1Spatial |
Trading in line, no COVID-19 impact so far |
Trading update |
Software & comp services |
23 March 2020 |
Share price performance
Business description
Next events
Analysts
1Spatial is a research client of Edison Investment Research Limited |
1Spatial’s trading update confirms FY20 (ended January) financials will be in line with our estimates. We update exceptionals, amortisation of acquired intangibles and the year-end cash balance but make no material changes to underlying forecasts. The company has seen no impact from COVID-19 so far but is ready to take ‘appropriate action’. Given this, the halving of the share price in the last two weeks seems an overreaction.
Year end |
Revenue (£m) |
Adjusted EBITDA* (£m) |
EBIT* |
EPS* |
EV/sales |
EV/EBIT* |
P/E |
01/18 |
16.9 |
0.4 |
(1.3) |
(2.3) |
0.7 |
N/A |
N/A |
01/19 |
17.6 |
1.2 |
(0.7) |
(1.1) |
0.6 |
N/A |
N/A |
01/20e |
23.0 |
3.1 |
0.8 |
0.8 |
0.5 |
13.3 |
17.7 |
01/21e |
25.6 |
3.7 |
1.5 |
1.0 |
0.4 |
7.6 |
13.2 |
Note: *Adjusted EBITDA, EBIT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Forecasts include the consolidation of Geomap-Imagis from May 2019.
Revenue/EBITDA at least £23m and £3m
Expectations for revenue and EBITDA of ‘at least’ £23m and £3m are in line with our forecasts. The year-end gross cash balance of £5.1m is below our estimate (£6.1m), reflecting delays in cash collection. We understand collections picked up in February and, excluding a £1.0m exceptional charge related to the Geomap-Imagis (GI) acquisition, 1Spatial generated £1.5m of cash in H2.
Underlying forecasts unchanged despite COVID-19
We adjust our forecasts to include the amortisation of acquired intangibles for the first time (£0.8m, non-cash), increase FY20 exceptionals to £1.0m (previously £0.5m) and reduce our year-end FY20 gross cash balance (see Exhibit 1). However, our underlying forecasts are unchanged. 1Spatial has seen no impact on orders from COVID-19 so far but stands ready to take ‘appropriate action’.
Progress in FY20 and prospects undimmed
1Spatial made substantial progress in FY20 in our view. The GI deal addressed a geography unaligned strategically and underperforming financially (see Fixing France). The business reached underlying EBIT breakeven and was cash generative in H2. Clearly COVID-19 increases forecast uncertainty, but there is no direct impact on 1Spatial so far. The US is growing healthily and the 1Data Gateway launch should significantly enhance scalability.
Valuation: Share price halved, forecasts unchanged
1Spatial’s share price has halved in two weeks. At 13.5p, it stands at its lowest level since listing and the implied FY21e EV/EBIT multiple is just 7.6x. It is difficult to rule out an indirect impact of COVID-19 on the business but 1Spatial appears willing, and has scope, to mitigate an impact should it be needed. In our view, the current rating is not appropriate for a growing, now cash-generative business that has executed well in the last three years.
Forecast changes
Exhibit 1: Forecast changes
£m |
FY19 |
FY20e |
FY21e |
||||
Old |
New |
Change (%) |
Old |
New |
Change (%) |
||
Revenue |
17.6 |
22.8 |
23.0 |
0.9 |
25.6 |
25.6 |
0.0 |
EBITDA |
1.2 |
3.1 |
3.1 |
0.0 |
3.7 |
3.7 |
0.0 |
Depreciation |
(0.1) |
(0.1) |
(0.2) |
(0.2) |
(0.2) |
||
IFRS-16 |
0.0 |
(0.0) |
(1.0) |
(0.0) |
(0.9) |
||
Amortisation of cap soft |
(1.8) |
(2.2) |
(1.2) |
(2.1) |
(1.2) |
||
Adjusted EBIT |
(0.7) |
0.8 |
0.8 |
0.0 |
1.5 |
1.5 |
0.0 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
(0.8) |
0.0 |
(1.2) |
||
Exceptionals |
(0.7) |
(0.5) |
(1.0) |
0.0 |
0.0 |
||
Reported EBIT |
(1.4) |
0.3 |
(1.0) |
N/A |
1.5 |
0.3 |
(78.3) |
Gross cash |
6.4 |
6.1 |
5.1 |
(16.1) |
6.9 |
6.8 |
(0.4) |
Debt |
0.0 |
(0.8) |
(1.2) |
(0.8) |
(1.2) |
||
Net cash |
6.4 |
5.3 |
3.9 |
(26.7) |
6.1 |
5.6 |
(7.6) |
Source: 1Spatial announcements, Edison Investment Research
Exhibit 2: Financial summary
£000s |
2016 |
2017 |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
18,300 |
15,133 |
16,938 |
17,624 |
23,036 |
25,638 |
Delivery costs |
(7,715) |
(6,868) |
(7,994) |
(8,449) |
(10,953) |
(12,325) |
||
Gross Profit |
10,585 |
8,265 |
8,944 |
9,175 |
12,083 |
13,313 |
||
Adjusted EBITDA |
|
|
2,902 |
(874) |
403 |
1,188 |
3,135 |
3,730 |
Operating Profit (before amort. and except.) |
|
|
1,584 |
(12,494) |
(1,302) |
(738) |
836 |
1,471 |
Acquired Intangible Amortisation |
(200) |
0 |
0 |
0 |
(800) |
(1,150) |
||
Exceptionals |
(1,081) |
(2,590) |
(1,041) |
(672) |
(1,000) |
0 |
||
Share based payments |
(976) |
(566) |
538 |
(218) |
(218) |
(218) |
||
Operating Profit |
(673) |
(15,650) |
(1,805) |
(1,628) |
(1,182) |
103 |
||
Net Interest |
(27) |
(25) |
(151) |
(191) |
(36) |
(102) |
||
Other |
(421) |
(266) |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
1,136 |
(12,785) |
(1,453) |
(929) |
799 |
1,367 |
Profit Before Tax (FRS 3) |
|
|
(1,121) |
(15,941) |
(1,956) |
(1,819) |
(1,218) |
0 |
Tax |
503 |
1,081 |
753 |
389 |
150 |
150 |
||
Profit After Tax (norm) |
1,136 |
(12,785) |
(1,453) |
(929) |
799 |
1,139 |
||
Profit After Tax (FRS 3) |
(618) |
(14,860) |
(1,203) |
(1,430) |
(1,068) |
150 |
||
Average Number of Shares Outstanding (m) |
691.3 |
728.9 |
63.3 |
87.4 |
104.9 |
111.2 |
||
EPS - normalised (p) |
|
|
0.16 |
(1.75) |
(2.30) |
(1.06) |
0.76 |
1.02 |
EPS - normalised fully diluted (p) |
|
|
0.16 |
(1.75) |
(2.30) |
(1.06) |
0.76 |
1.02 |
EPS - (IFRS) (p) |
|
|
(0.09) |
(2.04) |
(1.90) |
(1.64) |
(1.02) |
0.14 |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
57.8 |
54.6 |
52.8 |
52.1 |
52.5 |
51.9 |
||
EBITDA Margin (%) |
15.9 |
N/A |
2.4 |
6.7 |
13.6 |
14.5 |
||
Operating Margin (before GW and except.) (%) |
8.7 |
N/A |
N/A |
N/A |
3.6 |
5.7 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
22,115 |
13,025 |
10,873 |
10,479 |
13,479 |
15,279 |
Intangible Assets |
18,900 |
11,968 |
10,540 |
10,194 |
13,194 |
14,994 |
||
Tangible Assets |
1,638 |
1,057 |
333 |
285 |
285 |
285 |
||
Investments |
1,577 |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
16,202 |
11,442 |
7,050 |
11,481 |
16,223 |
18,371 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
10,815 |
8,929 |
5,510 |
4,998 |
11,000 |
11,400 |
||
Cash |
4,996 |
1,966 |
1,319 |
6,358 |
5,098 |
6,846 |
||
Other |
391 |
547 |
221 |
125 |
125 |
125 |
||
Current Liabilities |
|
|
(11,071) |
(13,029) |
(10,234) |
(8,578) |
(13,204) |
(15,277) |
Creditors & other |
(11,071) |
(12,348) |
(9,183) |
(8,578) |
(12,004) |
(14,077) |
||
Short term borrowings |
0 |
(681) |
(1,051) |
0 |
(1,200) |
(1,200) |
||
Long Term Liabilities |
|
|
(1,579) |
(1,535) |
(899) |
(192) |
(192) |
(192) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other long-term liabilities |
(1,579) |
(1,535) |
(899) |
(192) |
(192) |
(192) |
||
Net Assets |
|
|
25,667 |
9,903 |
6,790 |
13,190 |
16,305 |
18,181 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
(722) |
(1,061) |
245 |
(749) |
(1,477) |
5,300 |
Net Interest |
(31) |
(166) |
(167) |
(175) |
(36) |
(102) |
||
Tax |
55 |
425 |
751 |
410 |
150 |
150 |
||
Capex |
(3,800) |
(4,042) |
(1,035) |
(1,394) |
(3,297) |
(3,100) |
||
Acquisitions/disposals |
(1,033) |
(900) |
115 |
0 |
(4,500) |
(500) |
||
Financing |
1,940 |
896 |
0 |
7,996 |
5,500 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(3,342) |
(4,848) |
(91) |
6,088 |
(2,460) |
1,748 |
||
Opening net debt/(cash) |
|
|
(8,250) |
(4,996) |
(604) |
(268) |
(6,358) |
(3,898) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
88 |
456 |
(245) |
2 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(4,996) |
(604) |
(268) |
(6,358) |
(3,898) |
(5,646) |
Source: Company data, Edison Investment Research. Note: Forecasts include the acquisition of GI from May 2019.
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