Hybrid Software Group PLC Annual Report 2022 24 25 Hybrid Software Group PLC Annual Report 2022 Hybrid Software Group Strategic report Governance Financial statements Other information CHAIRMAN’S STATEMENT 2022 was a year of mixed results for Hybrid Software Group. From a financial standpoint we fell short of our growth projections in both revenue and net profit. As both the Executive Chairman and the majority shareholder of the company, I must look at this situation from two separate and unique perspectives. As a shareholder I expect year-overyear growth in revenue and profitability, but I must also take a longer-term view toward maximising the shareholder value of Hybrid Software Group. Perhaps it’s appropriate to call this a “hybrid” view of the company. The year began with strong sales in most of our business segments, but things changed quickly when the invasion of Ukraine and rising energy prices in Europe triggered rapid inflation in most worldwide markets. Printing companies faced energy prices that tripled or quadrupled in just a few months, which dampened their investments in software and new printing presses. Even the label and packaging industry, which weathered the pandemic with relative ease, was finally affected by rising prices for energy, paper, ink, and labour. Our business model has a degree of built-in resilience as we sell both to OEMs who manufacture digital printing presses and to end users, the printing companies who buy those and conventional devices. However, the economic downturn that started in 2022 impacted both our OEM and end user revenues. We acted quickly in response, tabling M&A activities and taking prudent steps to conserve cash and reduce our cost structure, especially external spending. We also slowed the pace of hiring while accelerating the consolidation of order processing, invoicing, and bookkeeping across our six operating businesses. But we never sacrificed the long-term value of Hybrid Software Group simply to deliver short-term results to the market. 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 gained significant market share during the pandemic, especially in our core label and packaging sector, by leaning into the challenge and partnering with our customers, and we intend to continue this approach in the challenging environment of today. Guido Van der Schueren, Executive Chairman “One of our key initiatives in 2022 which continues today is the “One Company” concept embodied by our name, Hybrid Software Group”. While nobody has a crystal ball, I predict a relatively short and shallow recession in most worldwide markets with a recovery starting in the second half of 2023. With our end-user customers facing heavy price increases in everything from energy to paper and packaging substrates, we have decided to support their businesses by not increasing our prices for software or maintenance in 2023. We’ve also increased our focus on SaaS-based production workflows which allow our customers to significantly reduce IT spending and capital investment. One of our key initiatives in 2022 which continues today is the “One Company” concept embodied by our name, Hybrid Software Group. Although we have six separate businesses in the group, we are not a holding company. We are a single company with a simple objective: to provide the core technology at the heart of digital printing for all applications. We have the right technologies to deliver this and are adopting a more streamlined structure to help us achieve it. In closing, I would like to thank the stakeholders of Hybrid Software Group: our shareholders, our nearly 300 employees, our Board and management team, and last but certainly not least, our customers for their continued support. We are ready for the challenges of 2023 and beyond, and I anticipate a much higher level of growth and profitability in the very near future. Chairman’s statement continued... Guido Van der Scheuren Executive Chairman Hybrid Software Group PLC is headquartered near Cambridge UK. Photographed by Leathon Lagerwall, Software Test Engineer.
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