Final Results

RNS Number : 4103T

Journeo PLC

25 March 2021

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR").

25 March 2021

Journeo plc

Final results for year ended 31 December 2020

("Journeo" or "the Group")

Journeo plc (AIM: JNEO), the information systems and transport technical services group, announces its final results for the year ended 31 December 2020.

Financial headlines

· Revenue increased 19% to £13.6m (2019: £11.4m)

· Gross profit increased 17% to £5.3m (2019: £4.5m)

· Underlying profit before tax £0.5m (2019: loss of £0.8m)

· Profit before tax £0.2m (2019: loss of £0.9m)

· Profit before tax excluding share-based payments £0.3m (2019: loss of £0.9m) 

· Cash and cash equivalents at 31 December 2020 £1.3m (2019: £0.7m)

· Diluted earnings per share 2.26p (2019: loss per share of 1.08p)

Operational headlines

· Business has adapted well to remote working and continued to provide support services during the challenging environment brought about by the Coronavirus pandemic.

· Journeo is increasingly being seen as a technology provider, solving complex operational requirements within our towns and urban centres.

· Increased adoption of Journeo technologies amongst the Group's Fleet Operator customers, with 50 customers and over 3,000 vehicles connected to Journeo's platforms, assisting the Fleet Systems business to grow recurring revenue.

· Passenger segments delivered 43% growth for year-on-year sales revenues as a result of flagship orders received for passenger information and associated infrastructure technologies, including the City of Edinburgh Council and a northern transport partnership.

· Investment in research and development continues to build our own IP; early customer adoption of Journeo's full-colour LED and low-power/renewables based display technology.

Russ Singleton, CEO of Journeo plc, said: "The Government's decision to continue to support national infrastructure projects during the Covid-19 pandemic provided us with opportunities and a degree of stability during the year. More than ever, our customers are looking for solutions that provide enhanced functionality, reduced carbon emissions and improved economics. Our ability to leverage existing systems and apply our R&D capabilities in a "customer-led, applied development" model differentiates us at a time when our customers are focused on solutions that lengthen the lifecycle of existing assets.

 

"2021 has started encouragingly, with purchase orders and contract awards valued at £4.2m announced during Q1. There is also a rising level of enquiries and sales opportunities in our order pipeline, which is now predominantly based upon our own IP, technologies, and software.

"The UK Government's £2.4bn Transforming Cities Fund ("TCF") and the recent release of the National Bus Strategy for England, to help deliver on the £3bn commitment to carbon zero solutions in public transport, will provide us with further opportunities in the years to come.

"Journeo is now positioned to capture an increasing share of a sizeable, dynamic and growing market. The combination of an increasing demand for our technologies and software with significant government funding, underpins our confidence and ambitious growth plans."

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 is an information systems and technical services business focussed on public transport and related infrastructure within towns, cities, airports, and local authorities. The Group 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 infrastructure solutions: design, manufacture, installation, and management of hardware and software for electronic public transport information systems, in and around towns, cities, ferry terminals and airports which includes smart-ticketing and wayfinding.

In the last few years, the Group has invested around £5m in research and development, enabling it to design and supply the very best solutions for customers' complex requirements and the demands of modern public transport. With an Internet of Things (IoT) approach and open standards, together with field-proven and reliable engineering, Journeo is able to offer flexible, scalable products and services that can integrate with existing technology while preparing for future advancements.

 

Chairman's Statement

Introduction

This time last year, as I began to draft my statement for the Annual Report 2019, the world had just entered the coronavirus pandemic, which has turned out to be a prolonged period of significant disruption and change that still persists.  The incredible work of key workers in supporting the nation and our scientists in developing vaccines which are now being rolled out in record time, points to a more encouraging future as economies recover.

The impact of Covid-19 on public transport and international travel throughout 2020 has been well documented. However, whilst there were many challenges, critical national infrastructure projects that are considered vital to the future of our country, including those within Transforming Cities Fund ("TCF"), continued to be supported by the Government. This provided Journeo with opportunities and a degree of stability during the year.

It is in light of this, that the Group was able to improve revenues and profits and, importantly, continued to make progress with the adoption of our technologies within target customer segments.

Trading Results

Group results for the year ended 31 December 2020 show an underlying profit of £464k (2019: loss of £777k).

Overall sales increased by £2.2m to £13.6m (2019: £11.4m) and gross profit increased to £5.3m (2019: £4.5m).

Passenger sales increased by 43% to £6.8m (2019: £4.8m). Margins reduced to 47% (2019: 55%) due to a higher proportion of new system installations, and gross profit increased to £3.2m (2019: £2.6m).

Fleet sales increased by 3% to £6.8m (2019: £6.6m) despite the falling passenger numbers for the operators after the March 2020 lockdown. Gross profit increased to £2.1m (2019: £1.9m) with an improvement in margins to 31% (2019: 29%).

Underlying administrative expenses decreased to £5.1m (2019: £5.5m) with lower levels of non-essential expenditure during lockdown periods.

The profit after a charge for share based payments of £0.1m (2019: nil) and before tax was £0.2m (2019: loss of £0.9m).

Placing

Following the placing in December 2019 which raised £1.2m before expenses, the Group had a remaining authority to issue a smaller number of shares. In April 2020, 513,750 shares were placed raising a further £256,875.

The net cash position at 31 December 2020 was £1.3m (31 December 2019: £0.7m).

Markets update

Operator reluctance to invest in new bus fleets began well before the pandemic, as operators looked to lengthen the lifecycle of their existing assets whilst low and zero carbon bus technology matured.  Travel restrictions in 2020 meant that public transport and international travel were amongst the first sectors to be severely affected by the pandemic and many continue to be so. As a result, our customers face prolonged and difficult operating conditions; and therefore more than ever are looking for solutions that provide enhanced functionality and improved economics.

While public transport infrastructure faced many operational challenges through the course of 2020, those that are considered of national importance were prioritised by the Government and were able to continue once the required health and safety measures were put in place. This allowed Journeo to continue operations and pre-sales support work whilst also delivering on a number of projects already in progress during the year.

We fully support the ongoing UK Government commitments to invest in town and City infrastructure, through schemes such as the £2.4bn Transforming Cities Fund ("TCF"), which drives innovation and improves the flow of people and goods in and around our smarter cities and urban centres. We look forward to working with the Enhanced Partnerships that are expected to form following the recent release of the National Bus Strategy for England, to help deliver on the £3bn commitment to carbon zero solutions in public transport.

Brexit & Covid-19

Leaving the European Union has created a number of challenges for the Group resulting from increased transport costs, delivery delays and additional bureaucracy. In addition, one of the many effects of the coronavirus pandemic has been an increase in the number of people working from home, which in turn led to an increased demand for laptops, phones, and tablets; and the key semiconductors and display components that they comprise. We build our display systems using many of the same world class components and have been carefully working with our supply chain partners to prevent shortages and minimising, where possible, increases in raw material costs. The Group is continuously monitoring these important factors and quickly takes corrective actions to optimise component stocks, maintain efficient production schedules and adjust pricing to protect margins.

Strategy

Journeo's strategy is to seek, identify and then solve current or anticipated future requirements in specific target segments within public transport infrastructure and passenger transport operations. We do this where we see a potential for increased market share of a growing market, due to technology transition or convergence, and where we see significant scale potential for resale of the core technology and our valuable IP on a worldwide basis.

Our mission is to form deep, trusted, and long-lasting customer bonds and profound, real-life end user insights and apply our R&D capabilities in a "customer-led, applied development" model.

The Group's ability to leverage existing systems and deliver customers with enhanced functionality through the IoT, differentiates us. Since the launch of Journeo's cloud-based platform in November 2019, we have seen adoption of our solution steadily grow. We currently have 50 companies and over 3,000 vehicles connected to our platforms with the ability to access a growing range of vital in-service information and data analytics safely, securely, and remotely.

In conjunction with our corporate social responsibility aims and our drive to improve sustainability, we have been investing in renewable energy powered technologies for some time now. Recent announcements regarding £1.1m of purchase orders for our low energy consumption, solar-powered displays technology is encouraging, and we have other 'renewables'-based solutions in development that are due to come to market later this year.

An increasing number of our own products, software and scalable solutions form the core of our sales opportunity pipeline and underpin our order books and support our ambitions for organic growth in 2021 and beyond. We also see opportunities to enhance this profitable growth through acquisition, where this provides a route to new or adjacent markets for our core capabilities, technologies, and Intellectual Property (IP).

Environment, Social and Governance

The Board takes its Environmental, Social and Governance (ESG) responsibilities seriously. In addition to seeking to comply with the QCA Corporate Governance Code, Journeo has in place international trademarks and recognised accreditations for Information Security Management System (ISO 27001:2013), Quality Management (ISO 9001:2015), Environmental Quality Management (ISO 14001:2015) and Occupational Health and Safety (ISO 45001:2018). Together these systems embed a strong culture of sound ethical values and behaviours within the Group.

As the world emerges from the restrictions that have come about as a result of the pandemic, the Board is focused on delivering solutions that benefit a green and sustainable recovery.  Through a combination of low power components that leverage our IoT systems infrastructure, our technologies and software can play an increasing part in the wider smart-city goals of developed nations.

In 2020, the Board initiated a process to formalise Journeo's sustainability strategy to embed this within the Group's wider strategy. Over the next few months, an initial review of sustainability and ESG activities will be completed, identifying issues of importance to internal and external stakeholders, as part of developing a more sustainable vision and strategy in the medium to long-term.

This work is ongoing and over the course of the next 12-months we will complete the baseline review and materiality assessment.  We will aim to improve sustainability messaging to explain our approach more clearly towards reducing carbon emissions and our responsibilities to our communities and staff.  We plan to issue a sustainability report, within the Annual Report due for release in 2022.

People

We continue to place the safety of our people and our customers first.  Our teams have adjusted well to the new working paradigm, and infrastructure that was previously in place to allow remote working, has proved invaluable to the continued development of the Group.  A small number of staff were placed on to the Government furlough scheme, for a very short period, with the remainder continuing in full time employment throughout the pandemic here in the UK and Sweden.  This 'new normal' meant a change not only to how we engage internally, but also to how we address and reach our customers in order to understand their needs and deliver the solutions they require.  Our teams reacted admirably to this task and I would like to take the opportunity to thank all team members for their continued dedication and hard work as we strive to further improve the position of the Group. 

Outlook

At the present time, there is a good degree of uncertainty about the precise timing and structure of the post-Coronavirus recovery here in the UK, and more so in parts of the Far East and Asia, where many of our supply chain partners are based, and Continental Europe, where we have an operating centre and a number of major customers.

We have delivered on our plans for FY2020, whilst navigating a path through the unprecedented challenges presented by the pandemic and remain confident that our customer-led, applied development strategy is working and is the right way forward.

2021 has started encouragingly, with purchase orders and contract awards valued at £4.2m announced during Q1. There is also a rising level of enquiries and sales opportunities in our pipelines, which are now predominantly based upon our own IP, technologies, and software.

The £2.4bn Transforming Cities Fund and the recently announced £3bn National Bus Strategy (Bus Back better) are significant Government commitments to increase the use of public transport in and around our congested cities over the next few years. These powerful market drivers will lead to the creation of new, world-class passenger-friendly infrastructure, and at the same time provide the commercial impetus for fleet operators to invest in new technologies and carbon-zero vehicles.

Journeo is well placed to capture an increasing share of this sizeable, dynamic and growing market, both organically and through acquisition where this provides a route to market for our core capabilities. The combination of an increasing demand for our technologies and software with significant government funding, underpins our confidence and ambitious growth plans.

Once again, I would like to take this opportunity to thank each and every member of the Journeo team for their flexibility, dedication, and attention to detail during the last 12 months, where many of them have been working from home. Nearly 30 million people in the UK have now received at least one dose of a coronavirus vaccine, part of the biggest inoculation programme the country has ever launched, and we look forward to when businesses and the associated travel; bus, coach, rail, and air, return to pre-pandemic levels.

Mark Elliott

Chairman

 

Chief Executive's report

 

Introduction

Our strategy to develop our own technologies, IP and engineering capabilities centred around strong customer relationships and meeting customer and market needs started to bear fruit in 2020. The progress we made was all the more pleasing against a backdrop of challenging market conditions, and I am pleased to see the growing number of sales and pipeline opportunities this year that are based upon our own technologies, products, software, and services. These include strategically important contract wins, such as the £1.3m transport infrastructure award and the £1.8m fleet operator framework, announced in January and the recently announced £1.1m award which included our latest double-sided and solar powered display systems.

A number of sectors within the public transport and rail freight transport markets are realising the benefits of the type of converged solutions we are developing. Over the coming years, we will continue to invest in specific areas of research and development to create new capabilities, as we become more deeply integrated into the solutions that will become essential in smarter, greener cities.

Whilst the disruption caused by the pandemic has been experienced throughout most sectors of the transport market and has impacted the delivery of some elements in our own projects, our business continuity procedures ensured that we have been able to operate throughout the year, with minimal recourse to the Government furlough scheme.

Operational Review

Passenger Infrastructure Systems

The significant potential for growth I referenced in my report last year is beginning to be delivered.  The sales process for large infrastructure projects can be long and difficult to predict, and the substantial orders secured at the start of 2020 were the result of sustained pre-sales work by our team over many months.  I am delighted that despite the challenges, the sales pipeline has continued to build; delivering a 43% increase in sales revenues for the full year to £6.8m (2019: £4.8m).

The UK Government issued a number of commitments to develop urban centres through stimulus packages such as the £2.4bn Transforming Cities Fund (TCF), and these are continuing. As the country moves on from the restrictions of the past 12 months, the consensus view suggests that this important market driver for further regeneration will continue, or possibly accelerate.  This is bolstered following the £3bn National Bus Strategy for England, announced on 15 March 2021. 

Our sales and marketing teams have been successful in accessing the opportunities that TCF has presented and the £1.9m award from a northern transport partnership, announced in February of last year to deliver our powerful EPIX Content Management System (CMS) and associated display hardware, evidence this.  The first phase of the project roll-out was delivered on time and on budget, and our high quality solutions have been well received by the customer, to such extent that we secured subsequent purchase orders totalling £1.3m in January of this year.

In January 2020, we announced the receipt of a £0.8m purchase order from City of Edinburgh Council for the delivery of critical transport infrastructure at Edinburgh Bus Station, which is part of a five year, £4.8m contract.  While local lockdown restrictions have understandably delayed some elements of commissioning, the first phase is nearing completion and will soon be at the centre of an impressive real-time information estate that will serve residents and visitors alike, promoting the use of public transport within the capital of Scotland. We are proud to be working with this world class capital city as they elevate the capabilities of their transport infrastructure and are confident that our innovative technology will lead to further orders. Once the works are completed, the system will become a showcase for our capabilities on a global stage, for many years to come.

Our relationship with Transport for West Midlands (TfWM) is developing and in July we announced £0.6m orders had been received under the Enhanced Infrastructure Framework Agreement. Predominantly for in-shelter information technology, it included the provision of CCTV security solutions which connect into their control centre. We are also supplying a number of our second generation pollution detection sensors, which monitor and report in real time on the air quality along the regions key transport corridors.

Major transport infrastructure projects are becoming the cornerstone for our success with local authority and passenger transport executive customers. We have a growing pipeline of sales opportunities that will further embed the Group within transport and associated highways infrastructure systems.

Whilst the transport community has and continues to face many challenges, we have ensured that we have been ready and able to support our customers throughout the pandemic, responding to their changing needs as the levels of public transport requirements fluctuated. Journeo, like many organisations, welcomes the roadmap out of lockdown that has been presented by the Government and sees further opportunities as members of the public return to school, work and centres of economic benefit.

Fleet Transport Operator Systems

Our fleet business made further progress in the year, winning new customers, retaining key asset clients, and embedding our solutions more deeply into our customers' operations.

Revenue remained relatively stable at £6.8m (2019: £6.6m) which, in light of the operating conditions our customers were facing, is a satisfying result. 

With fewer people using public transport, vehicle refresh programmes were largely suspended, further eroding the already suppressed numbers of new bus registrations and the sales that we benefit from alongside them. However, the wider consequences of fewer new vehicle registrations were offset by our ability to offer secure remote working and uplifting the capability of operators' legacy systems

Much of this resilience can be attributed to the growing adoption of our secure, cloud-based technologies.  Whilst the pandemic resulted in fleet operators suspending large, fleet-wide technology roll outs, our agnostic and open approach enabled us to stay on track financially whilst growing our user base, and by delivering real and meaningful benefits to our customers.

This approach was rewarded in August with a three-year renewal of the framework agreement with Abellio.  Operating services in and around the London area, this multi-modal transport operator is currently evaluating a number of Journeo connected bus technologies and has already purchased a 200-vehicle installation of our Journeo Edge IoT gateway.  The agile and agnostic nature of our solution has the capabilities for wider multi-modal deployment on rail, tram and coach as well as bus operations.

Our ground breaking airport passenger and flight crew transfer solutions continue to attract attention and we are in discussions with a number of other UK and European airports looking to deploy similar solutions based on our software and technologies. Deliveries of our systems at Stansted Airport were slightly delayed, due to lock-down restrictions, and the airport is planning its return to full service with projections of operating at Peak Vehicle Requirement (PVR), in Q3 and Q4 of 2021. We are coordinating our airport systems marketing campaign so that potential customers can contact and visit Stansted Airport to see our latest solution in action.

We have, for many years, maintained a small and agile rail team and our enhanced capabilities, via our own IP, to address the safety, security and operational efficiencies of multi-modal customers has seen our activities with rail operating companies throughout the year grow.  In addition to this, there has been direct work with Network Rail, trialling advanced video analytics to maintain critical rail infrastructure.

Central Services

As previously highlighted, the Group has operated continually throughout the pandemic, with careful attention given to supporting our people, many of whom were working from home. During this time, our central services teams have maintained relationships throughout our supply chains to secure raw materials and maintain stock levels whilst preserving our cash reserves and reducing expenditure where possible.

One such area where we suspended non-essential spending was a project to unify the branding of our operating companies.  Despite the benefits that a more intuitive and informative website would bring to future sales, we decided that the Group would be better served by delaying the investment in this project.  The project recommenced in January this year and will be materially completed during H1.

To support the increased on-line presence, we have also begun to invest in additional sales and marketing resources as we acquire more customers and increase market share, whilst at the same time, extend our reach into new or related markets.

Russ Singleton

Chief Executive

Consolidated statement of comprehensive income

for the year ended 31 December 2020

	Notes	2020 £'000	2019 £'000
Revenue	2,3	13,605	11,402
Cost of sales		(8,304)	(6,863)
Gross profit	3	5,301	4,539
Underlying administrative expenses		(5,142)	(5,530)
Other income		305	214
Underlying profit / (loss)		464	(777)
Share-based payments		(116)	-
Total administrative expenses and other income		(4,953)	(5,316)
Operating profit / (loss)		348	(777)
Finance expense		(155)	(171)
Profit / (loss) before taxation from continuing operations		193	(948)
Taxation credit	4	2	15
Profit / (loss) for the year being total comprehensive profit / (loss) attributable to owners of the parent		195	(933)
Profit / (loss) per share	5
Basic		2.27p	(1.08p)
Diluted		2.26p	(1.08p)

 

Consolidated statement of changes in equity

for the year ended 31 December 2020

	Share capital £'000	Share premium account £'000	Retained earnings £'000	Total equity shareholders' funds £'000
Balance at 1 January 2019	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
Profit and total comprehensive income for the year	-	-	195	195
Proceeds from issue of new shares	33	216	-	249
Share-based payments	-	-	116	116
Balance at 31 December 2020	6,250	1,174	(6,680)	744

 

Consolidated statement of financial position

at 31 December 2020

	Notes	2020 £'000	2019 £'000
Assets
Non-current assets
Goodwill	6	1,345	1,345
Other intangible assets		1,144	1,054
Property, plant and equipment		619	287
Trade and other receivables		43	43
		3,151	2,729
Current assets
Inventories		1,675	1,271
Trade and other receivables		4,207	3,923
Cash and cash equivalents		1,254	725
		7,136	5,919
Total assets		10,287	8,648
Equity and Liabilities
Shareholders' equity
Share capital		6,250	6,217
Share premium account		1,174	958
Retained earnings		(6,680)	(6,991)
Total equity		744	184
Non-current liabilities
Deferred revenue		957	671
Other payables		80	-
Loans and borrowings		564	570
Deferred tax liability		-	9
Lease liabilities		358	64
Provisions		278	315
		2,237	1,629
Current liabilities
Trade and other payables		3,332	3,212
Deferred revenue		3,061	2,214
Loans and borrowings		595	1,141
Lease liabilities		135	88
Provisions		183	180
		7,306	6,835
Total equity and liabilities		10,287	8,648

 

Consolidated statement of cash flows

for the year ended 31 December 2020

	Notes	2020 £'000	2019 £'000
Net cash flows from operating activities	7	1,574	(249)
Cash flows from investing activities
Purchases of property, plant and equipment		(55)	(45)
Purchases / generation of intangible assets		(519)	(538)
Net cash flows from investing activities		(574)	(583)
Cash flows from financing activities
Cash flows from financing activities		(546)	145
Principal element of lease repayments		(168)	(170)
Repayment of loans		(6)	(10)
Issue of Shares		249	1,106
Net cash flows from financing activities		(471)	1,071
Net increase in cash and cash equivalents		529	239
Cash and cash equivalents at beginning of year		724	485
Effect of foreign exchange rate changes		1	1
Cash and cash equivalents at end of year		1,254	725

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 2020

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 along with the principal risks and uncertainties.

The Group's net underlying profit for the year was £464k (2019: £777k loss). As at 31 December 2020 the Group had net current liabilities of £170k (2019: £916k) and net cash reserves of £1,254k (2019: £725k).

In December 2020, the 2016 Loan Notes maturity date was extended to 31 March 2022.

The Group raised gross proceeds of £1.2m from a placing in December 2019 and £0.25m from a placing in April 2020.

The Directors have prepared Group cash flow projections for the period to 30 June 2022 based on latest forecasts that show that the Group will be able to operate within the Group current funding resources with significant headroom.

As with all businesses there are particular times of the year where our working capital requirements are at their peak. The Group is well placed to manage these business risks effectively and the Board reviews the Group's performance against budgets and forecasts on a regular basis to ensure action is taken where needed.  The Directors also monitor a rolling cash flow forecast, and key management review working capital movements and requirements on a daily basis.

The projections, taking account of reasonably possible changes in trading performance, indicate that the Group will operate within available facilities throughout the projection period and therefore, based on these projections, 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 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:

	2020 £'000	2019 £'000
Goods	9,417	6,996
Services	4,188	4,406
	13,605	11,402
Contract works included in goods	5,332	3,218

The other income is split as follows:

	2020 £'000	2019 £'000
R&D Tax credit	267	214
Furlough Income	38	-
	305	214

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 2020 £'000	Gross profit 2020 £'000	Revenue 2019 £'000	Gross profit 2019 £'000
Fleet Systems	6,827	2,147	6,646	1,900
Passenger Systems	6,778	3,154	4,756	2,639
Total	13,605	5,301	11,402	4,539

Major customers

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

Underlying profit / (loss)

	2020 £'000	2019 £'000
Fleet Systems	81	(469)
Passenger Systems	634	(80)
	715	(549)
Central	(251)	(228)
Underlying profit / (loss)	464	(777)

Reconciling to profit / (loss) before interest and tax

2020	Underlying  operating profit/(loss) £'000	Share-based  payments £'000	Operating profit/(loss) £'000	Profit/(loss) before interest and tax £'000
Fleet Systems	81	(58)	23	23
Passenger Systems	634	(58)	576	576
	715	(116)	599	599
Central	(251)	-	(251)	(251)
	464	(116)	348	348

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)

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 2020 £'000	Liabilities 2020 £'000	Net assets 2020 £'000	Assets 2019 £'000	Liabilities 2019 £'000	Net assets 2019 £'000
Fleet Systems	3,599	(2,932)	667	3,501	(2,700)	801
Passenger Systems	4,077	(5,372)	(1,295)	3,059	(3,968)	(909)
	7,676	(8,304)	(628)	6,560	(6,668)	(108)
Goodwill	1,345	-	1,345	1,345	-	1,345
Cash and borrowings	1,254	(1,159)	95	725	(1,711)	(986)
Unallocated	12	(80)	(68)	18	(85)	(67)
Total	10,287	(9,543)	744	8,648	(8,464)	184

Geographical segments

	Revenue 2020 £'000	Gross profit 2020 £'000	Revenue 2019 £'000	Gross profit 2019 £'000
UK	13,025	4,923	10,522	4,025
International
- Scandinavia	520		515
- Other EU	52		355
- Non-EU	8		10
Total international	580	378	880	514
Total	13,605	5,301	11,402	4,539

Assets and liabilities by location

	2020 £'000	2019 £'000
Assets
UK	10,265	8,628
International	22	20
Total assets	10,287	8,648
Liabilities
UK	(9,533)	(8,436)
International	(10)	(28)
Total liabilities	(9,543)	(8,464)

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

 

4. Taxation

(a) Analysis of credit in year:

	2020 £'000	2019 £'000
Current tax
UK corporation tax on the loss for the year (19%)	-	-
Swedish corporation tax on the profit for the year (22%)	-	-
Prior year under provision	7	10
Deferred tax credit
- Temporary differences on acquisition	(9)	(25)
Total tax credit for the year	(2)	(15)

(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% (2019: 19%). The differences are explained below:

	2020 £'000	2019 £'000
Profit / (loss) on ordinary activities before tax	193	(948)
Profit / (loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019: 19%)	37	(180)
Effects of:
Expenses not deductible for tax purposes	(4)	(8)
Change in unrecognised deferred tax assets	15	204
Income not taxable	(57)	(41)
Prior year under provision	7	10
Total tax credit for the year	(2)	(15)

(c) Deferred tax asset / (liability)

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

Group	Unrecognised			Recognised
	2020 £'000	2019 £'000		2020 £'000	2019 £'000
Tax losses	841	669		-	-
Decelerated capital allowances	(47)	51		-	-
Arising on acquisition	-	-		-	(9)
	794	720		-	(9)

The Group has £4,425,000 of unutilised tax losses (2019: £3,937,000) which may be carried forward indefinitely. On 3 March 2021, the Chancellor of the Exchequer announced that the corporation tax rate would increase to a maximum of 25% from 1 April 2023.

 

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.

Group	2020			2019
	Profit / (loss) £'000	Per share amount Pence		Profit / (loss) £'000	Per share amount Pence
Basic EPS
Profit / (loss) attributable to Ordinary Shareholders	195	2.27		(933)	(1.08)
Diluted EPS
Profit / (loss) attributable to Ordinary Shareholders	195	2.26		(933)	(1.08)

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

	2020 '000	2019 '000
Basic weighted average number of shares	8,610	86,433
Dilutive potential Ordinary Shares	29	-
Diluted weighted average number of shares	8,639	86,433

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 2019	1,345	1,345
At 31 December 2019	1,345	1,345
At 31 December 2020	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:

	2020 %	2019 %
Passenger Systems	13	13

The discount rates used are based on the Board's judgement considering macroeconomic factors and reflecting specific risks in each segment such as the nature of the market served, the concentration of customers, cost profiles and barriers to entry.

Passenger Systems also has intangible assets, which are considered in the same value-in-use calculations as goodwill.

The Passenger Systems cash flow projections used to determine value in use are based upon assumptions of sales, margins and cost bases. Of these assumptions the value in use is most sensitive to the level of sales. Margins are fixed in the forecast based upon past experience; the cost base is similarly based upon past experience and will vary depending upon the level of sales. In accordance with the requirements of IAS 36 our value-in-use calculations do not include cash flows from restructurings to which the Group is not yet committed.

The level of sales is the key assumption used in the cash flow forecast. Sales have been determined by management using estimates based upon past experience and future performance with reference to market position and the sales pipeline. The macroeconomic environment has improved and there has been an increase in the number and size of contracts available. In 2017 a major restructuring took place, followed by a reinvestment in key staff during 2018 and 2019. The 2021 forecast predicts growth of 19%. The remaining four years are based upon compound sales growth of 5%.

The value-in-use calculation supports the carrying value of the CGU with headroom of £8,114k. A sensitivity analysis has been performed on the impairment test. The Directors consider that an absolute change in the key sales assumption is possible and a reduction in the growth rate in 2021 to 5% would result in headroom remaining in the current carrying value of goodwill in relation to Passenger Systems of £4,974k. If sales forecasts were down 20% across the whole period and overheads remained unchanged then there would be headroom of £2,776k.

Based on the review the discount rate applied to equate the net present value of the forecast cash flows to the carrying value of goodwill and the intangible assets was 84.1%, whereas the required rate of return of the CGU is 13%.

In view of this, the Directors consider that no impairment of goodwill or intangible assets is required.

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

	2020 £'000	2019 £'000
Profit / (loss) for the year	195	(933)
Adjustments for:
- Finance expense	155	171
- Deferred tax credit	(9)	(25)
- Depreciation of property, plant and equipment	209	198
- Amortisation of intangible fixed assets	429	453
- Share-based payment expense	116	-
- Foreign exchange rate	17	12
- (Decrease) / increase in provisions	(34)	5
Operating cash flows before movement in working capital	1,078	(119)
(Increase) / decrease in inventories	(404)	379
Increase in receivables	(280)	(523)
Increase in payables	1,317	183
Cash inflow / (outflow) from operations	1,711	(80)
Income taxes paid	(7)	(10)
Interest paid	(130)	(159)
Net cash inflow / (outflow) from operating activities	1,574	(249)

8. Availability of audited accounts:

Copies of the 2020 audited accounts will be made available following the announcement of the date of our AGM. They will also be available on the Group's website (www.journeo.com) for the purposes of AIM Rule 26 and will be posted to shareholders in due course.

- Ends -

 

END

 

 

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