Journeo (LSE:JNEO) — Full Year Results

0:00 Good afternoon, and welcome to the JOURNEO PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO, Russ Singleton. Good afternoon to you, sir. Good afternoon, Alex, and welcome to everybody that's joining us, to to hear our f y twenty five results. Thank you for making time. I'm Russ. An engineer. I'm the CEO of the company, and I'm joined by my colleague on the left who's Moe. He's our chief financial officer. We've both been with the company a fair while now, and we're both shareholders.

0:50 And around the board, we've got about 4% of the company. Yeah. We're really pleased with the results for f y twenty five. JOURNEO has been developing quite steadily over the years. We're now, one of the leading, some intelligent systems providers in transport. And recently through the acquisition of Crown Fire, we've moved into critical national infrastructure. The results for '25 were, in line with the forecast, very, very strong. We've increased our revenue, our profit, and cash generative. We've improved margins across the board in the group. We acquired Crime of Fire, Defense in September last year. And, we've got a a increasing sales opportunity pipeline, and we're well positioned for, further growth both organically and, through acquisition.

1:49 We'll go to these details a bit more, later, but, revenue was up, gross profit was up, adjusted profit before tax was up, and and so was the cash. From those that perhaps are new to our story, we we really are a sort of technology based systems integration company. We build solutions in, in basically down to these sort of five marketplaces, which are predominantly integrating services or bundling of, aggregated services. We provide information systems, and that can be on the acquisition, the filtering, the processing, and the outbound delivery. And more recently, now we have the infrastructure protection business that deals with both visual, cyber, and physical security threats.

2:38 Our fleet systems business, is sort of core, of the original business, that JNEO has turned into, and that is a specialist provider of integrated solutions onboard buses, trains, coaches, and trams. And it's really all about sort of an IoT approach, linking the subsystems on the vehicle, and then provide information out to the operator, whether that's the actual, fleet operator, the local authority, or, you know, potentially things like British Transport Police and other stakeholders. And passenger systems business is really about the delivery of information into the streets, bus station, bus shelters, and some some railway stations.

3:26 And there, we design and manufacture a lot of the solution ourselves. Invertake is the market leading, rail displays manufacturer. It's on about 80% of The UK network. It's on about a third of the underground. And more recently, it's moved into The United States and also into Denmark. JOURNEO AS is a Nordic's business where we've combined JOURNEO Denmark, which came as a result of the acquisition of MultiQ in September 23, and also JOURNEO Stockholm based business. And that is provider of all of the solutions that JOURNEO Group has.

4:13 And made some recent announcements about contract wins there. And ChromaFire is the infrastructure protection business that we acquired in September last year. We have a growing list of partners and with customers, and and we're really proud to have these people on there. These are obviously some of the larger ones, but we're equally proud to be working with smaller operators or, smaller physical sites. But, as we sit here today, we've got about 35,000 connections concurrently to our cloud based platforms. We're on about, 30 odd percent of The UK bus network for our cloud based systems, and we've got just under 300 people actually now in the company. This was at the end of the period.

5:05 So, what I'll do now is I'll hand over to Nick to run through the financial results. Okay. So so as Ross said, a good set of results. Revenue was up 11% year on year to £55,000,000. Gross margins increased again as we got another 2% out of gross margins, moved them to 40%. And as you'll see later, we we had an uplift across all all segments of the business. So gross profit, actually increased by 23% to 21,800,000. Adjusted PBT was up 13% to 5,700,000. And if you remove the impact of the acquisition, we, increased 8% to 5,400,000, which is where we expect it to be. Diluted EPS was down slightly at 23.83 p.

5:56 There's two strong reasons for that. The smaller part of it is that there were some new shares issued during the year from the acquisition of Crime and Fire and some options exercised. The largest part is that our effective tax rate in 2024 was was exceptionally low as we have some brought forward tax losses, and some over over provisions. So the the tax charge in '25 was a more normal position. So that's that's the key reason that EPS actually dropped slightly. Cash was good, very good, close to 12,000,000, down 2,300,000 year on year, but that's after we spent 10,000,000 on the acquisition. So true true operating movement was actually about 8,000,000 uplift in in cash.

6:45 We always state our r and d number, so we spent about 2,000,000 in the year on r and d. Fundamentally, that will pass us through the p and l. So the 5,700,000 adjusted PBT is actually after writing off 2,000,000 of r and d. Into the segments, fleet was was was a good performance. Revenue was up 3%. Margin was up by 2%. So we actually increased gross profit by 9%, 7,300,000. As as a as a contribution from fleet, we were up 17% to 3,000,000, so very, very strong contribution from that business. Passenger performed phenomenally well. Revenue was up 33% to 12,700,000.

7:31 Strong gross margins at 49%, made gross profit moved up 39% to 6,200,000. And the really pleasing bit from passengers, that delivered a bottom line of 1,500,000, which is just almost seven times what it delivered last year. In for tech, revenue was down to 8,000,000. The reason for that, and it's exactly as we expected, is that we had a contribution from, the New York contract in 2024 that we didn't have in 2025. What we did do during the year was win $10,000,000 of new orders with the same customer, and the vast majority revenue actually falls into 2026.

8:19 So we expect or or we'll see a significant uplift in revenue in Infotech this year. Margins were good, up up to 42%, which meant the gross profit was 3,400,000. And as a bottom line, it still delivered just shy of £1,000,000. JNEO AS, so our Danish business, again, revenue was down slightly at 3,600,000. This was predominantly lower margin work. So, actually, as a as a contribution, the business, maintained gross profit of 1,900,000, and actually increased the bottom line very slightly. Again, we expect more from that business entering this year. We've just just announced a contract which will help that.

9:06 Crime and fire, we acquired in September, so this is four months trading. We've had revenue of 7,400,000, gross profit of 3,000,000, and a and a small contribution of 400,000 for the for the period. Recurring revenue, we say each of the years. We we we had another uplift. We had a 10% uplift year on year to 7,700,000. It's 14% of the whole revenue for the group, and SaaS sits at roughly 40% of the the total proportion of recurring revenue. Next slide is, historically, we've listed all of our, all of our RMSs for contract wins. We had we had 13 announcements during 2025, so we we've we've we've summarized it here.

9:55 What what the slide ultimately shows is that we we've won business in all segments of of the group. So it's not not only focused in one segment. The announcements are across different segments of the business, and that helps what we've carried forward in q twenty twenty six. K. Thanks, Nick. So, basically, we've just wanted to really share this slide with you. This is effectively why we're here. This is why we've put our own money into this business. It's what we firmly believe. There's some really, strong trends occurring in various parts of the world. And what we're looking to do is to align, the sort of, the design of our solutions so that as these, megatrends start to be impacting different countries and different market segments, we've got the solutions right at the sort of cutting edge ready to go. And on the other side of that, we then look for market drivers that are going to enable these new systems to actually move into actually in terms of revenue generative, reality.

11:04 So if I just go through there's actually an extensive list of these megatrends, but we just lifted these five out. So with this rapid urbanization, that's, really, you know, people moving more sort of from rural centers into to to towns and cities, the megacities emerging. That's driving up congestion. It's changing the demand for passengers, but more importantly, it's actually putting greater demands on the utilities, in and around the cities. They've got the climate change and, scarcity of resources and the move towards zero emission vehicles and the use of renewables. And we see a lot of the sort of infrastructure around the towns and cities, particularly on the information delivery, needing to be off grid, and in some cases, actually generated back to the grid.

11:57 You then got the shift in, economic power. That is really manifesting itself now where China are a long way ahead in electric vehicle production and the battery technology in particular. You got the demographic and social changes and also then the technological breakthroughs with some amazing developments in in in artificial intelligence and also in solid state battery technology for renewables. So we have been aligning ourselves with some of these. It comes from a sort of a a well known theme of the smartest cities, and these are an extract of that. And then on the other side of that, we look then for what's actually gonna make change, what will where's the inflection point, and and what do we need to do to align ourselves with that? And so I've listed three here.

12:46 The first one is the city regional sustainable transport settlements. Bit of a mouthful there. The government put 5,700,000,000 in to enable mayor of authorities to, to build future transport solutions, and that's very recently been added to by, 15,600,000,000 of funding that runs after the, the initial fund ends, so from the period 2027 to 2032. So in total, there's around, 20,000,000,000 or so, and we're seeing that being applied now to through the bus services act towards franchising. So we believe that that's going to operate as a market driver out to 2032 and beyond.

13:33 And the bus service improvement plan plan, which is really, aimed at sort of local transport grants, 2,000,000,000 or so has been pledged, previously to that, and we've we've seen sort of first phases of that coming to an end. Now there's another 2,300,000,000 of funding, and this is for non mayoral authorities to gain access to this funding through the twenty twenty five to twenty thirty period. And then through the crime of fire defense business, we've seen, UK government committing to increase core spending on defense from 2.3% of GDP down to 3.5, by 2035. So, what that says to us is that, by building our solutions so that we can enable some of these megatrends to to to be applied and aligning this with our local authority PTO and defense or security based customers, we can actually enable some of these these funds to be drawn down and these projects to take place, and that is driving our growth.

14:40 Our aim is to take JNEO to a 150,000,000, million revenue with, at least double digit operating margins. We're going to continue to do that through technology enabled growth and also through acquisition. So our business is growing strongly organically as Nick's already demonstrated. We've seen an increase in our recurring revenue and also the SaaS component within that. We are active in, our active m and a program, where, obviously, we just completed the acquisition of Crown and Fire. We have a raft of other acquisitions that we're working through. Some of them are into adjacent markets such as Crown and Fire, but some of them are also consolidation opportunities.

15:25 And we're also, working, pretty actively in adjacent markets, both in The UK, North America, and also in Continental Europe. So, I really just wanted to spend a few moments, introducing CRIMEFORNEO it's relatively new to us, and, there there might be people, with us now that don't really know about Chromophile. So Chromophile is a well established business working in, utility protection, particularly, the critical national infrastructure. We acquired it in 2025 in September, and it's got a team of about 72 permanent staff and a similar number of contracted staff works predominantly throughout The UK, and it has all the certifications and approvals that you need, to work in these very dangerous, sites where high pressure mains gas, super grid level, electric, electric distribution, and also some of the defense related sites.

16:29 It's got sort of four legs to the business. It had its own products, its own intellectual property, things like the map vault and can post where over the years, it's improved some of the designs to the point where now it has third party inquiries for some of the products, which historically, it's only designed for itself. It does its own in house design, which it has to because of the nature of the security. They are BS seven eight five eight SC and DV cleared people within the team. It has a network of installation engineers, and they're working throughout The UK. And it also has a construction department, so some of the physical security systems can be quite large if they're protecting a gas treatment site or reservoirs and these sorts of things in in quite hostile environments.

17:23 So the the reason that we we want to crumify in in our business is that we've been building JNEO essentially from what was a fleet services business, integrated services. We then introduced the passenger information systems piece, and some of the work that we've been able to secure has been at the intersection of those those sort of the two two circles on the left where, things like airports, they've actually wanted a a mix of the onboard, long stay car park or staff bussing car park technology linking into the bus shelter, actually, then into the airport SLA adherence. And through the airport SLA adherence, we've been asked if we could interface then with things like the perimeter intrusion detection systems and the access control of very secure places.

18:16 Another example of things like nuclear power stations. And so we started talking to many years ago, about integrating those skills into our business. And they, in turn, started to talk to us. Could we provide remote access services so they can remotely monitor some of their visual systems? And, also, could we run some of our, particularly our analytic tools in real time for their systems? So it took a long time, but we we actually came to the conclusion that this would actually be the sort of third circle in the JOURNEO Group offering. And, in September, we closed that acquisition, and that's now means that this is now what JOURNEO Group looks like. So we have that core capability right at the center of this, the shared resources of I mean, actually, it's people like Nick and I and the m and a, the exec team. We have HR, research and development marketing, and our group IT cybersecurity.

19:14 But then we have the domain expertise, specific focused domain expertise in in the integrated services business, which is ostensibly anything that's moving or the IT systems. Where we bundle up the hardware, the software, the installation services. And and, then on the information side, this is predominantly where a lot of our artificial intelligence led solutions are going. And then infrastructure protection. The infrastructure protection is relatively new to us at the moment. The, the impact in our growth plan is yet to come, but that's actually why we wanted this inside our group. And we're pretty confident that this can take us through the 150,000,000 revenue with at least a 10% net operating margin. So what we've been doing with JOURNEO is we've been increasing our opportunities, like like, funnel of opportunities. We've been increasing our capability at the same time as reducing risk, and it's all about assurance, making sure that the systems are working, whether that's through the remote access services from onboard vehicles or indeed whether it's through remote health monitoring, the displays in bus shelters, in railway stations, or out in the street.

20:27 In 2024, the business looked like it does on the left where we had Invitate, Fleet, Passenger, and Denmark. In '25, we added on the crime of fire business, and our go to market for 2026 now looks like this. And we're really confident that we can take this thing forward. The business now has an sales qualified sales opportunity pipeline north of 200,000,000. The actual funnel is much, much larger than that. And through this, we are starting to see now synergies. So we announced a contract last week for the Danish State Railway, which is a combination of JNEO design center, JOURNEO AS in Denmark, and Invertech providing the manufacturing for a new class of displays that are going to be installed on the outside doors of the trains for DSB.

21:21 And we have inquiries from other European rail authorities for these kinds of solutions. So that's kind of an introduction to to to to to our current three phase business model and an explanation of our f y twenty five results. So, we now like to take some questions. That's great, Ross, Nick. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you the recording of this presentation along with a copy of the slides and the published Q A can be accessed via investor dashboard.

22:06 And, Ross Nick, at this point, if I may just hand back to you to take us through the q and a session, and I'll pick up from you at the end. Thank you. Okay. I'm just gonna I think I'm just tidy a couple. Okay. I can take that one. Okay. Right. So there's a question on the quantity of our forward order book. And and and the follow-up, if if we can't say what is, where do we see the strongest growth coming from? So so we we don't publish our our order book at the moment. But in but in terms of colors where we see growth this year, I I guess in in order of growth, so we have, we will have twelve months of crime and fire this year rather rather than four months. So we we we had 7,000,000 revenue from that last year, and it's it did 17,000,000 in the year pre acquisition. So so we will see a full year of good growth in crime and fire.

23:06 As I said, when we came to Infotech will improve significantly this year. Biggest chunk of that will be through the New York contract, but we'll also see some movement in UK rail. Passenger should continue its its significant, significant improvement, and fleet will also improve. So so so I guess in terms of ranking of of additions to revenue, I I would say it'd be crime and fire followed by impact followed by passenger followed by Fleet for for the growth this year. There's a question there. How does Crime and Fire fit with the because I think we've explained that. So the rationale for why we're interested in Crime and Fire. Okay.

23:54 Page 39 and page 40 of the recent annual report identify high risks of increased competition on being overtaken by new technology approaches. Please elaborate. That's a really good question there. So, obviously, we're scanning the horizon for things that, can impact us, and there's some very obvious ones, you know, such as, you know, cyber attacks with 35,000 connections now to our cloud based systems. It would indeed be quite a problem if, if we if if we were hacked and could deliver because a number of organizations now are relying on this. We've got seven airports that are connected well, actually, their mobility systems are run by by our portal and about 13,000 buses and trains. So it'd be quite serious.

24:43 So but so we we we deal with that. We have a team that's working on that, and we're going through the Microsoft Sentinel approach, and we're part of the NCSC. Other risks that we've identified are increased competition. What we mean by that, in fact, I'm being overtaken by new technology. They're actually sort of one and the same. What we've seen is that, the the incredible performance of agentic AI is is now we believe is gonna decimate a number of kinda traditional SaaS business models that are relying really on the asymmetry of huge data or big data and a user base that's unable to actually filter that. And, and we do have, an awful lot of data, particularly that that comes from the real time information systems on more vehicles.

25:35 So there's always a possibility that there's a a new sort of technology solution could come in a bit like a JNEO PLC is doing right now that could actually take a lot of the, if you like, the software deliverable away. So at the moment, we we have a policy inside the company that we actually don't use any of the agentic AI tools in any safety critical solutions. So we do use machine learning, but we're using fully traceable and predictable outcomes. So we don't have the possibility of things like hallucinations within the service delivery. So the the risks are more to do with some amazing new development that could come that could actually sweep away some of the delivery.

26:22 So we're reminded to that. And rather than be fearful of it, our approach is actually to embrace it and adopt it. So we're and that's that's really what we're doing. K? Want to take it? Try something. There's a question around tariff threats impacting our US opportunities. I think so so far, they've they've they've actually helped us. So the the most likely source of displays outside of us is is actually China. So so the tariffs on us are less than than than on China. So the so the tariff, has has not impacted. It may may have helped us. How we we we may move around that going forward is we we are we we could potentially final assemble the product in The US, which would enable us to to to move around the tariffs anyway.

27:21 So so so far, you know, the tariffs have not have not impacted us, and and The US customer is is is certainly very, very, very pleased with what with what they're taking from us. Okay. Great. There's one here then, Kevin c. So we so as you say that you're looking for acquisitions with some overseas, have you also considered, excuse me, having in house start ups overseas? Again, that's a really good question, and and the answer to that is yes. We have been looking and are looking and are talking to a number of overseas potential acquisitions. Some of them, we're actually unable to do at the moment because the valuations, particularly in North America and The United States, are much higher than they are actually and they are in other parts of the world too. So, the business is actually starting to take off in The US. So, we are at pretty advanced stage of of, taking, some office space and actually open up JNEO Inc. On the East Coast Of The US to serve New York City, the MTA, and our customer base out there. We got a team out there now. We've had a service center actually in our customers' premises for about eighteen months.

28:34 So we've had JNEO engineering, tech support actually in The US throughout that time. So that is I think that that answers, the question. So let's have a look for if we're gonna go to the next one. Do you wanna take that, Josh? So so there's a question that said well, we changed it. So that six months ago, we gave a 100,000,000 revenue target within two to three years, and we're now six months into that. So so how are we doing? Is it realistic? So so Cavendish have a forecast for us to hit £72,000,000 this year. So, yeah, it is certainly is still a realistic target. And and as as Russ said, we have moved the target on for for this year, to towards a 150,000,000.

29:26 So we are, we we we're we're comfortable with the targets that we have we have stated. So, next one. Are there any plans to be more active internationally, US, Denmark, or even in The EU? And what is preventing what was that? Sorry. What is preventing us from doing so doing so? Okay. In common with companies. Okay. So, yes, in The US, we we we're gonna do our own sort of small start up. And that really is as everything is in JNEO, it's a customer focused activity. So it's working with customer. The customer's asking us to do this. We have the capability to do that. So we have a a US, you know, ZIP code, an incorporated business so we can offer our customer even greater support both post sale and also looking forward.

30:19 In other parts of the world, we at the moment, we have an active m and a pipeline with about, I would say, 20 to 30 businesses in it. At any one point in time, we probably have half a dozen that we're at various stages of discussions with. We'd love to do more within the EU, and we do have plans to do that. And we also do have plans to do this actually in other parts of the world, you know, particularly in South America and Asia as these new products that are being designed by the JNEO center come to fruition. So we'll initially do that through channel partners and value added resellers. That's the plan. We don't intend to be opening up offices in many, many countries. We'll only do that when we've actually got an an established customer base. We bonded to that customer, because we're effectively then part of the supply chain. And as everybody knows, it's actually supply chains that compete.

31:11 So I hope hope that answers your question. I think we've covered much challenges around. So, actually, should I take that one? How do you see AI playing a part in cost optimization to times two of your sales? Will the need for headcount need to increase in areas? So as again, it's a quite a insightful question. So we see AI playing a part across all facets of our business. So, actually, internally for our SAP, our CRM, our HR systems, and also outbound to to our customers and actually, obviously, embedded within our systems. So, we're working on a number of sort of distillation models for, the large language models both onboard our vehicles and actually in the streams, but also within our CRM, as I've explained.

32:08 So we don't expect to times to our headcount to times to our sales. Where we do expect our headcount to increase is that despite the benefits that things like the IoT and the, AgenTiC AI can bring, You actually also do need to go to a site physically because, for example, where you've got a bus, a train, or a tram, or in fact, some specialist vehicles and military vehicles has other goods vehicles, the technology onboard them can fail, and, ultimately, somebody needs to go to service that. And within crime and fire, they have this very significant pipeline of of projects coming down framework agreements. And to increase that business, what we need to be able to do is to do more projects concurrently, and that will be a function of headcount.

33:00 So it's not a one for one, but it may be that to, you know, to double the the the revenue through that channel, you might need to increase the headcount by, let's say, 30 to 40%. And we we're actually going to use some of the AI tools to do it. So this is not jargon. This stuff actually really does work, as I'm sure many of you know. Okay. I think yours really are yeah. Most of them are actually these are the last last year's. Yeah. These are actually all the same questions that show show so we've done them. That's great. If I may just jump back in there, guys. Thank you for addressing those questions for investors today. But before we direct investors to provide you with their feedback, which one is particularly important to you and the company, Ross, could I just please ask you for a few closing comments?

33:50 I'd really just like to thank everybody for making time to listen to our story. We we've we've been developing JNEO. It's taken us a long time to actually get the platform, the services, and the technology right. And there's loads of things that we actually want to do in the company to improve it. But but the aim is to try and do more for our customers to help them get more performance out of the system or reduce the cost of the delivery onto the the b to c component, and to really listen and learn to some of these megatrends and these funding, streams so that we can actually capture more of the sale and, really just enable everybody within JNEO to sort of progress. It's an exciting place to be.

34:38 We're doing first of a kind implementations, and we want to do more of it. So thank you very much for making time to hear our story. Really appreciate it. Fantastic, Ross Nick. Thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.