Last checked at 30 Sep 2014 07:00
Altitude Group plc
("Altitude" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
Altitude Group plc (AIM: ALT), the provider of information and technology services, announces its interim results for the six month period ended 30 June 2014.
Financial highlights:
• Revenue increased by 5% to £3.04m (H1 2013: £2.89m)
• Adjusted operating profit* increased to £0.1m (H1 2013: £0.04m)
• £2m cash received in the period relating to the outstanding vendor note from the 2011 sale of the Promotional Marketing Division to an MBO team
• Constant currency technology revenue growth of 20%
• Constant currency revenue growth in US of 51%
• Strong performance at The Trade Only National Show with solid improvement in profitability. Bookings for 2015 in line with our expectations
• Net cash balance of £1.9m at 30 June 2014: (31 December 2013 £0.45m)
(* before amortisation of intangible assets, share-based payments and non-recurring administrative expenses)
Stephen Yapp commented: "Throughout the first half of 2014, the Group has made good progress towards achieving the short term strategic goals announced in September 2013. The £2m cash received in June enables the group to continue to develop and invest in both management and technology. The final phase of these investments is expected to be completed in the second half of 2014 and, whilst the structure is still being developed, the initial results are encouraging.
"There remains work ahead for the Group in the near term. However, the changes and investments made to date, coupled with the heightened focus on our SaaS technology, are starting to deliver improvements in both the financial and operational performance of the business. The Board is confident this will consequently provide a stronger, more efficient and competitive platform for future growth."
Enquiries:
Altitude Group plc | |
Stephen Yapp (Executive Chairman) Richard Sowerby (Chief Financial Officer | Tel: 07879 443087
Tel: 07525 220876 |
WH Ireland Limited (Nominated Adviser and Broker) | |
Tim Feather James Bavister | Tel: 020 7220 1666 |
Strategic update
For the past year, our focus has been to address our financing requirements, the management and operating structure and to invest in enhancing our products and the people to service and support our growing customer base. In all of the aforementioned areas, we have made good progress, particularly in ensuring the Group is adequately funded for the foreseeable future.
Global spending on Software as a Service ("SaaS") is predicted by Gartner to grow from $13.5bn in 2011 to $32.8bn in 2016 and it is anticipated by IDC that SaaS delivery will significantly outpace traditional software product delivery, growing nearly five times faster than the software market as a whole and becoming the significant growth driver to all functional software markets. By 2017, IDC envisage that the cloud software model will account for $1 of every $6 spent on software.
It is against this backdrop that our fundamental strategy remains unchanged, as we focus our SaaS offerings largely on SME's under the "Trade Only" umbrella, both within the UK and increasingly within North America where we are confident that there remains a great opportunity.
We continue to make progress in 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 starting from a very competitive $99 per month.
We have also continued to invest in our core technology products and envisage that this process will be substantially completed by the year end with 2015 returning to a lower maintenance level of expenditure.
Our balance sheet was significantly strengthened in the period as the outstanding vendor loan note from the MBO was settled in cash for £2m. Consequently, at 30 June 2014 we had £1.9m cash in the business. This transaction sees the group adequately financed to achieve its objectives over the coming years.
Results
Our operating loss for the period of £207,000 was a substantial reduction from the prior period (2013: operating loss of £707,000). Gross margins remained consistent and we have invested in people and products in the period. Product development and maintenance expenditure in the six months was £540,000, an increase of nearly £100,000 on 2013. We have capitalised £215,000, (£161,000 2013), of this cost.
In the US we have begun to build the new management team and have substantially addressed the challenges identified in 2013. Whilst our focus has been operational, our revenues were up 51% on the same period last year in dollar terms.
Our virtual sample solution business, "Technologo" has continued to deliver growth with revenues for the half year up 5% year on year and creating almost 1 million virtual samples a month from some 50,000 users. During the period we have invested in the sales team putting the business in a strong position for future growth.
In the UK, the 2014 Trade Only National Show in January was sold out again. Whilst it delivered only modest revenue growth due to the fact that we are at capacity, there was a significant improvement in profitability. The exhibition continues to be the premier event in the promotional products industry calendar and we have pre-sold available space for January 2015 in line with our expectations.
Product Development
We have continued to develop our products to enhance the user experience and provide additional functionality in an increasingly competitive market place.
Through the newly created 'Incubator' product development function, we have identified a new product opportunity called artworktooltm which enables users to easily create and share graphics and print-ready artwork using any device with a suitable browser. We believe this has sales opportunities beyond the current focus of our key markets. The product has a US patent pending with an anticipated market launch in 2015.
In the UK, the main performance driver remains The Trade Only National Show, and we see this continuing to be a key event in the promotional products and closely related markets calendar. In addition, we are investing in the resources to grow our technology sales and will place an increased focus on these recurring revenues in 2015.
Outlook
Throughout the first half of 2014, the Group has made good progress towards achieving the short term strategic goals announced in September 2013. The £2m cash received in June enables the group to continue to develop and invest in both management and technology. The final phase of these investments is expected to be completed in the second half of 2014 and, whilst the structure is still being developed, the initial benefits seen are encouraging.
There remains work ahead for the Group in the near term. However, the changes and investments made to date coupled with the heightened focus on our SaaS technology, are starting to deliver improvements in both the financial and operational performance of the business. The Board is confident this will consequently provide a stronger, more efficient and competitive platform for future growth.
Stephen Yapp
Executive Chairman
Consolidated income statement for the six month period ended 30 June 2014
Unaudited | Restated (note5) Unaudited | ||
30 June 2014 | 31 December 2013 | 30 June 2013 | |
£'000 | £'000 | £'000 | |
Revenue | 3,044 | 4,201 | 2,888 |
Cost of sales | (812) | (991) | (774) |
Gross profit | 2,232 | 3,210 | 2,114 |
Administrative costs | (2,439) | (5,391) | (2,821) |
Operating profit/(loss) before amortisation of intangible assets, non-recurring administrative expenses and share based payment charges | 133 | (780) | 43 |
Amortisation of intangible assets | (238) | (447) | (187) |
Non recurring administrative expenses | - | (767) | (409) |
Foreign exchange differences | (18) | (59) | (95) |
Share based payment charges | (84) | (128) | (59) |
Operating loss | (207) | (2,181) | (707) |
Finance income | 85 | 242 | 129 |
Finance expenses | - | (1) | - |
Loss before tax | (122) | (1,940) | (578) |
Taxation | - | 182 | - |
Loss from continuing operations | (122) | (1,758) | (578) |
Loss attributable to the equity shareholders of the Company | (122) | (1,758) | (578) |
Loss earnings per ordinary share attributable to the equity shareholders of the Company : | |||
- Basic (pence) | (0.28) | (4.10) | (1.35) |
- Diluted (pence) | (0.28) | (4.10) | (1.35) |
Consolidated statement of changes in equity for the six month period ended 30 June 2014
Share | Share | Retained | |
Capital | Premium | Earnings | |
£'000 | £'000 | £'000 | |
At 1 January 2014 | 172 | 6,254 | (2,747) |
Result for the period | - | - | (122) |
Share based payment charges | - | - | 84 |
At 30 June 2014 | 172 | 6,254 | (2,785) |
Consolidated balance sheet as at 30 June 2014
Unaudited | Unaudited | ||
30 June 2014 | 31 December 2013 | 30 June 2013 | |
£'000 | £'000 | £'000 | |
Non-current assets | |||
Property, plant & equipment | 144 | 159 | 197 |
Intangibles | 1,164 | 1,187 | 1,222 |
Goodwill | 564 | 564 | 564 |
Long-term loan receivable | - | 2,000 | 3,100 |
Deferred tax | 244 | 244 | 244 |
2,298 | 4,336 | 5,327 | |
Current assets | |||
Trade and other receivables | 479 | 1,009 | 657 |
Cash and cash equivalents | 1,927 | 450 | 412 |
Total current assets | 2,406 | 1,459 | 1,069 |
Total assets | 4,704 | 5,795 | 6,396 |
Current liabilities | |||
Trade and other payables | (1,063) | (2,116) | (1,607) |
(1,063) | (2,116) | (1,607) | |
Net assets | 3,641 | 3,679 | 4,789 |
Called up share capital | 172 | 172 | 172 |
Share premium | 6,254 | 6,254 | 6,254 |
Retained earnings | (2,785) | (2,747) | (1,637) |
Total equity | 3,641 | 3,679 | 4,789 |
Consolidated cash flow statement for the six month period ended 30 June 2014
Unaudited | Restated (note 5) Unaudited | ||
30 June 2014 | 31 December 2013 | 30 June 2013 | |
£'000 | £'000 | £'000 | |
Operating activities | |||
Profit/(loss) for the period | (122) | (1,758) | (578) |
Amortisation of intangible assets | 238 | 447 | 187 |
Depreciation | 48 | 100 | 47 |
Net finance (credit)/expense | (85) | (241) | (129) |
Impairment of loan note receivable | - | (400) | - |
Corporation tax charge/(credit) | - | (182) | |
Share based payment charges | 84 | 128 | 59 |
Operating cash flow before changes in working capital | 163 | (1,106) | (414) |
Movement in trade and other receivables | 530 | 43 | 396 |
Movement in trade and other payables | (1,053) | 7 | (507) |
Operating cash flow from operations | (360) | (1,056) | (525) |
Interest received | 85 | 242 | 129 |
Interest paid | - | (1) | - |
Income taxes | - | 31 | 31 |
Net cash flow from operating activities | (275) | (784) | (365) |
Investing activities | |||
Purchase of plant and equipment | (33) | (38) | (22) |
Purchase of intangible assets | (215) | (388) | (161) |
Repayment of loan note receivable | 2,000 | 900 | 200 |
Net cash flow from investing activities | 1,752 | 474 | 17 |
Net increase/(decrease) in cash and cash equivalents | 1,477 | (310) | (348) |
Cash and cash equivalents at the beginning of the period | 450 | 760 | 760 |
Cash and cash equivalents at the end of the period | 1,927 | 450 | 412 |
Notes to the half yearly financial information
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30 June 2014 has been prepared applying the accounting policies and presentation that were applied in the preparation of the Groups published consolidated financial statements for the year ended 31 December 2013.
The consolidated half yearly report was approved by the Board of directors on 29 September 2014.
The financial information contained in the interim report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for complete financial statements. Comparative figures for the year ended 31 December 2013 have been extracted from the statutory accounts for the year ended 31 December 2013 which 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 2014 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 2014 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 2013, 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 2013.
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 2014 | 31 December 2013 | 30 June 2013 | |
Earnings (£'000) | (122) | (1,758) | (578) |
Weighted average number of shares (number '000) | 42,908 | 42,908 | 42,908 |
Fully diluted weighted average number of shares (number '000) | 42,908 | 42,908 | 42,908 |
Basic earnings per ordinary share (pence) | (0.28)p | (4.10)p | (1.38)p |
Diluted earnings per ordinary share (pence) | (0.28)p | (4.10)p | (1.38)p |
5. Restatement of 2013 results
The results for the six months to 30 June 2013 have been restated to write off foreign exchange charges in that period to the consolidated income statement. This treatment is consistent with the audited accounts for the year ended 31 December 2013. The impact of this change was to increase the operating loss by £95,000 as set out on the face of the statement.
6. Interim Report
The Interim Report is available to download from the Company's website at www.altitudeplc.com.