REG - Altitude Group PLC - Interim Results
28/11/2023 07:00
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RNS Number : 8323U Altitude Group PLC 28 November 2023
28 November 2023
Altitude Group plc
("Altitude", the "Company" or the "Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Altitude Group Plc (AIM: ALT), the leading end-to-end solutions provider for
branded merchandise, is pleased to announce its unaudited interim results for
the six months to 30 September 2023 ("HY24").
As reported on 27 October 2023, The Group's financial performance in HY24
demonstrates significant year-on-year growth, surpassing the figures from HY23
by over 50% on revenue and nearly 40% on Adjusted Operating Profit. The Group
has benefited from strong growth in its diversified Merchanting Division and
continuing solid performance in its Services Division.
As of September 2023, the contracts that had been awarded to the Adjacent
Market Programmes (AMPs) have all been successfully launched on time and in
multiple locations across the United States. Commercial trading within
these spaces has recently commenced. Additionally, the business development
team remains active and the pipeline continues to be robust. The Group is on
track to achieve record year-end results in FY24.
Financial Highlights
· Group revenues increased by 53.5% to £11.8
million (HY23: £7.7 million) and 59.3% at constant currency
· Services revenue grew by 7.0% reflecting consistent growth and
performance across the AIM network
· Merchanting revenue grew by 100.4% reflective of new affiliate
signings and expansion of AMPs
· Gross profit increased 24.8% to £4.9 million (HY23: £3.9
million)
· Merchanting gross margin increased to 14.6% (HY23 9.0%) due to
the growth of AMPs
· Gross margin of 41.8% (HY23: 51.4%) is reflective of blended
revenues across the Group's programmes
· Group adjusted operating profit* increased in HY24 by 38.8%
to £1.1 million (HY23: £0.8 million) and 46.8% at constant currency
· Adjusted basic earnings per share** increased by 61% to 0.71
pence (HY23: 0.44 pence)
· Investment of £1.1 million in AMPs within working capital £0.7
million, intangible assets of £0.3 million and tangible assets of £0.1
million
· Pre AMPs investment a net cash inflow of £0.4 million with a
post investment net cash outflow of £0.7 million (HY23 £0.2 million outflow)
· The Group's balance sheet remains strong with gross cash of £0.4
million (HY23: £0.8 million) supported by $1.4 million (HY23: $0.7m) of
remaining loan facility, which provides sufficient working capital for the
group's existing needs
* 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 HY24 growth in Merchanting programmes underpinned by key Services
programmes
Services:
· Continued growth in Services revenue in HY24 showcasing 7% YOY
growth. This growth is primarily driven by membership activity, an increase in
throughput revenue, and the AIM membership package programme growth which
includes SaaS technology subscriptions, marketing services and art services
· In-network preferred partner sales continued to rise during the
period showing an increase of c. 4% in the period
Merchanting:
· Merchanting expansion continues to advance and drive strong
revenue growth for the Group
· All previously announced awarded AMPs contracts have been
successfully launched on time and in multiple locations across the United
States
· At HY24 we have 15 AMPs contracts with an annualised expected
gross revenue of at least $7m
· In our AMPs programme, we have successfully built a strong brand
name and reputation which will accelerate our success into the future
· Our current AMPs pipeline has gained in strength, value and early
momentum compared with this time last year with the main announcement of new
contracts expected between March and June in 2024 when contracts are finalised
· Within ACS we are achieving c13% organic growth and benefiting
from the full year impact of the significant affiliate recruitment in FY23
Technology:
The Group's unwavering commitment to excellence within its proprietary
technology platforms is evident in our ongoing investments to continually
optimise these platforms. Key highlights during the first half of this
financial year are:
· Expansion of our technological capabilities by adding further
integrations with accounting, webstores, and analytics platforms, further
enhancing the technological possibilities available to our users
· Implementation of platform configuration and security
enhancements to facilitate rapid expansion both online and in-store within our
AMP's division
· Customised adaptation of our US platform specifically designed
for seamless utilisation within the Canadian promotional product market
· Over 200 integrations facilitating streamlined electronic data
exchange across our preferred partner platforms, users on member and affiliate
platforms, and complementary platforms
· Robust technology-driven operational improvements and process
enhancements designed to facilitate scalable growth within the ACS business
Outlook
Revenue and adjusted operating profit* are in line with market expectations
which we believe is a strong position given the current macro-economic
environment in addition to gaining experience and building brand reputation
within a new market. We are committed to delivering growth and shareholder
value and will continue to keep the market informed of our progress.
Nichole Stella, Group CEO of Altitude, said:
"The first half of our current financial year has been a period of intense
focus and hard work, achieving significant expansion for the Group. I am very
proud of the team and their continued attention to growth and delivery. This
continuous upward momentum and successful entry into new verticals, especially
during challenging macro-economic times, is a testament to the entire team's
talent, care, and commitment. We remain focused on both scaling through new
contract awards and gearing the business for long-term success. Revenue and
adjusted operating profit* are in line with market expectations, which we
believe is a strong position given the current macro-economic environment in
addition to gaining experience and building brand reputation within a new
market. The Group is well placed for continued accelerated future growth, and
the Board is confident in the long-term success of the business. It is very
pleasing to note that the momentum we showed in the first half of the year has
continued into this period and we look forward to updating shareholders in the
New Year."
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 2023
During the initial half of this financial year, the Group was extremely active
with a concentrated focus on the delivery of our new AMPs contracts to meet
our launch date targets for HY24. I am pleased to report we achieved those
targets delivering widespread expansion and growth for the Group. Our teams
played a crucial role in successfully safeguarding our core business while
achieving this. As a result, we drove growth across all Services and
Merchanting programmes and were able to increase Group revenues by 53.5%
(59.3% at constant currency) to £11.8 million (HY23: £7.7 million) and
Group adjusted operating profit* by 38.8% (46.8% at constant currency)
to £1.1 million (HY23: £0.8 million).
A significant part of the Group's growth has been a continual investment into
new business development and vertical market entry. We believe this is
critical to creating long-term shareholder value and our continued investments
in pipeline growth, business infrastructure, and technology-driven efficiency,
have set the stage for continued scalable growth in revenue and profit. We are
confident in our ability to scale successfully via investments in technology,
operational gearing and talent. Both Services and Merchanting programmes
maintain robust business development pipelines, providing the Group with
continued expansion opportunities through new partner agreements across all
our key business areas.
Who Are We
Altitude is a diversified portfolio group that is the leading end-to-end
solutions provider for branded merchandise across a variety of sectors from
the corporate and print vertical markets to the higher-education and
collegiate sector.
We deliver products and services in two distinct areas - Services and
Merchanting. Services are derived from operating distributor/vendor networks
in the promotional products industry comprising of technology and software
applications, membership subscriptions, Preferred Partner programmes, and
marketing services programmes. Our Merchanting programmes focus on the sale of
promotional products and includes AIM Capital Solutions (ACS) and our AMPs.
Technology is at our core, and we support our Services and Merchanting
divisions with our proprietary technology platforms providing product search
engines, order management tools, design applications, and e-commerce sites
that deliver innovative solutions. Our trading platform facilitates the
execution of both offline and online transactions. With an eye ever on the
future we continue to innovate and develop our systems to drive efficiency and
scalability - today Artificial Intelligence (AI) presents a great opportunity
to deliver new tools to drive efficiency and scale.
What's New
· Services
o Services demonstrated continued growth, increasing revenue by 7%,
achieving £4.1 million (HY23: £3.9 million)
o Global membership network stands at 2489 (FY23: 2476), with a
self-reported average individual annual turnover of £1.2 million
o Successful onboarding of new members following the successful go live of
our strategic partnership with Fully Promoted across membership and technology
· Merchanting Revenue experienced a 100.4% increase,
totalling £7.6 million (HY23: £3.8 million).
o AMPs contracts
§ Our AMPs division is growing quickly, with the successful delivery of all
our new contracts in H1. We now have 15 contracts with an annualised
expected gross revenue of at least $7m.
§ We categorise our AMP accounts into 4 levels ranging from Small to Extra
Large with our existing contracts falling into the small to large range. As
the relationships deepen, we develop closer strategic partnerships and this
provides organic growth for the Group, which will further enhance our levels
of operational gearing.
§ We are actively engaged in the annual pitching season added to by referrals
as our brand reputation strengthens. Today, our pipeline is strong, growing,
and inclusive of all 4 levels of accounts Small to Extra Large.
o ACS affiliates
§ In FY23, we doubled our affiliate base for ACS, to c$14m which is
benefiting our top line growth. In HY24 this growth normalised and is in line
with industry trends and growth rates. We place strong emphasis on recruitment
of high-quality affiliates and our commitment to maintaining exceptional
quality standards and are achieving c13% organic growth in our annual expected
revenue.
What Do We Do - Merchanting
Gear Shops: The Group secures long term contracts within the higher-education
and collegiate sectors to provide, technology & e-commerce solutions,
marketing tools, supply chain know-how, and innovative retail experiences
across the US markets. Additionally, via a partner, we provide access to
textbooks to deliver a seamless, single on-campus solution. As a result, Gear
Shops:
· Provide specialist expertise on branded merchandise with access
to full product ranges from our Preferred Partners
· Provide e-commerce, marketing solutions and modern/innovative
spaces to drive brand awareness and community engagement
· In specialised partnership, seamlessly deliver a single Gear Shop
solution, delivering both branded merchandise with course materials and text
books
ACS Affiliates: The Group recruits high-calibre sales professionals to
affiliate (Affiliates) with the Group 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 for the Group
What Do We Do - Services
We deliver Services to our members and Preferred Partners that helps them to
drive sales growth and increase cost savings while improving their efficiency
and ease of doing business.
Services - Member benefits: 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
Services - Preferred Partner: The Group provides vendors and suppliers with
services to expand their visibility and sales to the AIM and ACS community
through:
· Top level visibility across our marketplace product search engine
· Preferred technology integration opportunities
· Guaranteed participation in publications, catalogues, educational
product programmes and merchandise campaigns
· Expanded access to AIM community via social media and events
Services - Technology: Our marketplace platform delivers important
opportunities and efficiencies to our members and affiliates, improving
profitability through:
· Efficiency - providing an intuitive online ordering experience
for buyers coupled with the back-end technology stack to support the quick
fulfilment of orders for branded merchandise
· Effectiveness - ensuring product availability whenever and
wherever you are, with 24/7/365 uptime and a mobile first approach
· Experience - delivering the right experience and high degree of
satisfaction for members, affiliates, partners, and end-buyers
· Trust - providing a compliant and reliable service from start to
finish
Technology
Altitude's technology platforms remain pivotal, serving as the nexus for our
activities within both the Services and Merchanting segments. Our unwavering
commitment to excellence is reflected in the ongoing investments made to
continually optimise these platforms. The primary objective is to enhance
operational efficiency and scalability, extract meaningful data insights, and
uphold best-in-industry integrations and systems.
Altitude continues to experience increased utilisation of the core AIM Tech
Suite and ACS proprietary platforms, with continuing increases in high value,
higher quality users, and the active onboarding of end-to-end users who
conduct their order cycles through the platform. As a result, our emphasis
remains on driving operational efficiencies and insights for all users,
partner suppliers and internal teams and addressing the evolving needs of
their businesses.
During the initial six months of FY24, significant technological progress was
made within our proprietary AIM and ACS Tech Suite. Notably, targeted
enhancements were implemented to facilitate localised customisations, offering
a solution tailored for Canadian users. This resulted in the immediate
adoption of the AIM Tech Suite, which is now operational with Canadian users
utilising the platform for search and order processing, which is customised to
meet their specific requirements.
A specific focus during this period has been on enhancing scalability within
the Merchanting segment. Substantial progress has been achieved, particularly
in realising efficiency gains within the ACS division for both Affiliates and
our internal processing teams. Additionally, there has been a swift and
concentrated effort to deploy technology solutions and establish secure
environments to accommodate the rapid growth within the AMP division and its
multi-channel retail approach. Both technological and operational gearing have
been strategically designed to support the dynamic expansion of this key
segment of our business.
Financial Results
Group revenue for the period increased by £4.1m to £11.8m (HY23: £7.7m), an
increase of 53.5%.
Services have grown by £0.3 million or 7%, driven from increased levels of
network activity and throughput. We continue to outperform against published
market data from ASI Central, which reported c.4% average quarter-on-quarter
growth. Industry reports are mixed but are relatively consistent that there is
increased uncertainty in the Industry for the calendar year 2023 with
macro-economic events impacting confidence.
Merchanting has been positively impacted by an additional £3.8 million
revenue and £0.8 million gross profit from the full impact of ACS affiliates
recruitment and the successful onboarding of new AMPs contracts in the
educational sector. The new AMPs contracts were onboarded throughout the
period with a number commencing trading in August and September.
Gross profit increased by £1.0m, or by 24.8%, to £4.9m (HY23: £3.9m), with
gross margin reducing to 41.8% (HY23: 51.4%) reflecting an increased mix of
merchanting especially within our ACS affiliate programme. Merchanting gross
profit increased to 14.6% (HY23: 9.0%) from the higher margin AMPs contracts.
Services gross margin remained strong at 92.5% (HY23: 93.5%).
Administration expenses before share-based payments, amortisation,
depreciation and exceptional charges increased by £0.7m to £3.9m (HY23:
£3.2m). The increase is driven by the implementation of AMPs operations,
procurement and support teams. Central costs remain flat year on year.
Adjusted operating profit* increased by 38.8%% to £1.1m (HY23: £0.8m) and
the profit before taxation increased by £0.2m to £0.1m (HY23: loss £0.1m).
Basic and diluted profit per share improved by 0.17p to 0.07p (HY23: loss
0.10p).
Net operating cash flow before exceptional items reduced by £0.2m to a £0.2m
inflow (HY23: inflow £0.4m) driven from a £0.3m improved operating cashflow
before working capital countered by £0.5m investment predominantly in
inventory for the new AMPs contracts. Net cash outflow from investing
activities was £1.0m (HY23: £0.4m outflow), primarily comprising of
capitalised software development costs of £0.5m (HY23: £0.4m) and AMPs
contract investments of £0.4m (HY23: £nil), which are made up of equipment
and deferred contract assets. Net cash outflows from financing activities of
£0.1m were mainly comprised of lease repayments and interest (HY23: £0.1m)
with the drawdown of the revolving facility being an inflow of £0.2m (HY23:
£nil). 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 £0.7m (HY23: £0.2m outflow). The bank facility of
$1.7m, secured in FY23, was put in place to fund short-term working capital
fluctuations and investment in inventory, equipment and fitting out costs as a
result of our growth in Merchanting.
* Operating profit before share-based payment charges, amortisation of
intangible assets, depreciation of tangible assets and exceptional charges
Outlook
The first half of our current financial year has been a period of intense
focus and hard work, achieving significant expansion for the Group. I am very
proud of the team and their continued attention to growth and delivery. This
continuous upward momentum and successful entry into new verticals, especially
during challenging macro-economic times, is a testament to the entire team's
talent, care, and commitment.
We remain focused on both scaling through new contract awards and gearing the
business for long-term success. Revenue and adjusted operating profit* are in
line with market expectations, which we believe is a strong position given the
current macro-economic environment in addition to gaining experience and
building brand reputation within a new market. The Group is well placed for
continued accelerated future growth, and the Board is confident in the
long-term success of the business. It is very pleasing to note that the
momentum we showed in the first half of the year has continued into this
period and we look forward to updating shareholders in the New Year.
Nichole Stella
Chief Executive Officer
28 November 2023
Consolidated income statement for the six months ended 30 September 2023
Unaudited Audited Unaudited
6 months 12 months 6 months
Note 30 Sep 2023 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Revenue 3 11,768 18,761 7,666
Cost of sales (6,846) (10,156) (3,723)
Gross profit 4,922 8,605 3,943
Administrative expenses before share based payment charges, depreciation (3,863) (6,648) (3,180)
amortisation and exceptional expenses
Operating profit before share based payment charges, depreciation, 1,059 1,957 763
amortisation and exceptional charges
Share based payment charges (305) (511) (231)
Depreciation and amortisation (634) (1,131) (562)
Exceptional charges (69) (101) (76)
Total administrative expenses (4,871) (8,391) (4,049)
Operating profit/(loss) 51 214 (106)
Finance expenses (20) (62) (27)
Profit / (loss) before taxation 31 152 (133)
Taxation 17 238 60
Profit /(loss) attributable to the equity shareholders of the Company 48 390 (73)
Earnings per ordinary share attributable to the equity shareholders of the
Company:
- Basic and diluted (pence) 4 0.07p 0.55p (0.10p)
Consolidated statement of changes in equity for the six months ended 30
September 2023
Share Capital Share Premium Retained Earnings Foreign Exchange Translation Reserve Total
£'000 £'000 £'000 £'000 £'000
At 31 March 2022 283 20,194 (11,962) (410) 8,105
Profit 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:
Share based payment charges - - 231 - 231
Total transactions with owners - - 231 - 231
At 30 September 2022 283 20,194 (11,804) 815 9,488
Profit for the period attributable to equity shareholders - - 463 - 463
Foreign exchange differences - - - (800) (800)
Total comprehensive income - - 463 (800) (337)
Transactions with owners recorded directly in equity:
Share based payment credit - - 280 - 280
Total transactions with owners - - 280 - 280
At 31 March 2023 283 20,194 (11,061) 15 9,431
Profit for the period attributable to equity shareholders - - 48 - 48
Foreign exchange differences - - - 102 102
Total comprehensive income - - 48 102 150
Transactions with owners recorded directly in equity:
Share based payment charges - - 305 - 305
Total transactions with owners - - 305 - 305
At 30 September 2023 283 20,194 (10,708) 117 9,886
Consolidated balance sheet as at 30 September 2023
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2023 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 266 202 137
Right of use assets 437 471 667
Intangibles 2,976 2,652 2,614
Goodwill 2,969 2,934 3,219
Deferred tax 400 458 467
Total non-current assets 7,048 6,717 7,104
Current assets
Inventory 1,054 361 93
Trade and other receivables 5,645 5,521 4,654
Corporation tax receivable 218 91 59
Cash and cash equivalents 441 1,173 814
Total current assets 7,358 7,146 5,620
Total assets 14,406 13,863 12,724
LIABILITIES
Current liabilities
Revolving facility (213) - -
Trade and other payables (3,514) (3,699) (2,341)
(3,727) (3,699) (2,341)
Net current assets 3,631 3,447 3,279
Non-current liabilities
Deferred tax liabilities (268) (347) (374)
Lease liabilities (525) (386) (521)
Total non-current liabilities (793) (733) (895)
Total liabilities (4,520) (4,432) (3,236)
Net assets 9,886 9,431 9,488
EQUITY
Called up share capital 283 283 283
Share premium 20,194 20,194 20,194
Retained earnings (10,591) (11,046) (10,989)
Total equity attributable to equity holders of the parent 9,886 9,431 9,488
Consolidated cash flow statement for the six months ended 30 September 2023
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2023 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Operating Profit /(loss) 51 214 (106)
Amortisation of intangible assets 480 901 450
Depreciation 154 230 112
Share based payment (credit) /charge 305 511 231
Exceptional items 69 101 76
Operating cash flow before changes in working capital 1,059 1,957 763
Movement in Inventory (669) (339) (55)
Movement in trade and other receivables (218) (1,532) (175)
Movement in trade and other payables 38 1,404 (90)
Changes in working capital (849) (467) (320)
Net operating cash flow before exceptional items 210 1,490 443
Exceptional items (69) (84) (76)
Net operating cash flow activities after exceptional items 141 1,406 367
Income tax received (26) 144 -
Net cash flow from operating activities 115 1,550 367
Cash flows from investing activities
Purchase of tangible assets (108) (119) (46)
Purchase of intangible assets (846) (986) (345)
Net cash flow from investing activities (954) (1,105) (391)
Cash flows from financing activities
Repayment of lease borrowings (84) (163) (105)
Lease interest paid (18) (47) (25)
Other interest paid (2) (15) (6)
Drawdown of Revolving facility 213 - -
Net cash flow from financing activities 109 (225) (136)
Net increase/(decrease) in cash and cash equivalents (730) 220 (160)
Cash and cash equivalents at the beginning of the period 1,173 902 902
Effect of foreign exchange rate changes on cash and cash equivalents (2) 51 72
Cash and cash equivalents at the end of the period 441 1,173 814
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30
September 2023 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 2023. 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 2023.
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 FY23 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
2023 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 2023 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
2023, 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 2023. 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 2023.
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 2024. 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 a financing facility in place of $1.7m 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 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.
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. By far the most significant operation that
carries out merchanting is within ACS. 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 including branded merchandise, 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.
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 2023, the Group has two operating
segments, North America, and the United Kingdom.
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-23 30-Sep-23 30-Sep-23 30-Sep-23
£'000 £'000 £'000 £'000
Group North America UK and Europe Central
Services
Turnover 4,120 3,562 558 -
Cost of Sales (312) (221) (90) -
Gross Profit 3,809 3,341 467 -
Merchanting
Turnover 7,648 7,648 - -
Cost of Sales (6,534) (6,534) - -
Gross Profit 1,114 1,114 - -
Group
Turnover 11,768 11,210 558 -
Cost of Sales (6,846) (6,756) (90) -
Gross Profit 4,922 4,455 467 -
Adjusted* Operating Profit/(Loss) 1,059 1,867 (60) (747)
Share-based payment charges (305) - - (305)
Depreciation (480) (79) (402) -
Amortisation (154) (123) (30) -
Exceptional charges (69) (19) (38) (11)
Finance charges (20) (16) (3) -
Segmental profit before income tax 31 1,629 (534) (1,064)
* 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-22 30-Sep-22 30-Sep-22 30-Sep-22
£'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
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-23 31-Mar-23 30-Sep-22
Continuing operations (£000) 48 390 (73)
Weighted average number of shares (number '000) 70,813 70,813 70,778
Fully diluted weighted average number of shares (number '000) 71,128 71,198 71,236
Basic and diluted profit / (loss) per ordinary share (pence)
Continuing operations 0.07 0.55 (0.10)
Adjusted profit / (loss) per ordinary share (pence) on continuing operations
Continuing operations (£000) 48 390 (73)
add back:
Share based payments 305 511 231
Amortisation on acquired intangibles 78 151 75
Exceptional charges 69 100 76
Adjusted earnings 500 1,152 309
Adjusted basic and diluted earnings per ordinary share (pence) on continuing 0.71 1.63 0.44
operations
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 2023.
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-23 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Revenue 11,768 18,761 7,666
Gross Profit 4,922 8,605 3,943
Adjusted EBITDA* 1,059 1,957 763
Statutory loss before tax 31 152 (133)
Adjusted profit before tax** 483 915 249
Gross Margin (per cent.) 41.8% 45.9% 51.4%
Adjusted basic earnings per share (pence)*** 0.71 1.63 0.44
*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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