Trading Statement

RNS Number : 2906Z

Altitude Group PLC

14 December 2017

 

14 December 2017                                  

ALTITUDE GROUP PLC

 (the "Company" or "Altitude")

AiM progress update, launch of online aggregator "AndEverything.com" and 2017 trading update

Altitude Group plc (AIM: ALT), the operator of a leading marketplace for personalised products, is pleased to update shareholders on progress made as we head towards the end of the financial year.

We have had a very busy period following the appointment of Nichole Stella as President US Operations and the publication of the half year report in September, and look to enter the New Year with a great deal of positivity and confidence.

AiM progress update

As stated in our half year report, we have increased focus on our partnership with AiM as the quickest route to significant revenue having enhanced the enterprise partnership agreement with AiM, to provide members with a combined Channl ecommerce platform together with Altitude's full cloud based CRM and order management system.

Having created approximately 1,400 Channl sites for AiM members, and appreciating the need to train and engage with members to drive their use of the platform, we have accelerated investment into the US to provide Nichole with the resource to begin "on boarding" AiM members. With the knowledge that the fast growing AiM group (over 100 new members and circa $80 million of revenue added in the last quarter), who execute more than $1.3 billion of annual revenue, will utilize our processes to transact all orders, we have now integrated both our ecommerce (Channl) and cloud based legacy order processing applications to capture all orders. We have branded the integrated platform as "AiMPro".

AiMPro is a full cloud-based business management platform that features full CRM, enterprise e-commerce websites, company stores and instant websites. All merchandise on the platform will utilise our unique and patent protected design and productions software Artworktool. The provision of this full product suite is a member benefit to AiM members and is provided free of charge to them.

AiM suppliers

Suppliers have shown great enthusiasm for the launch of the AiMPro platform and at the prospect of gaining increased exposure to the largest and fast growing distributor Group in the US. To be competitive and retain access to this member group, AiM preferred suppliers are showing that they are willing to contract to pay differential percentage based transaction fees to Altitude on both online and offline orders. Online orders will still command higher Channl levels of gross transactional revenue.

To that end we are delighted to announce that we have agreed terms with two of the top 50 AiM preferred suppliers in the last week and anticipate many more suppliers will be added during Q1 of 2018. These suppliers will be integrated within AiMPro on a percentage of transaction basis. Contracting with the suppliers in this way means that we potentially have access to gross transactional revenue ("GTR") across the whole of the AiM revenue base once the throughput is captured in AiMPro. We expect that, over time, AiM members will inevitably and increasingly migrate to online trading via the ecommerce (Channl) platform embedded in AiMPro and as they do this Altitude's GTR% will increase.

AiM members

Initial marketing of AiMPro to the first 40 AiM members ("AiM40") in November highlighted that AiM members are very keen to adopt a single solution that addresses all of their operational and e-commerce needs. On 16 November 2017 we hosted a fully attended and very well received introductory webinar to the AiM40 and we have a team based in Philadelphia who, supported by the UK, are fully engaged in on-boarding and training the AiM40.

Execution of the on boarding process will be of paramount importance to the success of our partnership with AiM and to the speed at which members can engage with the AiMPro platform. The team in Philadelphia have been hired and trained to initially focus on the on-boarding of the AiM40. On 16 January 2018 the wider roll out to more AiM members will launch at the PPAI EXPO in Las Vegas. Nichole and her team will present to more than 300 AiM members at an invitational reception at PPAI EXPO, and will then provide two separate 2 day sessions focussed on on-boarding members. Currently there are more than 200 AiM members have registered for the on boarding sessions at the EXPO.

Following the PPAI Expo in Las Vegas, the Company will execute a strategic on boarding and education campaign to AiM members throughout 2018. A programme of online training/webinars will be offered and the Company will undertake a 60 day AiMPro roadshow tour to various cities across the US to deliver on-boarding sessions directly to those AiM members not able to attend the Las Vegas EXPO. 

AndEverything.com

We are also delighted to announce the launch of our online aggregator or market place called AndEverything.com ("AE"). It will be fully supported by search engine optimisation activity.

We believe that AE is the only comprehensive promotional products aggregator and market place in the world, and will enable any promotional product distributor to be listed and "found" by end users searching and browsing the internet for promotional products, including B2C as well as B2B.

AE provides the end user with the unique full Channl experience, enabling them to upload their brand logos, fully personalise the print area, produce production ready artwork, and then finally select a preferred price, distributor, location and delivery time from the selection of registered members and competitive pricing, then purchase and checkout. It is a complete online purchasing experience without the need for human interaction or artwork proofing, designed very much as an Amazon style experience.

AE has been "soft" launched in the UK, initially with 20 registered distributors and will be available in the US by the end of the month ahead of a formal launch at Altitude's national UK trade show "PPD Live" at the Ricoh Stadium, Coventry, and the national US PPAI EXPO in Las Vegas, both of which are being held on 16 January 2018. An AE listing will also be made available to AiM members as an added value benefit.

The board believe AE is highly complementary to our current offering and the wider business strategy and effectively completes a circle of products which will enable any distributor to truly trade online, and Altitude to potentially monetise every part of the supply chain. Altitude technology can now provide any distributor with:

·    a free unrivalled ecommerce Channl trading platform for each of their customers complete with a supply chain built-in;

·    a free and comprehensive order management system for offline orders;

·    a route to additional online orders via listing on AE; and

·    the ability to be found online by promotion of AE through search engine optimisation

AE is not provided free to distributors. There is a monthly subscription fee and sales commission payable in respect of orders placed with the distributor. An AE listing will be offered free to AiM members after a qualifying period of proven throughput across AiMPro, though additional sales commission charges will apply.

We are very excited by the launch of AE and believe it has enormous potential to generate shareholder value in its own right. An order was generated on the first day of "soft" launch in the UK without any promotion, and we have already received very positive feedback from the initial distributors.

Ad Products.com Limited ("ADP")

The acquisition of ADP in June of this year is progressing well, although the unfortunate four week delay caused by the vendor's bank in the completion of the deal meant that we missed the additive benefits of that period's revenue (circa £400k that we otherwise would have received), as well as the causal knock that the delay had on our plans to reorganise the business.

We are however now very pleased with the contribution that ADP is already making versus the price paid and the speed with which we have integrated the ADP business and increased efficiency.

Conclusion

Based on the high level of engagement of AiM members and suppliers and the sheer size of the AiM opportunity, the board are confident that our strategy of getting the combined technology foundations absolutely right and focussing resources on AiM on-boarding as our main and quickest route to significant monetisation, is correct.

A significant focus on the execution of the enhanced AiM agreement will, as we continue to execute as planned, allow us to capture more of their value chain and faster. AiMPro will provide Altitude with immediate access to monetise offline as well as online orders, which will apply across the majority of the huge $1.3 billion of combined AiM membership revenue. This is evidenced by the willingness of AiM preferred suppliers to pay differential percentage based transaction fees for inclusion on AiMPro.

The decision to focus and invest in the people and technology required to deliver the AiM growth opportunity in the US has marginally impacted revenue expectations in 2017]. The profit, despite the lost contribution attributable to the delay in completion of the ADP acquisition and the significant investment in the US, remains broadly in line with market forecasts. The momentum in the US confirms that the decision in this financial period to strengthen our technology and recruit a US team to work under Nichole's leadership was absolutely the correct course of action.

Our newly launched online aggregator, AndEverything.com, is the final piece of the jigsaw which ensures that Altitude can monetise every part of the supply chain and thus access a significant and growing share of the value chain as the promotional products markets in both the US (circa $23 billion) and UK (circa £1 billion) inevitably migrate online. We believe AndEverything.com will become a significant business in its own right and enhances and complements our "free" Channl ecommerce and combined AiMPro trading platforms. It is a very exciting and significant development to see AE launched in the UK with the US to follow very soon.      

The pipeline of enterprise opportunities is growing and we are engaged with several who, in terms of party and scale, would be as endorsing of our full customer proposition as the enhanced AiM agreement is. We are hopeful of converting these opportunities and will update the market at the appropriate time. As such, the board looks to the future with confidence.

Enquiries:

Altitude Group plc Peter Hallett, Executive Chairman	07887 987469
finnCap ltd	020 7220 0500
Jonny Franklin-Adams (Corporate Finance)
Scott Mathieson (Corporate Finance)
Richard Chambers (Corporate broking)

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

END

 

 

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