TIDMALT
RNS Number : 6745M
Altitude Group PLC
25 January 2021
25 JANUARY 2021
Altitude Group plc
("Altitude", the "Company" or the "Group")
Altitude Group Trades Profitably Through COVID-19
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER
2020
Altitude Group plc (AIM: ALT), the operator of a leading
marketplace for the global promotional products industry, is
pleased to announce its unaudited interim results for the 6 months
to 30 September 2020. Comparative figures for H1 2019 comprise the
reported trading results for the six month period ended 30 June
2019, adjusted for the disposal of Ad Products.
Key corporate developments and operational highlights
-- The Group traded profitably in the period by enacting an
immediate and effective response to the COVID-19 pandemic and
subsequent lockdowns
-- Robust performance in H1 resulting in an adjusted operating
profit** of GBP0.3m, despite the impact of COVID-19
-- The Group traded within its existing cash resources and
remains debt free with a current cash balance of GBP1.3m as at 22
January 2021. Cash flow is stabilised and reflective of anticipated
working capital movement
-- AIM membership remains stable with a total of 2,085 members,
up from 1,917 at time of acquisition, despite the impact of
COVID-19
-- Retained 100% participation levels in the Preferred Partner
Program despite the impact of COVID-19
-- Purchase orders processed through the AIM system have shown
progressive improvement to c.70% of original volume expectations
since steepest point of COVID-19 decline in April of 2020
-- Focus on delivering further growth with high quality
distributor partners via AIM Capital Solutions ("ACS") Launched as
a premium enhanced member program in August 2019, ACS, provides
full system order processing, innovative technology, administrative
support and supply chain finance services to members
Financial Highlights
-- Group revenue from continuing operations increased by GBP1.1m
or 36% to GBP4.4m in the period (H1 2019*: GBP3.3m)
-- AIM US revenues increased to GBP3.9m (H1 2019*: GBP2.2m)
assisted by the Group Buy programme delivering a US adjusted
operating profit of GBP0.5m (H1 2019*: GBP0.7m)
-- AIM core gross margin maintained at 2019 levels, excluding the Group Buy programme
-- Adjusted operating profit** of GBP0.3m (H1 2019*: GBP0.6m)
-- Total administrative expenses for the period were GBP3.1m (H1
2019*: GBP3.4m), including the benefit of GBP0.4m of Paycheck
Protection funding
-- Adjusted profit before taxation*** GBP0.2m (H1 2019*: GBP0.6m)
-- Adjusted basic and diluted earnings from continuing
operations per share 0.39p (H1 2019*: 0.86p)
-- Statutory loss before taxation GBP0.6m (H1 2019*: GBP0.4m)
-- Statutory basic and diluted loss from continuing operations
per share 0.86p (H1 2019*: 0.64p)
-- Cash inflow from continuing operations before changes in
working capital was GBP0.2m (H1 2019*: GBP0.1m)
-- As of 30 September 2020 Group was debt free and had net cash
of GBP1.2m (31 March 2020: GBP2.4m). At 22 January 2021 the Group's
cash resources were GBP1.3m. Cash inflows are expected to increase
over the next three months reflecting the settlement of annual
agreements.
* Comparative figures for H1 2019 comprise the reported trading
results for the six month period ended 30 June 2019, adjusted for
the disposal of Ad Products
** Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
*** Profit before taxation, share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Nichole Stella , Group CEO of Altitude, said:
"In the face of the most challenging business environment in
modern times, the Board is pleased with the resilience, effort and
performance of the team and business during the period. Since the
acquisition of AIM in 2019, we have worked tirelessly to develop
the foundation and strategy of the business, and have driven
significant growth in both revenue and profit.
"This pre-pandemic effort and our ability to act quickly and
pragmatically in navigating the challenges imposed by COVID-19 have
ensured our ability to trade profitably during this unprecedented
period of disruption as well as protect and position the Group for
sustainable future growth.
"Whilst uncertainty remains on the overall duration of COVID-19
disruption, the Board remains confident in the long-term future of
the Company, its growth trajectory and strong position in the
market place."
Enquiries:
Altitude Group plc - via Instinctif Partners 020 7457 2020
Nichole Stella, Chief Executive Officer
Graeme Couturier, Chief Financial Officer
Keith Edelman, Non-Executive Chairman
finnCap Ltd 020 7220 0500
Jonny Franklin-Adams / Charlie Beeson (Corporate
Finance)
Richard Chambers (ECM)
Instinctif Partners 020 7457 2020
Matthew Smallwood
Hannah Campbell
Chief Executive's statement
Interim results for the 6 months ended 30 September 2020
The first six month trading period of FY 2020/21, included the
most intense period of disruption in the US and around the globe
caused by the COVID-19 pandemic. This has proven to be the most
challenging time in history for many promotional products
businesses and their customers to navigate, significantly slowing
economies and completely halting robust and major market sectors
like the events, education, hospitality, bar & restaurant,
sports, entertainment and retail industries, sectors most directly
correlated with the success of the AIM Smarter ("AIM") marketplace
and the suppliers and distributors who trade within it.
Regardless of the depth of the immediate downturn in March, the
acquisition of AIM in 2019 and the rapid efforts made in developing
the foundation and strategy of the acquired business prior to the
COVID-19 lockdowns, allowed the Group to respond to the crisis
quickly and effectively. Decisive action to protect the business
was taken alongside continuous improvement measures and timely
pivots to ensure the Group's ability to successfully emerge from
the pandemic and look to the future with confidence.
Despite the challenges imposed by COVID-19 during the six months
to 30 September 2020, the Group achieved revenues from continuing
operations of GBP4.4m (H1 2019*: GBP3.3m) and an adjusted operating
profit** of GBP0.3m (H1 2019*: GBP0.6m).
* Comparative figures for H1 2019 comprise the reported trading
results for the six month period ended 30 June 2019, adjusted for
the disposal of Ad Products
Liquidity
The Group continues to trade within its current cash resources
and remains debt free with a current cash balance of GBP1.3m as at
22 January 2021. Cash flow is stabilised and reflective of
anticipated working capital movement. The cash balance reflects the
self-funding of ACS receivables in the current financial year.
We continue to monitor the likelihood of further US Federal
support in the near future. However, notwithstanding the
availability of any further support the Board remains confident
that, subject to continued steady recovery in the promotional
product market through the current year, we have sufficient
liquidity to trade through to more normalized levels of
trading.
In addition, all the requirements for the permanent retention of
$0.5m of COVID-19 relief funding received under the US Federal
Paycheck Protection Plan have been met.
COVID-19 Response
During this time, it became clear AIM's role would be to support
and guide our member and supplier community through this crisis.
Thus, AIM quickly pivoted to provide a broad range of educational
information, SME guidance on government programs, supplier business
operations updates and virtual events. Through these efforts,
membership numbers have remained steady with 2,085 AIM Members as
of 1 January 2021, with average (pre COVID-19) distributor revenue
increasing to c.$1.2m pa and aggregate historic (pre-COVID-19)
member revenues of circa $2.26 Bn per self-certification. Our
Preferred Partners remain unchanged at 175 from our last
update.
Additionally, AIM played a vital role providing members access
to high-demand PPE products from safe and trusted supplier sources
and launched our digital AIM "Group Buys" platform. This program
also showcased our ability to act as a direct sales conduit to
members on high-demand products.
Finally, the Group took quick action to secure and benefit from
US government support programs, receiving $0.5m in funding under
the US Federal Paycheck Protection Program. We also took the
necessary steps in decreasing employee headcount by 21% across the
Company. During the period through September US headcount was 36
and UK headcount was 30, mainly comprising the systems development
team. In addition, we instituted a temporary salary decrease of 20%
across the Management team and Executives, as well as a reduction
in working hours across all other employees, following the
cessation of the period covered by the Paycheck Protection Program
from June through October.
AIM Progress and Trading
AIM continues to drive awareness and sales growth for both our
Preferred Partners (to our AIM members) and our AIM members (to
their clients). By providing marketing and technology services to
our members and Preferred Supplier Partners, we are committed to
creating a virtuous growth cycle for the AIM marketplace.
Our focus remains on the following major routes to revenue
growth:
-- Continued growth in the AIM membership of high-quality promotional product distributors.
-- Delivering added value services, leveraging existing
applications, technology, resources and expertise, to help selected
preferred partners grow their share of the total AIM purchase
pipeline.
-- Develop and sell additional added value services, leveraging
its existing applications, resources and expertise, to help AIM
distributor members grow their business
-- Continued drive to increase member utilisation of the AIM Tech Suite
-- The addition of AIM Capital Solutions ("ACS") to AIM's
offering completes the Group's current portfolio of services. This
premium distributor program launched in August 2019, requires full
system order processing via the Group's innovative technology and
provides administrative support and supply chain finance services
to participating members
Despite COVID-19, we maintained our preferred partner network
175 of the industry's top suppliers. To further strengthen and more
aggressively drive sales through our preferred network, drive our
technology adoption, increase tracking order data and increase
efficiency in orders, we launched our VIP Incentive Program, which
gives cash back to members when purchasing "in network."
Additionally, the Group partnered with ASI to utilize their data
feed in the AIM Tech Suite.
Member adoption and usage of our technology solutions continues
to grow with 429 distributors adopting the AIM Tech Suite for
product search and/or order creation and 1,642 unique distributors
utilizing AIM's website and company store technology with more than
2,700 sites live to date.
Enhanced Member Services
We are pleased with the launch of and continued increased
interest shown by our members in the enhanced member services. 241
members have utilised AIM's various paid enhanced services and we
are working on initiatives to increase this number in the current
financial year. The pace of sales on marketing services have
retracted due to COVID-19, however, digital platform sales and our
premium program, AIM Capital Solutions has continued to be
developed and grown despite COVID-19 as outlined above.
UK Business
The UK business delivered revenue of GBP0.6m in the period ended
30th September 2020.
In May 2020 the UK company rebranded from Customer Focus
Software Limited to AIM Smarter Limited and launched AIM Smarter
services to UK members and supplier partners. Following a
successful launch there are currently 57 preferred suppliers in
participation and distributor members have grown 186% from 51 to
146 since launch whilst continuing to provide various software
applications to the promotional industry on a monthly recurring
revenue model.
Throughout this period the technology development team delivered
additional integrations with US product data providers to provide
access to product data through the AIM Tech Suite and Websites,
recognizing that seamless access to product data is core to member
requirements. Additionally, the core technology was enhanced to
create a process driven, scalable Group platform to enable
efficient processing of AIM Capital Solutions (ACS) transactions
allowing for Group, Member and Customer level order processing and
communications which is now live.
Disposal of Ad Products
On 18 March 2020, the Company's wholly owned subsidiary Customer
Focus Interactive Imaging Limited ("CFIIL") entered into a
conditional agreement with Product Source Group Limited ("PSG") for
the disposal of the trade and certain assets of Ad Products
("ADP"), the trading name of CFIIL and a UK based trade supplier
and printer of promotional products (the "Disposal") for a total
maximum consideration of GBP0.8 million.
Total maximum consideration of GBP0.8 million made up as
follows:
-- GBP0.35 million in cash on completion
-- GBP0.3 million receivable in 4 tranches over the 12-month
period following completion, subject to a personal guarantee of
Martin Varley; and
-- GBP0.15 million conditional deferred consideration with
performance criteria based on ADP revenue
generation in the 12- month period following completion
PSG was owned and controlled by Joanne Varley, wife of Martin
Varley who was at the time a non-executive Director of and a 14.8
percent shareholder in Altitude. The Disposal, therefore, was
considered a related party transaction for the purposes of the AIM
Rules and was a substantial property transaction under the
Companies Act.
The transaction was approved by shareholders in a General
Meeting on 3 April 2020.
Ad Products results for the period are included in the
consolidated income statement under "Loss from discontinued
operation".
Financial Results
Group revenue for the period increased by GBP1.1m to GBP4.4m (H1
2019*: GBP3.3m), an increase of 36%.
The promotional products industry was subject to significant
disruption during the period, resulting in a substantial decrease
in transactional throughput related Partner services revenues. The
decrease in Partner services revenues was largely offset by new AIM
Smarter Group Buy revenues.
Gross profit decreased by GBP0.5m, or 16%, to GBP2.5m (H1 2019*:
GBP3.0m), with gross margin decreasing to 57% (H1 2019*: 92%)
reflecting lower margins on AIM Smarter Group Buy activities.
Administration expenses before share-based payments,
amortization of intangible assets, depreciation of tangible assets
and exceptional charges decreased by GBP0.2m, or 7% to GBP2.2m (H1
2019*: GBP2.4m), driven by the receipt of GBP0.4m of Paycheck
Protection funding which has been offset against payroll
expenditure in accordance with IAS 20 - Accounting for Government
Grants and Disclosure of Government Assistance. The Company can
confirm that all conditions for permanent retention of the funding
received under the Program have been met.
Administration expenses before share-based payments,
amortization of intangible assets, depreciation of tangible assets
and exceptional charges for the 6 month period are representative
of an annualized run rate of GBP5.2m per annum.
Adjusted operating profit** was GBP0.3m (H1 2019*: GBP0.6m) and
the loss before taxation was GBP0.6m (H1 2019*: GBP0.4m).
The loss from discontinued operations of GBP0.1m reflects
expenditure related to the disposal of Ad Products.
Statutory operating loss and loss before taxation were each
GBP0.6m (H1 2019*: GBP0.4m), with basic and diluted loss per share
of 0.86p (H1 2019*: 0.64p).
Operating cash inflow from continuing operations (before changes
in working capital) was GBP0.2m (H1 2019*: GBP0.1m).
Net cash outflows from investing activities was GBP0.3m (H1
2019*: GBP4.8m outflow), primarily comprising capitalised software
development costs. The net cash outflow in H1 2019* included the
purchase of AIM (GBP3.9m) and the purchase of tangible assets
(GBP0.7m).
Net cash outflows from financing activities of GBP0.6m reflects
repayment of finance agreements and interest of GBP0.5m, lease
repayments (under IFRS 16) of GBP0.1m and the issue of shares for
cash (net of expenses) of GBP0.1m in respect of options exercised
during the period.
Total net cash outflow was GBP1.1m (H1 2019*: GBP3.1m
inflow).
Current net cash balances stand at GBP1.3m as at 22 January
2021, compared with GBP1.2m at 30 September 2020.
* Comparative figures for H1 2019 comprise the reported trading
results for the six month period ended 30 June 2019, adjusted for
the disposal of Ad Products
** Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Outlook
In the face of the most challenging business environment in
modern times, the Board is pleased with the resilience, effort and
performance of the team and business during the period. Since the
acquisition of AIM in 2019, we have worked tirelessly to develop
the foundation and strategy of the business and have driven
significant growth in both revenue and profit.
This pre-pandemic effort and our ability to act quickly and
pragmatically in navigating the challenges imposed by COVID-19 have
ensured our ability to trade profitably during this unprecedented
period of disruption and has protected and positioned the Group for
sustainable future growth.
Whilst uncertainty remains on the overall duration of COVID-19
disruption, the Board remains confident in the long-term future of
the Company, its growth trajectory and strong position in the
marketplace.
Nichole Stella
Chief Executive Officer
25 January 2021
Consolidated income statement for the six months ended 30
September 2020
Restated
Unaudited Audited Unaudited
6 months 15 months 6 months
30 Sep 31 Mar 30 Jun
Note 2020 2020 2019
GBP'000 GBP'000 GBP'000
Revenue - Continuing Operations 4,443 8,308 3,264
Cost of sales (1,922) (851) (261)
-------------------------------------------- ----- ---------- ---------- ----------
Gross profit 2,521 7,457 3,003
Administrative expenses before share based
payment charges, depreciation amortisation
and exceptional expenses (2,248) (6,996) (2,425)
---------- ----------
Operating profit before share based payment
charges, depreciation, amortisation and
exceptional charges 273 461 578
Share based payment charges (274) (1,401) (433)
Depreciation and amortisation (533) (1,170) (598)
Exceptional charges (24) (444) 26
---------- ---------- ----------
Total administrative expenses (3,079) (10,011) (3,430)
-------------------------------------------- ----- ---------- ---------- ----------
Operating loss (558) (2,554) (427)
Finance expenses (43) (112) -
-------------------------------------------- ----- ---------- ---------- ----------
Loss before taxation (601) (2,666) (427)
Taxation - 275 -
-------------------------------------------- ----- ---------- ---------- ----------
Loss attributable to continuing
operations (601) (2,391) (427)
Loss on discontinued operation (117) (3,336) (315)
-------------------------------------------- ----- ---------- ---------- ----------
Loss attributable to the equity shareholders
of the Company (718) (5,727) (742)
--------------------------------------------------- ---------- ---------- ----------
Loss per ordinary share attributable to
the equity shareholders of the Company:
--------------------------------------------------- ---------- ---------- ----------
- Basic and diluted (pence) - Continuing
operations 3 (0.86p) (3.51p) (0.64p)
- Basic and diluted (pence) - Discontinued
operations 3 (0.17p) (4.90p) (0.47p)
-------------------------------------------- ----- ---------- ---------- ----------
Consolidated statement of changes in equity for the six months
ended 30 September 2020
Share Share Retained
Capital Premium Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 219 11,000 (6,982) 4,237
Loss for the period attributable
to equity shareholders - - (742) (742)
Foreign exchange differences - - 59 59
----------------------------------- --------- --------- ---------- --------
Total comprehensive income - - (683) (683)
----------------------------------- --------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 53 8,947 - 9,000
Preliminary expenses - (477) - (477)
Shares issued as consideration 3 582 - 585
Share based payment charges - - 433 433
Adoption of IFRS 16 - - 36 36
----------------------------------- --------- --------- ---------- --------
Total transactions with owners 56 9,052 469 9,577
----------------------------------- --------- --------- ---------- --------
At 30 June 2019 275 20,052 (7,196) 13,131
Loss for the period attributable
to equity shareholders - - (4,985) (4,985)
Foreign exchange differences - - 5 5
----------------------------------- --------- --------- ---------- --------
Total comprehensive income - - (4,980) (4,980)
----------------------------------- --------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 2 28 - 30
Share based payment charges - - 968 968
Adoption of IFRS 16 - - (63) (63)
----------------------------------- --------- --------- ---------- --------
Total transactions with owners 2 28 905 935
----------------------------------- --------- --------- ---------- --------
At 31 March 2020 277 20,080 (11,271) 9,086
Loss for the period attributable
to equity shareholders - - (718) (718)
Foreign exchange differences - - (249) (249)
----------------------------------- --------- --------- ---------- --------
Total comprehensive income - - (967) (967)
----------------------------------- --------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 3 73 - 76
Share based payment charges - - 274 274
Total transactions with owners 3 73 274 350
----------------------------------- --------- --------- ---------- --------
At 30 September 2020 280 20,153 (11,964) 8,469
Consolidated balance sheet as at 30 September 2020
Unaudited Audited Unaudited
6 months 15 months 6 months
30 Sep 31 Mar 30 Jun
2020 2020 2019
Note GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant & equipment 172 189 801
Right of use assets 818 957 285
Intangibles 2,650 2,814 2,718
Goodwill 3,017 3,108 2,690
Deferred tax 442 456 450
---------------------------------------- ----- ---------- ---------- ----------
Total non-current assets 7,099 7,524 6,944
---------------------------------------- ----- ---------- ---------- ----------
Current assets
Inventory - - 1,620
Assets classified as held for sale 5 - 650 -
Trade and other receivables 3,020 2,738 3,279
Corporation tax receivable 36 35 32
Cash and cash equivalents 1,215 2,350 3,485
---------------------------------------- ----- ---------- ---------- ----------
Total current assets 4,271 5,773 8,416
---------------------------------------- ----- ---------- ---------- ----------
Total assets 11,370 13,297 15,360
---------------------------------------- ----- ---------- ---------- ----------
LIABILITIES
Non-current liabilities (1,251) (1,326) (188)
---------------------------------------- ----- ---------- ---------- ----------
Total non-current liabilities (1,251) (1,326) (188)
---------------------------------------- ----- ---------- ---------- ----------
Current liabilities
Trade and other payables (1,650) (2,885) (2,041)
---------------------------------------- ----- ---------- ---------- ----------
Total current liabilities (1,650) (2,885) (2,041)
---------------------------------------- ----- ---------- ---------- ----------
Total liabilities (2,901) (4,211) (2,229)
---------------------------------------- ----- ---------- ---------- ----------
Net assets 8,469 9,086 13,131
---------------------------------------- ----- ---------- ---------- ----------
EQUITY
Called up share capital 280 277 275
Share premium 20,153 20,080 20,052
Retained earnings (11,964) (11,271) (7,196)
---------------------------------------- ----- ---------- ---------- ----------
Total equity attributable to equity holders
of the parent 8,469 9,086 13,131
----------------------------------------------- ---------- ---------- ----------
Consolidated cash flow statement for the six months ended 30
September 2020
Unaudited Audited Unaudited
6 months 15 months 6 months
30 Sep 31 Mar 30 Jun
2020 2020 2019
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Loss for the period - Continuing
operations (601) (2,391) (427)
Loss for the period - Discontinued
operations (117) (3,336) (315)
Amortisation of intangible assets 432 995 465
Depreciation 101 523 189
Impairment of asset held for sale - 2,207 -
Interest paid 43 112 30
Taxation - (275) -
Exchange differences (37) 82 59
Share based payment charges 274 1,401 433
---------------------------------------------- ---------- ---------- ----------
Operating cash (outflow)/inflow before
changes in working capital 95 (682) 434
Movement in Inventory - (285) (74)
Movement in trade and other receivables 18 (2,166) (2,228)
Movement in trade and other payables (337) 299 715
---------------------------------------------- ---------- ---------- ----------
Operating cash outflow from operations (319) (2,152) (1,586)
Tax received - 646 -
--------------------------------------------- ---------- ---------- ----------
Net cash used in continuing operations (224) (2,188) (1,152)
---------------------------------------------- ---------- ---------- ----------
Cash flows from investing activities
Purchase of certain assets and undertakings
of AI Mastermind LLC - (3,357) (3,880)
Proceeds on disposal of trade and assets - 350 -
Purchase of tangible assets (7) (166) (655)
Purchase of intangible assets (326) (803) (237)
---------------------------------------------- ---------- ---------- ----------
Net cash used in investing activities (333) (3,976) (4,772)
---------------------------------------------- ---------- ---------- ----------
Financing activities
Repayment of borrowings (491) (402) (89)
Interest paid (163) (57) (30)
Issue of shares for cash (net of
expenses) 76 8,553 9,108
---------------------------------------------- ---------- ---------- ----------
Net cash from financing activities (578) 8,094 8,989
---------------------------------------------- ---------- ---------- ----------
Net increase/(decrease) in cash and cash
equivalents (1,135) 1,930 3,065
Cash and cash equivalents at the beginning
of the period 2,350 420 420
---------------------------------------------- ---------- ---------- ----------
Cash and cash equivalents at the
end of the period 1,215 2,350 3,485
---------------------------------------------- ---------- ---------- ----------
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half
year ended 30 September 2020 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
2020. The Group's accounting policies are based on the recognition
and measurement principles of International Financial Reporting
Standards as adopted by the European Union. 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 22 January 2021.
The financial information contained in the interim report has
not been reviewed or audited, and does not constitute statutory
accounts for the purpose of Section 434 of the Companies Act 2006,
and does not include all of the information or disclosures required
and should therefore be read in conjunction with the Group's
2019/20 consolidated financial statements, which have been prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union.
The financial information relating to the period ended 31 March
2020 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
2020 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 2020, 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 2020. 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 2020.
The Financial Reporting Council issued "Going Concern and
Liquidity Risk: Guidance for Directors of UK Companies" in 2009,
and "Guidance on the Going Concern Basis of Accounting and
Reporting on Solvency and Liquidity Risks" in 2016. The Directors
have considered these when preparing the interim financial
statements.
The current economic conditions caused by the COVID-19 pandemic
have created uncertainty particularly over the level of demand for
the Group's products and services and over the availability of
finance which the directors are mindful of. The Board is confident
that the Group has sufficient liquidity to trade through to more
normalized 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 summarized below:
-- The Directors have prepared sensitised cash flow forecasts
extending to March 2022. The cashflows include a base scenario and
a sensitized revenue scenario.
-- The base scenario assumes reductions in revenue of 44% and
17% in the current financial year to March 2021 and the year to 31
March 2022 respectively, compared to an annualized 2019/20
comparative. The sensitized scenario assumes reductions in revenue
of 47% and 23% respectively, each compared to an annualized 2019/20
comparative. The model indicates that the Company can trade
throughout the period to 31 March 2022 in either scenario.
In addition, the forecast assumes continued elongation of credit
terms with customers. Collection of receivables during the pandemic
has been understandably problematical and in the current climate we
are unable to predict with accuracy the timing of future cash
receipts and therefore rely on current and past experience to make
such judgments. The model assumes cash collections in line with
what we have experienced since the acquisition of AIM and more
recently in the post COVID-19 period
-- The base and sensitized cash flow forecasts do not include
any mitigating factors available to management in terms of:
-- discontinuing the development of AIM Capital Services to release working capital
-- reactionary cost reduction programmes in respect of headcount and organisation
-- the availability of a second round of Federal support in the
US in the form of the Paycheck Protection Programme
-- securing new working capital facilities in respect of the AIM Capital Solutions business
-- The Group maintains the distributor membership and preferred
suppliers throughout the forecast period
-- The Group continues to develop the product offerings to meet
the demands of the market and customers
The Directors have considered the position of the individual
trading companies in the Group to ensure that these companies are
also able to continue to meet their obligations as they fall
due.
There are not believed to be any contingent liabilities which
could result in a significant impact on the business if they were
to crystallise.
Based on the above indications and assumptions, the Directors
believe that it remains appropriate to prepare the interim
financial statements on a going concern basis.
However, the impact of COVID-19 could still possibly result in
revenue and resulting cash inflows that are less and later than
modelled potentially creating a need to secure additional funding.
The Directors consider that such a severe, yet plausible scenario
indicates the existence of a material uncertainty which may cast
significant doubt on the Group and company's ability to continue as
a going concern.
Notwithstanding that these factors represent a material
uncertainty that may cast significant doubt about the Group's
ability to continue as a going concern, the Board has a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern
basis in preparing the Annual Report and Accounts.
The interim financial statements do not include any adjustments
that would result from the basis of preparation being
inappropriate.
3. 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 15 months 6 months
30 Sep 31 Mar 30 Jun
2020 2020 2019
GBP'000 GBP'000 GBP'000
Continuing operations - Loss for
the period (601) (2,391) (427)
Discontinued operations - Loss for
the period (117) (3,336) (315)
Weighted average number of shares
(number '000) 69,637 68,125 67,060
---------- ---------- ----------
Fully diluted weighted average number of
shares (number '000) 71,811 69,948 68,864
---------- ---------- ----------
- Basic and diluted (pence) - Continuing
operations (0.86p) (3.51p) (0.64p)
- Basic and diluted (pence) - Discontinued
operations (0.17p) (4.90p) (0.47p)
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 2020.
4. Prior period adjustment
The results for the six month period to 30 June 2019 have been
restated due to a cut off error identified in Ad Products during
the FY19/20 financial period relating to 2018.
An accrual was erroneously made in the 2018 financial statements
in respect of certain goods in transit, requiring correction by
increasing cost of sales and decreasing goods in transit
respectively by GBP188k, resulting in retained losses at 31
December 2018 being increased by GBP188k.
As a result of the above error Ad Products cost of sales was
overstated by GBP188k in the interim financial results for the six
month period to 30 June 2019.
The impact of the restatement is shown below.
Increase/ Restated
As previously Decrease 30 June
Consolidated income statement (extract) stated GBP000's 2019
Loss on discontinued operation (503) 188 (315)
(Loss)/profit attributable to the equity
shareholders of the Company (930) 188 (742)
(Loss)/Earnings per ordinary share
attributable to the equity shareholders
of the Company:
- Basic and diluted (pence) - Continuing
operations (0.64p) 0.00p (0.64p)
- Basic and diluted (pence) - Discontinued
operations (0.75p) 0.28p (0.47p)
5. Assets held for sale
On 23 March 2020 the Ad Products business was classified as
assets held for sale following Board approval of the disposal of Ad
Products to Product Services Group ("PSG").
PSG was owned and controlled by Joanne Varley, wife of Martin
Varley who was at the time a non-executive Director of and a 14.8
percent shareholder in Altitude. The Disposal, therefore, was
considered a related party transaction for the purposes of the AIM
Rules and was a substantial property transaction under the
Companies Act.
As required by IFRS 5, the Group re-measured Ad Products assets
at the lower of the carrying amount and fair value less costs to
sell, as set out below.
The transaction completed on 7 April 2020 following approval by
the shareholders in general meeting on 3 April 2020. The business
was not sold at 31 March 2020 and is therefore classified as held
for sale at this date.
In accordance with IFRS 5, assets and liabilities classified as
held for sale are shown as a separate line on the balance sheet.
IFRS 5 also requires that the profit or loss from a discontinued
operation is shown as a single amount on the face of the income
statement and the comparatives and related notes have been restated
accordingly.
The loss for the period represents total post-tax loss of the
disposal group for the whole of the financial period, including any
post-tax gain or loss on the measurement of fair value, as well as
the post-tax loss on sale of the disposal group.
Financial Performance
The financial performance and cash flow information presented
are for the fifteen months ended 31 March 2020 (2019/20 column) and
the year ended 31 December 2018.
15 months
31 Mar
2020
GBP'000
Revenue - Continuing Operations 4,460
Cost of sales (2,647)
------------------------------------------------ ----------
Gross profit 1,813
Administrative expenses before share based
payment charges, depreciation amortisation
and exceptional expenses (2,171)
Operating loss before share based payment
charges, depreciation, amortisation and
exceptional charges (358)
Depreciation and amortisation (332)
Exceptional charges (439)
Total administrative expenses (2,942)
------------------------------------------------ ----------
Operating loss before taxation (1,129)
Taxation -
--------------------------------------------- ----------
Loss for the period (1,129)
* The prior year adjustment arose from a cut-off error
discovered during the current financial period relating to 2018. An
accrual was erroneously made in the 2018 financial statements in
respect of certain goods in transit, requiring correction by
increasing cost of sales and decreasing goods in transit
respectively by GBP188k, resulting in retained losses at 31
December 2018 being increased by GBP188k.
Cash flow from the discontinued operation is as follows:
15 months
31 Mar
2020
GBP'000
Operating cash outflow before changes in
working capital (751)
-------------------------------------------- ---- ----------
Net cash out ow from operating activities 185
-------------------------------------------------- ----------
Net cash out ow from investing activities (30)
-------------------------------------------------- ----------
Net cash in ow from financing activities (306)
-------------------------------------------------- ----------
Net cash outflow from discontinued
operation 151
-------------------------------------------------- ----------
Details of the sale of the Ad Products business
The loss on measurement and disposal of assets held for sale is
calculated as follows:
31 Mar 31 Mar
2020 2020
GBP'000 GBP'000
Disposal proceeds
---------------------------------------- --------
Cash on completion* 350
Unconditional deferred consideration** 300
Additional deferred consideration*** -
Total consideration 650
------------------------------------------ --------
Carrying value of assets as at date
of sale:
---------------------------------------- --------
Fixed assets 692
Inventory 1,819
Trade and other debtors 346 (2,857)
------------------------------------------ --------
Loss on measurement of assets held
for sale (2,207)
------------------------------------------ --------
*The cash due on completion of disposal on 3rd April 2020 was
prepaid by the purchaser prior to the period end and is included in
the financial statements as deferred income within other
creditors.
**The unconditional deferred consideration is subject to the
personal guarantee of Martin Varley and is receivable under the
following schedule:
-- GBP50,000 on 3 August 2020
-- GBP50,000 on 3 October 2020
-- GBP100,000 on 3 December 2020 and
-- GBP100,000 on 3 March 2021
As at 22 January 2021, all amounts due under the agreed schedule
have been received. The Directors currently consider the current
fair value of the unconditional deferred consideration to be GBP0.3
million.
*** The additional consideration of GBP150k is payable subject
to the achievement of a revenue target by the disposed business in
the year to 31 March 2021. The Directors consider achievement of
the target revenue to be unlikely given the impact of COVID-19 on
the Ad Products business and have therefore estimated the fair
value of the additional consideration to be GBPnil.
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation as at 31 March
2020:
31 Mar
2020
GBP'000
Assets classified as held for sale
------------------------------------------ --------
Property, plant, machinery and equipment -
Promotional products 294
Trade debtors 356
Total assets of disposal group held
for sale 650
--------------------------------------------- --------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR SEEFAEEFSEFF
(END) Dow Jones Newswires
January 25, 2021 02:00 ET (07:00 GMT)
Altitude (LSE:ALT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Altitude (LSE:ALT)
Historical Stock Chart
From Apr 2023 to Apr 2024
