TIDMALT
RNS Number : 4655A
Altitude Group PLC
29 September 2015
Altitude Group plc
("Altitude" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Altitude Group plc (AIM: ALT), the provider of innovative
technology solutions for small to medium sized businesses,
announces its interim results for the six month period ended 30
June 2015.
Highlights:
-- Revenue increased to GBP3.14m (H1 2014: GBP3.04m)
-- Adjusted operating profit* GBP0.17m (H1 2014: GBP0.13m)
-- Reduction in annualised overhead base of GBP1.5m through
restructuring of Group in the period
-- Strong performance at The Trade Only National Show with solid
improvement in profitability. Bookings for 2016 in line with our
expectations
-- Award of USA patent for the artworktool(tm) application in August 2015
(* before amortisation of intangible assets, share-based
payments and non-recurring administrative expenses and discontinued
operations)
Executive Chairman, Richard Sowerby, commented: "The Group
undertook a substantial restructuring process in the period
including changes to the Board. We now have a much leaner and
focused business with clear reporting lines and responsibilities
under a centralised management structure led by a Group Managing
Director. Our North American sales function now operates from a
single location reducing duplication of cost and effort.
"Securing the patent in August 2015 for the artworktool(tm)
solution and the processes it uses to help users create artwork
online has been a tremendous achievement and is the result of three
years of hard work and considerable cash investment. We now have a
comprehensive suite of products to take forward using exclusive,
unique and protected proprietary technology.
"The restructuring and the award of the patent ensure that the
Group is in good shape. We have reduced our cost base by an annual
GBP1.5m at the cost of just over GBP0.3m from which the benefit
will start to flow in the second half of the year and beyond. Our
focus going forward will be to capitalise on this hard work and
drive shareholder value by leveraging the Company's existing
technology products and continuing to build the successful
exhibitions and publications business."
Enquiries:
Altitude Group plc
Richard Sowerby (Executive Chairman) Tel: 07525 220876
WH Ireland Limited (Nominated
Adviser and Broker)
Tim Feather Tel: 0113 394
Liam Gribben 6600
Strategic update
Our fundamental 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.
We continue to make progress in the defined personalised product
sector, as well as the closely related print reseller market with
our integrated Web Store and CRM/ERP solution which enables
businesses to operate in these niches for a subscription starting
from a highly competitive $99 per month.
Our Exhibition and publications business continues to perform
strongly. The January 2015 event showed another strong performance
with increased profitability. Bookings for the 2016 show are in
line with management expectations and we expect another good
performance from this business in H1 2016 based on booked
orders.
With the over 4,000 delegates that attend 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.
Structure
Throughout 2013 and 2014 the Group invested significantly in its
overhead base and development creating a number of autonomous
entities managed and controlled locally under a part time Group
Executive Chairman. It became clear that this strategy was not only
expensive but also distracting and inefficient. The changes made to
the board in April 2015 were the catalyst for a wider and
comprehensive restructuring exercise.
This process saw the appointment of Vicky Robinson as Group
Managing Director providing a single point of Group management and
control, and Peter Hallett as Non-Executive Director to improve our
compliance with sound corporate governance principles, and my move
to Executive Chairman.
The structural review led to our North American sales efforts
being focused out of a single location in Costa Mesa California,
the centralisation of many support functions predominantly in the
UK, and the outsourcing of much of our development activity to low
cost Eastern Europe.
These changes have reduced our annualised overhead cost base,
excluding development and maintenance activities, by GBP1.5m
comparing June 2015 with January 2015 run rates, dropping from
GBP4.8m annualised to GBP3.3m.
Results
Whilst we reported sales growth from GBP3.04m in 2014 to
GBP3.15m in 2015 and an increase in gross profit of GBP0.16m to
GBP2.39m, the cost build up under the previous structure, and the
costs incurred in the restructuring resulted in a net loss for the
period of GBP0.7m compared to GBP0.2m for the same period last
year.
Profit before amortisation, exceptional and non-recurring
expenses, foreign exchange and share based payments was GBP0.17m
for the period compared to a profit of GBP0.13m for the same period
in 2014. This reflects the underlying result for the period before
the costs of restructuring and the businesses that were
discontinued in the period. Our combined US operations ended the
period making a positive contribution to Group profits under this
new structure.
The exceptional and non-recurring expenses of GBP0.56m include
the cost of the restructuring exercise of GBP0.32m and
non-recurring costs for the Canadian business of GBP0.24m. The
non-recurring expenses compare to GBP0.19m for the six months to
June 2014 and GBP0.43m for the full year which are included in
administrative expenses.
In the UK, the 2015 Trade Only National Show in January was sold
out again and delivered an improved profit contribution on 2014.
The exhibition, now renamed as The Promotional Products Expo
("PPE"), continues to be the premier event in the promotional
products industry calendar and we have pre-sold available space for
January 2016 in line with our expectations.
The costs of restructuring had an impact on our cash balance in
the period. We saw a cash outflow in the six months of GBP0.97m.
Our business cycle means that we recognise the income and
expenditure from the National Show in the first half, but the cash
for that event is received in the second half of the year. In
addition we have funded the majority of the costs of the
restructuring in the period. Our operating cash flow before
exceptional and non-recurring expenses was an outflow of GBP0.37m
(H1 2014: GBP0.36m), but we are confident that levels of business
and our cost savings will ensure that the business is adequately
funded for the foreseeable future.
Product Development
Product development remains at the heart of our SaaS business.
Our new structure benefitted from the appointment of a Chief
Technology Officer in the period. We have ensured that we have
continued to develop and enhance our products in a more cost
effective manner using a mixture of in-house and outsourced
developers.
In the period we spent a total of GBP0.5m in this area of which
we have capitalised GBP0.12m. In the six month period ended 30 June
2014 we spent GBP0.54m with GBP0.22m capitalised across a number of
products.
A significant achievement in this area has been the success in
obtaining 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. We believe this has
revenue opportunities beyond the current focus of our key
markets.
Outlook
We continue to drive forward a leaner and more focused structure
with clear and concise reporting lines. In addition our product
development team is delivering products of which the Board is
confident will be a source of increasing shareholder value in 2016
and beyond.
Richard Sowerby
Executive Chairman
Consolidated income statement for the six month period ended 30
June 2015
Retated
(note5)
Unaudited Unaudited
30 June 31 December 30 June
2015 2014 2014
GBP'000 GBP'000 GBP'000
Revenue - Continuing Operations 3,146 4,440 3,044
Cost of sales (753) (971) (812)
---------- ------------ -----------
Gross profit 2,393 3,469 2,232
Administrative costs (3,094) (4,699) (2,439)
---------- ------------ -----------
Operating (loss)/profit before
amortisation of intangible
assets, non-recurring administrative
expenses and share based
payment charges 170 (1,035) 133
Amortisation of intangible
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assets (239) (478) (238)
Exceptional and non-recurring
administrative expenses (562) - -
Foreign exchange differences (37) 26 (18)
Share based payment charges (33) (168) (84)
--------------------------------------- ---------- ------------ -----------
Operating loss (701) (1,655) (207)
Finance income - 89 85
Loss before tax (701) (1,566) (122)
Taxation - - -
---------- ------------ -----------
Loss attributable to the
equity shareholders of the
Company (701) (1,566) (122)
========== ============ ===========
Loss earnings per ordinary
share attributable to the
equity shareholders of the
Company :
- Basic (pence) (1.63) (3.64) (0.28)
- Diluted (pence) (1.63) (3.64) (0.28)
---------- ------------ -----------
Consolidated statement of changes in equity for the six month
period ended 30 June 2015
Share Share Retained
Capital Premium Earnings
GBP'000 GBP'000 GBP'000
At 1 January 2015 172 6,254 (4,145)
Result for the period - - (701)
Share based payment charges - - 33
-------- -------- ---------
At 30 June 2015 172 6,254 (4,813)
-------- -------- ---------
Consolidated balance sheet as at 30 June 2015
Unaudited Unaudited
30 June 31 December 30 June
2015 2014 2014
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant & equipment 79 105 144
Intangibles 1,069 1,184 1,164
Goodwill 564 564 564
Deferred tax 244 426 426
---------- ------------ ----------
2,298 2,279 2,298
Current assets
Trade and other receivables 479 787 479
Cash and cash equivalents 1,927 1,280 1,927
---------- ------------ ----------
Total current assets 2,406 2,067 2,406
---------- ------------ ----------
Total assets 4,704 4,346 4,704
---------- ------------ ----------
Current liabilities
Trade and other payables (1,063) (2,065) (1,063)
---------- ------------ ----------
(1,063) (2,065) (1,063)
---------- ------------ ----------
Net assets 3,641 2,281 3,641
---------- ------------ ----------
Called up share capital 172 172 172
Share premium 6,254 6,254 6,254
Retained earnings (4,813) (4,145) (2,785)
---------- ------------ ----------
Total equity 1,613 2,281 3,641
---------- ------------ ----------
Consolidated cash flow statement for the six month period ended
30 June 2015
Restated
(note
Unaudited 5) Unaudited
30 June 31 December 30 June
2015 2014 2014
GBP'000 GBP'000 GBP'000
Operating activities
Loss for the period (701) (1,566) (122)
Amortisation of intangible assets 239 448 238
Depreciation 46 102 48
Net finance (credit)/expense - (89) (85)
Share based payment charges 33 168 84
---------- ------------ --------------
Operating cash flow before changes
in working capital (382) (907) 163
Movement in trade and other
receivables 415 222 530
Movement in trade and other
payables (862) (48) (1,053)
---------- ------------ --------------
Operating cash flow before exceptional
and non-recurring expenses (367) (733) (360)
Cash flow from exceptional and
non-recurring charges (462) - -
---------------------------------------- ---------- ------------ --------------
Operating cash flow from operations (829) (733) (360)
Interest received - 89 85
---------- ------------ --------------
Net cash flow from operating
activities (829) (644) (275)
---------- ------------ --------------
Investing activities
Purchase of plant and equipment (21) (51) (33)
Purchase of intangible assets (125) (475) (215)
Repayment of loan note receivable - 2,000 2,000
---------- ------------ --------------
Net cash flow from investing
activities (146) 1,474 1,752
---------- ------------ --------------
Net increase/(decrease) in cash
and cash equivalents (975) 830 1,477
Cash and cash equivalents at
the beginning of the period 1,280 450 450
---------- ------------ --------------
Cash and cash equivalents at
the end of the period 305 1,280 1,927
---------- ------------ --------------
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 2015 has been prepared applying the accounting
policies and presentation that were applied in the preparation of
the Group's published consolidated financial statements for the
year ended 31 December 2014.
The consolidated half yearly report was approved by the Board of
directors on 28 September 2015.
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 2014
have been extracted from the statutory accounts for the year ended
31 December 2014 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 2015 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 2015
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 2014, 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 2014.
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
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