TIDMJNEO
RNS Number : 1859Y
Journeo PLC
05 September 2022
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
5 September 2022
Journeo plc
("Journeo", "Company" or "the Group")
Interim results for the six months ended 30 June 2022
Journeo plc (AIM: JNEO) a leading provider of information
systems and technical services to transport operators and local
authorities, announces its interim results for the six months ended
30 June 2022 ("H1 2022").
Financial headlines
-- Strong revenue growth of 23% to GBP8.9m (H1 2021: GBP7.2m)
o Fleet revenue increased 31% to GBP4.9m (H1 2021: GBP3.7m)
o Passenger revenue increased 15% to GBP4.0m (H1 2021:
GBP3.5m)
-- Gross profit increased 16% to GBP3.3m (H1 2021: GBP2.8m)
o Fleet: GBP1.4m (H1 2021: GBP1.2m)
o Passenger: GBP1.9m (H1 2021: GBP1.6m)
-- U nderlying profit before depreciation and amortisation of GBP0.7m (H1 2021: GBP0.6m)
-- Cash as at 30 June of GBP1.2m (H1 2021: GBP1.3m)
-- Available debt facility increased from GBP1.25m to GBP2.75m
immediately post period to provide additional working capital to
fund further growth
-- Basic undiluted profit per share of 1.92p (H1 2021: 1.81p)
Operational headlines
-- Record order intake of GBP12.9m during H1 2022 and momentum
continuing with GBP4m orders already received in H2 2022
-- Secured the Company's largest SaaS based framework agreement
valued at GBP9m over three years with First Bus
-- Number of connections generating monthly recuring revenue to
SaaS-based Journeo Portal increased by 25% in H1 2022 and on-track
to increase by 150% to over 10,000 connections by the end of the
year
-- Increased investment in R&D, sales and marketing,
aligning teams and technologies with Government backed initiatives
for public transport applications
-- Growing adoption of the Journeo CMS digital wing mirror
replacement system in the UK with over 1,000 installations on new
buses, retrofit trials currently underway and the first systems now
being installed in Sweden
-- Supply chain management and strategic stock purchasing,
stepped up during the Covid-19 pandemic has led to an improvement
in delivery schedules for a number of key components that deferred
approximately GBP0.5m revenue from H1 into H2
-- Work on our first Environmental, Social and Governance (ESG)
initiatives is progressing with a further update planned for the
2022 full-year report, and maintained ISO 9001, 14001, 27001 and
45001 accreditations
Russ Singleton, CEO of Journeo plc, said:
"I am pleased with the results for the six months ended 30 June
2022. The business has delivered strong revenue growth, is
profitable and has generated its largest order intake. This
performance demonstrates resilience during a period of challenging
market conditions impacted by supply chain constraints and hikes in
inflation.
Our technology is becoming more deeply integrated within our
existing customer base and is extending into new customers and
opportunities that would previously have been inaccessible to
us.
The second half has started well with GBP4m orders already
secured and we remain confident that results for the full year will
be in line with current market expectations. The business is
focussed on continuing momentum to deliver existing orders and
convert pipeline opportunities to support our positive outlook for
H2 and an exciting and growing future for Journeo for the years
ahead"
A digital copy of this announcement will be available on the
Group's website: www.journeo.com
For further information, please contact:
Journeo plc
Russ Singleton/ Nick Lowe +44 (0) 203 651 9166
Cenkos Securities - Nominated Adviser and Broker
K aty Birkin/ Callum Davidson +44 (0) 207 3 97 8900
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 4 years, the Company has invested over GBP5m in
research and development, enabling it to design and supply the 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
Overview
We are pleased to report the results for the six months ended
June 2022 ("H1 2022") which are in line with management's
expectations. The business has delivered strong growth in revenues
and generated its largest order intake to date of GBP12.9m. This
performance demonstrates the resilience of our business during a
period of challenging market conditions impacted by supply chain
constraints and hikes in inflation.
The Group is performing well, our technology is becoming more
deeply integrated within our existing customer base and is
extending into new customers and opportunities that would
previously have been inaccessible to us.
During H1 2022, revenue increased by 23% to GBP8.9m (H1 2021:
GBP7.2m) and operating profits increased 14% to GBP0.3m (H1 2021:
GBP0.3m).
We have seen a number of supply chain issues are now easing,
having deferred approximately GBP0.5m revenue into H2 2022. This,
and the record levels of sales orders and pipeline of future
opportunities support our positive outlook for H2 2022 and
beyond.
Strategic progress
The UK Government continues to provide funding streams to
improve the provision and sustainability of public transport.
Facing the prospect of rising fuel and energy costs, coupled with
the uncertainty of the impacts of climate change, the adoption of
reliable, mass public transportation services which operate
efficiently is a key deliverable, this country, and others, must
deliver to ensure that Net Zero carbon goals are achieved.
The technology that we are developing, delivering and
maintaining plays an increasingly important role in addressing some
of these market challenges. Through our low-powered infrastructure
solutions and ensuring that work which would have once required
engineer visits can be conducted remotely using artificial
intelligence and machine learning, we are building efficiencies and
increased capacity within our customers' teams.
Our growing success can be attributed to the capabilities and
commitment of our people and investment in Research and Development
and sales and marketing. To maintain this momentum, we continued to
invest in these areas throughout H1 2022 to broaden the
customer-base that we are able to engage with and integrate more
tightly the solutions that we provide.
An example of this can be seen in the number of vehicles
connected to the SaaS-based Journeo Portal, each generating
recurring monthly revenue which increased by 25% to over 5,000 in
H1 2022 and is on-track to increase by 150% to over 10,000
connections by the end of the year.
Work to progress the preliminary findings in our first
Environmental, Social and Governance (ESG) statement (available in
the 2021 Annual Report) is ongoing, with a further update planned
for the 2022 full-year report. We have also maintained our ISO
9001, 14001, 27001 and 45001 accreditations.
Financial results
Revenue for H1 2022 was up nearly GBP1.7m to GBP8.9m (H1 2021:
GBP7.2m), an increase of 23% due to a rise in Fleet Systems revenue
of 31% to GBP4.9m (H1 2021: GBP3.7m), and a Passenger Systems
revenue increase of 15% to GBP4.0m (H1 2021: GBP3.5m).
Passenger Systems' gross profit of GBP1.9m (H1 2021: GBP1.6m)
represented an 18% increase, with margin increasing to 47% (H1
2021: 45%).
Fleet Systems' gross profit of GBP1.4m (H1 2021: GBP1.2m)
increased by GBP0.2m, with a decrease in overall margin to 29% (H1
2021: 33%) due to the upfront costs associated with large SaaS
rollout programmes.
Overall gross profit increased by GBP0.5m to GBP3.3m (H1 2021:
GBP2.8m), whilst gross margin decreased by 2% to 37%, resulting
from the programmes referred to above. An operating profit of
GBP0.3m was achieved, 14% higher than reported in H1 2021. Our
expenditure on Research and Development (R&D) resulted in a tax
credit claim of GBP0.1m (H1 2021: GBP0.2m) being received during
the period.
The underlying profit before depreciation and amortisation was
GBP0.7m (H1 2021: GBP0.6m).
The basic undiluted profit per share was 1.92p (H1 2021:
1.81p).
Tight controls over cash management, including the repayment of
GBP0.6m prior year COVID-19 related VAT deferral in full and the
profit achieved have maintained a cash position at the period end
of GBP1.2m (H1 2021: GBP1.3m).
In July 2022, immediately post period, we increased our
available debt facility from GBP1.25m to GBP2.75m.
Research and Development
Continued deployment of our solutions across major bus fleets
and at flagship sites such as London Heathrow Airport is testament
to the work being completed by our R&D teams and is fuelling
our growth. The connection rollout programme to the Journeo Portal
is progressing well and we remain on-target to achieve our
10,000-connection milestone by the end of the year.
Scaling in this fashion is not an easy task, but it is a
challenge that we had planned for, and we have coped well with the
rapid growth. We continually review the technologies that underpin
our solutions and maintain an iterative and customer-focused
development trajectory.
Developing and maintaining close bonds with our customers is
essential to our continued progression. We are fortunate to work
with stakeholders that are engaged with the solutions that we
provide and many actively work with us to add functionality and
capability, thereby continually improving and innovating our wider
product offering.
During H1 2022, we began the important and substantial task of
integrating our EPIX(1) content management software into the
Journeo Portal, to unify development of all our enterprise software
products, enhance cyber security and provide world-class
scalability and authentication throughout.
The migration is progressing well and we expect completion of
this exercise by the second quarter of 2023. In addition, we are
working with customers on migrating towards new MQTT(2) based
communication protocols and cloud infrastructure which will bring
about efficiencies and will form the basis of new development
opportunities for our customers to improve the distribution of
information to the travelling public.
Passenger Infrastructure Systems
Our Passenger Infrastructure Systems business continues to
perform in line with management expectations, increasing H1 2022
revenue year-on-year by 15% to GBP4m. We are pleased with the
progress the business is making, showing steadily increasing sales,
demonstrating the increasing adoption of our technologies.
In March 2022, we were delighted to announce a purchase order
for the second phase of the City of Edinburgh project. The GBP2.1m
purchase order for display systems and content management services
included 400 of our new Optically Bonded(3) displays which deliver
enhanced display quality and clarity, at a lower power consumption
rate.
The displays will also be the first major deployment in the UK
to support a new open standard, based upon MQTT communication
protocols. Journeo is embracing the new industry standard, produced
by the Real Time Information Group (RTIG), and has performed an
active role in its development with RTIG to ensure that it meets
the needs of our customers.
The new standard will support local authorities who wish to be
unlocked from proprietary standards that have restricted their
movement to new suppliers. It is being viewed with great interest
by local authorities and Passenger Transport Executives (PTEs)
throughout the UK and its adoption was an important factor in
winning the first of two contracts with Nottingham City Council in
June 2022. Cumulatively valued at GBP1.7m, the first contract
comprises GBP1.4m of this and will see Journeo assume control of
more than 1,600 legacy displays in the region. This is enabling
Journeo to take the same approach of enhancing legacy systems with
IoT(4) technology, to work alongside new and emerging systems, that
has been so successful on the Fleet Transport Operator Systems side
of our business.
The second part of the Nottingham City Council contract, whilst
comparatively low-valued at GBP0.3m, is arguably just as important
strategically. Journeo's powerful new messaging software tool will
enable Nottingham City Council to integrate vital travel disruption
information with scheduled and real time departure data for over
10,000 bus stops throughout the region. This intelligent new
service will consume data from standardised data feeds and
autonomously distribute the most relevant information to transport
users via displays, mobile apps and online sources already used by
the authority to provide information.
The new messaging tool will also be a catalyst for migrating our
EPIX software into the Journeo Portal, ensuring that all of our
customers are served from the same flexible, powerful and secure
cloud-based platform.
Fleet Transport Operator Systems
The Fleet Systems business continues to perform in line with
management expectations, increasing H1 2022 revenue year on year by
31% to GBP4.9m as the strategy to broaden the customer base and
develop from being an integrator of third-party equipment to a
technology partner progresses.
The renewal of the First Bus framework agreement in April 2022,
valued at GBP9m, initially for a period of 3 years but with a
possible extension for a further 2 years to March 2027, was the
largest SaaS-based framework agreement ever secured by the
business. The award will see the entirety of the fleet connected to
the Journeo Portal, increasing from 1,200 to over 4,500
vehicles.
The First Bus announcement, following shortly after the Arriva
UK Bus contract award in November 2021; in which Arriva committed
to connect all 5,000 of their vehicles to the Journeo Portal,
demonstrates the growth potential of the solution. Both roll-out
projects are underway and we expect to achieve 10,000 connections
by the end of the year.
We are also delighted with the growing adoption of the Journeo
Camera Monitoring System (CMS) or 'digital wing mirror' replacement
system. This high-performance safety solution is proving to be very
reliable and is gaining acceptance by the industry. Since its
introduction in 2019, we have installed systems on over 1,000 new
buses and now have initial retrofit trials underway. We renewed our
exclusive distribution agreement with the OEM in March 2022,
through to 2025. Low profile, digital wing mirror systems like the
Journeo CMS are now a mandatory fitment on all new London vehicles,
as part of TfL's Vision Zero programme. We are similarly engaging
with the new mayoral authorities and franchised bus services to
encourage them take a similar approach to the safety of their roads
and the public transport vehicles that occupy them.
The Fleet Systems business continues to play a small but active
role in the rail industry, with a responsive and dedicated team.
The solutions that we have created for bus and coach applications
are transferable to rail and in January 2022 we announced a
three-year framework with GB Railfreight, valued initially at
GBP0.7m, for the supply of high definition Forward Facing CCTV that
will be connected to the Journeo Portal. We intend to continue to
focus efforts in areas where the flexibility, security and
scalability of our platform can deliver tangible benefits to
customers.
Airport Passenger Transfer Solutions
The capabilities of our software-based Passenger Transfer
Solutions for airport applications, as already deployed at Gatwick,
Stansted and currently being delivered at Bristol and London
Heathrow airports, has started to generate interest from airport
authorities and operators outside the UK. As part of our research,
we invested additional resources into marketing our capabilities
and exhibited at the Passenger Terminal Expo in Paris, in June
2022. Participating in this event enabled us to demonstrate our
software to a wider, international audience of consultants, systems
integrators and bussing operators.
Our solution being delivered for Transdev Airport Services at
London Heathrow Airport, announced in September 2021, is nearing
completion and we expect the launch of the full suite of solutions
shortly. The work undertaken onsite has been well-received and this
has been recognised in the award of a further contract, announced
post period in August 2022, for the tracking and critical system
monitoring of over 300 mobile airside assets, ranging from London
Heathrow's blue light vehicles to snow ploughs and plane tugs.
We are looking forward to the delivery of the project and
deepening our bond with both Transdev and London Heathrow Airport
through this new and interesting application of our core
technology.
Market update
Mass public transportation continues to represent an attractive
market for Journeo. We are continuing to benefit from the
previously announced Transforming Cities Funding (TCF) through our
Passenger Systems business and are increasingly benefitting from
the roll-out of new, zero emission vehicles through our Fleet
Systems Business.
Work with local authority customers over the allocation of their
funding achieved through Bus Service Improvement Plans (BSIP) is
ongoing, and whilst the GBP1.2bn available for these plans is less
than central Government initially announced, we believe that the
addition of GBP5.7bn in City Regional Sustainable Transport
Settlements (CRSTS) will provide Journeo with significant
opportunities in future years. This, in addition to the
William-Schapps plan for rail and the ongoing Zero Emission Bus
Regional Areas (ZEBRA) scheme that aims to bring over 4,000 zero
emission vehicles to England's roads, convinces us of the
substantial nature of this market opportunity.
Cumulatively, the UK Government funding points to a real
commitment to make mass public transportation and active travel a
truly viable choice for members of the public, reducing our
society's reliance on fossil fuels and moving towards a more
sustainable transport model and future.
COVID-19 and supply chain
The impacts of COVID-19 will doubtless be felt for many years to
come, but the business has adjusted well with many team members
adopting hybrid working practices and splitting time between
customer sites, working from home and working at the office. We
ensure that we monitor for any change in Government guidance and,
as always, place the health and safety of our people and all those
that we interact with, at the highest level of importance.
Sourcing high quality semiconductors and display components is a
vital activity in the creation of our solutions. Through a
combination of redesign, strategic stock purchasing and close
relationships with our suppliers we have improved delivery
schedules for a number of key components that deferred
approximately GBP0.5m revenue from H1 into H2.
Outlook
We entered H2 2022 in a strong position following the GBP12.9m
orders secured in H1 2022, many of which will be completed during
H2 2022. In addition, we are having a good start to H2 2022 and
have already secured a further GBP4m of new business, including the
recently announced GBP0.6m Derby Bus Station award.
We have a growing sales opportunity pipeline on top of the
Company-record order intake. The resilience the business is
showing, underscored by increased adoption of our technology and
improving performance, provides confidence in delivering further
growth in H2 2022 and achieving market expectations for the 2022
financial year.
Adoption of our technology within major fleets such as Abellio,
Arriva and First UK Bus has seen connections to our cloud platform
accelerate rapidly. Deep integration with these customers' other
business systems is firmly embedding our solutions into their
operations, enabling them to feel the benefits that Journeo can
deliver.
Whilst pressure on certain areas within our supply chains has
eased somewhat, we remain ever vigilant to the risks that have the
potential to impact our scheduling and closely monitor the
situation for any changes.
Significant UK Government funding initiatives such as the
GBP1.2bn Bus Service Improvements Plans and GBP5.7bn City Regional
Sustainable Transport Settlements are now flowing through to local
authorities to improve public transport and associated
infrastructure. Over the next few years these important market
drivers will enable Journeo to further embed our solutions more
deeply within transport operators, local authorities and PTEs.
We are pleased with the organic growth that the Group is
achieving through the increased adoption of our solutions and seek
to augment this through targeted acquisitions, where we identify
opportunities and synergies to deliver our technology into related
or adjacent markets.
_______________
Footnotes
1 EPIX, or Electronic Passenger Information version X, is an
established platform used by local authorities and PTEs across the
UK to control the content displayed on public transport information
estates and gives them the power to display scheduled and real-time
transport information in conjunction with supporting media and
vital disruption messaging for routes and services.
2 MQTT, or Message Queuing Telemetry Transport, is a messaging
protocol for the Internet of Things (IoT) and is used for
connecting remote devices that experience minimal or unreliable
network bandwidth, such as buses on the move that need to send
regular updates.
3 Optical Bonding is a process where a layer of resin (OCR) or
film (OCA) is applied between the glass or touchscreen and TFT LCD
panel of a monitor, bonding them to make a solid laminate with no
gaps or pockets of air.
(4) IoT, or The Internet of Things, describes physical objects
(or groups of such objects) with sensors , processing ability,
software and other technologies that connect and exchange data with
other devices and systems over the Internet or other communications
networks.
Consolidated statement of comprehensive income
for the six months ended 30 June 2022
Unaudited
Unaudited six six months Year ended
months ended ended 31 December
30 June 2022 30 June 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------- ------------
Revenue (notes 4,5) 8,879 7,213 15,592
Cost of sales (5,616) (4,409) (9,569)
-------------------------------------------------- ------- ------------- ------------
Gross profit 3,263 2,804 6,023
Other income 119 168 168
Underlying administrative expenses before
depreciation and amortisation (2,730) (2,378) (4,901)
-------------------------------------------------- ------- ------------- ------------
Underlying profit before depreciation and
amortisation 652 594 1,290
Depreciation and amortisation (344) (320) (656)
Share-based payments (24) (24) (49)
Administrative expenses (2,985) (2,554) (5,438)
-------------------------------------------------- ------- ------------- ------------
Operating profit 284 250 585
Finance expense (117) (84) (176)
-------------------------------------------------- ------- ------------- ------------
Profit before taxation from continuing operations 167 166 409
Taxation credit - (8) (2)
-------------------------------------------------- ------- ------------- ------------
Profit for the period being total comprehensive
profit attributable to owners of parent 167 158 407
-------------------------------------------------- ------- ------------- ------------
Profit per share (note 6)
Basic 1.92p 1.81p 4.65p
Diluted 1.84p 1.74p 4.46p
-------------------------------------------------- ------- ------------- ------------
All results derive from continuing operations.
Consolidated statement of changes in equity shareholders'
funds
Total equity
Share Share Retained shareholders'
capital premium earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- --------- --------------
Balance as at 1 January 2021 6,250 1,174 (6,680) 744
Profit and total comprehensive income for
the period - - 158 158
Share-based payments - - 24 24
Balance at 30 June 2021 6,250 1,174 (6,498) 926
------------------------------------------ -------- -------- --------- --------------
Balance at 1 January 2021 6,250 1,174 (6,680) 744
Profit and total comprehensive income for
the year - - 407 407
Share-based payments - - 49 49
------------------------------------------ -------- -------- --------- --------------
Balance at 31 December 2021 6,250 1,174 (6,224) 1,200
Profit and total comprehensive income for
the period - - 167 167
Share-based payments - - 24 24
------------------------------------------ -------- -------- --------- --------------
Balance at 30 June 2022 6,250 1,174 (6,033) 1,391
------------------------------------------ -------- -------- --------- --------------
Consolidated statement of financial position
at 30 June 2022
Unaudited Unaudited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- -----------
Assets
Non-current assets
Goodwill (note 7) 1,345 1,345 1,345
Other intangible assets 1,216 1,136 1,166
Property, plant and equipment 528 562 565
Trade and other receivables 41 43 43
------------------------------ --------- --------- -----------
3,130 3,086 3,119
------------------------------ --------- --------- -----------
Current assets
Inventories 2,544 2,232 1,609
Trade and other receivables 8,009 5,559 5,931
Cash and cash equivalents 1,207 1,294 1,096
------------------------------ --------- --------- -----------
11,760 9,085 8,636
------------------------------ --------- --------- -----------
Total assets 14,890 12,171 11,755
------------------------------ --------- --------- -----------
Equity and liabilities
Shareholders' equity
Share capital 6,250 6,250 6,250
Share premium account 1,174 1,174 1,174
Retained earnings (6,033) (6,498) (6,224)
------------------------------ --------- --------- -----------
Total equity 1,391 926 1,200
------------------------------ --------- --------- -----------
Non-current liabilities
Deferred revenue 1,506 1,009 947
Loans and borrowings 596 - 604
Lease liabilities 246 294 261
Provisions 263 240 313
------------------------------ --------- --------- -----------
2,611 1,543 2,125
------------------------------ --------- --------- -----------
Current liabilities
Trade and other payables 3,442 3,404 2,636
Deferred revenue 5,557 3,375 3,408
Loans and borrowings 1,097 1,564 1,175
Lease liabilities 108 133 121
Tax liabilities 460 1,001 863
Provisions 224 225 227
------------------------------ --------- --------- -----------
10,888 9,702 8,430
------------------------------ --------- --------- -----------
Total equity and liabilities 14,890 12,171 11,755
------------------------------ --------- --------- -----------
Consolidated statement of cash flows
for the six months ended 30 June 2022
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ----------- ------------
Net cash from operating activities (note 8) 600 (49) 2
------------------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (71) (51) (165)
Purchases of intangible fixed assets (285) (204) (460)
------------------------------------------------------- ----------- ----------- ------------
Net cash from investing activities (356) (255) (625)
------------------------------------------------------- ----------- ----------- ------------
Financing activities
Cash flow from financing activities 3 408 642
Principal element of lease repayments (43) (67) (148)
Repayment of loans (90) (3) (22)
------------------------------------------------------- ----------- ----------- ------------
Net cash from financing activities (130) 338 472
------------------------------------------------------- ----------- ----------- ------------
Net increase / (decrease) in cash and cash equivalents 114 34 (151)
Cash and cash equivalents at beginning of period 1,096 1,254 1,254
Effect of foreign exchange rate changes (3) 5 (7)
------------------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at end of period 1,207 1,293 1,096
------------------------------------------------------- ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2022
1. Basis of preparation and approval of interim statement
The financial information for the six months ended 30 June 2022
and for the six months ended 30 June 2021 is unaudited.
The interim financial statement for the six months to 30 June
2022 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 2021.
The financial information has been prepared on the basis of
IFRSs that the Directors expect to be applicable as at 31 December
2022.
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 2021, 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 2021 were
approved by the Board on 28 March 2022 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 5 September 2022.
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 UK 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 2021
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
2023.
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
2022 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ------------
Revenue
Goods 6,349 4,831 10,615
Services 2,530 2,382 4,977
----------------------------------------- ----------- ----------- ------------
8,879 7,213 15,592
----------------------------------------- ----------- ----------- ------------
Construction contracts included in goods 3,435 2,672 5,520
----------------------------------------- ----------- ----------- ------------
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
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------- ----------- ----------- ------------
Revenue
Fleet Systems 4,901 3,747 9,290
Passenger Systems 3,978 3,466 6,302
------------------------- ----------- ----------- ------------
8,879 7,213 15,592
------------------------- ----------- ----------- ------------
Gross profit
Fleet Systems 1,409 1,227 2,919
Passenger Systems 1,854 1,577 3,104
------------------------- ----------- ----------- ------------
3,263 2,804 6,023
------------------------- ----------- ----------- ------------
Underlying profit/(loss)
Fleet Systems 119 199 698
Passenger Systems 330 209 339
------------------------- ----------- ----------- ------------
449 408 1,037
Central (141) (134) (403)
------------------------- ----------- ----------- ------------
Underlying profit 308 274 634
------------------------- ----------- ----------- ------------
Reconciling to profit before interest and tax
Underlying Share-based Operating
profit/(loss) payments profit/(loss)
GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- --------------
Fleet Systems 119 (12) 107
Passenger Systems 330 (12) 318
------------------ -------------- ----------- --------------
449 (24) 425
Central (141) - (141)
------------------ -------------- ----------- --------------
Total 308 (24) 284
------------------ -------------- ----------- --------------
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
2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- ------------
Assets
Fleet Systems 5,703 4,384 5,193
Passenger Systems 6,636 5,148 4,109
-------------------- ----------- ----------- ------------
12,339 9,532 9,302
Goodwill 1,345 1,345 1,345
Cash and borrowings 1,207 1,294 1,096
Unallocated (1) - 12
-------------------- ----------- ----------- ------------
14,890 12,171 11,755
-------------------- ----------- ----------- ------------
Liabilities
Fleet Systems (3,387) (3,023) (3,216)
Passenger Systems (8,419) (6,658) (5,449)
-------------------- ----------- ----------- ------------
(11,806) (9,681) (8,665)
Cash and borrowings (1,693) (1,564) (1,779)
Unallocated - - (111)
-------------------- ----------- ----------- ------------
(13,499) (11,245) (10,555)
-------------------- ----------- ----------- ------------
Net assets
Fleet Systems 2,315 1,361 1,977
Passenger Systems (1,782) (1,510) (1,340)
-------------------- ----------- ----------- ------------
533 (149) 637
Goodwill 1,345 1,345 1,345
Cash and borrowings (486) (269) (683)
Unallocated (1) (1) (99)
-------------------- ----------- ----------- ------------
1,391 926 1,200
-------------------- ----------- ----------- ------------
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
2022 2021 2021
000 000 000
---------------------------------------- ----------- ----------- ------------
Basic weighted average number of shares 8,741 8,741 8,741
Dilutive potential Ordinary Shares 386 361 370
---------------------------------------- ----------- ----------- ------------
9,127 9,102 9,111
---------------------------------------- ----------- ----------- ------------
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 2021 1,345 1,345
------------------------------------- ------------ ---------
At 30 June 2021 1,345 1,345
------------------------------------- ------------ ---------
At 1 January 2022 1,345 1,345
------------------------------------- ------------ ---------
At 31 December 2021 and 30 June 2022 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
2022 2021 2021
% % %
------------------ ----------- ----------- ------------
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. There was an investment in
key staff during 2018 and 2019. The 2022 forecast assumes growth of
34%. 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 GBP5,869k. 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 2022 to 10% would result in
headroom remaining in the current carrying value of goodwill in
relation to Passenger Systems of GBP1,149k. If sales forecasts were
down 20% across the whole period and overheads remained unchanged
then there would be headroom of GBP598k.
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 65%, 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
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ----------- ----------- ------------
Profit for the period 167 158 407
Adjustments for:
- Finance expense 117 84 176
- Depreciation of property, plant and equipment 109 108 218
- Amortisation of intangible fixed assets 235 212 438
- Share-based payment expense 24 24 49
- Foreign exchange rate - 12 (15)
- (Increase) / decrease in provisions (52) 3 79
------------------------------------------------------ ----------- ----------- ------------
Operating cash flows before movement in working
capital 600 601 1,352
(Increase) / decrease in inventories (936) (557) 66
(Increase) in receivables (1,519) (1,290) (1,724)
Increase in payables 2,557 1,289 450
------------------------------------------------------ ----------- ----------- ------------
Cash inflow from operations 702 43 144
Income taxes paid - (8) (2)
Interest paid (102) (84) (140)
------------------------------------------------------ ----------- ----------- ------------
Net cash inflow / (outflow) from operating activities 600 (49) 2
------------------------------------------------------ ----------- ----------- ------------
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END
IR MZGGLLFLGZZG
(END) Dow Jones Newswires
September 05, 2022 02:00 ET (06:00 GMT)
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