Final Results

25 March 2014

Embargoed 0700hrs

Journey Group plc

Annual Results

for the year ended 31 December 2013

Journey Group plc (the "Group"), a leading provider of catering services and in-flight products to the international airline and travel industries, today announces its results for the year ended 31 December 2013.

Positioned for growth

Strategic:

· US Division focusing on identified significant growth opportunities within its existing customer base

· Disposal of MNH for a headline consideration of £900,000

· Group now comprises two businesses, Air Fayre (the US Division) and Watermark Products (the Products Division)

· Re-positioning Watermark Products to focus on up coming opportunities in Asia Pacific, North America and the Middle East

· Reorganisation of Group Board and Watermark Products' senior management leading to annualised cost savings of approximately £700,000 by early H2 2014 after a one-off cost of £430,000, with £114,000 already incurred during 2013 and £316,000 to be incurred during 2014

Operational:

· US Division operating profit increased by 72% boosted by successful transition of the former Continental Airlines traffic at Los Angeles International Airport ("LAX") and the JetBlue Airways traffic at Long Beach Airport

· Post year end the US Division won second contract with JetBlue Airways at LAX and during the year new contracts with Federal Express and North American Airlines also at LAX and has become a multiple client business

· Watermark Products renewed two key contracts with Delta Air Lines and British Airways

Financial:

· Adjusted profit before tax from continuing operations stepped up 77% to £1,828,000 (2012: £1,035,000)

· Adjusted basic earnings per share from continuing operations up 65% to 8.29 pence versus 5.01 pence last year

· Loss from discontinued operations of £941,000 after exceptional loss of £1,064,000

· Net cash increased by £1,299,000 to £4,410,000

· Interim dividend paid of 1.25 pence per share with a proposed final dividend of 1.5 pence per share, making a total of 2.75 pence for the year and representing a 10% increase over the previous year

Stephen Yapp, Executive Chairman commented

"2013 was the second successive year during which the Group grew substantially its profit before tax and net cash position establishing an increasingly strong financial position.

The disposal of MNH left the Group focused on two distinct activities. Watermark Products is being re-positioned to focus more effectively on up coming growth opportunities primarily in the Asia Pacific, North American and Middle East regions. Most importantly, Air Fayre is focusing on growth opportunities available in the next two years where it can replicate its successful business model with new facilities. It has identified a number of significant prospects within its existing customer base.

Accordingly, your Board looks forward with confidence and considers the Group well positioned for growth."

For further information please contact:

Stephen Yapp

Carl Fry

Journey Group plc

Tel: +44 (0) 20 8606 2000

[email protected]

N+1 Singer (Nominated Advisor & Broker)

Jonny Franklin-Adams

Matt Thomas

Tel: +44 (0) 20 7496 3000

EXECUTIVE CHAIRMAN'S LETTER TO SHAREHOLDERS

INTRODUCTION

Over the period since my last annual letter to you, your Group delivered a strong financial performance. It has achieved a substantial improvement in profitability, sold MNH Sustainable Cabin Services Ltd ("MNH") to focus on its two remaining businesses, Air Fayre and Watermark Products, and implemented significant cost savings. Air Fayre, our US business, continued its momentum of high growth, whilst preparing the model to be fully transferable. Watermark Products is being re-positioned to focus more effectively on up coming opportunities.

Over the coming 18 months there are a number of significant new business opportunities in both the Air Fayre and Watermark Products businesses for which the Group is well positioned to bid and service.

The principal highlights were:

Strategic:

· US Division focusing on identified significant growth opportunities within its existing customer base

· Disposal of MNH for a headline consideration of £900,000

· Group now comprises two businesses, Air Fayre (the US Division) and Watermark Products (the Products Division)

· Re-positioning Watermark Products to focus on up coming opportunities in Asia Pacific, North America and the Middle East

· Reorganisation of Group Board and Watermark Products' senior management leading to annualised cost savings of approximately £700,000 by early H2 2014 after a one-off cost of £430,000, with £114,000 already incurred during 2013 and £316,000 to be incurred during 2014

Operational:

· US Division operating profit increased by 72% boosted by successful transition of the former Continental Airlines traffic at Los Angeles International Airport ("LAX") and the JetBlue Airways traffic at Long Beach Airport

· Post year end the US Division won second contract with JetBlue Airways at LAX and during the year new contracts with Federal Express and North American Airlines also at LAX and has become a multiple client business

· Watermark Products renewed two key contracts with Delta Air Lines and British Airways

Financial:

· Adjusted profit before tax from continuing operations stepped up 77% to £1,828,000 (2012: £1,035,000)

· Adjusted basic earnings per share from continuing operations up 65% to 8.29 pence versus 5.01 pence last year

· Loss from discontinued operations of £941,000 after exceptional loss of £1,064,000

· Net cash increased by £1,299,000 to £4,410,000

· Interim dividend paid of 1.25 pence per share with a proposed final dividend of 1.5 pence per share, making a total of 2.75 pence for the year and representing a 10% increase over the previous year

STRATEGIC UPDATE

Following a good financial performance in 2012 and with the Group's internal forecasts showing further significant improvement during 2013, the Group's primary focus moved during the year to establishing the platform for growth and, in particular, the measures required to position the Group best to achieve increased future earnings and cash flow. As a consequence, three key decisions were taken: the disposal of MNH; the re-positioning of Watermark Products; and the reorganisation of the Board and Watermark Products' senior management. The overall effect of these measures is a clearer focus on core activities, a significant reduction in costs and an enhanced capability within Watermark Products to address growth opportunities.

MNH was sold as its activities were considered to be no longer synergistic with the rest of the Group. The disposal benefitted the Group by increasing its cash resources and by allowing the Group to focus on its two core businesses of Air Fayre (the US Division) and Watermark Products (the Products Division). MNH was sold by way of a management buyout to a team led by MNH's managing director and including myself in a minority capacity for a consideration of £900,000 of which £500,000 was received on completion and £400,000 is receivable during 2014. Prior to charging goodwill there was a profit on disposal of £378,000, but following the write-off of historic goodwill of £1,442,000 an exceptional loss of £1,064,000 arose, which is included in the loss from discontinued operations.

Watermark Products has concluded that over the coming years its most promising growth opportunities primarily lie in the Asia Pacific, North American and Middle East regions and, accordingly, is re-positioning its resources to focus more effectively on opportunities in those markets. The management team is to be re-organised so that the key management are all located in the Asia Pacific region, its largest market. Patricia Manten, a long standing executive and its current chief operating officer, based in Sydney, Australia has replaced me as managing director of Watermark Products. Additionally, a new finance and commercial director has been recruited based in Sydney alongside Patricia Manten. The Division will also open an office during 2014 in the USA to more effectively address significant up coming growth opportunities in that region.

As a consequence of these measures and other steps taken over the last 18 months, the opportunity has arisen to re-organise the Board. Along with the changes to Watermark Products' senior management, the reorganisation is expected to lead to an annualised reduction in costscompared with those incurred during 2013 of approximately £700,000 by early H2 2014. The implementation of these changes will be achieved for a one-off cost of approximately £430,000 of which £114,000 was incurred during the year and £316,000 will be incurred during H1 2014. The changes to the Board are set out below.

MARKET CONDITIONS

The global airline industry saw healthy growth in 2013. According to IATA, full year passenger traffic for the total market was 5.2% ahead of 2012, maintaining a similar rate of growth to 2012 and at a level consistent with the long-term growth trend in the industry. The growth in traffic, however, was regionally uneven with those areas served by the Group mostly showing modestly lower growth than the total market, albeit at generally higher rates than in 2012. Encouragingly, airlines continued to manage capacity well with the overall load factor modestly improved to 79.5% versus 79.1% last year and at a high level historically. In line with these positive metrics, industry profits are expected to show significant improvement. IATA has forecast 2013 net profits to grow to $12.9 billion from $7.6 billion in 2012 and rise further to $19.7 billion in 2014. Whilst the world's major economies still struggle to fully emerge from recession into a meaningful and sustainable recovery, these profit growth projections, along with the expectation of continued passenger traffic growth, provide a solid basis towards higher levels of activity by airlines in seeking the cost effective and high quality of service solutions the Group offers.

RESULTS

The results for the year were as follows:

The Group's profitability grew considerably. The US Division was substantially ahead of the prior year, but this was partly offset by a reduced contribution from the Products Division. The improvement in the US Division was driven by the benefit of a full year of the former Continental Airlines and the JetBlue Airways contract wins. In the Products Division, the lower contribution was mainly due to lower revenues partly mitigated by a strengthening of gross margins. Net cash showed a further strong increase.

Revenue increased by 14% to £40,282,000 and EBITDA before exchange differences grew by 38% to £2,752,000 with the EBITDA margin improving to 6.8% from 5.6% for the previous year. Depreciation and amortisation rose 13% to £805,000 mainly due to the additional trucks purchased to service the former Continental Airlines and JetBlue Airways traffic in the US Division. This drove growth of 57% in operating profit before share based payments to £1,891,000. Finance costs fell 63% mostly reflecting the expiry of the sales finance facility during May 2013. Adjusted profit before tax from continuing operations stepped up 77% to £1,828,000 versus £1,035,000 previously. On a statutory basis, profit before tax from continuing operations was the same at £1,828,000 versus £868,000 last year, which was arrived at after charging share based payments of £167,000.

The income tax expense was £777,000 compared with a credit of £668,000 for the previous year. This credit included the write-back of a deferred tax asset relating to the US Division of £1,082,000, without which there would have been an adjusted income tax expense in the prior year of £414,000. The adjusted effective tax rate was 42.5% compared with 40.0% in the previous year. These tax rates substantially reflect the rate of tax in the USA of almost 40%. Profit after tax from continuing operations amounted to £1,051,000 compared with £1,536,000 last year.

Adjusted basic earnings per share from continuing operations amounted to 8.29 pence compared with 5.01 pence last year, an increase of 65% and adjusted diluted earnings per share from continuing operations amounted to 7.23 pence compared with 4.50 pence last year, an increase of 61%. The Board considers that adjusted profit before tax and adjusted earnings per share provide a better guide to the underlying performance of the Group.

There was a loss from discontinued operations of £941,000, comprising an exceptional loss on disposal of £1,064,000 offset by a profit after tax of £123,000, versus a profit after tax of £102,000 for the previous year. The profit attributable to equity shareholders was £110,000 versus £1,638,000 last year.

Net cash amounted to £4,410,000, comprising cash of £5,207,000 less debt under finance leases of £797,000, compared with net cash of £3,111,000 last year, an increase of £1,299,000. This increase, which underlines the strong cash generative nature of the Group's business, was due to cash flow generated from operating activities of £2,235,000, net disposal proceeds of MNH of £441,000 and £102,000 received in respect of the exercise of warrants less capital expenditure of £851,000, which mainly related to truck purchases in the US Division, dividend payments of £480,000 and a translation loss of £148,000.

DIVIDENDS

The Group paid an interim dividend of 1.25 pence per share in December 2013 and, in line with the Group's progressive dividend policy, the Board has decided to recommend a final dividend for the year of 1.5 pence per share, making a total of 2.75 pence for the year and representing a 10% increase over the previous year. The total dividend is covered 2.6 times by adjusted diluted earnings per share from continuing operations. If approved by shareholders, the ex-dividend date will be 28 May 2014 and the dividend will be paid on 27 June 2014 to shareholders who are on the register as at the close of business on 30 May 2014.

US DIVISION

The US Division, which operates under the Air Fayre brand, had a particularly successful year. Driven by a full year's contribution from the former Continental Airlines and JetBlue Airways traffic, revenue and operating profit rose substantially. In addition, two new customers were won during the year and a second contract was won with JetBlue Airways. North American Airlines, a charter airline for military and other private clients, was added early in the year and the Federal Express traffic was added from mid year. Subsequent to the year end, JetBlue Airways awarded Air Fayre a contract to service its flights out of Los Angeles International Airport ("LAX") resulting in the US Division now serving JetBlue Airways at both Long Beach Airport ("LGB") and LAX. The new contract, which is anticipated to commence in May 2014, is for Air Fayre to provide a fresh buy on board service and first class offering for JetBlue's predominantly transcontinental flights out of LAX. There is an average of 9 flights per day during low season and up to fifteen flights per day during high season. Additionally, Air Fayre has been selected to design JetBlue Airways' menu for special meals (gluten free, vegan etc) across all of their US operations.

With its unique patented business model, which includes a complete chill chain from manufacturing to delivery on board aircraft, Air Fayre is able to provide excellent service and outstanding reliability to multiple clients at multiple airports from one location. During the year it serviced 47,204 flights with food and beverages for four clients at two locations. United Airlines traffic out of LAX increased to around 90 flights a day with a summer peak of 115 flights a day. In total 35,298 United Airlines flights were serviced with 2,172,315 meals. There were approximately 26 JetBlue flights a day out of LGB with a peak of 33 flights a day during the summer resulting in a total of 10,337 flights for the year. For Federal Express, a total of 1,803 flights were serviced, 3,816 meals provided and 2,159 aircraft cleaned. There were 6 charter flights serviced for North American Airlines.

Revenue increased by 49% to £25,863,000. EBITDA before share based payments rose 50% to £2,639,000 and the EBITDA margin rose marginally to 10.2% versus 10.1% last year. The charge for depreciation increased by 15% to £761,000, which was mostly due to the additional trucks purchased to service the former Continental Airlines and JetBlue Airways traffic. Operating profit before share based payments considerably increased by 72% to £1,878,000.

With a high level of utilisation of its Los Angeles facility delivering strong and steady cash flow, the US Division continues to focus on growth opportunities for new facilities where it can replicate its successful business model. In particular, it is targeting its existing customer base where over the next 18 months significant potential new business opportunities are expected.

PRODUCTS DIVISION

The Products Division produced a solid performance notwithstanding its reduced contribution. Consistent with expectations, revenue fell by 20% to £14,419,000 following the decision in the previous year in Watermark Products to focus on higher quality, stronger gross margin business and exit underperforming contracts. As a consequence and although the gross margin % strengthened significantly, EBITDA before exchange differences and share based payments fell by £255,000 or 33% to £514,000. However, of the £255,000 reduction, £111,000 was due to a reduction in the release of inventory provisions of £40,000 versus £151,000 last year. The inventory provisions written back arose primarily in previous years mainly as a consequence of uncertainties that have since been resolved and, accordingly, are no longer considered necessary. The depreciation charge fell by 10% to £44,000. Operating profit before share based payments fell 37% to £430,000.

During the year Watermark Products successfully renewed two key customer contracts. The largest of these was with Delta Air Lines for the provision of meal service items in the premium cabins, which was renewed for two years. The renewal reflects a strong relationship with this carrier and is consistent with Watermark Products ongoing strategy to continue to focus on meal service and other longer term product lines. A new multi-product contract was also signed with British Airways for three years. In the Middle East, amenity kit and meal service business with Etihad was also renewed during the year.

As set out above, in order to focus more effectively on up coming opportunities in the Asia Pacific, North American and Middle East regions, the operations of Watermark Products are being re-positioned. The management team is to be re-organised with the key management all located in the Asia Pacific, its largest market. Patricia Manten who is based in Sydney, Australia has replaced me as managing director of Watermark Products. Patricia is a long standing executive having joined Watermark Products in 2002. She has held a variety of roles, including in sales, design & development, and latterly as chief operating officer. A new finance and commercial director has been recruited based in Sydney alongside Patricia Manten. The operations director is located in Hong Kong. As a consequence of these changes all of the key management will be located in similar time zones, which will enable an enhanced focus on sales and procurement. North America has become a major market for Watermark Products and there are a number of significant opportunities emerging in the region over the coming year. Accordingly, to service better existing customers and improve sales prospects the Division plans to open an office in the USA during 2014.

MNH was sold in late November 2013. During the year it successfully renewed its key contracts with Qantas Airways and Virgin Atlantic, although it suffered a contract loss in its bundled product sales division serving the rail and ferry sectors. Whilst MNH had a strong H1, during H2 to the date of its disposal its performance was adversely impacted by this contract loss together with a reduced contribution from the new contract with Qantas Airways. As already noted, MNH's results have been treated as discontinued operations.

CENTRAL COSTS

The reduction in central costs before share based payments of 27% to £417,000 mainly reflected a higher rate of divisional charges versus the previous year. Both the year and the previous year benefited from the write-back of an historic accrual relating to uncertainties that have been reduced.

BOARD CHANGES

In line with the evolution of the Group's strategy, David Young and Carl Fry will be stepping down from the Board. David Young will be leaving the Board on 30 April 2014 and Carl Fry on 1 July 2014 to ensure a smooth handover period to the new Chief Financial Officer. David Young joined the Group in January 2008 as Managing Director for the Products Division and became a member of the Board in February 2009. His role transitioned to Chief Commercial Officer during 2012. Carl Fry joined the Group as Interim Chief Financial Officer in January 2008 and became a member of the Board in December 2009. Both David and Carl entered service during a very difficult phase during which the Group was incurring substantial losses and was significantly indebted. In their respective fields both made a major contribution to the Group's recovery, subsequent return to significant profitability and to its positioning for future growth. On behalf of the Board I would like to express our sincere appreciation to them and wish them well for the future.

I am delighted to announce that Alison Whittenbury will be joining the Board as Chief Financial Officer on 1 July 2014. Alison has direct experience of both the Group's in-flight catering and product businesses. She first joined the Group in October 2007 as interim finance director of Air Fayre Limited, the Group's former in-flight catering operation serving London Heathrow airport. Shortly afterwards Alison accepted a permanent position and played a key role in the restructuring and recovery of Air Fayre Limited before it was sold into a joint venture with Alpha Flight in November 2009, where she continued as finance director for the combined operation. Alison played a part in the successful start up of the Air Fayre operations in Los Angeles. She remained with Alpha Airfayre in November 2010 when the Group disposed of its interest in the joint venture, but rejoined the Group in July 2011 when she was appointed finance director of Watermark Products.

As noted in my interim letter to shareholders, Dimitri Goulandris has rejoined the Board as a Non-executive Director. I am delighted to welcome him back after an absence of approximately 10 months. Previously, Dimitri had served as a Non-executive Director for almost four years. His experience and knowledge in the public and private smaller company arenas is valuable and strengthens the existing skill set of the Board. Dimitri has been appointed to both the Audit and Remuneration Committees.

TEAM

The Group has assembled a highly professional and committed team with industry leading experience in their respective fields. They have again demonstrated their ability to provide the Group's customers with outstanding service and meet the challenges of growth. I would like to say thank you on behalf of the Board.

OUTLOOK

2013 was the second successive year during which the Group grew substantially its profit before tax and net cash position establishing an increasingly strong financial position.

The disposal of MNH left the Group focused on two distinct activities. Watermark Products is being re-positioned to focus more effectively on up coming growth opportunities primarily in the Asia Pacific, North American and Middle East regions. Most importantly, Air Fayre is focusing on growth opportunities available in the next two years where it can replicate its successful business model with new facilities. It has identified a number of significant prospects within its existing customer base. Accordingly, your Board looks forward with confidence and considers the Group well positioned for growth.

Stephen Yapp

Executive Chairman

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

* Total equity is all attributable to shareholders of the parent

NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2013

1. Basis of preparation and statement of compliance

The financial information contained in this preliminary announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2013 or 2012, but is derived from these financial statements. The financial statements for the year ended 31 December 2012 have been delivered to the Registrar of Companies. 

The financial statements for the year ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the year ended 31 December 2013 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

Significant judgements and estimates

In preparing the financial statements the Directors are required to make judgements and estimates in applying accounting policies. The Directors did not consider any significant judgements have been made. The most significant area where estimates have been made is as follows:

Estimates

· In conducting the annual impairment test of goodwill, various significant assumptions have been made in arriving at the recoverable amounts of cash generating units.

Going concern

The Directors have reviewed the Group's budgets and forecasts for the coming 12 months, which have been prepared with appropriate regard to the current macroeconomic environment and the conditions in the principal markets served by the Group. As a result, and taking into consideration the Group's financial position, including its net funds, and its principal risks and uncertainties, at the time of approving these financial statements, the Directors consider that the Group has sufficient financial resources to continue in operational existence for the foreseeable future and, therefore, that it is appropriate to adopt the going concern basis in preparing these financial statements.

2. Segmental reporting

The Group is organised into two primary segments, the Products and the US Divisions. These reportable segments are the strategic divisions for which 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 US Division is a supplier of catering and beverages to the domestic and international travel industry within the United States of America.

Segment revenues, expenses and results include transfers and transactions between 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. Segment revenues are based on the country of domicile of the customer; information is not available to produce segment revenues based on sales by destination.

Segment assets include all operating assets used by a segment and consist principally of operating cash, receivables, prepayments, inventories, goodwill and property, plant and equipment, net of allowances and provisions. Where allocation of assets across segments is not possible, they are classified as unallocated corporate assets. Segment non-current assets comprise fixed assets and goodwill and are based on the location of the assets and operations. Segment liabilities include all operating liabilities and consist principally of finance leases, accounts payable, social security and other taxes, and accrued liabilities. Where allocation of liabilities across segments is not possible, such liabilities are classified as unallocated corporate liabilities. Segment assets and liabilities do not include receivable or payable balances in respect of income taxes.

The Group had one customer (2012: three customers), who accounted for revenues of £22.8 million (2012: £20.7 million), which amounts to more than 10% of Group revenues. Of these revenues £22.8 million (2012: £16.1 million) arose in the US Division and £nil (2012: £4.6 million) arose in the Products Division.

Information by geographical region for 2013

Information by geographical region for 2012

Information by business segment for 2013

Information by business segment for 2012

3. Inventories

During the year, £40,000 was credited (2012: credit of £151,000) to the income statement in respect of a reduction in obsolete and slow moving inventories.

4. Income tax

The major components of income tax expense/(credit) were as follows:

The prior year deferred income tax credit in respect of previous years of £1,082,000 arose through a reassessment of the recognition of a deferred tax asset in respect of tax losses following an increase in the profitability and improved prospects for the Group's US operations.

The reconciliation of the income tax expense based on the profit before tax at the statutory income tax rate to the income tax expense/(credit) at the Group's effective income tax rate is as follows:

The adjusted effective tax rate has been calculated on profit before tax after adding back share based payments and excluding from income tax expense the deferred tax credit of £1,082,000 arising in respect of previous years from the Group's US operations.

The movement on the deferred tax asset was as follows:

The Group has estimated UK tax losses of £8.3 million (2012: £8.6 million) that are available indefinitely for offset against future taxable profits arising from the same trades of the companies in which the losses arose. The Group has also estimated non-trade UK tax losses of £3.5 million (2012: £3.9 million) that are available indefinitely for offset against future non-trading gains. Deferred tax assets have not been recognised in respect of these UK tax losses as there is insufficient certainty of future taxable profits against which to utilise them. The Group also had estimated US tax losses for Federal and State purposes of, respectively, £0.8 million (2012: £2.3 million) and £0.5 million (2012: £2.2 million) that are available for offset against future taxable profits arising from the same trades of the company in which the losses arose.

5. Discontinued operations

On 29 November 2013 the Group disposed of its investment in MNH Sustainable Cabin Services Ltd to MNH Grp Ltd and, accordingly, the results of its operations have been treated as discontinued operations. Revenue and expenses of MNH Sustainable Cabin Services Ltd have been removed from the results of continuing operations and are shown as a single line item on the face of the income statement as discontinued operations. The operating results of the discontinued operations were as follows:

The exceptional loss on disposal comprised total consideration of £900,000 less goodwill of £1,442,000, net assets sold of £443,000, directly attributable disposal costs of £59,000 and transfer from foreign currency translation reserve of £20,000. At 31 December 2013 there was outstanding deferred consideration of £400,000 plus a further £118,000 due to the Group in respect of the settlement of former inter-company balances and terms agreed with the purchaser in relation to debt and working capital.

6. Earnings per share

The basic earnings per share from continuing and discontinued operations is calculated by dividing the profit attributable to equity shareholders (numerator) by the weighted average number of ordinary shares in issue during the year (denominator). The basic earnings per share from continuing operations is calculated by dividing the profit after tax from continuing operations (numerator) by the weighted average number of ordinary shares in issue during the year (denominator). The basic loss per share from discontinued operations is calculated by dividing the loss from discontinued operations (numerator) by the weighted average number of ordinary shares in issue during the year (denominator). The diluted earnings per share is calculated using the same numerator with the denominator adjusted for the dilutive effects of share options and warrants. The adjusted basic and diluted earnings per share from continuing operations uses the denominator described in the appropriate paragraph above with the numerator adjusted to remove the post tax impact of share based payments and the deferred tax credit arising in respect of tax losses from previous years from the Group's US operations.

In the comparative figures, the weighted average number of shares in issue and the basic and diluted earnings per share figures have been revised following the consolidation of the Company's ordinary share capital on the basis of 1 new ordinary share for every 25 existing ordinary shares. The weighted average diluted number of shares in issue includes warrants outstanding over 999,277 (2012: 1,407,432) ordinary shares and 855,935 (2012: nil) ordinary shares that would have been issuable under the management incentive scheme for the Executive Directors had all participants exercised their options based on the share price at the year end date of 145.50 pence.

Share options and warrants are dilutive for earnings per share from continuing operations and in accordance with IAS 33 have been treated as dilutive for diluted earnings per share from discontinued operations. Accordingly, the diluted loss per share from discontinued operations is less than the basic loss per share from discontinued operations.

7. Dividends

A final dividend of 2.5 pence per share in respect of the year ended 31 December 2012 amounting to £319,984 was paid on 25 June 2013. An interim dividend of 1.25 pence per share in respect of the year ended 31 December 2013 amounting to £159,992 was paid on 6 December 2013. A final dividend of 1.5 pence per share has been recommended by the Board in respect of the year ended 31 December 2013 amounting to £206,980 based on the issued share capital at 31 December 2013 as increased by the exercise of warrants since that date. If approved by shareholders, it will be paid on 27 June 2014 to shareholders who are on the register as at the close of business on 30 May 2014.

8. Share capital

At the year end the Company's share capital comprised 12,799,365 ordinary shares of 25 pence each (2012: 309,780,243 ordinary shares of 1 pence each). During the year the Company consolidated its ordinary share capital on the basis of 1 new ordinary share of 25 pence each for every 25 existing ordinary shares of 1 pence each. The increase during the year of £102,000 representing 408,155 ordinary shares related to the exercise of warrants.

At the year end the Company had warrants outstanding over 999,277 ordinary shares of 25 pence each with a subscription price of 25 pence per share (2012: 35,185,825 ordinary shares of 1 pence each with a subscription price of 1 pence per share). Subsequent to the year end, all of these warrants were exercised for a total subscription price of £249,819. The number of ordinary shares that would have been issuable under the management incentive scheme for the Executive Directors had all participants exercised their options on 31 December 2013 was 855,935 ordinary shares based on the share price at that date of 145.5 pence.

9. Additional cash flow information

10. Annual accounts

The annual report and financial statements will be posted to all shareholders shortly and will be available from the Company's website at www.journeygroup.plc.uk and its registered office:

The Encompass CentreInternational Avenue

Heston

Middlesex

TW5 9NJ