TIDMJNY
RNS Number : 9091Z
Journey Group PLC
30 September 2009
30 September 2009
Embargoed, 0700hrs
Journey Group PLC
Interim Results
for the six months ended 30 June 2009
Journey Group plc ("Journey Group" or the "Group"), a leading provider of
in-flight products, catering and cabin management services to the airline and
travel industry today announces its results for the six month ended 30 June
2009.
Highlights
* EBITDA profitability remained despite deteriorating and challenging conditions
* Tight control over working capital with net debt reduced to GBP5.2 million from
GBP5.6 million at 31 December 2008
* Los Angeles operations EBITDA profit of GBP0.6 million in its first full half
year
* Services Division increased EBTIDA profit of GBP0.7 million compared with GBP0.6
million (excluding non-recurring income) in H1 2008
Stephen Yapp, Chairman commented, "Considerable progress continues to be made in
re-positioning the Group's businesses to lay the foundations for future growth
while taking the steps required to mitigate the worst effects of the present
challenging market conditions. The near term future continues to be difficult to
predict and the Group is exposed to a number of uncertainties beyond its
control, but I believe that it is increasingly well equipped to meet the
challenges ahead and deliver value in the long term."
For further information please contact:
Stephen Yapp
Journey Group plc
Tel: +44 (0) 20 8606 2000
info@journeygroup.plc.uk
KBC Peel Hunt Ltd (Nominated Advisor & Broker)
David Anderson / Daniel Harris
Tel: +44 (0) 20 7418 8900
CHAIRMAN'S LETTER TO SHAREHOLDERS
INTRODUCTION
In the first half year your Group has continued to make significant progress
towards building the foundations for creating significant future value for
shareholders. Growth opportunities have been created and the Group's businesses
have been re-positioned with an attactive and competitive product range and
service offering together with a lean cost structure. This progress has been
made through a clear strategic focus, which has directed management's efforts
towards driving change across the Group and creating new opportunities.
Key financial achievements during the period were:
* EBITDA profitability remained despite deteriorating and challenging conditions.
* Tight control over working capital with net debt reduced to GBP5.2 million from
GBP5.6 million at 31 December 2008.
* Los Angeles operations EBITDA profit of GBP0.6 million in its first full half
year.
* Services Division increased EBTIDA profit of GBP0.7 million compared with GBP0.6
million (excluding non-recurring income) in H1 2008.
I noted in my 2008 year end report that the airline industy, which is the
Group's principal marketplace, continues to face tough challenges in the current
economic environment and exposes the Group's businesses to further pricing and
volume pressures. The International Air Transport Association estimate that
global airline losses are expected to widen to $11 billion for 2009, which
compares with their previous estimate of $9 billion. They attribute the increase
to higher oil prices for the latter part of the year and continued weak business
travel. The progress made during the half year was achieved nothwithstanding
these challenging conditions, although not without a significant adverse impact
on the Products Division. I expect that the challenging conditions that
prevailed during the first half year will remain with us well into 2010.
An important part of the Group's strategy has been to review its portfolio of
businesses and to develop a strategy for maximising their longer term value to
shareholders. As part of this approach, the Company's wholly owned subsidiary,
Air Fayre Limited, entered into a letter of intent with a competitor, Alpha
Flight UK Limited, which is part of Autogrill S.p.A., one of the world's largest
providers of food and beverage and retail services for travellers. The letter of
intent provides for exclusive discussions for the purpose of creating a joint
venture of their flight catering operations at London Heathrow. The creation of
the proposed joint venture would considerably enhance the competitive position
of the combined business and enable a much enhanced range of services, along
with superior delivery, to be offerred to its combined customer base.
Significant progress has been made towards this transaction and, although there
can be no certainty, the Board is optimistic regarding its successful outcome
materially in line with the terms currently being negotiated.
RESULTS
The results for the half year were as follows:
+---------------------------------------------------------------+-------+----+-------+
| 6 months to 30 June | 2009 | | 2008 |
| | GBP'm | | GBP'm |
+---------------------------------------------------------------+-------+----+-------+
| Revenue | 39.8 | | 48.9 |
+---------------------------------------------------------------+-------+----+-------+
| EBITDA | 0.1 | | 0.8 |
+---------------------------------------------------------------+-------+----+-------+
| Depreciation and amortization | (1.1) | | (0.7) |
+---------------------------------------------------------------+-------+----+-------+
| Operating (loss)/profit before exceptional items and share | (1.0) | | 0.1 |
| based payments | | | |
+---------------------------------------------------------------+-------+----+-------+
| Share based payments | (0.1) | | (0.3) |
+---------------------------------------------------------------+-------+----+-------+
| Exceptional items | (1.1) | | (1.1) |
+---------------------------------------------------------------+-------+----+-------+
| Net interest payable | (0.4) | | (0.9) |
+---------------------------------------------------------------+-------+----+-------+
| Loss before taxation | (2.6) | | (2.2) |
+---------------------------------------------------------------+-------+----+-------+
| Basic loss per share (pence) | 0.9 | | 4.7 |
+---------------------------------------------------------------+-------+----+-------+
The results for the half year reflect the challenging market conditions that
prevailed during the period. EBITDA (before exceptional items and share based
payments) fell to GBP0.1 million from GBP0.8 million in H1 2008, although
included in the comparative figure there was non-recurring income of GBP0.4
million. The reduction in EBITDA of GBP0.3 million (excluding the benefit of the
non-recurring income in H1 2008) was due to the Products Division where EBITDA
fell by GBP0.8 million plus increased head office costs of GBP0.2 million offset
by an initial EBITDA contribution from Los Angeles of GBP0.6 million and an
improvement in the Services Division of GBP0.1 million.
At the operating profit level prior to exceptional items and share based
payments the Group incurred a loss of GBP1.0 million compared with a profit of
GBP0.1 million in H1 2008. Exceptional items of GBP1.1 million comprised
start-up costs relating to the Los Angeles facility of GBP0.5 million,
re-organisation costs of GBP0.4 million and costs of re-financing of
GBP0.2 million. Finance costs fell to GBP0.4 million from GBP0.9 million in H1
2008, but of this GBP0.6 million related to the convertible bonds now converted
into ordinary shares.
There was a net loss before taxation of GBP2.6 million compared with a loss of
GBP2.2 million in H1 2008. The basic loss per share was 0.9 pence per share
compared with 4.7 pence per share in H1 2008. The improvement substantially
arose from the increase in the weighted average number of ordinary shares in
issue following the placing of ordinary shares and conversion of convertible
bonds into ordinary shares in H2 2008.
Net debt fell by GBP0.4 million to GBP5.2 million from GBP5.6 million at 31
December 2008, which reflects our continued management of working capital. On 31
August 2009 the Company's existing facilities with Barclays Bank, comprising a
term loan of GBP4,610,500 and a GBP1,500,000 multi-option facility, were due to
expire and on 27 August 2009 they were cancelled and replaced by a new
multi-option facility of GBP5,820,500 and a bank guarantee facility of
GBP290,000. The total facilities available under the new arrangements initially
remained the same as under the previous position, although the multi-option
facility was subsequently reduced to GBP4,750,000. The new facilities are
repayable on demand and expire on 31 August 2010.
SERVICES DIVISION
+---------------------------------------------------------------+-------+----+-------+
| 6 months to 30 June | 2009 | | 2008 |
| | GBP'm | | GBP'm |
+---------------------------------------------------------------+-------+----+-------+
| Revenue | 21.3 | | 35.7 |
+---------------------------------------------------------------+-------+----+-------+
| EBITDA before exceptional items and share based payments | 0.7 | | 0.6 |
| Underlying | - | | 0.4 |
| Non-recurring income | | | |
+---------------------------------------------------------------+-------+----+-------+
| | 0.7 | | 1.0 |
+---------------------------------------------------------------+-------+----+-------+
The major element of the reduction in the Division's revenue was due to a change
in the business model of the Encompass business to an agency basis, which had
minimal profit impact. Divisional EBITDA (excluding the benefit of the
non-recurring income in H1 2008) increased by GBP0.1 million.
Air Fayre Limited, the principal business within the Division, delivered solid
financial results in H1 and is on target to continue to deliver positive EBITDA
in H2. This performance is especially commendable given the harsh trading
conditions, which has seen airlines both combine and cancel flights on a daily
basis in line with changing passenger numbers. Success has been driven through
innovation and firm cost controls. The inevitable reductions in flight numbers
required Air Fayre to refine the manner of support extended to airlines. In the
Spring, a major restructuring exercise removed excess direct labour; a level of
management was also removed and smarter LEAN working practices were adopted.
Daily activity was managed through a 6 sigma measurement approach. This, when
combined with greater empowerment and better direction passed down to management
and staff, led to improved On-Time and In-Full performance figures to customers,
retaining the highest performance at Heathrow (99.95%), whilst reducing
operating costs.
These improvements have enabled Air Fayre to retain all of its customers and win
new business. Kingfisher was brought on stream in July with 2 flights daily to
India. The Division also enjoyed an encouraging market response to its wider
service offering. Media on the Move started three new onboard retail programmes
mid summer, bringing new revenue streams to the business. Elev8 Retail launched
its marketing campaign in July to take its now proven offering to the wider
market.
LOS ANGELES DIVISION
+---------------------------------------------------------------+-------+----+-------+
| 6 months to 30 June | 2009 | | 2008 |
| | GBP'm | | GBP'm |
+---------------------------------------------------------------+-------+----+-------+
| Revenue | 8.2 | | - |
+---------------------------------------------------------------+-------+----+-------+
| EBITDA before exceptional items and share based payments | 0.6 | | - |
+---------------------------------------------------------------+-------+----+-------+
In its first full six months of operations the Los Angeles facility achieved an
EBITDA profit of GBP0.6 million and has demonstrated continuous improvement in
stabilising its operations. Flight activity increased during this period from
approximately 64 flights per day up to 83 flights per day whilst consistently
delivering a high standard of service to its customer, United Airlines. With our
model now settled in the USA, the team have begun the process of introducing new
potential customers to our offering.
.
North America has been identified as a main strategic opportunity for the Air
Fayre catering business model. The signing of the contract with United Airlines
was the first step in realising this strategy. As new customers are secured for
the facility, the business model will be further validated in the USA and the
benefits of change demonstrated within this large geographic market. This will
create the basis for expanding into other US cites.
PRODUCTS DIVISION
+---------------------------------------------------------------+-------+----+-------+
| 6 months to 30 June | 2009 | | 2008 |
| | GBP'm | | GBP'm |
+---------------------------------------------------------------+-------+----+-------+
| Revenue | 10.3 | | 14.7 |
+---------------------------------------------------------------+-------+----+-------+
| EBITDA before exceptional items and share based payments | (0.4) | | 0.4 |
+---------------------------------------------------------------+-------+----+-------+
Despite a very difficult half year, the Division has continued to refine its
strategic focus and take the steps necessary towards re-building its profit
potential.
The reduction in the Division's revenue and EBITDA reflects the impact of a
combination of factors driven by the difficult economic environment facing its
airline customers. Lower passenger traffic, particularly in the premium cabins,
the continuing deferral of product launches, the utilisation of existing
inventories by airlines and pressure for price reductions all contributed to the
reduced revenues. Whilst gross margins were successfully maintained, the savings
achieved through greatly improved procurement activities were largely applied to
fund customer mandated pricing discounts. Work continues to improve further the
efficiencies in the Division's supply chain activities.
Overheads were reduced in response to revenue shortfalls. A major restructuring
exercise was implemented in Europe and Asia, which has seen a reduction in
headcount of some 30%. Whilst this was necessary to meet the challenge of the
aviation market this year, it has allowed a stronger more flexible platform to
be established ready for the return of growth in the market segments served by
the Division and expected in 2010.
Notwithstanding the difficult conditions, the Division was successful during the
period in renewing and extending contracts with British Airways, Etihad and
Virgin Atlantic. The MNH Sustainable Cabin Services business entered into a new
agreement with Qantas to develop a sustainable cabin service model across their
network. We believe that the MNH model has rewarding applications across a
number of customers and we intend to continue to grow this segment of the
Division.
OUTLOOK
As set out in note 2ii to the interim results, in applying the going concern
assumption, the Directors have made certain assumptions and enquiries and have
considered the uncertainties, and on the basis of this consider that there is a
reasonable expectation that the Group will have adequate financial resources to
continue in operational existence for the foreseeable future.
Considerable progress continues to be made in re-positioning the Group's
businesses to lay the foundations for future growth while taking the steps
required to mitigate the worst effects of the present challenging market
conditions. The near term future continues to be difficult to predict and the
Group is exposed to a number of uncertainties beyond its control, but I believe
that it is increasingly well equipped to meet the challenges ahead and deliver
value in the long term.
Stephen Yapp
Chairman
29 September 2009 UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
for the 6 months to 30 June 2009
+----------------------------+------+-------------+-------------+----------+----------+----------+
| | Note | Before | Exceptional | Total | Restated | Total |
| | | exceptional | items to | 6 months | Total | 12 |
| | | items to | 30 June | to | 6 months | months |
| | | 30 June | 2009 | 30 June | to | to |
| | | 2009 | GBP'm | 2009 | 30 June | 31 |
| | | GBP'm | | GBP'm | 2008 | December |
| | | | | | GBP'm | 2008 |
| | | | | | | GBP'm |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Revenue | 4 | 39.8 | - | 39.8 | 48.9 | 91.3 |
| | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Cost of sales | | (31.8) | - | (31.8) | (40.4) | (75.3) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Gross profit | | 8.0 | - | 8.0 | 8.5 | 16.0 |
| | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Operating and | | (9.1) | - | (9.1) | (8.7) | (15.9) |
| administrative costs | | | | | | |
| (excluding exceptional | | | | | | |
| items) | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Exceptional items: | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Costs of refinancing | 5 | - | (0.2) | (0.2) | (0.5) | (0.5) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Los Angeles start-up costs | 5 | - | (0.5) | (0.5) | (0.3) | (2.8) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Re-organisation costs | 5 | - | (0.4) | (0.4) | - | (0.1) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Bad debt | | - | - | - | (0.3) | (0.3) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Fair value charges | | - | - | - | - | (5.0) |
| relating to convertible | | | | | | |
| bonds | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Supply contract | | - | - | - | - | (0.6) |
| termination | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Total operating and | (9.1) | (1.1) | (10.2) | (9.8) | (25.2) |
| administrative expenses | | | | | |
+-----------------------------------+-------------+-------------+----------+----------+----------+
| Operating loss | 4 | (1.1) | (1.1) | (2.2) | (1.3) | (9.2) |
| | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Operating loss before share | (1.0) | (1.1) | (2.1) | (1.0) | (8.6) |
| based payments | (0.1) | - | (0.1) | (0.3) | (0.6) |
| Share based payments | | | | | |
+-----------------------------------+-------------+-------------+----------+----------+----------+
| Finance costs | 7 | (0.4) | - | (0.4) | (0.9) | (1.3) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Loss before tax | | (1.5) | (1.1) | (2.6) | (2.2) | (10.5) |
| attributable to equity | | | | | | |
| shareholders | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Income tax | | - | - | - | - | - |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Loss after tax | 4 | (1.5) | (1.1) | (2.6) | (2.2) | (10.5) |
| attributable to equity | | | | | | |
| shareholders | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Loss per share (pence) | | | | | | |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Basic | 6 | | | (0.9p) | (4.7p) | (8.1p) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
| Diluted | 6 | | | (0.9p) | (4.7p) | (8.1p) |
+----------------------------+------+-------------+-------------+----------+----------+----------+
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 6 months to 30 June 2009
+-----------------------------------------------+-----+----------+----------+----------+
| | | 6 months | Restated | 12 |
| | | to | 6 months | months |
| | | 30 June | to | to |
| | | 2009 | 30 June | 31 |
| | | GBP'm | 2008 | December |
| | | | GBP'm | 2008 |
| | | | | GBP'm |
+-----------------------------------------------+-----+----------+----------+----------+
| Loss for the period | | (2.6) | (2.2) | (10.5) |
+-----------------------------------------------+-----+----------+----------+----------+
| Other comprehensive loss | | | | |
+-----------------------------------------------+-----+----------+----------+----------+
| Exchange differences on translating foreign | | (0.1) | - | (0.2) |
| operations | | | | |
+-----------------------------------------------+-----+----------+----------+----------+
| Other comprehensive loss, net of tax | | (0.1) | - | (0.2) |
+-----------------------------------------------+-----+----------+----------+----------+
| Total comprehensive loss for the period | | (2.7) | (2.2) | (10.7) |
| attributable to the equity holders of the | | | | |
| parent company | | | | |
+-----------------------------------------------+-----+----------+----------+----------+
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 June 2009
+--------------------------------+------------+------------+-----------+--------------+
| | Note | 30 June | Restated | 31 December |
| | | 2009 | 30 June | 2008 |
| | | GBP'm | 2008 | GBP'm |
| | | | GBP'm | |
+--------------------------------+------------+------------+-----------+--------------+
| Assets | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Non-current assets | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Property, plant and equipment | 8 | 13.8 | 9.5 | 15.6 |
+--------------------------------+------------+------------+-----------+--------------+
| Goodwill | | 10.0 | 10.0 | 10.0 |
+--------------------------------+------------+------------+-----------+--------------+
| Intangible assets | | 0.3 | 0.5 | 0.3 |
+--------------------------------+------------+------------+-----------+--------------+
| Current assets | | 24.1 | 20.0 | 25.9 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Inventories | | 2.5 | 8.1 | 3.9 |
+--------------------------------+------------+------------+-----------+--------------+
| Trade and other receivables | | 6.8 | 14.4 | 10.5 |
+--------------------------------+------------+------------+-----------+--------------+
| Prepayments | | 1.4 | 1.5 | 1.3 |
+--------------------------------+------------+------------+-----------+--------------+
| Current income tax | | 0.1 | - | 0.1 |
+--------------------------------+------------+------------+-----------+--------------+
| Cash and short-term deposits | | 1.1 | 2.0 | 1.8 |
+--------------------------------+------------+------------+-----------+--------------+
| | | 11.9 | 26.0 | 17.6 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Total assets | | 36.0 | 46.0 | 43.5 |
+--------------------------------+------------+------------+-----------+--------------+
| Equity and liabilities | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Equity attributable to equity share owners | | | |
| of the parent | | | |
+---------------------------------------------+------------+-----------+--------------+
| Issued share capital | | 2.9 | 0.5 | 2.9 |
+--------------------------------+------------+------------+-----------+--------------+
| Share premium account | | 36.4 | 21.6 | 36.4 |
+--------------------------------+------------+------------+-----------+--------------+
| Shares to be issued | | 0.1 | - | 0.1 |
+--------------------------------+------------+------------+-----------+--------------+
| Merger reserve | | 1.5 | 1.5 | 1.5 |
+--------------------------------+------------+------------+-----------+--------------+
| Equity element of convertible | | - | 0.3 | - |
| bonds | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Foreign currency translation | | (1.0) | (0.7) | (0.9) |
| reserve | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Retained earnings | | (25.1) | (19.5) | (22.6) |
+--------------------------------+------------+------------+-----------+--------------+
| Total equity | | 14.8 | 3.7 | 17.4 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Non-current liabilities | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Interest bearing loans and | | 1.2 | 4.6 | 1.6 |
| borrowings | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Convertible bonds | | - | 9.0 | - |
+--------------------------------+------------+------------+-----------+--------------+
| Current liabilities | | 1.2 | 13.6 | 1.6 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Trade and other payables | | 14.9 | 25.0 | 18.7 |
+--------------------------------+------------+------------+-----------+--------------+
| Interest bearing loans and | | 5.1 | 3.7 | 5.8 |
| borrowings | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| | | 20.0 | 28.7 | 24.5 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Total liabilities | | 21.2 | 42.3 | 26.1 |
| | | | | |
+--------------------------------+------------+------------+-----------+--------------+
| Total equity and liabilities | | 36.0 | 46.0 | 43.5 |
+--------------------------------+------------+------------+-----------+--------------+
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the 6 months to 30 June 2009
+------------------------------------------+-----------+------------+--------------+
| | 6 months | Restated | 12 months to |
| | to | 6 months | 31 December |
| | 30 June | to | 2008 |
| | 2009 | 30 June | GBP'm |
| | GBP'm | 2008 | |
| | | GBP'm | |
+------------------------------------------+-----------+------------+--------------+
| Net cash flows from operating activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Loss after tax | (2.6) | (2.2) | (10.5) |
+------------------------------------------+-----------+------------+--------------+
| Depreciation and amortisation | 1.1 | 0.7 | 1.7 |
+------------------------------------------+-----------+------------+--------------+
| Exceptional supply contract termination | - | - | 0.4 |
+------------------------------------------+-----------+------------+--------------+
| Share based payment expense | 0.1 | 0.3 | 0.6 |
+------------------------------------------+-----------+------------+--------------+
| Finance costs | 0.4 | 0.9 | 1.3 |
+------------------------------------------+-----------+------------+--------------+
| Fair value charges relating to | - | - | 5.0 |
| convertible bonds | | | |
+------------------------------------------+-----------+------------+--------------+
| Decrease/(increase) in inventories | 1.4 | (0.9) | 3.2 |
+------------------------------------------+-----------+------------+--------------+
| Decrease in trade and other receivables | 3.6 | 0.7 | 4.7 |
+------------------------------------------+-----------+------------+--------------+
| (Decrease)/increase in trade and other | (3.9) | 0.5 | (5.9) |
| payables | | | |
+------------------------------------------+-----------+------------+--------------+
| Cash inflows generated from operations | 0.1 | - | 0.5 |
+------------------------------------------+-----------+------------+--------------+
| Interest paid | (0.3) | (0.3) | (0.8) |
+------------------------------------------+-----------+------------+--------------+
| Net cash outflows used in operating | (0.2) | (0.3) | (0.3) |
| activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Cash flows from investing activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Purchase of property, plant and | (0.2) | (0.7) | (7.4) |
| equipment | | | |
+------------------------------------------+-----------+------------+--------------+
| Purchase of intangible assets | - | (0.2) | (0.5) |
+------------------------------------------+-----------+------------+--------------+
| Net cash flows used in investing | (0.2) | (0.9) | (7.9) |
| activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Cash flows from financing activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Proceeds from issue of shares | - | - | 7.9 |
+------------------------------------------+-----------+------------+--------------+
| Proceeds from borrowings | - | 1.5 | 2.1 |
+------------------------------------------+-----------+------------+--------------+
| Payment of bank loan, hire purchase and | (1.1) | (0.3) | (1.6) |
| finance lease obligations | | | |
+------------------------------------------+-----------+------------+--------------+
| Net cash flows (used in)/generated from | (1.1) | 1.2 | 8.4 |
| financing activities | | | |
+------------------------------------------+-----------+------------+--------------+
| Net increase in cash and cash | (1.5) | - | 0.2 |
| equivalents | | | |
+------------------------------------------+-----------+------------+--------------+
| Net foreign exchange difference | 0.8 | - | (0.4) |
+------------------------------------------+-----------+------------+--------------+
| Cash and cash equivalents at beginning | 1.8 | 2.0 | 2.0 |
| of period | | | |
+------------------------------------------+-----------+------------+--------------+
| Cash and cash equivalents at end of | 1.1 | 2.0 | 1.8 |
| period | | | |
+------------------------------------------+-----------+------------+--------------+
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 6 months to 30 June 2009
Consolidated condensed statement of changes in equity for the 6 months to 30
June 2009
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| | Issued | Share | Shares | Merger | Foreign | Retained | Total |
| | share | premium | to be | reserve | currency | earnings | equity |
| | capital | account | issued | GBP'm | translation | GBP'm | GBP'm |
| | GBP'm | GBP'm | GBP'm | | reserve | | |
| | | | | | GBP'm | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| At 1 January 2009 | 2.9 | 36.4 | 0.1 | 1.5 | (0.9) | (22.6) | 17.4 |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Cost of share based | - | - | - | - | - | 0.1 | 0.1 |
| payments | | | | | | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Transactions with | - | - | - | - | - | 0.1 | 0.1 |
| owners | | | | | | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Loss for the period | - | - | - | - | - | (2.6) | (2.6) |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Other comprehensive | | | | | | | |
| loss: | | | | | | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Exchange differences on | - | - | - | - | (0.1) | - | (0.1) |
| translating foreign | | | | | | | |
| operations | | | | | | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| Total comprehensive | - | - | - | - | (0.1) | (2.6) | (2.7) |
| loss | | | | | | | |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
| At 30 June 2009 | 2.9 | 36.4 | 0.1 | 1.5 | (1.0) | (25.1) | 14.8 |
+-------------------------+---------+---------+--------+----------+-------------+----------+--------+
Restated consolidated condensed statement of changes in equity for the 6 months
to 30 June 2008
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| | Issued | Share | Merger | Equity | Foreign | Retained | Total |
| | share | premium | reserve | based | currency | earnings | equity |
| | capital | account | GBP'm | financial | translation | GBP'm | GBP'm |
| | GBP'm | GBP'm | | instruments | reserve | | |
| | | | | GBP'm | GBP'm | | |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| At 1 January 2008 | 0.5 | 21.6 | 7.6 | 0.3 | (0.7) | (23.7) | 5.6 |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| Cost of share based | - | - | - | - | - | 0.3 | 0.3 |
| payments | | | | | | | |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| Transfer between | - | - | (6.1) | - | - | 6.1 | - |
| reserves | | | | | | | |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| Transactions with | - | - | (6.1) | - | - | 6.4 | 0.3 |
| owners | | | | | | | |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| Loss for the period | - | - | - | - | - | (2.2) | (2.2) |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| Total comprehensive | - | - | - | - | - | (2.2) | (2.2) |
| loss | | | | | | | |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
| At 30 June 2008 | 0.5 | 21.6 | 1.5 | 0.3 | (0.7) | (19.5) | 3.7 |
+-------------------------+---------+---------+---------+-------------+-------------+----------+--------+
Consolidated condensed statement of changes in equity for the 12 months to 31
December 2008
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| | Issued | Share | Shares | Merger | Equity | Foreign | Retained | Total |
| | share | premium | to be | reserve | based | currency | earnings | equity |
| | capital | account | issued | GBP'm | financial | translation | GBP'm | GBP'm |
| | GBP'm | GBP'm | GBP'm | | instruments | reserve | | |
| | | | | | GBP'm | GBP'm | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| At 1 January 2008 | 0.5 | 21.6 | - | 7.6 | 0.3 | (0.7) | (23.7) | 5.6 |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Issue of share capital | 2.4 | 14.8 | - | - | - | - | - | 17.2 |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Equity element of | - | - | - | - | (0.3) | - | - | (0.3) |
| convertible loan | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Fair value changes | - | - | 0.1 | - | - | - | 4.9 | 5.0 |
| relating to convertible | | | | | | | | |
| bonds | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Cost of share based | - | - | - | - | - | - | 0.6 | 0.6 |
| payments | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Transfer between | - | - | - | (6.1) | - | - | 6.1 | - |
| reserves | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Transactions with | 2.4 | 14.8 | 0.1 | (6.1) | (0.3) | - | 11.6 | 22.5 |
| owners | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Loss for the period | - | - | - | - | - | - | (10.5) | (10.5) |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Other comprehensive | | | | | | | | |
| loss: | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Exchange differences on | - | - | - | - | - | (0.2) | - | (0.2) |
| translating foreign | | | | | | | | |
| operations | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| Total comprehensive | - | - | - | - | - | (0.2) | (10.5) | (10.7) |
| loss | | | | | | | | |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
| At 31 December 2008 | 2.9 | 36.4 | 0.1 | 1.5 | - | (0.9) | (22.6) | 17.4 |
+-------------------------+---------+---------+--------+---------+-------------+-------------+----------+--------+
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED ACCOUNTS
from the 6 months to 30 June 2009
1. CORPORATE INFORMATION
Journey Group plc is a public limited company incorporated and domiciled in
England & Wales. The Company's shares were publicly traded on the AIM market of
the London Stock Exchange during the reporting period.
The comparative figures for the year ended 31 December 2008 were derived from
the statutory accounts for that year which have been delivered to the Registrar
of Companies. Those accounts received an unqualified audit report, which did not
contain statements under sections 498(2) or (3) (accounting record or returns
inadequate, accounts not agreeing with records and returns or failure to obtain
necessary information and explanations) of the Companies Act 2006, but which did
include a reference to an emphasis of matter regarding the Group's ability to
continue as a going concern. The interim results are unaudited.
The principal activities of the Group are described in Note 4.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i. Basis of preparation
The accounting policies applied in preparing the interim results for the period
ended 30 June 2009 are unchanged from those adopted in the financial statements
for the year ended 31 December 2008.
ii. Going concern
The Group incurred a loss after tax attributable to equity shareholders of
GBP2.6 million for the 6 months to 30 June 2009. The Company's existing
borrowing facilities, comprising a multi-option facility of GBP4.75 million and
a bank guarantee facility of GBP0.29 million, are repayable on demand and have
an expiry date of 31 August 2010. Taking these facilities into consideration, in
the absence of additional cash resources becoming available, the Group's
forecasts, allowing for reasonably possible changes in trading performance, show
that during the next 12 months it will not have sufficient financial resources
to enable it to continue in operational existence in its current form. The
Directors have concluded that the combination of these circumstances represent a
material uncertainty that casts significant doubt upon the Group's ability to
continue as a going concern.
In order to reduce the extent of the required additional cash resources, the
Group is in negotiations in relation to a corporate transaction that, if
successful, would lead to significant cash resources becoming available. On 30
July 2009 the Company announced that Air Fayre Limited, its wholly owned
subsidiary, had entered into a letter of intent with Alpha Flight UK Limited,
part of Autogrill S.p.A., for exclusive discussions for the purpose of creating
a joint venture of their flight catering operations at London Heathrow.
Significant progress has been made towards this transaction and, although there
can be no certainty, the Directors are optimistic regarding its successful
outcome materially in accordance with the terms currently being negotiated. In
order for the transaction to be completed the agreement of the Company's bankers
will be required to release the charges currently held by them over the trade
and assets of Air Fayre Limited and its subsidiaries. Discussions are in
progress with the Company's bankers to establish terms under which such security
would be released.
Measures have also been taken to maintain appropriate cash headroom under the
Company's existing borrowing facilities pending completion of the foregoing
corporate transaction by the deferral of payment of certain amounts owing to a
small number of creditors to whom significant balances are outstanding. The
total amount overdue to such creditors at 31 August 2009 amounted to GBP2.5
million, although this amount will progressively reduce in accordance with the
understandings and agreements reached with them.
In assessing the financing requirements of the Group the Directors have prepared
forecasts incorporating the measures taken in relation to the deferral of
creditors and have determined the levels and period of availability of bank
facilities required to maintain the Group in operational existence in its
current form assuming that the corporate transaction currently under negotiation
is completed, and that the amount realised and the completion date are
materially in line with the terms currently being negotiated. In such event, the
Directors consider they would have a reasonable expectation that such facilities
will be available, although inherently there is no certainty that they will be
available. Following completion of the foregoing corporate transaction the
Directors intend to take steps to secure such facilities.
In considering the going concern position of the Group the Directors have made
the following principal assumptions:
1. The agreement of the Company's bankers to release the charges currently held
by them over the trade and assets of Air Fayre Limited and its subsidiaries is
received allowing the corporate transaction under negotiation to proceed and
that such transaction is completed and the amount realised and its completion
date are materially in line with the terms currently being negotiated.
2. Payments to the creditors referred to above to which significant balances
are presently outstanding are in accordance with the understandings and
agreements reached with them.
3. The Company's existing borrowing facilities, comprising a multi-option
facility of GBP4.75 million and a bank guarantee facility of GBP290,000, which
are repayable on demand and have an expiry date of 31 August 2010, are not
withdrawn or amended except in conjunction with the corporate transaction under
negotiation. Appropriate new borrowing facilities become available prior to the
expiry of the Company's existing borrowing facilities on 31 August 2010.
4. The forecasts as referred to above prepared by the Directors for the
purposes of assessing the financing requirements of the Group are accurate in
all material respects.
On the basis of the foregoing assumptions and having made enquiries and
considering the uncertainties described above, the Directors have a reasonable
expectation that the Group will have adequate financial resources to continue to
adopt the going concern basis. Failing the foregoing assumptions being met, the
Group may not have adequate financial resources to continue in operational
existence for the foreseeable future and, in such circumstances, it may not be
appropriate to continue to adopt the going concern basis. The financial
statements do not include any of the adjustments that would result if the Group
was unable to continue as a going concern, which would include writing down the
carrying value of assets, including goodwill, to their recoverable amount and
providing any further liabilities that may arise.
iii. Statement of compliance
This financial information has been prepared on the basis of the recognition and
measurement requirements of IFRSs in issue that are adopted by the EU and
expected to be effective at 31 July 2009. The new standards adopted in the
preparation of these financial statements include IAS 1 'Presentation of
Financial Statements' (revised 2007) and IFRS 8 'Operating Segments'. Neither of
these standards has resulted in any measurement changes. The Group has also
complied with International Accounting Standard 34 "Interim Financial
Reporting".
3. RESTATEMENT OF PRIOR YEAR RESULTS
During the year ended 31 December 2005 the Company entered into a contract under
which income arose of GBP1,000,000 that was credited wholly to revenue in that
year. As the terms of the contract provide that services would be provided over
a five year period, the income arising under the contract is more appropriately
accounted for by crediting it evenly to revenues over the period of the contract
and, accordingly, the results for the 6 months ended 30 June 2008 have been
restated.
The effect of the restatement on the financial statements is summarised in the
table below:
+----------------------------------------------------------------------+-----------+
| Consolidated income statement | Restated |
| | 6 months |
| | to |
| | 30 June |
| | 2008 |
| | GBP'm |
+----------------------------------------------------------------------+-----------+
| Increase in revenue | 0.1 |
+----------------------------------------------------------------------+-----------+
| Decrease in loss before tax attributable to equity shareholders | 0.1 |
+----------------------------------------------------------------------+-----------+
| Consolidated balance sheet | |
+----------------------------------------------------------------------+-----------+
| Increase in accruals and deferred income | (0.4) |
+----------------------------------------------------------------------+-----------+
| Reduction in net assets | (0.4) |
+----------------------------------------------------------------------+-----------+
| Decrease in retained earnings brought forward | (0.5) |
+----------------------------------------------------------------------+-----------+
As a result of the prior year adjustment, the basic and diluted loss per share
has reduced by 0.2 pence from 4.9 pence to 4.7 pence and the adjusted basic and
adjusted diluted loss per share has reduced by 0.2 pence from 2.6 pence to 2.4
pence.
4. SEGMENTAL REPORTING
Historically, Journey Group was organised into two primary business segments,
namely the Products and Services Divisions. Following the award of the United
Airlines contract and the successful commencement of operations at the Los
Angeles facility in November 2008, the Los Angeles have been treated as a
separate division with effect from 1 January 2009. These reportable segments are
the three strategic divisions for which monthly financial information is
provided to the Chief Operating Decision Maker.
The Products Division provides a broad range of travel supplies predominately to
the international travel industry on a global basis. The Services Division is a
supplier of catering to the international travel industry within the United
Kingdom and of media services to the international travel industry within the
United Kingdom. The Services Division is also engaged in supply chain
management. Both divisions provide marketing, design and consultancy
services. The Los Angeles Division is a supplier of catering services to the
domestic and international travel industry in the USA.
Information on primary reporting by business segment is shown below.
Segment revenues, expenses and results include transfers and transactions
between business segments. Such transactions are accounted for at competitive
market prices which would be charged to unaffiliated clients for similar
goods. All inter-segment transactions are eliminated on consolidation.
Exceptional items relate to significant non-recurring expenditure of an unusual
nature.
Segmental information by business segment for 6 months to 30 June 2009
+-------------------------------+----------+----------+-----------+--------------+----------+
| | Products | Services | Los | Eliminations | Total |
| | Division | Division | Angeles | 6 | 6 months |
| | 6 months | 6 months | Division | months to 30 | to |
| | to | to | 6 months | June 2009 | 30 June |
| | 30 June | 30 June | to | GBP'm | 2009 |
| | 2009 | 2009 | 30 June | | GBP'm |
| | GBP'm | GBP'm | 2009 | | |
| | | | GBP'm | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Revenue | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Travel supplies, catering and | 10.3 | 20.8 | 8.2 | - | 39.3 |
| media services | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Supply chain management | - | 0.4 | - | - | 0.4 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Marketing, design and | - | 0.1 | - | - | 0.1 |
| consultancy | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Net sales to other segments | - | - | - | - | - |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Total revenue | 10.3 | 21.3 | 8.2 | - | 39.8 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Result | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment result before | (0.4) | - | 0.2 | - | (0.2) |
| exceptional items | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Exceptional costs | (0.1) | (0.3) | (0.5) | - | (0.9) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment result | (0.5) | (0.3) | (0.3) | - | (1.1) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated corporate | | | | | (0.9) |
| expenses | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated exceptional | | | | | (0.2) |
| refinancing costs | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Operating loss | | | | | (2.2) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Finance costs | | | | | (0.4) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Income tax | | | | | - |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Loss after tax | | | | | (2.6) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Other information | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment assets | 3.8 | 12.7 | 6.3 | - | 22.8 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated corporate assets | | | | | 13.2 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| | | | | | 36.0 |
+-------------------------------+----------+----------+-----------+--------------+----------+
Restated segmental information by business segment for 6 months to 30 June 2008
+-------------------------------+----------+----------+-----------+--------------+----------+
| | Products | Services | Los | Eliminations | Total |
| | Division | Division | Angeles | 6 months to | 6 months |
| | 6 months | 6 months | Division | 30 June | to |
| | to | to | 6 months | 2008 | 30 June |
| | 30 June | 30 June | to | GBP'm | 2008 |
| | 2008 | 2008 | 30 June | | GBP'm |
| | GBP'm | GBP'm | 2008 | | |
| | | | GBP'm | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Revenue | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Travel supplies, catering and | 13.2 | 24.4 | - | - | 37.6 |
| media services | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Supply chain management | - | 10.8 | - | - | 10.8 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Marketing, design and | - | 0.1 | - | - | 0.1 |
| consultancy | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Other non-recurring income | - | 0.4 | - | - | 0.4 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Net sales to other segments | 1.5 | - | - | (1.5) | - |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Total revenue | 14.7 | 35.7 | - | (1.5) | 48.9 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Result | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment result before | 0.3 | 0.3 | - | - | 0.6 |
| exceptional items | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Exceptional costs | (0.3) | (0.3) | - | - | (0.6) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment result | - | - | - | - | - |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated corporate | | | | | (0.8) |
| expenses | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated exceptional | | | | | (0.5) |
| refinancing costs | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Operating loss | | | | | (1.3) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Finance costs | | | | | (0.9) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Income tax | | | | | - |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Loss after tax | | | | | (2.2) |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Other information | | | | | |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Segment assets | 6.6 | 24.9 | - | - | 31.5 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| Unallocated corporate assets | | | | | 14.5 |
+-------------------------------+----------+----------+-----------+--------------+----------+
| | | | | | 46.0 |
+-------------------------------+----------+----------+-----------+--------------+----------+
Segmental information by business segment for 12 months to 31 December 2008
+-------------------------+-------------+------------+-------------+--------------+------------+
| | Products | Services | Los | Eliminations | Total |
| | Division | Division | Angeles | 12 months to | 12 months |
| | 12 | 12 months | Division | 31 December | to |
| | months to | to | 12 months | 2008 | 31 |
| | 31 December | 31 | to | GBP'm | December |
| | 2008 | December | 31 December | | 2008 |
| | GBP'm | 2008 | 2008 | | GBP'm |
| | | GBP'm | GBP'm | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Revenue | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Travel supplies, | 28.3 | 47.0 | 2.5 | - | 77.8 |
| catering and media | | | | | |
| services | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Supply chain management | - | 12.4 | - | - | 12.4 |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Marketing, design and | - | 0.2 | - | - | 0.2 |
| consultancy | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Other non-recurring | - | 0.9 | - | - | 0.9 |
| income | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Net sales to other | 2.6 | - | - | (2.6) | - |
| segments | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Total revenue | 30.9 | 60.5 | 2.5 | (2.6) | 91.3 |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Result | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Segment result before | 1.4 | 0.4 | - | - | 1.8 |
| exceptional items | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Exceptional costs | (0.3) | (0.6) | (2.8) | - | (3.7) |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Segment result | 1.1 | (0.2) | (2.8) | - | (1.9) |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Unallocated corporate | | | | | (1.7) |
| expenses | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Unallocated exceptional | | | | | (5.6) |
| refinancing costs | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Operating loss | | | | | (9.2) |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Interest expense | | | | | (1.3) |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Finance costs | | | | | - |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Loss after tax | | | | | (10.5) |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Other information | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Segment assets | 7.0 | 15.3 | 7.4 | (0.1) | 29.6 |
+-------------------------+-------------+------------+-------------+--------------+------------+
| Unallocated corporate | | | | | 13.9 |
| assets | | | | | |
+-------------------------+-------------+------------+-------------+--------------+------------+
| | | | | | 43.5 |
+-------------------------+-------------+------------+-------------+--------------+------------+
5. EXCEPTIONAL ITEMS
+------------------------------------------+------------+------------+--------------+
| | 6 months | 6 months | 12 months to |
| | to | to | 31 December |
| | 30 June | 30 June | 2008 |
| | 2009 | 2008 | GBP'm |
| | GBP'm | GBP'm | |
+------------------------------------------+------------+------------+--------------+
| Costs of refinancing | 0.2 | 0.5 | 0.5 |
+------------------------------------------+------------+------------+--------------+
| Los Angeles start-up costs | 0.5 | 0.3 | 2.8 |
+------------------------------------------+------------+------------+--------------+
| Re-organisation costs | 0.4 | - | 0.1 |
+------------------------------------------+------------+------------+--------------+
| Bad debt | - | 0.3 | 0.3 |
+------------------------------------------+------------+------------+--------------+
| Fair value charges relating to | - | - | 5.0 |
| convertible bonds | | | |
+------------------------------------------+------------+------------+--------------+
| Supply contract termination | - | - | 0.6 |
+------------------------------------------+------------+------------+--------------+
| Total exceptional items | 1.1 | 1.1 | 9.3 |
+------------------------------------------+------------+------------+--------------+
The exceptional items incurred during the period were as follows:
* The costs of refinancing relate to bank fees in respect of amendments to bank
covenants and legal costs incurred in bringing certain US subsidiaries within
the bank's security structure.
* The Los Angeles start-up costs relate to excess direct labour costs incurred in
the first quarter of the year.
* The re-organisation costs relate to redundancies.
6. LOSS PER SHARE
The basic loss per share is calculated by dividing after tax loss for the period
attributable to equity shareholders (numerator) by the weighted average number
of ordinary shares in issue during the period (denominator).
The diluted loss per share is calculated using the same numerator with the
denominator adjusted for the dilutive effects of share options and shares to be
issued. As the Group has made a loss for the first 6 months of the year, no
adjustment is made to the denominator for the impact of share options and shares
to be issued because the potential shares are anti-dilutive.
The adjusted loss per share, both basic and diluted, use the denominator
described in the appropriate paragraphs above. For both adjusted basic loss per
share and adjusted diluted loss per share, the numerator is adjusted to remove
the post tax impact of exceptional items from the calculations.
The following represents loss and share data used to calculate basic, diluted
and adjusted earnings per share:
+--------------------------------+-----------+------------+------------+---------------+
| Loss table | Ref | 6 months | 6 months | 12 months to |
| | | to | to | 31 December |
| | | 30 June | 30 June | 2008 |
| | | 2009 | 2008 | GBP'm |
| | | GBP'm | GBP'm | |
+--------------------------------+-----------+------------+------------+---------------+
| Loss attributable to equity | A | (2.6) | (2.2) | (10.5) |
| shareholders | | | | |
+--------------------------------+-----------+------------+------------+---------------+
| Exceptional items (post tax) | | 1.1 | 1.1 | 9.3 |
+--------------------------------+-----------+------------+------------+---------------+
| Adjusted loss after tax | | | | |
| attributable to equity | | | | |
+--------------------------------+-----------+------------+------------+---------------+
| shareholders | B | (1.5) | (1.1) | (1.2) |
+--------------------------------+-----------+------------+------------+---------------+
+-----------------------------------+---------+-------------+------------+---------------+
| Share table | Ref | Weighted | Weighted | Weighted |
| | | average | average | average |
| | | shares | shares | shares |
| | | 6 months | 6 months | 12 months to |
| | | to | to | 31 December |
| | | 30 June | 30 June | 2008 |
| | | 2009 | 2008 | Number |
| | | Number | Number | |
+-----------------------------------+---------+-------------+------------+---------------+
| Weighted average shares for basic | C | 290,572,553 | 46,732,093 | 130,010,939 |
| loss per share | | | | |
+-----------------------------------+---------+-------------+------------+---------------+
| Weighted average shares for | D | 290,572,553 | 46,732,093 | 130,010,939 |
| diluted loss per share | | | | |
+-----------------------------------+---------+-------------+------------+---------------+
| | | | | |
+-----------------------------------+---------+-------------+------------+---------------+
| Loss per share table | Formula | Loss per | Loss per | Loss per |
| | | share | share | share |
| | | 6 months | 6 months | 12 months to |
| | | to | to | 31 December |
| | | 30 June | 30 June | 2008 |
| | | 2009 | 2008 | Pence |
| | | Pence | Pence | |
+-----------------------------------+---------+-------------+------------+---------------+
| Basic loss per share | A/C | (0.9) | (4.7) | (8.1) |
+-----------------------------------+---------+-------------+------------+---------------+
| Diluted loss per share | A/D | (0.9) | (4.7) | (8.1) |
+-----------------------------------+---------+-------------+------------+---------------+
| Adjusted basic loss per share | B/C | (0.5) | (2.4) | (0.9) |
+-----------------------------------+---------+-------------+------------+---------------+
| Adjusted diluted loss per share | B/D | (0.5) | (2.4) | (0.9) |
+-----------------------------------+---------+-------------+------------+---------------+
7. FINANCE COSTS
+------------------------------------------+-----------+------------+---------------+
| | 6 months | 6 months | 12 months to |
| | to | to | 30 June 2008 |
| | 30 June | 30 June | GBP'm |
| | 2009 | 2008 | |
| | GBP'm | GBP'm | |
+------------------------------------------+-----------+------------+---------------+
| Bank loans and overdrafts | 0.2 | 0.3 | 0.7 |
+------------------------------------------+-----------+------------+---------------+
| Finance charges payable under finance | 0.1 | - | 0.1 |
| leases and | | | |
| hire purchase contracts | | | |
+------------------------------------------+-----------+------------+---------------+
| Other interest | 0.1 | | - |
+------------------------------------------+-----------+------------+---------------+
| Convertible bonds | - | 0.6 | 0.5 |
+------------------------------------------+-----------+------------+---------------+
| Total finance costs | 0.4 | 0.9 | 1.3 |
+------------------------------------------+-----------+------------+---------------+
8. PROPERTY, PLANT AND EQUIPMENT
During the period plant and equipment has been purchased amounting to GBP0.2m (6
months to 30 June 2008: GBP0.7m). There were no asset disposals in the reporting
period.
9. CAPITAL COMMITMENTS
Capital commitments contracted for but not provided for at 30 June 2009 amounted
to nil (30 June 2008 GBP3.7m).
10. EVENTS AFTER THE BALANCE SHEET DATE
a) Joint venture with Alpha Flight UK Ltd
On 30 July 2009, the Group announced that Air Fayre Ltd, the Group's wholly
owned subsidiary which provides in-flight catering to the airline industry, and
Alpha Flight UK Ltd, part of Autogrill S.p.A, one of the world's largest
providers of food & beverage and retail services for travellers, have entered
into a Letter of Intent providing for exclusive discussions for the purpose of
creating a joint venture of their flight catering operations at London Heathrow.
Significant progress has been made towards this transaction and the Directors
are optimistic regarding its successful outcome materially in accordance with
the terms currently being negotiated.
b) Bank facilities
On 31 August 2009 the Company's existing facilities with Barclays Bank,
comprising a term loan of GBP4,610,500 and a GBP1,500,000 multi-option facility,
were due to expire and on 27 August 2009 they were cancelled and replaced by a
new multi-option facility of GBP5,820,500 and a bank gaurantee facility of
GBP290,000. The total facilities available under the new arrangements remained
the same as under the previous position. The new facilities are repayable on
demand and expire on 31 August 2010. As part of these arrangements a warrant is
to be issued to Barclays Bank over 5% of the existing share capital at an
exercise price of 2 pence per share.
INDEPENDENT REVIEW REPORT TO JOURNEY GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009 which comprises the condensed consolidated income statement, condensed
consolidated statement of comprehensive income, condensed consolidated balance
sheet, condensed consolidated cash flow statement, condensed consolidated
statement of changes in equity and notes 1 to 9. We have read the other
information contained in the half yearly financial report which comprises only
the Chairman's Letter to Shareholders and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. Our review work has been
undertaken so that we might state to the Company those matters we are required
to state to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the interim
report in accordance with the AIM Rules.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM Rules.
Emphasis of matter - Going concern
In forming our conclusion on the financial statements, which is not qualified,
we have considered the adequacy of the disclosure made in note 2(ii) to the
financial statements concerning the Group's ability to continue as a going
concern. As more fully explained in note 2, the Group has prepared cash flow
forecasts that include certain cash flow assumptions relating to the
implications of the Group's existing borrowing facilities and the ability of the
Group to generate further cash from the creation of a new joint venture which is
subject to the agreement of the Company's bankers to release the charges
currently held by them in order to allow the transaction under negotiation to
proceed. These conditions, along with the other matters referred to in note
2(ii) indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going concern. The
financial statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
GRANT THORNTON UK LLP
AUDITOR
LONDON
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR CKCKPOBKDFCB
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