Last checked at 30 Apr 2010 07:00
Altitude Group plc
Unaudited Preliminary Results for the year to 31 December 2009
Altitude Group plc ("Altitude", the "Group" or the "Company")announces its unaudited preliminary results for the year to 31 December 2009.
Highlights:
·; Operating Profit before amortisation of intangible customer related assets, non-recurring administrative expenses and share based payment charges of £277k (2008: £450k)
·; Operating Loss £(615)k (2008: £(35)k)
·; Strong performance from Trade and Information services businesses.
·; Group fully restructured with appropriate cost base
·; Improved order intake during final months of 2009
·; Closing Net Cash of £773k (2008: £431k)
Chairman's comments
"2009 was the most difficult year on record for a promotional products industry that was hard hit by reduction in discretionary spend by large and small corporate users. Our own large banking, building materials and motoring clients were particularly quick to reduce spend as the recession took hold and as a result revenues in our Promotional Marketing business reduced by 14% in the year against a total market estimated to have contracted by 20%.
It was a more positive story in our information and exhibition business which managed to maintain revenue at similar levels to 2008, despite the downturn, while maintaining investment in the technology products that have become market leading tools in this sector.
A greater focus on cash management and controls from April 2009 onwards has resulted in the Company significantly improving the year-end cash position to £773k (2008: £431k)
Looking forward, sales and order intake in 2010 so far are in line with management expectations in all businesses. Our forward order book in the Promotional Product business is slightly ahead of the same period last year and substantially ahead of the levels seen in the last quarter of 2009.
We are gaining new customers for our Information and Exhibition business at an improving rate, catalogue sales are well ahead of the same period last year. Our Trade Only National Show in January saw visitor numbers grow by 18% and as a result, bookings by exhibitors for the 2011 event are substantially ahead of the same period as last year with around 85% of available space sold already, at an overall improved yield.
I am encouraged that the business units are reporting higher levels of customer activity and that the cash management has improved over the past 12 months. We now have an appropriate cost base for the size of the business and the potential for additional performance improvements if market conditions remain stable.
Our primary focus is on the development and growth of the existing divisions of the company, we are however mindful that the constituent parts of the group which are all making good progress in their own right, have the potential to unlock substantial value should we explore alternative strategies for the group We will continue to consider options as they present themselves but will maintain our focus on delivering profit growth and positive cash flow in the meantime."
The Company's Unaudited Preliminary Results are available on its website www.altitudeplc.com
- ends -
Enquiries:
Altitude Group plc
Martin Varley, Chief Executive Officer 07912 599 012
David Smith, Group Finance Director 07979 535 333
Daniel Stewart & Company plc
Simon Leathers 020 7776 6550
Chairman's Statement
Performance overview
2009 was the most difficult year on record for a promotional products industry that was hard hit by reduction in discretionary spend by large and small corporate users. Our own large banking, building materials and motoring clients were particularly quick to reduce spend as the recession took hold and as a result revenues in our Promotional Marketing business reduced by 14% in the year against a total market estimated to have contracted by 20%.
It was a more positive story in our information and exhibition business which managed to maintain revenue at similar levels to 2008, despite the downturn, while maintaining investment in the technology products that are have become market leading tools in this sector.
The Group posted a loss after taxation of £(0.5)m (2008: £0.1m profit). Profit before non-recurring items, amortisation of customer related intangibles and share based payment charges was £0.3 (2008: £0.5m).
A greater focus on cash management and controls from April 2009 onwards has resulted in the Company significantly improving the year-end cash position to £773k. (2008: £431k)
Promotional Marketing
In a challenging environment, Promotional Marketing made an operating profit before non-recurring items, amortisation of customer related intangibles and share based payment charges of £0.4m in 2009 (2008: £0.9m).
Within this division, our Dowlis Corporate Solutions business was hit hard by the 20% reduction in overall market size and despite winning a number of new accounts throughout the year, the order intake from client base that included a number of banking, building materials and motor companies reduced substantially.
Our trade supply division AdProducts.com enjoyed double digit revenue growth for the fifth consecutive year compared to the reduction in the market size and vindicates our decision to maintain investment in this area with a wider product range and additional sales resource. The team worked hard to improve stock turn and focus on cash, and despite the revenue growth, they reduced stock levels by 18% in the year.
Information and Exhibitions
Our Information and Exhibitions business made further excellent progress in gaining market share and a similar result to 2008. The strong visitor growth at the 2009 Trade Only National Show encouraged exhibitors to rebook early despite the difficult climate and as a result the 2010 event was sold out by the end of the year.
Overall the division made an operating profit before non-recurring items, amortisation of customer related intangibles and share based payment charges of £0.5m in 2009 (2008: £0.3m), Bookings received for the 2010 exhibition were substantially ahead of 2009.
The software tools that we provide to the promotional product industry are typically the only platform that customers use once they have installed and implemented our technology. As a result, recurring revenues are predictable and stable, this gave us comfort to continue to invest in and develop our proprietary technology that has fast become the market-leading product for the sector.
Corporate activity
Our primary focus is on the development and growth of the existing divisions of the company, we are however mindful that the constituent parts of the group which are all making good progress in their own right, have the potential to unlock substantial value should we explore alternative strategies for the group We will continue to consider options as they present themselves but will maintain our focus on delivering profit growth and positive cash flow in the meantime
People
The difficult market conditions placed an incredible strain on our dedicated and hard working team members. They have risen to the unique challenges that 2009 presented in a remarkable way and I am grateful for all their efforts and support.
Outlook
Sales and order intake in 2010 so far are in line with management expectations in all businesses, our forward order book in the Promotional Product business is slightly ahead of the same period last year and substantially ahead of the levels seen in the last quarter of 2009.
We are gaining new customers for our Information and Exhibition business at an improving rate; catalogue sales are well ahead of the same period last year. Our Trade Only National Show in January saw visitor numbers grow by 18% and as a result, bookings by exhibitors for the 2011 event are substantially ahead of the same period as last year with around 85% of available space sold already, at an overall improved yield.
I am encouraged that the business units are reporting higher levels of customer activity and that the cash management has improved over the past 12 months. We now have an appropriate cost base for the size of the business and the potential for additional performance improvements if market conditions remain stable.
Colin Cooke
Chairman
30 April 2010
Operating Review
Promotional Marketing
|
| 2009 £m | 2008 £m |
| Sales | 13.1 | 15.9 |
| Operating profit before non-recurring items, amortisation of customer related intangibles and share based payment charges | 0.4 | 0.9 |
| Operating (loss)/profit after non-recurring items, amortisation of customer related intangibles and share based payment charges | (0.1) | 0.7 |
| Net assets | 4.4 | 4.8 |
Promotional Marketing comprises of our trade supplier AdProducts.com ,and our distributor business Dowlis Corporate Solutions, Ross and Distinctive Ideas. During the year we integrated the Distinctive Ideas business into our Byfleet site as part of the wider cost reduction exercise. Forming the largest part of the group, the end user businesses delivered revenue of £10.2m revenues in 2009 (£13.6m in 2008).
Trade supply business AdProducts grew sales again in 2009 through an extended product range and a successful customer acquisition program. We made further modest investments in production equipment and through improved stock forecasting and planning reduced stock levels by 18% We now have 1,050 live customers against a market opportunity in excess of 3,500 companies that would benefit from using AdProducts.com as a trade supplier.
Our main end user facing business, Dowlis Corporate Solutions suffered a difficult year with volumes down substantially despite new account wins. With major clients in banking, motor and building materials, we suffered and dramatic and sudden reduction in volume from previously active accounts.
Our headcount reduction program has resulted in a more appropriate cost base, and alongside a new structure that offers greater visibility of performance we are better able to measure performance and predict future revenue streams.
Cash management improved substantially due to a greater focus on purchasing best practice, termination of non-profitable customer relationships and reduction in branded stocks held through adoption of our 'On Demand' solution for lower volume corporate program requirements.
Information and Exhibitions
|
| 2009 £m | 2008 £m |
| Sales | 2.8 | 2.9 |
| Operating profit before non-recurring items, amortisation of customer related intangibles and share based payment charges | 0.5
| 0.3 |
| Operating profit / (loss) after non-recurring items, amortisation of customer related intangibles and share based payment charges | 0.3 | 0.3 |
| Net capital employed | 0.2 | 0.1 |
Our information and Exhibitions business provides a collection of marketing and technology tools to both suppliers and distributors that operate in the promotional products industry. These tools work either independently, or as a powerful integrated 'suite' that help with sales, marketing, and operational processes.
Our major event, the Trade Only National Exhibition in 2009 grew visitor numbers by 48% over 2008 and achieved strong levels of re-bookings for the 2010 event that was all but sold out by the year-end; customer feedback on the overall exhibition experience was exceptional. Pre registrations for the 2010 event grew in line with our expectations; the exhibition has become the number one industry show in the UK by any measure.
Spectrum and Envoy are catalogues that distributors use as their selling tool. For a modest outlay, they receive a comprehensive product catalogue, with their own details on, enabling them to attract customers without the need for the substantial investment in time or --resources to produce their own catalogue. As part of the package, distributors are provided with comprehensive information on the source and cost price for the products, along with a matching web site and other sales tools.
PromoServe is a CRM software package and Trade Only Search is an on-line product portal offering that gives real time information on product supply sources and important data such as price and specification to promotional product distributors. Average monthly users grew in 2009 by c.30% PromoServe is provided to users through a rental model, and as such gives us a predictable recurring revenues. Average monthly revenue reached £75k at December 31st
Our magazine, Promotional Product Distributor (PPD), is published bi-monthly and has over 10,000 readers and is the most widely read publication in the industry.
Financial review
Results for the year and key performance indicators
Group revenues decreased by 14.7% to £15.3m (2008: £18.0m). Gross margin remained constant at 41.0% (2008: 41.0%) as a result of a mix shift toward our stronger margin business units. With total operating costs reduced at £6.9m (2008: £7.5m) the Group posted a loss before taxation of £0.6m (2008: loss £0.03m). Operating costs included £0.8m (2008: £0.3m) non-recurring administrative expenses, amortisation of intangible assets and share based payment charges taking operating profit before these costs to £0.3m (2008: £0.5m).
Acquisitions
There were no acquisitions during the year.
Taxation
The Group recorded a tax credit during the year. This represents the recognition of a deferred tax asset which takes into account the cumulative unrelieved tax losses currently held within the Group.
Earnings per share
Basic loss per share was to (1.41)p (2008: earnings per share 0.28p).
Cash flow
The Group has reported a net cash inflow from operations of £0.4m which is £0.9m ahead of the reported operating loss of the Group. Cashflow reflects a £1.1m reduction in trade receivables and a further £0.5m reduction in inventories. This working capital improvement has enabled the group to reduce trade payables by £0.9m.
The Group benefited in the year from only minor capital investment of £0.1m.
Treasury
The Group continues to manage the cash position in a manner designed to maximise interest income, whilst at the same time minimising any risk to these funds. Where there are surplus cash funds, these are deposited with commercial banks that meet credit criteria approved by the Board. At 31 December 2009, the Group had £0.8m on short term deposits (2008: £0.4m).
Martin Varley David Smith
Chief Executive Officer Group Finance Director & Company Secretary
30 April 2010
Unaudited Consolidated Income Statement for the year ended 31 December 2009
|
|
|
|
|
|
|
| 2009 | 2008 |
|
| Note | £000 | £000 |
| Revenue |
|
|
|
| - continuing |
| 15,329 | 17,972 |
|
|
|
|
|
| Cost of sales |
| (9,026) | (10,556) |
|
|
| ------------- | ------------- |
| Gross profit |
| 6,303 | 7,416 |
|
|
|
|
|
| Administrative costs |
| (6,918) | (7,451) |
|
|
| ------------- | ------------- |
| Operating profit before amortisation of intangible customer related assets, non-recurring administrative expenses and share based payment charges |
| 277 | 450 |
| Amortisation of intangible customer related assets |
| (64) | (95) |
| Non-recurring administrative expenses | 3 | (783) | (346) |
| Share based payment charges |
| (45) | (44) |
|
|
| ------------- | ------------- |
|
|
|
|
|
| Operating loss |
| (615) | (35) |
|
|
|
|
|
| Finance income |
| 1 | 7 |
| Finance expenses |
| (10) | (5) |
|
|
| ------------- | ------------- |
| (Loss) before taxation |
| (624) | (33) |
|
|
|
|
|
| Taxation |
| 86 | 140 |
|
|
| ------------- | ------------- |
| (Loss)/profit attributable to the equity shareholders of the Company |
|
(538) |
107 |
|
|
| ------------- | ------------- |
|
|
|
|
|
| (Loss)/earnings per ordinary share attributable to the equity shareholders of the Company : |
|
|
|
| - Basic | 4 | (1.41p) | 0.28p |
| - Diluted | 4 | (1.41p) | 0.28p |
|
|
| ------------- | ------------- |
Unaudited Consolidated Balance Sheet as at 31 December 2009
|
|
|
|
|
|
|
| 2009 | 2008 |
|
|
| £000 | £000 |
| Non-current assets |
|
|
|
| Property, plant & equipment |
| 448 | 721 |
| Customer related intangible assets |
| 110 | 174 |
| Goodwill |
| 2,621 | 2,621 |
|
|
| ------------- | ------------- |
|
|
| 3,179 | 3,516 |
|
|
| ------------- | ------------- |
| Current assets |
|
|
|
| Inventories |
| 1,337 | 1,825 |
| Trade and other receivables |
| 2,913 | 3,964 |
| Cash and cash equivalents |
| 773 | 431 |
|
|
| ------------- | ------------- |
|
|
| 5,023 | 6,220 |
|
|
| ------------- | ------------- |
| Total assets |
| 8,202 | 9,736 |
|
|
| ------------- | ------------- |
| Current liabilities |
|
|
|
| Trade and other payables |
| (3,475) | (4,392) |
|
|
| ------------- | ------------- |
|
|
| (3,475) | (4,392) |
|
|
| ------------- | ------------- |
| Non-current liabilities |
|
|
|
| Trade and other payables |
| (13) | (59) |
| Deferred consideration |
| (297) | (297) |
| Deferred tax liabilities |
| - | (78) |
|
|
| ------------- | ------------- |
|
|
| (310) | (434) |
|
|
| ------------- | ------------- |
| Total liabilities |
| (3,785) | (4,826) |
|
|
| ------------- | ------------- |
| Net assets |
| 4,417 | 4,910 |
|
|
| ------------- | ------------- |
| Equity attributable to equity holders of the Company |
|
|
|
| Called up share capital |
| 153 | 153 |
| Share premium account |
| 5,293 | 5,293 |
| Retained earnings |
| (1,029) | (536) |
|
|
| ------------- | ------------- |
| Total equity |
| 4,417 | 4,910 |
|
|
| ------------- | ------------- |
Unaudited Statement of Changes in Equity
|
| Share capital | Share premium | Retained earnings |
|
| £000 | £000 | £000 |
|
|
|
|
|
| At 1 January 2008 | 153 | 5,293 | (687) |
| Result for the period | - | - | 107 |
| Share based payment charges | - | - | 44 |
|
| ------------- | ------------- | ------------- |
| At 31 December 2008 | 153 | 5,293 | (536) |
| Result for the period | - | - | (538) |
| Share based payment charges | - | - | 45 |
|
| ------------- | ------------- | ------------- |
| At 31 December 2009 | 153 | 5,293 | (1,029) |
|
| ------------- | ------------- | ------------- |
Unaudited Consolidated Cash Flow Statement for the year ended 31 December 2009
|
|
| 2009 | 2008 |
|
|
| £000 | £000 |
| Operating activities |
|
|
|
| (Loss)/profit for the period |
| (538) | 107 |
| Amortisation of intangible assets |
| 64 | 95 |
| Depreciation |
| 320 | 343 |
| Loss on disposal of fixed assets |
| 4 | - |
| Net finance expense |
| 9 | (2) |
| Income tax (credit) |
| (86) | (140) |
| Share based payment charges |
| 45 | 44 |
|
|
| ------------- | ------------- |
| Operating cash (outflow)/inflow before changes in working capital | (182) | 447 | |
| Movement in inventories |
| 488 | (69) |
| Movement in trade and other receivables |
| 1,052 | 1,129 |
| Movement in trade and other payables |
| (928) | (1,307) |
|
|
| ------------- | ------------- |
| Operating cash inflow from operations |
| 430 | 200 |
| Interest received |
| 1 | 7 |
| Interest paid |
| (10) | (5) |
| Income tax received / (paid) |
| 7 | (60) |
|
|
| ------------- | ------------- |
| Net cash flow from operating activities |
| 428 | 142 |
|
|
| ------------- | ------------- |
| Investing activities |
|
|
|
| Purchase of plant and equipment |
| (59) | (122) |
| Disposal of plant and equipment |
| 8 | - |
| Acquisition of subsidiaries |
| - | (283) |
|
|
| ------------- | ------------- |
| Net cash flow from investing activities | (51) | (405) | |
|
|
| ------------- | ------------- |
| Financing activities |
|
|
|
| Net (payments)/proceeds of hire purchase contracts |
| (35) | 42 |
|
|
| ------------- | ------------- |
| Net cash flow from financing activities |
| (35) | 42 |
|
|
| ------------- | ------------- |
| Net increase/(decrease) in cash and cash equivalents |
| 342 | (221) |
| Cash and cash equivalents at the beginning of the year |
| 431 | 652 |
|
|
| ------------- | ------------- |
| Cash and cash equivalents at the end of the year |
| 773 | 431 |
|
|
| ------------- | ------------- |
Notes
1. The financial information set out herein is an extract from the forthcoming Group financial statements for the year ended 31December 2009. It does not constitute the Group's statutory accounts for the year ended 31 December 2009 or the year ended 31 December 2008. The comparative information in respect of the year ended 31 December 2008 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 237 (2) or (3) of the Companies Act 1985. The audited accounts will be posted to all shareholders in due course and will be available on request by contacting the Company Secretary at the Company's Registered Office.
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.
In the current year, the Group has adopted IFRS8 "Operating Segment" and IFRS 1 (Revised) "Presentation of Financial Statements" for the first time. As both IFRS's are disclosure standards, there is no impact of that change in accounting policy on the financial results presented for the year ended 31 December 2008. Full details of the change will be disclosed in the statutory accounts for the year ended 31 December 2009.
The preparation of financial statements in conformity with IFRS 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.
3. Non-recurring administrative expenses
|
|
| 2009 | 2008 |
|
|
| £000 | £000 |
| Termination payments | a | 80 | 163 |
| Non-Recurring Salary Costs | b | 424 | 183 |
| Closure of divisions | c | 217 | - |
| Other | d | 62 | - |
|
|
| ------------- | ------------- |
|
|
| 783 | 346 |
|
|
| ------------- | ------------- |
a. Termination payments relate to compensation payments for loss of office for employees who left the business in 2009 and 2008.
b. Relate to the non-recurring salary costs of people who left the business in 2009 and 2008, and therefore will no longer be incurred.
c. Costs in relation to closure of divisions relate principally to salary and other overhead costs which, following the restructuring programme, will no longer be incurred.
d. Other costs relate primarily to professional fees incurred in the resolution of one-off employment related matters during the year.
4. Basic and diluted loss per ordinary share
The calculation of earnings per ordinary share is based on the profit or loss for the period and the weighted average number of equity voting shares in issue as follows.
|
| 2009 | 2008 |
|
|
|
|
| Earnings (£000) | (538) | 107 |
|
| ------------- | ------------- |
| Weighted average number of shares (number '000) | 38,203 | 38,203 |
|
| ------------- | ------------- |
| Fully diluted average number of shares (number '000) | 38,679 | 38,605 |
|
| ------------- | ------------- |
| Basic (loss)/earnings per ordinary share (pence) | (1.41p) | 0.28p |
| Diluted (loss)/earnings per ordinary share (pence) | (1.41p) | 0.28p |
|
| ------------- | ------------- |