Interim Results

RNS Number : 3583M

Altitude Group PLC

17 September 2012

 



17 September 2012 

Altitude Group plc

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

Unaudited interim results for the 6 months ended 30 June 2012

Altitude Group plc (AIM: ALT), the provider of information and technology services, announces its interim results for the six month period ended 30 June 2012.

Highlights:

·      Revenue increased by 17% to £2.86m (H1 2011: £2.46m)

·      Adjusted operating profit* of £0.27 (H1 2011: £0.36m)

·      USA H1 2012 revenue increased by 19% on H2 2011

·      Two capital repayments by MBO team

* before amortisation of intangible assets, share-based payments and non-recurring administrative expenses.

Martin Varley, Chief Executive Officer of Altitude commented:

"We have made considerable progress in the first half of the year in developing our operations in the North American market, which offer considerable potential for the Company. I am confident that the Company is moving in the right direction and that 2013 will see a significant increase in revenues."

Colin Cooke, Chairman of Altitude commented:

"I am delighted with the further progress made on both sides of the Atlantic. The Company is well positioned, has a highly skilled team, substantial growth opportunities and a clear focus on the goal of delivering meaningful shareholder returns."

Enquiries:

Altitude Group plc

Colin Cooke (Chairman)                             Tel: + 44 (0) 870 224 6677

Martin Varley (Chief Executive)                  Tel: [phone]

Merchant Securities (Nominated Adviser and Broker) 

Simon Clements                   Tel: [phone]

Chief Executive's Statement

The primary focus of the Group continues to be on the expansion of the Software as a Service ("SaaS") offerings, under the Trade Only brand both within the UK and increasingly within North America.   

We continue to make good progress within the defined promotional product sector, as well as the closely related print reseller market with our integrated Web Store, CRM/ERP solution that enables businesses to operate in these niches for a subscription as little as $99 per month.

Our experience from our more established UK customer base shows high levels of customer loyalty and retention and initial experiences in the USA indicates a similar pattern is likely.

We have continued to refine the business model to ensure that we can offer high levels of customer service with suitable financial returns to a more clearly defined target market of customers.

In the print and promotional space, we are focusing our attention on two ends of the market. Firstly, smaller businesses that previously have not had access to enterprise level functionality for a low monthly fee. There is substantial opportunity here. At the other end of the scale are larger organizations that require a 'hybrid' solution combining our client/server ERP solution with our 'cloud' accessed offering for remote staff that prefer the convenience of a browser accessed solution. We are focusing at the two extremes as smaller companies value highly the best in class functionality for a modest monthly cost, and the larger companies have the internal resources and budgets to enable comprehensive installation and training programmes.

Costs continue to be managed carefully to ensure we achieve the maximum impact from investment and that we are operating within budget. Development resource will remain our biggest investment. We will continue to increase developer headcount modestly in the USA over the next 3-6 months to ensure the availability of resource to accommodate new contract business.

The move to a new office facility in Costa Mesa, CA has helped us attract the right caliber of software engineers and provides an appropriate working environment at a reasonable cost.

The balance sheet position remains solid with net cash balances of £0.61m at 30 June (31 December 2011: £0.29m). During the period £0.4m was repaid against the £4.0m 2016 Loan Note outstanding from the sale in 2011 of the Promotional Marketing Division, which is a good indication of the buyout team's intentions to reduce the balance.

Product Development

Whilst we have substantial opportunity within the print and promotional sector and a determination to achieve a market leading position amongst a potential customer market in excess of 50,000 companies, the greater opportunity for value creation is within the general SMB market within the USA.

Small companies that need enterprise level functionality are poorly served with little access to solutions that are affordable and accessible. Our plan is to provide these tools under the brand 'Customer Focus' (www.customerfocus.com)

With a target market of more than 27 million SMB's in the USA, this solution will offer a complete business management solution with packages ranging from 'free' to $149 per month.

The official launch is planned for the latter part of this year with a major marketing effort scheduled for the start of 2013.

In early September, VISION^TM 2.0, the major update of VISION^TM, was released in the USA. This was somewhat later than originally planned and had been awaited by customers. Its release should now provide added impetus to the accretion of new customers.

Trading

We have recently agreed terms on long-term contracts with two further Top 40 Promotional Product distributors in the USA. Both will utilize our hybrid solution and are expected to go live in the early part of 2013.

Our implementation with EmbroidMe is going well and we anticipate the system will go live for first adopting franchisees during October 2012. The rate of adoption at this early stage is encouraging and we are confident that our estimate of user numbers will come to fruition during 2013.

The launch of VISION 2.0 is a major milestone in the development in the USA. This was later than planned but the additional time taken has resulted in our software platform being able to integrate with leading companies such as Intuit and their QuickBooks solution and Authorize.net a leading payment gateway service provider.

The Trade Only National Show, the premier trade show for the UK promotional products industry, again saw record attendance in January 2012, with attendance up 7% against 2011 and our revenues up 13%. Currently, the 2013 show is 96% pre-sold compared with 85% pre-sold at the same time last year. 

Outlook

In the USA, new customer wins alongside indicated contract awards from large organisations provide scope for us to increase recurring revenue substantially over time. I expect that tangible progress will be made in the final months of this year, providing momentum to carry us forward into 2013, when the launch of www.customerfocus.com will provide further opportunity.

The UK business continues to deliver strong cash generation, with the bookings for 2013 events and publications giving visibility to its revenues.

Martin Varley

Chief Executive Officer

Consolidated income statement for the six month period ended 30 June 2012

	Unaudited		Unaudited
	30 June 2012	31 December 2011	30 June 2011
	£'000	£'000	£'000
Revenue	2,862	3,539	2,456
Cost of sales	(804)	(905)	(764)
Gross profit	2,058	2,634	1,692
Administrative costs	(1,975)	(3,457)	(1,630)
Operating profit/(loss) before amortisation of intangible assets, non-recurring administrative expenses and share based payment charges	273	(145)	358
Amortisation of intangible assets	(138)	(249)	(79)
Non recurring administrative expenses	-	(428)	(197)
Share based payment charges	(52)	(1)	(20)
Operating profit/(loss)	83	(823)	63
Finance income	154	152	-
Finance expenses	(2)	(1)	-
Profit/(loss) before tax	235	(672)	63
Taxation	(12)	116	-
Profit/(loss) from continuing operations	223	(556)	63
Profit from discontinued operations	-	314	307
Profit/(loss) attributable to the equity shareholders of the Company	223	(242)	370
Earnings/(loss) earnings per ordinary share attributable to the equity shareholders of the Company :
- Basic (pence)	0.52	(0.58)	0.90
- Diluted (pence)	0.52	(0.58)	0.89

There were no recognised gains or losses in the period other than the profit for the period and therefore no statement of recognised income and expenses is presented.

Consolidated statement of changes in equity for the six month period ended 30 June 2012

	Share	Share	Retained
	Capital	Premium	Earnings
	£'000	£'000	£'000
At 1 January 2012	171	6,214	(708)
New shares issued	-	17	-
Result for the period	-	-	223
Foreign exchange difference	-	-	1
Share based payment charges	-	-	52
At 30 June 2012	171	6,231	(432)

Consolidated balance sheet as at 30 June 2012         

	Unaudited		Unaudited
	30 June 2012	31 December 2011	30 June 2011
	£'000	£'000	£'000
Non-current assets
Property, plant & equipment	181	136	79
Intangibles	1,261	1,332	1,608
Goodwill	564	564	273
Long-term loan receivable	3,600	4,000	4,000
Deferred tax	90	90	-
	5,696	6,122	5,960
Current assets
Inventories	-	-	-
Trade and other receivables	820	1,125	2,771
Cash and cash equivalents	611	294	-
Total current assets	1,431	1,419	2,771
Total assets	7,127	7,541	8,731
Current liabilities
Bank overdrafts	-	-	(1,120)
Trade and other payables	(1,145)	(1,864)	(1,354)
Current taxes	(12)	-	(3)
	(1,157)	(1,864)	(2,477)
Net assets	5,970	5,677	6,254
Called up share capital	171	171	168
Share premium	6,231	6,214	6,159
Retained earnings	(432)	(708)	(73)
Total equity	5,970	5,677	6,254

Consolidated cash flow statement for the six month period ended 30 June 2012

	Unaudited		Unaudited
	30 June 2012	31 December 2011	30 June 2011
	£'000	£'000	£'000
Operating activities
Profit/(loss) for the period	223	(242)	370
Amortisation of intangible assets	138	273	79
Depreciation	34	41	19
(Profit)/loss on sale of discontinued operations	-	10	(59)
Net finance (credit)/expense	(152)	(147)	-
Net foreign exchange losses	-	2	-
Corporation tax charge/(credit)	12	(116)	-
Share based payment charges	52	11	20
Operating cash flow before changes in working capital	307	(168)	429
Movement in inventories	-	(570)	(532)
Movement in trade and other receivables	255	(679)	(388)
Movement in trade and other payables	(664)	276	(193)
Operating cash flow from operations	(102)	(1,141)	(684)
Interest received	154	152	-
Interest paid	(2)	(5)	-
Income taxes	-	14	3
Net cash flow from operating activities	50	(980)	(681)
Investing activities
Purchase of plant and equipment	(79)	(115)	(34)
Purchase of intangible assets	(69)	(203)	-
Payment of deferred consideration	-	(176)	(176)
Disposal of subsidiary undertakings	-	928	(1,004)
Acquisition of subsidiary and business undertakings	-	(1,622)	(1,627)
Repayment of loan note receivable	400	-	-
Net cash flow from investing activities	252	(1,188)	(2,841)
Financing Activities
Proceeds from issue of share capital	18	939	877
Net payments on hire purchase contracts	-	(9)	(8)
Net cash flow from financing activities	18	930	869
Net increase/(decrease) in cash and cash equivalents	320	(1,238)	(2,653)
Cash and cash equivalents at the beginning of the period	294	1,533	1,533
Effect of exchange rate fluctuations on cash held	(3)	(1)	-
Cash and cash equivalents at the end of the period	611	294	(1,120)

Responsibility statement

The Board confirms that to the best of its knowledge:

-     The condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU;

-     The interim report includes a fair review of the information required by :

(i)  DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the six months ended 30 June 2012 and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii) DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the six months ended 30 June 2012 that have materially affected the financial position or performance of the entity during that period. 

The directors who served during the period are:

Colin Cooke (Non-Executive Chairman)

Martin Varley (Chief Executive Officer)

David Dannhauser (Non-Executive Director)

Notes to the half yearly financial information

1. Basis of preparation

This consolidated half yearly financial information for the half year ended 30 June 2012 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union.

The consolidated half yearly report was approved by the Board of directors on 17 September 2012. 

The financial information contained in the interim report does not constitute statutory accounts and does not include all of the information and disclosures required for complete financial statements.  Statutory accounts for the year ended 31 December 2011 have been filed with the Registrar of Companies.  The auditor's report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report and did not contain a statement made under Section 498 (2) or (3) of the Companies Act 2006.

There were no recognised gains or losses in the six month period ended 30 June 2012 other than the profit for the period and therefore no statement of recognised income and expenses is presented.

The half-year results for the current and comparative period are unaudited.

2. Accounting policies

The condensed, consolidated financial statements in this half-yearly financial report for the six months ended 30 June 2012 have been prepared using accounting policies and methods of computation consistent with those set out in the Annual Report and financial statements for the year ended 31 December 2011, except as described below.  In preparing the condensed, consolidated financial statements, management are required to make accounting assumptions and estimates.  The assumptions and estimation methods were consistent with those applied to the Annual Report and financial statements for the year ended 31 December 2011.  

3. Operating Segments

Under IFRS 8 "Operating Segments" the Group has determined that it has one reportable segment, Technology & Information.

IFRS 8 has been applied to aggregate operating segments on the grounds of similar economic characteristics. This position will be monitored as the Group develops.

4. Basic and diluted earnings per ordinary 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		Unaudited
	30 June 2012	31 December 2011	30 June 2011
Earnings (£'000)	223	(242)	370
Weighted average number of shares (number '000)	42,821	41,563	40,915
Fully diluted weighted average number of shares (number '000)	42,821	41,571	41,408
Basic earnings per ordinary share (pence)	0.52p	(0.58)p	0.90p
Diluted earnings per ordinary share (pence)	0.52p	(0.58)p	0.89p

 

END

 

 

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