REG - 1Spatial Plc - Final Results
26/04/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230426:nRSZ4521Xa&default-theme=true
RNS Number : 4521X 1Spatial Plc 26 April 2023
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018.
26 April 2023
1Spatial plc
("1Spatial", the "Group" or the "Company")
Final results for the year ended 31 January 2023
1Spatial, (AIM: SPA), a global leader in Location Master Data Management
('LMDM') software and solutions, is pleased to announce audited final results
for the year ended 31 January 2023.
· Significant high-value contracts signed in FY 2023 combined with
a strong pipeline of prospects.
· Organic revenue growth achieved from new customer wins and
expansion contracts in all regions.
· A significant increase in Group profit before tax compared to FY
2022.
Financial highlights
31 January 31 January Change
2023 2022
£m £m %
Group revenue 30.0 27.0 +11
Recurring revenue 14.8 12.2 +21
Term licences revenue 5.2 2.9 +79
Group total ARR* 15.8 13.4 +18
Term licences ARR* 5.6 4.1 +37
Group gross profit 15.5 13.9 +12
Adjusted EBITDA** 5.0 4.2 +19
Adjusted EBITDA** margin (%) 16.7 15.5 +1.2pp
Operating profit 1.3 0.4 +225
Profit before tax 1.0 0.2 +400
Earnings per share - basic (p) 1.0 0.3 +233
Earnings per share - diluted (p) 0.9 0.3 +200
Net cash*** 3.1 3.2 (3)
* Annualised recurring revenue ("ARR") - Annualised Recurring Revenue ("ARR")
is the annualised value at the year-end of committed recurring contracts for
term licences and support & maintenance.
** Adjusted EBITDA - Adjusted EBITDA is a company-specific measure which is
calculated as operating profit/(loss) before depreciation (including right of
use asset depreciation), amortisation and impairment of intangible assets,
share-based payment charge and strategic, integration, and other non-recurring
items.
*** Net cash - Net cash is gross cash less bank borrowings.
Operational highlights
· Approximately 50% of revenue represented by recurring revenue
with year-on-year term licence revenue growth of 79%.
· Continued R&D investment in innovative solutions creating
market-leading Location Master Data Management ('LMDM') platform.
· Inflationary cost pressures across the business being well
managed, with the increasing strength of the balance sheet providing the
confidence to continue investment into people and offering.
· Named among the top 100 organisations featured in the 2023 UK's
Most Loved Workplace® list, backed by Best Practice Institute ('BPI')
research and analysis.
Outlook
· Trading in the current financial year has started positively with
a significantly growing sales pipeline.
· Two new SaaS offerings in trials with customers, representing an
additional avenue for growth.
· Increased investment to accelerate scale up of the sales team to
capture the substantial opportunity presented.
· Continuing growth of ARR and revenue backlog provides comfort
during challenging macro environment.
· While cognisant of inflationary cost pressures, the Board remains
confident in delivering further progress in FY 2024.
Commenting on the update, 1Spatial CEO, Claire Milverton, said:
"This year confirmed that 1Spatial sits right at the heart of numerous changes
across multiple sectors. We secured a number of high-profile wins, invested in
our technology and sales team, and expanded our customer and partner networks
to position the business to serve a range of customers globally.
"Looking ahead, we continue to see multiple areas of significant opportunity,
particularly in the US and for our new SaaS offerings. Through the launch of
our cloud platform we are adding a new layer of potential growth, targeting
niche areas of the location market where we have identified significant demand
and low levels of competition. We believe these offerings have the potential
to be transformational for 1Spatial.
"Trading in the new financial year has begun positively. Our growing sales
pipeline and increased levels of recurring revenue provide the Board with
confidence in the Group's prospects. We will continue to invest in our sales
team and offering in order to capture what we believe to be a considerable
long-term growth opportunity."
For further information, please contact:
1Spatial plc 01223 420 414
Claire Milverton / Stuart Ritchie
Liberum (Nomad and Broker) 020 3100 2000
Max Jones / Edward Mansfield / Miquela Bezuidenhoudt
Alma PR 020 3405 0205
Caroline Forde / Hannah Campbell 1spatial@almapr.co.uk
1Spatial plc's LEI Number is: 213800VG7OZYQES6PN67
About 1Spatial plc
1Spatial plc is a global leader in providing Location Master Data Management
('LMDM') software and solutions, primarily to the Government, Utilities and
Transport sectors. Our global clients include national mapping and land
management agencies, utility companies, transportation organisations,
government and defence departments.
Today - as location data from smartphones, the Internet of Things and great
lakes of commercial Big Data increasingly drive commercial decision-making -
our technology drives efficiency and provides organisations with confidence in
the data they use.
We unlock the value of location data by bringing together our people,
innovative solutions, industry knowledge and our extensive customer base. We
are striving to make the world more sustainable, safer and smarter for the
future. We believe the answers to achieving these goals are held in data. Our
1Spatial Location Master Data Management (LMDM) platform incorporating our
1Integrate rules engine delivers powerful data solutions and focused business
applications on-premise, on-mobile and in the cloud. This ensures data is
current, complete, and consistent through the use of automated processes and
always based on the highest quality information available.
1Spatial plc is AIM-listed, headquartered in Cambridge, UK, with operations in
the UK, Ireland, USA, France, Belgium, Tunisia and Australia.
For more information visit www.1spatial.com
Chairman's Report
1Spatial has delivered another year of solid growth, securing landmark new
customers across our key geographies, many of which have the potential for
further expansion. We have increased investment in the business, adding to our
team and product and thereby enhancing the ability of the business to scale
through the sale of repeatable business applications and software solutions.
Despite the current macro environment, digital transformation and government
investment initiatives continue at pace and are driving a substantial need for
data management tools, particularly those capable of managing complex location
data. 1Spatial is increasingly being chosen as the provider for these projects
sitting at the heart of this rapidly increasing demand.
Our key financial objectives for the year were to grow recurring revenues,
while generating funds to be reinvested into the business. We are making
meaningful progress against our strategic priorities and I am delighted to
report that we achieved double-digit revenue and profit growth this year. Our
focus on growing recurring revenue can be seen in the increasing proportion of
recurring revenues we are now generating, which now account for approximately
50% of total revenue. The Group has successfully managed inflationary
pressures, achieving adjusted EBITDA growth, resulting in our second year of
operating profit and profit before tax.
Operational successes
We have won several new landmark customers across all regions, with particular
success in the UK and the US, some of which provide us with secure long-term
levels of annual recurring revenue ('ARR') and excellent references and
opportunities to increase revenues within these accounts.
People
During FY 2023, we invested in the expansion of our senior leadership team to
ensure we have the depth of management to deliver our growth strategy and have
been encouraged by the immediate positive impacts the new team members have
made. We were delighted to welcome Stuart Ritchie to the Board as CFO in
December 2022; he will provide great financial leadership to the business
alongside Claire and the team, as we seek to capture the considerable
opportunity ahead of us. On behalf of the Board, I would like to thank Andrew
Fabian for the role he has played as CFO in seeing 1Spatial safely into its
next stage of growth, providing the business with a solid financial platform
to support its evolving SaaS business model.
Environmental, Social and Governance ('ESG')
Like many businesses, ESG is very important to 1Spatial as we strive to make
the world safer, smarter and more sustainable for the future. This year, we
launched our ESG strategy and established an ESG steering committee. During
the coming year, we also plan to undertake a detailed carbon assessment,
starting with our UK operations, further details of which are set out in the
Annual Report.
Summary and outlook
This year 1Spatial has become a more robust business with an increasing
ability to capture the increasing demand for accurate and usable location
data. We are successfully delivering against our three-year growth plan,
improving profits and cash generation, whilst continuing to invest in our
platform which will act as a catalyst for future expansion.
Looking ahead, we continue to see significant opportunities from the US, from
our expanding partner network and from our investment in our market-leading
cloud platform. Through the launch of our cloud platform, we are adding a new
layer of potential growth, targeting niche areas of the location market where
we have identified significant demand and low levels of competition, for
example our automated solution for the creation of traffic management plans
('TMPA').
We enter the new financial year in a strong position and we believe the
investments made over the past year in our people and technology position us
well to take advantage of the huge opportunity that is ahead. With a strong
sales backlog and increased levels of recurring revenue, I am confident the
Group's success over the past 12 months is set to continue.
Andy Roberts
Non-Executive Chairman
CEO Review
This has been another year of progress for 1Spatial achieving growth despite a
difficult economic backdrop, delivering across our strategic growth pillars of
Innovation, Customer Relationships and Smart Partnerships.
Resilient financial performance
The Group achieved double-digit revenue growth in the year, with an increasing
proportion of recurring revenues, which now account for approximately 50% of
total revenue. Within that, high margin software term licence revenue
increased by 79% to over £5 million.
Our rules engine, 1Integrate, and cloud portal, 1Data Gateway, are recognised
both by our customers and a growing number of influential partners, as
powerful tools to ensure good quality data and trust when sharing data.
Through our offering, we help over 1,000 customers, spanning key sectors such
as government, utilities and transportation, make better business decisions
and move towards a smarter world, through improved accuracy and sharing of
location data.
We are global leaders in providing Location Master Data Management and this
proposition is at the intersection of two global growing markets. Firstly, the
global geographic information system ('GIS') market size reached US$ 10.1
billion in 2021. Looking forward, the IMARC Group expects the market to reach
US$ 21.1 billion by 2027, a CAGR of 13.1% during 2022-2027. Similarly, the
global master data management market was valued at US$16.68 billion in 2022
and is expected to grow to US$ 54 billion by 2030 at a CAGR of 15.8% during
the forecast period according to Polaris Market Research.
US delivering strong growth
The US has been key to the Group's expansion, being the most significant
contributor of recurring revenue with growth of 45% in annualised recurring
revenue at constant currency. During the year, we successfully sold and
implemented 1Integrate and 1Data Gateway in several clients, both new and
expanding on existing contracts, building our annual recurring revenue from
our repeatable solutions such as Next Generation 9-1-1.
US legislation requires all states to upgrade their emergency services and
public safety systems. Building digital platforms and incorporating the use of
location data to support Next Generation ('NG') 9-1-1 services and ensure a
modern and safe emergency response system. Our NG-9-1-1 solution, now being
implemented in eight US states, ensures that emergency services are
using validated, integrated and up-to-date data and ultimately that the
teams on the ground can respond to incidents more quickly.
The launch of our cloud platform in January 2023 also means we now offer a
"light version" NG9-1-1 SaaS solution aimed at the counties and cities within
each state, significantly increasing our addressable opportunity. We continue
to invest in this solution and the trials are progressing as planned.
There is also sizeable opportunity for growth within each state by launching
additional solutions, including Highway Performance Monitoring Systems
('HPMS') and Conflation. HPMS offers US highway agencies the ability to fully
comply with reporting requirements on the use of the routes within their
jurisdiction. The Conflation solution enables the aggregation of large
quantities of data, the automatic selection of the best quality data points
and the generation of an accurate, reliable whole data set. We have already
seen success in California where we have doubled the initial annual term
licence revenue through the upsell of additional solutions.
This all contributes to a high-margin medium-term opportunity, based around
our own IP and channels to market that can transform the economics of our US
operation. Further out we have the opportunity for expansion into Canada and
Latin America.
Europe
In FY 2022, Europe was the most significant geographical component at a
revenue level. However, year- on-year growth of 1% in FY 2023 led to this
segment dropping behind the UK in FY 2023. Europe experienced some delays in
FY 2023 transitioning its large customer base away from perpetual licences,
but we are encouraged by the year-on-year increase of 15% in Europe's Annual
Recurring Revenue ('ARR') as well as a significant increase in term licence
revenue compared to last year. On 1 February 2023, we appointed a highly
experienced European Sales Director to lead this transition and to focus our
teams on sales of proprietary product.
UK
In the UK, we have delivered top and bottom-line growth through new multi-year
contracts across different sectors. We signed our first contract with HS2, to
build a data validation gateway, which has significant potential for further
expansion. The gateway solution will enable HS2 to validate the quality,
conformance and design of construction-related data submitted by their supply
chain, which in turn will contribute to the efficiency and effective
information delivery on Europe's largest infrastructure project.
We are pleased that the first phase of the NUAR Project ('National Underground
Asset Register') (also known as the MVP stage), has now been completed and
launched by government on 5 April 2023. This first phase of NUAR contains data
from public and private sector organisations which own pipes and cables in
North East England, Wales and London including all of the major energy and
water providers.
Successes such as these in the UK, and the considerable size of our sales
pipeline, give us the confidence to continue to invest in the business. We
have the right structure to deliver on the growing opportunity as we move into
the final year of our three-year growth plan.
Strategic review
We are building our highly scalable business on three pillars: Innovation,
Customer Relationships and Smart Partnerships and I am proud to report
considerable progress against all three throughout the year.
Innovation
Innovation lies at the heart of 1Spatial and during the year we invested in
our market-leading platform to ensure our patented software remains at the
forefront of the expanding industry. Our software can handle huge volumes of
complex data allowing our customers not only to ensure accuracy and security
but also save significant amounts of time and money, giving them the ability
to solve complex challenges in the management of their spatial and non-spatial
data.
The 1Spatial Platform for Location Master Data Management can be split into
two key areas, one of which is Data Management Solutions (managing data to
ensure it is correct, consistent and compliant) which we continued to invest
in throughout the year, including in our patented 1Integrate rules engine and
our cloud-enabled portal 1Data Gateway, to improve the user experience. This
innovation in both 1Integrate and 1Data Gateway facilitated further growth and
accessibility of our solutions and the development team continue to assess the
products against both customer and market needs.
The second key area is Business Applications where we have expanded our
addressable market opportunity through the launch of new offerings and
cloud-based versions of some core solutions, making our technology available
to mid-tier organisations.
We provide two types of business applications to meet our customers' needs.
Applications can either plug directly into the 1Spatial Platform or
alternatively can plug into the 1Spatial Platform whilst also utilising the
benefits of the Esri technology.
Applications plugged directly into the 1Spatial Platform
· Specific Business Applications - term licences (cloud enabled)
We have targeted applications such as those for NG9-1-1 which are cloud
enabled and can reside within a customer's own infrastructure, within their
own private cloud or 1Spatial can offer a hosted solution.
· Specific Business Applications - SaaS applications
This year, we continued the development of our Traffic Management Plan
Automation ('TMPA') solution for production of traffic management within
minutes. This is a UK application and is currently undergoing trials by
selected customers.
· Validation Applications (Validation as a Service - VaaS)
These applications validate data to a pre-defined set of rules and return a
report and visual map-based representation of the errors. The first of these
applications is NG9-1-1 which we have now launched and is undergoing trials.
We have also identified a number of other VaaS solutions across our
territories which we will be looking to trial during H2 of FY24.
Both the Specific Business Applications and Validation Applications provide
the Group with potential exciting new "go to" market models, lowering the
price point for new customers onto the platform, making our technology
available to mid-tier organisations.
· Launch of 1Spatial cloud platform
During the year, we finalised the majority of the development on the 1Spatial
cloud platform which will allow us to sell the cloud solutions noted above.
The multi-tenancy SaaS platform will be more cost effective for 1Spatial as we
will be managing fewer deployments and the elastic nature of the platform
architecture is more cost efficient.
Applications using the benefits of Esri technology
To meet our customers' needs we also invested in our Esri based business
applications, such as 1Water and 1Telecomms which manage water and telecom
networks respectively. Whilst these applications are being sold to new
customers they are also necessary to facilitate the migration from the Group's
legacy Elyx platform to Esri-supported solutions.
Customer relationships
We continued to strengthen our relationships with existing customers
throughout the year and secured landmark new customer wins across all
territories, with particular growth in the UK and US, including high-profile
national-level digital transformation initiatives. This has demonstrated
1Spatial's increasing ability to secure larger contracts across key
geographies and to design, deliver and implement large-scale critical systems.
We typically expand our customer relationships over time, as we identify
additional areas in which our software and expertise can support our
customers.
This year we undertook a customer satisfaction survey with our global key
accounts and, although we recognise there are areas to address, compared to
the 40+ industry average of B2B software and SaaS organisations, we are
satisfied with the results of an overall 8.1 Net Promoter Score. (Source:
Retently B2B sample of 10,000 B2B organisations)
The success of our customer focus, combined with ongoing transition to term
licencing, can be seen in the 26% growth in Annualised Recurring Revenue
driven both by new customer wins and expansion of existing customer accounts.
Land and expand
Key new customer wins include:
· High Speed Two (HS2) - supporting the UK's new high speed rail
network to build a data validation gateway (£0.9m over two years with the
potential for expansion for a further two years).
· Major multi-year contract with a leading European aerospace
agency - for software licenses, including 1Telecomms and 1Integrate, for the
implementation and subsequent annual recurring software and managed services.
The total value of the contract over five years is approximately €3 million.
· Five year contract with University of Maryland CATT Labs - with
an initial value of around US$0.6 million, which will be recognised over the
five-year period, adding to the Group's annual recurring revenue.
· Contract with the state of New York - for various
proof-of-concept projects using 1Integrate and 1Data Gateway.
· Seven year contract with the state of Arkansas - for NG9-1-1, for
US$1.2 million over the period and now the eighth US state to select the
solution.
· Contract with the Eastern Transportation Coalition, a partnership
of 18 US east coast states and Washington DC, which has secured its first
contract through the marketplace, for US$400k with Massachusetts Department of
Transportation.
· Contract with the state of Indiana - for various proof-of-concept
projects using 1Integrate and 1Data Gateway.
· Contract with Highlander Tek in the USA for licence fees for
1Integrate and 1Data Gateway, for US$90k, a geospatial platform that provides
delivery-specific location information to streamline the shipping process from
quote to delivery to payment.
These new clients provide secure long-term levels of ARR and excellent
references and opportunities to increase revenues within these accounts.
Customer expansion contracts in the period, included:
· Department of Environment, Food and Rural Affairs ('Defra') to
support the Land Management System, operated by Defra's Rural Payments Agency
('RPA'), in partnership with Version 1 - £1.2 million over five years.
· Another contract win with Defra and RPA to support its field
collection system - £0.5 million (£0.4 million licence over two years).
· Multi-year framework agreement with Land and Property Services in
Northern Ireland in partnership with Version 1, to support the Department of
Finance's ongoing programme of Digital Transformation.
· Managed service for a major utility organisation in France in
support of the deployment of 1Water - €0.3 million.
· US$1.4 million expansion contract with the state of California
over four years - secured in partnership with Rizing (now Wipro), a global
SAP partner. The state of California is an existing client of 1Spatial, having
already selected 1Spatial's Next Generation 9-1-1 solution.
· Additional services and licences for Google Real Estate and
Workplace Services - US$0.9 million (US$0.3 million licence).
· In France, 32 existing customers have completed or commenced
migration from the Group's legacy Elyx platform to Esri-supported solutions,
including 1Water.
Smart partnerships
Partnerships have played a critical role in enabling us to secure new
customers in the year, demonstrating the credibility of these businesses.
Key focus areas have been to identify and extend our relationships with large
global corporates, where location data management forms part of a larger
customer bid, and to extend our technology partnerships with Esri and other
geospatial vendors such as Hexagon Geospatial.
Key partnership highlights include the signing of a teaming agreement
(delivery partnership) with CGI Inc., one of the world's largest independent
IT and business consulting services firms, to be a strategic delivery partner
on a five-year contract with the Home Office. We also started working in
partnership with ATOS, a global leader in digital transformation and Rizing
(now part of Wipro), a global SAP partner. We secured a four-year contract
with the California Department of Transportation ('Caltrans') which was won in
conjunction with Rizing and is an indication that our strategic growth plan in
the US continues to bear fruit.
Large global corporates
We are increasingly being selected as the data integrity provider within a
consortium, cleansing the data before passing it back through wider systems.
The depth of our data domain expertise and the enterprise grade of our
software means we are one of the few technology partners able to work on the
scale that our partners need.
New partners we have commenced work with this year include Atkins, Qinetiq and
Landmark. We also strengthened our longstanding partnership with both Version1
and Ordnance Survey.
Technology partnership - Esri
Our long-term partnership with Esri is a key differentiator for us in many
markets and provides a major opportunity as we build our own IP solutions.
Esri is the global market leader in GIS with a network of over 2,700 partners
around the world. We are engaging with our European contacts to showcase our
Utility Network Migration Capabilities to different geographies across Europe.
Corporate activity
We will continue to identify potential strategic and bolt-on acquisitions to
complement our organic growth.
People
The success of our business is a tribute to our employees' commitment and
knowledge. We continue to invest in our people, providing them with the tools
and training to support and allow them to realise their potential. The success
of this is evidenced through our selection as one of the top 100 organisations
featured on the 2023 UK's Most Loved Workplace® list backed by Best Practice
Institute ('BPI') research and analysis. This was based on our scores on their
Love of Workplace Index™, which surveys employees on employee satisfaction
and sentiment, including the level of respect, collaboration, support, and
sense of belonging they feel inside the Company.
We continue to roll out mental health awareness training, internal events and
initiatives to encourage staff to take time out from their working day and
have appointed mental health first aiders. We kicked off our annual wellbeing
month in September 2022 and held a range of activities including an employee
volunteering community clean-up day in the UK.
We are always looking at ways to ensure equality and diversity across our
Company and an inclusive, welcoming working environment for everyone. Over
the past year, we have created global initiatives to celebrate: International
Women's Day, Thanksgiving, Mental Health Awareness Week, Earth Day and Health
and Happiness Month.
We continuously monitor the skills and expertise of the senior leadership
teams across all of our regions. During the latter stages of FY23 and early
part of FY24, we brought a highly experienced Sales Director into each of our
European and US businesses. These individuals will enable us to deliver on the
growing opportunities ahead of us and to ensure we have the ability to grow
our sales pipeline across our key geographies.
During the year we carried out an employment engagement survey to determine
employee satisfaction. We were delighted with the overall results and feel
that we have developed a great team spirit as an organisation. The survey
showed that over 80% of our people are happy with their line manager
relationship and feel respected and trusted by their line manager and peers
and 70% of colleagues felt that they were regularly informed with relevant
1Spatial news. We will continue to survey the team and strive to improve our
scores each year.
The teams continue to show ingenuity and commitment day-to-day, and live our
values as revised in 2021: We Respect, We Innovate, We Collaborate, We Trust
and We Care. As a Board, we thank them wholeheartedly; their ability to
innovate continually whilst delivering the highest levels of customer
satisfaction means that our growth pillars are built on very secure
foundations.
Strategic priorities for the year ahead
As we move into our final year of our three-year growth plan, we will continue
to invest in the business to take advantage of the huge opportunity ahead.
Through the launch of our cloud platform in January 2023, we have added a new
layer of potential growth, targeting niche areas of the location market where
we have identified significant demand and low levels of competition.
We will continue to grow our pipeline and invest in the business and our
people to support our expanded customer base. The Group remains focused on
increased revenue growth, underpinned by growing annual recurring revenue,
increased profitability at adjusted EBITDA level and higher cash generation
over the long-term.
Current trading and outlook
This year confirmed that 1Spatial sits right at the heart of numerous changes
across multiple sectors. We secured a number of high-profile wins, invested in
our technology and sales team, and expanded our customer and partner networks
to position the business to serve a range of customers globally.
Looking ahead, we see multiple areas of significant opportunity, particularly
in the US and for our new SaaS offerings. Through the launch of our cloud
platform we are adding a new layer of potential growth, targeting niche areas
of the location market where we have identified significant demand and low
levels of competition. We believe these offerings have the potential to be
transformational for 1Spatial.
Trading in the new financial year has begun positively. Our growing sales
pipeline and increased levels of recurring revenue provide the Board with
confidence in the Group's prospects, and we will continue to invest in our
sales team and offering to capture what we believe to be a considerable
long-term growth opportunity.
Claire Milverton
Chief Executive Officer
CFO review
In FY 2023 the Group continued to build on foundations set in the previous
year by delivering double-digit growth in annual revenues, future recurring
revenues and adjusted EBITDA. The improvement in the financial performance,
notably in operating profit and profit before tax, has resulted in an increase
of 112% in cash generated from operations to £5.4 million (FY 2022: £2.5
million). Increases in these key financial metrics have allowed the Group to
continue significant investment into development of its proprietary
technology.
Revenue
Group revenue increased by 11% (9% at constant currency) to £30.0 million
from £27.0 million in FY 2022.
Recurring revenue
The business strategy is to grow revenue from repeatable business solutions on
long-term contracts by increasing sales of term licences (rather than one-off
perpetual licences) and increasing the proportion of recurring revenue
compared to services. As a result, excluding the impact of the reduction in
perpetual licence revenue, the business achieved a year-on-year growth in
total revenue of 15%. Recurring revenue, as a percentage of total revenue,
increased to almost 50% (FY 2022: 45%).
Revenue by type is shown below:
Revenue by type
FY 2023 FY 2022 % change
£m £m
Recurring revenue 14.76 12.18 21%
Services 13.52 12.36 9%
Revenue (excluding perpetual licences) 28.28 24.54 15%
Perpetual licences 1.72 2.49 (31%)
Total revenue 30.00 27.03 11%
Percentage of recurring revenue 49% 45%
Annualised Recurring Revenue
The Annualised Recurring Revenue ('ARR') increased by 17% from £13.4 million
to £15.8 million as at 31 January 2023 with ARR attributable to term licences
growing by £1.1 million. The growth rate varied by region with the US region
growing at 59%, boosted by the several multi-year term licence sales. The
overall renewal rate improved to 94% (FY 2022: 93%) providing a strong
platform for the current year.
ARR by region
FY 2023 FY 2022 % growth
£m £m
UK/Ireland 6.51 5.93 10%
Europe 5.49 4.79 15%
US 2.22 1.40 59%
Australia 1.56 1.32 18%
Total ARR 15.78 13.44 17%
Committed revenue
The level of committed services revenue, which has reduced since the start of
the year as services revenue on the major projects we won last year is
recognised, nevertheless remains high at approximately £10 million and
provides strong revenue visibility, underpinning the Group's strong financial
footing.
The combination of growing ARR, committed services revenue backlog and a
strong pipeline of prospects means that the business is on track to make
further progress on its revenue growth plan. With the business focus on
developing and selling repeatable software solutions, there is an increased
level of revenue visibility, which allows the Board to continue to invest with
confidence.
Regional revenue
Regional revenue
FY 2023 FY 2022 % change % change (constant fx)
£m £m
UK/Ireland 11.92 9.93 20% 20%
Europe 11.01 10.88 1% 1%
US 4.30 3.72 16% 3%
Australia 2.77 2.50 11% 6%
Total revenue 30.00 27.03 11% 9%
Revenue (at constant currency) grew organically in all regions, with overall
revenue growth of 11%. The UK/Ireland region had a further year of
double-digit growth, with a revenue increase of 20%. In Europe, revenue was
impacted by the timing of closing contracts during the year and a slower
transition to a recurring term licence model than anticipated. This resulted
in modest growth of 1% at constant currency. The US had a strong year with a
large increase in sales of term licences, increasing total ARR by 59%.
Combined with a lower level of services, the revenue growth in the year in the
US was more modest than in previous years at 16%. In Australia, where revenue
is primarily derived from third-party software deals, we experienced more
competitive pricing pressure, combined with the transition from perpetual to
term licences, which resulted in only 6% growth in revenue at constant
currency. Going forward, all regions will continue to focus on increasing
sales of higher margin owned technology sold as term licences.
Gross profit margin
The gross margin grew by 11% but gross margin % was the same as the prior year
at 52%. The Board approved expenditure increases in sales and delivery
capacity in order to secure higher value contracts; and increased spending on
R&D, which is included within the cost of sales, is expected to yield
higher gross margins in future years. Going forward, the management team are
also focused on driving improvements to gross margin through revenue growth of
higher margin term licences and SaaS solutions.
Adjusted EBITDA
The adjusted EBITDA increased by 19% to £5.0 million from £4.2 million in
the prior year resulting in a higher adjusted EBITDA margin of 16.7% (FY 2022:
15.5%). Cost management remains an important focus and expenses are constantly
reviewed to ensure the level is appropriate for the structure of the business
during this growth phase.
Strategic, integration and other non-recurring items
Included within strategic, integration and other non-recurring items are costs
amounting to £0.2 million relating to the change of Chief Financial Officer
('CFO') in December 2022. Costs include all payments due to the outgoing CFO
on exit together with professional services fees incurred in onboarding his
replacement, drafting of contracts, share options and tax advice.
Operating profit and profit before tax
The Group achieved an operating profit of £1.3 million (FY 2022: £0.4
million) and profit before tax of £1.0 million (FY 2022: £0.2 million),
representing a further year of significantly improved profitability for the
Group compared to the prior year.
Taxation
The net tax credit for the period was £14k (FY 2022: £0.2 million). The 2022
tax credit is as restated following a prior year adjustment leading to the
recognition of a deferred tax asset.
Balance sheet
The Group's net assets increased to £17.4 million at 31 January 2023 (2022:
£15.5 million), mainly due to the overall profit after tax adjusted for
currency differences in reserves.
Trade and other receivables increased in the year to £14.2 million (FY 2022:
£12.3 million), mainly due to increased accrued income at year-end and timing
of invoicing and payment receipts attributable to the increased level of
revenue. Trade and other payables increased in the year to £15.8 million
(2022: £13.3 million) due to timing of payments around year end and increases
in the levels of recurring cost around the Group.
Cash flow
Operating cash inflow (before strategic, integration and other non-recurring
items) increased significantly to £5.4 million (2022: £2.8 million) due to
continued focus on improving working capital on larger projects, resulting in
a significant improvement in free cash flow in the year. As part of the
three-year growth plan, the Group has been investing in expanding the sales
and delivery team and investment in product development and this impacted the
operating cash flow and free cash flow as shown below.
Operating cash flow FY 2023 FY 2022
£'000 £'000
Cash generated from operations 5,352 2,497
Add back: Cash flow on strategic, integration and other non-recurring items 48 294
Cash generated from operations before strategic, integration and other 5,400 2,791
non-recurring items
Free cash flow FY 2023 FY 2022
£'000 £'000
Cash generated from operations before strategic, integration and other 5,400 2,791
non-recurring items
Net interest paid (210) (134)
Net tax received 179 176
Expenditure on product development and intellectual property capitalised (3,854) (2,449)
Purchase of property, plant and equipment (163) (164)
Lease payments (1,099) (1,088)
Free cash flow before strategic, integration and other non-recurring items 253 (868)
Cash flow on strategic, integration and other non-recurring items (48) (294)
Free cash flow 205 (1,162)
Investment in R&D
Development costs capitalised in the year increased to £3.9 million (FY 2022
£2.4 million) as the business has increased its investment in its technology
and business solutions. The key areas where spending increased were on the
cloud platform for solutions such as Traffic Management Plan in the UK and
NG9-1-1 in the US, and other technology such as 1integrate, 1Data Gateway,
1Telecomms and 1Water. Amortisation of development costs was £1.6 million (FY
2022 £1.7 million).
Financing
The Group's financial position is supported by long-term bank loans. As the
number of higher value sales contracts has increased, the Board decided to put
in place a £3 million Revolving Credit Facility. The facility, arranged in
June 2022, is committed for three years and priced on competitive terms. The
facility was undrawn as at 31 January 2023 and 25 April 2023.
At the end of January 2023, the remaining principal balance outstanding on the
long-term loans was £2.0 million (2022: £2.4 million). The amount repayable
in FY 2024 is approximately €0.7 million (FY 2022: £0.6 million). With a
gross cash position of £5.0 million at 31 January 2023 (FY 2022: £5.6
million), a growing adjusted EBITDA and positive operating cash generation,
the business is in a healthy financial position, which gives the Board the
confidence to continue to invest.
Going forward, the Board and management teams are focused on increasing
revenues, in particular recurring revenues, whilst improving the Group's
profitability and cash generation.
Alternative Performance Measures
Certain analyses include Alternative Performance Measures ("APMs") which are
not defined by generally accepted accounting principles (GAAP) as defined
under UK-adopted international accounting standards or other generally
accepted accounting principles. We believe this information, along with
comparable GAAP measurements, is useful to investors because it provides a
basis for measuring our operating performance. Our management and Board of
Directors uses these financial measures, along with the most directly
comparable GAAP financial measures, in evaluating our operating performance.
Non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, financial information presented in compliance with GAAP.
Wherever appropriate and practical, we provide reconciliation to relevant GAAP
measures.
APMs have been provided for the following reasons:
· to present users of the financial statements with a clear view of
what we consider to be the results of our underlying operations, aiding the
understanding of management analysis and enabling consistent comparisons over
time
· to provide additional information to users of the financial
statements about our financial performance or financial position
The following APMs appear in this document:
# APM Explanation of APM
1 Recurring revenue (s) Recurring Revenue is the value of committed recurring contracts for term
licences and support & maintenance recorded in the year.
2 Annualised recurring revenue ("ARR") Annualised Recurring Revenue ("ARR") is the annualised value at the year-end
of committed recurring contracts for term licences and support &
maintenance.
3 Adjusted EBITDA Adjusted EBITDA is a company-specific measure which is calculated as operating
profit/(loss) before depreciation (including right of use asset depreciation),
amortisation and impairment of intangible assets, share-based payment charge
and strategic, integration, and other non-recurring items.
4 Operating cashflow Operating cashflow is a company-specific measure which is calculated as cash
generated from operations excluding cash flow on strategic, integration and
other non-recurring items.
5 Free cashflow Free cash flow is defined as net increase/(decrease) in cash for the year
before cash flows from the acquisition of subsidiaries, cash flows from new
borrowings and repayments of borrowings and cash flow from new share issue.
But excludes lease liabilities.
6 Net cash Net cash is gross cash less bank borrowings.
Stuart Ritchie
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 January 2023
2023 2022
(restated)*
Note £'000 £'000
Revenue 3 30,002 27,027
Cost of sales (14,504) (13,078)
Gross profit 15,498 13,949
Administrative expenses (14,244) (13,534)
1,254 415
Adjusted EBITDA 4,997 4,182
Less: depreciation (253) (198)
Less: depreciation on right of use asset 11 (1,056) (989)
Less: amortisation and impairment of intangible assets 6 (2,048) (2,254)
Less: share-based payment charge (192) (326)
Less: strategic, integration and other non-recurring items 4 (194) -
Operating profit 1,254 415
Finance income 19 14
Finance costs (229) (209)
Net finance cost (210) (195)
Profit before tax 1,044 220
Income tax credit 5 14 163
Profit for the year 1,058 383
Profit for the year attributable to:
Equity shareholders of the Parent 1,058 383
1,058 383
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Actuarial gains arising on defined benefit pension, net of tax 162 113
Exchange differences arising on translation of net assets of foreign 415 (246)
operations
Other comprehensive income/(loss) for the year, net of tax 577 (133)
Total comprehensive gain for the year 1,635 250
Total comprehensive gain attributable to the
equity shareholders of the Parent 1,635 250
2023 2022
(restated)*
Note £'000 £'000
Earnings per ordinary share attributable to the owners of the Parent during
the year (expressed in pence per ordinary share):
Basic earnings per share 15 1.0 0.3
Diluted earnings per share 15 0.9 0.3
* The 2022 Consolidated statement of comprehensive income has been restated
for the recognition of deferred tax.
Registered company number (England): 5429800
Consolidated statement of financial
position
As at 31 January 2023
2023 2022
(restated)**
Note £'000 £'000
Assets
Non-current assets
Intangible assets including goodwill 6 17,408 15,003
Property, plant and equipment 302 350
Right of use assets 11 1,609 1,747
Total non-current assets 19,319 17,100
Current assets
Trade and other receivables 7 14,151 12,271
Current income tax receivable 35 124
Cash and cash equivalents 8 5,036 5,623
Total current assets 19,222 18,018
Total assets 38,541 35,118
Liabilities
Current liabilities
Bank borrowings 9 (660) (531)
Trade and other payables 10 (15,797) (13,284)
Lease liabilities 11 (608) (748)
Deferred consideration 12 (28) (340)
Total current liabilities (17,093) (14,903)
Non-current liabilities
Bank borrowings 9 (1,322) (1,861)
Lease liabilities 11 (1,077) (976)
Deferred consideration 12 - (27)
Defined benefit pension obligation (1,154) (1,276)
Deferred tax 13 (544) (565)
Total non-current liabilities (4,097) (4,705)
Total liabilities (21,190) (19,608)
Net assets 17,351 15,510
Share capital and reserves
Share capital 14 20,155 20,150
Share premium account 14 30,488 30,479
Own shares held 14 (139) (303)
Equity-settled employee benefits reserve 4,122 3,930
Merger reserve 16,465 16,465
Reverse acquisition reserve (11,584) (11,584)
Currency translation reserve 501 86
Accumulated losses (42,180) (43,236)
Purchase of non-controlling interest reserve (477) (477)
Total equity 17,351 15,510
** The 2022 Consolidated statement of financial position has been restated for
the recognition of deferred tax.
Consolidated statement of changes in equity
For the year ended 31 January 2023 Share capital Share premium account Own shares held Equity-settled employee benefits reserve Merger reserve Reverse Currency translation reserve Purchase of non-controlling interest reserve Accumulated losses Total equity
£'000 acquisition
reserve
Balance at 31 January 2021 as previously reported 20,150 30,479 (303) 3,604 16,465 (11,584) 332 (477) (43,931) 14,735
Prior year adjustment - - - - - - - - 199 199
Balance at 31 January 2021 as restated 20,150 30,479 (303) 3,604 16,465 (11,584) 332 (477) (43,732) 14,934
Comprehensive profit
Profit for the year - - - - - - - - 383 383
Other comprehensive loss
Actuarial gains arising on defined benefit pension - - - - - - - - 113 113
Exchange differences on translating foreign operations - - - - - - (246) - - (246)
Total other comprehensive (loss)/income - - - - - - (246) - 113 (133)
Total comprehensive income - - - - - - (246) - 496 250
Transactions with owners
Recognition of share-based payment expense - - - 326 - - - - - 326
- - - 326 - - - - - 326
Balance at 31 January 2022 as restated 20,150 30,479 (303) 3,930 16,465 (11,584) 86 (477) (43,236) 15,510
Comprehensive profit
Profit for the year - - - - - - - - 1,058 1,058
Other comprehensive income
Actuarial gains arising on defined benefit pension - - - - - - - - 162 162
Exchange differences on translating foreign operations - - - - - - 415 - - 415
Total other comprehensive income - - - - - - 415 - 162 577
Total comprehensive income - - - - - - 415 - 1,220 1,635
Transactions with owners
Recognition of share-based payment expense - - - 192 - - - - - 192
Issue of share capital 5 9 14
Transfer of treasury shares 164 (164) -
5 9 164 192 - - - - (164) 206
Balance at 31 January 2023 20,155 30,488 (139) 4,122 16,465 (11,584) 501 (477) (42,180) 17,351
Consolidated statement of cash flows
For the year ended 31 January 2023
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Cash generated from operations 8 (a) 5,352 2,497
Interest received 19 12
Interest paid (229) (146)
Tax paid (-) (24)
Tax received 179 200
Net cash generated from operating activities 5,321 2,539
Cash flows from investing activities
Purchase of property, plant and equipment (163) (164)
Expenditure on development costs and other intangibles 6 (3,854) (2,449)
Net cash used in investing activities (4,017) (2,613)
Cash flows from financing activities
Proceeds from loans and borrowings 500 -
Repayment of loans and borrowings (1,043) (423)
Repayment of lease obligations 11 (1,099) (1,088)
Payment of deferred consideration on acquisition 12 (352) -
Net proceeds from share issue 14
Net cash used in financing activities (1,980) (1,511)
Net decrease in cash and cash equivalents (676) (1,585)
Cash and cash equivalents at start of year 5,623 7,278
Effects of foreign exchange on cash and cash equivalents 89 (70)
Cash and cash equivalents at end of year 8 (b) 5,036 5,623
Notes to the financial statements
For the year ended 31 January 2023
1. Basis of preparation
The preliminary information of 1Spatial plc has been prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006. The consolidated financial statements have been
prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies.
The results shown for the year ended 31 January 2023 and 31 January 2022 are
audited. The consolidated financial information contained in this announcement
does not constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. Statutory accounts of the Company in respect of the
financial year ended 31 January 2023 were approved by the Board of directors
on 25 April 2023 and will be delivered to the Registrar of Companies in due
course. The report of the auditors on those accounts was unqualified and did
not contain an emphasis of matter paragraph nor any statement under Section
498 of the Companies Act 2006.
2. Going concern
The Board used as its basis for the going concern review the budget for the FY
2024 year, rolled out to 31 July 2024 using part of its forecast for FY 2025,
so that a full 12-month period from the date of signing the FY 2023 Annual
Report and Accounts is considered. In addition to applying the normal
sensitivities to cash flows, the going concern review included a
reverse-stress test to demonstrate that even if new business and renewals are
severely impacted, the finances of the Group remain robust.
The year ended 31 January 2023 saw a record year for revenues and profits for
the Group with a strong performance in all regions. FY 2023 was a year of
increased revenue, operating profit, profit before tax as well as double-digit
growth in recurring revenue, increased adjusted EBITDA and a significant
increase in the operating cash conversion to approximately 106% (FY 2022:
60%). Metrics for future years are positive with Annualised Recurring Revenue
("ARR") increasing to approximately £16m (FY 2022: approximately £13m)
driven primarily by term licence in the US. Additionally, the value of
committed service orders going into FY 2024 remains strong at approximately
£10m. We anticipate that revenue on these orders will be recognised in FY
2024. We entered the current year with a record level of contracted future
revenue, a wide range of customers in stable industry segments of Government,
Utilities and Transport and growing proof of delivery in all regions.
The operating cash flow generated in FY 2023 was positive but was impacted by
working capital requirements on larger projects and the Group's decision to
continue to invest in growing the business. The Group entered into a Revolving
Credit Facility ("RCF") in June 2022 denominated in GBP with a limit of £3m
and an expiry date of 22 June 2025.
The Group started the current financial year on 1 February 2023 with cash of
£5.0m and debt of £1.9m, giving net funds (before lease liabilities) of
£3.1m. Including the new RCF facility, the Group's liquidity is approximately
£6.1m.
The Board has concluded, after reviewing the work detailed above, that the
Group has adequate resources to continue in operation for at least 12 months
from the date of approval of the financial statements. Accordingly, they
have adopted the going concern basis in preparing these financial statements.
3. Segmental information
The chief operating decision-maker has been identified as the Board of
Directors, which makes the Group's strategic decisions. The Group is now
focused on developing and selling repeatable solutions and recurring term
licences globally, with associated support services. As such, the Board
considers that the Group operates with only one segment and one CGU under one
global strategy and the results are accordingly presented as Group results
only.
The following table provides an analysis of the Group's revenue by type.
Revenue by type
2023 2022
£'000 £'000
Term licences 5,167 2,940
Support and maintenance - own 6,727 7,350
Support and maintenance - third party 2,861 1,890
Recurring revenue 14,755 12,180
Services 13,601 12,357
Perpetual licences - own 393 800
Perpetual licences - third party 1,253 1,690
Total revenue 30,002 27,027
The Group's operations are located in the United Kingdom, Europe (Ireland,
France and Belgium) the United States, Tunisia and Australia. The following
table provides an analysis of the Group's revenue by geographical destination.
Revenue by region
2023 2022
£'000 £'000
UK 10,454 8,903
Europe 12,173 11,583
US 4,325 3,721
Rest of World 3,050 2,820
Total revenue 30,002 27,027
The Board assesses the performance of the Group based on adjusted EBITDA.
Adjusted EBITDA is a company-specific measure which is calculated as operating
profit before depreciation (including right of use asset depreciation),
amortisation and impairment of intangible assets, share-based payment charge
and strategic, integration, and other non-recurring items (see note 4). As
these are non-GAAP measures, they should not be considered as replacements for
IFRS measures. The Group's definition of these non-GAAP measures may not be
comparable to other similarly titled measures reported by other companies.
The following table provides an analysis of the Group's revenue by country of
domicile, split by whether the revenue is recognised at a point in time or
over time.
2023 2022
£'000 £'000
UK/Ireland 11,921 9,926
At a point in time 2,185 2,257
Over time 9,736 7,669
Europe 11,011 10,875
At a point in time 2,011 1,796
Over time 9,000 9,079
United States 4,303 3,721
At a point in time 2,159 1,286
Over time 2,144 2,435
Australia 2,767 2,505
At a point in time 1,070 1,040
Over time 1,697 1,465
30,002 27,027
As at 31 January 2023, costs to obtain and fulfil a contract of £109,000 were
included in other receivables (2022: £169,000). Amortisation of costs to
obtain and fulfil a contract for the year ended 31 January 2023 were £75,000
(2022: £54,000). The Group has no significant concentration risk with no
major customers representing more than 10% of Group revenue (2021: nil).
The Group has significant contract balances (both assets and liabilities),
which arise out of the ordinary course of its operations. Contract assets
include accrued income, which arises where chargeable work is performed, and
the revenue is recognised based upon satisfaction of performance obligations
in advance of invoicing the client. This can arise because, particularly for
some larger projects, client invoicing may be in stages and linked to project
milestones. Once an invoice is raised then the related accrued income will be
reduced by the invoiced amount.
Significant contract liabilities arise when a client has been invoiced
annually in advance (for example, for annual support and maintenance
contracts) and the revenue is recognised on a monthly basis over the year. In
that case, the initial invoiced amount is fully deferred and then released to
the profit and loss over the course of the contract.
The following table provides an analysis of the Group's non-current assets by
location.
2023 2022
£'000 £'000
UK/Ireland 7,790 6,800
Europe 7,869 7,645
United States 3,656 2,650
Rest of World 4 5
Total 19,319 17,100
4. Strategic, integration and other non-recurring items
In accordance with the Group's policy for strategic, integration and other
non-recurring items, the following charges were included in this category for
the year:
2023 2022
£'000 £'000
Amounts paid relating to change of CFO 194 -
Total 194 -
The cash impact in FY 2023 relating to the strategic, integration and other
non-recurring items was £48,000 (2022: £294,000).
Amendments to Geomap-Imagis Share Purchase Agreement (SPA)
The final step in the integration of Geomap-Imagis ("G-I"), which was acquired
in May 2019, was completed in March 2021. As part of the restructuring, two of
the G-I founders and former directors left the business and the parties
amended the original SPA as explained below.
Under the original terms, the Group agreed to pay the vendors consideration,
which included €1,166,999 to be satisfied by the issue by 1Spatial of
ordinary shares (the "Consideration Shares").
Of the consideration to be satisfied by the issue of the Consideration Shares,
€726,459 was satisfied immediately upon Completion, with the balance of
€440,540 originally to be satisfied on 30 March 2023 (the "Deferred Share
Consideration Amount"). Accordingly, on Completion the Company issued to the
vendors 1,902,686 new ordinary shares (the "Initial Consideration Shares"),
subject to a lock up obligation until 31 December 2021.
In connection with completion of the integration of G-I, the Group entered
into an Amendment Agreement with two GI founders and former directors in March
2021 to amend the terms of the original agreement primarily as follows:
· Release 1,765,173 of the Initial Consideration Shares (the
"Released Shares") from the above-mentioned lock up obligation; and
· pay out in cash to certain of the vendors, at the earlier date of
10 September 2022, €408,701 of the Deferred Share Consideration Amount.
The balance of consideration €31,839 was issued in shares on 31 March 2023.
5. Income tax credit
2023 2022
(restated)
£'000 £'000
Current tax
UK corporation tax on income for year (57) (172)
Foreign 79 40
tax
Adjustments in respect of prior years (15) (19)
Total current tax credit 7 (151)
Deferred tax
Origination and reversal in temporary differences (58) (83)
Effect of tax rate change on opening balance 38 71
Adjustments in respect of prior years (1) -
Total deferred tax (21) (12)
Total tax credit (14) (163)
Factors affecting the tax credit for the year:
The differences between the standard rate of corporation tax in the UK and the
actual tax credit are explained below:
2023 2022
(restated)
£'000 £'000
Profit on ordinary activities before tax 1,044 220
198 42
Profit/(loss) on ordinary activities before tax multiplied by the effective
rate of corporation tax in the UK of 19% (2022: 19%)
Effect of:
Expenses not deductible for tax purposes 96 55
Adjustment in respect of R&D tax credits (312) (238)
Effect of movement in deferred tax rate 38 71
Utilisation of losses not previously recognised for tax purposes (66) (348)
Deferred tax not recognised on losses carried forward 110 212
Adjustments in respect of prior years (15) (19)
Differences in tax rates applicable to overseas subsidiaries (47) 37
Other differences (16) 25
Total tax credit for the year (14) (163)
The relevant deferred tax balances have been measured at 25% for the current
year-end, being the tax rate enacted by the reporting date (2022: 25%).
6. Intangible assets including goodwill
Goodwill Brands Customers and Software Development Intellectual property Total
related contracts costs
£'000
£'000
£'000 £'000 £'000 £'000 £'000
Cost
At 1 February 2022 17,194 450 4,547 6,574 21,228 72 50,065
Additions - - - 39 3,815 - 3,854
Effect of foreign exchange 478 12 191 186 554 - 1,421
At 31 January 2023 17,672 462 4,738 6,799 25,597 72 55,340
Accumulated impairment and amortisation
At 1 February 2022 11,330 291 3,640 4,958 14,826 17 35,062
Amortisation - 22 149 227 1,644 6 2,048
Effect of foreign exchange 187 5 144 109 377 - 822
At 31 January 2023 11,517 318 3,933 5,294 16,847 23 37,932
Net book amount at 6,155 144 805 1,505 8,750 49 17,408
31 January 2023
Net book amount at 5,864 159 907 1,616 6,402 55 15,003
31 January 2022
The net book amount of development costs includes £8,750,000 (2022:
£6,402,000) internally generated capitalised software development costs that
meet the definition of an intangible asset. The amortisation charge of
£2,048,000 (2022: £2,254,000) is included in the administrative expenses in
the statement of comprehensive income.
The key assumptions used in the value in use calculation were the pre-tax
discount rate applied (14% (FY 2022: 13%)), revenue growth rates of 9.5% per
annum and cost growth rates of 7% per annum for the five-year period from 1
February 2023 to the year ending 31 January 2028. The Board approved budget
for the year ending 31 January 2024 was used as the basis for the Group's
value in use calculation. Results for the next four years were calculated
using the above assumptions to derive the Group's value in use. No impairment
is required as no individual asset has a higher carrying value than its value
in use.
Goodwill Brands Customers and Software Development Intellectual property Total
related contracts costs
£'000
£'000
£'000 £'000 £'000 £'000 £'000
Cost
At 1 February 2021 17,447 464 4,764 6,757 19,285 72 48,789
Additions - - - 26 2,423 - 2,449
Written-off - - - - - - (30)
Effect of foreign exchange (253) (14) (217) (209) (480) - (1,173)
At 31 January 2022 17,194 450 4,547 6,574 21,228 72 50,065
Accumulated impairment and amortisation
At 1 February 2021 11,548 252 3,641 4,696 13,454 11 33,602
Amortisation - 42 153 360 1,693 6 2,254
Written-off - - - - - - -
Effect of foreign exchange (218) (3) (154) (98) (321) - (794)
At 31 January 2022 11,330 291 3,640 4,958 14,826 17 35,062
Net book amount at 5,864 159 907 1,616 6,402 55 15,003
31 January 2022
Impairment tests for goodwill
Goodwill is assessed for the Group as a whole as the Group operates with one
segment and one CGU as the Group manages its operations under one global
strategy. All aspects of the business are focusing now on growing recurring
revenue of repeatable solutions using technology that will be deployed
globally under a single strategy. Products developed by regional development
teams are marketed globally.
2023 2022
Goodwill Total Total
£'000 £'000
Opening carrying value 5,864 5,899
Effect of foreign exchange 291 (35)
Closing carrying value 6,155 5,864
Basis for calculation of recoverable amount
The Group has prepared a five-year plan for its CGU (based on a formally
approved 1-year plan extended for four more projected years). The detailed
plan put together by the management team and the Board makes estimates for
revenue and gross profit expectations. This is from both contracted and
pipeline revenue streams. It also takes account of historical success of
winning new work and has been prepared in accordance with IAS 36: 'Impairment
of Assets'.
The key assumptions used in the value in use calculations were the pre-tax
discount rates applied (14%) and the growth assumptions. Growth in sales and
corresponding costs for the five-year period has been forecast at 9.5% and 7%
per annum respectively and the EBITDA to cash conversion is assumed to be 60%
or greater.
The rates used in the above assumptions are consistent with management's
knowledge of the industry and strategic plans going forward. The assumptions
noted above have been given in terms of revenue and overhead percentage
growth. For 2024 and subsequent years, the assumption has been provided in
terms of growth on the prior year EBITDA. The terminal growth rate of 2% does
not exceed the long-term growth rate for the business in which the CGUs
operate. The discount rate used is pre-tax and reflects specific risks
relating to the Group. The forecasts are most sensitive to changes in
revenue and overhead assumptions (taken together as the EBITDA). However,
there are no major changes to the key assumptions which would cause the
goodwill to be impaired.
There would have to be a reduction in forecast EBITDA by 14% for each year of
the five-year period ending 31 January 2028 for the headroom to be removed.
7. Trade and other receivables
Current 2023 2022
£'000 £'000
Trade receivables 4,992 4,895
Less: provision for impairment of trade receivables (29) (25)
4,963 4,870
Other receivables 2,044 1,413
Prepayments and accrued income 7,144 5,988
14,151 12,271
Below is a reconciliation of the movement in accrued income:
2023 2022
£'000 £'000
At 1 February 2022 5,075 2,950
Accrued revenue invoiced in the year (5,075) (2,950)
Revenue accrued in the year 5,947 5,188
Foreign exchange difference 57 (113)
At 31 January 2023 6,004 5,075
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.
At 31 January 2023, trade receivables of £3,698,000 (2022: £3,650,000) were
fully performing. Before accepting any new customer, the Group assesses the
potential customer's credit quality and defines credit limits by customer.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective
basis, trade receivables and contract assets are grouped based on similar
credit risk and aging. The contract assets have similar risk characteristics
to the trade receivables for similar types of contracts. The expected credit
losses are based on the Group's historical credit losses which are then
adjusted for current and forward-looking information on macroeconomic factors
affecting the Group's customers. The Group has identified gross domestic
growth rates, unemployment rates, interest rates and inflation rates as the
key macroeconomic factors in the countries in which the Group operates.
At 31 January 2023, trade receivables of £1,269,000 (2022: £1,220,000) were
past due but not impaired. The ageing analysis of these customers is set out
below. There has been no change in the credit quality of these balances;
they relate to customers where there is no history of default and are still
considered fully recoverable.
The ageing of these receivables is as follows:
2023 Weighted average loss rate Impairment loss allowance
£'000 £'000
Current 3,698 0.1% 4
Up to 3 months overdue 1,029 0.5% 5
3 to 6 months overdue 98 2.0% 2
6 to 12 months overdue 10 5.0% 1
> 12 months overdue 157 10.0% 17
4,992 29
2022 Weighted average loss rate Impairment loss allowance
£'000 £'000
Current 3,653 0.1% 3
Up to 3 months overdue 853 0.5% 4
3 to 6 months overdue 242 2.0% 5
6 to 12 months overdue 36 5.0% 2
> 12 months 111 10.0% 11
4,895 25
As of 31 January 2023, trade receivables of £29,000 were impaired (2022:
£25,000) and provided for.
The trade receivables above include performance retentions on long-term
contracts.
Movements on the Group provision for impairment of trade receivables are as
follows:
2023 2022
£'000 £'000
At 1 February 25 80
Increase/(decrease) in provision 4 (55)
At 31 January 29 25
The other classes within trade and other receivables do not contain impaired
assets and the Group expects to recover these in full. There are no
financial assets whose terms have been renegotiated that would otherwise be
past due or impaired.
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable noted above. The Group does not hold any
collateral as security.
8. Cash and cash equivalents and notes to the consolidated statement of
cash flows
2023 2022
£'000 £'000
Cash at bank and in hand 5,036 5,623
5,036 5,623
The fair value of the Group's cash and cash equivalents is the same as its
book value stated above.
Notes to the consolidated statement of cash flows
(a) Cash generated from operations
Note 2023 2022
£'000 £'000
Profit before tax 1,044 220
Adjustments for:
Finance income (19) (14)
Finance cost 229 209
Depreciation 1,309 1,187
Amortisation of acquired intangibles 386 561
Amortisation and impairment of development costs 1,662 1,693
Share-based payment charge 192 326
Net foreign exchange movement - 1
Increase in trade and other receivables (1,426) (1,784)
Increase in trade and other payables 1,963 206
Increase/(decrease) in defined benefit pension obligation 12 (108)
Cash generated from operations 5,352 2,497
2023 2022
£'000 £'000
Cash generated from operations before strategic, integration and other 5,400 2,791
non-recurring items
Cash flow on strategic, integration and other non-recurring items (note 4) (48) (294)
Cash generated from operations 5,352 2,497
(b) Reconciliation of net cash flow to movement in net funds
2023 2022
£'000 £'000
(Decrease) in cash in the year (676) (1,585)
Changes resulting from cash flows (676) (1,585)
Net cash outflow in respect of borrowings repaid 543 423
Effect of foreign exchange (44) 127
Change in net funds (177) (1,035)
Net funds at beginning of year 3,231 4,266
Net funds at end of year 3,054 3,231
Analysis of net funds
Cash and cash equivalents classified as:
Current assets 5,036 5,623
Bank loans (1,982) (2,392)
Net funds at end of year 3,054 3,231
Net funds is defined as cash and cash equivalents net of bank loans (and
excluding lease liabilities).
c) Reconciliation of movement in liabilities from financing activities
Bank borrowings and leases due within 1 year Bank borrowings and leases due after 1 year Total
£'000 £'000 £'000
Total debt (including lease liabilities) as at 1 February 2022 1,279 2,837 4,116
Borrowings at 1 February 2022 531 1,861 2,392
Repayment of borrowings (543) - (543)
Foreign exchange difference 12 121 133
Borrowings before transfer - 1,982 1,982
Transfer from due after 1 year to due within 1 year 660 (660) -
Borrowings as at 31 January 2023 660 1,322 1,982
Lease liability at 1 February 2022 748 976 1,724
Cash movements:
Lease payments (1,099) - (1,099)
Non-cash movements:
Additions in the year 779 - 779
Interest cost 88 - 88
Reclassifications (516) 709 193
Lease liability before transfer - 1,685 1,685
Transfer from due after one year to due within one year 608 (608) -
Lease liability as at 31 January 2023 608 1,077 1,685
Total debt (including lease liabilities) as at 31 January 2023 1,268 2,399 3,667
9. Bank borrowings
2023 2022
£'000 £'000
Current bank borrowings 660 531
Non-current bank borrowings 1,322 1,861
1,982 2,392
Bank borrowings
Bank borrowings relate to bank loans in 1Spatial France totalling €2.25m
(2022: €2.87m). Bank loan interest is charged on a fixed rate basis with
interest rates ranging between 0% and 3.6%, included the related guarantee
costs.
The loans are due for repayment over the period to FY 2028, with a broadly
even repayment pattern with approximately €0.7m (£0.6m) due for repayment
in FY 2024. New borrowings in the year amounted to nil (2022: nil). There are
no financial covenants attached to the loans, nor is there any security
applied. All long-term loans are denominated in €.
Revolving credit facility
There are covenants associated with the Revolving Credit Facility ("RCF") in
relation to the maximum gearing of the Group. The RCF is denominated in GBP,
the facility limit is £3m with an expiry date of 22 June 2025. The interest
rate for any drawn amounts is 2.95% per annum over the Bank of England
Sterling Overnight Index Average ("SONIA"). There is a commitment fee of 1.15%
per annum of any undrawn part of the Facility. This facility was undrawn as at
31 January 2023.
10. Trade and other payables
Current
2023 2022
£'000 £'000
Trade payables 2,861 2,227
Other taxation and social security 3,653 2,924
Other payables 506 534
Accrued liabilities 1,229 1,987
Deferred income 7,548 5,612
15,797 13,284
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.
Below is a reconciliation of the movement in deferred income:
2023 2022
£'000 £'000
At 1 February 5,612 5,870
Revenue recognised in the year (5,612) (5,870)
Revenue deferred at year end 7,460 5,636
Foreign exchange difference 88 (24)
At 31 January 7,548 5,612
11. Leases
Right of use assets Total
£'000
At 1 February 2022 1,747
Additions 893
Depreciation (1,056)
Foreign exchange difference 26
At 31 January 2023 1,609
2023 2022
£'000 £'000
Buildings 1,490 1,522
Cars 82 185
Others 37 40
1,609 1,747
Lease liabilities
Total
£'000
At 1 February 2022 1,724
Additions 779
Interest cost 88
Cash paid (1,099)
Other adjustments 163
Foreign exchange difference 30
At 31 January 2023 1,685
2023 2022
£'000 £'000
Current 608 748
Non-current 1,077 976
1,685 1,724
Amounts recognised in profit or loss:
Depreciation charge of right of use assets 2023 2022
£'000 £'000
Buildings 955 866
Cars 88 96
Others 13 27
1,056 989
12. Business combinations
On 7 May 2019, the Company entered into share purchase agreements to acquire
the entire issued share capital of Geomap-Imagis Participations
("Geomap-Imagis") for a total consideration of €7.0m (the "Consideration").
Full details of the acquisition were provided in the Annual Report for the
year ended 31 January 2020. As disclosed in note 4, there were some minor
changes to the terms of the Share Purchase agreement. The remaining balance
payable at 31 January 2022 of €440,540 (equivalent to £380,000) was
satisfied mainly in cash (£352,000) in September 2022, with the balance
settled by an issue of 57,685 ordinary shares of £0.10 on 31 March 2023.
These shares had a market value of €31,839 (£28,000) at the date of issue.
There are no further elements of deferred consideration due to the former
shareholders of Geomap-Imagis Participations ("Geomap-Imagis").
13. Deferred tax
The following are the major deferred tax liabilities and (assets) recognised
by the Group and movements thereon during the current year and prior reporting
years.
Tax losses Accelerated tax depreciation Intangibles Other temporary differences Total
£'000 £'000 £'000 £'000 £'000
At 31 January 2021 as previously reported (562) - 1,355 (17) 776
Prior year adjustment (199) - - - (199)
At 31 January 2021 as restated (761) - 1,355 (17) 577
Deferred tax (credit)/charge for year in profit or loss - restated (189) - 188 (11) (12)
DT credit OCI - - - (25) (25)
Foreign exchange difference - - - 25 25
At 31 January 2022 (950) - 1,543 (28) 565
Deferred tax (credit) / charge for year in profit or loss (77) - 76 (20) (21)
DT charge OCI - - - 54 54
Foreign exchange difference - - - (54) (54)
At 31 January 2023 (1,027) - 1,619 (48) 544
Deferred income tax assets are recognised against tax loss carry-forwards to
the extent that the realisation of the related tax benefit through future
taxable benefits is probable. The Group did not recognise potential deferred
tax assets of £3,243,000 (2022: £4,027,000) in respect of losses amounting
to £13,133,300 (2022: £16,044,500) that can be carried forward against
future taxable income, on the grounds that at the balance sheet date their
utilisation is not considered probable. Losses have no expiry date.
The deferred tax balance is analysed as follows:
Deferred tax Deferred tax liability Total
asset £'000 £'000
£'000
Recoverable within 12 months - 235 235
Recoverable after 12 months - 1,384 1,384
Settled within 12 months (48) - (48)
Settled after 12 months (1,027) - (1,027)
(1,075) 1,619 544
14. Share capital, share premium account and own shares held
Allotted and fully paid 2023 2022
Number Number
Ordinary shares of 10p each 110,859,545 110,805,795
226,699,878 226,699,878
Deferred shares of 4p each
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.
Voting Rights
1Spatial Plc has 110,859,545 (2022: 110,805,795) ordinary shares of 10p in
issue, of which a total of 147,084 (2022: 319,635) ordinary shares are held in
treasury. Therefore, the total number of ordinary shares with voting rights is
110,712,461* (2022: 110,486,160).
* In addition, deferred consideration shares with an approximate value of
€0.03 million (€0.4m at 31 January 2021) which were issued on 31(st) March
2023, in relation to the Geomap-Imagis acquisition.
Number of shares Allotted, called up and fully paid shares Share Own shares held
£'000 premium £'000
account
£'000
At 31 January 2022 337,505,673 20,150 30,479 (303)
Issue of new shares 53,750 5 9 -
Transfer of treasury shares - - 164
At 31 January 2023 337,559,423 20,155 30,488 (139)
On the 24th January 2023, 53,750 new ordinary shares of 10p each were issued
for consideration of £14,244 in settlement of share options exercised.
Own shares
The Group has 147,084 (FY 2022: 319,635) ordinary shares of 10p each and
3,500,000 deferred shares with a nominal value of 4p each held in treasury.
The original consideration paid was £0.3m. During the year 172,551 shares
were transferred out of treasury to satisfy employee share awards.
15. Earnings per ordinary share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the year.
2023 2022
(restated)
£'000 £'000
Profit attributable to equity shareholders of the Parent 1,058 383
2023 2022
Number Number
000s 000s
Ordinary shares with voting rights 110,712 110,486
Deferred consideration payable in shares 55 58
Basic weighted average number of ordinary shares 110,807 110,544
Impact of share options/LTIPS 2,845 4,008
Diluted weighted average number of ordinary shares 113,652 114,552
2023 2022
(restated)
Pence Pence
Basic earnings/ per share 1.0 0.3
Diluted earnings/ per share 0.9 0.3
16. Prior year adjustment
The Group has a deferred tax liability in relation to temporary differences on
intangibles assets in 1Spatial Group Limited. This deferred tax liability is
partially offset by the recognition of a deferred tax asset in 1Spatial Group
Limited.
In preparation of the consolidated financial statements for the year ended 31
January 2023, an error was noted in that a deferred tax asset in 1Spatial plc
should have been recognised on consolidation to offset this deferred tax
liability, as required by IAS12, Income taxes. This is because the taxable
temporary differences associated with the intangible assets relates to the
same tax authority (UK) as the 1Spatial plc deferred tax asset, and as such
the asset meets the criteria for recognition. In addition, the offset criteria
of IAS 12 are also met and therefore the deferred tax amounts are presented
net in the consolidated statement of financial position.
The error has been corrected by restating each of the affected financial
statement line items as follows:
Consolidated statement of financial position
A third consolidated statement of financial position has not been presented as
the impact as of 1 February 2021 was not deemed to be material.
2021 Adjustment 2021
£'000 £'000 Restated
£'000
Non-current liabilities: Deferred tax 776 (199) 577
Accumulated losses 43,931 (199) 43,732
Net assets / Total equity 14,735 199 14,934
2022 Adjustment 2022
£'000 £'000 Restated
£'000
Non-current liabilities: Deferred tax 970 (405) 565
Accumulated losses 43,641 (405) 43,236
Net assets / Total equity 15,105 405 15,510
Consolidated statement of comprehensive income
2022 Adjustment 2022
£'000 £'000 Restated
£'000
Income tax charge / (credit) 43 (206) (163)
Profit for the year 177 206 383
Refer to note 13, Deferred tax, for the adjusted disclosure of deferred tax.
Earnings per share and diluted earnings per share adjusted disclosure is
included in note 15.
17. 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 (http://www.1spatial.com/) .
1Spatial plc is registered in England and Wales with registered number
5429800. The registered office is c/o Tennyson House, Cambridge Business Park,
Cambridge, Cambridgeshire, CB4 0WZ.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FELLLXZLBBBXRecent news on 1Spatial
See all newsREG - 1Spatial Plc - Notice of Results Presentations
AnnouncementREG - 1Spatial Plc - 1Streetworks Contract Win with Kent County Council
AnnouncementREG - 1Spatial Plc - Trading Update and Notice of Results
AnnouncementREG - 1Spatial Plc - Notification of major holdings
AnnouncementREG - 1Spatial Plc - Exercise of Options and Total Voting Rights
Announcement