REG - Altitude Group PLC - Interim Results
30/11/2021 07:00
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RNS Number : 9578T Altitude Group PLC 30 November 2021
30 November 2021
Altitude Group plc
("Altitude", the "Company" or the "Group")
Altitude Group sees continuing recovery and growth
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Altitude Group plc (AIM: ALT), the operator of a leading marketplace for the
global promotional products industry, is pleased to announce its unaudited
interim results for the six months to 30 September 2021.
Financial Highlights
· Group revenues increased by £1.5m to £5.9m, a 33% increase, in
the half year period (H1 2020: £4.4m)
· Acceleration of core strategic AIM Capital Solutions ("ACS")
merchanting revenues of £3.0m in H1 2021 replaces one-off sales of Protective
Personal Equipment of £2.0m H1 2020
· Gross profit increased 12% to £2.8m (H1 2020 £2.5m) with
increased trading activity
· Administrative costs held steady £2.3m (H1 2020 £2.2m)
· Adjusted operating profit* before central plc costs increased 57%
to £1.2m (H1 2020: £0.7m) comprising:
• increase of 58% in the US to £1.0m (H1 2020: £0.7m)
• increase of 47% in the UK to £0.1m (H1 2020: £0.1m)
· Group adjusted operating profit* increased by 86% to £0.5m (H1
2020: £0.3m)
· Statutory loss before taxation reduced by 31% to £0.4m (H1 2020:
loss £0.6m)
· Cash inflow from operating activities was £0.7m (H1 2020:
£0.1m)
· Working capital investment of £1.7m driven by growth in trading
activity and recovery
· The Group currently remains debt free
· Short term facility secured with a permanent credit line expected
to be in place in the new year
· The Group continues to trade positively, with current business
performance remaining in line with the Board's expectations
*Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Key corporate developments and operational highlights
· Accelerating recovery evidenced by strong growth across all
revenue streams in both recurring & repeating services and merchanting
activity:
o US services revenue grew by 34% to £2.2m (H1 2020: £1.7m)
o US merchanting revenue grew by 41% to £3.1m (H1 2020: £2.2m)
· The Group now has 318 members of the AIM global Preferred Partner
network (H1 2020: 228), 187 US Preferred Partners (H1 2020: 175), 131 UK
Preferred Partners (H1 2020: 53)
· Preferred partner service fees increased by 79.8% on H1 2020 and
11.2% on H1 2019
· AIM global membership increasing to 2,405 members (H1 2020:
2,200)
· Global AIM Technology platform adoption increased 20% to 431 (H1
2020: 359) for search and orders
· The Group is continuing to accelerate its ACS offering and
continues to develop programmes that will accelerate the growth of merchanting
revenue
Nichole Stella, Group CEO of Altitude, said:
"Throughout H1 2021, the industry has experienced initial recovery from the
impact of the pandemic. Though caution across the industry still remains, our
team continues to be focused on executing our strategic growth plan including
developing and supporting our community, technology, services, and pipeline
development, thus successfully increasing both Services and Merchanting
revenue. The Board is pleased to report that the Group continues to trade
positively, and current business performance is in line with the Board's
expectations. With ongoing investment in growth, strong focus on core business
development and sustained recovery the Board is optimistic and expects
continued profitability in the full year."
Enquiries:
Altitude Group plc Via Zeus Capital
Nichole Stella, Chief Executive Officer
Graham Feltham, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser & Broker) Tel: 0203 829 5000
Dan Bate / David Foreman / James Edis (Corporate Finance)
Dominic King (Corporate Broking)
Chief Executive's statement
Interim results for the 6 months ended 30 September 2021
Throughout this period, the management team remained focused on both recovery
and our long-term strategic growth plans. We continued to invest in the
development of our technology and software applications to drive ease of use
and greater efficiencies for members, affiliates and preferred partners, as
well as investing in our people and strategic growth areas of the business.
Despite supply chain disruption, the Group traded positively throughout the
period.
AIM membership has increased to 2,405 (H1 2020: 2,200) with average US
distributor revenue of c.$1.1 million pa and aggregate member revenue rising
to c.$2.6 billion per self-certification (pre-COVID-19). Our continuous
development of our order management platform, e-commerce and popup shops, and
marketing programmes have initiated recovery and growth in our Service
programmes. These combined efforts have helped us to grow our US service
revenues by 34% in the period to £2.2m (HY1 2020: £1.7m) and overall service
revenues by 26% to £2.8m (H1 2020: £2.2m).
The nature of our service revenues is very sticky whether derived from our AIM
members or our stable of contracted Preferred Partners. Approximately 98% of
our services revenues are either annual recurring fixed revenues or repeating
ad valorem marketing revenues based on AIM members transactional volume with
contracted Preferred Partners.
We continue to enjoy strong relationships with our key partners and have
retained 100% of them throughout the period. Trading has recovered well with
Preferred Partner service fees increasing by 79.8% on H1 2020 and 11.2% on H1
2019.
Additionally, our Merchanting programmes, which includes ACS acting as
principal in the underlying transaction and therefore all gross transactional
revenue ("GTR") is recognised as Group revenue, grew by 41% in the half year
to £3.1m (H1 2020: £2.2m). Whilst the business is lower in margin at 7.2% it
is high volume and has potential for significant growth. It is worth noting
that H1 2020 included £1.9m of PPE merchanting generated in a direct and
opportunistic response to the pandemic and which yielded a gross margin of
circa 16%. These products have now become over-supplied in the market and
therefore the business has not been repeated in 2021.
Our continued focus on execution resulted in an overall Group revenue increase
of £1.5 million to £5.9 million (H1 2020: £4.4m). As a result, the Group
adjusted operating profit* increased 86% to £0.5m (H1 2020: £0.3m) and
adjusted operating profit* before central Plc costs increased 57% to £1.2m
(H1 2020: £0.7m).
The Group remained debt-free, with the exception of leases held under IFRS 16.
The Group is also pleased to report it has secured a short term facility ahead
of a permanent credit line to support continued growth for ACS currently
anticipated to be in place in the new year.
The Group continues to be cautious in its approach to all discretionary spend
and is carefully managing cash whilst adapting programmes and services to meet
the changing needs of the industry.
*Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
AIM Smarter Progress and Trading
AIM Smarter US & UK support the development and growth of small to
mid-size global promotional products businesses through the delivery of supply
chain management, efficiency through technology platforms, and marketing
services. AIM continues to drive awareness and grow sales for both our
Preferred Partners and for our AIM members to their clients. Through these
services to our members and Preferred Partners, we are creating an
interconnected growth-oriented marketplace that benefits all participants and
delivers growth for the Group.
Routes to Revenue:
Services Revenue (Annual recurring and repeating revenues):
· Continued growth in the AIM membership of high-quality
promotional product distributors
· Continued development of our Preferred Partner network and
increasing their sales through the network
· Continued Sales of Enhanced Packages to assist AIM members and
affiliates grow their business to end-user clients
· Continued growth in member utilisation of the AIM Tech Suite to
drive efficiencies, transactional visibility and growth across the AIM network
Merchanting Revenue:
· Promoting and growing ACS, which completes the Groups current
portfolio of services to its AIM members
· Continued development of our Group buys & Adjacent Markets
Programmes
US Business
The US business delivered £5.3m of revenue in the period. AIM US membership
is stable with 2,070 members, up from 1917 at the time of acquisition and
poised for growth as US industry recovery accelerates. Our Preferred Partner
network has grown to 187 partners (H1 2020: 175).
The US has seen acceleration of its newly launched ACS Program despite the
one-off PPE merchanting sales generated in 2020. ACS requires mandatory use of
the full AIM Tech suite and offers technology driven back-office support,
procurement, and supply chain finance. ACS is recognised as "Principal" in the
underlying transactions generated by affiliate members. Accordingly, we
recognise the revenue and gross margin of the full transaction, including the
commission paid to ACS affiliates as a cost of sale. We anticipate significant
further uptake of the programme by new and existing AIM members.
During the period, we continued to invest in our people and technology to
deliver on our future growth plans and advance the business further as
recovery accelerates.
UK Business
The UK business also experienced recovery, albeit not as pronounced as the US
markets, delivering revenue of £0.6m in the period, an increase of 3% (H1
2020 £0.6m).
AIM UK Membership continues to grow since the launch of the AIM Membership
package in May 2020. Currently, there are 335 UK Members, an increase of 129%
from the 146 Members in September 2020. In addition, the UK continues to
provide and support the Group's proprietary enterprise-level software
solutions to mid-sized UK and US based distributors and suppliers.
Technology
The Group continues to research and actively develop technological
advancements within the AIM Tech Suite for both AIM and ACS Members.
Following the successful implementation of the Group's agile development
processes and strengthening of the structure of the core technology
development team within a new centralised location in the UK, a series of
major technology releases have taken place to advance the efficiencies and
promote the growth of ACS Members and group processes.
Key integrations with global leading accounting platforms and shipping agents
were also launched to strengthen the end-to-end nature of the Tech Suite,
along with promotional product industry specific integrations allowing the
easy passage of product and order data between Members and Partner Suppliers
to widen the connectivity of the platform.
The continued technological advancements and user desire for connected
solutions is reflected in the ongoing growth of Member Tech Suite adoption
with usage continuing to grow, having increased 20% within the past 12 months
from 359 to 431 distributors adopting the AIM Tech Suite for search and order
creation. Our e-commerce platforms continue to be attractive in the current
environment with 2,594 live pop-up stores and websites.
Board Changes
There were a number of board changes in the period. Keith Edelman stepped
down from his role as Non-Executive Chairman on 26 November 2021. The Board
thanks Keith for his valuable contribution to the Group during his term,
especially throughout the global COVID-19 pandemic, and wish him well in his
future endeavours.
In November, the Board was pleased to welcome David Smith, he has stepped into
the role of Non-Executive Chairman as of 26 November 2021. David's extensive
experience in industries that have evolved through technology advancements and
industry shifting buying behaviours will be invaluable to the Group as it
continues to grow.
Additionally, on 5 October 2021, the board welcomed Graham Feltham to the
board as Chief Financial Officer, replacing Graeme Couturier. Graham Feltham
is an experienced public company CFO and brings a wealth of knowledge to the
finance team. His expertise will be instrumental in delivering accelerated
growth in the future.
Financial Results
Group revenue for the period increased by £1.5m to £5.9m (H1 2020: £1.1m),
an increase of 33%.
The recognition of ACS revenue, with ACS being the principal in the
transaction, along with the recovery in the membership network related
revenues, has driven our top line growth.
When compared with last year, this growth was countered by the non-recurring
AIM Smarter merchanting revenues of £1.9m which related to the direct
sourcing of Personal Protective Equipment (PPE) in response to COVID-19
demand. However, our ACS merchanting revenue, inclusive of Group Buys and
adjacent market merchanting activities were successful and more than
compensated for the non-repeating PPE revenue in the first half of the year.
Gross profit increased by £0.3m, or 12.1%, to £2.8m (H1 2020: £2.5m), with
gross margin decreasing to 48% (H1 2020: 57%) reflecting lower margins on ACS
merchanting compared to the non-repeating PPE margin.
Administration expenses before share-based payments, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
slightly increased with prior year at £2.3m (H1 2020: £2.2m).
Adjusted operating profit* increased by 86% to £0.5m (H1 2020: £0.3m) and
the loss before taxation fell by 31.1% to £0.4m (H1 2020: loss £0.6m).
Statutory operating loss was £0.4m (H1 2020: loss £0.6m), with basic and
diluted loss per share falling by 51.2% to 0.42p (H1 2020: loss 0.86p).
Operating cash inflow from continuing operations (before changes in working
capital) was £0.7m (H1 2020: £0.1m).
Operating cash outflow of £1.7m (H1 2020: £0.4m) was driven by £0.9m
increased trading activity generated by market recovery and growth in ACS
revenue with one off recovery outflows of £0.3m relating to the partial
repayment of the UK HMRC 'time to pay' initiative and the deferred receivable
of £0.5m from the US employee retention scheme to be set-off against future
payroll taxes.
Net cash outflow from investing activities was £0.4m (H1 2020: £0.3m
outflow), primarily comprising capitalised software development costs.
Net cash outflows from financing activities of £0.1m were mainly comprised of
lease repayments and interest. The prior period activities of £0.6m reflects
repayment of finance agreements and interest of £0.5m, lease repayments of
£0.1m and the issue of shares for cash (net of expenses) of £0.1m in respect
of options exercised during the period.
Total net cash outflow was £1.3m (H1 2020: £1.1m outflow).
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Outlook
Throughout H1 2021, the industry has experienced initial recovery from the
impact of the pandemic. Though caution across the industry still remains, our
team continues to be focused on executing our strategic growth plan including
developing and supporting our community, technology, services, and pipeline
development, thus successfully increasing both Services and Merchanting
revenue. The Board is pleased to report that the Group continues to trade
positively, and current business performance is in line with the Board's
expectations. With ongoing investment in growth, strong focus on core business
development and sustained recovery the Board is optimistic and expects
continued profitability in the full year.
Nichole Stella
Chief Executive Officer
30 November 2021
Consolidated income statement for the six months ended 30 September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
Note 30 Sep 2021 31 Mar 2021 30 Sep 2020
£'000 £'000 £'000
Revenue - Continuing Operations 3 5,928 7,707 4,443
Cost of sales (3,102) (2,131) (1,922)
Gross profit 2,826 5,576 2,521
Administrative expenses before share based payment charges, depreciation (2,319) (5,015) (2,248)
amortisation and exceptional expenses
Operating profit before share based payment charges, depreciation, 507 561 273
amortisation and exceptional charges
Share based payment charges (360) (544) (274)
Depreciation and amortisation (518) (1,228) (533)
Exceptional charges - (39) (24)
Total administrative expenses (3,197) (6,826) (3,079)
Operating loss (371) (1,250) (558)
Finance expenses (43) (73) (43)
Loss before taxation (414) (1,323) (601)
Taxation 114 230 -
Loss attributable to continuing operations (300) (1,093) (601)
Loss on discontinued operation - (133) (117)
Loss attributable to the equity shareholders of the Company (300) (1,226) (718)
Loss per ordinary share attributable to the equity shareholders of the Company
:
- Basic and diluted (pence) - Continuing operations 4 (0.42p) (1.56p) (0.86p)
- Basic and diluted (pence) - Discontinued operations 4 - (0.19p) (0.17p)
Consolidated statement of changes in equity for the six months ended 30
September 2021
Share Capital Share Premium Retained Earnings Foreign Exchange Translation Reserve Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2020 277 20,080 (11,250) (21) 9,086
Loss for the period attributable to equity shareholders - - (718) - (718)
Foreign exchange differences - - - (249) (249)
Total comprehensive loss - - (718) (249) (967)
Transactions with owners recorded directly in equity:
Shares issued for cash 3 73 - - 76
Share based payment charges - - 274 - 274
Total transactions with owners 3 73 274 - 350
At 30 September 2020 280 20,153 (11,694) (270) 8,469
Loss for the period attributable to equity shareholders - - (508) - (508)
Foreign exchange differences - - - (442) (442)
Total comprehensive income - - (508) (442) (950)
Transactions with owners recorded directly in equity:
Shares issued for cash 2 (2) - - -
Share based payment charges - - 270 - 270
Total transactions with owners 2 (2) 270 - 270
At 31 March 2021 282 20,151 (11,932) (712) 7,789
Loss for the period attributable to equity shareholders - - (300) - (300)
Foreign exchange differences - - - 219 219
Total comprehensive income - - (300) 219 (81)
Transactions with owners recorded directly in equity:
Shares issued for cash 1 43 - - 44
Share based payment charges - - 360 - 360
Total transactions with owners 1 43 360 - 404
At 30 September 2021 283 20,194 (11,872) (493) 8,112
Consolidated balance sheet as at 30 September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2021 31 Mar 2021 30 Sep 2020
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 91 115 172
Right of use assets 738 736 818
Intangibles 2,431 2,462 2,650
Goodwill 2,668 2,668 3,017
Deferred tax 428 419 442
Total non-current assets 6,356 6,400 7,099
Current assets
Inventory 18 - -
Trade and other receivables 3,790 2,378 3,020
Corporation tax receivable 154 220 36
Cash and cash equivalents 754 2,095 1,215
Total current assets 4,716 4,693 4,271
Total assets 11,072 11,093 11,370
LIABILITIES
Non-current liabilities (976) (1,047) (1,251)
Total non-current liabilities (976) (1,047) (1,251)
Current liabilities
Trade and other payables (1,984) (2,257) (1,650)
Total current liabilities (1,984) (2,257) (1,650)
Total liabilities (2,960) (3,304) (2,901)
Net assets 8,112 7,789 8,469
EQUITY
Called up share capital 283 282 280
Share premium 20,194 20,151 20,153
Retained earnings (12,365) (12,644) (11,964)
Total equity attributable to equity holders of the parent 8,112 7,789 8,469
Consolidated cash flow statement for the six months ended 30 September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2021 31 Mar 2021 30 Sep 2020
£'000 £'000 £'000
Operating activities
Loss for the period - Continuing operations (300) (1,093) (601)
Loss for the period - Discontinued operations - (133) (117)
Amortisation of intangible assets 421 1,032 432
Depreciation 97 196 101
Interest paid 43 73 43
Taxation (114) (230) -
Exchange differences 151 (313) (37)
Share based payment charges 360 544 274
Operating cash (outflow)/inflow before changes in working capital 658 76 95
Movement in Inventory (18) - -
Movement in trade and other receivables (1,425) 710 18
Movement in trade and other payables (226) (707) (337)
Operating cash outflow (1,669) 3 (319)
Tax received 182 11 -
Net cash used in continuing operations (829) 90 (224)
Cash flows from investing activities
Proceeds on disposal of trade and assets - 300 -
Purchase of tangible assets (66) 21 (7)
Purchase of intangible assets (352) (659) (326)
Net cash used in investing activities (418) (338) (333)
Cash flows from financing activities
Repayment of borrowings (95) (73) (491)
Interest paid (43) (10) (163)
Issue of shares for cash (net of expenses) 44 76 76
Net cash from financing activities (94) (7) (578)
Net increase/(decrease) in cash and cash equivalents (1,341) (255) (1,135)
Cash and cash equivalents at the beginning of the period 2,095 2,350 2,350
Cash and cash equivalents at the end of the period 754 2,095 1,215
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30
September 2021 has been prepared in accordance with the AIM rules and applying
the accounting policies and presentation that were applied in the preparation
of the Group's published consolidated financial statements for the period
ended 31 March 2021. The Group's accounting policies are based on the
recognition and measurement principles of UK-adopted international accounting
standards. The financial information is presented in Sterling and has been
rounded to the nearest thousand (£000).
The consolidated half yearly report was approved by the Board of directors on
30 November 2021.
The financial information contained in the interim report has not been
reviewed or audited, and does not constitute statutory accounts for the
purpose of Section 434 of the Companies Act 2006, and does not include all of
the information or disclosures required and should therefore be read in
conjunction with the Group's 2020/21 consolidated financial statements, which
have been prepared in accordance with UK-adopted international accounting
standards. The financial information relating to the period ended 31 March
2021 is an extract from the latest published financial statements on which the
auditor gave an unmodified report that did not contain statements under
Section 498 (2) or (3) of the Companies Act 2006 and which have been filed
with the Registrar of Companies.
2. Accounting policies
The condensed, consolidated financial statements in this half-yearly financial
report for the six months ended 30 September 2021 have been prepared in
accordance with the AIM Rules for Companies and on a basis consistent with the
accounting policies and methods of computation consistent with those set out
in the Annual Report and financial statements for the period ended 31 March
2021, except as described below. The Group has chosen not to adopt IAS 34
'Interim Financial Statements' in preparing these interim financial statements
and therefore the Interim financial information is not in full compliance with
International Financial Reporting Standards.
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. The financial statements have been prepared
on a going concern basis. The Group's business activities, together with the
factors likely to affect its future development, performance and position are
set out in the strategic report and Chairman's statement in the Annual Report
and financial statements for the period ended 31 March 2021.
The Financial Reporting Council issued "Going Concern and Liquidity Risk:
Guidance for Directors of UK Companies" in 2009, and "Guidance on the Going
Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks" in
2016. The Directors have considered these when preparing the interim financial
statements.
The current economic conditions caused by the COVID-19 pandemic have created
uncertainty particularly over the level of demand for the Group's products and
services and over the availability of finance which the directors are mindful
of. The Board is confident that the Group has sufficient liquidity to trade
through to more normalised trading conditions. The interim 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
December 2022. These show that the Group has sufficient funds available to
meet its trading requirements.
· The Group's year to date financial performance has been factored
into the cash flow forecasts.
· The Group does not currently have external bank borrowings, or
any covenants based on financial performance. The Group is in the process of
finalising a permanent credit line for growing the ACS business and has
secured the offer of a temporary short-term facility in advance of this should
it be required.
· The Directors have considered the position of the individual
trading companies in the Group to ensure that these companies are also in a
position 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 interim financial statements on a going
concern basis. However, the impact of COVID-19 could still possibly result in
revenue and resulting cash inflows that are less and later than modelled
potentially creating a need to secure additional funding. The Directors
consider that such a severe, yet plausible scenario indicates the existence of
a material uncertainty which may cast significant doubt on the Group and
company's ability to continue as a going concern. Notwithstanding that these
factors represent a material uncertainty that may cast significant doubt about
the Group's ability to continue as a going concern, the Board has a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. For these reasons, they continue to
adopt the going concern basis in preparing the Annual Report and Accounts. The
interim financial statements do not include any adjustments that would result
from the basis of preparation being inappropriate.
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:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. 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.
An element of preferred partner revenue is treated as variable consideration
under IFRS 15 due to uncertainty over timing and value. 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 goods and includes revenues generated through ACS affiliated members
and other merchanting activities.
By far the most significant operation that carries out merchanting is within
ACS. Under the terms of the ACS contract the AIM member affiliates act as
independent sales representatives of ACS to secure sales with customers. All
transactions are mandatorily processed through the AIM technology platform and
utilise ACS people and know-how to efficiently operate the back office
function. ACS bears the risk of the transaction as Principal, determining the
transaction price, performing credit control and processing payments. The GTR
of the full transaction is therefore recognised as revenue, with the related
costs of goods supplied, freight and AIM affiliates selling commission
recognised as the cost of goods sold.
During the COVID-19 pandemic the Group established a Group Buy scheme whereby
it sourced 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.
3. Segmental Performance
The chief operating decision maker has been identified as the Board of
Directors and the segmental analysis is presented in the Group's internal
reporting to the Board. At 30 September 2021, the Group has two operating
segments, North America, and the United Kingdom.
To demonstrate the evolving nature of the Group's operations an additional
analysis presenting 'Service' and 'Merchanting' is shown. Service revenues are
derived from servicing our AIM membership base and generating throughput with
our contracted Preferred Partners. Merchanting revenues are when the Group
acts as principal in the underlying transaction and therefore all GTR is
recognised as Group merchanting revenue.
Unaudited 6 months to 30 Sep 2021
Group North America United Kingdom and Europe Central
£'000 £'000 £'000 £'000
Turnover
Services 2,821 2,224 597 -
Merchanting 3,107 3,107 - -
5,928 5,331 597 -
Cost of Sales (3,102) (3,071) (32) -
Gross Profit 2,826 2,260 566 -
Administrative expenses* (1,661) (1,224) (436) -
Operating profit before central costs* 1,165 1,036 129 -
Central costs (658) - - (658)
Operating profit* 507 1,036 129 (658)
Gross Margin Services 92% 92% 95%
Gross Margin Merchanting 7% 7%
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Unaudited 6 months to 30 Sep 2020
Group North America United Kingdom and Europe Central
£'000 £'000 £'000 £'000
Turnover
Services 2,234 1,655 579 -
Merchanting 2,209 2,209 - -
4,443 3,864 579 -
Cost of Sales (1,922) (1,883) (39) -
Gross Profit 2,521 1,981 540 -
Administrative expenses* (1,779) (1,327) (452) -
Operating profit before central costs* 743 655 88 -
Central costs (469) - - (469)
Operating profit* 273 655 88 (469)
Gross Margin Services 90% 89% 93%
Gross Margin Merchanting 23% 23% -
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
4. Basic and diluted earnings per share
The calculation of earnings per ordinary share is based on the profit or loss
for the period divided by the weighted average number of equity voting shares
in issue.
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2021 31 Mar 2021 30 Sep 2020
£'000 £'000 £'000
Continuing operations - Loss for the period (300) (1,093) (601)
Discontinued operations - Loss for the period - (133) (117)
Weighted average number of shares (number '000) 70,633 69,897 69,637
Fully diluted weighted average number of shares (number '000) 72,883 69,948 71,811
- Basic and diluted (pence) - Continuing operations (0.42) (1.56) (0.86)
- Basic and diluted (pence) - Discontinued operations - (0.19) (0.17)
Share options that could potentially dilute basic earnings per share in the
future were not included in the calculation of diluted earnings per share
because they are antidilutive for the six months ended 30 September 2021.
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