This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR").

27 September 2021

Journeo plc

("Journeo", the "Company" or the "Group")

Interim results for the six months ended 30 June 2021

Journeo plc (AIM: JNEO), the information systems and transport technical services Group, announces its interim results for the six months ended 30 June 2021.

Financial headlines

·    Revenue increased by £0.5m to £7.2m (2020: £6.8m)

o  Fleet revenue increased 17% to £3.8m (2020: £3.2m)

o  Passenger revenue decreased slightly to £3.5m (2020: £3.6m)

·    Gross profit increased by £0.3m to £2.8m (2020: £2.5m)

o  Fleet £1.2m (2020: £0.9m)

o  Passenger £1.6m (2020: £1.6m)

·    Underlying profit before depreciation and amortisation of £0.6m (2020: £0.5m)

·    Cash as at 30 June of £1.3m (2020: £1.2m)

·    Invested over £0.5m in research and development during the period

Operational headlines

·  Business continues to adapt to the impacts of the Coronavirus pandemic, providing uninterrupted essential services and support to customers throughout.

·     Improved H1 performance and secured important contract wins.

·   Increased SaaS-based revenue as number of connected vehicles climbs 30% to over 4,000 since the beginning of the year.

·   Continued investment in research and development and new website design as central digital asset to improve communications, drive future sales and provide platform for marketing initiatives.

·   First end to end deployment of our new service management software, integrated into SAP to deliver service and maintenance activity reports to customers in real time.

·   Initiated Environmental, Social and Governance survey and maintained ISO 9001, 14001, 27001 and 45001 accreditations

Russ Singleton, CEO of Journeo plc, said:

"We are making good progress in our growth strategy, applying research and development and extensive end-user operational experience towards solving real-life challenges, needs and future requirements of fleet operator and transport infrastructure customers. Investment into sales and marketing capabilities, including a new website and unification under the Journeo brand, is amplifying our market presence and providing multiple platforms for promotion of our solutions and IP to new and existing customers.

Whilst trading conditions as a result of the Coronavirus pandemic remain challenging and present a degree of uncertainty with bids and project timings, we are encouraged not only by the resilience of the business during this period but the successful growth of revenues and the order book in H1. We are confident in our future, and we believe the powerful market drivers, including in the form of substantial Government backed initiatives,  will provide the Group with significant opportunity over the next few years."

A digital copy of interim results report will be available on the Groups' website: www.journeo.com.

For further information, please contact:

Notes to editors:

Journeo plc is an information systems and technical services business focussed on public transport and related infrastructure within towns, cities, airports, and local authorities. The Company works extensively with local government departments, combined authorities, and many of the largest multinational transport operators, supporting them as systems converge towards a more efficient and sustainable smarter-cities future.

The business currently comprises two segments:

·    Fleet operator solutions: CCTV video surveillance to improve passenger & driver safety, telematics for vehicle and driver performance monitoring, real-time communications for remote condition monitoring and automatic passenger counting.

·    Passenger transport infrastructure solutions: design, manufacture, installation, and management of hardware and software for electronic public transport information systems, in and around towns, cities, ferry terminals and airports which includes smart-ticketing and wayfinding.

In the last few years, the Company has invested around £5m in research and development, enabling it to design and supply the very best solutions for customers' complex requirements and the demands of modern public transport.  With an Internet of Things (IoT) approach and open standards, together with field-proven and reliable engineering, Journeo is able to offer flexible, scalable products and services that can integrate with existing technology while preparing for future advancements. 

Chairman and Chief Executive's review

Summary

Overview

We are pleased to report the results for the six months ended 30 June 2021. Overall trading has been better than the same period last year, with strong order intake as the Group executes its strategy of developing technologies, IP and engineering capabilities centred around customers and applications in target market sectors.

Revenue increased by 7% to £7.2m (H1 2020: £6.8m) and operating profits increased to £0.3m (H1 2020: £0.2m).

The Group is performing well and supports a growing customer base.

Strategic progress

During the period we continued to make good progress in delivering upon our strategic plans demonstrated by the adoption of the technologies developed in-house for both existing and new customers.  Orders for displays and our Content Management Software ("CMS") totalling £2.4m, and the renewal of the framework with First UK Bus, extending the relationship to over 10 years, were all reliant on our IoT approach to improve information systems in public transport market sectors.

The Group has increased its pre-sales technical support to help local authorities develop Bus Service Improvement Plans and Enhanced Partnerships in response to Government initiatives and the shift in their needs.

We have significantly increased investment in sales and marketing since the beginning of the year and launched a new website as the centrepiece for information, branding, messaging and communications. This valuable digital asset will be a focal point for campaigns, demonstrating our increasing capabilities to the market. In addition, the Environmental, Social and Corporate Governance survey that we highlighted in our 2020 Annual Report is underway with preliminary findings available next year.  

We have maintained all ISO 9001, 14001, 27001 and 45001 accreditations.

COVID 19

The Group has continued to provide customers with uninterrupted essential services and support throughout the Coronavirus pandemic, delivering and maintaining vital information and safety systems that are critical to their operations.

We remain vigilant of the risks that persist with the pandemic and those noted within our 2020 Annual Report. The Group has adjusted well to the various restrictions and on 19 July initiated a safe return to office work for a limited number of team members. 

Nevertheless, we continue to monitor the situation closely and follow the prevailing recommendations of government, placing the health and safety of our people, suppliers, contractors, customers and the travelling public in a position of paramount importance.

Financial results

Revenue for H1 was up by nearly £0.5m to £7.2m (H1 2020: £6.8m), an increase of 7% due to an increase in Fleet Systems revenue to £3.7m (H1 2020: £3.2m), while Passenger Systems revenue decreased slightly to £3.5m (H1 2020: £3.6m).

Passenger Systems gross profit of £1.6m (H1 2020: £1.6m) remained static, with margin increasing to 46% (H1 2020: 45%).

Fleet Systems gross profit of £1.2m (H1 2020: £0.9m) increased by £0.3m, with an increase in overall margin to 33% (H1 2020: 28%) as Software as a Service ("SaaS") income increased.

Overall gross profit increased by £0.3m to £2.8m (H1 2020: £2.5m), while gross margin increased by 2% to 39%, resulting from the SaaS income referred to above. An operating profit of £0.3m was achieved, compared with £0.2m in H1 2020.  Our expenditure on R&D resulted in a tax credit claim of £0.2m being received during the period.

The underlying profit before depreciation and amortisation was £0.6m (H1 2020: £0.5m).

The basic undiluted profit per share was 1.81p (H1 2020: 1.11p).

Tight controls over cash management, and the profit achieved have contributed to an increased cash position at the period end of £1.3m (30 June 2020: £1.2m).

Research and Development

Our team of developers, designers and engineers provide an agile and responsive innovation capability. This is a core part of our strategy that underpins our growth plans. An increasing proportion of the sales pipeline is based on our own technologies, designed to deliver better solutions for customers whilst, at the same time, improve the visibility and quality of our earnings through SaaS, where the number of connections has risen 30%  to 4,000 since the beginning of the year, and multi-year support contracts.

Notable wins announced just after the period end, with Abellio and Metroline are based upon the benefits brought by our Intellectual Property ("IP"), enabling these important London transport operators to uplift the functionality of their legacy systems at the same time as deploying the latest safety-oriented products into their fleets.

We work closely with industry thought-leaders and customers to inform our roadmaps and develop the technologies that will be needed in the years to come. One example during the first half of the year has led to the development and first sales of a new ultra-low power display that is fully integrated into our EPIX CMS.  This outdoor display can be operated continuously off-grid for many years using small solar panels, wind turbines or via its own internal rechargeable batteries. Our sustainable design ethos appeals to many businesses and local authorities with commitments to reducing carbon footprint or achieving Net Zero status within their infrastructure.

Passenger Infrastructure Systems

The year started positively for Passenger Infrastructure Systems. Our broad range of displays built around a core technology and powered by EPIX is being deployed as part of local authority and Transport Executives' delivery of Transforming Cities Funding and a number of other schemes throughout the UK.

In January this year, we announced further orders from a Northern Transport Partnership.  At a value of £1.3m, this has increased their investment in our displays and associated CMS technology to over £3m in the past two years, demonstrating significant confidence in the systems that we provide as they expand what is already one of the largest passenger information display signage estates in the UK.

Further orders, totalling £1.1m in March for displays and CMS, were achieved through a customer that has previously not had a real time passenger information estate. With  a goal to achieve a Net Zero impact within their infrastructure  they selected our low-power displays technology. We have recently extended this offering with a new range of ultra-low power displays released to market just before the end of the period.

Completing transport infrastructure work during a time of travel restrictions has presented a number of challenges, and progress on some contracts, which require bus, coach, rail or airport services to be running have been delayed. The situation has eased since we moved into the second half of the year, in particular with the ability to travel more freely in Wales and Scotland. Completion of the initial phase of the £4.8m City of Edinburgh Council contract is due shortly, enabling progress to commence on the substantially larger second phase.

Fleet Transport Operator Systems

With a foundation of integration and support services, Fleet Transport Operator Systems is increasingly being recognised as an innovative solutions provider with advanced technical capabilities. Over the last two years this has led to the development of a highly scalable SaaS solution with over 4,000 vehicle connections across bus and rail customers. The recent announcements of strategically important wins with Abellio and Metroline, will in due course, further increase our market share within London.

We were delighted to start the year with an extension to the framework agreement with First UK Bus.  In addition to the revenues anticipated from the agreement, it included a further 800 connections into our cloud-based, SaaS solution. First Bus were early adopters of Remote Condition Monitoring technology and are now using our Agnostic Video Management Software module which enables users to instantly connect to vehicles and access evidential quality video and supporting data for further analysis. This significantly speeds up the video evidence gathering process and considerably reduces costs for fleet operators. 

Our achievements are being recognised at many levels within the industry, opening-up new opportunities that would previously have been inaccessible. Work with prestigious organisations such as the Transport Research Laboratory, which was instrumental in the formation of Transport for London's Vision Zero standard, has enabled further integration of our solutions to capture more data on vehicle and driver behaviour.

We maintain a Rail capability focussed on leveraging our technologies within the highly regulated and safety-critical railway environment. The sales cycle for rail opportunities can be protracted, but we are confident that we will build upon the orders we have received from organisations such as the British Transport Police for licences to our cloud-based software.

Passenger Transfer Solutions

None of our customers have been more adversely affected by the coronavirus pandemic than those based at airports. The restrictions impacted project delivery programmes and extended timescales for other airport bids.  However, since the recent lifting of restrictions there has been a marked increase in activity with purchase orders being received from Bristol Airport and, earlier this month, we were delighted to announce our largest airport contract award to date (£2.5m) with Transdev Airport Services at a major UK international airport.

Market update

The release of two publications in the first half of this year; Bus Back Better, the National Bus Strategy for England and the Williams-Shapps Plan for Rail demonstrate significant commitments by the Government towards more sustainable and better funded public transport services.

The National Bus Strategy announced on 15 March 2021 is the first major central Government intervention in the bus market since the deregulation of the 1980s.  It provides local authorities, Transport Executives and operators alike a mandated framework under which to operate and be compliant with the Bus Services Act 2017.  The strategy marks out Government goals and is, for the first time in a generation, backed by substantive funding of c.£3 billion, that will assist operator and the relevant authority stakeholders to level up the services provided to passengers. 

Train operating companies were faced with what quickly became insurmountable operating conditions as passenger numbers dramatically fell as the pandemic took hold and travel restrictions were imposed. The Department for Transport stepped in, effectively ending the current rail franchising model, and the Williams-Schapps Plan for Rail announced on 20 May 2021 sets out a way forward for this essential public service ahead of the next control period of funding.

Over the medium to longer term, these two Government initiatives are powerful market drivers that will both underpin and reinforce the move away from fossil fuels towards cleaner, greener, and more sustainable transport. 

Outlook

Ever increasing adoption of our proprietary technology and increased funding from central government have helped to significantly increase our order book compared to this time last year.

We have orders this year to enable delivery of results in line with market expectations although the achievement of this will depend on bus manufacturers scheduling remaining on plan and on orders being processed before the year end.

The current variables of COVID and the wider supply-chain issues, particularly affecting semi-conductor supplies may also contribute to scheduling changes and we estimate that up to £0.3m of our forecast profit before tax may be processed in 2022 should we be affected.

Our business has been very resilient over the last year and we see this building as we go forward.

Our significant cash resources at the half year will be applied in supporting the required working capital for the increasing order book and year end cash will reflect this.

Our pipeline and confirmed orders continue to grow for the solutions we have developed, and this gives us confidence of meeting market expectations for 2022.

We continue to meet with potential acquisitions where we can identify synergies to accelerate our profitable growth and are optimistic that our organic growth and potential acquisitions will deliver value to shareholders and we look forward to continuing to update the market as these develop.