Hybrid Software Group PLC Annual Report2021
Hybrid Software Group PLC (formerly Global Graphics PLC) annual statements report and ﬁnancial for the year ending 31st December 2021.
Hybrid Software Group PLC Annual Report 2021
Hybrid Software Group 4
Our markets 8
Group strategic report 16
Board of directors 38
Directors’ report 40
Corporate governance report 46
Audit committee report 48
Directors remuneration report 49
Independent auditors’ report to the shareholders of Hybrid Software Group PLC 58
Consolidated ﬁnancial statements 66
Notes to the consolidated ﬁnancial statements 70
Company ﬁnancial statements 106
Notes to the Company ﬁnancial statements 108
HYBRID SOFTWARE GROUP
Enterprise software for industrial print manufacturing
Hybrid Software Group PLC (formerly Global Graphics PLC) is a public limited-liability company registered in England and Wales with its shares traded on Euronext Brussels under stock code HYSG. It is headquartered near Cambridge, UK.
In October 2021 Hybrid Software Group PLC changed its name from Global Graphics PLC to underline the Group’s position as a software company providing innovative technology for industrial print manufacturing at a time when industry is accelerating towards mass customisation, smart factories, and Industry 4.0. The Group’s solutions are hybrid because they meet the needs of analogue and digital production processes and because they integrate both software and printhead drive electronics.
With more than 275 employees worldwide and a pedigree stretching back more than 30 years, Hybrid Software Group develops enterprise software for industrial print manufacturing.
Industrial print is when printing technology is used in broader manufacturing processes where it isn’t the print itself that is being sold. Hybrid Software Group provides critical technology for manufacturing a diverse range of goods, from labels and packaging, to textiles, tiles, laminates, wall coverings, additive manufacturing and 3D printing applications.
The Group is the only full stack supplier of all the critical core technologies needed for inkjet printing. Inkjet is being widely adopted for the digital conversion of industrial printing applications. Our principal customers are Original Equipment Manufacturers (“OEMs”) of digital printing equipment and end users, primarily printers who print and convert labels and packaging materials and to whom we license software technology. Our printhead driver solutions are sold directly to manufacturers of printing devices. Accordingly, the Group’s printing technology lies at the heart of industry leading brands of digital pre-press systems, high-speed digital production presses, professional color prooﬁng devices, wide format color printers, and industrial inkjet systems for ceramic tiles, packaging, textiles and additive manufacturing.
The Group’s strategic focus is to provide all critical core technologies for industrial print manufacturing and be the go-to supplier of choice for OEMs for their turnkey solutions or for individual components to enable them to build their own solutions.
A visual of STEPZ, HYBRID Software’s specialized software for digital labels and packaging printing.
Our investment case
• Inkjet adoption is increasing rapidly across multiple industries.
• Analogue markets are converting to digital production.
• Hybrid Software Group PLC is the only vertically integrated supplier to this market.
• Group operating companies are award-winning technology leaders.
• Hybrid Software Group enables customers to migrate their traditional manufacturing processes to digital inkjet.
• Synerges between Group companies following strategic acquisitions made in 2021 will accelerate innovation and revenue growth.
Hybrid Software Group PLC Annual Report 2021
THE DIGITAL REVOLUTION IN PRINT MANUFACTURING
The print manufacturing market is transitioning from the mass production of products (many thousands of identical products) to the mass customisation of products (thousands of products and each one unique) in response to a consumer demand. Digital inkjet printing makes this possible because it is capable of changing what is printed in real time on every object.
A typical labeling workﬂow
Specialized software is used to prepare the PDF ﬁle for printing. This may include merging a data stream to generate bar codes for product identiﬁcation or security purposes; color management to achieve speciﬁc brand colours; layout tools to Ensure the most economical use of raw materials; tools to proof the artwork on screen and enterprise software for workﬂow automation.
It can be used at diﬀerent points in the production process, for instance during product decoration, packaging and labeling. Mass customization is a huge potential area for growth for which the inkjet process is ideally suited.
Unlike a traditional analogue workﬂow where graphic designs are transferred to a printing plate to produce multiples of the same item, in a digital workﬂow a PDF ﬁle created by the designer encapsulates all the data required for printing. The PDF ﬁle is submitted to the digital printing press via a digital front end (DFE).
Other software embedded in the printing process ensures high-quality output through RIPPing and screening Depending on the speciﬁcations of the printing device. As many as 7 colors may be jetted with diﬀerent sizes of ink drops, to achieve the desired output.
All of these need calibrating with the printing device.
THE ONLY FULL STACK SUPPLIER OF ALL THE CRITICAL CORE TECHNOLOGIES NEEDED FOR INKJET PRINTING
OUR VALUE PROPOSITION TO OEM SUPPLIERS IS TO OFFER TURNKEY SOLUTIONS AND INDIVIDUAL
OUR VALUE PROPOSITION TO PRINT SERVICE PROVIDERS AND CONVERTERS IS A COMPLETE SET OF SOFTWARE APPLICATIONS TO MAXIMISE EFFICIENCY IN PRODUCTION WORKFLOWS.
Hybrid Software Group PLC Annual Report 2021
Our markets continued…
In addition to growing its revenues from commercial and wide format printing, the Group is active in four other strategic growth markets: packaging, ceramics, textiles, and 3D printing or additive manufacturing. Two market trends in particular play to the Group’s strengths: digital press manufacturers are asking for turnkey Digital Front Ends (DFEs) to drive their presses rather than the components to build their own DFEs, and the Group is uniquely positioned to deliver these. Secondly, new generation printing devices are faster than ever before and require more print-ready jobs to be delivered to the DFE. The Group specialises in the automation and enterprise integration required to achieve this.
By 2030 the global packaging market is expected to reach $1.1 trillion ($876 billion in 2020)a and will account for almost two thirds of the global print market, making this a key strategic market for the Group’s products.
Digital inkjet devices can print a wide variety of labels, folding cartons, ﬂexibles, and corrugated board and only 3%-15% (varies by segment) had converted to digital printing as of 2021.a
This market requires very specialized knowledge and advanced software solutions, especially for variable data printing and serialisation.
Group companies enjoy strategic partnerships with the major players in this market and are experts in a number of key areas: variable data preparation and processing, color management for matching brand colours, and the speed and precision required for high-volume production environments.
a The global print market to 2030. Smithers Pirawww.smithers.com/en-gb/services/market-reports/packaging/future-packaging-long-term-strategic-forecast-2030
This market is fast growing, dynamic and innovative. During the pandemic there has been a surge in digital production of labels and packaging in response to changing consumer buying patterns and the steep rise in home deliveries due to on-line purchasing.
Of all the diﬀerent materials used for packaging – paperboard, metal, glass, rigid plastics, ﬂexible ﬁlm, paper, and foil – it is folding cartons and especially corrugated board that have beneﬁtted from the rise in ecommerce. But sustainability is a key driver that is supporting growth here too, as brands set out their sustainability goals and underline their green credentials.
Digital printing minimises waste and the costs of storing inventory in warehouses. It also enables the incorporation of new features on product packaging or labeling that would not be possible with analogue printing. These might include personalisation or anti-counterfeit measures requiring the high-speed processing of variable data so that each item is unique and identiﬁable.
Group companies are experts in variable data processing and oﬀer the full software and hardware stack that OEMs required to get their new digital presses to market on schedule. Furthermore, many consumer brands are looking to incorporate printing into their production lines. The Group has developed a SmartDFE designed to be the heart of a fully automated manufacturing system supporting Industry 4.0.
The ceramics market is the largest user of industrial inkjet equipment and components.
The global ceramic tile market is expected to reach USD 582.68 billion by 2027.b
90% of ceramic tile printing has converted to inkjet over a 10-year period and it is estimated that printhead design and ink formulation will increase the uptake of inkjet. Its use will also increase for tile decoration in the future as inkjet will be used not just for printing designs but also for simulating textures and highlights on ceramic tiles.
The Group’s software and electronic solutions are compatible with all the leading printheads used for ceramic tile decoration and are designed to easily support ceramics printers of any size and printing speed.
b Ceramic Tiles Market Size, Share & Trends Analysis Report By Product (Glazed Ceramic, Porcelain Tiles), By Application (Wall, Floor), By End
Use, By Region, And Segment Forecasts, 2020 – 2027. Grand View Researchwww.grandviewresearch.com/industry-analysis/ceramic-tiles-market
Digital printing has revolutionized the decoration of ceramic tiles. Industrial inkjet systems are now considered to be the industry standard and are rapidly replacing screen printers worldwide.
Economic conditions around the world influence the ceramics market. As residential or commercial construction projects spring up around the globe there is more demand for ceramic tiles for interior and exterior decoration. China is a key producer and consumer of ceramics although there is also a dynamic industry in Europe, and growth opportunities in many other regions.
Cost and design beneﬁts
Digital printing of ceramic tiles oﬀers signiﬁcant cost advantages over analogue screen printing. Short production runs become economically feasible due to lower set-up requirements and reduced stock of ﬁnished goods. Other manufacturing beneﬁts include less breakage/ waste due to non-contact printing and ease of color matching for repeat orders.
Inkjet-printed ceramic tiles oﬀer attractive design beneﬁts including the ability to produce realistic images of marble and other natural materials and to print large quantities of tiles without repeating patterns.
The Group’s drive electronics and software provide scalable, customisable solutions for systems of any size, speed, or complexity. Special features for ceramic tile printers include recirculating printheads and ink systems to prevent the sedimentation and nozzle blocking to which heavily-pigmented ceramic inks are prone. Led by Meteor Inkjet, the Group’s products fully implement the control functions required of such systems.