Final Results

RNS Number : 5019I

Journeo PLC

02 April 2020

 

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation no. 596/2014 ("MAR")

2 April 2020

Journeo plc

("Journeo" or "the Group" or "the Company")

Journeo plc (AIM: JNEO), the information systems and transport technical services group, announces its final results for the year ended 31 December 2019.

Financial headlines

· Revenue £11.4m (2018: £12.6m)

· Gross profit £4.5m (2018: £4.8m)

· Underlying loss before tax £0.8m (2018: loss of £0.1m)

· Loss before tax of £0.9m (2018: profit of £0.1m)

· Diluted loss per share 1.08p (2018: profit 0.15p)

· Cash and cash equivalents at year end £0.7m (2018: £0.5m)

· Raised £1.2m (before expenses) by way of share placing in December 2019 to strengthen the balance sheet and provide additional working capital.

Operational headlines

· Contract awards totalling approximately £9.0m of new business confirmed in late 2019, for delivery in 2020 and beyond, including projects for Stansted Airport, City of Edinburgh Council, and a northern transport partnership.

· Renamed to Journeo to create unified branding reflecting the transformation of the Group into the technology-led business of today.

· Passenger System sales increased to £4.8m (2018: £4.4m) and gross profit increased to £2.6m (2018: £2.5m).

· Fleet System sales decreased by 19% to £6.6m (2018: £8.2m) and gross profit decreased to £1.9m (2018: £2.4m), mainly due to a reduction in overseas sales.

Russ Singleton, CEO of Journeo plc, said: "Although trading conditions in our fleet business remained a challenge, we made a great deal of progress in 2019. This was evidenced by the combined value of contracts secured at the end of 2019 totalling around £9m and which provided us with a record order book at the start of 2020. Trading in the first quarter has been in line with our expectations and we are benefitting from a stronger balance sheet and additional working capital.

Our technologies are playing a part in the smarter-cities of the future and our growth plans are being supported by government-backed regulatory schemes for transforming public transport infrastructure and information delivery systems.

Whilst there is a significant degree of uncertainty as a result of the coronavirus, the essential need for public transport and the contracts we currently have, give us confidence that we will be able to navigate these challenging times, and will emerge in a position from which we can grow in the future."

For further information, please contact:

Journeo plc Russ Singleton/ Nick Lowe	[phone]
WH Ireland  - Nominated Adviser and Broker Mike Coe/ Chris Savidge	[phone]
Communications Portfolio Ariane Comstive	[phone]

Notes to editors:

Journeo plc, formerly 21st Century Technology plc, is the specialist provider of advanced information systems and transit related technical services to towns, cities, and local authorities.  The Group works with many of the UK's largest multinational public transport operators, supporting them towards the creation of smarter-cities.

The business comprises two segments:

· Passenger Systems, including design, manufacture, installation and management of all the hardware and software for electronic passenger information systems, smart-ticketing and wayfinding.

· Fleet Systems solutions, including CCTV video surveillance to improve passenger & driver safety, vehicle and driver performance monitoring, real-time on-board IT subsystems management and automatic passenger counting.

In the last few years, the Group has invested heavily in research and development, enabling it to design and supply the very best solutions in order to meet 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 and scalable products and services that can integrate with existing technology while preparing for future advancements.

Chairman's Statement

As I began drafting this Chairman's statement the world was in a very different place than the position as I commit this to print, as we face the effects of the coronavirus pandemic. The Company is responding admirably to the challenges and once we are through this period, we are in a strong position to build on the considerable interest in the Company's products and services evidenced by the contract awards totalling approximately £9 million of new business that were confirmed late last year, for delivery in 2020 and beyond. The successful £1.2m placing in December strengthens our balance sheet and provides additional working capital to fund the growth.

I am pleased to report that results for the year-ended December 2019 are in-line with market expectations and whilst trading conditions in some areas of public transport, particularly in the UK remained a challenge, a great deal of progress is being made. Our strategy of applying our research and development to create innovative and valuable solutions is gaining traction. The growing demand for these solutions in the government-backed, regulatory schemes for transforming public transport infrastructure and information delivery systems is beginning to produce tangible business in both our Passenger and Fleet segments. Our systems are playing a part in the smarter-cities of the future. 

This strategy led to significant contract awards and framework agreements being secured towards the end of the year resulting in our strongest order book to date. These wins along with increasing adoption of our own technologies and a record sales prospects pipeline underpin our confidence in further progress being made in 2020.

Trading results

Group results for the year ended 31 December 2019 show an underlying loss of £777k (2018: £138k).  Overall sales decreased to £11.4m (2018: £12.6m) and gross profit decreased to £4.5m (2018: £4.8m).

Passenger sales increased to £4.8m (2018: £4.4m) with similar margins to last year and gross profit increased to £2.6m (2018: £2.5m).

Fleet sales decreased by 19% to £6.6m (2018: £8.2m), reflecting the problems that bus operators faced with falling passenger numbers, changing technology to carbon-zero vehicles, reduced government subsidies and regulatory changes. Gross profit decreased to £1.9m (2018: £2.4m) following the sales decrease as margins were maintained.

Underlying administrative expenses increased slightly to £5.5m (2018: £5.4m), with continued investment in technical and sales personnel to support our strategy.

The loss before tax was £0.9m (2018: profit £0.1m).

Strategy & Markets Update

As we continue to invest in the development of our own core technologies and software, the importance, scale and value of the business-critical infrastructure opportunities that we are able to access is changing. 

It is evident that some segments within the public transport markets in which the Group operates are challenging, but it is very encouraging to see the receptive approach both new and existing customers are taking towards the new technologies and services we are developing to help them meet their needs of delivering efficient and inter-connected operations within modern, carbon-zero, public transport environments.

The contracts that were secured towards the end of 2019 such as the £4.8m Edinburgh project and the £1.5m Stansted airport project were of a scale and complexity that would previously have been unattainable by the Group. The resource optimisation and real-time information software, alongside our IoT and 'on-board' security and information systems demonstrate our strategy is working. Developing innovative solutions built from a core, scalable technology platform that can be applied to other market applications will deliver increasing efficiencies to our customers and increasing value to our shareholders.

We have many operators both in the UK and overseas at various stages in their evaluation of our new on-board and cloud-based technologies. We look forward to these progressing during 2020. The sales cycle for new on-board technologies can be somewhat protracted given the nature of the projects on many thousands of vehicles and the operators' need to prove the business-case and, through a sequence of trials, gain the necessary safety and homologation approvals. The trials are going well with positive feedback and initial orders have been received in Q1 2020.

A key market driver is government support at both a local and national level for increased use of public transport responding to aims of carbon-zero, reduced emissions and lowering congestion. Following many years of austerity, which has seen reductions in support for the bus industry in general, we are starting to benefit from new programmes. The £2.4bn Transforming Cities Fund is one example. This fund's objective is to increase productivity and growth through investment in public and sustainable transport with a focus on intra-city connectivity. The recently announced £1.9m order for a northern transport partnership flows from this funding source.

Within the UK bus market, vehicle replacement programmes have, for the second year in a row, diminished with substantially fewer new vehicles being built compared with historic levels. Reorganisation of the UK bus manufacturers saw ADL being acquired by NFI and, in late 2019, Bamford Bus set-up from the receivership of Wrightbus in Northern Ireland. These developments have also been influenced by uncertainties surrounding the changing technology to carbon-zero vehicles. The recent DfT and government statements about £4bn investment over the next five years for British manufactured carbon-zero bus variants provides some much need clarity and we look forward to new bus registrations increasing in the medium term.

Share placing and change of name

In October 2019 the Company appointed W H Ireland as NOMAD and broker and successfully carried out a £1.2m share placing alongside a share consolidation. The Company also took the opportunity to change its name to Journeo plc to better reflect the technology-led strategy of the Group.

I would like to welcome Canaccord Genuity as our new and largest institutional shareholder and we were delighted to receive the ongoing commitment and support of many new and existing shareholders, including Board members and a number of our senior managers who also participated in the placing. 

Outlook

We have begun the year with an unprecedented order book, a large and growing sales prospects pipeline and, having just raised £1.2m in the recent placing, have a stronger balance sheet and additional working capital to fund our growth plans for FY2020. Trading in the first few months of this year has been in-line with management expectations. The government initiatives are real and there are substantive economic drivers in the smarter-cities markets we serve.

However, the unforeseen and rapidly developing public health situation as a result of coronavirus has the potential to impact key elements of our complex supply chains, engineering teams and end-user or customer site operations. This is covered in more detail in the Risk section of the Report and Accounts. Our priority is the safety and well-being of all of the people involved in the business and continuing to provide our essential services in the public transport arena. We will act at all times in accordance with prevailing Government recommendations.

Whilst a significant degree of operational uncertainty has been introduced, the need for public transport and the contracts we currently have, give us confidence that we will navigate this crisis successfully.

Undoubtedly these are exceptionally challenging times, but we have dedicated, talented and resourceful people working hard to get through the coronavirus crisis. On behalf of the Board, I would like to offer my sincere thanks to all our people and I am sure we will emerge in a strong position from which to profitably grow.

Mark Elliott

Chairman

Chief Executive's report

The rebranding to Journeo plc was a key moment in the development of our business, marking a watershed in our transition to better serve our customers and markets. Over the last few years, we have been building our technology capabilities in response to a rapidly evolving landscape for both our fleet operators and passenger network managers. We needed to change into a technology led business with software and specialist product design skills to facilitate the converging and more complex systems required by our customers. We adopted "Connected Systems for Connected Journeys" as our strapline to reflect our aspirations and the direction of travel in our markets. We have invested in our vision and are starting to deliver those complex converged systems to our customers, thereby continuing our heritage which has been built on engineering excellence, technology leadership, a deep affinity with our customers and a commercial aim to grow our business.

Journeo - New Journey

Our investment started with the acquisition of our Passenger Systems business in 2015 which provided access to the UK passenger information market and the software product and skills to build upon.  The Research and Development team was established in 2016 by Dr Houghton, who applied these software capabilities and developed the Journeo Remote Condition Monitoring (RCM) application to monitor and manage on-vehicle CCTV and associated IT sub-systems. This has evolved into a powerful, software-based service to manage critical safety and information systems on the vehicle.  We delivered our first converged solution at London Gatwick for passenger transit for the flying public and the airport and airline workers, with information and safety on the vehicle, at the bus stop and in the terminal. We are now working on cloud-based video management solutions for our fleet operators. The recent contract wins we announced amounting to £9m, which include work for Stansted Airport, City of Edinburgh and a northern transport partnership, are evidence of the transformation we have been undergoing to become the technology-led business we are today and of the increasing the value we are able to deliver to our customers. I expect this to feed through into a profitable and growing business this year.

Operational review

Passenger systems

Earlier in the year we reported that market conditions in the UK passenger information sector were encouraging and that the Company's technology innovations were competing well and attracting significant interest. At the half year end the order book was some 50% higher as compared with prior year. We anticipated that revenues for the year would be ahead of 2018 with a large carry forward order book and the segment was expected to produce a profitable contribution. Whilst revenue for 2019 increased 8.3% to £4.8m (2018: £4.4m), broadly in line with management expectations, there were a number of project delays that resulted in a small loss for the year of £80k (2018: £60k loss). On the surface this may appear modest progress, but it masks what has been achieved through the year.

There is significant potential for growth, as our capabilities and investments in technology begin to mature at a time when there are major market opportunities. This is demonstrated by the announcements made in our December trading update where we highlighted around £7.5m of future business that will transform our Passenger Systems segment. The largest two wins were:

· In October, we were made aware of the recommendation of a £2.9m contract for the provision of real time passenger information systems for the City of Edinburgh bus network. At the time contractual negotiations were at an advanced stage and the anticipated value of the project over its duration was expected to increase to £4.8m, with one important element worth £0.8m scheduled to be completed early in H1 2020. The £4.8m framework contract and the first £0.8m order were secured in January 2020.

· In November we were notified by a northern transport partnership that a contract had been awarded to a Tier-1 contractor for the Company's passenger information systems technology.  The contract is part of the first tranche of the Transforming Cities Fund ("TCF").  In February 2020, we secured a contract for £1.9m from the Tier-1 contractor to work on the project.

We also announced in December that we had been awarded the contracts for Lots 1, 2 and 3 of the Electronic Bus Stop display supply - OJEU Contract reference 2019/S 189-459067 - from Nottinghamshire County Council. As this is a framework arrangement, there is no specific value attached to the awards, but the contract duration encompasses tranche 2 of the Transforming City Fund projects. Lot 1 will include the Company's new high brightness LED displays, Lot 2 will include high-definition thin film transistor (TFT) displays and Lot 3 will be including the Company's new ultra-low power solutions. In aggregate the value of work expected to be undertaken will be material to the Company.

These wins are an endorsement of our strategy of combining engineering services, partnerships with complementary industry specialists and our own latest generation of industry specific products and software for the benefit of our customers. This creates a powerful offering that allows us to access large and complex projects that would previously have been inaccessible to us.

We are also developing new solutions in response to the needs of local authorities and Passenger Transport Executives (PTEs) as we seek to extend our role in the transport sector of the wider smarter city. For instance, air quality monitoring technology is currently expensive to purchase, install and maintain.  Our response has been to invest in a solution to address this and we currently have active trials of our low-cost and fast deployment solution with a small number of customers.  In addition, we have responded to the UK's pothole problem and have initial trials of our new road surface monitoring technologies with a local authority customer, which has yielded positive results and is feeding back into the development process - a great example of our customer led development.

Overall, I am pleased with the progress in the Passenger Systems business and look forward to continuing to build on our successes with customers, industry complementors and the supply chain. 

Fleet Systems

We made substantial progress in the year retaining existing clients, adding new Tier-1 operators and advancing our Journeo technology platform, however, the results from the Fleet business, although in line with management expectations, were disappointing.

Revenue fell by 19% to £6.6m (2018: £8.2m). There were two main reasons for this; a £0.4m reduction in our Scandinavian revenue as our operator customers were unsuccessful in renewing a number of their route franchises leading to a reduction in the number of vehicles under contract. Secondly, 2019 did not have any major fleet-wide technology programs as our operators responded to their market conditions by cancelling or delaying projects that were anticipated; whereas in 2018 we benefited from a £1m update program for a New Zealand based bus operator.

Gross profit fell similarly by 21% to £1.9m (2018: 2.4m) whilst margins were broadly in-line with the previous year at 29%. 

The underlying loss for the year was £469k (2018: loss £90k).

Our customers in the UK market faced difficult conditions with on-going reductions in government subsidies resulting in fewer routes, fleet miles and ultimately passenger journeys. This suppressed retrofit programmes of new technologies on legacy fleets and exerted price pressure on any contract renewals for supply or services. In addition, the market for new vehicles was also held back by the uncertainties of changing technology to zero-emissions vehicles and the regulatory environment in cities.

The Society of Motor Manufacturers and Traders published data on the UK's bus and coach registrations showing a 14% fall to 2,766 (2018: 3,212). We have seen similar decreases in our major customers new bus build and the receivership of Wrightbus, one of the UK's two main bus manufacturers, highlighted the problems. Thankfully its factory re-opened as the Bamford Bus Company stepped in to rescue parts of the business, no doubt buoyed by the recently announced Government plans for substantial support for more carbon-zero public transport.

UK sales were down 3% to £5.8m (2018: £6.0m) with an encouraging £0.1m increase in gross profits, benefitting from initiatives that offset reduced bus numbers and delayed technology refreshes. Business development efforts won a new major operator customer in National Express and secured exclusive rights to the innovative SmartVision "digital wing-mirrors", increasing our supply to existing customers and, via bus manufacturers, extending our reach to all five of the Tier-1 and many other fleet operators. The Journeo Remote Condition Monitoring SaaS services are generating a lot of interest and played an important part in contract renewals and new business acquisition.

We maintain a small and agile Rail team in order to respond to requirements from rail customers and were delighted to win a number of orders in the sector prior to year-end.  The benefit of these were too late in the year to impact 2019 results, but the orders will begin to filter through the early part of 2020.

Our strategic aims for deliviering profitable growth are to:

· increase the value of our solutions via technology investment in the Journeo platform

· increase our overseas sales with new routes to market for our Journeo technology solutions through vehicle manufacturers, multi-national fleet operators and regional market leading integrators 

· extend our supply opportunities by adding more complementary products

Our investments to support this include the development of the Journeo Technology Platform and the key services of remote condition monitoring and agnostic video management.  This will enable our customers to deliver operational efficiencies and provide a real incentive to drive through fleet technology refreshes, which are a major driver for our business.

In addition, we have been building on the London Gatwick airport passenger transit solution we completed in 2017, that delivered technology on-bus and at car park bus stop locations along with operational and management reporting software. I was pleased to announce in the December trading update a £1.5m contract with National Express at Stansted Airport for a similar transit solution and five-year support services, with the option to extend to eight years.

We continue to support our large fleet operator customers and in H1 2019 were pleased to announce the renewal of a three-year framework with Arriva UK Bus.  The continuation of this long-term relationship is testimony to the value we bring to our fleet customers.

Central services

The Central Services support our overall strategy goals of customer bonding, engineering excellence, technology leadership and business growth.

The major corporate activity in the year was the share consolidation and successful £1.2m share placing to strengthen our balance sheet and fund future growth.

The Group's business development team played an important role in our major bids by linking our technology investments to the market opportunities.

In marketing, the major change has been the rebranding of the company to Journeo and this will continue in 2020 as the segments adopt the unified branding.

I am pleased to report that we successfully gained accreditation for our Information Security Management System to ISO 27001:2, and this joins our existing ISO accreditations for Quality, Health and Safety and Environmental Management.

There appears to be real momentum gathering around the UK bus market and we are well placed to capitalise on the opportunities that will arise. However, there remains significant questions on the timing of any upturn, particularly with the effects of the coronavirus pandemic on the world's bus operators and manufacturers. We will keep the situation under close review and react accordingly.

Russ Singleton

Chief Executive

Consolidated statement of comprehensive income

for the year ended 31 December 2019

	Notes	2019 £'000	2018 £'000
Revenue	2,3	11,402	12,601
Cost of sales		(6,863)	(7,752)
Gross profit	3	4,539	4,849
Underlying administrative expenses		(5,530)	(5,357)
Other income		214	370
Underlying loss		(777)	(138)
Share-based payments		-	398
Total administrative expenses		(5,316)	(4,589)
Operating (loss) / profit		(777)	260
Finance expense		(171)	(121)
(Loss) / profit before taxation from continuing operations		(948)	139
Taxation credit	4	15	3
(Loss) / profit for the year being total comprehensive (loss) / profit attributable to owners of the parent		(933)	142
(Loss) / profit per share	5
Basic		(1.08p)	0.15p
Diluted		(1.08p)	0.15p

Consolidated statement of changes in equity

for the year ended 31 December 2019

	Share capital £'000	Share premium account £'000	Retained earnings £'000	Total equity shareholders' funds £'000
Balance at 1 January 2018	6,061	8	(5,802)	267
Profit and total comprehensive income for the year	-	-	142	142
Share-based payments	-	-	(398)	(398)
Balance at 31 December 2018	6,061	8	(6,058)	11
Loss and total comprehensive income for the year	-	-	(933)	(933)
Proceeds from issue of new shares	156	950	-	1,106
Balance at 31 December 2019	6,217	958	(6,991)	184

Consolidated statement of financial position

at 31 December 2019

	Notes	2019 £'000	2018 £'000
Assets
Non-current assets
Goodwill	6	1,345	1,345
Other intangible assets		1,054	969
Property, plant and equipment		287	138
Trade and other receivables		43	43
		2,729	2,495
Current assets
Inventories		1,271	1,650
Trade and other receivables		3,923	3,224
Cash and cash equivalents		725	485
		5,919	5,359
Total assets		8,648	7,854
Equity and Liabilities
Shareholders' equity
Share capital		6,217	6,061
Share premium account		958	8
Retained earnings		(6,991)	(6,058)
Total equity		184	11
Non-current liabilities
Deferred revenue		671	499
Loans and borrowings		570	576
Deferred tax liability		9	35
Lease liabilities		64	-
Provisions		315	290
		1,629	1,400
Current liabilities
Trade and other payables		3,212	2,914
Deferred revenue		2,214	2,329
Loans and borrowings		1,141	1,000
Lease liabilities		88	-
Provisions		180	200
		6,835	6,443
Total equity and liabilities		8,648	7,854

Consolidated statement of cash flows

for the year ended 31 December 2019

	Notes	2019 £'000	2018 £'000
Net cash flows from operating activities	7	(249)	380
Cash flows from investing activities
Purchases of property, plant and equipment		(45)	(91)
Purchases/generation of intangible assets		(538)	(452)
Net cash flows from investing activities		(583)	(543)
Cash flows from financing activities
Cash flows from financing activities		145	126
Principal element of lease repayments		(170)	-
Issue of loan notes		-	250
Repayment of loans		(10)	(32)
Issue of Shares		1,106	-
Net cash flows from financing activities		1,071	344
Net increase in cash and cash equivalents		239	181
Cash and cash equivalents at beginning of year		485	302
Effect of foreign exchange rate changes		1	2
Cash and cash equivalents at end of year		725	485

The accompanying notes form an integral part of these condensed consolidated financial statements.

Notes to the consolidated financial statements

for the year ended 31 December 2019

1. Basis of preparation

The Group financial statements are prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued and effective (or adopted early) and endorsed by the European Union at the time of preparing these financial statements and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, except financial instruments and share-based payments, which are prepared in accordance with IFRS 9 and IFRS 2 respectively. A summary of the more important Group accounting policies is set out below.

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group entity are expressed in Sterling (£), which is the presentation currency for the consolidated financial statements. The numbers in the financial statements are rounded in £'000 for presentation purposes.

Going concern

The Group's business activities, together with factors likely to affect its future development, performance and position, are set out in the Strategic Report of the Report and Accounts along with the principal risks and uncertainties.

The Group's net underlying loss for the year was £777k (2018: £138k). As at 31 December 2019 the Group had net current liabilities of £916k (2018: £1,084k) and net cash reserves of £725k (2018: £485k).

In December 2018 the 2016 Loan Notes maturity date was extended and an additional £250k of 2018 Loan Notes were issued to enable the Group to continue its investment in R&D and provide working capital to ensure that the Group can capitalise on anticipated opportunities.

In December 2019 the Group raised gross proceeds of £1.2m from a placing.

The Directors have prepared Group cash flow projections for the period to 30 June 2021 based on latest forecasts that show that the Group will be able to operate within the Group current funding resources. The financial uncertainty created within the economy as a result of Covid-19 is clearly difficult to forecast and predict, but the Directors have produced sensitised forecasts based on their best estimates of likely outcomes, and these indicate that for the 12 month period from the date of signing these financial statements the group will be able to operate within the financial facilities available to it, with significant headroom to allow for any lost revenues.

The Directors also monitor a rolling cashflow forecast and key management review working capital movements and requirements on a daily basis.  The Directors are satisfied that the group will be able to settle their debts as they fall due.

The pledges made by the UK Government provide further comfort to the Directors, that they will have access to additional funding, should they require from the various measures that the Government has put in place to help protect employment and support businesses through this period of uncertainty.

Whilst there is a significant degree of operational uncertainty as a result of the Coronavirus, the essential need for public transport and the contracts we currently have, provides confidence that the Group will be able to navigate these challenging times, and will emerge in a position from which The Group  can grow in the future.

On this basis, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of these financial statements. The Directors therefore continue to adopt the going concern basis in preparing the financial statements.

2. Revenue

The revenue split between goods and services is:

	2019 £'000	2018 £'000
Goods	6,996	8,202
Services	4,406	4,399
	11,402	12,601
Contract works included in goods	3,218	2,699

3. 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.

Revenue and gross profit

	Revenue 2019 £'000	Gross profit 2019 £'000	Revenue 2018 £'000	Gross profit 2018 £'000
Fleet Systems	6,646	1,900	8,217	2,395
Passenger Systems	4,756	2,639	4,384	2,454
Total	11,402	4,539	12,601	4,849

Major customers

In the year, two customers within the Fleet Systems segment each accounted for over 10% of Group revenue at 16% and 10%. In the prior year, there were two Fleet Systems customers that each accounted for over 10% of revenue at 19% and 11%. There were no major customers within the Passenger Systems segment.

Underlying (loss)/profit

	2019 £'000	2018 £'000
Fleet Systems	(469)	148
Passenger Systems	(80)	(57)
	(549)	91
Central	(228)	(229)
Underlying (loss)/profit	(777)	(138)

Reconciling to loss before interest and tax

2019	Underlying  operating profit/(loss) £'000	Share-based  payments £'000	Operating profit/(loss) £'000	Profit/(loss) before interest and tax £'000
Fleet Systems	(469)	-	(469)	(469)
Passenger Systems	(80)	-	(80)	(80)
	(549)	-	(549)	(549)
Central	(228)	-	(228)	(228)
	(777)	-	(777)	(777)

2018	Underlying  operating profit/(loss) £'000	Share-based  payments £'000	Operating profit/(loss) £'000	Profit/(loss) before interest and tax £'000
Fleet Systems	148	398	546	546
Passenger Systems	(57)	-	(57)	(57)
	91	398	489	489
Central	(229)	-	(229)	(229)
	(138)	398	260	260

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.

Net assets

	Assets 2019 £'000	Liabilities 2019 £'000	Net assets 2019 £'000	Assets 2018 £'000	Liabilities 2018 £'000	Net assets 2018 £'000
Fleet Systems	3,501	(2,700)	801	2,848	(2,183)	665
Passenger Systems	3,059	(3,968)	(909)	3,135	(4,039)	(904)
	6,560	(6,668)	(108)	5,983	(6,222)	(239)
Goodwill	1,345	-	1,345	1,345	-	1,345
Cash and borrowings	725	(1,711)	(986)	485	(1,576)	(1,091)
Unallocated	18	(85)	(67)	41	(45)	(4)
Total	8,648	(8,464)	184	7,854	(7,843)	11

Geographical segments

	Revenue 2019 £'000	Gross profit 2019 £'000	Revenue 2018 £'000	Gross profit 2018 £'000
UK	10,522	4,025	10,337	3,755
International
- Scandinavia	515		924
- Other EU	355		345
- Non-EU	10		995
Total international	880	514	2,264	1,094
Total	11,402	4,539	12,601	4,849

Assets and liabilities by location

	2019 £'000	2018 £'000
Assets
UK	8,628	7,823
International	20	31
Total assets	8,648	7,854
Liabilities
UK	(8,436)	(7,814)
International	(28)	(29)
Total liabilities	(8,464)	(7,843)

All non-current assets are located within the United Kingdom.

4. Taxation

(a) Analysis of (credit)/charge in year:

	2019 £'000	2018 £'000
Current tax
UK corporation tax on the loss for the year (19%)	-	-
Swedish corporation tax on the profit for the year (22%)	-	(3)
Prior year under provision	10
Deferred tax (credit)/charge
- Temporary differences on acquisition	(25)	-
Total tax credit for the year	(15)	(3)

(b) Factors affecting the total tax (credit)/charge for the year

The tax assessed for the year differs from the standard rate of corporation tax in the UK at 19% (2018: 19%). The differences are explained below:

	2019 £'000	2018 £'000
(Loss) / profit on ordinary activities before tax	(948)	140
(Loss) / profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2018: 19%)	(180)	27
Effects of:
Expenses not deductible for tax purposes	(8)	(53)
Change in unrecognised deferred tax assets	204	96
Income not taxable	(41)	(70)
Prior year under/(over) provision	10	(3)
Total tax credit for the year	(15)	(3)

(c) Deferred tax asset/(liability)

The unrecognised and recognised deferred tax assets/(liability) comprise the following:

	Unrecognised			Recognised
Group	2019 £'000	2018 £'000		2019 £'000	2018 £'000
Tax losses	669	508		-	-
Decelerated capital allowances	51	24		-	-
Short term timing differences	-	43		-	-
Arising on acquisition	-	-		(9)	(35)
	720	575		(9)	(35)

The Group has £3,937,000 of unutilised tax losses (2018: £2,987,000) which may be carried forward indefinitely.

5. Profit/(loss) per Ordinary Share

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to Ordinary Shareholders by the weighted average number of Ordinary Shares in issue during the year.

For diluted earnings, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of all dilutive potential Ordinary Shares.

	2019			2018
Group	Profit / (Loss) £'000	Per share amount Pence		Profit / (Loss) £'000	Per share amount Pence
Basic EPS
Profit / (Loss) attributable to Ordinary Shareholders	(933)	(1.08)		142	0.15
Diluted EPS
Profit / (Loss) attributable to Ordinary Shareholders	(933)	(1.08)		142	0.15

Details of the weighted average number of Ordinary Shares used as the denominator in calculating the earnings per Ordinary Share are given below:

	2019 '000	2018 '000
Basic weighted average number of shares	86,433	93,240
Dilutive potential Ordinary Shares	-	-
Diluted weighted average number of shares	86,433	93,240

6. 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:

	Passenger Systems £'000	Total £'000
Deemed cost:
At 1 January 2018	1,345	1,345
At 31 December 2018	1,345	1,345
At 31 December 2019	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:

	2019 %	2018 %
Passenger Systems	13	14

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 2020 forecast predicts growth of 50%. 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 £6,958k. 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 of 20% points in the growth rate in 2020 to 30% would result in headroom remaining in the current carrying value of goodwill in relation to Passenger Systems of £2,851k. If sales forecasts were down 20% across the whole period and overheads remained unchanged then there would be headroom of £797k.

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 72.2%, 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.

7. Reconciliation of operating (loss) / profit to net cash outflow from operating activities

	2019 £'000	2018 £'000
(Loss) / profit for the year	(933)	142
Adjustments for:
- Finance expense	171	121
- Deferred tax credit	(25)	-
- Depreciation of property, plant and equipment	198	79
- Amortisation of intangible fixed assets	453	313
- Share-based payment (income)/ expense	-	(398)
- Foreign exchange rate	12	17
- Increase / (decrease) in provisions	5	(128)
Operating cash flows before movement in working capital	(119)	146
Decrease / (increase) in inventories	379	(295)
(Increase) / decrease in receivables	(523)	515
Increase in payables	183	133
Cash (outflow) / inflow from operations	(80)	498
Income taxes (paid) / received	(10)	3
Interest paid	(159)	(121)
Net cash (outflow) / inflow from operating activities	(249)	380

8. Availability of audited accounts:

Copies of the 2019 audited accounts will be made available following the announcement of the date of our AGM. They will also be available on the Company's website (www.journeo.com) for the purposes of AIM Rule 26 and will be posted to shareholders in due course.

- Ends -

 

END

 

 

FR FFFVISTILIII