Acquisition of IGL Limited and Fundraising

RNS Number : 5415K

Journeo PLC

22 December 2022

 

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (AS AMENDED) (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

22 December 2022

Journeo plc

("Journeo", the "Company" and together with its subsidiaries the "Group")

Proposed acquisition of IGL Limited

Proposed Placing and Subscription of 6,666,666 New Ordinary Shares to raise £7 million

Proposed Retail Offer of up to 333,333 New Ordinary Shares to raise up to £0.35 million

Repayment of Loan Notes

and

Notice of General Meeting

Journeo plc (AIM: JNEO), the information systems and transport technical services group , is pleased to announce that it has entered into a conditional agreement to acquire the entire issued share capital of IGL Limited for an aggregate consideration of approximately £8.7 million (the "Acquisition").

IGL Limited, together with its subsidiaries ("IGL" or "Infotec") is a leading provider of innovative display solutions and is the UK's leading rail passenger information equipment provider, with over 15,000 displays in operation. Infotec services approximately 80 per cent. of the UK's rail network and is one of the few UK display companies that designs, manufactures, tests and distributes its own products, which include rail information displays for main, hub and small stations. Approximately 2.19 million passenger journeys rely on Infotec's products every day and the Company's products are installed in 1,476 stations and vehicles across the UK and worldwide. The Acquisition is expected to be significantly earnings accretive to Journeo and is expected to add approximately £12 million of sales and approximately £2 million of pre-tax profit to the Enlarged Group in the first full year following completion of the Acquisition ("Completion").

Journeo also announces that, in order to primarily finance the Acquisition, the Company has conditionally raised gross proceeds of £7 million by way of a placing and subscription of a total of 6,666,666 new Ordinary Shares of 6.5 pence each in the Company, comprising 6,142,860 new Ordinary Shares in relation to the placing ("Placing Shares") at a price of 105 pence per Ordinary Share (the "PlacingPrice") with new and existing institutional and other investors (the "Placing") and a subscription for 523,806 new Ordinary Shares at the Placing Price in relation to the Subscription (the "Subscription Shares"). The Placing is conditional on, inter alia, shareholder approval of certain resolutions (the "Resolutions") to be proposed at a general meeting of the Company to be held on 13 January 2023 ("General Meeting"). Cenkos Securities plc ("Cenkos") is acting as nominated adviser, sole broker and sole bookrunner in connection with the Placing.

The Company has £0.55 million of loan notes in issue carrying a 10 per cent coupon (the "Loan Notes"). The Company proposes to use part of the proceeds of the Fundraising to redeem and repay the Loan Notes. All Loan Note Holders, including certain of the Directors, intend to use all of the proceeds of the redemption to subscribe for the Subscription Shares.

The Placing Price of 105 pence per New Ordinary Share represents a discount of 6.25 per cent. to the 1-month volume weighted average price of 112 pence per Ordinary Share on 21 December 2022 (being the last practicable date prior to the date of this announcement).

In addition to the Placing, it is proposed that there will be a separate conditional retail offer to existing Shareholders via the Bookbuild platform to raise up to £0.35 million (before expenses) at the Placing Price (the "Retail Offer" and together with the Placing and the Subscription, the "Fundraising"), to provide existing retail Shareholders in the Company an opportunity to participate in the Fundraising. A separate announcement will be made shortly by the Company regarding the Retail Offer and its terms. Those investors who subscribe for new Ordinary Shares pursuant to the Retail Offer (the "Retail Offer Shares"), will do so pursuant to the terms and conditions of the Retail Offer contained in that announcement.  For the avoidance of doubt, the Retail Offer is not part of the Placing.

Pursuant to the Acquisition, the Seller will receive initial cash consideration of approximately £6.2 million and £0.5 million payable in 476,190 new Ordinary Shares at the Placing Price (the "Consideration Shares") on Completion, plus deferred cash consideration of £2.0 million, payable in two tranches prior to the date that is 24 months following Completion.

The Placing and the Acquisition are inter conditional, with the Fundraising and Acquisition conditional upon, inter alia, the passing by Shareholders of the Resolutions at the General Meeting to provide authority for the issue of the Placing Shares, Subscription Shares, Retail Offer Shares and Consideration Shares (together, the "New Ordinary Shares").

If the Resolutions are passed at the General Meeting, (i) the Placing Shares, Subscription Shares and Retail Offer Shares are expected to be admitted to trading on AIM at 8.00 am on 16 January 2023 ("First Admission") and (ii) the Consideration Shares are expected to be admitted to trading on AIM at 8.00 am on 18 January 2023 ("Second Admission", and together with First Admission, "Admission") .

The Company will today be posting a circular to Shareholders ("Circular") detailing the Fundraising and Acquisition and convening the General Meeting at which the Resolutions will be proposed. The Circular will be available to view on the Company's website shortly at  www.journeo.com/investor .

Capitalised terms in this announcement shall have the same meaning as in the Circular.

Transaction Highlights:

· The Acquisition is expected to be significantly earnings accretive, adding approximately £12 million of sales and approximately £2 million of pre-tax profit to the Enlarged Group in the first full year following Completion.

· The Acquisition includes free cash from Infotec of approximately £3 million (excluding advanced customer payments) which will strengthen the balance sheet of the Enlarged Group. Infotec also brings to the Enlarged Group a signed order book of approximately £25 million in revenues.

· Significantly oversubscribed Placing and Subscription to raise gross proceeds of £7 million through the issue of 6,666,666 Placing Shares and Subscription Shares at the Placing Price including participation by the Company's directors. The Placing has received strong support from existing and new blue chip institutions.

· Total consideration of approximately £8.7 million payable under the Acquisition. The Acquisition will be primarily funded using the net proceeds from the Fundraising and through the issue of the Consideration Shares.

Russ Singleton, Chief Executive Officer of Journeo, commented:

"We are delighted to announce the acquisition of Infotec, a leader in the rail passenger displays market.

The Fundraising  enables Journeo to welcome new institutional and retail investors as well as supporting existing shareholders in increasing the value of their investment.

Both Infotec and Journeo have strong, organically-driven order books and the Acquisition will accelerate Journeo's growth into the rail market, which currently accounts for only around 10% of Journeo's 10,000 SaaS connections, providing recurring revenue through the Journeo Portal.  We envisage the addition of Infotec to the Enlarged Group will complement our bus and coach fleet operator solutions alongside our in-street passenger transport infrastructure and simultaneously provide cross-selling opportunities for both businesses.

The continued need to move people from their personal-use cars into mass public and active transport modes is being driven by substantial Government initiatives.  One of the keys to modal shift is ensuring that transport data is understandable and the Acquisition will better position Journeo to deliver enhanced solutions to our customers that achieve this, aligned with more opportunities for our team members and increased value for our shareholders".

Further details of the Acquisition and the Fundraising are set out below.

For further information please contact:

Journeo plc  Russ Singleton, Chief Executive Officer Nick Lowe, Chief Financial Officer	[phone]
Cenkos Securities plc (Nominated adviser and Broker) Katy Birkin / Callum Davidson (Corporate Finance) Michael Johnson (Sales)	[phone]

Background to and reasons for the Fundraising and the Acquisition

Journeo business overview

Journeo provides information systems and technical services to the UK public transportation sector and supplies a range of products and services to its customers which include fleet managers, transport operators, airports, local councils and other transport authorities. Journeo's solutions assist public transport authorities to improve their services, help operators to improve efficiencies and ensure that public transport passengers can enjoy safe, secure and well-informed journeys. The Group has 110 dedicated team members.

Over the past three years, the Company has seen strong revenue growth from £11.4 million in FY2019 to £15.6 million in FY2021, equating to a compound annual growth rate of 16 per cent. This growth has been supported following the launch of the Company's SaaS platform in 2019. Connections from the SaaS platform are on track for a year-on-year increase of approximately 150 per cent. in FY2022 and are becoming an increasingly core component of the Group's operations and strategic focus.

As reported in the Company's interim results for the six months ended 30 June 2022, Journeo achieved a record order intake of £12.9 million during the period. This run-rate has continued throughout the year and the order intake now stands at approximately £26 million. During the period, Journeo invested over £0.5 million in research and development ("R&D") to support its next phase of growth. The Group is increasingly winning higher value contracts and, in April 2022, the Group announced that it had secured its largest ever framework contract with a major customer, First Bus, valued at £9 million. The Group has continued to invest in R&D and sales and marketing activities, whilst it continues to roll out its SaaS-based connections which have more than doubled to 10,000 vehicles. Other recent announcements include:

· £3.4 million from Transdev Airport Services to provide bussing and telematics services for Heathrow Airport;

· £1.3 million from Arriva for a fleetwide SaaS framework;

· £9.0 million from First Bus for a fleetwide SaaS framework;

· £2.3 million to improve transport infrastructure across Nottingham and Derby; and

· £1.2 million for Network Rail for ScotRail for software and associated services.

Since the date of Company's interim results, trading has been robust and the Directors believe that trading continues in line with market expectations.

Journeo's products and services

Journeo addresses the market through its two operating companies; a) Journeo Fleet Systems Limited ("Fleet Systems"), and b) Journeo Passenger Systems Limited ("Passenger Systems"). The Group's revenue is generated from a combination of hardware sales, provision of cloud-SaaS management applications, service and maintenance fees and content management services.

Fleet Systems provides, inter-alia, CCTV products, SaaS, passenger counting systems, telematics systems to monitor vehicle performance and efficiency, and safety systems for bus, coach and train operators. Fleet Systems' customers  include First Group, Arriva, Stagecoach, National Express and Go-Ahead. The Directors believe that approximately 25 per cent. of the UK's buses will be connected to Journeo's cloud management platform by the end of 2022.

Passenger Systems provides, inter-alia, passenger display systems, software, real-time information for bus stations and shelters for local authorities & network infrastructure. Passenger Systems' customers include Transport for West Midlands, City of Edinburgh Council and D2N2. The Group manages, supports and maintains approximately 5,000 displays across the UK and the Company's data and/or systems support over 3 million departures per day.

Journeo deploys shared resources across its two operating divisions to support its business and customers. These include a 15-strong R&D team, software development and support, customer support, hardware design, expert project management and marketing, finance, IT and HR teams.

Journeo's growth strategy

The Group's growth strategy is to become, through technology-enabled organic growth and acquisition, a market leader in intelligent transport systems aspiring to generate annual revenues in excess of £70 million in the medium term with double digit operating margins.

Journeo seeks to achieve this through four key drivers:

1.  Organic growth - through increasing the Group's share in a growing market and further adoption of the Group's 's technologies.

2.  Consolidating existing markets - through delivery of multiple services through a consolidated user interface, reducing the number of systems that customers need to administer their operations. The Company is in discussions with potential acquisition targets.

3.  Increasing portion of recurring revenue and SaaS - the Group has a growing pipeline of sales opportunities for its SaaS based services as more passenger transport executives ("PTEs") and local authorities are considering SaaS as an option.

4.  Entry into adjacent markets - the Company sees opportunities to deploy the Group's products and technologies into adjacent markets outside of fleet and passenger systems, including hazardous goods and fuel distribution.

Market drivers in the transportation sector and competitive landscape

The Directors believe that the Group is well placed to capitalise on the current market drivers within the UK public transport sector. As a result of increased urbanisation, climate change and demographic changes, the UK transport sector is faced with increased congestion and passenger demand. Vehicle production is rising in Asia and there is a continuing globalisation of supply chains, alongside higher adoption of zero emission vehicles. The market trends present a need for greater operational efficiencies across public transport and more intelligent transport solutions.

The UK public transport sector is currently benefiting, or set to benefit, from substantial financial support from UK Government backed initiatives, with a view to making public transport the de-facto choice for passengers. Such initiatives include the William-Schapps Plan to improve rail services, BSIP (Bus Service Improvement Plans) (£1.2 billion), ZEBRA (Zero Emission Bus Regional Areas) (£220 million) and CRSTS (City Region Sustainable Transport Settlements) (£5.7 billion).

BSIP and CRSTS form part of the Government's "Bus Back Better" initiative whereby it intends to make the bus a more attractive transport option, with the aim to reduce reliance on the personal-use car and, in turn, assisting to meet their Carbon Net Zero targets.

CRSTS have been awarded to mayoral authorities to level-up public transport and emulate the success of promoting bus travel that has been seen by TfL (Transport for London) through a range of schemes including new bus transit corridors, transport interchanges, active travel improvements and new electric and hydrogen buses.  These are all areas of interest to Journeo, where its technology can be deployed to improve passenger experience and improve monitoring and management of on-board technology for operators.  The funding is awarded in tranches to each authority in tranches over five years, starting from 2022/2023 through to 2026/2027.

BSIP serve a similar purpose to CRSTS and have been awarded to local authorities, based upon the ambition and deliverability of their plans.  Spread across 31 local authorities, the funding level varies dependent upon the schemes they have applied to deliver. The five year funding period also runs from 2022/2023 to 2026/2027. Funding from BSIPs has started to be received by authorities and conversations about BSIP-funded projects are well underway.

ZEBRA is a funding stream that has been designed to support operators outside of London as they move away from traditional diesel vehicles, to full-electric and hydrogen fuel cell vehicles.  Awarded across 17 LTAs to date, the fund is supporting the purchase of over 1,250 zero emission buses.

The Group's products and services are well suited to benefit from these initiatives, some of which are driven by regulatory needs, and assist in delivering improved services within the transportation sector.   The Directors believe that the provision of technical services to the UK transportation sector has high barriers to entry. The requirement to service large fleets of vehicles combined with network complexity creates challenges for new entrants into the market, as does the critical cost of failure.

Within its Passenger Systems division, the Group has established a presence across approximately 44 per cent. of the UK-based authorities which have influence over the transport sector, including English Combined Authorities, English Local Authorities, Scottish Transport Authorities, Welsh Principal Authorities and Northern Ireland. Insofar as the Directors are aware, the main businesses providing competing services to the Group's passenger systems products and services include:

· Trapeze Group UK -a provider of technology to UK public transport;

· Vix Technology Ltd - a provider of automatic fare collection, transit information and transit analytics solutions;

· Trueform Ferrograph - a provider of public transport related products and services;

· R2P - a provider of intelligent technology systems within public transport; and

· JMW Systems - a supplier of passenger information systems, transport information data providers and fuel management systems.

Within its Fleet Systems division, the Group's customers are major bus, coach, freight and train operating companies including Network Rail. The Group has a significant market share with its SaaS-based Journeo Portal currently servicing approximately 800 trains out of an estimated 12,000, and 9,000 buses out of an estimated total of 35,000 within the UK. Insofar as the Directors are aware, the main businesses providing competing services to the Group's fleet systems products and services include:

· Synectics plc - a UK-based AIM quoted company focused on security and surveillance;

· SureTransport Ltd - a provider of monitoring systems;

· Petards Group plc - UK-based AIM quoted rail systems business;

· Flowbird Group -  European provider of smart mobility, parking, EV Charging, and mobility management solutions; and

· Icomera - provider of integrated connectivity solutions for trains, trams, buses and coaches.

The Directors believe that the Group's advanced technologies and software, wide range of capabilities and holistic service offering to the transportation industry provide the Company with a competitive advantage.

Overview of Infotec

As detailed above, Journeo has adopted a growth strategy to become a leader in intelligent transport systems through technology enabled organic and acquisitive growth. Through selected acquisitions, the Company seeks to deliver multiple services to customers through a consolidated user interface, reducing the number of systems that customers need to administer their operations. The Company is continually exploring the market for acquisition opportunities and has a pipeline of near and longer-term acquisition opportunities.

The Board has identified Infotec as an attractive business for the Group's first major acquisition, which will substantially increase Journeo's share of the rail market and enable a wider range of services to be provided to additional customers.

IGL Limited, together with its subsidiaries ("IGL" or "Infotec") is a leading provider of innovative display solutions and is the UK's leading rail passenger information equipment provider, with over 15,000 displays in operation. Infotec services approximately 80 per cent. of the UK's rail network and is one of the few UK display companies that designs, manufactures, tests and distributes its own products, which include rail information displays for main, hub and small stations. Approximately 2.19 million passenger journeys rely on Infotec's products every day and the Company's products are installed in 1,476 stations and vehicles across the UK and worldwide. Infotec has several accreditations and is approved by Network Rail. In addition to Network Rail, Infotec provides services to the following customers:

· Outfront Media - a NYSE quoted outdoor media company;

· Siemens - an ETR quoted technology company focused on industry, infrastructure, transport, and healthcare;

· Transport for Wales - a not-for-profit company owned by the Welsh Government;

· Stella Controls Ltd - a specialist industrial electrical distributor; and

· Telent - technology company specialising in the design, build, operation, and maintenance of the UK's critical digital infrastructure.

Infotec's more recent projects include a £1.9 million contract to provide platform door departure displays on the newly opened Elizabeth Line, a £1.2 million contract to supply large LED array displays at London Waterloo and Victoria Stations, and a US$18 million contract for displays for 535 new Kawasaki R211 subway trains in New York City. Infotec utilises open data and open architecture for flexible integration of its products and technologies with its customers. Infotec has 40 full time employees and has a lease on a 25,000 square foot factory premises in Ashby-de-la-Zouch, Leicestershire, near to the Group's head office. Infotec has limited customer overlap with Journeo, providing cross selling opportunities following Completion.

Infotec is expecting to grow its revenues from £5.8 million for the year ended 30 September 2021 to approximately £12.0 million for the year ended 30 September 2022. This high revenue growth has been supported by Infotec's major contract win with a value of US$18 million with Outfront Media ("OFM"), to supply displays for 535 new Kawasaki R211 subway trains for New York City.

As at 30 September 2021, Infotec had total assets of approximately £12.1 million and generated approximately £0.7 million of profit before tax for the year ended 30 September 2021. Infotec is expecting to report total assets of approximately £18 million as at 30 September 2022 and generate revenues and profit before tax of approximately £12 million and £2 million respectively for the year ended 30 September 2022.

Figure 1: Infotec historical financial information

Year	Revenue (£m)	Profit before tax (£m)
2018	7.26	0.94
2019	7.12	1.03
2020	5.65	0.85
2021	5.53	0.54

Rationale for the Acquisition

The Acquisition is expected to be significantly earnings accretive, and is expected to add approximately £12 million of sales and approximately £2 million of pre-tax profit to the Enlarged Group in the first full year following Completion.

The Acquisition includes free cash from Infotec of approximately £3 million (excluding advanced customer payments) which will strengthen the balance sheet of the Enlarged Group. Infotec also brings to the Enlarged Group a signed order book of approximately £25 million in revenues.

The Directors have identified significant top line and cost synergies which could be achieved through the introduction of SaaS, coupled with field maintenance into Infotec's business mix and providing rail certification and approvals within Journeo's product set. In addition, in the medium term, there is scope for combining the Enlarged Group's two sites in Coventry and two sites in Ashby-de-la-Zouch into a single location.

The Acquisition will enable greater market access for Journeo's existing products and technologies by substantially increasing the Group's market share within the rail sector, where it currently has a relatively small presence. There is minimal current customer overlap between the businesses of Journeo and Infotec, enabling cross selling opportunities within the Enlarged Group, including the sale of Journeo's software to Infotec's customers. For example, Journeo completed trials of a new image processing application running in its cloud-based SaaS platform for Network Rail, which monitors track incursion and subsequently won a £1.2 million contract for software and associated services announced on 19 December 2022. Infotec is one of Network Rail's main providers of CIS displays technology within rail stations. Combining the products and capabilities of both companies could enable the Enlarged Group to provide Network Rail with heuristic systems and services, linking the on-vehicle systems to infrastructure delivered through a consolidated user interface.

Furthermore, the Enlarged Group will have the opportunity to combine Journeo's system design technologies with Infotec's displays hardware to provide end to end communications and security design, installation, management and maintenance services across a wider client base of train operating companies.

The Directors believe that Infotec's business is highly complementary to that of Journeo's and presents growth opportunities within the UK, EU, New Zealand and USA.  Infotec's design and manufacturing capability is expected to generate cost efficiencies with the Enlarged Group which will benefit from bringing certain outsourced manufacturing in house. Importantly, the Acquisition also provides an opportunity for Journeo to incorporate Infotec's customer base in rail with Journeo's SaaS platform to increase recurring revenues as Infotec do not currently have a field service and support capability; whereas Journeo has a team of 35 engineers located throughout the UK equipped with vehicles, test equipment and component spares.

Following Completion, Infotec's sole shareholder (Timothy Court) and its chief operating officer (Neil Scott), will remain with the Enlarged Group as senior Journeo employees.

Use of Proceeds

The net proceeds of the Fundraising will be used to:

· primarily fund the Acquisition;

· redeem and repay the Loan Notes;

· support development of the Enlarged Group; and

· strengthen the balance sheet .

Details of the Fundraising and Placing Agreement

Details of the Placing

The Company has conditionally raised gross proceeds of approximately £6.45 million through a placing of 6,142,860 Placing Shares at the Placing Price with new and existing institutional and other investors. The Placing Price represents a discount of 6.25 per cent. to the 1-month volume weighted average price of 112 pence per Ordinary Share on 21 December 2022 ( being the last practicable date prior to the date of the announcement of the Fundraising).

Pursuant to a placing agreement between the Company and Cenkos dated 21 December 2022 (the "Placing Agreement"), Cenkos has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. Cenkos has conditionally placed the Placing Shares with certain new and existing institutional and other investors at the Placing Price.

The Placing has not been underwritten by Cenkos or any other party and is conditional, inter alia, on:

• the Placing Agreement not having been terminated in accordance with its terms prior to admission of the Placing Shares to trading on AIM;

• the Resolutions being passed which will provide shareholder authority for the issue by the Company of the Placing Shares, Subscription Shares, Retail Offer Shares and the Consideration Shares for cash on a non-pre-emptive basis;

• all conditions of the Acquisition Agreement (other than Second Admission) having been satisfied; and

• First Admission of the Placing Shares, Subscription Shares and the Retail Offer Shares becoming effective by no later than 8.00 a.m. on 16 January 2023 or such later time and/or date as the Company and Cenkos may agree (being no later than 8.00 a.m. on 30 January 2023.

Completion of the Retail Offer is conditional, inter alia, upon the completion of the Placing. Completion of the Placing is not conditional on the completion of the Retail Offer.

The Placing Agreement contains customary warranties given by the Company to Cenkos as to matters in relation to, inter alia, the accuracy of information in this document and other matters relating to the Group and its business. In addition, the Company has provided a customary indemnity to Cenkos in respect of liabilities arising out of, or in connection with, the Placing.

Cenkos is entitled to terminate the Placing Agreement in certain circumstances prior to First Admission including where any of the warranties are found not to be true or accurate or were misleading in any respect, the failure of the Company to comply in any material respect with any of its obligations under the Placing Agreement, the occurrence of a material adverse change affecting the condition (financial, operational, legal or otherwise), the earnings or business affairs or business prospects of the Group as a whole.

Details of the Retail Offer

The Company values its retail Shareholder base and believes that it is appropriate to provide its existing retail Shareholders resident in the United Kingdom the opportunity to participate in the Retail Offer.

The Company is therefore making the Retail Offer available in the United Kingdom through the financial intermediaries which will be listed, subject to certain access restrictions, on the following website: https://www.bookbuild.live/deals/KD7MG7/authorised-intermediaries. Cenkos will be acting as retail offer coordinator in relation to this Retail Offer (the "Retail Offer Coordinator").

Existing retail Shareholders can contact their broker or wealth manager ("intermediary") to participate in the Retail Offer. In order to participate in the Retail Offer, each intermediary must be on-boarded onto the BookBuild platform have an active trading account with the Retail Offer Coordinator and have been approved by the Retail Offer Coordinator as an intermediary in respect the Retail Offer, agree to the final terms and the retail offer terms and conditions, which regulate, the conduct of the Retail Offer on market standard terms and provide for the payment of commission to any intermediary that elects to receive a commission and/or fee (to the extent permitted by the FCA Handbook Rules) from the Retail Offer Coordinator (on behalf of the Company).

Any expenses incurred by any intermediary are for its own account. Investors should confirm separately with any intermediary whether there are any commissions, fees or expenses that will be applied by such intermediary in connection with any application made through that intermediary pursuant to the Retail Offer.

The Retail Offer will be open to eligible investors in the United Kingdom at 8.00 a.m. on 23 December 2022. The Retail Offer is expected to close at 4.30 p.m. on 4 January 2023. Investors should note that financial intermediaries may have earlier closing times. The Retail Offer may close early if it is oversubscribed.

To be eligible to participate in the Retail Offer, applicants must be a customer of one of the participating intermediaries listed on the above website, resident in the United Kingdom and, as at the date of this announcement or prior to placing an order for Retail Offer Shares, shareholders in the Company, which may include individuals aged 18 years or over, companies and other bodies corporate, partnerships, trusts, associations and other unincorporated organisations.

The Company reserves the right to scale back any order at its discretion. The Company reserves the right to reject any application for subscription under the Retail Offer without giving any reason for such rejection.

It is vital to note that once an application for Retail Offer Shares has been made and accepted via an intermediary, it cannot be withdrawn.

The Retail Offer is an offer to subscribe for transferable securities, the terms of which ensure that the Company is exempt from the requirement to issue a prospectus under Regulation (EU) 2017/1129 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus Regulation"). The aggregate total consideration for the Retail Offer will not exceed €8 million (or the equivalent in pounds Sterling) and therefore the exemption from the requirement to publish a prospectus, set out in section 86(1) FSMA, will apply.

As set out above, a separate announcement will be made shortly by the Company regarding the Retail Offer and its terms.

Details of the Subscription

The Company has £0.55 million of loan notes in issue carrying a 10 per cent. coupon; £0.3 million of the loan notes were issued and announced on 8 December 2016 ("Loan Notes One") and a further £0.25 million of the loan notes were issued and announced on 24 December 2018 ("Loan Notes Two"), together the "Loan Notes".

As set out in paragraph 1 above, the Company proposes to use part of the proceeds of the Fundraising to redeem and repay the Loan Notes. All Loan Note Holders, including certain of the Directors (as detailed in paragraph 6 below), intend to use all of the proceeds of the redemption to subscribe for 523,806 Subscription Shares.

Acquisition Agreement and Lock-in Arrangements

Pursuant the Acquisition Agreement, which was executed and exchanged on 21 December 2022, Journeo has agreed to acquire the entire issued share capital of IGL from the Seller for an aggregate consideration of approximately £8.7 million as further detailed below.

Consideration

Subject to satisfying all of the conditions to Completion, the total purchase price of approximately £8.7 million will be payable by Journeo as consideration for the Acquisition. The consideration will be satisfied as follows:

(a)  £6.2 million in cash on Completion;

(b)  £2 million in cash payable in two tranches prior to the date that is 24 months following Completion; and

(c)  by the allotment and issue to the Seller of the Consideration Shares.

Conditions to Completion

Completion is conditional on the following conditions precedent ("Conditions"):

(a)  the Resolutions being passed at the General Meeting approving, inter alia, the issue and allotment of the Placing Shares, the Subscription Shares, the Retail Offer Shares and the Consideration Shares;

(b)  the Placing Agreement becoming unconditional in all respects; and

(c)  Journeo being in receipt of the Placing proceeds.

If the conditions have not been met or waived by Journeo on or before 30 January 2023 (or such other date as the Seller and Journeo may agree) ("Acquisition Long Stop Date") the Acquisition Agreement will terminate.

Undertakings of the Seller up to Completion

The Acquisition Agreement contains certain undertakings given by the Seller to Journeo restricting the conduct of the business and affairs of IGL during the period between the date of execution of the Acquisition Agreement and Completion.

Rescission Rights

In addition to the fact that the Acquisition Agreement will terminate if the Conditions are not satisfied by the Acquisition Long Stop Date, Journeo also has the right to rescind the Acquisition Agreement if at any time prior to completion of the Acquisition:

(a)  there is any fact, matter, event, circumstance, condition or change to IGL which materially and adversely affects, or could reasonably be expected to materially and adversely affect, the business, operations, assets, liabilities or position (whether financial or trading) of IGL (excluding any matter disclosed by the Seller on entering into the Acquisition Agreement or the announcement of the Acquisition) ("MAC");

(b)  the Seller breaches the undertakings in the Acquisition Agreement giving rise to a MAC;

(c)  there is any breach of any warranty in the Acquisition Agreement giving rise to a MAC; or

(d)  any MAC is disclosed in a disclosure letter to be provided by the Seller on Completion.

Warranties and Indemnities

Under the Acquisition Agreement, the Seller has on execution of the Acquisition Agreement, given certain warranties ("Warranties") to Journeo, including warranties concerning his ability to sell the shares in IGL, accounts (both audited and management), the corporate structure of IGL, financial matters, regulatory, data protection, intellectual property and IT, trading and assets, commercial contracts, properties, employees, pensions, environment, health and safety and taxation. The Warranties, which are customary for a transaction of this nature, are given subject to the disclosure made by the Seller in the disclosure letter delivered to Journeo on the date of the Acquisition Agreement. The Warranties will be repeated at Completion and the Seller will be entitled to make further disclosures at that time.

In particular, the Acquisition Agreement contains Warranties relating to two incidences of display failures in July and September 2021 that were reported on a first test train and an incidence of a display failure on the second test train. The faulty displays were quickly repaired and the Directors believe that the customer relationship remains strong.

Under the terms of the Acquisition Agreement, Journeo also has the benefit of a taxation indemnity in the form customary for transactions of this nature and certain other specific indemnities given by the Seller.

Any claims under the Warranties are subject to certain limitations including specified time periods within which to bring certain claims against the Seller, individual and aggregate claim thresholds and liability caps that are usual for a transaction of this nature.

The aggregate liability of the Seller under the Acquisition Agreement is limited to £5 million in aggregate.

Lock-In Arrangements

Separately, the Seller shall also enter into a lock-in agreement with effect from Completion between Cenkos, the Company and the Seller in which the Seller further undertakes not to sell, transfer or otherwise dispose of, or create any encumbrance over, any of the Consideration Shares (or any interest in them), or enter into any agreement to do so, for 24 months following Second Admission, except in certain limited specified circumstances.

Director Participation in the Fundraising

The following Directors have subscribed, in aggregate, for 81,905 Placing Shares and 80,951 Subscription Shares:

Director	Number of Existing Ordinary Shares	% of Existing Ordinary Shares	Number of Placing Shares subscribed for at the Placing Price	Number of Subscription Shares subscribed at the Placing Price*	Number of Ordinary Shares held on First Admission	% of Enlarged Share Capital on First Admission
Mark Elliott	100,000	1.14	-	23,809	123,809	0.79
Russ Singleton	300,000	3.43	52,381	47,619	400,000	2.54
Nick Lowe	15,000	0.17	20,000	-	35,000	0.22
James Cumming	25,000	0.29	9,524	9,523	44,047	0.28

*As detailed in paragraph 4 above, certain holders of Loan Notes, including the Directors shown in this table, have subscribed for Subscription Shares in order to satisfy the redemption of the Loan Notes in full.

Nick Lowe, Chief Financial Officer , has subscribed for 20,000 Placing Shares. As agreed with the Company ' s Remuneration Committee, Nick Lowe is required to re-invest 50 per cent. of his cash bonus (net of tax) ("Bonus Amount") per annum, into Ordinary Shares at the market price at the time of purchase, and at the next available opportunity in each financial year, until such time that his shareholding in the Company is valued at 100 per cent of his then basic salary. Nick Lowe's participation in the Placing includes the reinvestment of his Bonus Amount for FY2021 and his anticipated Bonus Amount for FY2022.

Related Party Transactions

The aggregated participation by all of the Directors in the Fundraising and the participation in the Placing by Canaccord Genuity Wealth Management Limited and Slater Investments Limited as substantial shareholders of the Company, constitute related party transactions for the purpose of Rule 13 of the AIM Rules for Companies. As all the Directors are participating in the Fundraising, Cenkos, the Company's nominated adviser, confirms that it considers that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

EIS/VCT Schemes

The Directors do not expect the New Ordinary Shares to constitute a qualifying holding for venture capital trust schemes or to satisfy the requirements for tax relief under the enterprise investment scheme. Therefore, the Company has not applied for confirmation from HMRC in this regard.

Admission, Settlement, Dealings and Total Voting Rights

The New Ordinary Shares will, when issued, be credited as fully paid up and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the New Ordinary Shares, and will on issue be free of all claims, liens, charges, encumbrances and equities.

Application will be made to the London Stock Exchange for the admission of the New Ordinary Shares to trading on AIM. First Admission of the Placing Shares, the Subscription Shares and the Retail Offer Shares to trading on AIM is expected to occur at 8.00 a.m. on 16 January 2023 (or such later times(s) and/or date(s) as Cenkos and the Company may agree).

Second Admission of the Consideration Shares to trading on AIM is expected to occur at 8.00 a.m. on 18 January 2023 (or such later times(s) and/or date(s) as Cenkos and the Company may agree).

Following First Admission, the total number of Ordinary Shares in the capital of the Company in issue (assuming full take up of the Retail Offer) is expected to be 15,741,249 with each Ordinary Share carrying the right to one vote.  There are no Ordinary Shares held in treasury and therefore the total number of voting rights in the Company is expected to be 15,741,249. The above figure may be used by Shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure, Guidance and Transparency Rules.

General Meeting

The Board is seeking the approval of Shareholders at the General Meeting to allot the New Ordinary Shares.

The Notice of General Meeting, which is to be held at the offices of Cenkos, 6.7.8 Tokenhouse Yard, London, EC2R 7AS at 11.00 a.m. on 13 January 2023, is set out at the end of this document.

The Fundraising is conditional, inter alia, on the passing of both of the Resolutions by Shareholders at the General Meeting. If either of the Resolutions are not passed at the General Meeting, the Placing will not proceed and the Acquisition will not complete.

At the General Meeting, the following inter-conditional resolutions will be proposed:

Resolution 1 - Authority to allot shares

Resolution 1 is an ordinary resolution, to authorise the Directors to allot relevant securities for cash up to an aggregate nominal amount of £485,952.29, being equal to 7,476,189 New Ordinary Shares (i.e. the maximum number of Ordinary Shares that may be allotted pursuant to or in connection with the Placing, the Retail Offer, the Subscription and the Acquisition).

Resolution 2 - Disapplication of statutory pre-emption rights

Resolution 2, which is conditional on the passing of Resolution 1, and is a special resolution, to authorise the Directors to allot up to 7,476,189 New Ordinary Shares for cash pursuant to or in connection with the Placing, the Retail Offer, the Subscription and the Acquisition on a non-pre-emptive basis (being the number of Placing Shares, Subscription Shares, Retail Offer Shares and Consideration Shares).

Recommendation

The Directors believe the Acquisition, the Fundraising and the passing of the Resolutions to be in the best interests of the Company and its Shareholders, taken as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions as all of the Directors intend so to do in respect of their beneficial shareholdings amounting to 440,000 Ordinary Shares, representing approximately 5.03 per cent. of the Existing Ordinary Shares.

The Fundraising is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, neither the Placing nor the Acquisition will proceed.

Expected Timetable of Principal Events

Announcement of the Fundraising and Acquisition and posting of this Circular	22 December 2022
Announcement of the Retail Offer	22 December 2022
Announcement of the result of the Retail Offer	5 January 2023
Latest time and date for receipt of electronic Forms of Proxy or CREST proxy appointment for the General Meeting	11.00 a.m. on 11 January 2023
General Meeting	11.00 a.m. on 13 January 2023
Results of General Meeting announced	13 January 2023
First Admission effective and dealings in the Placing Shares, Subscription Shares and Retail Offer Shares expected to commence on AIM	8.00 a.m. on 16 January 2023
CREST accounts credited in respect of the Placing Shares, Subscription Shares and Retail Offer Shares to be held in uncertificated form (subject to First Admission)	8.00 a.m. on 16 January 2023
Where applicable, expected date for dispatch of definitive share certificates for Placing Shares, Subscription Shares and Retail Offer Shares to be held in certificated form	within 10 Business Days following First Admission
Second Admission effective and dealings in the Consideration Shares expected to commence on AIM	8.00 a.m. on 18 January 2023
Completion of the Acquisition	18 January 2023
Expected date for dispatch of definitive share certificate for Consideration Shares to be held in certificated form	Within 10 Business Days following Second Admission

Each of the times and dates refer to London (UK) time and are subject to change by the Company (with the agreement of Cenkos), in which case details of the new times and dates will be notified to the London Stock Exchange and the Company will, if appropriate, make an announcement through a Regulatory Information Service. Certain of the events in the above timetable are conditional upon, inter alia, the approval of the Resolutions to be proposed at the General Meeting.

References to times in this document are to London (UK) time.

Important notices

The distribution of this Announcement and any other documentation associated with the Fundraising into jurisdictions other than the United Kingdom may be restricted by law.  Persons into whose possession these documents come should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction.  In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in, into or from the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so may constitute a violation of the securities laws or regulations of any such jurisdiction (each a "Restricted Jurisdiction").

The New Ordinary Shares have not been and will not be registered under the US Securities Act 1933 (as amended) (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the New Ordinary Shares in the United States.  The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act.  The New Ordinary  Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of this Announcement.  Any representation to the contrary is a criminal offence in the US. In addition, offers, sales or transfers of the securities in or into the US for a period of time following completion of the Fundraising by a person (whether or not participating in the Fundraising) may violate the registration requirement of the Securities Act.

The New Ordinary  Shares have not been and will not be registered under the relevant laws of any state, province or territory of any Restricted Jurisdiction and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Restricted Jurisdiction except pursuant to an applicable exemption from registration requirements.  There will be no public offer of the New Ordinary Shares in Australia, Canada, Japan, or the Republic of South Africa.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of the New Ordinary Shares (as the case may be).  In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

This Announcement has been issued by, and is the sole responsibility of, the Company.  No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or Cenkos.  Subject to the AIM Rules for Companies, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Announcement or that the information contained in it is correct at any subsequent date.

Cenkos, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is acting exclusively for the Company and no one else in connection with the Fundraising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Fundraising and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Fundraising, Admission or any matters referred to in this Announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Cenkos by the Financial Services and Markets Act 2000  or the regulatory regime established thereunder, Cenkos does not accept any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or theNew OrdinaryShares or the Fundraising, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future.  Cenkos accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.

No statement in this Announcement is intended to be a profit forecast or profit estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share of the Company.

This Announcement may include statements that are, or may be deemed to be, "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology.  These forward-looking statements include matters that are not historical facts.  They appear in a number of places throughout this Announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets.  By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.  Actual results and developments could differ materially from those expressed or implied by the forward-looking statements.  Forward-looking statements may and often do differ materially from actual results.  Any forward-looking statements in this Announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity.  Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect.  Save as required by applicable law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this Announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this Announcement.

Information to Distributors

UK Product Governance Requirements

Solely for the purposes of the product governance requirements contained within of Chapter 3 of the FCA Handbook Production Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of investors who meet the criteria of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in paragraph 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all distribution channels (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors (for the purposes of UK Product Governance Requirements) should note that: (a) the price of the New Ordinary Shares may decline and investors could lose all or part of their investment; (b) the New Ordinary Shares offer no guaranteed income and no capital protection; and (c) an investment in the New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.  The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraising.  Furthermore, it is noted that, notwithstanding the Target Market Assessment, Cenkos will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.

EU Product Governance Requirements

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that the New Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "EU Target Market Assessment"). Notwithstanding the EU Target Market Assessment, distributors should note that: the price of the New Ordinary Shares may decline and investors could lose all or part of their investment; the New Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The EU Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraising.

For the avoidance of doubt, the EU Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase or take any other action whatsoever with respect to the New Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.

Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this Announcement.

Certain figures contained in this Announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this Announcement may not conform exactly with the total figure given.

All references to time in this Announcement are to London time, unless otherwise stated.

 

END

 

 

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