REG - Journeo PLC - Half-year Report
26/09/2023 07:00
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RNS Number : 5863N Journeo PLC 26 September 2023
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.
26 September 2023
Journeo plc
("Journeo, the "Company" or the "Group")
Interim results for the six months ended 30 June 2023
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 2023 ("H1 2023").
Financial headlines
· Group revenue grew by 146% to £21.8m (H1 2022: £8.9m)
· On a like-for-like basis (excluding Infotec) revenues grew 41% to
£12.5m
o Fleet revenue increased 61% to £7.9m (H1 2022: £4.9m)
o Passenger revenue increased 16% to £4.6m (H1 2022: £4.0m)
· Infotec revenue contribution of £9.3m since acquisition in January
2023
· Group gross profit increased 77% to £6.4m (H1 2022: £3.3m) and by
35% to £3.9m on a like-for-like basis
· Underlying profit before depreciation and amortisation increased 277%
to £2.5m (H1 2022: £0.7m).
· Cash and cash equivalents at the end of the period increased to
£11.3m (H1 2022: £1.2m) of which £3.5m was customer payments in advance.
· Basic undiluted profit per share of 9.03p (H1 2022: 1.92p)
Acquisition and Placing
· Acquired IGL Limited ("Infotec") for an aggregate consideration of
£8.7m
· Acquisition funded primarily by way of Placing of £7m (net of
expenses), also enabling the repayment of Loan Notes
Operational headlines
· Record order book as at 30 June 2023 of £27m
· Number of connections generating monthly recuring revenue on
SaaS-based Journeo Portal reached 12,000 connections in H1 2023 (FY 2022:
10,000 and H1 2022: 5,000)
· Integration of Journeo's EPIX system with Journeo Portal progressing
well and once complete will mark a shift towards the new industry standard
open protocol, enabling the connection of all transport displays
· Secured contracts with Transport for Wales and Cardiff City Council
totalling £2.6m which will see displays technology migrate onto open
standards delivering valuable recurring revenue.
· Arriva UK Bus framework agreement extended to April 2024 to provide
high-definition CCTV systems and nationwide support services
Russ Singleton, CEO of Journeo plc, said:
"I am delighted with the results for the six months ended 30 June 2023.
Journeo underwent a step-change during the period, delivering a strong
performance on a like-for-like basis as we grow our sales pipeline and
increase the number of valuable recurring revenue connections to our SaaS
cloud-based solutions. The acquisition of Infotec is accelerating Journeo's
growth into the rail market, complementing our fleet operator and passenger
infrastructure systems and providing us with opportunities that would
previously have been inaccessible to us.
The second half started strongly with an order book of £27m which has been
enhanced by further contract awards and a £55m sales pipeline, as well as the
acquisition of MultiQ, strengthening our position in the Nordic region.
We are focused on continuing this momentum while integrating the two
businesses and are confident in meeting our financial targets for the year
end."
A digital copy of this announcement will be available on the Group's website:
www.journeo.com (http://www.journeo.com/) .
For further information, please contact:
Journeo plc +44 (0) 203 651 9166
Russ Singleton/ Nick Lowe
Cavendish Securities plc - Nominated Adviser and Broker +44 (0) 207 220 0500
Katy Birkin/ Callum Davidson
Notes to editors:
Journeo plc is a leading Intelligent Transport Systems provider, delivering
solutions in towns, cities, airports, and the public transport networks that
connect them. The Company works extensively with local and combined
authorities, Network Rail and many of the largest multinational transport
operators, supporting them as systems converge towards a more efficient and
sustainable future.
The business has five operating companies:
· Journeo Fleet Systems: 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.
· Journeo Passenger Systems: 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.
· Infotec: design, advanced manufacture, installation and software
management of information displays hardware for rail applications in stations,
on-platform and on-vehicle.
· MultiQ (based in Aarhus, Denmark): full-service provider of
Intelligent Transport Systems ("ITS") with customers in Denmark, Sweden and
Iceland.
· 21st Century AB (based in Stockholm, Sweden): technical services
provider to public transport customers in Sweden.
In the last 4 years, the Company has invested over £5 million in research and
development, enabling it to design and supply powerful innovative 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
The Board is pleased to report the results for the six months ended 30 June
2023 ("H1 2023"), which are in line with management's expectations. The Group
is continuing to deliver strong growth across all operating companies,
increasing revenues in all areas of operation. This performance reflects the
ongoing need to invest in public transport and its supporting infrastructure,
encouraging reduced usage of personal vehicles to deliver a greener future.
The first half of this year has seen the Group enter a transformational stage
in its development, following the acquisition of Infotec in January 2023.
Strategic progress
The strategy for the Group is being driven by the ongoing requirements of our
customers to deliver high-quality, affordable public transport. UK Government
funding is providing both fleet operators and local authorities an opportunity
to invest in solutions that simultaneously increase their operational
efficiency and facilitate their push to achieve their net zero ambitions.
Our continued investment to develop solutions that aid customers to achieve
these ambitions has been the cornerstone of our organic development. The
increase in use of our low-power infrastructure solutions, coupled with the
adoption of our SaaS cloud-based solutions are testament to the critical role
Journeo's technology plays in helping customers meet their goals. However,
whilst this organic growth is pleasing, there is more that we can achieve.
The Board has, for many years, sought to reinforce the Group's organic growth
through innovation and with acquisitions that provide the opportunity to
broaden the customer base, deepen capabilities and access thematically linked
adjacent markets. In January 2023, Journeo completed the acquisition of IGL
Limited, together with its subsidiaries ("Infotec"), the UK market leader in
rail display signage and post period, Journeo completed the acquisition of
MultiQ A/S Denmark ("MultiQ"), a leading full-service provider of Intelligent
Transport Systems ("ITS") with customers in Denmark, Sweden and Iceland.
The Group will publish its first Carbon Reduction Plan (CRP) assessing our
Scope 1 and Scope 2 emissions in 2024, signalling further progress on our
Environmental, Social and Governance (ESG) journey.
Financial performance
Revenue increased by 146% to £21.8m (H1 2022: £8.9m) and by 41% on a
like-for-like basis to £12.5m, excluding Infotec.
Revenue by segment
H1 2023 H1 2022 FY 2022
£'m £'m £'m
Passenger Infrastructure Systems 4.6 4.0 8.6
Fleet Transport Operator Systems 7.9 4.9 12.5
Like for like revenue 12.5 8.9 21.1
Infotec 9.3 ― ―
Group revenue 21.8 8.9 21.1
Gross profit increased 77% to £6.4m (H1 2022: £3.3m) with gross profit
margin at 29%. On a like-for-like basis gross profit was £3.9m with margin at
35%.
Gross profit by segment
H1 2023 H1 2022 FY 2022
£'m £'m £'m
Passenger Infrastructure Systems 2.0 1.9 4.1
Fleet Transport Operator Systems 1.9 1.4 3.7
Like for like gross profit 3.9 3.3 7.8
Infotec 2.5 ― ―
Group gross profit 6.4 3.3 7.8
Underlying profit before depreciation and amortisation increased 277% to
£2.5m (H1 2022: £0.7m).
Cash and cash equivalents at the end of the year increased to £11.3m (H1
2022: £1.2m) of which £3.5m was customer payments in advance.
Acquisition and fund raising
In January 2023, we completed the acquisition of Infotec for an aggregate
consideration of £8.7m
To primarily finance the acquisition, the Group raised £7m (net of expenses)
in a significantly oversubscribed placing and retail offer.
The fund raising also enabled the Company to repay Loan Notes, originally
issued in 2016, that supported the Company in its earlier growth.
Research and Development
Our customer-led Research and Development ("R&D") is an area of the
business that fuels growth and enables the Group to access sales opportunities
that were previously not attainable. We continue to invest in Journeo's
future, supporting the efforts of our R&D teams.
The Journeo Portal, our cloud-based SaaS platform for managing intelligent
transport systems continues to attract new and existing customers. Building on
the 10,000-connection target we reached in 2022, the platform has gained a
further 2,000 connections in the first half of the year, generating additional
monthly recurring revenue per connection.
The Development Team is making good progress on one of our key objectives for
2023, the migration of our EPIX content management software into the Journeo
Portal, which will consolidate the customer interface into a single web-based
application. The scope of this integration was extended following the £1m
award from Transport for Wales (TfW) to provide their new, nationwide Welsh
Bus Data Content Management System (WBDCMS). Early conversations are ongoing
with other large transport authorities to upgrade them to this new, more
powerful feature-rich platform.
Our new cloud-based software will benefit Journeo in terms of additional SaaS
revenue, reducing the number of systems to maintain and administer. In
addition, it will also enable users to manage the operational efficiency of
both on-vehicle and in-street systems; an ever-increasing need as authorities
move to franchise and enhanced partnership models for managing their transport
networks.
Passenger Infrastructure Systems
The Passenger Infrastructure Systems business continues to provide consistent
growth, delivering a 16% increase in year-on-year growth to a revenue of
£4.6m (H1 2022: £4m). This trajectory is in line with management
expectations and we are pleased to see the continual progress the business is
making, coupled with the ever-increasing footprint of our technologies in
major urban centres and rural communities throughout the UK. Margins were
slightly lower than the same period last year, at 43.4% (H1 2022: 46.6%),
reflecting the competitive nature of public tenders.
In early March of this year, we announced the award of a £1m software and
services contract from TfW. The solution is a paradigm shift for the industry,
removing local authorities from single-supplier lock-ins and delivering a
solution that is based upon collaboration and the use of open standards. The
WBDCMS solution will be based upon the delivery of the integration of
Journeo's EPIX content management system into the Journeo Portal and, once
delivered, will enable the nationwide transport authority to connect all
transport displays in the country to our solution, with each display
connection delivering valuable recurring revenue to Journeo.
This success was quickly followed at the end of March, with the announcement
of contracts worth £1.6m for displays technology in Wales comprising a £1m
contract award with Cardiff City Council and £0.6m contract with TfW. All new
displays will connect to the new WBDCMS when it is complete and will be
operated in the interim through our current system. There is a clear
strategy across Wales to improve the provision of transport information and
migrate people onto Public Transport.
The new displays, and indeed the WBDCMS, will all communicate using a new
industry standard open protocol, based on MQTT communication protocols, in
development by the not-for-profit industry body, the Real Time Information
Group (RTIG). Journeo are the first to have deployed any displays using this
protocol, following the installation of the first tranche of displays in the
City of Edinburgh.
Fleet Transport Operator Systems
The Fleet Transport Operator Systems business has delivered a strong 61%
revenue growth in the first half of 2023, achieving sales of £7.9m (H1 2022:
4.9m). Margins were lower than for the same period last year, at 23.5% (H1
2022: 28.7%), mainly due to the technology-mix of sales completed in the first
half of this year. Margins are expected to improve during H2 2023.
The framework agreement extension with Arriva UK Bus, announced in April of
this year, extends the framework to April 2024 and is currently expected to
generate approximately £1.1m in revenue. The framework is separate to
Journeo's three-year fleet-wide SaaS contract (announced in November 2021)
with Arriva UK Bus and enables Journeo to provide high-definition CCTV systems
and nationwide support services.
Journeo's relationship with Arriva UK Bus has been established since 2010 and
this ongoing commitment from the nation's third largest operator (outside of
London) demonstrates the confidence that large, multinational companies have
in working with Journeo to deliver business-critical systems.
We have a strong sales pipeline within rail as we continue to deliver our
powerful solutions into the sector. Developments in our rail applications
coupled with the acquisition of Infotec, have already created cross-selling
opportunities across the rail industry. Proposals have been provided to
customers in readiness for the commencement of Control Period 7 in April 2024.
Airport Passenger Transport Solutions
The unique capabilities of Journeo's Airport Passenger Transport Solutions
continue to be adopted within the industry.
In April 2023, the Company announced that East Midlands Airport would be
joining London Gatwick Airport, London Stansted Airport and London Heathrow
Airport in having passenger transfer solutions managed and optimised by
Journeo's software-led solutions. A smaller implementation than its
predecessors, the work at East Midlands Airport, being completed on behalf of
First Bus who will be running the operation, demonstrates the flexibility of
the system to work in any environment where the challenge is to move
passengers to or away from a single point of focus, such as a terminal
building.
Work is expected to commence on this latest implementation shortly, following
the completion of Dublin Airport.
In March of this year, Gatwick Airport awarded Journeo a £0.5m five-year
extension to the support contract for Journeo's first airport bus transfer
management application, originally installed in 2017.
Infotec
The Infotec business has performed well since the completion of the
acquisition on 18 January 2023 and has delivered strong revenue of £9.3m in
the period. Margins of 27.2% were below historical levels as a result of a
large, high-volume contract to supply specialist displays. This contract is
scheduled to complete during H1 2024.
Integration of the businesses is progressing smoothly. An initial step taken
was to bolster Infotec's manufacturing capabilities with a £0.4m investment
in surface mount production capacity, alongside retaining focus on the
continuing development of its core technologies. This has already
significantly reduced production lead times.
Appointments
To enhance the strength and diversity of experience of the Board of Directors,
Barney Kent was appointed to the Board in March 2023 as an Independent
Non-executive Director. Barney brings a wealth of knowledge to Journeo, with
over 20 years' technology and M&A leadership, including a decade with
Ideagen plc as Chief Operating Officer before its $1.3bn acquisition in 2022
by a private equity firm.
Market update
Our strategy to closely bond with customers and develop the technologies and
services they require to help them make mass public transportation an
attractive and cost-effective alternative for members of the public, underpins
our confidence and drives our growth.
Whilst passenger numbers in all areas of the UK continue to lag behind
pre-Covid levels, to achieve its carbon Net Zero goals it will be essential
for the UK to invest in a clean and efficient public transportation system.
Work with Local Authority customers, to identify projects for our solutions
that can be funded through remaining Transforming Cities Funding, Bus Service
Improvement Plan funding and City Regional Sustainable Transport Settlements
is ongoing and continues to present the Company with significant
opportunities.
In respect of rail travel, the commencement of Control Period 7 in April 2024,
currently backed by £44bn of funding, is expected to generate new
opportunities for Journeo.
We work closely with our partners in our supply chains and hold strategic
levels of stock of key components to our solutions.
The public transport industry is placing increasing focus on cyber-security
and our secure-by-design approach is welcomed by customers, backed by our
ISO27001 and Cyber Essentials accreditations.
ESG update
The Group continues to focus on important Environmental, Social and Governance
(ESG) and in 2024 will publish a Carbon Reduction Plan, which will baseline
Scope 1 and Scope 2 emissions and set targets.
Outlook
The first half of this year has seen the Group enter a transformational stage
in its development following the acquisition of Infotec in January and
generate both strong organic and acquisitive growth, which is continuing into
H2 2023.
As anticipated following the acquisition of Infotec there are a number of
cross selling initiatives underway to broaden the customer base and to
increase sales, annual recurring revenues and margins.
The Board continues to seek complementary acquisitions to support growth and
as announced on 20 September 2023, the Company completed the acquisition of
MultiQ. On behalf of the Board and all of us at Journeo, we would like to
extend a warm welcome to our new colleagues in Denmark.
We entered H2 2023 with a £27m order book and a £55m sales pipeline. This
together with trading and further orders won since the start of H2 2023 gives
the board confidence that we will meet our financial targets and that the
Company continues to trade in line with market expectations.
We continue to develop products the industry needs and with the substantial
central government financial support being provided we continue to view the
future of Journeo with confidence.
Consolidated statement of comprehensive income
for the six months ended 30 June 2023
Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022
£'000 £'000 Year ended 31 December 2022
£'000
Revenue (notes 4,5) 21,824 8,879 21,123
Cost of sales (15,425) (5,616) (13,354)
Gross profit 6,399 3,263 7,769
Other income 49 119 119
Underlying administrative expenses before depreciation and amortisation (3,993) (2,730) (6,013)
Underlying profit before depreciation and amortisation 2,455 652 1,875
Depreciation and amortisation (500) (344) (717)
Share-based payments (13) (24) (45)
Acquisition costs (132) ― ―
Administrative expenses (4,589) (2,979) (6,656)
Operating profit 1,810 284 1,113
Finance expense (146) (117) (207)
Profit before taxation from continuing operations 1,664 167 906
Taxation charge (260) ― (3)
Profit for the period being total comprehensive profit attributable to owners
of parent
1,404 167 903
Profit per share (note 6)
Basic 9.03p 1.92p 10.33p
Diluted 8.72p 1.84p 9.80p
All results derive from continuing operations.
Consolidated statement of changes in equity shareholders' funds
for the six months ended 30 June 2023
Total equity shareholders'
Share capital Share premium Retained earnings funds
£'000 £'000 £'000 £'000
Balance as at 1 January 2022 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
Balance at 1 January 2022 6,250 1,174 (6,224) 1,200
Profit and total comprehensive income for the year - - 903 903
Share-based payments - - 45 45
Balance at 31 December 2022 6,250 1,174 (5,276) 2,148
Proceeds from issue of new shares 486 6,851 - 7,337
Profit and total comprehensive income for the period - - 1,404 1,404
Share-based payments - - 13 13
Balance at 30 June 2023 6,736 8,025 (3,859) 10,902
Consolidated statement of financial position
at 30 June 2023
Unaudited 30 June 2023 Unaudited 30 June 2022 31 December
£'000 £'000 2022
£'000
Assets
Non-current assets
Goodwill (note 7) 3,581 1,345 1,345
Other intangible assets 1,998 1,216 1,300
Property, plant and equipment 1,589 528 504
Trade and other receivables 40 41 41
7,208 3,130 3,190
Current assets
Inventories 7,463 2,544 3,455
Trade and other receivables 9,631 8,009 8,130
Cash and cash equivalents 11,300 1,207 533
28,394 11,760 12,118
Total assets 35,602 14,890 15,308
Equity and liabilities
Shareholders' equity
Share capital 6,736 6,250 6,250
Share premium account 8,025 1,174 1,174
Retained earnings (3,859) (6,033) (5,276)
Total equity 10,902 1,391 2,148
Non-current liabilities
Deferred revenue 2,810 1,506 2,304
Loans and borrowings 205 596 40
Lease liabilities 698 246 225
Deferred Tax 25 - -
Provisions 925 263 271
4,663 2,611 2,840
Current liabilities
Trade and other payables 8,323 3,442 5,178
Deferred revenue 8,758 5,557 1,552
Loans and borrowings 412 1,097 2,616
Lease liabilities 150 108 121
Tax liabilities 414 460 618
Provisions 1,980 224 235
20,037 10,888 10,320
Total equity and liabilities 35,602 14,890 15,308
Consolidated statement of cash flows
for the six months ended 30 June 2023
Unaudited six months Unaudited six months
ended 30 June 2023 ended 30 June 2022 Year ended 31 December
£'000 £'000 2022
£'000
Net cash from operating activities (note 8) 2,472 600 (587)
Cash flows from investing activities
Purchases of property, plant and equipment (382) (71) (58)
Purchases of intangible fixed assets (281) (285) (628)
Acquisition costs (132) - -
Net cash inflow on acquisition 4,423 - -
Net cash from investing activities 3,628 (356) (686)
Financing activities
Cash flow from financing activities 206 3 891
Principal element of lease repayments (131) (43) (170)
Issue of Shares 6,837 - -
Repayment of loans (2,244) (90) (15)
Net cash from financing activities 4,668 (130) 706
Net increase / (decrease) in cash and cash equivalents 10,768 114 (567)
Cash and cash equivalents at beginning of period 533 1,096 1,096
Effect of foreign exchange rate changes (1) (3) 4
Cash and cash equivalents at end of period 11,300 1,207 533
Notes to the interim financial statements
for the six months ended 30 June 2023
1. Basis of preparation and approval of interim statement
The financial information for the six months ended 30 June 2023 and for the
six months ended 30 June 2022 is unaudited.
The interim financial statement for the six months to 30 June 2023 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 2022.
The financial information has been prepared on the basis of IFRSs that the
Directors expect to be applicable as at 31 December 2023.
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 2022, 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 2022 were approved by the Board on 28 March 2023
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 26
September 2023.
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 2022 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 2024.
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 six months
Unaudited six months ended 30 June 2023 ended 30 June 2022 Year ended 31 December
£'000 £'000 2022
£'000
Revenue
Goods 18,138 6,349 15,621
Services 3,686 2,530 5,502
21,824 8,879 21,123
Construction contracts included in goods 4,102 3,435 7,599
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 profit
on the same basis as set out in the consolidated statement of comprehensive
income, no further reconciliation is considered to be necessary.
Unaudited six months Unaudited six months
ended 30 June 2023 ended 30 June 2022 Year ended 31 December
£'000 £'000 2022
£'000
Revenue
Fleet Transport Operator Systems 7,893 4,901 12,494
Infotec 9,303 - -
Passenger Infrastructure Systems 4,627 3,978 8,629
21,823 8,879 21,123
Gross profit
Fleet Transport Operator Systems 1,858 1,409 3,711
Infotec 2,534 - -
Passenger Infrastructure Systems 2,007 1,854 4,058
6,399 3,263 7,769
Underlying profit
Fleet Transport Operator Systems 352 119 690
Infotec 1,580 - -
Passenger Infrastructure Systems 161 330 740
2,093 449 1,430
Central
(270) (141) (272)
Underlying profit 1,823 308 1,158
Reconciling to profit before interest and tax
Underlying profit/(loss) Share-based payments Operating profit/(loss)
£'000 £'000 £'000
Fleet Transport Operator Systems 352 (7) 345
Infotec 1,580 - 1,580
Passenger Infrastructure Systems 161 (6) 155
2,093 (13) 2,080
Central (270) - (270)
Total 1,823 (13) 1,810
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 six months Unaudited six months Year ended 31
December
ended 30 June 2023 ended 30 June 2022
2022
£'000 £'000
£'000
Assets
Fleet Transport Operator Systems 8,456 5,703 8,134
Infotec 7,084 - -
Passenger Infrastructure Systems 5,181 6,636 5,156
20,721 12,339 13,290
Goodwill 3,581 1,345 1,345
Cash and borrowings 11,300 1,207 533
Unallocated - (1) 139
35,602 14,890 15,307
Liabilities
Fleet Transport Operator Systems (4,518) (3,387) (3,627)
Infotec (11,328) - -
Passenger Infrastructure Systems (8,237) (8,419) (6,744)
(24,083) (11,806) (10,371)
Cash and borrowings (617) (1,693) (2,656)
Unallocated - - (134)
(24,700) (13,499) (13,161)
Net assets / (liabilities)
Fleet Transport Operator Systems 3,938 2,315 4,507
Infotec (4,244) - -
Passenger Infrastructure Systems (3,056) (1,782) (1,588)
(3,362) 533 2,919
Goodwill 3,581 1,345 1,345
Cash and borrowings 10,683 (486) (2,123)
Unallocated - (1) 5
10,902 1,391 2,146
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 six months Unaudited six months
ended 30 June 2023 ended 30 June 2022 Year ended 31 December
000 000 2022
000
Basic weighted average number of shares 15,551 8,741 8,741
Dilutive potential Ordinary Shares 560 386 470
16,111 9,127 9,211
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 three operating segments,
Fleet Systems, Passenger Systems and Infotec. The carrying amount of goodwill
has been allocated to the CGUs as follows:
21st Century Passenger Systems Limited Total
£'000
Infotec
£'000
Deemed cost:
At 1 January 2022 1,345 - 1,345
At 30 June 2022 1,345 - 1,345
At 31 December 2022 and 1 January 2023 1,345 - 1,345
At 30 June 2023 1,345 2,236 3,581
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 six months Unaudited six months Year ended 31 December 2022
ended 30 June 2023 ended 30 June 2022 %
% %
Passenger Systems 13 13 13
Infotec 13 N/A N/A
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 continues to be
an increase in the number and size of contracts available. The 2023 forecast
predicts sales growth of 4%. 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 £7,301k. 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 sales forecast in 2023 of
10% would result in headroom remaining in the current carrying value of
goodwill in relation to Passenger Systems of £4,385k. If sales forecasts were
down 20% across the whole period and overheads remained unchanged then there
would be headroom of £1,468k.
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 77%, 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 six months ended Unaudited six months ended Year ended 31 December
30 June 2023
30 June 2022
2022
£'000
£'000
£'000
Profit for the period 1,404 167 903
Adjustments for:
- Finance expense 146 117 207
- Depreciation of property, plant and equipment 231 109 224
- Amortisation of intangible fixed assets 269 235 494
- Share-based payment expense 13 24 45
- Acquisition expenses 132 ― -
- Profit on disposal of fixed assets 1 ― -
- Decrease / (increase) in provisions 399 (52) (34)
Operating cash flows before movement in working capital 2,595 600 1,839
Increase in inventories (961) (936) (1,846)
Decrease / (increase) in receivables 2,988 (1,519) (1,564)
Increase / (decrease) in payables (1,824) 2,557 1,166
Cash inflow / (outflow) from operations 2,798 702 (405)
Income taxes paid (207) ― (3)
Interest paid (119) (102) (179)
Net cash inflow / (outflow) from operating activities 2,472 600 (587)
9. Businesses Acquired - Infotec Group of Companies
On 18 January 2023, the Group acquired 100% of the equity of IGL Limited,
together with its subsidiaries ("IGL" or "Infotec"), all UK-based businesses.
Infotec is a leading provider of innovative display solutions and is the UK's
leading rail passenger information equipment provider, with over 15,000
displays in operation. Infotec services approximately 80 per cent. of the UK's
rail network
The details of the business combination are as follows:
Unaudited
£'000
Fair value of consideration
Amount Settled in Cash 7,218
Deferred Consideration 1,000
Consideration Shares 500
Total Consideration 8,718
Identifiable net assets (recognised at fair value):
Other intangibles 1,301
Property, plant and equipment 264
Inventories 3,047
Trade and other receivables 3,980
Cash 12,641
Total assets 21,233
Equity and liabilities
Trade and other payables (5,422)
Deferred revenue (6,883)
Tax liabilities (446)
Provisions (2,000)
Total Liabilities (14,751)
Net Assets 6,482
Goodwill on Acquisition 2,236
Consideration settled in cash 8,218
Cash and cash equivalents acquired 12,641
Net cash inflow on acquisition 4,423
Consideration transferred
The acquisition of Infotec was settled in cash amounting to £8,218k
(including deferred consideration of £1,000k). Acquisition related costs
amounting to £132k were incurred.
Identifiable net assets
The fair value of identifiable net assets acquired as part of the business
combination amounted to £6,482k.
Separable intangible assets
One separable intangible asset was identified at acquisition, being the
acquired customer relationships. The acquired customer list was valued by
assessing a discounted cashflow based on expected customer attrition rates and
using the Group discount factor of 13%. The useful life has been estimated at
5 years.
Goodwill
Goodwill is primarily related to the core growth expectations that are
expected from combining Infotec and Journeo technologies and upselling this to
existing customers.
Infotec contribution to the Group results
Infotec generated a profit of £1,472k for the period from 18 January 2023 to
the reporting date. Revenue for the period to the reporting date was £8,953k.
In the six months to 30(th) June 2022 Infotec sales were approximately
£6,762k with profit before tax of £1,120k. In the twelve months to 30(th)
December 2022 Infotec sales were approximately £16,520k with profit before
tax of £2,646k.
10. Post balance sheet events
On 19 September 2023, Journeo plc acquired 100% of the share capital of MultiQ
Denmark A/S ("MultiQ). MultiQ is a leading full-service provider of
Intelligent Transport Systems ("ITS") with customers in Denmark, Sweden and
Iceland.
Due to the short timeframe between completion of the acquisition and approval
of these financial statements, it was not possible to reliably estimate the
fair values of assets and liabilities or the goodwill associated with the
acquisition.
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