TIDMALT
RNS Number : 8023Y
Altitude Group PLC
20 May 2016
Altitude Group plc
("Altitude", the "Company" or "Group")
PRELIMINARY UNAUDITED RESULTS FOR THE YEARED 31 DECEMBER
2015
Altitude Group plc (AIM: ALT), the provider of innovative
technology solutions for small to medium sized businesses,
announces its unaudited preliminary results for the year ended 31
December 2015.
Highlights:
-- Revenue increased by 2.1% to GBP4.54m (2014: GBP4.44m) and
gross margin maintained at 78.0% (2014 78.1%) during a year of
restructuring
-- Radical restructuring was undertaken in the year, removing
GBP1.8m of annualised administrative expenses
-- Adjusted operating profit* increased 164.5% to GBP0.29m
(2014: GBP0.11m after reclassification of GBP1.2m of costs as
non-recurring)
-- Operating cash inflow from activities, excluding
non-recurring and exceptional costs and expenses, GBP0.52m (2014
GBP0.50m)
-- Group remains free of bank borrowing, with net cash resources
of GBP0.37m (2014 GBP1.28m), sufficient for current
requirements
-- Strong performance at January 2016 Promotional Product Expo
("PPE") event with solid improvement in profitability. Bookings for
2017 in line with our expectations
-- Award of USA patent for the artworktool(tm) application in August 2015
-- Strong pipeline of large enterprise opportunities for technology solutions
* before amortisation of intangible assets, share-based payments and exceptional expenses and non-recurring costs relating to the restructuring exercise
Non-Executive Chairman, Peter Hallett, commented:
"The Group undertook a radical restructuring process during the
year including changes to the Board and senior management. We are
now a much leaner and focused business with clear reporting lines
and responsibilities, led by a Chief Executive with the requisite
knowledge and experience to develop our proprietary software
applications.
"Securing the patent in August 2015 for the artworktool(tm)
solution and the processes it uses to help users create artwork
online is a tremendous achievement and the result of three years of
hard work and considerable cash investment. We now have a
comprehensive suite of products to leverage using exclusive, unique
and protected proprietary applications which can be delivered on a
global scale.
"The successful restructuring and the award of the patent has
ensured that the Group is in good shape, both financially and
commercially. We have reported an adjusted operating profit, remain
free of bank borrowing and retain sufficient cash resources for our
current requirements. The Board is confident that the Group is well
placed to deliver growth in shareholder value."
Enquiries:
Altitude Group plc
Peter J Hallett (Non-Executive Tel: 07887 987469
Chairman)
WH Ireland Limited (Nominated
Adviser and Broker)
Tim Feather Tel: 0113 394 6600
Liam Gribben
Chairman's Statement
I am delighted to be reporting to you for the first time as
Chairman of Altitude, having been appointed as Chairman on 14
January 2016 after joining the Board as a non-executive director on
28 April 2015.
Restructuring
As reported in our interim results, the Group recognised early
in the year that the substantial investment in operational
management structure made during 2013 and 2014 was not producing
sufficient revenue growth to offset the corresponding increase in
overhead.
A comprehensive and urgent restructuring of the business was
required and the Group has moved quickly to "right size" the
business. As a technology company leveraging the best solutions to
help collaboration and agile development, we recognised that
duplicating resources in various locations in the USA was not only
expensive but also inefficient and unnecessary. We have therefore
now minimised the number of staff located outside our UK base.
All software maintenance and development is now controlled from
the UK, with a continued commitment to outsourcing new development
in Eastern Europe, under the day to day control of the Chief
Operating Officer, with all changes to development programmes
requiring Board sanction.
I am happy to report that the restructuring is now complete,
with day to day management being provided by the Chief Operating
Officer, leaving the Chief Executive Officer clearly focused on
establishing new enterprise relationships and markets, leveraging
the Group's proprietary software assets.
Results
Despite the significant operational disruption arising from the
restructuring, the Group has grown revenue by 2.1% to GBP4.54m
(2014 GBP4.44m), and maintained gross margins at 78.0% (2014
78.1%).
The radical restructuring undertaken during the year has removed
annualised costs of circa GBP1.8m.
Adjusted Operating profit* of GBP0.29m (2014 GBP0.11m) has
increased by 164.5%. However, as a result of the restructuring
action taken in 2015, administrative costs in 2014 of GBP1.12m have
been reclassified as non- recurring and exceptional charges, thus
increasing the 2014 adjusted operating profit* to GBP0.11m from the
originally reported loss of GBP1.05m.
Included within administrative costs are software development
costs of GBP0.83m (2014 GBP0.69m), as the Group has maintained its
support and development of its proprietary software assets. In
addition, the Group capitalised GBP0.20m of software development
costs (2014 GBP0.48m). Our new structure enabled us to remove the
US based former Chief Technology Officer, with responsibilities
being transferred to the UK under the new Chief Operating
Officer.
Operating losses amounted to GBP1.25m (2014 GBP1.66m), a
decrease of 24.4%, after inclusion of amortisation of GBP0.45m
(2014 GBP0.48m), share based payments credit of GBP0.04m (2014
charge of GBP0.17m), and non-recurring and exceptional charges of
GBP1.13m (2014 GBP1.12m).
Net cash flow from operating activities, excluding non-recurring
non-recurring and exceptional charges, was an inflow of GBP0.52m
(2014 GBP0.50m).
The Group remains free of bank borrowings, and has cash
resources of GBP0.37m (2014 GBP1.28m), which are sufficient for the
Group's current requirements.
* before amortisation of intangible assets, share-based payments and exceptional expenses and non-recurring costs relating to the restructuring exercise
Customer Focus Technology
Our fundamental technology strategy remains unchanged, as we
focus our SaaS offerings largely on SMEs under the Customer Focus
brand, both within the UK and increasingly within North
America.
During the period, as part of the reorganisation, we combined
the sales and customer service operations for our Technologo and
artworktool(tm) products under the Customer Focus brand. This
integrated offering is attracting increased interest and, whilst
the product enhances our overall technology offering, the
possibilities for the technology are applicable to a much wider
market and the opportunity is potentially very large for the
Group.
A significant achievement in this area has been the successful
application for a patent for artworktool(tm) , a solution which
enables users to easily create and share graphics and print-ready
artwork using any device with a suitable browser.
The Group balance sheet incorporates its proprietary intangible
software assets at cost, as required under the accounting
regulations where the assets are expected to deliver substantial
returns. However, the Board believe that these assets will prove to
be of significant value as the Group begins to leverage their
potential.
These assets, in particular artworktool, allow the Group to
present attractive and profitable solutions to global businesses.
This is evidenced by our relationship with Constant Contact
("CTCT"), a world leader in the provision of email marketing
solutions to more than 650,000 businesses. Under the terms of the
agreement, CTCT have embedded artworktool(tm) functionality into
the user accounts of all customers allowing them easily to create
engaging graphics to use in email campaigns without the need to
purchase expensive specialist software applications.
It is therefore in this area that the Group, and in particular
the efforts of the Chief Executive Officer, are focused.
Trade Only Exhibitions & Publications
Our Exhibition and Publications business continues to perform
well. The January 2016 event showed another strong performance with
increased profitability. Bookings for the 2017 show are in line
with our expectations and we expect another good performance from
this business in 2017 based on booked orders.
With over 4,000 delegates attending the main event in January
each year all being involved in the print, promotional and
personalised gift sectors, the potential to drive additional sales
of our SaaS products in the UK remains strong and adds further
value to the Group from the ability to engage so many customers
with other products and services.
On 15 April 2016, following an increase in the Company's share
price, the Group was obliged to disclose the existence of early
stage discussions for the disposal of the Exhibitions and
Publications business. The discussions are ongoing, and there is no
guarantee at this stage that they will lead to a successful
conclusion. If the transaction is agreed, the Directors expect that
it would be classified as a fundamental change of business under
the AIM Rules for Companies and require the prior approval of
shareholders.
Board Changes
As previously reported, the changes made to the board on 28
April 2015 were the catalyst for the comprehensive restructuring of
the Group detailed above.
This process saw the appointment of Vicky Robinson as Group
Managing Director, myself as Non-Executive Director and Richard
Sowerby moving to Executive Chairman, following the departure of
the former Executive Chairman.
On 28 January, I agreed to become Non-Executive Chairman, with
Richard Sowerby becoming Non-Executive Director, and Martin Varley
appointed as Chief Executive Officer. Martin has an unrivalled
knowledge of the business and in particular the potential of its
proprietary software assets and the target markets for their
application. The Board has no doubt that he is the best person for
this role.
On 28 January we also appointed Shaun Parker to the Board as
Chief Operating Officerand Vicky Robinson left the Group, wishing
to take time out with her family after ten years of service. Shaun
brings wide and relevant experience of the technology sector gained
through senior management positions in Redstone plc, Hewlett
Packard and Compaq amongst others.
The Board now comprises two executive and two non-executive
directors.
Outlook
We continue to drive forward with a leaner and more focused
structure, centred in the UK, with clear and concise reporting
lines and objectives
We are fortunate to have a portfolio of proprietary software and
technology assets which the Board is confident has the potential
yto generate increasing shareholder value in 2016 and beyond. In
addition, we have a successful Exhibitions and Publications
business which provides synergies to our technology business and
which we would be very happy to retain should the discussions
regarding its potential sale not result in a transaction.
The successful restructuring and the award of the patent for
artworktool(tm) has ensured that the Group is in good shape, both
financially and commercially. We have reported an adjusted
operating profit*, remain free of bank borrowing and retain
adequate cash resources for our current requirements. The Board is
confident that the Group is well placed to deliver growth in
shareholder value.
Peter J Hallett
Non-Executive Chairman
* before amortisation of intangible assets, share-based payments and exceptional expenses and non-recurring costs relating to the restructuring exercise
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2015
2015 2014
Note GBP'000 GBP'000
Unaudited Audited
Revenue 4,535 4,440
Cost of sales (998) (971)
--------------------- ----------------------
Gross Profit 3,537 3,469
-------------------------------- ------------ --------------------- ----------------------
Administrative costs before
share based payment charges,
amortisation, exceptional
charges and non-recurring
costs (3,246) (3,359)
Operating profit before
share based payment charges,
amortisation, exceptional
charges and non-recurring
costs 291 110
Share based payment charges 38 (168)
Amortisation (448) (478)
Exceptional charges 3 (404) -
Non recurring costs 4 (729) (1,119)
-------------------------------- ------------ --------------------- ----------------------
Operating loss (1,252) (1,655)
Finance income 3 89
--------------------- ----------------------
Loss before taxation (1,249) (1,566)
Taxation - -
--------------------- ----------------------
Loss attributable to the
equity shareholders of
the Company (1,249) (1,566)
Other comprehensive income:
Foreign exchange differences (1) -
--------------------- ----------------------
Total comprehensive loss
for the year (1,250) (1,566)
Loss per ordinary share
attributable to the equity
shareholders of the Company
Basic (pence) 5 (2.91) (3.68)
Diluted (pence) 5 (2.91) (3.68)
Consolidated Balance Sheet
as at 31 December 2015
2015 2014
GBP'000 GBP'000
Unaudited Audited
Non-current assets
Property, plant & equipment 42 105
Intangible assets 937 1,184
Goodwill 564 564
Deferred tax 426 426
----------------- ----------
1,969 2,279
Current assets
Trade and other receivables 696 787
Cash and cash equivalents 366 1,280
----------------- ----------
1,062 2,067
----------------- ----------
Total assets 3,031 4,346
----------------- ----------
Current liabilities
Trade and other payables (2,038) (2,065)
----------------- ----------
Total liabilities (2,038) (2,065)
----------------- ----------
Net assets 993 2,281
----------------- ----------
Equity attributable to equity
holders of the Company
Called up share capital 172 172
Share premium account 6,254 6,254
Retained earnings (5,433) (4,145)
----------------- ----------
Total equity 993 2,281
----------------- ----------
Consolidated Cash Flow Statement
for the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
Unaudited Audited
Operating activities
Loss for the period (1,249) (1,566)
Amortisation of intangible
assets 448 478
Depreciation 78 102
Net nance credit (3) (89)
Share based payment charges (38) 168
---------- ----------
Operating cash outflow before
changes in working capital (764) (907)
Movement in trade and other
receivables 91 222
Movement in trade and other
payables (28) (52)
---------- ----------
Operating cash outflow from
operations (701) (737)
Interest received 3 89
---------- ----------
Net cash ow from operating
activities (698) (648)
Investing activities
Purchase of tangible assets (15) (48)
Purchase of intangible assets (201) (474)
---------- ----------
Net cash ow from investing
activities (216) (522)
---------- ----------
Financing activities
Loan note repayment received - 2,000
---------- ----------
Net cash ow from nancing activities - 2,000
---------- ----------
Net increase in cash and cash
equivalents (914) 830
Cash and cash equivalents at
the beginning of the year 1,280 450
---------- ----------
Cash and cash equivalents at
the end of the year 366 1,280
---------- ----------
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the Company
Share Share Retained
Capital Premium Earnings
GBP000 GBP000 GBP000
As at 1 January 2014 172 6,254 (2,747)
Total comprehensive
loss for the year - - (1,566)
Transactions with owners
recorded directly in
equity:
Share based payment
charges - - 168
--------- --------- ----------
At 31 December 2014 172 6,254 (4,145)
Total comprehensive
loss for the year - - (1,250)
Transactions with owners
recorded directly in
equity:
Share based payment
charges - - (38)
--------- --------- ----------
At 31 December 2015 172 6,254 (5,433)
--------- --------- ----------
Notes
1 Financial information
The financial information set out herein does not constitute the
Group's statutory accounts for the year ended 31 December 2015 or
the year ended 31 December 2014 within the meaning of section 435
of the Companies Act 2006. The 2015 statutory accounts have not
been finalised but this preliminary announcement has been prepared
by the Directors based on the results and position which they
expect will be reflected in the statutory accounts. The comparative
information in respect of the year ended 31 December 2014 has been
derived from the audited statutory accounts for the year ended on
that date upon which an unmodified audit opinion was expressed and
which did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006. The audited accounts will be posted to all
shareholders in due course and will be available on the Company's
website. A further announcement will be made at that time.
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 on the basis
of the accounting policies adopted for the year ended 31 December
2015, that will be set out in the Company's Annual Report and
Accounts, and as previously disclosed in the Company's Annual
Report and Accounts for the year ended 31 December 2014.
The preparation of financial statements in conformity with IFRS
requires management to make judgments, 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 consistent with those made in the
financial statements for the year ended 31 December 2014 and 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 judgments 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 Exceptional expenses
2015 2014
GBP'000 GBP'000
Exceptional expenses incurred 404 -
in redundancies and terminations
404 -
4 Non-recurring administrative expenses
2015 2014
GBP'000 GBP'000
Non-recurring employment
expenses following the restructuring 511 701
Non-recurring costs of locations
closed in the year 218 418
729 1,119
The non recurring expenses include specific payroll and office
costs that were incurred to the point that they were terminated as
part of the restructuring exercise. These have been identified and
separated to show the impact of the restructuring in the year. As
part of this process we have restated the prior year figures to
separate these costs and provide information on a like-for-like
basis.
5 Basic and diluted earnings per share
2015 2014
Earnings GBP'000 (1,249) (1,566)
Weighted average number of
shares (number '000) 42,908 42,908
Fully diluted average number
of shares (number '000) 42,908 42,908
Basic loss per ordinary share
(pence) (2.91) (3.68)
Diluted loss per ordinary
share (pence) (2.91) (3.68)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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