Final Results

RNS Number : 0741J

Altitude Group PLC

01 April 2015

 

Altitude Group plc

("Altitude", the "Company" or the "Group")

Final results FOR the year ended 31 december 2014

Chairman's statement

Throughout 2014 we have made some good progress in a number of areas, whilst investing time and resource in reshaping the Group. The Group has now a clearly defined management structure which in the coming year will drive forward the operational and strategic direction of the business.

The principal highlights of the year were:

•     Revenue up 6%

•     Loss before tax of £1.5m before share based payment charges (2013: £2.05m)

•     Net cash at 31 December 2014 of £1.28m (2013: £0.45m)

•   Receipt of £2.0m in cash from the redemption of the vendor loan note outstanding from the sale to the MBO team in 2011 of the Promotional Marketing Division

•   Successful embedding of the new management structure and processes

•   Martin Varley will step down from the Board of Altitude Group plc from 1 April 2015

Strategic update and market review

The Group has reviewed its strategic objectives for the near term and remains positive on the outlook for the software-as-a-service ("SaaS") business and our related product offerings in the UK and North America where we believe there are considerable opportunities.

This is supported by a research study by Goldman Sachs which forecasts global SaaS revenues to exceed US$106 billion in 2016, an increase of 21% over the projection for 2015 with spending on cloud computing infrastructure and platforms growing at a 30% CAGR from 2013 to 2018 compared with 5% growth for overall enterprise IT.  These findings are encouraging for Altitude's SaaS cloud-based offering for the promotional product, print and signage industries, which has both horizontal and vertical components.

We are beginning to see the benefits from the personnel changes made during the year.  In addition, the Group has invested significantly in the core technology over the past eighteen months with development attention primarily on a number of features for some key clients.  Future priorities will be to further enhance the scalability and performance of the solutions and move toward merging functionality on to a single platform.  

In the UK, we are pleased that our exhibition and publication businesses remain industry leading and consistently deliver a good user experience.

Performance review

The Group operating loss before taxation and share based payment charges was £1.49m (2013: £2.05m) on revenues which increased by 6% to £4.44m (2013: £4.20m).  As previously mentioned, in 2014 it was the continued investment in our software and resources which gave rise to our losses in the period.  During the year we have expensed £0.69m (2013 £0.65m) of software development costs in addition to £0.48m (2013: £0.38m) which has been capitalised in the year.  In addition we have invested in resources to drive revenues in 2015 and 2016 with the headcount rising from 72 in December 2013 to 89 in December 2014 with growth focused on sales and service staff.

Cash flow was positive in the year with the MBO loan settled for £2m in the first half of the year.  The group closed the year with £1.28m of net cash.

Technologo

Following a year of investing heavily in key people, sales have grown with most of the increase from recurring revenue, which will carry over into 2015.  With the sales and service teams now fully trained, a healthy pipeline and a new marketing focus, good growth is expected in 2015 and onwards.

We have established relationships with potential re-sellers for the Technologo tools to their customer base throughout Europe.  This is a relatively new approach that seems to have generated a significant amount of interest from the participating service providers.  Ours is a tool that makes their services more attractive to their clients and prospects, while at the same time generating revenue from sources previously unattainable to us.  This is provides a good opportunity for us and will be a key focus for the upcoming year.

US

The US operation made further progress in 2014 with sales up like-for-like in USD by 22% and customer numbers increasing by 14%.  Key customer relationships were opened up with major distributor groups and the number of suppliers supporting our platforms increased by over 80 in the year.  

SignStore.net was launched in August at the SGIA show and generated a tremendous amount of interest in a potential US market of 25,000 sign makers.

We invested in enhancing the stability and functionality of our core technology platforms and in April 2014 PromoServe 5.0 was released, an advanced business management system for both distributors and suppliers in the print and promotional products industries.  Hosted in Amazon Web Services and accessed via Citrix, Version 5.0 this release delivered 500 new features and ensured availability and scalability for companies of all sizes.

The team was also strengthened significantly with the appointment of a new President and also a VP of Sales and Marketing later in the year to drive sales into 2015.  

UK

Growth in sales has been seen in all three areas of the UK business, technology, publications and exhibitions.  Over one third of the promotional products industry now uses one or more of our products or services.

The number of technology customers has grown by 10% during 2014 and the churn rate remained consistently below 1%.  As a result the average lifetime value of a customer has increased significantly over the course of the year.  There has also been continued investment in additional sales resource to facilitate growth in the ERP software solution. 

Despite a downwards trend in the print and publications industry, there has been another increase in sales for the publications section of the business as our publications remain industry leaders.  Spectrum catalogue users exceeded 500 again for the third consecutive year.

The 2015 National Show was very successful with revenues and profits increasing for the eighth consecutive year.  This has again been followed again by a high rebooking rate for the 2016 exhibition.

People

Whilst there were no changes to the Board during the year, as mentioned above, Martin Varley will step down from the Board of Altitude Group plc from 1 April 2015.  I would like to thank Martin for his support over the last two years and wish him success in his future ventures.

Outlook

"We have made good progress in the turnaround thus far with the businesses trading in line with our expectations.  With the new management team in place, along with defined financial and operational controls, your Board considers that the Group is well placed to face the challenges which lie ahead."

Stephen Yapp

Executive Chairman

Enquiries:

Altitude Group plc
Stephen Yapp (Executive Chairman) Richard Sowerby (Chief Financial Officer)	Tel: [phone] Tel: [phone]
WH Ireland Limited (Nominated Adviser and Broker)	0113 394 6600
Tim Feather Liam Gribben

Consolidated Statement of Comprehensive Income for the year ended 31 December 2014

		2014 (unaudited)	2013 (audited)
	Note	£'000	£'000
Revenue		4,440	4,201
Cost of sales		(971)	(991)
Gross Profit		3,469	3,210
Administrative costs		(5,139)	(5,391)
Operating loss before share based payment charges		(1,502)	(2,053)
Share based payment charges		(168)	(128)
Operating loss		(1,670)	(2,181)
Finance income		89	242
Finance expenses		-	(1)
Loss before taxation		(1,581)	(1,940)
Taxation		-	182
Loss attributable to the equity shareholders of the Company		(1,581)	(1,758)
Other comprehensive income		-	-
Total comprehensive loss for the year		(1,581)	(1,758)
Loss per ordinary share attributable to the equity shareholders of the Company
-      Basic (pence)	4	(3.68)	(4.10)
-      Diluted (pence)	4	(3.68)	(4.10)

Consolidated Balance Sheet

as at 31 December 2014

		2014	2013
		£000 (unaudited)	£000 (audited)
Non-current assets
Property, plant & equipment		105	159
Intangible assets		1,184	1,187
Goodwill		564	564
Long-term receivable		-	2,000
Deferred tax		426	426
		2,279	4,336
Current assets
Trade and other receivables		787	1,009
Cash and cash equivalents		1,280	450
		2,067	1,459
Total assets		4,346	5,795
Current liabilities
Trade and other payables		(2,080)	(2,116)
Total liabilities		(2,080)	(2,116)
Net assets		2,266	3,679
Equity attributable to equity holders of the Company
Called up share capital		172	172
Share premium account		6,254	6,254
Retained earnings		(4,160)	(2,747)
Total equity		2,266	3,679

Consolidated Cash Flow Statement

for the year ended 31 December 2014

	2014	2013
	£'000 unaudited	£'000 audited
Operating activities
Loss for the period	(1,581)	(1,758)
Amortisation of intangible assets	478	447
Depreciation	102	100
Net finance credit	(89)	(241)
Impairment of loan note receivable	-	400
Corporation  tax credit	-	(182)
Share based payment charges	168	128
Operating cash outflow before changes in working capital	(922)	(1,106)
Movement in trade and other receivables	222	43
Movement in trade and other payables	(37)	7
Operating cash outflow from operations	(737)	(1,056)
Interest received	89	242
Interest paid	-	(1)
Income tax received	-	31
Net cash flow from operating activities	(648)	(784)
Investing activities
Purchase of tangible assets	(48)	(38)
Purchase of intangible assets	(474)	(388)
Net cash flow from investing activities	(522)	(426)
Financing activities
Loan note repayment  received	2,000	900
Net cash flow from financing activities	2,000	900
Net increase in cash and cash equivalents	830	(310)
Cash and cash equivalents at the beginning of the year	450	760
Cash and cash equivalents at the end of the year	1,280	450

Statement of Changes in Equity

	Share Capital	Share Premium	Retained Earnings
	£'000	£'000	£'000
As at 1 January 2013	172	6,254	(1,117)
Result for the period	-	-	(1,758)
Share based payment charges	-	-	128
At 31 December 2013	172	6,254	(2,747)
Result for the period	-	-	(1,581)
Share based payment charges	-	-	168
At 31 December 2014	172	6,254	(4,160)

Notes

1          Financial information

The financial information set out herein does not constitute the Group's statutory accounts for the year ended 31 December 2014 or the year ended 31 December 2013 within the meaning of section 435 of the Companies Act 2006.  The 2014 statutory accounts have not been finalised, but this preliminary announcement has been prepared by the Directors based on the results and position which they expect will be reflected in the statutory accounts.  The comparative information in respect of the year ended 31 December 2013 has been derived from the audited statutory accounts for the year ended on that date upon which an unqualified audit opinion was expressed and which did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.  The audited accounts have not yet been filed with the Registrar of Companies and will be made available to all shareholders in due course on the Company's website www.altitudeplc.com and on request by contacting the Company Secretary at the Company's Registered Office:

Altitude Group plc
Unit 4 Rhodes Business Park
Silburn Way
Middleton, Manchester
M24 4NE
UK

2          Basis of preparation

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union on the basis of the accounting policies adopted for the year ended 31 December 2014, which will be set out in the Company's Annual Report and Accounts, and as previously disclosed in the Company's Annual Report and Accounts for the year ended 31 December 2013.

The preparation of financial statements in conformity with IFRS requires management to make judgments, 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 judgments about carrying values of assets and liabilities that are not readily apparent from other sources.  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.

3          Non-recurring administrative expenses

	2014	2013
	£'000	£'000
Legal costs regarding dispute in US	-	268
Impairment of loan note receivable	-	400
Employment termination expenses	-	31
Non-recurring employment costs	-	68
	-	767

4          Basic and diluted earnings per share

	2014	2013
Earnings £'000	(1,581)	(1,758)
Weighted average number of shares (number '000)	42,908	42,908
Fully diluted average number of shares (number '000)	42,908	42,908
Basic loss per ordinary share (pence)	(3.68)	(4.10)
Diluted loss per ordinary share (pence)	(3.68)	(4.10)

 

END

 

 

FR UAUNRVOAOOAR