Journeo plc

Thank you for making time to listen to our presentation. So by means of introduction, I'm Russ. I'm an engineer and I'm the CEO. My colleague on the right is Nick, who is our chief financial officer. And we've got today a short slide deck really just to run through our FY24 results, which we're pretty pleased with actually. everybody's new to us journey is really information systems and technical services business working predominantly in the transport sector we've been growing strongly really over the last five years and the results that we've announced build on that so a strong growth in revenue profit and cash We've got a growing sales pipeline, which has gone up from 50 million in 23 to 60 million in 24. We're now running ahead of 75 million opportunities in the pipeline with qualified opportunities and prospects. We've been really busy last year. Whilst we've been executing our business plans and our strategy, we've also been beefing up the what we call the bench or the senior team around the canine so that we can absorb further growth and that we ourselves don't become a bottleneck on that. So we made some kind of appointments which we can cover later on. And we've also been investing in some of the systems behind that. So through CRM packages and HR software packages. And then sort of final point really there is that we've been developing an active M&A program with a number of businesses that we've been getting to know over the last three or four years, or even longer than that, such that we are able to bring businesses into journey of group that we understand with people that we know and we can trust. And we'll give you a bit more information on that later on. The headlines are there, so we'll come on to the financials a little bit later. So what Journeo is doing is we bring in sort of off the shelf IT products and software and really tailoring them for fleet operators, businesses to help them drive costs and improve efficiency. And it's all about really making public transport and freight transport safer, more sustainable, of course, and more attractive where there's passengers involved, as part of a program really to get people out of personal use cars into public transport, which aid congestion, and it's all part of the decarbonisation agenda. And Genia really focuses everything that it does into two course kind of application areas. One of them is on vehicle systems where our IT solutions are on board the bus, the train, the tram, the coach. and also the infrastructure around the rail platforms, bus stations, and parts of the inner cities. And we do that currently through four operating companies. So the image on the left is a picture of a train, actually, and that's obviously our fleet systems business where what we're doing there is providing integrated services. So it's a bundle of hardware, know-how, external products and software, binding them all together and then providing over-air, generally through cloud-based applications, access to the onboard systems, whether they are passenger counting, access maybe to the vehicle's telemetry information or security. Our passenger systems really is about public sector information delivery. And that business works with civil contractors, architects and specifiers. And it has a focus on real time information delivery out to members of the public. And it's got some quite long duration relationships with local authorities and government agencies. Infotech is market-leading manufacturer of rail information systems in the UK. It's on about 80% of the network and it has some quite sophisticated cloud-based software applications for managing the displays, particularly the graphical layouts and ingesting the different data streams that are connected to that. And the new business, Journeo AS, is based in Denmark. This has been formed from Journeo's operation in Stockholm, where we have an engineering services business for the last 10 years, and MultiQ, and that's now run by the managing director of the business that we acquired, a chap called Mads Hansen. And the aim of Journeo AS is to take everything that Journeo has to offer out into the Scandinavian market, but also bring back from that Scandinavian market the really modern aesthetic engineering approach to their products, which look really cool. This next slide really is about the fabulous list of companies that we work for. And obviously, predominantly, these are in the UK, but there's a number of them that are outside the UK, where we're dealing with, for example, a large media agency called Outfront Media, who have the New York City contract for the subway, obviously, Dublin Airport. skala trafficking which is the uh transport uh regional um uh provider in southwest uh sweden and copenhagen airport and the ties it which is the swedish listed digital media company um that we work with um and their subsidiary grass fish but a really good selection of operator customers. And we're very happy to work with the small coach operator that may have two or three coaches right through to operations with many thousands of them. The bar at the bottom is a sort of snapshot of a few KPIs. We currently have 31,000 assets that could be buses, trains, coaches, or displays, of pollution sensing equipment connected to our cloud-based platform that's growing all the time. Our onboard systems are now connected to about 30% of the buses and coaches in the UK. I won't go through all of these, but there's just Just over 200 people actually in the company as I sit here today. So revenue is about 50 million and that's all delivered through these business units and 200 people. So that's a quick introduction to what June is about. I'll now hand over to Nick to run through the financial results.

Okay. So 2024 was a good, very, very good year. Revenue was up 8% for the group to £49.6 million. Another particularly pleasing bit was gross margin increased by 5% to 36%. So we touched on this at the intrams, but we improved margins significantly. And that obviously flowed through to gross profit, where we were up 24% to £17.7 million. We flowed the profit well down to PBT. were up 33% to £5 million for the year. EPS was up to 26.29p, which is a 46% uplift, so we had a very low effective tax rate, which aided the uplift in EPS, so that's a combination of R&D tax claims and other pieces, we had a very low effective tax rate. And cash, we were very, up by £6.2 million from the year before. We also paid deferred consideration of £1.25 million during the year as well on that made in 2023. So operationally cash actually moved by about £7 million just over in the year. We always talk about R&D and how much we spent there. So we spent just over £1.5 million during the year. It all passes through the P&L amortisation matches of R&D. Into the segments, so Russell has explained each segment. So fleet systems was a phenomenal year. We were 45% for revenue there, £23.7 million. That's nigh on doubled in two years. So very, very strong performance. Gross margin is, it's got the lowest margins in million and the really pleasing bit with the fleet is we had a bottom line in fleet of two and a half million so an operating margin of over ten percent in fleet passenger systems we were up five percent to nine and a half million consistent uplift with last year we have good margins here so we were in the 40s 47 margin which means gross profit was uh up by 12 to 4.4 million um bottom line operating profit was a bit lower here it's um but but has improved um we have a fairly fixed overhead base in there now so it will only take it only takes a bit more and uplifting revenue to move that to be to be a very variable operating margin uh into infotech so revenue Decreased here to 12.4 million. Missed exactly what we expected. So we, as we've mentioned before, we had a large contract in New York, which ended during the year. So that was fundamentally the movement in year-on-year revenue. If you just look at Infotech in terms of its like-for-like UK rail, it had its best every year. So it's, again, although the revenue decreased, it's as expected and we are pleased with the performance. Again, margins were up here significantly, 7% up. So gross profit, I guess, a much lower decrease. We're at 4.6 million there. And there's an overall contribution for Infotech. It made just over £2 million. So operating margin is just over 15% there. So very, very good result. Journey OAS, which is the Danish business we acquired in 2023, previously called MultiQ. We just had three and a half to four months of it in 2023, a full year in 2024, so revenue was up to £4 million. Gross margins are very good here, 48%, so it delivered a gross profit of £2 million. And this business has the benefit that it has a good the year off, which then moves to group recurring revenue. So we were up 40% of group recurring revenue year on year. We moved from 5 million to 7 million. It's 14% of the total group revenue in the year. The SAS element is about 40% to 45% of the total. The balance is more maintenance and services, but SAS is the area which has had the biggest growth in the year. Next slide. So contract wins. So this is, I guess, a list of the announcements we made during the year. We did previously increase our announcement threshold. So we had less announcement than we have historically, but the threshold is higher. So they are large, large wins. The good thing with this list is it shows success across the group and the different areas. The first one, £4.7 million for transport for London is fleet on bus. The next one, £3 million is success on train. So we've done well there. Metroline Manchester, again, is on bus. The following three, so the Northern Transport Partnership, Swansea and Edinburgh, are all within passenger systems business, and that's a mixture of hardware. and recurring ongoing income. And the bottom one is, although below a million, it shows a win for our Danish business, a new movers contract won by Journeo AS. Operational highlights, as Russ said, we spent a lot of this year, or last year, getting ready for next steps. So we formed the Journeo Design Centre for product development. Organisational developments, we've made a number of key recruits in key areas to get us ready for the next step. We've implemented group-wide HR systems and support programmes. As Russell said, we've now got over 200 people, so we've made steps there. And we've retained all our ISO, cybersecurity and information certifications.

Okay, thanks Nick. So really this next couple of slides really are about what we see, why Nick and I put our own money into this business, why we actually believe that there's an opportunity if we can get the technology and the services right to scale this business up significantly. And I'm sure most of you are aware of the Smarter Cities agenda, which has been going on for at least the last 20 years. And that has moved from being about congestion to being about mobilisation to these kind of five major sort of descriptors that we've been using to say, well, actually, what are these trends? Are we just trying to fix a problem that's applicable just in the UK or is some of the solutions that we're developing, whether they're services or products or indeed software, does this have a potential for, you know, explosion growth in terms of, you know, worldwide deployment or certainly replicated in other major economies? And so these things, the urbanization, which is leading to more people coalescing on large cities, you know, London's a good example of that, that's leading to further congestion, And that's obviously a problem. There's then the climate change agenda where lots of governments are looking at how they can decarbonise parts of society, public transport and shipping are pretty major areas to go. You've got the shift in economic power and whilst the pandemic affected globalization and started to see sort of friend sourcing or insourcing, there still is an inexorable move towards electric vehicle production in Asia, where China leads the world in renewable, both solar manufacture and battery technology manufacture, and also the rare earth products for the motors. And obviously got some demographic changes now where young people are in increasing numbers deciding not to take driving licence and actually to use public transport. And on the technological side, we can see things like with the IoT and the smarter cities agenda, where there just is going to be more connectivity between vehicles and the infrastructure and the signalling and things like highways monitoring. as the world starts to adopt autonomous vehicles as part of this kind of change. And so what Journeo has been doing is we've been creating the integrated services platform where we can link together all sorts of disparate technologies. It doesn't matter what the operator has or what the local authority has, we will connect it up and give them access to that over a cloud and that's kind of like a sort of a single level uh access but then what we're starting to do then is to overlay machine learning and ai into that so that we can start to pull meaning or valuable sort of insights out of this connectivity and that's helping journey directly for things like our predictive maintenance schedules but it's so much more that that can be useful So those are kind of like the things that's in the background, you know, fragmented supply chain at the moment. And there are substantive government backing for a number of initiatives. And it's things like the bus open data, which is effective trying to make the information more accessible. trying to get public transport to become a de facto choice. You've got what's left of the William Shapps Plan and Control Period 7 for rail and then effectively two quite important initiatives that the government has started one is the bus service improvement plan which effectively put 1.2 billion into the market to enable local authorities and fleet operators to form enhanced partnerships and have access to this and in december uh january uh this year that was extended by another 958 million taking the total up to 2.2 billion um so that's effectively going to provide a catalyst for further investment in clean energy vehicles for the next few years and there's also something called city regional sustainable transport settlements crsts which is 5.7 billion and that's effectively going into mayoral authorities that are one of the aspects that we are very interested in there is that these mayoral authorities are A number of them are looking at adopting the franchising model, which has been adopted, obviously, originally by Transport for London, but more recently by Transport for Greater Manchester, with great success. And with these schemes come integrated park and rides schemes, cycle lanes, clean, pollution-free zones. All of which are opportunities for Genio, either through its public information businesses or through its fleet services businesses. And as a result of that, we're feeling that there's now a really good opportunity for Genio to take another step forward and effectively double its revenues that take us through the 100 million mark. And if we're able to continue to drive out costs out of our integrated supply chains and unified manufacturer, we believe that this could lead to sort of 100 billion market cap opportunity for us. And we're talking about a sort of two to three year timeframe for that. And the way that we're going to achieve that is through organic growth. We won't be able to maintain the 45% in our fleet business, where we can get that to. But we believe sort of 10% or more is realistic. There are opportunities, and obviously we're going to come on to the questions shortly, but there are a number of opportunities for us in terms of consolidation, where some service providers or niche providers or services, whether that's in street furniture or it's on vehicle, could make sense for us to acquire. And obviously that would give us some sort of leverage in there because we have more sort of advanced technology and a nationwide service to expand those businesses. Our recurring revenue has grown and obviously that grows as a function of our sales and it gives us sort of high quality future visibility about revenue. But we're also very interested now in businesses that are providing services to what we call adjacent markets where Journeyo at the moment doesn't have within its extent of supply or not within our firm boundary. But it would make sense for us to have them within our firm boundary rather than them be subcontract. Because obviously when you're dealing with a subcontract, ultimately, you don't actually have control of the priorities of the subcontractor business. And this would enable Journeo to capture more of the spend on some of these larger infrastructure projects. So at the moment, the sort of summary picture for Journeo is that we We delivered what we set out to deliver in FY24, and in fact, it's ended up better than we originally expected, and that led to upgrades from Cavendish. Overall, an 8% increase in revenue to just 50 million. The profit, sort of 5 million, very healthy. Cash generation, as Nick said, even after settling deferred consideration on the acquisitions. And there's a lot of momentum now, both in the UK and it's gathering momentum in our Scandinavian operations. So I think that's probably a good point for us to start with the sort of presentation. And do we hand back to Paul now for the questions?

Fantastic. Thank you very much indeed for your presentation, Rusnik. Ladies and gentlemen, do please continue to submit your questions just using the Q&A tab situated in the right hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation, along with a copy of the slides and the presentation will be available on the InvestorMeet company dashboard. Rusnik, as you can see, we've had a number of questions both pre-submitted throughout today's presentation. Thank you to all the investors who submitted those. If I may just ask you just to click on that Q&A tab and where appropriate to do so, just read out the question, give your response, and I'll pick up from you at the end.

Okay. Do you want to go right up to the top then? Yeah, please. Oh, it's good. There's quite a few. Okay. So it doesn't say who this is from. It says, who are your biggest competitors and what is the main reason for customers choosing Journey over there? So I Competitors, really, we don't have one sort of monolithic competitor that we're up against. There tends to be different competitors in each of our business segments. And that may be because we're sort of entering the market, so we try to dislodge an incumbent. Or it could be that we are the incumbent and we've got people obviously trying to buy market share. So in our fleet systems business, which is predominantly bus, rail and coach, The businesses that some of you might have heard of that we compete with are companies like Traxxas on rail and to some extent Petards. In the bus and coach market, it tends to be smaller operator, privately owned companies that can sometimes offer a lower cost on a sort of one-off basis. In our passenger business, we don't really have many competitors because there aren't many people who can actually do the breadth of things that we do. So the company is sort of on the periphery of that, that our specialists may be in ticketing. And so they perhaps provide ticket vending solutions and they're able to provide some passenger information systems. Or we may well find that there's a large contractor that picks up the whole contract. And they perhaps will bring in displays from, say, from the Far East, and then connect them up. But we don't see a lot of that. In Infotech, it's on about 80% of the UK rail network now. There are competitors come up from time to time. I think one of them was a company called Black Box, who had a relationship, I believe, with Samsung for their displays. And from time to time, they'll sort of different companies come in there. But as infotech has also been growing, it's now starting to get involved directly with the very large 30 or 40 meter concourse wide displays. And there are very few businesses actually that can combine the sort of active digital media with the real time information that they provide. So in a similar situation actually in Scandinavia, What we're finding is that there are not many companies that can actually provide both the in-street and the onboard technology. I must point out that in terms of onboard connectivity, the Scandinavian market is ahead of the UK. So they have something called ITXPT, which is Internet for Passenger or Public Transport. They've had that for quite some time. um so their systems tend to be more deeply integrated um and journey has benefited from that because we've had sort of advanced warning for many years about the kind of technology that we should be bringing into the uk so we've used that to our benefit actually so i hope that's uh it's enough on that one okay some of them are the same question aren't they yeah okay and i'll take this one Are you able to put a specific figure on your sales pipeline for this year? In the same presentation last year, we said the sales pipeline was 60 million. Yes, I can answer that. And as you can see there, our sales pipeline actually, when we started the year on January 1st, was actually 79 million. What we've been doing... We've recruited a new group sales director working across Journeo, supporting the managing directors or the divisional directors of each of our four businesses. And we've put in something called HubSpot, which is a unified CRM system. So prior to this, Journeo fleet and passenger were using something called Pipedrive for CRM. The Danish and Swedish business were using Salesforce.com and Infotech used something called eFax, which is an ERP based system. And by putting all of the sales opportunities and pipelines together, the pipeline is now heading towards twice the figure that we've revealed here. The only reason, in fact, that we haven't included it in this presentation is it's not on a like-for-like basis. So the actual overall sales pipeline is very significantly higher than 75 million. Okay. What is the geographical split for the business? That's perhaps one for Nick to answer. Okay, I'll just pull out the notes.

So we are... So UK, we are about 40 million. So 80% of us last year was UK. And 20% was overseas. Of the overseas, about half of it is Scandinavia. So a mixture of Danish business we acquired and our Swedish business we already have. So there's about 5 million of other overseas revenue. at 3.6 related to the end or the last part of the US contract with Infotech. And we have about one and a half million roughly of sales to predominantly bus builders overseas. So there's a number in China, there's Egypt, there's others. So I guess The original source of the business is our UK operators, but the actual sale will be to either Chinese or Egyptian or other overseas builders.

There's a lot of repeat here. There's a couple, so just bear with us.

Okay, one here. Can we provide more colour on the display to the New York City implementation? So, Infotech secured a contract with a media company called Outfront Media, based in the US, to provide displays on board the new New York City Metro. Outfront Media has the exclusive marketing rights on board the new Metro between 2020 and 2030. And as part of that contract, um they are installing digital media screens on the new trains the first phase um of so the 1600 new they call them subway cars 1600 um of them being supplied under a six billion dollar contract uh from the mta and the vehicles are being manufactured by kawasaki japanese company who set up a manufacturing presence in nebraska um Outfront Media placed a contract with Infotech to provide about 5,000 displays for these first 500 trains, so roughly 100 of these digital media screens per train. And the contract was about 18 million US dollars. And that was already partway through when we acquired Infotech. and the project went through to completion in 2024. The subsequent phase is for about 600 additional trains, and Kawasaki have made announcements to say that they have received the PO to start building them. But our customer, Outfront Media, um as advisors that they're not currently taking up their option to fit the digital media screens on these next batch of trains because the passenger footfall on the metro um has been suppressed since the pandemic so they signed the contract in 2020 and that obviously the pandemic hit and as a result of that they haven't had anywhere near the same passenger footfall in order to monetize the displays on the screens So the trains are going to be built and they're going to be pre-wired so that they can be retrofitted with digital media screens at some point in future. And whilst it's not concrete at this point in time, because we speak to our customer twice a week, what they are saying to us is that President Trump's made statements about people returning to offices and that anecdotally the metro is getting busier. So if the passenger footfall metrics sustain the kind of tipping point that our media customer needs, then they would start to install the media screens. And we've had some conversations with them about that, nothing definitive at this stage. So that's the position.

Okay, so there's a couple of questions about the market consensus for us. One question is that the consensus revenue for FY25 is £52 million, which means prudent. So we're comfortable with the forecast that is in the market for us. That's the best answer to that. There's another question referencing, are we likely to be H2 weighted this year? We have been in many years. We weren't last year. I suspect there's a small chance we might be slightly H2 rated. So yeah, it's possible. Historically, we have been.

So what's the revenue? Okay, what's the revenue split between government and private customers? That's difficult to answer. A lot of public transport has its origination in government, whether that's actually direct capex through things like the BCIP or the funds that preceded that, or in fact whether it's coming from the local authority directly. more than likely it still has its roots in central government finance indirectly. We do have some commercial revenue, quite a bit of what Geoneo does in coach is actually private, the coach is privately owned and obviously the fleet operators are generally privately owned. And in rail, A lot of the work we're doing is actually with the Roscoe, which for those that don't know, that actually is effectively the leasing company that owns the rolling stock. So it's not really related to government funding. And obviously the overseas isn't related to sorts of government finance. So I can't put a figure on it, and it is obviously a good proportion of what we do does originate in central government funding, either directly or indirectly, but we're not completely reliant on it.

Okay. I guess there's several questions around plans for cash and acquisition, which I guess Russ answered in the presentation. So as Russ said, we have several acquisition targets and we would

hope that we utilize some of the cash for acquisitions. Yeah, I mean, one of the questions, what firm plans do we have for our cash over the next 12 months? What order do you give to acquisitions, buyback and dividends? And how likely is a European acquisition? So our priority, obviously, we're very cash generated business. And our priority is to deploy that cash to grow the company. So we're at various stages of conversations with businesses that we think that we understand, that we know very well. that would fit very nicely into the journey of portfolio. And we believe that that's really the right place for us to grow the company. In due course, obviously dividends are a possibility, but they're not at the moment on our agenda, nor are buybacks. We think we've got better use for that cash to grow the company. And in terms of European acquisitions, we are looking at potential acquisitions elsewhere in continental Europe and also in the United States. But I will say that our priority, certainly for the medium term anyway, is the United Kingdom, where there's a number of consolidation opportunities and also acquisitions in adjacent markets that we think can really help us scale the business up.

Okay, so there's a question around from the Camdenish forecast as to why EPS is forecast to be lower next year or this year. So from a PBT perspective, the Cavendish forecast is that we will be higher. There's more prudence around the tax charge. So that's why the EPS appears to be lower.

But from a pure profit perspective, the expectation is that we will be higher.

I think we've actually covered most of the questions, so I think we'll hand back to you.

Fantastic, Rosnick, thanks indeed, and thanks for covering all four of the questions you can. Of course, you will, if any further questions come through, have the ability to review those. Publish responses where appropriate to do so on the InvestorMeet company platform. Just before redirecting investors to provide you with their feedback, I know it's particularly important to you and the team. Russ, if I may, just ask you for a few closing comments, please.

Really, the takeaway from this is that the opportunity that we saw a number of years ago to link these disparate systems together, both in street and on vehicle, is gathering pace. There are more opportunities now. So this is actually something that's expanding, it's not contracting. We've been building the technical delivery platform through a nationwide network of engineers with spares in their vehicles to keep these things going 24-7. And we also have the remote condition monitoring and cloud-based services now to scale them up truly. There's a number of areas that look very exciting. We're in a pretty strong cash position to execute acquisitions without initially having to come back to the market. So it feels like the sort of vista for the next few years looks quite attractive. And we're very excited by the opportunities that are emerging. So thank you very much for everybody's time.

Fantastic. Rosnick, thanks indeed for updating investors today. Could I please ask the investors not to close the session? It should be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This may take a few moments to complete and is greatly valued by the company. On behalf of the management team of Genio PLC, we'd like to thank you very much for attending today's presentation. That concludes today's session and good afternoon to you all.