Altitude Group (LSE:ALT) — Final Results

0:00 Good morning, and welcome to the ALTITUDE GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Nikki Stella, CEO. Good morning. Good morning. Thank you for the the introduction,

0:33 and we are thrilled to be with you to today to run through our full year 2024 results. And with that, we can just skip quickly into some, brief introductions on my background and, my partner today in the presentation, Graham Feltem, our CFO. My name is Nicole Stella. Many of you know me. Nineteen years executive level experience in the promotional product industry, that corporate branding, side of the business, as well as now having a a great deal of higher education, experience, a track record of identifying and capitalizing on new revenue opportunities, sources, launching new products lines and revenue, and driving a profitable growth.

1:18 I'm experienced AIM PLC CEO and a board member and have been named to the ASI ASI Power 50 most influential in a promo industry. I think that this is for five years now. So, this is an industry publication, that profiles the leadership in the in the marketplace. And with that, I can pass over to Graham Feltem, our chief financial officer, who is with me here today. Hi. Nice to nice to meet everyone again. So I'm qualified chartered accountant with two

1:51 thousand, Experience at AIM, PLC c CFO and board member. I've experienced a number of industries, that's tech services, FMCG, and manufacturing. I've also worked in different structures such as private equity and going through a significant transaction while I was at Safety Kleen between Warburgs and Apex, but with relevant experience with a with STATPRO on market. The I've had a I've got I've had a very broad range of financial experience in a number of different different aspects as well throughout my career.

2:31 Wonderful. Thank you, Graham. So with that, we'll go through our results in detail with you today, and we are are looking forward to running through the numbers with you. So the key financial highlights for the year, we're thrilled to share that we had a 33% increase in revenues to £24,000,000 25% increase in gross profit to £10,400,000 Our group adjusted operating profit beat expectations in the market to 2,400,000, a 30% increase. And our adjusted basic earnings per share increased 60% to 2.61 p. Our cash balance at the year end, and this was a year that was filled with activity and launches and new gear shop launches and investment in systems.

3:21 So we ended our year or we started our year last year at £1,200,000 in the bank, and we ended the year a year full of activity with £1,200,000 in the bank. So we're we're thrilled with the the results that we achieved this year, and we're looking forward to going through everything with you today. So, for me, this is probably one of the most vital and important, slides of the entire presentation today. So it it really speaks to what we've been up to, what we are doing day in and day out, and it also showcases that hockey stick growth, that scalable growth that we've been talking about for the business over the course of the last few years. So you'll see that step up climb in in scaling of the business from f y twenty one straight through to f y twenty four. So what have we been up to? Most vitally and most importantly, we've been selling. We've been closing contracts, selling on campus pro our campus programs, our affiliates and and their sales in the promotional products industry, and then our services programs with distributors and suppliers.

4:31 All of these things have been churning, and we have a great group of people on each one of those teams that are ensuring that we are addressing the markets that we serve each and every day to drive those sales and close those contracts. Also, vitally important to the business is strong financial health. So while we have been experiencing this exponential growth year over year, we also have a financially strong foundation on the financial health of the business that is profitable and that we are building trust and a track record for future growth. Further, we're investment in pipeline and partnerships. We have wonderful relationships with our partners who are collaborative with us across all areas of the business, whether that be on a college campus or whether that is with our supplier partners or our distributor affiliates or members. We have great relationships, and it really is a part of the core culture of the business to continue to scale and grow those relationships in a collaborative fashion.

5:32 And then gearing for greater efficiency. We have been growing fast. And so ensuring that we are able to manage the business from an operational gearing and efficiency standpoint, it's imperative for us to continue to drive greater efficiency through systems. And we've been working on system transformation throughout the year. Strengthening core relationships, retaining and deepening those current relationships so that we have that strong foundation that has empowered us to grow throughout the year. But this slide is really such an important slide for for us to share with you at the forefront of this event today because we are in every aspect of the business, foot on the gas, accelerating the programs, and driving, growth on behalf of ALTITUDE and its shareholders.

6:23 So who are we? We are a diversified portfolio group. We are the leading end to end solutions provider for branded merchandise across a variety of sectors from the corporate promotional products industry and print vertical markets to the higher education sector, which we found to be a disruptive adjacent market that we could easily step into and gain market share.

6:49 So how do we break up our revenue? We do this in two ways. Our services, which is really our b to b business services that we deliver back to our distributor members as well as our supplier partners. And we do this through delivering a a series of of services that we'll walk through in just a bit, but running from software applications, membership subscriptions, technology platforms, and our supplier partner programs. All of these things comprise our services program. And then to the right, we have our merchanting, where we are the principal in the sale of the promotional product. And this includes both our AIM Capital Solutions, ACS affiliate program, and our adjacent market program, which is our gear shop solution, which are both driving that growth for the for the business.

7:41 Always, always, always, technology is at our core. We have a proprietary technology platform, which is used throughout the business, whether that be from our Gear Shop solution straight through to our distributor members, our supplier partners as well as our affiliates. So our proprietary technology platform really underpins everything that we do, from our product search engine, our order management tools, our procurement process that we have that is smooth and efficient for our distributor members and affiliates, we've got design applications and our ecommerce enabled sites. So all of those things are proprietary to us, and they are first in class. They are best in class solutions. We talked about a relationship with Fully Promoted last year that we were able to promote our technology and membership program to this franchise organization.

8:34 They reviewed 20 different technology platforms, and they selected ours as their premium program and technology offer for all of their franchisees. And this year, we just won a vendor of the year award for our work that we've been doing with our partner, Fully Promoted. So you can see that our technology is best in class. It's top notch, and it drives that efficiency in the ordering process for distributors and for our gear shops alike. Additionally, we are always reviewing new technology and innovations and artificial intelligence. It presents a great opportunity for us to deliver new tools to drive efficiency and scale. And these are programs that we're working with now. Our teams are working within AI tools and something that we're always investigating new innovative processes and tools through technology.

9:28 So the markets we serve, and we'll run through each one of these to help delineate where we really sit within the industries that we serve. And what does that market opportunity really look like? It's it's quite large for us, and it's one that we believe that we can gain market share substantially. So the corporate market, and we've talked about this quite a few times throughout the year. So some of you may have heard this run through in terms of the promotional product industry. It's $26,000,000,000 in The US alone, about 1,000,000,000 here in The UK. So that promotional product is anything that you can put a logo on, whether that be an umbrella, a baseball cap, a T shirt, a notebook, a padfolio, or a drinkware piece. So that that market in The US alone is 26,000,000,000. It's highly fragmented, and it's comprised of about 3,000 suppliers and 23 distributors.

10:20 We'll talk about how our business sits within that base, about 10% of the marketplace. But these 23,000 distributors serve a very broad customer base spanning from very small businesses to large corporates like Amazon, Chase Bank, the New York Yankees, and nonprofit organizations alike.

10:44 Then additionally, we serve the collegiate space. So given our length of experience in the corporate branding marketplace, this gave us a very simple step into the retail higher education collegiate market. Understanding the supply chain, understanding the artwork nuances, understanding everything about that type of branded merchandise business made this a very simple leap for us. So we estimate this this market to be about 12,000,000,000 with 4,000 campuses and two primary legacy competitors where we are seeing that great opportunity for growth for us to go in, disrupt, and grab market share. So combined, the group has an addressable market size of nearly 40,000,000,000.

11:34 And we are, as I mentioned previously, foot on the gas, going and growing and scaling the business through through all of these opportunities, enabling us to scale the business for future growth. This is a quick run through on the supply chain. I know that I've done this quite a few times, but it is always really good to have a refresher on this. How does that supply chain work within the markets that we serve? And so in that bottom gray column, you see that overseas manufacturer. That manufacturer exists primarily in China, Bangladesh, Mexico, Vietnam, and they are the the the manufacturers of the product itself, whether that be a hoodie, a t shirt, a baseball cap, or a pen, pet folio, or a drinkware piece.

12:22 Then in that blue column, you have your supplier, and that supplier is inventorying a myriad of thousands and thousands, 10,000 SKUs, where they can pick and pull. And on their factory floors, they have decoration equipment where they can put that logo onto that product. Then in that center column, you can see the three channels that that ALTITUDE GROUP has access to in order to scale and grow the business. That is your distribution channel. And so you've got your red column, which is your independent members of AIM. You've got your green column, which is our affiliate program in the merchanting side of the business, ACS affiliates. And then you've got our gear shop, which is our collegiate program.

13:09 So what happens is when, an order comes in through any of those three columns, that order is pushed to our our partner, our supplier partner, and that product is then produced and decorated and then blind shipped out to either that corporate, client up in that top, yellow corner or the collegiate, gear shop where it's sold then to a faculty, student, and the community campus the campus communities that we serve.

13:40 So efficiency and scale. How do we make money? This is probably one of the most important questions. We always start with the foundational business, which is our services revenue. And this is the businesses that has enabled AIM or enabled the AIM and ALTITUDE GROUP to be able to spin off the gear shop solution, the affiliate partner program, all of these different things because of the strength of our foundation within the AIM business and our services businesses. So what do we offer to a distributor in the services program? We have preferred pricing benefits. That's where they receive technology services, innovative, offerings in terms of products. We can deliver back, freight programs and shipping discounts, insurance, health insurance programs, community and networking opportunities, educational and professional development.

14:36 And then they receive that end quantity pricing where they can purchase a product, maybe 50 or 25 pieces of a product for the same price that you would purchase 5,000. There's great deal of of benefits to an independent distributor who becomes a member of AIM who utilizes our services and our technology platform. And how do we make money? We make money through subscription fees, through a broad range of of services, whether that be marketing, supplier relations services, negotiated group discounts, events and exhibitions, etcetera. So in 2024, we saw an increase in our revenues of 5.6%, to £8,700,000. And we'll talk a little bit about that 5.6% in a moment after we've gone through the supplier side of of the services program.

15:27 So then you've got our services preferred program, which is that blue column. So that business that is bringing in product from overseas, they are warehousing that product, picking, pulling it, and decorating that upon the order from, the distributor the distribution channel. What do we give to a supplier that would make them want to participate in our network? Our distributor network of AIM membership is about 10% of the market, is massive. When you think about that $26,000,000,000 marketplace, you know, then you've got 23,000 distributors. We've got access to nearly 10% of the market. And so what do we give to suppliers? We give them visibility and access to our distribution channel, top level visibility on our search engine within our technology platform, preferred technology integrations so that when a distributor comes onto our platform, they will not only find our preferred vendors first, but then we can push that order straight through to the vendor. The the distributor is able to see, inventory.

16:33 They're able to see shipping statuses. There's a myriad of different tools that are all integrated into our tech stack that they have access to because they're a part of our preferred vendor network. They've got guaranteed participation in publications, catalogs, educational product programs, and merchandise campaigns, and then expanded access to the AIM community via our events and social media campaigns. And so how do we make money from our supply preferred partner program is via a six a three to 6% transactional fee on every order that goes through our membership, as well as our affiliate programs, and even our gear shops who are purchasing those those products via our supplier partners. And so in 2024, again, I mentioned we saw a 5.6% increase across our services revenues.

17:25 And so that number may seem low, when you think about a 5.6% increase, but the industry as a whole experienced a massive boom in 2023. So that come out of COVID period, we had this massive boom time period, and then we saw a flattening of growth in the corporate promotional products industry. That industry, as a whole, reported 1.2% growth. So our AIM programs and business, the services business, outpaced the entire industry by quite a bit, achieving 5.6% growth in the year versus 1.2 for the greater industry itself.

18:11 So then we flip over to our merchanting program. So our affiliate program is that spin off from our AIM membership. So we always talk about why would an AIM member potentially leave our membership program. Oftentimes, it's either because of retirement or some other reason where they're they're leaving the industry, or they're looking for that affiliate type of program that delivers back administrative assistant help and and empowers them to be the strong salespeople that they are and not being focused on the detailed financial invoicing and all the variety of other things that they need to do from an administrative standpoint. So what do we do? We focus our our efforts and energy on recruiting high caliber salespeople to join us as, affiliates in our affiliate program.

19:03 That utilization of our technology is end to end, and it's mandatory. And it provides scalable expansion and growth back to the group. This is one of those areas where we always talk about it's a high volume play. So the more affiliates we have, we are scaled for the business. We are ready to go and grow, and we're seeing that that scalability happening across our affiliate program. And we'll talk a little bit about the successes that we've seen for the affiliate program in our f y '24. But so how do we make money? We derive revenue from the sale of the promotional product directly. It's procured via our affiliates, and we, who act as our sales agents. And along with our dedicated team, our affiliates utilize our technology, our preferred partner network, and efficient processes and financial expertise to deliver increased sell sales levels and profitability.

19:58 And then we have our adjacent market program, that one program that we stepped into, really just recently, our gear shop solution in the collegiate market. So what do we do here? We provide specialist expert expertise on branded merchandise with access to a full product range from our preferred partners. We go in. We provide ecommerce solutions, marketing solutions, and a modern innovative space to drive brand awareness. And we have specialty partnerships, which we have actually built out and and gained more steam on in delivering more relationships with course material textbook providers. So partnerships, brands, we spoke last year about our relationships with Nike,

20:44 Under Armour, Champion, Apple. So we have all of these wonderful partnerships where we can go in, and we can derive revenue from long term contracts where we are actually selling product straight through to the campus community and through that higher, adjacent higher education collegiate market. So in 2024, our merchanting revenue grew by 55.8%, £15,300,000. So we're seeing that scale of the business, is happening every single day, with all the campuses, communities that we meet with, day after day, in terms of of bringing on, new campus programs. This is a quick case study in our gear shop. And so one of the stores that we took over, you can see we changed the the flooring. We brightened it up. We've got much more apparel. And you can see that in, compared to f y twenty three to twenty four, we had an increase in apparel sales of six times.

21:48 So we see this in the campuses that we, that we sign on in that first year. We see that we we have learnings on the campus community where we're actually empowered in that first year to really learn a lot about the the campus that we're serving, meeting the faculty, learning about what makes them tick, and then really being able to deliver a variety of different services and products, direct to that campus that attends to their specific needs. This makes us very different from the incumbent companies, and, and we offer a myriad of of fashion pieces and a a variety of different products as well. Again, our technology is at our core. It is used across every area of our business, providing efficiency, effectiveness, experience, and trust.

22:38 Our platform is second to none. We have invested in platform development and growth, and we are very proud of, as I mentioned previously, being named vendor of the year, being selected above all other companies in the marketplace that are delivering tech

22:56 stack out to distributors. So we're very proud of that. And we derive revenue through group SaaS technology fee revenues across the marketplace, ecommerce solutions, and via delivering of our ERP system.

23:13 So what's new? What are we doing today that has changed the business and helped to drive this growth? We've experienced disruptive market share growth with 19 campus programs across 22 locations. We delivered 13 Gear Shop contracts in FY 2024 on campuses across The U. S. With our innovative specialty higher education solution and delivered 600% growth. I I have to share with you, just an a quick anecdotal, story around somebody that I met with and spoke to, across the marketplace. So they were providing independent services and setting up shops. They were a textbook and and branded merchandise provider. And they said over ten years, they delivered 10 programs.

23:59 So that was one win a year. We have actually seen disruptive growth. We're being seen by those legacy providers in the space as a threat to them. And we are out there pitching and going and growing the gear shop business. We've got seven gear shop wins thus far, and we've actually experienced an elongated process this year where we are seeing more contracts coming up for tender even throughout the summer months and into the autumn and potentially through the winter season. So we've not seen a stop in June as we may have expected. It has continued on, and we still have a robust pipeline of potential gear shop wins for FY '25 as well as into FY '26.

24:46 Our current position, 45,000,000

24:48 total lifetime contract value, 19 Gear Shop contracts, 9,000,000 annualized average expected revenues comparatively to FY twenty three where we had five active contracts and 1,000,000 in in annualized revenues.

25:05 And so what's new on the services side?

25:09 Our ACS oh, I'm sorry. That's our merchanting side. Our ACS affiliate program continued to add significant revenue growth. We increased our annualized expected revenues in f y twenty four by 32% to 18,000,000, above the 13,600,000 in FY twenty three. Our full year '25 is off to a fast start. We've already added 2,000,000 in recruitment to reach $20,000,000 in annualized revenues. We've had significant progress in systems integrations and processes

25:40 via the installation of a new and innovative technology platform that will help drive greater scale and operational gearing, and it will it will prevent us having the need for a greater overheads. We've been successful in driving increased purchasing through our VIP partners by holding specific ACS and VIP partner events, as well as, utilizing our our VIP partners in every facet of the business. And that's what really helped to drive, that 5.6 increase, above the promotional products industry, outstripping them the market at that 1.2%.

26:19 So the financials and how we performed. I'll hand off to Graham, and he can run through the financials for you now. Hi. So the p and l, it reflects a significant, yeah, year of growth and evolution that the group has been through. We've increased revenue by 33%, and that's mainly driven by merchanting with 600% growth in the gear shop. We'll go into more detail in the following slide. The expected there's an expected drop in gross margin of three percentage points due to the merchanting mix, which, again, we'll see on the next slide, to 43%, Although the value has increased by 1,800,000. The adjusted operating profit goes has increased by 30% constant currency to 2,400,000, and then constitutes an increase in in expected against the expected market forecast.

27:17 PBT is at breakeven. So we've transformed as a business. We've transformed our sales structure. We have we we have delivered an ERP project that delivered in in the early months of FY twenty four for the gear shop '25, apologies, for the gear shop. We have gone live with multiple gear shop contracts, which then has an impact on these. We we defer the setup cost of those over the life of the contract over and that's usually within a five or seven years depending on each individual contract. And we have an increase in the share based payment cost.

28:00 Down below PPT, then we have an improved tax position, and that's where we see the u the utilization of of all of our losses that we have, so coming up in on the horizon. So we're therefore recognizing some deferred tax assets and an unwind of a deferred tax liability has improved that situation. Our earnings per share has increased by 78% to 0.98 p, and adjusted EPS has increased by 60% to 2.61 p. And then we go into the segmental position. So you'll see here that the services, as as Nick has discussed, has grown by 5.6% on the revenue side versus that market of 1.2.

28:46 Similarly, in the previous year, we had significant upside against the market growth as well. We have a very high consistent gross profit margin of 90% fall through. On the merchanting side, then you see that the 56% sales growth, again, six times gear shop growth and continued ACS growth. You get the full year impact of the previous year's growth plus then the the impact of the growth during the year. The improvement of the gross profit margin by 7% to 16% is that margin from the gear shop contract. So you got that mix effect there where the gear shop contracts, you know, would would or the gear shop generally gives a more a 40% type of margin compared to the affiliates on a circa 8%. And we actually had a question which we can address right now. I think it's really important we can we can address the increasing margins in each segment of the business. And so you can see on this slide, number one, the high high gross profit margin on the services business, 90%.

29:59 So so that is a a strong gross profit. And then on the merchanting, this was a a much discussed point, I believe, last year where we had that 9%, really driven by the affiliate model, which now we see. And and we discussed this last year, I believe, in the investor meet session where I talked about as we see the university gear shop programs increasing, we'd see see the sales of the gear shops expanding, then that would start to level off and and scale up that gross margin in the merchanting line. And it's done exactly as we expected it to do. And I would say that as we you know, the affiliates, they continue to scale. We've got a great team on our affiliate sales recruitment side, so they continue to scale. And our gear shop side continues to scale, and we've got a great team over there addressing that market and selling into those programs. So we'll continue to see a mix of of margin, but you can see it's starting to rise exactly as we had shared and anticipated that it would from f y twenty three to f y twenty four.

31:04 And and, yeah, on the affiliates side, we've got the the increase in that annualized revenue have gone up 32%, and that's a mix of organic and recruitment growth within that within that annualized expected revenue. So we did see a we did see a flattening off in the market as we as we've raised and discussed on the services side. The our affiliates play in that market as well. And therefore, there was a there there was a, you know, there was that impact on that recruitment, but we also gained that organic growth during the year. We've had a strong start that it's a it's a they're a little bit like buses in the way of modeling. They don't come in even, you know, couple every month.

31:49 So that we what we saw was that there was quite an impact of new affiliate signing towards the end of f y twenty four. And then at the beginning and up till now, you know, it's still going on the on f y twenty five on those signing up and those recruitment of new affiliates, which is a which is a a helpful yeah. It's just an indication of that market and that confidence and people wanting to move and change, and that's evolving as we as we go through. And I think that there's also that question around revenues.

32:19 Our revenues in the RNS. And so that really is a mix of affiliate versus gear shops. And I think that in that modeling, exactly as Graham mentioned, you see a higher rate of the gear shops and our affiliates programs. There's just that mix there that impacted the revenues. Yeah. And then if we put ourselves back in the shoes a year over a year ago now, then where we were sat, we'd we'd have we had those five gear shops of a million recurring revenue or annual annualized expected revenue. And then the and we had the affiliates who had doubled from from excuse me. I'm using round numbers, but 7,000,000 to 14. And that was the position that's where that's where our brokers kind of, you know, pegged our growth. That that profile has been different as we've then panned out through the year.

33:14 However, we've been able to deliver higher profitable growth on a on a slightly lower sales number. And that really is that mix of Gear Shop versus affiliate. So that really covers that off in terms of beating expectations on adjusted operating profit and then the revenue number. Absolutely. So on the group side, there's 33% up in sales, 1,800,000 additional group gross profit.

33:42 And we've had some savings in central costs, and that all results in that 23% increase in adjusted operating profit year on year. So we've moved to our cash flow. So it's very important to note that in this year, significant change and delivery and investment in our future that we have become we are still cash generative.

34:08 So we started the year at 1.2. We've ended the year at 1.2. And that's after increasing our investment in inventory for going live with those gear shop contracts. We've had an improved timing for our supplier revenues and our ACS affiliates, yeah, receivables, and we've had an increase. And and, you know, really that if we then skip to the investments line, which has the is the bigger bigger other variance, then our our investments of 1,800,000, which is naught point five of GearShock,

34:45 ERP of naught point two, and development of 1,100,000. So with after even after that investment, we're we're cash generative position. We have also doubled our facility, our main facility. So our main facility was 1,500,000 previously dollars,

35:05 and that's doubled to 3,000,000. We're probably about 90% utilized at at certain times of our cash phasing during the year of that facility only for a matter of a couple of months. And then at the year end, we were completely undrawn. So it is a working capital facility to support that growth in most things, which we've very explicit about over the years.

35:37 The balance sheet. So we look at this. Most of this has been discussed in the way of cash flows and the movements. So really, can see that our net asset position is growing again, and it's grown by 13%, and cash is held strong. You'll see that some of those investments in the likes of the gear shop and the ERP and the development will come in as a mix of intangibles and tangible fixed assets when you see that in the more detailed annual report.

36:11 And yeah. And and so that will be reflected there.

36:20 So our aspirations and our outlook. We are are and continue to be very confident in the growth of the business. FY 2024 was a continuation of the accelerated growth we achieved in FY twenty twenty three. And again, we achieved record breaking results for the group. It was a year that required intense focus on delivery in new markets.

36:45 We shared with the market that we would be entering these 13 gear shops. And I remind you, that company shared with me that they did 10 over ten years. We did 13 in three months' time. So intense focus on delivery in new markets, ensuring continued scale within our core industry, our corporate, markets, which we have wonderful teams. So one of the things that I did when I joined the business was to instill and install great people with great experience. Through my nineteen years of experience, I I see talent. I recognize that talent, and I was able to put them into core seats in the business. So

37:24 they are focusing on all areas. There's never any sort of shift in in, in attention from one area to another. We are pushing our services. We are pushing our affiliate program, and we are pushing our gear shop solutions every day, twenty four hours a day. And we are intensely focused on these new markets to ensure that continued scale within, within the industry. FY twenty five has started strong

37:49 and, with that commercial growth in merchanting and and our services continuing, and we continue to outperform the wider industry. So these are really, really important elements, and we remain very confident about our growth potential and our continue to trade in line with market expectations.

38:09 And we retain our high growth ambitions. We're confident in our ability to scale and expand the business. The management team continues to be wildly focused on scalable growth in this new financial year and accelerated compounding future growth. So we're focused on delivery and committed to achieving our aspirations to build a $100,000,000 business.

38:34 And with that, we can take a look at the questions. And please note, we'll answer off as many as we can today. And if there's anything that we don't have answers to or we run out of time, as always, we will be sure to follow back up with you post the event today. One of the things I think we should do, Graham, is go back to that slide seven, and we can leave that just so that can be present in seeing the work that we've achieved in FY '24. It's really important to understand how much work, focus. And one of the questions here talks about impressive growth throughout the year. So our foot is on the gas across all areas of the business. And there was a question about slowdown in momentum on the Gear Shop solution.

39:27 Absolutely not. We continue to be wildly focused on scaling the Gear Shop program. As I mentioned previously, we have a pipeline, a robust pipeline across f y still for f y twenty five and into f y twenty six. The one difference I would say that we're seeing, there was a question about a couple of contracts that were lost, is we understand these contracts better, and we understand the businesses better when we're going into them. So there was a couple of programs that we exited because

40:03 they weren't good programs for ALTITUDE. So ALTITUDE always comes first, and ensuring that we have a strong financially healthy business is why, we determined that it made sense for us to exit those contracts. But have we lost momentum? Absolutely not. Are we 100% all in on our gear shop solution and we believe that we can continue to disrupt the market? We absolutely do. So let me take a peek at some of the additional questions here for you folks today. There is a question about how many students in total do the current GEAR shop contract serve. I will need to pull that data for you. So I'm gonna mark that question as answered, and we will get back to you with a a response on that one.

40:53 It's many. It's many, many. So our our college campuses range from 26,000 to to 3,000 across the, campus communities that we serve. So we'd have to sit down and run through those numbers for you. You're achieving impressive growth in campus locations. What is the growth ceiling in this area, and what are the main challenges in in replacing incumbents or their current current arrangements? I think that when we go to RFP and when we are presenting, we are always up against those incumbents. So I believe that, we are winning, and we are beating the incumbent companies. Whenever we win a contract, we're going against, in this David and Goliath environment.

41:39 We are David, and we are going after Goliath. And we when we win those contracts, we are beating out two very, very large, competitors. And so we're proud of of our achievements and and our ability to compete and beat, those incumbents. So what is the growth ceiling? It's it's hard for me to to determine that. I think that, we are responding to as many RFPs as we possibly can. And I don't know, Graham, if you have any thoughts on that one. So the growth ceiling is is specific. So at the moment, I wouldn't right now, I wouldn't see one because Right. Because, really, it's that shift of the industry or the shift of those universities. There's over the last six to ten years, there's been there's been a a shift to digital, to online.

42:30 We are disruptive in this area with the collegiate collegiate with the with the universities. We offer we offer an online. We can offer a digital, and we can also offer a a physical bookstore with our partners, with our book partners. We've expanded on those strategic partnerships from one to four, which actually covers most of the book. Yeah. And previously, our our textbook partner offering was simply an online solution. And and so as Graham pointed to, if there is a program and this is this is a recent occurrence. If there is a program where they still require textbooks on the ground, we are now able to offer that. So that could be one of those challenges. If a if a campus community is not quite ready to make the shift to that hybrid environment, now we're able to offer a solution that answers to that answers to that call to have the textbooks on the ground. Our preference, we like to have no textbooks. We are highly innovative, and we like to have a space that is filled with energy and filled with music and sound and fashionable products and branded merchandise.

43:43 And and but but so every now and again, you do have that campus community that prefers to have the textbooks on the ground. Yeah. Because that extension of that university marketing arm is is key and and really converting that from what can be sometimes a bit of a dusty bookshop. Yeah. In in in terms of learning, this year has been instrumental in our learning the marketplace and understanding how do we go out and how do we compete effectively against these incumbents. And we've learned a lot in terms of how do we go to market and compete with them effectively. And so we're looking forward to continuing the pitch, which has not stopped. I have programs that are happening right now where we'll be traveling out to go visit the campus communities.

44:32 So we're gonna keep on our foot on the gas and believe that we can be highly disruptive and continue to be highly disruptive in this space. Let me take a peek here. What's your target for merchanting gross profit going forward? Is 20% plus realistic? I I I think that a 20% gross margin, it just depends as we spoke of earlier about that mix of affiliate versus Gear Shop solution. Right? So more Gear Shop's higher gross profit, more affiliate signing on, that mix, that could that could bring about, you know, a slightly lower gross profit. So I think that we're always looking at how, how we can, increase and improve upon the gross profit margins going forward. And, 20% is is certainly realistic dependent upon the growth levers that were, you know, that were being enacted. That that would have a bias towards the gear shop contracts growth over the over the in comparison to the affiliate model.

45:37 So it's underlyingly, I think you can split the mix out. So underlyingly, I think we're looking well, we're definitely looking at the operational gearing within this small fall through to to profit mix. So the the margins within, I think there's an opportunity within the margins as in the gross profit margin area. There's definitely some opportunities that will that we're interested in and looking at and exploring. Mhmm. And yes. So it's kind of more about what's the space for that. Awesome. And then we've got a question around how do you plan to use your strong cash position and undrawn financing facilities to support future growth?

46:23 I think it's important to note today that we are in a strong position. And all of the growth that we have seen post 2018 has been organic and has been self funded. And we we will continue to self fund our growth. We feel very strong about the position that we are in in terms of our financial and our our financial health. And and, Graham, you may wanna talk about that a little more a little bit more, but we are not intending to hit a roadshow. There could be if we wanna whale, that could be a circumstance where we may come to the market. But, otherwise, I'm not seeing any rationale or reason. Or if there was an acquisition, we've talked about acquisitions in the past, how that may be an opportunity for a raise. But other than that, we're not seeing any any raise. We're self funding the business, and we're scaling the business organically Mhmm. Through our own own facilities.

47:17 No. Absolutely. I mean, I think you nailed it. The we'll we'll be looking at we've got we've got pipeline still still to chase this year, and we've got opportunities to to, you know, grow the business that we'll be looking at to effectively use our cash that we've got in hand. We do and and yeah. And, yeah, if it's a big contract, it could mean that we come back to the market or we do something different. And and that would be a good a good problem to to come against. Yes. Indeed. Indeed. And then there is a question here today about explain we well, we talked about the contracts that were exited. So I think that it was not it was a matter of they were not good contracts for us. What have we learned? We learned a great deal in terms of the size of the campus community that we want to be going after. So we have done a great deal of work in assessing a campus community prior to even responding to an RFP.

48:28 And so we see that, you know, 500 4 to 500,000 is our base minimum. And and so those are the programs that we find attractive. And so it was not a matter of of retention on the specific contracts. It was a matter of whether or not they were good programs for us to stay in as a business. And and so I think that we're always reviewing agreements and always reviewing once that campus once we've entered into that campus, we're doing extensive extensive review of those contracts to ensure that they are maintaining that level. And we we know that when we go in, we can scale and we can grow them once we're there. But we we're always watching and assessing those programs to ensure that they're good programs for ALTITUDE.

49:17 Yes. And I think just understanding just understanding the the nature of those contracts, we've gone live with a huge amount, and we've we've we would've were certainly trawling over all the numbers, September, October, November. How are they doing? How are they versus our phasing? Where are we expecting that to go? And I think we had a significant, you know, a significant amount of the or say significant. There was a a decent amount of revenue related to graduation. So that phasing then occurs between March and May. And so that so therefore, that phasing would necessarily see that in September, for instance. Also yeah. And then in year one of the contracts, we believe there's probably a 7070% effective rate when you're at year one ramp up rate.

50:05 And then as you go through the contract, then you'll grow grow that relationship with the university. You'll sell in a lot more. You'll be able to add extra programs with that university to the seat a 100%, go up to a 150%. And we've got to experience that. We've experienced it with, like, one or two universities so far. We're at the end of year one on most of these universities. So that that's our expectation of that ramp up, which is kind of which makes which we're which we're which we're seeing. And there's a question here. Has a financing prevented ALTITUDE from winning larger value contracts? I think that if previously, we had had when we first launched the Gear Shop solution, we had the opportunity to RFP a very, very large institution.

50:56 And, and because we had not gone through, the experience and scaled the business to the level that we have today, we opted to not, respond to that RFP and present to that that university. This is this is, early on. Today, we are much more confident in our ability, to present and deliver to a large campus community. And some of those campus communities can it can range from $5.07 to 10 to $15,000,000 programs. So I think brand recognition is wildly important for us, and we are starting to obtain that. Our the the legacy companies, are seeing us in the marketplace. So I always prefer, to kind of go under the radar, but we are no longer under the radar. They are aware that we're here, and that, we are able to respond to those larger contracts with confidence.

51:51 Again, I think I mentioned, you know, there is no intention for us to raise any any cash right now for the business. If we were to win something like a $15,000,000 program, then we would probably be looking to to raise funds or finance that somehow. So is it stopping us from going after them? No. We are confident in our ability to deliver. It is it is simply one that we would have to to review it upon award. Yeah. Which we which we really do. And the and just for one example of a contract that we were looking at, obviously, we're hung hungry for growth, and we're looking at it. We go over big bigger contract or bigger potential tenders as a board.

52:37 And we look we looked at one one where the university was probably looking at the winner to to some to then fund most of the building work at the university, which we as a board decided not to go to. Yes. Yes. Because it would be, yeah, just not reasonable in the extent, you know, in in putting us under any pressure. That's actually an important to note. So this year, we've turned down opportunities because they were not the right fit. So turned down either too small or or to you know, didn't fit within within our perfect within our assessment of what that program should be. We have got a question here, Graham, that said, should the 1,300,000 of software development be considered an annual cost irrespective of how it is treated in the accounts?

53:23 Yeah. We've we've had so that's that's gone up from point nine to 1.2 on the way of the software development. There's been some other costs that have that have come in to bring that up to 1.3 relating to ERP. But the but there yeah. There is a regular cost. You can see that in our history. If you go back, it does fluctuate depending on what we're doing and what we need to do. And I envisage that that will, you know, will continue continually look at what's appropriate for the business. Awesome. There is a question here. When will this the 100,000,000 target date? That is an aspiration of the business. It is a strong aspiration of mine, So not soon enough for me is the easy answer.

54:17 It is it is certainly an aspiration of the business, but we have the building blocks and the foundation in place to be able to achieve a 100,000,000, business. And so, with the opportunity that is before us each year, when we look at this slide and, again, I I I point to this slide as being an ever important ever important slide to really keep in the backs of your minds when you're thinking about us, 54% growth, 57% growth, 33% growth. We don't see a slowdown. Our our aspirations and our drive and our ambition is strong, and we keep our foot on the gas. And the number one most important thing that we are doing is always selling. So always selling, closing contracts, selling on campus, selling those promotional products through our affiliates, selling services to our distributor members and our suppliers.

55:09 So we are always and it does not matter, what role you are in the business. We're always commercially intelligent and always selling programs and services, to our partners and our programs. So that's probably the most important thing. We are a sales organization, and, our foot is on the gas to achieve, that great and exponential growth. And I'll pick up the there's a rash there's a question on the rationale of the, investor key communications from May 1, the recent RNS. It's a it's a relatively boring technical answer. We went we've grown the business, and changed the business substantially in the year. The gear shop has become a much more material part of our business. And therefore, with our auditors, we went we've just been through an audit or through everything.

55:59 And there's and there was a number of well, there's there was a number of new papers that we came up with on our accounting treatments and our reviews of that. We're working with the auditors on, which we got a clean bill of health on. But then we it was only once that confirmation came through could we then then say, yep. This is this is this is now what we would have loved to have come out earlier on that, to be honest. But but we thought it was safe and sensible to only come out to the market when they were when we had that old ITUDE screen light. Absolutely. That green light from the auditors is vitally important. And then immediately, as soon as we had the green light, we released the announcement. So I believe with that, I think we have answered all the questions. I see, could you provide more information on how you expect to harness AI to enhance operational efficiency and customer experience, please? This is something that our tech and dev teams are always looking at. I believe there are ways to drive efficiency through the purchase order process, and that's something that that I've asked the team to really review.

57:12 There's this to and fro that happens when you're placing an order for a promotional product that it is time expansive. And so if we can condense that and drive efficiency through the power harnessing the power of AI, that is something that is top of mind for me in enabled in our ability to deliver back to our supplier partners an efficient order that's being placed, as well as driving that efficiency for our membership. And as we as we're able to dig into that a bit more, we'll share more of that information with you here on our investor meets. Perfect. Nikki, Graham, thanks very much for answering those questions you can from investors. Of course, the company can review all the questions submitted today, and we'll publish those responses on the investment company platform.

58:02 But just before redirecting investors, provide you their feedback, which is particularly important to the company, Nikki, I was just wondering if you could provide a few closing comments. Absolutely. And I think I I I really hit it when I say look to this slide, look to the growth, look at at that exponential year over year. I personally am hungry, ambitious, and have the drive to win. And I put that drive to win to work, for you, our shareholders, every single day relentlessly, tirelessly, I believe. And, and so we are a sales organization, and we are driving and closing those contracts, and our foot is on the gas. There is nothing more important to me, than delivering on behalf of you. So I appreciate your support, and I thank you for joining us today and being here with us today.

58:57 And and I encourage you to consider this slide and and look at what we've done in terms of the financial health health of the business, the profitability of the business, and the scale of the business all being done in the course of a year's time. I I believe that our team has done an incredible job, and I'm very proud of of their effort and and the delivery. So thank you so much for your support and for your time today. Thank you very much. Perfect. Nikki Graham, thank you for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback and what the management team can better understand your views and expectations? This will only take a few moments to complete, but some should be greatly valued by the company. On behalf of the management team of ALTITUDE GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all.