1Spatial — Investing in the transformational SaaS opportunity

1Spatial (AIM: SPA)

Last close As at 24/06/2024

GBP0.69

−0.50 (−0.72%)

Market capitalisation

GBP76m

More on this equity

Research: TMT

1Spatial — Investing in the transformational SaaS opportunity

1Spatial’s FY24 results reflected robust momentum for the enterprise business and continued improvement in the revenue mix, with investment in growth suppressing margin and cash generation. This investment phase will continue in FY25 to lay the foundation for transformational growth from 1Streetworks and in the US in the coming years. Our scenario analysis indicates the upside from successful execution is significant, with further wins for 1Streetworks and in the US being the key catalysts for more rapid, operationally geared growth to be priced in.

Written by

Dan Ridsdale

Head of Technology

TMT

1Spatial

Investing in the transformational SaaS opportunity

Full year results

Software and comp services

3 May 2024

Price

63p

Market cap

£70m

$1.25/£

Net cash at FY24

£1.1m

Shares in issue

110.8m

Free float

79%

Code

SPA

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.7

19.4

24.8

Rel (local)

4.8

11.8

18.9

52-week high/low

64.0p

45.5p

Business description

1Spatial’s core technology validates, rectifies and enhances customers’ geospatial data. 1Spatial’s SaaS products leverage the core technology to solve significant workflow bottlenecks, such as the creation of traffic management plans and validating data for public safety entities.

Next events

AGM

June/July 2024

Analyst

Dan Ridsdale

+44 (0)20 3077 5700

1Spatial is a research client of Edison Investment Research Limited

1Spatial’s FY24 results reflected robust momentum for the enterprise business and continued improvement in the revenue mix, with investment in growth suppressing margin and cash generation. This investment phase will continue in FY25 to lay the foundation for transformational growth from 1Streetworks and in the US in the coming years. Our scenario analysis indicates the upside from successful execution is significant, with further wins for 1Streetworks and in the US being the key catalysts for more rapid, operationally geared growth to be priced in.

Year end

Revenue
(£m)

EBITDA*
(£m)

EBIT*
(£m)

EPS*
(p)

EV/EBITDA
(x)

P/E
(x)

01/23

30.0

5.0

2.0

1.2

13.8

51.3

01/24

32.3

5.5

2.5

1.4

12.5

44.2

01/25e

35.8

5.7

2.4

1.4

12.1

45.3

01/26e

38.7

7.6

3.8

2.6

9.0

24.4

Note: *EBITDA, EBIT and EPS exclude amortisation of acquired intangibles, exceptional items and share-based payments.

Focus on growth in the US and 1Streetworks

Growth in FY24 was driven by the enterprise business, with 1Spatial achieving wins across all target geographies. 1Spatial has demonstrated its ability to sell in the US and is now investing in its business development team to build a stronger position in a market estimated to be six-and-a-half times the size of the UK. In February, 1Spatial secured a landmark win for 1Streetworks with UK Power Networks. The company has four trials ongoing, with an additional 10 expected to start in H125, which have potential annual recurring revenues (ARR) of between £100k and £3m. 1Spatial is investing in its sales resource to drive market uptake. Good conversion of these opportunities will be key to demonstrating the transformative potential of 1Streetworks, with management targeting £40m SaaS ARR over five years.

Improving mix and investing into the opportunity

FY24 revenues grew by 8% y-o-y to £32.3m, while recurring revenues increased by 22% to £18.1m (56% of sales) and gross margin increased by 15%, reflecting the improving weighting towards product sales over services. EBITDA grew by 10% yo-y, but, as flagged in its trading update, net cash reduced to £1m from £3m in FY23, reflecting higher R&D costs. We upgrade our FY25 revenue and gross profit estimates but bring back EBITDA and EPS to reflect the increased investment. We forecast continued growth, with margin expansion in FY26, although the upside from growth initiatives is likely to come through beyond our forecast period.

Valuation: Upside from execution is significant

1Spatial trades at a discount to peers on an EV/sales basis but at a premium on an EV/EBITDA and P/E basis, which highlights that the business has a cost base built for growth. We believe the market is likely to seek evidence that key growth initiatives are gaining traction, with further wins and scale-ups for 1Streetworks and progress in the US being the main ones to look for. However, the upside from successful execution could be significant. Our DCF analysis indicates the share price could double if the company gets halfway to its five-year £40m ARR goal for 1Streetworks and achieving it would justify a fair value of 270p.

Investment summary

Business recap

1Spatial is a provider of geospatial software and solutions, with a core competence in location master data management, enabling organisations globally to consolidate, integrate and unlock value from their geospatial and non-geospatial datasets. The company is based in Cambridge, UK, and operates across Western Europe, Australia and the US.

The company’s enterprise platform comprises a suite of geospatial data products, which automate workflows for managing geospatial datasets, from collection and integration to management and analytics. 1Spatial sells these solutions to organisations, which typically have large, complex physical footprints (transport, utilities, manufacturing, etc), enabling them to integrate and optimise the value of their geospatial data. These enterprise solutions have been the primary driver of growth (CAGR) over the past five years.

Over the same period, 1Spatial has invested significantly in developing SaaS-based applications, leveraging the core platform to solve specific business problems for enterprise clients. The most advanced of these are 1Streetworks, for automated traffic management planning, and Next Generation 911 (NG9-1-1), for supporting US public safety organisations with their data readiness.

Commercial adoption of these products is still at a nascent stage, but they significantly expand 1Spatial’s addressable market and have the potential to drive a transformative acceleration in growth and margin expansion.

Exhibit 1: 1Spatial’s platform

Source: 1Spatial

The company has a three-pronged growth strategy:

1.

Leveraging partnerships with larger industry partners to drive faster growth for the core enterprise platform.

2.

SaaS-based business applications that enable 1Spatial to capture more value by providing a more complete solution to customers and build recurring revenue streams.

3.

US expansion, across both SaaS and enterprise in a market six-and-a-half times the size of the UK market.

The underlying market dynamics look supportive. The group serves a £10–12bn geospatial market growing at a healthy double-digit pace, driven by surging data volumes, policy evolution and uptake in new verticals, while the strategic initiatives above give 1Spatial the potential to significantly outgrow the market.

Enterprise

The enterprise solutions have been the primary driver of 1Spatial’s growth over the past five years and we expect robust performance to continue, with the potential for an acceleration on the back of additional investment being put into sales teams in the US and Europe, as well as further development of the company’s partnership network.

US growth a key priority

Growth in the US market is one of management’s main areas of focus and investment. The company has been growing in the region, with revenues up 10% to £4.7m and recurring revenues growing 23%. The company now has 18 state-level organisations as customers, each of which has significant expansion potential, with management’s longer-term goal being to build revenues to $1m in each state. The company secured its first contract with the state of Oregon in FY24 and follow-on or expanded contracts with Caltrans (through a partnership with Rizing), Federal Highway Administration and Google’s Real Estate & Workplace Services.

However, 1Spatial remains underrepresented in the region and, having demonstrated its ability to win business from both government and commercial customers, management is now investing in expanding its US sales operations to deliver on this potential. In addition to the pending hire of a head of sales, the company is expanding its sector-based account management team and hiring a specialist in NG9-1-1 solutions to drive sales of this product.

Europe responding to investment

The company saw growth in all regions during FY24 except for Europe, which has been transitioning from legacy software. However, 1Spatial’s investment in this transition and in business development appears to be bearing fruit, with several contract wins secured towards the end of the year. The most notable of these was a contract with a Belgian distribution network operator, announced in January, worth a total of €9.1m, of which €4.9m will be delivered by offshore partners.

SaaS

1Streetworks: Investing to capitalise on the opportunity

1Streetworks is 1Spatial’s flagship SaaS application in the UK and the individual product with the most potential to transform the company’s growth and margin profile. The product automates the production and submission of traffic management plans, diversion routing and asset inventory lists, which are now required for obtaining a roadwork permit in the UK.

The addressable market for 1Streetworks is significant. Management estimates that for the UK’s low-speed roads alone, the market opportunity is c £400m per annum, a calculation based on 4m plans per annum at £100 per plan. Management aims to grow 1Streetworks’ recurring SaaS revenue to £40m within five years, equating to 10% of this market opportunity.

The company signed a landmark client for 1Streetworks with UK Power Networks in February 2024. This contract has a minimum value of £0.34m over 12 months, with deployment covering one department (small connections) in Kent and Surrey. We believe this contract value has the potential to expand significantly with good surveyor uptake and adoption in additional regions or departments. 

Strong return on investment from customer trials

UK Power Networks has been a strong advocate of the platform, with its proof-of-concept trial indicating that the average time from starting a plan to completing the quote was more than halved, down to two days from five to six using the traditional approach. This time-saving extended to a five-day reduction in the time to connect a customer, which fell to 15 days from 20 days (SDSW23 UK Power Networks traffic management). 1Spatial’s management estimates this equates to a saving of around £1,000 per plan.

Exhibit 2: 1Streetworks case study – UK Power Networks

Source: 1Spatial

Investing to get over the hump

UK Power Networks notwithstanding, commercial progress with 1Streetworks has taken longer than initially anticipated. We believe this is due to the complex contracting environment, with responsibility for traffic management plans spread across multiple departments, and the challenges of disrupting deeply embedded workflows. Given the strong return on investment and lack of any competition that we are aware of, we believe there is a high probability that 1Streetworks will achieve significant adoption in the UK market. 1Spatial is investing in additional sales, customer success and technology support resource to accelerate this process. We also believe that the barriers to adoption will significantly reduce as the company grows its reference customer base.

At year-end, 1Spatial had four ongoing trials for 1Streetworks, with an additional 10 expected to start in H125, which have potential ARR of between £100k and £3m, depending on the size of the deployment.

Next Generation 911

NG9-1-1 is 1Spatial’s solution for supporting US public safety entities with their data readiness needs. Management estimates the total addressable market for this product to be $350m, although, unlike 1Streetworks, direct competitors do exist. 1Spatial launched the cloud version of NG9-1-1 in FY24 and signed up five new clients for the product, with another five trials underway.

Again, management is investing to accelerate uptake of this product. 1Spatial has recruited an NG9-1-1 specialist salesperson and is working with Esri (the world’s largest geospatial software provider and an existing partner of 1Spatial) to integrate NG9-1-1 into Esri’s product suite and to promote it to Esri’s customer base.

FY24 results

Improving mix and gross margins, increased investment

1Spatial’s financial performance over the past five years reflects good progress migrating the business from a bespoke solutions provider to a scalable software model, while also bearing the cost of developing cloud and SaaS products. FY24 saw a continuation of this trend, with robust momentum for the company’s enterprise business and continued improvement in the revenue mix. Revenues grew by 8% y-o-y, while recurring revenues increased by 22% to £18.1m (56% of sales). This includes £0.2m from the recently launched SaaS products. Perpetual licence revenues declined by 23% to £1.27m. Gross profit increased by 15%, with gross margin expanding by 300bp to 55%, reflecting the improving weighting towards product sales over services.

Exhibit 3: Quality of revenues continues to improve

Source: 1Spatial, Edison Investment Research

Operating costs and cash flows reflect the company’s reinvestment into sales and sales support staff, development of the SaaS products to drive growth and cost inflation. EBITDA increased by 10% to £5.5m (a 30bp increase in margin) but free cash flow declined to a £1.9m outflow (vs £0.2m inflow in FY23), reflecting increased capitalised development costs (£5.3m vs £3.8m in FY23). As a result, year-end net cash reduced to £1.1m from £3.1m in FY23. While this investment phase is compressing nearterm margins and cash flows, we believe it is key to unlocking the potential of 1Spatial’s products and establishing a foundation for an acceleration in high-quality, scalable growth.

Estimate changes

We upgrade our FY25 revenue and gross profit estimates to reflect the robust revenue momentum, the impact of new sales hires and the improving revenue mix. EBITDA is brought back by 11% due to the company’s investment in the sales team across the UK and the US, but also due to the allocation of more technical staff costs to P&L expenses rather than being capitalised as a result of staff being deployed to support customers instead of core product development. The reduction in our EBIT and EPS forecasts reflects rising software amortisation charges from the company’s investment in SaaS product development.

Our FY26 estimates are new, with uptake of SaaS driving growth and further improvements in revenue mix towards high-margin recurring subscriptions. We expect operating margins to expand again as operational leverage comes through.

Exhibit 4: Estimates and changes

£000s

FY24

FY25e

FY26e

Edison

Reported

Difference

Old

New

Change

New

Revenue

32,132

32,315

1%

35,185

35,800

2%

38,700

y-o-y growth (%)

7%

8%

1%

10%

11%

1%

8%

Gross profit

17,512

17,926

2%

19,528

19,690

1%

21,672

Gross margin (%)

55%

55%

0%

56%

55%

-1%

56%

Adjusted EBITDA

5,541

5,479

-1%

6,539

5,700

-13%

7,600

Adjusted EBITDA margin (%)

17%

17%

0%

19%

16%

-3%

20%

Normalised operating income

2,561

2,463

-4%

3,559

2,411

-32%

3,811

Normalised net income

1,781

1,581

-11%

2,530

1,542

-39%

2,858

Reported net income

1,416

1,180

-17%

2,096

1,274

-39%

2,590

Adjusted EPS diluted (p)

1.57

1.40

-10%

2.22

1.37

-38%

2.54

Free cash flow (pre-lease payments)

(506)

(978)

93%

2,098

73

-97%

1,505

Net debt/(cash)

(2,518)

(1,079)

-57%

(4,605)

(1,085)

-76%

(2,524)

Source: 1Spatial data, Edison Investment Research

Looking beyond our forecast period, 1Spatial’s enterprise and SaaS growth initiatives should drive an acceleration in growth and substantial margin expansion. Management has communicated its ambition of generating ARR of £40m for 1Streetworks within five years, while investment into other SaaS products, partnerships and business development could accelerate growth and margin expansion in the enterprise business. In Exhibit 5 we demonstrate what revenues and cash EBITDA (EBITDA minus capitalised development costs) could look like on a five-year basis under varying scenarios for the SaaS and enterprise businesses.

Exhibit 5: Scenario analysis (FY29e)

Low SaaS

Low SaaS

Mid SaaS

Mid SaaS

High SaaS

High SaaS

Low enterprise

High enterprise

Low enterprise

High enterprise

Low enterprise

High enterprise

SaaS revenues FY29e (£m)

10

10

20

20

40

40

Enterprise revenue CAGR for FY26–29e (%)

8%

16%

8%

16%

8%

16%

Revenues (£m)

50

56

58

65

75

82

EBITDA adjusted (£m)

14

17

20

23

33

36

EBITDA margin (%)

28%

30%

35%

36%

44%

44%

Cash EBITDA (EBITDA – capitalised dev costs) (£m)

13

15

18

20

28

31

Cash EBITDA margin (%)

25%

27%

30%

32%

37%

38%

Source: Edison Investment Research

To help contextualise the scenario analysis above, the average EBITDA margin of enterprise software businesses focusing on infrastructure-based markets is 29%. The EBITDA of SaaS businesses varies significantly. However, companies with dominant market positions and strong return on income can achieve very strong margins of up to 50%.

It is important to note that 1Spatial currently has a cost base in place to drive significant growth. If growth does not materialise then we would expect cost rationalisations to drive improved profitability and cash generation. Equally, it is reasonable to expect some reinvestment back into the business if growth initiatives really take off, which we reflect in our analysis.


Valuation

Upside from execution

As discussed, 1Spatial has undergone a significant investment phase to drive global enterprise growth and to launch its scalable SaaS business applications. The margin expansion potential from this is not captured in our forecast period.

1Spatial is trading at a discount to its peers on an EV/sales basis (1.8.0x vs 2.5x on a two-year forward basis) but at a premium on P/E (25x vs 22x), reflecting 1Spatial’s lower margins through this investment phase. We believe that the upside from successfully executing a SaaS-oriented growth strategy is significant. This can be illustrated by the rating of IQGeo, a UK-listed provider of SaaS geospatial solutions focused on telecoms and now a utility network operator. IQGeo grew revenues at 40% in FY23, with EBITDA margins expanding to 30% from 12.5% the year before. The business is being rewarded for this with a rating of 4.8x forward sales and 52x P/E, versus respective multiples of 1.6x and 45x for 1Spatial.

We have performed a DCF sensitivity analysis looking at varying revenue growth rates and EBITDA margin assumptions, assuming consistent growth rates from 2026 to 2029 (then a gradual fade), with EBITDA margins expanding in a straight line from our FY26 21% estimate to the target figure in FY29. We use a 10% WACC assumption.

Exhibit 6: DCF sensitivity analysis (p/share)

Mid-term revenue growth

8.0%

11.8%

15.5%

19.3%

23.0%

Target EBITDA margin
(from FY29)

44%

132

159

191

230

276

40%

120

145

174

209

250

37%

108

130

157

188

225

33%

96

116

139

167

200

30%

85

102

122

146

174

26%

73

87

104

125

149

22%

61

73

87

104

123

19%

50

59

70

83

98

15%

38

44

52

62

72

Source: Edison Investment Research. Note: WACC = 10% and terminal growth rate = 2%.

This indicates that some degree of revenue and margin expansion is being priced in, but success in delivering operationally leveraged growth should deliver substantial upside. For example, delivering on the £40m five-year ARR target for 1Streetworks, together with mid-teens growth for the enterprise business, returns a fair value of over 270p/share. Achieving £20m of SaaS sales, while sustaining enterprise growth at 8%, would deliver value of around 130p.

Downside mitigation through cost control and strategic options

We also stress that a scenario where 1Spatial delivers no acceleration in growth or margin expansion should be unlikely, as management has the option to reduce costs to improve margin performance if growth looks less likely to come through. The company could also be a strategically valuable asset to a trade buyer or interesting to private equity building a position in this field. We believe these factors provide a good level of downside protection.

Exhibit 7: Financial summary

£'k

2021

2022

2023

2024

2025e

2026e

Year end 31 January

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

24,600

27,027

30,002

32,315

35,800

38,700

Cost of Sales

(11,451)

(13,078)

(14,504)

(14,389)

(16,110)

(17,028)

Gross Profit

13,149

13,949

15,498

17,926

19,690

21,672

EBITDA

 

 

3,632

4,182

4,997

5,479

5,700

7,600

Normalised operating profit

 

 

435

1,302

2,026

2,463

2,411

3,811

Amortisation of acquired intangibles

(917)

(561)

(386)

(391)

(391)

(391)

Exceptionals

(492)

0

(194)

(693)

0

0

Share-based payments

(272)

(326)

(192)

33

33

33

Reported operating profit

(1,246)

415

1,254

1,412

2,053

3,453

Net Interest

(187)

(195)

(210)

(355)

(355)

0

Joint ventures & associates (post tax)

0

0

0

0

0

0

Exceptionals

0

0

0

0

0

0

Profit Before Tax (norm)

 

 

248

1,107

1,816

2,108

2,056

3,811

Profit Before Tax (reported)

 

 

(1,433)

220

1,044

1,057

1,698

3,453

Reported tax

308

163

14

123

(425)

(863)

Profit After Tax (norm)

198

886

1,362

1,581

1,542

2,858

Profit After Tax (reported)

(1,125)

383

1,058

1,180

1,274

2,590

Minority interests

0

0

0

0

0

0

Discontinued operations

0

0

0

0

0

0

Net income (normalised)

198

886

1,362

1,581

1,542

2,858

Net income (reported)

(1,125)

383

1,058

1,180

1,274

2,590

Basic average number of shares outstanding (m)

112

111

111

111

111

111

EPS - basic normalised (p)

 

 

0.18

0.80

1.23

1.43

1.39

2.58

EPS - diluted normalised (p)

 

 

0.17

0.77

1.20

1.40

1.37

2.54

EPS - basic reported (p)

 

 

(1.01)

0.35

0.95

1.06

1.15

2.34

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

5.2

9.9

11.0

7.7

10.8

8.1

Gross Margin (%)

53.5

51.6

51.7

55.5

55.0

56.0

EBITDA Margin (%)

14.8

15.5

16.7

17.0

15.9

19.6

Normalised Operating Margin

1.8

4.8

6.8

7.6

6.7

9.8

BALANCE SHEET

Fixed Assets

 

 

18,273

17,100

19,277

21,524

23,118

23,600

Intangible Assets

15,187

15,003

17,408

19,951

22,058

23,053

Tangible Assets

3,086

2,097

1,869

1,498

985

472

Investments & other

0

0

0

75

75

75

Current Assets

 

 

18,332

18,018

19,222

17,030

18,488

21,078

Stocks

0

0

0

0

0

0

Debtors

10,890

12,271

14,151

12,770

14,222

15,374

Cash & cash equivalents

7,278

5,623

5,036

4,260

4,266

5,704

Other

164

124

35

0

0

0

Current Liabilities

 

 

14,813

14,903

17,093

15,334

16,834

17,349

Creditors

13,418

13,284

15,797

14,004

15,504

16,019

Tax and social security

0

0

0

99

99

99

Short term borrowings

470

531

660

647

647

647

Other

925

1,088

636

584

584

584

Long Term Liabilities

 

 

7,057

5,110

4,097

4,913

4,913

4,913

Long term borrowings

2,542

1,861

1,322

2,534

2,534

2,534

Other long term liabilities

4,515

3,249

2,775

2,379

2,379

2,379

Net Assets

 

 

14,735

15,105

17,309

18,307

19,860

22,416

Minority interests

0

0

0

0

0

0

Shareholders' equity

 

 

14,735

15,105

17,309

18,307

19,860

22,416

CASH FLOW

Op Cash Flow before WC and tax

2,961

4,048

4,593

4,356

5,345

7,600

Working capital

791

(1,578)

537

(112)

48

(637)

Exceptional & other

52

(107)

12

0

0

0

Tax

484

176

179

140

(425)

(863)

Net operating cash flow

 

 

4,288

2,539

5,321

4,384

4,968

6,100

Capex

(2,312)

(2,613)

(4,017)

(5,362)

(4,895)

(4,595)

Acquisitions/disposals

(585)

0

0

0

0

0

Net interest

0

0

0

0

0

1

Equity financing

0

0

14

19

0

0

Dividends

0

0

0

0

0

0

Other

585

(1,708)

(1,994)

357

(67)

(67)

Net Cash Flow

1,976

(1,782)

(676)

(602)

6

1,439

Opening net debt/(cash)

 

 

(3,887)

(4,403)

(3,231)

(3,054)

(1,079)

(1,085)

FX

194

127

89

(174)

0

0

Other non-cash movements

(1,654)

483

410

(1,199)

0

0

Closing net debt/(cash)

 

 

(4,403)

(3,231)

(3,054)

(1,079)

(1,085)

(2,524)

Source: 1Spatial accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by 1Spatial and prepared and issued by Edison, in consideration of a fee payable by 1Spatial. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by 1Spatial and prepared and issued by Edison, in consideration of a fee payable by 1Spatial. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Datatec — FY24 underlying EPS more than doubles y-o-y

In a second more detailed trading update for FY24, Datatec confirmed revenue growth of 6% to $5.46bn, with Westcon International delivering excellent performance, Logicalis International having a strong H2 and Logicalis Latin America affected by difficult market conditions in Argentina and Brazil. The company also provided provisional EPS data, with reported EPS likely to come in ahead of our forecast and underlying EPS just below our forecast. We maintain our forecasts pending FY24 results on or around 27 May.

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