Marketing outfit Altitude (ALT:AIM) hit new highs today, up 64% to 89p, prompting the company to issue a statement saying there is ‘no operational or corporate reason’ for its share price increase.

Altitude’s stock is up 826% year-to-date amid investor euphoria over the appointment of former 4imprint (FOUR:AIM) manager Martin Varley, new distribution deals and a return to profit at half-year results published 20 September.

The big question for investors now is whether Altitude’s profit performance can keep up – or catch up – with its share price gains.


On 20 September in a half-year results statement, chairman Peter Hallett was bullish on the company’s ability to deliver shareholder value, though Altitude’s stock price then was only 40p. Today’s statement to the stock exchange indicates Altitude’s board did not expect those gains in shareholder value to be delivered quite so quickly.

Reported profit for the six months to 30 June 2016 was £410,000 – a decent turnaround from a £701,000 loss in 2015 – though still small compared to Altitude’s now inflated market cap of £35 million.

Altitude’s cash position improved only marginally from the £366,000 it reported at the end of 2015, to £415,000. While the business has no debt, Altitude owes its suppliers £1.5 million and would need to find external finance if operating performance suffered a setback.

Can Altitude's profit improvements continue? One important feature of the half-year numbers was a decline in revenue of around 4.2% to £3 million. That indicates Altitude’s improvement in bottom-line performance was achieved via cost-cutting, not new sales.

Over the longer term, revenue growth will be essential if Altitude is to sustainably grow profit and cash flow.

Other risks for investors include cyclical demand for Altitude’s key services which include websites and software for small businesses as well as exhibitions and publishing activities.

Overall, the turnaround overseen by chairman Hallett and led by Varley has delivered impressive early results. But Altitude has a long way to go and a lot to prove before it can begin to replicate the successes of sector peer 4imprint.

Issue Date: 03 Oct 2016