TIDMALT
RNS Number : 9164S
Altitude Group PLC
30 September 2014
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 GBP3.04m (H1 2013: GBP2.89m)
-- Adjusted operating profit* increased to GBP0.1m (H1 2013: GBP0.04m)
-- GBP2m 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 GBP1.9m at 30 June 2014: (31 December 2013 GBP0.45m)
(* 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 GBP2m 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) Tel: 07879 443087
Richard Sowerby (Chief Financial Officer
Tel: 07525 220876
WH Ireland Limited (Nominated Adviser and
Broker)
Tim Feather Tel: 020 7220 1666
James Bavister
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 GBP2m. Consequently, at 30 June 2014 we had GBP1.9m 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 GBP207,000 was a
substantial reduction from the prior period (2013: operating loss
of GBP707,000). 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 GBP540,000, an
increase of nearly GBP100,000 on 2013. We have capitalised
GBP215,000, (GBP161,000 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
artworktool(tm) 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 GBP2m 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
Restated
Unaudited (note5) Unaudited
30 June 2014 31 December 30 June 2013
2013
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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 31 December 30 June
2014 2013 2013
GBP'000 GBP'000 GBP'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
Restated
(note 5)
Unaudited Unaudited
30 June 31 December 30 June
2014 2013 2013
GBP'000 GBP'000 GBP'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 31 December 30 June
2014 2013 2013
Earnings (GBP'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
GBP95,000 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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