Final results for the year ended 31 January 2016

RNS Number : 1427X
1Spatial Plc
04 May 2016
 

4 May 2016

                                                            1Spatial plc (AIM: SPA)                                                           

 

("1Spatial", the "Company" or the "Group")

 

Final results for the year ended 31 January 2016

 

-     Increased Adjusted* EBITDA, Profit after Tax and deliverance on stated strategy -

 

The Board of directors of 1Spatial (the "Board"), the global spatial software and solutions company which manages the world's largest spatial data is pleased to announce the Company and consolidated group's (the "Group") audited final results for the year ended 31 January 2016.

 

Highlights

 

Financial highlights

 

·      Record revenues from operations with an increase of 6% to £20.7m (2015: £19.6m), reflecting the inclusion of £3.2m of revenues from Enables IT acquired in July 2015

·      Strong recurring revenues of 58% providing visibility of earnings

·      Improvement in gross profit margin from 55% to 57%

·      Increase in adjusted* EBITDA on prior year up 20% to £3.7m (2015: £3.1m)

·      Significant improvement in profit after tax to £12k (2015: loss after tax of £1.5m)

·      £5m net cash position and robust period-end balance sheet (2015: £7.8m net cash)

·      Strong secured order book maintained at £8.0m (2015: £7.0m) which includes new wins and consisting of a greater number of customers with a higher gross margin.

·      Acquisition of Enables IT Group plc for £1.8m of shares on 23 July 2015

*Adjusted for strategic, integration, other one-off items and share-based payment charge 

  

Operational highlights

 

·        The momentum in the second half of the financial year has clearly illustrated the attractiveness of 1Spatial's solutions in its marketplace having recently secured a number of key contract wins including:

 

·      US$1m contract with a US Federal Government Agency

·      1Integrate contract for US$1.1m with HERE USA

·      rolling contract with one of the UK's leading transport infrastructure operators

·      £3m contract with a large US healthcare provider

 

·      Consistently strong maintenance renewal levels (approximately 95% renewal rate).

 

·        Significant focus on R&D activities with further development of its scalable open technology during the year, enabling 1Spatial's products to integrate with enterprise technology vendors and thus widening the Group's addressable market and expanding its global reach.

 

·        Further strengthening of 1Spatial's relationship with key partner ESRI, a world leader in GIS technology with market revenues in excess of US$1.5b1, and the global launch of the Group's "1Integrate for ArcGIS" product, which runs on the ESRI platform.

 

·        Further delivery on US Census Bureau contract providing core infrastructure spatial technology enabling the Census team to lay the foundations for the 2020 decennial census.

 

·        Development of the US business with increased investment in sales and marketing; building relationships with US Census Bureau, key government organisations and with a large US healthcare provider.

 

·        Acquisition of Enables IT in July 2015 has helped provide expertise and capability that augments the Group and significantly enhances its ability to support clients with a full-service managed solution, also allowing customers to pilot and adopt 1Spatial's products much more quickly.

 

·      London Stock Exchange recognised 1Spatial plc as one of the 1,000 Most Inspiring Companies for the third year running.

 

Post period-end

 

·        1Spatial US, Inc. acquisition (formerly Laser Scan Inc.)

On 29 February 2016, the Group exercised its call option to acquire a further 26% of its US distributor Laser Scan Inc. ("LSI") for US$1.3m payable in cash taking the Group's total holding in LSI to 73%. LSI is the sole distributor of 1Spatial geospatial products and solutions across the Americas, which includes significant contracts with the US Census Bureau. The acquisition further strengthens 1Spatial's position within the US market.

 

 

Commenting on the results CEO, Marcus Hanke, said:

 

"We are pleased with the advancements achieved during the financial year. As part of our stated strategy, we have continued with the investment in our 'Open' technology and into Strategic relationships. These relationships include ESRI, the global market leader in the GIS market, and also a partnership with HERE. We believe that the combination of our open technology combined with strategic relationships is the right strategy for scalable operationally geared growth. 

 

Our 1Integrate for ArcGIS product, which has been developed on the ESRI platform, was launched globally in January 2016 and the feedback from this has been very positive, generating a significant pipeline of opportunities.

 

The Company has enjoyed client success both with new and existing clients and we have been pleased with the performance of the Enables IT acquisition, both from the results of the Company in it's own right plus the increased service offering that we can now provide to our geospatial customers. On the back of this success, we are able to report an increased overall Adjusted EBITDA and a positive profit after tax. 

 

Since the year end we have acquired a controlling stake in LSI, our US distributor, this supports our strategy for growth in the key US market. 

 

The Company continues to follow its stated strategy and looks forward to the future with confidence."

 

For further information, please contact:

 

  1Spatial plc         0203 427 5004

  Marcus Hanke / Claire Milverton

 

  FTI Consulting   020 3727 1000

  Dwight Burden / Alex Le May

 

  N+1 Singer         020 7496 3000

  Shaun Dobson / Lauren Kettle

 

1.See

https://www.lloyds.com/~/media/files/the%20market/tools%20and%20resources/electronic%20distribution/esri%20tls%2020151006.pdf

 

 

 

About 1Spatial

1Spatial manages the world's largest spatial big data and works with users and creators of the largest geospatial databases, helping them collect, store, manage and interpret location-specific information.

 

1Spatial's clients include national mapping and cadastral agencies, utility and telecommunications companies, and government departments including emergency services, defence and census bureaus.

 

A leader in the field, 1Spatial has over forty years' experience and a record of continual innovation and development.  Today, with an ever increasing reliance on spatial and location-critical data, demand for our expertise has never been greater.

 

1Spatial operates globally, and has a portfolio of customers both in the Commercial and Government sector, with headquarters in Cambridge, UK and offices in France, Belgium, Ireland, Australia and the United States.  To find our more, visit www.1spatial.com

 

Investment proposition

 

Geospatial market

 

The global market for "geo services" is large and growing quickly, generating annual revenues of US$150-US$270b, roughly five times that of the video games industry2. Such services, from location-sensitive apps for smartphone users to effective asset management for utility firms, rely on the time- and cost-effective management of spatial data.

 

Our Geospatial Credentials

 

1Spatial is a market leader in technology that manages the unique complexities of spatial Big Data. Tracing our roots back almost 50 years, we have widely recognised and unrivalled expertise in our field.

 

We have a strong portfolio of IP, developed by providing solutions to the world's largest, most sophisticated users of geospatial data; organisations like Ordnance Survey Great Britain, the UK Ministry of Defence and the US Census Bureau.

 

Developing a scalable suite of software products

 

In recent years, our development strategy has been to take our portfolio of IP and develop a modular solution stack.  This end to end modular mapping solution is called the 1Spatial Management Suite (1SMS).

 

Sales of the 1SMS have been successful in their own right; however, the Group has sought to extend its market reach by ensuring that the modular software products can be deployed on other companies' solution platforms. 

 

The first product from the 1SMS stack to be integrated with another Group's solution stacks is the 1Integrate product which has been integrated on the ESRI solution platform.  This product is known as 1integrate for ArcGIS and was launched globally in January 2016.

 

ESRI is the global market leader in GIS and has around 350,000 customers globally and more than 1,000,000 users3  for ArcGIS. 

 

Investment in 1Spatial plc is underpinned by the following advantages:

 

·      Industry partnerships with the likes of ESRI providing market and global reach

·      long-term, recurring revenue contracts with blue chip and government organisations

 

Strong relationships with global partners

 

1Spatial has strong partnerships with industry leaders such as Oracle, ESRI, Microsoft and more recently HERE (previously known as Navteq).  1Spatial is increasingly leveraging these partner relationships as part of its strategy to achieve scalable growth.

 

Robust revenues and strong gross margins

 

The Group has robust revenues with 53% being represented by recurring revenues on an annualised basis. The Group has dependable and respected customers including some of the world's largest mapping agencies and data providers such as Ordnance Survey GB, Ordnance Survey Ireland, IGN France, US Census Bureau and HCA Healthcare. The software and maintenance renewal rates in the Geospatial business are 95% with cloud services having a 90% renewal rate. The Group has strong gross margins averaging in excess of 50%.

 

Strong balance sheet

 

1Spatial has a strong balance sheet with net assets in excess of £25m and £5m of cash. The Group has no debt.

 

Investors

 

1Spatial's current shareholder base includes a number of large and very supportive institutional shareholders.

 

 

2 Source: Oxera Consulting Ltd, What is the economic impact of Geo services? (January 2013)

3 See  http://www.esri.com/partners/partner_news/2014/spatial-dimension

 

 

 

Chairman's report

 

I am pleased to present the results for 1Spatial plc for the year ended 31 January 2016. 

 

It has been another successful year of investing in the opportunities that geospatial Big Data presents. These investments, following the strategy that we set in 2012, has manifested in the continuing development of our modular, open-technology software solutions and in the expansion of our market reach. I am delighted that this progress and all of our hard work has been recognised by large international entities who are increasingly partnering with 1Spatial to provide them with critical geospatial capabilities.

 

Our business is underpinned by long-term, recurring revenue contracts with blue chip and government organisations. These valued relationships have enabled us to fund our ongoing software development and the Board is confident that these fundamentals will underpin the next exciting stage of growth for the Group as it builds on its investment in critical technology.

 

Performance

 

The Group reports record revenues of £20.7m and an adjusted* EBITDA of £3.7m, with a significantly improved loss before tax of £0.8m. These results represent a 6% growth in revenues and a 19% increase in adjusted EBITDA and a 48% decrease in loss before tax. The acquisition of Enables IT and the inclusion of its results for six months has been a direct contributor for this increase. Given the relatively small investment of £1.8m that the Group made in the year, the Board believes the return on this is very positive. 

 

The Group enters the next financial year with an order backlog of £8m and a healthy pipeline of sales opportunities enhanced by the ESRI relationship. It also has a strong balance sheet with cash of £5m and zero debt. 

 

Corporate transactions

 

Azini Capital Partners LLP

In May 2015, 1Spatial plc raised £1.92m from a placing of new ordinary shares with Azini Capital Partners LLP. Azini is a specialist technology investor and the Board was extremely pleased to welcome an investor of this calibre as a shareholder. Azini's investment represents a significant vote of confidence in 1Spatial's evolving business model.

 

LSI

In February 2015 1Spatial plc acquired 47% of Laser Scan Inc. (LSI) for a cash consideration of US$2.25m (£1.5m). Just after the year end, in February 2016, the Group exercised its option to acquire a further 26% for the sum of US$1.3m (£0.9m). This brings 1Spatial plc's total holding in LSI to 73%.

 

LSI is the sole distributor for 1Spatial products and solutions across the Americas and the two companies have worked closely together on strategic accounts including the US Census Bureau and the Brazilian Army. LSI's personnel already have expert knowledge of 1Spatial's solutions, the business is a certified supplier to US Federal government departments and its key personnel have security clearance to work with the US Defence Department. This investment will secure 1Spatial's American base and bring additional opportunities across this significant market.

 

Under the terms of the sale and purchase agreement, 1Spatial has an option to acquire the remaining 27% of LSI from 1 February 2017 for the total sum of US$1.25m, payable in cash or by the issue of new ordinary shares in 1Spatial. As a result, LSI's option to buy back the stake has now fallen away.

 

Enables IT

In July 2015, 1Spatial plc acquired 100% of Enables IT Group plc, financed by the issue of £1.8m of new shares in 1Spatial plc. Enables IT is a provider of IT managed services with data centre facilities in the UK and US. As well as offices in the UK and US, Enables IT has additional telephone support facilities in South Africa.

 

The acquisition brings important capabilities to the 1Spatial business. Enables IT's data centres, its Infrastructure-as-a-Service software platform and its expertise in providing hosted services will enable 1Spatial to expand the offering of its core geospatial software as a hosted - or cloud - service. Enables IT's service desk and managed service expertise allows 1Spatial to offer richer, round-the-clock support to its customers. Both aspects help 1Spatial to meet increasing demand for more agile access to its expertise, underpinned by robust, resilient support. Pleasingly, during the year Enables IT secured a £3m contract with a large US healthcare provider. 

 

The Board

 

This is my second Statement as interim Non-Executive Chairman. The Board is actively recruiting a permanent replacement and hopes to announce a new Chairman at the forthcoming AGM.

 

Following Azini Capital Partners' investment in 1Spatial, we welcomed Nick Habgood to the Board as Non-Executive Director. Nick is the Founder and Managing Partner of Azini and he has brought substantial, board-level experience of helping technology companies execute on growth opportunities.

 

 

Corporate governance

 

1Spatial plc is committed to maintaining high standards of corporate governance. The Board has well-established policies and procedures in place, which are designed to facilitate and ensure that strong ethical standards are met.

 

Summary

 

1Spatial plc is continuing to successfully execute on the strategy it outlined in 2012. We have established new structures to support future growth, capitalised on opportunities where they aligned with our strategy and conducted strategic reviews on areas that were not performing as expected. Where necessary, we have made changes to adapt to market or other external forces.

 

Technology trends - from the ubiquity of smartphones and the growth of wearable tech, through the rise of Big Data and cloud computing, to the emergence of the Internet of Things - are driving the growing importance of location-specific information. Today, the global market for geo-services generates annual revenues between US$150-US$270bn, and is experiencing double-digit annual growth.

 

As we look to the future, we will continue to forge the partnerships and develop the solutions to help organisations exploit their geospatial data.

 

1Spatial anticipated this trend and has been repurposing its expertise and intellectual property to meet the opportunity. Our software can now be deployed in a modular, scalable form across a wide range of sectors and scenarios. We are investing in software development while continuing to increase profits at both an adjusted* EBITDA level and a loss before and after tax level.

 

1Spatial's success, the business relationships it has built and the reputation it enjoys is entirely due to its management team and employees across the world.  During the year we have invested significantly in our staff with a fully refurbished office at the Cambridge headquarters and new modern offices for the teams in our Liege office in Belgium. It is rewarding therefore to see the business recognised for the third year running as one of London Stock Exchange's 1,000 Most Inspiring Companies.

 

1Spatial people are approachable, smart, innovative and agile. As we look forward to future growth, I would like to take this opportunity to welcome those who have joined 1Spatial plc during the year and to thank everyone for their continuing hard work and dedication.

 

*Adjusted for strategic, integration, other one-off items and share-based payment charge 

 

 

 

David Richards

Interim Chairman

 

 

Strategic report

 

Chief Executive's review

 

More than maps

 

Geospatial data is data that relates to location. This data is most obviously of interest to government departments and national mapping agencies; however, geospatial data has been growing in importance across many sectors, including: utilities, telecoms, emergency services, supply-chain and retail.

 

There are many drivers for this growth, not least the continually falling price of computing power and storage (which enable cost-effective analysis) and the increasing prevalence of location-aware devices that produce geospatial data: smartphones, wearable tech, GPS systems, in-vehicle tracking devices and the burgeoning Internet of Things.

 

There are sector-specific drivers as well. The utilities sector is increasing its focus on asset management; a considerable challenge in a sector with widely dispersed assets (pipelines, sewers, cables, sub-stations etc.) and historic records that are often incomplete and of uncertain quality.

 

Government departments are increasing levels of collaboration and data-sharing both with partner organisations and with citizens (through Open Data initiatives). Frequently, the common element that unites datasets and drives insight is location; but this can be in different formats and of uncertain age and provenance.

 

Commercial organisations continue to seek efficiencies and competitive advantage through location. When logistics firm UPS launched its famous No Left Turns policy in the US, it saved 3m gallons of fuel (and 31,000 tons of CO2 emissions) in a single year.4

 

In the retail sector, firms can combine proximity data from smartphones with the location of their stores to send location and time specific offers to passing (or even in-store) customers.

 

A significant opportunity

 

Overall, the economic benefits are enormous. A 2013 report by Oxera Consulting Ltd. on the economic impact of "geo services" estimated the total annual revenue generated by geospatial services was between US$150-US$270bn, roughly five times that of the video games industry. The report estimated that such services saved 1.1bn hours of travel time, and 3.5bn litres of gasoline, each year; improvements to agriculture yielded global savings US$8-US$22bn and geo services' globally added value was estimated to be US$100bn per year.5

 

All of this economic value is predicated on the quality of the underlying geospatial data. Authoritative data has value; Ordnance Survey's reference dataset of the UK is independently valued as being worth £100b.6.

 

The increasing importance of geospatial information and analysis is reflected in successive analysts' forecasts. Markets and Markets expect the global geospatial analytics market to grow at a CAGR of 21.4%, from US$27.4bn in 2015 to US$72bn in 2020. P&S Market Research foresees the global market for geographic information systems (GIS) growing at a CAGR of 11.4%, from US$7.6bn in 2014 to US$14.6bn in 2020. Reports forecast the market for Cloud GIS to grow at a CAGR of 11.0% from 2016 to 2020.

 

For many organisations, GIS is central to their ability to understand the geospatial component of their business. However, the success of this is wholly dependent on the quality of the underlying spatial data.

 

Typically, GIS vendors focus on the front-end of their systems - on the user interface and analytical abilities. Many offer relatively simple data validation tools, but their focus is not on data management - the collection, validation, correction, maintenance, extraction, publication and interpretation of geospatial data.

 

That is 1Spatial's speciality. It is our heritage, our profession and our opportunity.

 

 

4.New York Times, Left-Hand-Turn Elimination, New York Times (2007),

http://www.nytimes.com/2007/12/09/magazine/09left-handturn.html?_r=1&

5Oxera (for Google), What is the economic value of Geo services? (2013), http://www.oxera.com/Oxera/media/Oxera/downloads/reports/What-is-the-economic-impact-of-Geo-services_1.pdf

6.See:http://1spatial.com/wp-content/uploads/2012/10/1Spatial_CaseStudy_OrdnanceSurvey1.pdf

 



Review of the year ended 31 January 2016

 

It has been a year of substantial progress against our strategy.

 

We have continued to improve our financial results and we have made significant progress against our objective of realising the value of our unique IP and heritage.

 

During the year, we have significantly strengthened our presence in the key US market; we have released a strategically important new product (1Integrate for ArcGIS); we have added capabilities that improve our overall offering and we have announced partnerships with two of the most important players in the GIS and mapping sector.

 

Results

 

Although the focus this year has been consolidation and targeted investment, I am delighted that during this period we have seen record levels of financial performance delivering revenue of £20.7m and adjusted EBITDA of £3.7m, 19% higher than the previous year. The Group also achieved a small profit after tax of £12k.

 

The acquisition of Enables IT and the inclusion of its results for six months has been a direct contributor to these improvements, adding £3.2m to revenue and £0.6m to adjusted EBITDA. As outlined in more detail below, Enables IT brings important capabilities to the Group as well as underpinning our expansion in the important US market.

 

With the addition of Enables IT, we have two clearly defined operating divisions - GIS Solutions and Cloud Services - supported by a cost centre, Central Costs.

 

GIS Solutions

 

GIS Solutions delivers 77% of the Group's revenue and represents the core strategic focus of the business; the provision of software and services for the management of geospatial data. The division is underpinned by a number of recurring revenue contracts from large customers with well-established relationships. During the year, we announced additional new contracts including a US$1m extension contract with the US Census Bureau and a US$1.1m contract with HERE USA.

 

Cloud Services

 

Cloud Services (representing 23% of revenue) provides important capabilities that extend the Group's reach and ability to offer a complete solution to geospatial customers. These capabilities include hosting for cloud services (the acquisition of Enables IT brought data centre facilities in the US and UK), managed services, network services, 24/7 support, storage management, project management expertise and business intelligence solutions.

 

The Cloud Services division also has a considerable base of non-geospatial customers, including well-known names such as Tesco and Unilever. In January 2016, the division announced a new £3m contract win with a global healthcare provider. The Cloud Services division comprises Enables IT, Avisen, Storage Fusion and its associated undertaking, Sitemap.

 

As noted at the time of acquisition, Enables IT's former Chief Executive Officer, Michael Walliss, now manages the Cloud Services division freeing 1Spatial's management to focus on the development of the core Geospatial business.

 

Strategy and business model

 

Our objective is to release the untapped potential of 1Spatial's IP and rich heritage in the management of geospatial data. We are a leader in our field with almost fifty years' experience and continue to be at the forefront of innovation with the value of our products being increasingly recognised by large international customers.

 

There is a growing demand by all organisations and corporations for the location-driven insights that can be derived from geospatial data. While organisations typically meet this demand by acquiring a GIS package, such solutions pre-suppose an adequate quality in the underlying geospatial data. In reality, this is seldom the case. 1Spatial's traditional customer base met this challenge by engaging 1Spatial to help manage the quality of their data; its collection, validation, correction, maintenance, extraction, publication and interpretation of geospatial data.

 

Historically, the Group's expertise was the delivery of solutions for relatively few, very large, clients - the creators and users of some of the largest (and most critical) geospatial databases globally. This was achieved through bespoke projects leveraging resource-constrained professional services built on a fragmented code-base of software.

 

Since 2012, we have invested in the development of modular, "off-the-shelf" software, packaging 45 years of innovation and expertise so that it can be effectively deployed for repeated and scalable use. Effectively, we have inverted our historic business model from one grounded in ad hoc, bespoke and constrained consulting services that drew on a fragmented code-base, to one where a robust and repeatable software model enables added-value professional services.

 

 

Strategy in Action

 

"Enables IT's US and UK data centres allow 1Spatial to offer its expertise as an agile, scalable and secure cloud service."

 

The first of these products was 1SMS, the 1Spatial Management Suite, which we launched in 2012/13. Bespoke projects continue, of course, and many complex projects - requiring significant additional professional services revenue - are now grounded in the 1SMS package. However, the new model enables us to focus our team of developers on a single, central code-base, an approach which yields technological advances that would not have been available under the previous approach of wholly ad hoc, bespoke projects.

 

We now have a business model that is repeatable and affordably scalable. Core functionality and reusable IP can be re-sold as packaged product and our valuable, highly-skilled people can be better deployed at the cutting edge; delivering innovation for our customers.

 

Valuable, reusable IP developed by our developers and consultants working on bespoke projects can be captured and fed into the development cycle for future iterations of our packaged software.

 

Open technology - at the heart of complex solutions

 

The nature of 1Spatial's expertise means that our solutions are often found at the heart of complex installations, working alongside and inter-operating with the technology of other vendors.

 

Strong partnerships with other industry leaders have always been an important part of the 1Spatial strategy. However, as the use of GIS grows outside of specialist geospatial organisations, we see increasing demand for different solutions to work together ever more seamlessly. Consequently, we have committed ourselves to provide software solutions that are 'open' and which work well with key vendors in the field. We have seen two important developments during the year; 1Integrate for ArcGIS and HERE.

 

1Integrate for ArcGIS

 

In October 2014, we announced an important partnership with GIS market leader ESRI. ESRI, a privately held US company sometimes known as Environmental Systems Research Institute, has a 43% share of the GIS market and around 350,000 organisations use its core ArcGIS software.

 

The first product of this partnership is 1Integrate for ArcGIS. This strategically important product makes 1Spatial's unique technology available directly from within the ESRI user interface. 1Integrate for ArcGIS opens up ESRI's entire customer base to 1Spatial.

 

HERE

 

Our second partnership in pursuit of open technology is with HERE. HERE, previously known as Navteq, is a leader in the field of location intelligence, delivering precise and up-to-date maps and "location experiences" across multiple screens and operating systems.

 

Drawing on more than 80,000 sources of data, HERE offers maps, voice guided navigation and live traffic information. With investment from Audi AG, BMW Group and Daimler AG, the business provides mapping solutions to consumers, the automotive sector and enterprise in general. Announced in January 2016, our partnership will enable customers to use 1Spatial technology to easily combine their own data with HERE's high quality map data yielding significant operational efficiencies.

 

Geographic expansion

 

The Group's headquarters are in Cambridge, UK; our offices in USA, France and Belgium cover French-speaking markets, especially in Africa.  We also have an Asia-Pacific office in Sydney, Australia and an office in Ireland. 

 

US Presence

 

Our investment in LSI and the acquisition of Enables IT has significantly increased our presence in the important US market.

 

LSI is the sole distributor for 1Spatial products and solutions across the Americas. Over the years, 1Spatial and LSI have worked closely together on strategic accounts including the US Census Bureau, the US Army and the Brazilian Army. LSI is a certified supplier to US Federal government departments and key personnel have security clearance to work with the US Defence Department.

 

Enables IT, acquired in July 2015, brings expertise in managed and hosted services, a US office and data centre (as well as a data centre in the UK).

 

 

Strategy in Action

 

"Our investment in LSI (now known as 1Spatial US, Inc.) - a registered supplier to US federal agencies, with security-cleared geospatial experts - gives us access to the valuable US government market."

 

Together, LSI and Enables IT significantly enhance our offering and capability in the US market. The US public sector is a significant customer sector for ESRI and, with our 1Integrate for ArcGIS product, we foresee the US government becoming an important market for us in the future.

 

Other geographic markets

 

We continue to drive business and promote our brand across our other geographic markets. A programme of sponsoring the most significant events in the geospatial calendar has seen the 1Spatial brand promoted in Australia, the Far East, Middle-East, Europe and the Americas, often in association with partners like ESRI and Safe Software (publishers of FME).

 

1Spatial also continues its membership of influential bodies such as the OGC (the Open Geospatial Consortium), British Cartographic Society and NSGIC (the National States Geographic Information Council). During the year, 1Spatial became a Gold Partner of NSGIC and won the Space & Place Award from ORLOGI (the Irish Organisation for Geographic Information).

 

Leveraging our Geospatial expertise

 

During the period we continued to develop our data services platform known as Sitemap which leverages Open Data opportunities.  This is an exciting opportunity for the Group which we will continue to develop and commercialise in Q3 of the next financial year.

 

Outlook

 

I am very pleased with the progress that 1Spatial has made this year. We have executed against our strategic objective of consolidation and targeted investment, and the Group is now well positioned to benefit from growth opportunities across key markets.

 

We have improved our overall operating results while continuing our transition towards a more open and scalable business model. At every step the acquisitions we have made, the new products we have launched and the partnerships we have forged have created a stronger, yet more agile, business.

 

We continue to drive long-term shareholder value by investing in our spatial software and technology, developing innovative, off-the-shelf products and services and exploiting the opportunities across geographic markets.

 

The investments we have made, the growing demand for our products reflected in our strong order book, recurring revenues and our strong relationships with governments, service providers and customers across numerous markets mean that we look forward to still greater success in the year ahead.

 

 

 

 

Marcus Hanke
Chief Executive

 

 

 

Chief Financial Officer's review

 

Driving long-term shareholder value

 

1Spatial's prime objective is to generate value for its shareholders over the long term. To achieve this objective it has been necessary for the Group to invest in a number of key areas during the current year including new structures to support growth and significant investment in the Group's Intellectual Property. Despite this backdrop, the Group has performed well during the period, with record revenues, adjusted* EBITDA and results before and after tax.

 

Investment areas

 

The key areas of investment during the year have been:           

 

·     Leveraging the Group's unique intellectual property through the development of its off the shelf suite of software products so they can work seamlessly with other technologies, providing a distinguished platform for future scalable revenue growth.

·     Establishing long-term sales pipeline of opportunities and recurring revenue streams

·     Continual review of the current operating business to ensure operating efficiencies are optimised and that the Group is adapting to market and other external forces

·     Acquisitions of new entities and partnerships with other companies in the sector to support growth

 

In my report, I will highlight how these areas above have impacted the results for the year.

 

Record results

 

Revenues, gross margins, adjusted* EBITDA, loss before tax and profit after tax have all improved on the previous year. 

 

The acquisition of Enables IT and the inclusion of its results for six months has been a direct contributor to this increase, adding £3.2m to revenues and £0.6m to adjusted EBITDA for the year. Given the relatively small investment of £1.8m that the Group made in the year, the Board is pleased with the returns this investment is already delivering.

 

A summary of the results compared to the prior year, are set out below:

 

 

 

2016

2015

Variance

Variance

 

£m

£m

£m

%

Revenues

20.7

19.6

1.1

6%

Gross profit

11.8

10.8

1.0

9%

Gross profit %

57%

55%

 

 

Adjusted* EBITDA

3.7

3.1

0.6

19%

Loss before tax

(0.8)

(1.5)

0.7

(47%)

Profit/(loss) after tax

0.0

(1.5)

1.5

(100%)

 

*Adjusted EBITDA is stated net of certain strategic, integration, other one-off costs and share option charge.  See note 3 to the Accounts for further information.

 

The Group finished the year with £5m of net cash (2015: £7.8m) and net assets of £25.7m (2015: £21.0m).

 

Further information on the Group's financial results and cash flows are summarised later in this report.

 

Establishing new structures to support growth

 

During the year, the Company made the following corporate transactions which will enhance the ability of the Group to execute on its stated strategy:

§      Acquisition of 47% stake in Laser Scan Inc. (now 1Spatial US, Inc.) for £1.5m and subsequent to the year end taking a further stake for £0.9m taking our total holding to 73%

§      Acquisition of 100% Enables IT Group plc for £1.8m

 

The Group is segmented into three key business segments, being:

§   Geospatial

§ Cloud Services

§ Central costs

 

 

The Geospatial business represents the core 1Spatial business which has offices in the UK (Cambridge), Ireland, France, Belgium, Australia and subsequent to the year end, USA (Washington DC). 

 

The Cloud Services division is represented by Enables IT plus the Group's two smaller businesses; Avisen and Storage Fusion, and its associate, Sitemap. Enables IT's former Chief Executive Officer, Michael Walliss, now manages the Cloud Services division freeing 1Spatial's management to focus on development of the core Geospatial business.

 

Development of its off the shelf suite of software products that can work seamlessly with other technologies

 

The Group has invested significantly in its suite of software products in the year, in particular in its main 1SMS product and making this more readily able to be deployed onto other companies' solution platforms. This development is key in securing long-term growth for the business.

 

The total amount spent in the period on this development and other development in the Group was £3.0m (2015: £2.4m) all of which has been capitalised in the Group's balance sheet.

 

A short-term consequence of this investment is that that there has been some negative impact on revenues in the year. This is because the development team has become resource-constrained and therefore the Group has had to be selective over certain revenue-generating projects that it has entered into. The Group retains strict criteria when assessing projects and these will only be entered into if they achieve a target gross margin or are of strategic importance to the Group, in which case a lower margin will be accepted.

 

Establishing long-term sales pipeline and recurring revenues

 

The Group is constantly reviewing and evolving its sales model so it aligns with the Group's strategy. The sales model has been developed and adapted for the financial year to January 2017 with a split of the teams between major accounts (large traditional accounts with mapping agencies/data providers where more bespoke software and services are provided) and non-major accounts where the sales are more transactional and will align to the 1Integrate for ArcGIS sales. 

 

During the second half of the year the Group was successful in executing on a number of sales which will give rise to revenue in the next financial year and will create a platform for further sales growth in the future. These were:

 

·      US$1m contract with a US Federal Government Agency

·      1Integrate contract for US$1.1m with HERE USA

·      rolling contract with one of the UK's leading transport infrastructure operators

·      £3m contract with a large US healthcare provider

 

In addition, the Group announced a significant strategic partnership with HERE, a leader in navigation and mapping. The combination of 1Spatial's software and services with HERE's high grade maps and content will enable end-customers to benefit from significant improvements in operational performance whilst providing substantial incremental sales opportunities for the Group.

 

At the end of the year, the Group had a strong growing pipeline of opportunities and a secured order book of opportunities to execute on.

 

Continual review of the current operating business to ensure operating efficiencies are optimised

 

The Group achieved record gross margins in the period, which is significant given the fact that the acquisition in the year of Enables IT Group has lower gross margins due to the nature of its business.

 

Revenues in the year in the Geospatial segment have been adversely affected by the execution of the software development strategy and also by external factors such as foreign exchange and pricing pressure in the French and Belgian markets. The French and Belgian market pricing pressure issue was ascertained at the end of the last financial year and was a key reason for the redundancies that were announced in January 2015 but paid in the financial year to January 2016.

 

 

Record results - Analysis by Segment

 

An overview of each of business types is set out below:

 

 

 

 

Adjusted*

Adjusted*

 

Revenue

Revenue

EBITDA

EBITDA

 

2016

2015

2016

2015

 

£m

£m

£m

£m

Geospatial (at constant currency)

16.7

17.9

4.9

5.1

Cloud Services

4.8

1.7

1.1

0.5

Central costs

-

-

(2.1)

(2.5)

FX adjustment (constant currency**)

(0.8)

 -

(0.2)

-

Reported numbers

20.7

19.6

3.7

3.1

 

 

*Adjusted EBITDA is stated net of certain strategic, integration, other one-off costs and share option charge.  See note 3 to the Accounts for further information.

 

** Constant currency has been calculated by applying the previous year's exchange rates to the current year's figures in currency.

 

Geospatial

 

 

2016

2015

Variance

Variance

Figures in constant currency

£m

£m

£m

%

Revenues

16.7

17.9

(1.2)

(7%)

Gross profit

10.2

9.9

0.3

3%

Gross profit %

61%

55%

 -

 -

Adjusted* EBITDA

4.9

5.1

(0.2)

(4%)

 

Revenues

 

Revenues have decreased compared to the prior period; however, as noted in the section above, management have taken steps to mitigate the impact on gross profit and adjusted* EBITDA. Management are still very confident with the future prospects of the business and envisage sales of the 1Integrate for ArcGIS product (particularly in the US market) having a positive impact on the numbers to 31 January 2017. A number of new sales were also closed prior to the year end and just after the year end; however, due to orders taken but products or services not delivered, these could not be recognised in the financial year to January 2016. Other key reasons for the decrease in the year are as follows:

·      Deployment of the software development team onto the development of the products rather than being able to deliver service revenues for the Group

·      Impact of the pricing pressure from government departments on the French and Belgian support and maintenance revenues

·      Only engaging on contracts yielding target margin levels given resource constraints in development team (except in cases where the customer is strategically advantageous)

·      1Integrate for ArcGIS being launched later in the year than expected and therefore not having an impact on the results until the year ended 31 January 2017

 

The Group continues to have a strong support and maintenance renewal, which is still at a renewal rate in excess of 95%. With pricing pressure in the French and Belgian markets, we have sought to reduce prices where necessary to keep customers, maintaining some of the revenue stream whilst keeping the customers engaged for future upsell and cross sell opportunities. 

 

The key revenue streams in the Geospatial segment are:

·      Licences - these are generally perpetual licences with an annual support and maintenance fee in the region of 20% of the upfront licence fee 

·      Services - development and consultancy services to existing and new clients, utilising our Geospatial domain expertise 

·      Support and maintenance - which have arisen on the back of perpetual licence sales

 

 

The Geospatial business has over 600 clients on recurring support and maintenance and the revenue streams are split as follows:

 

 

2016

2015

Licences

17%

19%

Services

42%

42%

Support and maintenance

41%

39%

 

The future revenue strategy is to increase the proportion of licence sales of the new product and these products would be sold on a subscription basis rather than a perpetual licence basis. 

 

Gross profit and adjusted* EBITDA

 

Whilst revenue growth has been lower than expected, gross margins have been strong and this is as a result of strong commercial discipline within the business and management of the cost base. Key objectives for the management and commercial teams have been to:

·      Maintain 1Spatial's strong recurring support and maintenance revenues

·      Improve project management and margins on some of the longer term projects

·      Implement strict processes and procedures on Bid/No Bid decisions for new contracts to ensure good gross margins are achieved

·      Drive revenue mix towards more profitable licence sales

·      Reduce costs in the French and Belgian business in line with loss of revenues

 

Adjusted* EBITDA is broadly in line with the prior year and is mainly as a result of the sustained gross profit figure.

 

Cloud Services

 

2016

2015

Variance

Variance

 

£m

£m

£m

%

Revenues

4.8

1.7

3.1

182%

Gross profit

2.0

0.9

1.1

122%

Gross profit %

42%

53%

 -

 -

Adjusted* EBITDA

1.1

0.5

0.6

120%

 

The increase in the Cloud Services Revenue, gross profit and adjusted* EBITDA is due to the acquisition of Enables IT and its inclusion in the results for approximately six months. 

 

Revenues

 

The key revenue streams in the Cloud services division are:

·      Recurring revenue*

·      Third-party software and products

·      Services

 

* Managed/cloud services and support and maintenance

 

The Cloud Services business has approximately 130 clients on recurring revenue streams (managed services and/or support and maintenance) and the revenue streams are split as follows:

 

 

2016

2015

Recurring revenue

48%

5%

Third-party software and products

20%

0%

Services

28%

66%

Licences

4%

29%

 

Gross profit and adjusted* EBITDA

 

The gross profit margin is less than the prior year due to the inclusion of the Enables IT business which has lower gross profit margins than that of Avisen and Storage Fusion. Following the year end, the Avisen business was transferred into the Enables IT business. 

 

Storage Fusion continues to offer its SRA software and has a number of important contracts that renew on an annual basis. We continue to invest in the SRA software and it is currently undergoing a complete 'refresh' with a new platform due for release in May 2016.

 

The increase in adjusted* EBITDA is as a result of the acquisition of Enables IT.

Central costs

 

Excluding share option charges, strategic, integration and other one-off items, head office costs were £2.1m in the year, which is a reduction of £0.4m on the prior year of £2.5m. The main reason for this reduction was cost saving efficiencies in the year coupled with recharges of costs to associated undertakings for the time spent by the central team on these businesses during the period (LSI and Sitemap). With the central infrastructure now in place, we do not expect head office costs to increase significantly as the Group increases in size.

 

Overall result for the year

 

 

2016

2015

 

£m

£m

 

 

 

Adjusted* EBITDA

3.7

3.1

Depreciation

(0.4)

(0.3)

Amortisation of intangible assets

(1.5)

(1.2)

Share-based payment charge

(1.0)

(0.7)

Strategic, integration and other one-off items

(1.1)

(2.3)

Operating loss

(0.3)

(1.4)

Net finance cost

(0.1)

(0.1)

Share of associates' results

(0.4)

 -

Loss before tax

(0.8)

(1.5)

Tax

0.8

 -

Profit/(loss) for the year

-

(1.5)

 

* Adjusted EBITDA is stated net of certain strategic, integration, other one-off costs and share option charge. See note 3 to the Accounts for further information.

 

To breakeven after tax for the year is a significant improvement of a loss in 2015 of £1.5m. This is largely the result of the improved adjusted* EBITDA, reduced strategic, integration and other one of items and a tax credit offset by increased share option charge and amortisation.

 

Amortisation of intangibles

 

Overall, amortisation of intangible assets has increased on the prior year by £0.3m. The main reason for the increase is amortisation of development costs which have had a full year of amortisation in the current year compared to part of the year in 2015. The amortisation starts as the product development finishes and the products are launched to market.  There will be an increase in amortisation in future financial years given the extent of product development that has taken place with products starting to be launched to market.

 

Share-based payment charge

 

The share option charge represents the 'non-cash' charge under IFRS 2 attributable to issuing share options this financial year. The increase in this charge is due to some new share options that were issued to management in March 2015. This is part of the Group's strategy to attract, motivate and retain talent within the business.

 

 

 

Strategic, integration and other one-off items

 

 

 

2016

£'000

2015

£'000

Costs associated with corporate transactions and other strategic costs

689

514

Integration costs associated with Enables IT and Laser Scan Inc. business

121

-

Integration costs associated with French and Belgian business

-

402

Loss-making contract release in Belgium

(254)

-

Defined benefit pension provision in France

454

-

Loss on sale of building in Belgium

272

-

Training and other costs associated with the implementation of the new ERP system

11

78

Restructuring and redundancy costs of French and Belgian business

75

1,135

Restructuring and redundancy costs of other business

54

88

Release of liability for sales tax exposure

(411)

-

Other

129

128

Total

1,140

2,345

 

Given the recent acquisitive nature of the business, the Group incurs one-off costs which impact the overall underlying results of the business. Where possible the Group seeks to separate these out along with any other one-off items which the Board believe should be shown separately in this category. 

 

A summary of key transactions within this category, are set out above with further details provided in note 3. The overall figure has decreased compared to the prior year with the majority of all the redundancy and restructuring costs in France and Belgium being finalised in 2015 with only a small amount in relation to this in 2016.

 

Corporate transactions (LSI, Enables IT and Sitemap) have given rise to the majority of the £0.7m of cost in relation to corporate transactions and other strategic costs. The majority of the rebranding and integration costs of Enables IT have been incurred by the end of the year.

 

Tax

 

The tax credit for the Group is £0.8m (2015: credit of £5k). This is partially as a result of research and development claims in the year, and partially as a result of deferred tax recognised on the French pension provision, on the reversal of the original fair value adjustment on the sale of the building in Belgium, and on tax losses.
 

Statement of financial position

 

The Group has a strong balance sheet at 31 January 2016 with net assets of £25.7m (2015: £21.0m). 

 

Non-current assets:

 

Intangible assets and goodwill

 

Intangible assets and goodwill increased by £4.2m as a result of additions of £5.6m (development costs of £3m and customer relationships, goodwill arising on acquisition of Enables IT of £2.6m) offset by amortisation of £1.5m.

 

Property, plant and equipment

 

This increased by £1.1m in the period mainly as a result of the acquisition of Enables IT of £0.7m. Other investments in fixed assets in the period included datacentre equipment for Enables IT, US datacentre assets (providing more capacity to sell to future customers) and leasehold property improvements at the UK headquarters in Cambridge.

 

Interests in associate

 

This represents the interest in Sitemap Ltd and LSI. Subsequent to the year end, the Group increased its stake in LSI resulting in it now being a subsidiary undertaking. LSI has also changed its name to 1Spatial US, Inc.

 

 

Current assets:

 

Trade and other receivables

 

Trade and other receivables were £10.8m, an increase of £3.4m on the prior year. One of the main reasons for this increase is due to the inclusion of the Enables IT balances of £1.8m along with increases in trade debtors across the rest of the Group.  In the prior year, certain large trade debtor invoices were paid just before the year end, but this was not the case at 31 January 2016.

 

Cash balance

 

The cash balance reduced from £8.2m in the prior year to £5m. The analysis of this is discussed in the cash flow section below.

 

Assets classified as held for sale

 

The balance of £1m at 31 January 2015 related to the Group's property in Liege, Belgium, which was put on the market and sold in January 2016 for £0.7m. The loss of £0.3m on the disposal of the asset has been recorded in the profit and loss account for the year. The team in Liege have now moved to more modern rented premises near the centre of Liege and this has had a positive impact on the working environment and staff morale of the team in Liege.

 

Current liabilities:

 

Trade and other payables have increased by £2.4m, which is mainly as a result of additional liabilities due to the inclusion of Enables IT liabilities of £2.8m plus a decrease in liabilities across the rest of the Group.

 

There are no borrowings at the end of January 2016. Following the sale of the building in Liege, all debt was repaid due to the debt being secured on the building.

 

Provisions have decreased in the period by £0.8m.

 

Non-current liabilities

 

Given there are no borrowings, the only balances in this classification are the defined benefit pension obligation of £0.5m (none at the previous year end) and deferred tax liabilities of £1.1m. The decrease of £0.6m in the deferred tax liability is explained in the Tax section above.

 

Share capital and reserves

 

Share capital and reserves increased by £4.7m in the year mainly as a result of the share placing in May 2015 for £1.9m and the share issue for the Enables IT acquisition for £1.8m.

 

 

 

Cash flow

 

The year end cash and cash equivalents position was £5m (2015: £8.2m). The net cash position was £5m (2016: £7.8). The net cash position in 2016 is the same as the cash and cash equivalents position due to the debt being repaid in January 2016 as noted above.

 

A cash flow bridge is presented below which reconciles the adjusted* EBITDA to the year end cash balance.

 

                   

 

 

Adjusted* EBITDA

3.7

Exceptional items (paid)

(2.1)

Purchase of property, plant and equipment

(0.8)

Expenditure on product development and intellectual property capitalised

(3.0)

Working capital movements

(2.2)

Investment in Laser Scan Inc.

(1.5)

Issue of shares

1.9

Exercise of warrants

0.1

Cash acquired on Enables IT acquisition

0.5

Building sale proceeds

0.7

Effect of forex

(0.1)

Net cash outflow

(2.8)

Opening net cash

7.8

Closing net cash

 

* Adjusted EBITDA is stated net of certain strategic, integration, other one-off costs and share option charge.  See note 3 to the Accounts for further information

 

 

Whilst there was a net cash outflow in the period, the above summary details some of the key cash outflows which are strategically important for the Group including the transaction with LSI (US distributor based in Washington) and the investment in the R&D activities. From a trading perspective the main cash outflow was the payment of exceptional costs which includes transaction costs in relation to the acquisitions and reorganisation costs of approximately £1.1m in relation to the French and Belgian businesses which were accrued in January 2015 but paid out in February 2015.

 

The Company was pleased to secure an investment from Azini Capital in May 2015 which strengthened the balance sheet position. In addition the Group sold its building in Liege, Belgium which gave rise to £0.7m of proceeds on sale.

 

 

 

1Spatial plc

Consolidated statement of comprehensive income

Year ended 31 January 2016

 

 

Note

2016

£'000

2015

£'000

Revenue

 

20,738

19,598

Cost of sales

 

(8,960)

(8,804)

Gross profit

 

11,778

10,794

Administrative expenses

 

(12,119)

(12,260)

 

 

(341)

(1,466)

 

 

 

 

Adjusted* EBITDA

 

3,677

3,052

Less: depreciation

 

(427)

(267)

Less: amortisation and impairment of intangible assets

5

(1,474)

(1,183)

Less: share-based payment charge

 

(977)

(723)

Less: strategic, integration and other one-off items

3

(1,140)

(2,345)

Operating loss

 

(341)

(1,466)

 

 

 

 

Finance income

 

74

30

Finance costs

 

(105)

(86)

Net finance cost

 

(31)

(56)

 

 

 

 

Share of net loss of associates accounted for using the equity method

 

(421)

-

 

 

 

 

Loss before tax

 

(793)

(1,522)

 

 

 

 

Income tax credit

4

805

5

 

 

 

 

Profit/(loss) for the year

 

12

(1,517)

Profit/(loss) for the year attributable to:

 

 

 

Equity shareholders of the Parent

 

12

(1,517)

Non-controlling interest

 

-

-

 

 

12

(1,517)

 

 

 

 

Other comprehensive income/(loss)

 

 

 

Items that may subsequently be reclassified to profit or loss:

 

 

 

Actuarial gains arising on defined benefit pension, net of tax

 

56

-

Exchange differences arising on translation of net assets of foreign operations

 

(140)

 

(316)

Other comprehensive loss for the year, net of tax

 

(84)

(316)

 

 

 

 

Total comprehensive loss for the year

 

(72)

(1,833)

Total comprehensive loss attributable to:

 

 

 

Equity shareholders of the Parent

 

(72)

(1,833)

Non-controlling interest

 

-

-

 

 

(72)

(1,833)

 

 

 

 

 

 

 

 

Earnings/(loss) per ordinary share expressed in pence per ordinary share:

 

 

 

Basic

10

0.00

(0.23)

Diluted

10

0.00

(0.23)

 

 

 

 

* Adjusted for strategic, integration, other one-off items (note 3) and share-based payment charge.

 

1Spatial plc                                                                                                                          Registered number: 5429800

Consolidated statement of financial position                                             

As at 31 January 2016

 

 

Notes

2016

£'000

2015

£'000

 

 

 

 

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets including goodwill

5

18,859

14,729

Property, plant and equipment

 

1,638

552

Interests in associates

 

1,577

500

Total non-current assets

 

22,074

15,781

 

 

 

 

Current assets

 

 

 

Trade and other receivables

6

10,815

7,453

Current income tax receivable

 

391

134

Cash and cash equivalents

7

4,996

8,250

Assets classified as held for sale

 

-

994

Total current assets

 

16,202

16,831

 

 

 

 

Total assets

 

38,276

32,612

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

8

(10,686)

(8,301)

Current income tax liabilities

 

-

(22)

Borrowings

 

-

(242)

Provisions

 

(344)

(1,151)

Total current liabilities

 

(11,030)

(9,716)

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

 

-

(191)

Defined benefit pension obligation

 

(457)

-

Deferred tax

 

(1,122)

(1,697)

Total non-current liabilities

 

(1,579)

(1,888)

Total liabilities

 

(12,609)

(11,604)

Net assets

 

25,667

21,008

 

 

 

 

Share capital and reserves

 

 

 

Share capital

9

16,223

15,572

Share premium account

9

22,264

20,608

Own shares held

9

(306)

(306)

Equity-settled employee benefits reserve

 

2,688

1,711

Merger reserve

 

15,347

13,900

Reverse acquisition reserve

 

(11,584)

(11,584)

Currency translation reserve

 

(432)

(292)

Accumulated losses

 

(18,533)

(18,601)

Total equity attributable to shareholders of the parent

 

25,667

21,008

 

 

 

1Spatial plc

Consolidated statement of changes in equity

Year ended 31 January 2016

 

£'000

Share capital

Share premium account

Own shares held

Equity-settled employee benefits reserve

Merger reserve

Reverse

acquisition

reserve

Currency translation reserve

Accumulated losses

Total equity attributable to the equity shareholders of the parent company

Non-controlling interest

Total equity

Balance at 1 February 2015

15,572

20,608

(306)

1,711

13,900

(11,584)

(292)

(18,601)

21,008

-

21,008

Comprehensive income/loss

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

-

-

12

12

-

12

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

Actuarial gains arising on defined benefit pension

-

-

-

-

-

-

-

56

56

-

56

Exchange differences on translating foreign operations

-

-

-

-

-

-

(140)

-

(140)

-

(140)

Total other comprehensive income

-

-

-

-

-

-

(140)

56

(84)

-

(84)

Total comprehensive income/(loss)

-

-

-

-

-

-

(140)

68

(72)

-

(72)

Transactions with owners recognised directly in equity

 

 

 

 

 

 

 

 

 

 

 

Proceeds from shares issued (note 9)

651

1,656

-

-

1,447

-

-

-

3,754

-

3,754

Recognition of share-based payments

-

-

-

977

-

-

-

-

977

-

977

 

651

1,656

-

977

1,447

-

-

-

4,731

-

4,731

Balance at 31 January 2016

16,223

22,264

(306)

2,688

15,347

(11,584)

(432)

(18,533)

25,667

-

25,667
 

 

1Spatial plc

Consolidated statement of changes in equity

Year ended 31 January 2016

 

£'000

Share capital

Share premium account

Own shares held

Equity-settled employee benefits reserve

Merger reserve

Reverse

acquisition

reserve

Currency translation reserve

Accumulated losses

Total equity attributable to the equity shareholders of the parent company

Non-controlling interest

Total equity

Balance at 1 February 2014

15,572

20,608

(306)

988

13,900

(11,584)

24

(17,084)

22,118

-

22,118

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

-

-

-

-

(1,517)

(1,517)

-

(1,517)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

-

-

-

-

(316)

-

(316)

-

(316)

Total other comprehensive income

-

-

-

-

-

-

(316)

-

(316)

-

(316)

Total comprehensive loss

-

-

-

-

-

-

(316)

(1,517)

(1,833)

-

(1,833)

Transactions with owners recognised directly in equity

 

 

 

 

 

 

 

 

 

 

 

Recognition of share-based payments

-

-

-

723

-

-

-

-

723

-

723

 

-

-

-

723

-

-

-

-

723

-

723

Balance at 31 January 2015

15,572

20,608

(306)

1,711

13,900

(11,584)

(292)

(18,601)

21,008

-

21,008

 

 

1Spatial plc

Consolidated statement of cash flows

Year ended 31 January 2016

 

 

Note

2016

£'000

2015

£'000

Cash flows from operating activities

 

 

 

Cash (used in)/generated from operations

(a)

(721)

379

Interest received

 

74

30

Interest paid

 

(105)

(86)

Tax received/(paid)

 

55

(21)

Net cash (used in)/generated from operating activities

 

(697)

302

 

 

 

 

Cash flows from investing activities

 

 

 

Cash acquired with subsidiaries

 

465

-

Acquisition of investment in associate

 

(1,498)

(500)

Purchase of property, plant and equipment

 

(841)

(258)

Proceeds from sale of property, plant and equipment

 

52

37

Proceeds from sale of building (asset previously held for sale)

 

687

-

Expenditure on product development and intellectual property capitalised

 

(3,011)

(2,363)

Net cash used in investing activities

 

(4,146)

(3,084)

 

 

 

 

Cash flows from financing activities

 

 

 

Increase in borrowings

 

-

38

Repayment of borrowings

 

(438)

(47)

Net proceeds of share issue

9

1,940

-

Net cash generated from/(used in) financing activities

 

1,502

(9)

 

 

 

 

Net decrease in cash and cash equivalents

 

(3,341)

(2,791)

Cash and cash equivalents at start of year

 

8,250

11,165

Effects of foreign exchange on cash and cash equivalents

 

87

(124)

Cash and cash equivalents at end of year

(b)

4,996

8,250

 

 

 

 

Notes to the consolidated statement of cash flows

 

(a) Cash (used in)/generated from operations

 

 

 

2016

£'000

2015

£'000

Loss before tax

 

(793)

(1,522)

Adjustments for:

 

 

 

Share of net loss of associates

 

421

-

Net finance cost

 

31

56

Depreciation

 

427

267

Amortisation

 

1,474

1,183

Share-based payment charge

 

977

723

Net foreign exchange movement

 

(202)

-

Loss on disposal of building (asset previously held for sale)

 

272

-

Loss on disposal of property, plant and equipment

 

18

-

Decrease in inventories

 

-

15

Increase in trade and other receivables

 

(2,710)

(1,020)

Increase in trade and other payables

 

134

192

(Decrease)/increase in provisions

 

(1,283)

485

Increase in defined benefit pension obligation

 

513

-

Cash generated from/(used in) operations

 

(721)

379

 

 

 

 (b) Reconciliation of net cash flow to movement in net funds

               

 

 

2016

£'000

2015

£'000

 

 

 

 

Decrease in cash in the year

 

(3,341)

(2,791)

Net cash inflow in respect of new borrowings

 

-

(38)

Net cash outflow in respect of borrowings paid

 

438

47

Changes resulting from cash flows

 

(2,903)

(2,782)

Effect of foreign exchange

 

82

(82)

Change in net funds

 

(2,821)

(2,864)

Net funds at beginning of year

 

7,817

10,681

Net funds at end of year

 

4,996

7,817

 

 

 

 

Analysis of net funds

 

 

 

Cash and cash equivalents classified as:

 

 

 

Current assets

 

4,996

8,250

Bank and other loans

 

-

(433)

Net funds at end of year

 

4,996

7,817

 

 

 

 

 

 

Notes to the financial statements

For the year ended 31 January 2016

 

1.   Basis of preparation

 

The financial information included in this preliminary announcement does not comprise accounts within the meaning of section 434 of the Companies Act 2006, but has been extracted from the statutory financial statements for the year ended 31 January 2016.

 

The preliminary results for the year ended 31 January 2016 have been prepared in accordance with the accounting policies set out in its annual report for the year ended 31 January 2015.  These accounts have been audited and the audit report is unqualified and does not contain a statement under section 498 of the Companies Act 2006.

 

These policies have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("IFRSs as adopted by the EU"), IFRIC (International Financial Reporting Interpretations Committee) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated results have been prepared under the historical cost convention, as modified for any financial assets which are stated at fair value though profit or loss.  The results have been prepared in sterling as this represents the functional currency of the Group and figures have been rounded to the nearest thousand.

 

2.   Segmental information

 

Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions.

 

The United Kingdom is the home country of the Group.  For management purposes during the year, the Group was organised into the following operating divisions - Central costs, Geospatial (1Spatial Group including France and Belgium and Laser Scan Inc.) and Cloud, previously 'Other' (Avisen, Enables IT, Storage Fusion and Sitemap).  These divisions are the basis on which the Group reports its segmental information.  The Geospatial business represents the core 1Spatial business which has offices in the UK (Cambridge), Ireland, France, Belgium, Australia and the USA (Washington DC).  The Cloud Services division represents the Enables IT business plus the two smaller businesses in the Group, of Avisen and Storage Fusion. The Central costs mainly represent costs associated with 1Spatial plc including costs of the Board of Directors and other costs which are not specific to any of the other segments.  Examples of cost include the Group accounting function and marketing.  It also includes costs associated with being an AIM listed company and other statutory costs including audit fees. 

 

The Board assesses the performance of the operating segments based on a measure of adjusted EBITDA.  This measurement basis excludes the effects of strategic, integration and other one-off items from the operating segments.

 

2.   Segmental information (continued)

 

The segment information provided to the Board for the reportable segments for the year ended 31 January 2016 is as follows:

31 January 2016

Central costs

£'000

Geospatial

£'000

Cloud

£'000

Total

£'000

 

 

 

 

 

Revenue

-

15,957

4,781

20,738

Cost of sales

(6,172)

Gross profit

-

9,785

1,993

11,778

 

 

 

 

 

Total administrative expenses

(3,216)

(7,480)

(1,423)

(12,119)

 

 

 

 

 

Adjusted EBITDA

(2,105)

4,659

1,123

3,677

Less: depreciation

(74)

(220)

(133)

(427)

Less: amortisation and impairment of intangible assets

-

(1,114)

(360)

(1,474)

Less: share-based payment charge

(690)

(286)

(1)

(977)

Less: strategic, integration and other one-off items

(734)

(1,140)

Total operating (loss)/profit

(3,216)

2,305

570

(341)

 

 

 

 

 

Finance income

9

65

-

74

Finance cost

(95)

Net finance income/(cost)

6

(30)

(7)

(31)

 

 

 

 

 

Share of net loss of associates accounted for using the equity method

-

(148)

(273)

(421)

 

 

 

 

 

(Loss)/profit before tax

(3,210)

2,127

290

(793)

Tax

495

(Loss)/profit for the year

(3,210)

2,622

600

12

 

Results attributable to non-controlling interests

-

-

-

-

(Loss)/profit attributable to equity holders of the parent

(3,210)

2,622

600

12

                                                                    

 

 

 

31 January 2016

Central costs

£'000

Geospatial

£'000

Cloud

£'000

Total

£'000

Segment assets

1,304

28,536

8,436

38,276

Segment liabilities

(1,241)

(8,132)

(3,236)

(12,609)

Segment net assets

63

20,404

5,200

25,667

 

3.   Strategic, integration and other one-off items

 

In accordance with the Group's policy for strategic, integration and other one-off items, the following charges were included in this category for the year:

 

 

2016

£'000

2015

£'000

Costs associated with corporate transactions and other strategic costs

689

514

Integration costs associated with Enables IT and Laser Scan Inc. business

121

-

Integration costs associated with French and Belgian business

-

402

Loss-making contract release in Belgium

(254)

-

Defined benefit pension provision in France

454

-

Loss on sale of building in Belgium

272

-

Training and other costs associated with the implementation of the new ERP system

11

78

Restructuring and redundancy costs of French and Belgian business

75

1,135

Restructuring and redundancy costs of other business

54

88

Release of liability for sales tax exposure

(411)

-

Other

129

128

Total

1,140

2,345

 

Corporate transactions and other strategic costs relate in the main to the acquisition of 1Spatial's US distributor, Laser Scan Inc. on 3 February 2015 and the Enables IT Group on 23 July 2015. The costs comprise broker costs, due diligence and other advisory fees.   In addition, and in line with our stated strategy, the Company assessed other potential acquisitions during the year and used various advisers to assist with this process and the overall strategic direction of the Company.

 

Integration costs incurred on the acquisition of Laser Scan Inc. and the Enables IT include rebranding costs and other costs of aligning operating strategies and sales and marketing strategies.

 

During the second half of the year, the Group fundamentally revisited its approach to one of the Belgian contracts, identified as loss-making at the time of acquisition. Consequently certain future expenditure previously considered as bespoke to this customer contract was reallocated to development of a generic product to form part of the broader product offering. As a result, the level of provision for the loss-making contract was re-estimated, resulting in £254,000 being released unutilised. As the provision was recorded as part of the acquisition balance sheet of the Belgian entity, and was therefore not charged to the income statement, the release of the provision has been credited within strategic, integration and other one-off items.

 

During the year we identified additional costs related to the defined benefit pension scheme operated by 1Spatial France, the subsidiary acquired in June 2013. On acquisition, a liability of £67,000 was recognised on the basis of only recognising a liability for those individuals over the age of 55. During the year, the Group has revised its approach to estimating the liability and in doing so it has been assumed that a proportion of individuals below the age of 55 will remain with the business through to retirement which has given rise to the increased cost.

 

The building in Belgium classified as an asset held for sale in the previous financial year was sold in the year, resulting in a loss on sale.

 

During the year, notification was received from the tax authorities that an enquiry raised in a prior year relating to the treatment of sales tax had been resolved in the Group's favour and no amounts will become payable. As such, the liability that had been recorded at 31 January 2015 was released.

 

Other costs include items such as one-off premises related costs in the UK and payments to the outgoing French audit firm to terminate their contract early so that the audit of the Group is performed by the same firm.

 

4.   Income tax charge/(credit)

 

 

2016

£'000

2015

£'000

Current tax

 

 

UK corporation tax on income for year

45

22

Foreign tax

39

42

Adjustments in respect of prior years

(254)

(102)

Total current tax

(170)

(38)

Deferred tax

 

 

 Origination and reversal in temporary differences

(635)

33

Total deferred tax

(635)

33

 

 

 

Total tax credit

(805)

(5)

 

Factors affecting the tax charge/(credit) for the year:

The tax assessed for the year is lower (2015: higher) than the standard rate of corporation tax in the UK. The differences are explained below:

 

 

2016

£'000

2015

£'000

Loss on ordinary activities before tax

(793)

(1,522)

 

(793)

(1,522)

 

Loss on ordinary activities before tax multiplied by the effective rate of corporation tax in the UK of 20.16% (2015: 21.33%)

(160)

(325)

Effect of:

 

 

Expenses not deductible for tax purposes

230

112

Income not taxable

(203)

-

Overseas tax rates (higher)/lower than UK tax rates

(173)

21

Tax losses for which no deferred tax asset was recognised

203

623

Benefit of losses brought forward utilised not previously recognised

(318)

(293)

Research and development relief

(62)

(43)

Adjustments to corporation tax in respect of prior years

(254)

(102)

Adjustments to deferred tax in respect of prior years

-

12

Impact of change in tax rate

(68)

(10)

Total tax credit for year

(805)

(5)

 

The standard rate of corporation tax in the UK changed from 21% to 20% with effect from 1 April 2015. Accordingly, the Group's losses for this financial year are taxed at an effective rate of 20.16%. In the Budget on 8 July 2015 the UK government proposed, amongst other things, to further reduce the main rate of UK corporation tax to 19% with effect from 1 April 2017 and to 18% with effect from 1 April 2020. These rate changes were substantively enacted in the Finance Bill 2015 on 26 October 2015, so the relevant deferred tax balances have been remeasured at 19% for the current year end

5.   Intangible assets including goodwill

 

 

Goodwill

 

 

 

£'000

Brands

 

 

 

£'000

Customers and

related contracts

£'000

Software

 

 

 

£'000

Development

Costs

 

 

£'000

Website costs

 

 

£'000

Intellectual property

 

 

£'000

Total

 

 

 

£'000

Cost

 

 

 

 

 

 

 

 

At 1 February 2015

13,268

232

2,357

4,053

5,635

30

18

25,593

Arising on acquisition of Enables IT

1,307

-

1,307

-

-

-

-

2,614

Additions

-

-

-

-

3,003

-

8

3,011

Effect of foreign exchange

(106)

-

16

6

80

-

-

(4)

At 31 January 2016

14,469

232

3,680

4,059

8,718

30

26

31,214

 

 

 

 

 

 

 

 

 

Accumulated impairment and amortisation

 

 

 

 

 

 

 

 

At 1 February 2015

6,355

73

567

1,958

1,881

30

-

10,864

Amortisation

-

23

287

409

755

-

-

1,474

Effect of foreign exchange

-

-

5

3

9

-

-

17

At 31 January 2016

6,355

96

859

2,370

2,645

30

-

12,355

Net book amount at

31 January 2016

8,114

136

2,821

1,689

6,073

-

26

18,859

 

 

Goodwill

 

 

£'000

Brands

 

 

 

£'000

Customers and

related contracts

£'000

Software

 

 

 

£'000

Development

Costs

 

 

£'000

Website costs

 

 

£'000

Intellectual property

 

 

£'000

Total

 

 

 

£'000

Cost

 

 

 

 

 

 

 

 

At 1 February 2014

13,467

232

2,493

4,129

3,383

30

12

23,746

Additions

-

-

-

13

2,344

-

6

2,363

Effect of foreign exchange

(199)

-

(136)

(89)

(92)

-

-

(516)

At 31 January 2015

13,268

232

2,357

4,053

5,635

30

18

25,593

 

 

 

 

 

 

 

 

 

Accumulated impairment and amortisation

 

 

 

 

 

 

 

 

At 1 February 2014

6,355

50

347

1,556

1,389

30

-

9,727

Amortisation

-

23

232

428

500

-

-

1,183

Effect of foreign exchange

-

-

(12)

(26)

(8)

-

 

-

(46)

At 31 January 2015

6,355

73

567

1,958

1,881

30

-

10,864

Net book amount at

31 January 2015

6,913

159

1,790

2,095

3,754

-

18

14,729

 

The net book amount of development costs includes £6,073,000 (2015: £3,754,000) internally generated capitalised software development costs that meet the definition of an intangible asset.

 

The amortisation charge of £1,474,000 (2015: £1,183,000) is included in the administrative expenses in the statement of comprehensive income.

 

 

5.   Intangible assets including goodwill (continued)

 

Impairment tests for goodwill

 

Goodwill is allocated to the Group's cash-generating units (CGUs).  The basis of the allocation is made to those CGUs that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.   A summary of the goodwill allocation is presented below.

 

 

2016

 

2015

 

Avisen & Enables IT

£'000

1Spatial

£'000

 

 

 

 

1Spatial France / Belgium

£'000

Total

£'000

 

Avisen

£'000

1Spatial

£'000

 

 

 

 

1Spatial France / Belgium

£'000

Total

£'000

Goodwill

 

 

 

 

 

 

 

 

 

Opening NBA

339

3,346

3,228

6,913

 

339

3,346

3,427

7,112

Arising on acquisition

693

614

-

1,307

 

-

-

-

-

Foreign exchange

-

-

(106)

(106)

 

-

-

(199)

(199)

Closing NBA

1,032

3,960

3,122

8,114

 

339

3,346

3,228

6,913

 

The Group has prepared, and formally approved, a one-year plan for each CGU.  The detailed plan put together by the management team and the Board makes judgements and assessments on revenue and gross profit expectations.  This is from both contracted and pipeline revenue streams. It also takes account of historic success of winning new work and has been prepared in accordance with IAS 36, 'Impairment of Assets'.

 

 

6.   Trade and other receivables

 

Current

2016

£'000

2015

£'000

Trade receivables

6,069

3,749

Less: provision for impairment of trade receivables

(45)

(16)

 

6,024

3,733

Other taxes and social security

119

194

Other receivables

1,645

827

Prepayments and accrued income

3,027

2,699

 

10,815

7,453

 

The fair value of the Group's trade receivables and other receivables is the same as its book value stated above. No interest is charged on overdue receivables.

 

 

7.   Cash and cash equivalents

 

 

2016

£'000

2015

£'000

Cash at bank and in hand

4,941

8,196

Financial assets - restricted access account

55

54

 

4,996

8,250

 

The fair value of the Group's cash and cash equivalents is the same as its book value stated above. 

 

8.   Trade and other payables

 

Current

 

 

 

2016

£'000

2015

£'000

Trade payables

2,380

1,892

Other taxation and social security

1,848

1,668

Other payables

588

550

Accrued liabilities

1,448

1,586

Deferred income

4,422

2,605

 

10,686

8,301

 

The Directors consider that the book value of trade payables, taxation, other payables, accrued liabilities and deferred income approximates to their fair value at the reporting date.

 

9.   Share capital, share premium account and own shares held

 

Allotted, called up and fully paid

2016

Number

2015

Number

Ordinary shares of 1p each

715,499,308

650,415,354

Deferred shares of 4p each

226,699,878

226,699,878

 

 

 

Rights of shares

 

Ordinary shares

The ordinary shares all rank pari passu, have the right to participate in dividends and other distributions made by the Company, and to receive notice of, attend and vote at every general meeting of the Company. On liquidation, ordinary shareholders are entitled to participate in the assets available for distribution pro rata to the amount credited as paid up on such shares (excluding any premium).

 

Deferred shares

The deferred shares do not carry voting rights or a right to receive a dividend. The holders of deferred shares will not have the right to receive notice of any general meeting of the Company, nor have any right to attend, speak or vote at any such meeting. The deferred shares will also be incapable of transfer (other than to the Company). In addition, holders of deferred shares will only be entitled to a payment on a return of capital or on a winding up of the Company after each of the holders of ordinary shares has received a payment of £1,000,000 in respect of each ordinary share. Accordingly, the deferred shares will have no economic value. No application will be made for the deferred shares to be admitted to trading on AIM nor to trading on any other stock or investment exchange.

 

 

 

Number of shares

 

Allotted, called up and fully paid shares

£'000

Share

premium

account

£'000

Own shares held

£'000

At 1 February 2014 and 31 January 2015

877,115,232

15,572

20,608

(306)

Issue of shares

65,083,954

651

1,692

-

Share issue costs

-

-

(36)

-

At 31 January 2016

942,199,186

16,223

22,264

(306)

 

 

On 7 May 2015 1Spatial plc issued 32,000,000 new ordinary shares in the capital of the Company to Azini Capital Partners LLP ("Azini"). The shares were subscribed for by Azini at a price of 6p per share, raising total gross proceeds of £1.92m for the Company.

 

On 23 July 2015, 1Spatial plc acquired control of Enables IT Group plc (now Enables IT Group Limited). The purchase consideration was satisfied by the issue of 30,831,262 ordinary shares of 1Spatial plc (1.13 1Spatial plc shares for each Enables IT Group plc share) at a price of 5.88p per share.

 

On 30 July 2015, 2,252,692 warrants (issued on 30 July 2010) were exercised at an exercise price of 5.09p.

 

 

Own shares

 

As a result of the disposal of Avisen (Pty) SA Limited on 14 July 2010, 3,500,000 shares with a nominal value of 5p each were purchased and held in treasury. The consideration paid was £306,000. On 28 November 2011, the Company sub-divided its existing share capital of 5p shares into 1p ordinary shares and 4p deferred shares.

 

10. Earnings/(loss) per ordinary share

 

Basic loss per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

 

 

2016

£'000

2015

£'000

Profit/(loss) attributable to equity holders

12

(1,517)

 

 

 

Adjustments:

 

 

Income tax credit

(805)

(5)

Net finance cost

31

56

Share of net loss of associates accounted for using the equity method

421

-

Depreciation

427

267

Amortisation and impairment of intangible assets

1,474

1,183

Share-based payment charge

977

723

Integration, strategic and one-off costs

1,140

2,345

Adjusted EBITDA

3,677

3,052

 

 

2016

Number

000s

2015

Number

000s

Basic weighted average number of ordinary shares

691,283

650,415

Impact of share options and warrants

3,593

22,970

Diluted weighted average number of ordinary shares

694,876

673,385

 

 

2016

Pence

2015

Pence

Basic (loss) per share

0.00

(0.23)

Diluted (loss) per share

0.00

 (0.23)

Basic adjusted EBITDA per share

0.53

0.47

Diluted adjusted EBITDA per share

0.53

0.45

 

Where there is a loss per share, the share options and share warrants are not dilutive and hence the diluted earnings per share is the same as the basic.

 

 

11. Availability of annual report and financial statements

 

Copies of the Company's full annual report and financial statements are expected to be posted to shareholders in due course and, once posted, will also be made available to download from the Company's website at www.1spatial.com.

 

The annual report and financial statements will also be made available for inspection at the Company's registered office during normal business hours on any weekday.  1Spatial plc is registered in England and Wales with registered number 5429800.  The registered office is c/o Capita Company Secretarial Services Limited, First Floor, 40 Dukes Place, London EC3A 7NH.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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