Altutude Group; 2018 results and update

Altitude Group: (ALT.L, AIM All-Share, Market Cap £80m, 116p, 3.7% of JIC Portfolio and 0.0 of JIC Top 10)

Results for the year ended 31st December 2018.

The trading statement a month ago said that results were in-line with expectations. They look a little behind to me, with ShareScope showing revenue forecasts of £6.9m and an expected loss of £1.4m. This might all be slightly irrelevant given the acquisition of AIM in January. It is still early days, and although we have been given some stats on growth this year, I’m not sure it will be enough to satisfy the market. I previously said, “as long as management execute the strategy well, the shares look very cheap”. That remains the case, but I don’t think one can glean enough information from today’s announcement to be confident that the potential will be realised. The shares had a good run ahead of today’s results, and I would be surprised if they don’t give up some of these gains to profit taking. In summary, the jury is still out. I wouldn’t buy at this level. It deserves more time, however. Holder!

Revenues of £6.6m, up from £6.1m, adjusted operating loss of £0.8m compared to a profit of £0.9m in the previous year, Loss before tax of £2.8m v 2017 profit of £0.1m.

At 30th April it had net cash of £3.8m.

Earlier this year it acquired AIM in the US for $5.0m, funded by a placing of shares at 68p, which raised £9.0m. I covered the rationale for the deal at the time.

It says, “Just four months post the acquisition of AIM, we are very pleased with progress, especially with both supplier and member adoption. We look to the future with confidence.” There are some figures to back this up: It has signed up 149 supplier partners, with the majority effective from Q2 with first billings commencing last month; Sales order throughput totalled more than $31.0m in the first five months of 2019 with the weekly average doubling from $1.0m in March to over $2.0m in April. It has also created and launched over 2,900 live distributor member websites.

AIM membership continues to grow since its acquisition by Altitude. 191 members have been added, taking the total to 2,108. Aggregate member revenues are estimated at $1.9bn.

Peter Hallett, non-executive chairman. 

“The Future

The business has been through significant change over the last 18 months and is now positioned for rapid growth. We have put together a strong management team to drive that growth and acquired AIM which provides multiple opportunities and enormous potential. In the first 4 months since the acquisition we are seeing that potential starting to be realized.”

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