REG - Altitude Group PLC - Audited Final Results and Notice of AGM
28/07/2022 07:16
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RNS Number : 9998T Altitude Group PLC 28 July 2022
Altitude Group plc
("Altitude", the "Company" or the "Group")
Audited Annual Results for the Year Ended 31 March 2022 and Notice of Annual
General Meeting
Robust Trading Drives Growth with Continued Expansion in Progress
Financial Highlights
· Group revenues increased by 54.9% to £11.9 million (2021:
£7.7 million)
· Services revenue grew by 17.3%, surpassing the Industry average
of 12.1% reflecting the strong performance of our AIM network
· Strong trading momentum has continued into the first quarter of
our new financial year providing further confidence that the current market
expectations are at least in line for the full year
· Gross margin of 51.5% (2021: 72.3%) as anticipated and reflective
of blended revenues across the Group
· Group adjusted operating profit* increased 90.2% to £1.1
million (2021: £0.6 million)
· Adjusted basic earnings per share** from continuing operations
increased by 71.9% to 1.77p (2021: 1.03p)
· Operating cashflow before changes in working capital increased by
149% to £1.1m (2021: £0.4m)
· The Group held a cash balance at year end of £0.9m (2021
£2.1m), with cash at 30 June 2022 of £1.6 million
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
** Adjusted basic earnings per share from continuing operations is calculated
using profit after tax but before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional
charges and the weighted average number of equity voting shares in issue
Key corporate developments and operational highlights
· AIM membership has continued to grow, and currently totals 2,425
global members, up from 1,917 at acquisition, consolidating its position as
one of the largest global distributor organisations
· The Group has continued to strengthen its core technology
platforms, with 476 distributors adopting the AIM Tech Suite for search and
order creation, a 32% increase from 359 in FY 2021. To date, the Group has
launched 2,646 unique webstores
· Merchanting revenue increased by 141.4% to £5.6 million (2021:
£2.3 million) through the now fully evolved AIM Capital Solutions ("ACS")
programme
· During the year the Group secured a financing facility of £0.5m
that remains undrawn
Notice of Annual General meeting ("AGM")
The Company also gives notice that its AGM will be held at the offices of
Zeus, 10 Burlington St, London, W1S 3AG on 15 September 2022 at 11 a.m. The
Notice of AGM and the Annual Report for the year ended 31 March 2022 will be
posted to shareholders and will be available on the Group's website
(https://www.altitudeplc.com/reports-results
(https://www.altitudeplc.com/reports-results) ) in due course.
Outlook
· Preferred Partner service fees tracked 32% over last year
demonstrating recovery and gaining momentum into the new financial year
· The Group's Merchanting programmes are expanding and driving new
growth within the promotional products industry and adjacent markets
· The Group remains debt free and has a credit facility in place to
support continued growth and expansion
· The Board is confident in the future scalability and success of
the business and the executive management team's ability to successfully
execute upon the Group's strategy
Nichole Stella, Group CEO of Altitude, said:
"The Group experienced a year of strong profitable growth, driven by the
commitment of our teams and the quality of our programmes. We are also
extremely pleased to see last year's strong trading momentum has continued
into the first quarter of our new financial year providing further confidence
that the current market expectations are at least in line for the full
year. We have continued to be nimble and drive the business forward through
the most uncertain of times, building a strong foundation and delivering
year-over-year positive growth, whilst remaining debt free and not raising
dilutive funds. We retain our high growth ambitions and are confident in our
ability to substantially scale and expand the business."
Altitude Group plc Via Zeus
Nichole Stella, Chief Executive Officer
Graham Feltham, Chief Financial Officer
Zeus (Nominated Adviser & Broker) Tel: +44 (0) 203 829 5000
Dan Bate/David Foreman/James Edis (Investment Banking)
Dominic King (Corporate Broking)
Chairman's Statement
Once again, we are reporting on a year impacted by the global pandemic. There
was hope and expectation that the impact would diminish as the year progressed
but the spring Delta variant and autumn Omicron outbreak ensured an overhang
that covered the majority of 2021. However, despite these significant
headwinds, the year was one of great progress, with revenue rising by 55% to
£12 million and adjusted operating profit rising by 88.4% to £1.1 million. A
very significant part of this success was the replacement of the one-off PPE
sales of £2 million in 2020/21 into core, repeatable revenue.
The management team remained focused on the continued development of the
technology platform and marketing initiatives to provide our AIM distributors,
ACS Affiliates and Preferred Partner suppliers with an exceptional experience,
whilst diversifying revenue streams and extracting greater value through the
$23 billion promotional goods industry value chain.
Year in Focus
Most importantly, material investment was made in our technology base to
improve and simplify processes for our AIM/ACS distributors and Preferred
Partner suppliers. Further connection of our unique proprietary software to
business utilities was made in line with distributor and supplier demand, with
customer satisfaction continuing to rise. We are, at our core, a technology
company enabling a global marketplace within the industry, and significant
progress was made in enhancing the experience for all participants. For
Altitude to remain at the forefront of the industry this investment is vital
and will stand the Group in good stead as the promotional goods industry
continues to rebound strongly in 2022.
All key performance metrics moved in the right direction. AIM membership and
product sales via our supplier Preferred Partnerships increased resulting in
our service revenues increasing. More ACS affiliates came on board with
Merchanting revenues rising sharply. Group Buys shifted in focus from one-off
PPE to core, repeatable Merchanting revenue, proving our ability to respond to
changing market challenges. The strategic focus on diversifying revenue
streams via a high-quality technology experience gathered pace as the pandemic
eased in Q1 2022. Whilst Q4 growth was slowed by Omicron, both Q4 2021 and Q1
2022 saw an industry rebound that helped deliver the stronger revenue and
adjusted operating profit performance recorded for the full year.
Cash was prudently managed through the pandemic and the cash balance remained
at £0.9 million at year end, having funded a material £1.4 million increase
in trade and other receivables during the year. Cash balances at 30 June 2022
stood at £1.6 million. The Group remains debt free with a material credit
facility in place to support future growth as opportunity arises.
Board Changes
The Board was enhanced with the addition of Graham Feltham as CFO. Both
experienced and entrepreneurial, Graham adds strength in depth beyond his
finance remit. Alongside Nichole Stella as CEO, Deborah Wilkinson as COO, and
Peter Hallett and Martin Varley as Non-Executive Directors, who represent a
knowledgeable and well-balanced Board.
Keith Edelman stood down as Chair in November 2021 and leaves with our best
wishes. I'd like to thank Keith for his professionalism during the transition
and handover to me.
Looking Forward
The year was a very important one for the Group as we moved through and beyond
the pandemic. On behalf of the Board I'd like to thank all the Altitude
Group's employees for their hard work and passion which has delivered this
strong set of results.
As we move through 2022, we will continue to focus on technology development
to expand and enhance our unique promotional goods marketplace. We expect to
see material growth in both our Services and Merchanting revenue as great
distributor and supplier experience leads to increased membership and usage.
The management team are far from complacent, alive to current inflationary and
supply chain issues and remain confident. Beyond 2022 we expect to continue to
capitalise on our ownership of the pre-eminent global promotional goods
distribution network and our enabling technology to achieve significant scale.
The Board looks forward to supporting the successful execution of our strategy
and listening to our stakeholders, from employees to distributors, to
suppliers, and investors, as together we build an ever-stronger marketplace
and business.
David Smith
Non-Executive Chairman
27 July 2022
Chief Executive's Statement
I am pleased to report the full-year results for the year ended March 31,
2022. The team's continued high-level performance, commitment to the
business and passion for growth has delivered another year of positive results
for the Group. We continue to successfully navigate the post-covid "new
normal" business environment while strengthening our technology, delivering
innovative solutions, and driving revenue and profit growth across the Group.
Our revenues increased 54.9% to £11.9 million (2021: £7.7 million) and
Group adjusted operating profit* increased 90.2% to £1.1 million (2021:
£0.6 million).
Additionally, Group revenues over this 12-month period grew by 43.7% to £11.9
million (2020 (a 15-month period): £8.3 million) showcasing both recovery
from the pandemic, continuous organic growth across the business and a fully
evolved ACS Affiliate model. The Group's adjusted operating profit has shown
continual year over year growth since 2018, culminating in a 90.2% growth
compared to prior year.
Our business routes to revenue, how we make money, are separated into two
distinct segments, Services and Merchanting. Our Services Revenue is comprised
of membership subscriptions, Preferred Partner service fees on a percentage of
network sales throughput, SaaS technology fees and marketing services fees.
Our Merchanting revenue is comprised of sales of promotional products via our
Affiliate and adjacent market programmes. In both programmes the Group is the
principal in the transaction. In the financial year, our Services revenue
increased 17.3% to £6.3 million (2021: £5.4 million) and our Merchanting
revenue increased 141.4% to £5.6m (2021: £2.3 million).
Our Services programmes are global, with members present in every state in the
US, across Canada and the UK. Our current membership is 2,425 globally,
representing an estimated $2.8 billion+ pa in US aggregate pipeline sales and
an average of $1.3 million pa annual turnover per US Distributor. We have more
than 300 Preferred Partner lines, also around the globe in the US, Canada and
UK. Our Merchanting programmes are based solely out of the US with national
sales which are expected to grow and expand.
Our technology platforms are the centre of all of the Group's activities on
both the Services and Merchanting segments of the business. Working within an
agile and continuous improvement environment, the Group continued to invest in
our platforms to ensure we drive efficiency, data insights and
best-in-industry integrations and systems. These efforts drive efficiency and
scalability across all of areas of the business, including our Merchanting
services where all transactions are processed end-to-end through our
platforms.
Our e-commerce and marketplace platforms include nearly 1 million products and
connects our users (members and Affiliates) to the industry's best products
and our Preferred Partners. When searching, our users will see our Preferred
Partners products at the top of our search results. Users can seamlessly check
inventory levels, create client quotes for their campaigns, push supplier
purchase orders directly into the decoration facility and send sales invoices
straight to clients from the platform. Welcoming a new open environment era,
the Group's platforms now integrate with top accounting software, sales tax
calculation platforms, payment processors, shipping providers, email services
and the industry's top supplier companies.
Additionally, we have launched our business intelligence data warehouse which
provides the Group the ability to extract data and information to find
trending products, predict market shifts and understand our users' needs to
drive efficiency, engagement and business insights.
The success of this year places the Group in a strong position for the start
of the new financial year. We are focused on protecting our current business,
growing our current core opportunities and utilising the strength in our
technology stack and industry know-how to expand in the industry and adjacent
markets.
Progress and Strategy
Looking forward, the Board and management team remain focused on investing in,
and fostering a culture of technological innovation, supported by continued
investment in our products, people and client relationships. This ensures we
continue to deliver innovative solutions to our customers who engage with us
to leverage their buying power of promotional goods. Our strategy is not only
to grow our footprint of clients globally, but to expand and deepen engagement
across our existing customer base of over 2,425 members.
In the financial year the Group experienced growth via our Services programmes
which includes Preferred Partner programmes, SaaS technology fees, marketing
service fees, subscription fees, and product fees via:
· Driving growth for our Preferred Partners
· Retention and continued growth in the AIM membership of high-quality
promotional product distributors
· Delivering added value services, leveraging existing applications,
technology resources, and expertise, to help selected Preferred Partners grow
their share of the total AIM member purchase pipeline
· Developing and selling additional added value services, leveraging
existing applications, technology resources and expertise, to help AIM
distributor members grow their business to end-user clients and purchase
through preferred vendors and programmes, driving revenue and profits to AIM
and benefiting the Group as whole
· Continuing to increase member utilisation of the AIM Tech Suite.
The Group also experienced growth in the financial year in our Merchanting
programme, ACS, through the recruitment of high-calibre sales affiliates. ACS
enables affiliates to focus on sales activities, which is their core skillset.
ACS delivers affiliates the opportunity to become part of a corporate business
driving growth and profitability, which is our skillset. ACS's supplier
access, operational expertise, financial strength and technology systems
exceeds their stand-alone potential, and is particularly attractive as
inflationary and recessionary fears rise. ACS provides the business with
significant potential to scale revenue and thus profit through volume sales.
During the year the Group secured a new working capital credit facility with
TD Bank N.A., with an initial 12-month revolving facility of $700k. The
facility will provide access to non-dilutive funding to support the Group in
executing its growth strategy. The facility is secured from the successful
delivery of the AIM business, along with a parental guarantee, which allows
the Group to focus on developing growth areas within Merchanting.
Market Opportunities
Altitude has entered the new financial year with positive trajectory, having
expanded our Group's technology, grown our services and enhanced our supply
chain strength throughout the pandemic. In the financial year the Group was
able to successfully expand services into adjacent markets to offer "Gear
Shop" services in the education sector by delivering our comprehensive
technology stack, increasing our marketplace and e-commerce solutions, and by
the constant upgrade of our supply chain and merchandising capabilities in a
non-competing adjacent market. Early-stage implementation has proven
successful and the Group anticipates continued growth in this sector and also
looks to additional adjacent markets such as print, uniform and signage
industries to drive expansion opportunities and growth.
Technology
Altitude's technology platforms are the centre of all of the Group's
activities on both the Services and Merchanting segments of the business.
Working within and agile and continuous improvement environment, the Group
continued to invest in its platforms to ensure we drive efficiency, data
insights and best-in-industry integrations and systems. These efforts drive
efficiency and scalability across all of areas of the business, including our
Merchanting services where all transactions are processed end-to-end through
the Group's systems. As the technology evolves, Member adoption and usage of
Altitude's technology solutions continues to grow with 476 distributors
adopting the AIM Tech Suite for search and order creation, a 32% increase from
359 in FY 2021 and 2,646 unique websites live to date.
Our People & Our Commitment
Our people and community are our strength and the lifeblood of the business.
We continue to focus on employee development and the creation of a culture
that is welcoming, engaging and recognises the successes and contributions
across all employees in every aspect of the business. In the year, we were
able to continue to promote from within, assisting 11 US employees advance
their careers and grow their skillset. Additionally, acknowledging the
difficult global environment we are all working within today, the Group is
launching a programme addressing stress and anxiety issues with forums to
discuss coping skills and build mechanisms to assist the AIM team and the
community in managing the stress and anxiety that many are experiencing since
the onset of the global pandemic.
Diversity, Equity & Inclusion
We embrace and are committed to a culture of diversity, equity and inclusion
("DEI"). This guiding principle is instrumental in how we build our teams,
cultivate our leaders and create collaborative, innovative and inclusive
environments throughout the AIM network and industry. Our inclusive culture
supports diverse perspectives, drives courageous conversations and empowers
every individual across the team and throughout the AIM community.
Financial Results
The significant increase in Group adjusted operating profit* of 90.2%
to £1.1 million (2021: £0.6 million) is demonstrative of our ambition to
deliver scalable growth and also of the operational leverage inherent within
the business. To deliver this in a year still impacted by COVID-19, whilst
growing the Merchanting lines, is a great achievement. To further support the
growth in Merchanting we have secured the credit facility as mentioned above.
This places Altitude in a financially secure and strong position to overlay
growth opportunities in the future. A detailed financial review can be found
in the CFO's report.
Outlook
The Group experienced a year of strong profitable growth, driven by the
commitment of our teams and the quality of our programmes. We are also
extremely pleased to see last year's strong trading momentum has continued
into the first quarter of our new financial year providing further confidence
that the current market expectations are at least in line for the full
year. We have continued to be nimble and drive the business forward through
the most uncertain of times, building a strong foundation and delivering
year-over-year positive growth, whilst remaining debt free and not raising
dilutive funds. We retain our high growth ambitions and are confident in our
ability to substantially scale and expand the business.
Nichole Stella
Chief Executive
27 July 2022
Chief Operating Officer's Report
Altitude provides a proprietary SaaS-based technology suite to promotional
product distributors operating in the USA and UK. The technology suite
provides an online marketplace for the procurement of best-in-class
promotional merchandise by supporting AIM members and ACS affiliates with the
capability to source, showcase and fulfil orders for branded items.
The four value drivers that guide our software innovations and technology
roadmap focus on providing members, partners and buyers with a world-class
online experience which is fully aligned with our preferred partner suppliers'
products, and customer experience teams providing an effortless ordering
experience with every interaction:
· Efficiency - providing an intuitive online ordering experience for
buyers coupled with the back-end technology stack to support the quick
fulfilment of orders for branded merchandise
· Effectiveness - ensuring product availability whenever and wherever
you are, with 24/7, 365 uptime and a mobile first approach
· Experience - delivering a delightful experience and high degree of
satisfaction for Members, Affiliates, Partners, and End-buyers
· Trust - providing a compliant and reliable service from start to
finish
The tech suite has been developed specifically for the seamless ordering and
fulfilment of branded merchandise, encompassing over 20 years of industry
knowledge and features. Our technology team consists of a suite of experienced
individuals who have combined technical and industry experience and operate
agile methodology which enables the Group to stay relevant by learning-from
and shaping the tech suite to users evolving requirements, advancing buying
behaviour and technological advancements.
The click-to-ship technology stack includes a full suite of tools required for
the sale of branded merchandise including quotation and order management,
finance, e-commerce webstores, inventory and warehousing capabilities,
production planning, reporting, logo visualisation and interactive online
catalogues.
The tech suite is utilised by users throughout the USA and UK with a robust
infrastructure that provides localised environments with country specific
product catalogues, multiple currency and language support online. As a
result, our e-commerce platforms are trusted by multi-million-dollar brands in
a range of sectors such as healthcare, IT and finance with an average
enterprise-level user lifetime of over 10 years.
As the technology evolves, member adoption and usage of the Group's technology
solutions continues to grow, with 476 distributors adopting the AIM Tech Suite
for search and order creation, a 32% increase from 359 in 2021, whilst 2,646
unique websites have been launched to date.
Throughout this period the technology department delivered key advancements
with focusses on scalable growth, user and supply chain efficiencies and
user-retention.
The ACS platform was provided with its own branding and identity and had
significant advancements released to support financial process automations,
with a focus on scalability and efficiencies both internally and for
affiliates.
Across AIM and ACS preferred partner supplier relationships were enhanced,
with continuing focus on deeper integrations to add increased automation and
strengthen the availability of real-time data between parties. The tech suite
now features two-way API data exchanges, enabling live preferred partner
supplier inventory levels and electronic purchase order submission directly
into partner ERP systems. With the addition of automated order and shipping
status updates returned from partner and shipping agents to AIM and ACS member
systems, this reduces the manual exchange of information and speeds up order
processing.
Further advancements include the addition of an inventory module within the
order management and webstore platforms, widening usage by supporting the
operations of members who hold stock themselves or run corporate scheme
programmes.
The technology focus for the financial year 2023 will see a continuing pace of
further enhancements to the tech suite for AIM and ACS. One of the key roadmap
items for the coming financial year is in-line with the rise in e-commerce
within the promotional products industry. The second half of the year will see
the launch of an upgraded e-commerce platform, which will include new user and
buyer driven features for SEO and online purchasing and serve the growing
needs of our members and affiliates operating corporate scheme and niche
transactional webstores. The new e-commerce platform will encompass a retail
experience with a mobile-first approach to meet evolving buyer expectations
and will be fully integrated with our order management suite for member
efficiencies and preferred partner supplier network connectivity.
The ongoing investment in the wider technology roadmap for financial year 2023
will ensure the tech suite continues to evolve to attract new members and
affiliates, strengthen partner relationships and support member retention.
Deborah Wilkinson
Chief operating Officer
27 July 2022
Chief Financial Officer's Report
Financial Results
Group revenues for the year increased by £4.2 million to £11.9 million
(2021: £7.7m), an increase of 54.9%.
2022 is a significant year for Altitude, with a 17.3% growth in Services,
surpassing the Industry distributor average of 12.1%, which reflects the
strong performance of the AIM network and the Industry's recovery from
COVID-19. This year, with the evolution of the business model, Merchanting
predominately reflects the sale of promotional products through our Affiliate
sales network, which is the main driver behind the 141.4% increase over last
year. In the prior year the majority of Merchanting revenue was derived from a
one-off initiative to supply COVID-19 related product placed through our Group
Buys platform.
Year ended Year ended
31 March 31 March
2022 2021
£'000 £'000
Group Group Change % Change
Turnover
Services 6,308 5,376 932 17.3%
Merchanting 5,628 2,331 3,297 141.4%
Total 11,936 7,707 4,229 54.9%
Gross Profit
Services 5,750 4,863 887 18.2%
Merchanting 400 712 (312) -43.8%
Total 6,150 5,575 575 10.3%
Gross Profit Margin
Services 91.2% 90.5%
Merchanting 7.1% 30.5%
Total 51.5% 72.3%
Gross profit has increased by £0.6 million, a 10.3% increase, to £6.2
million (2021: £5.6 million). This is mainly driven by an increase in the AIM
purchasing pushed through our Preferred Partner network, demonstrating the
value of our Services to our Preferred Partners.
Gross margin was 51.5% (2021: 72.3%) reflecting the growth in lower margin
Merchanting activity, whilst Services retained a consistently high margin.
Merchanting has benefited from multiple technology enhancements and a rigorous
review of process during the quieter COVID-19 impacted period. The
established ACS core processes provides the Group with a solid platform for
scalable growth for which we saw increased demand and Affiliate onboarding
late in the year. ACS is primarily a volume business which fully utilises
our Technology and also benefits from our Preferred Partner network.
Administration expenses before share-based payments, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges of
£5.1 million (2021: £5.0 million) are broadly in line with prior year. In a
year of increased activity, the Group has maintained tight control over costs,
and taken advantage of the US Government support of the Employee Retention
Scheme, which contributed £0.5 million (2021: £0.4 million) through Paycheck
Protection.
Adjusted operating profit* increased by 90.2% to £1.1 million (2021: £0.5
million). The statutory loss before taxation was £0.2 million (2021: loss of
£1.3 million), whilst the adjusted profit*** before taxation increased by
£0.7 million to £0.1 million (2021: loss of £0.6 million).
Exceptional costs
The Group incurred exceptional costs of £234,000 (2021: £39,000) reflecting
the first stage of finance transformation, including the development of a new
forecasting model, costs of recruiting a new CFO, costs associated with the
change in Nominated Adviser and Broker and costs incurred in a bad debt.
Development
The Group capitalised £0.8 million of software development (2021: £0.7
million). The commitment to investing in our technology is underpinned by our
spend and our close relationship with our affiliates and members in driving
customer focused improvements. This is discussed in more detail in the COO
review.
Earnings per share
Basic earnings per share for continuing operations were 0.14p (2021 loss
1.56p). Adjusted basic earnings per share** from continuing operations was
1.77p (2021: 1.03p), representing an increase of 72%.
Taxation
The Group is carrying a deferred taxation asset of £436,000 mainly in respect
of tax losses carried forward. Based on future forecasts the Directors believe
the Group's profits will be sufficient to fully utilise the deferred tax asset
within the next four years. The Group was again successful in its application
for the R&D tax credit with two years credit received resulting in a net
income tax received position of £413,000 (2021: £11,000).
Cash flow
Operating cash inflow before changes in working capital was £1.1 million
(2021: £0.4 million). Working capital increased by £1.5 million (2021:
£Nil) principally driven by trade and other debtors, reflecting the growth in
revenue and timing of receipts. Net cash outflow from investing activities of
£0.9 million (2021: £0.3 million outflow) represents the purchase of
tangible and intangible assets (software development) of £0.9 million (2021:
£0.6 million). The prior year was also impacted by £0.3 million of proceeds
from the disposal of Ad Products. Financing activities included the
repayment of finance agreements and interest of £0.2 million (2021: £0.1
million) with a small inflow from the issue of shares relating to share
options exercised. Total net cash outflow was £1.2 million (2021: £0.1
million inflow). The year-end cash balance stood at £0.9 million (2021: £2.1
million).
Treasury
The Group continues to manage the cash position in a manner designed to meet
the operational needs of the businesses. Cash balances held in foreign
currencies reflect the geographies in which the Group operates. There is no
policy to hedge the Group's currency exposures arising from the profit
translation or the effect of exchange rate movements on the Group's overseas
net assets.
The Group has secured a new working capital credit facility (the "Facility")
with TD Bank N.A., with an initial 12-month revolving facility of $700k. The
Facility has no significant financial covenants and is secured by the assets
of the US Group with a parental guarantee from Altitude Group PLC. The
Facility will provide access to non-dilutive funding to support the Group in
executing its growth strategy. The Facility has an arrangement fee
of $3,500 annually and incurs interest at 1% above the US Prime Rate on
drawdown. This Facility remains undrawn at the year end.
Share capital
The share capital increased by 213,896 to 70,681,164 (2021: 70,467,268). All
of the shares issued in the period were in respect of options exercised by
employees.
The Company issued share options to senior management of 444,444 (2021:
3,400,000). During the year the number of share options exercised was 213,896
(2021: 1,171,089) with the number of share options forfeited being 2,329,667
(2021: 60,000). The total number of share options in issued being 4,299,445
(2021: 6,398,564).
Key performance indicators
The Group's key performance indicators as discussed above are:
Year ended Year ended
31 March 31 March
2022 2021
£'000 £'000
Revenue 11,936 7,707
Gross Profit 6,150 5,576
Gross Margin 52% 72%
Operating profit before share-based payment charges, depreciation, 1,067 561
amortisation, and exceptional charges*
Statutory loss before tax (157) (1,323)
Adjusted profit before tax*** 84 (594)
*Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges is
a consistently used measure used to show the performance of the revenue
generating activities and the related costs involved in the delivery of the
revenue for the current year
** Basic adjusted earnings per share from continuing operations is calculated
using profit after tax but before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges and
the weighted average number of equity voting shares in issue and, when
relevant, in respect of diluted earnings per share includes the effect of
share options that could potentially dilute basic earnings per share. This
provides a consistent metric with the Income Statement for underlying
performance
***Adjusted Profit Before Tax is profit before tax adjusted for share based
charges, exceptional costs and amortisation on acquired intangibles. This
metric is introduced this year to review the performance of the underlying
business including the depreciation for development costs.
Graham Feltham
Chief Financial Officer
27 July 2022
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2022
Year to Year to
31 March 31 March
Notes 2022 2021
£'000 £'000
Revenue
- continuing 2 11,936 7,707
Cost of sales (5,786) (2,131)
Gross profit: 6,150 5,576
Administrative expenses before share-based payment charges, depreciation, (5,083) (5,015)
amortisation, and exceptional charges
Operating profit before share-based payment charges, depreciation, 1,067 561
amortisation, and exceptional charges
Share-based payment credits/ (charges) 127 (544)
Depreciation and Amortisation (1,044) (1,228)
Exceptional charges 3 (234) (39)
Total administrative expenses (6,234) (6,826)
Operating loss (84) (1,250)
Finance charges (73) (73)
Loss before taxation (157) (1,323)
Taxation 254 230
Profit/(loss) attributable to continuing operations 97 (1,093)
Loss on discontinued operation - (133)
Profit/(loss) attributable to the equity shareholders of the Company 97 (1,226)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss:
• Foreign exchange differences 302 (691)
Total comprehensive income / (loss) for the year 399 (1,917)
Earnings per ordinary share attributable to the equity shareholders of the
Company:
- Basic (pence) - Continuing operations 4 0.14p (1.56p)
- Basic (pence) - Discontinued operations 4 - (0.19p)
Consolidated Statement of Changes in Equity
for the year ended 31 March 2022
Share Share Retained Foreign exchange translation Total
capital premium losses reserve equity
£'000 £'000 £'000 £'000 £'000
Group
At 31 March 2020 277 20,080 (11,250) (21) 9,086
Loss for the period - - (1,226) - (1,226)
Foreign exchange differences - - - (691) (691)
Total comprehensive loss - - (1,226) (691) (1,917)
Transactions with owners recorded directly in equity
Share-based payment charge - - 544 - 544
Shares issued for cash 5 71 - - 76
Total transactions with owners 5 71 544 - 620
At 31 March 2021 282 20,151 (11,932) (712) 7,789
Profit for the period - - 97 - 97
Foreign exchange differences - - - 302 302
Total comprehensive income - - 97 302 399
Transactions with owners recorded directly in equity
Share-based payment credit - - (127) - (127)
Shares issued for cash 1 43 - - 44
Total transactions with owners 1 43 (127) - (83)
At 31 March 2022 283 20,194 (11,962) (410) 8,105
Consolidated Balance Sheet
as at 31 March 2022
As at As at
31 March 31 March
2022 2021
£'000 £'000
Non-current assets
Goodwill 2,781 2,668
Intangible assets 2,477 2,462
Property, plant and equipment 139 114
Right of use assets 606 736
Deferred tax assets 436 419
Total non-current assets 6,439 6,399
Current assets
Inventory 29 -
Trade and other receivables 3,875 2,378
Corporation Tax Receivable 42 220
Cash and cash equivalents 902 2,095
Total current assets 4,848 4,693
Total assets 11,287 11,092
Liabilities
Current liabilities
Trade and other payables (2,282) (2,390)
(2,282) (2,390)
Net current assets 2,566 2,303
Non-current liabilities
Deferred tax liabilities (364) (382)
Lease liabilities (536) (531)
(900) (913)
Total liabilities (3,182) (3,303)
Net assets 8,105 7,789
Equity attributable to equity holders of the Company
Called up share capital 283 282
Share premium account 20,194 20,151
Retained losses and foreign exchange (12,372) (12,644)
Total equity 8,105 7,789
The consolidated financial statements were authorised for issue by the Board
of Directors on 27 July 2022 and signed on its behalf by:
Graham Feltham
Chief Financial Officer
Registered number: 05193579
Consolidated Cash Flow Statement
for the year ended 31 March 2022
Year to Year to
31 March 31 March
2022 2021
£'000 £'000
Operating loss - Continuing operations (84) (1,250)
Operating loss - Discontinued operations - (133)
Amortisation of intangible assets 845 1,032
Depreciation 199 196
Share-based payment charges (127) 544
Exceptional items 234 39
Operating cash flow before changes in working capital 1,067 428
Movement in inventory (29) -
Movement in trade and other receivables (1,398) 710
Movement in trade and other payables (101) (707)
Changes in working capital (1,528) 3
Net cash flow from operating activities before exceptional items (461) 431
Exceptional items (179) (39)
Net cash flow from operating activities after exceptional items (640) 392
Income tax received 413 11
Net cash flow from operating activities (227) 403
Cash flows from investing activities
(Purchase)/ proceeds of tangible assets (64) 21
Purchase of intangible assets (788) (659)
Proceeds of disposal of trade and assets - 300
Net cash flow from investing activities (852) (338)
Cash flows from financing activities
Repayment of lease borrowings (135) (73)
Lease interest paid (52) (10)
Other interest paid (21) -
Issue of shares for cash (net of expenses) 44 76
Net cash flow from financing activities (164) (7)
Net increase/(decrease) in cash and cash equivalents (1,243) 58
Cash and cash equivalents at the beginning of the period 2,095 2,350
Effect of foreign exchange rate changes on cash and cash equivalents 50 (313)
Net (decrease)/increase in cash and cash equivalents (1,243) 58
Cash and cash equivalents at the end of the period 902 2,095
Notes to the Consolidated Financial Statements
1. Financial Information
The financial information in this preliminary announcement has been extracted
from the audited Group Financial Statements for the year ended 31 March 2022
and does not constitute statutory accounts within the meaning of section 434
of the Companies Act 2006.
The Group Financial Statements for 2020/21 were delivered to the registrar of
companies, and those for 2021/22 will be delivered in due course. The
auditor's report on the Group Financial Statements for 2020/21 and 2021/22
were both unqualified and unmodified. The auditors' report was signed on 27
July 2022. The Group Financial Statements and this preliminary announcement
were approved by the Board of Directors on 27 July 2022
The audited accounts will be posted to all shareholders and will be available
on the Group's website (https://www.altitudeplc.com/reports-results
(https://www.altitudeplc.com/reports-results) ) later today.
2. Basis of preparation
The financial information has been prepared in accordance with the recognition
and measurement principles of International Financial Reporting Standards
(IFRS) adopted for use in the European Union, including IFRIC interpretations
issued by the International Accounting Standards Board, and in accordance with
the AIM rules and is not therefore in full compliance with IFRS. The principal
accounting policies of the Group have remained unchanged from those set out in
the Group's 2021 annual report.
The Accounts have been prepared under the historical cost convention. The
Consolidated Financial Statements are presented in Sterling, rounded to the
nearest thousand.
The preparation of financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities,
income, and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
In preparing the condensed, consolidated financial statements, management are
required to make accounting assumptions and estimates. The assumptions and
estimation methods are consistent with those applied to the Annual Report and
financial statements for the period ended 31 March 2021.
Additionally, the principal risks and uncertainties that may have a material
impact on activities and results of the Group remain materially unchanged from
those described in that Annual Report.
Going concern
The financial statements have been prepared on a going concern basis.
Although the outlook has improved from prior years the current economic
conditions caused as a result of COVID-19 restrictions being eased have
resulted in supply chain challenges in meeting the subsequent increase in
Global demand. Combining with the increase in Global demand, the Russian
invasion of Ukraine has increased pressure on energy prices. The resultant
impact on the Industry is uncertain with Corporate costs increasing putting
pressure on budgets and therefore marketing spend countering the increase in
demand and revival of the Industry and Corporate activity post Pandemic. The
Board is approaching the immediate future with caution, keeping focussed on
growth and reviewing options to flex spends accordingly.
The Board is confident that the Group has sufficient liquidity to trade
through to more normalized trading conditions. The financial statements have
therefore been prepared on a going concern basis. The Directors have taken
steps to ensure that their belief that the going concern basis of preparation
remains appropriate. The key factors are summarized below:
· The Directors have prepared cash flow forecasts extending to
September 2023. The cash flow forecasts include a mid-scenario and sensitized
high/low cases
· The low scenario assumes reductions in revenue of c10% compared to
the mid-scenario. The high scenario assumed increases of c20% based on
pipeline opportunities
· The forecasts assume regular collections and payments in line with
the now normalised conditions experienced. The Group has caught up any delayed
payments and Government support initiatives available and has a financing
facility in place to support cash cycle throughout the year
· The base and sensitized cash flow forecasts do not include any
mitigating factors available to management in terms of:
· discontinuing the development of AIM Capital Services to release
working capital
· reactionary cost reduction/flex programmes in respect of headcount
and organisation
· securing additional working capital facilities in respect of any
growth of AIM Capital Solutions business outside of the sensitised forecast
· The Group maintains the distributor membership and preferred
suppliers throughout the forecast period
· The Group continues to develop the product offerings to meet the
demands of the market and customers
· The Directors have considered the position of the individual trading
companies in the Group to ensure that these companies are also able to
continue to meet their obligations as they fall due
· There are not believed to be any contingent liabilities which could
result in a significant adverse impact on the business
Based on the above factors and assumptions, the Directors believe that it
remains appropriate to prepare the financial statements on a going concern
basis.
The financial statements do not include any adjustments that would result from
the basis of preparation being inappropriate.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and the entities controlled by the Company (its subsidiaries) made
up to 31 March each period. Control is achieved when the Company:
· has the power over the investee
· is exposed, or has rights, to variable return from its involvement
with the investee and
· has the ability to use its power to affect returns
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements above. Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses control over the
subsidiary.
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued, and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill. If the cost of acquisition is less than the
fair value of net assets of the subsidiary acquired, the difference is
recognised directly in the Consolidated Statement of Comprehensive Income.
All intra-group balances and transactions, including unrealised profits
arising from intra-group transactions, are eliminated fully on consolidation.
Revenue recognition
Revenue represents the amounts receivable, excluding sales related taxes, for
goods and services supplied during the period to external customers shown net
of sales taxes, returns, rebates and discounts.
When assessing revenue recognition against IFRS15, the Group assess the
contract against the five steps of IFRS15:
· Identifying the contract with a customer
· Identifying the performance obligations
· Determining the transaction price
· Allocating the transaction price to the performance obligations
· Recognising revenue when/as performance obligation(s) are satisfied
This process includes the assessment of the performance obligations within the
contract and the allocation of contract revenue across these performance
obligations once identified. Revenue is recognised either at a point in time
or over time, when, or as, the Group satisfies performance obligations by
transferring the promised goods or services to its customers.
The difference between the amount of income recognised and the amount invoiced
on a particular contract is included in the statement of financial position as
accrued or deferred income. Amounts included in accrued and deferred income
due within one year are expected to be recognised within one year and are
included within current assets and current liabilities respectively.
The Group has a number of different revenue streams which are described below.
Services Revenue
Includes a range of member and member-related revenues as well as legacy
software license revenue.
Member subscription revenues
AIM distributor members pay a monthly subscription fee for basic membership
which confers immediate access to a range of commercial benefits at no
additional cost to the member. Members may elect to upgrade their membership
to access a range of enhanced services provided by AIM in exchange for an
increased monthly subscription fee. Subscription revenues are recognised on a
monthly basis over the membership period.
Other discretionary services
Certain other services are made available to AIM members on a discretionary
usage basis such as artwork processing services, catalogues and merchandise
boxes. These revenues are recognised upon performance of the service or
delivery of the product. For example, catalogue and merchandise box revenues
are recognised on dispatch of the products to members.
Events and exhibitions revenues
AIM promotes and arranges events for AIM members and groups of supplier
customers to meet and build relationships. Revenue from these events is
recognised once the performance obligations have been satisfied, typically on
completion of an event or exhibition.
Preferred Partner revenues
AIM provides services to vendors within the promotional products industry
whereby preferred partners are actively promoted to AIM members via a variety
of methods including utilising the AIM technology platform, webinars, email
communications and quarterly publications.
Revenues are variable and depend on the value of purchases made and services
utilised by the AIM members from preferred partners. Revenue is recognised
over time by reference to the value of transactions in the period. Payment for
AIM's marketing services is made by preferred partner customers on a calendar
quarter or annual basis. Revenue is recognised to the extent that it is highly
probable that it will not reverse based on historic fact pattern and latest
market information.
Software and technology services revenues
Revenues in respect of software product licences and associated maintenance
and support services are recognised evenly over the period to which they
relate. An element of technology services revenue is dependent on the value of
orders processed via the Group's technology platforms. Revenue is accrued
based on the value of underlying transactions and the relevant contractual
arrangements with the customer. Revenue is constrained to the extent that is
that it is highly probable that it will not reverse.
Merchanting revenues
Merchanting revenues arise when group companies contract with customers to
supply promotional products. By far the most significant operation that
carries out merchanting is within ACS. Over the past 18 months significant
investment in our technology and the evolution of contracting with our
affiliates along with enforcement of contractual terms has prompted the
Directors to re-evaluate the application of IFRS 15. Under the terms of the
ACS contract the AIM member affiliates act as independent sales
representatives of ACS to secure sales with customers. The contracts have
evolved since the inception of ACS along with enforcement, monitoring and
control over the substance of the contracts. All transactions are
mandatorily processed through the AIM technology platform and utilise ACS
people and know-how to efficiently operate the full end to end process.
ACS bears the risk of the transaction as Principal, provisioning of orders and
contracting with the customer, determining the transaction price, provision of
fulfilment and supplier contracts and pricing, performing credit control and
processing payments. The sale of the promotional products, with the related
costs of goods supplied, freight and AIM affiliates selling commission
recognised as the cost of goods sold. The revenue is recognised on the
shipment of the goods from the supplier and as notified by the supplier
invoice which are raised following shipment. The Directors accept that the
technical transfer of risks and rewards to the customer occur on delivery of
the goods which are usually delivered within 2-5 days of shipment. The
Directors use a proxy of the shipment date as the trigger for recognising
revenue.
The Group also sources products directly through its network of preferred
partners, which it sells to AIM members and adjacent markets, where such sales
do not conflict with the interest of either suppliers or the AIM membership.
The Group Buy scheme falls under Merchanting and is a facility that supported
the sales of Personal Protective Equipment in the prior year.
2. Segmental information
The chief operating decision maker has been identified as the Board of
Directors and the segmental analysis is presented based on the Group's
internal reporting to the Board. At 31 March 2022, the Group has two operating
segments, North America, and the United Kingdom along with a Central segment.
The Group further analysis performance to Gross Profit by presenting 'Service'
and 'Merchanting' as shown. Service revenues are derived from servicing our
AIM membership base and generating throughput with our contracted Preferred
Partners. Merchanting revenues are sales of promotional products where the
Group acts as principal in the underlying transaction.
Segment assets consist primarily of property, plant and equipment, intangible
assets, trade and other receivables and cash and cash equivalents. Segment
liabilities comprise operating liabilities. Capital expenditure comprises
additions to property, plant and equipment and intangible assets, including
additions resulting from acquisitions through business combinations. Assets
and liabilities at 31 March 2022 and capital expenditure for the period then
ended are as follows.
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2022 2022 2022 2022
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Turnover
Services 5,139 1,169 - 6,308
Merchanting 5,628 - - 5,628
Total 10,767 1,169 - 11,936
Cost of Sales
Services (518) (40) - (558)
Merchanting (5,228) - - (5,228)
Total (5,746) (40) - (5,786)
Gross Profit
Services 4,621 1,129 - 5,750
Merchanting 400 - - 400
Total 5,021 1,129 - 6,150
Operating Profit/(Loss) before share-based payment charges, depreciation, 1,623 286 (842) 1,067
amortisation, and exceptional charges
Share-based payment charges - - 127 127
Depreciation (142) (57) - (199)
Amortisation (156) (689) - (845)
Management fees (1,495) 581 914 -
Exceptional charges (91) - (143) (234)
Finance charges (41) (32) - (73)
Segmental profit before income tax (302) 89 56 (157)
Assets* 8,745 1,715 827 11,287
Liabilities* (1,689) (619) (874) (3,182)
Net Assets 7,056 1,096 (47) 8,105
*external balances disclosed for segmental purposes
Capital expenditure
Intangible assets - (788) - (788)
Property, plant and equipment (51) (13) - (64)
Right of use assets - - - -
Capital Expenditure (51) (801) - (852)
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2022 2022 2022 2022
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Timing of Revenue Recognition
At a point in time 5,984 47 - 6,031
Over time 4,783 1,122 - 5,905
Total Revenue 10,767 1,169 - 11,936
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2021 2021 2021 2021
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Turnover
Services 4,192 1,184 - 5,376
Merchanting 2,331 - - 2,331
Total 6,523 1,184 - 7,707
Cost of Sales
Services (462) (51) - (513)
Merchanting (1,619) - - (1,619)
Total (2,081) (51) - (2,132)
Gross Profit
Services 3,730 1,133 - 4,863
Merchanting 712 - - 712
Total 4,442 1,133 - 5,575
Operating Profit/(Loss) before share-based payment charges, depreciation, 1,035 241 (715) 561
amortisation, and exceptional charges
Share-based payment charges - - (544) (544)
Depreciation (139) (57) - (196)
Amortisation (167) (865) - (1,032)
Exceptional charges (39) - - (39)
Finance charges (57) (16) - (73)
Segmental profit before income tax 633 (697) (1,259) (1,323)
Assets* 8,342 1,470 1,280 11,092
Liabilities* (1,487) (798) (1,018) (3,303)
Net Assets 6,855 672 262 7,789
*external balances disclosed for segmental purposes
Capital expenditure
Intangible assets - (659) - (659)
Property, plant and equipment - 21 - 21
Right of use assets - - - -
Capital Expenditure - (638) - (638)
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2021 2021 2021 2021
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Timing of Revenue Recognition
At a point in time 2,755 154 - 2,908
Over time 3,768 1,031 - 4,799
Total Revenue 6,523 1,184 - 7,707
3. Exceptional charges
Analysis of exceptional items:
Year ended Year ended
31 March 31 March
2022 2021
£'000 £'000
Legal, professional and consultancy costs 168 39
Other exceptional costs 66 -
234 39
Exceptional charges principally relate to, finance transformation being the
recruitment of a new CFO and business modelling, the one-off costs relating to
the change of our corporate broker and NOMAD and the write-off of a bad debt
(2021: relates to legal costs). Other exceptional costs in the year
principally relate to a bad-debt write-off.
4. Basic and diluted earnings per ordinary share
The calculation of earnings per ordinary share is based on the profit for the
period after taxation and the weighted average number of equity voting shares
in issue as follows:
Year ended Year ended
31 March 31 March
Profit / (loss) attributable to the equity shareholders of the Company: 2022 2021
Continuing operations (£000) 97 (1,093)
Discontinued operations (£000) - (133)
Weighted average number of shares (number '000) 70,657 69,897
Basic and diluted profit / (loss) per ordinary share (pence)
Continuing operations 0.14 (1.56)
Discontinued operations - (0.19)
Adjusted profit / (loss) per ordinary share (pence) on continuing operations
Continuing operations (£000) 97 (1,093)
add back:
Share based payments (127) 544
Depreciation and amortisation 1,044 1,228
Exceptional charges 234 39
Adjusted earnings 1,248 718
Adjusted basic and diluted earnings per ordinary share (pence) on continuing 1.77 1.03
operations
Disclosure of the number of shares in issue including the effects of share
options that could potentially dilute basic loss per share in the future were
not included in the table above as the calculation of diluted earnings per
share has an immaterial impact for the current period and was anti-dilutive
for the previous year.
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