TIDMALT
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 MONTHSED 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 GBP11.8 million (HY23:
GBP7.7 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 GBP4.9 million (HY23: GBP3.9 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 GBP1.1 million (HY23: GBP0.8 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 GBP1.1 million in AMPs within working capital
GBP0.7 million, intangible assets of GBP0.3 million and tangible
assets of GBP0.1 million
-- Pre AMPs investment a net cash inflow of GBP0.4 million with
a post investment net cash outflow of GBP0.7 million (HY23 GBP0.2
million outflow)
-- The Group's balance sheet remains strong with gross cash of
GBP0.4 million (HY23: GBP0.8 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
Dan Bate / David Foreman / James Edis (Investment 5000
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 GBP11.8 million (HY23: GBP7.7
million) and Group adjusted operating profit* by 38.8% (46.8% at
constant currency) to GBP1.1 million (HY23: GBP0.8 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 t he 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 GBP4.1 million (HY23: GBP3.9 million)
o Global membership network stands at 2489 (FY23: 2476), with a
self-reported average individual annual turnover of GBP1.2
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
GBP7.6 million (HY23: GBP3.8 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 GBP4.1m to GBP11.8m
(HY23: GBP7.7m), an increase of 53.5%.
Services have grown by GBP0.3 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 GBP3.8
million revenue and GBP0.8 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 GBP1.0m, or by 24.8%, to GBP4.9m
(HY23: GBP3.9m), 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
GBP0.7m to GBP3.9m (HY23: GBP3.2m). 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 GBP1.1m (HY23:
GBP0.8m) and the profit before taxation increased by GBP0.2m to
GBP0.1m (HY23: loss GBP0.1m).
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
GBP0.2m to a GBP0.2m inflow (HY23: inflow GBP0.4m) driven from a
GBP0.3m improved operating cashflow before working capital
countered by GBP0.5m investment predominantly in inventory for the
new AMPs contracts. Net cash outflow from investing activities was
GBP1.0m (HY23: GBP0.4m outflow), primarily comprising of
capitalised software development costs of GBP0.5m (HY23: GBP0.4m)
and AMPs contract investments of GBP0.4m (HY23: GBPnil), which are
made up of equipment and deferred contract assets. Net cash
outflows from financing activities of GBP0.1m were mainly comprised
of lease repayments and interest (HY23: GBP0.1m) with the drawdown
of the revolving facility being an inflow of GBP0.2m (HY23:
GBPnil). The prior period activities of a GBP0.1m outflow includes
a credit for issue of shares for cash (net of expenses).
Total net cash outflow was GBP0.7m (HY23: GBP0.2m 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 31 Mar 30 Sep
2023 2023 2022
GBP'000 GBP'000 GBP'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 amortisation
and exceptional expenses (3,863) (6,648) (3,180)
Operating profit before share based payment
charges, depreciation, amortisation and exceptional
charges 1,059 1,957 763
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
Foreign
Exchange
Share Share Retained Translation
Capital Premium Earnings Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 31 Mar 30 Sep
2023 2023 2022
GBP'000 GBP'000 GBP'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 31 Mar 30 Sep
2023 2023 2022
GBP'000 GBP'000 GBP'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 (GBP000).
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
GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ----------
Group North UK and Central
America Europe
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
GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ----------
Group North UK and Central
America Europe
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 30-Sep-23 31-Mar-23 30-Sep-22
shareholders of the Company:
---------- ---------- ----------
Continuing operations (GBP000) 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 (GBP000) 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 operations 0.71 1.63 0.44
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
31 Mar 30 Sep
30-Sep-23 2023 2022
GBP'000 GBP'000 GBP'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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END
IR FEUEEWEDSEEF
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