REG - Altitude Group PLC - Interim Results
29/11/2022 07:00
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RNS Number : 8457H Altitude Group PLC 29 November 2022
29 November 2022
Altitude Group plc
("Altitude", the "Company" or the "Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
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 2022 ("HY23").
As reported on 22 November 2022, the Group delivered on its strategy
experiencing continued robust trading via expansion of its Services and
Merchanting programmes and, as a result of the strong underlying business
performance, the Board announced that the Group in on track to achieve record
year-end results.
Financial Highlights
· Group revenues increased by 29.3% to £7.7
million (HY22: £5.9 million)
· Services revenue grew by 36.5% reflecting the strong performance
of our AIM network
· Merchanting revenue grew by 22.8% reflective of new signings and
onboarding of high-quality affiliates
· Gross profit increased 39.5% to £3.9 million (HY22: £2.8
million)
· Gross margin of 51.4% (HY22: 47.7%) is reflective of blended
revenues across the Group's programmes
· Group adjusted operating profit* increased in HY23 by 50.5%
to £0.76 million (HY22: £0.51 million)
o At constant currencies the group delivered growth of 26.2%
o HY23 profitability growth achieved without the benefit of the HY22 £0.50
million of US Government Employee Retention Credit
o Adjusted operating profit* before central costs increased 28.9% to £1.50
million (HY22: £1.17 million)
· Adjusted basic earnings per share** increased by 145% to 0.44
pence (HY22: 0.18 pence)
· Net operating cash flow before exceptional items increased by
£1.60 million to £0.44 million inflow (HY22: outflow of £1.16 million)
· The Group's balance sheet remains strong and working capital
movements are within seasonal expectations
· Group credit facility of $0.7 million (HY22: $nil) remains
undrawn with a cash position of £0.81 million (HY22: £0.75 million)
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
** Adjusted basic earnings per share from continuing operations is calculated
using profit after tax but before share-based payment charges, amortisation of
acquired intangible assets and exceptional charges with the weighted average
number of equity voting shares in issue
Highlights & Key Corporate Developments
Strong HY23 underlying business performance across key Services and
Merchanting programmes
Technology:
The Group's technology and teams are built for scalable growth and our agile
approach in technology development has proven beneficial delivering:
· The platform is geared for scalability and is attracting
high-value, high quality users
· The Group recently signed a new partnership agreement with United
Franchise Group ("UFG") to provide technology solutions to its promotional
product franchise division Fully Promoted
· 524 distributors adopting the AIM Tech Suite for search and order
creation, a 10% increase from FY 2022
· The launch of 2,658 unique webstores to date
Services:
· 36.5% growth in Services revenue in HY23 driven by a combination
of increased activity and throughput revenue, additional upsell into the AIM
membership and favourable exchange rates
· Excellent AIM member in-network preferred partner sales during
the period, driving underlying growth of 31% through the Groups preferred
partner network, sharply higher than the ASI reported distributor growth of
c13%
Merchanting:
· Merchanting programmes have shown strong growth from the solid
platform built from FY22
· An additional c. $6 million in new expected annualised revenue
within the Group's core Merchanting programmes, proven to be commercially
attractive and gaining traction across both AIM Capital Solutions ("ACS") and
our adjacent market programme
Group:
· The Group benefits from an advantageous exchange rate and has not
experienced any negative impact to date from the current macro-economic
turbulence
· The Board remains cognisant of the macro-economic uncertainty and
the potential impact on the business although remains cautiously optimistic
· Continued robust growth anticipated into second half of the year
with new partner agreements signed across all key programmes and a growing new
business pipeline
Nichole Stella, Group CEO of Altitude, said:
"In the first six-months of the current financial year, the Group experienced
a robust performance across key Services and Merchanting programmes showing
significant growth on the same period last year. The continued strong,
consistent, and upward momentum in the performance of the business in both
revenue and profit growth demonstrates the Group's ability to execute on its
strategy. Based on the performance in the year to date, the Board was pleased
to announce on 22 November 2022 that the Group is on track to achieve record
year-end results. With continued focus on scaling the business and a healthy
new business pipeline, the Group is well placed for accelerated future
growth, and the Board is confident in the long-term success of the business
and its positive outlook for the future."
Enquiries:
Altitude Group plc Via Zeus
Nichole Stella, Chief Executive Officer
Graham Feltham, Chief Financial Officer
Zeus (Nominated Adviser & Broker) Tel: 0203 829 5000
Dan Bate / David Foreman / James Edis (Investment Banking)
Dominic King (Corporate Broking)
Chief Executive's statement
Interim results for the 6 months ended 30 September 2022
It's been a great first half to the financial year for the Group, posting
gains across all Services and Merchanting programmes. The success across the
entire Group has been powered by the talented and passionate Altitude team,
with our continued investment in culture, team, technology and scalability
throughout the pandemic and beyond, proving to have been successful.
Our continued focus on execution resulted in an overall Group revenue increase
of 29.3% to £7.7 million (HY22: £5.9m) and an adjusted operating profit*
increase of 50.5% to £0.76 million (HY22: £0.51 million***).
The Group's prior investments in a flexible technology platform and business
infrastructure has delivered a powerful foundation and an immediate
springboard to scalable future growth in both revenue and profit. Given our
investment in technology and talent, we are confident in our ability to scale
the business. Our Services and Merchanting programmes both have strong
business development pipelines and, the Group has continued to expand with new
partner agreements signed across all key programmes.
Who We Are
Altitude is a technology company and has developed an industry specific
marketplace which provides various design tools, applications, and web site
pop-up stores for promotional product distributors and suppliers. We have
developed a robust e-commerce enabled and scalable trading platform that
facilitates the execution of both offline and online promotional product
transactions. This gives us the ability to generate revenue based on the
transactional throughput both inside and outside our platform. The Group's
technology combined with an experienced team and proven service offerings
delivers in-industry scalable growth opportunities and expansion into adjacent
markets. We deliver products and services in two distinct areas - Services and
Merchanting. Services is comprised of technology and software applications,
membership subscriptions, preferred partner programmes, and marketing services
programmes. Our Merchanting programmes include our affiliate programme, ACS
and our adjacent market programme, where the Group is the principal in the
sale of promotional products.
What We Do
We deliver Services to our members, affiliates and preferred partners that
helps them to drive sales growth, increase cost savings and improve their
efficiency and ease of doing business. Our Merchanting teams drive scalable
growth on sales, ensuring we have the right products available for fulfilling
our customers' needs, effective and seamless processing of orders and tight
working capital management.
Services
In addition to our marketplace platform, the Group delivers highly
sought-after business benefits to members and affiliates such as:
• Preferred Partner pricing benefits
• Freight programmes and shipping discounts
• Community & networking opportunities
• Education & professional development
• Expanded marketing services, products and tools
The Group derives subscription fee revenue from providing a broad range of
services to distributors including supplier relations services, negotiated
group discounts, events and exhibitions, catalogues, artwork services and
marketing programmes.
In HY23, the Group achieved Global AIM membership of 2,425 (HY22: 2,200) with
average US distributor revenue of c.$1.3 million pa (HY22: c.$1.1 million)
and aggregate member revenue rising to c.$2.8 billion per self-certification
(HY22: $2.6 billion).
We continue to enjoy strong relationships with our key partners and have
retained 100% of them throughout HY23.
Our Services revenue showed strong growth in HY23, growing by 36.5%,
reflecting a robust performance across our AIM network and growth in sales
across our preferred partners.
Merchanting
Affiliate Programme / AIM Capital Solutions
The Group recruits high-calibre sales professionals to affiliate with the
Group via its ACS programme which:
• Enables Affiliates to focus on sales activities, which is their
skillset, and to become part of a corporate business driving growth and
profitability, which is our skillset, which helps them exceed their
stand-alone potential
• Full utilisation of technology is both advantageous and
mandatory
• Provides scalable expansion and growth back to the Group
Our strategic approach in agile technology development, creating collaborative
environments, engaging culture and core capabilities in the promotional
product industry have made this programme attractive to high-caliber,
respected distributor sales professionals. In the period the Group's
Merchanting revenue grew by 22.8% reflective of new signings and onboarding of
high-quality affiliates. With a strategic focus on high-caliber sales
professionals, the Group added over $5 million in expected annualised revenue
in HY23 within the ACS division.
Adjacent Markets
The Group continues to expand services into adjacent markets to offer its
services in the education sector by delivering our comprehensive technology
stack, increasing our marketplace and e-commerce solutions, and by the
constant upgrade of our supply chain and merchandising capabilities in this
non-competing adjacent market. In HY23 the Group further developed this
adjacent market by adding 3 new partners and investing in strengthening its
pipeline, programmes and services. The Group anticipates continued growth in
this sector and also looks to additional adjacent markets such as print,
uniform and signage industries to drive growth.
Technology
In 2020, we instituted an agile approach, not only across our technology
development but across the business as a whole. This approach, embracing
collaboration and continuous improvement, has allowed us to future-proof our
tech stack, be deliberately innovative, and scale the business while building
a culture of trust and engagement across our preferred partners, members, and
affiliate communities.
Altitude's technology platforms continue to be the centre of all the Group's
activities on both the Services and Merchanting segments of the business. The
Group continues to invest in its platforms to ensure we drive efficiency, data
insights and best-in-industry integrations and systems. Throughout HY23 there
has been a core focus on driving efficiencies for both users and internal
processes in line with increasing usage and volumes of orders being processed
through the AIM Tech Suite and ACS platforms. Multiple Supplier Partner
integrations are now live providing real-time passage of data between Members
using the technology and industry Suppliers systems; syncing product
inventory, orders, and statuses to provide enhanced visibility and reduced
manual efforts across the supply chain. The launch of the AIM Tech upgraded
e-commerce platform is underway with the first pop-up store having recently
been launched providing a retail experience to meet the needs of Members'
corporate clients online purchasing requirements.
Usage continues to rise and the Group has recently signed an agreement with
UFG to provide technology solutions to its promotional product franchise
division, Fully Promoted. This new partnership is anticipated to grow our user
base by c.5%.
Additionally, member adoption and usage of Altitude's technology solutions
continues to grow with 524 distributors adopting the AIM Tech Suite for search
and order creation, a 10% increase from 476 in FY 2022 and there are 2,658
unique websites live to date.
Financial Results
Group revenue for the period increased by £1.7m to £7.7m (HY22: £5.9m), an
increase of 29.3%.
Services have grown by £1.0m, driven from increased levels of network
activity and throughput outstripping published market data from ASI Central,
which reported c.13% average quarter on quarter growth. Upsell activities into
the AIM membership has also provided additive year on year underlying growth.
Ongoing delivery of our strategic growth initiatives within Merchanting have
contributed to an additional £0.7m in revenue. Growth in the number of ACS
affiliates and adjacent market partners expecting to contribute c.$6m
annualised sales has been achieved during HY23, with a continued strong
pipeline anticipating further growth into the second half of FY23 and leading
into FY24.
Gross profit increased by £1.1m, or 39.5%, to £3.9m (HY22: £2.8m), with
gross margin increasing to 51.4% (HY22: 47.7%) reflecting stronger throughput
impact from Partner revenues driven from both Services and Merchanting
activity.
Administration expenses before share-based payments, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
increased to £3.2m (HY22: £2.3m). At constant currency costs have increased
by £0.65m with £0.5m of the increase attributed to the US Government
Employee Retention Credit secured in HY22 in recognition of retention of
labour under COVID-19 impacted conditions. Without this benefit, costs have
marginally increased by £0.15m with the return to growth activities in line
with our strategic initiatives.
Adjusted operating profit* increased by 50.5% to £0.8m (HY22: £0.5m) and the
loss before taxation fell by 67.9% to £0.1m (HY22: loss £0.4m).
Basic and diluted loss per share improved by 0.32p to 0.10p (HY22: loss
0.42p).
Net operating cash flow before exceptional items increased by £1.6m to a
£0.4m inflow (HY22: outflow £1.2m) as a reflection of more normalised
working capital movements compared to HY22 where the activity levels were
returning from a period of lower activity due to COVID-19 lockdowns. Net cash
outflow from investing activities was £0.4m (HY22: £0.4m 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 a £0.1m outflow includes a credit
for issue of shares for cash (net of expenses).
Total net cash outflow was £0.2m (HY22: £1.5m outflow). The bank facility of
$0.7m, secured in FY22, was put in place to fund short term working capital
fluctuations as a result of our growth in Merchanting. The facility is
currently undrawn owing to a stronger than expected performance in Services.
Management has carried out a review of the Key Performance Indicators
applicable to the Group with reference to external market sentiment and
internal incentive schemes. More details can be found in Note 5.
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Outlook
In the first six-months of the current financial year, the Group experienced a
robust performance across key Services and Merchanting programmes showing
significant growth on the same period last year. The continued strong,
consistent, and upward momentum in the performance of the business in both
revenue and profit growth demonstrates the Group's ability to execute on its
strategy. Based on the performance in the year to date, the Board was pleased
to announce on 22 November 2022 that the Group is on track to achieve record
year-end results. With continued focus on scaling the business and a healthy
new business pipeline, the Group is well placed for accelerated future
growth, and the Board is confident in the long-term success of the business
and its positive outlook for the future.
Nichole Stella
Chief Executive Officer
28 November 2022
Consolidated income statement for the six months ended 30 September 2022
Unaudited Audited Unaudited
6 months 12 months 6 months
Note 30 Sep 2022 31 Mar 2022 30 Sep 2021
£'000 £'000 £'000
Revenue 3 7,666 11,936 5,928
Cost of sales (3,723) (5,786) (3,102)
Gross profit 3,943 6,150 2,826
Administrative expenses before share based payment charges, depreciation (3,180) (5,083) (2,319)
amortisation and exceptional expenses
Operating profit before share based payment charges, depreciation, 763 1,067 507
amortisation and exceptional charges
Share based payment charges (231) 127 (360)
Depreciation and amortisation (562) (1,044) (518)
Exceptional charges (76) (234) -
Total administrative expenses (4,049) (6,234) (3,197)
Operating loss (106) (84) (371)
Finance expenses (27) (73) (43)
Loss before taxation (133) (157) (414)
Taxation 60 254 114
Profit / (loss) attributable to the equity shareholders of the Company (73) 97 (300)
Profit / (loss) per ordinary share attributable to the equity shareholders of
the Company :
- Basic and diluted (pence) 4 (0.10p) 0.14p (0.42p)
Consolidated statement of changes in equity for the six months ended 30
September 2022
Share Capital Share Premium Retained Earnings Foreign Exchange Translation Reserve Total
£'000 £'000 £'000 £'000 £'000
At 1 April 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 loss - - (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
Profit for the period attributable to equity shareholders - - 397 - 397
Foreign exchange differences - - - 83 83
Total comprehensive income - - 397 83 480
Transactions with owners recorded directly in equity:
Shares issued for cash - - - - -
Share based payment credit - - (487) - (487)
Total transactions with owners - - (487) - (487)
At 31 March 2022 283 20,194 (11,962) (410) 8,105
Loss for the period attributable to equity shareholders - - (73) - (73)
Foreign exchange differences - - - 1,225 1,225
Total comprehensive income - - (73) 1,225 1,152
Transactions with owners recorded directly in equity:
Shares issued for cash - - - - -
Share based payment charges - - 231 - 231
Total transactions with owners - - 231 - 231
At 30 September 2022 283 20,194 (11,804) 815 9,488
Consolidated balance sheet as at 30 September 2022
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2022 31 Mar 2022 30 Sep 2021
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 137 139 91
Right of use assets 667 606 738
Intangibles 2,614 2,477 2,431
Goodwill 3,219 2,781 2,668
Deferred tax 467 436 428
Total non-current assets 7,104 6,439 6,356
Current assets
Inventory 93 29 18
Trade and other receivables 4,654 3,875 3,790
Corporation tax receivable 59 42 154
Cash and cash equivalents 814 902 754
Total current assets 5,620 4,848 4,716
Total assets 12,724 11,287 11,072
LIABILITIES
Non-current liabilities (895) (900) (976)
Total non-current liabilities (895) (900) (976)
Current liabilities
Trade and other payables (2,341) (2,282) (1,984)
Total current liabilities (2,341) (2,282) (1,984)
Total liabilities (3,236) (3,182) (2,960)
Net assets 9,488 8,105 8,112
EQUITY
Called up share capital 283 283 283
Share premium 20,194 20,194 20,194
Retained earnings (10,989) (12,372) (12,365)
Total equity attributable to equity holders of the parent 9,488 8,105 8,112
Consolidated cash flow statement for the six months ended 30 September 2022
Unaudited Audited Unaudited
6 months 12 months 6
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h
s
30 Sep 2022 31 Mar 2022 3
0
S
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2
0
2
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£'000 £'000 £
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0
0
0
Operating profit / (loss) for the period (106) (84) (371)
Amortisation of intangible assets 450 845 421
Depreciation 112 199 97
Share based payment (credit) /charge 231 (127) 360
Exceptional items 76 234 -
Operating cash flow before changes in working capital 763 1,067 507
Movement in Inventory (55) (29) (18)
Movement in trade and other receivables (175) (1,398) (1,425)
Movement in trade and other payables (90) (101) (226)
Changes in working capital (320) (1,528) (1,669)
Net cash flow from operating activities before exceptional items 443 (461) (1,162)
Exceptional items (76) (179) -
Net cash flow from operating activities after exceptional items 367 (640) (1,162)
Income tax received - 413 182
Net cash flow from operating activities 367 (227) (980)
Cash flows from investing activities
Purchase of tangible assets (46) (64) (66)
Purchase of intangible assets (345) (788) (352)
Net cash flow from investing activities (391) (852) (418)
Cash flows from financing activities
Repayment of lease borrowings (105) (135) (95)
Lease interest paid (25) (52) (27)
Other interest paid (6) (21) (16)
Issue of shares for cash (net of expenses) - 44 44
Net cash flow from financing activities (136) (164) (94)
Net increase/(decrease) in cash and cash equivalents (160) (1,243) (1,492)
Cash and cash equivalents at the beginning of the period 902 2,095 2,095
Effect of foreign exchange rate changes on cash and cash equivalents 72 50 151
Net (decrease)/increase in cash and cash equivalents (160) (1,243) (1,492)
Cash and cash equivalents at the end of the period 814 902 754
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30
September 2022 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 2022. 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
28 November 2022.
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
2022 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 2022 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
2022, 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 2022. 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 2022.
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 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
November 2023. 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 has an unutilised financing facility in place of $0.7m
which provides additional comfort and headroom to the cash forecasts. We
expect that with future additional growth this facility can be increased to
support any excess working capital requirements.
· 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 and macro-economic factors
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
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. The sale of promotional products, with the
related costs of goods supplied, freight and selling commission are recognised
on the shipment of goods. The Directors accept that the technical transfer
of risks and rewards to the customer occur on delivery of the goods which are
usually delivered between 2 to 5 days of shipment. The Directors use a proxy
of the shipment date as the trigger for recognising revenue. The Group 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.
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 2022, 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 from the sale of
promotional products.
Unaudited Unaudited Unaudited Unaudited
6 months 6 months 6 months 6 months
30 Sep 2022 30 Sep 2022 30 Sep 2022 30 Sep 2022
£'000 £'000 £'000 £'000
Group North America UK and Europe Central
Services
Turnover 3,850 3,179 671 -
Cost of Sales (250) (222) (28) -
Gross Profit 3,600 2,957 643 -
Merchanting
Turnover 3,816 3,816 - -
Cost of Sales (3,473) (3,473) - -
Gross Profit 343 343 - -
Group
Turnover 7,666 6,995 671 -
Cost of Sales (3,723) (3,695) (28) -
Gross Profit 3,943 3,300 643 -
Adjusted* Operating Profit/(Loss) 763 1,312 190 (739)
Share-based payment charges (231) - - (231)
Depreciation (112) (82) (30) -
Amortisation (450) (84) (366) -
Exceptional charges (76) - (66) (10)
Finance charges (27) (21) (6) -
Segmental profit before income tax (133) 1,125 (278) (980)
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Unaudited Unaudited Unaudited Unaudited
6 months 6 months 6 months 6 months
30-Sep-21 30-Sep-21 30-Sep-21 30-Sep-21
£'000 £'000 £'000 £'000
Group North America UK and Europe Central
Services
Turnover 2,821 2,224 597 -
Cost of Sales (219) (187) (32) -
Gross Profit 2,602 2,037 565 -
Merchanting
Turnover 3,107 3,107 - -
Cost of Sales (2,883) (2,883) - -
Gross Profit 224 224 - -
Group
Turnover 5,928 5,331 597 -
Cost of Sales (3,102) (3,070) (32) -
Gross Profit 2,826 2,261 565 -
Adjusted* Operating Profit/(Loss) 507 1,036 129 (658)
Share-based payment charges (360) - - (360)
Depreciation (97) (69) (28) -
Amortisation (421) (78) (343) -
Exceptional charges - - - -
Finance charges (43) (24) (19) -
Segmental profit before income tax (414) 865 (261) (1,018)
* 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
Profit / (loss) attributable to the equity shareholders of the Company: 30-Sep-22 31-Mar-22 30-Sep-21
Continuing operations (£000) (73) 97 (300)
Weighted average number of shares (number '000) 70,778 70,657 70,657
Fully diluted weighted average number of shares (number '000) 71,236 70,957 72,907
Basic and diluted profit / (loss) per ordinary share (pence)
Continuing operations (0.10) 0.14 (0.42)
Adjusted profit / (loss) per ordinary share (pence) on continuing operations
Continuing operations (£000) (73) 97 (300)
add back:
Share based payments 231 (127) 360
Amortisation on acquired intangibles 75 134 66
Exceptional charges 76 234 -
Adjusted earnings 309 338 126
Adjusted basic and diluted earnings per ordinary share (pence) on continuing 0.44 0.48 0.18
operations
*Calculation of adjusted profit was amended to add back amortisation on
acquired intangibles compared to the previous presentation that added back
depreciation and amortisation. See key performance indicators for further
explanation.
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 2022.
5. Key performance indicators
The Group's key performance indicators have been updated to align with
external market sentiment including incentives for the Executive and Senior
Management.
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2022 31 Mar 2022 30 Sep 2021
£'000 £'000 £'000
Revenue 7,666 11,936 5,928
Gross Profit 3,943 6,150 2,826
Adjusted EBITDA* 763 1,067 507
Statutory loss before tax (133) (157) (414)
Adjusted profit before tax** 249 84 12
Gross Margin (per cent.) 51.4% 51.5% 47.7%
Adjusted basic earnings per share (pence)*** 0.44 0.48 0.18
*Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges.
'Adjusted EBITDA' is a consistent measure used to show the performance of the
revenue generating activities and the related costs involved in the delivery
of revenue for the current year.
**Adjusted profit before tax is profit before tax adjusted for share based
charges, exceptional costs and amortisation on acquired intangibles. This
metric is introduced to review the performance of the underlying business
including depreciation and amortisation of development costs and is aligned
with the principle of underlying total shareholder return.
*** Basic adjusted earnings per share from continuing operations is calculated
using profit after tax but before share-based payment charges, amortisation of
acquired intangible assets and exceptional charges with the weighted average
number of equity voting shares in issue. This provides a metric that is used
when evaluating shareholder return combined with the underlying performance of
the business.
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