Knowing where it is going

1Spatial 31 May 2018 Update
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1Spatial

Knowing where it is going

Full year results

Software & comp services

31 May 2018

Price

3.35p

Market cap

£25m

Net cash (£m) at 31 January 2018

0.3

Shares in issue

760.5m

Free float

91%

Code

SPA

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.5

(5.6)

(7.6)

Rel (local)

12.8

(11.1)

(9.9)

52-week high/low

4.2p

2.8p

Business description

1Spatial’s core technology validates, rectifies and enhances customers’ geospatial data. The combination of its software and advisory services reduces the need for costly manual checking and correcting of data.

Next events

Investor teach-in

13 June 2018

Analysts

Dan Ridsdale

+44 (0)20 3077 5729

Alasdair Young

+44 (0)20 3077 5700

1Spatial is a research client of Edison Investment Research Limited

1Spatial’s return to growth and cash break-even in FY18 reflect the initial success of management’s turnaround plan. Supportive market dynamics and a strong pipeline give us confidence that the business can return to sustainable growth and profitability. We believe the renewed focus on its solution strategy and goals to grow its offerings that master, define and maintain accurate geospatial information from multiple data sets in key target verticals could provide the potential for an acceleration of growth.

Year end

Revenue (£m)

EBITDA (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/Sales
(x)

P/E
(x)

01/17**

15.1

(0.9)

(12.8)

(1.75)

0.0

1.6

N/A

01/18**

16.9

0.4

(1.5)

(0.19)

0.0

1.5

N/A

01/19e

17.8

1.0

(1.0)

(0.13)

0.0

1.4

N/A

01/20e

18.8

1.6

0.3

0.04

0.0

1.3

83.8

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Continuing businesses only.

Turnaround plan delivers initial success

Following the disposal of EnablesIT in March, 1Spatial is solely focused on developing its geospatial business. This business recovered robustly, reflecting the initial success of management’s turnaround plan. Continuing business revenues grew by 12% y-o-y to £16.9m (Edison: £16.5m), with EBITDA of £0.4m (Edison: £0.3) vs a £0.9m loss last year. Net cash outflow for the year was £0.1m and year-end net cash was £0.3m (£1.3m cash, with £1m borrowings from a £2.5m facility).

Recovery well embedded, eyeing the next phase

Through continuing with its GIS solutions provider model, and a ‘Land and Expand’ approach in the key verticals of government, utilities and transport, we believe that 1Spatial has the potential to sustain 10%+ revenue growth and with operational leverage, generate robust profit and cash generation, although scarcity of engineering staff is a constraint at present. Looking to the next phase, management is now targeting a potentially significant incremental opportunity in solutions that enable clients to master, define and maintain accurate geospatial information from multiple data sets. Progress over FY19 will help calibrate the scale and timing of this opportunity, but successful execution could drive an acceleration of growth.

Estimates upgraded, still cautious

Management indicates that trading thus far in FY19 has been strong. For the ongoing GIS operations, we estimate FY19 revenues of £17.8m (5% growth), while FY19 adjusted EBITDA moves up from £0.7m to £1.0m (modestly below our previous estimate, which included EnablesIT). We believe these estimates are conservative and that revenue upside should gear strongly into earnings.

Valuation

Our confidence that 1Spatial will consolidate its recovery has strengthened and, based on our current forecasts, we believe that a FY19e EV/sales multiple of 2.0x (vs 1.35x for GIS on current forecasts) is justifiable. This would imply a value of c 5p per share. The incremental opportunity provides the potential for an acceleration of scalable growth or for a strategic premium to become priced in.

Phase one of recovery plan yielding results

FY18 financial performance reflected good execution on the company’s turnaround plan, which commenced in March 2017. This plan was based around a shift towards a client-led solutions provider model, with the company’s 1Integrate product at the core and focusing on 1Spatial’s traditional customer base of heavy-duty GIS users in the government, utilities and transport verticals.

Revenues grew by 12% y-o-y to £16.9m driven by higher licence revenues (up 73% to £2.5m) and service revenues (up 9% to £7.2m), while support and maintenance revenues were broadly flat at £7.2m.

Geographically, revenue growth (by destination) was driven by the UK (revenues £5.0m, +15% year-on-year) and Europe (£7.3m, +13% y-o-y), whereas the US remained broadly flat at £2.6m on a tough comparative period, which had benefited from a $1.7m deal with a US government agency. The company also reports winning three clients in the US since the start of this year (average value $120k) and therefore looks well set to resume a growth trajectory, driven by increasing adoption by government agencies in the region.

Despite the higher contribution from licensing, gross margins dropped back a touch to 53% from 55%, which reflects the fact that, with the change in model, a higher proportion of engineering cost is being expensed through the P&L rather than capitalised as R&D. Capitalised R&D expenditure dropped from £3.5m in FY17 to £1.0m in FY18.

As a consequence, while EBITDA improved to £0.4m from a loss of £0.9m last year, operating cash flow from continuing operations improved by £1.9m to a £0.7m inflow versus a £1.2m outflow last year.

Year-end net cash stood at £0.3m (£1.3m cash, with £1m borrowings from a £2.5m facility) which, with careful management, should be sufficient to support the business through our forecast period.

Exhibit 1: Revenue and margin progression (continued business only), £000s

Source: Company data, Edison Investment Research

Plenty further to go with the current model

The turnaround is by no means complete, but by continuing with its GIS solutions provider model, we believe that 1Spatial can continue on a similar robust growth trajectory and generate the operating leverage to deliver profitability and cash generation.

Management reports that the pipeline is healthy. 1Spatial has differentiated IP in its 1Integrate product and a well-proven ability to deliver value in its core government, utilities and transport verticals. The global Geographic Information Systems (GIS) technology market is large (estimated at $9bn) and growing at a double-digit rate.

Staff the key constraint

The key constraint on growth is likely to be the company’s ability to recruit the appropriate engineering staff, with Brexit making it more difficult to recruit staff from Europe in an already tight recruitment market for engineers in Cambridge. The company is planning to establish teams elsewhere in the UK and Ireland to widen the recruitment net and is considering plans to open up an offshore development centre to help ease this constraint. Acquisitions, which bring on board both skilled staff and client relationships, are also likely to be explored.

New products expanding the opportunity

Management has introduced a number of new growth initiatives with the results.

New data types could support penetration of new verticals: the company has recently added two new data types to the 1Integrate platform: linear referencing systems (LRS) data, which could strengthen the company’s offering in infrastructure and transport; and computer-aided design (CAD) data, which are expected to open up opportunities in the facilities management market. With respect to the latter, the company has recently completed an $80k proof of concept (PoC) with a very large US technology vendor to clean and integrate CAD-based GIS data. The company is now in the process of engaging with this client to carry out work on a number of other campuses, while other opportunities have also since emerged in this vertical.

Moving 1Integrate capability to client devices: whereas 1Integrate has typically been deployed on the server to correct and integrate data collected in the field, the company is in the process of developing client-based (mobile, desktop or web) business applications, to address clients’ specific data collection needs. Embedding 1Integrate into the business application will correct and validate data collected at source. In addition to opening up new revenue opportunities, customer lock-in should benefit from the expanded use of 1Spatial’s technology in the workforce/workflows of an organisation.

Building on GIS solutions portfolio

With the shift to a solutions provider model now well embedded, the next step in management’s strategic plan aims to leverage the company’s core IP and expertise to transform 1Spatial progressively into a differentiated, scalable business in geospatial/location master data management.

To explain the concept, it is important to understand the broader discipline of Master Data Management (MDM), whereby data from multiple sources are integrated, updated, cleaned, corrected and standardised to create a single “golden source” that can be relied upon. This is a well-established but rapidly evolving industry, which Transparency Market Research estimates was worth $3.8bn globally in 2017 and will grow at a 27% CAGR through 2024 to reach $21bn. According to Gartner, the leading vendors are SAP, IBM, Oracle, Informatica and Stibo Systems.

The opportunity for 1Spatial stems from the complexity and specialist nature of geospatial data, which is not always well addressed by the mainstream MDM providers. 1Spatial’s open architecture software can manage both geospatial and non-geospatial data, thereby enabling clients to master, define and maintain accurate geospatial information from multiple data sets. While the company will need to invest in developing a platform to fully capitalise on the opportunity, it is already working on a number of proofs of concept (PoCs) with customers in this area.

Early stage, but strong execution could add scalability and strategic value

While the initiative is still at an early stage, we believe that successful execution could open up opportunities for accelerated, scalable growth (e.g. platform vs service sales, leveraging channel partners) and potentially for a strategic premium to become priced in. We expect to learn more at the company’s forthcoming investor teach-in day (13 June).

Estimates

Our P&L model (for the ongoing geospatial business only) is set out in Exhibit 2.

While we believe the demand environment could support 10%+ growth, we factor in the tight recruitment situation and consequently set our revenues estimates at a more cautious level (5% and 5% growth for FY19e and FY20e respectively). We understand that management has good visibility on more than 80% of our FY19 £17.8m revenue forecast.

We forecast a significant expansion in adjusted EBITDA, driven by the improving sales mix (licensing revenue growth) and operational gearing, with opex remaining relatively flat. Again, we believe there is scope for upside, with success in driving licensing income the most significant swing factor.

At the operating profit level we forecast continued losses this year, with the company moving into profitability in FY20e. This is primarily as a result of high levels of R&D amortisation stemming from significant capitalised investment in previous years. 1Spatial still capitalises development costs, but with a shift in model to a much less significant extent than previously (£1m in FY18 vs £3.5m in FY17) and the amortisation charge now significantly outweighs the level of capitalisation. (We forecast £1.1m of capitalised R&D in FY19 vs a £1.6m amortisation charge.)

Ultimately, we believe that a solutions provider of this nature should be targeting 15%+ operating margins, while moving into MDM could provide the opportunity for margins to scale materially north of this (20%+) over time.

Cash flow and balance sheet

We forecast that 1Spatial will operate at net cash flow break-even in FY19 before starting to generate cash again in FY20. While the company registered a small £0.5m increase in working capital in FY18, both receivables and payables reduced significantly, indicating the implementation of a more disciplined approach. We see scope for further improvements, through an improving licensing mix and securing a higher level of upfront payments for services, but at present forecast that working capital levels will grow in Iine with sales.

As previously discussed,1Spatial’s £0.3m net cash position is somewhat tight, but with continued careful management should be sufficient to see the company through to positive cash generation.

Exhibit 2: P&L model (continued business)

£000s

2017

2018

2019e

2020e

Revenue

Licenses - own

600

1,200

1,800

2,160

Licenses - third party

858

1,315

1,700

2,040

Services

6,571

7,178

7,500

7,725

Support and maintenance

7,104

7,228

6,800

6,842

Product

0

17

0

0

Group revenue

15,133

16,938

17,800

18,767

Growth

(5%)

12%

5%

5%

Total gross profit

8,265

8,944

9,710

10,598

Group gross margin

55%

53%

55%

56%

Cash costs

Geospatial

6,787

6,940

7,044

7,255

Central Costs

2,352

1,601

1,681

1,698

Total ongoing cash costs

9,139

8,541

8,725

8,953

Group EBITDA adj

(874)

403

985

1,645

Group EBITDA margin (%)

(6)

2

6

9

Depreciation

297

231

231

231

Amortization of software

11,323

1,474

1,600

1,111

Adjusted operating profit

(12,494)

(1,302)

(846)

303

SBP

(566)

(538)

(250)

(250)

One-off items

(2,590)

(1,041)

(300)

0

Operating profit

(15,650)

(1,805)

(1,396)

53

Interest

(25)

(151)

(161)

3

Associates

(266)

0

0

0

PBT (reported)

(15,941)

(1,956)

(1,557)

57

Tax

1,081

753

405

(11)

PAT (reported)

(14,860)

(1,203)

(1,152)

46

EPS (p) (reported)

(2.0)

(0.2)

(0.2)

0.0

Source: Company data, Edison Investment Research

Estimate changes and discontinued business

Our estimate changes are shown in Exhibit 3. Our previous estimates included the contribution from EnablesIT, which was disposed of in March for a minimal amount (see our March 2018 update note, Core GIS business robust/disposal of Enables). We include only the continued geospatial business in our estimates, where we leave revenue almost unchanged and lift EBITDA by 35%.

Exhibit 3: Estimate changes

£000s

2018

2019e

2020e

Forecast

Actual

Change (%)

Old

New

Change (%)

New

Geospatial

16,534

16,938

2

17,935

17,800

(1)

18,767

Enables IT

7,279

0

(100)

7,643

0

0

Revenue

23,812

16,938

(29)

25,577

17,800

(30)

18,767

% change

0%

0%

0

5

5

Gross profit

10,351

8,944

(14)

11,201

9,710

(13)

10,598

% gross profit margin

43%

53%

21

44

55

25

56

EBITDA Geospatial

310.3

403

729

985

35

EBITDA Discontinued

410

0

430

0

(100)

EBITDA

720

403

(44)

1,160

985

(15)

1,645

Operating profit (before GW and except.)

(542)

(1,302)

140

(78)

(846)

985

303

EPS - normalised fully diluted (p)

(0.08)

(0.19)

149

(0.03)

(0.13)

320

0.04

Net debt/(cash)

(656)

(268)

(59)

(1,335)

(372)

(72)

(1,096)

Source: Company data, Edison Investment Research

Valuation: Recovery not priced in

1Spatial’s shares still trade on typical recovery multiples, with a low EV/Sales multiple (FY19e: 1.35x) but high P/E (loss in FY19e, 83.8x in FY20e) due to the current compressed margin status. However, our confidence that the company will consolidate its recovery has strengthened; we feel our estimates are conservative and revenue upgrades should gear strongly to earnings if they come through.

Consequently, we believe1Spatial should progressively shake off its recovery multiple as further evidence that it is consolidating its recovery and moving into profitability comes through. Looking beyond this, the location master data management opportunity provides the potential for an operationally geared acceleration in growth. While it is too early to price in such an acceleration at present, we believe the company’s potential in this space could prompt some strategic interest.

On this basis, we believe that an FY19e EV/Sales multiple of 2.0x (vs 1.35x for GIS on current forecasts) would be easily justifiable, implying a value of c 5p per share.

Exhibit 4: Peer comparison

Name

Ytd
perf (%)

Price
(reporting ccy)

Quoted currency

Market cap (m)

EV/Sales 1FY (x)

EV/Sales 2FY (x)

EV/EBITDA 1FY (x)

EV/EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

Hexagon AB-B SHS

18

47

SEK

174,887

5.2

4.9

16.1

14.8

23.6

21.4

Trimble

(15)

35

USD

8,648

3.1

2.9

16.2

13.9

19.8

17.4

Nemetschek

42

107

EUR

4,104

9.0

7.8

33.9

29.2

54.0

46.0

First Derivatives

(2)

41

GBp

1,053

5.9

5.2

33.0

29.1

60.9

53.9

Saison Information Systems

(34)

1,543

JPY

24,997

0.8

0.7

N/A

N/A

19.8

13.0

D4T4 Solutions

(5)

1

GBp

53

2.5

2.1

9.7

9.0

13.3

12.3

Kainos Group

19

4

GBp

478

4.9

4.3

28.2

23.0

39.6

32.1

IDOX

9

0

GBp

162

1.9

2.0

7.3

7.8

10.0

11.5

K3 Business Technology Group

(10)

2

GBp

70

0.8

N/A

9.1

N/A

16.2

N/A

SDL

(2)

4

GBp

355

1.1

1.1

12.1

10.3

19.6

17.2

SCISYS

52

2

GBp

52

1.1

1.0

9.7

8.8

14.7

13.2

Iomart Group

6

4

GBp

448

4.8

4.4

11.9

10.7

22.7

20.0

Average

3.4

3.3

17.0

15.6

26.2

23.5

1Spatial

3

GBp

25

1.4

1.3

25.5

15.3

N/A

83.8

Source: Company data, Bloomberg consensus. Note: Prices as at 25 May 2018.

Exhibit 5: Financial summary

£'000s

2016

2017

2018

2019e

2020e

31-January

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

18,300

15,133

16,938

17,800

18,767

Delivery costs

(7,715)

(6,868)

(7,994)

(8,090)

(8,169)

Gross Profit

10,585

8,265

8,944

9,710

10,598

EBITDA

 

 

2,902

(874)

403

985

1,645

Operating Profit (before amort. and except.)

1,584

(12,494)

(1,302)

(846)

303

Acquired Intangible Amortisation

(200)

0

0

0

0

Exceptionals

(1,081)

(2,590)

(1,041)

(300)

0

Share based payments

(976)

(566)

538

(250)

(250)

Operating Profit

(673)

(15,650)

(1,805)

(1,396)

53

Net Interest

(27)

(25)

(151)

(161)

3

Other

(421)

(266)

0

0

0

Profit Before Tax (norm)

 

 

1,136

(12,785)

(1,453)

(1,007)

306

Profit Before Tax (FRS 3)

 

 

(1,121)

(15,941)

(1,956)

(1,557)

57

Tax

503

1,081

753

405

(11)

Profit After Tax (norm)

1,136

(12,785)

(1,453)

(1,007)

306

Profit After Tax (FRS 3)

(618)

(14,860)

(1,203)

(1,152)

46

Average Number of Shares Outstanding (m)

691.3

728.9

747.7

760.5

760.5

EPS - normalised (p)

 

 

0.16

(1.75)

(0.19)

(0.13)

0.04

EPS - normalised fully diluted (p)

 

 

0.16

(1.75)

(0.19)

(0.13)

0.04

EPS - (IFRS) (p)

 

 

(0.09)

(2.04)

(0.16)

(0.15)

0.01

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

57.8

54.6

52.8

54.6

56.5

EBITDA Margin (%)

15.9

N/A

2.4

5.5

8.8

Operating Margin (before GW and except.) (%)

8.7

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

22,115

13,025

10,873

10,130

10,121

Intangible Assets

18,900

11,968

10,540

10,011

10,002

Tangible Assets

1,638

1,057

333

119

119

Investments

1,577

0

0

0

0

Current Assets

 

 

16,202

10,761

7,050

6,434

7,473

Stocks

0

0

0

0

0

Debtors

10,815

8,929

5,510

5,790

6,105

Cash

4,996

1,285

1,319

423

1,147

Other

391

547

221

221

221

Current Liabilities

 

 

(11,071)

(13,029)

(10,234)

(9,777)

(10,296)

Creditors & other

(11,071)

(12,348)

(9,183)

(9,726)

(10,245)

Short term borrowings

0

(681)

(1,051)

(51)

(51)

Long Term Liabilities

 

 

(1,579)

(1,535)

(899)

(899)

(899)

Long term borrowings

0

0

0

0

0

Other long term liabilities

(1,579)

(1,535)

(899)

(899)

(899)

Net Assets

 

 

25,667

9,222

6,790

5,888

6,400

CASH FLOW

Operating Cash Flow

 

 

(722)

(1,061)

245

948

1,852

Net Interest

(31)

(166)

(167)

(161)

3

Tax

55

425

751

405

(11)

Capex

(3,800)

(4,042)

(1,035)

(1,088)

(1,120)

Acquisitions/disposals

(1,033)

(900)

115

0

0

Financing

1,940

896

0

0

0

Dividends

0

0

0

0

0

Net Cash Flow

(3,342)

(4,848)

(91)

104

724

Opening net debt/(cash)

 

 

(8,250)

(4,996)

(604)

(268)

(372)

HP finance leases initiated

0

0

0

0

0

Other

88

456

(245)

0

0

Closing net debt/(cash)

 

 

(4,996)

(604)

(268)

(372)

(1,096)

Source: Company accounts, Edison Investment Research. Note: 2017 and 2018 P&L figures relate to continuing businesses only. Loss from discontinued operations, not shown above, was £1,255k in 2018


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Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by 1Spatial and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by 1Spatial and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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