TIDMALT
RNS Number : 9578T
Altitude Group PLC
30 November 2021
30 November 2021
Altitude Group plc
("Altitude", the "Company" or the "Group")
Altitude Group sees continuing recovery and growth
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER
2021
Altitude Group plc (AIM: ALT), the operator of a leading
marketplace for the global promotional products industry, is
pleased to announce its unaudited interim results for the six
months to 30 September 2021.
Financial Highlights
-- Group revenues increased by GBP1.5m to GBP5.9m, a 33%
increase, in the half year period (H1 2020: GBP4.4m)
-- Acceleration of core strategic AIM Capital Solutions ("ACS")
merchanting revenues of GBP3.0m in H1 2021 replaces one-off sales
of Protective Personal Equipment of GBP2.0m H1 2020
-- Gross profit increased 12% to GBP2.8m (H1 2020 GBP2.5m) with increased trading activity
-- Administrative costs held steady GBP2.3m (H1 2020 GBP2.2m)
-- Adjusted operating profit* before central plc costs increased
57% to GBP1.2m (H1 2020: GBP0.7m) comprising:
-- increase of 58% in the US to GBP1.0m (H1 2020: GBP0.7m)
-- increase of 47% in the UK to GBP0.1m (H1 2020: GBP0.1m)
-- Group adjusted operating profit* increased by 86% to GBP0.5m (H1 2020: GBP0.3m)
-- Statutory loss before taxation reduced by 31% to GBP0.4m (H1 2020: loss GBP0.6m)
-- Cash inflow from operating activities was GBP0.7m (H1 2020: GBP0.1m)
-- Working capital investment of GBP1.7m driven by growth in trading activity and recovery
-- The Group currently remains debt free
-- Short term facility secured with a permanent credit line
expected to be in place in the new year
-- The Group continues to trade positively, with current
business performance remaining in line with the Board's
expectations
*Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Key corporate developments and operational highlights
-- Accelerating recovery evidenced by strong growth across all
revenue streams in both recurring & repeating services and
merchanting activity:
o US services revenue grew by 34% to GBP2.2m (H1 2020:
GBP1.7m)
o US merchanting revenue grew by 41% to GBP3.1m (H1 2020:
GBP2.2m)
-- The Group now has 318 members of the AIM global Preferred
Partner network (H1 2020: 228), 187 US Preferred Partners (H1 2020:
175), 131 UK Preferred Partners (H1 2020: 53)
-- Preferred partner service fees increased by 79.8% on H1 2020 and 11.2% on H1 2019
-- AIM global membership increasing to 2,405 members (H1 2020: 2,200)
-- Global AIM Technology platform adoption increased 20% to 431
(H1 2020: 359) for search and orders
-- The Group is continuing to accelerate its ACS offering and
continues to develop programmes that will accelerate the growth of
merchanting revenue
Nichole Stella , Group CEO of Altitude, said:
"Throughout H1 2021, the industry has experienced initial
recovery from the impact of the pandemic. Though caution across the
industry still remains, our team continues to be focused on
executing our strategic growth plan including developing and
supporting our community, technology, services, and pipeline
development, thus successfully increasing both Services and
Merchanting revenue. The Board is pleased to report that the Group
continues to trade positively, and current business performance is
in line with the Board's expectations. With ongoing investment in
growth, strong focus on core business development and sustained
recovery the Board is optimistic and expects continued
profitability in the full year."
Enquiries:
Altitude Group plc Via Zeus Capital
Nichole Stella, Chief Executive Officer
Graham Feltham, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser Tel: 0203 829
& Broker) 5000
Dan Bate / David Foreman / James Edis (Corporate
Finance)
Dominic King (Corporate Broking)
Chief Executive's statement
Interim results for the 6 months ended 30 September 2021
Throughout this period, the management team remained focused on
both recovery and our long-term strategic growth plans. We
continued to invest in the development of our technology and
software applications to drive ease of use and greater efficiencies
for members, affiliates and preferred partners, as well as
investing in our people and strategic growth areas of the business.
Despite supply chain disruption, the Group traded positively
throughout the period.
AIM membership has increased to 2,405 (H1 2020: 2,200) with
average US distributor revenue of c.$1.1 million pa and aggregate
member revenue rising to c.$2.6 billion per self-certification
(pre-COVID-19). Our continuous development of our order management
platform, e-commerce and popup shops, and marketing programmes have
initiated recovery and growth in our Service programmes. These
combined efforts have helped us to grow our US service revenues by
34% in the period to GBP2.2m (HY1 2020: GBP1.7m) and overall
service revenues by 26% to GBP2.8m (H1 2020: GBP2.2m).
The nature of our service revenues is very sticky whether
derived from our AIM members or our stable of contracted Preferred
Partners. Approximately 98% of our services revenues are either
annual recurring fixed revenues or repeating ad valorem marketing
revenues based on AIM members transactional volume with contracted
Preferred Partners.
We continue to enjoy strong relationships with our key partners
and have retained 100% of them throughout the period. Trading has
recovered well with Preferred Partner service fees increasing by
79.8% on H1 2020 and 11.2% on H1 2019.
Additionally, our Merchanting programmes, which includes ACS
acting as principal in the underlying transaction and therefore all
gross transactional revenue ("GTR") is recognised as Group revenue,
grew by 41% in the half year to GBP3.1m (H1 2020: GBP2.2m). Whilst
the business is lower in margin at 7.2% it is high volume and has
potential for significant growth. It is worth noting that H1 2020
included GBP1.9m of PPE merchanting generated in a direct and
opportunistic response to the pandemic and which yielded a gross
margin of circa 16%. These products have now become over-supplied
in the market and therefore the business has not been repeated in
2021.
Our continued focus on execution resulted in an overall Group
revenue increase of GBP1.5 million to GBP5.9 million (H1 2020:
GBP4.4m). As a result, the Group adjusted operating profit*
increased 86% to GBP0.5m (H1 2020: GBP0.3m) and adjusted operating
profit* before central Plc costs increased 57% to GBP1.2m (H1 2020:
GBP0.7m).
The Group remained debt-free, with the exception of leases held
under IFRS 16. The Group is also pleased to report it has secured a
short term facility ahead of a permanent credit line to support
continued growth for ACS currently anticipated to be in place in
the new year.
The Group continues to be cautious in its approach to all
discretionary spend and is carefully managing cash whilst adapting
programmes and services to meet the changing needs of the
industry.
*Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
AIM Smarter Progress and Trading
AIM Smarter US & UK support the development and growth of
small to mid-size global promotional products businesses through
the delivery of supply chain management, efficiency through
technology platforms, and marketing services. AIM continues to
drive awareness and grow sales for both our Preferred Partners and
for our AIM members to their clients. Through these services to our
members and Preferred Partners, we are creating an interconnected
growth-oriented marketplace that benefits all participants and
delivers growth for the Group.
Routes to Revenue:
Services Revenue (Annual recurring and repeating revenues):
-- Continued growth in the AIM membership of high-quality promotional product distributors
-- Continued development of our Preferred Partner network and
increasing their sales through the network
-- Continued Sales of Enhanced Packages to assist AIM members
and affiliates grow their business to end-user clients
-- Continued growth in member utilisation of the AIM Tech Suite
to drive efficiencies, transactional visibility and growth across
the AIM network
Merchanting Revenue:
-- Promoting and growing ACS, which completes the Groups current
portfolio of services to its AIM members
-- Continued development of our Group buys & Adjacent Markets Programmes
US Business
The US business delivered GBP5.3m of revenue in the period. AIM
US membership is stable with 2,070 members, up from 1917 at the
time of acquisition and poised for growth as US industry recovery
accelerates. Our Preferred Partner network has grown to 187
partners (H1 2020: 175).
The US has seen acceleration of its newly launched ACS Program
despite the one-off PPE merchanting sales generated in 2020. ACS
requires mandatory use of the full AIM Tech suite and offers
technology driven back-office support, procurement, and supply
chain finance. ACS is recognised as "Principal" in the underlying
transactions generated by affiliate members. Accordingly, we
recognise the revenue and gross margin of the full transaction,
including the commission paid to ACS affiliates as a cost of sale.
We anticipate significant further uptake of the programme by new
and existing AIM members.
During the period, we continued to invest in our people and
technology to deliver on our future growth plans and advance the
business further as recovery accelerates.
UK Business
The UK business also experienced recovery, albeit not as
pronounced as the US markets, delivering revenue of GBP0.6m in the
period, an increase of 3% (H1 2020 GBP0.6m).
AIM UK Membership continues to grow since the launch of the AIM
Membership package in May 2020. Currently, there are 335 UK
Members, an increase of 129% from the 146 Members in September
2020. In addition, the UK continues to provide and support the
Group's proprietary enterprise-level software solutions to
mid-sized UK and US based distributors and suppliers.
Technology
The Group continues to research and actively develop
technological advancements within the AIM Tech Suite for both AIM
and ACS Members. Following the successful implementation of the
Group's agile development processes and strengthening of the
structure of the core technology development team within a new
centralised location in the UK, a series of major technology
releases have taken place to advance the efficiencies and promote
the growth of ACS Members and group processes.
Key integrations with global leading accounting platforms and
shipping agents were also launched to strengthen the end-to-end
nature of the Tech Suite, along with promotional product industry
specific integrations allowing the easy passage of product and
order data between Members and Partner Suppliers to widen the
connectivity of the platform.
The continued technological advancements and user desire for
connected solutions is reflected in the ongoing growth of Member
Tech Suite adoption with usage continuing to grow, having increased
20% within the past 12 months from 359 to 431 distributors adopting
the AIM Tech Suite for search and order creation. Our e-commerce
platforms continue to be attractive in the current environment with
2,594 live pop-up stores and websites.
Board Changes
There were a number of board changes in the period. Keith
Edelman stepped down from his role as Non-Executive Chairman on 26
November 2021. The Board thanks Keith for his valuable contribution
to the Group during his term, especially throughout the global
COVID-19 pandemic, and wish him well in his future endeavours.
In November, the Board was pleased to welcome David Smith, he
has stepped into the role of Non-Executive Chairman as of 26
November 2021. David's extensive experience in industries that have
evolved through technology advancements and industry shifting
buying behaviours will be invaluable to the Group as it continues
to grow.
Additionally, on 5 October 2021, the board welcomed Graham
Feltham to the board as Chief Financial Officer, replacing Graeme
Couturier. Graham Feltham is an experienced public company CFO and
brings a wealth of knowledge to the finance team. His expertise
will be instrumental in delivering accelerated growth in the
future.
Financial Results
Group revenue for the period increased by GBP1.5m to GBP5.9m (H1
2020: GBP1.1m), an increase of 33%.
The recognition of ACS revenue, with ACS being the principal in
the transaction, along with the recovery in the membership network
related revenues, has driven our top line growth.
When compared with last year, this growth was countered by the
non-recurring AIM Smarter merchanting revenues of GBP1.9m which
related to the direct sourcing of Personal Protective Equipment
(PPE) in response to COVID-19 demand. However, our ACS merchanting
revenue, inclusive of Group Buys and adjacent market merchanting
activities were successful and more than compensated for the
non-repeating PPE revenue in the first half of the year.
Gross profit increased by GBP0.3m, or 12.1%, to GBP2.8m (H1
2020: GBP2.5m), with gross margin decreasing to 48% (H1 2020: 57%)
reflecting lower margins on ACS merchanting compared to the
non-repeating PPE margin.
Administration expenses before share-based payments,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges slightly increased with prior year at
GBP2.3m (H1 2020: GBP2.2m).
Adjusted operating profit* increased by 86% to GBP0.5m (H1 2020:
GBP0.3m) and the loss before taxation fell by 31.1% to GBP0.4m (H1
2020: loss GBP0.6m).
Statutory operating loss was GBP0.4m (H1 2020: loss GBP0.6m),
with basic and diluted loss per share falling by 51.2% to 0.42p (H1
2020: loss 0.86p).
Operating cash inflow from continuing operations (before changes
in working capital) was GBP0.7m (H1 2020: GBP0.1m).
Operating cash outflow of GBP1.7m (H1 2020: GBP0.4m) was driven
by GBP0.9m increased trading activity generated by market recovery
and growth in ACS revenue with one off recovery outflows of GBP0.3m
relating to the partial repayment of the UK HMRC 'time to pay'
initiative and the deferred receivable of GBP0.5m from the US
employee retention scheme to be set-off against future payroll
taxes.
Net cash outflow from investing activities was GBP0.4m (H1 2020:
GBP0.3m outflow), primarily comprising capitalised software
development costs.
Net cash outflows from financing activities of GBP0.1m were
mainly comprised of lease repayments and interest. The prior period
activities of GBP0.6m reflects repayment of finance agreements and
interest of GBP0.5m, lease repayments of GBP0.1m and the issue of
shares for cash (net of expenses) of GBP0.1m in respect of options
exercised during the period.
Total net cash outflow was GBP1.3m (H1 2020: GBP1.1m
outflow).
* Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Outlook
Throughout H1 2021, the industry has experienced initial
recovery from the impact of the pandemic. Though caution across the
industry still remains, our team continues to be focused on
executing our strategic growth plan including developing and
supporting our community, technology, services, and pipeline
development, thus successfully increasing both Services and
Merchanting revenue. The Board is pleased to report that the Group
continues to trade positively, and current business performance is
in line with the Board's expectations. With ongoing investment in
growth, strong focus on core business development and sustained
recovery the Board is optimistic and expects continued
profitability in the full year.
Nichole Stella
Chief Executive Officer
30 November 2021
Consolidated income statement for the six months ended 30
September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
Note 30 Sep 31 Mar 30 Sep
2021 2021 2020
GBP'000 GBP'000 GBP'000
Revenue - Continuing Operations 3 5,928 7,707 4,443
Cost of sales (3,102) (2,131) (1,922)
----------------------------------------------- ----- ---------- ---------- ----------
Gross profit 2,826 5,576 2,521
Administrative expenses before share based
payment charges, depreciation amortisation
and exceptional expenses (2,319) (5,015) (2,248)
Operating profit before share based payment
charges, depreciation, amortisation and
exceptional charges 507 561 273
Share based payment charges (360) (544) (274)
Depreciation and amortisation (518) (1,228) (533)
Exceptional charges - (39) (24)
---------- ---------- ----------
Total administrative expenses (3,197) (6,826) (3,079)
----------------------------------------------- ----- ---------- ---------- ----------
Operating loss (371) (1,250) (558)
Finance expenses (43) (73) (43)
----------------------------------------------- ----- ---------- ---------- ----------
Loss before taxation (414) (1,323) (601)
Taxation 114 230 -
----------------------------------------------- ----- ---------- ---------- ----------
Loss attributable to continuing operations (300) (1,093) (601)
Loss on discontinued operation - (133) (117)
----------------------------------------------- ----- ---------- ---------- ----------
Loss attributable to the equity shareholders
of the Company (300) (1,226) (718)
----------------------------------------------- ----- ---------- ---------- ----------
Loss per ordinary share attributable to
the equity shareholders of the Company :
----------------------------------------------- ----- ---------- ---------- ----------
- Basic and diluted (pence) - Continuing
operations 4 (0.42p) (1.56p) (0.86p)
- Basic and diluted (pence) - Discontinued
operations 4 - (0.19p) (0.17p)
----------------------------------------------- ----- ---------- ---------- ----------
Consolidated statement of changes in equity for the six months
ended 30 September 2021
Foreign
Exchange
Share Share Retained Translation
Capital Premium Earnings Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2020 277 20,080 (11,250) (21) 9,086
Loss for the period attributable
to equity shareholders - - (718) - (718)
Foreign exchange differences - - - (249) (249)
----------------------------------- --------- --------- ---------- ------------- --------
Total comprehensive loss - - (718) (249) (967)
----------------------------------- --------- --------- ---------- ------------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 3 73 - - 76
Share based payment charges - - 274 - 274
Total transactions with owners 3 73 274 - 350
----------------------------------- --------- --------- ---------- ------------- --------
At 30 September 2020 280 20,153 (11,694) (270) 8,469
Loss for the period attributable
to equity shareholders - - (508) - (508)
Foreign exchange differences - - - (442) (442)
----------------------------------- --------- --------- ---------- ------------- --------
Total comprehensive income - - (508) (442) (950)
----------------------------------- --------- --------- ---------- ------------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 2 (2) - - -
Share based payment charges - - 270 - 270
Total transactions with owners 2 (2) 270 - 270
----------------------------------- --------- --------- ---------- ------------- --------
At 31 March 2021 282 20,151 (11,932) (712) 7,789
Loss for the period attributable
to equity shareholders - - (300) - (300)
Foreign exchange differences - - - 219 219
----------------------------------- --------- --------- ---------- ------------- --------
Total comprehensive income - - (300) 219 (81)
----------------------------------- --------- --------- ---------- ------------- --------
Transactions with owners recorded
directly in equity:
Shares issued for cash 1 43 - - 44
Share based payment charges - - 360 - 360
Total transactions with owners 1 43 360 - 404
----------------------------------- --------- --------- ---------- ------------- --------
At 30 September 2021 283 20,194 (11,872) (493) 8,112
----------------------------------- --------- --------- ---------- ------------- --------
Consolidated balance sheet as at 30 September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 31 Mar 30 Sep
2021 2021 2020
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant & equipment 91 115 172
Right of use assets 738 736 818
Intangibles 2,431 2,462 2,650
Goodwill 2,668 2,668 3,017
Deferred tax 428 419 442
---------------------------------------------- ---------- ---------- ----------
Total non-current assets 6,356 6,400 7,099
---------------------------------------------- ---------- ---------- ----------
Current assets
Inventory 18 - -
Trade and other receivables 3,790 2,378 3,020
Corporation tax receivable 154 220 36
Cash and cash equivalents 754 2,095 1,215
---------------------------------------------- ---------- ---------- ----------
Total current assets 4,716 4,693 4,271
---------------------------------------------- ---------- ---------- ----------
Total assets 11,072 11,093 11,370
---------------------------------------------- ---------- ---------- ----------
LIABILITIES
Non-current liabilities (976) (1,047) (1,251)
---------------------------------------------- ---------- ---------- ----------
Total non-current liabilities (976) (1,047) (1,251)
---------------------------------------------- ---------- ---------- ----------
Current liabilities
Trade and other payables (1,984) (2,257) (1,650)
---------------------------------------------- ---------- ---------- ----------
Total current liabilities (1,984) (2,257) (1,650)
---------------------------------------------- ---------- ---------- ----------
Total liabilities (2,960) (3,304) (2,901)
---------------------------------------------- ---------- ---------- ----------
Net assets 8,112 7,789 8,469
---------------------------------------------- ---------- ---------- ----------
EQUITY
Called up share capital 283 282 280
Share premium 20,194 20,151 20,153
Retained earnings (12,365) (12,644) (11,964)
---------------------------------------------- ---------- ---------- ----------
Total equity attributable to equity holders
of the parent 8,112 7,789 8,469
---------------------------------------------- ---------- ---------- ----------
Consolidated cash flow statement for the six months ended 30
September 2021
Unaudited Audited Unaudited
6 months 12 months 6 months
30 Sep 31 Mar 30 Sep
2021 2021 2020
GBP'000 GBP'000 GBP'000
Operating activities
Loss for the period - Continuing
operations (300) (1,093) (601)
Loss for the period - Discontinued
operations - (133) (117)
Amortisation of intangible assets 421 1,032 432
Depreciation 97 196 101
Interest paid 43 73 43
Taxation (114) (230) -
Exchange differences 151 (313) (37)
Share based payment charges 360 544 274
------------------------------------------------- ---------- ---------- ----------
Operating cash (outflow)/inflow before changes
in working capital 658 76 95
Movement in Inventory (18) - -
Movement in trade and other receivables (1,425) 710 18
Movement in trade and other payables (226) (707) (337)
------------------------------------------------- ---------- ---------- ----------
Operating cash outflow (1,669) 3 (319)
Tax received 182 11 -
------------------------------------------------- ---------- ---------- ----------
Net cash used in continuing operations (829) 90 (224)
------------------------------------------------- ---------- ---------- ----------
Cash flows from investing activities
Proceeds on disposal of trade and assets - 300 -
Purchase of tangible assets (66) 21 (7)
Purchase of intangible assets (352) (659) (326)
------------------------------------------------- ---------- ---------- ----------
Net cash used in investing activities (418) (338) (333)
------------------------------------------------- ---------- ---------- ----------
Cash flows from financing activities
Repayment of borrowings (95) (73) (491)
Interest paid (43) (10) (163)
Issue of shares for cash (net of
expenses) 44 76 76
------------------------------------------------- ---------- ---------- ----------
Net cash from financing activities (94) (7) (578)
------------------------------------------------- ---------- ---------- ----------
Net increase/(decrease) in cash and cash
equivalents (1,341) (255) (1,135)
Cash and cash equivalents at the beginning
of the period 2,095 2,350 2,350
------------------------------------------------- ---------- ---------- ----------
Cash and cash equivalents at the
end of the period 754 2,095 1,215
------------------------------------------------- ---------- ---------- ----------
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half
year ended 30 September 2021 has been prepared in accordance with
the AIM rules and applying the accounting policies and presentation
that were applied in the preparation of the Group's published
consolidated financial statements for the period ended 31 March
2021. The Group's accounting policies are based on the recognition
and measurement principles of UK-adopted international accounting
standards. The financial information is presented in Sterling and
has been rounded to the nearest thousand (GBP000).
The consolidated half yearly report was approved by the Board of
directors on 30 November 2021.
The financial information contained in the interim report has
not been reviewed or audited, and does not constitute statutory
accounts for the purpose of Section 434 of the Companies Act 2006,
and does not include all of the information or disclosures required
and should therefore be read in conjunction with the Group's
2020/21 consolidated financial statements, which have been prepared
in accordance with UK-adopted international accounting standards.
The financial information relating to the period ended 31 March
2021 is an extract from the latest published financial statements
on which the auditor gave an unmodified report that did not contain
statements under Section 498 (2) or (3) of the Companies Act 2006
and which have been filed with the Registrar of Companies.
2. Accounting policies
The condensed, consolidated financial statements in this
half-yearly financial report for the six months ended 30 September
2021 have been prepared in accordance with the AIM Rules for
Companies and on a basis consistent with the accounting policies
and methods of computation consistent with those set out in the
Annual Report and financial statements for the period ended 31
March 2021, except as described below. The Group has chosen not to
adopt IAS 34 'Interim Financial Statements' in preparing these
interim financial statements and therefore the Interim financial
information is not in full compliance with International Financial
Reporting Standards.
In preparing the condensed, consolidated financial statements,
management are required to make accounting assumptions and
estimates. The assumptions and estimation methods are consistent
with those applied to the Annual Report and financial statements
for the period ended 31 March 2021. Additionally, the principal
risks and uncertainties that may have a material impact on
activities and results of the Group remain materially unchanged
from those described in that Annual Report. The financial
statements have been prepared on a going concern basis. The Group's
business activities, together with the factors likely to affect its
future development, performance and position are set out in the
strategic report and Chairman's statement in the Annual Report and
financial statements for the period ended 31 March 2021.
The Financial Reporting Council issued "Going Concern and
Liquidity Risk: Guidance for Directors of UK Companies" in 2009,
and "Guidance on the Going Concern Basis of Accounting and
Reporting on Solvency and Liquidity Risks" in 2016. The Directors
have considered these when preparing the interim financial
statements.
The current economic conditions caused by the COVID-19 pandemic
have created uncertainty particularly over the level of demand for
the Group's products and services and over the availability of
finance which the directors are mindful of. The Board is confident
that the Group has sufficient liquidity to trade through to more
normalised trading conditions. The interim financial statements
have therefore been prepared on a going concern basis. The
directors have taken steps to ensure that they believe the going
concern basis of preparation remains appropriate. The key
conditions are summarised below:
-- The Directors have prepared cash flow forecasts extending to
December 2022. These show that the Group has sufficient funds
available to meet its trading requirements.
-- The Group's year to date financial performance has been
factored into the cash flow forecasts.
-- The Group does not currently have external bank borrowings,
or any covenants based on financial performance. The Group is in
the process of finalising a permanent credit line for growing the
ACS business and has secured the offer of a temporary short-term
facility in advance of this should it be required.
-- The Directors have considered the position of the individual
trading companies in the Group to ensure that these companies are
also in a position to continue to meet their obligations as they
fall due
-- There are not believed to be any contingent liabilities which
could result in a significant impact on the business if they were
to crystallise
Based on the above indications and assumptions, the Directors
believe that it remains appropriate to prepare the interim
financial statements on a going concern basis. However, the impact
of COVID-19 could still possibly result in revenue and resulting
cash inflows that are less and later than modelled potentially
creating a need to secure additional funding. The Directors
consider that such a severe, yet plausible scenario indicates the
existence of a material uncertainty which may cast significant
doubt on the Group and company's ability to continue as a going
concern. Notwithstanding that these factors represent a material
uncertainty that may cast significant doubt about the Group's
ability to continue as a going concern, the Board has a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis in
preparing the Annual Report and Accounts. The interim financial
statements do not include any adjustments that would result from
the basis of preparation being inappropriate.
Revenue recognition
Revenue represents the amounts receivable, excluding sales
related taxes, for goods and services supplied during the period to
external customers shown net of sales taxes, returns, rebates and
discounts.
When assessing revenue recognition against IFRS15, the Group
assess the contract against the five steps of IFRS15:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
This process includes the assessment of the performance
obligations within the contract and the allocation of contract
revenue across these performance obligations once identified.
Revenue is recognised either at a point in time or over time, when,
or as, the Group satisfies performance obligations by transferring
the promised goods or services to its customers.
The difference between the amount of income recognised and the
amount invoiced on a particular contract is included in the
statement of financial position as accrued or deferred income.
Amounts included in accrued and deferred income due within one year
are expected to be recognised within one year and are included
within current assets and current liabilities respectively.
The Group has a number of different revenue streams which are
described below.
Services Revenue
Includes a range of member and member-related revenues as well
as legacy software license revenue.
Member subscription revenues
AIM distributor members pay a monthly subscription fee for basic
membership which confers immediate access to a range of commercial
benefits at no additional cost to the member. Members may elect to
upgrade their membership to access a range of enhanced services
provided by AIM in exchange for an increased monthly subscription
fee. Subscription revenues are recognised on a monthly basis over
the membership period.
Other discretionary services
Certain other services are made available to AIM members on a
discretionary usage basis such as artwork processing services,
catalogues and merchandise boxes. These revenues are recognised
upon performance of the service or delivery of the product. For
example, catalogue and merchandise box revenues are recognised on
dispatch of the products to members.
Events and exhibitions revenues
AIM promotes and arranges events for AIM members and groups of
supplier customers to meet and build relationships. Revenue from
these events is recognised once the performance obligations have
been satisfied, typically on completion of an event or
exhibition.
Preferred Partner revenues
AIM provides services to vendors within the promotional products
industry whereby preferred partners are actively promoted to AIM
members via a variety of methods including utilising the AIM
technology platform, webinars, email communications and quarterly
publications.
Revenues are variable and depend on the value of purchases made
and services utilised by the AIM members from preferred partners.
Revenue is recognised over time by reference to the value of
transactions in the period. Payment for AIM's marketing services is
made by preferred partner customers on a calendar quarter or annual
basis.
An element of preferred partner revenue is treated as variable
consideration under IFRS 15 due to uncertainty over timing and
value. Revenue is recognised to the extent that it is highly
probable that it will not reverse based on historic fact pattern
and latest market information.
Software and technology services revenues
Revenues in respect of software product licences and associated
maintenance and support services are recognised evenly over the
period to which they relate. An element of technology services
revenue is dependent on the value of orders processed via the
Group's technology platforms. Revenue is accrued based on the value
of underlying transactions and the relevant contractual
arrangements with the customer. Revenue is constrained to the
extent that is that it is highly probable that it will not
reverse.
Merchanting revenues
Merchanting revenues arise when group companies contract with
customers to supply goods and includes revenues generated through
ACS affiliated members and other merchanting activities.
By far the most significant operation that carries out
merchanting is within ACS. Under the terms of the ACS contract the
AIM member affiliates act as independent sales representatives of
ACS to secure sales with customers. All transactions are
mandatorily processed through the AIM technology platform and
utilise ACS people and know-how to efficiently operate the back
office function. ACS bears the risk of the transaction as
Principal, determining the transaction price, performing credit
control and processing payments. The GTR of the full transaction is
therefore recognised as revenue, with the related costs of goods
supplied, freight and AIM affiliates selling commission recognised
as the cost of goods sold.
During the COVID-19 pandemic the Group established a Group Buy
scheme whereby it sourced products directly through its network of
preferred partners, which it sells to AIM members and adjacent
markets, where such sales do not conflict with the interest of
either suppliers or the AIM membership.
3. Segmental Performance
The chief operating decision maker has been identified as the
Board of Directors and the segmental analysis is presented in the
Group's internal reporting to the Board. At 30 September 2021, the
Group has two operating segments, North America, and the United
Kingdom.
To demonstrate the evolving nature of the Group's operations an
additional analysis presenting 'Service' and 'Merchanting' is
shown. Service revenues are derived from servicing our AIM
membership base and generating throughput with our contracted
Preferred Partners. Merchanting revenues are when the Group acts as
principal in the underlying transaction and therefore all GTR is
recognised as Group merchanting revenue.
Unaudited 6 months to 30 Sep 2021
Group North United Kingdom Central
America and Europe
GBP'000 GBP'000 GBP'000 GBP'000
Turnover
Services 2,821 2,224 597 -
Merchanting 3,107 3,107 - -
5,928 5,331 597 -
Cost of Sales (3,102) (3,071) (32) -
Gross Profit 2,826 2,260 566 -
Administrative expenses* (1,661) (1,224) (436) -
Operating profit before
central costs* 1,165 1,036 129 -
Central costs (658) - - (658)
Operating profit* 507 1,036 129 (658)
-------- --------- --------------- --------
Gross Margin Services 92% 92% 95%
Gross Margin Merchanting 7% 7%
* Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
Unaudited 6 months to 30 Sep 2020
Group North United Central
America Kingdom
and
Europe
GBP'000 GBP'000 GBP'000 GBP'000
Turnover
Services 2,234 1,655 579 -
Merchanting 2,209 2,209 - -
4,443 3,864 579 -
Cost of Sales (1,922) (1,883) (39) -
Gross Profit 2,521 1,981 540 -
Administrative expenses* (1,779) (1,327) (452) -
Operating profit before
central costs* 743 655 88 -
Central costs (469) - - (469)
Operating profit* 273 655 88 (469)
-------- --------- --------- --------
Gross Margin Services 90% 89% 93%
Gross Margin Merchanting 23% 23% -
* Operating profit before share-based payment charges,
amortisation of intangible assets, depreciation of tangible assets
and exceptional charges
4. Basic and diluted earnings per 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 Audited Unaudited
6 months 12 months 6 months
30 Sep 31 Mar 30 Sep
2021 2021 2020
GBP'000 GBP'000 GBP'000
Continuing operations - Loss for
the period (300) (1,093) (601)
Discontinued operations - Loss for
the period - (133) (117)
Weighted average number of shares
(number '000) 70,633 69,897 69,637
---------- ---------- ----------
Fully diluted weighted average number of
shares (number '000) 72,883 69,948 71,811
---------- ---------- ----------
- Basic and diluted (pence) - Continuing
operations (0.42) (1.56) (0.86)
- Basic and diluted (pence) - Discontinued
operations - (0.19) (0.17)
Share options that could potentially dilute basic earnings per
share in the future were not included in the calculation of diluted
earnings per share because they are antidilutive for the six months
ended 30 September 2021.
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END
IR FEIEDUEFSEDF
(END) Dow Jones Newswires
November 30, 2021 02:00 ET (07:00 GMT)
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