1Spatial |
Well positioned to cope with any downturn |
Full-year results |
Software & comp services |
15 June 2020 |
Share price performance
Business description
Next event
Analysts
1Spatial is a research client of Edison Investment Research Limited |
1Spatial’s FY20 results (to January) confirm reported revenue growth of 33% y-o-y and EBITDA rising 83% (pre IFRS16). The company generated positive underlying cashflow and EBIT in H2, has seen no impact on trading from COVID-19 so far and just secured a $2.6m contract win in the US. However it is prudently acknowledging that sales cycles are likely to lengthen in the current economic climate. As a precaution it has withdrawn forward guidance and stands ready to take action on costs if needed.
Year end |
Revenue (£m) |
EBITDA* (£m) |
EBIT* |
EPS* |
EV/sales |
EV/EBIT* |
P/E |
01/18 |
16.9 |
0.4 |
(1.3) |
(2.3) |
1.5 |
N/A |
N/A |
01/19 |
17.6 |
1.2 |
(0.7) |
(1.1) |
1.5 |
N/A |
N/A |
01/20 |
23.4 |
3.2 |
0.1 |
(0.1) |
1.1 |
184.0 |
N/A |
Note: * EBITDA, EBIT and EPS exclude amortisation of acquired intangibles, exceptional items and share-based payments. Geomap-Imagis (GI) consolidated from May-19.
Profitability and cash generation in H2
1Spatial delivered revenue of £23.4m (up 33% y-o-y) and underlying EBITDA of £3.2m in FY20 (marginally ahead of the £23.0m and £3.1m indicated in the March trading statement). Organic growth was flat, with a 7% y-o-y rise in Spatial Solutions revenue offset by declines in GIS, but margins improved. Bolstered by a full period of GI, 1Spatial achieved both profitability (at the underlying EBIT level) and positive FCF in H2. Improving financials and the strategically significant GI deal (see Fixing France) demonstrate the progress the company made in FY20.
Trading in line, but reduced visibility
Much has changed around the world since January but management has seen no impact of COVID-19 on financial performance so far. Trading is in line with its expectations, new multi-year contracts have been signed with an HS2 supplier (UK), Seine Grands Lacs (France) and State of Michigan (US – see over). While the pipeline remains healthy the company is acknowledging that, in the current economic climate, sales cycles are likely to extend, and this is creating additional forecast uncertainty. In this context it is not providing any guidance and we have withdrawn our FY21 forecasts.
Well positioned to cope with any downturn
1Spatial enters this period of reduced visibility in good health. Assuming no organic growth, FY21 revenue would be £25.4m and recurring revenues account for 41% of sales. At the end of FY20 gross cash stood at £5.1m and it has since extended its credit facility by £1.8m. 1Spatial is cash generative and profitable on an underlying EBIT basis and stands ready to take ‘appropriate action’ on costs if needed.
Valuation: Excessive punishment?
1Spatial has executed well over the last three years, sharpening its strategic focus and raising margins. Visibility is not great but COVID-19 has had no material impact to date and we believe management has scope to mitigate the effect of a slowdown should the need arise. At 26.5p the shares have recovered much of the ground lost in 2020 but remain down 18% over the last year versus AIM, which is down 8%.
US$2.6m contract win with the US State of Michigan
Following the results 1Spatial announced it has signed a five year contract with US State of Michigan valued at $2.6m to upgrade to the enterprise 1Integrate platform. As an existing customer this win can be seen in the context of 1Spatial’s “land and expand” strategy and will also include access via 1Data Gateway, 1Spatial’s recently launched portal.
Of the $2.6m contract, c. $1.5m will be recognized within two years as service revenue and $1.1m will be recognized as software licence revenue spread over the five years. Against a broader backdrop of uncertainty this is a significant win and a meaningful boost to its US business (annual revenues of £2.3m in FY20) in particular. The company has a healthy pipeline and is aiming to sign further large deals but the timing of these wins is difficult to predict.
Exhibit 1: Financial summary
£000s |
2016 |
2017 |
2018 |
2019 |
2020 |
||
Year end 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
18,300 |
15,133 |
16,938 |
17,624 |
23,385 |
Delivery costs |
(7,715) |
(6,868) |
(7,994) |
(8,449) |
(11,123) |
||
Gross Profit |
10,585 |
8,265 |
8,944 |
9,175 |
12,262 |
||
Adjusted EBITDA |
|
|
2,902 |
(874) |
403 |
1,188 |
3,226 |
Operating Profit (before amort. and except.) |
|
|
1,584 |
(12,494) |
(1,302) |
(738) |
139 |
Acquired Intangible Amortisation |
(200) |
0 |
0 |
0 |
(111) |
||
Exceptionals |
(1,081) |
(2,590) |
(1,041) |
(672) |
(1,167) |
||
Share based payments |
(976) |
(566) |
538 |
(218) |
(398) |
||
Operating Profit |
(673) |
(15,650) |
(1,805) |
(1,628) |
(1,537) |
||
Net Interest |
(27) |
(25) |
(151) |
(191) |
(195) |
||
Other |
(421) |
(266) |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
1,136 |
(12,785) |
(1,453) |
(929) |
(57) |
Profit Before Tax (FRS 3) |
|
|
(1,121) |
(15,941) |
(1,956) |
(1,819) |
(1,732) |
Tax |
503 |
1,081 |
753 |
389 |
248 |
||
Profit After Tax (norm) |
1,136 |
(12,785) |
(1,453) |
(929) |
(57) |
||
Profit After Tax (FRS 3) |
(618) |
(14,860) |
(1,203) |
(1,430) |
(1,484) |
||
Average Number of Shares Outstanding (m) |
691.3 |
728.9 |
63.3 |
87.4 |
110.2 |
||
EPS - normalised (p) |
|
|
0.16 |
(1.75) |
(2.30) |
(1.06) |
(0.05) |
EPS - normalised fully diluted (p) |
|
|
0.16 |
(1.75) |
(2.30) |
(1.06) |
(0.05) |
EPS - (IFRS) (p) |
|
|
(0.09) |
(2.04) |
(1.90) |
(1.64) |
(1.35) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
57.8 |
54.6 |
52.8 |
52.1 |
52.4 |
||
EBITDA Margin (%) |
15.9 |
N/A |
2.4 |
6.7 |
13.8 |
||
Operating Margin (before GW and except.) (%) |
8.7 |
N/A |
N/A |
N/A |
0.6 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
22,115 |
13,025 |
10,873 |
10,479 |
19,206 |
Intangible Assets |
18,900 |
11,968 |
10,540 |
10,194 |
15,560 |
||
Tangible Assets |
1,638 |
1,057 |
333 |
285 |
374 |
||
Investments |
1,577 |
0 |
0 |
0 |
3,272 |
||
Current Assets |
|
|
16,202 |
11,442 |
7,050 |
11,481 |
14,985 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
10,815 |
8,929 |
5,510 |
4,998 |
9,644 |
||
Cash |
4,996 |
1,966 |
1,319 |
6,358 |
5,108 |
||
Other |
391 |
547 |
221 |
125 |
233 |
||
Current Liabilities |
|
|
(11,071) |
(13,029) |
(10,234) |
(8,578) |
(12,844) |
Creditors & other |
(11,071) |
(12,348) |
(9,183) |
(8,578) |
(12,709) |
||
Short term borrowings |
0 |
(681) |
(1,051) |
0 |
(135) |
||
Long Term Liabilities |
|
|
(1,579) |
(1,535) |
(899) |
(192) |
(5,892) |
Long term borrowings |
0 |
0 |
0 |
0 |
(1,086) |
||
Other long-term liabilities |
(1,579) |
(1,535) |
(899) |
(192) |
(4,806) |
||
Net Assets |
|
|
25,667 |
9,903 |
6,790 |
13,190 |
15,455 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(722) |
(1,061) |
245 |
(749) |
572 |
Net Interest |
(31) |
(166) |
(167) |
(175) |
(144) |
||
Tax |
55 |
425 |
751 |
410 |
314 |
||
Capex |
(3,800) |
(4,042) |
(1,035) |
(1,394) |
(2,320) |
||
Acquisitions/disposals |
(1,033) |
(900) |
115 |
0 |
(2,151) |
||
Financing |
1,940 |
896 |
0 |
7,996 |
2,805 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(3,342) |
(4,848) |
(91) |
6,088 |
(1,178) |
||
Opening net debt/(cash) |
|
|
(8,250) |
(4,996) |
(604) |
(268) |
(6,358) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
(1,221) |
||
Other |
88 |
456 |
(245) |
2 |
(72) |
||
Closing net debt/(cash) |
|
|
(4,996) |
(604) |
(268) |
(6,358) |
(3,887) |
Source: 1Spatial, Edison Investment Research
|
|