Recovery plan

1Spatial 14 September 2017 Outlook
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1Spatial

Recovery plan

Full year results

Software & comp services

14 September 2017

Price

3.8p

Market cap

£29m

Net cash (£m) as at 31 January 2017

0.6

Shares in issue

760.5m

Free float

83%

Code

SPA

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

14.8

19.2

(8.8)

Rel (local)

13.9

21.0

(17.8)

52-week high/low

4.2p

1.6p

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

Interim results

10 October 2017

Analysts

Dan Ridsdale

+44 (0)20 3077 5729

Bridie Barrett

+44 (0)20 3077 5700

1Spatial is a research client of Edison Investment Research Limited

1Spatial’s restructured management team has made brisk progress in reducing overheads and realigning the business to deliver on the client-centric solutions model. The turnaround is still in its early stages, but we believe it could yield good results in a relatively short timeframe. The market for GIS technology is large and growing at a double-digit rate and we believe that 1Spatial has the customer base, technology and expertise to capitalise on this. Recent contract wins in the UK and the US indicate the turnaround is on track. We believe there is substantial intrinsic value within the business, which with continued execution should be unlocked.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/sales
(x)

P/E
(x)

01/16

18.3

1.1

0.16

0.0

1.5

23

01/17

22.1

(2.4)

(0.33)

0.0

1.3

N/A

01/18e

23.8

(0.6)

(0.08)

0.0

1.2

N/A

01/19e

25.6

(0.2)

(0.03)

0.0

1.1

N/A

Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments.

Rapid progress with restructuring

The new model integrates 1Spatial’s own software with third-party software and services to provide complete geospatial solutions to its traditional customer base of geospatial information users. The board and management teams have been reshaped, annualised costs have been reduced by £2.5m, and the company has exited non-core, loss-making businesses Avisen and Storage Fusion, while 1Spatial Inc and Sitemap have been brought under full control.

Contract wins indicate recovery is on track

Progress so far in FY18 looks encouraging. In Europe the company has secured a number of new customers, the most recent of which was a significant contract with Northern Gas Networks. Recent wins in the US, with US Federal Highways (USFH) and National Oceanic Atmospheric Administration (NOAA) are strategically important, given size of opportunity in the US and in the case of USFH, the potential for this relationship to be a platform for sales to other providers who feed data into the USFH. The company continues to work with key GIS players such as Esri and anticipates sales growth from these relationships during FY18.

Valuation: Good recovery credentials

We reinstate forecasts at a cautious level (8% FY18 revenue growth), mindful that recoveries following substantial restructuring are often not smooth. However, if deal flow remains robust we could see upside and with the business forecast to trade close to break-even, any upside should gear strongly into earnings – particularly licensing income. In the medium term, we believe that the core GIS business should be able to achieve mid-teens operating margins. If the Geospatial business continues to show that it is on a growth and margin expansion trajectory, we believe that a 2x EV/sales ratio (implying 4.7p a share) would be readily justifiable. Valuing Enables IT at 5-7x EBITDA (0.3-0.4p a share) would suggest a 5p value for the group.

Investment summary

Company description: Spatial software and solutions

1Spatial’s core technology enables the provision of software and services for managing geospatial data. Its customers include some of the largest and most sophisticated geospatial data users globally, including the US Census Bureau, Ordnance Survey Great Britain, United Utilities and many others. The proprietary platform (1SMS) correlates location specific data from multiple sources simultaneously. It can then identify data errata, before automatically correcting and enhancing them with additional information from other sources, due to the multi-layered nature of spatial data. Following the extensive strategic review in December, management has made rapid progress with restructuring. 1Spatial will integrate the company’s own software with third-party software and services to provide complete geospatial solutions to the company’s traditional customer base of heavy-duty GIS (geographical information systems) users, particularly national mapping agencies, data providers, government departments and utility companies. 1Spatial is also expanding into new sectors such as transport and is increasing its geographic reach for its traditional customer base by having a greater focus on the US. 1Spatial continues to work with key GIS players such as Esri and anticipates sales growth from these relationships during FY18.

Financials: A return to growth

FY17 results highlighted the need for change but also bore the impact of substantial restructuring towards the end. Revenues from the core geospatial business declined by 20% organically, net free cash outflow was £4.4m while the net loss was £18.4m (including discontinued operations and write downs of £11.2m). We reinstate forecasts at a conservative level, assuming 9% growth from Geospatial and 5% growth from Enables IT in FY18. The Geospatial growth compares with double-digit expansion of the wider GIS market (P&S Market Research). Post restructuring, 1Spatial has reduced its annualised cost base by £2.5m, while the company also incurred an exceptional operating cost of £1m in its FY17 results, burning £4.4m of cash over the period. With the business forecast to trade close to break-even, any upside should gear strongly into earnings – particularly licensing income – and we believe that mid-teens operating margins should be achievable for the Geospatial business in the medium term. We forecast a return to modest cash generation in FY18. Furthermore, 1Spatial has a £3m overdraft facility, so we do not expect it to need to raise additional funds, assuming delivery of our estimates.

Valuation: Firm evidence of a recovery should prompt upside

1Spatial currently trades on an FY18e EV/sales multiple of 1.2x, a significant discount to its GIS peers (typically 2x+). This is understandable given the recent history of the stock, but we see it as low considering its IP, customer base, and expertise within a large and growing geospatial market. The Geospatial business needs to demonstrate that it is on a sustainable growth and margin expansion trajectory over the course of FY18. If it does, we believe that a 2x EV/sales ratio (implying 4.7p a share) would be readily justifiable. Valuing Enables IT at 5-7x FY18e EBITDA (0.3-0.4p a share) would suggest a 5p value for the group.

Sensitivities

1Spatial is a business in transition, during which time financial visibility is typically reduced and returns more difficult to gauge. We believe that continued deal flow and particularly progress in the US are the key milestones upon which to gauge progress. On the basis of our forecasts we do not anticipate that the company will need to raise more cash, but cash flows will need to be managed carefully.

Company update

Transformation programme well underway

Having undertaken a full strategic review following the profit warning and departure of ex-CEO Marcus Hanke in December, management has made brisk progress in restructuring the group.

At the group level, the structure has been simplified so that it now consists of two fully owned business units, the core Geospatial business and Enables IT, a managed IT service provider.

Exhibit 1: FY17 group divisional revenue profit and EBITDA (pre central costs)

Source: 1Spatial accounts

The cost base of the ongoing businesses has been reduced by £2.5m, while the exits from the loss-making Avisen and Storage Fusion businesses would save the business £0.8m on the FY17 run rate.

We highlight the key changes made in Exhibit 2.

Exhibit 2: Key elements of the execution plan (Geospatial)

Already executed

Near-term priorities

Medium-term goals

Leadership changes

Board changes

Appointed senior management team and defined roles

Strengthen board

Restructuring

£2.5m reduction in run-rate costs.

C £0.8m benefit from exiting loss-making businesses. (Disposal of Avisen, closure of Storage Fusion – combined £10.4m write down.)

Acquisition of remaining 27% stake in 1Spatial Inc (£0.8k) and of remaining 51% in Sitemap for £0.2m.

Consolidate solutions provider structure

New customer support & maintenance initiatives.

Build business in the US

Strengthen US team – new sales person for federal government accounts and marketing.

Product/service development

Focus majority of R&D on near-term client needs.

IP development focused on initiatives with clear visibility of commercialisation.

Complete development of 1Integrate with major ERP platform.

Recycle IP from solutions operations into products.

Commercial development

Positive start to Q1. Three new customers signed in Q1 across three different geographies, being UK, Europe (Spain) and US.

Important strategic win with the US Federal Highways. Another with the National Oceanic Atmospheric Administration

Consolidate client-centric solutions model

Build business focusing on key verticals – National mapping/data providers, government and utilities.

Strengthen platform in the US.

Continue to support Esri commercial relationship.

Continued execution

Expand US business into utilities and transport.

Support platform relationships with Esri and ERP vendors.

Source: Edison Investment Research

Geospatial shift to client-facing solutions provider vs IP

The company’s migration towards a more client-centric solutions provider model from the previous IP-centric indirect channel strategy is now taking shape. Under the new model, 1Spatial will integrate the company’s own software with third-party software and services to provide complete geospatial solutions to the company’s traditional customer base of heavy-duty GIS users. The Geospatial business represented 68% of revenues in FY17, and is expected to be the company’s key driver of growth.

More pragmatic strategy, focus on execution

We believe that management’s decision to pursue this more pragmatic path is the right one, especially given recent trading and the company’s current financial position. While the new model does sacrifice some potential operational scalability versus the old one, the reality is that integrating a product into a major software vendor’s platform requires significant upfront investment and time does not guarantee significant sales. The solutions model provides a more reliable strategy (with a shorter sales cycle) for leveraging the company’s deep domain expertise, technology and tier one customer base.

Getting closer to the customer base

Building closer relationships with the client base is a key part of the turnaround strategy. Management has spent time re-engaging with customers as part of the strategic review in order to better understand clients’ needs and how 1Spatial can provide solutions to address these. Major account plans are being put in place and new customer support and maintenance initiatives are being introduced.

Unlocking a strong level of latent demand

We believe that the initiatives have the potential to produce meaningful results in the near term. 1Spatial’s customer base includes some of the largest and most sophisticated geospatial data users, spanning national mapping agencies, utility companies, transportation companies and government agencies. Whereas with the previous IP-focused strategy, engagement with this customer base dropped off and this resource remained largely untapped, management initiatives to re-engage with this customer base suggest that there is a strong level of latent demand.

Large and growing addressable market

The industry is also large and growing. A May 2017 report by market analyst P&S Market Research estimates the size of the global GIS software, services and hardware market at $9.0bn and forecasts that it will grow at a 10.1% CAGR to reach $17.5bn by 2023. Software is estimated to account for around half of this market at present, with growth forecast at circa 9% through 2023, whereas the revenue opportunity for services is expected to grow more rapidly – at c 12% from around $3.5bn currently.

Exhibit 3: Forecast growth of the global GIS Market

Source: P&S Market Research (Geographic Information System Market report)

Growth driven by increased volumes, complexity and criticality

There are multiple factors driving growth in the GIS market, the combination of which should create a fertile growth environment for 1Spatial, particularly given the company’s core strength in enabling the management and correlation of large volumes of data from different sources.

In parallel with all types of data, the amount of GIS data being produced is growing very rapidly. For example, the US Census Bureau has stated that the amount of data it needs to process is increasing by c 15% annually. This growth rate could accelerate with the adoption of 3D mapping and data gathered from “internet of things” connected devices, drones and so on. With this increased volume of data comes increased complexity, and as the industry evolves, geospatial information is increasingly being deployed in mission critical applications demanding a much higher degree of accuracy and real-time data input.

Deal flow suggests recovery is on track

Of 1Spatial’s four key markets, it has made particularly strong progress in utilities. This was a vertical the company invested into in 2017 and the benefits now appear to be coming through.

The company also highlights a number of new client wins, listed below. While some of these are likely to be carried over due to the slippage in the pipeline from Q4, we believe that this momentum gives an encouraging indication that the shift towards a more client-centric solutions model will yield positive results in a relatively short timeframe.

Exhibit 4: H1 new client wins

Solution description

Geography

Sector

Web based mapping

UK

Water

1Integrate for spatial data

UK

Water

Field Engineering Solution

UK

Gas

1Integrate for spatial data

Europe

Satellite

1Integrate for ArcGIS and 1Integrate

US

State government – Geo information office

1Integrate for ArcGIS and 1Integrate

US

State GIO office

Northern Gas Networks – smart work asset management system

UK

Gas

US Federal Highways – automating data integration

US

Govt Agencies/transport

National Oceanic & Atmospheric Administration – software, training and consultancy

Govt Agencies/research

Source: 1Spatial

Successful exploitation of the US could drive an acceleration

New business momentum in H1 mainly came out of the UK and Europe, and with a well-established position in these geographies, we believe that 1Spatial could generate solid growth largely from these markets. 1Spatial is significantly under penetrated in the US – FY17 revenues from the US were only £173k, down from £2.1m in FY16, but growing in the region is a key strategic goal and the company does have some promising assets to build upon. In particular, the company’s relationship with the US Census Bureau, with which it has developed an automated conflation process (to bring together geospatial data from varied sources), provides a potentially strong platform to sell into the multiple organisations that supply data into the Census Bureau.

To solidify the platform, the company acquired the remaining 27% stake in 1Spatial Inc for £789k in April 2017 (previously Laser Scan Inc, the company’s sole distributor in the US). The company’s country and pre-sales managers have an Esri background and the company is now looking to strengthen its sales and marketing teams.

US Federal Highways deal provides a good platform for growth

In this context, the company’s two recent wins in the US are an encouraging indicator of the company’s potential to execute on its opportunity in the world’s largest GIS market. The larger and more important of these, is with the US Federal Highways (FHWA) worth an initial license value worth $339k with an estimated total contract value of over $500k with consultancy work. The solution from 1Spatial will enable FHWA's to automate currently mostly manual processes to ensure regulatory requirements and compliance are met.

The deal is strategically interesting because FHWA collects highway information from individual US State Departments of Transport and feeds this data into the National Data Inventory which is used to determine the extent, usage, condition and performance of the Nation’s highways. Consequently, we believe that this deal could provide a significant support for the company’s sales drive to the State Departments of Transport which feed data to the FHWA.

The other US deal 1Spatial with the National Oceanic & Atmospheric Administration (NOAA), is smaller $127k plus $16k support and maintenance, but provides further evidence of forward progress.

Still potential from integration into major software platforms

It should be noted that while R&D efforts have been trimmed to focus on projects with a high probability of generating a return, the company has not completely jettisoned its initiatives to embed its software into the offerings of larger software companies. Whereas previously the company’s strategy and investment case revolved around this strategy, we now see this as useful upside.

The company’s initiatives in this area are focused around two key players: Esri and a very large ERP platform vendor. The integration of 1Integrate into Esri’s ArcGIS is complete, but sales progress has been slow, although some tier one key customers such as the State of Arizona in the US and Ordnance Survey Great Britain have signed up. We expect this relationship with Esri to generate increased revenues this year. The development work to integrate 1Integrate into a major ERP platform is ongoing.

The timing and rate of revenue build from these embedded products is very difficult to forecast, but given the indirect model, any revenue should drop directly through to the bottom line. We no longer break out revenues from these channels explicitly in our forecasts, but in keeping GIS gross margin broadly flat, we are implicitly assuming minimal uptake during our forecast period.

Enables IT

Post restructuring, Enables IT is now the group’s only non-geospatial business line. Enables provides a range of IT managed services, from consultancy and project management to the installation of physical infrastructure. It is primarily a UK-based business with some operations in Europe. The majority of Enables IT’s clients are based in the UK with sector expertise across healthcare, legal services and education. While the business is non-core, it is profitable and cash generative and has a stable customer base (75% of revenues are generated from customers who have been with the company over five years), although low-margin hardware sales add volatility to revenues. We believe management sees value in retaining the business and the cash flows it generates in the near term.


Financials

FY results highlighted the need for change

Highlighting the need for change, financial performance in FY17 reflected the lack of structure and sales execution that prevailed for the majority of the year and there was substantial restructuring at a cost of c £0.9m towards the end of the period. Headline P&L figures flatter performance due to the contribution from FY16 and H117 acquisitions Enables IT and Laser Scan and £3.5m of capitalised R&D versus a £1m amortisation charge. On a like-for-like basis, revenues in the core Geospatial business fell by 20% year-on-year, while the company burned through £4.4m of cash over the year. Of a total of £11.2m impairments, £9.4m related to continuing business, with £5.1m on goodwill, £1.5m of intangibles and £2.8m of capitalised development costs.

Net cash at year-end was £0.6m and the company has recently renewed its £3m overdraft facility.

Reinstating forecasts at a cautious level

We are reinstating our forecasts, having withdrawn them in January, as the company was undergoing management changes and shaping its restructuring programme. We show our breakdown of forecasts for the Geospatial and Enables IT businesses in Exhibit 5.

We believe that our FY18 revenue growth estimates should be very achievable (9% growth from Geospatial and 5% growth from Enables) especially given the encouraging trading in Q1, but turnarounds are rarely smooth and therefore we believe that a cautious stance is merited.

Through the restructuring, the company has reduced its annualised cost base by £2.5m, while the FY17 results included £1m of operating exceptional cost. These cost savings are not fully reflected in the group EBITDA, however, as the reduction in speculative R&D reduces the capitalised development charge.

Mid-teens EBITDA margins a reasonable mid-term target for Geospatial

If we add capitalised R&D costs back in, we have the core business (Geospatial plus central costs) moving to broadly break-even this year, with the company moving to a 3% EBITDAC margin next year. If the company can execute on its plan then we believe that it should be able to achieve substantially better than this and that a 15% EBITDAC margin would be a reasonable mid-term goal.

We are assuming a broadly steady state for Enables IT.

Exhibit 5: P&L model (continuing operations)

Year end 31 January, £000s

2016

2017

2018e

2019e

Geospatial

Revenues

16,000

15,133

16,534

17,935

Growth

nm

-5%

9%

8%

Gross profit

9,785

8,265

8,965

9,746

Gross margin

61%

55%

54%

54%

Cash opex

(5,126)

(6,787)

(7,126)

(7,411)

Adjusted EBITDA contribution

4,659

1,478

1,839

2,335

Share of central costs

(1,946)

(2,008)

(1,324)

(1,397)

Capitalised development costs (Geospatial)

(3,011)

(3,552)

(500)

(537)

Core business EBITDAC

(298)

(4,082)

15

401

Enables IT

Revenues

2,300

6,932

7,279

7,643

Growth

nm

nm

5%

5%

Gross profit

800

1,414

1,385

1,455

Gross margin

35%

20%

19%

19%

Cash opex

(452)

(947)

(975)

(1,024)

Adjusted EBITDA contribution

348

467

410

430

Share of central costs

(159)

(344)

(205)

(208)

Enables IT EBITDAC inc central costs

189

123

205

222

Group EBITDA

2,902

(407)

720

1,160

Group EBITDAC

(109)

(3,959)

220

623

Year-end net debt/(cash)

(4,996)

(604)

(656)

(1,335)

Source: 1Spatial data, Edison Investment Research

We forecast marginal cash generation this year then a pick-up in cash generation in FY19 (the financial year ending January 2019). With a £3m overdraft facility the company should not require further funds on the basis of these estimates, although careful cash management will be required.


Valuation

1Spatial is valued at typical recovery multiples, with a low EV/sales of 1.2x vs 2x+ for most peers, but a high P/E due to the company’s compressed margins (losses forecast for FY18). The case for upside therefore hinges on the company performing somewhat better than our forecasts, with operational gearing driving a significant improvement in profitability.

As previously discussed, we believe that this is very possible. The market for GIS technology is large and growing at a double-digit rate and we believe that 1Spatial has the customer base, technology and expertise to capitalise on this. A continuation of the encouraging Q1 through the year would, we believe, drive upgrades.

5p a good starting point, if financial performance improves

Looking at the core Geospatial business, if the company can maintain top-line growth and demonstrate that margins are on an expansion track, then a 2x+ FY19e EV/sales ratio would be easily justifiable. This would imply a valuation of £36m or 4.7p per share for the Geospatial business alone.

Enables IT is unlikely to attract a high multiple; we believe that an FY19e EBITDA multiple of 5-7x would be fair, implying a £2.2m to £3m (0.3-0.4p per share) valuation based on our conservative estimates. We see EBITDA multiples as more instructive in this instance due to the steady state nature of the Enables IT business, contrasted with the recently volatile performance of the Geospatial segment.

Together, these multiples would imply that a 5p share price is very achievable in the near term, if financial performance continues to improve.

Cost synergies and strategic assets add value

We also believe that the GIS business could continue to play a role in further industry consolidation. This is an acquisitive space and we believe that 1Spatial is well positioned with its expertise, customer base and technology, augmented by significant potential cost synergies through reducing central costs.

Exhibit 6: Peer group multiples

Name

Price – reporting currency

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)

GIS related

 

 

 

 

 

 

 

 

 

 

HEXAB SS Equity

Hexagon AB-B SHS

41.1

SEK

141510

5.0

4.7

16.3

14.2

23.5

20.9

TRMB US Equity

Trimble Inc

39.9

US$

10096

4.0

3.6

20.7

17.6

27.8

24.0

NEM GY Equity

Nemetschek SE

65.4

2518

6.3

5.5

24.1

20.8

40.3

34.1

UK software and services

 

FDP LN Equity

First Derivatives

27.3

GBp

690

4.0

3.6

22.6

20.5

42.7

39.6

D4T4 LN Equity

D4T4 Solutions

1.6

GBp

61

2.4

2.2

11.3

10.1

15.7

13.8

KNOS LN Equity

Kainos Group

3.0

GBp

351

3.6

3.2

20.4

17.3

29.4

24.7

IDOX LN Equity

Idox

0.6

GBp

247

2.8

2.5

10.1

8.8

13.6

11.5

KBT LN Equity

K3 Business Technology Group

1.5

GBp

62

0.7

1.0

9.1

10.8

23.9

18.2

SDL LN Equity

SDL

4.7

GBp

384

1.2

1.2

13.2

10.2

21.5

17.1

SSY LN Equity

SCISYS

1.0

GBp

28

0.7

0.7

6.9

6.4

9.1

8.4

IOM LN Equity

Iomart Group

3.2

GBp

347

3.6

3.4

9.0

8.4

17.8

16.0

 

SPA LN Equity

1Spatial

3.8

GBp

29

1.2

1.1

126.8

44.8

N/A

N/A

Source: Bloomberg consensus, Edison Investment Research forecasts for 1Spatial. Note: Priced at 13 September 2017.

Sensitivities

US rollout: The US is the largest market for geospatial solutions by some margin and a region in which 1Spatial is substantially underpenetrated. Growing in the US is an element of management’s strategy. Success in the US could transform the company’s financial profile but equally succeeding in the US often takes longer and requires more investment than originally anticipated. We believe that we have taken a conservative stance in our forecasts.

Transitional status reduces visibility: 1Spatial’s business model is still in transition, which inevitably reduces the visibility over future financial performance. Nevertheless, the shift in emphasis towards direct sales rather than relying on channel partners should give the company some better visibility over its pipeline versus the previous strategy.

Balance sheet: On the basis of our forecasts the company should not need to raise more funds although careful cash management will be required and the margin for error is low. It is also possible that the company raises funds to accelerate growth at some stage, although we believe that this would only be likely once the current transformation plan has been shown to deliver material benefits.

Large direct customer engagements: 1Spatial’s direct engagements with clients can be sizeable, and it can be difficult to predict when deals will close.

Currency: 1Spatial reports in sterling and its cost base is sterling weighted, but in FY17 only 48% of revenues came from the UK and this should reduce as the company builds its presence in the US and Europe (18% and 26% of revenues, respectively).

Exhibit 7: Financial summary (continuing operations)

£000s

2016

2017

2018e

2019e

Year end 31 January

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

18,300

22,065

23,812

25,577

Delivery costs

(7,715)

(12,386)

(13,461)

(14,376)

Gross Profit

10,585

9,679

10,351

11,201

EBITDA

 

 

2,902

(407)

720

1,160

Operating Profit (before amort. and except.)

1,584

(2,071)

(542)

(78)

Acquired Intangible Amortisation

(200)

(825)

(400)

(400)

Exceptionals

(1,081)

(11,988)

0

0

Share based payments

(976)

(566)

(750)

(750)

Operating Profit

(673)

(15,450)

(1,692)

(1,228)

Net Interest

(27)

(32)

(42)

(161)

Other

(421)

(266)

0

0

Profit Before Tax (norm)

 

 

1,136

(2,369)

(585)

(240)

Profit Before Tax (FRS 3)

 

 

(1,121)

(15,748)

(1,735)

(1,390)

Tax

503

988

347

278

Profit After Tax (norm)

1,136

(2,369)

(585)

(240)

Profit After Tax (FRS 3)

(618)

(14,760)

(1,388)

(1,112)

Average Number of Shares Outstanding (m)

691.3

728.9

747.7

760.5

EPS - normalised (p)

 

 

0.16

(0.33)

(0.08)

(0.03)

EPS - normalised fully diluted (p)

 

 

0.16

(0.33)

(0.08)

(0.03)

EPS - (IFRS) (p)

 

 

(0.09)

(2.02)

(0.19)

(0.15)

Dividend per share (p)

0.0

0.0

0.0

0.0

Gross Margin (%)

57.8

43.9

43.5

43.8

EBITDA Margin (%)

15.9

N/A

3.0

4.5

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

8.7

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

22,115

13,025

12,413

11,980

Intangible Assets

18,900

11,968

11,558

11,308

Tangible Assets

1,638

1,057

855

672

Investments

1,577

0

0

0

Current Assets

 

 

16,202

10,761

12,254

12,591

Stocks

0

0

0

0

Debtors

10,815

8,929

8,870

9,527

Cash

4,996

1,285

2,837

2,516

Other

391

547

547

547

Current Liabilities

 

 

(11,071)

(13,029)

(14,147)

(14,013)

Creditors & other

(11,071)

(12,348)

(11,966)

(12,832)

Short term borrowings

0

(681)

(2,181)

(1,181)

Long Term Liabilities

 

 

(1,579)

(1,535)

(1,088)

(1,088)

Long term borrowings

0

0

0

0

Other long term liabilities

(1,579)

(1,535)

(1,088)

(1,088)

Net Assets

 

 

25,667

9,222

9,431

9,469

CASH FLOW

Operating Cash Flow

 

 

(722)

(1,061)

397

1,369

Net Interest

(31)

(166)

(42)

(161)

Tax

55

425

347

278

Capex

(3,800)

(4,042)

(750)

(806)

Acquisitions/disposals

(1,033)

(900)

100

0

Financing

1,940

896

0

0

Dividends

0

0

0

0

Net Cash Flow

(3,342)

(4,848)

52

680

Opening net debt/(cash)

 

 

(8,250)

(4,996)

(604)

(656)

HP finance leases initiated

0

0

0

0

Other

88

456

0

0

Closing net debt/(cash)

 

 

(4,996)

(604)

(656)

(1,335)

Source: 1Spatial reports, Edison Investment Research. Note: Net losses on discontinued businesses in FY17 of £3.5m are not shown in the exhibit above.

Contact details

Revenue by geography (continuing operations)

Tennyson House
Cambridge Business Park
Cambridge
CB4 0WZ
UK
+44 (0) 1223 420414
1spatial.com

Contact details

Tennyson House
Cambridge Business Park
Cambridge
CB4 0WZ
UK
+44 (0) 1223 420414
1spatial.com

Revenue by geography (continuing operations)

Management team

Executive Chairman: Andrew Roberts

Interim CEO and CFO: Claire Milverton

Andrew led The Innovation Group plc from 2009 until its sale to Carlyle Group in 2016 for £500m. He was also chairman of Kewill plc, non-executive director and chairman of Civica and prior to this was non-executive chairman of Vega Group plc until its sale in 2008 to Finmeccanica SPA for £61m. Andrew started his career at ICL and then led the management team that turned around private–equity owned Data Sciences, which was sold to IBM in 1996.

Claire joined the board in April 2010. Prior to this, Claire was the group financial controller at Xploite plc, a company acquired by 1Spatial plc in 2010. Claire joined Xploite plc having previously been a senior manager at PwC. Claire was appointed interim chief executive officer on 30 December 2016, in addition to her existing role as chief financial officer for 1Spatial. Claire has had a number of years of experience in the technology industry and is a chartered accountant and a fellow of the Institute of Chartered Certified Accountants.

Financial Director: Nicole Payne

Non-executive Director: Nick Habgood

Nicole was group financial accountant within 1Spatial from January 2015 to March 2017, having previously worked at Broadcom Europe Limited, prior to which she trained and qualified with Deloitte.

Nick is the founder and managing partner of London-based private equity firm Azini Capital Partners LLP. Nick has substantial board level experience helping technology companies execute on growth opportunities.

Management team

Executive Chairman: Andrew Roberts

Andrew led The Innovation Group plc from 2009 until its sale to Carlyle Group in 2016 for £500m. He was also chairman of Kewill plc, non-executive director and chairman of Civica and prior to this was non-executive chairman of Vega Group plc until its sale in 2008 to Finmeccanica SPA for £61m. Andrew started his career at ICL and then led the management team that turned around private–equity owned Data Sciences, which was sold to IBM in 1996.

Interim CEO and CFO: Claire Milverton

Claire joined the board in April 2010. Prior to this, Claire was the group financial controller at Xploite plc, a company acquired by 1Spatial plc in 2010. Claire joined Xploite plc having previously been a senior manager at PwC. Claire was appointed interim chief executive officer on 30 December 2016, in addition to her existing role as chief financial officer for 1Spatial. Claire has had a number of years of experience in the technology industry and is a chartered accountant and a fellow of the Institute of Chartered Certified Accountants.

Financial Director: Nicole Payne

Nicole was group financial accountant within 1Spatial from January 2015 to March 2017, having previously worked at Broadcom Europe Limited, prior to which she trained and qualified with Deloitte.

Non-executive Director: Nick Habgood

Nick is the founder and managing partner of London-based private equity firm Azini Capital Partners LLP. Nick has substantial board level experience helping technology companies execute on growth opportunities.

Principal shareholders

(%)

Hargreave Hale

12.79

Azini Capital Partners LLP

12.46

Liontrust Asset Management

10.73

J O Hambro Capital Management

8.76

Legal & General Investment Management

8.10

Octopus Investments

4.83

Threadneedle Asset Management

4.95

Hargreaves Lansdown Asset Management

3.37

Companies named in this report

Hexagon AB (HEXAB.SS), Trimble Inc (TRMB.US), Nemetschek (NEM.GR), D4T4 Solutions (D4T4.LN), Kainos Group (KNOS.LN), First Derivatives (FDP.LN), IDOX (IDOX.LN), K3 Business Tech (KBT.LN), SDL (SDL.LN), SCISYS (SSY.LN), iomart Group (IOM.LN).

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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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 Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 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 Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. 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 2017. “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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