Hi, good morning, everybody. I think it's just a minute to eight. We'll kick off just in a minute or so, but thanks for your patience. Hi, morning, everybody. I'll kick off now. Alistair, if you just tell me you've got the screen and you can hear me and everything.
Yeah, all good.
All right. Perfect. Thank you. Thanks for joining us this morning. We've got our full year results for 2025 coming out and a little bit of sort of understanding what we're doing going forward as well. Our presentation's on our website. We'll go through it with you now and Claire and I will flip-flop between sort of Brand Addition, Facilisgroup and the group numbers.
If we can kinda go through this, we'll probably do this in about 15, 20 minutes or so and then we'll take questions at the end and where we'll be able to sort of you know if you put your hand up we'll be able to unmute you and put you on the screen to do that if you had any questions. I think you know most of you know who we are. We've been in the business for a long time, and I suppose we're invested financially and emotionally when you you've done that. As I say, we'll kind of this is our results for 2025, also sharing a little bit of the direction that we're going in in 2026 and beyond.
We're in the promotional product sector and look around. Claire's got a kind of water bottle there with kind of Pebble Group on and a physical product making an emotional attachment to an individual with a brand. Whether that's the employee, the customer or potential supplier, it is all about an individual receiving something that connects them to a brand.
When AI and the world of digital is all around us and surrounding us and that noise gets a little bit overwhelming, I think a physical product making that emotional attachment is very, very valuable and some of the best-known technology brands in the world really embracing what we do and in terms of promotional merchandise as part of their marketing strategy tells you that this sort of that physical product is probably even more important than ever in a world that's sort of AI and digital dominated right now. The market itself is a large one. We estimate $50 billion overall. In other words, $50 billion worth of promotional merchandise bought by companies all around the world each year.
We have really good statistics on that from the U.S. industry, which is about half of that $50 billion, from the trade association called PPAI and a service provider called ASI Central. They give great data around the U.S. business, and that's where a lot of our footprint is. That $50 billion and $25 billion in North America, we get to see about $1.7 billion of that through our two companies. Facilisgroup providing technology to promotional products distributors in North America. We have around 250 businesses that use our technology through there. Those 250 businesses put $1.6 billion of sales. Divide one by the other, our average customer size in their business is about $6 million.
We get to see an amazing amount of data and understanding of what's going on in the North American market through Facilisgroup. Not only does it provide technology, but we have a GPO around there or kind of a market network, and we also create a really nice community of a win-win situation. Talk about that. Then the other sort of $0.1 billion that goes through is from Brand Addition. Brand Addition is a global provider of merchandise to some of the biggest companies in the world. We're doing that about just over GBP 100 million goes through that, and that's the sort of secondary sort of view of the market that we have.
In terms of kind of, you know, why us, you know, I think long-term relationships are really important. Both our brands, Facilisgroup and Brand Addition, are market leading in what they do. That's because long-term relationships are created with our clients in Brand Addition and our partners at the Facilisgroup. Sort of those relationships come first, building on those and making sure that we never take those for granted means we have a very kind of repeatable revenue stream going forward, recurring revenue stream in the future. The size of the market versus the size of us means we have opportunity to grow. Both of our businesses are very cash generative.
It allows us to invest in our own business and then also kind of give returns to shareholders if we have sort of that excess capital, we can do that as well. In terms of the highlights, on the right-hand side, that's where the action is. They're the businesses. On the left-hand side, that's sort of The Pebble Group and the head office and the like. What we've done there, last year, we returned GBP 12 million to our shareholders. That was on top of GBP 3 million the year before. Our cash flow is really improving.
That cash flow conversion is now sort of over 90%, and that's as our normalization of our capital expenditure program at Facilisgroup came in in 2025. The strong cash generation really allows us to make choices of investing into our own business, but also giving returns to shareholders as well. So the real action and all the fun is at Facilisgroup and Brand Addition, and there's some nice statistics on both that sort of demonstrate great retention, long-term relationships and good customer backing in terms of our NPS scores. Taking up highlights out of Facilisgroup, the 2023-2025 has really been about getting our focus right, getting our team and our leadership correct.
Now those things are in place, and we actually have everything in place to grow, and we're doing that. We've got some really nice evidence of that in 2025, and that's carrying on in 2026 too. This business is ready to grow, and when it does that, I think we've got something really valuable here. Pulling a statistic out this time, you know, concentrating on more than we have done in the past, is what's the lifetime value of a partner and how much does it take to win those?
That LTV to CAC ratio we think is incredibly strong, and it's really encouraging to say, do more in terms of if we can get a repeatability of that sort of, cost of customer acquisition against what is a really strong lifetime value, that says really good things about what 2026, 2027, 2028 can deliver for us and very strong cash conversion there too. But Brand Addition contracts with some of the best brands in the world. They stay with us for a long time. Really disciplined management around that in terms of our cost base and our gross margins, and again, very cash generative and really beginning to increase the number of new business wins that we have in there and have a sensible start into 2026 as well. So Claire, do you wanna talk some numbers?
Yeah. Yep, thank you. We'll go into more detail on the KPIs as we go through the presentation, but you know, the theme for the day that I hope you go away with is, you know, it's been a very difficult time, but these businesses are very resilient, and I'll talk more about, you know, growth coming through at Facilisgroup. Brand Addition, you can pretty much throw anything at it, and it still remains profitable and cash generative. While our revenue might be flat, the focus really on growing gross margins and we've seen an improvement year-over-year in Brand Addition.
We signaled this time last year about our investment into sales and marketing at Facilisgroup, and you can see that in the EBITDA number and again, we'll give some more detail on that as we go through the presentation. We also said that we expected our free cash conversion to start to improve, and it has at 91%. As both our businesses are extremely cash generative, we've been able to increase the return that we pay to our shareholders. This diagram hopefully helps you get your head around the group. Over on the left-hand side and you know, the different business models that are in there, you can see Brand Addition is that products business. It's the lion's share of the revenue.
Facilisgroup is a much smaller proportion of the overall group revenue. When you move across the page to the right-hand side and EBITDA, you can see those SaaS revenues at Facilisgroup that translate into, you know, a significant proportion of the group's EBITDA. Focusing our energy and attention on growing that Facilisgroup revenue line, you know, will obviously have a material impact on the right-hand side of that chart. This is the group PNL. As I said, coming on revenue, we've come flat with last year, and that was largely driven all around Brand Addition where a bit of pressure on our existing customers.
The team worked really hard, as Christopher said, about bringing in new business opportunities, and we've seen some nice increases there that mean that we've been able to offset any pressure from our existing with the new that we've brought in. You know, have improved our gross profit margins, so really focusing on what we can control, increasing that profit margin and controlling our costs. You know, Brand Addition, that's translated through to improving EBITDA. Then the investment at Facilisgroup, you know, is in line with what we've signaled, and is giving us something to look forward to in as we move into 2026, which we'll share as we go through this presentation. Balance sheet, kind of really straightforward.
When you look at The Pebble Group balance sheet or I think Brand Addition, that's large international companies, kind of best-known brands in the world, and the working capital is linked directly with the volumes that those guys are spending and so it's kind of high quality and backed by blue-chip businesses. As we said, as I've said a couple of slides ago, you know, we're kind of, this is supporting our organic growth and has supported us returning a significant amount to shareholders through 2025. That comes out in the cash flow. The investment in working capital is Brand Addition and as I said, kind of timing and linked with the sales volumes there.
You can see the reduction in capital expenditure that we signaled that's supporting our increased free cash flows. That's now normalized. The increase in dividends and the returns to shareholders. A 50% increase on dividends paid last year and significant increase on returns through our share buyback and tender offer. What does that mean for our capital allocation and priorities going forward? You know, we are becoming increasingly confident in the returns that we're getting out of the investment in Facilisgroup. That's both the lifetime value of the new customers and the cost of acquisition and the success that we're having in that being a repeatable process.
We're going to invest in our organic growth, and we've signaled that this morning, and we'll talk you through that. You know, we'll maintain our dividends. We increased the dividend pay by 50%, and our earnings per share has moved up in 2025 as well. I think I've said it about five times now, but our capital returns increased significantly through 2025, and we've signaled again this morning a 5 million share buyback that will start today. As ever, we remain open to other opportunities, be that M&A if the right opportunity becomes available. Really focusing on accelerating our organic growth and in particular Facilisgroup which Chris will talk us through now.
Thanks, Claire. Yes, we'll talk about the two businesses now. I'll sort of run you through Facilisgroup and then Claire through Brand Addition, and then we'll take any questions. Facilisgroup is a technology business, but more than that, what we do with the sort of scale of what goes through Facilisgroup is actually create this buying organization or market network to make sure our distributors get great pricing from the preferred suppliers, and we really help those relationships through incentive programs, events and great marketing. We create a community as well.
Here on the screen is something called Empower, which we take all the sort of women leaders around the supply chain, our distributors and ourselves, and bring this great community together. More it is technology, it is a buying group and supply chain and a community as well. Those three things really do lend itself to a strong business with a two-sided income model, but actually great retention levels as well. There is a much deeper relationship than simply providing some technology to different businesses. That's what we're trying to say on here. Also I think the scale of what we're producing, so giving $1.6 billion goes through our technology each year.
Behind that GBP 1.36 billion and those invoices are probably 4 or 5 order lines that might be sort of 10 or 11 quotes. We know the zip code that it's going to, we know the brand that it's going to, what business it's coming from, and that is an incredible amount of detailed data that we have that we can use to our advantage and support our distributor partners and support our suppliers. We're really beginning to unlock those data assets and bring out some integrations with other best in class technologies that's beginning to support. If our average is GBP 6 million, our larger partners are GBP 20 million +, and we're beginning to attract more and more of those larger businesses as we unlock this data and those integrations.
Our average partner, I'm hoping, is gonna go forward over the next year or so. In terms of the metrics, I'll talk about the bottom row first, and so number of partners driving the GMV that goes through our platform and driving the spend with preferred suppliers, they're all statistics that are going to help future revenue. We return to growth in number of partners in 2025, and we expect that to accelerate in 2026, which will have a direct knock on impact into the GMV and the spend with preferred. But some nice statistics on retention rates and EBITDA margins. What we need to do, and it's kind of no secret, is drive that top left-hand side of that revenue. That's what we're looking to do.
This slide kind of absolutely sets out the challenge to us is to say, nice business, nice cash flows, but actually its value comes from its growth. We spent the last 18 months really sort of organizing ourselves, getting ourselves refocused, building the right leadership team, getting the right wider team, beyond that, a better product in terms of what we're doing, with our technology, but also better communicated as well. Now all those things are in place, they're done, so now it's about returning to growth in 2026 and beyond. We spent some money in 2025, and we're gonna continue to do that in 2026 in order to drive that revenue growth.
Although that kind of number comes down on the right-hand side in terms of Adjusted EBITDA, it's for absolutely good reasons. It's driven a nearly 100% growth rate on new partner wins in 2025 versus 2024. We're looking to accelerate that again in 2026. When we do the math, the evidence is there that says really strong LTV to CAC, spend money on growth. We're beginning to get more and more confident and encouraging in those metrics that we can get repeatable growth from better products, better leadership, better sales team, and that's beginning to come through.
You know, this is a slide that we tried to say, you know, the left-hand side we go, "Why have we got a really strong lifetime value, and what are we doing to make sure we have a repeatability in the ability to acquire new customers?" We have a strong lifetime value for a number of reasons. I'll go through them one by one. We have a two-sided income model. We have subscriptions for our technology, but with that, buying group, we also get an activity-based fee for each dollar that's spent between our distributor partner and the preferred supplier. That gives us a bump in actually being a two-sided income model, which is really strong. We help our partners grow.
That GMV through training, through events, and through bringing together community, we actually help those businesses grow that are with us. As they grow, their fees grow with us, so that's a really strong thing. Great retention rates through our data, through our technology, through better communication, a better sales team, we're attracting larger partners into our organization. I can see a bit of growth in the average new partner win in 2025. In the sort of the first 11 weeks of 2026, I can see an even greater growth in the quality and the size of the business that we're attracting. That's really helpful to us as well.
We've taken out, you know, even though when we're investing some money, there's still sort of +40% EBITDA margins and a 20% cash profit as well out of that. That combination of things says there's a really strong lifetime value. What is the cost of customer acquisition? Well, we've got the right leaders in place, better product, better leadership selling and communicating our technology, and a real good focus on, you know, this TAM is $25 billion, but what is our bull's-eye? What's our serviceable obtainable market in there? That's what we're really focusing on and having some good returns from that. So that gives us these, well, some statistics in that come through in 2025 says the partner number had gone from 16 to 30 wins.
In 2024, 16 wins. In 2025, 30. We're expecting that to accelerate again in 2026. That's on stable retention numbers and very strong ones, and that means we're beginning to grow. We've got 88% growth in 2025. I'm hoping kind of and 2026 has started well. We're gonna move that forward again on very kind of decent retention rates. That LTV to CAC comes through here. If I just do the math for you, all the breadcrumbs are there in terms of organizing this. We got 14 incremental new partners, so your 30 in 2025 minus the 16 in 2024.
The average lifetime value of one of each partner is about $500,000, so that gives us the $7 million as our numerator, and the denominator is set around about an extra $1 million was spent on really driving that revenue growth. That 7-to-1 ratio is really strong because of all those attributes about the lifetime value. It says do more, and that's exactly what we're signaling. We'll return to growth in 2026, and that really begins to multiply up in 2027 onwards. Investing for growth, and we think we're doing the right thing with our capital. Summing that up, it's important we always look after our existing relationships, keep great engagement with those guys.
We will continue to spend some money in our technology and drive that forward, and coming out of that is integrations and really kind of making use of our data assets that we have in there going forward and returning to revenue growth. Understand the kind of, you know, when people look at our business, it's that top line. If we can put some momentum into that, we think we can get to that Rule of 40 with a business in terms of our revenue growth and our EBITDA margins. Those two things come together, I think we've got a good valuable business here. Heads down and returning to revenue growth, I think we've got something very special in Facilisgroup. In terms of Brand Addition. Oh, yeah. Okay.
Brand Addition, different business model, selling products to some of the largest known brands in the world under contract. Every single one of Brand Addition's customers you would know as a household name. Characteristics it shares with Facilisgroup are those excellent retention rates that you can see there, 97%. Long-term relationships are important to this group. Brand Addition has got a great heritage in winning new customers and holding on to them. Just sharing some stats there around the quality of business and the reasons why people choose to work with us. The financials, you know, the revenue over on the left-hand side. There's two ways you can look at that.
That's been pretty flat over the last couple of years. I think, you know, what we believe that demonstrates is in a really tough market, Brand Addition has been extremely resilient. You can throw whatever you like at it, but it's hold onto its customers. It's managed to supplement any softening its existing customers with acquisitions of new business and really kind of hold on to that revenue line, but also positioning itself well with those retention rates and new business or new client logos to go when the market turns that there's an opportunity for us to grow to regaining market share. Really focused while life's been difficult on controlling what we can control.
The team have done an amazing job of moving that gross margin number forward, and we're at 37%, in 2025 compared to, you know, 28 or 30 when we, you know, back in 2022. That improvement in margin and the good control of costs has translated through to an improvement in EBITDA in the year. In a, you know, in a tough market, revenue's flat, but EBITDA's moved forward. Then those two charts at the bottom are really showing you kind of, you know, like where some of that resilience comes from, and we've got that nice spread of revenue by sector and by geographical destination that kind of real resilience to the Brand Addition. This is, I suppose, hopefully explaining the story of our year.
You know, we're bridging 2024 EBITDA through to 2025. You can see there the ins and the outs on our existing clients where there's been some pressure, but that's been offset by the contribution from new. Really focusing on that gross margin percentage, and that supported those numbers. Looking after our costs and being really careful around where we spend our cash has meant that improved margin has translated through to increased EBITDA. Coming behind that and within that is again, you know, like we said with Facilisgroup, you've got, you know, the team, the new business team really focusing on driving new business wins.
You can see there's been a step change in the number of new customers won in 2025. It was three in 2024, it was eight in 2025. It's not quite the sausage machine that Facilisgroup is in terms of, you know, of. Facilisgroup is more in our control. In Brand Addition, we're waiting for people to go out to tender, but the guys are kind of having real success in making sure that when we get on a tender that we win. You can see that in the number of customers that come through and also the average value of those contracts, similar to what we've been experiencing historically. What we're focusing on in 2026 is retention, maintain those stats, because growth starts with retention.
New client attraction, can we continue that momentum? You know, our pipeline right now is good, we would look to push forward on new client wins in 2026. Also maintaining that financial discipline. Aiming for 5% revenue growth, and, you know, building our business around an expectation of a 35% profit margin and translating that through to a +10% EBITDA.
Thanks, Claire. Then we have a couple slides on ESG and we do things for the good of the business, the good of long-term relationships, our team, our suppliers, and our partners/clients. Those good things I hope that we do happen to come under a banner of ESG. We're not trying to follow a trend, trying to be fashionable. We're trying to be a good company to both invest in, to work with, to work at, for the long term. We see there's some of the initiatives that have gone through in 2025. We will have our fourth or fifth ESG report that'll come out next week that kind of explains this in a lot more detail.
The cornerstones going behind us are looking after our people, kind of being a responsible organization in terms of how we manage ourselves and how we kind of, you know, are part of a community and the environment. That was sort of important to me that we do the right thing, manage the right way, and in our own tone of voice as opposed to follow any fashion or trends. We'll continue to do that and explain some of those things under what comes as the banner of ESG, say our 2025 report comes out in a week or two. Where does that take us then into 2026 started pretty well, pretty sensibly.
The investment that we've made in Facilisgroup has paid off in 2025, and it'll return us to growth in 2026, and we're expecting an acceleration those new partner numbers as well, encouraged by that LTV to CAC ratio. At Brand Addition, you know, kind of as Claire said, throw anything at it, and it's been resilient, robust, kept its customer relationships, and managed its profitability and margins. We expect to do exactly the same again. We have cash, you know. We're investing in Facilisgroup, but we still have excess cash. We returned best part of GBP 12 million last year. There's a GBP 3 million dividend and a GBP 5 million buyback already sort of announced for this year. It feels then we're in a sensible spot.
You know, we can't control what's going out in the world, but we can point our business in the right direction for the good of the future, and that's hopefully what we're doing right now. We have some segmentals and things like that in the back in terms of other detailed P&L. We'll pause here. We'll stop sharing those slides and really happy to take any questions that anybody has. If you can stick your hands up and I'll try and come back to. Yeah, there. Have we got any hands up?
Joe.
Joe. Right. I will, on this tiny screen, I'll try and get Joe to talk to us. Have I clicked the right buttons there? Yeah, Joe, if you can go ahead, please. Have I clicked the right ones? I can't see. Either you're on mute or I need to unmute you, Joe. Give me a second. Oh, is that not working? Sorry, Joe. We're struggling. Oh, in fact, I'll put my camera on. Sorry. Yeah. Sorry, I've got you, Joe, now. I couldn't see without my glasses. I'm trying desperately to unmute you. Yeah.
I think you're on. I think you should be on, Joe.
Yeah. Can you try and unmute at your end, Joe? It's not, is it? Shit.
Can you hear me now?
Oh, yeah. There you go.
Excellent.
I'm blaming you for that, Joe. Yeah.
Yeah, you should.
Thank you. Thank you for taking responsibility. That makes me feel a lot better, even though it might not have been you.
Okay. Thank you very much. Three questions if I may. Firstly, you know, the U.S. is clearly an important market for both your businesses. Interested in your view of life on the ground there, and you can't control the future, but I guess you know what's going on now. Secondly, I think at Brand Addition you talk about gross margin guidance of 36%. Can you just talk us through, what's going on with that? And then, if I picked up correctly, at Facilisgroup you talked about an acceleration of partner growth. If you could just give us some sense of what that trajectory could look like.
The US market, our partners have started sensibly in terms of what we're seeing coming through Facilis. They're not double-digit growth, but overall, I think it's a sensible market as we stand now, as sensible as it can be. We've certainly not seen any significant drop-off. Absolutely not. It is sort of moving along at a not dissimilar pace to what it did last year. The gross margin guidance on Facilis, I think we've said we're trying to do plus 36%. We made 37% last year.
Just trying to moderate that to say, you know, kind of our aim will obviously be to retain the 37, but probably guide in a little bit more prudently than that. We have continued the acceleration in new partner wins. They're well ahead now of what they were this time last year. If we, you know, again, it's only, I think we're 11 weeks in, you know, if you extrapolate out the numbers that we've done so far this year into the full year, then, you know, two things are happening there. One is we are ahead and growing nicely of, you know, if you extrapolate it out from here in terms of number.
Really interestingly, that number, the average size of that business that's been attracted to us is, you know, a decent size and a material size bigger than the ones we've attracted in the past. There's a nice kind of both number and size that kind of points to you know points to some you know good signals this early in the year. I feel, you know, sensible start to the year, and hopeful that Facilisgroup goes to growth and we demonstrate again we can accelerate those partner numbers and the size and quality of those partners.
Perfect. Thanks so much.
All right. Any other hands up? I'll. Don't think there is. Yeah. dun. Yeah. No, I think that's everybody. Won't delay people unnecessarily. We're not hard to find, so if there's any questions and follow-ups, we will be happy to receive them. Thank you very much for today and enjoy the rest of your day. Thank you. Thanks. Bye-bye.