One of the few companies to be brave enough to float on AIM in the final weeks of 2019 is promotional products company Pebble Group. The AIM admission should take place in early December.
Manchester-based Pebble (www.thepebblegroup.com) is a relatively small player in a global promotional products market worth more than $50bn annually. It has strong relationships with major global brands and with smaller promotional products companies.
The main subsidiary Brand Addition was previously owned by Bemrose Corporation, which became 4Imprint (LON:FOUR). It was sold to HIG Capital for £24m in early 2012, when chief executive Christopher Lee and finance director Claire Thomson joined the board. In 2011, revenues were £65m.
Private equity firm Elysian Capital invested in Brand Addition in May 2017 when it acquired the corporate vehicle that owned the business. The main shareholders in the group are Elysian, Beechbrook Private Debt III SARL and management.
Brand Addition provides promotional products to global companies, which own brands in sectors including health, beauty, consumer goods, transport, technology, charities and financials. Nearly all this company’s revenues are repeat business with long-standing clients.
Facilisgroup is a Software-as-a-Service business that provides services to smaller promotional product distributors in the US and Canada. The services offered include order management, customer relationship management and reporting. Facilisgroup also offers a service that consolidates the buying power of its clients.
In the year to December 2018, The Pebble Group Ltd (Company number 10695334, which was renamed The Pebble Group (Holdings) Ltd) generated revenues of £93m, but there was little contribution from Facilisgroup. A full contribution would have taken revenues to £99.8m.
The sales are international with the fastest growth in recent years coming in the US and rest of the world.
Underlying operating profit was £5.39m, before transaction and reorganisation costs of £632,000, although the financial structure meant that interest charges on debt and preference shares were slightly higher, partly due to a foreign exchange loss on the revaluation of debt.
There was £65.2m of loans and preference shares at the end of 2018, plus £11.5m of potential deferred consideration for Facilisgroup. There was also cash of £8.15m on the balance sheet.
The business does generate cash from operating activities and the flotation will undoubtedly pay down at least some of the debt. However, no figures were included in the announcement.
It appears that a new holding company is being floated on AIM, but the underlying figures will be the consistent with the main subsidiary. It is difficult to assess the appropriate valuation for Pebble until further financial details are available.