Tech services firm announces proposed £800k disposal

Altitude Group, the Manchester-based technology and information services firm, has announced the proposed disposal of its AdProducts (ADP) for £800,000 to Product Source Group (PSG).

ADP is the trading name of CFIIL and a UK-based trade supplier and printer of promotional products.

The proposed disposal requires the agreement of shareholders at a general meeting scheduled in London for April 3.

Altitude Group will use the proceeds to continue to invest in the AIM Smarter business in the United States where the company continues to focus on engagement with, and service provision to, both sides of the AIM Smarter marketplace.

PSG was created to acquire the assets of ADP and other similar supplier businesses and is led by trade supplier veteran Diane Anderton, previously of 4imprint/Brand Addition and SPS EU, and certain others industry experts that combined will be interested in 45% of PSG.

PSG is currently owned and controlled by Joanne Varley, wife of Martin Varley who is a non-executive director of, and a 14.8%. shareholder in Altitude.

On August 15, 2019, Altitude Group announced that it had received an unsolicited approach from a third party interested in potentially acquiring ADP.

It engaged Sentio Partners, a third-party corporate finance consultancy to manage and oversee the engagement of all interested parties, including PSG.

Altitude said: “The independent directors – being all those save for Martin Varley – carefully considered all the offers made for the business, together with the advice provided by Sentio Partners and are of the view that the offer is the best offer available and that the value potential and market opportunity available to the company via the AIM Smarter platform in the US, means that it is in the best interests of the company to focus all possible resources on AIM Smarter.”

Payment comprises £350,000 in cash on completion, £300,000 receivable in four tranches over the 12-month period following completion, subject to a personal guarantee of Martin Varley, and £150,000 conditional deferred consideration with performance criteria based on ADP revenue generation in the 12 month period following completion.

In addition, the company expects to realise further cash of around £400,000 from the unwind of retained ADP working capital not included in the disposal.

Martin Varley has informed the board of his decision to stand down from the board and the company at the same time as the completion of the disposal.

Altitude’s statement today said that Martin has made this decision in recognition of the company’s shift of operational focus to the USA.

“Martin has been instrumental in the formation of the group and the execution of the strategic expansion in the US. Whilst Martin will continue to be permanently available to the board for consultation, he believes it is the right time to step down.

“The board thank him for his immense contribution over the years.”

In the year ended December 31, 2018, Altitude generated revenues of £6.6m, an adjusted EBITDA loss of £800,000 and an operating loss before tax of £2.7m, of which ADP contributed revenues of £3.7m, an adjusted EBITDA of £100,000 and a break even at an operating level.

The net assets of ADP, subject to disposal as at December 31, 2018, amounted to £2.1m.

In a trading update today, Altitude said: “Early indications show that trading during January and February 2020 was strong, although this has inevitably changed in recent weeks as the impact of the COVID-19 outbreak has started to take hold.

“At this time, it is too early to establish the impact of COVID-19 for February and March 2020 on the orders to our preferred supply partners and, therefore, the directors cannot be certain of the full effect that this has had on trading and its implications for the period as a whole.

“Similarly, given the high level of uncertainty arising from the global pandemic and its unprecedented effect on the markets that we serve, we are unable to give any guidance for the 12 months trading period to the end of March 2021. We will provide further market updates as appropriate.”

Chief executive Nikki Stella said: “The process for this disposal was well advanced when the full impact of the COVID-19 virus on this business started to be understood just a few days ago.

“We are, therefore, very appreciative that this disposal has been able to be agreed with Diane Anderton and her team at PSG, despite substantially changed market conditions.

“We wish them every success for the future and look forward to welcoming them as a supplier partner to Aim Smarter UK.

“During this unprecedented time the entire AIM Smarter team remains focused and is assisting both our members and suppliers to navigate COVID-19. We will update the market as appropriate.”