Altitude Group
plc
("Altitude", the "Company" or
the "Group")
Audited Annual Results for
the Year Ended 31 March 2024 and Notice of Annual General
Meeting
ALTITUDE CONTINUES TO DELIVER
RECORD BREAKING RESULTS
Financial Highlights
· Adjusted basic earnings per share increased by 60.1% to 2.61p
(2023: 1.63p)
· Basic
earnings per share increased by 78.2% to 0.98p (2023:
0.55p)
· Group
revenues increased by £5.2 million to £24.0 million, 33.0% at
constant currency (2023: £18.8 million)
· Gross
profit increased 25.1% at constant currency by £1.8 million to
£10.4 million (2023: £ 8.6 million)
· We are
proud to report a record Group adjusted operating profit* growing
by 30.2% at constant currency to £2.4 million (2023: £2.0
million)
· Cash
inflow from operating activities increased by £0.6 million to £2.1
million (2023: inflow £1.6m) driven by significant revenue growth
and increased trading activities
· Cash
remained robust at £1.2 million (2023: £1.2 million) following
increased levels of investment, highlighting our financial
stability.
· The
Group increased its total financing facilities to $3.5 million
(2023: $2.0 million) to support working capital fluctuations and
future substantial growth in Merchanting. The facility is undrawn
at the year end.
*Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Key
corporate developments and operational highlights
· The
Group enjoyed another record year, doubling revenues since FY22 and
increasing adjusted operating profit* by 2.25 times in the same
two-year period
· The
Group's investment in Merchanting growth is the significant growth
driver supported by the Services division which continued to
outpace the greater promo industry
· The US
delivered adjusted operating profit growth before central costs of
17% reaching $4.8 million (2023: $4.1 million)
· The
Group's disruptive collegiate Gear Shop solution continued to
expand with 7 new contracts since HY24 and continues to have a
strong pipeline of opportunities this financial year
· UGS
has 19 campus programmes at 22 locations, with a total lifetime
contract value of c$45 million and $9 million (2023: 5 active
contracts of $1 million) annualised average expected
revenues
· ACS
continued to add significant revenue growth, further growing
annualised expected revenues by 32% to $18 million (2023: $13.6
million) from both recruitment and organic growth
· ACS
has started FY25 of with an additional $2 million of wins to reach
$20 million annualised expected revenue
· Services revenue has grown by 5.6%, delivering 90.5% gross
margin
· US AIM
membership has continued to grow, and currently totals 2,262
members, up from 1,917 at acquisition, consolidating its position
as one of the largest and strongest distributor organisations,
recently being named a top distributor by the industry trade
association PPAI
Please note that percentages are calculated based on unrounded
numbers as reported in the primary statements.
Notice of Annual General meeting ("AGM")
The Company also gives notice that
its AGM will be held at the offices of Zeus, 125 Old Broad Street,
12th Floor, London, EC2N 1AR on 23 September 2024 at 11 a.m. The
Notice of AGM and the Annual Report for the year ended 31 March
2024 will be posted to shareholders and will be available on the
Group's website (https://www.altitudeplc.com/reports-results)
in due course.
Nichole Stella, Group CEO of
Altitude, said:
"FY24 was a
continuation of the accelerated growth we achieved in FY23, and
once again we achieved record-breaking results for the Group. It
was a year that required intense focus on delivery in new markets
and ensuring continued scale within our core industry. FY25 has
started strongly, with commercial growth in Merchanting and with
Services continuing to outperform the wider industry. We remain
excited about our growth potential, and continue to trade in line
with market expectations."
Altitude Group
plc
Nichole Stella, Chief Executive
Officer
Graham Feltham, Chief Financial
Officer
|
Via Zeus
|
Zeus (Nominated
Adviser & Broker)
Dan Bate / James Edis (Investment
Banking)
Dominic King (Corporate Broking)
|
Tel: +44 (0) 203 829 5000
|
Chairman's Statement
I
am pleased to report that the Group has shown strong performance in
FY24 and once again delivered excellent revenue
growth.
The management team have continued
to deliver on our growth strategy and have built out a diversified
offering in strategically attractive markets. The delivery of a
large number of Gear Shop contracts and substantial growth in our
ACS affiliates in the last financial year complements our
traditional strengths in servicing the promotional products
industry. The Group delivered 28% revenue growth to £24.0 million
(2023: £18.8 million). Highlighting the importance of our
Merchanting division, the Group grew gross profit by £1.8 million
to £10.4 million (2023: £8.6 million) with £1.6 million of the
growth being driven by Merchanting. The high margin service
division remains a material contributor to the Group's adjusted
operating profit, which increased by 23% to £2.4 million (2023:
£2.0 million), almost 10% ahead of market expectations. This is an
excellent result and is testament to the continued delivery of our
strategy and the power of our business model.
We continue to invest in the
development of our technology and marketing platforms to provide
our AIM distributors, ACS Affiliates and Preferred Partner suppliers with market leading
capabilities. In addition, we have invested
in our Gear Shops to expand our reach and in the underlying systems
and processes of the Group to drive benefits in operational gearing
as we scale.
Year in Focus
Establishing a strong foothold within the Collegiate market
whilst growing our Affiliates and outperforming the market in the
Promotional Products Industry has taken effort and places us well
for future growth.
In January 2023 we launched our
third physical Gear Shop and by the end of March 2024 we landed
with 16 live contracts. We also improved the quality within that
number exiting 2 'online only' small stores but replacing with 13
more strategic contracts. Going live at 15 locations mostly in
March to August is an extraordinary achievement and I commend the
team on its delivery. FY25 has started with a further 7 contract
wins and churn of 3 contracts in a season which is still open to
win more contracts as we progress through the year.
Our ACS Affiliates, after doubling
in annualised expected revenues during the prior year, has again
grown by 32% from a mix of Affiliate recruitment and organic
growth. We are seeing the material revenue growth arising from the
prior year's wins and we look forward to securing additional
Affiliates to ACS in FY25.
The promotional products industry,
as reported by ASI Research, showed a slowdown in growth throughout
FY24 with September to December 2023 being flat year on year. This
brought industry growth rates for the calendar year 2023 to 1.2%
(Calendar 2022: 11.4%) with our own underlying Services growth rate
achieving 5.6% in FY24. Our ability to exceed the industry
benchmark is testament to our compelling offer, high-quality
membership and partner network. We will continuously strive to grow
further in a competitive and fragmented market.
In a year where the business model
of the Group has substantially evolved we have managed our cash
position highly effectively. Delivering net increase in cash and
cash equivalents of £0.1 million (2023: increase £0.2 million) in a
year where we increased capital investment by 62.5% to £1.8 million
(2023: £1.1 million), whilst building in organic growth is a
significant achievement. We extended our existing credit facility
from $1.5 million to $3.0 million which supports the up-front
investment in fit out and inventory for our Gear Shop contracts and
other routine working capital fluctuations. The facility has been
secured ahead of time and will be under constant review at each
annual renewal. The Group has utilised its facility during the
year, but is debt free at the year end and the facility remains in
place to support future growth as opportunity arises.
Management have outperformed in what
has been a transformative year for the Group. They have delivered
above market expectations for the second year running, and I have
confidence in them continuing to deliver excellent
performance.
Looking Forward
A business only moves forward though
the skills and dedication of its people. On behalf of the Board, I
would like to thank all the Altitude Group's employees for their
hard work and passion which has delivered another strong set of
results.
As we move through 2024 and 2025, we
will focus on increasing profitability and strengthening our
position within the Collegiate market. Continued focus on
promotional products strategic partnerships within AIM and scaling
our Affiliate model are further priorities.
The Management team have overcome
many operational challenges to deliver the business we have today
and retain the hunger to further improve and win new business. I am
confident we have the right team in place under the dynamic and
agile leadership of Nichole to continue delivery of our
strategy.
Despite the slowdown in the
promotional products market, we have delivered excellent growth in
revenues and profits for the third consecutive year. We will
continue to execute on our strategy to ensure we provide
sustainable performance year on year. As ever we remain committed
to listening to and delivering superior value to our stakeholders
and look forward to the exciting opportunities that lie
ahead.
David
Smith
Non-Executive
Chairman
29 July
2024
Chief Executive's
Statement
Financial year 2024 ("FY24") saw a
continuation of Altitude's accelerated organic scale, expansion and
delivery of more Group record-breaking results. We reported growth
across our services divisions and affiliate program, outstripping
the wider promotional product industry in YOY growth, which
industry body PPAI reported grew by 2.24% in 2023 and reported
sales figures of $26.1 billion (2022: $25.5 billion). Additionally,
the Group's reputation within the specialty education market
continues to grow with the nationwide launch and delivery of our
newly contracted Gear Shops.
Our teams focus on performance and
relentless pursuit of growth, once again delivered a year of
outstanding results for the Group. For FY24, we delivered an
increase in revenues of 33.0% at constant currency to £24 million
(2023: £18.8 million) and Group adjusted operating profit*
increased by 30.2% at constant currency to £2.4
million (2023: £2 million). The US operations delivered an
adjusted operating profit before central costs increase of 17% to
$4.8 million (2023: $4.1 million), which has powered our ability to
scale the business organically.
Operational Excellence
We prioritise continuous improvement
and operational efficiency by utilising strategies for process
optimisation, scaling programs, and enhancing technology. Recent
operational streamlining has enabled reinvestment in our business,
fuelling pipeline growth and new revenue opportunities. This focus
enhances our agility in adapting to market changes and seizing new
opportunities. Examples include optimising supply chain logistics
and upgrading production systems for increased
efficiency.
Services &
Merchanting
In FY24 the Group delivered growth
across both its Global Services programmes and its US based
Merchanting programmes. The Global Services division delivered
continued growth of 5.6% at constant currency reaching £8.7 million
(2023: £8.5 million). Whilst tempered following the post-covid boom
of FY 2023, our Services programmes continue to deliver high gross
margins and support our organic growth strategies. Simultaneously,
our Merchanting Revenue experienced a 55.8% at constant currency
increase, totalling £15.3 million (2023: £10.2 million). These
results are evidence of our business's accomplishments in expanding
market influence and broadening our revenue sources.
Our services programs have a
worldwide presence, encompassing members in all US states, Canada,
and the UK. At year end, our global membership totals
2,509 (2023: 2,476), representing an estimated share
of the promotional products aggregate sales figure of
$3.0 billion (2023: $2.9 billion) and an average annual turnover
per member of $1.2 million (2023: $1.2 million). Additionally, we
continue to have strong supply partners with more
than 300 Preferred Partners spanning the US, Canada, and the
UK.
In contrast, our Merchanting programs are
exclusively focused in the US, and are steadily expanding across
the country. Our specialty education Gear Shops have
grown exponentially in the year achieving 600% growth in the year.
We have built on both our live contracts and learnings in a new
market - adding stronger campus partners and releasing small online
low yield contracts. Additionally, the team has built a solid
reputation within the market and we anticipate continued scaling in
this market. With our team's growing knowledge, we are able to be
more selective in the campus programs we agree to serve and can
approach larger institutions with confidence as we continue to
compete against the large legacy providers.
Our affiliate programme, ACS, continues to
mature and gain brand recognition. The division continues to
recruit high-calibre promotional product sales professionals to
join ACS. These sales professionals act as our sales agent and in
return we provide access to our Preferred Partner network and
administrative, accounting and financial assistance. ACS grew by
32%, highlighting the strong emphasis we
place on recruitment of high-quality affiliates and our commitment
to maintaining exceptional quality standards.
Technology
Our technology is the heart of our operations,
spanning both the Services and Merchanting segments of our
business. We continue to work within an agile framework focused on
continuous improvement. In the year we have maintained a steadfast
investment in enhancing our systems through integrations, and
systematic systems and feature upgrades. This focus empowers us to
consistently deliver exceptional services to our clients and
attract larger members, affiliates and campus clients.
Last year we introduced notable partnerships
like Fully Promoted, a global franchise group, that chose our order
management platform after conducting a comprehensive industry-wide
review of over 20 tech providers. Today, we continue to grow with
Fully Promoted serving more than 90 franchisees in the US and now
Canada. Additionally, we are now the exclusive technology provider
for all new Franchisees and have recently been named 'Vendor of the
Year' at the Fully Promoted 'World Expo'.
Credit Facility
We were also pleased to report in
the financial year that the Group secured an increase in its
facilities (the "Facilities") with TD Bank N.A.
totalling $3.2 million, previously $1.7m. The facilities increase was secured from continued successful
delivery across all areas of the business. The Facilities have no significant financial covenants
and will
provide access to non-dilutive funding to support the continued
execution of the Group's growth strategy. The main Facility was
undrawn at the year end and is renewed annually.
Trading Progress
Services
Throughout the financial year our focus
remained squarely on driving efficiency, investing in and expanding
our pipelines and promoting growth across our major routes to
revenue growth through our services programs, including our
Preferred Partner Program, technology service fees, marketing
service fees, subscription fees, and product fees via:
·
Driving growth for our Preferred Partners;
·
Retention and continued growth in the AIM membership of
high-quality promotional product distributors;
·
Helping selected Preferred Partners grow their share of the
total AIM purchase pipeline;
·
Supporting AIM distributor members grow their business to
end-user clients and driving the end-users to purchase through
preferred vendors and programs, all of which drives revenue and
profits to AIM and benefits the Group as a whole; continuing to
increase member utilisation of the AIM Tech Suite.
Merchanting
The financial year saw growth across its
Merchanting segments via:
· The
Group's Gear Shop division won significant contracts, delivered the
national launch of the new contracts on time and benefited from
these wins in FY24. As a new and disruptive service provider in the
space, we have garnered attention and entered into new partnerships
that accelerated growth in FY24 and will continue to drive growth
of the division in FY25 and beyond. In addition, we began efforts
to provide longer term efficiencies in supply logistics and
inventory management which will benefit the Group in FY25 and
beyond.
·
AIM's premium enhanced member service marketed as ACS
requires mandatory use of the full AIM Tech suite and offers
technology driven back-office support, procurement utilising our
supply chain relationships, on which the Group is the principal in
the sale and pays the sales agent a commission.
Market Opportunities
We continue to see notable momentum within our
Group as we explore promising opportunities in adjacent markets.
Specifically, our key areas of interest within the higher education
service provider sector. Within the estimated $12 billion higher
education market, our Gear Shop solution has proven to be
disruptive and has garnered much interest. We remain intensively
focused on expanding our pipeline, securing deals, and innovating
within this adjacent market. With additional multi-year contracts
already signed this financial year, we view this as a crucial area
for substantial growth in both the short and long term for our
Group.
At present, the Group continues to boast a
network of 2,262 distributors in North America, accounting for
approximately 10% of the total distributor companies in the
industry. As noted previously, PPAI's market research estimates the
current size of the U.S. promotional products market in 2023,
experienced tempered growth in the year of 2.24% to a market size
of $26.1 billion. Their report further noted, "While another
milestone, this represents a net negative for the
industry. The growth rate for 2023 was 2.24%, failing to
outpace inflation, which has not dipped below 3% since March 2021."
While the industry experienced slower growth rates in the year, 63%
of distributors are bullish on growth for the new year. The Group,
with our Services and ACS affiliate division of Merchanting, easily
outstripped the wider market growth in its market share gains down
to both affiliate recruitment as well as from our existing
affiliates and we anticipate this accelerated growth continuing
through this new financial year.
We have a highly skilled management
team and advanced technology tailored to the markets we serve.
Pairing our ongoing industry expansion and our
successful entrance into the
higher education market we are confident in the Group's continued
significant opportunities.
Our People & Our
Commitment
Our workforce and community are the cornerstone
of our organisation. We are committed to nurturing employee
development and cultivating a supportive and inclusive culture that
celebrates the accomplishments and contributions of every team
member, from entry-level to executive positions. We prioritise
creating an environment where individuals can thrive and grow
professionally, fostering a sense of belonging and engagement. Our
dedication to recognising and rewarding achievements ensures that
each employee feels valued and motivated, enhancing overall morale
and productivity across the organisation. Throughout the year, we
continued to prioritise internal promotions, enabling 16
individuals to advance their careers and expand their skill
sets.
Diversity, Equity &
Inclusion
Our organisation fully embraces and
upholds the values of diversity, equity, and inclusion (DEI). These
principles play a vital role in how we form our teams, develop our
leaders, and establish collaborative, innovative, and inclusive
environments within the Altitude Group and our wider industry. Our
inclusive culture fosters a range of perspectives, encourages open
and honest discussions, and empowers each individual within our
team and the broader communities we serve.
Community Engagement & Giving
Back
At Altitude, we are a
forward-thinking organisation that integrates ESG principles into
our everyday operations. Our
commitment to community engagement and giving back is core to who
we are and what we believe to be vital for the overall
success and well-being of society. We
view our commitment to community engagement not just as corporate
duty but a defining core value of the
business. Our goal is to represent
positive change and commitment to corporate responsibility that
contributes to a more inclusive resilient society that works
towards the betterment of all.
A notable initiative launched in
FY23 and expanded in FY24 is our Gear Shop division's Educational
Giving Back (EGB) scholarship program, in which we donate financial
scholarships to students in need. The Gear Shop division is a
growing area for our business and thus our pledged scholarships
will continue expanding as the division expands. Our EGB
scholarship program is national throughout the campus communities
we serve. We empower students' equitable outcomes by providing
financial support in order to access educational programs and
course materials. Additionally, we extend our impact in higher
education through student internship and ambassador programs. These
initiatives further equip students with practical skills and a
future competitive edge when they enter the job market. We are
committed to today's students, nurturing their talent for
successful outcomes and futures and thus provide a positive
contribution to society.
Altitude Group continues its social
responsibility efforts and "adopted" Arthur's Acres Animal
Sanctuary (AAAS), reflecting dedication to animal welfare and
sustainability. Our initiatives align with the sanctuary's mission
of rescue, rehabilitation, and education for a sustainable and
cruelty-free world. In FY24, in partnership with one of our Gear
Shop university clients, we paired (AAAS) with the university's
architectural program, for a semester long project to redesign a
new rehabilitation barn for animals with special needs.
Additionally, we provide donations and allow employees to
participate in various volunteer efforts in support of this
program.
Outlook
FY24 was a continuation of the accelerated
growth we achieved in FY23, and once again we achieved
record-breaking results for the Group. It was a year that required
intense focus on delivery in new markets and ensuring continued
scale within our core industry. FY25 has started strongly, with
commercial growth in Merchanting and with Services continuing to
outperform the wider industry. We remain excited about our growth
potential, and continue to trade in line with market
expectations.
Nichole
Stella
Chief
Executive
29 July
2024
Chief Operating Officer's
Report
During FY24 we continued to invest
strategically in technology development to gear our Services and
Merchanting operations for further growth, our dual focus on
innovation and operational excellence has bolstered our ability to
deliver superior services to our members, affiliates and clients
providing several technologically driven advancements that have
enabled contract wins across all divisions.
Product Innovation and
Development
We continued to advance our proprietary Tech
Suite, providing an end-to-end SaaS solution that enables our users
to source, showcase, and seamlessly fulfil orders for branded items
across the US, UK and Canada. Our commitment to technological
innovation remains at the forefront of our strategy. Throughout the
year, our highly skilled and knowledgeable in-house research and
development team introduced several core enhancements to the AIM
and ACS Tech Suite, addressing the evolving needs of our users and
providing increased efficiency for internal processing teams to
support growing volumes of orders being processed.
Key achievements included:
Eight Technology Releases: This year focussed
largely on increasing operational efficiencies within our order
management solution, with growing order volumes processed through
our Merchanting divisions, 35 major technological advancements were
made to enable efficient scalability through technological
solutions. These advancements provided enhancements to platform
users, internal order processing and account management teams and
end-buyers.
MerchBook™ was developed and launched, a
proprietary and fully customisable online publication solution that
enables users to upload logos directly to interactive merchandise
catalogues, driving forward a digital approach to industry
publications.
Canadian Market: Specialised development was
completed to Tech Suite which has enabled the introduction of a
Canadian product catalogue and specific Canadian system operations
resulting in the successful onboarding of AIM's first Canadian
based promotional product distributors.
Strengthened Supplier Relations: Now with over
335 integrations (FY23: 220) that facilitate live data exchanges
between Preferred Partners and Tech Suite users, continued effort
was placed on enhancing and strengthening these relationships
through deeper electronic processes centred around the seamless
exchange of passage of product, inventory, art and order
data.
Data Intelligence
Data intelligence is now integral to our
strategic approach, driving informed decision-making
and uncovering valuable insights across Services, Merchanting and
campus operations. By leveraging advanced analytics and Amazon Web
Services data processing power, we have developed a robust internal
business intelligence platform that tracks key performance
indicators (KPIs) throughout the group. This platform enables us to
monitor and optimise various aspects of our business, from
operational efficiencies to user behaviour and market trends. The
actionable insights derived from our data intelligence efforts and
dedicated team empower our teams to make data-driven decisions,
enhancing productivity, manage cost bases and ultimately improve
user and buyer experiences, this is key to our sustained growth and
competitive edge in the industry.
Operational Excellence
We continued to enhance our operational
efficiency and agility through various initiatives. By implementing
deeper automation of processes across various departments including
data processing, account management, finance, system development
and quality assurance we have and continue to streamline processes
and improve our scalability.
Cybersecurity and Data
Protection
Cybersecurity remains a top priority as we
safeguard our digital infrastructure and protect our customers'
data. During FY24, we have implemented additional advanced
cybersecurity measures to defend against evolving threats, ensuring
robust protection for our systems and sensitive information. Our
proactive approach includes regular updates to our security
protocols and the deployment of cutting-edge technologies to detect
and mitigate potential vulnerabilities. Additionally, we have
implemented targeted dedicated employee training on cybersecurity
best practices, fostering a culture of vigilance and awareness
throughout the organisation.
Our commitment to data protection, privacy and
payment compliance, and adherence to industry standards is
unwavering, as we strive to maintain the highest levels of trust
and security for our members, affiliates, clients and
partners.
Looking Ahead
Looking ahead, we remain committed to providing
best-in-class solutions to our market by integrating customer
feedback and emerging trends into our business strategies. We will
continue to invest in research, development, and data intelligence
with a core focus on delivering internal scalability and
best-in-class solutions.
Deborah
Wilkinson
Chief
Operating Officer
29 July
2024
Chief Financial Officer's Report
Financial Results
Group revenues for the year
increased by an underlying £6.2 million despite an adverse foreign
exchange variance of £1.0 million to arrive at reported revenues of
£24.0 million (2023: £18.8 million), an underlying increase of
33.0%.
FY24 was the year of 'locking in'
successful Collegiate contract wins and reaffirming our position as
a key player in the Promotional Products Industry. We have
achieved our revenue growth from new contract wins in our
Merchanting division and performing well in Services which was
impacted by an industry-wide slower growth year when compared
against 2022, which was boosted by being the first full year
post-pandemic.
Our underlying Service revenue
growth of 5.6% is mainly driven from throughput volume, derived
from membership activity through our VIP Supplier network,
surpassing the industry 2023 calendar year distributor average of
1.2% (2023:11.2%) as reported by ASI Central. This reflects our
commitment to a high quality distributor membership
model.
The Merchanting Division has grown
from further expansion in our Affiliate sales network with year-end
expected annualised run-rate revenues growing by 32% to $18 million
(2023: $13.6 million) from a mix of 18% recruitment and 14% organic
growth. Following the year end we have signed additional
Affiliates comprising a further approximately $2 million in
potential annual revenue to reach the $20 million milestone in
annualised expected revenue run rates.
Our Adjacent Market Programme
('AMP') focusing on our Collegiate Gear Shops within the
Educational Sector has seen underlying revenue growth of 600%,
ending the year with 16 (2023: 5) contracts of over $7 million
(2023: $1 million) expected aggregate annualised revenues. During
FY24 we gained 13 contracts and exited 2 small online only
contracts. Altitude's now firm foothold into the
complementary Collegiate adjacent market provides growth
opportunities as well as diversification. We commence FY25
with 6 newly awarded programmes and 3 churned contracts to reach 19
contracts comprising approximately of $9 million annualised average
expected revenues with an active near term pipeline of
opportunities to go for. We have recently expanded our reach by
developing further strategic partnerships. We cannot
underplay how much we believe our expansion and market positioning
positively impacts the outlook for the Group as we continue to
learn and grow in this exciting space.
Operational gearing is a key area of
focus for us with our Affiliate model delivering high levels of
revenue growth for lower margin, profitability is sensitive to
overhead increases. Therefore process efficiency and cost control
is essential to maximising profit realisation. Within our Gear
Shops we measure expected returns on each contract to assess the
appropriate level of investment in a strong central team. The
central Gear Shop team will then be equipped to deliver further
growth. In Merchanting as a whole we have implemented
improved processes throughout the year and have now gone live with
a new ERP with integrated inventory management within our AMP's
programmes.
|
|
Year ended
|
|
Year ended
|
|
Impact of currency
translation
|
|
Underlying
change
|
|
Total
change
|
|
|
31 March
|
|
31 March
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
Group
|
|
Group
|
|
Group
|
Group
|
|
Group
|
Group
|
Turnover
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
8,690
|
|
8,523
|
|
(313)
|
|
480
|
5.6%
|
|
167
|
2.0%
|
Merchanting
|
|
15,319
|
|
10,238
|
|
(637)
|
|
5,718
|
55.8%
|
|
5,081
|
49.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
24,009
|
|
18,761
|
|
(950)
|
|
6,198
|
33.0%
|
|
5,248
|
28.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
7,862
|
|
7,718
|
|
(287)
|
|
431
|
5.6%
|
|
144
|
1.9%
|
Merchanting
|
|
2,512
|
|
887
|
|
(104)
|
|
1,729
|
195.0%
|
|
1,625
|
183.2%
|
Total
|
|
10,374
|
|
8,605
|
|
(391)
|
|
2,160
|
25.1%
|
|
1,769
|
20.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
90.5%
|
|
90.6%
|
|
|
|
|
|
|
|
|
Merchanting
|
|
16.4%
|
|
8.7%
|
|
|
|
|
|
|
|
|
Total
|
|
43.2%
|
|
45.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit has increased by £2.2
million, a 25.1% underlying increase, to £10.4 million (2023: £8.6
million) despite an adverse currency variance of £0.4
million.
Gross margin is relatively stable at
43.2% (2023: 45.9%). Whilst Services retained a consistently
high margin of 90.5%, Merchanting gross margin grew to 16.4% (2023:
8.7%) being driven from the delivery of won contracts in the
Collegiate sector which delivers a substantially higher gross
margin than the Affiliate model. The graduation regalia sales that
mainly occur between March and May with an element in December have
a mix of store sales and commission sales which occur when we
utilise an online supplier sales channel as is customary in the
Industry.
Administration expenses before
share-based payments, amortisation
of intangible assets, depreciation of tangible
assets and exceptional charges of £8.0 million (2023: £6.6 million)
are ahead of prior year by £1.3 million or £1.6 million at
underlying rates. This increase has been driven from the roll out
and delivery of the Collegiate contracts of £1.0 million from store
employees, central procurement and operations. Volume-related
increases driven by transaction levels with administrative support
staff c£0.4 million countered by a reduction in incentives of £0.4
million. Inflationary wage rises and costs increases have been
estimated at impacting c£0.2 million.
Adjusted operating profit* increased
by 30.2% at underlying rates and at actual exchange rates by 23.0%
to £2.4 million (2023: £2.0 million). The statutory profit before
taxation was at break even (2023: profit of £0.2 million), whilst
the adjusted profit*** before taxation increased by £0.2 million to
£1.2 million (2023: £0.9 million). Please see below for constant
currency analysis.
Exceptional costs
The Group incurred exceptional costs
of £0.3 million (2023: £0.1 million) relating to re-organisations
within Sales, introducing a Global Head of Sales, along with
continued Finance transformation including a system project to make
stepped changes to support the fast changing nature of the
Group.
Development
The Group capitalised £1.3 million of software
development (2023: £0.9 million). The commitment to investing in
our technology is underpinned by our spend and our close
relationship with our Affiliates and members in driving customer
focused improvements. Included within Internally generated
development is £0.2 million related to the ERP system
implementation. This is discussed in more detail in the COO
review.
Earnings per share
Basic earnings per share were 0.98p
(2023: 0.55p), an increase of 78.2%. Adjusted basic earnings
per share** was 2.61p (2023: 1.63p), representing an increase of
60.1%. The calculation for adjusted earnings per share was updated
in the prior year to be consistent with external measures by adding
back amortisation on acquired intangibles whereas previously all
depreciation and amortisation was added back.
Taxation
The Group is carrying a deferred
taxation asset of £0.7 million (2023: £0.5 million) reflecting the recognition of tax
losses carried forward. Based on future forecasts the Directors
believe the Group's profits will be sufficient to fully utilise the
deferred tax asset within the next four years. The Group was again
successful in its application for the R&D tax credit resulting
in a profit and loss tax credit of £0.1 million (2023: £0.2
million).
Cash flow
Operating cash inflow before changes
in working capital was £2.4 million (2023: £2.0 million). Working
capital represented an outflow of £0.1 million (2023: £0.4 million)
from an increase in collegiate store inventory countered by earlier
receipts from supplier revenues and less receivables outflow due to
timing of orders around the year end and lower accruals. Net cash
flow from operating activities increased by £0.6 million to £2.1
million (2023: £1.6 million inflow). Net cash outflow from
investing activities of £1.8 million (2023: £1.1 million outflow)
is mainly represented by our development spend, investments in our
retail operations and system change. Financing activities included
the repayment of finance agreements and interest of £0.3 million
(2023: £0.2 million). Total net cash inflow was £0.1 million (2023:
£0.2 million inflow). The year-end cash balance stood at £1.2
million (2023: £1.2 million) with no debt at the balance sheet
date.
Treasury
The Group continues to manage the
cash position in a manner designed to meet the operational needs of
the businesses. Cash balances held in foreign currencies reflect
the geographies in which the Group operates. There is no policy to
hedge the Group's
currency exposures arising from the profit translation or the
effect of exchange rate movements on the Group's overseas net assets.
The Group has secured an increase in
its main credit facility (the "Facility") with TD Bank N.A.,
to $3.0 million (2023: $1.5 million). The Facility has no
significant financial covenants and is secured by the assets
of the US Group with a parental guarantee from Altitude Group PLC
and is senior to the subordinated Intercreditor loans. The
Facility will provide access to non-dilutive funding to support the
Group in executing its growth strategy. The Facility has a small
annual arrangement fee and incurs interest at 1% above the US Prime
Rate on drawdown. This Facility remains undrawn at the year end.
The Group has other operational facilities of $0.5 million (2023:
$0.5million).
Share capital
The number of shares increased by
287,900 to 71,135,730 (2023: 70,847,830). All of the shares
issued in the period were in respect of deferred bonus share awards
and are detailed in note 5 with further disclosures related to
Directors' interests in note 4.
The Company issued share options to
senior management of nil (2023: 2,648,000). During the year the
number of share options exercised was nil (2023: 166,666) with the
number of share options and warrants lapsed being 1,636,000 (2023:
1,211,110). The total number of share options outstanding at
the year-end is 4,741,447 (2023: 6,357,447).
Key performance
indicators
The Group's key performance indicators as
discussed above are:
|
Year ended
|
|
Year ended
|
|
Impact of currency
translation
|
|
Underlying
change
|
|
Total
change
|
|
31 March
|
|
31 March
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
24,009
|
|
18,761
|
|
(950)
|
|
6,198
|
33.0%
|
|
5,248
|
28%
|
Gross profit
|
10,374
|
|
8,605
|
|
(391)
|
|
2,160
|
25.1%
|
|
1,769
|
21%
|
Gross margin
|
43%
|
|
46%
|
|
|
|
|
|
|
|
|
Adjusted operating
profit*
|
2,407
|
|
1,957
|
|
(141)
|
|
591
|
30.2%
|
|
450
|
23%
|
Adjusted profit before
tax***
|
1,152
|
|
915
|
|
(24)
|
|
261
|
28.5%
|
|
237
|
26%
|
Statutory profit/(loss) before
tax
|
(5)
|
|
152
|
|
(9)
|
|
(148)
|
-
|
|
(157)
|
-
|
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.
*Adjusted operating profit is before share-based payment
charges, amortisation
of intangible
assets, depreciation of tangible assets and exceptional charges is
a consistently used measure used to show the performance of the
revenue generating activities and the related costs involved in the
delivery of the revenue for the current year
**
Basic adjusted earnings per share is calculated using profit after
tax but before share-based payment charges, amortisation of
acquired intangible assets and exceptional charges and the weighted
average number of equity voting shares in issue and, when relevant,
in respect of diluted earnings per share includes the effect of
share options that could potentially dilute basic earnings per
share. This provides a consistent metric with the Income Statement
for underlying performance
***Adjusted profit before tax is profit before tax adjusted
for share based charges, exceptional costs and
amortisation on acquired intangibles.
This metric is to review the performance of the underlying business
including the depreciation for development costs
Significant judgements and
estimates
In preparing the financial
statements the Directors have made judgements and estimates in
applying accounting policies. Details of the most significant areas
where judgements and estimates have been made are set out in note 1
to the group financial statements.
Principal risks and
uncertainties
The Group's financial and operational
performance is subject to a number of risks. The Board seeks to
ensure that appropriate processes are put in place to manage,
monitor and mitigate these risks. The Board considers the principal
risks faced by the Group to be as follows at 31 March
2024:
·
a significant deterioration in economic
conditions, particularly in USA affecting SME's, the principal
target customers for the Group's technology products
·
significant delays and or cost overruns in
developing and delivering products to meet customer requirements in
the targeted market sectors
·
a risk of cyber attack that targets our systems
causing downtime to end user processing or point of sale
·
significant AMPs wins requiring investment over
and above our cash resources
·
predatory pricing or other actions by established
competitors in our market sectors
·
the risk of bad debts arising from AIM Capital
Solutions
·
a significant, adverse movement in the short-term
in the US $ exchange rate compared with GBP
·
the propensity of AIM distributor members to
migrate orders to AIM preferred suppliers
·
the propensity of AIM distributor members to
upgrade membership to include enhanced marketing and sales support
services
·
deteriorating retention of the membership base of
the acquired AIM business
·
a risk of under-reported revenue through
incomplete visibility of member transactions
In all cases the Group seeks to
mitigate these risks wherever possible by continuous marketing
initiatives and promotions to stimulate market demand and
continuous development of enhanced member services and the
promotion of AIM Capital Solutions to high quality distributors
with careful attention to credit risk. In addition, we maintain
close relationships with all customers with service contracts based
on transactional volume, and monitor progress using data sampling
and quarterly confirmation. Growth in our AMPs contracts require
investment in inventory at the onset of the contract and fit out
usually at the end of the first year of the contract. Management
review funding requirements depending on pipeline wins to assess
this risk and work closely with the Board on major contract
tenders. The COO manages development projects closely and works
with the Executive team to ensure that we continue to offer
services that meet our customer needs.
US operations are self-funding,
mitigating the risk from short term exchange rate fluctuations. The
US now regularly remits a funds back to the UK, generally on a
monthly basis at relatively low levels. Management have reviewed
the requirement of a formal hedging strategy however this will only
be necessary if the funding levels increase. In the meantime, spot
rates have been utilised
with an outsourced foreign currency
firm.
AIM is the largest distributor
member organisation in the USA, with a 9-11% estimated member share
of the promotional products aggregate sales figures in a very
fragmented market. We assess the risk of predatory pricing from
other established competitors to be low as they do not possess the
scale or geographic coverage necessary influence the market as a
whole. AIM members are incentivised to order from AIM preferred
suppliers through the provision of significant
discounts.
Cyber Security processes and
controls including reminders and training and regularly provided to
all staff to ensure they remain extra vigilant and exercise extreme
caution when using email and the internet.
Liquidity
The Group remains debt free as at
the year end with a cash balance of £1.2 million.
We have extended our finance
facilities to $3.2 million from $1.7 million with TD Bank. The
facility has supported the growth in Merchanting and was utilised
during the year to manage the peaks and troughs in our working
capital cycle.
Graham
Feltham
Chief
Financial Officer
29 July
2024
Consolidated Statement of Comprehensive
Income
for
the year ended 31 March 2024
|
|
|
Year to
|
|
Year to
|
|
|
|
31 March
|
|
31 March
|
|
|
Notes
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Revenue
|
|
2
|
24,009
|
|
18,761
|
Cost of sales
|
|
|
(13,635)
|
|
(10,156)
|
Gross profit:
|
|
|
10,374
|
|
8,605
|
|
|
|
|
|
|
Administrative expenses before
share-based payment charges, depreciation, amortisation, and
exceptional charges
|
|
|
(7,967)
|
|
(6,648)
|
Operating profit before share-based payment charges,
depreciation, amortisation, and exceptional
charges
|
|
|
2,407
|
|
1,957
|
Share-based payment
charges
|
|
|
(708)
|
|
(511)
|
Depreciation and
Amortisation
|
|
|
(1,325)
|
|
(1,131)
|
Exceptional charges
|
|
3
|
(295)
|
|
(101)
|
Total administrative expenses
|
|
|
(10,295)
|
|
(8,391)
|
Operating profit
|
|
|
79
|
|
214
|
|
|
|
|
|
|
Finance charges
|
|
|
(84)
|
|
(62)
|
(Loss)/profit before taxation
|
|
|
(5)
|
|
152
|
|
|
|
|
|
|
Taxation
|
|
|
702
|
|
238
|
Profit attributable to operations
|
|
|
697
|
|
390
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
Items that may be reclassified
subsequently to profit and loss:
|
|
|
|
|
|
Foreign exchange
differences
|
|
|
(174)
|
|
425
|
Total comprehensive income for the
year
|
|
|
523
|
|
815
|
|
|
|
|
|
|
Earnings per ordinary share
attributable to the equity shareholders of the Company:
|
|
|
|
|
|
- Basic (pence)
|
|
4
|
0.98p
|
|
0.55p
|
- Diluted (pence)
|
|
4
|
0.96p
|
|
0.55p
|
Consolidated Statement of Changes in Equity
for
the year ended 31 March 2024
|
Share
|
Share
|
Retained
|
Foreign exchange
translation
|
Total
|
|
capital
|
premium
|
losses
|
reserve
|
equity
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Group
|
|
|
|
|
|
At
31 March 2022
|
283
|
20,194
|
(11,962)
|
(410)
|
8,105
|
Profit for the period
|
-
|
-
|
390
|
-
|
390
|
Foreign exchange
differences
|
-
|
-
|
-
|
425
|
425
|
Total comprehensive income
|
-
|
-
|
390
|
425
|
815
|
Transactions with owners recorded directly in
equity
|
|
|
|
|
|
Share-based payment
credit
|
-
|
-
|
511
|
-
|
511
|
Total transactions with owners
|
-
|
-
|
511
|
-
|
511
|
At
31 March 2023
|
283
|
20,194
|
(11,061)
|
15
|
9,431
|
Profit for the period
|
-
|
-
|
697
|
-
|
697
|
Foreign exchange
differences
|
-
|
-
|
-
|
(174)
|
(174)
|
Total comprehensive income
|
-
|
-
|
697
|
(174)
|
523
|
Transactions with owners recorded directly in
equity
|
|
|
|
|
|
Share-based payment
charge
|
-
|
-
|
708
|
-
|
708
|
Shares issued
|
2
|
-
|
(2)
|
-
|
-
|
Total transactions with owners
|
2
|
-
|
706
|
-
|
708
|
At
31 March 2024
|
285
|
20,194
|
(9,658)
|
(159)
|
10,662
|
Consolidated Balance Sheet
as
at 31 March 2024
|
|
As at
|
As at
|
|
|
31 March
|
31 March
|
|
|
2024
|
2023
|
|
Notes
|
£'000
|
£'000
|
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
|
2,881
|
2,934
|
Intangible assets
|
|
3,089
|
2,652
|
Property, plant and
equipment
|
|
326
|
202
|
Right of use assets
|
|
270
|
471
|
Deferred tax assets
|
|
668
|
458
|
Total non-current assets
|
|
7,234
|
6,717
|
Current assets
|
|
|
|
Inventory
|
|
1,044
|
361
|
Trade and other
receivables
|
|
4,882
|
5,521
|
Corporation Tax
Receivable
|
|
115
|
91
|
Cash and cash equivalents
|
|
1,220
|
1,173
|
Total current assets
|
|
7,261
|
7,146
|
Total assets
|
|
14,495
|
13,863
|
Liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
(3,642)
|
(3,699)
|
|
|
(3,642)
|
(3,699)
|
Net
current assets
|
|
3,619
|
3,447
|
Non-current liabilities
|
|
|
|
Deferred tax liabilities
|
|
-
|
(347)
|
Lease liabilities
|
|
(191)
|
(386)
|
|
|
(191)
|
(733)
|
Total liabilities
|
|
(3,833)
|
(4,261)
|
|
|
|
|
Net
assets
|
|
10,662
|
9,431
|
|
|
|
|
Equity attributable to equity holders of the
Company
|
|
|
|
Called up share capital
|
|
285
|
283
|
Share premium account
|
|
20,194
|
20,194
|
Retained losses and foreign
exchange
|
|
(9,817)
|
(11,046)
|
Total equity
|
|
10,662
|
9,431
|
Consolidated Cash Flow Statement
for
the year ended 31 March 2024
|
Year to
|
Year to
|
|
31 March
|
31 March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
|
|
|
Operating profit
|
79
|
214
|
Amortisation of intangible
assets
|
1,071
|
901
|
Depreciation
|
254
|
230
|
Share-based payment
charges
|
708
|
511
|
Exceptional items
|
295
|
101
|
Operating cash flow before changes in working capital and
exceptionals
|
2,407
|
1,957
|
Movement in inventory
|
(694)
|
(339)
|
Movement in trade and other
receivables
|
540
|
(1,532)
|
Movement in trade and other
payables
|
23
|
1,404
|
Changes in working capital
|
(131)
|
(467)
|
Net
cash flow from operating activities before exceptional
items
|
2,276
|
1,490
|
Exceptional items
|
(263)
|
(84)
|
Net
cash flow from operating activities after exceptional
items
|
2,013
|
1,406
|
Income tax received
|
121
|
144
|
Net
cash flow from operating activities
|
2,134
|
1,550
|
|
|
|
Cash flows from investing activities
|
|
|
Purchase of tangible
assets
|
(223)
|
(119)
|
Purchase of intangible
assets
|
(1,573)
|
(986)
|
Net
cash flow from investing activities
|
(1,796)
|
(1,105)
|
|
|
|
Cash flows from financing activities
|
|
|
Repayment of lease
borrowings
|
(174)
|
(163)
|
Lease interest paid
|
(33)
|
(47)
|
Other interest paid
|
(50)
|
(15)
|
Issue of shares for cash (net of
expenses)
|
-
|
-
|
Net
cash flow from financing activities
|
(257)
|
(225)
|
|
|
|
Net
increase in cash and cash equivalents
|
81
|
220
|
Cash and cash equivalents at the beginning of the
period
|
1,173
|
902
|
Effect of foreign exchange rate
changes on cash and cash equivalents
|
(34)
|
51
|
Net increase in cash and cash
equivalents
|
81
|
220
|
Cash and cash equivalents at the end of the
period
|
1,220
|
1,173
|
Notes to the Consolidated Financial
Statements
1. Accounting
policies
The financial information in this preliminary
announcement has been extracted from the audited Group Financial
Statements for the year ended 31 March 2024 and does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006.
The Group Financial Statements for 2023 were
delivered to the registrar of companies, and those for 2024 will be
delivered in due course. The auditor's report on the Group
Financial Statements for 2023 and 2024 were both unqualified and
unmodified. The auditors' report was signed on 29 July 2024. The
Group Financial Statements and this preliminary announcement were
approved by the Board of Directors on 29 July 2024.
The audited accounts will be posted to all
shareholders and will be available on the Group's website
(https://www.altitudeplc.com/reports-results)
in due course.
Basis of
preparation
The group financial statements have been
prepared in accordance with UK adopted International Accounting
Standards. The Company financial statements have been prepared
under FRS 101.
Both financial statements have been prepared on
the historical cost basis, with the exception of certain items
which are measured at fair value as disclosed in the accounting
policies set out below. The financial information is presented in
Sterling and has been rounded to the nearest thousand
(£000).
The preparation of financial statements in
conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources of
information. Actual results may differ from these
estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future
periods.
New standards impacting the Group that are not
yet effective and have not been adopted in the annual financial
statements for the year ended 31 March 2024 are:
·
Supplier Finance Arrangement (Amendments to IAS 7 and IFRS
7)
·
Lease Liability in a Sale and Leaseback (Amendments to IFRS
16)
·
Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1)
·
Non-Current Liabilities with Covenants (Amendments to IAS
1)
These new standards, interpretations and
amendments will be adopted in the financial statements as and when
they are applicable and adoption of these new standards,
interpretations and amendments, will be reviewed for their impact
on the financial statements prior to their initial application but
are not currently expected to have a material impact.
The following material accounting policies have
been applied consistently to all periods presented in these Group
financial statements:
Going concern
The financial statements have been prepared on
a going concern basis.
The Group is following a strong growth
trajectory despite the macro-economic conditions of high inflation
and interest rates. The conflicts in Ukraine and Israel have
continued to create instability however the initial signs of a
reduction in inflation with signs that interest rates will be
reducing in the shorter term is encouraging for global economic
recovery. The Promo Industry's growth has unsurprisingly slowed
compared to the post-covid recovery year of 2022 which resulted in
a flat calendar Q4 in 2023 and a marginal decline in Q4 2024 as
reported by ASI central. This is not surprising with the
significant growth experienced post covid to then have a period of
normalisation. The Group continues to deliver diversified growth by
maintain strong relationships within the AIM network, growing ACS
Affiliate recruitment and delivered significant AMPs contracts
whilst generating cashflow.
The Board is confident that the Group has
sufficient liquidity to manage the growth of the company and group
and can flex on overhead spend should any part of the business
underperform against our expectations. The 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 July 2025.
The cash flow forecasts include a mid scenario and sensitised
cases.
· The
low scenario assumes reductions in revenue of c5% compared to the
mid-scenario.
· The
forecasts assume regular collections and payments in line with the
normalised conditions experienced with detailed modelling of growth
cash outflows included.
· The
base and sensitised 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
·
reduced tendering activities for AMPs to avoid investment in
working capital, fit out and set up costs along with exiting
contracts to recover inventory value
·
reactionary cost reduction programmes in respect of headcount
and organisation
·
securing new working capital facilities in respect of any
growth of Merchanting business outside of the sensitised
forecast.
· 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
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.
Basis of
consolidation
The consolidated financial statements
incorporate the financial statements of the Company and the
entities controlled by the Company (its subsidiaries) made up to 31
March each period. Control is achieved when the Company:
· has
the power over the investee
· is
exposed, or has rights, to variable return from its involvement
with the investee and
· has
the ability to use its power to affect returns
The Company reassesses whether or not it
controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements above.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control over the subsidiary.
The acquisition method of accounting is used to
account for the acquisition of subsidiaries by the Group. The cost
of an acquisition is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or
assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the
fair value of net assets of the subsidiary acquired, the difference
is recognised directly in the Consolidated Statement of
Comprehensive Income.
All intra-group balances and transactions,
including unrealised profits arising from intra-group transactions,
are eliminated fully on consolidation.
Contract costs
Costs to fulfil a contract are capitalised,
amortised and assessed for impairment if they meet the required
criteria. If the costs do not meet the criteria they are expensed
as incurred.
Costs to fulfil a contract are recognised as an
asset only if they:
·
Relate directly to a contract, or to an anticipated
contract that can be specifically identified
·
Generate or enhance resources to be used to satisfy
performance obligations in future, and
· Are
expected to be recovered.
The policy applies to contracts that are
greater than one year in length.
The asset is amortised over the life of the
contract once the contract is live.
Revenue
recognition
Revenue represents the amounts receivable, excluding
sales related taxes, for goods and services supplied during the
period to external customers shown net of sales taxes, returns,
rebates and discounts.
When assessing revenue recognition against IFRS15,
the Group assess the contract against the five steps of IFRS15:
· Identifying the contract
with a customer
· Identifying the performance
obligations
· Determining the transaction
price
· Allocating the transaction
price to the performance obligations
· Recognising
revenue when/as performance obligation(s) are satisfied
This process includes the assessment of the
performance obligations within the contract and the allocation of
contract revenue across these performance obligations once
identified. Revenue is recognised either at a point in
time or over time, when, or as, the Group satisfies performance
obligations by transferring the promised goods or services to its
customers.
The difference between the amount of income
recognised and the amount invoiced on a particular
contract is included in the balance sheet as accrued or deferred
income. Amounts included in accrued and deferred income due within
one year are expected to be recognised within one year
and are included within current assets and current liabilities
respectively.
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.
AMPs, "Gear Shops", 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.
2. Segmental
information
The chief operating decision maker has been
identified as the Board of Directors and the segmental analysis is
presented based on the Group's internal reporting to the Board. At
31 March 2024, the Group has two operating segments, North America,
and the United Kingdom & Europe along with a Central segment.
The Group further analyses performance to Gross Profit by
presenting 'Service' and 'Merchanting' as shown. Service revenues
are derived from servicing our AIM membership base and generating
throughput with our contracted Preferred Partners. Merchanting
revenues are sales of promotional products where the Group acts as
principal in the underlying transaction.
Segment assets consist primarily of property,
plant and equipment, intangible assets, trade and other receivables
and cash and cash equivalents. Segment liabilities comprise
operating liabilities. Capital expenditure comprises additions to
property, plant and equipment and intangible assets, including
additions resulting from acquisitions through business
combinations. Assets and liabilities at 31 March 2024 and capital
expenditure for the period then ended are as follows.
|
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
31 March
|
31 March
|
|
|
2024
|
2024
|
2024
|
2024
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
North
America
|
UK and
Europe
|
Central
|
Group
|
Turnover
|
|
|
|
|
|
Services
|
|
7,540
|
1,150
|
-
|
8,690
|
Merchanting
|
|
15,319
|
-
|
-
|
15,319
|
Total
|
|
22,859
|
1,150
|
-
|
24,009
|
|
|
|
|
|
|
Cost of Sales
|
|
|
|
|
|
Services
|
|
(651)
|
(177)
|
-
|
(828)
|
Merchanting
|
|
(12,807)
|
-
|
-
|
(12,807)
|
Total
|
|
(13,458)
|
(177)
|
-
|
(13,635)
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
Services
|
|
6,889
|
973
|
-
|
7,862
|
Merchanting
|
|
2,512
|
-
|
-
|
2,512
|
Total
|
|
9,401
|
973
|
-
|
10,374
|
|
|
|
|
|
|
Operating Profit/(Loss) before share-based payment charges,
depreciation, amortisation, and exceptional
charges
|
|
3,824
|
(57)
|
(1,360)
|
2,407
|
Share-based payment
charges
|
|
-
|
-
|
(708)
|
(708)
|
Depreciation
|
|
(193)
|
(61)
|
-
|
(254)
|
Amortisation
|
|
(231)
|
(840)
|
-
|
(1,071)
|
Management fees
|
|
(2,273)
|
1,104
|
1,169
|
-
|
Exceptional charges
|
|
(200)
|
(36)
|
(59)
|
(295)
|
Finance charges
|
|
(74)
|
(6)
|
(4)
|
(84)
|
Segmental profit before income tax
|
|
853
|
104
|
(962)
|
(5)
|
|
|
|
|
|
|
Assets*
|
|
11,486
|
2,366
|
643
|
14,495
|
Liabilities*
|
|
(3,390)
|
(393)
|
(352)
|
(4,135)
|
Net
Assets
|
|
8,096
|
1,973
|
291
|
10,360
|
*external balances disclosed for
segmental purposes
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure
|
|
|
|
|
|
Intangible assets
|
|
(303)
|
(1,270)
|
-
|
(1,573)
|
Property, plant and
equipment
|
|
(203)
|
(13)
|
(7)
|
(223)
|
Right of use assets
|
|
-
|
-
|
-
|
-
|
Capital Expenditure
|
|
(506)
|
(1,283)
|
(7)
|
(1,796)
|
|
|
|
|
|
|
|
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
31 March
|
31 March
|
|
|
2024
|
2024
|
2024
|
2024
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
North
America
|
UK and
Europe
|
Central
|
Group
|
Timing of Revenue Recognition
|
|
|
|
|
|
At a point in time
|
|
16,380
|
90
|
-
|
16,470
|
Over time
|
|
6,479
|
1,060
|
-
|
7,539
|
Total Revenue
|
|
22,859
|
1,150
|
-
|
24,009
|
|
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
31 March
|
31 March
|
|
|
2023
|
2023
|
2023
|
2023
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
North
America
|
UK and
Europe
|
Central
|
Group
|
Turnover
|
|
|
|
|
|
Services
|
|
7,155
|
1,368
|
-
|
8,523
|
Merchanting
|
|
10,238
|
-
|
-
|
10,238
|
Total
|
|
17,393
|
1,368
|
-
|
18,761
|
|
|
|
|
|
|
Cost of Sales
|
|
|
|
|
|
Services
|
|
(582)
|
(223)
|
-
|
(805)
|
Merchanting
|
|
(9,351)
|
-
|
-
|
(9,351)
|
Total
|
|
(9,933)
|
(223)
|
-
|
(10,156)
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
Services
|
|
6,573
|
1,145
|
-
|
7,718
|
Merchanting
|
|
887
|
-
|
-
|
887
|
Total
|
|
7,460
|
1,145
|
-
|
8,605
|
|
|
|
|
|
|
Operating Profit/(Loss) before share-based payment charges,
depreciation, amortisation, and exceptional
charges
|
|
3,426
|
170
|
(1,639)
|
1,957
|
Share-based payment
charges
|
|
-
|
-
|
(511)
|
(511)
|
Depreciation
|
|
(171)
|
(59)
|
-
|
(230)
|
Amortisation
|
|
(168)
|
(733)
|
-
|
(901)
|
Management fees
|
|
(2,397)
|
778
|
1,619
|
-
|
Exceptional charges
|
|
(65)
|
(14)
|
(22)
|
(101)
|
Finance charges
|
|
(41)
|
(21)
|
-
|
(62)
|
Segmental profit before income tax
|
|
584
|
121
|
(553)
|
152
|
|
|
|
|
|
|
Assets*
|
|
11,187
|
2,368
|
308
|
13,863
|
Liabilities*
|
|
(3,475)
|
(462)
|
(495)
|
(4,432)
|
Net
Assets
|
|
7,712
|
1,906
|
(187)
|
9,431
|
*external balances disclosed for
segmental purposes
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure
|
|
|
|
|
|
Intangible assets
|
|
(99)
|
(887)
|
-
|
(986)
|
Property, plant and
equipment
|
|
(91)
|
(26)
|
(2)
|
(119)
|
Right of use assets
|
|
-
|
-
|
-
|
-
|
Capital Expenditure
|
|
(190)
|
(913)
|
(2)
|
(1,105)
|
|
|
|
|
|
|
|
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
31 March
|
31 March
|
|
|
2023
|
2023
|
2023
|
2023
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
North
America
|
UK and
Europe
|
Central
|
Group
|
Timing of Revenue Recognition
|
|
|
|
|
|
At a point in time
|
|
11,216
|
186
|
-
|
11,402
|
Over time
|
|
6,177
|
1,182
|
-
|
7,359
|
Total Revenue
|
|
17,393
|
1,368
|
-
|
18,761
|
|
|
|
|
|
|
3. Exceptional
charges
Analysis of exceptional
items:
|
|
|
|
Year ended
|
Year ended
|
|
31 March
|
31 March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
|
|
|
Legal, professional and consultancy
costs
|
109
|
84
|
Other exceptional costs
|
186
|
17
|
|
295
|
101
|
|
|
| |
Exceptional charges principally relate to
acquisition projects, a strategic restructure of the sales
organisation and new ERP system. (2023: to second-phase
finance transformation costs, along with a provision for the
historic portion of a VAT reclaim). Other exceptional costs
principally relate to restructuring costs, other costs associated
with the strategic review and bad debt, offset by a historical VAT
reclaim (2023: relates to a reversal of a historical VAT
reclaim).
4. Basic and diluted
earnings per ordinary share
The calculation of earnings per ordinary share
is based on the profit for the period after taxation and the
weighted average number of equity voting shares in issue as
follows:
|
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
|
|
2024
|
2023
|
Profit attributable to the equity
shareholders of the Company (£000)
|
|
697
|
390
|
Weighted average number of shares
(number '000)
|
|
70,972
|
70,813
|
Fully diluted weighted average
number of shares (number '000)
|
|
72,621
|
71,198
|
|
|
|
|
Basic profit per ordinary share
(pence)
|
|
0.98p
|
0.55p
|
Diluted profit per ordinary share
(pence)
|
|
0.96p
|
0.55p
|
|
|
|
|
Adjusted profit per ordinary
share (pence)
|
|
|
|
Profit attributable to the equity
shareholders of the Company (£000)
|
|
697
|
390
|
add back:
|
|
|
|
Share based payments
|
|
708
|
511
|
Amortisation on acquired
intangibles
|
|
154
|
151
|
Exceptional charges
|
|
295
|
100
|
Adjusted earnings
|
|
1,854
|
1,152
|
|
|
|
|
Adjusted basic earnings per ordinary share
(pence)
|
|
2.61p
|
1.63p
|
Adjusted diluted earnings per ordinary share
(pence)
|
|
2.55p
|
1.62p
|
We determine potentially dilutive shares as any
share which is exercisable on publishing of the Annual
Report.