Notes

 

1.  Significant accounting policies

 

a)   General information

 

Trainline plc (the "Company") and subsidiaries controlled by the Company (together, the "Group") are Europe's 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 28 February 2022 were approved by the Directors on 5 May 2022.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Trainline plc transitioned to UK-adopted International Accounting Standards in its Group Financial Statements on 1 March 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.

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 financial information contained in this document does not constitute Group statutory accounts as defined in Sections 404 and 435 of the Companies Act 2006. It is based on, and is consistent with, that in the Group's statutory accounts for the year ended 28 February 2022. Those Financial Statements have not yet been delivered to the Registrar of Companies. The auditor's report on those accounts is unqualified, does not draw attention to any matters by way of emphasis and does not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

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 2021 to 28 February 2022.

(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.

 

 

Notes - significant accounting policies (continued)

 

c)   Basis of measurement

 

The Financial Statements are prepared on the historical cost basis except for the following:

•      Non-current assets are stated at the lower of the carrying value and the recoverable amount

•      Derivative financial instruments are measured at fair value

•      Financial instruments at fair value through the income statement are measured at fair value

 

 

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.

d)   Functional and presentation currency

The Financial Statements are presented in sterling, 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 twelve 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 2022 and 28 February 2023, 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, key uncertainties and sensitivities, including the prolonged impact of COVID-19 on the future performance of the Group, borrowing facilities and covenant requirements.

 

Following strong recovery as COVID travel restrictions were lifted, there have been material improvements in Trainline's net ticket sales and profitability during FY2022. Performance has improved as restrictions lifted and public confidence in travel returned towards pre-pandemic demand levels.

 

Although profitability continued to be impacted by COVID in FY2022, the Group has returned to positive adjusted EBITDA, reduced its net debt, and generated positive cash flows. Positive adjusted EBITDA of £39 million was earned in the period (FY2021: £25 million EBITDA loss) and net debt at 28 February 2022 was £90 million (FY2021: £241 million). For the duration of FY2022 the Group had in place a covenant waiver with a minimum liquidity requirement which was obtained during FY2021. The covenant waiver period ended on 28 February 2022, and the Group is no longer subject to the £75 million minimum liquidity requirement for the duration of the going concern assessment period. The Group is next subject to its net debt to adjusted EBITDA covenant test on 31 August 2022.

 

As at 28 February 2022 the Group was in a net current liability position of £114 million driven by the negative working capital cycle (FY2021: £19 million net current asset position). Despite the net current liability position, the Group has access to £274 million additional funds under its revolving credit facility. As such the Group has sufficient liquidity to easily cover the net current liability position.

Notes - significant accounting policies (continued)

 

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, without any mitigations, and their potential impact on the Group's forecast, specifically considering varying degrees of prolonged impact from COVID-19.  Two severe but plausible downside scenarios were modelled: (1) permanent reduction in the size of the rail market, primarily manifesting as a 25-30% reduction in the size of the UK rail segment versus FY2020; and (2) ongoing winter restrictions in December 2022 and January 2023, based on actual performance from December 2021 and January 2022 which were impacted by the UK Government's "Plan B" restrictions (including asking people to work from home if they were able to) and similar restrictions across Europe.

 

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. This includes complying with the net debt to adjusted EBITDA covenant requirement at the 31 August 2022 and 28 February 2023 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 have therefore continued to adopt the going concern basis in preparing the Consolidated Financial Statements.

f)   Cost of sales

Cost of sales include costs in relation to the provision of rail tickets, 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 at 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.

 

 

Notes - significant accounting policies (continued)

 

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. Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to estimates are recognised prospectively.

 

The following estimate is deemed significant as it has been identified by Management as one which could result in a material adjustment in the next financial year:

 

•      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 judgement in estimating the future cash flows, the time period over which they will occur, and in arriving at an appropriate discount rate to apply to the cashflows as well as an appropriate terminal growth rate. As part of the impairment review for the year ended 28 February 2022, the prolonged impacts of COVID-19 have been taken into account in the forecasting. Each of these assumptions have an impact on the overall value of cashflows expected and therefore the headroom between the cashflows and carrying values of the cash generating units.

 

i)    New standards and interpretations adopted

 

A number of new standards are effective from 1 March 2021, 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:

 

·      Amendments to IAS 37: Onerous Contracts-Cost of Fulfilling a Contract  (effective date to be confirmed);

·      Amendments to References to the Conceptual Framework in IFRS 3 (effective date to be confirmed);

·      Amendments to IAS 16: Property, Plant and Equipment-Proceeds before Intended Use (effective date to be confirmed); and

·      Annual Improvements to IFRS Standards 2018-2020 (effective date to be confirmed).

 

In April 2021 the IFRS Interpretations Committee finalised their agenda decision regarding configuration and customisation costs in Cloud Computing Arrangements (Software as a Service, 'SaaS') under IAS 38. The Group has assessed costs incurred associated with the implementation of SaaS noting that all material costs incurred in the past have been expensed on the basis that they were determined to be related to services provided during the relevant period. As such, the agenda decision has no material effect on the Group's Financial Statements.

 

 

 

 

 

Notes (continued)

 

2.   Operating segments    

In accordance with IFRS 8 Operating Segments the Group determines and presents its operating segments based on internal information that is provided to the Board, who is the Group's chief operating decision maker ("CODM").

 

The Group has three operating and reportable segments which are considered:

 

·      UK Consumer¹ - Travel apps and websites for individual travellers for journeys within the UK;

·      UK Trainline Partner Solutions (TPS)¹ - Branded travel portal platforms for corporates and travel management companies and white label ecommerce platforms for Train Operating Companies within the UK; and

·      International - Travel apps and websites for individual travellers for journeys outside the UK.

 

¹ UK Consumer and UK Trainline Partner Solutions are collectively referred to as the UK

 

The Group's global operating model means that investments in platform technology and central overheads are leveraged across the business, and are reported to the CODM at the group level, rather than being allocated to segments. No single customer accounted for 10% or more of the Group's sales.  

 

 

Notes - operating segments (continued)

 

 

The CODM monitors:

-     The three operating segments results at the level of net ticket sales, revenue and gross margin;

-     Results split by UK and International at the level of net ticket sales, revenue, gross margin, and contribution (as shown in this disclosure); and

-     No results at a loss before/after tax or in relation to the statement of financial position are reported to the CODM at a lower level than the consolidated Group.

 

Segmental analysis for the year ended 28 February 2022:

	UK Consumer £'000	UK TPS £'000	Total UK £'000	International £'000	Total Group £'000
Net ticket sales	1,811,715	290,082	2,101,797	418,475	2,520,272
Revenue	152,538	15,245	167,783	20,730	188,513
Cost of sales	(23,909)	(4,453)	(28,362)	(7,355)	(35,717)
Gross profit	128,629	10,792	139,421	13,375	152,796
Direct administrative expenses			(41,112)	(22,030)	(63,142)
Contribution			98,309	(8,655)	89,654
Central administrative expenses					(50,608)
Adjusted EBITDA					39,046
Depreciation and amortisation					(42,576)
Share-based payment charges					(6,783)
Exceptional items					-
Operating loss					(10,313)
Net finance costs					(5,229)
Loss before tax					(15,542)
Tax					3,637
Loss after tax					(11,905)

 

 

 

Notes - operating segments (continued)

Segmental analysis for the year ended 29 February 2021:

	UK Consumer £'000	UK TPS £'000	Total UK £'000	International £'000	Total Group £'000
Net ticket sales	472,808	75,476	548,284	234,800	783,084
Revenue	43,798	12,087	55,885	11,199	67,084
Cost of sales	(9,885)	(3,843)	(13,728)	(4,680)	(18,408)
Gross profit	33,913	8,244	42,157	6,519	48,676
Direct administrative expenses			(21,540)	(10,986)	(32,526)
Contribution			20,617	(4,467)	16,150
Central administrative expenses					(41,054)
Adjusted EBITDA					(24,904)
Depreciation and amortisation					(41,199)
Share-based payment charges					(7,093)
Exceptional items					(26,508)
Operating loss					(99,704)
Net finance costs					(7,058)
Loss before tax					(106,762)
Tax					15,458
Loss after tax					(91,304)

 

 

 

3.   Exceptional items

 

Exceptional items are operating 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 trade. There were no exceptional items in FY2022.

 

Restructuring costs

Restructuring costs incurred as part of a strategic/management reorganisation.

 

Goodwill impairment

This is the impairment charge on the goodwill on the International CGU. Refer to Note 7 for disclosure.

 

		2022		2021
			£'000		£'000
Restructuring costs			-		1,313
Goodwill impairment charge			-		25,195
Net exceptional costs			-		26,508

 

 

 

Notes (continued)

 

4.   Finance income and 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 repurchase of convertible bonds.

 

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.

 

		2022		2021
			£'000		£'000
Bank interest income			36		22
Gain on convertible bond buyback			3,914		-
Foreign exchange gain			-		556
Finance income			3,950		578
Interest and fees on bank loans			(5,777)		(6,729)
Foreign exchange loss			(927)		-
Loss on interest rate swap			-		(6)
Interest and fees on convertible bonds			(1,878)		(189)
Interest on lease liability			(594)		(694)
Other interest			(3)		(18)
Finance costs			(9,179)		(7,636)
Net finance costs recognised in the income statement			(5,229)		(7,058)

 

 

5.   Taxation

 

This note analyses the tax income 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 expense 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 - 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.

 

 

 

Notes - taxation (continued)

 

Amounts recognised in the income statement

	2022			2021
	£'000			£'000
Current tax charge/(credit)
Current year corporation tax			315		(3,205)
Adjustment in respect of prior years			3,444		(2,608)
Total current tax charge/(credit)			3,759		(5,813)
Deferred tax credit
Current year			(1,364)		(11,777)
Adjustment in respect of prior years			(3,948)		1,511
Effect of change in tax rates			(2,084)		621
Total deferred tax credit			(7,396)		(9,645)
Tax credit			(3,637)		(15,458)

 

Corporation tax was calculated at 19% (FY2021: 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 credit of £3.6 million (FY2021: credit of £15.5 million) is made up of a current corporation tax charge of £3.8 million (FY2021: credit of £5.8 million) arising in the UK, and a deferred tax credit of £7.4 million (FY2021: £9.6 million).

 

A current tax prior period adjustment has been recognised to adjust the Group's tax receivable, as the Group's Financial Statements in FY2021 included an expected tax repayment for a loss carry back claim to taxable profits in FY2020 which was not claimed on submission of the UK tax returns, instead carrying these losses forward to utilise against expected future profits. A corresponding deferred tax prior period adjustment has also been recognised in respect of those losses which were not carried back.

 

The Group has continued to recognise a deferred tax asset on unutilised losses carried forward. This is on the basis that it is probable that future taxable profit will be available against which the unutilised tax losses and credits can be set against. This is supported by the Group's latest profit and cash flow forecasts approved by the Board, which show improved trading performance following market recovery from the impact of COVID-19. The deferred tax credit in FY2022 also includes the unwind of deferred tax liabilities arising on acquired intangibles and deferred tax on equity-settled share-based payment charges issued during the period, where tax relief is obtained in the year the shares vest. The release of these deferred tax assets and liabilities are accounting adjustments and do not impact the corporation tax payable or receivable by the Group.

 

The Group has remeasured its deferred tax asset to take into account the future change in the rate of UK corporation tax from 19% to 25%, as substantively enacted in May 2021. This has given rise to a one-off deferred tax credit in FY2022.

 

 

Notes - taxation (continued)

	2022		2021
	£'000		£'000
Loss before tax		(15,542)		(106,762)
Tax on loss at standard UK rate of 19% (FY 2021: 19%)		(2,971)		(20,285)
Effect of:
Expenses not deductible/income not deductible		1,147		4,849
Amounts not recognised1		1,148		924
Effect of changes in tax rates		(2,626)		621
Adjustment in respect of prior years		(504)		(1,097)
Difference in overseas tax rates		2		19
Deferred tax credited to equity		85		-
Losses utilised		-		(489)
Other		82		-
Total tax credit		(3,637)		(15,458)
Effective tax rate		23%		14%

 

¹ Primarily relates to unrecognised losses which are not expected to be recoverable and therefore not recognised as deferred tax assets.

 

 

The effective tax rate is higher than the UK corporation tax rate of 19% (FY2021: lower) which primarily reflects the remeasurement of deferred tax balances for the increase in the UK corporation tax rate to 25%.

 

 

Tax debtor per the consolidated balance sheet:

	2022			2021
	£'000			£'000
Current tax receivable1			1,599		7,522

 

¹ Reflects the current tax charge/credit for the year, less any corporation tax payments on account made during the year, less the Research and Development expenditure credit ("RDEC"). The FY2022 current tax receivable balance reflects a £1.6 million RDEC. No corporation tax was payable by the Group in FY2022. (FY2021: Current tax receivable of £7.5 million made up of £2.0 million RDEC plus £5.5 million of current tax credit.)  

 

 

 

 

Notes - taxation (continued)

Deferred tax asset as at 28 February 2022:

	Acquired intangible assets	Tangible assets and other			Share- based payments		Losses carried forward		Total
	£'000		£'000		£'000		£'000		£'000
At 1 March 2021	(4,365)		(1,560)		1,227		9,781		5,083
Effect of increased tax rate on opening balance	(636)		(441)		174		2,987		2,084
Adjustment in respect of prior years	-		(1,600)		-		5,548		3,948
Adjustments posted through equity	-		(9)		94		-		85
Credit/(charge) to consolidated income statement	1,346		232		(258)		45		1,365
At 28 February 2022	(3,655)		(3,378)		1,237		18,361		12,565

 

 

Deferred tax asset/(liability) as at 28 February 2021:

 

	Acquired intangible assets	Tangible assets and other			Share- based payments		Losses carried forward		Total
	£'000		£'000		£'000		£'000		£'000
At 1 March 2020	(5,298)		(508)		1,461		-		(4,345)
Adjustments posted through equity	-		37		(254)		-		(217)
Credit/(charge) to consolidated income statement	933		(1,089)		20		9,781		9,645
At 28 February 2021	(4,365)		(1,560)		1,227		9,781		5,083

 

 

 

 

 

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.

 

 

 

Notes - earnings per share (continued)

 

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.

 

(ii)           Diluted earnings per share

Earnings attributable to ordinary equity holders of the Group, 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 purchase of convertible bonds, 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.

 

(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 repurchase of convertible bonds, 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'.

 

 

 

	2022		2021
	No. shares		No. shares
Weighted average number of ordinary shares:
Weighted average number of ordinary shares	480,680,508		462,099,526
Weighted average number of treasury shares	(3,096,733)		(2,678,111)
Weighted number of ordinary shares1	477,583,775		478,002,397

 

¹ As the Group has incurred a loss in FY2022 and FY2021, the impact of its potential dilutive ordinary shares has been excluded as they would be anti-dilutive.

 

 

Notes - earnings per share (continued)

 

	2022		2021
	£'000		£'000
Loss after tax	(11,905)		(91,304)
Earnings attributable to equity holders	(11,905)		(91,304)
Adjusted earnings1	(3,844)		(51,678)
	2022		2021
	pence		pence
Loss per share
Basic	(2.49)p		(19.10)p
Diluted2	(2.49)p		(19.10)p
Adjusted loss per share
Basic	(0.80)p		(10.81)p
Diluted2	(0.80)p		(10.81)p

 

 

¹ Refer to the alternative performance measures section for the calculation of adjusted earnings.

² As the Group has incurred a loss in FY2022 and FY2021, the impact of its potential dilutive ordinary shares has been excluded as they would be anti-dilutive.

 

 

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 (see Note 1h).

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.

 

(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.

 

 

Notes - intangible assets and goodwill (continued)

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. 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 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 - intangible assets and goodwill (continued)

 

Intangible assets and goodwill as at 28 February 2022:

	Software development		Brand		Customer				Total
			valuation3		lists3		Goodwill
	£'000		£'000		£'000		£'000		£'000
Cost:
At 1 March 2021	132,755		51,738		92,690		444,652		721,835
Additions1	25,090		-		-		-		25,090
Disposals	(10,435)		-		-		-		(10,435)
FX2	-		-		-		(2,097)		(2,097)
At 28 February 2022	147,410		51,738		92,690		442,555		734,393
Accumulated amortisation and impairment:
At 1 March 2021	(74,328)		(30,800)		(90,676)		(25,195)		(220,999)
Amortisation	(29,595)		(5,167)		(1,913)		-		(36,675)
Disposals	10,435		-		-		-		10,435
At 28 February 2022	(93,488)		(35,967)		(92,589)		(25,195)		(247,239)
Carrying amounts:
At 28 February 2022	53,922		15,771		101		417,360		487,154

 

¹ Total additions include £24.2 million of internally developed intangible assets

² Effects of foreign exchange rate changes

³ At FY2022, the remaining useful economic life was 3 years for brand valuation assets and 5 years for customer lists

 

Intangible assets and goodwill as at 28 February 2021:

	Software development		Brand		Customer				Total
			valuation3		lists3		Goodwill
	£'000		£'000		£'000		£'000		£'000
Cost:
At 1 March 2020	108,621		51,738		92,690		443,357		696,406
Additions1	24,134		-		-		-		24,134
FX2	-		-		-		1,295		1,295
At 28 February 2021	132,755		51,738		92,690		444,652		721,835
Accumulated amortisation and impairment:
At 1 March 2020	(46,181)		(25,633)		(87,680)		-		(159,494)
Amortisation	(28,147)		(5,167)		(2,996)		-		(36,310)
Impairment charge	-		-		-		(25,195)		(25,195)
At 28 February 2021	(74,328)		(30,800)		(90,676)		(25,195)		(220,999)
Carrying amounts:
At 28 February 2021	58,427		20,938		2,014		419,457		500,836

 

¹ Total additions of £24.1 million all relate to internally developed intangible assets

² Effects of foreign exchange rate changes

³ At FY2021, the remaining useful economic life was 4 years for brand valuation assets and 6 years for customer lists

Notes - intangible assets and goodwill (continued)

Of the amortisation charge for the year £7.1 million (FY2021: £8.2 million) related to the amortisation of intangible assets which were recognised on the Group's acquisition of Trainline.com Limited and Trainline SAS, while £29.6 million (FY2021: £28.1 million) related to internally developed and purchased intangible assets recognised at historical cost.

Disposals in the year of £10.4 million (FY2021: £nil) fully amortised internally developed software assets and £2.8 million of fully amortised software development assets.

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. Management monitors goodwill no lower than the geographical operating segments, hence, CGUs are the same as the geographical operating segments.      

 

The Group has gross goodwill balances totalling £442.6 million (FY2021:  £444.7 million) which comprise:

     i. £336.4 million (FY2021: £336.4 million) from the FY 2016 acquisition of Trainline.com

     ii. £106.2 million (FY2021: £108.3 million) from the FY 2017 acquisition of Trainline SAS (formerly Capitaine Train SAS)

 

The majority of goodwill arising from the acquisition of Trainline.com was attributed to UK Consumer CGU with a small proportion allocated to the International CGU. The goodwill related to the Capitaine Train SAS acquisition was mostly attributed to the International CGU, with the remainder allocated to UK Consumer CGU. The carrying amount of goodwill has been allocated as follows:

 

CGU	2022		2021
	£'000		£'000
UK Consumer	351,271		351,271
UK Trainline Partner Solutions	-		-
International	66,089		68,186
Total goodwill	417,360		419,457

 

For all CGUs the recoverable amount was determined by measuring their value-in-use ("VIU").

 

 

 

Notes - intangible assets and goodwill (continued)

 

Assumptions

The key value in use assumptions were:

	2022	2021	2022	2021
	UK Consumer	UK Consumer	International	International
Pre-tax discount rate1	9.7%	11.6%	12.0%	18.6%
Terminal growth rate2	2.5%	1.5%	2.5%	1.0%
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 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 (FY2021: UK Consumer CGU £nil, International CGU £25.2 million).

 

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. The forecasts reflect management's expectations and best estimates for each CGU. 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.

 

Forecasts used for the purposes of the impairment review as at 28 February 2022 remain impacted by the long-term effects of COVID-19. 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. To reflect the higher level of uncertainty in the International forecasts, a premium is applied to the discount rate.

 

 

Notes - intangible assets and goodwill (continued)

 

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.

 

 

	2022	2021	2022	2021
	UK Consumer	UK Consumer	International	International
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%	20%	20%

None of the individual reasonably possible scenarios listed above resulted 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 (FY2021: no indicators).

 

 

Property, plant and equipment as at 28 February 2022:

	Plant and equipment		Leasehold improvements		Right-of-use assets		Total
	£'000		£'000		£'000		£'000
Cost:
At 1 March 2021	9,671		4,448		26,861		40,980
Additions	1,771		2,536		600		4,907
Disposals	(4,063)		-		-		(4,063)
At 28 February 2022	7,379		6,984		27,461		41,824
Accumulated depreciation and impairment:
At 1 March 2021	(7,362)		(1,890)		(5,857)		(15,109)
Depreciation	(1,511)		(625)		(3,765)		(5,901)
Disposals	4,063		-		-		4,063
At 28 February 2022	(4,810)		(2,515)		(9,622)		(16,947)
Carrying amounts:
At 28 February 2022	2,569		4,469		17,839		24,877

 

 

 

 

 

 

 

Notes - property, plant and equipment (continued)

 

Property, plant and equipment as at 29 February 2021:

	Plant and equipment		Leasehold improvements		Right-of-use assets		Total
	£'000		£'000		£'000		£'000
Cost:
At 1 March 2020	8,278		4,448		17,692		30,418
Additions	1,411		-		4,948		6,359
Disposals	(18)		-		-		(18)
Lease extensions1	-		-		4,221		4,221
At 28 February 2021	9,671		4,448		26,861		40,980
Accumulated depreciation and impairment:
At 1 March 2020	(6,075)		(1,445)		(2,714)		(10,234)
Depreciation	(1,301)		(445)		(3,143)		(4,889)
Disposals	14		-		-		14
At 28 February 2021	(7,362)		(1,890)		(5,857)		(15,109)
Carrying amounts:
At 28 February 2021	2,309		2,558		21,004		25,871

 

 

¹ Relates to lease extensions which do not constitute a new lease addition pursuant to IFRS 16.

 

 

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 an exceptional finance cost.

 

Notes - loans and borrowings (continued)

 

 

	2022		2021
		£'000		£'000
Non-current liabilities
Revolving Credit Facility1		21,800		100,417
Convertible bonds2		112,663		147,378
Other term debt		37		216
Lease liabilities		15,496		18,358
Total non-current liabilities		149,996		266,369
Current liabilities
Accrued interest		1,425		831
Lease liabilities		3,489		3,336
Total current liabilities		4,914		4,167

 

1  Included within the Revolving Credit Facility is the principal amount of £25.0 million (FY2021: £104.9 million) and directly attributable transaction costs of £3.2 million (FY2021: £4.5 million).

2  Included within the Convertible bonds is the principal amount of £114.8 million (FY2021:  £150.0 million) and directly attributable transaction costs of £2.1 million (FY2021: £2.6 million). During FY2022 the Group bought back and cancelled £35.2 million (face value) of its own convertible bonds for £31.3 million, resulting in a gain of £3.9 million presented on the income statement within finance income.

 

 

Terms and repayment schedule

Agreement	Interest rate	Year of maturity	Face value		Carrying amount
			£'000		£'000
Revolving Credit Facility	LIBOR/SONIA1 + 1-2%	2024	25,000		21,800
Convertible bonds	1.00%	2026	114,800		112,663
Lease liabilities	Various2	Various	20,281		18,985
Other term debt	0.0%	2022	37		37
Total borrowings			160,118		153,485

 

¹ The interest rate applicable to the Revolving Credit Facility was LIBOR plus 2% until 31 December 2021. Following the cessation of LIBOR, the interest rate applicable to the Revolving Credit Facility was SONIA plus credit adjustment spread plus 1-2% from 1 January 2022. 

² The average interest rate of lease liabilities is 4.0%

 

 

Notes - loans and borrowings (continued)

 

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		Between 2 and 5 years		Over 5 years
	£'000		£'000		£'000		£'000		£'000
Revolving Credit Facility	26,456		510		625		25,321		-
Convertible bonds	119,213		1,148		1,148		116,917		-
Lease liabilities	20,281		3,940		9,323		6,081		937
Other term debt	37		37		-		-		-
Total cash flows	165,987		5,635		11,096		148,319		937

 

 

Revolving Credit Facility

The Revolving Credit Facility became effective on 26 June 2019, the total facility amount is £350.0 million. The facility allows draw downs in cash or non-cash to cover bank guarantees. At 28 February 2022 the cash drawn amount is £25.0 million (FY2021: £104.9million), the non-cash bank guarantee drawn amount is £51.3 million (FY2021: £21.9 million) and the undrawn amount on the facility is £273.7 million (FY2021: £223.2 million).

 The Group's Revolving Credit Facility is secured by a fixed and floating charge over certain assets of the Group. Interest is payable on a margin of 1.0% to 2.0% above LIBOR until 31 December 2021, and on a margin of 1.0% to 2.0% above SONIA plus credit adjustment spread from 1 January 2022.

The Group is subject to certain bank covenants under this facility, however, those financial covenants were waived by the Group's loan syndicate until and including February 2022, to support the business through the COVID-19 pandemic and the related impact on trading. The Group was in compliance with bank covenants on 28 February 2022, albeit with the covenant waiver remaining in place on this date. As part of the waiver, the Group was required to maintain a minimum liquidity headroom of £50 million on a monthly basis from April 2020 to December 2020. This requirement was increased to £75 million on a monthly basis subsequent to the issuance of the convertible bonds in January 2021 and until February 2022.  The Group was in compliance with the liquidity requirement throughout all applicable periods. 

Convertible bonds

On 7 January 2021, Trainline plc announced the launch of an offering of £150.0 million of senior secured 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 £6.6670 representing a premium of 50% above share price on 7 January 2021 (£4.4447).

 

Notes - loans and borrowings (continued)

 

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 within the terms and conditions attached to the bonds meant Trainline plc has an unavoidable obligation to settle in cash.

During FY2022, the Group bought back and cancelled £35.2 million (face value) of its own convertible bonds for £31.3 million, resulting in a gain of £3.9 million presented on the income statement within finance income. As at FY2022, the Group had convertible bonds with a principal amount of £114.8 million in issuance (FY2021: £150.0 million).

 

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 28 February 2022 and 28 February 2021

	Number		£'000
Ordinary shares - £0.01	480,680,508		4,807

 

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 were £1.00 but the initial offering price was £3.50.

Share premium is stated net of any direct costs relating to the issue of shares.

Retained earnings

Retained earnings represents the profit the Group makes that is not distributed as dividends. No dividends have been paid 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 - capital and reserves (continued)

	Merger reserve		Treasury reserve		Share-based payment reserve		Total other reserves
	£'000		£'000		£'000		£'000
At 1 March 2020	(1,122,218)		(10,897)		7,360		(1,125,755)
Addition of treasury shares	-		(4,123)		-		(4,123)
Share-based payment charge	-		-		5,420		5,420
Allocation of treasury shares to fulfil share-based payment	-		7,268		(7,268)		-
Deferred tax on share-based payment	-		-		(254)		(254)
Transfer to retained earnings1	-		-		(280)		(280)
At 28 February 2021	(1,122,218)		(7,752)		4,978		(1,124,992)
Addition of treasury shares	-		(16,600)		-		(16,600)
Share-based payment charge	-		-		5,984		5,984
Allocation of treasury shares to fulfil share-based payment	-		2,621		(2,823)		(202)
Deferred tax on share-based payment	-		-		94		94
Transfer to retained earnings1	-		-		(945)		(945)
At 28 February 2022	(1,122,218)		(21,731)		7,288		(1,136,661)

Other reserves

 

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 28 February 2022 the Group's EBT held 8.0 million shares (FY2021: 2.1 million) which have a historical cost of £21.7 million (FY2021: £7.8 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.

 

 

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 £2,499,799 (FY2021: £1,545,336); post-employment benefits £73,625 (FY2021: £136,795); and ongoing share-based payment schemes £889,234 (FY2021: £419,856). No other long-term benefits or termination benefits were paid (FY2021: £nil). The highest paid director received: short term employee benefits £1,152,611 (FY2021: £380,090); post-employment benefits £31,625 (FY2021: £40,647); and ongoing share-based payment schemes £586,982 (FY2021: £202,676).  There were two directors to whom retirement benefits are accruing under defined contribution schemes (FY2021: two).

 

Information on the emoluments of the Directors who served during the year, together with information regarding the beneficial interest of the Directors in the ordinary shares of the Company is included in the Directors' Remuneration Report on pages 96 to 103.

At 28 February 2022 key management personnel held 2,340,720 shares in Trainline plc (FY2021: 9,947,734 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 statement of financial position.

 

The Group's capital commitments at 28 February 2022 are £nil (FY2021: £2.4 million). 

 

 

13. Post balance sheet events

 

There have been no material post balance sheet events between 28 February 2022 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

 

Net ticket sales represent the gross value of ticket sales to customers, less the value of refunds issued, during the accounting period. The Group acts as an agent 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 processed on 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 which can differ significantly. 

 

Adjusted EBITDA is calculated as profit/(loss) 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 - adjusted EBITDA (continued)

 

A reconciliation of operating profit to adjusted EBITDA is as follows:

 

	Notes	2022		2021
		£'000		£'000
Operating loss		(10,313)		(99,704)
Adjusting items:
Depreciation and amortisation	7,8	42,576		41,199
Share-based payment charges		6,783		7,093
Exceptional items	3	-		26,508
Adjusted EBITDA		39,046		(24,904)

 

 

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 loss after tax with share-based payment charged in administrative expenses and finance costs, exceptional costs, gain on repurchase of convertible bonds 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. 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 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.

 

A reconciliation from the loss after tax to adjusted earnings it as follows:

 

 

	Notes	2022		2021
		£'000		£'000
Loss after tax		(11,905)		(91,304)
Earnings attributable to equity holders		(11,905)		(91,304)
Adjusting items:
Exceptional items	3	-		26,508
Exceptional finance costs	4	(3,914)		-
Amortisation of acquired intangibles1	7	7,083		8,563
Share-based payment charges		6,783		7,093
Tax impact of the above adjustments		(1,891)		(2,538)
Adjusted earnings		(3,844)		(51,678)

¹ This consists of the amortisation of brand valuation of £5.2 million (FY2021: £5.2 million), customer valuation of £1.9 million (FY2021:  £3.0 million) and software development of £nil (FY2021: £0.4 million)
 

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. 

 

The calculation of net debt is as follows:

 

	Notes	2022		2021
		£'000		£'000
Loan and borrowings1	9	(158,821)		(277,681)
Cash and cash equivalents		68,496		36,575
Net debt		(90,325)		(241,106)

 

¹ This amount is the aggregate amount of loans and borrowings as disclosed in Note 9 amounting to £153.5 million (FY2021: £270.5million) and the capitalised finance charges amounting to £5.3 million (FY2021: £7.1  million).

 

Operating free cash flow

 

The Group use operating free cash flow as a supplementary measure of liquidity.

                                                                                                                   

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:

 

		2022		2021
		£'000		£'000
Cash (used in)/generated from operating activities		195,167		(121,254)
Cash exceptional items		-		1,313
Purchase of property, plant and equipment and intangible assets		(29,344)		(26,335)
Operating free cash flow		165,823		(146,276)

 

 

 

Alternative performance measures (continued)

 

 

Liquidity

 

The Group uses liquidity as a measure of available funds. Liquidity headroom is cash and cash equivalents plus the undrawn, unencumbered balance on the Revolving Credit Facility.

 

 

		2022		2021
		£'000		£'000
Cash and cash equivalents		68,496		36,575
Undrawn balance on the Revolving Credit Facility		273,676		223,152
Liquidity headroom		342,172		259,727