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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to the Pebble Group interim 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, [ Tamsin ]. Hopefully, you can all see and hear us okay, and say welcome to Pebble Group's half year '22 results. For those who dialed in to this call before, we'll give you a little sort of headlines to the group numbers, then we'll dive into our individual businesses and happy to take any questions at the end. My name is Chris. I'm the Chief Exec, and been part of the business and the group and what it's evolved into for the last 22 years and hugely supported by Claire, who's our CFO, and we've been together running the business for about 15 years or so.
Let's talk a little bit about the industry to start with in the industry we operate in. And then from there, go through our numbers and the individual businesses themselves. So the promotional products industry is much larger than a lot of people might think it's around about GBP 50 billion industry overall. And the reason why it's so large is all businesses, all sizes, sectors and geographies, really proud of who they are and really enjoy using product to make an emotional engagement with MS stakeholders.
I might be their employees, their customers for general marketing purposes. But again, any size, any type of business really enjoy putting their brand out there to engage in make an emotional connection with their stakeholders. And that GBP 50 billion, we estimate around half of that industry is in North America. The way the industry is built up is we have the brands who kind of create that demand. And then behind that, I just like to talk you through a little bit of the supply chain. We have our suppliers. So suppliers are often product focused. So it might be drinkware, writing instruments, clothing, but the actual brand wants all of those items.
And with the supply has been specialist, it creates a need for this group in the middle of distributors. And that's really how our industry has operated for many, many years. We think a little bit of that's changing, though. -- the sort of more technology, the more that comes into play, there is really helping the smoothness that technology is helping a smooth and efficient flow of orders between suppliers, distributors and the end user. And we feel that's really changing and quite quickly at the moment. And then secondary to that, what else is coming into our change is actually talking about sustainability and ESG. There's been a couple of, I think, [indiscernible] starts regarding sustainability in our industry where it's become important and something else has happened from backwards again.
But I think that's really changed over the last 2 years. I think sustainability and ESGs really here to stay and the people and the customers and our brands are really demanding a sort of an understanding of where the product comes from which hands, it's made in, et cetera. And so that sort of move of technology and that move around sustainability is really what's changed over the last year or so. And where do our businesses fit in? Well, branded issue is a large distributor. Brandvision focuses on supplying product to some of the best-known brands in the world, and that's under contract and internationally. So quite complex services it's branded issue is doing for its customers and supporting them in their marketing needs.
And then we have Faselis Group, the Faselis is technology business and actually pushes across its technology across all 3 of those points of the supply chain and in bringing into distributors order workflow that supports distributors and the smooth and efficient running of our businesses between the suppliers and their customers. And those 2 points of which branded it operates in the promotional products industry, quite different businesses that are very common in terms of the industry they're working in. And the working capital there is flowing between suppliers and distributors and distributors and end users. So brand addition has working capital and facility really doesn't, and Claire will go into a little bit of that detail later.
So that's the industry operating. Looking at some of the headlines of the Pebble Group in the first half has done very well. Business has been very good across both Brandedition and Faselis Group, and that's group revenues nearly 30% up and adjusted EBITDA of 50% up. And so that very good performance. We don't see sort of any drop-off of activity at the moment. We continue to do quite well. And where does that come from? So really excited that Faselis Group, is uninterrupted growth has continued.
We really have a clear strategy to sale that organization, and we'll go into that in a little more detail. And then at Brandedition, new client wins that we talked about in 2020 and 2021 are really beginning to come through and making a difference to this half revenue. And we get a lot of questions around supply chain and Brandedition. We've got some wonderful people across the globe, managing that for us. And right now, that kind of feels very well managed and under control. So a slight introduction from me. I'm going to hand over to Claire who is going to talk through the numbers.
Thank you. So sharing here in the KPIs for the group. And the message I wanted to give to you is that these are all moving in the right direction. So we've got that nice growth in revenue that Chris referred to that's translating through to EBITDA, which is a combination of the volume increases in revenue and also some margin improvements, which will come on to in a little bit, then that flowed through the P&L and into our cash flow where we're GBP 4 million ahead of where we were at this time last year.
I'm here, just giving you a visual of the financial dynamics of the group. And so when we get into the detail of the businesses, you'll see brand addition, is that products business and that dominates the revenue of the group. But then we've got the SaaS revenues from Faselis Group, which generates some very special EBITDA returns, and that means that an EBITDA level, the group is pretty much 50-50 split between the businesses. P&L here for the record, and I'm very happy to take any more detailed questions at the end, but we so we've got revenue growth of 30%. But Faselis Group that is continuing to grow our partner numbers and also continuing to increase the share of spend that we get through our preferred suppliers.
At Brandedition we've seen continued growth in our new business. And also, we benefited from the stabilization and working patterns that we've seen on some of our like-for-like customers. Gross profit numbers move forward. And again, that's coming from Brandedition. We've pointed to that at the start of the year, a really well-managed supply chain is coming through in our numbers, and we're getting back to the 30% levels that we'd always indicated. We've been through a period of investment in our strategic ambitions, particularly to scale Faselis Group, and you can see that coming through in the D&A charge in the P&L, that's all translating through to an operating profit as moving ahead of last year.
Cash flow, really nice and straightforward and where the numbers reflect the words that we used to describe our business. So the growing EBITDA, we get that movement in working capital, and that's all associated with Brandedition. But with that increase is proportionate to the growth in volumes in that business. And then we've got the additional capital expenditure, which is always investing in our ambitions to scale for Faselis Group. Balance sheet, again, I'm quite boring here, but really come straightforward and simple. It's blue-chip backed assets, again, all linked to Brandedition and the customers at Brandedition and the increases that you can see there are proportionate to the increase in revenue that we've experienced in that business. So we'll get into a little bit more detail on Faselis Group.
I'll quickly go through the results, and then Chris will go through the business model, how we're progressing with Commercio and then how we see things moving forward. So at Faselis, we've achieved 30% ARR growth in GDP, and that's 21% in U.S. dollars. And that's, as I said, a combination of great retention on our existing partners, incremental new wins and then -- and as also benefiting from the contribution -- increased contribution from our preferred suppliers. We've managed to maintain those fabulous EBITDA returns, and that's the most we are investing to grow, and that number is coming out where we indicated that it would do and where we expect it to be. And again, as I've just said, you can see the additional depreciation and amortization charge coming through as a result of us investing in our future for Faselis.
Thanks, Claire. And so there's some special numbers in that. So this is a really great business that we're really focused on growing. And first, I'm going to go through some of the numbers behind those sort of historic financials, but then talk about the plan that we have in place to grow the business going forward. So again, for the record, our revenues in sterling and in U.S. dollars, but we split that between H1 and H2. And what you should think about is always H2 is slightly bigger than H1 due to the kind of the volumes to our industry tend to be a little bit sort of slightly back-end weighted as well.
So you're looking at those on the right-hand side, Faselis Group is a U.S. dollar-denominated business. We'd expect our revenues to be higher than that GBP 9.5 million in the second half than they were in the first. But again, behind those numbers, what makes those numbers work, are these 3 things really. So our partner numbers, the gross merchandise value that goes through our system from those partners and then the spend that those partners make with our preferred supply purchases. So if each 3 of these -- the graphs are moving in the right direction, we know our business is progressing and scaling.
And so again, another good year. We talked about uninterrupted growth in Faselis and all through 2020. And you can see we've grown partner numbers, GMV and spend with preferred. And again, looking on the right split out between H1 and H2 and expect H2 to be large in H1 on some of those dynamics that are flowing through, but all given us an indication that the business is in good shape. So then I'm going to talk a little bit now about sort of the industry and how -- and how Faselis in. So hopefully, you recognize these slides from what we spoke about a few minutes ago and where Faselis fits in will go through.
But I think it's important to kind of try and understand the scale of the organization and what's happening. So we're providing technology and services through to distributors, which are then are using those technology service to interact with suppliers and end users. And the volume that's actually happening there. So trying to piece it all together, you can see we talked about the 2,000 -- sorry, 218 partners that we have and the sit as those distributors, but the volumes that have been created here, we're kind of trying to put them all on one slide.
Nearly 1 million orders, those partners are creating with our customers. And that's creating on a rolling 12-month basis now, around about $1.3 billion of GMV. And then taking the gross margin away, you can see around about $1 billion of purchases go back to the supply. So that really gives you a sense that in the industry and if the U.S. industry is around GBP 25 billion or the North American industry, you can see that there's an awful lot of volume and a decent market share that we're beginning to do. [indiscernible] sort of Faselis Group's revenue model and what it does, we have a product called [indiscernible], which is really helping the order workflow of our partners and making order to smoothly run through the system all the way from discussion, quotation to invoice.
And that happens through Cinco. It allows our partners to professionalize, to grow their own organizations and spend more time with their customers than internally on their system. So it's a really kind of supportive piece of technology that does that. We have income from 2 areas then through Cinco and picking the middle point, first point to is our partners pay us a subscription for that technology on a monthly basis. And then secondly, each time there's an interaction between our suppliers and the partner and there's a transaction there between them, then our partner benefits from that and so do we in terms of some income.
So that is the business that all the historic numbers are based on to date. But really excitedly, we're trying to kind of grow the business. We're trying to do other things. And now we're going to be trying to work on the sort of right-hand side of this chart and helping our distributors work with their brands and end users. And so in June, we launched a basic called Commercio or a product called Commercio, which delivers e-commerce stores to partners or distributors to help them sell more to their customers.
And our partners are already using some technology from lots of different suppliers to do this. And if they can do that through us, if we can integrate that with Cinco and really bring some great efficiencies to them, we see it's a great offering for our partners to help their businesses continue to grow and develop and a really good tool for us in terms of acquisition of new partners, retention of existing partners and growing the share of wallet as well. But also on commercial, it's been built but not only does it serve our own partners, but it can serve the wider industry, too. And something like over 20,000 small businesses in our industry in North America, and Commercio is the first product coming to market that we can place and point towards those businesses as well.
So it's a really big and important step in us looking to scale our business from really proud of what it is today and where it's come from, but really excited about where it might be able to go to -- so just a little piece here on Commercio. We got Commercio.com website is out there, so please kind of take a look at that and see that opportunity. But what we really do, we built a sales team over the last sort of 12 months, particularly and continue to grow that. So not only now selling in Cinco, but also selling Commercio and a slightly different cell, but building a team around that and extremely motivated. And the audience for Commercio is much larger, some like over 20,000.
And by using our industry knowledge, attendance trade shows through the trade magazines, we really believe we can sort of get to that audience. The Faselis Group name is very strong in the industry and bringing a product to that audience. We're very hopeful with some green shoots coming through in terms of early accounts and contract wins, but we are very hopeful for where that product goes in the next 12 to 18 months. We set ourselves some targets looking to get to a GBP 50 million recurring revenue number and GBP 50 million we certainly own and are looking to get there. When we started on this journey, I think as a plc, we were around about GBP 12 million of recurring revenues. We expect to be over $20 million in 2022.
And so you can see going from 12 to 20, 50 is definitely our initial target of where we want to be going through there. And that's not just owned by me or by clear, that's owned throughout the whole team Faselis is really motivated and very dedicated to those kind of numbers. In terms of progress we've made at the moment against our milestones for 2022. We brought those into play. You can see there, ramping up the income offer, the income streams that we have by bringing Commercio into market, and I'll come back to where that 263 comes from our partners and increase in number of partners are doing well and getting that GMV on a rolling 12-month basis to GBP 1.3 million. And then on the back of that, the spend for our preferred suppliers is doing well as well.
So we'll keep track against these numbers. And as I say, sort of to us GBP 50 million is a really important target that we do own. And to us, it will be really when rather than the if is certainly what we're kind of pushing on internally on that master -- and so just to give you a little flavor of how Commercio is helping us grow and develop. So 206 in core partners at the end of the year and really nicely. That's turned into 218 right now. We're ambitious to keep that number growing.
But where Commercio comes in now, it gives us access to that 22,000. -- got 14 in the first couple of months on top of another 31 of actually our existing Cinco partners. So you can see here now, we've got 260-plus income streams. -- that going from Cinco to Cinco plus Commercio allows us to do. And obviously, in our aspiration of coming to market, we want to grow all of those numbers. So you can see there how the opportunities begin to roll off and come through. So really exciting opportunities for this business. We got a super team and a growing team who dedicated and got that GBP 50 million in [indiscernible]...
Yes. Thank you. So we'll just -- we'll go through the numbers for Brandedition and then share a little bit last thinking on the outlook for the rest of the year -- so fabulous revenue growth at Brandedition, so that continues against what was a strong comparator last year and were 30% up at June 22 versus June '21. And that's a combination, I think, as I've already said, of continued success with new business and also we'll see in the impact of the stabilization of working patterns across our customer base. The team have done a brilliant job getting that gross profit number back up to 30%.
So last year, we were impacted by the additional cost of Brexit and the heavily escalated freight rate prices, but the margins over a historic period at [ unaddition ] have always been around 30%, and that's why the business has got back to maintain -- sorry, so that volume and the increase in gross profit is moving through to EBITDA and again, moving that percentage forward. Sharing here a split of our revenue by client and by geography. And I think this is just telling us that there's a really nice spread across sectors and across geographies that gives Brandedition some insulation against what might be coming, but also kind of gives us opportunities to grow as well.
And here, hopefully, there of you that's been with us on these presentations before you'll recognize this slide. But this was just given a view of where we see 2022 turning out. So 115 million is the number that's out there in the market was at the minute. And I think as we stand today, we feel that we're in a sensible place against that and feel quite comfortable with it based on what we've invoiced to the end of June and what we know in terms of activity that's happened since then.
And how will we get to that, then we had amazing growth in our consumer promotions division between '20 and '21. So what we -- our expectation is that we'll hold on to that growth. And so that tail blue line will be a similar number when we get to the end of '22. I said already, we've had great success with new business, and we see that number moving forward versus what it was in '21. And then again, the gap will be plugged by those like-for-like businesses where we're seeing additional volumes as our world kind of stabilize and the new norm that has appeared.
And then -- so we've got a sort of as a bit of detail on the 2 businesses. We're going to kind of finish on some ESG and then some highlights and very happy to take questions after that. But ESG is really important to us. It's not hard. It's kind of coming in is harder to do. We want to embrace -- want to do it really well. We have some super people who are dedicated to it who are based with the Pebble Group. -- but then valuation with our businesses on a day-to-day basis to make sure what we talk about is lived and breathe and in the businesses, and it's just a part of the business as anything else.
So we published our first report last year. We're really pleased, I think, in October, our second report comes out for 2022 and working hard on that. But here is showing the 4 cornerstones that we pulled together after talking to our people, our customers, our suppliers, our investors, saying, what's most important to them when they think of us and from that feedback and from sort of all the best practices out there, really try to make something our own and own it and put it out in our tone of voice. And that's translated as some principles into kind of what goes on, on a day-to-day basis in the business. And our business is not different. So we have to have a different view of things and a different focus in different areas.
But I'll leave at that for the record and just say kind of it's just a good thing, kind of why don't businesses want to work hard at doing the right thing for the environment, for their customers, for our people, for our investors. And I think that's what we see ESG at and something we really want to do and embrace on a day-to-day basis -- and so kind of finishing with our sort of outlook and our messages. It's a strange world out there. We're out there "(discernible)" on a day-to-day basis. And you were getting a lot of questions about the sort of defensive nature of the business. Now we've seen any softening of orders right now. And the answer to that is we feel really well placed. I think behind us. We've got a good set of results and really set our set results we're really proud of.
And I the ahead of us. We've got clear strategies where we sit today, we feel very well placed against the expectations that are out there in the market. And I think results that we just talked about for the last 20 minutes or so, don't happen by -- they happen because there's a really dedicated group of people working really hard to a good plan. And kind of when you pull those 2 things together, I think that makes for a good business and a business I think that is Claire and I have been working together for 15 years. There's a lot of people -- we've seen all types of economic cycle, all types of currency changing, all times of change in the market, but we feel we're kind of -- our business and our people are good enough to adapt to all of those situations.
And as I say, a good set of half year results behind us. And I think we feel well placed for the rest of the year as well. But it's always a great opportunity at this point for me to say thanks to that team behind it from Asia, Europe and North America across the Pebble Group, Brandedition and Faselis, and just say thank you to those guys for all the hard work. We really appreciate it. It's definitely come through in the results and the feedback we've had from our investors so fun. So that was really us. There is some kind of further financial guidance or some detail on kind of customer movement at Faselis in the appendices. But I think that's us really giving you the headlines in the business and where we are and really pleased to take questions right now.
[Operator Instructions] And we already have one question. How much more incremental cost is required for Faselis over the next couple of years? And what would be a sensible margin expectation for Faselis when it gets to USD 50 million revenue?
I'll take the first one. I'll let Chris to second to that. So I think what we've said is to focus on a 50% EBITDA return for '22 and '23 feels like a sensible number. And I'll let Chris give where are things we can get to. But I think our view is, once you start to get towards GBP 50 million ARR, it's clearly really difficult to keep that number down at 50%, and you we would definitely will be moving north. We're just -- that's where it is when we get there.
Yes. And in terms of CapEx, it's going in over the next couple years...
Yes, yes. And so I've given some guidance in the back on CapEx because obviously back will come through the P&L through the D&A. And so I think around I've split that between tangible and intangible, and that intangible investment is largely offset -- and I would say that we should expect that to repeat next year at a similar level. And then we'll expect that to tailor off and become a more maintenance level of CapEx.
And how many new contracts were won for brand addition in the first half of the year?
So it's not a number we'll actually disclose out. But I think Brandedition might be as typically would win sort of between 5 and 10 contracts per year. And you might say then there's probably 3 or 4 of those become quite meaningful. And I would say the success in new business team done an amazing job over the last 2 or 3 years. And I can't think that have that trend in your mind. I think Claire showed the slide that sort of have the pieces of new business. I think new business over the last couple of years has rolled into GBP 10 million and kind of think of that pattern has repeated itself, I think, would be the right thing to do.
Thank you very much. And how much visibility do you tend to have over orders at Brandedition?
So we have visibility on that kind of consumer promotions piece, which is, again, if you go back to Brandeditions, a column chart, the GBP 46 million that's attached to the consumer promotions business. We have great visibility of that. So that's kind of between 3 and 6 months in terms of what's coming through there. In the corporate program business, slightly different. We do have some projects that give us 2 or 3 months visibility. But I suppose what's really kind of nice about the mix of business that we have, we have some kind of large pieces that we have great visibility in the future, but we can kind of really sort of generate orders on a sort of day and weekly basis as well. And as Claire alluded to, where we got to at the half year, from what the outlook is and the analyst is GBP 15 million revenue. And what we have kind of built and ordered in between that, it feels like a very achievable number for us to get to by the end of the year.
And new client wins from 2021 have driven a lot of growth you're experiencing now. Looking forward to '23, how is the new client pipeline looking?
Yes. And I think -- so growth we've put the new and that new but isn't just -- it is growth from 2020 and 2021 and anything that comes in 2022 as well. So we sort of set the points for everything from 2019 is included in that number. And so the -- we've had great success, and the business has done extremely well. And as I said, we always point people on Brandedition to think of high single-digit year-on-year growth. That can come from doing better with our existing customers, either geographically or through the other brands as well as well as from new business as well. But -- so I kind of always point people when they're thinking of Brandedition, I think high single-digit revenue growth year-on-year. And the great thing about that business with consumer promotions, working with some of the best brands in the world and the corporate program business as well. We're doing that over multiple geographies or some amazing brands and a couple of different sort of routes to market. So that allows that high single-digit growth to come from a number of areas. But -- so we would always point people high single digits year-on-year.
You see great across all regions.
Yes. I think many of the contracts Brandedition winning are, that's why that business is winning them because it's multi-region. Great people and offices of substance in Europe, Asia and North America. And that means a new business pipeline or a new business target based in North America. Actually, we'll get that over the line because we're able to service that in Europe and Asia. And that kind of counts across all the different regions. So a lot of the new business we're in now. The reason is the investment, the infrastructure that's been put in there and good people translating that across geographies. That's why the business is winning and growing.
And in Brandedition, it sounds like you're not seeing any slowdown from the weaker consumer backdrop. But is there also a risk that retailers decide to stock your products? And if so, would that have a direct impact on the business?
So... Brandedition in retail is about that consumer promotions piece again. That's sort of that part of the column is $46 million. And there, what we supply to our customers is gift with purchase really. That's the main thing. So we are helping our customers to sell their product. So if you went to an in-store sort of packet product and it has to have a gift with it to help push the core product itself and that if we purchase what we're supplying. So we're a really key part of our customers making sales to their audience. And so actually, we've never found through recession, they haven't pulled back on that. It was actually a key part of making sure they can keep their sales in front of the consumer. And if the consumer is making a choice that gift would purchase helps them make that choice towards their product. So as of now -- and these are on long lead times as well. And so as of now, we're not seeing any softening in that part of demand of our business.
And I guess, Commercio is going up against Shopify. Is that correct? And what's your educated Commercio's other competitors given their much greater scale?
Yes. And so I think -- so there are hundreds of providers of e-commerce platforms. I think what became clear to us is that our partners were using something like 25 different options. And that sort of says to me that nothing is really working. Nothing had a good market share at all. And our partners are coming to us and say, "Well, can you produce something that's bespoke to this industry and integrates into Cinco. And so rather than us push something into the market just as a sort of me-too product. We believe we're bringing someone to the market. And in this, we really know well. We spoke for this industry that integrates into Cinco. And so it's kind of -- it's been pulled from our partners rather than us pushing it to them. And obviously, kind of knowing the industry, and we do believe -- it's huge, it's 25 million in North America, 20,000 businesses. And if we can capture some of that market share, I think it can be a really exciting second products that we bring to market.
Faselis overhead has risen in line with revenue. When do you see that leveling off? Or is it quasi variable with revenue?
And so kind of where I go wrong, you might I think we're putting more people in sales into marketing. We're also now back doing events, which is really great. So we have, I think, over 750 people in event in Orlando, our partners, our preferred suppliers, our team all coming together interaction, it is fantastic. And that spending money in that way is a really good fit. That supports retention of our partners. It supports our community at Faselis Group, which is a really important part of the business. And so that is a good thing that that's been going up for our organization.
I think as Claire sort of said earlier, there's a point at which we scale the revenues that the margins do get bigger because you can't possibly spend at the same rate as which should grow. The point at which that is, I think we're not really sure. But I think it would -- it such the right thing for us to do now is to spend money on scaling because if we do, I think the rewards are really powerful. And so investment today is absolutely going into our teams, our sales and marketing teams, our partner success teams and also into our technology teams as well. So I think invest in, spending money now is a really good thing, and I appreciate that kind of my sort of -- margins are still 50%. So it's still an amazing number. But if we can scale that, I think the next 2 or 3 years of margins will be really special.
And within Faselis, is the GMV being driven more by price or volume?
I think... There is more partners. So therefore, that has a direct impact. But I do think our partners are doing better. I hope Faselis plays a part in that. Their relationship with our preferred suppliers pays a part in that, too. But they're good businesses join facilities, good, very professionally run ambitious businesses. And we are there to help them grow. They're making their decisions, they're doing at the end of the day. But I'm absolutely sure that it is based upon their growth, not on the back of inflation. But their growth in terms of their own businesses, growing better, attracting more customers. And so I hope we play a part in that, but our partners are ambitious and bright excellent business people. And we're thrilled to be helping on that journey.
And can you increase your share of transaction value in Cinco?
I think we want to make sure it's a win-win situation for everybody. So -- and retention is really high. So in terms of bringing -- helping -- if we help our partners grow, we think we should be able to share in that. So if their GMV grows, I think our fees growing in tandem with that, I think, is a good thing, and that's in place. Bringing products like Commercio to market is increasing the share of their spend in technology. And I think that's a really good thing for us. And so I think that's how our business model works today. And in terms of we help our customers grow. And in turn, we grow with them. And if we can bring new products to market that help themselves, how become more efficient, again, that extends the share of wallet. And so our target of GBP 50 million is based upon back premise as opposed to simply increasing their fees.
And could you talk about the operational footprint of Brandedition, -- for example, how many warehouses there are and where they're located and how did the consolidation of the European warehouse progress during the period?
So when we talk about Brandedition, I think it's -- we've put a nice put a map of the world and it's easy to put some pins on there, isn't it and say, this is where we are everywhere. Brandedition has got centers of excellence or offices of substance in 3 major regions in Asia and in Europe and in North America. And we have warehouses in each 3 of those regions. And so our warehouse in North America is in St. Louis where our business is based there. In Europe, we have 2 warehouses, 1 in Germany and 1 in the U.K. and in Asia warehouse in Shanghai. So the way Brandedition works is offices substance in all 3 of those regions.
And so if one of our clients is big in one area but has still smaller, but important parts of its business in the other regions, which can support them as well. And I think the question is the consolidation of -- we've put in the majority of our warehouse in now in Europe into Germany. And that is all, I think we consolidated 3 warehouses into one, and we have one of our really experienced team members to kind of manage that process and now orders have been received, orders are going out the door, and that business is working very smoothly between Germany and Manchester and working with the kind of Brandedition teams across Europe. So I hope that's answered that question, which was another part [indiscernible].
[indiscernible] EBITDA increased double digit, but operating profit declined double digit due to amortization of capitalized R&D. Should we not be focusing on operating margins, given the R&D spend required to drive GMV, et cetera?
Yes. And I think we've been -- I feel like we've been fairly transparent about that as we've been through this process. So we've been really clear that for us to get to that GBP 50 million that we need to invest in CapEx and which is what we've done. And as we are releasing those products to market, then we can see the impact of that coming through. And that will have a short-term impact on our operating profit returns whilst we grow the revenue line from those new products. So we think yet, we can look at that. I hope it's not a surprise to anybody. We've shared what our investments been and we've got a really clear 3-year amortization policy and we're on that journey, and that's why -- and that's what the impact on the operating profit margin has been.
Yes. And I think the answer we should look at all the main ratios and KPIs, we it's all part of the story. So we've been trying to be a saying that's definitely our aim to really clear about the strategy, how we're looking to come to market and how we're looking to grow. And so it's really important for us, I think that our words and our numbers sit together, and you can kind of come on a journey with it. So investment has been made, but not to drive GMV. Investment has been made to drive new products coming into the market to widen our addressable market and help scale the business. So I think if you go through our materials, you kind of put the words and the numbers together, I think we shouldn't concentrate on any single line in our numbers, particularly in this period where we're trying to scale and grow. I think from our KPIs on preferred partner numbers, customer numbers and GMV to top line growth and EBITDA growth and operating profit, it all plays a part in understanding the business that we're running and trying to grow.
And do you have any other new product plans, which might require significant investment?
So we haven't sort of touched upon it in this set of results, but our strategy is consistent with what we talked about last time. So we are kind of, as Commercio brings as a product that we can bring into that tail of 20,000 smaller distributors. We are looking to bring an order workflow product into those smaller distributors as well. And work is going on with that. But that isn't over and above what Claire talked about in terms of the investment. That is part of the investment that's going in. It's just a little further down the road than Commercio. We wanted to concentrate on Commercio today. But when we come to speak in March, we'll be bringing that orders to the smaller business, that product interview for everybody then.
And I think we might have time for one more. How are you reaching non Cinco customers for Commercio?
Yes. So the North American market is huge, to repeat, $20-plus billion of sales, 20-plus thousand distributors. So it's very large. But in some ways, it's quite small. So it's the same sort of industry trade bodies, industry service providers that are out there. We all go to the same shows with the same websites and trade magazines. So we do have a sales and marketing team that are really focused on engaging, communicating with our audience. And Faselis Group has a great reputation, a long standing in the business. And so we can go to that market in a slightly different way and what we're going for Sancor users. And we'll learn, I've got no doubt and as we go. But we believe it's an audience that we can understand, we can find and hopefully communicate well with. And as I say, it's 22,000 doesn't take us too much market share to making some good inroads and that sort of scale and exercise that we're trying to do.
I know you've got a very, very busy road show. So I apologize to anyone whose question, we haven't been able to answer first, you haven't been [indiscernible].
You're only trying to take this opportunity every time to say results don't happen by accident. It's an amazing group of people. I've got the pleasure of working with, Claire definitely amongst that. Everyone else out there, too, across the Faselis, Brandedition and Pebble Group. So always a big thanks to them for their efforts and hard work. And we'll be here in 6 months' time and to communicate our second half results and look forward to that.
Tremendous -- many thanks, Chris and Claire. And to everyone listening, you'll now be taken to a web page to give some anonymous feedback on today's presentation. If you're unable to complete it now, you'll receive a follow-up e-mail about an hour afterwards, we'd be really grateful if you could take a few minutes to complete. Many thanks for joining. This is the end of the webinar.