2 May 2013
AIM: ALT
Altitude Group plc
("Altitude", the "Group" or the "Company")
Unaudited Preliminary Results for the year to 31 December 2012
Altitude announces its unaudited preliminary results for the year to 31 December 2012.
Highlights:
-
Milestone accounts of EmbroidMe and Signarama secured during the year and installations completing
to schedule
* Underlying operating loss before amortisation of intangible assets, non-recurring administrative expenses and share based payment charges
Stephen Yapp, Non-Executive Chairman of Altitude commented:
During the last two years, the Group's objectives have been refocused to areas providing considerable long-term opportunity to create meaningful shareholder value. The customer base continues to expand; we carry no net debt and will benefit from increasing visibility of recurring revenues. As I assume the position of Chairman, the Company is well placed to capitalise on the opportunities before it and we will continue to refine our strategy for building on the progress made and delivering on the substantial potential for growth.
The Company's Unaudited Preliminary Results are available on its website www.altitudeplc.com
Enquiries:
Altitude Group plc Stephen Yapp (Chairman) Martin Varley (Chief Executive) |
Tel: 0870 224 6677 Tel:+ 1 305 639 0252 |
WH Ireland Limited Tim Feather James Bavister |
Tel: 0113 394 6600 |
ChairmanÕs Statement
Group Overview
The Group has made further good progress in 2012 in line with the strategy of concentrating on its Technology and Information business and developing its presence in North American markets through Trade Only Inc. in USA and Trade Only Technology Services in Canada.
The Trade Only solutions include a fully integrated business management platform for the Promotional Products and Print sectors allowing manufacturers and distributors in the supply chain to transact their business more efficiently. Offered as Software as a Service model (ÒSaaSÓ), the Trade Only technology enables small business customers to access software tools without the need for them to have substantial technical knowledge or expensive hardware resources in-house.
Performance Review
The Group operating loss before non-recurring items, amortisation of intangible assets and share based payment charges was £0.40m (2011: loss £0.15m) on revenues increased by 15% to £4.07m (2011: £3.54m). The operating loss reflects the continued expenditure on developing the scale and capacity of the USA operations as well as the significant ongoing expensed software development cost, where £0.47m has been expensed in 2012 (2011 £0.43m)
The Group balance sheet remains strong and was debt free at 31 December 2012 with a net cash balance of £0.76m (2011 £0.29m). With investing activities of £0.45m against an operating cash inflow of £0.18m, the improvement during the year principally reflects the £0.7m of repayments received against the 2016 loan note receivable, outstanding from the sale in 2011 of the Promotional Marketing Division.
Technology and Information
Overall in 2012, the division made an operating loss before non-recurring items, amortisation of intangible assets and share based payment charges of £0.40m (2011: loss £0.15m). Expenditure on enhancing the functionality and user experience of the technology platforms and their applicability to a broader range of users, which was significantly increased in 2011, has been maintained during 2012 and was marginally higher than in the previous year at £0.47m.
During the year we increased the depth of our customer services, development and marketing resources in the USA and more recently strengthened the senior management team with the appointment of Alan Patrick as President and Chief Operating Office and Julie Henderson as Financial Controller respectively.
In early 2012 Trade Only was selected by EmbroidMe, the world's leading franchise for embroidered garments and promotional products, to provide our fully integrated point of sale ("POS"), web store, customer relationship manager ("CRM") and order management solution to its franchisee base across the USA, Canada, EMEA and Australia. As further endorsement of our technology Trade Only was later in the year selected by Signarama, another division of United Franchise Group, to provide its customerfocus.comsolution to Signarama franchisees. Both these installations have been brought to completion during the early part of 2013 and are now entering the revenue generation phase.
By the year-end annualised recurring software revenues of the North America businesses had been developed to £0.8m to add to UK recurring revenues of £1.4m.
Board changes
In February 2013, I joined the Board as Chairman designate and assumed the position of Chairman upon Colin CookeÕs retirement from the Board on 26 April 2013. On behalf of my colleagues and shareholders, I would like to extend our gratitude to Colin for his contribution since his appointment in 2005, in particular during the period of the last two years as the Company has refocused its strategy.
In March 2013, David Dannhauser, who was appointed to the Board an a non-executive director in May 2011, was appointed Chief Financial Officer.
The recent Board changes and the senior management appointments made in the USA have put into place a management team around Martin Varley as CEO to meet the needs of the CompanyÕs continued development.
Strategy
Our core objective is to capitalise on the unrivalled functionality of the technology platforms the Group offers to the promotional products, print and other similar industries. The opportunities in these sectors are substantial and in addition we will continue to broaden the use of the tools by SMEÕs more generally providing further growth potential. In the medium term, the greatest emphasis will be given to expanding the business in USA but other opportunities, such as developing international sales of the Technologotm virtual sampling technology, will continue to be explored.
In pursuing these objectives we will aim to remain a debt free company.
People
The staff have shown great endeavour in addressing our fast paced expansion into additional markets in the USA and their commitment is much appreciated.
We added later on in the year senior level resource in the California office including our new USA based President and COO, Alan Patrick and local FC Julie Henderson to lead the next phase of the businessÕ development. I am delighted to welcome them and all of the new team members and to thank them all for their enthusiasm and drive in meeting the demands placed upon them.
Outlook
We enjoyed another strong performance from our cash generative UK Exhibition and Information business earlier this year resulting in a 3.5% increase in revenues from the January 2013 Trade Only National Show. We are delighted to have already pre-sold more than 80% of the space for the eighth annual event taking place on 22nd and 23rd January 2014.
The level of recurring revenues in North America is increasing all the while and with the installation phase being concluded for major accounts such as EmbroidMe and Signarama during the second quarter of this year, we should see further significant growth.
As further progress is made within the niches that include promotional products, print and corporate clothing and this business develops scale, we will be in a position to progress our longer-term plans directed at the provision of SaaS tools targeted at the estimated 27m and 2.5m small businesses in the USA and UK respectively.
During the last two years, the GroupÕs objectives have been refocused to areas providing considerable long-term opportunity to create meaningful shareholder value. In 2013, we will develop further our USA operations but the emphasis will be on progressing longer-term revenue opportunities. The customer base continues to expand, we carry no net debt and will benefit from increasing visibility of recurring revenues. As I assume the position of Chairman, the Company is well placed to capitalise on the opportunities before it and we will continue to refine our strategy for building on the progress made and delivering on the potential for growth.
Stephen Yapp
Chairman
2 May 2013
Consolidated Statement of Comprehensive Income for the year ended 31 December 2012
|
|
2012 |
2011 |
|
Note |
£000 |
£000 |
|
|
|
|
|
|
|
|
Revenue |
|
4,074 |
3,539 |
|
|
|
|
Cost of sales |
|
(822) |
(905) |
|
|
|
|
Gross profit |
|
3,252 |
2,634 |
|
|
|
|
Administrative costs |
|
(4,233) |
(3,457) |
|
|
|
|
Operating loss before amortisation of intangible assets, non-recurring administrative expenses and share based payment charges |
|
(398) |
(145) |
Amortisation of intangible assets |
|
(370) |
(249) |
Non-recurring administrative expenses |
3 |
(105) |
(428) |
Share based payment charges |
|
(108) |
(1) |
|
|
|
|
|
|
|
|
Operating loss |
|
(981) |
(823) |
|
|
|
|
Finance income |
|
296 |
152 |
Finance expenses |
|
(3) |
(1) |
|
|
|
|
Loss before taxation |
|
(688) |
(672) |
|
|
|
|
Taxation |
|
186 |
116 |
|
|
|
|
Loss from continuing operations |
|
(502) |
(556) |
|
|
|
|
Profit from discontinued operations |
|
- |
314 |
|
|
|
|
Loss attributable to the equity shareholders of the Company |
|
(502) |
(242) |
|
|
|
|
Loss per ordinary share attributable to the equity shareholders of the Company : |
|
|
|
- Basic (pence) |
4 |
(1.17) |
(0.58) |
- Diluted (pence) |
4 |
(1.17) |
(0.58) |
Consolidated Balance Sheet as at 31 December 2012
|
|
2012 |
2011 |
|
|
£000 |
£000 |
Non-current assets |
|
|
|
Property, plant & equipment |
|
222 |
136 |
Intangible assets |
|
1,248 |
1,332 |
Goodwill |
|
564 |
564 |
Long-term loan receivable |
|
3,300 |
4,000 |
Deferred tax |
|
244 |
90 |
|
|
|
|
|
|
5,578 |
6,122 |
|
|
|
|
Current assets |
|
|
|
Trade and other receivables |
|
1,084 |
1,115 |
Cash and cash equivalents |
|
760 |
294 |
|
|
|
|
|
|
1,844 |
1,409 |
|
|
|
|
Total assets |
|
7,422 |
7,531 |
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
|
(2,113) |
(1,854) |
|
|
|
|
Total liabilities |
|
(2,113) |
(1,854) |
|
|
|
|
Net assets |
|
5,309 |
5,677 |
|
|
|
|
Equity attributable to equity holders of the Company |
|
|
|
Called up share capital |
|
172 |
171 |
Share premium account |
|
6,254 |
6,214 |
Retained earnings |
|
(1,117) |
(708) |
|
|
|
|
Total equity |
|
5,309 |
5,677 |
|
|
|
|
Statement of Changes in Equity
|
Share capital |
Share premium |
Retained earnings |
|
£000 |
£000 |
£000 |
|
|
|
|
At 31 January 2011 |
153 |
5,293 |
(463) |
New shares issued |
18 |
921 |
- |
Result for the period |
- |
- |
(242) |
Foreign exchange difference |
- |
- |
(15) |
Share based payment charges |
- |
- |
12 |
|
|
|
|
At 31 December 2011 |
171 |
6,214 |
(708) |
New shares issued |
1 |
40 |
- |
Result for the period |
- |
- |
(502) |
Foreign exchange difference |
- |
- |
(15) |
Share based payment charges |
- |
- |
108 |
|
|
|
|
At 31 December 2012 |
172 |
6,254 |
(1,117) |
Consolidated Cash Flow Statement for the year ended 31 December 2012
|
|
2012 |
2011 |
|
|
£000 |
£000 |
Operating activities |
|
|
|
Loss for the period |
|
(502) |
(242) |
Amortisation of intangible assets |
|
370 |
273 |
Depreciation |
|
76 |
41 |
Loss on disposal of discontinued operations |
|
- |
10 |
Net finance (credit)/charge |
|
(293) |
(147) |
Net foreign exchange losses |
|
(6) |
2 |
Corporation tax credit |
|
(186) |
(116) |
Share based payment charges |
|
108 |
11 |
|
|
|
|
Operating cash inflow before changes in working capital |
|
(433) |
(168) |
Movement in inventories |
|
- |
(570) |
Movement in trade and other receivables |
|
52 |
(679) |
Movement in trade and other payables |
|
266 |
276 |
|
|
|
|
Operating cash inflow from operations |
|
(115) |
(1,141) |
Interest received |
|
296 |
152 |
Interest paid |
|
(3) |
(5) |
Income tax received |
|
- |
14 |
|
|
|
|
Net cash flow from operating activities |
|
178 |
(980) |
|
|
|
|
Investing activities |
|
|
|
Purchase of tangible assets |
|
(162) |
(114) |
Purchase of intangible assets |
|
(286) |
(204) |
Acquisitions of subsidiary and business undertakings |
|
- |
(1,622) |
Payment of deferred consideration |
|
- |
(176) |
Disposal of subsidiary undertakings |
|
- |
928 |
|
|
|
|
Net cash flow from investing activities |
|
(448) |
(1,188) |
|
|
|
|
Financing activities |
|
|
|
Issue of new ordinary shares |
|
41 |
939 |
Loan note repayments received |
|
700 |
- |
Repayments of obligations under finance leases |
|
- |
(9) |
|
|
|
|
Net cash flow from financing activities |
|
741 |
930 |
|
|
|
|
Net increase in cash and cash equivalents |
|
471 |
(1,238) |
Cash and cash equivalents at the beginning of the year |
|
294 |
1,533 |
Effect of exchange rate fluctuations on cash held |
|
(5) |
(1) |
Cash and cash equivalents at the end of the year |
|
760 |
294 |
Notes
1. Financial information
The financial information set out herein does not constitute the GroupÕs statutory accounts for the year ended 31 December 2012 or the year ended 31 December 2011 within the meaning of section 435 of the Companies Act 2006. The 2012 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 2011 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 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 request in due course by contacting the Company Secretary at the CompanyÕs 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 on the basis of the accounting policies adopted for the year ended 31 December 2012, as set out in the CompanyÕs Annual Report and Accounts, and as previously disclosed in the CompanyÕs Annual Report and Accounts for the year ended 31 December 2011.
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
|
2012 |
2011 |
|
£000 |
£000 |
|
|
|
Legal costs re licensing dispute |
9 |
162 |
Acquisition legal expenses |
- |
25 |
USA business set-up costs |
- |
126 |
Employment termination expenses |
34 |
36 |
Non-recurring employment costs |
62 |
79 |
|
|
|
|
105 |
428 |
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 and the weighted average number of equity voting shares in issue as follows.
|
2012 |
2011 |
|
|
|
Earnings (£000) |
(502) |
(242) |
|
|
|
Weighted average number of shares (number Ô000) |
42,791 |
41,563 |
|
|
|
Fully diluted average number of shares (number Ô000) |
42,791 |
41,563 |
|
|
|
Basic (loss)/earnings per ordinary share (pence) |
(1.17) |
(0.58) |
Diluted (loss)/earnings per ordinary share (pence) |
(1.17) |
(0.58) |
