And really sort of proudly on the right-hand side there, you can see that our business just was nominated and actual won all of the AIM Awards for the sort of best corporate governance on AIM. And I think that is a wide group of people who kind of put us forward for that and then vote on that. So that's a really proud moment in terms of the business and recognized for the initiatives that it's actually doing. So in terms of how the business has started I think we have 2 super organizations in Facilis and Brand Addition in terms of the culture in the organizations, the differentiated strategies, and the addressable markets they can actually grow into. So to us year-after-year-after-year it keep proofing that, and it's been our financial direction forward and our strategy forward. But it's turns out the start to 2023, it's very much in line with our expectations. And as I say, when I sit here in 6 months' time or in a year's time, we very much will be consistent to the strategies that we've taken up and hope we're further up on the curves on each of those strategies. So I think that's everything from us. We're really happy to take questions now.

[Operator Instructions] And the first question is, you commented that the current CapEx won't be ongoing. What can we expect CapEx to normalize going forward?

Yes. So that, tried to share that on the Slide 12. And so there's a level of CapEx in Brand Addition. You can see that's been roughly around the $2 million mark over the last few years, and I'd expect that to be there. And then what we pointed to for Facilisgroup is GBP 3 million, GBP 3 million. And so that's for -- there will be other $50 million scale revenue and will be supporting 3 products as opposed to the one that we've had historically.

And you've talked about Facilis having a 96% retention. Why do partners leave?

So the main reason we've had in the past, I think it's twofold really. One is these are great businesses that have probably been established for a long time, and there'll be a sort of, at some point, the old owners and partners of those businesses perhaps want to realize some of the value they created and might sell their organization. And so that's probably the main reason that happens. When that does happen, we'd like to keep them in the family and for them to sell their business to one of our other partners. And even that actually is part of our attrition. We don't say that as we keep an existing customer. So that happens and that we call that attrition or if they're acquired by someone outside of Facilis then obviously, that is as well. So that's the main reason. Occasionally, we're bringing a partner that perhaps it might not fit. There might be quite small. They might not be buying enough on the preferred supply network, and so they might not exactly suit them. But a 96% customer acquisition, I think is really strong. We kind of will work and continue to work very hard at keeping that. But that acquisition and perhaps something is that small, it's probably 2 main reasons.

And the U.K. and U.S. interest rates have gone up again today. Does this concern you?

So I think we always need to kind of be aware of the wider economic environment. As Claire showed in Brand Addition, there's been a lot thrown at Brand Addition, the group generally Facilis is very much included in that as well, in over the 3 years that we've been listed. And I think if, you know I am an investor in Pebble, but if I'm thinking about an investment in Pebble, I go, well, actually, I'm worried about something that happens in 3 months' time and what might have happened. So if I'm a 3-month investor, I probably might be slightly concerned about interest rates or recession or what might happen. But I think if you find a 1-year, 2-year, 3-year investor in the business, then I think the strategy we have on Facilis, the way that Brand Addition continues to retain and grow and its disruption is, the example Claire showed you there where customers stay with us, the business continues to grow with new customers. So if I take that sort of 1-year, 2-year view, then I am an investor and I'm obviously buying.

And a related question, which you may feel you've already answered, are marketing budgets holding up during this increasingly challenging global economic conditions?

Yes. I just say we've been through quite a lot, and it's kind of, I suppose, when we show that Brand Addition next year, we might just try to show a little bit further, but we still expect our guidance in the market and that's -- we have some of that publicly available now through addition on our website. So the guidance in the market, we're comfortable where we sit today. Brand Addition is well spread in terms of sectors like Claire said. And so that spread of sectors, I think, helps us in terms of kind of weather some of those storms as does the geographic side. So I think our line was in the outlook marketing budget in terms of our expectation, 2023 has started within that management expectation.

And what's the strategy for accessing the market at Facilis? How do you market the products? And will the approach differ between the 3 offers?

Yes, absolutely. Certainly, so for the first time, I think what's really exciting is that if we have an engagement with any distributor in the promotion product sector in North America, we will have a product that would be used to them. Now any conversation we have is something that we're going to help their business get more efficient or help their business out. But obviously, sort of the products are quite different because they're for different markets. So Syncore is asking a business account and put something else in new. So that is more sophisticated sell in some terms, in terms of kind of taking away the processes and procedures you have now and putting new ones in. And so that might have a little longer life cycle and also in terms of making sure we're experts in their business from the promotional products market of Brand Addition and Pebble Group. So we understand their paying points and helping them demonstrate how our technology gets over those paying points is a big part of getting people across the line on Syncore. There's a bit more of a volume sell going on, on orders and Commercio. And so the teams work very closely together but there are separate teams. And if we try and -- we're expecting to sell a Commercio product, we might end up selling Syncore or we might even sell orders. But I think there is a slightly different sale. And our investment into sales and marketing would be very important in making sure we successful in [Technical Difficulty] I'd say that's the question again and through dotcom view the product trial it and pay for it with loss.

[Technical Difficulty] and does it affect margins?

So I think certainly I've been here for 20-something years and the product quality has improved, I would say, much more retail quality. People do want you to keep that product in retail again and again and again, that is the idea behind promotional products. And so, I think that product quality towards retail definitely. And I think increasingly, certainly, for the customers that Brand Addition are interacting with the sustainability story. Does it fit with their values around ESG? I think that's definitely a train that's left the station, and leading in that area will support Brand Addition growth. In terms of margins, certainly, again, I'll kind of focus on the Brand Addition, which is the business selling product. And we always point people to 30% on a blended basis. And obviously, that has a bandwidth around it. But overall, 30% is what we think is the right number. That is our customers willing to pay a margin that values the services we bring, but also kind of want sort of retainers and gives us an amount of profit as well what we believe is reasonable for the work that we do. So I don't think it does change the margin. We will always point as Brand Addition to a 30% gross profit margin.

And are supply chain issues still affecting the business? Or have they largely been overcome?

It's hard to say if we just could become immune to everything that is thrown at you, because Brexit was a big disruption and continues to be much more inefficient than in terms of moving product than it ever was. And followed by that was freight capacity, freight rate increase, supply chain challenges, China and even currency. So I think we kind of -- I'm not sure that becomes the new normal, but we kind of -- we -- Claire talked about the quality of the team, the depth of relationship with customers and suppliers. And I think it allows us to deal with whatever gets thrown at us. So it has been a fairly tough ride, but the quality of both Facilis And Brand Addition, if you look on the top and the way the business has continued to develop, I think is a reflection of people hard work and kind of the position of the organization.

And how do you handle currency fluctuations?

Yes. So there's kind of 2 points that really impact the group. We've got the translational, we got our businesses in the U.S., Brand Addition U.S. and Facilis. So we get a translational impact there, what's down at profit, operating profit level. So that is part of the group's numbers. And then in Brand Addition, if we are buying product directly in the Far East where we've purchased $9, then we hedge that spot to the point that is placed to protect our margins [indiscernible] if we are invoicing in Europe out of the U.K. company, then again, we'll hedge that forward and protect our margins when we know we're collecting that cash.

And can you tell us a little bit about the OTCQ existing? And will it help with liquidity?

Yes. So it's not a listed on [indiscernible], it's a trading platform. And our intention there was to just help our employees, partners, suppliers, people interested in our business, help them, give them an opportunity to buy our shares. So it's literally -- it's a trading platform. It will be as easy to buy shares if you are a U.S.-based investor as it is for the U.K. at the U.K. team.

So does that mean it's going to be a dual listing?

No, no. So it's not a dual listing. We are only listed on AIM, the OTCQ exist just as a platform that will help people buy the shares that are listed on AIM.

And that's the end of the questions. Chris, do you have any closing remarks.

Yes. I think as always, it's a great opportunity for me to say thank you to the team. So our results have, I think it have moved forward again. That doesn't happen by accident, some talented people working on really clear strategies and working extremely hard. And the combination of those things kind of what brings our results out. So it's thank you to them. Thank you for your time, for your interest in the group, and we will keep our strategy consistent. We'll be ambitious for the business, and we'll do this all again in 6 months' time.

Tremendous. Many thanks indeed, Chris and Claire. And to everyone listening, you'll now be taken to a webpage to give some anonymous feedback on today's presentation. If you can't complete it now, you'll receive a follow-up email. We and the company would be really grateful if you could take a few minutes to complete. Many thanks for joining. This is the end of the webinar.