annual report and financial statements 2015

Annual Report and Financial Statements 2015

POSITIONED FOR GRO

WTH

J O U R N E Y G R O U P P L C Annual Report & Financial Statements 20152

CONTENTS

1 Executive Chairman’s Letter to Shareholders

6 Directors’ Biographies

8 Strategic Report

14 Directors’ Report

17 Corporate Governance

19 Statement of Directors’ Responsibilities

20 Independent Auditor’s Report to the Members of Journey Group plc

21 Consolidated Income Statement

22 Consolidated Statement of Comprehensive Income

23 Consolidated Statement of Financial Position

24 Consolidated Cash Flow Statement

25 Consolidated Statement of Changes in Equity

26 Notes to the Consolidated Financial Statements

50 Company Statement of Financial Position

51 Company Cash Flow Statement

52 Company Statement of Changes in Equity

53 Notes to the Company Financial Statements

63 Shareholder Information

64 Notice of Annual General Meeting

68 Explanatory Notes to the Notice of Annual General Meeting

J O U R N E Y G R O U P P L C Annual Report & Financial Statements 2015 1

INTRODUCTION

Journey has had a transformational year strategically in which Air Fayre demonstrated that our model could be replicated and moved beyond the boundaries of California whilst at the same time strengthening our relationship with United Airlines Inc. (“United”) at Los Angeles International Airport (“LAX”). Financially, within the US Division we have also continued to make both good profit progression and cash generation with results in line with expectations notwithstanding the previously announced challenges in the US from the change in the mix of types of aircraft utilised and adverse weather in the first quarter at LAX.

FINANCIAL HIGHLIGHTS:

• Revenue of $63.6 million (2014: $64.3 million) • Profit before tax from operations of $3.3 million (2014: $3.3 million)• Basic earnings per share from operations of 17.18 cents (2014: 19.09 cents)• Net cash at 31 December 2015 of $3.6 million ($7.8m before the share buyback) (2014: $6.7 million)• Bought back a total of 1,523,035 shares for $4.2 million (£2.75 million). Following the repurchases the

total number of shares held in treasury is 1,787,948• An interim dividend of 3.4 pence per share in respect of the year ending 31 December 2016

OPERATIONAL HIGHLIGHTS:

US Division “Air Fayre”• Awarded a five year contract by Federal Express (“Fedex”) to provide in-flight catering and lounge services

for all of their crew members at its main hub, Memphis International Airport. Successfully launched 1 September 2015.

• Awarded a three year contract extension with United Airlines Inc. (“United”) for their entire international and domestic in-flight catering needs out of Los Angeles International (“LAX”). Commenced 1 January 2016.

• Awarded a three year contract extension with JetBlue for Long Beach and LAX. Commenced 1 January 2016.

Products Division “Watermark”• Awarded crockery business with United Airlines, a new customer for Watermark. Anticipated launch in

Q2 2016.• Exclusive deals with leading brands combined with Watermark leading edge design winning business

and obtaining media recognition e.g. Qantas amenity kit in conjunction with Country Road.

MARKET CONDITIONS

Global air passenger traffic grew by 6.5% in 2015 as a whole, well above the 10 year average annual growth of 5.5% with the global load factor reaching an all-time high of 80.3% according to the International Air Transport Association (IATA), the airline trade body.

In IATA’s Economic Performance of the Airline Industry end of year report for 2015, it noted that the Airline CFOs and Heads of Cargo had become more cautious about future growth in October 2015, but that consensus remains that 2016 should be slightly better than this year with growth in traffic of approximately 6.9%. This reflects consumers continuing to benefit from lower energy prices boosting consumer incomes and spending together with lower fares and more routes.

Encouragingly for the Group, the report also notes that the strongest financial performance is anticipated by airlines in North America, our core market, where net post-tax profits are forecast to be $19.2bn significantly up from $11.2bn in 2014 and net margin predictions of 9.5% exceed the peak of the late 1990s.

EXECUTIVE CHAIRMAN’S LETTER TO SHAREHOLDERS



RESULTS

The results for the year were as follows: RestatedYear to 31 December 2015 2014 $’000 $’000 Revenue 63,574 64,253

EBITDA 4,965 4,779Depreciation and amortisation (1,592) (1,371)Operating profit 3,373 3,408 Finance costs (96) (65)Adjusted profit before tax from operations 3,277 3,343 Share based payments (23) -Profit before tax from operations 3,254 3,343 Income tax expense (954) (806)Profit attributable to equity shareholders 2,300 2,537

Basic earnings per share 17.18 cents 19.09 cents Diluted earnings per share 16.92 cents 19.09 cents * Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) is a non IFRS measure which the Group uses to assess its performance. It is defined as earnings before interest, taxation, depreciation and amortisation.

Overall, the Group had a good year of trading largely driven by the US division.

Total revenue was down only 1% with the US Division’s growth of $4.0 million offset by the Watermark’s reduction of $4.7 million.

EBITDA from operations increased by 4% to $5.0 million, mainly the net result of the US Division’s improvement of $0.6 million, the Product’s Division reduction of $0.1 million and a $0.3m reduction at the Head Office level due to an unusually high prior year’s patent royalty income which included a one-off catch up amount.

Operating profit and profit before tax broadly unchanged at $3.4 million and $3.3 million respectively, predominantly reflecting the increased depreciation charge from trucks purchased for new contracts.

The tax charge of 29% is an average percentage that reflects a mix of trading profits chargeable at US corporate tax rates (40%) combined with patent income in the UK, which has been offset by non-trading losses. The previous year effective tax rate of 24% was unusually low, attributable to the backdated increase in patent royalty charges, which, being classed as non-trading income at Group level, were offset against brought forward non-trading losses.

The resulting profit from operations after tax was $2.3 million.

Net cash as at 31 December 2015 amounted to $3.6 million comprising cash of $6.4 million less debt under finance leases of $2.8 million. This compares with net cash at 31 December 2014 of $6.7 million and at 30 June 2015 of $7.2 million. The reduction in net cash reflects the share buyback purchase settlements of $3.1 million and the timing of payments at Memphis.


US DIVISION

Year to 31 December 2015 2014 $’000 $’000 Revenue 45,775 41,717EBITDA 3,907 3,302Operating profit 2,401 2,016

The US Division delivered a strong financial performance in line with expectations despite the challenges of an ongoing change in the mix of aircraft utilised by airlines to smaller planes and severe weather throughout the USA which caused significant delays and cancellations during the first quarter.

Several milestones were achieved throughout the year. In California, this included the additional award of United Express in the second quarter and the subsequent extension of the initial United Airlines contract for three years from 1 January 2016, along with the JetBlue contracts in Long Beach and Los Angeles being extended for three years.

The transformational event was the award and launch of Air Fayre’s new facility to service all of Fedex flights with beverages and crew meals out of their main hub at Memphis International Airport, Tennessee under a five year agreement.

The business serviced some 85,300 flights out of LAX, of which 68,200 were for United. Since the start of the contract we have serviced over 21,700 flights for Fedex out of Memphis.

Revenue rose 10% in US$ terms to $45.8 million from $41.7 million reflecting the new contract with Fedex at Memphis, an enhanced food offering from United and a full year impact of JetBlue at LAX.

EBITDA increased by 19% to $3.9 million with operating profit before share based payments increasing 19% from $2.0 million to $2.4 million. Profits are after expensing set up costs relating to ExpressJet Airlines at LAX and Fedex at Memphis, with underlying profits being slightly higher than stated.



PRODUCTS DIVISION

Year to 31 December 2015 2014 $’000 $’000 Revenue 17,799 22,536EBITDA 432 540Operating profit 346 455

Watermark’s year was impacted by reduced volumes from several customers with revenue for the full year down 21% to $17.8 million. The business reacted by improving cost efficiencies and more of a focus on R&D, technology and brand partnerships which resulted in an operating profit of $0.3 million. The successful investment in brands, design and procurement have resulted in the launches of several new products, namely the Qantas Country Road amenity kit programme for Premium Economy which brings together two iconic Australian brands, Air Tahiti Nui’s and Air Calin’s business class programmes and the upcoming launches for new customers across the Americas.

Challenges do still persist but the business is now operating as a base line organisation with additional specialist resources bought in as required to deliver ‘best in class’ whilst keeping costs project-based.

CENTRAL COSTS

Year to 31 December 2015 2014 $’000 $’000 Central income 626 937

Central income reduced 33% to $626,000 reflecting the unusually high net income in the previous year. During 2014 the patent royalty rates were increased and backdated royalty fees were recognised as additional income within the central unit. Underlying head office costs have also reduced and are continually reviewed.

DIVIDEND POLICY

Post-period end, an interim dividend in respect of the year ending 31 December 2016 has been declared of 3.4 pence per share which will be paid on 31 March 2016 to those who were on the register as at close of business 11 March 2016. This was deemed beneficial to shareholders ahead of the tax changes relating to dividends which take effect at the start of April 2016. As a consequence the Board will not be proposing to recommend the payment of a final dividend for the twelve months ended 31 December 2015.


TEAM

In most instances, our success in being awarded and retaining contracts is the culmination of many years of dedication and hard work and I would like to express my gratitude to all staff for their ongoing support and contribution.

OUTLOOK

The Group’s performance reflects our continued strategy of pursuing identified near-term opportunities in the US alongside a significant investment in the quality of our service offering to existing customers. In the interim, we remain committed to using our surplus resources effectively without constraining our future investment requirements.

We ended 2015 as a very different business from the beginning of the year and entered 2016 with increased confidence in the Group’s prospects.

Stephen YappExecutive Chairman24 March 2016


DIRECTORS’ BIOGRAPHIES

Stephen YappExecutive Chairman, Age 58Stephen Yapp has been Executive Chairman since 4 June 2007, he currently holds a NED and Chairman designate at Pittards Plc and is Chairman of MNH Group Ltd. Since 2007 Stephen has also held the positions of Executive Chairman of Altitude Plc to April 2014, Redstone plc from September 2009 to September 2010 and Non-executive Director of Imagesound plc from December 2007 to December 2009. Previous to that he was Chief Executive of the DCS Group plc between 2001 and 2006 and held the position of Finance Director at SBG between 1997 and 2000. He has been a director of a number of private and public companies during the course of his career. He is also a Fellow Chartered Management Accountant and holds an MBA.

Joseph GolioPresident – US Division, Age 60Joseph Golio joined in June 2008 and was instrumental in the start-up of Air Fayre CA Inc’s Los Angeles facility. He became President of Air Fayre CA Inc shortly after joining and became a member of the Board on 22 December 2009. As an industry veteran, Joseph has held a number of key roles within the airline catering industry. He began his career with Dobbs International in 1978 and progressed to become Vice-President and Managing Director in 1998, responsible for thirty nine kitchens serving United Airlines. During 2000 to 2001 Joseph was Senior Vice-President of North America West operations for Gate Gourmet. In 2001 he became Executive Vice-President & Chief Operating Officer for Exhibit Group / Giltspur. Joseph has a B.Sc. in Business Administration and Economics from Wagner College.

Alison WhittenburyChief Financial Officer, Age 48Alison Whittenbury is a chartered accountant who joined in October 2007 as Finance Director for the Services Division and during 2008 was part of the start-up team who set up the catering facility in Los Angeles for Air Fayre CA Inc. In 2009, Air Fayre Ltd entered into a joint venture with Alpha Ltd and Alison became Finance Director for the combined catering operations at Heathrow. She became Finance Director of the Products Division in 2011. Alison was appointed as Chief Financial Officer and became a member of the Board on 1st July 2014. Alison is a member of the Institute of Chartered Accountants in England and Wales and holds a B.Sc. Hons in Chemistry from Leeds University.

Graham Bird † ‡Non-executive Director, Age 46Graham Bird joined the Board on 4 January 2007. He has previously held senior management roles at PayPoint plc, including Executive Chairman of PayByPhone, Deputy Managing Director of Mobile and Online, and Director of Strategic Planning and Corporate Development. Prior to that his roles include Fund Manager for SVG Investment Managers Limited; Director, Corporate Finance at JP Morgan Cazenove and Head of Corporate Finance for Cazenove in South Africa. He is currently Managing Director, Investments and head of the Strategic Public Equity division at Gresham House plc. After training with Deloitte, he qualified as a Chartered Accountant in 1997.

Dimitri Goulandris † ‡Non-executive Director, Age 48Dimitri Goulandris is a Managing Partner of Cycladic Capital Management Limited, which he established in 2002 to focus on making public and private investments in small and medium sized companies, predominantly in Europe. He also serves as its Chief Investment Officer. He serves as a board member of Gemini Equipment and Rentals Pvt. Ltd, Knightsbridge Schools International (Malta) Ltd, MonuRent (UK) Limited and Premier Travels (India) Private Ltd. Dimitri’s previous positions also include setting up and running the European operations of the private equity firm Whitney & Company and eight years at Morgan Stanley in its private equity group.


Christopher Mills Non-executive Director, Age 63 ‡Christopher Mills founded Harwood Capital Management Ltd in 2011, a successor from its former parent company J O Hambro Capital Management Ltd, which he co-founded in 1993. He is Chief Executive of North Atlantic Smaller Companies Investment Trust plc, a Director and Investment Manager of Oryx International Growth Fund Ltd and Chief Investment Officer of Harwood Capital LLP. He is a Non-executive Director of several companies. Christopher was a Director of Invesco MIM, where he was head of North American investments and venture capital and of Samuel Montagu International.

† Member of the audit committee ‡ Member of the remuneration committee


STRATEGIC REPORT

Strategic objectivesOur overriding strategic aim remains to increase and improve our shareholder value.

Specifically our main strategic objectives are:1) Air Fayre – continue building a multi-location and multi-client business across the US with our unique

logistics-based model. 2) Watermark - focus on design-based contracts and brand partnerships to pursue longer-term and better

margin business. 3) Maintain and use our balance sheet effectively4) Continue to drive efficiencies at the corporate level

Group’s businessesThe Group’s operations are organised into two divisions, Products and US. The Products Division is based at the Group’s headquarters, The Square near Heathrow. The US Division is based at its facility in Los Angeles, USA.

The US Division provides in-flight catering principally to the domestic and international travel industry within the United States of America. The business model is predominantly a logistics operation under which the provision of catered products is outsourced to local specialist suppliers, then assembled in the Division’s facilities in Los Angeles and Memphis and delivered to the aircraft. Gross profit is mainly earned from handling fees, which are charged to customers for each aircraft visited, less direct labour costs, although some gross profit is earned on supplies of catered products.

The Products Division operates globally through companies incorporated in the United Kingdom, Hong Kong and Australia. Its principal activities are the provision of in-cabin travel supplies primarily for the international airline industry. Goods are sourced through regional procurement, covering China, Europe, India and South East Asia. Gross profit is earned on the difference between the amounts charged to customers and their cost from suppliers.

Business objectivesThe Group’s primary business objective is to increase shareholder value. The operations of each Division have been developed independently with Air Fayre focusing on airlines operating out of the US. However, as both divisions have the international airline industry as their client base, there are some cross selling opportunities which are developed at senior management level, where the customer relationships are held. The markets in which the Group operates are competitive.

Business key performance indicatorsThe Board considers that the following key performance indicators (“KPIs”) are the most effective measures of progress towards achieving the Group’s primary business objective.

Long term target 2015 2014 Revenue $ values 63,574 64,253Gross profit margin percentage 25% 25% 26%Operating profit margin percentage* 5%-10% 5.3% 5.3%*Calculated before share based payments


Financial performanceRevenue decreased by 1% to $63.6 million with a gross margin percentage in line with our long term target of 25%. EBITDA from operations increased by 4% to $5.0 million with operating profit and profit before tax broadly unchanged at $3.4 million and $3.3 million respectively, predominantly reflecting the increased depreciation charge from trucks purchased for new contracts.

Net finance costs rose to $0.1 million from $0.07 million again as a result of the trucks purchased and the associated finance costs. Share based payments of $0.02 million relating to the share option scheme introduced in January 2015 were also incurred, leading to a profit before tax of $3.25 million from $3.34 million in 2014.

Income tax charges were $0.95 million versus $0.8 million in 2014 with the profit attributable to equity shareholders amounting to $2.30 million compared with $2.54 million in 2014.

Revenue 2015 2014 $’000 $’000 US Division 45,775 41,717Products Division 17,799 22,536Group 63,574 64,253

Revenue decreased by 1% overall, although this was the net result of an increase in the US Division driven by additional contracts in the year, with Express Jets and Fedex, offset by a fall in the Products Division due to reduced volumes from key customers.

Gross margin percentage 2015 2014 Group 25% 26%

The Group achieved its target KPI of 25% although the result was slightly down on the previous year, mainly due to the changes in mix of aircraft types utilised by UAL during the year.


Operating profit 2015 2014 $’000 $’000 US Division 2,401 2,016Products Division 346 455Unallocated corporate costs 626 937Group operating profit 3,373 3,408

Comprising: EBITDA 4,965 4,779Depreciation and amortisation (1,592) (1,371)

Group 3,373 3,408

Group operating profit margin percentage 5.3% 5.3%

The Group made an operating profit of $3.37 million, being broadly unchanged with the prior year. The operating profit margin percentage remained at 5.3% and within the target KPI range of 5-10%.

The US Division’s increase in operating profit of $0.38 million is a combination of the full year of extra business with JetBlue and new contracts with ExpressJets and Fedex combined with the reduction in gross profit percentage attributable to the changes in mix of aircraft types. The reduction of $0.1 million in the Products Division’s operating profit mainly reflected the lower volume of business in the current year.

The unallocated corporate costs and income are shown as a net income of $0.63 million compared to the prior year of $0.94 million. The previous year’s income included additional patent fees charge to the US Division, relating to a backdated increase in the patent rate. Depreciation and amortisation increased mainly due to depreciation on additional trucks purchased during the year to service the new contracts with ExpressJets and Fedex.

Finance charges 2015 2014 $’000 $’000 Loans and overdrafts 8 -Finance leases 88 65Total finance costs 96 65

The increase in finance charges from loans and overdrafts and finance leases mainly related to the trucks purchased for servicing the new contracts awarded during the year.

TaxationIncome tax charges were $0.95 million versus $0.8 million in 2014 with the effective rate of tax at 29.3% up from the unusually low 24.0% in 2014. The prior year charge was unusually low due to the additional patent fee income in the Group’s parent company which was offset with non-trading losses brought forward.

Deferred tax assets continue not to be recognised in respect of UK tax losses. The Group had UK tax trading losses of approximately $13.8 million available for offset against future taxable profits arising from the same trades of the companies in which the losses arose. The Group also had non-trade UK tax losses of approximately $5.5 million that are available for offset against future non-trading gains. Further details of the tax expense/credit, deferred tax and tax losses are set out in Note 6 to the Group financial statements.

STRATEGIC REPORT


Earnings per share 2015 2014 Cents Cents Basic earnings per share 17.18 19.09Adjusted basic earnings per share 17.35 19.09Diluted earnings per share 16.92 19.09Adjusted diluted earnings per share 17.09 19.09

The decrease in basic and diluted earnings per share from operations reflect the flat profits along with increased tax charges of $0.3 million in the current year, in comparison with the unusually low tax rate in 2014. Additionally, the weighted average number of shares increased in 2015 due to the share options granted on 5th January 2015. The maximum no of shares that can be granted under the scheme is 1,379,864. Details of the calculations are set out in Note 7 to the Group financial statements.

Cash flowNet cash as at 31 December 2015 amounted to $3.6 million comprising cash of $6.4 million less debt under finance leases of $2.8 million. This compares with net cash at 31 December 2014 of $6.7 million and at 30 June 2015 of $7.2 million. The reduction in net cash predominantly reflects the share buyback purchase settlements of $3.1 million, and the timing of receipts at Memphis.

Capital managementThe Group’s capital management objectives are to ensure the Group is appropriately funded to meet its operational requirements and strategic objectives, continue as a going concern and to provide an adequate return to shareholders commensurate with risk. The Group defines capital as being total shareholders’ equity. The Group’s capital structure is periodically reviewed and, if appropriate, adjustments are made in the light of expected future funding needs, changes in economic conditions, financial performance and changes in Group structure. The Group’s cash balances are reviewed and if large surpluses are held with no near term investment or funding needs, then share purchases may be made in order to return capital to shareholders should they wish to sell part or all of their holding. The Group’s current and forecast net funds position along with available debt facilities is monitored with the intention of ensuring that, in the opinion of the Board, the Group has and will continue to have, bearing in mind risk, sufficient funds to meet the Group’s current and forecast needs. The Group monitors its current and forecast financial performance and position for the purposes of financial covenants compliance.

2015 2014 $’000 $’000 Cash and short-term deposits 6,508 8,387Bank overdraft (105) -Finance leases (2,761) (1,715)Net funds 3,642 6,672


DividendsA final dividend of 1.65 pence per share in respect of the year ended 31 December 2014 amounting to £0.22 million (approx. $0.34 million) was paid on 1 May 2015. An interim dividend of 3.4 pence per share has been announced for the year ending 31 December 2016, rather than a final dividend for the year ended 31 December 2015, as it is likely to be more beneficial to shareholders to pay the dividend prior to the finalisation of the Company’s accounts for year ended 31 December 2015, given the tax changes relating to dividends that are to take effect at the start of April this year.

Principal risks and uncertaintiesThe Group’s financial and operational performance is subject to a number of risks. The Board seeks to ensure that appropriate processes are put in place to manage, monitor and mitigate these risks. The Board considers the principal risks faced by the Group and the steps taken or that would be taken to mitigate such risks to be as follows:

Risks Mitigation

Loss of major customers

The Group has a small number of major customers. As contracts reach their expiry they are normally put out to tender in accordance with industry practice. Accordingly, there is a risk of loss of major clients that could result in a reduction in revenue.

The Group endeavours to provide an excellent service at competitive pricing. In the event of the loss of a major customer, steps would be taken to reduce the Group’s cost base.

Customer failure

The Group has a small number of major customers and, accordingly, is exposed to potentially significant bad debts should a major customer become insolvent.

The Group operates a credit control policy to reduce the risk of customer failure, although the Group does not have credit insurance in place.

Competition

The Group’s competitors may offer superior products or services or lower prices, which could reduce the attractiveness of the Group’s products and services and result in a reduction in revenue.

The Group endeavours to provide an excellent service at competitive pricing. If revenue fell significantly steps would be taken to reduce the Group’s cost base.

Competition from suppliers

The Products Division faces competition from suppliers seeking to contract directly with the Division’s customers.

The Products Division seeks to provide superior service by offering a range of products and design services at competitive prices. If revenues fell significantly steps would be taken to reduce the Division’s cost base.

Limited number of suppliers

The Group operates with a limited number of key suppliers. The failure of a key supplier or disruption in supply could restrict the Group’s ability to serve its customers leading to a loss of revenue or higher costs.

The Group is aware of alternative sources of supply and would take immediate steps should a key supplier fail or cause material disruption in supply.

STRATEGIC REPORT


Risks Mitigation

Exchange rate risk

The Group is exposed to foreign exchange risk arising from transactional exposures arising from purchases and sales in currencies other than the functional currencies of operating entities and from intercompany balances being denominated in currencies other than the functional currency of the entity concerned.

Where possible the Group seeks to reduce its exposure by natural hedging. The Group may also enter into derivative transactions, principally forward exchange rate contracts to hedge exchange rate risks.

Cost increases from suppliers

The Products Division sources a large proportion of its products from China and is potentially subject to significant price increases from its Chinese suppliers.

The Products Division seeks to contract with its customers such that material price increases charged by suppliers can be passed on to customers. The Division also seeks to geographically diversify its supply base where products can be competitively sourced.

Attraction and retention of Directors and key employees

The success of the Group depends on its Executive Directors and key employees. The loss of such personnel or inability to recruit replacements or further such personnel could have a significant adverse effect on the operations and development of the Group.

The Group seeks to reward Executive Directors and key employees at appropriate levels, including the provision of equity incentive schemes, designed to attract and retain Executive Directors and key employees of appropriate calibre.

Unforeseen events

The Group’s business models are based on passenger and flight numbers. Unforeseen events such as economic downturn, war, terrorist acts, natural disasters or disease could result in lower passenger and flight numbers leading to a reduction in revenue. Also, unforeseen events could adversely impact the business models of customers resulting in demands for lower prices that the Group may find difficult to resist.

These events would be outside the control of the Group. In the event of their occurrence, steps would be taken to reduce the Group’s cost base.

Going concernThe Directors consider that the Group and the Company have 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. More details for adopting going concern basis have been provided in accounting policies in Note 2 of the consolidated financial statements.

Alison WhittenburyChief Financial Officer24 March 2016


The Directors present their Annual Report on the affairs of the Group, together with the financial statements and auditor’s report for the year ended 31 December 2015. The information given in the Directors’ Report includes the information given in the Directors’ Biographies, the Strategic Report, Corporate Governance and the Statement of Directors’ Responsibilities.

Activities and resultsThe Group’s principal activities comprise the provision of catering and travel supplies to the international airline and travel industry. The Executive Chairman’s Letter to Shareholders on pages 1 to 5 and the Strategic Report on pages 8 to 13 report on the principal activities of the Group, its financial and operating performance during the year and the future development of the business. These statements are incorporated into this report by reference to them.

DividendsA final dividend of 1.65 pence per share in respect of the year ended 31 December 2014 amounting to £0.22 million (approx. $0.34 million) was paid on 1 May 2015. An interim dividend of 3.4 pence per share has been announced for the year ending 31 December 2016, rather than a final dividend for the year ended 31 December 2015, as it is likely to be more beneficial to shareholders to pay the dividend prior to the finalisation of the Company’s accounts for year ended 31 December 2015, given the tax changes relating to dividends that are to take effect at the start of April this year.

Derivatives and financial instrumentsThe objectives of the Group’s treasury policy are to manage financial risk, secure cost-effective funding and minimize the adverse effects of fluctuations in the financial markets on the value of financial assets and liabilities on reported profitability and on cash flows. The Group does not trade in financial instruments. We do not hedge balances or transactions. The Group’s financial risk management objectives and policies are set out in Note 22 to the Group financial statements.

DirectorsThe Company’s current Directors are listed on pages 6 and 7, together with their biographical details. The Directors who served at any time during the year and since the year end were as follows:

Director Date of resignation Date of appointment Graham Bird Joseph Golio Dimitri Goulandris Max Lesser 5 January 2015 Christopher Mills 5 January 2015Stephen Yapp Alison Whittenbury

Under the Company’s articles of association any Director who was not re-elected at either of the last two annual general meetings must retire at the next annual general meeting, although they may offer themselves for re-election. Notwithstanding the provisions of the articles of association the Directors have decided that they will all retire voluntarily and submit themselves for re-election.

Directors’ indemnitiesIn accordance with the articles of association, the Directors are granted an indemnity from the Company to the extent permitted by law in respect of liabilities incurred as a result of their office. The Company maintains insurance against certain liabilities which could arise from a negligent act or a breach of duty by its Directors and Officers in the discharge of their duties.

DIRECTORS’ REPORT


Employment policiesThe Group’s employment policies are designed to create an employment environment that attracts, retains and motivates the best people. The Group recognises that this can only be achieved through an active policy of equal opportunity from selection and recruitment, through training and development, appraisal and promotion.

The Group’s policy is to ensure a working environment that is free from all types of discrimination and is one where all employees receive equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. Employees with disabilities, or who become disabled during their employment, are encouraged to develop their skills to their full potential and every effort is made to meet their individual needs. The Group welcomes applications from disabled people and will judge their application solely on their ability to perform the role applied for.

The Group seeks to make all employees aware of its policies, business development and progress, including financial performance. Employees are encouraged to provide feedback through their performance reviews, during briefing meetings and directly to the Audit Committee if required. All views expressed by employees are reviewed and acted upon in confidence.

Success for the Group is dependent upon the quality and performance of its employees. To encourage and motivate employees to contribute to the Group’s performance, substantially all employees are eligible for annual bonuses that are subject to performance targets. Consideration is given to appropriate medium term incentive arrangements for senior management and the Executive Directors.

Health, safety and the environmentThe Group is committed to the health, safety and welfare of its employees, clients and others. Accordingly, it is the Group’s policy to manage its activities so as to avoid causing any unnecessary or unacceptable risk to health and safety and the environment. The Group recognises that safe operations depend not only on technically sound plant and equipment, but also on competent people and an active health, safety and environmental culture. It ensures that its employees, contractors and others are informed, engaged in and committed to the health, safety and environmental improvement process.

Capital managementThe Group’s capital management objectives have been discussed in detail in the strategic report on page 11.

Share capitalDetails of the Company’s share capital are set out in Note 14 to the Group financial statements.

The authority given to the Directors to allot shares or grant rights to subscribe for, or to convert securities into, shares of up to a maximum of approximately 33.3% of the Company’s issued ordinary share capital and the authority given to the Directors to allot equity securities for cash equivalent to approximately 5% of the Company’s issued ordinary share capital otherwise than to existing shareholders on a pro rata basis, and to modify statutory pre-emption rights to deal with legal, regulatory or practical problems that may arise on a rights issue or other pre-emptive offer or issue, expire at the Annual General Meeting. The Company’s authority to purchase its own shares of up to a maximum of approximately 15% of the Company’s issued ordinary share capital has been approved, of which 5% was approved at a General Meeting in December 2015, expires at the Annual General Meeting. During 2015, a total of 1,523,035 ordinary shares (approximately 11% of the issued share capital) were purchased for $4.2 million (£2.75 million). The nominal value of these shares was $0.58 million (£0.38 million). The total number of shares held in treasury as at 31 December 2015 was 1,787,948 (2014: 264,913) representing 12.96% (2014: 1.92%) of issued share capital.


The Directors recommend that the authority to purchase up to a further 281,848 of its own shares be renewed to expire on the earlier of the day before the anniversary of passing the resolution and the Annual General Meeting to be held in 2017. This authority would take the treasury holding up to the maximum of 15% of the Company’s issued ordinary share capital. The Directors further recommend that both the authority to allot shares or grant rights to subscribe for, or to convert securities into, shares and the authority to allot equity securities for cash equivalent to approximately 5% of the Company’s issued ordinary share capital otherwise than to existing shareholders on a pro rata basis be renewed so as to expire at the conclusion of the Annual General Meeting to be held in 2017.

In accordance with S414c(11) of the Companies Act included in the Strategic Report is the review of the business, principal risks and uncertainties and key performance indicators. This information would have otherwise been required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008 to be contained in the Directors’ report.

AuditorsRSM UK Audit LLP were appointed auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at Annual General Meeting.

By order of the Board

Building OneThe SquareSouthall LaneSouthallMiddlesexUB2 5NH

Alison WhittenburyChief Financial Officer24 March 2016

DIRECTORS’ REPORT


CORPORATE GOVERNANCE

IntroductionThe Company is listed on the AIM market of the London Stock Exchange. Although the rules of AIM do not require the Company to comply with the Quoted Companies Alliance’s Corporate Governance guidelines for small and mid-sized companies (“the Guidelines”), the Company supports the principles set out in the Guidelines and seeks to comply wherever reasonably practical, given both the size and resources available to the Company. The Company considers that this facilitates an environment in which growth in long term shareholder value can be fostered.

The BoardThe Company is led and controlled by the Board. The Board currently comprises three Executive Directors and three Non-executive Directors. The names, functions and biographical details of the Directors are set out on pages 6 and 7.

Stephen Yapp is the Executive Chairman, which incorporates the role of Chief Executive. The Company considers the combined role to be appropriate given the Group’s size and its divisional structure. Both divisions have separate management teams. Stephen Yapp is supported by Executive Directors and Non- executive Directors who bring a wide range of skills, experience and independence of thought to the Board. The Executive Directors bring the necessary skills and experience relevant to their executive responsibilities and the Non-executive Directors bring a broad range of business and financial skills. Of the three Non-executive Directors, Graham Bird and Dimitri Goulandris are judged to be independent as the Board considers them to possess the necessary qualities of character and judgement and neither represents any of the Company’s shareholders. Christopher Mills is not considered to be independent as he is a major shareholder of the Company.

The Board is responsible for approving Group policy and strategy. The Executive Chairman is responsible for the effectiveness of the Board and ensuring communication with shareholders. The Executive Chairman is also accountable for the management of the Group. A full board meeting is normally held at least every quarter. In addition to full board meetings, other meetings are held to deal with specific issues as required and informal board calls are also periodically held as considered necessary. The Board has a schedule of matters specifically reserved to it for decision. Management supplies the Board with appropriate and timely information about the Group’s activities and developments and the Directors are free to seek any further information they consider necessary.

During the year there were four full board meetings. All Directors attended all meetings they were eligible to attend.

Board committeesThere are two committees of the Board, being the audit and remuneration committees. Membership of these committees, and their principal terms of reference are set out below. The Board does not have a nominations committee as due to its size it does not consider a nominations committee to be necessary. Appointments to the Board are handled directly by the Board. The Board keeps under review the skills, knowledge and experience of its Directors with a view to ensuring that it remains appropriate for the Company’s needs.

Audit committeeMembership: Graham Bird (Chairman) and Dimitri Goulandris.

The audit committee reports to the Board. Its principal terms of reference are as follows:

• Overseeing preparation of the Group’s financial statements. • Monitoring the adequacy of financial controls and risk management processes. • The selection, compensation, independence and performance of the Group’s external auditors. The terms of reference of the audit committee are available on the Company’s website: www.journeygroup.plc.uk. The audit committee meets a minimum of three times each year to consider the half year results, planning for the annual audit and the annual results. The external auditor is present during these meetings. At these and any other meetings the audit committee also considers matters relevant to its other areas of responsibility besides financial statement preparation. The Company does not have an internal audit function. The audit committee has considered the need for one and decided that it is not justified given the size of the Group and cost.


RSM UK Audit LLP, as the Company’s external auditor, undertakes non-audit related work. Such work includes taxation and other related services. The audit committee has reviewed the nature and extent of non-audit services supplied by the external auditor to ensure that their objectivity and independence is maintained. Details of fees paid for such non-audit services are set out in Note 5 to the Group financial statements.

In discharging its duties during the year the audit committee has had regard for the challenges arising from the current economic conditions. In particular, consideration has been given to the key risks faced by the Group and the reliance placed on estimates, assumptions and forecasts in the Group financial statements.

Three meetings of the audit committee were held during the year. All members attended all meetings they were eligible to attend.

Remuneration committeeMembership: Dimitri Goulandris (Chairman), Graham Bird and Christopher Mills.

The remuneration committee reports to the Board. Its principal terms of reference are as follows:

• Setting remuneration for Executive Directors, including share based incentives, pensions and other benefits.• Monitoring the level and structure of remuneration for senior management below board level.• Approving initial grants and subsequent exercise of all share based incentives.

The terms of reference of the remuneration committee are available on the Company’s website: www. journeygroup.plc.uk. The remuneration committee meets as required.

Four meetings of the remuneration committee were held during the year. All members attended all meetings they were eligible to attend.

Relations with shareholdersThe Board seeks and encourages engagement with all shareholders, including two-way communications with institutional investors, analysts and private investors. Meetings are held with institutional shareholders and analysts as appropriate. The Board considers the Annual Report and the Annual General Meeting to be important methods of communicating with shareholders and encourages shareholders to participate by submitting questions in advance of the Annual General Meeting.

Maintenance of a sound system of internal controlThe Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. The system is designed to manage, rather than eliminate, risk of failure to achieve the business objectives and, as such, can provide only reasonable and not absolute assurance against material misstatement or loss.

The Group’s system of internal control includes the following:

• Preparation and approval of annual budgets and regularly updated forecasts; • Preparation and regular reviews of monthly management accounts;• Regular reviews of business performance; • Clearly defined organizational structures and appropriate delegated authorities for executives throughout

the Group; and • Policies, standards and procedures relating to key business activities.

There is a process for identifying, evaluating and managing the significant risks faced by the Group. The size of the Group is such that the establishment of a separate risk committee is not appropriate and so management reports directly to the Board. A system of business risk identification, assessment and evaluation is in place within the management process throughout the Group. Strategic risks are reviewed by the Board.

CORPORATE GOVERNANCE


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare group and company financial statements for each financial year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company law to prepare the company financial statements in accordance with IFRS as adopted by the EU. The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the group and the company and the financial performance of the group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group for that period. In preparing the group and company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgements and accounting estimates that are reasonable and prudent;• state whether they have been prepared in accordance with IFRSs adopted by the EU;• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

group and the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and the company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


We have audited the group and parent company financial statements (“the financial statements”) on pages 21 to 62. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs more fully explained in the Directors’ Responsibilities Statement set out on page 19, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at http://www.frc.org.uk/auditscopeukprivate

Opinion on financial statementsIn our opinion:

• the financial statements give a true and fair view of the state of the group’s and the parent’s affairs as at 31 December 2015 and of the group’s profit for the year then ended;

• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union

• the parent financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the Companies Act 2006; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

MARK HARWOOD (Senior Statutory Auditor)For and on behalf of RSM UK Audit LLP, Statutory Auditor Chartered Accountants25 Farringdon StreetLondon EC4A 4AB24 March 2016

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JOURNEY GROUP PLC


CONSOLIDATED INCOME STATEMENT

2015 2014For the 12 months to 31 December Note $’000 $’000

Revenue 4 63,574 64,253

Cost of sales 5 (47,871) (47,482)

Gross profit 15,703 16,771

Operating and administrative costs 5 (12,353) (13,363)

Operating profit 4 3,350 3,408

Operating profit before share based payments 3,373 3,408Share based payments (23) -

Finance costs 5 (96) (65)

Profit before tax 3,254 3,343

Income tax expense 6 (954) (806)

Profit attributable to equity shareholders 2,300 2,537

Earnings per share

Basic 7 17.18 cents 19.09 centsDiluted 7 16.92 cents 19.09 cents


Restated 2015 2014For the 12 months to 31 December $’000 $’000

Profit attributable to equity shareholders 2,300 2,537

Other comprehensive income Items that will not subsequently be reclassified to profit and loss: Exchange differences on translating into presentational currency (57) (222)

Other comprehensive income, net of tax (57) (222)

Total comprehensive income attributable to the equity shareholders 2,243 2,315

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Restated Restated 2015 2014 2013As at 31 December Note $’000 $’000 $’000

Assets Non-current assets Property, plant and equipment 9 7,016 6,456 6,604Goodwill 10 4,171 4,171 4,171Intangible assets 10 612 128 98Deferred tax 6 57 57 141 11,856 10,812 11,014Current assets Inventories 12 1,006 745 1,031Trade and other receivables 13 6,002 5,107 6,055Other short-term financial assets - - 858Prepayments 13 240 257 255Current income tax 6 435 564 22Cash and short-term deposits 6,508 8,387 8,624 14,191 15,060 16,845 Total assets 26,047 25,872 27,859

Equity and liabilities Equity attributable to equity shareholders of the parent Issued share capital 14 5,715 5,715 5,300Merger reserve 14 2,519 2,519 2,519Foreign currency translation reserve 14 (1,844) (1,787) (1,565)Retained earnings 14 8,169 10,353 11,429Total equity 14,559 16,800 17,683

Non-current liabilities Deferred tax liability 6 553 497 -Interest bearing loans and borrowings 16 1,960 1,228 997 2,513 1,725 997Current liabilitiesTrade and other payables 17 8,069 6,829 8,833Current income tax - 31 23Interest bearing loans and borrowings 16 906 487 323 8,975 7,347 9,179 Total liabilities 11,488 9,072 10,176 Total equity and liabilities 26,047 25,872 27,859

The financial statements on pages 21 to 49 were approved by the Board on 24 March 2016 and signed on its behalf by

Stephen YappExecutive Chairman

Company Number 01944667


Restated 2015 2014For the 12 months to 31 December Note $’000 $’000

Net cash flows from operating activities Profit after tax 2,300 2,537Depreciation and amortisation 1,592 1,371Share based payments 23 -Finance costs 96 65Income tax expense 954 806(Increase)/decrease in inventories (261) 286(Increase)/decrease in trade and other receivables (878) 946Increase/(decrease) in trade and other payables 134 (2,004)Cash flows generated from operations 3,960 4,007

Interest paid (96) (65)Income taxes paid (800) (759)Net cash flows generated from operating activities 3,064 3,183

Cash flows from investing activities Purchase of property, plant and equipment (434) (378)Purchase of intangible assets (541) (71)Disposal of property, plant and equipment 15 -Deferred consideration on prior disposal of subsidiary - 858Net cash flows (used in)/from investing activities (960) 409

Cash flows from financing activities Proceeds from issue of shares - 415Dividends paid (333) (625)Share buy back (3,068) (1,312)Cash settlement on exercise of share options - (1,445)Employer related payroll taxes on exercise of share options - (231)Payment of finance lease obligations (630) (409)Net cash flows used in financing activities (4,031) (3,607)

Net decrease in cash and cash equivalents 24 (1,927) (15)Net foreign exchange difference (57) (222)Cash and cash equivalents at beginning of year 8,387 8,624Cash and cash equivalents at end of year 24 6,403 8,387

CONSOLIDATED CASH FLOW STATEMENT


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Foreign Issued currency share Merger translation Retained Total capital reserve reserve earnings equity* $’000 $’000 $’000 $’000 $’000

At 1 January 2014 as previously reported 5,300 2,519 (1,565) 11,710 17,964Prior period adjustments (Note 3) - - - (281) (281) 5,300 2,519 (1,565) 11,429 17,683Issue of ordinary shares 415 - - - 415Share buy back - - - (1,312) (1,312)Exercise of share options - - - (1,676) (1,676)Dividends - - - (625) (625)Transactions with owners 415 - - (3,613) (3,198)Profit attributable to equity shareholders - - - 2,537 2,537Other comprehensive income: Exchange differences on translating into presentational currency - - (222) - (222)Total comprehensive income - - (222) 2,537 2,315

At 31 December 2014 5,715 2,519 (1,787) 10,353 16,800Share buy back - - - (4,174) (4,174)Share based payments - - - 23 23Dividends - - - (333) (333)Transactions with owners - - - (4,484) (4,484)Profit attributable to equity shareholders - - - 2,300 2,300Other comprehensive income: Exchange differences on translating into presentational currency - - (57) - (57)Total comprehensive income - - (57) 2,300 2,243

At 31 December 2015 5,715 2,519 (1,844) 8,169 14,559

* Total equity is all attributable to shareholders of the parent


1. CORPORATE INFORMATION

The consolidated financial statements of Journey Group plc and its subsidiary companies (the “Group”) for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the Directors on 24 March 2016 and the balance sheet was signed on the Board’s behalf by Stephen Yapp. Journey Group plc is a public limited company incorporated and domiciled in England & Wales. The Company’s shares are publicly traded on the AIM market of the London Stock Exchange. The principal activities of the Group are described in Note 4.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

i. Basis of preparation and statement of complianceJourney Group plc has prepared its consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The financial statements have been prepared on the historical cost basis. The consolidated financial statements are presented in US Dollars and are rounded to the nearest thousand ($’000) except where otherwise indicated.

Going concernThe Group’s business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Executive Chairman’s Letter to Shareholders on pages 1 to 5 and in the Strategic Report on pages 8 to 13. 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.

ii. ConsolidationThe Group financial statements consolidate the financial statements of Journey Group plc and the entities it controls (its subsidiaries) drawn up to 31 December each year. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises an investor having power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.

Acquisitions of subsidiaries are dealt with by the acquisition method. On acquisition, assets and liabilities of subsidiaries are measured at their fair values at the date of acquisition with any excess of the fair value of consideration transferred over this value being capitalised as goodwill, after separating out identifiable intangible assets. Details of the composition of the Group are included in Note 6 of the separate parent company financial statements.

iii. Goodwill and intangible assetsAfter initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill is allocated to the related cash generating units monitored by management at business entity level or combination of business entity level as appropriate. Where the higher of the fair value less cost to sell of the cash generating unit and its value in use is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement. The carrying amount of goodwill allocated to a cash generating unit is taken into account when determining the gain or loss on disposal of the unit or of an operation within it.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Intangible assets acquired separately are capitalised at cost and where acquired from a business combination are capitalised at their fair value at the date of acquisition. The useful lives of these intangible assets are assessed to be either finite or indefinite. Where the life of an intangible asset is identified as being finite the cost of the asset is amortised over its useful economic life. If the life is considered to be indefinite the asset is subject to annual impairment reviews. Computer software costs are accounted for as an intangible asset and are amortised over their estimated useful economic life of not more than 5 years. The amortisation charge of intangible assets with finite lives is included within operating and administrative costs in the income statement.

iv. RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty. Journey Group plc is organised and managed through the Products Division and the US Division. The following criteria must also be met before revenue is recognised:

Products DivisionThis division sells travel supplies mainly to airlines. Shipments are normally made in bulk quantities to the airline for subsequent draw-down for individual flights. Depending on the terms of the contract, revenue is recognised either at the point of shipment or delivery to the customer, whichever indicates the risks and rewards of ownership have been transferred.

US DivisionThis division supplies food and beverages to airlines. Supply is generally made directly to the aircraft in the quantities specified by the airline, often with very short lead times. Revenue is recognised when the goods are delivered to the aircraft. Revenue is recognised on raw materials that are bought in and sold on to caterer on the basis that the risks and rewards of ownership are initially assumed by Journey Group Plc and are subsequently transferred to the caterer.

v. Foreign currencyThe presentation currency of the Group is US Dollars (USD).

Items included in the Group’s financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The functional currency of the majority of the Group’s subsidiaries is the USD. The consolidated financial statements are presented in USD (“the presentation currency”) because this is the currency better understood by the principal users of the financial statements.

Up to 2014, the Group’s financial statements were presented in sterling. In 2015, management has decided to change the presentation currency to USD. The Company believes that the presentation of financial results in USD, which is the functional currency of the majority of the Group, will provide greater transparency and provide shareholders and other users of the financial statements with reliable and more relevant information, providing a more accurate reflection of the Group’s underlying financial performance and financial position. The change has been applied retrospectively in line with IAS 8 “Accounting Policies, Changes in accounting Estimates and Errors” and as a result the comparative financial information for the year ended 31 December 2014 has been presented in USD. Further, in accordance with IAS 1, a balance sheet as at 31 December 2013 was presented in these consolidated financial statements. The sterling to USD exchange rates as at 31 December 2013, 2014 and 2015 were 1.6563, 1.5593 and 1.4739, respectively. The average sterling to USD exchange rates for 2014 and 2015 were 1.6450 and 1.5285, respectively.

vi. Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is provided on all plant and equipment at rates calculated to write off the cost, less estimated residual value, of each asset on a straight line basis over its expected useful economic life at the following annual rates:

Plant and machinery – 10% to 25%Fixtures and fittings – 10% to 25%Office equipment – 20% to 25%


vii. Impairment of non-financial assetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes estimates of the asset’s recoverable amount. The recoverable amount of the asset or cash generating unit is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

viii. LeasesAssets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the fair value of the leased asset or, if lower, the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the estimated useful life of the asset since full ownership of the asset is obtained at the end of the arrangement.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the income statement on a straight line basis over the lease term.

ix. InventoriesInventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition. Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal. Raw materials, consumables and finished goods are accounted for on a first-in first-out basis.

x. Financial assets other than derivativesFinancial assets other than derivatives currently comprise trade and other receivables, cash and cash equivalents.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Included within loans and receivables are trade and other receivables, which generally have 15 to 30 day terms. Trade and other receivables are recognised and carried at the lower of their original invoiced value, where this equates to the fair value, and their recoverable amount. Where the time value of money is material, receivables are carried initially at fair value and subsequently at amortised cost using effective interest rate method. Provision is made when there is objective evidence that the Group will not be able to recover balances in full.

Cash and cash equivalentsCash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less and where there is an insignificant risk of changes in value. In the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as in the balance sheet, net of loans maturing in less than 3 months and bank overdrafts.



xi. Financial liabilities other than derivativesFinancial liabilities other than derivatives, currently comprise trade and other payables and finance leases.

Trade and other payablesTrade and other payables are stated at amortised cost using the effective interest rate method.

xii. De-recognition of financial assets or liabilities

Financial assetsA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is de-recognised where the rights to receive cash flows from the asset have expired.

Financial liabilitiesA financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in the income statement.

xiii. Share based paymentsThe cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted using binomial pricing model and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined by using an appropriate pricing model. In valuing equity-settled transactions at the grant date, no account is taken of any non-market vesting conditions. Where an award has market-based performance conditions, the fair value of the award reflects the probability of achieving these via the pricing model.

At each subsequent balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions which will determine the number of equity instruments that will ultimately vest. No adjustment is made where forfeiture is due to the failure to meet market-based performance measures. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income statement for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value treated as an expense in the income statement.

The unrecognised grant date fair value is recognised in profit or loss in the year that the options are cancelled or settled. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Awards under the management incentive scheme (the “Scheme”) have been accounted for as equity settled as the Group does not have any present obligation to settle these awards in cash. Awards under the scheme can be settled in cash or equity at the discretion of the Group. xiv. Borrowing costsInterest and borrowing costs are accounted for on the accruals basis under the effective interest method and are recognised through the income statement in full.


xv. Income taxesCurrent tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

• where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

• in respect of deferred income tax assets which are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Income tax is charged or credited directly to equity or other comprehensive income if it relates to items that are credited or charged to equity or other comprehensive income. Otherwise income tax is recognised in the income statement.

xvi. Pension scheme contributionsThe Group operates a defined contribution group personal pension plan for eligible employees. The Group contributes a percentage of an employee’s salary into their individual fund set up under the scheme. Contributions made into the scheme are recognised in the income statement during the period in which they arise.

xvii. Significant judgements and estimatesIn preparing the financial statements the Directors are required to make judgements and estimates in applying accounting policies. The most significant areas where judgements and estimates have been made are as follows:

Judgements• No deferred tax assets have been recognised in respect of UK tax losses that are available indefinitely for

offset against future taxable profits arising from the same trades of the companies as there is insufficient certainty of future taxable profits against which to utilise them (see Note 6).

• Awards under the management incentive scheme (the “Scheme”) have been accounted for as equity settled. The option holders can request cash settlement or equity settlement whilst exercising awards under the Scheme but the Group has the ultimate authority to determine the mode of settlement. Based on Group’s discretion to determine the mode of settlement and absence of any present obligation to settle such awards in cash, the management considers that it is more appropriate to account for the awards under the Scheme as equity settled (See Note 19).

• Revenue is recognised in US Division on raw materials that are bought in and sold on to caterer on the basis that the risks and rewards of ownership are initially assumed by Journey Group plc and are subsequently transferred to the caterer (see Note 4).

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 (see Note 11).



xviii. New accounting standards and interpretationsThe Directors do not anticipate that any of the standards and interpretations issued by the IASB and IFRIC that have an effective date after the date of these financial statements will have a material impact on the Group’s financial statements in the period of initial application. The Group will apply relevant new standards from their effective date.

3. RESTATEMENT OF THE PRIOR YEAR’S RESULTS

A review of the Group’s operational and accounting systems, processes and internal controls was carried out during the year. This review identified the following items which had not been accounted for appropriately during 2014. In accordance with IAS8 “Accounting Policies, Changes in Estimates and Errors”, the nature of the errors and the impact on each financial item affected is stated below.

The effect of the prior year adjustments is to increase the profit before taxation attributable to equity shareholders by $24,000. The prior year restatements are as follows:

• Salary costs were reduced by $10,000 for the correction in the value of vacation accrual in US Division.• Rent was reduced by $14,000 for the correction in the value of deferred rent liability in US Division.

The effect of the restatement on the prior year income statement is summarised in the table below:

Restated 12 Months to 31 December 2014Consolidated income statement $’000

Reduction in salary costs 10Reduction in rent 14

Increase in profit attributable to equity shareholders 24

The effect of the prior year adjustments on cumulative brought forward balances in statement of financial position was as follows:

• Vacation accrual increased by $191,000 in 2014 (2013: $201,000).• Deferred rent liability increased by $66,000 in 2014 (2013: $80,000).• Retained earnings brought forward decreased by $257,000 in 2014 (2013: $281,000).

The effect of the restatement on the prior years’ statement of financial position is summarised in the table below:

Restated Restated As At As At 31 December 31 December 2014 2013Consolidated balance sheet $’000 $’000

Increase in trade and other payables 257 281

Decrease in earnings brought forward 257 281

Prior year numbers have also been restated from GBP to USD which is the functional currency of the majority of the Group. Change in presentation currency from GBP to USD has resulted in a gain of $711,000 in foreign currency revaluation reserve in the earliest period reported in the financial statements.



4. 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 two customers (2014: two customers), who accounted for revenues of $45.5 million (2014: $43.5 million), which amounts to more than 10% of Group revenues. Of these revenues $36.5 million (2014: $35.3 million) arose in the US Division and $9.0 million (2014: $8.2 million) arose in the Products Division.

Information by geographical region for 2015 Non-current Revenue assets $’000 $’000

United Kingdom 2,471 4,258United States of America 54,683 7,510Other 6,420 31 63,574 11,799Deferred tax - 57 63,574 11,856

Information by geographical region for 2014 Non-current Revenue assets $’000 $’000

United Kingdom 3,748 4,302United States of America 50,017 6,381Other 10,488 72 64,253 10,755Deferred tax - 57 64,253 10,812


Information by business segment for 2015

Products US Division Division Total $’000 $’000 $’000

Revenue 17,799 42,396 60,195Revenue from sale of unprocessed food* - 3,379 3,379

Total Revenue 17,799 45,775 63,574

Segment result 346 2,401 2,747Unallocated corporate income 626Operating profit 3,373Share based payments (23) Finance costs (96)Income tax expense (1,018)Profit attributable to equity shareholders 2,236

Segment assets 3,361 17,596 20,957Unallocated corporate assets 4,598 25,555Deferred income taxes 492Consolidated assets 26,047

Segment liabilities 2,780 6,713 9,493Unallocated corporate liabilities and eliminations 1,442 10,935Current and deferred income taxes 553Consolidated liabilities 11,488

Capital expenditure including intangible assets 16 2,635 2,651

Depreciation and amortisation 86 1,506 1,592

* Revenue is recognised on raw materials that are bought in and sold on to caterer on the basis that the risks and rewards of ownership are initially assumed by Journey Group plc and are subsequently transferred to the caterer.



4. SEGMENTAL REPORTING continued

Information by business segment for 2014

Products US Division Division Total $’000 $’000 $’000

Revenue 22,536 38,309 60,845Revenue from sale of unprocessed food - 3,408 3,408

Total Revenue 22,536 41,717 64,253

Segment result 455 2,016 2,471Unallocated corporate costs 937Operating profit 3,408Finance costs (65)Income tax expense (806)Profit after tax 2,537

Segment assets 3,787 15,783 19,570Unallocated corporate assets 6,245 25,815Current and deferred income taxes 57Consolidated assets 25,872

Segment liabilities 2,662 5,485 8,147Unallocated corporate liabilities and eliminations 397 8,544Current and deferred income taxes 528Consolidated liabilities 9,072

Capital expenditure including intangible assets 169 1,084 1,253

Depreciation and amortisation 85 1,286 1,371


5. EXPENSES AND FINANCE COSTS

Cost of sales and operating and administrative costs

2015 2014 $’000 $’000

Included in cost of sales and operating and administrative costs Cost of inventories recognised as an expense 34,903 36,104Direct labour 12,968 11,378Depreciation of property, plant and equipment 1,535 1,330Amortisation of intangible assets 57 41Net foreign exchange gain (9) (20)Operating lease rentals payable 857 872Share based payments 23 -Fees paid to the Company’s auditors:

For the audit of the Company’s annual financial statements 50 52For other services:

The audit of the Company’s subsidiaries pursuant to legislation 98 113Review of interim financial statements 15 15Tax services 17 46

Other administrative costs 9,710 10,914Total costs of sales, administrative and other operating costs 60,224 60,845

Finance costs

2015 2014 $’000 $’000

Loans and overdrafts 8 -Finance leases 88 65 96 65

6. INCOME TAX

The major components of income tax expense were as follows:

2015 2014 $’000 $’000

Current income tax: Overseas taxation 898 225

898 225

Deferred income tax: Current year 56 581

56 581

Income tax expense 954 806



6. INCOME TAX continued

The reconciliation of the income tax expense based on the profit before tax at the statutory income tax rate to the income tax expense at the Group’s effective income tax rate is as follows: 2015 2014 $’000 $’000

Profit before tax 3,254 3,343UK corporation tax rate 20.25% 21.50%Income tax expense at UK corporation tax rate 659 719Tax on overseas earnings at other rates 537 352Expenses not deductible for tax purposes 12 21Movement in unprovided deferred tax (197) (290)Utilisation of brought forward tax losses (57) -Others, net - 4 954 806

Effective tax rate 29% 24%

The movement on the deferred tax asset and liability was as follows: Other Products Division – Deferred tax asset Tax Accelerated tax temporary losses depreciation differences Total $’000 $’000 $’000 $’000

At 1 January 2014 74 2 - 76Charge to the income statement (19) - - (19)At 31 December 2014 55 2 - 57Charge to the income statement - - - -At 31 December 2015 55 2 - 57

Other US Division –Deferred tax asset Tax Accelerated tax temporary losses depreciation differences Total $’000 $’000 $’000 $’000

At 1 January 2014 499 - 171 670Charge to the income statement (499) - (141) (640)At 31 December 2014 - - 30 30Charge to the income statement - - 151 151At 31 December 2015 - - 181 181

Other US Division – Deferred tax liability Tax Accelerated tax temporary losses depreciation differences Total $’000 $’000 $’000 $’000

At 1 January 2014 - (605) - (605)Charge to the income statement - 67 11 78At 31 December 2014 - (538) 11 (527)Charge to the income statement - (131) (76) (207)At 31 December 2015 - (669) (65) (734)


Deferred tax balances in US Division have been offset in Statement of Financial Position.

The Group has timing differences in respect of decelerated capital allowances available to carry forward of $2.8 million (2014: $3.4 million).

The Group has estimated UK tax losses of $13.8 million i.e. £8.3 million (2014: $13.8 million i.e. £8.3 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 $5.5 million i.e. £3.3 million (2014: $5.8 million i.e. £3.5 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.

7. EARNINGS PER SHARE

The basic earnings per share 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 diluted earnings per share is calculated using the same numerator with the denominator adjusted for the dilutive effects of share options. The adjusted basic earnings per share is calculated by dividing the adjusted profit after tax to remove the impact of share based payments (numerator) by the weighted average number of ordinary shares in issue during the year (denominator). The adjusted diluted earnings per share is calculated using the same numerator with the denominator adjusted for the dilutive effects of share options.

2015 2014Profit table $’000 $’000

Profit attributable to equity shareholders 2,300 2,537Share based payments 23 - 2,323 2,537

Weighted average number of shares in issue 2015 2014

For basic earnings per share 13,390,380 13,288,918For diluted earnings per share 13,595,213 13,288,918

2015 2014Earnings per share table Cents Cents

Basic earnings per share 17.18 19.09 Adjusted basic earnings per share 17.35 19.09

Diluted earnings per share 16.92 19.09

Adjusted diluted earnings per share 17.09 19.09



8. DIVIDENDS PAID

A final dividend of 1.65 pence per share in respect of the year ended 31 December 2014 amounting to $333,000 (£199,480) was paid on 1 May 2015 to shareholders who were on the register as at the close of business on 7 April 2015. An interim dividend in respect of the year ending 31 December 2016 has been declared of 3.4 pence per share which will be paid on 31 March 2016 to those who were on the register as at close of business 11 March 2016.

9. PROPERTY, PLANT AND EQUIPMENT

Plant and Fixtures and Office machinery fittings equipment Total $’000 $’000 $’000 $’000 At 1 January 2014, net of accumulated depreciation 3,927 2,616 61 6,604Additions at cost 969 155 58 1,182Depreciation charge (722) (562) (46) (1,330)At 31 December 2014, net of accumulated depreciation 4,174 2,209 73 6,456Additions at cost 2,037 52 21 2,110Disposals - (15) - (15)Depreciation charge* (917) (578) (40) (1,535)At 31 December 2015, net of accumulated depreciation 5,294 1,668 54 7,016

At 1 January 2014 Cost 6,620 5,606 331 12,557Accumulated depreciation (2,693) (2,990) (270) (5,953)Net carrying amount 3,927 2,616 61 6,604

At 1 January 2015 Cost 7,590 5,757 370 13,717Accumulated depreciation (3,416) (3,548) (297) (7,261)Net carrying amount 4,174 2,209 73 6,456

At 31 December 2015 Cost 9,627 5,702 359 15,688Accumulated depreciation (4,333) (4,034) (305) (8,672)Net carrying amount 5,294 1,668 54 7,016* Depreciation charge is included in operating and administrative costs in income statement.

These assets form security under the terms of an unlimited debenture.

Included in additions in plant and machinery are assets of $1,676,000 (2014: $804,000) bought under arrangements of finance leases. The net book value of all assets subject to finance leases as at 31 December 2015 was $3,470,000 (2014: $2,106,000). The depreciation charged during the year relating to these assets was $371,000 (2014: $218,000). The leased assets are pledged as security for the related finance lease liabilities.



10. GOODWILL AND INTANGIBLE ASSETS

Purchased Software goodwill $’000 $’000

At 1 January 2014, net of amortisation and impairment 98 4,171Additions at cost 71 -Amortisation charge (41) -At 31 December 2014, net of amortisation and impairment 128 4,171Additions at cost 541 -Amortisation charge (57) -At 31 December 2015, net of amortisation and impairment 612 4,171

At 1 January 2014 Cost 166 35,557Accumulated amortisation (68) -Accumulated impairment losses - (31,386)Net carrying amount 98 4,171

At 1 January 2015 Cost 237 35,557Accumulated amortisation (109) -Accumulated impairment losses - (31,386)Net carrying amount 128 4,171

At 31 December 2015 Cost 771 35,557Accumulated amortisation (159) -Accumulated impairment losses - (31,386)Net carrying amount 612 4,171* Amortisation charge is included in operating and administrative costs in income statement.

Software assets form security under the terms of an unlimited debenture.

Purchased goodwill is not amortised and is tested annually for impairment.


11. IMPAIRMENT TESTING OF GOODWILL

For impairment testing of goodwill acquired through business combinations, following the disposal of MNH Sustainable Cabin Services Ltd in 2013, the remaining cash generating unit in the Products Division business segment is Watermark (comprising Watermark Limited and Watermark Asia Limited).

The recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on forecasts that cover a three-year period and are approved by management. The cash flow projections include assumptions that revenues will largely arise from existing customers, including that fixed period customer contracts will either be rolled over on termination or replaced with equivalent new business, and that the gross profit percentage, operating costs and working capital ratios will be consistent with existing levels. The projections further assume that capital expenditure will relate substantially to replacement expenditure. The discount rate applied to cash flow projections is 8.55% (2014: 13.0%), which has been selected by management to reflect the pre-tax weighted average cost of capital and the risk factors associated with future operating plans of this specific asset. Cash flows beyond three years are assumed to increase at an inflation rate of 0.1% per annum (2014: 2.5%) with real growth of 2.9% per annum (2014: 2.5%). Impairment calculation is based on the assumption that significant contracts will be renewed.

The carrying amount of goodwill was as follows:

Watermark $’000 At 1 January 2015 and 31 December 2015 4,171

The Group holds no other intangible assets with indefinite useful economic lives.

The most significant assumptions used in calculating the value-in-use are the three-year projected cash flows, the discount rate, the inflation rate and the long term growth rate. The headroom and the impact thereon of a 5% reduction in the three-year projected cash flows, an increase in the discount rate of 1%, a reduction in the inflation rate by 1% or a reduction in the real growth rate by 1% would reduce the value-in-use within the cash generating units as follows:

Discount Inflation Real growth Headroom Cash flows rate rate rate $’000 $’000 $’000 $’000 $’000

Watermark 2,898 (359) (1,115) (1,115) (1,115)



12. INVENTORIES

2015 2014 $’000 $’000

Goods for resale 1,006 745

During the year, $nil was credited (2014: credit of $25,000) to the income statement in respect of a reduction in obsolete and slow moving inventories.


13. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS

2015 2014 $’000 $’000

Trade receivables 5,375 4,438Less: provision for impairment (13) (13)Trade receivables – net 5,362 4,425Other receivables 640 682Total trade and other receivables 6,002 5,107

Prepayments 240 257

As of 31 December 2015, trade and other receivables of $2,241,000 (2014: $658,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of past due but not impaired trade and other receivables is as follows:

2015 2014 $’000 $’000

Up to 3 months 2,241 658

As of 31 December 2015, trade receivables of $13,000 (2014: $13,000) were impaired. The ageing of these trade receivables was:

2015 2014 $’000 $’000

Up to 3 months - 13Over 6 months 13 -


13. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS continued

The movement on the provision for impairment of trade receivables was: 2015 2014 $’000 $’000

At the beginning and at end of the year 13 13

The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security.

Part of these assets form security under the terms of an unlimited debenture.

14. SHARE CAPITAL AND RESERVES

Share capital

Issued and fully paid Par value Number £’000 $’000

At 1 January 2014 25 pence 12,799,365 3,200 5,300Exercise of warrants 25 pence 999,277 250 415

At 31 December 2014 25 pence 13,798,642 3,450 5,715

At 31 December 2015 25 pence 13,798,642 3,450 5,715

The Company had warrants as at 31 December 2013 outstanding over 999,277 ordinary shares of 25 pence each with a subscription price of 25 pence per share. During the previous year all of these warrants were exercised for a total subscription price of £249,819 (USD 415,000). On 31 December 2015 the Company had 1,787,948 (2014: 264,913) ordinary shares held in treasury.

Merger reserveThis reserve represents the excess consideration received above the nominal value of share capital issued for the acquisition of subsidiary undertakings. There has been no movement on this reserve during the year or previous year.

Foreign currency translation reserveThis reserve records foreign exchange differences arising on the translation of the financial statements of parent and subsidiaries with a functional currency different to the presentation currency of the Group. The movement in the reserve is shown in the consolidated statement of changes in equity on page 25.

Retained earningsRetained earnings records the profits generated by the Group after tax, dividends and transactions recognised directly within reserves. The movement in the reserve is shown in the consolidated statement of changes in equity on page 25.

15. CAPITAL MANAGEMENT

The Group’s capital management objectives are to ensure the Group is appropriately funded to meet its operational requirements and strategic objectives, continue as a going concern and to provide an adequate return to shareholders commensurate with risk. More details about Group’s capital management objectives are provided in Strategic Report on page 11.



16. INTEREST BEARING LOANS AND BORROWINGS

Effective interest rate % 2015 2014 2015 2014 $’000 $’000

Current Bank overdraft 2.0% - 105 -Obligations under finance leases (see Note 20) 3.9% 3.9% 801 487 906 487

Non-current Obligations under finance leases (see Note 20) 3.9% 3.9% 1,960 1,228

The obligations under finance leases are secured by the related assets.

17. TRADE AND OTHER PAYABLES

2015 2014 $’000 $’000

Current Trade payables 5,074 5,078Sales tax payable 51 2Social security and other taxes 109 112Accruals, deferred income and other payables 1,749 1,637Other payables 1,086 - 8,069 6,829

18. EMPLOYEE COSTS AND DIRECTORS’ EMOLUMENTS

Employee benefits expense and average monthly number of persons, including Directors, employed during the year were as follows:

2015 2014 $’000 $’000

Wages and salaries Wages and salary costs 5,518 6,211Social security costs 416 502Pension costs 208 200Termination payments - 446 6,142 7,359

2015 2014 Number Number

Average number of employees Sales and distribution 38 28Management and administration 57 60 95 88


18. EMPLOYEE COSTS AND DIRECTORS’ EMOLUMENTS continued

Remuneration in respect of Directors was as follows:

2015 2014 $’000 $’000

Emoluments Graham Bird 53 57Carl Fry - 302Joseph Golio 417 467Dimitri Goulandris 38 41Max Lesser - 49Christopher Mills 46 -Stephen Yapp 197 208David Young - 372Alison Whittenbury 208 104 959 1,600Pension contributions to money purchase pension schemes David Young - 8Alison Whittenbury 15 8 15 16Gain on exercise of share options Carl Fry - 543Joseph Golio - 284Stephen Yapp - 567David Young - 543 - 1,937

Total remuneration 974 3,553

During the previous year, emoluments of Carl Fry and David Young included, respectively, $170,000 and $276,000, totaling $446,000, in respect of their leaving costs.

The amounts set out above include remuneration in respect of the highest paid Director as follows:

2015 2014 $’000 $’000

Director Joseph Golio David Young

Emoluments 417 923

19. EMPLOYEE BENEFITS

PensionsThe Group operates a group personal pension scheme for eligible employees and contributes in respect of employees within the scheme at a rate of between 3% and 10% per annum. The scheme is separately administered. As at 31 December 2015 there were no prepaid or accrued pension contributions (2014: $nil).



Employee share option schemesDuring the year the Group operated approved share options scheme and management incentive scheme.

All the options under approved share options scheme expired during the year. The number of outstanding options under approved share options scheme as at 31 December 2014 was 400 which expired during the year. The exercise price of these options was £36.00 per share. At 31 December 2015 there were no options outstanding over ordinary shares under approved share options scheme.

The management incentive scheme (the “Scheme”) was adopted by the Board in January 2015. Each of the Company’s existing three Executive Directors along with six senior managers of the US Division participate in the Scheme. Awards under the Scheme take the form of share options granted over ordinary shares. Options are exercisable at an aggregate price of £1.295 per ordinary share. The Scheme includes vesting conditions under which all the options will vest in full, if on the end date which is 18 months from the date of grant of the option the average price per ordinary share over any continuous 30 day period from the date of grant (5th January 2015) to the end date (4th July 2016), is in excess of £2.25. The Scheme allows for a maximum number of options to be awarded of up to 10% of the Company’s shares in issue (13,798,642 shares). The Company has the discretion to decide the form and manner of settlement of awards under the Scheme when exercised by the participants.

Total number of awards issued under the scheme are 1,379,864. The number of ordinary shares that would have been issuable under the Scheme had all participants exercised their options on 31 December 2015 was nil based on the share price at that date of £1.785.

The fair value of awards under the Scheme was estimated at the date of grant using a binomial model and amounted to $35,000, of which $23,000 was charged as an expense during the year. The following table gives the assumptions used to value the awards made under the Scheme:

Scheme

Spot price £1.295Strike price £1.295Expected life of options 1.5 yearsRisk free rate 2%Historical volatility 20%Barrier price £2.25

During the previous year, each of the Company’s four Executive Directors exercised their share options in the management incentive scheme adopted by the Board in March 2011. There are no more outstanding share options under this Scheme. The gain on exercise of share options was compensated in shares and cash as shown in the table below:

Settlement in Settlement in Settlement Share price shares shares in cash Name of Director Date of exercise Cents Number $’000 $’000Carl Fry 14 May 2014 253 - - 543David Young 14 May 2014 253 - - 543Stephen Yapp 31 October 2014 186 144,042 302 265Joseph Golio 31 October 2014 186 91,045 190 94 235,087 492 1,445

During the year, the Company’s share price has ranged from 122.50 pence per share to 183.50 pence per share. At the year end the Company’s share price was 178.50 pence per share.

J O U R N E Y G R O U P P L C Annual Report & Financial Statements 201446 J O U R N E Y G R O U P P L C Annual Report & Financial Statements 201546


20. COMMITMENTS AND CONTINGENCIES

Operating lease commitments – propertyThe Group has entered into commercial property leases which have non-cancellable outstanding lease terms of between 1 to 5 years. The total future minimum payments under these arrangements are:

2015 2014 $’000 $’000

Within one year 991 864After one year but not more than five years 1,312 2,057Total 2,223 2,921

Operating lease commitments – equipmentThe Group has outstanding operating lease commitments on certain items of small machinery and equipment. These items have an average outstanding life of between 1 to 2 years. The future minimum payments under these arrangements are:

2015 2014 $’000 $’000

Within one year 34 27After one year but not more than five years 70 18Total 104 45

Finance lease and hire purchase commitmentsThe Group has finance leases for various items of plant, machinery and equipment. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments is set out below.

2015 2014 Present Present Minimum value of Minimum value of payments payments payments payments $’000 $’000 $’000 $’000 Within one year 891 801 543 487After one year but not more than five years 2,070 1,960 1,292 1,228 2,961 2,761 1,835 1,715Less: amounts representing finance charges (200) - (120) -Present value of minimum lease payments 2,761 2,761 1,715 1,715

Capital commitmentsThe Group had capital commitments outstanding at 31 December 2015 amounting to $74,000 (2014: $999,000).

J O U R N E Y G R O U P P L C Annual Report & Financial Statements 2014 47J O U R N E Y G R O U P P L C Annual Report & Financial Statements 2015 47

21. RELATED PARTY DISCLOSURE

Compensation of key management personnel (including directors): 2015 2014 $’000 $’000

Short-term employee benefits 1,914 2,339Post-employment benefits 15 72Termination payments - 446Gain on exercise of share options - 1,937 1,929 4,794

The Company disposed of its investment in MNH Sustainable Cabin Services Ltd to MNH Grp Ltd in 2013, a company in which Mr Stephen Yapp is a director and shareholder. During the year, income amounting to $83,000 (2014: $185,000) has been received from MNH Sustainable Cabin Services Ltd in respect of products supplied. At 31 December 2015 (2014: $nil) there was no outstanding balance (2014: $nil) owed by MNH Sustainable Cabin Services Ltd to the Group.

During the year Mr Stephen Yapp, Mr Graham Bird, Mr Dimitri Goulandris and Mr Joseph Golio who are Directors of the Company, received dividends in respect of their holdings in the ordinary shares of the Company amounting to, respectively, $10,143, $304, $20,013 and $2,243 (2014: $12,619, $402, $14,076 and $nil).

22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise finance leases and cash. The main purpose of these financial instruments is to provide finance for the Group’s operations. The Group has various other financial instruments such as trade receivables and trade payables, which arise directly from its operations. The Group may also enter into derivative transactions, principally forward exchange rate contracts to manage currency risks arising from the Group’s operations and its sources of finance.

The main risks arising from the Group’s financial instruments are foreign currency risk and credit risk. The Board reviews and agrees policies for managing these risks, which are summarised below. The Board does not consider the Group to have significant exposure for the time being to liquidity risk, cash flow risk and interest rate risk as it has significant net funds and low gross borrowings. The Board does not consider the Group to have any exposure for the time being to market price risk arising from derivative transactions as during the year and the preceding year the Group did not enter into such transactions. The Board also does not consider the Group has significant direct exposure to commodity price risk.

Foreign currency riskThe Group has transactional currency exposures arising from sales and purchases by operating units being made in currencies other than their functional currencies. Steps are taken where possible to minimise net monetary balances in currencies other than the functional currencies of the operating units concerned.

The Group also has intercompany balances denominated in currencies other than the functional currencies of the entities concerned. Foreign currency exposures arise in relation to the translation of these balances into the functional currency of the entity concerned. Steps are taken where possible to minimise such balances.

Credit riskThe Group’s policy is to trade with recognised, creditworthy third parties. Credit verification procedures are carried out in relation to all new customers with whom material transaction activity is expected. In addition, receivable balances are monitored with the objective of minimising the Group’s exposure to bad debts. At the year end, the Group had two (2014: one) customer where its exposure represented in excess of 10% of the trade receivables balance. The Group is also subject to credit risk in relation to cash and cash equivalents arising from potential default of the counterparty, with a maximum exposure equal to the carrying amount.


23. FINANCIAL INSTRUMENTS

Financial assets and liabilities

Financial assets 2015 2014Loans and receivables $’000 $’000

Trade and other receivables 6,002 5,107Cash and short-term deposits 6,508 8,387 12,510 13,494

Financial liabilities 2015 2014Other financial liabilities at amortised cost $’000 $’000

Trade and other payables 7,909 6,715Bank overdraft 105 -Finance leases 2,961 1,835 10,975 8,550

60 days to 0 to 60 days 12 months 1 to 2 years 2 to 5 years 2015 2015 2015 2015Maturity of financial liabilities $’000 $’000 $’000 $’000 Trade and other payables 7,909 - - -Bank overdraft 105 - - -Obligations under finance leases 153 738 805 1,265 8,167 738 805 1,265

2014 2014 2014 2014 $’000 $’000 $’000 $’000

Trade and other payables 6,715 - - -Obligations under finance leases 90 452 516 777 6,805 452 516 777

Fair valuesThe fair values of financial assets and financial liabilities are not materially different to their carrying values in the financial statements.



24. ADDITIONAL CASH FLOW INFORMATION

1 January Exchange 31 December 2015 Cash flow differences 2015 $’000 $’000 $’000 $’000 Cash and cash equivalents 8,387 (1,927) (57) 6,403Finance leases (1,715) (1,046) - (2,761)Net funds 6,672 (2,973) (57) 3,642

1 January Exchange 31 December 2014 Cash flow differences 2014 $’000 $’000 $’000 $’000

Cash and cash equivalents 8,624 (15) (222) 8,387Finance leases (1,320) (395) - (1,715)Net funds 7,304 (410) (222) 6,672

New finance leases of $1,676,000 (2014: $804,000) were secured during the year to buy plant and machinery. The net finance lease liability paid during the year was $630,000 ($409,000).

Cash and cash equivalents comprise: 1 January 31 December 31 December 2014 2014 2015 $’000 $’000 $’000 Cash 8,624 8,387 6,508Bank overdraft - - (105)Cash and cash equivalent 8,624 8,387 6,403


31 December 31 December 1 January 2015 2014 2014 Note £’000 £’000 £’000

Fixed assets Investments in subsidiaries 6 10,834 12,200 14,210

Current assets Other receivables - - 1,381Cash at bank 57 280 876 57 280 2,257 Current liabilitiesTrade and other payables 7 (3,928) (1,685) (2,732)Net current liabilities (3,871) (1,405) (475) Net assets 6,963 10,795 13,735

Capital and reserves Called up share capital 9 3,450 3,450 3,200Merger reserve 10 2,047 2,047 2,047Profit and loss account 10 1,466 5,298 8,488Equity shareholders’ funds 6,963 10,795 13,735

The financial statements on pages 50 to 62 were approved by the Board on 24 March 2016 and signed on its behalf by:

Stephen YappExecutive Chairman

Company Number 01944667

COMPANY STATEMENT OF FINANCIAL POSITION


2015 2014For the 12 months to 31 December £’000 £’000

Net cash flows from operating activities Loss after tax (859) (2,007)Impairment of investment 1,366 2,010Finance costs 5 3Decrease in debtors - 1,381Increase/(decrease) in creditors 1,506 (1,047)Cash flows generated from operations 2,018 340

Interest paid (5) (3)Net cash flows generated from operating activities 2,013 337 Cash flows from financing activitiesProceeds from issue of shares - 250Dividends paid (223) (382)Share buy back (2,013) (801)Net cash flows used in financing activities (2,236) (933) Net decrease in cash and cash equivalents (223) (596)Cash and cash equivalents at beginning of year 280 876Cash and cash equivalents at end of year 57 280

COMPANY CASH FLOW STATEMENT


Issued share Merger Retained Total capital Reserve earnings equity £’000 £’000 £’000 £’000

At 1 January 2014 3,200 2,047 8,488 13,735Issue of ordinary shares 250 - - 250Share buy back - - (801) (801)Dividends - - (382) (382)Transactions with owners 250 - (1,183) (933) Profit attributable to equity shareholders - - (2,007) (2,007)Total comprehensive income - - (2,007) (2,007)

At 31 December 2014 3,450 2,047 5,298 10,795Share buy back - - (2,750) (2,750)Dividends - - (223) (223)Transactions with owners - - (2,973) (2,973)

Profit attributable to equity shareholders - - (859) (859)Total comprehensive income - - (859) (859)

At 31 December 2015 3,450 2,047 1,466 6,963

COMPANY STATEMENT OF CHANGES IN EQUITY


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies of the Company are summarised below. They have all been applied consistently throughout the year and the preceding year.

i. Basis of preparationThese financial statements are the first published financial statements of the Company in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The financial statements of the Company were previously prepared in accordance with applicable United Kingdom accounting standards (“UK GAAP”). Some of the IFRS recognition, measurement, presentation and disclosure requirements and accounting policy choices differ from UK GAAP. Consequently, the directors have amended certain accounting policies to comply with IFRS.

Comparative figures have been restated to reflect the adjustments made, except to the extent that the directors have taken advantage of exemptions to retrospective application of IFRS permitted by IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’.

Reconciliations and descriptions of the affect of the transition to IFRS on the Company equity and company total comprehensive income previously reported under UK GAAP are given in Note 3.

Going concernThe Group’s business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Executive Chairman’s Letter to Shareholders on pages 1 to 5 and in the Strategic Report on pages 8 to 13. The Directors have reviewed the Group’s and Company’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 Company 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.

ii. RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. The Company derives revenue by providing intellectual property (IP) service to US Division. The revenue is measured at a contractually agreed percentage of the handling revenue in US Division. Revenue is recognized when the handling service has been provided by the US Division to the external customers.

iii. TaxationCurrent taxation, including UK corporation taxation and foreign taxation, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised on all temporary differences where the transactions or events that give the Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date.

iv. Investments in subsidiariesFixed asset investments are stated at cost less provisions for impairment.

v. Financial assetsFinancial assets comprise amounts due from subsidiary undertakings classified as loans and receivables and cash at bank.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

J O U R N E Y G R O U P P L C Annual Report & Financial Statements 201454 J O U R N E Y G R O U P P L C Annual Report & Financial Statements 201554


Loans and receivablesLoans and receivables are initially recognised at their fair value and subsequently carried at amortised cost using the effective interest method if the time value of money is significant.

Cash at bankCash at bank in the balance sheet comprises cash at banks and in hand and deposits repayable on demand.

vi. Financial liabilitiesFinancial liabilities comprise amounts owed to subsidiary undertakings and accruals.

Amounts owed to subsidiary undertakingsAmounts owed to subsidiary undertakings are measured at fair value and subsequently stated at amortised cost.

AccrualsAccruals are stated at amortised cost.

vii. De-recognition of financial assets or liabilities

Financial assetsA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is de-recognised where the rights to receive cash flows from the asset have expired.

Financial liabilitiesA financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.

viii. Foreign currencyThe presentation currency and the functional currency of the Company is sterling. Transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.

ix. Impairment of investments in subsidiariesThe Company assesses at each reporting date whether there is an indication that an investment in a subsidiary company may be impaired. If any such indication exists, or when annual impairment testing for an investment in a subsidiary company is required, the Company makes an estimate of the investment’s recoverable amount. An investment’s recoverable amount is the higher of its net realisable value and its value-in-use and is determined for an individual investment. Where the carrying amount of an investment in a subsidiary company exceeds its recoverable amount, the investment is considered impaired and is written down to its recoverable amount. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the investment. Impairment losses of continuing operations are recognised in the income statement.

x. Borrowing costsInterest and borrowing costs are accounted for on the accruals basis under the effective interest rate method and are recognised through the income statement in full. No interest or borrowing costs have been capitalised.


xi. Share based paymentsThe Company grants share options to employees of its subsidiary companies. The cost of equity-settled transactions is measured by reference to the fair value at the date at which they are granted using binomial pricing model and is recognised over the vesting period as an addition to the cost of investment in the subsidiary company. The vesting period ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined by using an appropriate pricing model. In valuing equity-settled transactions at the grant date, no account is taken of any non-market vesting conditions. Where an award has market-based performance conditions, the fair value of the award reflects the probability of achieving these via the pricing model.

At each subsequent balance sheet date before vesting, the cumulative cost is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions which will determine the number of equity instruments that will ultimately vest. No adjustment is made where forfeiture is due to the failure to meet market-based performance measures. The movement in cumulative cost since the previous balance sheet date is recognised as an addition to the cost of investment in the subsidiary company, with a corresponding entry in equity.

Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification, is recognised over the remainder of the new vesting period. No reduction is recognised if this difference is negative. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised for the award is recognised immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value treated as an addition to the cost of investment in the subsidiary company.

The unrecognised grant date fair value is recognised in profit or loss in the year that the options are cancelled or settled. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Awards under the management incentive scheme (the “Scheme”) have been accounted for as equity settled as the Group does not have any present obligation to settle these awards in cash. Awards under the scheme can be settled in cash or equity at the discretion of the Group.

xii. Significant judgements and estimatesIn preparing the financial statements the Directors are required to make judgements and estimates in applying accounting policies. The most significant areas where judgements have been made are as follows:

Judgements• Awards under the management incentive scheme (the “Scheme”) have been accounted for as equity

settled. The option holders can request cash settlement or equity settlement whilst exercising awards under the Scheme but the Company has the ultimate authority to determine the mode of settlement. Based on Company’s discretion to determine the mode of settlement and absence of any present obligation to settle such awards in cash, the management considers that it is more appropriate to account for the awards under the Scheme as equity settled (see Note 9).

Estimates• In conducting the annual impairment test of investments, various significant assumptions have been made

in arriving at the recoverable amounts of investments in subsidiaries (see Note 6).

xiii. New accounting standards and interpretationsThe Directors do not anticipate that any of the standards and interpretations issued by the IASB and IFRIC that have an effective date after the date of these financial statements will have a material impact on the Group’s financial statements in the period of initial application. The Group will apply relevant new standards from their effective date.



2. PROFIT ATTRIBUTABLE TO JOURNEY GROUP PLC

In accordance with the provisions of section 408 of the Companies Act 2006, the Company has elected not to present income statement. The retained loss for the financial year dealt within the financial statements of the parent company, Journey Group plc, was £859,000 (2014: £2,007,000) and is stated after taxation.

Fees payable to the Company’s auditors for the audit of the Company’s financial statements amounted to £32,000 (2014: £32,000). These costs were paid by a subsidiary company as in prior year.

3. FIRST TIME ADOPTION OF IFRS

These financial statements, for the year ended 31 December 2015, are the first the Company has prepared in accordance with IFRS. For periods up to and including the year ended 31 December 2014, the Company prepared its financial statements in accordance with UK GAAP. Accordingly, the Group has prepared financial statements which comply with IFRS applicable for periods ending on or after 31 December 2015, together with the comparative period data as at and for the year ended 31 December 2014, as described in the accounting policies. In preparing these financial statements, the Group’s opening statement of financial position was prepared as at 1 January 2014, the Group’s date of transition to IFRS. This note explains the principal adjustments made by the Group in restating its UK GAAP statement of financial position as at 1 January 2014 and its previously published UK GAAP financial statements as at and for the year ended 31 December 2014.

There were no material reconciling differences in balances between IFRS and UK GAAP.

4. OPERATING PROFIT/(LOSS)

Operating profit/(loss) is stated after charging fees payable to the Company’s auditors for the audit of the Company’s financial statements of £32,000 (2014: £32,000). These costs were paid by a subsidiary company as in the prior year.

5. DIVIDENDS

A final dividend of 1.65 pence per share in respect of the year ended 31 December 2014 amounting to £199,480 was paid on 1 May 2015 to shareholders who were on the register as at the close of business on 7 April 2015. An interim dividend in respect of the year ending 31 December 2016 has been declared of 3.4 pence per share which will be paid on 31 March 2016 to those who were on the register as at close of business 11 March 2016.


6. INVESTMENTS IN SUBSIDIARIES

Subsidiary undertakings £’000 Cost At 1 January 2015 47,826At 31 December 2015 47,826

Provision for impairment in value At 1 January 2015 (35,626)Impairment during the year (1,366)At 31 December 2015 (36,992)

Net book value 31 December 2015 10,83431 December 2014 12,200

The carrying value of Company’s investment in Watermark Limited has been written down to its recoverable amount in accordance with IAS36. The recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on forecasts that cover a three-year period and are approved by management. The cash flow projections include assumptions that revenues will largely arise from existing customers, including that fixed period customer contracts will either be rolled over on termination or replaced with equivalent new business, and that the gross profit percentage, operating costs and working capital ratios will be consistent with existing levels. The projections further assume that capital expenditure will relate substantially to replacement expenditure. The discount rate applied to cash flow projections is 8.55% (2014: 13.0%), which has been selected by management to reflect the pre-tax weighted average cost of capital and the risk factors associated with future operating plans of this specific asset. Cash flows beyond three years are assumed to increase at an inflation rate of 0.1% per annum (2014: 2.5%) with real growth of 2.9% per annum (2014: 2.5%). Impairment calculation is based on the assumption that significant contracts will be renewed.

The most significant assumptions used in calculating the value-in-use are the three-year projected cash flows, the discount rate, the inflation rate and the long term growth rate. The impact of a 5% reduction in the three-year projected cash flows, an increase in the discount rate of 1%, a reduction in the inflation rate by 1% or a reduction in the real growth rate by 1% would increase the impairment charge as follows: Discount Inflation Real growth Cash flows rate rate rate £’000 £’000 £’000 £’000

Watermark (244) (757) (757) (757)


6. INVESTMENTS IN SUBSIDIARIES continued


Name of subsidiary undertaking Nature of business activities

Watermark Limited Provision of travel supplies and marketing to the international travel sectorWatermark Asia Limited Provision of travel supplies and marketing to the international travel sectorWatermark Asia Pacific Pty Limited Provision of travel supplies and marketing to the international travel sectorWatermark Asia Holdings Limited Provision of staff and employees to Hong Kong based subsidiariesAir Fayre Limited Provision of intellectual propertyAir Fayre CA Inc. Provision of catering and logistics to the international travel sectorAir Fayre USA Inc. Holding companyWatermark Group Services (UK) Limited Management companyWatermark Products Limited Dormant

All subsidiaries are 100% owned directly by Journey Group plc except for the investments in the following subsidiary undertakings which are indirectly owned 100%:

Name of subsidiary undertaking Immediate parent undertakingWatermark Asia Limited Watermark Asia Holdings LimitedAir Fayre CA Inc. Air Fayre USA Inc.

All subsidiaries are incorporated in England and Wales except for:

Name of subsidiary undertaking Country of incorporationAir Fayre USA Inc. Delaware, USAAir Fayre CA Inc. California, USAWatermark Asia Limited Hong KongWatermark Asia Holdings Limited Hong KongWatermark Asia Pacific Pty Limited Australia

For the period ended 31 December 2015, the following companies were wholly owned subsidiaries of Journey Group Plc and were entitled to exemption from audit under section 479A of the Companies Act 2006.

Name of subsidiary undertaking Company registration numberAir Fayre Limited 03645843Watermark Group Services (UK) Limited 06200189

7. TRADE AND OTHER PAYABLES

2015 2014 £’000 £’000

Amounts owed from subsidiary undertakings 3,187 1,685Other creditors 741 - 3,928 1,685



8. FINANCIAL INSTRUMENTS

Financial assets and liabilities

Financial assets 2015 2014Loans and receivables £’000 £’000

Cash and short-term deposits 57 280

Financial liabilities 2015 2014Other financial liabilities at amortised cost £’000 £’000

Trade and other payables 3,928 1,685

60 days to 0 to 60 days 12 months 1 to 2 years 2 to 5 years 2015 2015 2015 2015Maturity of financial liabilities £’000 £’000 £’000 £’000

Trade and other payables 3,928 - - -

2014 2014 2014 2014 £’000 £’000 £’000 £’000

Trade and other payables 1,685 - - -

Fair valuesThe fair values of financial assets and financial liabilities are not materially different to their carrying values in the financial statements.



9. SHARE CAPITAL

Issued and fully paid Par value Number £’000

At 1 January 2014 25 pence 12,799,365 3,200Exercise of warrants 25 pence 999,277 250

At 31 December 2014 25 pence 13,798,642 3,450

At 31 December 2015 25 pence 13,798,642 3,450

The Company had warrants as at 31 December 2013 outstanding over 999,277 ordinary shares of 25 pence each with a subscription price of 25 pence per share. During the previous year all of these warrants were exercised for a total subscription price of £249,819. On 31 December 2015 the Company had 1,787,948 (2014: 264,913) ordinary shares held in treasury.

During the year the Group operated approved share options scheme and management incentive scheme.

All the options under approved share options scheme expired during the year. The number of outstanding options under approved share options scheme as at 31 December 2014 was 400 which expired during the year. The exercise price of these options was £36.00 per share. At 31 December 2015 there were no options outstanding over ordinary shares under approved share options scheme.

The management incentive scheme (the “Scheme”) was adopted by the Board in January 2015. Each of the Company’s existing three Executive Directors along with six senior managers of the US Division participate in the Scheme. Awards under the Scheme take the form of share options granted over ordinary shares. Options are exercisable at an aggregate price of £1.295 per ordinary share. The Scheme includes vesting conditions under which all the options will vest in full, if on the end date which is 18 months from the date of grant of the option the average price per ordinary share over any continuous 30 day period from the date of grant (5th January 2015) to the end date (4th July 2016), is in excess of £2.25. The Scheme allows for a maximum number of options to be awarded of up to 10% of the Company’s shares in issue (13,798,642 shares). The Company has the discretion to decide the form and manner of settlement of awards under the Scheme when exercised by the participants.

Total number of awards issued under the scheme are 1,379,864. The number of ordinary shares that would have been issuable under the Scheme had all participants exercised their options on 31 December 2015 was nil based on the share price at that date of £1.785.

The fair value of awards under the Scheme was estimated at the date of grant using a binomial model and amounted to $35,000, of which $23,000 was charged as an expense during the year. The following table gives the assumptions used to value the awards made under the Scheme:

Scheme

Spot price £1.295Strike price £1.295Expected life of options 1.5 yearsRisk free rate 2%Historical volatility 20%Barrier price £2.25


During the previous year, each of the Company’s four Executive Directors exercised their share options in the management incentive scheme adopted by the Board in March 2011. There are no more outstanding share options under this Scheme. The gain on exercise of share options was compensated in shares and cash as shown in the table below:

Settlement in Settlement in Settlement Share price shares shares in cash Name of Director Date of exercise Pence Number £’000 £’000Carl Fry 14 May 2014 151 - - 331David Young 14 May 2014 151 - - 331Stephen Yapp 31 October 2014 116 144,042 184 162Joseph Golio 31 October 2014 116 91,045 116 57 235,087 300 881

During the year, the Company’s share price has ranged from 122.50 pence per share to 183.50 pence per share. At the year end the Company’s share price was 178.50 pence per share.

10. RESERVES

Merger reserveThis reserve represents the excess consideration received above the nominal value of share capital issued for the acquisition of subsidiary undertakings. There has been no movement on this reserve during the year or previous year.

Retained earningsRetained earnings records the profits generated by the Company after tax, dividends and transactions recognised directly within reserves. The movement in the retained earnings is shown in the Company’s statement of changes in equity on page 52.



11. CONTINGENT LIABILITIES AND COMMITMENTS

The Company has guaranteed the bank borrowings of its subsidiary undertakings, which at 31 December 2015 was £70,987 (2014: £33,827).

The Directors do not consider the fair value of the provision of the guarantees in respect of the bank borrowings of subsidiary companies to be material.

12. RELATED PARTY TRANSACTIONS

The Company provided intellectual property (IP) services to its 100% owned subsidiary ‘Air Fayre CA Inc.’. During the year, the amount of service provided amounted to £515,000.

At 31 December 2015, the Company had following payable balances with its subsidiaries:

2015 2014 Subsidiary £’000 £’000

Air Fayre Limited 2,408 1,685Watermark Group Services (UK) Limited 779 -

13. DIRECTORS’ AND KEY MANAGEMENT PERSONNEL EMOLUMENTS

The Directors and other key personnel received no remuneration or benefits directly from the Company. Directors and other key personnel are remunerated through the Company’s subsidiary undertakings. Details of directors’ emoluments have been provided in Note 18 of the consolidated financial statements.

14. ULTIMATE CONTROLLING PARTY

The Directors consider that there is no ultimate controlling party.


SHAREHOLDER INFORMATION

Registered office Building One, The Square, Southall Lane, Southall, Middlesex, UB2 5NH

Company registration number 01944667

Email address [email protected]

Website www.journeygroup.plc.uk

Registrars Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU

Auditors RSM UK Audit LLP, 25 Farringdon Street, London, EC4A 4AB

Bankers National Westminster Bank plc, RBS House, Brooklands Close, Sunbury on Thames, TW16 7DX

Stockbroker Nplus1 Singer Advisory LLP, One Bartholomew Lane, London, EC2N 2AX

Quick and easy share dealing serviceIf you want to sell your shares or purchase more, a service is available through Capita Share Dealing Services, where there is no need to pre-register or complete an application form. Go to www.capitadeal.com or call 0871 664 0445 (calls cost 10p per minute, including VAT plus network extras; lines open 8 a.m. to 4.30 p.m. Monday to Friday).

Shareholder enquiriesAll administrative enquiries relating to shareholdings, such as queries concerning dividend payments, notification of change of address or the loss of a share certificate, should be made to our registrars by telephone on 0871 664 0300 (calls cost 10p per minute, including VAT plus network extras; lines open 8.30 a.m. to 5.30 p.m. from Monday to Friday) or in writing to the address given above. Capita also operate a web-based enquiry service; please visit www.capitashareportal.com where you can view your shareholding and see a range of useful information.


Notice is hereby given that the Annual General Meeting of Journey Group plc (the “Company”) will be held at 6 Stratton Street, London W1J 8LD at 11a.m. on 17 May 2016 to consider and, if thought fit, pass the following resolutions. Resolutions 1 to 10 are Ordinary Resolutions and, for these to be passed, more than 50% of the votes cast must be in favour. Resolutions 11 and 12 are Special Resolutions and, for these resolutions to be passed, 75% of votes cast must be in favour.

ORDINARY BUSINESS

1) To receive and adopt the audited accounts for the year ended 31 December 2015 together with the reports of the directors and auditors of the Company therein.

2) To re-elect Stephen Yapp as a director of the Company.

3) To re-elect Graham Bird as a director of the Company.

4) To re-elect Alison Whittenbury as a director of the Company.

5) To re-elect Joseph Golio as a director of the Company.

6) To re-elect Dimitri Goulandris as a director of the Company.

7) To re-elect Christopher Mills as a director of the Company.

8) To reappoint RSM UK Audit LLP as auditors of the Company, to hold office until the conclusion of the next Annual General Meeting of the Company.

9) To authorise the directors of the Company to fix the auditors’ remuneration.

10) To generally and unconditionally authorise the directors to exercise all powers of the Company to allot shares and to grant rights to subscribe for or to convert any security into shares up to an aggregate nominal amount of £1,149,886.75 provided that this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2017, except that the Company may before such expiry make any offer or agreement which would or might require shares to be allotted or such rights to be granted after such expiry and the directors may allot shares or grant such rights in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired.

SPECIAL RESOLUTIONS

11) That, subject to the passing of resolution 11, the directors be empowered pursuant to section 570 of the Companies Act 2006 to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the general authority conferred on them pursuant to resolution 11 as if section 561 of the Act did not apply to any such allotment provided that such power shall be limited to:

a) the allotment of equity securities in connection with an offer of equity securities open for acceptance for a period fixed by the directors of the Company to the holders of ordinary shares on a fixed record date in proportion (or as nearly as practicable) to their respective holdings of ordinary shares (but subject to such exclusions or other arrangements as the directors of the Company may consider necessary or expedient to deal with any legal problems under or resulting from the application or apparent application of the laws of any territory or in connection with fractional entitlements or otherwise howsoever);

b) the allotment of equity securities, other than pursuant to sub-paragraph 11a) of this resolution, up to an aggregate nominal amount of £172,483.00, being approximately 5% of the issued share capital of the Company;

NOTICE OF ANNUAL GENERAL MEETING


Provided further that such power shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2017 save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities in pursuance of such offer or agreement as if the power conferred by this resolution had not expired.

a) Subject to paragraph (b) of this resolution, the Company be and is hereby granted general and unconditional authority (pursuant to section 701 of the Act) to make market purchases of its own shares on such terms and in such manner as the directors of the Company may from time to time determine.

b) That the authority conferred by paragraph (a) of this resolution shall:i. expire on the earlier of the day falling before the first anniversary of the date of passing of this

resolution and the date of the Annual General Meeting of the Company for the year 2017, but the Company may, if it agrees to purchase ordinary shares under this authority before it expires, complete the purchase wholly or partly after this authority expires;

ii. be limited to a maximum of 15% of issued share capital (excluding treasury shares) being 1,801,604 shares; and

iii. not permit the payment per ordinary share of more than 5% above the average of the middle market quotations for an ordinary share derived from the London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on which any purchase by the Company of ordinary shares is made.

c) That the minimum price which may be paid for any ordinary share is 25 pence.

d) That this authority shall only be capable of variation, revocation or renewal by the Company in general meeting.

On behalf of the Board Registered office: Building One, The Square Southall Lane Southall Middlesex UB2 5NH Alison Whittenbury Company Secretary Registered in England and Wales No. 0194466724 March 2016

12)


Notes

1) A shareholder is entitled to appoint another person as that shareholder’s proxy to exercise all or any of that shareholder’s rights to attend and to speak and vote at the AGM. A shareholder may appoint more than one proxy in relation to the AGM, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy does not need to be a shareholder of the Company. A proxy is legally required to vote in accordance with any voting instructions given by his appointing shareholder.

2) A personalised form of proxy for use in connection with the AGM is enclosed with the document of which this notice forms part. If you do not have a personalised form of proxy and believe that you should, please contact the Company’s registrars, Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. Completion and return of a form of proxy will not prevent a shareholder from attending and voting at the AGM. Addresses (including electronic addresses) in this document are included strictly for the purposes specified and not for any other purpose.

3) To appoint a proxy or proxies shareholders must complete: (a) a form of proxy, sign it and return it, together with the power of attorney or any other authority under which it is signed, or a notarially certified copy of such authority, to the Company’s registrars, Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU; or (b) a CREST Proxy Instruction (see note 7 below), in each case so that it is received no later than 11a.m. on 13 May 2016.

4) To direct your proxy how to vote on the resolutions mark the appropriate box on your proxy form with an ‘X’. To abstain from voting on a resolution, select the relevant ‘Vote Withheld’ box. A vote withheld is not a vote in law, which means that it will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

5) In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).

6) In the case of a member which is a company, your proxy form must be executed under its common seal or signed on its behalf by a duly authorised officer of the Company or an attorney for the Company.

7) CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the AGM and any adjournment(s) of the meeting by using the procedures described in the CREST Manual (available via http://www.euroclear.com/CREST). CREST Personal Members or other CREST sponsored members and those CREST members who have appointed any voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company’s agent (ID RA10) by the latest time for receipt of proxy appointments set out in paragraph 3 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

NOTICE OF ANNUAL GENERAL MEETING


CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed any voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as is necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

8) If you submit more than one valid proxy appointment, the appointment received last before the latest time of receipt of proxies will take precedence.

9) Only those shareholders included in the register of members of the Company at 6 p.m. on 13 May 2016 or, if the meeting is adjourned, in the register of members at 6 p.m. on the day which is two working days before the time for holding any adjourned meeting, will be entitled to attend and to vote at the AGM in respect of the number of shares registered in their names at that time. Changes to entries on the share register after the relevant deadline will be disregarded in determining the rights of any person to attend or vote at the AGM.

10) Copies of the directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office during normal business hours on any weekday (excluding Saturdays, Sundays and public holidays) until the end of the Annual General Meeting and will also be available for inspection at the place of the Annual General Meeting for at least 15 minutes before and during the Annual General Meeting.

11) As at 11a.m. on 23 March 2016 (being the last business day prior to the publication of this notice), the Company’s issued share capital comprised 13,798,642 ordinary shares of 25 pence each. Each ordinary share carries the right to one vote at a general meeting of the Company.


The notice of the Annual General Meeting of the Company to be held on 17 May 2016 is set out on pages 64 to 67. The following notes provide an explanation as to why the resolutions set out in the notice are to be put to shareholders.

Resolutions 1 to 11 are ordinary resolutions. These resolutions will be passed if more than 50% of the votes cast for or against are in favour.

Resolution 1 – Laying of accountsThe directors are required by the Companies Act 2006 to present to the shareholders of the Company at a general meeting the reports of the directors and auditors, and the audited accounts of the Company, for the year ended 31 December 2015.

Resolutions 2 to 7 – Re-election of directorsUnder the Company’s articles of association any director who was appointed by the Board or not re-elected at either of the last two annual general meetings before this meeting must retire, although they may offer themselves for re-election. Notwithstanding the provisions of the articles of association the directors have decided that they will all retire voluntarily and those wishing to serve again shall submit themselves for re- election.

Resolution 8 – Auditors’ appointmentThe Companies Act 2006 requires that auditors be appointed at each general meeting at which accounts are laid, to hold office until the next such meeting. This resolution seeks shareholder approval for the reappointment of RSM UK Audit LLP. The Audit Committee keeps under review the independence and objectivity of the external auditors, further information on which can be found in the annual report and financial statements on pages 17 and 18. After considering relevant information the Audit Committee recommended to the board of directors that RSM UK Audit LLP be reappointed.

Resolution 9 – Auditors’ remunerationThis resolution gives the directors the authority to determine the remuneration of the auditors for the audit work to be carried out by them in the next financial year. The amount of the remuneration paid to the auditors for the next financial year will be disclosed in the next audited accounts of the Company.

Resolution 10 – Authority to the directors to allot sharesThe Companies Act 2006 provides that the directors may only allot shares or grant rights to subscribe for or to convert any security into shares if authorised by shareholders to do so. This resolution will, if passed, authorise the directors to allot shares up to a maximum nominal amount of £1,149,886.75, which represents an amount which is approximately equal to one-third of the issued ordinary share capital of the Company as at 23 March 2016, the latest practicable date prior to the publication of the notice. As at that date, the Company had 1,787,948 treasury shares.

The authority will expire at the conclusion of the next Annual General Meeting of the Company. Passing this resolution will ensure that the directors continue to have the flexibility to act in the best interests of shareholders, when opportunities arise, by issuing new shares. There are no current plans to issue new shares except in connection with employee share schemes.

EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING


Resolutions 11 and 12 are special resolutions. These resolutions will be passed if not less than 75% of the votes cast for and against are in favour.

Resolution 11 – Disapplication of statutory pre-emption rightsThe Companies Act 2006 requires that, if the Company issues new shares, or grants rights to subscribe for or to convert any security into shares, for cash or sells any treasury shares, it must first offer them to existing shareholders in proportion to their current holdings. It is proposed that the directors be authorised to issue shares for cash and / or sell shares from treasury (if any are so held) up to an aggregate nominal amount of £172,483.00 (up to 689,932 new ordinary shares of 25 pence each) (representing approximately 5% of the Company’s issued share capital as at 23 March 2016, the latest practicable date prior to the publication of the notice) without offering them to shareholders first, and to modify statutory pre-emption rights to deal with legal, regulatory or practical problems that may arise on a rights or other pre-emptive offer or issue. If passed, this authority will expire at the same time as the authority to allot shares given pursuant to Resolution 10.

Resolution 12 – Purchase of own shares by the CompanyIf passed, this resolution will grant the Company authority to buy its own shares in the market. The resolution limits the number of shares that may be purchased to 15% of the Company’s issued share capital (excluding treasury shares) as at 23 March 2016, the latest practicable date prior to the publication of the notice. The price per ordinary share that the Company may pay is set at a minimum amount (excluding expenses) of 25 pence per ordinary share and a maximum amount (excluding expenses) of 5% over the average of the previous five days’ middle market prices.

The directors’ present intention is that shares purchased pursuant to this authority (to the extent statutory requirements are met and with an expectation that treasury shares held will not exceed 15% of the Company’s issued share capital) will be held in treasury for future cancellation, sale for cash, or transfer to an employee share scheme, although they may be cancelled immediately on repurchase in the light of circumstances at the time. The effect of any cancellation would be to reduce the number of shares in issue. For most purposes, while held in treasury, shares are treated as if they have been cancelled (for example, they carry no voting rights and do not rank for dividends).

Journey Group plcBuilding One The Square Southall Lane Middlesex UB2 5NH United Kingdom

Tel: +44 (0)20 8744 7080 Fax: +44 (0)20 8574 4991

www.journeygroup.plc.uk

annual report and financial statements 2015

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