TIDMJNEO
RNS Number : 9748M
Journeo PLC
27 September 2021
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR").
27 September 2021
Journeo plc
("Journeo", the "Company" or the "Group")
Interim results for the six months ended 30 June 2021
Journeo plc (AIM: JNEO), the information systems and transport
technical services Group, announces its interim results for the six
months ended 30 June 2021.
Financial headlines
-- Revenue increased by GBP0.5m to GBP7.2m (2020: GBP6.8m)
o Fleet revenue increased 17% to GBP3.8m (2020: GBP3.2m)
o Passenger revenue decreased slightly to GBP3.5m (2020:
GBP3.6m)
-- Gross profit increased by GBP0.3m to GBP2.8m (2020: GBP2.5m)
o Fleet GBP1.2m (2020: GBP0.9m)
o Passenger GBP1.6m (2020: GBP1.6m)
-- Underlying profit before depreciation and amortisation of GBP0.6m (2020: GBP0.5m)
-- Cash as at 30 June of GBP1.3m (2020: GBP1.2m)
-- Invested over GBP0.5m in research and development during the period
Operational headlines
-- Business continues to adapt to the impacts of the Coronavirus
pandemic, providing uninterrupted essential services and support to
customers throughout.
-- Improved H1 performance and secured important contract wins.
-- Increased SaaS-based revenue as number of connected vehicles
climbs 30% to over 4,000 since the beginning of the year.
-- Continued investment in research and development and new
website design as central digital asset to improve communications,
drive future sales and provide platform for marketing
initiatives.
-- First end to end deployment of our new service management
software, integrated into SAP to deliver service and maintenance
activity reports to customers in real time.
-- Initiated Environmental, Social and Governance survey and
maintained ISO 9001, 14001, 27001 and 45001 accreditations
Russ Singleton, CEO of Journeo plc, said:
"We are making good progress in our growth strategy, applying
research and development and extensive end-user operational
experience towards solving real-life challenges, needs and future
requirements of fleet operator and transport infrastructure
customers. Investment into sales and marketing capabilities,
including a new website and unification under the Journeo brand, is
amplifying our market presence and providing multiple platforms for
promotion of our solutions and IP to new and existing
customers.
Whilst trading conditions as a result of the Coronavirus
pandemic remain challenging and present a degree of uncertainty
with bids and project timings, we are encouraged not only by the
resilience of the business during this period but the successful
growth of revenues and the order book in H1. We are confident in
our future, and we believe the powerful market drivers, including
in the form of substantial Government backed initiatives, will
provide the Group with significant opportunity over the next few
years."
A digital copy of interim results report will be available on
the Groups' website: www.journeo.com .
For further information, please contact:
Journeo plc
Russ Singleton/ Nick Lowe +44 (0) 844 871 7990
WH Ireland - Nominated Adviser and Broker
Mike Coe/ Sarah Mather (Corporate Finance)
Jasper Berry (Corporate Broking) +44 (0)207 220 1666
Notes to editors:
Journeo plc is an information systems and technical services
business focussed on public transport and related infrastructure
within towns, cities, airports, and local authorities. The Company
works extensively with local government departments, combined
authorities, and many of the largest multinational transport
operators, supporting them as systems converge towards a more
efficient and sustainable smarter-cities future.
The business currently comprises two segments:
-- Fleet operator solutions: CCTV video surveillance to improve
passenger & driver safety, telematics for vehicle and driver
performance monitoring, real-time communications for remote
condition monitoring and automatic passenger counting.
-- Passenger transport infrastructure solutions: design,
manufacture, installation, and management of hardware and software
for electronic public transport information systems, in and around
towns, cities, ferry terminals and airports which includes
smart-ticketing and wayfinding.
In the last few years, the Company has invested around GBP5m in
research and development, enabling it to design and supply the very
best solutions for customers' complex requirements and the demands
of modern public transport. With an Internet of Things (IoT)
approach and open standards, together with field-proven and
reliable engineering, Journeo is able to offer flexible, scalable
products and services that can integrate with existing technology
while preparing for future advancements.
Chairman and Chief Executive's review
Summary
Overview
We are pleased to report the results for the six months ended 30
June 2021. Overall trading has been better than the same period
last year, with strong order intake as the Group executes its
strategy of developing technologies, IP and engineering
capabilities centred around customers and applications in target
market sectors.
Revenue increased by 7% to GBP7.2m (H1 2020: GBP6.8m) and
operating profits increased to GBP0.3m (H1 2020: GBP0.2m).
The Group is performing well and supports a growing customer
base.
Strategic progress
During the period we continued to make good progress in
delivering upon our strategic plans demonstrated by the adoption of
the technologies developed in-house for both existing and new
customers. Orders for displays and our Content Management Software
("CMS") totalling GBP2.4m, and the renewal of the framework with
First UK Bus, extending the relationship to over 10 years, were all
reliant on our IoT approach to improve information systems in
public transport market sectors.
The Group has increased its pre-sales technical support to help
local authorities develop Bus Service Improvement Plans and
Enhanced Partnerships in response to Government initiatives and the
shift in their needs.
We have significantly increased investment in sales and
marketing since the beginning of the year and launched a new
website as the centrepiece for information, branding, messaging and
communications. This valuable digital asset will be a focal point
for campaigns, demonstrating our increasing capabilities to the
market. In addition, the Environmental, Social and Corporate
Governance survey that we highlighted in our 2020 Annual Report is
underway with preliminary findings available next year.
We have maintained all ISO 9001, 14001, 27001 and 45001
accreditations.
COVID 19
The Group has continued to provide customers with uninterrupted
essential services and support throughout the Coronavirus pandemic,
delivering and maintaining vital information and safety systems
that are critical to their operations.
We remain vigilant of the risks that persist with the pandemic
and those noted within our 2020 Annual Report. The Group has
adjusted well to the various restrictions and on 19 July initiated
a safe return to office work for a limited number of team
members.
Nevertheless, we continue to monitor the situation closely and
follow the prevailing recommendations of government, placing the
health and safety of our people, suppliers, contractors, customers
and the travelling public in a position of paramount
importance.
Financial results
Revenue for H1 was up by nearly GBP0.5m to GBP7.2m (H1 2020:
GBP6.8m), an increase of 7% due to an increase in Fleet Systems
revenue to GBP3.7m (H1 2020: GBP3.2m), while Passenger Systems
revenue decreased slightly to GBP3.5m (H1 2020: GBP3.6m).
Passenger Systems gross profit of GBP1.6m (H1 2020: GBP1.6m)
remained static, with margin increasing to 46% (H1 2020: 45%).
Fleet Systems gross profit of GBP1.2m (H1 2020: GBP0.9m)
increased by GBP0.3m, with an increase in overall margin to 33% (H1
2020: 28%) as Software as a Service ("SaaS") income increased.
Overall gross profit increased by GBP0.3m to GBP2.8m (H1 2020:
GBP2.5m), while gross margin increased by 2% to 39%, resulting from
the SaaS income referred to above. An operating profit of GBP0.3m
was achieved, compared with GBP0.2m in H1 2020. Our expenditure on
R&D resulted in a tax credit claim of GBP0.2m being received
during the period.
The underlying profit before depreciation and amortisation was
GBP0.6m (H1 2020: GBP0.5m).
The basic undiluted profit per share was 1.81p (H1 2020:
1.11p).
Tight controls over cash management, and the profit achieved
have contributed to an increased cash position at the period end of
GBP1.3m (30 June 2020: GBP1.2m).
Research and Development
Our team of developers, designers and engineers provide an agile
and responsive innovation capability. This is a core part of our
strategy that underpins our growth plans. An increasing proportion
of the sales pipeline is based on our own technologies, designed to
deliver better solutions for customers whilst, at the same time,
improve the visibility and quality of our earnings through SaaS,
where the number of connections has risen 30% to 4,000 since the
beginning of the year, and multi-year support contracts.
Notable wins announced just after the period end, with Abellio
and Metroline are based upon the benefits brought by our
Intellectual Property ("IP"), enabling these important London
transport operators to uplift the functionality of their legacy
systems at the same time as deploying the latest safety-oriented
products into their fleets.
We work closely with industry thought-leaders and customers to
inform our roadmaps and develop the technologies that will be
needed in the years to come. One example during the first half of
the year has led to the development and first sales of a new
ultra-low power display that is fully integrated into our EPIX CMS.
This outdoor display can be operated continuously off-grid for many
years using small solar panels, wind turbines or via its own
internal rechargeable batteries. Our sustainable design ethos
appeals to many businesses and local authorities with commitments
to reducing carbon footprint or achieving Net Zero status within
their infrastructure.
Passenger Infrastructure Systems
The year started positively for Passenger Infrastructure
Systems. Our broad range of displays built around a core technology
and powered by EPIX is being deployed as part of local authority
and Transport Executives' delivery of Transforming Cities Funding
and a number of other schemes throughout the UK.
In January this year, we announced further orders from a
Northern Transport Partnership. At a value of GBP1.3m, this has
increased their investment in our displays and associated CMS
technology to over GBP3m in the past two years, demonstrating
significant confidence in the systems that we provide as they
expand what is already one of the largest passenger information
display signage estates in the UK.
Further orders, totalling GBP1.1m in March for displays and CMS,
were achieved through a customer that has previously not had a real
time passenger information estate. With a goal to achieve a Net
Zero impact within their infrastructure they selected our low-power
displays technology. We have recently extended this offering with a
new range of ultra-low power displays released to market just
before the end of the period.
Completing transport infrastructure work during a time of travel
restrictions has presented a number of challenges, and progress on
some contracts, which require bus, coach, rail or airport services
to be running have been delayed. The situation has eased since we
moved into the second half of the year, in particular with the
ability to travel more freely in Wales and Scotland. Completion of
the initial phase of the GBP4.8m City of Edinburgh Council contract
is due shortly, enabling progress to commence on the substantially
larger second phase.
Fleet Transport Operator Systems
With a foundation of integration and support services, Fleet
Transport Operator Systems is increasingly being recognised as an
innovative solutions provider with advanced technical capabilities.
Over the last two years this has led to the development of a highly
scalable SaaS solution with over 4,000 vehicle connections across
bus and rail customers. The recent announcements of strategically
important wins with Abellio and Metroline, will in due course,
further increase our market share within London.
We were delighted to start the year with an extension to the
framework agreement with First UK Bus. In addition to the revenues
anticipated from the agreement, it included a further 800
connections into our cloud-based, SaaS solution. First Bus were
early adopters of Remote Condition Monitoring technology and are
now using our Agnostic Video Management Software module which
enables users to instantly connect to vehicles and access
evidential quality video and supporting data for further analysis.
This significantly speeds up the video evidence gathering process
and considerably reduces costs for fleet operators.
Our achievements are being recognised at many levels within the
industry, opening-up new opportunities that would previously have
been inaccessible. Work with prestigious organisations such as the
Transport Research Laboratory, which was instrumental in the
formation of Transport for London's Vision Zero standard, has
enabled further integration of our solutions to capture more data
on vehicle and driver behaviour.
We maintain a Rail capability focussed on leveraging our
technologies within the highly regulated and safety-critical
railway environment. The sales cycle for rail opportunities can be
protracted, but we are confident that we will build upon the orders
we have received from organisations such as the British Transport
Police for licences to our cloud-based software.
Passenger Transfer Solutions
None of our customers have been more adversely affected by the
coronavirus pandemic than those based at airports. The restrictions
impacted project delivery programmes and extended timescales for
other airport bids. However, since the recent lifting of
restrictions there has been a marked increase in activity with
purchase orders being received from Bristol Airport and, earlier
this month, we were delighted to announce our largest airport
contract award to date (GBP2.5m) with Transdev Airport Services at
a major UK international airport.
Market update
The release of two publications in the first half of this year;
Bus Back Better, the National Bus Strategy for England and the
Williams-Shapps Plan for Rail demonstrate significant commitments
by the Government towards more sustainable and better funded public
transport services.
The National Bus Strategy announced on 15 March 2021 is the
first major central Government intervention in the bus market since
the deregulation of the 1980s. It provides local authorities,
Transport Executives and operators alike a mandated framework under
which to operate and be compliant with the Bus Services Act 2017.
The strategy marks out Government goals and is, for the first time
in a generation, backed by substantive funding of c.GBP3 billion,
that will assist operator and the relevant authority stakeholders
to level up the services provided to passengers.
Train operating companies were faced with what quickly became
insurmountable operating conditions as passenger numbers
dramatically fell as the pandemic took hold and travel restrictions
were imposed. The Department for Transport stepped in, effectively
ending the current rail franchising model, and the Williams-Schapps
Plan for Rail announced on 20 May 2021 sets out a way forward for
this essential public service ahead of the next control period of
funding.
Over the medium to longer term, these two Government initiatives
are powerful market drivers that will both underpin and reinforce
the move away from fossil fuels towards cleaner, greener, and more
sustainable transport.
Outlook
Ever increasing adoption of our proprietary technology and
increased funding from central government have helped to signi
cantly increase our order book compared to this time last year.
We have orders this year to enable delivery of results in line
with market expectations although the achievement of this will
depend on bus manufacturers scheduling remaining on plan and on
orders being processed before the year end.
The current variables of COVID and the wider supply-chain
issues, particularly affecting semi-conductor supplies may also
contribute to scheduling changes and we estimate that up to GBP0.3m
of our forecast pro t before tax may be processed in 2022 should we
be a ected.
Our business has been very resilient over the last year and we
see this building as we go forward.
Our signi cant cash resources at the half year will be applied
in supporting the required working capital for the increasing order
book and year end cash will re ect this.
Our pipeline and con rmed orders continue to grow for the
solutions we have developed, and this gives us con dence of meeting
market expectations for 2022.
We continue to meet with potential acquisitions where we can
identify synergies to accelerate our pro table growth and are
optimistic that our organic growth and potential acquisitions will
deliver value to shareholders and we look forward to continuing to
update the market as these develop.
Consolidated statement of comprehensive income
for the six months ended 30 June 2021
Unaudited
Unaudited six six months Year ended
months ended ended 31 December
30 June 2021 30 June 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------- ------------
Revenue (notes 4,5) 7,213 6,754 13,605
Cost of sales (4,409) (4,248) (8,304)
-------------------------------------------------- ------- ------------- ------------
Gross profit 2,804 2,506 5,301
Other income 168 287 305
Underlying administrative expenses before
depreciation and amortisation (2,378) (2,261) (4,504)
-------------------------------------------------- ------- ------------- ------------
Underlying profit before depreciation and
amortisation 594 532 1,102
Depreciation and amortisation (320) (333) (638)
Share-based payments (24) (38) (116)
Administrative expenses (2,554) (2,345) (4,953)
-------------------------------------------------- ------- ------------- ------------
Operating profit 250 161 348
Finance expense (84) (73) (155)
-------------------------------------------------- ------- ------------- ------------
Profit before taxation from continuing operations 166 88 193
Taxation credit (8) 6 2
-------------------------------------------------- ------- ------------- ------------
Profit for the period being total comprehensive
profit attributable to owners of parent 158 94 195
-------------------------------------------------- ------- ------------- ------------
Profit per share (note 6)
Basic 1.81p 1.11p 2.27p
Diluted 1.74p 1.11p 2.26p
-------------------------------------------------- ------- ------------- ------------
All results derive from continuing operations.
Consolidated statement of changes in equity shareholders'
funds
for the six months ended 30 June 2021
Total equity
Share Share Retained shareholders'
capital premium earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- --------- --------------
Balance as at 1 January 2020 6,217 958 (6,991) 184
Profit and total comprehensive income for
the period - - 94 94
Proceeds from issue of new shares 33 216 - 249
Share-based payments - - 38 38
Balance at 30 June 2020 6,250 1,174 (6,859) 565
------------------------------------------ -------- -------- --------- --------------
Balance at 1 January 2020 6,217 958 (6,991) 184
Profit and total comprehensive income for
the year - - 195 195
Proceeds from issue of new shares 33 216 - 249
Share-based payments - - 116 116
------------------------------------------ -------- -------- --------- --------------
Balance at 31 December 2020 6,250 1,174 (6,680) 744
Profit and total comprehensive income for
the year - - 158 158
Share-based payments - - 24 24
------------------------------------------ -------- -------- --------- --------------
Balance at 30 June 2021 6,250 1,174 (6,498) 926
------------------------------------------ -------- -------- --------- --------------
Consolidated statement of financial position
at 30 June 2021
Unaudited Unaudited
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- -----------
Assets
Non-current assets
Goodwill (note 7) 1,345 1,345 1,345
Other intangible assets 1,136 1,102 1,144
Property, plant and equipment 562 630 619
Trade and other receivables 43 43 43
------------------------------ --------- --------- -----------
3,086 3,120 3,151
------------------------------ --------- --------- -----------
Current assets
Inventories 2,232 1,956 1,675
Trade and other receivables 5,559 3,600 4,207
Cash and cash equivalents 1,294 1,242 1,254
------------------------------ --------- --------- -----------
9,085 6,798 7,136
------------------------------ --------- --------- -----------
Total assets 12,171 9,918 10,287
------------------------------ --------- --------- -----------
Equity and liabilities
Shareholders' equity
Share capital 6,250 6,250 6,250
Share premium account 1,174 1,174 1,174
Retained earnings (6,498) (6,859) (6,680)
------------------------------ --------- --------- -----------
Total equity 926 565 744
------------------------------ --------- --------- -----------
Non-current liabilities
Deferred revenue 1,009 845 957
Loans and borrowings - 267 564
Lease liabilities 294 401 358
Deferred tax liability - - 80
Provisions 240 291 278
------------------------------ --------- --------- -----------
1,543 1,804 2,237
------------------------------ --------- --------- -----------
Current liabilities
Trade and other payables 3,404 2,768 2,423
Deferred revenue 3,375 2,739 3,061
Loans and borrowings 1,564 809 595
Lease liabilities 133 99 135
Tax liabilities 1,001 953 909
Provisions 225 181 183
------------------------------ --------- --------- -----------
9,702 7,549 7,306
------------------------------ --------- --------- -----------
Total equity and liabilities 12,171 9,918 10,287
------------------------------ --------- --------- -----------
Consolidated statement of cash flows
for the six months ended 30 June 2021
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------------- ----------- ----------- ------------
Net cash from operating activities (note 8) (49) 1,277 1,574
------------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (51) (24) (55)
Addition of right-of-use asset - (422) -
Purchases of intangible fixed assets (204) (277) (519)
------------------------------------------------- ----------- ----------- ------------
Net cash from investing activities (255) (723) (574)
------------------------------------------------- ----------- ----------- ------------
Financing activities
Cash flow from financing activities 408 (633) (546)
Issue of shares - 249 249
IFRS 16 right-of-use lease liability addition - 422 -
Principal element of lease repayments (67) (73) (168)
Repayment of loans (3) (3) (6)
------------------------------------------------- ----------- ----------- ------------
Net cash from financing activities 338 (38) (471)
------------------------------------------------- ----------- ----------- ------------
Net increase in cash and cash equivalents 34 516 529
Cash and cash equivalents at beginning of period 1,254 725 725
Effect of foreign exchange rate changes 5 1 -
------------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at end of period 1,293 1,242 1,254
------------------------------------------------- ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2021
1. Basis of preparation and approval of interim statement
The financial information for the six months ended 30 June 2021
and for the six months ended 30 June 2020 is unaudited.
The interim financial statement for the six months to 30 June
2021 does not include all of the information required for full
annual financial statements and should be read in conjunction with
the consolidated financial statements for the year ended 31
December 2020.
The financial information has been prepared on the basis of
IFRSs that the Directors expect to be applicable as at 31 December
2021.
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those set out in
the Group's Annual Report and Financial Statements 2020, which were
prepared in accordance with IFRSs.
This interim financial statement does not comprise statutory
accounts within the meaning of Section 435 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2020 were
approved by the Board on 25 March 2021 and delivered to the
Registrar of Companies. The report of the auditor on those accounts
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statement under Section 498(2) or Section
498(3) of the Companies Act 2006.
AIM-listed companies are not required to comply with IAS 34
'Interim Financial Reporting' and accordingly the Company has not
applied this standard in preparing this report.
The interim financial statement was approved by the Board of
Directors on 27 September 2021.
2. International Financial Reporting Standards
The Group follows the standards and interpretations issued by
the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee of the
IASB and endorsed by the EU that are relevant to its
operations.
3. Going concern
The Group's business activities together with factors likely to
affect its future development, performance and position were set
out in the Strategic Report and Chairman's Statement of the 2020
Annual Report and the principal risks and uncertainties were set
out in the Strategic Report. The Directors have reviewed the cash
flow forecasts for the period up to and including 31 December
2022.
Based on the above, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future and for at least twelve months
from the date of the report. For this reason the Directors continue
to adopt the going concern basis in preparing the financial
statements.
4. Revenue
The revenue split between goods and services is:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ------------
Revenue
Goods 4,831 4,867 9,417
Services 2,382 1,887 4,188
----------------------------------------- ----------- ----------- ------------
7,213 6,754 13,605
----------------------------------------- ----------- ----------- ------------
Construction contracts included in goods 2,672 2,831 5,332
----------------------------------------- ----------- ----------- ------------
5. Segmental reporting
IFRS 8 requires operating segments to be determined on the basis
of those segments whose operating results are regularly reviewed by
the Board of Directors (the Chief Operating Decision Maker as
defined by IFRS 8) to make strategic decisions.
As the Board of Directors reviews revenue, gross profit and
operating loss on the same basis as set out in the consolidated
statement of comprehensive income, no further reconciliation is
considered to be necessary.
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------- ----------- ----------- ------------
Revenue
Fleet Systems 3,747 3,197 6,827
Passenger Systems 3,466 3,557 6,778
------------------------- ----------- ----------- ------------
7,213 6,754 13,605
------------------------- ----------- ----------- ------------
Gross profit
Fleet Systems 1,227 905 2,147
Passenger Systems 1,577 1,601 3,154
------------------------- ----------- ----------- ------------
2,804 2,506 5,301
------------------------- ----------- ----------- ------------
Underlying profit/(loss)
Fleet Systems 199 (28) 81
Passenger Systems 209 364 634
------------------------- ----------- ----------- ------------
408 336 715
Central (134) (137) (251)
------------------------- ----------- ----------- ------------
Underlying profit 274 199 464
------------------------- ----------- ----------- ------------
Reconciling to profit before interest and tax
Underlying Share-based Operating
profit/(loss) payments profit/(loss)
GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- --------------
Fleet Systems 199 (12) 187
Passenger Systems 209 (12) 197
------------------ -------------- ----------- --------------
408 (24) 384
Central (134) - (134)
------------------ -------------- ----------- --------------
Total 274 (24) 250
------------------ -------------- ----------- --------------
Net assets
Net assets attributed to each business segment represent the net
external operating assets of that segment, excluding goodwill, bank
balances and borrowings, which are shown as unallocated amounts,
together with central assets and liabilities.
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- ------------
Assets
Fleet Systems 4,384 3,833 3,599
Passenger Systems 5,148 3,500 4,077
-------------------- ----------- ----------- ------------
9,532 7,333 7,676
Goodwill 1,345 1,345 1,345
Cash and borrowings 1,294 1,242 1,254
Unallocated - (2) 12
-------------------- ----------- ----------- ------------
12,171 9,918 10,287
-------------------- ----------- ----------- ------------
Liabilities
Fleet Systems (3,023) (3,257) (2,932)
Passenger Systems (6,658) (5,021) (5,372)
-------------------- ----------- ----------- ------------
(9,681) (8,278) (8,304)
Cash and borrowings (1,564) (1,075) (1,159)
Unallocated - - (80)
-------------------- ----------- ----------- ------------
(11,245) (9,353) (9,543)
-------------------- ----------- ----------- ------------
Net assets
Fleet Systems 1,361 576 667
Passenger Systems (1,510) (1,521) (1,295)
-------------------- ----------- ----------- ------------
(149) (945) (628)
Goodwill 1,345 1,345 1,345
Cash and borrowings (269) 167 95
Unallocated (1) (2) (68)
-------------------- ----------- ----------- ------------
926 565 744
-------------------- ----------- ----------- ------------
6. Profit per Ordinary Share
Details of the weighted average number of Ordinary Shares used
as the denominator in calculating the basic and diluted earnings
per Ordinary Share are given below:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- ----------- ------------
Basic weighted average number of shares 8,741 8,477 8,610
Dilutive potential Ordinary Shares 361 - 29
---------------------------------------- ----------- ----------- ------------
9,102 8,477 8,639
---------------------------------------- ----------- ----------- ------------
7. Goodwill
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating unit (CGU) that is expected to
benefit from that business combination. The Group has two CGUs
which are its two operating segments, Fleet Systems and Passenger
Systems. The carrying amount of goodwill has been allocated to the
CGUs as follows:
21st Century
Passenger
Systems
Limited Total
GBP'000 GBP'000
------------------------------------- ------------ ---------
Deemed cost:
At 1 January 2020 1,345 1,345
------------------------------------- ------------ ---------
At 30 June 2020 1,345 1,345
------------------------------------- ------------ ---------
At 1 January 2021 1,345 1,345
------------------------------------- ------------ ---------
At 31 December 2020 and 30 June 2021 1,345 1,345
------------------------------------- ------------ ---------
The Group tests goodwill annually for impairment as at 31
December, or more frequently if there are indications that goodwill
might be impaired.
The recoverable amounts of the CGUs are determined based on a
value-in-use calculation which uses cash flow projections based on
financial budgets and business plans approved by the Directors
covering a five-year period. Cash flows beyond that period have
been extrapolated in perpetuity assuming no growth, which the
Directors consider to be a conservative approach.
The key assumptions for the value-in-use calculations are those
regarding discount rates and sales forecasts.
The discount rates needed to equate the net present value from
these cash flows to the carrying value of goodwill are compared to
the required rate of return from the CGU based upon an assessment
of the time value of money, prevailing interest rates and the risks
specific to the CGU. If this discount rate is in excess of the
required rate of return then it is assumed that no impairment has
occurred to the carrying value of goodwill.
The discount rates are as follows:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------ ----------- ----------- ------------
Passenger Systems 13 13 13
------------------ ----------- ----------- ------------
The discount rates used are based on the Board's judgement
considering macroeconomic factors and reflecting specific risks in
each segment such as the nature of the market served, the
concentration of customers, cost profiles and barriers to
entry.
Passenger Systems also has intangible assets, which are
considered in the same value-in-use calculations as goodwill.
The Passenger Systems cash flow projections used to determine
value in use are based upon assumptions of sales, margins and cost
bases. Of these assumptions, the value in use is most sensitive to
the level of sales. Margins are fixed in the forecast based upon
past experience; the cost base is similarly based upon past
experience and will vary depending upon the level of sales. In
accordance with the requirements of IAS 36 our value-in-use
calculations do not include cash flows from restructurings to which
the Group is not yet committed.
The level of sales is the key assumption used in the cash flow
forecast. Sales have been determined by management using estimates
based upon past experience and future performance with reference to
market position and the sales pipeline. The macroeconomic
environment has improved and there has been an increase in the
number and size of contracts available. In 2017 a major
restructuring took place, followed by a reinvestment in key staff
during 2018 and 2019. The 2021 forecast assumes growth of 19%. The
remaining four years are based upon compound sales growth of
5%.
The value-in-use calculation supports the carrying value of the
CGU with headroom of GBP8,114k. A sensitivity analysis has been
performed on the impairment test. The Directors consider that an
absolute change in the key sales assumption is possible and a
reduction in the growth rate in 2021 to 5% would result in headroom
remaining in the current carrying value of goodwill in relation to
Passenger Systems of GBP4,974k. If sales forecasts were down 20%
across the whole period and overheads remained unchanged then there
would be headroom of GBP2,776k.
Based on the review the discount rate applied to equate the net
present value of the forecast cash flows to the carrying value of
goodwill and the intangible assets was 84.1%, whereas the required
rate of return of the CGU is 13%.
In view of this, the Directors consider that no impairment of
goodwill or intangible assets is required.
8. Cash generated from operations
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ----------- ----------- ------------
Profit for the period 158 94 195
Adjustments for:
- Finance expense 84 73 155
- Deferred tax credit - (9) (9)
- Depreciation of property, plant and equipment 108 103 209
- Amortisation of intangible fixed assets 212 230 429
- Share-based payment expense 24 38 116
- Foreign exchange rate 12 (21) 17
- Increase/ (decrease) in provisions 3 (23) (34)
---------------------------------------------------- ----------- ----------- ------------
Operating cash flows before movement in working
capital 601 485 1,078
(Increase) in inventories (557) (685) (404)
(Increase)/ decrease in receivables (1,290) 496 (280)
Increase in payables 1,289 1,058 1,317
---------------------------------------------------- ----------- ----------- ------------
Cash inflow from operations 43 1,354 1,711
Income taxes paid (8) (4) (7)
Interest paid (84) (73) (130)
---------------------------------------------------- ----------- ----------- ------------
Net cash (outflow)/inflow from operating activities (49) 1,277 1,574
---------------------------------------------------- ----------- ----------- ------------
- Ends -
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END
IR DZGZLNDLGMZM
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