Journeo : Interim Report 2022

Financial highlights

Contents

Overview

Financial statements

Overview

Mark Elliot

Non-executive Chairman

Russ Singleton

Chief Executive

• We are pleased to report the results for the six months ended 30 June 2022 which are in line with expectations."

Overview

We are pleased to report the results for the six months ended June 2022

("H1 2022") which are in line with management's expectations. The business has delivered strong growth in revenues and generated its largest order intake to date of £12.9m. This performance demonstrates the resilience of our business during a period of challenging market conditions impacted by supply chain constraints and hikes in inflation.

The Group is performing well, our technology is becoming more deeply integrated within our existing customer base and is extending into new customers and opportunities that would previously have been inaccessible to us.

During H1 2022, revenue increased by 23% to £8.9m (H1 2021: £7.2m) and operating profits increased 14% to £0.3m (H1 2021: £0.3m).

We have seen a number of supply chain issues are now easing, having deferred approximately £0.5m revenue into H2 2022. This, and the record levels of sales orders and pipeline of future opportunities support our positive outlook for H2 2022 and beyond.

Strategic progress

The UK Government continues to provide funding streams to improve the provision and sustainability of public transport. Facing the prospect of rising fuel and energy costs, coupled with the uncertainty of the impacts of climate change, the adoption of reliable, mass public transportation services which operate efficiently is a key deliverable, this country, and others, must deliver to ensure that Net Zero carbon goals are achieved.

The technology that we are developing, delivering and maintaining plays an increasingly important role in addressing some of these market challenges. Through

our low-powered infrastructure solutions and ensuring that work which would have once required engineer visits can be conducted remotely using artificial intelligence and machine learning, we are building efficiencies and increased capacity within our customers' teams.

Our growing success can be attributed to the capabilities and commitment of our people and investment in Research and Development and sales and marketing. To maintain this momentum, we continued to invest in these areas throughout H1 2022 to broaden the customer-base that we are able to engage with and integrate more tightly the solutions that we provide.

An example of this can be seen in the number of vehicles connected to the SaaS-based Journeo Portal, each generating recurring monthly revenue which increased by 25%

to over 5,000 in H1 2022 and is on-track to increase by 150% to over 10,000 connections by the end of the year.

Work to progress the preliminary findings in our first Environmental, Social and Governance (ESG) statement (available in the 2021 Annual Report) is ongoing, with a further update planned for the 2022 full-year report. We have also maintained our ISO 9001, 14001, 27001 and 45001 accreditations.

Financial results

Revenue for H1 2022 was up nearly £1.7m to £8.9m (H1 2021: £7.2m), an increase of 23% due to a rise in Fleet Systems revenue of 31% to £4.9m (H1 2021: £3.7m), and a Passenger Systems revenue increase of 15% to £4.0m (H1 2021: £3.5m).

Passenger Systems' gross profit of £1.9m

(H1 2021: £1.6m) represented an 18% increase,

with margin increasing to 47% (H1 2021: 45%).

Fleet Systems' gross profit of £1.4m (H1 2021: £1.2m) increased by £0.2m, with a decrease in overall margin to 29% (H1 2021: 33%) due to the upfront costs associated with large SaaS rollout programmes.

Overall gross profit increased by £0.5m to £3.3m (H1 2021: £2.8m), whilst gross margin decreased by 2% to 37%, resulting from the programmes referred to above. An operating profit of £0.3m was achieved, 14% higher than reported in H1 2021. Our expenditure on Research and Development (R&D) resulted in a tax credit claim of £0.1m (H1 2021: £0.2m) being received during the period.

The underlying profit before depreciation and

amortisation was £0.7m (H1 2021: £0.6m).

The basic undiluted profit per share was 1.92p (H1 2021: 1.81p).

Tight controls over cash management, including the repayment of £0.6m prior year COVID-19 related VAT deferral in full and the profit achieved have maintained a cash position at the period end of £1.2m

(H1 2021: £1.3m).

In July 2022, immediately post period, we increased our available debt facility from £1.25m to £2.75m.

Research and Development

Continued deployment of our solutions across major bus fleets and at flagship sites such as London Heathrow Airport is testament to the work being completed by our R&D teams and is fuelling our growth. The connection rollout programme to the Journeo Portal is progressing well and we remain on-target to achieve our 10,000-connection milestone by the end of the year.

Scaling in this fashion is not an easy task, but it is a challenge that we had planned for, and we have coped well with the rapid growth. We continually review the technologies that underpin our solutions and maintain an iterative and customer- focused development trajectory.

Developing and maintaining close bonds with our customers is essential to our continued progression. We are fortunate to work with stakeholders that are engaged with the solutions that we provide and many actively work with us to add functionality and capability, thereby continually improving and innovating our wider product offering.

During H1 2022, we began the important and substantial task of integrating our EPIX1 content management software into the Journeo Portal, to unify development of all our enterprise software products, enhance cyber security and provide world-class scalability and authentication throughout.

The migration is progressing well and we expect completion of this exercise by the second quarter of 2023. In addition, we are working with customers on migrating towards new MQTT2 based communication protocols and cloud infrastructure which will bring about efficiencies and will form the basis of new development opportunities for our customers to improve the distribution of information to the travelling public.

Passenger Infrastructure Systems

Our Passenger Infrastructure Systems business continues to perform in line with management expectations, increasing

H1 2022 revenue year-on-year by 15% to £4m. We are pleased with the progress the business is making, showing steadily increasing sales, demonstrating the increasing adoption of our technologies.

In March 2022, we were delighted to announce a purchase order for the second phase of the City of Edinburgh project. The £2.1m purchase order for display systems and content management services included 400 of our new Optically Bonded3 displays which deliver enhanced display quality and clarity, at a lower power consumption rate.

The displays will also be the first major deployment in the UK to support a new open standard, based upon MQTT communication protocols. Journeo is embracing the new industry standard, produced by the Real Time Information Group (RTIG), and has performed an active role in its development with RTIG to ensure that it meets the needs of our customers.

The new standard will support local authorities who wish to be unlocked from proprietary standards that have restricted their movement to new suppliers. It is being viewed with great interest by local authorities and Passenger Transport Executives (PTEs) throughout the UK and its adoption was an important factor in winning the first of two contracts with Nottingham City Council in June 2022. Cumulatively valued at £1.7m, the first contract comprises £1.4m of this and will see Journeo assume control of more than 1,600 legacy displays in the region. This is enabling Journeo

to take the same approach of enhancing legacy systems with IoT4 technology, to work alongside new and emerging systems, that has been so successful on the Fleet Transport Operator Systems side of our business.

The second part of the Nottingham City Council contract, whilst comparatively low-valued at £0.3m, is arguably just as important strategically. Journeo's powerful new messaging software tool will enable Nottingham City Council to integrate vital travel disruption information with scheduled and real time departure data for over

10,000 bus stops throughout the region.

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This intelligent new service will consume data from standardised data feeds and autonomously distribute the most relevant information to transport users via displays, mobile apps and online sources already used by the authority to provide information.

The new messaging tool will also be a catalyst for migrating our EPIX software into the Journeo Portal, ensuring that all of our customers are served from the same flexible, powerful and secure cloud-based platform.