REG - Altitude Group PLC - Interim Results
03/12/2024 07:00
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RNS Number : 5116O Altitude Group PLC 03 December 2024
3 December 2024
Altitude Group plc
("Altitude", the "Company" or the "Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
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 2024 ("HY25").
As reported on 15 November 2024, The Group's financial performance in HY25
demonstrates strong year-on-year growth, surpassing the figures from HY24 by
24.0% on revenue and 13.3% on Adjusted Operating Profit at constant currency.
The Group has benefited from the ongoing strength of its highly profitable
Services Division, which is inclusive of its marketplace, subscription and
SaaS programmes. This continued strength has empowered the Group to develop
and expand its diversified Merchanting Division.
The Group's disruptive collegiate Gear Shop solution continued to expand in
HY25. Since the Trading Update on 15 November 2024, the Group has been awarded
a further contract. Additionally, the Group has successfully launched its 8
previously reported contracts and commercial trading within these spaces has
commenced. As the new tender season has launched, we have a robust pipeline,
which is benefitting from expanded strategic relationships. We now have a
total of 21 Gear Shop contracts at 24 locations with expected annualised
average revenues of c$10m.
ACS grew 19% in annualised run rate revenues by $3.4m to $21.4m through
robust recruitment of new affiliates in HY25.
Financial Highlights
· Group revenues increased by 24.0% at constant currency to £14.2
million (HY24: £11.8 million)
· Services revenue grew by 3.5% at constant currency reflecting
underlying growth and performance across the AIM network
· Merchanting revenue grew by 35.1% at constant currency reflective
of new affiliate signings and Gear Shop expansion
· Gross profit increased 7.9% at constant currency to £5.2 million
(HY24: £4.9 million)
· Merchanting gross margin increased to 14.9% (HY24: 14.6%) due to
the Gear Shop growth
· Group gross margin of 36.5% (HY24: 41.8%) is expected and
reflective of blended revenues as a result of growth in Merchanting across the
Group's programmes
· Group adjusted operating profit* increased in HY25 by 13.3% at
constant currency to £1.2 million (HY24: £1.1 million)
· Basic and diluted earnings per share increased by 18.8% and 16.0%
respectively to 0.08p (HY24: 0.07p)
· Net indebtedness was £0.6m (HY24: net cash £0.2m). The Group's
facility headroom was $1.8 million (HY24: $1.2m) which provides ample working
capital for the group's existing growth 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
Key corporate developments and operational highlights
Strong HY25 growth in Merchanting programmes underpinned by key Services
programmes
Services:
· Services continues to be a strong and consistent foundation for
the Group. Despite operating in a subdued promotional product market across
the industry, the Services division achieved 3.5% constant currency revenue
growth.
· This division performance outpaced the market, which reported
0.4% growth in first half of the calendar year and recently signalled strong
calendar Q3 growth of 4.2%
Merchanting:
· Merchanting expansion continues to advance and drive strong
revenue growth for the Group
· The Group's Gear Shop solution has experienced accelerated growth
in the last 18 months, growing from two locations during the initial beta
programme to 21 contracts and 24 locations with expected annualised average
revenue of at least $10m
· We have expanded our strategic partnerships and anticipate this
driving strong outcomes and continued accelerated expansion in the coming year
and beyond
· ACS has grown 19% in annualised run rate revenues
by $3.4m to $21.4m from robust recruitment of new affiliates in HY25
· Recruitment pipeline remains strong and will be entering its peak
period in the first calendar quarter of 2025
· The Group recently hit a milestone record high with more
than $2m invoiced sales in a month
Technology:
· The Group's steadfast dedication to excellence in its technology
platforms is reflected in continued investment to enhance and optimise
performance
· Increased uptake in adoption of SaaS platform from members and
new affiliates, driving 32% increased orders processed
· Ongoing development has continued to evolve the user experience,
deepen partner integrations and re-enforce cyber security measures continued
across all platforms, supporting growing usage across the Group's proprietary
suite of technology
· Key initiatives in HY25 have focused on the development and
implementation of a new core centralised finance system which will support
internal financial processes across all divisions and provide improved
operational capability and enable greater scalability
Outlook
The Group continues to benefit from robust growth in its Merchanting division,
and its performance is underpinned by the resilient Services division despite
subdued market conditions and a challenging economic environment in the US.
The Group has also made strong operational progress which will continue into
H2 25.
Additionally, with the US election completed, both market indicators and
industry consensus point to a return to year-on-year growth in calendar Q3
against a backdrop of near-term growth within the US economy. As a result of
the HY1 25 growth, and the improving economic situation in the US, the Board
remain confident that the Group will continue to deliver on its strategy and
that it remains in line with market expectations on revenue and adjusted
operating profit for the full financial year.
We are pleased that we have continued to drive profitable growth and invested
in people and systems to achieve improved operating leverage during
challenging market conditions. The Group anticipates the return to industry
growth to extend into the new financial year and the Board remains excited
about our future potential.
Nichole Stella, Group CEO of Altitude, said:
"The Group remains focused on delivery across all divisions. We are pleased
that we have continued to drive profitable growth and invested in people and
systems to achieve greater operational leverage during challenging market
conditions. The Group anticipates the return to industry growth to extend into
the new financial year. The Board remains confident that it will continue to
deliver on its strategy."
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 / James Edis (Investment Banking)
Dominic King (Corporate Broking)
Chief Executive's statement
Interim results for the 6 months ended 30 September 2024
The Group has benefited from the ongoing strength of its highly profitable
Services Division, which is inclusive of its marketplace, subscription and
SaaS programmes. This continued strength, despite subdued market conditions
and challenging conditions in the US, has empowered the Group to develop and
expand its diversified Merchanting Division. Additionally, the Group has
made strong operational progress as we continue to scale and grow the
business. Our teams were instrumental in not only delivering on these key
Merchanting growth initiatives but also in ensuring the continued stability
and success of our core Services operations. In the year our US AIM membership
grew to 2,264 (FY24 2,262). The AIM membership represents c.10% of the $26.1b
industry's c22,000 distributors. As a result, we drove growth across all
Services and Merchanting programmes and were able to increase Group revenues
by 24.0% to £14.2 million (HY24: £11.8 million) at constant currency and
increase Group adjusted operating profit* in HY25 by 13.3% to £1.2
million (HY24: £1.1 million) at constant currencies.
The executive management team has navigated a prolonged period of challenging
macro-economic conditions, while still achieving expansive organic profitable
growth, as we have clearly understood that the Group's success can only be
driven by ongoing investments in business development, infrastructure, and
technology-driven efficiencies. I am proud that we have continued to
organically scale to achieve our future aspirations. We are well-positioned in
the markets we serve and both our Services and Merchanting programmes maintain
strong pipelines for future scaling.
Who We Are
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 include AIM Capital Solutions (ACS) and our Gear Shop
solution.
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 great opportunity
to deliver new AI tools to drive efficiency and scale.
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 and
graduation regalia with quick access to full product ranges from our Preferred
Partners, laptops and other technology accessories, non-textbook course
materials and supplies, food and beverage items and personal care
· Provide e-commerce, marketing solutions and modern/innovative
spaces to drive brand awareness and community engagement
· In a specialised partnership, seamlessly deliver a single Gear
Shop solution, delivering both branded merchandise with course materials and
textbooks
ACS Affiliates: The Group recruits high-calibre sales professionals
(Affiliates) to affiliate 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, increase cost savings and improve 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 / inventory 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 proprietary technology platforms remain central to operations in
both the Services and Merchanting segments. Investments remain focused on
enhancing efficiency for growing user bases and internal workflows, delivering
deeper data insights, and supporting an expanding network of key partner
connections.
· The AIM and ACS Tech Suites have seen increasing adoption, with
growth in order volumes from the USA and UK, further bolstered by the recent
expansion into Canada enabled through FY24 technology enhancements
· Technological initiatives to enhance scalability in the
Merchanting segment have delivered efficiency gains for ACS affiliates, while
a comprehensive overhaul of ACS's financial systems has begun, aligning with a
new centralised finance platform to ensure streamlined operations further
operational gearing
· Cybersecurity has remained a top priority, with multiple
initiatives launched to fortify protections across our technology platforms,
operational systems, and processes
Financial Results
Unaudited Unaudited
6 months 6 months Impact of Underlying Total
30-Sep-24 30-Sep-23 currency change change
£'000 £'000 £'000 £'000 % £'000
Group Group
Services
Turnover 4,172 4,120 (90) 142 3.5% 52
Cost of Sales (479) (312) 6 (173) 56.5% (167)
Gross Profit 3,693 3,808 (84) (31) (0.8%) (115)
88.5% 92.4%
Merchanting
Turnover 10,068 7,648 (193) 2,613 35.1% 2,420
Cost of Sales (8,570) (6,534) 165 (2,201) 34.6% (2,036)
Gross Profit 1,498 1,114 (28) 412 37.9% 384
14.9% 14.6%
Group
Turnover 14,240 11,768 (283) 2,755 24.0% 2,472
Cost of Sales (9,049) (6,846) 171 (2,374) 35.6% (2,203)
Gross Profit 5,191 4,922 (112) 381 7.9% 269
36.5% 41.8%
Group revenue for the period increased by £2.4m to £14.2m (HY24: £11.8m),
an increase of 24.0% at constant currency.
Services have grown by £0.1 million or 3.5%, with the growth arising from the
timing of managed events. Supplier throughput revenues are flat year on year
which corresponds with market data from ASI Central for calendar Q1 and Q2
periods. The latest estimates are used for VIP suppliers with annual
contracts. Industry reports suggest a return to growth in the latest quarter
although there is widespread uncertainty in the industry with macro-economic
events impacting confidence.
Merchanting has delivered 35% growth with an additional £2.6 million of
revenue. ACS drives our top line growth with c19% growth in annual expected
revenues from both organic growth and successful recruitment. Our Gear Shops
have grown in the same proportion as ACS with the addition of 7 new stores
successfully going live within the half year. During the period we have
extended our course material partners and delivered joint solutions with them.
Additional partnerships offer more sales channels to us compared to having a
sole partner in prior years and selling periods.
Gross profit increased by £0.3m, or by 7.9% at constant currency, to £5.2m
(HY24: £4.9m), with an expected reduction in gross margin to 36.5% (HY24:
41.8%) reflecting an increased mix of Merchanting especially within our ACS
affiliate programme. Merchanting gross profit increased to 14.9% (HY24: 14.6%)
from an increase in higher margin Gear Shop contracts. Services gross margin
reduced to 88.5% (HY24: 92.4%) reflecting sales growth obtained from lower
margin virtual assistance services offered via our service partners to our
membership.
Administration expenses before share-based payments, amortisation,
depreciation and exceptional charges increased by 6.5% at constant currency to
£4.0m (HY24: £3.9m). The small increase is driven by the roll out of the
Gear Shops and the strengthening of the core team. Other administration and
central costs have remained flat year on year as a result of strong cost
control management.
Adjusted operating profit* increased, on a constant currency, by 13.3% to
£1.2m (HY24: £1.1m).
Basic and diluted earnings per share remained consistent at 0.08p (HY24:
0.07p) whilst adjusted basic earnings per share decreased by 6.4% to 0.66
pence (HY24: 0.71 pence).
Net operating cash flow before exceptional items reduced by £0.8m to a £0.6m
outflow (HY24: £0.2m inflow) driven mainly from a £1.2m outflow from earlier
cash collections in FY24 and an increased proportion of annual supplier
throughput contracts compared to quarterly and £0.7m outflow from peak
trading in ACS which has seen a record month of shipments and sales invoicing
which jointly comprise the majority of c£2.2m outflow in trade and other
receivables. Net cash outflow from investing activities was £1.0m (HY24:
£1.0m outflow), primarily comprising of capitalised software development
costs of £0.5m (HY24: £0.5m) and Gear Shops contract investments of £0.4m
(HY24: £0.4m), which are made up of equipment and deferred contract assets.
Net cash inflows from financing activities of £0.8m were mainly comprised of
a facility drawdown of £0.9m.
Total net cash outflow was £0.9m (HY24: £0.7m outflow). The main bank
facility of $3m, secured in FY24, 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 Group, despite subdued market conditions and a challenging economic
environment in the US, continues to benefit from robust growth in its
Merchanting division, and its performance is underpinned by the resilient
Services division. The Group has also made strong operational progress which
will continue into H2 25.
Additionally, with the US election completed, both market indicators and
industry consensus point to a return to year-on-year growth in calendar Q3
against a backdrop of near-term growth within the US economy. As a result of
the HY1 25 growth, and the improving economic situation in the US, the Board
remain confident that the Group will continue to deliver on its strategy and
that it remains in line with market expectations on revenue and adjusted
operating profit for the full financial year.
We are pleased that we have continued to drive profitable growth and invested
in people and systems to achieve improved operating leverage during
challenging market conditions. The Group anticipates the return to industry
growth to extend into the new financial year and the Board remains excited
about our future potential.
Nichole Stella
Chief Executive Officer
3 December 2024
Consolidated income statement for the six months ended 30 September 2024
Unaudited Audited Unaudited
6 months 12 months 6 months
Note 30 Sep 2024 31 Mar 2024 30 Sep 2023
£'000 £'000 £'000
Revenue 3 14,240 24,009 11,768
Cost of sales (9,049) (13,635) (6,846)
Gross profit 5,191 10,374 4,922
Administrative expenses before share based payment charges, depreciation (4,039) (7,967) (3,863)
amortisation and exceptional expenses
Operating profit before share based payment charges, depreciation, 1,152 2,407 1,059
amortisation and exceptional charges
Share based payment charges (248) (708) (305)
Depreciation and amortisation (754) (1,325) (634)
Exceptional charges (98) (295) (69)
Total administrative expenses (5,139) (10,295) (4,871)
Operating profit 52 79 51
Finance expenses (17) (84) (20)
Profit/loss before taxation 35 (5) 31
Taxation 23 702 17
Profit attributable to the equity shareholders of the Company 58 697 48
Earnings per ordinary share attributable to the equity shareholders of the
Company:
- Basic (pence) 4 0.08p 0.98p 0.07p
- Diluted (pence) 4 0.08p 0.96p 0.07p
Consolidated statement of changes in equity for the six months ended 30
September 2024
Share Capital Share Premium Retained Earnings Foreign Exchange Translation Reserve Total
£'000 £'000 £'000 £'000 £'000
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:
Shares issued for cash - - - - -
Share based payment charges - - 305 - 305
Total transactions with owners - - 305 - 305
At 30 September 2023 283 20,194 (10,708) 117 9,886
Profit for the period attributable to equity shareholders - - 649 649
Foreign exchange differences - - (276) (276)
Total comprehensive income - - 649 (276) 373
Transactions with owners recorded directly in equity:
Shares issued for cash - - - -
Share based payment charges - - 403 - 403
Shares issued 2 - (2) - -
Total transactions with owners 2 - 401 - 403
At 31 March 2024 285 20,194 (9,658) (159) 10,662
Profit for the period attributable to equity shareholders - - 58 - 58
Foreign exchange differences - - - (492) (492)
Total comprehensive income - - 58 (492) (434)
Transactions with owners recorded directly in equity:
Shares issued for cash - - - - -
Share based payment charges - - 248 - 248
Total transactions with owners - - 248 - 248
At 30 September 2024 285 20,194 (9,352) (651) 10,476
Consolidated balance sheet as at 30 September 2024
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2024 31 Mar 2024 30 Sep 2023
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 428 326 266
Right of use assets 179 270 437
Intangibles 3,246 3,089 2,976
Goodwill 2,737 2,881 2,969
Deferred tax 651 668 400
Total non-current assets 7,241 7,234 7,048
Current assets
Inventory 1,458 1,044 1,054
Trade and other receivables 6,660 4,882 5,645
Corporation tax receivable 172 115 218
Cash and cash equivalents 313 1,220 441
Total current assets 8,603 7,261 7,358
Total assets 15,844 14,495 14,406
LIABILITIES
Current liabilities
Revolving facility (896) - (213)
Trade and other payables (4,335) (3,642) (3,514)
(5,231) (3,642) (3,727)
Net current assets 3,372 3,619 3,631
Non-current liabilities
Deferred tax liabilities - - (268)
Lease liabilities (137) (191) (525)
Total non-current liabilities (137) (191) (793)
Total liabilities (5,368) (3,833) (4,520)
Net assets 10,476 10,662 9,886
EQUITY
Called up share capital 285 285 283
Share premium 20,194 20,194 20,194
Retained earnings (10,003) (9,817) (10,591)
Total equity attributable to equity holders of the parent 10,476 10,662 9,886
Consolidated cash flow statement for the six months ended 30 September 2024
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 2024 31 Mar 2024 30 Sep 2023
£'000 £'000 £'000
Operating Profit 52 79 51
Amortisation of intangible assets 605 1,071 480
Depreciation 149 254 154
Share based payment (credit) /charge 248 708 305
Exceptional items 98 295 69
Operating cash flow before changes in working capital 1,152 2,407 1,059
Movement in Inventory (494) (694) (669)
Movement in trade and other receivables (2,247) 540 (218)
Movement in trade and other payables 999 23 38
Changes in working capital (1,742) (131) (849)
Net operating cash flow before exceptional items (590) 2,276 210
Exceptional items (98) (263) (69)
Net operating cash flow activities after exceptional items (688) 2,013 141
Income tax received - 121 (26)
Net cash flow from operating activities (688) 2,134 115
Cash flows from investing activities
Purchase of tangible assets (214) (223) (108)
Purchase of intangible assets (785) (1,573) (846)
Net cash flow from investing activities (999) (1,796) (954)
Cash flows from financing activities
Repayment of lease borrowings (92) (174) (84)
Lease interest paid (12) (33) (18)
Other interest paid (13) (50) (2)
Drawdown of Revolving facility 896 - 213
Net cash flow from financing activities 779 (257) 109
Net increase/(decrease) in cash and cash equivalents (908) 81 (730)
Cash and cash equivalents at the beginning of the period 1,220 1,173 1,173
Effect of foreign exchange rate changes on cash and cash equivalents 1 (34) (2)
Net (decrease)/increase in cash and cash equivalents (908) 81 (730)
Cash and cash equivalents at the end of the period 313 1,220 441
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30
September 2024 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 2024. 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
2 December 2024.
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 FY24 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
2024 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 2024 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
2024, 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 2024. 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 2024.
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
2025. 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 total facilities in place of $3.5m 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, branded merchandise, graduation regalia,
non-textbooks course materials and supplies, food and beverage items and
personal care.
ACS sells promotional products via AIM member affiliates who 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 full end to end
process.
ACS bears the risk of the transaction as Principal, provisioning of orders and
contracting with the customer, determining the transaction price, provision of
fulfilment and supplier contracts and pricing, performing credit control and
processing payments. The sale of the promotional products, with the related
costs of goods supplied, freight and AIM affiliates selling commission
recognised as the cost of goods sold. The revenue is recognised on the
shipment of the goods from the supplier and as notified by the supplier
invoice which are raised following shipment. The Directors accept that the
technical transfer of risks and rewards to the customer occur on delivery of
the goods which are usually delivered within 2-5 days of shipment. The
Directors use a proxy of the shipment date as the trigger for recognising
revenue.
The Group also sources products directly through its network of Preferred
Partners, which it sells to AIM members and adjacent markets, where such sales
do not conflict with the interest of either suppliers or the AIM membership.
Gear Shop contracts sell branded merchandise, graduation regalia,
non-textbooks course materials and supplies, food and beverage items and
personal care. The majority of sales are either store sales or promotional
product sales as described above. Graduation regalia sales are made in
coordination with specialist graduation regalia providers. A subsection of
graduation regalia are sold via the providers online store in which a
commission is derived from this sale for the Group that are recognised at the
time of sale. The online sales usually occur after the Group performs
graduation events, fairs, in-store selling and marketing to drive any
latecomers to the online solution so that students still have an opportunity
to obtain their graduation regalia.
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 2024, 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-24 30-Sep-24 30-Sep-24 30-Sep-24
£'000 £'000 £'000 £'000
Group North America UK and Europe Central
Services
Turnover 4,172 3,632 540 -
Cost of Sales (479) (392) (87) -
Gross Profit 3,693 3,240 453 -
Merchanting
Turnover 10,068 10,068 - -
Cost of Sales (8,570) (8,570) - -
Gross Profit 1,498 1,498 - -
Group
Turnover 14,240 13,700 540 -
Cost of Sales (9,049) (8,961) (87) -
Gross Profit 5,191 4,739 453 -
Adjusted* Operating Profit/(Loss) 1,152 1,859 (23) (684)
Share-based payment charges (248) - - (248)
Depreciation (149) (112) (37) -
Amortisation (605) (130) (475) -
Exceptional charges (98) (66) (9) (23)
Finance charges (17) (13) (2) (2)
Segmental profit before income tax 35 1,538 (546) (957)
* 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-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) (91) -
Gross Profit 3,808 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) (6,755) (91) -
Gross Profit 4,922 4,455 467 -
Adjusted* Operating Profit/(Loss) 1,059 1,867 (60) (748)
Share-based payment charges (305) - - (305)
Depreciation (154) (124) (30) -
Amortisation (480) (79) (401) -
Exceptional charges (69) (19) (39) (11)
Finance charges (20) (16) (4) -
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
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 attributable to the equity shareholders of the Company: 30-Sep-24 31-Mar-24 30-Sep-23
Continuing operations (£000) 58 697 48
Weighted average number of shares (number '000) 72,032 70,972 70,813
Fully diluted weighted average number of shares (number '000) 74,066 72,621 71,128
Basic profit per ordinary share (pence) 0.08 0.98 0.07
Diluted profit per ordinary share (pence) 0.08 0.96 0.07
Adjusted profit per ordinary share (pence) on continuing operations
Continuing operations (£000) 58 697 48
add back:
Share based payments 248 708 305
Amortisation on acquired intangibles 72 154 78
Exceptional charges 98 295 69
Adjusted earnings 476 1,854 500
Adjusted basic and diluted earnings per ordinary share (pence) on continuing 0.66 2.61 0.71
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 2024.
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 Unaudited Audited
6 months 6 months Impact of Underlying Total 12 months
30-Sep-24 30-Sep-23 currency change change 31-Mar-24
£'000 £'000 £'000 £'000 % £'000 £'000
Revenue 14,240 11,768 (283) 2,755 24.0% 2,472 24,009
Gross Profit 5,191 4,922 (112) 381 7.9% 269 10,374
Adjusted EBITDA* 1,152 1,059 (41) 134 13.2% 93 2,407
Statutory loss before tax 35 31 (38) 4 (5)
Adjusted profit before tax** 453 483 - (30) 1,152
Gross Margin (per cent.) 36.5% 41.8% 43.2%
Adjusted basic earnings per share (pence)*** 0.66 0.71 2.61
Annualised expected revenue (ACS) $21.4m $14.3m $18m
Annualised expected average revenue (Gear Shops) $10m $7m $7m
Other KPI definitions used in the report
"Annualised expected revenue" is used in the context of ACS annualised revenue
expectations. When a potential affiliate goes through an extensive vetting
process with the team prior to signing their contract the annual expected
sales levels are identified and selling commissions are agreed upon based on
these levels. The expected level of sales generated is then measured against
the actual performance of the affiliate and updated annually according to
experienced performance, adjusting for one off large orders and other
influencing factors. As the sales are usually non-contractual then they are
called "expected".
"Annualised expected average revenue" is used in the context of our Gear Shop
contracts. On tendering for a contract during the Request for Proposal ("RFP")
the institution will usually release revenue histories which form a basis for
the tender process. The quality of this information can vary, and management
will review and take a prudent view of the expected contract size. It is
usually expected that the year 1 revenues generated will be under the expected
and that at some point during a 5 year contract the revenues may exceed the
original view therefore management call the expected annualised sales as
"average". The expected value will be reviewed annually and updated as
appropriate.
*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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