REG - Trainline PLC - Final Results
03/05/2024 07:00
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RNS Number : 0930N Trainline PLC 03 May 2024
3 May 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Trainline plc
Results for the twelve months ended 29 February 2024
Strong growth from Europe's most downloaded rail app
FY2024 financial summary:
£m unless otherwise stated: FY2024 FY2023 % YoY
Net ticket sales(1) 5,295 4,323 +22%
Revenue 397 327 +21%
Adjusted EBITDA(2) 122 86 +42%
Operating profit 56 28 +101%
Adjusted basic earnings per share (pence)(3) 12.3p 7.7p +59%
Basic earnings per share (pence)(3) 7.3p 4.5p +61%
Operating free cash flow 91 8 n.m.
Financial highlights:
· Net ticket sales up 22% year on year (YoY) to £5.3 billion at
top end of previous guidance range, driving growth in revenue of 21% to £397
million, above previous guidance range
· Adjusted EBITDA up 42% to £122 million, 2.3% of net ticket
sales; operating profit up 101% to £56 million, driven by volume growth and
operating leverage
· Basic earnings per share of 7.3p up 61%; adjusted basic earnings
per share of 12.3p, up 59%
· Operating free cashflow up from £8 million to £91 million;
leverage ratio down from 1.2x to 0.5x adj. EBITDA
Strategic highlights:
· Strong growth in mobile app downloads, now Europe's most
downloaded rail app(4)
· Helping shift the UK rail market to digital tickets:
o Eticket penetration of industry ticket sales increased to 47% from 43% in
FY2023(5)
o Grown on-the-day bookings to 66% of UK Consumer transactions, while
Trainline's share of commuter travel segment increasing to 23% from 10%
pre-COVID
· International Consumer net ticket sales surpassed £1 billion,
driven by European markets with most widespread carrier competition:
o Combined growth across Spain and Italy of 43%(6)
o Domestic ticket sales in Spain more than doubled for two consecutive
years(7)
o Consumer awareness in Spain and Italy has more than doubled since brand
campaigns launched in both markets 18 and 24 months ago respectively(8)
o Enhancing customer engagement through our Mobile App - International
Consumer app share of transactions now 62%, including Italy now at 73%
Group guidance for FY2025:
· Net ticket sales YoY growth of between +8% and +12%
· Revenue YoY growth of between +7% and +11%
· Adjusted EBITDA of between 2.4% and 2.5% of net ticket sales
New share buyback programme announced:
· In line with Trainline's stated capital allocation framework, we
have announced a new £75 million buyback programme to commence upon
completion of existing programme
· £38 million of shares repurchased under existing £50 million
programme as at the end of April 2024
Jody Ford, CEO of Trainline said:
"New entrant carrier competition is revolutionising rail in Europe as more
customers benefit from greater choice, lower prices and the opportunity to
choose greener travel. We are becoming the aggregator of choice in the UK and
internationally and are delivering strong growth, particularly in those
markets liberalising fastest such as Spain.
"With four carrier brands competing across its high-speed rail network, we
have doubled domestic ticket sales in Spain for the second year running and
significantly grown our market share on the top routes. With new entrant
carrier competition set to ramp up in Italy, France and the UK in the coming
years, the opportunity grows to create a golden age of rail travel."
Presentation of results
There will be a live webcast presentation of the results to analysts and
investors at 09:00am BST today (3 May 2024). Please register to participate at
the Company's investor website:
https://www.trainlinegroup.com/investors/results-reports-presentations/full-year-webcast-fy2024/
(https://www.trainlinegroup.com/investors/results-reports-presentations/full-year-webcast-fy2024/)
The person responsible for arranging the release of this announcement on
behalf of Trainline is Martin McIntyre, Company Secretary.
Enquiries
For investor enquiries, Andrew Gillian investors@trainline.com
(mailto:investors@trainline.com)
For media enquiries, Hollie Conway press@trainline.com
(mailto:press@trainline.com)
Brunswick Group
Simone Selzer
trainline@brunswickgroup.com (mailto:trainline@brunswickgroup.com) / +44 207
404 5959
Footnotes:
1. Please refer to the Alternative Performance Measures note for
definition of net ticket sales. Net ticket sales in FY2024 included an extra
day of trading given 2024 was a leap year.
2. Adjusted EBITDA (earnings before interest, tax, depreciation and
amortisation) excludes share-based payment charges and exceptional items.
3. Please refer to Note 6 for definitions of adjusted basic earnings
per share, basic earnings per share and diluted earnings per share.
4. Based on number of app downloads in Europe, as of Feb 2024.
5. Eticket penetration is % of UK industry net ticket sales fulfilled
using a barcode read eticket and is a subset of online penetration.
6. Geographical split of growth in net ticket sales within
International Consumer based upon carrier location.
7. Spanish domestic sales reflects sales to customers with a Spanish
IP address.
8. Prompted brand awareness measured by YouGov via a monthly national
representative survey of two thousand respondents in each market.
Forward looking statements and other important information
This document is for informational purposes only and does not constitute an
offer or invitation for the sale or purchase of securities or any businesses
or assets described in it, nor should any recipients construe the information
contained in this document as legal, tax, regulatory, or financial or
accounting advice and are urged to consult with their own advisers in relation
to such matters. Nothing herein shall be taken as constituting investment
advice and it is not intended to provide, and must not be taken as, the basis
of any decision and should not be considered as a recommendation to acquire
any securities of Trainline.
This document contains forward looking statements, which are statements that
are not historical facts and that reflect Trainline's beliefs and expectations
with respect to future events and financial and operational performance. These
forward looking statements involve known and unknown risks, uncertainties,
assumptions, estimates and other factors, which may be beyond the control of
Trainline and which may cause actual results or performance to differ
materially from those expressed or implied from such forward-looking
statements. Nothing contained within this document is or should be relied
upon as a warranty, promise or representation, express or implied, as to the
future performance of Trainline or its business. Any historical information
contained in this statistical information is not indicative of future
performance. The information contained in this document speaks only as at the
date of this document and Trainline expressly disclaims any obligations or
undertaking to release any update of, or revisions to, any forward-looking
statements in this document.
FY2024 PERFORMANCE REVIEW
Group Overview
Group net ticket sales increased to £5.3 billion, 22% higher YoY, at the top
end of our previously stated guidance range of 17 to 22%. The drivers of net
ticket sales growth are provided for each business unit below.
Increased net ticket sales helped Group revenue grow 21% to £397 million,
above Trainline's previously guided range of between 15% to 20%. Gross profit
also grew by 21% to £305 million.
FY2024 Segmental performance
FY2024 FY2023 % YoY
Net ticket sales (£m)
UK Consumer 3,469 2,811 +23%
International Consumer 1,041 915 +14%
Trainline Solutions 785 597 +31%
Total Group 5,295 4,323 +22%
Revenue (£m)
UK Consumer 209 172 +21%
International Consumer 53 45 +17%
Trainline Solutions 135 110 +23%
Total Group 397 327 +21%
Gross profit (£m)
UK Consumer 145 122 +19%
International Consumer 36 30 +19%
Trainline Solutions 124 100 +24%
Total Group 305 252 +21%
FY2024 FY2023 YoY
Adjusted EBITDA (£m)
UK Consumer 86 71 14
International Consumer (17) (22) 5
Trainline Solutions 53 37 16
Total Group 122 86 36
Adjusted EBITDA increased £36 million or 42% YoY to £122 million, outpacing
net ticket sales and revenue growth, given the benefit of operating leverage
in both marketing and people related costs. Adjusted EBITDA was 2.31% of net
ticket sales, exceeding our previously stated guidance range of 2.15% to
2.25%, which primarily reflected better than expected revenue growth and cost
discipline.
Marketing costs of £67 million grew 4% as we acquired more customers and
continued to invest in our brand. This was partly offset by our decision
announced in May 2023 to pause brand marketing in France until carrier
competition becomes more widespread.
People-related and other administrative costs increased 14% to £116 million.
This included the full year impact from increasing our headcount in FY2023, as
well as higher systems costs associated with processing more transactions,
partly offset by AWS and other platform efficiency cost savings.
UK Consumer
Net ticket sales were £3.5 billion, 23% higher YoY. This reflected continued
rail market recovery, as well as the industry experiencing fewer strikes than
in the prior year (25 strike days(9) in FY2024 vs 30 in FY2023), which were
also less severe in their impact (estimated gross ticket sales(10) impact per
strike day of c.£4 million in FY2024 vs £5-6 million in FY2023).
Net ticket sales growth also reflected more people switching to digital
tickets - with industry eticket penetration at 47% of ticket sales in FY2024,
up from 43% in FY2023(5) - while long-distance and leisure travel remained
strong.
Revenue grew 21% YoY to £209 million. This was slightly slower than net
ticket sales given faster growth in commuter and on-the-day travel, which
generate relatively lower rates of revenue than longer-distance travel, partly
offset by our increased focus on non-commission revenue generation.
Gross profit grew 19% to £145 million. Adjusted EBITDA of £86 million was
£14 million higher.
International Consumer
Net ticket sales were £1.0 billion, 14% higher YoY. Growth was led by Spain
and Italy - markets where carrier competition is most widespread - with
combined net ticket sales(6) up 43% YoY as Trainline positions itself as the
aggregator of choice. Combined net ticket sales across France and Germany grew
3% YoY, reflecting Trainline's decision to pause brand marketing in France
until the arrival of more widespread carrier competition. Germany remains a
small part of the portfolio today and unattractive from an investment
perspective until we see improved commercial terms and the arrival of carrier
competition.
Growth was led by Trainline's mobile App, which now makes up 62% of
transactions in International Consumer (FY2023: 54%), while Web sales growth
was tempered by changes to the presentation of search engine results, as
outlined in Trainline's Half Year results in November.
Revenue was £53 million, growing 17% YoY. Revenue growth outpaced net ticket
sales, driven by higher non-commission revenues and further growth in foreign
travel sales. Foreign travel sales generate higher revenue as a percentage of
net ticket sales than domestic travel.
Gross profit increased 19% to £36 million. Adjusted EBITDA loss reduced to
-£17 million (vs -£22 million last year). Adjusted EBITDA on a pre-internal
transaction fee basis(11) was -£1 million (vs -£9 million last year), in
line with previously stated guidance that it would approach breakeven in
FY2024.
Trainline Solutions
Net ticket sales were £785 million, 31% higher than prior year, with a strong
performance from IT Carrier Solutions and business travel in the UK industry
continuing to recover from a lower base.
Revenue increased by 23% YoY to £135 million. Most of the revenue related to
an internal transaction fee paid by UK Consumer and International
Consumer(11).
Gross profit was £124 million, 24% higher YoY. Adjusted EBITDA was £53
million, £16 million higher YoY.
Operating profit
The Group reported operating profit of £56 million, up £28 million or
101%. Operating profit included:
· Depreciation and amortisation charges of £42 million, in line
with prior year (FY2023: £41 million)
· Share-based payment charges of £23 million, reflecting the costs
of our all-employee share incentive plan (FY2023: £17 million)
· Exceptional items of £2 million in relation to business
restructuring costs (no exceptional items in FY2023)
Profit after tax
Profit after tax was £34 million, up £13 million or 60% YoY. Profit after
tax reflected operating profit of £56 million, net finance charges of £7
million, and a tax charge of £14 million. The effective tax rate of 29% was
above the UK corporation tax rate primarily due to losses in overseas entities
that are not recognised for deferred tax.
Earnings per share (EPS)
Adjusted basic earnings per share was 12.3 pence vs 7.7 pence in FY2023.
Adjusted basic earnings per share adjusts for exceptional one-off items in the
period, any gains on the repurchase of convertible bonds, amortisation of
acquired intangibles, and share-based payment charges, together with the tax
impact of these items.
Basic earnings per share was 7.3 pence vs 4.5 pence in FY2023.
Operating free cash flow and net debt
Operating free cash flow was £91 million, up £83 million YoY. Operating free
cashflow included adjusted EBITDA of £122 million and a working capital
inflow of £10 million, reflecting Trainline's negative working capital cycle.
This was partly offset by capital expenditure of £41 million, reflecting
ongoing investment in product and technology.
Net debt was £64 million at the end of February 2024, down from £100 million
in February 2023. The Group's leverage ratio was 0.5x adj. EBITDA (Feb-23:
1.2x; Feb-22: 2.3x). The reduction in net debt primarily reflected the
generation of positive operating free cash flow in FY2024, partly offset by
£28 million of share repurchases as at the end of February 2024.
Capital allocation framework and share buyback programme
This year, we communicated our capital allocation framework, which is as
follows:
· Trainline's primary use of capital is to invest behind its
strategic priorities - including enhancing the customer experience and
building demand for rail travel - to drive organic growth and deliver
attractive and sustainable rates of return.
· The Group may supplement that with inorganic investment, should
it help accelerate delivery of the Group's strategic growth priorities.
· Trainline will also continue to manage debt leverage, including
retaining a prudent and appropriate level of liquidity headroom should
unforeseen circumstances arise.
· Any surplus capital thereafter may be returned to shareholders,
including through the repurchase of Trainline's shares.
At the same time as communicating the above framework, Trainline announced the
launch of a share buyback programme of up to £50 million, to be conducted
over the subsequent 12 months. As at the end of April 2024, the Company had
bought back £38 million of its own shares under the programme.
Trainline has today announced a new share buyback programme of up to £75
million. The new programme will commence upon completion of the existing
programme and is to run over the subsequent 12 month period.
Trainline attained shareholder approval during FY2024 for a capital reduction
of the Company's share premium account. This provided the Company with
additional distributable reserves to make further distributions, as and when
considered appropriate by the Board.
Outlook and market guidance
We continue to enjoy significant growth opportunities, including increasing
eticket penetration in the UK and new entrant carrier competition increasing
the need for a market aggregator for European rail.
Following a positive start to the year, in FY2025 Trainline expects to
generate:
· Net ticket sales YoY growth of between +8% and +12%
· Revenue YoY growth of between +7% and +11%
· Adjusted EBITDA of between 2.4% and 2.5% of net ticket sales
Our growth expectations are despite headwinds from ongoing industrial action
in the UK, as well as Transport for London (TFL's) planned expansion of their
contactless travel zone to a further 53 stations in FY2025.
FY2024 PROGRESS AGAINST OUR STRATEGIC PRIORITIES
To achieve our mission to make rail and coach travel easier for customers in
all our markets, we invest behind four strategic priorities for long-term
growth: enhancing the customer experience, building demand, increasing
customer lifetime value, and growing Trainline Solutions. In FY2024, we
continued to make good progress against these long-term strategic growth
priorities.
UK Consumer
Enhancing the customer experience
The UK rail market recovered to an estimated £10.6 billion in passenger
revenues in FY2024, up from £8.9bn in the prior year. We aim to continue
growing the market by unlocking value and removing friction for customers
through our 4.9* rated mobile App(12). We have launched an improved price
prediction feature, leveraging predictive analytics to communicate to
customers when advance fare rises will happen and how many tickets are likely
to be left at the prevailing price. We improved our Ticket Alerts
functionality, which flags to customers when tickets become available for
their chosen route at the cheapest price. Our SplitSave proposition is now
better than ever and the number of routes where SplitSave is available is now
above 80%, with an advertised average saving of £13 per trip. Finally, with
growing carrier competition to incumbent carriers from open access operators
like Lumo, we have enhanced our fare presentation so customers can easily
compare times and fares.
Our investment in customer experience is helping shift more people to digital
channels. Industry sales through online channels grew to 55%, up from 53% in
the prior year. Within that, industry eticket sales increased to 47% in
FY2024, up from 43% in FY2023(5). However, there remains considerable
headroom for growth. Tickets bought offline represented around £3 billion of
total ticket sales in FY2024, most of which are estimated to be short-distance
and commute journeys. Trainline has therefore continued to prime its mobile
App to better serve those customers, including the recent launch of Best Price
Guarantee, refunding the difference if a customer finds the same on-the-day
ticket cheaper elsewhere. We also continued to scale digital season tickets,
with our digital season customers exhibiting more than double the retention
levels of our overall customer base in the UK. This has helped Trainline to
grow its share of commuter segment to 23%, from 10% pre-COVID.
Building demand
We continued to build demand for our products and services, helping drive up
active customers by 13% YoY. Under our "great journeys start with Trainline"
brand campaign, we continue to tell customers how they can save 35% on average
when booking a journey through Trainline. This included a new "Spliticus"
campaign, highlighting to customers how they can save £13 per trip through
SplitSave. The messaging also highlighted the convenience of digital
ticketing, including digital season tickets, focusing on regions where digital
season tickets have been enabled.
Separately, our viral "Trainline Wrapped" campaign gave every customer a
personalised view of their sustainability journey, along with a clear and
measurable understanding of the impact of their travel choices on the
environment. This served to highlight the environmental benefits of rail
travel, reflecting our core purpose to encourage greener travel choices.
Increasing customer lifetime value
As we continue growing our customer base, we are also increasing the frequency
with which those customers transact with us. Monthly active customer
transaction frequency has increased to 2.8x a month, from 2.4x in FY2022 and
2.6x in FY2023. This reflects our focus on commute and short-distance travel,
with on-the-day bookings now making up 66% of all of UK Consumer's
transactions (58% in FY2022; 62% in FY2023). In addition, our 4.9* rated
Mobile App(12) now represents 91% of our overall transactions in the UK, with
new App customers transacting c.1.5 times more often than Web customers.
Having significantly scaled net ticket sales over the past few years, we are
nurturing ancillary revenue streams to drive faster revenue growth. We are
leveraging partnerships with the likes of Booking.com (hotels), Just Park
(parking), and Karhoo (taxis). In addition, we launched a new Flexcover
insurance product that allows customers to cancel plans for any reason and get
fully refunded. Finally, we are beginning to enhance native advert placements
within our sales channels to optimise advertising revenues.
Growing Trainline Solutions
We have taken further steps to support our travel partners, leveraging the
strength of our platform.
For B2B travel, we recently integrated our business booking tool within the
Consumer App, which will allow customers to book business travel in the same
seamless way they already do for leisure and commuter travel. The integrated
tool allows customers to easily switch between their personal and business
accounts, while keeping their bookings separate.
We are actively engaging in several new tender processes from carriers for
online retailing solutions. This follows the UK Government's cancellation of
plans in December 2023 to create its own centralised retail app and website,
originally intended to replace the rail carriers' online retailing channels.
In addition, we recently added more customer experience features for white
label carrier partners, including push notifications and bike reservations.
Within Platform One, we are harnessing advanced machine learning within the
platform to deliver data-driven features and enhanced personalisation. This
year, we set up an internal AI Labs team to develop our own proprietary AI
Models. Building on Trainline's unique data opportunity, the aim is to use
generative AI to solve more complex problems, in turn creating smarter and
more personalised experiences across the whole user journey. We are taking a
privacy-first approach, experimenting with in-production large language models
(LLMs) within our own domain, rather than feeding our proprietary data into
external LLMs.
International Consumer
The c.€55 billion UK and European rail market provides significant headroom
for Trainline's future growth. While we operate across more than 40 countries
(including the UK), we have refined our international investment plan to
accelerate growth in the rail markets where we have the strongest customer
proposition today:
· Domestic markets with more widespread carrier competition,
primarily Spain and Italy. These rail markets together are worth c.€6
billion. Carrier competition significantly increases value and choice for
customers; by positioning Trainline as the aggregator of choice, we are well
placed to scale our international business over the medium term.
· Foreign travel, representing global customers from the US, UK and
the rest of the world, as well as some intra-EU cross border travel. It is
worth over €4 billion, and is typically higher margin business for
Trainline, generating a double-digit percentage revenue take-rate (revenue
generated as a percentage of net ticket sales).
We are making strong progress in our priority markets, which now make up three
of our top 10 routes globally (Barcelona-Madrid, London-Paris, Rome-Milan).
This reflects the strong progress we are making in positioning ourselves as
the aggregator of choice.
Enhancing the customer experience
We have continued to launch new features to remove friction and unlock value
for customers when booking rail travel. We recently overhauled our fare
presentation within our mobile App, providing clear and simple information
about each carrier and carriage class respectively. This helps customers
compare choices, particularly on routes with more than one carrier. We also
launched best price guarantee in Italy, Spain and France, where we promise to
refund the difference if a customer finds the same ticket cheaper elsewhere.
In Italy, we now find and automatically apply carrier promo codes for
customers . We have also made it easier for foreign travel customers to
upgrade to first class within the booking flow.
Building demand
We made strong headway growing consumer awareness in Italy and Spain, with
consumer awareness more than doubling since we launched brand campaigns in
both respective markets(6). In Italy, prompted brand awareness has increased
from 19% to 40% in 24 months, following the launch of our first nationwide
brand campaign in spring 2022. In Spain, prompted brand awareness has
increased from 8% to 21% in 18 months, following the launch of our Spanish
brand campaign in summer 2022. This has helped drive strong growth in app
downloads in Europe, and in Italy we became the second most downloaded travel
app after Booking.com.
Web sales growth slowed during the year, with the impact most pronounced in
foreign travel. There was more competition from carriers within keyword
auctions following a relatively benign period last year. In addition, there
were changes in the presentation of search engine results, with Google now
including trains within its travel module, as discussed at our Half Year
results. We have somewhat mitigated this impact over the last six months by
scaling our presence in the travel module to more than 3,000 routes across our
core markets in Europe.
Increasing customer lifetime value
As we strengthen our position as aggregator of choice in markets with carrier
competition, we are deepening our relationship with our customers. A key
example has been our success in encouraging more customers to download and use
our mobile App, given its superior user experience and transaction frequency
benefits. 62% of all customer transactions within International Consumer came
through our App in FY2024.
This is particularly the case in Italy. Our App share of overall transactions
increased to 73%, up from 62% a year ago and 51% two years ago. Given App
customers transact almost three times more often than Web customers in Italy,
this has helped increase overall transaction frequency. On average, our
monthly active customers now transact 2.2 times per month (FY2023 2.1x,
FY2022: 1.9x).
While positioning ourselves as the aggregator, we are placing greater focus on
monetisation. This includes growing foreign travel sales, which generate a
double-digit revenue take rate, and introducing ancillary products into the
booking flow, including hotels in partnership with Booking.com. This has
helped grow the underlying revenue we generate from ticket sales from 6.4% to
6.6%.
Spain case study
We increasingly believe we occupy a unique position that we can leverage to
become the aggregator of choice in Europe, given our:
· Clear remit to aggregate carriers across multiple geographies
· Scale and expertise to invest in new markets
· Scalable tech platform optimised for rail travel
Spain has quickly become the most competitive high speed carrier market in
Europe. Given the transformation of its rail market, it serves as a useful
template for what increased carrier competition might look like in other
European markets, such as Italy and France. Honing our aggregation playbook in
Spain is giving us a head start for when other rail markets liberalise.
Since 2021, Spain has gone from having one long-distance carrier, the national
incumbent Renfe, to four carrier brands nationwide. Carrier competition in
Spain is benefiting customers, who now enjoy significantly more choice and
lower prices. Renfe Avlo and Iryo both operate on six high speed routes, while
Ouigo operates on three(13). On the three high speed routes where all four
carrier brands compete (Madrid-Barcelona, Madrid-Valencia, Madrid-Alicante),
average fares have reduced by 50% vs 2019, precipitating a 70% increase in
passenger numbers.
However, greater market fragmentation also means greater complexity for
customers, particularly as the different carriers do not provide competitor
inventory on their respective retailing channels. This therefore strengthens
the need for a market aggregator, where customers can book the best value and
most convenient rail ticket for their specific journey.
Trainline has quickly positioned itself as the market aggregator for
high-speed rail, both in terms of marketing - more than doubling brand
awareness in 18 months(6) - and product innovation, deeply integrating with
the different carrier APIs while localising features within the App for the
Spanish market. In addition, we have launched TopCombo, a new product
proposition that allows customers to seamlessly stitch together different
carriers for multi-leg and return journeys. This helps customers optimise the
booking for price and convenience, while also increasing the opportunity for
new entrant carriers to grow market share.
By positioning ourselves as the market aggregator, Trainline has grown
significantly on liberalised routes, taking material share. By the end of
2023, Trainline's share of the top five high speed routes had increased to
8-13%, compared to c1% share across Spain in 2019.
Given our focus on aggregated routes, Spanish domestic net ticket sales have
doubled for two consecutive years(7). It has also driven a more engaged
customer base, with repeat customers making up 44% of domestic sales, up from
34% last year.
Today, Spain is the only market in Europe where four carrier brands compete on
the same long-distance routes. However, that is set to change, first in Italy
and thereafter in France.
Two long-distance carriers currently compete in the c.€4 billion domestic
Italian market. However, this is due to increase to four over the next couple
of years. New entrant carrier Longitude Arenaways is set to arrive in
late-2025, with plans already submitted to run one international and six
domestic intercity routes. SNCF's low cost carrier brand Ouigo is set to
follow from 2026.
In the c.€9 billion domestic French market, carrier competition is expected
to build over time. Today carrier competition is limited, but on routes
where there are new entrants, we see strong demand for market aggregation.
Paris-Lyon is the most notable example, where SNCF, Ouigo and Trenitalia have
competed since late 2021. Trainline's net ticket sales grew 42% this year on
the route, similar to the combined growth rate of Spain and Italy. Renfe are
due to launch a service between Paris-Lyon in H2 FY2025, increasing the number
of carrier brands on that route to four.
Carrier competition is set to arrive on London-Paris, potentially as early as
2025, with Evolyn announcing plans to launch a competitor service to Eurostar.
Similarly, Virgin Trains and other operators are reported to be planning to
launch their own service too. Thereafter, new entrant carriers Le Train and
Kevin Speed are planning to launch services across France from 2026 and 2028
respectively.
As has been the case in Spain, increasing the number of carrier brands running
services across Italy and France should significantly increase the competitive
dynamic of their rail markets, in turn catalysing the need for a market
aggregator like Trainline.
ENVIRONMENTAL SUSTAINABILITY
Our purpose at Trainline is to empower a greener way to travel. Transport is
the largest GHG emitting sector in the UK, with the energy sector having
reduced its emissions over recent years. Rail offers travellers a greener
alternative, generating 87% less CO2 emissions per passenger/KM than flying
and 67% less than driving(14).
We launched new features on our Mobile App and on Web to encourage modal
shift, including "Your sustainability story", which informs and educates
customers on their emission savings vs other forms of transport. At the end of
the year, "Your Year on Trains" gave every customer a personalised view of
their sustainability journey, along with a clear and measurable understanding
of the impact of their travel choices on the environment.
Last year, we launched the 'I Came By Train' campaign, which aims to grow the
public's awareness of the relative benefits of train travel and inspire pride
in those that take positive action. Having gained strong early momentum with
industry and government stakeholders, this year we followed up with a new
consumer campaign that celebrates all the heroes who travel by train. The
campaign also analysed 250,000 UK rail routes to create the 'Reasonable by
Rail' database, which shows when trains beat planes or cars for speed and
savings. This data has been made available to government and industry
stakeholders and is also used to power Trainline's Super Routes feature.
Trainline became one of the first 100 UK-based companies to have our net zero
targets officially verified by the Science Based Targets initiative (SBTi),
the global body enabling businesses to set ambitious emissions reduction
targets in line with climate science. The Company's verified target
commitments can be found on Trainline's Group website.
LEGAL, REGULATORY & POLICY DEVELOPMENTS
We have seen encouraging legal, regulatory and policy developments in the UK
and Europe recently.
In December 2023, the UK Government Department for Transport (DfT) withdrew
proposals to create a new Great British Railways ticket retailing website and
app. The proposals were originally outlined by the DfT in May 2021, as part
of the Williams-Shapps Plan for UK Rail white paper. The UK Government's
broader plans for rail set out in the draft Rail Reform Bill of February 2024
are undergoing parliamentary scrutiny, however they are unlikely to become
legislation before the upcoming General Election. In April 2024, the Labour
party launched their rail policy at an event held at Trainline's London
offices. Labour outlined plans to bring private rail operators back under
public ownership over time and create a centralised body, Great British
Railways. However, they have confirmed to Trainline that they have no plans
to revive the current Government's previous proposal for a national
retailing website and app. They also announced plans to accelerate the roll
out of key customer innovations, including automated Delay Repay and digital
season tickets.
In January 2024, the European Commission formally accepted commitments from
Renfe to enhance competition in online ticket sales by agreeing to provide
content, feature and fare parity to third party retailers with its own online
retail channels. The Commitments follow a decision by the European Commission
last year to launch a formal investigation into whether the carrier had abused
its market dominant position.
In March 2024, the European Commission opened proceedings against Alphabet to
assess compliance under the new Digital Markets Act, specifically
investigating whether its display of Google services within search results may
lead to self-preferencing. The Commission stated it is concerned that
Alphabet's current compliance measures may not ensure that third-party
services featuring on Google's search results page are treated in a fair and
non-discriminatory manner in comparison with Google's own services. This is an
important step to ensure accountability for large companies like Google and
secure long term market stability and contestability across Europe.
Footnotes:
9. Strike days include planned strike days that were cancelled only
shortly beforehand, therefore still resulted in significant industry
disruption.
10. Gross ticket sales are gross value of ticket sales to customers.
Please refer to the Alternative Performance Measures note for definition of
net ticket sales.
11. In September 2022, Trainline announced revisions to its segmentation
reporting. This included the introduction of an internal fee per transaction
payable by UK Consumer and International Consumer businesses to Trainline
Solutions in order to access Platform One. The transaction fee is reflected as
contra revenue to UK Consumer and International Consumer within segmental
reporting. This charge is eliminated on consolidation of the Group's results
and does not form part of total Group revenues.
12. iOS rating as at 22/04/24.
13. Carriers that have launched services on Spanish high-speed rail routes
as at 29(th) February 2024.
14. Emissions per passenger/km as per
https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2021
(https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2021)
Consolidated income statement
For the year ended 29 February 2024
Notes
2024 2023
£'000 £'000
Continuing operations
Net ticket sales(1) 5,295,072 4,323,298
Revenue 396,718 327,147
Cost of sales (91,433) (74,923)
Gross profit 305,285 252,224
Administrative expenses (249,706) (224,585)
Adjusted EBITDA(1) 122,133 86,098
Depreciation and amortisation 7,8 (41,662) (41,167)
Share-based payment charges (22,629) (17,292)
Exceptional items 3 (2,263) -
Operating profit 55,579 27,639
Finance income 4 2,745 4,721
Finance costs 4 (10,209) (10,270)
Net finance costs 4 (7,464) (5,549)
Profit before tax 48,115 22,090
Income tax expense 5 (14,129) (873)
Profit after tax 33,986 21,217
Earnings per share (pence)
Basic earnings per ordinary share 6 7.28p 4.53p
Diluted earnings per ordinary share 6 7.09p 4.48p
( )
(1) Non-GAAP measure - see alternative performance measures section on page
45.
Consolidated statement of comprehensive income
For the year ended 29 February 2024
Notes 2024 2023
£'000 £'000
Profit after tax 33,986 21,217
Items that may be reclassified to the income statement:
Re-measurements of defined benefit liability 17 16
Foreign exchange movement (1,096) 1,873
Other comprehensive (loss)/income, net of tax (1,079) 1,889
Total comprehensive income 32,907 23,106
Consolidated balance sheet
At 29 February 2024
Notes
2024 2023
£'000 £'000
Non-current assets
Intangible assets 7 70,350 66,827
Goodwill 7 418,527 420,710
Property, plant and equipment 8 17,948 21,189
Deferred tax asset 5 24,853 26,950
531,678 535,676
Current assets
Cash and cash equivalents 91,085 57,337
Trade and other receivables 59,170 60,158
150,255 117,495
Current liabilities
Trade and other payables (212,766) (200,202)
Loan and borrowings 9 (5,833) (4,891)
Current tax payable 5 (3,201) (7,642)
(221,800) (212,735)
Net current liabilities (71,545) (95,240)
Total assets less current liabilities 460,133 440,436
Non-current liabilities
Loan and borrowings 9 (147,280) (149,014)
Provisions (837) (778)
(148,117) (149,792)
Net assets 312,016 290,644
Equity
Share capital 10 4,710 4,807
Share premium 10 - 1,198,703
Foreign exchange reserve 10 2,232 3,328
Other reserves 10 (1,112,724) (1,128,978)
Retained earnings 10 1,417,798 212,784
Total equity 312,016 290,644
Consolidated statement of changes in equity
For the year ended 29 February 2024
Share capital Share premium Other reserves Foreign exchange reserve Retained earnings Total equity
Notes
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 March 2023 4,807 1,198,703 (1,128,978) 3,328 212,784 290,644
Profit after tax - - - - 33,986 33,986
Other comprehensive (loss)/income - - - (1,096) 17 (1,079)
Acquisition of Treasury Shares - - (7,500) - - (7,500)
Share-based payment charges(1) - - 23,823 - - 23,823
Purchase of own shares for cancellation 10 (97) - 97 - (27,858) (27,858)
Capital Reduction 10 - (1,198,703) - - 1,198,703 -
Transfer between reserves(1) 10 - - (166) - 166 -
Balance as at 29 February 2024 4,710 - (1,112,724) 2,232 1,417,798 312,016
( )
For the year ended 28 February 2023
Share capital Share premium Other reserves Foreign exchange reserve Retained earnings Total equity
Notes
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 March 2022 4,807 1,198,703 (1,136,661) 1,455 191,189 259,493
Profit after tax - - - - 21,217 21,217
Other comprehensive income - - - 1,873 16 1,889
Acquisition of Treasury Shares - - (7,947) - - (7,947)
Share-based payment charges(1) - - 15,992 - - 15,992
Transfer between reserves(1) 10 - - (362) - 362 -
Balance as at 28 February 2023 4,807 1,198,703 (1,128,978) 3,328 212,784 290,644
( )
( )
(1) Share-based payment charges noted here are net of tax, share issues and
N.I charge. Transfer between reserves relates to the difference between the
share price at grant date of the exercised shares and the actual cost of the
treasury shares purchased to fulfil the share-based payment.
Consolidated statement of cash flow
For the year ended 29 February 2024
Notes 2024 2023
£'000 £'000
Cash flows from operating activities
Profit before tax 48,115 22,090
Adjustments for:
Depreciation and amortisation 7, 8 41,662 41,167
Net finance costs(1) 4 7,464 5,549
Share-based payment charges 22,629 17,292
119,870 86,098
Changes in working capital:
Trade and other receivables 970 (13,986)
Trade and other payables 8,945 (29,097)
Cash generated from operating activities 129,785 43,015
Taxes paid (10,677) (4,135)
Interest received(2) 2,621 726
Net cash generated from operating activities 121,729 39,606
Cash flows from investing activities
Payments for intangible assets (37,030) (32,811)
Payments for acquisition of subsidiary entities, net of cash acquired (866) -
Payments for property, plant and equipment (2,853) (2,408)
Net cash flow from investing activities (40,749) (35,219)
Cash flows from financing activities
Purchase of treasury shares (7,500) (7,947)
Purchase of own shares for cancellation (27,858) -
Proceeds from revolving credit facility 90,000 105,000
Repayment of revolving credit facility and other borrowings (90,000) (70,000)
Issue costs and fees (58) (3,251)
Buyback of convertible bonds - (28,189)
Payments of lease liabilities (4,013) (4,501)
Payment of interest on lease liabilities (215) (440)
Interest paid (5,925) (6,410)
Net cash flow from financing activities (45,569) (15,738)
Net increase/(decrease) in cash and cash equivalents 35,411 (11,351)
Cash and cash equivalents at beginning of the year 57,337 68,496
Effect of exchange rate changes on cash (1,663) 192
Closing cash and cash equivalents 91,085 57,337
(1)Including gain on convertible bond buyback as disclosed in Notes 4 and 9
for FY2023.
(2)In the comparative period presented in the statement of cash flows we have
reclassified the interest received amounts from Financing to Operating which
more appropriately reflects their nature. The amounts were immaterial in all
periods presented.
Notes
(Forming part of the Financial Statements)
1. Significant accounting policies
a) General information
Trainline plc (the "Company") and subsidiaries controlled by the Company
(together, the "Group") are the leading independent rail and coach travel
platform selling rail and coach tickets worldwide. The Company is publicly
listed on the London Stock Exchange ("LSE") and is incorporated and domiciled
in the United Kingdom. The Company's registered address is 120 Holborn, London
EC1N 2TD.
The Group Financial Statements for the year ended 29 February 2024 were
approved by the Directors on 3 May 2024.
The Group Financial Statements of Trainline plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
The accounting policies set out in the sections below have, unless otherwise
stated, been applied consistently to all periods presented within the
Financial Statements and have been applied consistently by all subsidiaries.
b) Basis of consolidation
The Group Financial Statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group").
The Financial Statements presented herein is for the year from 1 March 2023 to
29 February 2024.
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The Financial Statements of subsidiaries
are included in the Consolidated Financial Statements from the date on which
control commences until the date on which control ceases. Control is achieved
when the Group (i) has power over the investee; (ii) is exposed, or has rights
to variable returns from its involvement with the investee; and (iii) has the
ability to use its power to affect the returns.
(ii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated.
c) Basis of measurement
The Group and Parent Company Financial Statements are prepared on the
historical cost basis except for the following:
• Financial instruments at fair value through the income statement
are measured at fair value.
Notes (continued)
1. Significant accounting policies (continued)
d) Functional and presentation currency
The Financial Statements are presented in pound sterling (£GBP), which is the
functional currency of the Parent Company. All amounts have been rounded to
the nearest thousand, unless otherwise indicated.
e) Going concern
The Consolidated Financial Statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet its liabilities as
they fall due over at least the next 12 months from the date of the approval
of these Financial Statements (the 'going concern assessment period')
including consideration of the covenants associated with the Group's revolving
credit facility at the next covenant test dates on 31 August 2024 and 28
February 2025, being the two relevant dates in this period.
The UK Corporate Governance Code requires the Board to assess and report on
the prospects of the Group and whether the business is a going concern. The
Directors have undertaken a rigorous assessment of going concern and
liquidity, taking into account financial forecasts and any key uncertainties
and sensitivities.
Positive adjusted EBITDA of £122.1 million was earned in the period (FY2023:
£86.1 million) and net debt at 29 February 2024 was £63.9 million (FY2023:
£100.4 million) resulting in a reduction in Net debt/adjusted EBITDA leverage
ratio from 1.17 at 28 February 2023 to 0.52 at 29 February 2024. As at 29
February 2024 the Group was in a net current liability position of £71.5
million driven by the negative working capital cycle whereby ticket sales
amounts are received before amounts due are paid by carriers (FY2023: £95.2
million net current liability position). The Group has in place bank
guarantees of £183.4 million (FY2023: £72.2 million) that can be utilised to
settle trade creditor balances. Bank guarantees are issued by lenders under
the Group's revolving credit facility and therefore reduce the Group's
remaining available facility. Despite the net current liability position, the
Group has access to £81.6 million additional funds under its revolving credit
facility (FY2023: £192.8 million). As such the Group has sufficient liquidity
to cover the net current liability position. The existing revolving credit
facility has an initial maturity date of November 2025 however the facility
offers optionality of two 1-year extensions after the initial maturity date.
The Directors performed a detailed going concern review using Board approved
forecasts (the 'base case') as well as considering two severe but plausible
downside scenarios in isolation, without any mitigations, and their potential
impact on the Group's forecast. The severe but plausible downside scenarios
modelled were: (1) a 15% reduction in forecast Group adjusted EBITDA caused by
a circa 9% reduction in UK revenue, or a circa 12% increase in Group marketing
and other administrative expenses; and (2) a 1% increase above the forecast
SONIA interest rate benchmark.
In the base case and both severe but plausible downside scenarios the Group is
able to continue in operation and meet its liabilities as they fall due, with
significant excess liquidity. This includes complying with the net debt to
adjusted EBITDA and the interest coverage covenant requirements at the 31
August 2024 and 28 February 2025 test dates.
Following the assessment described above, the Directors are confident that the
Group has adequate resources to continue to meet its liabilities as they fall
due and to remain in operation for the going concern assessment period. The
Board has therefore continued to adopt the going concern basis in preparing
the Consolidated Financial Statements.
Notes (continued)
1. Significant accounting policies (continued)
f) Cost of sales
Cost of sales include costs in relation to the provision of rail tickets,
industry system costs, ancillary services, settlement and fulfilment costs and
are recognised as incurred (at the point of sale).
g) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group companies at exchange rates applicable on the dates of the
transactions.
Monetary assets and liabilities denominated in foreign currencies are
translated to the functional currency exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated to the functional currency at the exchange
rate when the fair value was determined. Foreign currency differences arising
on translation are generally recognised in the income statement. Non-monetary
items that are measured based on historical cost in foreign currency are not
re-translated.
For the purpose of presenting the Consolidated Financial Statements, the
assets and liabilities of entities with a functional currency other than
sterling are expressed in sterling using exchange rates prevailing at the
reporting period date. Income and expense items and cash flows are translated
at the average exchange rates for each month and exchange differences arising
are recognised directly in other comprehensive income.
h) Use of judgements and estimates
In preparing these Financial Statements, management has made judgements,
estimates and assumptions that affect the application of the accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Estimates and underlying assumptions are reviewed on an ongoing basis. Actual
results may differ from these estimates. Revision to estimates are recognised
prospectively.
Notes (continued)
1. Significant accounting policies (continued)
Key Source of Estimation Uncertainty
The following estimate is deemed significant as it has been identified by
Management as one which is subject to a high degree of estimation uncertainty:
· Note 7 - Goodwill impairment test: key assumptions underlying
recoverable amounts
The Group tests goodwill for impairment annually by comparing the carrying
amount against the recoverable amount. The recoverable amount is the higher of
the fair value less costs of disposal and value in use. There is inherent
estimation uncertainty in estimating the future cash flows and the time period
over which they will occur. There is also estimation uncertainty in arriving
at an appropriate discount rate to apply to the cash flows as well as an
appropriate terminal growth rate. Each of these assumptions have an impact on
the overall value of cash flows expected and therefore the headroom between
the cash flows and carrying values of the cash generating units. An
unfavourable change in any of these assumptions could result in a significant
change in headroom. As such each of these constitute estimates in the
assessment of the recoverable amount of goodwill in respect of both the UK
consumer and International consumer cash-generating units ("CGUs"). Details of
the impact of reasonably possible changes to the future cash flows and timing
of these are evaluated in Note 7 to the Financial Statements.
Critical Accounting Judgements
Critical accounting judgements are those that the Group has made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the Financial Statements:
· Note 7 - Capitalisation of internal software development costs
The Group capitalises internal costs directly attributable to the development
of intangible assets. We consider this a critical judgement given the
application of IAS 38 involves the assessment of several different criteria
that can be subjective and/or complex in determining whether the costs meet
the threshold for capitalisation. During the year the Group has capitalised
internal development costs amounting to £37.5 million (FY2023: £32.2
million). While the Group makes judgements in determining the basis for
recognition of these internally developed assets, these judgements are formed
in the context of robust systems and controls.
i) New standards and interpretations adopted
A number of new standards are effective from 1 March 2023, but they do not
have a material effect on the Group's Financial Statements.
The following adopted IFRSs have been issued but have not been applied by the
Group in these consolidated Financial Statements. Their adoption is not
expected to have material effect on the Financial Statements unless otherwise
indicated:
· Definition of Accounting Estimates - Amendments to IAS 8
(effective date 1 January 2023);
Notes (continued)
1. Significant accounting policies (continued)
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2 (effective date 1 January 2023);
· Deferred tax related to assets and liabilities arising from a
single transaction - Amendments to IAS 12 (effective date 1 January 2023);
· International Tax Reform - Pillar Two Model Rules - Amendments to
IAS 12 (effective date 1 January 2023);
· IFRS 17 Insurance Contracts (effective date 1 January 2023).
2. Operating segments
In accordance with IFRS 8 the Group determines and presents its operating
segments based on internal information that is provided to the Board, being
the Group's Chief Operating Decision Maker ("CODM").
The Group's three operating and reporting segments are summarised as follows:
· UK Consumer - Travel apps and websites for individual travellers
for journeys within the UK
· International Consumer - Travel apps and websites for individual
travellers for journeys outside the UK including journeys between the UK and
outside the UK, and
· Trainline Solutions(1) - Travel portal platforms for Trainline's
own branded business units, in addition to external corporates, travel
management companies and white label ecommerce platforms for Train Operating
Companies. This segment operates Platform One Solutions and recharges a cost
to the UK and International Consumer segments.
(1) The Group's technology platform, UK Trainline Solutions and International
Trainline Solutions are collectively referred to as 'Trainline Solutions'
No single customer accounted for 10% or more of the Group's sales. In general,
the transfer pricing policy implemented by the Group is market-based.
The CODM reviews discrete information by segment disaggregated to adjusted
EBITDA to better assess performance and to assist in resource-allocation
decisions. The CODM monitors:
· the three operating segments results at the level of net ticket
sales, revenue, gross profit and adjusted EBITDA as shown in this disclosure;
and
· no results at a profit before/after tax level or in relation to
the statement of financial position are reported to the CODM at a lower level
than the consolidated Group.
Notes (continued)
2. Operating segments (continued)
Segmental analysis for the year ended 29 February 2024:
UK Consumer International Consumer Trainline Solutions Total Group
£'000 £'000 £'000 £'000
Net ticket sales 3,469,170 1,040,500 785,402 5,295,072
Revenue 208,802 53,156 134,760 396,718
(63,472) (17,364) (10,597) (91,433)
Cost of sales
145,330 35,792 124,163 305,285
Gross profit
(26,237) (40,574) (621) (67,432)
Marketing costs
(33,477) (11,901) (70,342) (115,720)
Other administrative expenses
Adjusted EBITDA 85,616 (16,683) 53,200 122,133
Depreciation and amortisation (41,662)
Exceptional Items (2,263)
Share-based payment charges (22,629)
Operating profit 55,579
Net finance costs (7,464)
Profit before tax 48,115
Income tax expense (14,129)
Profit after tax 33,986
Notes (continued)
2. Operating segments (continued)
Segmental analysis for the year ended 28 February 2023:
UK Consumer International Consumer Trainline Solutions Total Group
£'000 £'000 £'000 £'000
Net ticket sales 2,811,299 914,506 597,493 4,323,298
Revenue 172,066 45,387 109,694 327,147
(50,211) (15,318) (9,394) (74,923)
Cost of sales
121,855 30,069 100,300 252,224
Gross profit
(21,871) (42,517) (459) (64,847)
Marketing costs
(28,729) (9,415) (63,135) (101,279)
Other administrative expenses
Adjusted EBITDA 71,255 (21,863) 36,706 86,098
Depreciation and amortisation (41,167)
Share-based payment charges (17,292)
Operating profit 27,639
Net finance costs (5,549)
Profit before tax 22,090
Income tax expense (873)
Profit after tax 21,217
3. Exceptional Items
Exceptional items are costs or credits that, by virtue of their nature and
incidence, have been disclosed separately in order to improve a reader's
understanding of the Financial Statements. Exceptional items are one-off in
nature or are not considered to be part of the Group's underlying trading
performance.
2024 2023
£'000 £'000
Restructuring Costs 2,263 -
Exceptional items 2,263 -
Restructuring Costs
Restructuring costs related to projects being undertaken to improve operating
efficiency. The projects were completed by the end of FY2024. These costs
relate to consultancy fees and people costs in relation to the project and are
non-recurring and incremental in nature.
Notes (continued)
4. Net finance costs
Net finance costs comprise bank interest income and interest expense on
borrowings and lease liabilities, as well as foreign exchange gains/(losses)
and gains/(losses) on the buyback of convertible bonds.
On 26 July 2022, the Group entered into a £325.0 million revolving credit
facility (refer to Note 9 for further disclosure).
Accounting policy
Interest income and expense is recognised as it accrues in the income
statement, using the effective interest method. Foreign exchange gains and
losses are recognised in the income statement in accordance with the policy
for foreign currency transactions set out in Note 1g. Convertible bonds bought
back and cancelled are derecognised from non-current liabilities as set out in
Note 9, with any gains and losses arising recognised in finance income and
finance costs.
2024 2023
£'000 £'000
Bank interest income 2,745 730
Gain on convertible bond buyback - 3,987
Net foreign exchange gain - 4
Finance income 2,745 4,721
Interest and fees on bank loans (7,080) (8,856)
Net foreign exchange loss (1,839) -
Interest and fees on convertible bonds (830) (886)
Interest on lease liability (429) (528)
Other interest (31) -
Finance costs (10,209) (10,270)
Net finance costs recognised in the income statement (7,464) (5,549)
5. Taxation
This note analyses the tax expense for this financial year, which includes
both current and deferred tax. It also details tax accounting policies and
presents a reconciliation between profit before tax in the income statement
multiplied by the rate of corporation tax and the tax credit for the year.
The deferred tax section provides information on expected future tax charges
and sets out the assets and liabilities held across the Group.
Accounting policy
Income tax expense comprises current and deferred tax. It is recognised in the
income statement except to the extent that it relates to a business
combination, or items recognised directly in equity or in other comprehensive
income.
Notes (continued)
5. Taxation (continued)
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable
income or loss for the period and any adjustment to tax payable or receivable
in respect of previous years. It is measured using tax rates enacted or
substantively enacted at the reporting date.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised
for:
• temporary differences on the initial recognition of assets or liabilities
in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, to the
extent that the Group can control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the foreseeable
future; and
• taxable temporary differences arising on the initial recognition of
goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits
and deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be used before
their expiry. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
Amounts will be recognised first to the extent that taxable temporary
differences exist and it is considered probable that they will reverse and
give rise to future taxable profits against which losses or other assets may
be utilised before their expiry. Assets will then be recognised to the
extent that forecasts or other evidence support the availability of future
profits against which assets may be realised.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date. The measurement of deferred tax
reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount
of its assets and liabilities. Deferred tax assets and liabilities are offset
only if certain criteria are met.
The IASB amended the scope of IAS 12 to clarify that the standard applies to
income taxes arising from tax law enacted or substantively enacted to
implement the Pillar Two model rules published by the OECD, including tax law
that implements qualified domestic minimum top up taxes described in those
rules. The Group is not currently in scope of the Pillar Two model rules.
Notably, if the Group were in scope, the Parent Company would not be expected
to be required to pay a top-up tax where profits from subsidiaries are taxed
at an effective tax rate greater than 15%.
Notes (continued)
5. Taxation (continued)
Amounts recognised in the income statement
2024 2023
£'000 £'000
Current tax charge
Current year corporation tax 10,855 13,843
Adjustment in respect of prior years (2,749) 670
Total current tax charge 8,106 14,513
Deferred tax charge/(credit)
Current year 2,734 (9,302)
Adjustment in respect of prior years 3,199 (1,709)
Effect of tax rate change on deferred tax 90 (2,629)
Total deferred tax charge/(credit) 6,023 (13,640)
Tax charge 14,129 873
UK corporation tax was calculated at 24.5% (FY2023: 19%) of the taxable profit
for the year. Taxation for territories outside of the UK was calculated at the
rates prevailing in the respective jurisdictions. The total tax charge of
£14.1 million (FY2023: charge of £0.9 million) is made up of a current
corporation tax charge of £8.1 million (FY2023: charge of £14.5 million)
arising in the UK, and a deferred tax charge of £6.0 million (FY2023: credit
of £13.6 million).
The Group made claims under the Super Deduction Capital Allowances regime
giving rise to a prior period current and deferred tax adjustment. Also
included in the adjustments in respect of prior period is a release of
deferred tax asset relating to share based employee incentives that have
vested or did not settle and are no longer carried forward as an asset.
Included in the current year deferred tax charge is predominantly the unwind
of the deferred tax credit following the utilisation of UK tax losses.
2024 2023
£'000 £'000
Profit before tax 48,115 22,090
Tax on profit at standard UK rate of 24.5% (FY2023: 19%) 11,788 4,197
Effect of:
Expenses not deductible/income not deductible 527 (251)
Amounts not recognised(1) 1,033 482
Effect of changes in tax rates 89 (2,629)
Adjustment in respect of prior years 449 (1,039)
Share Options 410 -
Other (167) 113
Total tax charge 14,129 873
Effective tax rate 29% 4%
( )
(1) Primarily relates to unrecognised losses which are either not expected to
be recoverable or utilised in the short-term and therefore not recognised as
deferred tax assets.
Notes (continued)
5. Taxation (continued)
The consolidated tax rate for FY2024 was 24.5% which is in line with the UK
corporation tax rate of 25% (FY2023: 19%).
Tax (creditor)/debtor per the consolidated balance sheet:
2024 2023
£'000 £'000
Current tax payable (3,201) (7,642)
Deferred tax asset/(liability) as at 29 February 2024:
Acquired intangible assets Tangible assets and other Share- based payments Losses carried forward Total
£'000 £'000 £'000 £'000 £'000
At 1 March 2023 (2,673) (3,974) 5,275 28,322 26,950
Adjustment in respect of prior years 21 (3,723) 503 - (3,199)
Adjustments posted through equity - 34 3,892 - 3,926
Credit/(charge) to consolidated income statement 1,497 3,752 2,834 (10,907) (2,824)
At 29 February 2024 (1,155) (3,911) 12,504 17,415 24,853
Deferred tax asset/(liability) as at 28 February 2023:
Acquired intangible assets Tangible assets and other Share- based payments Losses carried forward Total
£'000 £'000 £'000 £'000 £'000
At 1 March 2022 (3,655) (3,378) 1,237 18,361 12,565
Adjustment in respect of prior years - (2,190) - 6,528 4,338
Adjustments posted through equity - (34) 779 745
-
Credit/(charge) to consolidated income statement 982 1,628 3,259 9,302
3,433
At 28 February 2023 (2,673) (3,974) 5,275 28,322 26,950
Notes (continued)
6. Earnings per share
This note sets out the accounting policy that applies to the calculation of
earnings per share, and how the Group has calculated the shares to be included
in basic and diluted earnings per share ("EPS") calculations.
Accounting policy
The Group calculates earnings per share in accordance with the requirements of
IAS 33 Earnings Per Share.
Four types of earnings per share are reported:
(i) Basic earnings per share
Earnings attributable to ordinary equity holders of the Group for the period,
divided by the weighted average number of ordinary shares outstanding during
the period, adjusted for treasury shares held.
(ii) Diluted earnings per share
Earnings attributable to ordinary equity holders of the Group for the period,
divided by the weighted average number of shares outstanding used in the basic
earnings per share calculation adjusted for the effects of all dilutive
'potential ordinary shares'.
(iii) Adjusted basic earnings per share
Earnings attributable to ordinary equity holders of the Group for the period,
adjusted to remove the impact of exceptional items, gain on convertible bonds
buyback, share-based payment charges, amortisation of acquired intangibles and
the tax impact of these items; divided by the weighted average number of
ordinary shares outstanding during the period, adjusted for treasury shares
held.
(iv) Adjusted diluted earnings per share
Earnings attributable to ordinary equity holders of the Group for the period,
adjusted to remove the impact of exceptional items, gain on convertible bond
buyback, share-based payment charges, amortisation of intangibles and the tax
impact of these items; divided by the weighted average number of shares
outstanding used in the basic earnings per share calculation adjusted for the
effects of all dilutive 'potential ordinary shares'.
At 29 February 2024 At 28 February 2023
Weighted average number of ordinary shares:
Ordinary shares 477,817,773 480,680,508
Treasury shares (10,697,997) (11,834,556)
Weighted number of ordinary shares 467,119,776 468,845,952
Dilutive impact of share options outstanding 12,034,501 4,216,223
Weighted number of dilutive shares 479,154,277 473,062,175
Notes (continued)
6. Earnings per share (continued)
2024 2023
£'000 £'000
Profit after tax 33,986 21,217
Earnings attributable to equity holders 33,986 21,217
Adjusted earnings(1) 57,311 36,271
2024 2023
pence pence
Profit per share
Basic 7.28p 4.53p
Diluted 7.09p 4.48p
Adjusted profit per share
Basic 12.27p 7.74p
Diluted 11.96p 7.67p
(1) Refer to the alternative performance measures section for the calculation
of adjusted earnings.
7. Intangible assets and goodwill
The consolidated balance sheet contains a significant goodwill carrying value
which arose when the Group acquired subsidiaries and paid a higher amount than
the fair value of the acquired net assets. Goodwill is not amortised but is
subject to an annual impairment review. Impairment reviews of goodwill make
use of estimates.
Other intangible assets predominantly arise on acquisition of subsidiaries or
are internally developed. These intangible assets are amortised and tested for
impairment when an indicator of impairment exists.
Accounting policy
(i) Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of
the consideration transferred and the amount recognised for non-controlling
interests, and any previous interest held, over the net identifiable assets
acquired and liabilities assumed. If the fair value of the net assets acquired
is in excess of the aggregate consideration transferred, the Group reassesses
whether it has correctly identified all of the assets acquired and all of the
liabilities assumed and reviews the procedures used to measure the amounts to
be recognised at the acquisition date. If the reassessment still results in an
excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognised in the income
statement. After initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
Notes (continued)
7. Intangible assets and goodwill (continued)
For the purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group's
cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquired business
are assigned to those units.
(ii) Software development costs
Expenditure on research activities is recognised in the income statement as
incurred.
External and internal development expenditure is capitalised only if the
expenditure can be measured reliably, the product or process is technically,
and commercially feasible, future economic benefits are probable, and the
Group intends to and has sufficient resources to complete development and to
use or sell the asset. Otherwise, it is recognised in the income statement as
incurred. Subsequent to initial recognition, development expenditure is
measured at cost less accumulated amortisation and any accumulated impairment
losses. Internal development expenditure is managed by the development team
and the amount capitalised is monitored through time charged to projects.
(iii) Brand and customer lists
Brand and customer lists that are acquired by the Group have finite useful
lives and are measured at cost less accumulated amortisation and any
accumulated impairment losses.
(iv) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future
economic benefits embodied in the asset to which it relates. All other
expenditure, including expenditure on internally generated goodwill and
brands, is recognised in the income statement as incurred.
(v) Amortisation
Amortisation is calculated to write off the cost of intangible assets less
their estimated residual values using the straight-line method over their
estimated useful lives and is recognised in administrative expenses in the
income statement. Goodwill is not amortised.
The estimated useful lives are as follows:
Software development
3-5 years
Brand valuation
10 years
Customer lists
5-7 years
Amortisation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
Notes (continued)
7. Intangible assets and goodwill (continued)
Intangible assets and goodwill as at 29 February 2024:
Software development(1) Brand Customer Total
valuation(3) Lists Goodwill
£'000 £'000 £'000 £'000 £'000
Cost:
At 1 March 2023 161,528 51,738 92,701 445,905 751,872
Additions 37,532 - 1,309 - 38,841
Disposals (11,689) - - - (11,689)
Exchange differences(2) - - - (2,183) (2,183)
At 29 February 2024 187,371 51,738 94,010 443,722 776,841
Accumulated amortisation and impairment:
At 1 March 2023 (105,307) (41,134) (92,699) (25,195) (264,335)
Amortisation (29,330) (5,167) (821) - (35,318)
Disposals 11,689 - - - 11,689
At 29 February 2024 (122,948) (46,301) (93,520) (25,195) (287,964)
Carrying amounts:
At 29 February 2024 64,423 5,437 490 418,527 488,877
( )
(1) Total software development includes £13.3 million of assets which
represent work in progress and which are not yet depreciating (FY2023: £11.1
million).
(2) Revaluation at the balance sheet date.
(3) At FY2024, the remaining useful economic life was one year for brand
valuation assets.
Intangible assets and goodwill as at 28 February 2023:
Software development(1) Brand Customer Total
valuation(3) lists Goodwill
£'000 £'000 £'000 £'000 £'000
Cost:
At 1 March 2022 147,410 51,738 92,690 442,555 734,393
Additions 32,174 - 11 - 32,185
Disposals (18,056) - - - (18,056)
Exchange differences(2) - - - 3,350 3,350
At 28 February 2023 161,528 51,738 92,701 445,905 751,872
Accumulated amortisation and impairment:
At 1 March 2022 (93,488) (35,967) (92,589) (25,195) (247,239)
Amortisation (29,840) (5,167) (110) - (35,117)
Disposals 18,021 - - - 18,021
At 28 February 2023 (105,307) (41,134) (92,699) (25,195) (264,335)
Carrying amounts:
At 28 February 2023 56,221 10,604 2 420,710 487,537
Notes (continued)
7. Intangible assets and goodwill (continued)
(1) Total software development includes £11.1m of assets which represent work
in progress and which are not yet depreciating.
(2) Revaluation at the balance sheet date.
(3) At FY2023, the remaining useful economic life was two years for brand
valuation assets.
Of the amortisation charge for the year, £6.0 million (FY2023: £5.3 million)
related to the amortisation of intangible assets which were recognised on the
Group's acquisition of Trainline.com Limited and Trainline SAS, while £29.3
million (FY2023: £29.8 million) related to internally developed and purchased
intangible assets recognised at historical cost.
Disposals in the year of £11.7 million (FY2023: £18.1 million) include
£11.7 million (FY2023: £18.1 million) of fully amortised internally
developed software assets which were no longer in use.
Goodwill impairment testing
The Group tests goodwill annually for impairment by reviewing the carrying
amount against the recoverable amount of the investment. The recoverable
amount is the higher of fair value less costs of disposal and value in use.
However, in line with IAS 36 Impairment of Assets, fair value less costs of
disposal is only determined where value in use would result in impairment.
Goodwill acquired in a business combination is allocated on acquisition to the
cash-generating units ("CGUs") that are expected to benefit from that business
combination. The Group has carrying value of goodwill totalling £418.5
million (FY2023: £420.7 million) which were initially recognised upon
acquisition of the following of Trainline.com Limited and Trainline SAS
(formerly Capitaine Train SAS).
CGU's are allocated on a more granular level than the operating segments.
Impairment reviews were conducted on these revised CGUs as summarised
below:
CGUs 2024 2023
£'000 £'000
UK Consumer 351,271 351,271
International Consumer 67,256 69,439
UK Trainline Partner Solutions - -
International Trainline Partner Solutions - -
Total goodwill 418,527 420,710
For all CGUs the recoverable amount was determined by measuring their
value-in-use ("VIU").
Notes (continued)
7. Intangible assets and goodwill (continued)
Assumptions
The key value in use assumptions for the goodwill impairment assessment were:
2024 2023 2024 2023
UK Consumer UK Consumer International International
Consumer Consumer
Pre-tax discount rate(1) 12.3% 10.9% 12.1% 13.2%
Terminal growth rate(2) 2.5% 2.5% 2.5% 2.5%
Number of years forecasted before terminal growth rate applied 5 5 5 5
(1) The pre-tax discount rate is based upon the weighted average cost of
capital reflecting specific principal risks and uncertainties. The discount
rate takes into account the risk-free rate of return, the market risk premium
and beta factor.
(2) The terminal growth rate reflects the expected natural price and
inflation growth into perpetuity of the business, taking into account the
current market and sector risks.
There has been no impairment charge for any CGU during the year (FY2023: nil).
As noted above, the key assumptions that form part of the value in use
assessment are the pre-tax discount rate, the terminal growth rate, the number
of years forecasted before terminal growth rate is applied and the underlying
cash forecasts. The pre-tax discount rate was determined based upon the
weighted average cost of capital reflecting specific principal risks and
uncertainties. The discount rate takes into account the risk-free rate of
return, the market risk premium and beta factor reflecting the average beta
for the Group and comparator companies which are used in deriving the cost of
equity. Further to this, the terminal growth rate was determined based on the
past inflation rate and has been utilised to reflect the long-term natural
price growth and inflation.
For the purpose of the goodwill impairment work, the Group prepares cash flow
forecasts using five-year projections which are extrapolated from the Board
approved three-year plan. The forecasts have been used in the VIU calculation
along with risk-adjusted discount rates. Cash flows beyond the five-year
period are extrapolated using a terminal growth rate, for the purpose of
goodwill impairment testing. The forecasts reflect management's expectations
and best estimates in determining EBITDA for each CGU. Management's
expectations and best estimates are determined based on a detailed top down
and bottom up forecasting process which incorporates consideration of the
Group's strategy, expectations in respect of market size and market share
while also taking account of risks and uncertainties in the market.
The core assumptions in the cash flow forecasts used in the impairment testing
were: UK: continues to grow sales, driven by ongoing investment in the
Trainline platform, the digitisation of ticketing and supported by modal shift
tailwinds; and International: strong continued sales growth at a higher level
than the Group as a whole driven by investment in marketing and continued
development in the user experience. Where costs or assets in the forecast are
not reported to the CODM at a CGU level, as disclosed in Note 2, a reasonable
and consistent allocation basis is applied for the purposes of impairment
testing.
Notes (continued)
7. Intangible assets and goodwill (continued)
Trading assumptions are based on estimates of market size, estimates of market
share and long-term economic forecasts.
As the International CGU is currently loss making, the cash flows are more
sensitive to a change in assumptions in the initial five-year forecast period
than the UK Consumer CGU.
Sensitivity analysis
The Group has conducted sensitivity analysis for reasonably possible changes
to key assumptions on each CGU's value in use. This included either increasing
the discount rates, reducing the terminal growth rate, or reducing the
anticipated future cash flows through changes to revenue or costs in each of
the years through to the terminal year. The sensitivity assumptions applied to
the value in use calculations are set out in the table below.
2024 2023 2024 2023
UK Consumer UK Consumer International International
Consumer Consumer
Increase in discount rate 1pt 1pt 1pt 1pt
Reduction in long-term growth rate applied in terminal year 0.5pt 0.5pt 0.5pt 0.5pt
Decrease in Adjusted EBITDA forecast in each year 15% 15% 15%(1) 20%
None of the individual reasonably possible scenarios listed above resulted in
an impairment charge to any of the CGUs.
( )
(1) In FY2024 the sensitivity of 15% was considered more appropriate than 20%.
If the sensitivity was 20% in line with prior year, this would not result in
an impairment charge to any of the CGUs.
Notes (continued)
8. Property, plant and equipment
This note details the physical assets used by the Group in running its
business.
Accounting policy
Items of property, plant and equipment ("PPE") are measured at cost less
accumulated depreciation and any accumulated impairment losses. Any gain or
loss on disposal of an item of property, plant and equipment is recognised in
the income statement. Depreciation is calculated to write off the cost of
items of property, plant and equipment less their estimated residual values
using the straight-line method over their estimated useful lives and is
generally recognised in the income statement. The estimated useful lives of
property, plant and equipment are as follows:
Plant and equipment 3-7 years
Leasehold improvements 3-10 years/remaining lease
length if shorter
Right-of-use assets Lease
length
The Group tests the carrying value of assets including right-of-use ("ROU")
assets for impairment if there is an indicator of impairment. PPE is included
in the carrying value of the Group's CGUs and have been included in the CGU
impairment assessments (see Note 7). There were no additional indicators of
specific impairment identified during the year relating to PPE (FY2023: no
indicators).
Plant and equipment Leasehold improvements Right-of-use assets Total
£'000 £'000 £'000 £'000
Cost:
At 1 March 2023 7,729 6,835 27,875 42,439
Additions 1,866 - 1,255 3,121
Disposals (364) (1) (297) (662)
At 29 February 2024 9,231 6,834 28,833 44,898
Accumulated depreciation and impairment:
At 1 March 2023 (4,443) (3,358) (13,449) (21,250)
Depreciation (1,421) (835) (4,088) (6,344)
Disposals 364 - 280 644
At 29 February 2024 (5,500) (4,193) (17,257) (26,950)
Carrying amounts:
At 29 February 2024 3,731 2,641 11,576 17,948
Property, plant and equipment as at 29 February 2024:
Notes (continued)
8. Property, plant and equipment (continued)
Property, plant and equipment as at 28 February 2023:
Plant and equipment Leasehold improvements Right-of-use assets Total
£'000 £'000 £'000 £'000
Cost:
At 1 March 2022 7,379 6,984 27,461 41,824
Additions 2,089 - 522 2,611
Disposals (1,739) (149) (108) (1,996)
At 28 February 2023 7,729 6,835 27,875 42,439
Accumulated depreciation and impairment:
At 1 March 2022 (4,810) (2,515) (9,622) (16,947)
Depreciation (1,301) (843) (3,906) (6,050)
Disposals 1,668 - 79 1,747
At 28 February 2023 (4,443) (3,358) (13,449) (21,250)
Carrying amounts:
At 28 February 2023 3,286 3,477 14,426 21,189
9. Loans and borrowings
This note details a breakdown of the various loans and borrowings of the
Group. It also provides the terms and repayment dates of each of these.
Accounting policy
Borrowings are recognised initially at fair value less attributable
transaction costs incurred. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective
interest method. At the date borrowings are repaid any attributable
transaction costs are released as finance costs.
2024 2023
£'000 £'000
Non-current liabilities
Revolving credit facility(1) 58,292 57,385
Convertible bonds(2) 81,652 81,105
Lease liabilities 7,336 10,524
Total non-current liabilities 147,280 149,014
Current liabilities
Accrued interest on secured bank loans 841 368
Lease liabilities 4,992 4,523
Total current liabilities 5,833 4,891
Notes (continued)
9. Loans and borrowings (continued)
(1)Included within the revolving credit facility is the principal amount of
£60.0 million (FY2023: £60.0 million) and directly attributable transaction
costs of £1.7 million (FY2023: £2.6 million).
(2)Included within the convertible bonds is the principal amount of £82.7
million (FY2023: £82.7 million) and directly attributable transaction costs
of £1.0 million (FY2023: £1.6 million). The fair value of this convertible
bond, as determined by the price on the Frankfurt Stock Exchange at 29
February 2024 is £74.7 million (FY2023: £68.7 million). The carrying value
is £81.7 million. During FY2023 the Group bought back and cancelled £32.1
million (face value) of its own convertible bonds for £28.1 million,
resulting in a gain of £4.0 million presented on the income statement within
finance income.
Terms and repayment schedule as at 29 February 2024
Agreement Interest rate Year of maturity Face value Carrying amount
£'000 £'000
Revolving credit facility SONIA 2025(2) 60,000 58,292
+ 1.25%-2.5%
Convertible bonds 1.00% 2026 82,700 81,652
Lease liabilities Various(1) Various 12,328 12,328
Total borrowings 155,028 152,272
( )
(1) The average interest rate of lease liabilities is 4.16%
(2) Not including two 1-year extension clause
The following are the remaining contractual maturities of financial
liabilities at the reporting date. The amounts are gross and undiscounted, and
include estimated future interest payments, so will not necessarily reconcile
to amounts disclosed on the statement of financial position.
Total contractual cash flows Less than 1 year Between 1 and 2 years(1) Between 2 and 5 years Over 5 years
£'000 £'000 £'000 £'000 £'000
Revolving credit facility 65,874 3,579 62,295 - -
Convertible bonds 84,250 827 83,423 - -
Lease liabilities 12,836 5,278 4,479 2,608 471
Total cash flows 162,960 9,684 150,197 2,608 471
( )
(1) Not including two 1-year extension clause per the revolving credit
facility
Revolving credit facility
On 26 July 2022, the Group entered into a £325.0 million revolving credit
facility with an initial maturity date of 30 November 2025, with the option to
extend for a further two, one-year periods to 30 November 2027.
Notes (continued)
9. Loans and borrowings (continued)
The facility in place during the year allows draw downs in cash or non-cash to
cover bank guarantees. At 29 February 2024 the cash drawn amount is £60.0
million (FY2023: £60.0 million), the non-cash bank guarantee drawn amount is
£183.4 million (FY2023: £72.2 million) and the undrawn amount on the
facility is £81.6 million (FY2023: £192.8 million).
The facility in place during the year was secured by a fixed and floating
charge over certain assets of the Group. Interest payable on the £325.0
million facility was at a margin of 1.20% to 1.50% above SONIA.
The Group was subject to bank covenants, all of which have been met during the
year. In relation to the £325.0 million facility entered into on 26 July
2022: (1) net debt to adjusted EBITDA must be no more than 3.00:1; and (2)
adjusted EBITDA to net finance charges must be no less than 4.00:1.
Convertible bonds
On 7 January 2021, Trainline plc announced the launch of an offering of
£150.0 million of senior convertible bonds due in 2026. Settlement and
delivery of convertible bonds took place on 14 January 2021.
The total bond offering of £150.0 million covers a five-year term beginning
on 14 January 2021 with a 1% per annum coupon payable semi-annually in arrears
in equal instalments. The initial conversion price was set at £6.6671
representing a premium of 50% above share price on 7 January 2021 (£4.4447).
The bonds were accounted for as a liability of £150.0 million upon issuance.
Directly allocable fees were offset against the liability and will be unwound
over the lifetime of the instrument. The bond was accounted for as a liability
as certain terms and conditions attached to the bonds meant Trainline plc has
an unavoidable obligation to settle in cash. Subsequent to this, bonds are
measured at amortised cost.
During FY2023, the Group bought back and cancelled £32.1 million (face value)
of its own convertible bonds for £28.1 million, resulting in a gain of £4.0
million presented on the income statement within finance income. There was no
such transaction in FY2024. As at the balance sheet date, the Group had
convertible bonds with a principal amount of £82.7 million in issuance
(FY2023: £82.7 million).
Notes (continued)
10. Capital and reserves
Share capital
Share capital represents the number of shares in issue at their nominal value.
Ordinary shares in the Group are issued, allotted and fully paid up. The
holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the
Company.
Shareholding at 29 February 2024
Number £'000
Ordinary shares - £0.01 471,032,086 4,710
Shareholding at 28 February 2023
Number £'000
Ordinary shares - £0.01 480,680,508 4,807
In September 2023, the Company commenced a share buyback programme to purchase
its own ordinary shares. The total number of shares bought back in FY2024 was
9,648,422 shares with a nominal value of £96,484 (FY2023: nil) representing
2% (FY2023: 0%) of the ordinary shares in issue (excluding shares held in
treasury). All shares bought back in FY2024 were cancelled.
The shares were acquired on the open market at a total consideration
(excluding costs) of £27.7 million (FY2023: £nil). The maximum and minimum
prices paid were £3.36 (FY2023: £nil) and £2.32 (FY2023: £nil) per share
respectively. The average price paid was £2.87 (FY2023: £nil). Costs
incurred on the purchase of own shares in relation to stamp duty and broker
expenses were £166,878 (FY2023: £nil).
Share premium
Share premium represents the amount over the nominal value which was received
by the Group upon the sale of the ordinary shares. Upon the date of listing
the nominal value of shares was £1.00 (subsequently reduced to £0.01 in
FY2020) but the initial offering price was £3.50.
Share premium is stated net of any direct costs relating to the issue of
shares.
On 19 December 2023, the High Court of Justice approved the cancellation of
the amount standing to the credit of the Company's share premium account in
full. The cancellation resulted in a corresponding increase in the Group's
distributable reserves.
Retained earnings
Retained earnings represents the profit the Group makes that is not
distributed as dividends. No dividends have been paid outside the Group in any
year.
Foreign exchange
The foreign exchange reserve represents the net difference on the translation
of the statement of financial position and income statements of foreign
operations from functional currency into reporting currency over the period
such operations have been owned by the Group.
Notes (continued)
10. Capital and reserves (continued)
Other reserves
Merger reserve Treasury reserve Share-based payment reserve Capital Redemption Reserve Total other reserves
£'000 £'000 £'000 £'000 £'000
At 1 March 2022 (1,122,218) (21,731) 7,288 - (1,136,661)
Addition of treasury shares - (7,947) - - (7,947)
Allocation of treasury shares to fulfil share-based payment - 2,950 (2,902) - 48
Share-based payment charge - - 15,165 - 15,165
Deferred tax on share-based payment - - 779 - 779
Transfer to retained earnings(1) - - (362) - (362)
At 28 February 2023 (1,122,218) (26,728) 19,968 - (1,128,978)
Addition of treasury shares - (7,500) - - (7,500)
Allocation of treasury shares to fulfil share-based payment - 4,466 (4,444) - 22
Share-based payment charge - - 19,909 - 19,909
Deferred tax on share-based payment - - 3,892 - 3,892
Purchase of own share for cancellation - - - 97 97
Transfer to retained earnings(1) - - (166) - (166)
At 29 February 2024 (1,122,218) (29,762) 39,159 97 (1,112,724)
( )
(1) Transfer to retained earnings relates to the difference between the share
price at grant date of the exercised shares and the actual cost of the
treasury shares purchased to fulfil the share-based payment.
Merger reserve
Prior to the initial public offering ("IPO") the ordinary shares of the
pre-IPO top company, Victoria Investments S.C.A., were acquired by Trainline
plc. As the ultimate shareholders and their relating rights did not change as
part of this transaction, this was treated as a common control transaction
under IFRS. The balance of the merger reserve represents the difference
between the nominal value of the reserves from the Victoria Investments S.C.A.
Group and the value of reserves in Trainline plc prior to the restructure.
Treasury reserve
Treasury shares reflect the value of shares held by the Group's Employee
Benefit Trusts ("EBT"). At 29 February 2024 the Group's EBT held 11.5 million
shares (FY2023: 10.9 million) which have a historical cost of £29.8 million
(FY2023: £26.7 million).
Share-based payment reserve
The share-based payment reserve is built up of charges in relation to
equity-settled share-based payment arrangements which have been recognised
within the profit and loss account.
Capital redemption reserve
The capital redemption reserve represents the nominal value of shares bought
back and cancelled.
Notes (continued)
11. Related parties
During the year, the Group entered into transactions in the ordinary course of
business with related parties.
Transactions with key management personnel of the Group
Key management personnel are defined as the Board of Directors, including
Non-Executive Directors.
During the period key management personnel have received the following
compensation: short-term employee benefits £3,593,819 (FY2023: £2,185,741);
post-employment benefits £58,111 (FY2023: £60,462); and ongoing share-based
payment schemes £3,033,999 (FY2023: £2,414,357). No other long-term benefits
or termination benefits were paid (FY2023: £nil). The highest paid director
received: short term employee benefits £1,980,067 (FY2023: £1,207,038);
post-employment benefits £35,304 (FY2023: £33,054); and ongoing share-based
payment schemes £2,172,523 (FY2023: £1,713,900). There were no directors
to whom retirement benefits were accruing under defined contribution schemes
(FY2023: one).
At 29 February 2024 key management personnel held 449,625 shares in Trainline
plc (FY2023: 361,413 shares).
12. Capital commitments
This note details any capital commitments in contracts that the Group has
entered which have not been recognised as liabilities on the balance sheet.
The Group's capital commitments at 29 February 2024 are £nil (FY2023:
£nil).
13. Post balance sheet events
There have been no material post balance sheet events between 29 February 2024
and the date of the approval of these Financial Statements.
Alternative performance measures
When assessing and discussing financial performance, certain alternative
performance measures ("APMs") of historical or future financial performance,
financial position or cash flows are used which are not defined or specified
under IFRS. APMs are used to improve the comparability of information between
reporting periods and operating segments.
APMs should be considered in addition to, not as a substitute for, or as
superior to, measures reported in accordance with IFRS.
APMs are not uniformly defined by all companies. Accordingly, the APMs used
may not be comparable with similarly titled measures and disclosures made by
other companies. These measures are used on a supplemental basis as they are
considered to be indicators of the underlying performance and success of the
Group.
Net ticket sales 1
Net ticket sales represent the gross value of ticket sales to customers, less
the value of refunds issued, during the accounting period via B2C or Trainline
solutions channels. The Group acts as an agent or technology provider in these
transactions. Net ticket sales do not represent the Group's revenue.
Management believe net ticket sales are a meaningful measure of the Group's
operating performance and size of operations as this reflects the value of
transactions powered by the Group's platform. The rate of growth in net ticket
sales may differ to the rate of growth in revenue due to the mix of commission
rates and service fees.
Adjusted EBITDA
The Group believe that adjusted EBITDA is a meaningful measure of the Group's
operating performance and debt servicing ability without regard to
amortisation and depreciation methods as well as share-based payment charges
which can differ significantly.
Adjusted EBITDA is calculated as profit after tax before net financing
income/(expense), tax, depreciation and amortisation, exceptional items and
share-based payment charges. Exceptional items are excluded as management
believe their nature could distort trends in the Group's underlying earnings.
This is because they are often one off in nature or not related to underlying
trade. Share-based payment charges are also excluded as they can fluctuate
significantly year on year.
Alternative performance measures - (continued)
A reconciliation of operating profit to adjusted EBITDA is as follows:
Notes 2024 2023
£'000 £'000
Operating profit 55,579 27,639
Adjusting items:
Depreciation and amortisation 7, 8 41,662 41,167
Share-based payment charges 22,629 17,292
Exceptional items 3 2,263 -
Adjusted EBITDA 122,133 86,098
Adjusted earnings
Adjusted earnings are a measure used by the Group to monitor the underlying
performance of the business, excluding certain non-cash and exceptional costs.
Adjusted earnings is calculated as profit after tax with share-based payment
charged in administrative expenses, exceptional items, gains on convertible
bond buyback and amortisation of acquired intangibles added back, together
with the tax impact of these adjustments also added back.
Exceptional items are excluded as management believe their nature could
distort trends in the Group's underlying earnings. Share-based payment charges
are also excluded as they can fluctuate significantly year on year and are a
non-cash charge to the business. Amortisation of acquired intangibles is a
non-cash accounting adjustment relating to previous acquisitions and is not
linked to the ongoing trade of the Group. Similarly, gains on convertible bond
buyback are added back as they are one-off in nature and don't relate to the
underlying trade.
A reconciliation from the profit after tax to adjusted earnings it as follows:
Notes 2024 2023
£'000 £'000
Profit after tax 33,986 21,217
Earnings attributable to equity holders 33,986 21,217
Adjusting items:
Exceptional items 3 2,263 -
Gain on convertible bond buyback 4 - (3,987)
Amortisation of acquired intangibles(1) 7 5,988 5,277
Share-based payment charges 22,629 17,292
Tax impact of the above adjustments (7,555) (3,528)
Adjusted earnings 57,311 36,271
(1) This consists of the amortisation of brand valuation of £5.2 million
(FY2023: £5.2 million), customer valuation of £0.8 million (FY2023: £0.1
million) and software development of £nil (FY2023: £nil).
Alternative performance measures (continued)
Net debt
Net debt is a measure used by the Group to measure the overall debt position
after taking into account cash held by the Group. Net debt represents
aggregate amount of loans and borrowings as disclosed in Note 9 (excluding
accrued interest on secured bank loans) and associated directly attributable
transaction costs after taking into account cash held by the Group.
The calculation of net debt is as follows:
Notes 2024 2023
£'000 £'000
Loan and borrowings(1) 9 (155,028) (157,747)
Cash and cash equivalents 91,085 57,337
Net debt (63,943) (100,410)
( )
(1) This amount is the aggregate amount of loans and borrowings as disclosed
in Note 9 amounting to £152.3 million (FY2023: £153.5 million) and the
capitalised finance charges amounting to £2.7 million (FY2023: £4.2
million).
Operating free cash flow
The Group use operating free cash flow as a supplementary measure of
liquidity. Liquidity has been removed as an APM in FY2024 because the Group is
no longer subject to a minimum liquidity requirement under the revolving
credit facility signed 26 July 2022.
The Group defines operating free cash flow as cash generated from operating
activities adding back cash exceptional items, and deducting cash flow in
relation to purchase of property, plant and equipment and intangible assets,
excluding those acquired through business combinations or trade and asset
purchases.
The calculation of operating free cash flow is as follows:
2024 2023
£'000 £'000
Cash generated from operating activities 129,785 43,015
Cash exceptional items 2,263 -
Purchase of property, plant and equipment and intangible assets (40,749) (35,219)
Operating free cash flow 91,299 7,796
(#_ftnref1) 1 Net ticket sales is not subject to audit as it is a
non-statutory measure.
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