Altitude Group Regulatory News (ALT)

Altitude Group plc

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

Audited Annual Results for the Year Ended 31 March 2022 and Notice of Annual General Meeting

Robust Trading Drives Growth with Continued Expansion in Progress

Financial Highlights

· Group revenues increased by 54.9% to £11.9 million (2021: £7.7 million)

· Services revenue grew by 17.3%, surpassing the Industry average of 12.1% reflecting the strong performance of our AIM network

· Strong trading momentum has continued into the first quarter of our new financial year providing further confidence that the current market expectations are at least in line for the full year

· Gross margin of 51.5% (2021: 72.3%) as anticipated and reflective of blended revenues across the Group

· Group adjusted operating profit* increased 90.2% to £1.1 million (2021: £0.6 million)

· Adjusted basic earnings per share** from continuing operations increased by 71.9% to 1.77p (2021: 1.03p)

· Operating cashflow before changes in working capital increased by 149% to £1.1m (2021: £0.4m)

· The Group held a cash balance at year end of £0.9m (2021 £2.1m), with cash at 30 June 2022 of £1.6 million

 * Operating profit before share-based payment charges, amortisation of intangible assets, depreciation of tangible assets and exceptional charges

** Adjusted basic earnings per share from continuing operations is calculated using profit after tax but before share-based payment charges, amortisation of intangible assets, depreciation of tangible assets and exceptional charges and the weighted average number of equity voting shares in issue

Key corporate developments and operational highlights

· AIM membership has continued to grow, and currently totals 2,425 global members, up from 1,917 at acquisition, consolidating its position as one of the largest global distributor organisations

· The Group has continued to strengthen its core technology platforms, with 476 distributors adopting the AIM Tech Suite for search and order creation, a 32% increase from 359 in FY 2021. To date, the Group has launched 2,646 unique webstores

· Merchanting revenue increased by 141.4% to £5.6 million (2021: £2.3 million) through the now fully evolved AIM Capital Solutions ("ACS") programme

· During the year the Group secured a financing facility of £0.5m that remains undrawn

Notice of Annual General meeting ("AGM")

The Company also gives notice that its AGM will be held at the offices of Zeus, 10 Burlington St, London, W1S 3AG on 15 September 2022 at 11 a.m. The Notice of AGM and the Annual Report for the year ended 31 March 2022 will be posted to shareholders and will be available on the Group's website (https://www.altitudeplc.com/reports-results) in due course.

Outlook

· Preferred Partner service fees tracked 32% over last year demonstrating recovery and gaining momentum into the new financial year

· The Group's Merchanting programmes are expanding and driving new growth within the promotional products industry and adjacent markets

· The Group remains debt free and has a credit facility in place to support continued growth and expansion

· The Board is confident in the future scalability and success of the business and the executive management team's ability to successfully execute upon the Group's strategy

Nichole Stella, Group CEO of Altitude, said:

"The Group experienced a year of strong profitable growth, driven by the commitment of our teams and the quality of our programmes. We are also extremely pleased to see last year's strong trading momentum has continued into the first quarter of our new financial year providing further confidence that the current market expectations are at least in line for the full year. We have continued to be nimble and drive the business forward through the most uncertain of times, building a strong foundation and delivering year-over-year positive growth, whilst remaining debt free and not raising dilutive funds. We retain our high growth ambitions and are confident in our ability to substantially scale and expand the business."

Chairman's Statement

Once again, we are reporting on a year impacted by the global pandemic. There was hope and expectation that the impact would diminish as the year progressed but the spring Delta variant and autumn Omicron outbreak ensured an overhang that covered the majority of 2021. However, despite these significant headwinds, the year was one of great progress, with revenue rising by 55% to £12 million and adjusted operating profit rising by 88.4% to £1.1 million. A very significant part of this success was the replacement of the one-off PPE sales of £2 million in 2020/21 into core, repeatable revenue.

The management team remained focused on the continued development of the technology platform and marketing initiatives to provide our AIM distributors, ACS Affiliates and Preferred Partner suppliers with an exceptional experience, whilst diversifying revenue streams and extracting greater value through the $23 billion promotional goods industry value chain.

Year in Focus

Most importantly, material investment was made in our technology base to improve and simplify processes for our AIM/ACS distributors and Preferred Partner suppliers. Further connection of our unique proprietary software to business utilities was made in line with distributor and supplier demand, with customer satisfaction continuing to rise. We are, at our core, a technology company enabling a global marketplace within the industry, and significant progress was made in enhancing the experience for all participants. For Altitude to remain at the forefront of the industry this investment is vital and will stand the Group in good stead as the promotional goods industry continues to rebound strongly in 2022.

All key performance metrics moved in the right direction. AIM membership and product sales via our supplier Preferred Partnerships increased resulting in our service revenues increasing. More ACS affiliates came on board with Merchanting revenues rising sharply. Group Buys shifted in focus from one-off PPE to core, repeatable Merchanting revenue, proving our ability to respond to changing market challenges. The strategic focus on diversifying revenue streams via a high-quality technology experience gathered pace as the pandemic eased in Q1 2022. Whilst Q4 growth was slowed by Omicron, both Q4 2021 and Q1 2022 saw an industry rebound that helped deliver the stronger revenue and adjusted operating profit performance recorded for the full year.

Cash was prudently managed through the pandemic and the cash balance remained at £0.9 million at year end, having funded a material £1.4 million increase in trade and other receivables during the year. Cash balances at 30 June 2022 stood at £1.6 million. The Group remains debt free with a material credit facility in place to support future growth as opportunity arises.

Board Changes

The Board was enhanced with the addition of Graham Feltham as CFO. Both experienced and entrepreneurial, Graham adds strength in depth beyond his finance remit. Alongside Nichole Stella as CEO, Deborah Wilkinson as COO, and Peter Hallett and Martin Varley as Non-Executive Directors, who represent a knowledgeable and well-balanced Board.

Keith Edelman stood down as Chair in November 2021 and leaves with our best wishes. I'd like to thank Keith for his professionalism during the transition and handover to me.

Looking Forward

The year was a very important one for the Group as we moved through and beyond the pandemic. On behalf of the Board I'd like to thank all the Altitude Group's employees for their hard work and passion which has delivered this strong set of results.

As we move through 2022, we will continue to focus on technology development to expand and enhance our unique promotional goods marketplace. We expect to see material growth in both our Services and Merchanting revenue as great distributor and supplier experience leads to increased membership and usage. The management team are far from complacent, alive to current inflationary and supply chain issues and remain confident. Beyond 2022 we expect to continue to capitalise on our ownership of the pre-eminent global promotional goods distribution network and our enabling technology to achieve significant scale.

The Board looks forward to supporting the successful execution of our strategy and listening to our stakeholders, from employees to distributors, to suppliers, and investors, as together we build an ever-stronger marketplace and business.

David Smith

Non-Executive Chairman

27 July 2022

Chief Executive's Statement

I am pleased to report the full-year results for the year ended March 31, 2022. The team's continued high-level performance, commitment to the business and passion for growth has delivered another year of positive results for the Group. We continue to successfully navigate the post-covid "new normal" business environment while strengthening our technology, delivering innovative solutions, and driving revenue and profit growth across the Group. Our revenues increased 54.9% to £11.9 million (2021: £7.7 million) and Group adjusted operating profit* increased 90.2% to £1.1 million (2021: £0.6 million).

Additionally, Group revenues over this 12-month period grew by 43.7% to £11.9 million (2020 (a 15-month period): £8.3 million) showcasing both recovery from the pandemic, continuous organic growth across the business and a fully evolved ACS Affiliate model. The Group's adjusted operating profit has shown continual year over year growth since 2018, culminating in a 90.2% growth compared to prior year.

Our business routes to revenue, how we make money, are separated into two distinct segments, Services and Merchanting. Our Services Revenue is comprised of membership subscriptions, Preferred Partner service fees on a percentage of network sales throughput, SaaS technology fees and marketing services fees. Our Merchanting revenue is comprised of sales of promotional products via our Affiliate and adjacent market programmes. In both programmes the Group is the principal in the transaction. In the financial year, our Services revenue increased 17.3% to £6.3 million (2021: £5.4 million) and our Merchanting revenue increased 141.4% to £5.6m (2021: £2.3 million).

Our Services programmes are global, with members present in every state in the US, across Canada and the UK. Our current membership is 2,425 globally, representing an estimated $2.8 billion+ pa in US aggregate pipeline sales and an average of $1.3 million pa annual turnover per US Distributor. We have more than 300 Preferred Partner lines, also around the globe in the US, Canada and UK. Our Merchanting programmes are based solely out of the US with national sales which are expected to grow and expand.

Our technology platforms are the centre of all of the Group's activities on both the Services and Merchanting segments of the business. Working within an agile and continuous improvement environment, the Group continued to invest in our platforms to ensure we drive efficiency, data insights and best-in-industry integrations and systems. These efforts drive efficiency and scalability across all of areas of the business, including our Merchanting services where all transactions are processed end-to-end through our platforms.

Our e-commerce and marketplace platforms include nearly 1 million products and connects our users (members and Affiliates) to the industry's best products and our Preferred Partners. When searching, our users will see our Preferred Partners products at the top of our search results. Users can seamlessly check inventory levels, create client quotes for their campaigns, push supplier purchase orders directly into the decoration facility and send sales invoices straight to clients from the platform. Welcoming a new open environment era, the Group's platforms now integrate with top accounting software, sales tax calculation platforms, payment processors, shipping providers, email services and the industry's top supplier companies.

Additionally, we have launched our business intelligence data warehouse which provides the Group the ability to extract data and information to find trending products, predict market shifts and understand our users' needs to drive efficiency, engagement and business insights.

The success of this year places the Group in a strong position for the start of the new financial year. We are focused on protecting our current business, growing our current core opportunities and utilising the strength in our technology stack and industry know-how to expand in the industry and adjacent markets.

Progress and Strategy

Looking forward, the Board and management team remain focused on investing in, and fostering a culture of technological innovation, supported by continued investment in our products, people and client relationships. This ensures we continue to deliver innovative solutions to our customers who engage with us to leverage their buying power of promotional goods. Our strategy is not only to grow our footprint of clients globally, but to expand and deepen engagement across our existing customer base of over 2,425 members.

In the financial year the Group experienced growth via our Services programmes which includes Preferred Partner programmes, SaaS technology 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

· Delivering added value services, leveraging existing applications, technology resources, and expertise, to help selected Preferred Partners grow their share of the total AIM member purchase pipeline

· Developing and selling additional added value services, leveraging existing applications, technology resources and expertise, to help AIM distributor members grow their business to end-user clients and purchase through preferred vendors and programmes, driving revenue and profits to AIM and benefiting the Group as whole

· Continuing to increase member utilisation of the AIM Tech Suite.

The Group also experienced growth in the financial year in our Merchanting programme, ACS, through the recruitment of high-calibre sales affiliates. ACS enables affiliates to focus on sales activities, which is their core skillset. ACS delivers affiliates the opportunity to become part of a corporate business driving growth and profitability, which is our skillset. ACS's supplier access, operational expertise, financial strength and technology systems exceeds their stand-alone potential, and is particularly attractive as inflationary and recessionary fears rise. ACS provides the business with significant potential to scale revenue and thus profit through volume sales.

During the year the Group secured a new working capital credit facility with TD Bank N.A., with an initial 12-month revolving facility of $700k. The facility will provide access to non-dilutive funding to support the Group in executing its growth strategy. The facility is secured from the successful delivery of the AIM business, along with a parental guarantee, which allows the Group to focus on developing growth areas within Merchanting.

Market Opportunities

Altitude has entered the new financial year with positive trajectory, having expanded our Group's technology, grown our services and enhanced our supply chain strength throughout the pandemic. In the financial year the Group was able to successfully expand services into adjacent markets to offer "Gear Shop" services in the education sector by delivering our comprehensive technology stack, increasing our marketplace and e-commerce solutions, and by the constant upgrade of our supply chain and merchandising capabilities in a non-competing adjacent market. Early-stage implementation has proven successful and the Group anticipates continued growth in this sector and also looks to additional adjacent markets such as print, uniform and signage industries to drive expansion opportunities and growth.

Technology

Altitude's technology platforms are the centre of all of the Group's activities on both the Services and Merchanting segments of the business. Working within and agile and continuous improvement environment, the Group continued to invest in its platforms to ensure we drive efficiency, data insights and best-in-industry integrations and systems. These efforts drive efficiency and scalability across all of areas of the business, including our Merchanting services where all transactions are processed end-to-end through the Group's systems.  As the technology evolves, Member adoption and usage of Altitude's technology solutions continues to grow with 476 distributors adopting the AIM Tech Suite for search and order creation, a 32% increase from 359 in FY 2021 and 2,646 unique websites live to date.

Our People & Our Commitment

Our people and community are our strength and the lifeblood of the business. We continue to focus on employee development and the creation of a culture that is welcoming, engaging and recognises the successes and contributions across all employees in every aspect of the business. In the year, we were able to continue to promote from within, assisting 11 US employees advance their careers and grow their skillset. Additionally, acknowledging the difficult global environment we are all working within today, the Group is launching a programme addressing stress and anxiety issues with forums to discuss coping skills and build mechanisms to assist the AIM team and the community in managing the stress and anxiety that many are experiencing since the onset of the global pandemic.

Diversity, Equity & Inclusion

We embrace and are committed to a culture of diversity, equity and inclusion ("DEI"). This guiding principle is instrumental in how we build our teams, cultivate our leaders and create collaborative, innovative and inclusive environments throughout the AIM network and industry. Our inclusive culture supports diverse perspectives, drives courageous conversations and empowers every individual across the team and throughout the AIM community.

Financial Results

The significant increase in Group adjusted operating profit* of 90.2% to £1.1 million (2021: £0.6 million) is demonstrative of our ambition to deliver scalable growth and also of the operational leverage inherent within the business. To deliver this in a year still impacted by COVID-19, whilst growing the Merchanting lines, is a great achievement. To further support the growth in Merchanting we have secured the credit facility as mentioned above. This places Altitude in a financially secure and strong position to overlay growth opportunities in the future. A detailed financial review can be found in the CFO's report.

Outlook

The Group experienced a year of strong profitable growth, driven by the commitment of our teams and the quality of our programmes. We are also extremely pleased to see last year's strong trading momentum has continued into the first quarter of our new financial year providing further confidence that the current market expectations are at least in line for the full year. We have continued to be nimble and drive the business forward through the most uncertain of times, building a strong foundation and delivering year-over-year positive growth, whilst remaining debt free and not raising dilutive funds. We retain our high growth ambitions and are confident in our ability to substantially scale and expand the business.

Nichole Stella

Chief Executive

27 July 2022

Chief Operating Officer's Report

Altitude provides a proprietary SaaS-based technology suite to promotional product distributors operating in the USA and UK. The technology suite provides an online marketplace for the procurement of best-in-class promotional merchandise by supporting AIM members and ACS affiliates with the capability to source, showcase and fulfil orders for branded items. 

The four value drivers that guide our software innovations and technology roadmap focus on providing members, partners and buyers with a world-class online experience which is fully aligned with our preferred partner suppliers' products, and customer experience teams providing an effortless ordering experience with every interaction:

· Efficiency - providing an intuitive online ordering experience for buyers coupled with the back-end technology stack to support the quick fulfilment of orders for branded merchandise

· Effectiveness - ensuring product availability whenever and wherever you are, with 24/7, 365 uptime and a mobile first approach

· Experience - delivering a delightful experience and high degree of satisfaction for Members, Affiliates, Partners, and End-buyers

· Trust - providing a compliant and reliable service from start to finish

The tech suite has been developed specifically for the seamless ordering and fulfilment of branded merchandise, encompassing over 20 years of industry knowledge and features. Our technology team consists of a suite of experienced individuals who have combined technical and industry experience and operate agile methodology which enables the Group to stay relevant by learning-from and shaping the tech suite to users evolving requirements, advancing buying behaviour and technological advancements.

The click-to-ship technology stack includes a full suite of tools required for the sale of branded merchandise including quotation and order management, finance, e-commerce webstores, inventory and warehousing capabilities, production planning, reporting, logo visualisation and interactive online catalogues.

The tech suite is utilised by users throughout the USA and UK with a robust infrastructure that provides localised environments with country specific product catalogues, multiple currency and language support online. As a result, our e-commerce platforms are trusted by multi-million-dollar brands in a range of sectors such as healthcare, IT and finance with an average enterprise-level user lifetime of over 10 years. 

As the technology evolves, member adoption and usage of the Group's technology solutions continues to grow, with 476 distributors adopting the AIM Tech Suite for search and order creation, a 32% increase from 359 in 2021, whilst 2,646 unique websites have been launched to date.

Throughout this period the technology department delivered key advancements with focusses on scalable growth, user and supply chain efficiencies and user-retention. 

The ACS platform was provided with its own branding and identity and had significant advancements released to support financial process automations, with a focus on scalability and efficiencies both internally and for affiliates.

Across AIM and ACS preferred partner supplier relationships were enhanced, with continuing focus on deeper integrations to add increased automation and strengthen the availability of real-time data between parties. The tech suite now features two-way API data exchanges, enabling live preferred partner supplier inventory levels and electronic purchase order submission directly into partner ERP systems. With the addition of automated order and shipping status updates returned from partner and shipping agents to AIM and ACS member systems, this reduces the manual exchange of information and speeds up order processing.

Further advancements include the addition of an inventory module within the order management and webstore platforms, widening usage by supporting the operations of members who hold stock themselves or run corporate scheme programmes.

The technology focus for the financial year 2023 will see a continuing pace of further enhancements to the tech suite for AIM and ACS. One of the key roadmap items for the coming financial year is in-line with the rise in e-commerce within the promotional products industry. The second half of the year will see the launch of an upgraded e-commerce platform, which will include new user and buyer driven features for SEO and online purchasing and serve the growing needs of our members and affiliates operating corporate scheme and niche transactional webstores. The new e-commerce platform will encompass a retail experience with a mobile-first approach to meet evolving buyer expectations and will be fully integrated with our order management suite for member efficiencies and preferred partner supplier network connectivity. 

The ongoing investment in the wider technology roadmap for financial year 2023 will ensure the tech suite continues to evolve to attract new members and affiliates, strengthen partner relationships and support member retention.

Deborah Wilkinson

Chief operating Officer

27 July 2022

Chief Financial Officer's Report

Financial Results

Group revenues for the year increased by £4.2 million to £11.9 million (2021: £7.7m), an increase of 54.9%.

2022 is a significant year for Altitude, with a 17.3% growth in Services, surpassing the Industry distributor average of 12.1%, which reflects the strong performance of the AIM network and the Industry's recovery from COVID-19. This year, with the evolution of the business model, Merchanting predominately reflects the sale of promotional products through our Affiliate sales network, which is the main driver behind the 141.4% increase over last year. In the prior year the majority of Merchanting revenue was derived from a one-off initiative to supply COVID-19 related product placed through our Group Buys platform.

Gross profit has increased by £0.6 million, a 10.3% increase, to £6.2 million (2021: £5.6 million). This is mainly driven by an increase in the AIM purchasing pushed through our Preferred Partner network, demonstrating the value of our Services to our Preferred Partners.

Gross margin was 51.5% (2021: 72.3%) reflecting the growth in lower margin Merchanting activity, whilst Services retained a consistently high margin. Merchanting has benefited from multiple technology enhancements and a rigorous review of process during the quieter COVID-19 impacted period. The established ACS core processes provides the Group with a solid platform for scalable growth for which we saw increased demand and Affiliate onboarding late in the year. ACS is primarily a volume business which fully utilises our Technology and also benefits from our Preferred Partner network.

Administration expenses before share-based payments, amortisation of intangible assets, depreciation of tangible assets and exceptional charges of £5.1 million (2021: £5.0 million) are broadly in line with prior year. In a year of increased activity, the Group has maintained tight control over costs, and taken advantage of the US Government support of the Employee Retention Scheme, which contributed £0.5 million (2021: £0.4 million) through Paycheck Protection.

Adjusted operating profit* increased by 90.2% to £1.1 million (2021: £0.5 million). The statutory loss before taxation was £0.2 million (2021: loss of £1.3 million), whilst the adjusted profit*** before taxation increased by £0.7 million to £0.1 million (2021: loss of £0.6 million).

Exceptional costs

The Group incurred exceptional costs of £234,000 (2021: £39,000) reflecting the first stage of finance transformation, including the development of a new forecasting model, costs of recruiting a new CFO, costs associated with the change in Nominated Adviser and Broker and costs incurred in a bad debt.

Development

The Group capitalised £0.8 million of software development (2021: £0.7 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. This is discussed in more detail in the COO review.

Earnings per share

Basic earnings per share for continuing operations were 0.14p (2021 loss 1.56p). Adjusted basic earnings per share** from continuing operations was 1.77p (2021: 1.03p), representing an increase of 72%.

Taxation

The Group is carrying a deferred taxation asset of £436,000 mainly in respect 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 with two years credit received resulting in a net income tax received position of £413,000 (2021: £11,000).

Cash flow

Operating cash inflow before changes in working capital was £1.1 million (2021: £0.4 million). Working capital increased by £1.5 million (2021: £Nil) principally driven by trade and other debtors, reflecting the growth in revenue and timing of receipts. Net cash outflow from investing activities of £0.9 million (2021: £0.3 million outflow) represents the purchase of tangible and intangible assets (software development) of £0.9 million (2021: £0.6 million). The prior year was also impacted by £0.3 million of proceeds from the disposal of Ad Products. Financing activities included the repayment of finance agreements and interest of £0.2 million (2021: £0.1 million) with a small inflow from the issue of shares relating to share options exercised. Total net cash outflow was £1.2 million (2021: £0.1 million inflow). The year-end cash balance stood at £0.9 million (2021: £2.1 million).

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 a new working capital credit facility (the "Facility") with TD Bank N.A., with an initial 12-month revolving facility of $700k. 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. The Facility will provide access to non-dilutive funding to support the Group in executing its growth strategy. The Facility has an arrangement fee of $3,500 annually and incurs interest at 1% above the US Prime Rate on drawdown. This Facility remains undrawn at the year end.

Share capital

The share capital increased by 213,896 to 70,681,164 (2021: 70,467,268). All of the shares issued in the period were in respect of options exercised by employees.

The Company issued share options to senior management of 444,444 (2021: 3,400,000). During the year the number of share options exercised was 213,896 (2021: 1,171,089) with the number of share options forfeited being 2,329,667 (2021: 60,000). The total number of share options in issued being 4,299,445 (2021: 6,398,564).

Key performance indicators

The Group's key performance indicators as discussed above are:

*Operating profit 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 from continuing operations is calculated using profit after tax but before share-based payment charges, amortisation of intangible assets, depreciation of tangible 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 introduced this year to review the performance of the underlying business including the depreciation for development costs.

Graham Feltham

Chief Financial Officer

27 July 2022

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2022

Consolidated Statement of Changes in Equity

for the year ended 31 March 2022

Consolidated Balance Sheet

as at 31 March 2022

The consolidated financial statements were authorised for issue by the Board of Directors on 27 July 2022 and signed on its behalf by:

Graham Feltham

Chief Financial Officer

Registered number: 05193579

Consolidated Cash Flow Statement

for the year ended 31 March 2022

Notes to the Consolidated Financial Statements

1.  Financial Information

The financial information in this preliminary announcement has been extracted from the audited Group Financial Statements for the year ended 31 March 2022 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The Group Financial Statements for 2020/21 were delivered to the registrar of companies, and those for 2021/22 will be delivered in due course. The auditor's report on the Group Financial Statements for 2020/21 and 2021/22 were both unqualified and unmodified. The auditors' report was signed on 27 July 2022. The Group Financial Statements and this preliminary announcement were approved by the Board of Directors on 27 July 2022

The audited accounts will be posted to all shareholders and will be available on the Group's website (https://www.altitudeplc.com/reports-results) later today.

2. Basis of preparation

The financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted for use in the European Union, including IFRIC interpretations issued by the International Accounting Standards Board, and in accordance with the AIM rules and is not therefore in full compliance with IFRS. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2021 annual report.

The Accounts have been prepared under the historical cost convention. The Consolidated Financial Statements are presented in Sterling, rounded to the nearest thousand.

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. 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.

In preparing the condensed, consolidated financial statements, management are required to make accounting assumptions and estimates. The assumptions and estimation methods are consistent with those applied to the Annual Report and financial statements for the period ended 31 March 2021.

Additionally, the principal risks and uncertainties that may have a material impact on activities and results of the Group remain materially unchanged from those described in that Annual Report.

Going concern

The financial statements have been prepared on a going concern basis.

Although the outlook has improved from prior years the current economic conditions caused as a result of COVID-19 restrictions being eased have resulted in supply chain challenges in meeting the subsequent increase in Global demand. Combining with the increase in Global demand, the Russian invasion of Ukraine has increased pressure on energy prices. The resultant impact on the Industry is uncertain with Corporate costs increasing putting pressure on budgets and therefore marketing spend countering the increase in demand and revival of the Industry and Corporate activity post Pandemic. The Board is approaching the immediate future with caution, keeping focussed on growth and reviewing options to flex spends accordingly.

The Board is confident that the Group has sufficient liquidity to trade through to more normalized trading conditions. The financial statements have therefore been prepared on a going concern basis. The Directors have taken steps to ensure that their belief that the going concern basis of preparation remains appropriate. The key factors are summarized below:

· The Directors have prepared cash flow forecasts extending to September 2023. The cash flow forecasts include a mid-scenario and sensitized high/low cases

· The low scenario assumes reductions in revenue of c10% compared to the mid-scenario. The high scenario assumed increases of c20% based on pipeline opportunities

· The forecasts assume regular collections and payments in line with the now normalised conditions experienced. The Group has caught up any delayed payments and Government support initiatives available and has a financing facility in place to support cash cycle throughout the year

· The base and sensitized cash flow forecasts do not include any mitigating factors available to management in terms of:

· discontinuing the development of AIM Capital Services to release working capital

· reactionary cost reduction/flex programmes in respect of headcount and organisation

· securing additional working capital facilities in respect of any growth of AIM Capital Solutions 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 adverse impact on the business

Based on the above factors 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.

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 statement of financial position 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. By far the most significant operation that carries out merchanting is within ACS. Over the past 18 months significant investment in our technology and the evolution of contracting with our affiliates along with enforcement of contractual terms has prompted the Directors to re-evaluate the application of IFRS 15. Under the terms of the ACS contract the AIM member affiliates act as independent sales representatives of ACS to secure sales with customers. The contracts have evolved since the inception of ACS along with enforcement, monitoring and control over the substance of the contracts. 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. The Group Buy scheme falls under Merchanting and is a facility that supported the sales of Personal Protective Equipment in the prior year.

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 2022, the Group has two operating segments, North America, and the United Kingdom along with a Central segment. The Group further analysis 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 2022 and capital expenditure for the period then ended are as follows.

3. Exceptional charges

Exceptional charges principally relate to, finance transformation being the recruitment of a new CFO and business modelling, the one-off costs relating to the change of our corporate broker and NOMAD and the write-off of a bad debt (2021: relates to legal costs). Other exceptional costs in the year principally relate to a bad-debt write-off.

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:

Disclosure of the number of shares in issue including the effects of share options that could potentially dilute basic loss per share in the future were not included in the table above as the calculation of diluted earnings per share has an immaterial impact for the current period and was anti-dilutive for the previous year.