REG - Altitude Group PLC - Audited Final Results and Notice of AGM
25/07/2023 07:00
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RNS Number : 0300H Altitude Group PLC 25 July 2023
Altitude Group plc
("Altitude", the "Company" or the "Group")
Audited Annual Results for the Year Ended 31 March 2023 and Notice of Annual
General Meeting
ALTITUDE DELIVERS IN CURRENT YEAR AND LOCKS IN FUTURE GROWTH
Financial Highlights
· Group revenues increased by £6.9 million to £18.8 million, up
57.2% (2022: £11.9 million)
· Gross profit increased 39.9% by £2.5 million to £8.6
million (2022: £6.2 million)
· We are proud to report a record Group adjusted operating profit*
growing by 83.4% to £2.0 million (2022: £1.1 million) replacing £0.5m of
US Government retention credit with sustainable profitable growth
· Basic and diluted earnings per share increased by 293% to 0.55p
(2022: 0.14p)
· Cash inflow from operating activities increased by £1.8 million to
£1.6 million (2022: outflow £0.2m) driven by significant revenue growth
and increased trading activities
· Cash outflow from investing activities of £1.1 million (2022:
£0.9 million)
· Cash increased by £0.3 million to £1.2 million (2022: £0.9
million)
· The Group secured a financing facility of $1.7 million to support
future substantial growth in Merchanting. The facility remains undrawn and the
Group is debt-free
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Key corporate developments and operational highlights
· The Group enjoyed a record year of adjusted operating profit
· The Group invested in pipeline growth and business development
efforts, which have paid off, and driven significant growth across its
Merchanting divisions, providing £1.6 million of operating cashflow to drive
future growth
· The US delivered adjusted operating profit growth of 49% reaching
$4.1 million (2022: $2.8 million)
· The Group's adjacent market solution has proven to be disruptive in
the sector and is driving hyper-growth across the Group with the signing of
high-value multi-year contracts which will all generate revenue in the first
half of the current financial year. Further contracts have been signed after
the year-end.
· ACS added significant revenue growth, doubling the annualised
expected revenue run-rate from Affiliates in the year
· Services revenue has grown by 35%, which delivers a 90.6% fall
through to gross margin
· US AIM membership has continued to grow, and currently totals 2,214
global members, up from 1,917 at acquisition, consolidating its position as
one of the largest distributor organisations
Please note that percentages are calculated based on unrounded numbers as
reported in the primary statements.
Notice of Annual General meeting ("AGM")
The Company also gives notice that its AGM will be held at the offices of
Zeus, 125 Old Broad Street, 12th Floor, London, EC2N 1AR on 14
September 2023 at 11 a.m. The Notice of AGM and the Annual Report for the
year ended 31 March 2023 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 revenues underlyingly grew by 21.5% in
the US compared to reported growth of 11.4%-15.6% Industry reported
distributor sales growth reflecting a healthy, active membership network.
Source (ASI and PPAI).
· New ACS Merchanting affiliates doubling expected annualised revenue
signed during the year with full year impact in FY24
· Significant new adjacent market contracts won and expected to start
transacting by September 2023 with further investment in pipeline for
continued scalable growth
· The Group remains debt free with an increased facility to support
growth
· The Board is confident that the Group will deliver substantial
growth for FY24 and win further material contracts for future years
Nichole Stella, Group CEO of Altitude, said:
"This financial year was one of great progress, strong trading and record
breaking results. We increased market share in our core markets and proved to
be a disruptive force in a new market. As a result, the Group has shown growth
across the business far exceeding our original expectations. This performance
is a testament to not only the incredible hard work of our dedicated staff and
management team but also a testament to the success of the strategy that was
put in place when I arrived and renewed with vigour in 2021. I am delighted
that we grew the existing business by 57.2% which in itself is no small feat,
but to do it on a global basis whilst establishing a new vertical is a great
achievement. We have a business that is robust, ambitious and is very well
positioned for scalable growth. We look forward to the future, both near term
and longer term, with great confidence."
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
I am pleased to report that the Group has shown strong performance in FY23 and
once again delivered revenue growth exceeding 50%.
The management team remained highly focused on operational gearing and
delivery of continuous scalable growth despite macro-economic headwinds. This
focus proved successful and the Group delivered 57% revenue growth to £18.8
million via the continued delivery of growth in AIM Services and the scaling
of our Merchanting programmes. Growth in adjusted operating profit of 83% to
£2.0 million has been achieved against the previous year that included a
non-recurring £0.5m US Government credit. This is an excellent result and is
testament to the continued delivery of our strategy and the power of our
business model.
The management team continued development of our technology and marketing
platforms to provide our AIM distributors, ACS Affiliates and Preferred
Partner suppliers with market leading capabilities. The AIM distribution
network continues to grow, with ACS Affiliates doubling their expected
annualised revenue. Significant new contracts were signed in our Adjacent
Market Programme to further boost revenue in FY24 and build an exciting new
growth engine for future years.
Year in Focus
We have seen growth in both our core businesses and our Adjacent Market
Programmes outstrip the market.
This is a very positive demonstration of our commitment to provide value to
our superb network of excellent suppliers and distributors via exceptional
service and the highest standards. Technology innovation and development
remain at the core of our business as we continue to gain more expert users
and utilise their demands and needs to drive improvement. Our technology
partnership with Fully Promoted is a prime example who selected to work with
us after carrying out an industry wide review of fit-for-purpose technology.
We will continue to invest capital and resource in technology for the benefit
of all our stakeholders.
The strategy to develop diversified revenue streams within our Merchanting
business has yielded excellent results. In our Adjacent Markets we have won a
significant number of material contracts in the education sector in its first
year of business development, via our fresh and innovative approach to the
sector. The doubling of our revenue base for ACS has resulted from the
exceptional support we provide to them to grow their business unencumbered by
bureaucracy. The results of this investment in Merchanting can be seen in this
report but the full impact will be seen in future years through diversity,
growth rate, and significantly enhanced pipeline. The focus of the management
team is firmly on delivery and execution of this strategy. They have
repeatedly delivered above market expectations during this year, and I have
trust in them to continue their excellent performance.
Cash has been managed well during the year generating an additional £0.3
million. Prudently the process was undertaken to extend our existing credit
facility from $0.7 million to $1.7 million in anticipation of growth in
Adjacent Markets where there is an element of up-front investment in fit out
and inventory to service the 5 year contracts. The facility has been secured
ahead of time and will be under constant review. The Group remains debt free
with the material credit facility in place to support future growth as
opportunity arises.
Looking Forward
A business only moves forward though the dedication of its people. 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 another strong set of results.
As we move through 2023 and 2024, we will focus on the world class onboarding
of the material contracts won, accelerating acquisition of new contracts, and
continuing to develop our technology to expand and enhance our unique
promotional goods marketplace. The Management team are under no illusions, the
success of our contract wins provides operational challenges to navigate and
overcome whilst maintaining the hunger to further improve and win new
business. I am confident we have the right team in place under the dynamic and
agile leadership of Nichole to continue delivery of our strategy.
We have made significant progress, achieved notable milestones, and positioned
ourselves for sustained growth in a dynamic marketplace. We remain committed
to listening to and delivering superior value to our stakeholders and look
forward to the exciting opportunities that lie ahead.
David Smith
Non-Executive Chairman
24 July 2023
Chief Executive's Statement
The year ended 31 March 2023 ("FY23") has proven to be a breakthrough year for
the Group, setting new records and heralding a notable phase of transformation
and scalability across the entire organisation. Against a backdrop of
macro-economic challenges, the Group has seen strong growth in our promotional
products divisions and the rapid advancement and expansion in our Adjacent
Markets Programs (AMPs) throughout North America.
Via our AMPs we identified, targeted, and seized a significant opportunity in
the higher-education space and successfully launched our Gear Shop solution
providing technology & e-commerce solutions, marketing tools, supply
chain know-how and innovative retail experiences across the US
markets. Throughout the year we expanded our pipeline and collaborated
closely with our course material partner. The combination of different
specialisms and enhanced services proved disruptive within the Educational/
Collegiate markets. In the year the Group delivered significant multi-year
contract wins and maintained an ever-growing pipeline. Continued expansion
and delivery of our Gear Shop technology solutions, marketing tools, supply
chain know-how and innovative retail experiences across the US markets will
remain a primary and growing focus within the Group's business model.
Thanks to the team's unwavering dedication, exceptional performance, and
relentless pursuit of growth, the Group has once again achieved a year of
outstanding results. Group revenues increased 57.2% to £18.8 million (2022:
£11.9 million) and Group adjusted operating profit* increased 83.4% to £2.0
million (2022: £1.1 million). Further, I am pleased to report our above
stated growth significantly out-paced the market. The promotional product
industry trade association, PPAI, recently released the U.S. promotional
products market, which grew by 15.6% over 2022 and reported sales figures to
$25.5 billion (2022: $22.1 billion).
Operational Excellence
As a company we are always focused on continuous improvement and heightened
operational gearing. We do this by regularly evaluating and implementing new
strategies to drive process optimisation, building programmes that focus on
economies of scale and improve our technology and systems to increase
production efficiency. Over the last year, the Group has made great gains in
streamlining operations which have empowered us to invest back in the business
to drive pipeline growth and new revenue generating activities. This focus on
operational gearing has enhanced our ability to adapt to changing market
conditions and take advantage of new opportunities.
Services
During FY23, our Services Revenue demonstrated remarkable growth, increasing
35.1% and reaching £8.5 million (2022: £6.3 million). Simultaneously, our
Merchanting Revenue experienced a 81.9% increase, totalling £10.2 million
(2022: £5.6 million). These impressive outcomes serve as a testament to the
achievements and advancements made by our business in expanding our market
presence and diversifying our revenue streams.
Our Services programs have a global reach, with members located in every state
in the US, as well as across Canada and the UK. Currently, our global
membership stands at 2476, with an impressive aggregate pipeline sales of
£2.9 billion and an average individual annual turnover of £1.2 million.
Furthermore, we are proud to have established partnerships with over 300
Preferred Partners across the US, Canada, and the UK.
Merchanting
In contrast, our Merchanting programs are exclusively focused in the US, and
are steadily expanding across the country. These programmes consist of ACS,
where we recruit high-calibre promotional product sales professionals to join
ACS. These sales professionals act as our sales agent and in return we provide
access to our Preferred Partner network and administrative, accounting and
financial assistance. Also within our Merchanting revenue stream is our AMPs,
where we provide branded merchandise solutions within adjacent markets. This
includes our Gear Shop solution.
In FY23, we doubled our revenue base for ACS, to £9.7 million (2022: £5.4
million). This growth highlights the strong emphasis we place on recruitment
of high-quality affiliates and our commitment to maintaining exceptional
quality standards.
Additionally, throughout the financial year we invested in our AMPs pipeline.
As previously noted, we identified, targeted, and invested in business
development and pipeline growth within the higher-education space and
successfully launched our Gear Shop solution. This investment proved powerful
and disruptive within the sector, and the Group successfully signed multiple
new significant contracts. All contracts are expected to begin generating
revenue for the Group in the first half of the financial year ending 31 March
2024 ("FY24").
Technology
The core of all our operations, across both the Services and Merchanting
segments of our business, is our technology platforms. Operating within an
agile and continuous improvement environment, we have consistently invested in
enhancing our systems. This ongoing commitment enables us to achieve greater
efficiency, leverage valuable data insights, and establish best-in-industry
integrations and systems. The result is a streamlined and optimised operation
that empowers us to deliver exceptional services to our clients.
As a testament to the power of our technology, in FY23, we continued to
attract a growing number of users, including notable partnerships like Fully
Promoted. Fully Promoted, a global franchise group, chose our order management
platform after conducting a comprehensive industry-wide review of over 20 tech
providers.
We are always focused on new technology and have begun to harness the power of
AI within the Group. Our core development teams continue to review how we as a
Group can maximize AI technology to drive automation and streamline efficiency
across all of our platforms and business divisions.
Credit Facility
We were also pleased to report in the financial year that the Group secured an
increase in its working capital credit facility (the "Facility") with TD Bank
N.A. to $1.7 million, previously $700k. The facility increase was secured
from continued successful delivery across all areas of the business. The
Facility has no significant financial covenants and will provide access to
non-dilutive funding to support the continued execution of the Group's growth
strategy. The Facility is currently undrawn.
The Management team continues to be focused on scalable growth in the new
financial year and accelerating future growth. We are focused on delivery and
committed to achieving our aspirations to build a $100 million business.
Market Opportunities
As noted previously, PPAI's market research estimates the current size of the
U.S. promotional products market in 2022, a healthy increase of more than 15%
over 2021. Their report further states that the market remains optimistic for
2023 with nearly 70% of the industry's distributors expecting even higher
sales in 2023, meaning we could continue to see the industry's momentum
continue to gain higher ground. The market remains highly fragmented with a
network of 23,000 distributors and the top 5 market-leading distributor
organisations representing a small segment of the market at c.$3 billion in
sales.
At present, the Group boasts a network of over 2,214 distributors in North
America, accounting for approximately 10% of the total distributor companies
in the industry. With a highly skilled management team and advanced technology
tailored to the industry, we offer comprehensive solutions to suppliers,
including pricing benefits, marketing support, finance assistance, and
administrative services. This strong foundation positions us optimally to
drive business growth through our service programs, namely AIM Membership, our
Preferred Partner program, and our merchanting program known as ACS Affiliate
Services.
Pairing ongoing industry expansion and the presence of an untapped addressable
market, along with our powerful software solutions and programs, we are
confident in the Group's continued significant promotional product market
opportunity.
Additionally, we are seeing incredible momentum within the Group across
identified adjacent markets opportunities. Our primary areas of focus are the
print industry with a reported market size of c$79 billion and the higher
education service provider sector with a stated $12 billion market size.
Currently we are actively and aggressively building our pipeline, closing
opportunities and disrupting the higher education adjacent market. Having
signed significant multi-year contracts in this financial year, we see this as
an important and significant growth area for the Group in the immediate term
and future.
Our People & Our Commitment
Our workforce and community form the backbone of our business. We remain
dedicated to fostering employee growth and cultivating a welcoming and
engaging culture that recognises the achievements and contributions of all
employees at every level of the organisation. Throughout the year, we
continued to prioritise internal promotions, enabling 12 individuals to
advance their careers and expand their skill sets.
Diversity, Equity & Inclusion
Our organisation fully embraces and upholds the values of diversity, equity,
and inclusion (DEI). These principles play a vital role in how we form our
teams, develop our leaders, and establish collaborative, innovative, and
inclusive environments within the Altitude Group and our wider industry. Our
inclusive culture fosters a range of perspectives, encourages open and honest
discussions, and empowers each individual within our team and the broader
communities we serve.
Community Engagement & Giving Back
At Altitude, our commitment to community engagement and giving back is core to
who we are and what we believe to be vital for the overall success and
well-being of society. We actively participated in a variety of
community-based initiatives in the financial year including launching a
JustGiving fundraiser with a corporate match for those impacted by the war in
Ukraine and the "adoption" of an animal rescue whose mission is to rescue,
rehabilitate and educate, as well as providing scholarship funds to students
within the campus communities we serve. We know this commitment fosters a
strong bond between our company and the communities we operate in, and also
increases loyalty and employee satisfaction. Our goal is to be a part of a
growing commitment to corporate responsibility that contributes to a more
inclusive resilient society that works towards the betterment of all.
Outlook
This financial year was one of great progress, strong trading and record
breaking results. We increased market share in our core markets and proved to
be a disruptive force in a new market. As a result, the Group has shown growth
across the business far exceeding our original expectations. This performance
is a testament to not only the incredible hard work of our dedicated staff and
management team but also a testament to the success of the strategy that was
put in place when I arrived and renewed with vigour in 2021. I am delighted
that we grew the existing business by 57.2% which in itself is no small feat,
but to do it on a global basis whilst establishing a new vertical is a great
achievement. We have a business that is robust, ambitious and is very well
positioned for scalable growth. We look forward to the future, both near term
and longer term, with great confidence.
Nichole Stella
Chief Executive
24 July 2023
Chief Operating Officer's Report
We continued to invest strategically in technology development and operational
efficiencies during the year. As a result, the Group ended FY23 with
significantly greater functionality and infrastructure to support both our
Merchanting and Services business segments. This period saw a particular focus
on leveraging technology to support increasing volumes and enhance operational
efficiency along with continuing advancements to our feature rich member and
affiliate Tech Suite solutions.
Product Innovation and Development
Our proprietary e-commerce and marketplace technology suite provides an
end-to-end SaaS solution that enables our users to source, showcase and fulfil
orders for branded items throughout the US and UK. Technological advancement
remains core to our strategy, and we made remarkable progress in developing
and launching new functionality to members and affiliates. Our talented
in-house research and development team introduced several advancements to the
AIM and ACS Tech Suite that address the evolving needs of our users. These
innovations have not only driven customer satisfaction but also contributed to
our revenue growth, by enabling more efficient platform usage by larger volume
affiliates and quicker onboarding of users.
Throughout this period seven planned technology releases were made available
to users which included over 25 substantial new user facing features
including: API company store order integrations expanding our customer reach;
enhancements to our in-built presentation tools to advance users sales
capabilities and optimised purchasing capabilities to increase user; and
internal order processing efficiencies.
Core to our systems is the accuracy and availability of data that is exchanged
between users and Preferred Partners. Access to live inventory, order and
shipping information from Preferred Partners allows users to process orders
efficiently and in a centralised location, while making communications more
efficient for Preferred Partners. The Group now have over 200 integrations
exchanging live data between Preferred Partners and Tech Suite users.
The Group has witnessed an increase in the depth of system usage with a 14.5%
growth over 2022 in users processing orders through the Tech Suite platform
and a 16% growth in volume of orders processed. There are currently 478
distributors utilising the Tech Suite for search and order creation.
Following the Group's introduction of adjacent market programmes in 2022, IT
and system environments including fixed and mobile point-of-sale
configurations with shared inventory-based ecommerce websites, were designed
to support the groups Merchanting revenues. There are currently 11
point-of-sale locations, 18 ecommerce solutions and complementary pop-up
ecommerce stores transactional with a robust operational plan to enable
further scaling.
Operational Excellence
We continued to enhance our operational efficiency and agility through various
initiatives. We have initiatives to implement artificial intelligence across
different departments, resulting in streamlined processes and greater ability
to scale more effectively. We have also implemented greater automation in
areas such as data conversion resulting in the capacity to migrate groups of
users at greater pace.
Cybersecurity and Data Protection
Safeguarding our systems, data, and customer information is of paramount
importance. We have implemented increased cybersecurity measures to protect
our digital infrastructure from evolving threats and increased the frequency
of employee training on cyber security and related topics. Furthermore, we
have reinforced our commitment to data protection, privacy compliance and
payment industry standards and rolled this out into our adjacent market
operations.
Looking Ahead
As we look ahead, we remain committed to providing best-in-class solutions to
our market by embracing customer feedback and emerging trends to support our
business strategies. We will continue to invest in research and development,
data intelligence and further exploring areas such as artificial intelligence
and automation to enhance user experiences and drive scalable growth through
operational efficiency.
Deborah Wilkinson
Chief operating Officer
24 July 2023
Chief Financial Officer's Report
Financial Results
Group revenues for the year increased by £6.9 million to £18.8 million
(2022: £11.9 million), an increase of 57% with an underlying growth of 41% at
constant currency.
FY23 is the year of 'lift off' for Altitude with 35% growth in Services and an
82% growth in Merchanting. Service growth is mainly driven from throughput
revenue, derived from membership activity through our VIP Supplier network,
surpassing the industry distributor average of 15.6% (as reported in PPAI
Research), which reflects our commitment to a high quality distributor
membership model. The Merchanting Division has grown from additions to our
Affiliate sales network, which is the main driver behind the 82% increase over
last year. Importantly, we have also grown our Adjacent Market Programmes
('AMPs') focusing on our Gear Shops within the Educational Sector. Altitude's
entrance into a complementary adjacent market provides growth opportunities as
well as diversification. As communicated we have secured a number of contracts
that will positively impact the results in future years.
Operational gearing is a key area of focus for us with the profitability
generated from our Services business model we have invested in the growth of
our Merchanting Division. With ACS delivering high levels of revenue growth
for lower margin, profitability is sensitive to overhead increases therefore
process efficiency and cost control is essential to maximise profit fall
through. Within our Gear Shops we assess returns on each contract to measure
the appropriate level of investment in a strong central team. The central Gear
Shop team will then be equipped to deliver further growth. To ensure
scalability in FY24 we are investing in systems and processes.
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Group Group Change % Change
Turnover
Services 8,523 6,308 2,215 35.1%
Merchanting 10,238 5,628 4,610 81.9%
Total 18,761 11,936 6,825 57.2%
Gross Profit
Services 7,718 5,750 1,968 34.2%
Merchanting 887 400 487 121.8%
Total 8,605 6,150 2,455 39.9%
Gross Profit Margin
Services 90.6% 91.2%
Merchanting 8.7% 7.1%
Total 45.9% 51.5%
Gross profit has increased by £2.5 million, a 40% increase, to £8.6 million
(2022: £6.2 million). This is mainly driven by an increase in the AIM
distributors purchasing through our Preferred Partner network, demonstrating
the value of our services to our Preferred Partners.
Gross margin was 45.9% (2022: 51.5%) reflecting the growth in lower margin
Merchanting activity, whilst Services retained a consistently high margin. The
relationship of the growth in AMPs and our ACS Affiliate model impacts our
Gross Profit margin. AMPs deliver a higher gross profit margin than the ACS
Affiliate model, which is a volume business. ACS won some larger one-off
orders this year, which is testament to our goal of enabling our Affiliates to
grow and deliver more activity and value.
Administration expenses before share-based payments, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges of
£6.6 million (2022: £5.1 million) are ahead of prior year by £1.5 million.
This increase has been driven by a prior year one-off US Government Employee
Retention Scheme Credit of £0.5 million, a £0.5 million foreign currency
translation, with the remaining increase of £0.5 million driven from a mix of
additional travel and marketing activities to drive pipeline and people costs.
Adjusted operating profit* increased by 83.4% to £2.0 million (2022: £1.1
million). The statutory profit before taxation was £0.4 million (2022: profit
of £0.1 million), whilst the adjusted profit*** before taxation increased by
£0.8 million to £0.9 million (2022: £0.1 million). Please see below for
constant currency analysis.
Exceptional costs
The Group incurred exceptional costs of £0.1 million (2022: £0.2 million)
relating to second-phase finance transformation costs, along with a provision
for the historic portion of a VAT reclaim and legal costs.
Development
The Group capitalised £0.9 million of software development (2022: £0.8
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 were 0.55p (2022: 0.14p), an increase of 293%.
Adjusted basic earnings per share** was 1.63p (2022: 0.48p), representing an
increase of 240%. The calculation for adjusted earning per share has been
updated to be consistent with external measures by adding back amortisation on
acquired intangibles whereas previously all depreciation and amortisation was
added back.
Taxation
The Group is carrying a deferred taxation asset of £458,000 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 although expect that this will reduce in light of
the UK Governments budget resulting in a profit and loss tax credit of
£193,000 (2022: £254,000).
Cash flow
Operating cash inflow before changes in working capital was £2.0 million
(2022: £1.1 million). Working capital represented an outflow of £0.4 million
(2022: £1.5 million) principally driven by an increase in inventory driven by
the early start of a significant Merchanting contract. Operating cash inflow
therefore increased by £1.8 million to £1.6 million (2022: outflow £0.2
million). Net cash outflow from investing activities of £1.1 million (2022:
£0.9 million outflow) is mainly represented by our development spend.
Financing activities included the repayment of finance agreements and interest
of £0.2 million (2022: £0.2 million). Total net cash inflow was £0.2
million (2022: £1.2 million outflow). The year-end cash balance stood at
£1.2 million (2022: £0.9 million) with no debt.
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 an increased credit facility (the "Facility") with TD
Bank N.A., to $1.7m (2022: $0.7 million). 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 and is senior to the
subordinated Intercreditor loans. The Facility will provide access to
non-dilutive funding to support the Group in executing its growth strategy.
The Facility has a small annual arrangement fee and incurs interest at 1%
above the US Prime Rate on drawdown. This Facility remains undrawn at the year
end.
Share capital
The number of shares increased by 166,666 to 70,847,830 (2022: 70,681,164).
All of the shares issued in the period were in respect of options exercised
by employees and are detailed in the full notes to the Annual Report.
The Company issued share options to senior management of 2,648,000 (2022:
444,444). During the year the number of share options exercised was 166,666
(2022: 213,896) with the number of share options forfeited being 1,211,110
(2022: 2,329,667). The total number of share options outstanding at the
year-end is 6,357,447 (2022: 4,299,445).
Key performance indicators
The Group's key performance indicators as discussed above are:
Year ended Year ended Impact of currency translation Underlying change Total Change
31 March 31 March
2023 2022
£'000 £'000 £'000 %
Revenue 18,761 11,936 1,988 4,837 41% 6,825
Gross profit 8,605 6,150 853 1,602 26% 2,455
Gross margin 46% 52%
Adjusted operating profit* 1,957 1,067 326 564 53% 890
Statutory profit/(loss) before tax 152 (157) 1 308 309
Adjusted profit before tax*** 915 84 26 805 958% 831
*Adjusted operating profit is 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 is calculated using profit after tax but
before share-based payment charges, amortisation of acquired intangible 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 to review the performance of the underlying business including the
depreciation for development costs.
Significant judgements and estimates
In preparing the financial statements the Directors have made judgements and
estimates in applying accounting policies. Details of the most significant
areas where judgements and estimates have been made are set out in note 1 to
the group financial statements.
Principal risks and uncertainties
The Group's financial and operational performance is subject to a number of
risks. The Board seeks to ensure that appropriate processes are put in place
to manage, monitor and mitigate these risks. The Board considers the principal
risks faced by the Group to be as follows at 31 March 2023:
· a significant deterioration in economic conditions, particularly in
USA affecting SME's, the principal target customers for the Group's technology
products
· significant delays and or cost overruns in developing and delivering
products to meet customer requirements in the targeted market sectors
· a risk of cyber attack that targets our systems causing downtime to
end user processing or point of sale
· predatory pricing or other actions by established competitors in our
market sectors
· the risk of bad debts arising from AIM Capital Solutions
· a significant, adverse movement in the short-term in the US $ exchange
rate compared with GBP
· the propensity of AIM distributor members to migrate orders to AIM
preferred suppliers
· the propensity of AIM distributor members to upgrade membership to
include enhanced marketing and sales support services
· deteriorating retention of the membership base of the acquired AIM
business
· a risk of under-reported revenue through incomplete visibility of
member transactions
In all cases the Group seeks to mitigate these risks wherever possible by
continuous marketing initiatives and promotions to stimulate market demand and
continuous development of enhanced member services and the promotion of AIM
Capital Solutions to high quality distributors with careful attention to
credit risk. In addition, we maintain close relationships with all customers
with service contracts based on transactional volume, and monitor progress
using data sampling and quarterly confirmation. We also manage development
projects closely and ensure that we continue to offer services that meet our
customer needs. The Group has also expanded its reach and diversified with
AMPs and extended into the Education sector.
Historically operations in the USA have been funded from the UK, exposing the
group to adverse short-term exchange rate movements. US operations are now
self-funding, mitigating the risk from short term exchange rate fluctuations.
The US now regularly remits funds back to the UK, generally on a monthly basis
at relatively low levels. Management have reviewed the requirement of a formal
hedging strategy however this will only be necessary if the funding levels
increase. In the meantime, spot rates have been utilised with an outsourced
foreign currency firm.
The Board are considering, with the onset of growth and potential utilisation
of the US credit facility in FY24, to undertake a review of the primary
economic environment that the Group is operating in and re-evaluating the
functional for the Group.
AIM is the largest distributor member organisation in the USA, with circa 9%
market share in a very fragmented market. We assess the risk of predatory
pricing from other established competitors to be low as they do not possess
the scale or geographic coverage necessary influence the market as a whole.
AIM members are incentivised to order from AIM preferred suppliers through the
provision of significant discounts.
Cyber Security processes and controls including reminders and training and
regularly provided to all staff to ensure they remain extra vigilant and
exercise extreme caution when using email and the internet.
Liquidity
The Group remains debt free with a cash balance of £1.2 million as at the
year end.
We have extended our finance facility by $1.0 million to $1.7 million with TD
Bank. The facility will support the growth in Merchanting specifically with
our AMPs new contract signings into the new year.
Graham Feltham
Chief Financial Officer
24 July 2023
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2023
Year to Year to
31 March 31 March
Notes 2023 2022
£'000 £'000
Revenue 2 18,761 11,936
Cost of sales (10,156) (5,786)
Gross profit: 8,605 6,150
Administrative expenses before share-based payment charges, depreciation, (6,648) (5,083)
amortisation, and exceptional charges
Operating profit before share-based payment charges, depreciation, 1,957 1,067
amortisation, and exceptional charges
Share-based payment (charges)/credits (511) 127
Depreciation and Amortisation (1,131) (1,044)
Exceptional charges 3 (101) (234)
Total administrative expenses (8,391) (6,234)
Operating profit/(loss) 214 (84)
Finance charges (62) (73)
Profit/(loss) before taxation 152 (157)
Taxation 238 254
Profit attributable to operations 390 97
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss:
• Foreign exchange differences 425 302
Total comprehensive income for the year 815 399
Earnings per ordinary share attributable to the equity shareholders of the
Company:
- Basic and diluted (pence) 4 0.55p 0.14p
Consolidated Statement of Changes in Equity
for the year ended 31 March 2023
Share Share Retained Foreign exchange translation Total
capital premium losses reserve equity
£'000 £'000 £'000 £'000 £'000
Group
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
Profit for the period - - 390 - 390
Foreign exchange differences - - - 425 425
Total comprehensive income - - 390 425 815
Transactions with owners recorded directly in equity
Share-based payment charge - - 511 - 511
Shares issued for cash - - - - -
Total transactions with owners - - 511 - 511
At 31 March 2023 283 20,194 (11,061) 15 9,431
Consolidated Balance Sheet
as at 31 March 2023
As at As at
31 March 31 March
2023 2022
£'000 £'000
Non-current assets
Goodwill 2,934 2,781
Intangible assets 2,652 2,477
Property, plant and equipment 202 139
Right of use assets 471 606
Deferred tax assets 458 436
Total non-current assets 6,717 6,439
Current assets
Inventory 361 29
Trade and other receivables 5,521 3,875
Corporation Tax Receivable 91 42
Cash and cash equivalents 1,173 902
Total current assets 7,146 4,848
Total assets 13,863 11,287
Liabilities
Current liabilities
Trade and other payables (3,699) (2,282)
(3,699) (2,282)
Net current assets 3,447 2,566
Non-current liabilities
Deferred tax liabilities (347) (364)
Lease liabilities (386) (536)
(733) (900)
Total liabilities (4,261) (3,182)
Net assets 9,431 8,105
Equity attributable to equity holders of the Company
Called up share capital 283 283
Share premium account 20,194 20,194
Retained losses and foreign exchange (11,046) (12,372)
Total equity 9,431 8,105
Consolidated Cash Flow Statement
for the year ended 31 March 2023
Year to Year to
31 March 31 March
2023 2022
£'000 £'000
Operating profit/(loss) 214 (84)
Amortisation of intangible assets 901 845
Depreciation 230 199
Share-based payment charges 511 (127)
Exceptional items 101 234
Operating cash flow before changes in working capital 1,957 1,067
Movement in inventory (339) (29)
Movement in trade and other receivables (1,532) (1,398)
Movement in trade and other payables 1,404 (101)
Changes in working capital (467) (1,528)
Net cash flow from operating activities before exceptional items 1,490 (461)
Exceptional items (84) (179)
Net cash flow from operating activities after exceptional items 1,406 (640)
Income tax received 144 413
Net cash flow from operating activities 1,550 (227)
Cash flows from investing activities
Purchase of tangible assets (119) (64)
Purchase of intangible assets (986) (788)
Net cash flow from investing activities (1,105) (852)
Cash flows from financing activities
Repayment of lease borrowings (163) (135)
Lease interest paid (47) (52)
Other interest paid (15) (21)
Issue of shares for cash (net of expenses) - 44
Net cash flow from financing activities (225) (164)
Net increase/(decrease) in cash and cash equivalents 220 (1,243)
Cash and cash equivalents at the beginning of the period 902 2,095
Effect of foreign exchange rate changes on cash and cash equivalents 51 50
Net (decrease)/increase in cash and cash equivalents 220 (1,243)
Cash and cash equivalents at the end of the period 1,173 902
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 2023
and does not constitute statutory accounts within the meaning of section 434
of the Companies Act 2006.
The Group Financial Statements for 2022 were delivered to the registrar of
companies, and those for 2023 will be delivered in due course. The auditor's
report on the Group Financial Statements for 2022 and 2023 were both
unqualified and unmodified. The auditors' report was signed on 24 July 2023.
The Group Financial Statements and this preliminary announcement were approved
by the Board of Directors on 24 July 2023
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) ) in due course.
Basis of preparation
The group financial statements have been prepared in accordance with UK
adopted International Accounting Standards. The Company financial statements
have been prepared under FRS 101.
Both financial statements have been prepared on the historical cost basis,
with the exception of certain items which are measured at fair value as
disclosed in the principal accounting policies set out below. The financial
information is presented in Sterling and has been rounded to the nearest
thousand (£000).
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 of information. 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.
The Group has consistently applied the accounting policies to all periods
presented in these consolidated financial statements.
New standards impacting the Group that have not been adopted in the annual
financial statements for the year ended 31 March 2023 are:
· Classification of Liabilities as Current or Non-current (Amendments to
IAS 1)
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
· Definition of Accounting Estimate (Amendments to IAS 8)
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
· Non-Current Liabilities with Covenants (Amendments to IAS 1)
Management anticipates that these new standards, interpretations and
amendments will be adopted in the financial statements as and when they are
applicable and adoption of these new standards, interpretations and
amendments, will be reviewed for their impact on the financial statements
prior to their initial application.
The following principal accounting policies have been applied consistently to
all periods presented in these Group financial statements:
Going concern
The financial statements have been prepared on a going concern basis.
The Group is following a strong growth trajectory despite the macro-economic
conditions of high inflation and growing interest rates amidst fears of
recession. The prolonged war in Ukraine and corrections in the Banking
industry has created instability and a slowing down in the global economic
recovery. The Promo Industry has continued to grow but at far lower growth
rates experienced last year as the Industry came out of the pandemic. With
single digit growth reported by the industry bodies in the quarter ending
March 2023 there is a degree of caution with some level of churn in
distributers expected along with a potential reluctance to change network or
affiliation. The Group continues to maintain strong relationships within the
AIM network and additionally has entered into strategic partnerships and added
diversifying revenues from the AMPs whilst constantly monitoring growth spend
and cash forecasts.
The Board is confident that the Group has sufficient liquidity to manage the
growth of the company and can flex on overhead spend should any part of the
business underperform against our expectations. The financial statements have
therefore been prepared on a going concern basis. The directors have taken
steps to ensure that they believe the going concern basis of preparation
remains appropriate. The key conditions are summarised below:
· The Directors have prepared cash flow forecasts extending to September
2024. The cash flow forecasts include a mid scenario and sensitised cases.
· The low scenario assumes reductions in revenue of c12% compared to the
mid-scenario.
· The forecasts assume regular collections and payments in line with the
normalised conditions experienced with detailed modelling of growth cash
outflows included.
· The base and sensitised 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 programmes in respect of headcount and
organisation
· securing new working capital facilities in respect of any growth of
Merchanting 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 impact on the business if they were to crystallise.
Based on the above indications 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.
Contract costs
Costs to fulfil a contract are capitalised, amortised and assessed for
impairment if they meet the required criteria. If the costs do not meet the
criteria they are expensed as incurred.
Costs to fulfil a contract are recognised as an asset only if they:
· Relate directly to a contract, or to an anticipated contract that can
be specifically identified
· Generate or enhance resources to be used to satisfy performance
obligations in future, and
· Are expected to be recovered.
The policy applies to contracts that are greater than one year in length.
The asset is amortised over the life of the contract once the contract is
live.
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 2023, the Group has two operating
segments, North America, and the United Kingdom & Europe along with a
Central segment. The Group further analyses 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 2023 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
2023 2023 2023 2023
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Turnover
Services 7,155 1,368 - 8,523
Merchanting 10,238 - - 10,238
Total 17,393 1,368 - 18,761
Cost of Sales
Services (582) (223) - (805)
Merchanting (9,351) - - (9,351)
Total (9,933) (223) - (10,156)
Gross Profit
Services 6,573 1,145 - 7,718
Merchanting 887 - - 887
Total 7,460 1,145 - 8,605
Operating Profit/(Loss) before share-based payment charges, depreciation, 3,426 170 (1,639) 1,957
amortisation, and exceptional charges
Share-based payment charges - - (511) (511)
Depreciation (171) (59) - (230)
Amortisation (168) (733) - (901)
Management fees (2,397) 778 1,619 -
Exceptional charges (65) (14) (22) (101)
Finance charges (41) (21) - (62)
Segmental profit before income tax 584 121 (553) 152
Assets* 11,187 2,368 308 13,863
Liabilities* (3,475) (462) (495) (4,432)
Net Assets 7,712 1,906 (187) 9,431
*external balances disclosed for segmental purposes
Capital expenditure
Intangible assets (99) (887) - (986)
Property, plant and equipment (91) (26) (2) (119)
Right of use assets - - - -
Capital Expenditure (190) (913) (2) (1,105)
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2023 2023 2023 2023
£'000 £'000 £'000 £'000
North America UK and Europe Central Group
Timing of Revenue Recognition
At a point in time 11,216 186 - 11,402
Over time 6,177 1,182 - 7,359
Total Revenue 17,393 1,368 - 18,761
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, 2,034 286 (1,253) 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 109 89 (355) (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
A central cost of £411,000 was previously reported as a cost allocated to
North America for FY22 and has been restated to a central cost in the table
above within Operating Profit/(Loss) before share-based payment charges,
depreciation, amortisation, and exceptional charges. Central costs were
previously reported at a loss of £842,000 and North America was a profit of
£1,623,000.
3. Exceptional charges
Analysis of exceptional items:
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Legal, professional and consultancy costs 84 168
Other exceptional costs 17 66
101 234
Exceptional charges principally relate to the second-phase of finance
transformation costs, along with a provision for the historic portion of a VAT
reclaim. (2022: relates 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). Other
exceptional costs principally relates to a reversal of a historic tax
prepayment (2022: relates 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
2023 2022
Profit attributable to the equity shareholders of the Company (£000) 390 97
Weighted average number of shares (number '000) 70,813 70,657
Fully diluted weighted average number of shares (number '000) 71,198 70,957
Basic and diluted profit per ordinary share (pence) 0.55p 0.14p
Adjusted profit per ordinary share (pence)
Profit attributable to the equity shareholders of the Company (£000) 390 97
add back:
Share based payments 511 (127)
Amortisation on acquired intangibles* 151 134
Exceptional charges 100 234
Adjusted earnings 1,152 338
Adjusted basic and diluted earnings per ordinary share (pence) 1.63p 0.48p
*To be consistent with external metrics and the updated Group's key
performance indicators adjusted earnings has been amended to only adjust for
amortisation on acquired intangibles and not for depreciation and other
amortisation as reported in previous years.
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. We determine potentially dilutive shares as
any share which is exercisable on publishing of the Annual Report.
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