Cambridge (UK): Hybrid Software Group PLC announces that it has published its annual report and financial statements for the financial year ended 31 December 2022.
The full document is available to download from the financial reports section of the Company’s web site at: https://www.hybridsoftware.group/investors/financial-reports.
CEO Mike Rottenborn comments, “We entered 2022 with bullish growth projections until the economic downturn began to affect our OEM and our end-user business. In addition, during the first half of the year our revenues were impacted by the global shortage of semiconductor chips. Meteor Inkjet’s revenue fell short of projections by more than £4 million during this period. Their team quickly redesigned a critical circuit board using a chip that was more widely available, but the lost first-half revenue was not fully recovered in 2022. I’m pleased to say that 2023 has started very strongly for Meteor, with revenues recovering to healthy levels and demand from China increasing rapidly.
“Despite all the challenges, we completed two strategic acquisitions, sold an old and unused intangible asset for net €3.3 million, achieved four new patents, and drew the constituent parts of the business closer together into one company, reorganising R&D resources and pushing ahead with product innovation to the benefit of our customers. There’s no doubt that Hybrid Software Group has emerged from 2022 as a stronger company. We have best-in-class technology, a sound business plan focussed on markets that are trending upwards, and strong cash position of Euros 6.3 million.”
Executive Chairman Guido Van der Schueren adds, “2022 was a year of mixed results and we fell short of our growth projections in both revenue and net profit. We acted quickly in response, taking prudent steps to conserve cash and reduce our cost structure, especially external spending. But we never sacrificed the long-term value of Hybrid Software Group. We did not cut any of our key personnel or reduce R&D spending, and if anything, we stepped up our sales efforts and increased the company’s presence at key trade shows and industry events. We have broadened our potential customer reach by offering successful products for all digital printing applications and I anticipate a much higher level of growth and profitability in the very near future.”
The consolidated pre-tax result for continuing operations was €1.84 million compared with a profit of €4.57 million in 2021. The decrease in profitability of €2.73 million was due to:
a decrease in revenue of €1.87 million;
a decrease in cost of sales of €1.09 million;
an increase in selling, general and administrative expenses of €4.38 million;
an increase in research and development expenses of €0.78 million;
a decrease in other operating expenses of €0.18 million;
an increase in other income of €3.27 million;
an increase in net finance expenses of €0.79 million; and
a decrease in foreign exchange losses of €0.55 million.
Revenue for the Printing Software segment was €15.26 million for the year (2021: €13.84 million).
Revenue for the Printhead Solutions segment was €8.66 million for the year (2021: €13.98 million). This segment was severely impacted by the shortage of its most commonly used chip until a critical circuit board was redesigned using a different component in mid-2022.
Revenue for the Enterprise Software segment was €22.78 million for the year (2021: €20.74 million).
Gross profit for the period increased to 84.2% of revenue (2021: 82.5%), primarily due to the higher mix of
software related sales during the year, particularly higher margin sales to end users by HYBRID Software.
Included in selling, general and administrative expenses is amortisation of €1.17 million (2021: €0.84 million)
related to intangible assets recognised as a result of acquisitions.
Research and development expenses includes the capitalisation and amortisation of internally generated intangible assets and the amortisation of certain intangible assets recognised as a result of acquisitions. During the period there was a net capitalisation of development expenditure of €2.00 million (2021: €2.39 million) and amortisation of acquired intangible assets of €5.10 million (2021: €3.93 million).
The net capitalisation of development expenditure comprised €4.0 million (2021: €3.40 million) of capitalised expenditure less €2.0 million (2021: €1.01 million) of amortisation.
The third quarter results were favourably impacted by the sale of an unused asset (approximately 69,000 IPv4 internet addresses) for a net amount of €3.3 million which closed in July. Given the nature of the sale this income is reported as “Other Income” and is not included in our revenue figures, but it is accretive to EBITDA.
Total operating expenses increased by €4.98 million, or 14.1% compared to the same period in the prior year. The increase was mainly due to higher sales & marketing related expenditures, increased amortization expenses and higher staff cost resulting from the acquisitions of ColorLogic and Hybrid Iberia in Q4 2021, and iC3D in Q1 2022.
Foreign exchange gains and losses were primarily due to the revaluation of currency balances held at the balance sheet date and the change in exchange rates during the year.
The Company presents EBITDA (earnings before interest, tax, depreciation and amortisation) and adjusted profit when reporting its financial results to provide investors with an additional tool to evaluate the Group’s results in a manner that focuses on what the Group believes to be its underlying business operations. The Group’s management believes that the inclusion of adjusted financial results provides consistency and comparability with past reports.
Additional commentary and analysis of the Company’s consolidated results for the year ending 31 December 2022 can be found in the annual report and financial statements.
Should you wish to receive a printed copy of the annual report, please send an e-mail to [email protected] or make your request in writing, for the attention of the Company’s Chief Financial Officer, to 2030 Cambourne Business Park, Cambourne, Cambridge, CB23 6DW, UK.
Annual General Meeting
The Company will hold its annual general meeting on Wednesday 24 May 2023. The official notice of the meeting will be available on the Company’s website at: https://www.hybridsoftware.group/investors/shareholders-annual-general-meeting.