Half-year Results

Journeo plc (AIM: JNEO) a leading provider of information systems and technical services to transport operators and local authorities, announces its interim results for the six months ended 30 June 2024 ("H1 2024").

Financial headlines

Group revenue grew 17% to £25.6m (H1 2023: £21.8m)

o Fleet systems revenue grew 17% to £9.3m (H1 2023: £7.9m)

o Passenger Systems revenue grew 12% to £5.2m (H1 2023: £4.6m)

o Infotec revenue was £8.5m (H1 2023: £9.3m) and MultiQ, acquired in H2 2023, delivered revenue of £2.7m

• Underlying profit before depreciation and amortisation increased 40% to £3.4m (H1 2023: £2.5m)
• Cash and cash equivalents at the end of the period increased to £12.9m (H1 2023: £11.3m)
• Basic undiluted profit per share was 15.30p (H1 2023: 9.03p)

Operational headlines

• Record order intake during the period of £24m (H1 2023: £18m)
• R&D investment increased to £1.0m as a core component of Group strategy
• Established the Journeo Design Centre, a centre of excellence that brings together specialists from across the Group
• Progressing unification of manufacturing and production
• Strengthening the senior leadership team
• Extended cloud-based Journeo portal for RTI infrastructure applications
• Strong sales pipeline across the Group

Russ Singleton, CEO of Journeo plc, said:

"The Group has continued to deliver strong performance, achieving growth in revenues, profits, margins and order intake in H1 2024.

We retain our strategy of bonding closely with our customers to develop and deliver new products, solutions and services, that meet their requirements of creating a more sustainable and efficient transport network. This focus, supported by the ongoing integration of Infotec, MultiQ and the newly formed Journeo Design Centre, is further strengthening our capabilities and driving the organic growth of the business as we continue to assess complementary acquisition targets.

Journeo is evolving into a more capable and resilient business as we aim to become the market-leader for Intelligent Transport Systems. With a growing customer base and a strong sales opportunity pipeline, the Board looks to the future with confidence."

A digital copy of this announcement will be available on the Group's website: www.journeo.com

Chairman and Chief Executive's review

Overview

The Board is pleased to report continued strong performance for H1 2024. The results are in line with management expectations, with the Group delivering year-on-year increases for revenue, gross profit and underlying profit.

The Group delivered strong organic growth in H1 2024 and the acquisitions of Infotec and MultiQ, completed in 2023, are further increasing the number of sales opportunities for Journeo technology in new regional and adjacent markets.

The need to encourage people away from personal use vehicles by providing more sustainable, better structured and better delivered public transport remains a priority. We welcome the new legislation announced in the King's Speech (15 July 2024) for Rail Reform, Passenger Railway Service (Public Ownership) and Better Buses. Journeo is well positioned to play an increasingly important role as governments invest in national and local transport infrastructure in the coming years.

Strategic progress

We continue to forge and maintain strong relationships with our customers as we support their current and legacy systems and help prepare them for future technologies.

The cultural alignment between Journeo, Infotec and MultiQ has been evident as we continue to integrate the companies, with new opportunities for collaboration and delivery of our deepened capabilities emerging. As part of this convergence, we have established the Journeo Design Centre (JDC). Formed with specialists from each of our operating companies, this group-wide centre of excellence is creating the next generation of products and solutions that will support the ongoing growth of the Group.

Cost efficiencies in our supply chain and optimisation through the design for manufacturing process continue to be realised and will further improve the quality and scalability of our solutions. These key strategies are an integral part of our ESG commitments of continual improvement and product responsibility.

Our customer-centric strategy to create deep customer bonds, demonstrate technology leadership and deliver engineering excellence continues. We are building on these attributes as we target both acquisitive and organic growth.

Financial results

Revenue for H1 2024 increased by 17% to £25.6m (H1 2023: £21.8m). Fleet Systems revenue of £9.3m (H1 2023: £7.9m) and Passenger Systems revenue of £5.2m (H1 2023: £4.6m) grew by 17% and 12%, respectively.

The revenue from Infotec was £8.5m (H1 2023: £9.3m) and MultiQ, acquired in H2 2023 delivered revenue of £2.7m.

Fleet Systems gross profit of £2.3m (H1 2023: £1.9m) increased by £0.4m, with an increase in overall gross margin to 25% (H1 2023: 24%).

Passenger Systems gross profit of £2.4m (H1 2023: £2.0m) also increased by £0.4m, with an improvement in gross margin to 46% (H1 2023: 43%).

Infotec gross margin improved to 38% (H1 2023: 27%), delivering a gross profit of £3.2m (H1 2023: £2.5m), whilst MultiQ produced a 40% gross margin, delivering a gross profit of £1.1m.

Group underlying profit before depreciation and amortisation increased by 40% to £3.4m (H1 2023: £2.5m) and basic undiluted profit per share was 15.30p (H1 2023: 9.03p).

Cash and cash equivalents at the end of the year increased to £12.9m (H1 2023: £11.3m).

Research and Development

We continue our investment in Research and Development (R&D) which is shaped by the close bonds we share with customers. This underpins our growth and provides the Group with new opportunities, both in creating future systems and supporting existing technology estates.

H1 2024 saw the first passenger information displays connected to the Journeo Portal at Cardiff Bus Interchange, as part of the new and national Content Management System (CMS) for Wales. The solution is not only the first of its kind to operate on recently released open industry standards; it demonstrates the power and flexibility of our software. The cloud-based Journeo Portal enables transport operators, local authorities and transport executives to manage their systems from a single, highly-secure and scalable platform.

Operational review

Passenger Infrastructure Systems

We are pleased to see Passenger Infrastructure Systems delivering strong year-on-year growth. Revenue for H1 2024 increased 12% to £5.2m (H1 2023: £4.6m) and the business has achieved a strong sales order intake throughout H1 2024.

In February, the Group announced a four-year framework with a Northern Transport Partnership which is expected to generate £5m in revenue across the length of the contract. The framework covers a range of Journeo display technologies, including high-definition Thin Film Transistor (TFT), ultra-bright Light Emitting Diode (LED) and low-power e-ink solutions. We are working closely with the Partnership as they continue to invest in their transport infrastructure; maintaining their position as one of the leading public transport estates in the UK.

In March, Journeo secured further expansion within Transport for Wales (TfW) through a £1.5m purchase order from Swansea Council to manufacture, install and maintain Journeo's advanced passenger information systems. Approximately 35% of the displays will work off-grid, powered only by solar panels, aligning with the council's drive to achieve Carbon Net Zero. These displays will be connected to TfW's new Welsh Bus Data Content Management System (WBDCMS), also supplied by Journeo.

The WBDCMS was announced by Journeo in 2023, and the first displays to use the software platform, operating from cloud-based Journeo Portal software, went live during H1 2024 at Cardiff Bus Interchange. The WBDCMS will support local authorities in Wales by being the first solution to manage transport content for the entire country using the latest open industry communication standards. Each additional display connected to the system, regardless of manufacturer, is licenced onto the Journeo software platform, generating recurring revenue.

Fleet Transport Operator Systems

We are delighted with the progress that our Fleet Transport Operator Systems business has demonstrated throughout H1 2024. Revenue has increased 17% to £9.3m (H1 2023: £7.9m) and underlying profit increased 57% to £0.6m (H1 2023: £0.4m).

The drive to move the industry towards carbon-zero through hydrogen, hybrid and electric vehicles, coupled with retrofit programmes for safety critical systems is fuelling strong sales order growth.

In March of this year, we announced purchase orders totalling £3.0m to complete retrofit programmes for Journeo's digital wing mirror system. The technology supports Transport for London (TfL) in its commitment to reduce accidents and injuries on London's road networks. The orders include installation of the solution onto London's iconic Routemaster vehicles.

Success is continuing, with significant new orders announced as we entered H2 2024.

In mid-July, we announced major new contracts for Rail systems totalling £3m. The first, for the provision of on-board CCTV and Automatic Passenger Counting (APC) systems for East Midlands Railway and CrossCountry was valued at £2.4m. The second, with Arriva TrainCare, valued at £0.6m, is to provide similar solutions alongside design and support services.

These awards demonstrate the flexibility of our solutions and the power of our software to operate in a multi-modal landscape. Importantly, these mission-critical software applications generate monthly recurring revenue for user licencing and asset connection.

In late July, we also announced purchase orders totalling £2.1m for Metroline Manchester to supply safety-critical CCTV and Journeo Portal services. Part of ComfortDelGro, Metroline has been awarded four franchises in Transport for Greater Manchester (TfGM) by the Greater Manchester Combined Authority (GMCA). This is a significant geographical win for Journeo, supplying solutions to GMCA for the first time.

Infotec

Infotec performed strongly during the period, delivering revenues of £8.5m (H1 2023 £9.3m) and underlying profit increasing by 11% to £1.8m (H1 2023: £1.6m).

The last tranche of deliveries for our US-based contract to deliver display technology for the first 535 New York City subway cars will be completed in Q3 2024. As ridership has so far only recovered to 58% of pre-pandemic levels, the next phase of 640 subway cars will have printed advertising but will be pre-wired to enable digital displays to be retrofitted in the future.

We have a strong sales opportunity pipeline, and the rail industry has recently entered Control Period 7 (CP7), the five-year period from April 2024 to March 2029 during which Network Rail will invest £45 billion in railway infrastructure.

MultiQ

H1 2024 marks the first full half-year results for our latest acquisition. Achieving revenues of £2.7m and an underlying profit of £0.2m, our Denmark-based Intelligent Transport Systems (ITS) integrator has performed well and is delivering value for the Group.

We announced in April that MultiQ had secured a contract to supply display hardware, installation and technical support services for up to six years to Grassfish AB throughout the Skåne County in the south of Sweden. This contract is anticipated to generate £0.3m revenue per year and provides access to the many fleet operators working in the region, for the supply of Journeo products, services and software. In September 2024, MultiQ's company name was changed to Journeo AS Denmark to support our ambitions to offer all of the Group's products, software, know-how and services to the Continental European and Nordic public transport markets.

ESG update

The Group continues to focus on important Environmental, Social and Governance (ESG) projects and is making good progress with its Carbon Reduction Plan.

Outlook

The Group has delivered its strongest set of interim results to date in H1 2024, with improving performance from Passenger Infrastructure Systems and Fleet Transport Operator Systems, strong performance from Infotec and valuable contribution from our most recent acquisition, MultiQ.

The Board is pleased with this performance and is confident that we will meet our financial targets and trade in line with market expectations for the full year.

We are focusing on areas where we can achieve efficiencies following our acquisitions, and nurturing the numerous cross-selling opportunities that are developing within the Group.

Our investment in Research and Development is delivering powerful new technologies which are the cornerstone of the Group's continued growth.

The Board continuously monitors risk and surveys the competitive landscape.

We actively evaluate acquisition opportunities that can bring further value to the Group, where there is access to a new customer base and complementary capabilities that can benefit customers. The Company is continuing discussions with a number of potential acquisition targets.

The Group retains a strong cash position at £12.9m (H1 2023: £11.3m) to enable the Board to capitalise on opportunities, as and when they arise.

Through organic growth and acquisition, Journeo is more resilient, capable and has increasing access to customers and opportunities. We enter H2 2024 with confidence, holding a strong sales pipeline and a growing customer base for our solutions. We are confident that the Group will continue to deliver value for all stakeholders as we build Journeo into a market leader in intelligent transport systems.

Mark Elliott, Non-executive Chairman

Russ Singleton, Chief Executive

Consolidated statement of comprehensive income

for the six months ended 30 June 2024

Notes to the interim financial statements

for the six months ended 30 June 2024

Basis of preparation and approval of interim statement

The financial information for the six months ended 30 June 2024 and for the six months ended 30 June 2023 is unaudited.

The interim financial statement for the six months to 30 June 2024 does not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2023.

The financial information has been prepared on the basis of UK adopted international accounting standards (IFRSs) that the Directors expect to be applicable as at 31 December 2024.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those set out in the Group's Annual Report and Financial Statements 2023, which were prepared in accordance with IFRSs.

This interim financial statement does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2023 were approved by the Board on 26 March 2024 and delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

The interim financial statement was approved by the Board of Directors on 17 September 2024.

International Financial Reporting Standards

The Group follows the standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee of the IASB and endorsed by the UK that are relevant to its operations.

Going concern

The Group's business activities together with factors likely to affect its future development, performance and position were set out in the Strategic Report and Chairman's Statement of the 2023 Annual Report and the principal risks and uncertainties were set out in the Strategic Report. The Directors have reviewed the cash flow forecasts for the period up to and including 31 December 2025.

Based on the above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of the report. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.

Revenue

The revenue split between goods and services is:

Profit per Ordinary Share

Details of the weighted average number of Ordinary Shares used as the denominator in calculating the basic and diluted earnings per Ordinary Share are given below:

Goodwill

Goodwill acquired in a business combination is allocated at acquisition to the cash-generating unit (CGU) that is expected to benefit from that business combination. The Group has two CGUs which are its three operating segments, Fleet Systems, Passenger Systems and Infotec. The carrying amount of goodwill has been allocated to the CGUs as follows:

Passenger Systems also has intangible assets, which are considered in the same value-in-use calculations as goodwill.

The Passenger Systems cash flow projections used to determine value in use are based upon assumptions of sales, margins and cost bases. Of these assumptions, the value in use is most sensitive to the level of sales. Margins are fixed in the forecast based upon past experience; the cost base is similarly based upon past experience and will vary depending upon the level of sales. In accordance with the requirements of IAS 36 our value-in-use calculations do not include cash flows from restructurings to which the Group is not yet committed.

Sensitivity analysis has been performed on the pre-tax discount rates, which shows that a pre-tax discount rate of 48.2% (Passenger Systems), 38.2% (Infotec) or 67.6% (MultiQ) would be required in order to eliminate the headroom which exists in these CGUs. The Directors consider that the discount rates used, which are already risk adjusted to capture the Directors' view of the extent to which each CGU is exposed to macroeconomic factors, represent a balanced view.

A sensitivity analysis has been performed on the impairment test. The Directors consider that an absolute change in the key sales assumption is possible and a reduction in the sales forecast in 2024 of 5% would result in headroom remaining in the current carrying value of goodwill. If sales forecasts were down 10% across the whole period and overheads remained unchanged then headroom would still remain.

The value in use for the Group exceeds the carrying value of the assets.

In view of this, the Directors consider that no impairment of goodwill or intangible assets is required.

Cash generated from operations