Half Yearly Report

RNS Number : 5530T

Journey Group PLC

30 September 2010

 

30 September 2010

 

Journey Group plc

Interim Results

for the six monthsended 30 June 2010

 

 

Journey Group plc ("Journey Group" or the "Group") a leading provider of in-flight products, catering and media services to the airline and travel industry today announces its results for the six months ended 30 June 2010.

 

Highlights

 

• EBITDA before exchange differences improved to £0.4 million from £0.1 million in H1 2009, but, adjusting for the transfer of businesses to the Alpha-Airfayre Limited joint venture, on a like for like basis EBITDA before exchange differences rose by £0.6 million.

 

• Los Angeles operation EBITDA profit of £1.0 million versus £0.6 million in H1 2009.

 

• New £4.5 million three year borrowing facility.

 

• Underlying net debt reduced to £2.9 million.

 

• Provision of £1.2 million against the carrying value of the investment in Alpha-Airfayre Limited.

 

Stephen Yapp, Chairman commented 

 

"Whilst conditions within the international airline industry generally remain challenging, your Group has re-positioned each of its businesses to provide a service offering that is relevant and attractive to its customers' present and future needs. With the new 3 year borrowing facility in place, the Group now has a stable financial base. We are confident that the achievement of these objectives will, in time and with market recovery, lead to attractive growth".

 

For further information please contact:

 

Stephen Yapp

Journey Group plc

Tel: +44 (0) 20 8606 2000

[email protected]

 

Carl Fry

Journey Group plc

Tel: +44 (0) 20 8606 2000

[email protected]

 

KBC Peel Hunt Ltd (Nominated Advisor & Broker)

Daniel Harris

Tel: +44 (0) 20 7418 8900

 

EXECUTIVE CHAIRMAN'S LETTER TO SHAREHOLDERS

 

Dear Shareholder,

 

INTRODUCTION

 

In line with the confidence expressed in my 2009 year end statement, the Group has made solid progress during the first half despite the tentative nature of the global economic recovery. The results for the half year reflect the strength of the Group's operation in Los Angeles and at the same time the challenging market conditions impacting our in-flight products business and the Alpha-Airfayre Limited joint venture.

 

The key highlights:

 

• EBITDA before exchange differences improved to £0.4 million from £0.1 million in H1 2009, but, adjusting for the transfer of businesses to the Alpha-Airfayre Limited joint venture, on a like for like basis EBITDA before exchange differences rose by £0.6 million.

 

• Los Angeles operation EBITDA profit of £1.0 million versus £0.6 million in H1 2009.

 

• New £4.5 million three year borrowing facility.

 

• Underlying net debt reduced to £2.9 million.

 

• Provision of £1.2 million against the carrying value of the investment in Alpha-Airfayre Limited.

 

The recovery in the airline industry has been geographically driven with the Asia Pacific and Middle East regions leading the way. Airlines in Asia Pacific, North America and Middle East regions are forecasting significantly improved profitability in 2010, although European airlines continue to forecast losses.

 

BORROWING FACILITIES

 

The key corporate activity this year has been the successful refinancing of the Group's £3.25m on demand bank facility and £0.1 million guarantee facility provided by Barclays Bank plc with new term facilities. As announced on 3 September 2010, the Group has entered a £4.5 million facility with a term of three years. Under the facility, warrants have been issued over up to 35,185,825 new ordinary shares, representing approximately 10% of the Group's fully diluted share capital, exercisable at a price of 1 pence per share on or before 2 September 2020. This refinancing was achieved against a difficult lending environment and is a testament to the current state of the Group's businesses and its future prospects. The longer term nature of this funding provides the Group with a stable capital base from which to plan its future strategy and growth. The refinancing also resulted in the termination of the substantial monthly facility fees charged by Barclays Bank plc, which have been treated as an exceptional item in these results.

 

RESULTS

 

The results for the half year were as follows:

 

6 months to 30 June	2010 £'m		2009 £'m
Revenue	17.1		39.8
EBITDA before exchange differences	0.4		0.1
Exchange differences	0.3		-
EBITDA	0.7		0.1
Depreciation and amortization	(0.5)		(1.1)
Operating profit/(loss) before exceptional items and share based payments	0.2		(1.0)
Share based payments	(0.1)		(0.1)
Exceptional items	(1.8)		(1.1)
Share of joint venture's net loss	(0.5)		-
Finance charges	(0.2)		(0.4)
Loss before taxation	(2.4)		(2.6)
Basic loss per share (pence)	0.8		0.9

 

Due to the transfer of the activities of Air Fayre Limited and Elev8 Retail Limited to the Alpha-Airfayre Limited joint venture in H2 2009, both turnover and EBITDA were negatively impacted. Turnover fell by £22.7 million to £17.1 million largely for this reason, but EBITDA before exchange differences rose by £0.3 million to £0.4 million. Adjusting for the transfer to the Alpha-Airfayre Limited joint venture, on a like for like basis EBITDA rose by £0.6 million. Foreign exchange differences of £0.3 million reflected the strength of the US dollar over the half year. After exchange differences, EBITDA rose by £0.6 million to £0.7 million.

 

Operating profit before exceptional items and share based payments amounted to £0.2 million compared with a loss of £1.0 million in H1 2009. The reduction in depreciation of £0.6 million was substantially due to the transfer of businesses to the Alpha-Airfayre Limited joint venture. Exceptional items of £1.8 million comprised a provision of £1.2 million against the carrying value of the investment in Alpha-Airfayre Limited, bank facility fees of £0.3 million as referred to above and reorganisation costs of £0.3 million mainly relating to the Products Division. The share of joint venture's net loss amounted to £0.5 million and finance charges fell by £0.2 million to £0.2 million.

 

There was a net loss before taxation of £2.4 million compared with a loss of £2.6 million in H1 2009. The basic loss per share was 0.8 pence compared with 0.9 pence in H1 2009.

 

Net debt amounted to £2.1 million compared with £0.5 million at 31 December 2009 and £5.2 million at 30 June 2009. However, under transitional arrangements the Group continued to collect cash belonging to the Alpha-Airfayre Limited joint venture and at 31 December 2009 had material creditors on deferred terms. Adjusting for these factors, underlying net debt fell to £2.9 million from £3.0 million at 31 December 2009.

 

LOS ANGELES DIVISION

 

6 months to 30 June	2010 £'m		2009 £'m
Revenue	7.4		8.2
EBITDA before exceptional items and share based payments	1.0		0.6

 

The Los Angeles operation performed better than expected and had a robust first half with EBITDA well ahead of the prior period. Turnover was lower due to a change in food supply arrangements towards free issue from United Airlines and away from third party purchases that are charged to United Airlines.

 

The operation maintained a high level of efficiency and has seen organic growth from United Airlines, its core customer. A high standard of service continued to be delivered to United and in recognition of this it was awarded first place by United for the best hub worldwide in the category of reliability / on time performance for the first half of 2010.

 

The unit was successful in winning a new customer, Express Jet, which is a charter airline serving the entertainment industry and VIP private business. The potential for this airline is exciting as it develops its business prospects. The Air Fayre business model continued to attract significant interest from airlines and non-aviation prospective clients with enquiries / RFPs and station visits. With significant spare capacity, the focus remains on securing new customers.

 

PRODUCTS DIVISION

 

6 months to 30 June	2010 £'m		2009 £'m
Revenue	8.4		10.3
EBITDA before exchange differences	(0.2)		(0.3)
Exchange differences	0.1		(0.1)
EBITDA before exceptional items and share based payments	(0.1)		(0.4)

 

The Products Division continued to be adversely impacted by very competitive market conditions leading to reduced turnover and gross profits. However, the restructuring that was largely implemented in 2009 led to significant overhead savings and as a result EBITDA showed a small increase.

 

These difficult conditions mainly impacted the in-flight products business, but the cancellations due to the ash cloud and the BA crew strike also had a negative effect. The restructuring of the in-flight products business was largely completed during the half year leading to additional exceptional costs. Management has recently been strengthened with the appointment of an Operations Director and a Finance Director. The focus for H2 is on stabilizing the new teams and enhancing the capabilities within sales and marketing to take advantage of emerging opportunities. Whilst the UK and Western Europe were particularly difficult, sales growth was achieved in the Middle East and Asia Pacific regions with both expected to be strong contributors to trading in 2011. In particular, new contracts were won with Etihad Airlines, Singapore Airlines, Qantas and Air New Zealand. MNH's sustainability and cabin management business continued to perform well.

 

We continue to develop the Division's strategy by broadening the in-flight products business into a creative products agency serving a broader range of industries. MNH continues to develop its services to provide a global capability.

 

SERVICES DIVISION

 

6 months to 30 June	2010 £'m		2009 £'m
Revenue	1.3		21.3
EBITDA before exchange differences	0.1		0.4
Exchange differences	-		0.3
EBITDA before exceptional items and share based payments	0.1		0.7

 

Following the transfer of the activities of Air Fayre Limited and Elev8 Retail Limited to the Alpha-Airfayre Limited joint venture in H2 2009, the remaining business within the Division is Media on the Move Limited, which provides media services mainly to the international airline industry. The reduction in turnover and EBITDA arose substantially from transfers to Alpha-Airfayre Limited.

 

Media on the Move Limited experienced a tougher half year than expected, but still achieved turnover of £1.2 million versus £1.2 million in H1 2009 and EBITDA of £28,000 versus £35,000 in H1 2009. The business continues to broaden its services and markets. New business wins included Sky Teams lounge at Heathrow, the carriers TAM and Eva Air, and Cross Country Rail. Developmental work during the first half is expected to see new media services being offered to Thomson Airways and National Express coaches in H2. A dedicated Financial Controller was appointed providing a stronger focus on key performance indicators, including margins, working capital and cash flow.

 

ALPHA-AIRFAYRE LIMITED JOINT VENTURE

 

The first half was focused on the integration of the Alpha and the Air Fayre businesses, on the renewal of some important customer contracts and on bids for new business. The integration was achieved successfully with the planned cost synergies being achieved. However, operating performance fell short of expectations primarily due to the ash cloud, which led to the temporary closure of operations at Heathrow. A key contract was not retained on renewal and the scope of another materially reduced. As a consequence, steps to restructure the business are planned that will lead to an overall smaller operation. In the light of this, the carrying value of the investment in the joint venture has been reviewed for impairment and an exceptional provision of £1.2 million has been made.

 

CENTRAL COSTS

 

6 months to 30 June	2010 £'m		2009 £'m
Corporate expenses before exchange differences	(0.5)		(0.7)
Exchange differences	0.2		(0.2)
Corporate expenses after exchange differences	(0.3)		(0.9)

 

Firm control remained over corporate expenses.

 

OUTLOOK

 

Whilst conditions within the international airline industry generally remain challenging, your Group has re-positioned each of its businesses to provide a service offering that is relevant and attractive to its customers' present and future needs. With the new 3 year borrowing facility in place, the Group now has a stable financial base. We are confident that the achievement of these objectives will, in time and with market recovery, lead to attractive growth.

 

 

Stephen Yapp

Executive Chairman

30 September 2010

 

 

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT

for the 6 months to 30 June 2010

 

 

	Note	Before Exceptional items to 30 June 2010 £'m	Exceptional items to 30 June 2010 £'m	Total 6 months to 30 June 2010 £'m	Total 6 months to 30 June 2009 £'m	Total 12 months to 31 December 2009 £'m
Revenue	3	17.1	-	17.1	39.8	74.5
Cost of sales		(12.7)	-	(12.7)	(31.8)	(59.4)
Gross Profit		4.4	-	4.4	8.0	15.1
Operating and administrative costs (excluding exceptional items)		(4.3)	-	(4.3)	(9.1)	(16.3)
Exceptional items:
Banking costs	4	-	(0.3)	(0.3)	(0.2)	(1.0)
Re-organisation costs	4	-	(0.3)	(0.3)	(0.4)	(0.7)
Exceptional impairment of investment in joint venture	4	-	(1.2)	(1.2)	-	-
Los Angeles start-up costs	4	-	-	-	(0.5)	(0.6)
Settlement of contract	4	-	-	-	-	(0.1)
Other	4	-	-	-	-	(0.1)
Total operating and administrative expenses		(4.3)	(1.8)	(6.1)	(10.2)	(18.8)
Operating profit/(loss)	3	0.1	(1.8)	(1.7)	(2.2)	(3.7)
Operating profit/(loss) before share based payments Share based payments		0.2 (0.1)	(1.8) -	(1.6) (0.1)	(2.1) (0.1)	(3.4) (0.3)
Share of joint venture's net loss		(0.5)	-	(0.5)	-	(0.4)
Finance costs	6	(0.2)	-	(0.2)	(0.4)	(0.6)
Loss before tax attributable to equity shareholders		(0.6)	(1.8)	(2.4)	(2.6)	(4.7)
Income tax credit		-	-	-	-	0.1
Loss after tax attributable to equity shareholders	3	(0.6)	(1.8)	(2.4)	(2.6)	(4.6)
Loss per share (pence)
Basic	5			(0.8p)	(0.9p)	(1.6p)
Diluted	5			(0.8p)	(0.9p)	(1.6p)

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

for the 6 months to 30 June 2010

 

 

	6 months to 30 June 2010 £'m	6 months to 30 June 2009 £'m	12 months to 31 December 2009 £'m
Loss for the period	(2.4)	(2.6)	(4.6)
Other comprehensive loss
Exchange differences on translating foreign operations	0.1	(0.1)	(0.1)
Other comprehensive income/(loss), net of tax	0.1	(0.1)	(0.1)
Total comprehensive loss for the period attributable
to the equity shareholders of the parent company	(2.3)	(2.7)	(4.7)

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 June 2010

 

 

	Note	30 June 2010 £'m	30 June 2009 £'m	31 December 2009 £'m
Assets Non-current assets Property, plant and equipment Goodwill Intangible assets Investment in joint venture	7	5.7 6.1 - 3.5	13.8 10.0 0.3 -	5.6 6.1 0.1 5.2
		15.3	24.1	17.0
Current assets Inventories Trade and other receivables Prepayments Current income tax Cash and short-term deposits	9 & 10	1.3 3.5 0.3 0.1 1.2	2.5 6.8 1.4 0.1 1.1	1.1 7.7 0.7 0.1 1.7
		6.4	11.9	11.3
Total assets		21.7	36.0	28.3
Equity and liabilities Equity attributable to equity share owners of the parent Issued share capital Share premium account Shares to be issued Merger reserve Foreign currency translation reserve Retained earnings		2.9 36.4 0.1 1.5 (0.9) (29.0)	2.9 36.4 0.1 1.5 (1.0) (25.1)	2.9 36.4 0.1 1.5 (1.0) (26.7)
Total equity		11.0	14.8	13.2
Non-current liabilities Interest bearing loans and borrowings	9	0.8	1.2	0.9
		0.8	1.2	0.9
Current liabilities Trade and other payables Interest bearing loans and borrowings	9	7.4 2.5	14.9 5.1	12.9 1.3
		9.9	20.0	14.2
Total liabilities		10.7	21.2	15.1
Total equity and liabilities		21.7	36.0	28.3

 

 

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the 6 months to 30 June 2010

 

 

	Note	6 months to 30 June 2010 £'m	6 months to 30 June 2009 £'m	12 months to 31 December 2009 £'m
Net cash flows from operating activities Loss after tax Depreciation and amortisation Share of joint venture's net loss Share based payment expense Finance costs Exceptional impairment of investment in joint venture Tax credit Gain on disposal Fair value charges relating to warrrants (Increase)/decrease in inventories Decrease in trade and other receivables Decrease in trade and other payables		(2.4) 0.5 0.5 0.1 0.2 1.2 - - - (0.2) 4.6 (5.5)	(2.6) 1.1 - 0.1 0.4 - - - - 1.4 3.6 (3.9)	(4.6) 2.1 0.4 0.3 0.6 - 0.1 (0.2) 0.2 2.1 3.1 (3.8)
Cash inflows (used in)/generated from operations Interest paid		(1.0) (0.2)	0.1 (0.3)	0.3 (0.6)
Net cash outflows used in operating activities		(1.2)	(0.2)	(0.3)
Cash flows from investing activities
Purchase of property, plant and equipment		(0.1)	(0.2)	(0.3)
Cash arising from joint venture transaction		-	-	5.0
Net cash flows (used in)/generated from investing activities		(0.1)	(0.2)	4.7
Cash flows from financing activities
Payment of bank loan and finance lease obligations		(0.1)	(1.1)	(5.9)
Net cash flows used in financing activities		(0.1)	(1.1)	(5.9)
Net decrease in cash and cash equivalents Net foreign exchange difference		(1.4) (0.3)	(1.5) 0.8	(1.5) 0.6
Cash and cash equivalents at beginning of period		0.9	1.8	1.8
Cash and cash equivalents at end of period	10	(0.8)	1.1	0.9

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN EQUITY

for the 6 months to 30 June 2010

 

 

Condensed consolidated statement of changes in equity for the 6 months to 30 June 2010

 

	Issued share capital £'m	Share premium account £'m	Shares to be issued £'m	Merger reserve £'m	Foreign Currency translation reserve £'m	Retained earnings £'m	Total equity £'m
At 1 January 2010	2.9	36.4	0.1	1.5	(1.0)	(26.7)	13.2
Cost of share based payments	-	-	-	-	-	0.1	0.1
Transactions with owners	-	-	-	-	-	0.1	0.1
Loss for the period	-	-	-	-	-	(2.4)	(2.4)
Other comprehensive loss:
Exchange differences on
translating foreign operations	-	-	-	-	0.1	-	0.1
Total comprehensive income/(loss)	-	-	-	-	0.1	(2.4)	(2.3)
At 30 June 2010	2.9	36.4	0.1	1.5	(0.9)	(29.0)	11.0

 

 

Condensed consolidated statement of changes in equity for the 6 months to 30 June 2009

 

	Issued share capital £'m	Share premium account £'m	Shares to be issued £'m	Merger reserve £'m	Foreign Currency translation reserve £'m	Retained earnings £'m	Total equity £'m
At 1 January 2009	2.9	36.4	0.1	1.5	(0.9)	(22.6)	17.4
Cost of share based payments	-	-	-	-	-	0.1	0.1
Transactions with owners	-	-	-	-	-	0.1	0.1
Loss for the period	-	-	-	-	-	(2.6)	(2.6)
Other comprehensive loss:
Exchange differences on
translating foreign operations	-	-	-	-	(0.1)	-	(0.1)
Total comprehensive loss	-	-	-	-	(0.1)	(2.6)	(2.7)
At 30 June 2009	2.9	36.4	0.1	1.5	(1.0)	(25.1)	14.8

 

 

Condensed consolidated statement of changes in equity for the 12 months to 31 December 2009

 

	Issued share capital £'m	Share premium account £'m	Shares to be issued £'m	Merger reserve £'m	Foreign Currency translation reserve £'m	Retained earnings £'m	Total equity £'m
At 1 January 2009	2.9	36.4	0.1	1.5	(0.9)	(22.6)	17.4
Cost of share based payments	-	-	-	-	-	0.3	0.3
Fair value charges relating to warrants	-	-	-	-	-	0.2	0.2
Transactions with owners	-	-	-	-	-	0.5	0.5
Loss for the period	-	-	-	-	-	(4.6)	(4.6)
Other comprehensive loss:
Exchange differences on
translating foreign operations	-	-	-	-	(0.1)	-	(0.1)
Total comprehensive loss	-	-	-	-	(0.1)	(4.6)	(4.7)
At 31 December 2009	2.9	36.4	0.1	1.5	(1.0)	(26.7)	13.2

 

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED ACCOUNTS

for the 6 months to 30 June 2010

 

 

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 2009 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 3.

 

 

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 2010 are unchanged from those adopted in the financial statements for the year ended 31 December 2009.

 

ii. Statement of compliance

These interim consolidated financial statements are for the six months ended 30 June 2010. They have been prepared in accordance with IFRSs as adopted by the European Union and IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.

 

iii. Alpha-Airfayre Limited joint venture

As described in the full annual financial statements for the year ended 31 December 2009, the Group entered into a joint venture transaction with Alpha Flight UK Limited in November 2009. The accounting policies adopted and key judgements made in connection with that transaction are detailed in the full financial statements. For the period ended 30 June 2009 the income statement and balance sheets of the trading subsidiaries Air Fayre Limited, International Catering Limited and Elev8 Retail Limited were fully consolidated on a line by line basis into the Group financial statements. In the period ended 30 June 2010 these operations are included within the single line 'Share of joint venture's net loss' in the Group income statement and 'Investment in joint venture' in the Group balance sheet.

 

 

3. SEGMENTAL REPORTING

 

The Group is organised on a worldwide basis into three primary business segments, the Products, Services and Los Angeles Divisions. 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 Los Angeles Division is a supplier of catering to the domestic and international travel industry within the United States of America. The Services Division was a supplier of catering to the international travel industry within the United Kingdom until the transfer of those operations to the joint venture with Alpha Flight UK Limited on 20 November 2009 and is a supplier of media services to the international travel industry in the United Kingdom. The Services Division was also engaged in supply chain management, but since 31 December 2009 this revenue stream ceased. Both the Products and Services Divisions provide marketing, design and consultancy services.

 

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 2010

 

	Product Division 6 months to 30 June 2010 £'m	Services Division 6 months to 30 June 2010 £'m	Los Angeles Division 6 months to 30 June 2010 £'m	Eliminations 6 months to  30 June 2010 £'m	Total 6 months to 30 June 2010 £'m
Revenue
Travel supplies, catering and media services Marketing, design and consultancy	8.4 -	1.2 0.1	7.4 -	- -	17.0 0.1
Total revenue	8.4	1.3	7.4	-	17.1
Result
Segment result before exceptional items Exceptional costs	(0.2) (0.2)	0.1 (0.1)	0.6 -	- -	0.5 (0.3)
Segment result	(0.4)	-	0.6	-	0.2
Unallocated corporate expenses					(0.4)
Unallocated exceptional banking costs					(0.3)
Unallocated exceptional impairment of investment in joint venture					(1.2)
Operating loss					(1.7)
Share of joint venture's net loss					(0.5)
Finance costs					(0.2)
Income tax					-
Loss after tax					(2.4)
Other information
Segment assets	4.7	0.9	7.3	(0.9)	12.0
Unallocated corporate assets					9.7
					21.7

 

Segmental information by business segment for 6 months to 30 June 2009

 

	Product Division 6 months to 30 June 2009 £'m	Services Division 6 months to 30 June 2009 £'m	Los Angeles Division 6 months to 30 June 2009 £'m	Eliminations 6 months to  30 June 2009 £'m	Total 6 months to 30 June 2009 £'m
Revenue
Travel supplies, catering and media services Supply chain management Marketing, design and consultancy	10.3 - -	20.8 0.4 0.1	8.2 - -	- - -	39.8 0.4 0.1
Total revenue	10.3	21.3	8.2	-	39.8
Result
Segment result before exceptional items Exceptional costs	(0.4) (0.1)	- (0.3)	0.2 (0.5)	- -	(0.2) (0.9)
Segment result	(0.5)	(0.3)	(0.3)	-	(1.1)
Unallocated corporate expenses					(0.9)
Unallocated exceptional banking costs					(0.2)
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

 

Segmental information by business segment for 12 months to 31 December 2009

 

	Product Division 12 months to 31 December 2009 £'m	Services Division 12 months to 31 December 2009 £'m	Los Angeles Division 12 months to 31 December 2009 £'m	Eliminations 12 months to 31 December 2009 £'m	Total 12 months to 31 December 2009 £'m
Revenue
Travel supplies, catering and media services Supply chain management Marketing, design and consultancy	20.4 - -	38.3 0.5 0.2	15.1 - -	- - -	73.8 0.5 0.2
Total revenue	20.4	39.0	15.1	-	74.5
Result
Segment result before exceptional items Exceptional costs	(0.1) (0.5)	0.3 (0.3)	0.3 (0.6)	- -	0.5 (1.4)
Segment result	(0.6)	-	(0.3)	-	(0.9)
Unallocated corporate expenses					(1.7)
Unallocated exceptional banking costs					(1.0)
Unallocated other exceptional costs					(0.1)
Operating loss					(3.7)
Share of joint venture's net loss					(0.4)
Finance costs					(0.6)
Income tax credit					0.1
Loss after tax					(4.6)
Other information
Segment assets	5.4	5.7	6.6	(2.1)	15.6
Unallocated corporate assets					12.7
					28.3

 

 

4. EXCEPTIONAL ITEMS

 

	6 months to 30 June 2010 £'m	6 months to 30 June 2009 £'m	12 months to 31 December 2009 £'m
Banking costs Re-organisation costs Exceptional impairment of investment in joint venture Los Angeles start-up costs Settlement of contract Other	0.3 0.3 1.2 - - -	0.2 0.4 - 0.5 - -	1.0 0.7 - 0.6 0.1 0.1
Total exceptional items	1.8	1.1	2.5

 

The exceptional items incurred during the period were as follows:

 

·; The banking costs mainly relate to bank facility fees in respect of the overdraft facility that are significantly in excess of reasonably normal levels.

 

·; The re-organisation costs primarily relate to redundancies.

 

·; The investment in joint venture has been written down to its recoverable value. This followed the loss of a key contract and the scope of another being materially reduced along with steps planned to restructure the business that will lead to an overall smaller operation.

 

 

5. LOSS PER SHARE

 

The basic loss per share is calculated by dividing the 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	6 months to 30 June 2010 £'m	6 months to 30 June 2009 £'m	12 months to 31 December 2009 £'m
Loss attributable to equity shareholders Exceptional items (post tax)	(2.4) 1.8	(2.6) 1.1	(4.6) 2.5
Adjusted loss after tax attributable to equity shareholders	(0.6)	(1.5)	(2.1)

 

 

Share table	Weighted average shares 6 months to 30 June 2010 Number	Weighted average shares 6 months to 30 June 2009 Number	Weighted average shares 12 months to 31 December 2009 Number
Weighted average shares for basic loss per share	290,572,553	290,572,553	290,572,553
Weighted average shares for diluted loss per share	290,572,553	290,572,553	290,572,553

 

 

Loss per share table	Loss per share 6 months to 30 June 2010 Pence	Loss per share 6 months to 30 June 2009 Pence	Loss per share 12 months to 31 December 2009 Pence
Basic loss per share Diluted loss per share Adjusted basic loss per share Adjusted diluted loss per share	(0.8) (0.8) (0.2) (0.2)	(0.9) (0.9) (0.5) (0.5)	(1.6) (1.6) (0.7) (0.7)

 

 

6. FINANCE COSTS

 

	6 months to 30 June 2010 £'m	6 months to 30 June 2009 £'m	12 months to 31 December 2009 £'m
Bank loans and overdrafts Finance charges payable under finance leases Other interest	0.1 0.1 -	0.2 0.1 0.1	0.2 0.2 0.2
Total finance costs	0.2	0.4	0.6

 

 

7. PROPERTY, PLANT AND EQUIPMENT

 

During the period, plant and equipment has been purchased amounting to £0.1 million (6 months to 30 June 2009: £0.2 million). There were no asset disposals in the reporting period.

 

 

8. CAPITAL COMMITMENTS

 

Capital commitments contracted for but not provided for at 30 June 2010 amounted to nil (30 June 2009: nil).

 

 

9. NET DEBT

 

	30 June 2010 £'m	30 June 2009 £'m	31 December 2009 £'m
Cash and short term deposits	1.2	1.1	1.7
Current interest bearing loans and borrowings: Obligations under finance leases Bank loans and overdraft	(0.5) (2.0)	(0.5) (4.6)	(0.5) (0.8)
	(2.5)	(5.1)	(1.3)
Non-Current interest bearing loans and borrowings: Obligations under finance leases	(0.8)	(1.2)	(0.9)
Net debt	(2.1)	(5.2)	(0.5)

 

 

10. CASH AND CASH EQUIVALENTS

 

	30 June 2010 £'m	30 June 2009 £'m	31 December 2009 £'m
Cash and short term deposits Bank overdraft	1.2 (2.0)	1.1 -	1.7 (0.8)
Cash and cash equivalents	(0.8)	1.1	0.9

 

 

11. EVENTS AFTER BALANCE SHEET DATE 

 

On 3 September 2010, the Group entered a £4.5 million facility with a term of three years and repaid its existing indebtedness to Barclays Bank plc. Under the facility, warrants were issued over up to 35,185,825 new ordinary shares exercisable at a price of 1 pence per share on or before 2 September 2020.

 

12. INTERIM RESULTS

 

In accordance with AIM Rules 20 and 26, copies of the Interim Results will be available at the Company's website www.journeygroup.plc.uk.

 

 

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 2010 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 11. 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 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union, and the AIM Rules.

 

 

GRANT THORNTON UK LLP

REGISTERED AUDITORS

CHARTERED ACCOUNTANTS

LONDON

 

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