REG-Altitude Group PLC <ALT.L> Interim Results
30th September 2009 RNS announcements
com:20090930:Rnsd9361Z
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RNS Number : 9361Z
Altitude Group PLC
30 September 2009
Altitude Group plc
Interim results for the six month period ended 30 June 2009
Altitude Group plc ("Altitude", the "Group" or the "Company"); a marketing,
information and logistics solutions provider; announces its interim results for
the six month period ended 30 June 2009.
KEY POINTS
* Gross profit increased 4% to £3.87m (H1 2008 : £3.72m) on Revenue of £9.043m
(H1 2008 : £9.047m)
* Adjusted operating profit increased by 49% to £387,000 (H1 2008 : £259,000)
* Total operating profit decreased by 77% to £41,000 (H1 2008 : £180,000)
* Substantial cost reduction program complete, potentially saving £500k in
2010
* Strong performance from Information and Exhibitions businesses
* Board changes and major restructuring plans virtually complete
Colin Cooke, Chairman, commented:
"This has been a challenging period in our development as spend by major
corporate clients has reduced substantially in the last 12 months across the
wider promotional marketing sector, resulting in lower revenues for the
promotional marketing division. However, following the board changes earlier in
the year, we quickly reviewed business levels and the cost base associated with
each division and as a result immediately adjusted our plans to ensure we
limited any downside risk.
Revenues in this area continue to be soft. I am however encouraged by the
results from our Information and Exhibitions businesses which whilst not immune
from the economic climate, have managed their costs well to insulate them from
any reductions in yield.
The period also saw changes in respect of two senior board members and we are
currently in litigation with the previous CEO, Craig Slater. We have made
provision for legal costs associated with this and we are further reviewing
documents in relation to the financial reporting of the Group during the prior
period with the help of a forensic accounting firm.
The new senior management team have shown a level of dedication, hard work and
commitment in recent months that deserves thanks from all of us"
30 September 2009
Enquiries:
Altitude Group plc Tel: + 44 (0) 844 225 7070
Martin Varley - Chief Executive Tel: + 44 (0) 7912 599 012
David Smith - Finance Director Tel: + 44 (0) 7979 535 333
Daniel Stewart & Co plc Tel: +44 (0) 20 7776 6550
Simon Leathers
CHAIRMAN'S STATEMENT
I am pleased to report the interim results for the six month period ended 30
June 2009.
Overview
On flat revenues of £9.0m, the Group produced an adjusted operating profit
increase to almost £0.4m (2008: £0.3m), profit before taxation fell to £0.04m
(2008 : £0.18m) as a result of £276k non-recurring administrative expenses (2008
: £Nil).
The Group's cash position worsened to net debt of £0.3m compared to net cash of
£1.1m at the same time last year and shareholders' funds increased by £0.1m over
the same period to £5.1m.
Poor revenue generation affected the Promotional Marketing business in the first
half resulting in lower sales and a loss at the operating profit level, however
strong performance from the Information and Exhibitions business improved
overall gross margins as the mix shifted to these higher margin areas. New
account wins in the 2nd quarter of the year are starting to deliver some modest
improvements.
Operational overview
Six month period ended Year ended Six month period ended
30Jun09 31Dec08 30Jun08
Revenues
Promotional marketing 7.0 15.9 7.7
Information & exhibitions 2.2 2.9 1.6
Intra-group (0.2) (0.8) (0.3)
------------ ------------ ------------
9.0 18.0 9.0
------------ ------------ ------------
Operating profit before non-recurring items, amortisation of
customer
related intangibles and share based payment charges
Promotional marketing - 0.9 0.5
Information & exhibitions 0.7 0.3 0.2
Central (0.3) (0.7) (0.4)
------------- ------------- -------------
0.4 0.5 0.3
------------ ------------ ------------
Operating profit/(loss) after non-recurring items, amortisation
of customer
related intangibles and share based payment charges
Promotional marketing (0.1) 0.7 0.5
Information & exhibitions 0.5 0.3 0.1
Central (0.4) (1.0) (0.4)
------------ ------------ ------------
- - 0.2
------------ ------------ ------------
Promotional Marketing
Revenue reductions from some major clients affected the Promotional Marketing
business substantially. However, with the new Group board structure in place
from May onwards, we immediately moved the focus into the two areas of cash and
revenue generation from both inactive older customers and new prospects. The
team have risen to the challenge well and there are signs that customers are now
recognising the range of financial and efficiency benefits of working with our
group.
We have reduced costs in this area by an annualised total of c.£200k. The full
benefit will show in 2010 and alongside new account wins and the plans for
increased investment in the direct marketing team will leave us well placed to
show improved results next year.
Improvements in customer service and a greater marketing focus have led to our
AdProducts, business growing in this tough market by 18% compared to reductions
in most of its peer group. From the 2nd quarter a clear focus on stock reduction
was implemented, resulting in substantial reductions to date. The team are on
target to reduce stocks to proper levels by the year-end.
Information & Exhibitions
Following the success of the 2008 event, the 2009 National Show for the
promotional product industry achieved a 30% increase in visitor numbers that
delighted the exhibitors resulting in 65% rebooking for the 2010 event by the
close of the show.
The catalogue and magazine publishing part of the business had a very strong
start to the year where the sales are heavily weighted in the first half. There
has been some softness in booking for key catalogues for 2010 but cost savings
achieved are expected to mitigate any reductions in yield.
We have restructured the software business and redirected the team towards
focusing on customer satisfaction as the key indicator of success rather than
order intake. To address this issue, discounts are no longer being offered and
customers that were paying reduced rates are being moved to higher rates as
contract renewals arise.
Financial review
The Group has increased gross margins to 42.8% over the comparative period (H1
2008 : 41.2%) on flat revenues, due to an improved mix of sales from the higher
margin Information & Exhibitions business. Adjusted operating profit has
increased by 49% over the comparative period to £387k (H1 2008 : £259k) as a
result of improved gross profit and lower overhead costs. Profit before taxation
fell to £41k (H1 2008 : £180k) as a result of £276k non-recurring administrative
expenses (H1 £2008 : £Nil). These costs are a mixture of termination payments
and the costs of those terminated employees whilst employed within the Group
which, following the restructuring programme, will no longer be incurred.
The profit for the six-month period to 30 June 2009 is after a tax credit of
£78k (H1 2008: £25k charge). This represents the recognition of a deferred tax
asset which takes into account the cumulative unrelieved tax losses currently
held within the Group.
Cash performance has been below expectations with net debt of £0.3m at 30 June
2009 (31 December 2008 : net cash £0.4m). There is a renewed focus on working
capital management with a stock reduction plan in place within our Adproducts
business and a focussed effort to collect c. £300k of debt within the group
which is over 90 days old.
The annual financial statements for the year ended 31 December 2008 included the
recognition of certain prior year restatements, and those prior year
restatements have been reflected, where appropriate, within the comparative six
month period ended 30 June 2008 presented within this half-yearly financial
information. The prior year restatements are described within the statutory
accounts for the year ended 31 December 2008. The overall affect of the total
adjustments was to reduce the profit for the six months period ended 30 June
2008 to £157,000 from £248,000 and total equity and reserves as at 30 June 2008
to £4,953,000 from £5,912,000.
Outlook
With a major cost reduction plan now complete, a management team focused on the
strategy and clear on the key tasks needing to be executed, I am comfortable
that the period of flux within the business is now behind us and we are well
placed to deliver improved results.
Our team are aware of the challenges in the current market, they are clear that
cash is the only true measure of success and they are running their business
units with this at the forefront of their thoughts and planning.
Colin Cooke
Chairman
Consolidated income statement
for the six month period ended 30 June 2009
Unaudited Year ended Unaudited
Six month period ended 31Dec08 Six month period ended
30Jun09 30Jun08
As restated
£'000 £'000 £'000
Revenue 9,043 17,972 9,047
Cost of sales (5,175) (10,556) (5,320)
------------- ------------- -------------
Gross profit 3,868 7,416 3,727
Administrative costs (3,827) (7,451) (3,547)
Adjusted operating profit 387 450 259
Share based payment charges (29) (44) (37)
Amortisation of customer related intangibles (41) (95) (42)
Non-recurring administrative expenses (276) (346) 0
------------- ------------- -------------
Total operating profit / (loss) 41 (35) 180
Finance income 1 7 3
Finance expenses (6) (5) (1)
------------- ------------- -------------
Profit / (loss) before taxation 36 (33) 182
Taxation 78 140 (25)
------------- ------------- -------------
Profit / (loss) for the period 114 107 157
------------- ------------- -------------
Profit / (loss) per ordinary share :
- Basic & Diluted 0.30p 0.28p 0.41p
There were no recognised gains or losses in the period other than the profit for
the period and therefore no statement of recognised income and expenses is
presented.
Consolidated statement of changes in equity
for the six month period ended 30 June 2009
Share Share Retained
Capital Premium Earnings
£'000 £'000 £'000
Opening 153 5,293 (536)
Result 114
Share based payments 29
Closing 153 5,293 (393)
Consolidated balance sheet
as at 30 June 2009
Unaudited Year ended Unaudited
30Jun09 31Dec08 30Jun08
£'000 £'000 £'000
restated
Non-current assets
Property, plant & Equipment 583 721 869
Customer related intangibles 133 174 76
Intangible assets 2,621 2,621 2,296
3,337 3,516 3,241
Current assets
Inventories 1,601 1,825 1,659
Trade and other receivables 3,801 3,964 3,211
Current taxes 290
Cash and cash equivalents 431 1,139
5,402 6,220 6,299
Total assets 8,739 9,736 9,540
Current liabilities
Bank overdrafts 261
Trade and other payables 3,061 4,392 3,885
Income taxes 434
3,322 4,392 4,319
Long term liabilities
Trade and other payables 67 59 36
Deferred consideration 297 297 147
Deferred taxation 78 85
364 434 268
Total liabilities 3,686 4,826 4,587
Net assets 5,053 4,910 4,953
Share capital 153 153 153
Share premium 5,293 5,293 5,293
Retained earnings (393) (536) (493)
5,053 4,910 4,953
Consolidated cash flow statement
for the six month period ended 30 June 2009
Unaudited Year ended Unaudited
6month period 31Dec08 6month period
30Jun09 30Jun08
£'000 £'000 £'000
Operating activities
Profit for the period 114 107 157
Depreciation 164 343 171
Amortisation of intangible assets 41 95 42
Net finance income/(expense) 5 (2) (2)
income tax charge/(credit) (78) (140) 25
Share based payment charges 29 44 37
Operating cash flow before changes in working capital 275 447 430
Movement in inventories 224 (69) 97
Movement in trade and other receivables 163 1,129 1,882
Movement in trade and other payables (1,308) (1,307) (1,811)
Operating cash flow from operations (646) 200 598
Interest received 1 7 3
Interest paid (6) (5) (1)
Income tax received/(paid) 0 (60) (32)
Net cash flow from operating activities (651) 142 568
Investing activities
Purchase of property, plant & equipment (26) (122) (97)
Acquisition of trade and assets 0 (283) 0
Net cash flow from investing activities (26) (405) (97)
Financing activities
Net proceeds/(payments) of hire purchase contracts (15) 42 16
Net cash flow from financing activities (15) 42 16
Net decrease in cash and cash equivalents (692) (221) 487
Opening cash 431 652 652
Closing cash (261) 431 1,139
Responsibility statement
The Board confirms that to the best of its knowledge :
* The condensed set of financial statements has been prepared in accordance
with IAS34 'Interim Financial Reporting' as adopted by the EU;
* The interim report includes a fair review of the information required by :
DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the six months ended 30 June 2009 and
their impact on the condensed set of financial statements, and a description of
the principal risks and uncertainties for the remaining six months of the year;
and
DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the six months ended 30 June 2009 that
have materially affected the financial position or performance of the entity
during that period;
The directors who served during the period are:
Colin Cooke (Non-Executive Chairman)
Keith Willis (Non-Executive Director)
Barry Fielder (Non-Executive Director)
Martin Varley (Chief Executive Officer)
David Smith (Group Finance Director)
Craig Slater (Chief Executive Officer) [Resigned 20 April 2009]
Tim Sykes (Group Finance Director) [Resigned 20 April 2009]
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half yearly financial information for the half year ended 30
June 2009 has been prepared in accordance with IAS 34, 'Interim financial
reporting' as adopted by the European Union.
The consolidated half yearly report was approved by the board of directors on 16
September 2009
The financial information contained in the interim report does not constitute
statutory accounts and does not include all of the information and disclosures
required for complete financial statements. Statutory accounts for the year
ended 31 December 2008 have been filed with the Registrar of Companies. The
auditors' report on those accounts was unqualified, did not include a reference
to any matters to which the auditors drew attention by way of emphasis without
qualifying their 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
2009 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.
Accounting policies
The condensed, consolidated financial statements in this half-yearly financial
report for the six months ended 30 June 2009 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 2008, except as
described below. In preparing the condensed 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 2008.
Presentation of financial statements
IAS 1(revised) Presentation of financial statements is mandatory for the first
time for the financial year beginning 1 January 2009. The standard requires that
all owner changes in equity are presented in the consolidated statement of
changes in equity and non-owner changes in equity to be presented in the
consolidated statement of comprehensive income. The Group adopts this policy and
there is no impact to the financial statements other than presentation. The
Group has elected [to present one statement of comprehensive income/separate
income statement and statement of comprehensive income].
Comparative information has been re-presented so that it is also in conformity
with the revised standard.
Operating segments
IFRS 8 Operating segments is mandatory for the first time for the financial year
beginning 1 January 2009. The standard requires that the segments should be
reported on the same basis as the internal reporting information that is
provided to the chief operating decision maker (CODM). The Group adopts this
policy and the CODM has been identified as the Chief Executive Officer. The
Chief Executive Officer considers there to be two operating segments, namely,
promotional marketing and Information and exhibitions. Internal reports
reviewed regularly by the CODM provide information to allow the chief operating
decision-maker to allocate resources and make decisions about the operations.
* 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
Six month period ended Year ended Six month period ended
30 Jun09 31Dec08 30Jun08
Earnings (£000) 114 107 157
Weighted average number of shares ('000) 38,203 38,203 38,203
Fully diluted weighted average number of shares ('000) 38,605 38,605 38,913
Fully diluted profit per ordinary share (pence per share) 0.3p 0.3p 0.4p
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The company news service from the London Stock Exchange
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