TIDMC21
RNS Number : 3492M
21st Century Technology PLC
16 September 2019
21st Century Technology plc
("21st Century", the "Company" or "the Group")
Interim Results for the six months ended 30 June 2019
21st Century Technology plc (AIM: C21), the specialist provider
of integrated IoT systems and software to the passenger transport
markets, announces its interim results for the six months ended 30
June 2019.
Financial headlines
-- Revenue GBP5.7m (2018: GBP6.4m):
o Passenger revenue increased 11%
o Fleet revenue decreased 22%
-- Gross profit of GBP2.2m (2018: GBP2.4m), with gross margin improved to 39% overall
o Passenger GBP1.3m (2018: GBP1.2m)
o Fleet GBP0.9m (2018: GBP1.2m)
-- Underlying loss before depreciation and amortisation GBP0.02m (2018: profit of GBP0.2m)
-- Cash GBP0.4m increased from GBP0.2m last year
-- Order intake in passenger systems is up 50% and 3% Fleet systems
-- Invested over GBP0.5m in R&D during the period
Operational headlines
-- The value, scale and complexity of opportunities in the sales
pipeline already identified for later this year and into 2020, when
the Transforming Cities Funding (TCF) developments start to
commence provides valuable growth opportunities for the group.
-- New solutions developed for regulation-driven opportunities based on our own technologies
-- Entry to new market segments, airports and hazardous goods
distribution; diversifying the Group's customer base and
offering.
-- First sale of passenger information systems into new bus station project in Toronto, Canada
-- Three-year framework contract renewal signed with Arriva
-- First sale newly developed colour LED street displays
technology for West Midlands Combined Authority
Russ Singleton, CEO of 21st Century Technology plc, said:
"The reduction in UK new vehicle registrations cannot continue
at this level for much longer and whilst this has impacted the
Company's financial performance in H1, this masks the full picture.
Order intake is up, particularly in our Passenger Business and we
continue to invest significant resources into R&D, delivering
new products and capabilities that are beginning to bear fruit.
The SaaS-based solutions that we have developed are putting the
Company in a much stronger position for the longer term as these
now proven technologies begin to generate customer demand in
domestic and international markets. The current and ongoing trials
have the potential to shift our business model away from reliance
on capital expenditure and revolutionise the transport service
industry to a service-on-demand model.
Investments in marketing are bolstering the awareness of our
systems in Airport and Hazardous Goods transport market sectors,
providing us with opportunities in sales channels that were
previously not accessible to 21(st) Century.
With our largest ever pipeline and a number of negotiations in
advanced stages giving us confidence, my dedicated team and I are
looking forward to an improved second half to the year and 2020 and
moving towards completion of the transformation of the
business."
A copy of the Interim Results Report is available on the
Company's website at www.21stplc.com.
Enquiries:
21st Century Technology Russ Singleton/Nick Lowe Tel: 0844 871 7990
plc
finnCap
Nominated Adviser Scott Mathieson/Teddy Whiley Tel: 0207 220 0500
Media enquiries
Communications Portfolio Ariane Comstive Tel: 07785 922
354
Notes to editors:
'Connected Systems for Connected Journeys'
21st Century Technology is the specialist provider of integrated
systems and software to the transport community, solving complex
operational requirements 'on-board' vehicles and the associated
'in-street' information delivery infrastructure. Comprising a Fleet
Systems division and a Passenger Systems division, 21st Century's
innovative IoT solutions are 'connecting systems for connected
journeys'.
Fleet Systems solutions include CCTV video surveillance to
improve passenger and driver safety, vehicle and driver performance
monitoring, real-time on-board IT subsystems management and
automatic passenger counting.
Passenger Systems solutions include design, manufacture,
installation and management of all the hardware and software for
electronic passenger information systems, smart-ticketing and
wayfinding.
With over 20 years' experience in the passenger transport
industry, 21st Century specialises in creating innovative,
cost-effective technology-led solutions to safely enhance the
passenger travel experience whilst delivering real operational
benefits to vehicle manufacturers, fleet operators, transport
networks and local authorities.
Further information on the company is available on
www.21stplc.com or search for 21st Century Technology on LinkedIn
and @21stCenturyLtd on Twitter.
Chairman and Chief Executive's review
Summary
The results for the six-months ending 30 June 2019 mask the
success and progress made, at a time when investment in new vehicle
manufacture and registrations in the UK Bus market continues to be
supressed.
We have focused on developing new sales and markets and have
continued to invest in R&D with a number of notable successes
which will come to full fruition in the second half and beyond. The
business is now in a much stronger position than it was a year ago,
in terms of the attractiveness of its solutions, its ability to
scale, diversified revenues and customer base.
In the six months to 30 June 2019, the Passenger division
achieved a 50% year-on-year increase in orders received and the
number, value and scale of opportunities already identified for
later this year and into 2020, when the Transforming Cities Funding
(TCF) developments start to commence, provides valuable growth
opportunities for the group.
Our Fleet division achieved a 3% increase in orders received
during the period and generated significant interest in our new
technology from a wide number of bus operating companies. We were
also delighted to announce a three-year contract renewal with
Arriva Bus UK with additional services built into the framework
agreement, to enable the supply of a broader range of
solutions.
Research and Development
Our continued investment in research and development is
delivering a new suite of products and capabilities that is leading
to a growing pipeline of significant potential orders for our Fleet
Systems and Passenger Systems Businesses, as well as the
opportunity to enter new, niche, regulation-driven markets.
The Journeo(TM) Remote Condition Monitoring (RCM) application is
being chosen by an increasing number of operators. It has formed
the cornerstone of a platform we are building which will allow
transit users to make operation-critical decisions in real time
through a central, cloud-based portal.
New applications have been created, maintaining the ethos of
leveraging the Internet of Things (IoT) to enhance legacy systems.
For example, an Agnostic Video Management System (AVMS) is being
trialled by a host of customers to improve their CCTV system
reliability and streamline their evidence gathering to improve
insurance claims management.
The scalable Journeo(TM) platform allows us to rapidly add new
applications as customer requirements arise. This approach has led
a number of customers to evaluate our technologies, some in paid
for trials and includes some customers that were previously
inaccessible to us.
We continue to develop our transport display Content Management
System (CMS) EPI4. Additional feature-sets are delivering new
customers, such as the recently announced contract award with East
Sussex County Council. Further enhancements are taking place to
capitalise on the impending Transforming Cities Funding (TCF) and
the Department for Transport's (DfT) promotion of Open Data
Standards.
In line with our strategy, we apply our Research and Development
to create innovative and valuable solutions that have the power to
generate significant savings for our customers users and mark a
shift in business model, for 21(st) Century, from reliance on
capital equipment supply to Software as a Service (SaaS).
The business commenced a challenging programme to achieve ISO
27001; which is the international standard that provides the
specification for Information Security Management System (ISMS)
during the calendar year. At the same time, a program to migrate
OHSAS 18001 accreditation to the new ISO 45001 standard was
started. I am pleased to report that both programmes are
progressing well and are on track.
Financial results
While the financial results show a fall in sales, they belie the
number of successes and progress made during the first half.
In the first six months trading in 2019, revenue decreased by
GBP0.7m to GBP5.7m, although gross margin improved to 39%, gross
profit decreased by GBP0.2m to GBP2.2m, producing an operating loss
of GBP0.3m, compared with an operating profit of GBP0.4m (after the
inclusion of a GBP0.4m share-based payment credit) in H1 2018. Our
expenditure on R&D resulted in a tax credit claim of GBP0.2m
being received after the period end.
Revenue for H1 2019 of GBP5.7m (H1 2018: GBP6.4m) decreased by
GBP0.7m due to a decrease in Fleet Systems revenue to GBP3.2m (H1
2018: GBP4.1m) and an increase in Passenger Systems revenue to
GBP2.5m (H1 2018: GBP2.3m).
Fleet Systems gross profit of GBP0.9m (H1 2018: GBP1.2m)
decreased by GBP0.3m with a reduction in overall margin to 28% (H1
2018: 29%). Passenger Systems gross profit of GBP1.3m (H1 2018:
GBP1.2m) increased by GBP0.1m with an increase in margin to 53% (H1
2018: 52%).
The underlying loss before depreciation was GBP18k (H1 2018:
profit of GBP205k). The operating result was a loss of GBP0.3m (H1
2018: profit of GBP0.4m following a share-based payment credit of
GBP0.4m) and the basic undiluted loss per share was 0.44p (H1 2018:
profit of 0.37p).
Tight controls over cash management have improved the half year
cash position and cash increased to GBP0.4m as at 30 June 2019 (30
June 2018: GBP0.1m). We place a lot of attention on supplier and
customer management and maintain a vigilant watch on our cost
base.
Fleet Systems
Despite the reduction in new buses entering the market,
attractive sales opportunities exist in upgrading legacy bus fleets
through convergence of the onboard IT systems. We have developed a
range of software solutions under the Journeo(TM) brand, creating a
cloud-based video management platform to improve insurance claims
handling, whilst at the same time providing remote condition
monitoring to improve reliability and reduce overall costs of
maintenance.
Our Fleet business continues to support some of the largest bus
fleets in the UK, Sweden and France and many of them are
multi-modal; operating a broad range of transport solutions from
ambulances and coaches to buses, trams and trains.
Many fleet operators are coming under increasing pressure to
continue to deliver high-quality services to the public during a
period of falling passenger numbers; particularly here in the UK
and this is one of the factors behind reduced investment in the
numbers of new vehicles. Whilst this may seem an unappealing
situation, the long-life of fleet vehicles creates a situation
where operators will invest where new technology enables them to
deliver improved services at the same time as reduce their costs.
This is a key target area for 21(st) Century and in response we
have been developing new software as a service (SaaS) solutions
that leverage the IoT and cloud-based computing and storage,
generating a lot of interest as a result.
The need for mass transit to safely move people around towns and
cities remains. New regulations such as TfL's Vision Zero and the
Bus Services Act are providing opportunities for our new
technologies in safety critical and accessibility-regulated areas.
Our exclusive agreement to provide SmartVision(TM) the wing mirror
replacement system, is benefitting 21(st) Century through more than
sales to early adopters who seek to install the technology ahead of
it becoming mandatory; it is also providing access to new
customers.
We were delighted to announce a three-year contract renewal with
Arriva Bus UK with additional services built into the framework
agreement, to enable the supply of a broader range of
solutions.
The first half of the year saw the Company promote our new ATEX
certified technology at the Fuel Providers Show (FPS), where,
assisted by our customer Rix Petroleum, we were able to promote a
new solution, for this hazardous and highly regulated market.
Interest in our airport passenger and staff car park information
and Service Level Agreement (SLA) adherence solutions is also
gathering pace. Improvements to the User Interface (UI), recently
delivered to our customer, Omniserv, at Gatwick Airport, has led to
enquiries from a number of similar operations with large surface
area car parks.
The new UI was the centrepiece of our presence at the British
and Irish Airports Expo in early June and supported our pre-sales
activities and built on our domain expertise and credentials in
this area.
Our Fleet Systems team continue to support our Rail customers,
with contract extensions of 18 months signed with Cross Country,
maintaining contact with the industry as we seek out niche
opportunities in the rail sector for our technology and
products.
Passenger Systems
Order intake is over 50% up on last year, with a growing
pipeline of sales prospects, supporting ambitious growth plans.
We are strengthening our relationships with customers in the
local authority space and this is further demonstrated by an order
with West Midlands Combined Authority (WMCA), which was announced
just outside of H1. Significant development effort during the first
half of the year went in to creating a new multi-colour LED display
solution; the first in-street transport application in the UK. The
technology is set to become a focal point within Birmingham
City-Centre's extensive real-time information estate as the UK's
second city hosts the Commonwealth Games in 2022.
The WMCA contract win included further technology to be deployed
as the region prepares itself for the Commonwealth Games with the
new SPRINT branded express transport routes. With the eyes of the
world on Britain's second city for the duration of the Games, the
need for an improved provision of real time information and public
transport infrastructure on key, high-profile routes are providing
our Passenger business with the opportunity to deliver core
technology.
Securing a GBP0.3m order for the delivery of display hardware
and enabling software for a new bus station project in Toronto,
Canada is an important win. It will be the first meaningful, scale
delivery of 21(st) Century Passenger Systems hardware and software
to be delivered outside of the UK and via a third party.
Outlook
Whilst it is disappointing that the situation in the UK fleet
market suppressed our results for H1, we have a large and growing
pipeline of sales opportunities; with a number of significant value
negotiations in late or final stages.
We are encouraged by the interest in our new SaaS offering,
especially given the feedback from customer trials. This technology
both complements and reduces the reliance on the traditional
capital equipment sales model and is opening up new lines of
business for the Group.
Our Passenger business is gaining momentum, as evidenced by the
50% growth in sales order intake and opportunities are emerging
where significant market share may be achievable, based on the
scalability of our technology and by leveraging our Cloud and IoT
based solutions.
The number, scale, complexity and value of the opportunities
that we are engaging with gives us confidence and we look forward
to making further announcements in this regard.
Mark Elliott
Non-executive Chairman
16 September 2019
Russ Singleton
Chief Executive
16 September 2019
Consolidated statement of comprehensive income
for the six months ended 30 June 2019
Unaudited
six months
Unaudited ended Year ended
six months ended 30 June 31 December
30 June 2019 2018 2018
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------------- ----------- ------------
Revenue (notes 4,5) 5,733 6,404 12,601
Cost of sales (3,499) (4,004) (7,752)
---------------------------------------------- ----------------- ----------- ------------
Gross profit 2,234 2,400 4,849
Other income 213 325 370
Underlying administrative expenses before
depreciation and amortisation (2,465) (2,520) (4,965)
---------------------------------------------- ----------------- ----------- ------------
Underlying (loss)/profit before depreciation
and amortisation (18) 205 254
Depreciation and amortisation (315) (193) (392)
Share-based payments - 399 398
Administrative expenses (2,567) (1,989) (4,589)
---------------------------------------------- ----------------- ----------- ------------
Operating (loss)/profit (333) 411 260
Finance expense (79) (57) (121)
---------------------------------------------- ----------------- ----------- ------------
(Loss)/profit before taxation from continuing
operations (412) 354 139
Taxation credit/(charge) 3 (5) 3
---------------------------------------------- ----------------- ----------- ------------
(Loss)/profit for the period being total
comprehensive (expense)/profit attributable
to owners of parent (409) 349 142
---------------------------------------------- ----------------- ----------- ------------
(Loss)/profit per share (note 6)
Basic and diluted (0.44p) 0.37p 0.15p
---------------------------------------------- ----------------- ----------- ------------
All results derive from continuing operations.
Consolidated statement of changes in equity shareholders'
funds
for the six months ended 30 June 2019
Total
equity
Share Share Retained shareholders'
capital premium earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- --------- --------------
Balance at 1 January 2018 6,061 8 (5,802) 267
Profit and total comprehensive income for the
period - - 349 349
Share-based payments - - (399) (399)
---------------------------------------------- -------- -------- --------- --------------
Balance at 30 June 2018 6,061 8 (5,852) 217
---------------------------------------------- -------- -------- --------- --------------
Balance at 1 January 2018 6,061 8 (5,802) 267
Profit and total comprehensive income for the
year - - 142 142
Share-based payments - - (398) (398)
---------------------------------------------- -------- -------- --------- --------------
Balance as at 31 December 2018 6,061 8 (6,058) 11
---------------------------------------------- -------- -------- --------- --------------
Adjusted balance at 1 January 2019 6,061 8 (6,058) 11
Loss and total comprehensive expense for the
period - - (409) (409)
Balance at 30 June 2019 6,061 8 (6,467) (398)
---------------------------------------------- -------- -------- --------- --------------
Consolidated statement of financial position
at 30 June 2019
Unaudited Unaudited
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- -----------
Assets
Non-current assets
Goodwill (note 7) 1,345 1,345 1,345
Other intangible assets 1,033 837 969
Right-of-use assets (note 9) 172 - -
Property, plant and equipment 121 148 138
Trade and other receivables 43 49 43
------------------------------ --------- --------- -----------
2,714 2,379 2,495
------------------------------ --------- --------- -----------
Current assets
Inventories 1,638 1,558 1,650
Trade and other receivables 3,694 3,671 3,224
Cash and cash equivalents 365 187 485
------------------------------ --------- --------- -----------
5,697 5,416 5,359
------------------------------ --------- --------- -----------
Total assets 8,411 7,795 7,854
------------------------------ --------- --------- -----------
Equity and liabilities
Shareholders' equity
------------------------------ --------- --------- -----------
Share capital 6,061 6,061 6,061
Share premium account 8 8 8
Retained earnings (6,467) (5,852) (6,058)
------------------------------ --------- --------- -----------
Total equity (398) 217 11
------------------------------ --------- --------- -----------
Non-current liabilities
Deferred revenue 548 655 499
Loans and borrowings 573 28 576
Lease liabilities (note 9) 41 - -
Deferred tax liability 22 35 35
Provisions 285 269 290
------------------------------ --------- --------- -----------
1,469 987 1,400
------------------------------ --------- --------- -----------
Current liabilities
Trade and other payables 2,953 2,970 2,314
Deferred revenue 2,505 1,716 2,329
Loans and borrowings 968 1,212 1,000
Lease liabilities (note 9) 117 - -
Tax liabilities 601 456 600
Provisions 196 237 200
------------------------------ --------- --------- -----------
7,340 6,591 6,443
------------------------------ --------- --------- -----------
Total equity and liabilities 8,411 7,795 7,854
------------------------------ --------- --------- -----------
Consolidated statement of cash flows
for the six months ended 30 June 2019
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------------------- ----------- ----------- ------------
Net cash from operating activities (note 8) 297 101 380
------------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (18) (61) (91)
Addition of Right-of-use Asset (21) - -
Purchases of intangible fixed assets (284) (160) (452)
------------------------------------------------- ----------- ----------- ------------
Net cash from investing activities (323) (221) (543)
------------------------------------------------- ----------- ----------- ------------
Financing activities
Cash flow from financing activities (28) 26 126
Issue of Loans - - 250
IFRS 16 Right-of-use lease liability addition 28 - -
Principal element of lease repayments (87) - -
Repayment of loans (7) (19) (32)
------------------------------------------------- ----------- ----------- ------------
Net cash from financing activities (94) 7 344
------------------------------------------------- ----------- ----------- ------------
Net decrease in cash and cash equivalents (120) (113) 181
Cash and cash equivalents at beginning of period 485 302 302
Effect of foreign exchange rate changes - (2) 2
------------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at end of period 365 187 485
------------------------------------------------- ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2019
1. Basis of preparation and approval of interim statement
The financial information for the six months ended 30 June 2019
and for the six months ended 30 June 2018 is unaudited.
The interim financial statement for the six months to 30 June
2019 does not include all of the information required for full
annual financial statements and should be read in conjunction with
the consolidated financial statements for the year ended 31
December 2018.
The financial information has been prepared on the basis of
IFRSs that the Directors expect to be applicable as at 31 December
2019.
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those set out in
the Group's Annual Report and Financial Statements 2018, which were
prepared in accordance with IFRSs.
This interim financial statement does not comprise statutory
accounts within the meaning of Section 435 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2018 were
approved by the Board on 26 March 2019 and delivered to the
Registrar of Companies. The report of the auditor on those accounts
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statement under Section 498(2) or Section
498(3) of the Companies Act 2006.
AIM-listed companies are not required to comply with IAS 34
'Interim Financial Reporting' and accordingly the Company has not
applied this standard in preparing this report.
The financial position and performance of the group was affected
by the adoption of the new leasing standard IFRS 16 Leases (see
note 9) during the six months to 30 June 2019. IFRS 16 will have no
economic effect on the business or cash flow.
The interim financial statement was approved by the Board of
Directors on [--] [September] 2019.
2. International Financial Reporting Standards
The Group follows the standards and interpretations issued by
the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee of the
IASB and endorsed by the EU that are relevant to its
operations.
3. Going concern
The Group's business activities together with factors likely to
affect its future development, performance and position were set
out in the Strategic Report and Chairman's Statement of the 2018
Annual Report and the principal risks and uncertainties were set
out in the Strategic Report. The Directors have reviewed the cash
flow forecasts for the period up to and including 31 December
2020.
Based on the above, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future and for at least twelve months
from the date of the report. For this reason the Directors continue
to adopt the going concern basis in preparing the financial
statements.
4. Revenue
The revenue split between goods and services is:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ------------
Revenue
Goods 3,626 4,356 8,202
Services 2,107 2,048 4,399
----------------------------------------- ----------- ----------- ------------
5,733 6,404 12,601
----------------------------------------- ----------- ----------- ------------
Construction contracts included in goods 1,738 1,489 2,699
----------------------------------------- ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2019
5. Segmental reporting
IFRS 8 requires operating segments to be determined on the basis
of those segments whose operating results are regularly reviewed by
the Board of Directors (the Chief Operating Decision Maker as
defined by IFRS 8) to make strategic decisions.
As the Board of Directors reviews revenue, gross profit and
operating loss on the same basis as set out in the consolidated
statement of comprehensive income, no further reconciliation is
considered to be necessary.
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------- ----------- ----------- ------------
Revenue
Fleet Systems 3,205 4,121 8,217
Passenger Systems 2,528 2,283 4,384
------------------------- ----------- ----------- ------------
5,733 6,404 12,601
------------------------- ----------- ----------- ------------
Gross profit
Fleet Systems 890 1,210 2,395
Passenger Systems 1,344 1,190 2,454
------------------------- ----------- ----------- ------------
2,234 2,400 4,849
------------------------- ----------- ----------- ------------
Underlying (loss)/profit
Fleet Systems (239) 142 148
Passenger Systems 13 (36) (57)
------------------------- ----------- ----------- ------------
(226) 106 91
Central (106) (94) (229)
------------------------- ----------- ----------- ------------
Underlying (loss)/profit (332) 12 (138)
------------------------- ----------- ----------- ------------
Reconciling to loss before interest and tax
Underlying Share-based Operating
(loss)/profit payments (loss)/profit
GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- --------------
Fleet Systems (239) - (239)
Passenger Systems 13 - 13
------------------ -------------- ----------- --------------
(226) - (226)
Central (106) - (106)
------------------ -------------- ----------- --------------
Total (332) - (332)
------------------ -------------- ----------- --------------
Net assets
Net assets attributed to each business segment represent the net
external operating assets of that segment, excluding goodwill, bank
balances and borrowings, which are shown as unallocated amounts,
together with central assets and liabilities.
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- ------------
Assets
Fleet Systems 3,264 3,201 2,848
Passenger Systems 3,437 3,011 3,135
-------------------- ----------- ----------- ------------
6,701 6,212 5,983
Goodwill 1,345 1,345 1,345
Cash and borrowings 365 187 485
Unallocated - 51 41
-------------------- ----------- ----------- ------------
8,411 7,795 7,854
-------------------- ----------- ----------- ------------
Liabilities
Fleet Systems (2,742) (2,314) (2,183)
Passenger Systems (4,525) (4,007) (4,039)
-------------------- ----------- ----------- ------------
(7,268) (6,321) (6,222)
Cash and borrowings (1,541) (1,240) (1,576)
Unallocated - (17) (45)
-------------------- ----------- ----------- ------------
(8,809) (7,578) (7,843)
-------------------- ----------- ----------- ------------
Net assets
Fleet Systems 521 887 665
Passenger Systems (1,088) (996) (904)
-------------------- ----------- ----------- ------------
(567) (109) (239)
Goodwill 1,345 1,345 1,345
Cash and borrowings (1,176) (1,053) (1,091)
Unallocated - 34 (4)
-------------------- ----------- ----------- ------------
(398) 217 11
-------------------- ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2019
6. (loss)/profit per Ordinary Share
Details of the weighted average number of Ordinary Shares used
as the denominator in calculating the basic and diluted earnings
per Ordinary Share are given below:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
'000 '000 '000
---------------------------------------- ----------- ----------- ------------
Basic weighted average number of shares 93,240 93,240 93,240
Dilutive potential Ordinary Shares - - -
---------------------------------------- ----------- ----------- ------------
93,240 93,240 93,240
---------------------------------------- ----------- ----------- ------------
7. Goodwill
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating unit (CGU) that is expected to
benefit from that business combination. The Group has two CGUs
which are its two operating segments, Fleet Systems and Passenger
Systems. The carrying amount of goodwill has been allocated to the
CGUs as follows:
21(st)
Century
Passenger
Systems
Limited Total
GBP'000 GBP'000
------------------------------------- ---------- --------
Deemed cost:
At 1 January 2018 1,345 1,345
------------------------------------- ---------- --------
At 30 June 2018 1,345 1,345
------------------------------------- ---------- --------
At 1 January 2018 1,345 1,345
------------------------------------- ---------- --------
At 31 December 2018 and 30 June 2019 1,345 1,345
------------------------------------- ---------- --------
The Group tests goodwill annually for impairment as at 31
December, or more frequently if there are indications that goodwill
might be impaired.
The recoverable amounts of the CGUs are determined based on a
value-in-use calculation which uses cash flow projections based on
financial budgets and business plans approved by the Directors
covering a five-year period. Cash flows beyond that period have
been extrapolated in perpetuity assuming no growth, which the
Directors consider to be a conservative approach.
The key assumptions for the value-in-use calculations are those
regarding discount rates and sales forecasts.
The discount rates needed to equate the net present value from
these cash flows to the carrying value of goodwill are compared to
the required rate of return from the CGU based upon an assessment
of the time value of money, prevailing interest rates and the risks
specific to the CGU. If this discount rate is in excess of the
required rate of return then it is assumed that no impairment has
occurred to the carrying value of goodwill.
The discount rates are as follows:
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
% % %
------------------ ----------- ----------- ------------
Passenger Systems 14 14 14
------------------ ----------- ----------- ------------
The discount rates used are based on the Board's judgement
considering macroeconomic factors and reflecting specific risks in
each segment such as the nature of the market served, the
concentration of customers, cost profiles and barriers to
entry.
Passenger Systems also has intangible assets, which are
considered in the same value-in-use calculations as goodwill.
The Passenger Systems cash flow projections used to determine
value in use are based upon assumptions of sales, margins and cost
bases. Of these assumptions the value in use is most sensitive to
the level of sales. Margins are fixed in the forecast based upon
past experience; the cost base is similarly based upon past
experience and will vary depending upon the level of sales. In
accordance with the requirements of IAS 36 our value-in-use
calculations do not include cash flows from restructurings to which
the Group is not yet committed.
The level of sales is the key assumption used in the cash flow
forecast. Sales have been determined by management using estimates
based upon past experience and future performance with reference to
market position and the sales pipeline. Due to the difficult
macroeconomic environment there has been a reduction in the
availability of contracts, which has in turn resulted in pressure
on margins. In 2017 a major restructuring took place, followed by a
reinvestment in key staff at the end of the year and during
2018.
The value-in-use calculation supports the carrying value of the
CGU with headroom of GBP1,567k. A sensitivity analysis has been
performed on the impairment test. The Directors consider that an
absolute change in the key sales assumption is possible and a
reduction of 10% points in the growth rate in 2019 to 30% would
result in an impairment charge being recognised for the current
carrying value of goodwill in relation to Passenger Systems of
GBP250k. If sales forecasts were down 10% across the whole period
and overheads were partially scaled back by 5% then there would be
headroom of GBP151k.
Based on the review the discount rate applied to equate the net
present value of the forecast cash flows to the carrying value of
goodwill and the intangible assets was 27.8%, whereas the required
rate of return of the CGU is 14%.
In view of this, the Directors consider that no impairment of
goodwill or intangible assets is required
8. Cash generated from operations
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------------------ ----------- ----------- ------------
(Loss)/profit for the period (409) 349 142
Adjustments for:
- Finance expense 79 57 121
- Deferred tax credit (13) - -
- Depreciation of property, plant and equipment 96 41 79
- Amortisation of intangible fixed assets 219 152 313
- Share-based payment (income)/expense - (399) (398)
- Foreign exchange rate 3 24 17
- Increase in provisions (9) (112) (128)
------------------------------------------------ ----------- ----------- ------------
Operating cash flows before movement in working
capital (34) 112 146
Decrease/(increase) in inventories 12 (203) (295)
(Increase)/decrease in receivables (412) 222 515
Increase in payables 814 32 133
------------------------------------------------ ----------- ----------- ------------
Cash inflow from operations 380 163 498
Income taxes (paid)/received (10) (5) 3
Interest paid (73) (57) (121)
------------------------------------------------ ----------- ----------- ------------
Net cash inflow from operating activities 297 101 380
------------------------------------------------ ----------- ----------- ------------
Notes to the interim financial statements
for the six months ended 30 June 2019
9. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16 Leases
on the group's financial statements and discloses the new
accounting policies that have been applied from 1 January 2019.
The new Standard has been applied using the modified
retrospective approach, together with all applicable permitted
practical expedients including;
- comparative amounts for 2018 and prior years are not restated,
and continue to reflect application of the previous standard, IAS
17.
- all of the lease agreements 21(st) Century plc reported as
operating leases in 2018 were converted as lease agreements and
recognised on the balance sheet on the adoption of IFRS 16.
- the cumulative effect of adopting IFRS 16 is recognised in
equity as an adjustment to the opening balance of retained earnings
for the current period. This was not material and there was no
impact on retained earnings.
- the Group has elected not to include initial direct costs in
the measurement of the right-of-use asset for operating leases in
existence at the date of initial application of IFRS 16, being 1
January 2019. At this date, the Group has also elected to measure
the right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at
the date of transition.
- all lease and associated non-lease components are accounted for as a single arrangement.
On transition to IFRS 16 the weighted average incremental
borrowing rate applied to lease liabilities recognised under IFRS
16 was 10% for property and 5% vehicles.
Total
GBP'000
----------------------------------------------------------- --------
Reconciliation of total operating lease commitments
Total operating lease commitments disclosed at 31 December
2018 646
Property - Change of lease length to break date (see
below) (480)
Vehicles - Change of recognition to IFRS 16 present value 45
----------------------------------------------------------- --------
Total lease liabilities recognised under IFRS 16 at 1
January 2019 211
----------------------------------------------------------- --------
The 21(st) Century plc premises lease has been restated from its
original end date to the contracted break date in October 2020.
The impact of adopting IFRS 16 for the six months to 30 June
2019 compared to prior years accounting standards is shown
below;
Total
GBP'000
----------------------------------------------- --------
Increase in depreciation 67
Increase in Interest expense 6
Decrease in property and vehicle lease expense (68)
----------------------------------------------- --------
Increase in underlying profit 5
----------------------------------------------- --------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKNDPPBKDOCD
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