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Research: TMT
1Spatial’s AGM statement confirms that trading has remained resilient. Ongoing projects have continued largely as planned and, despite protracted decision cycles in some areas, a healthy level of new business has been secured. It is too early to say that the company will emerge unscathed from a COVID-19 downturn (we are not reinstating forecasts at this stage), but it remains confident in the long-term outlook, has ample cash on the balance sheet and scope to reduce costs if needed.
Written by
1Spatial |
Remaining resilient |
AGM statement |
Software & comp services |
28 July 2020 |
Share price performance
Business description
Analysts
1Spatial is a research client of Edison Investment Research Limited |
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1Spatial’s AGM statement confirms that trading has remained resilient. Ongoing projects have continued largely as planned and, despite protracted decision cycles in some areas, a healthy level of new business has been secured. It is too early to say that the company will emerge unscathed from a COVID-19 downturn (we are not reinstating forecasts at this stage), but it remains confident in the long-term outlook, has ample cash on the balance sheet and scope to reduce 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 |
160.0 |
N/A |
Note: *EBITDA, EBIT and EPS exclude amortisation of acquired intangibles, exceptional items and share-based payments. Geomap-Imagis (GI) consolidated from May 2019.
Following the update given at the time it released FY20 results in June (see Well positioned to cope with any downturn), 1Spatial’s AGM statement confirms that trading remains resilient. The company has continued to sign healthy levels of new business and the statement highlights a ‘growing pipeline of 1Data Gateway opportunities in the US’ and the significant opportunity in this market. Activity levels in France were affected by the suspension of local authority procurement due to COVID-19 but have now recovered.
In these uncertain times it is difficult to definitively say that 1Spatial will emerge completely unscathed from a post COVID-19 downturn. However, it has executed well over the last three years, sharpening its strategic focus and raising margins. We believe management has scope to mitigate the effect of a slowdown (should the need arise) and has ample cash (£5.1m at year end January 2020). At 23.5p, the shares are down over 25% in the last year despite no obvious signs of a deterioration in trading compared with AIM, which is down just 4%.
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Disclaimer
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Disclaimer
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Research: Metals & Mining
On 10 July, Pan African Resources (PAF) released an operational update for the year to end June 2020 detailing production of 179,575oz gold in the year to June 2020. While production in H220 was (inevitably) lower than in H120 (see Exhibit 1) owing to the coronavirus, full-year production was nevertheless 4.1% higher than in FY19, 2.0% higher than guidance and 2.1% higher than our forecast (see Exhibit 2). In addition, PAF announced that net debt had declined from US$123.7m in December 2019 to US$62.5m in June 2020 (cf May guidance of US$70.0m – company calculation) – a reduction of US$61.2m or 49.5% within the space of six months. Self-evidently, continued debt reductions at this rate could see PAF net debt free within the next 12 months. This note updates our earnings forecasts and also our valuation for now known production in FY20, as well as changes in the macro-environment and the increase to our long-term estimated gold price (see A golden future, published on 11 June 2020).