REG - 1Spatial Plc - Interim Results <Origin Href="QuoteRef">SPA.L</Origin> - Part 1

1SpatialAnnouncement

10/10/2017 07:06

RNS Number : 1287T
1Spatial Plc
10 October 2017
10 October 2017
1Spatial plc (AIM: SPA)
("1Spatial", the "Group" or the "Company")
Interim Results for the six month period ended 31 July 2017
Turnaround delivering improved results
The Board of Directors of 1Spatial (the ''Board''), the software solutions provider and global leader in geospatial data management, is pleased to announce the Group's interim results for the six month period ended 31 July 2017.
Highlights 
In January 2017, the new management team set in place a clear plan to achieve a strong financial and operational platform for the business which would be evidenced through the generation of cash, growing profits and sustainable growth.
The financial performance in this half year provides clear evidence that the turnaround plan is working. 
Financial highlights
 Revenues grew by 2% from 11.9m to 12.1m 
o High-margin Geospatial underlying revenues** up by 19% from7.2mto8.6m
o In line with strategy, the low-margin hardware revenues from IT managed services business have reduced by 1m in the period 
o Continued strong recurring revenues base 
 Total cost base (including capitalised costs) reduced by 8% (1.1m). This equates to an annualised cost saving of 2.2m.
 Gross profit margin increased from 39% to 43% 
 Adjusted EBITDA* on a like-for-like basis1 has improved from a loss of 0.4m to a profit of 0.3m
 Operating loss reduced 37% from 1.9m to 1.2m
 2.7m positive swing in cash flow in the period (outflow of 0.3m compared to an outflow of 3m in H1 2016/17) 
o Net cash balance at 31 July 2017 of 0.3m (31 January 2017: 0.6m)
o Overdraft facility of 3m renewed in May 2017
 Significantly reduced loss after tax of 1.4m (year ended 31 January 2017: 18.3m loss: H1 2016/17 loss of 2.1m)
 The board believes that that the current bank overdraft facility is sufficient to support the Company's working capital requirements
Operational highlights
 Sales increased in all geographic segments with a focus on three key sectors of Land Management, Utilities and Transportation
o The enhanced sales strategy refocused on the key sectors has delivered growth from existing clients as well as established relationships with new potential customers
 Key customer wins: 
o UK - major contract with Northern Gas Networks (NGN). This will run for an initial three year period with an option to extend for a further three years
o US - strategically important contract with the US Federal Highways Administration (FHWA) for software and services together with ongoing support and maintenance for four option years (total value US$540k) 
o US - strategically important contract with the National Oceanic and Atmospheric Administration (NOAA) for software and services together with ongoing support and maintenance for four option years (total value US$207k) 
 Portfolio streamlined with:
o Disposal of significant share of loss-making business Enables IT Inc. in March 2017 for 0.1m receivable 
o Acquisition of the remaining 27% of the Company's exclusive US distributor 1Spatial Inc. strengthening the Group's ability to serve key US customers and partners such as US Census and ESRI
o Acquisition of the remaining 51% of Sitemap, strengthening the Group's technology platform
Board changes
 The board has continued to be strengthened and includes the following changes :
o Francis Small appointed to the Board as a Non-Executive Director on 1 August 2017
o Claire Milverton appointed CEO from 9 October 2017
o Nicole Payne appointed CFO from 9 October 2017
Commenting on the results 1Spatial CEO, Claire Milverton, said:
"The first half has shown considerable progress on our turnaround strategy. The focus on execution, and a greater engagement with our existing clients has seen an increase in revenues. Emphasis on growing our client base has also seen wins with a number of exciting new clients such as Northern Gas Networks and the Federal Highways Agency.From a financial perspective through increased sales and operational effectiveness we've also delivered a substantial improvement in profitability and cash flow, both of which remain key priorities for us going forward.
We are confident for the full year and that through our strategy of working in partnership with our customers to provide them with technology enabled innovative solutions, we are well placed to grow a substantial, profitable and cash-generative business out into the future". 
* Adjusted for strategic, integration, other one-off items and share-based payment charge 
** Underlying revenue - revenue on a like-for-like1 basis, at constant currency (prior period figures at current period exchange rates)
1 Like-for-like - prior half year revenues include 0.4m of revenues arising from recharges to associates, that are not recurring in the current half year as a result of these associates now being wholly-owned and the revenue being eliminated on consolidation
For further information, please contact:
1Spatial plc
01223 420 414
Andrew Roberts / Claire Milverton
N+1 Singer
020 7496 3000
Shaun Dobson / Lauren Kettle
FTI Consulting
020 3727 1000
Dwight Burden / Alex Le May
1spatial@fticonsulting.com
About 1Spatial
1Spatial plc is a group of market leading software and solutions companies trading under the brands 1Spatial and Enables IT.
1Spatial
1Spatial is a software solutions provider and global leader in managing geospatial data. We work with our clients to deliver real value by making data current, complete and consistent through the use of automated processes - ensuring that decisions are always based on the highest quality information available.
Our unique, rules-based approach delivers enterprise-scale, cross-platform automation to all stages of the data lifecycle. It builds confidence in the data while reducing the time and cost of stewardship. 
Our global clients include utilities, national mapping and land management agencies, government departments, transportation organisations, emergency services, defence and census bureaus. A leader in our field, we have a wealth of experience and a record of continual innovation and development. We partner with some of the leading technology vendors including, ESRI and Oracle.
We have offices in the UK, US, France, Belgium, Ireland and Australia. 
Enables IT
Enables IT provides IT Managed Services. It offers public, private and hybrid cloud offerings with everything from Backup-as-a-service through to managed desktops. Their end-to-end IT capability provides everything from consultancy and project management, to the installation of physical infrastructure.
Clients trust Enables IT to manage their systems and secure their data. From Healthcare to Education and from Financial Services to Legal, leading organisations rely on Enables IT to ensure their IT is an asset, not a liability.
To find our more, visit www.1spatial.com
Half-year review
In January 2017, the new management team set in place a clear plan to achieve a strong financial and operational platform for the business which would be evidenced through cash, growing profits and sustainable growth. This plan was the result of a full strategic review to develop a clear focus for the Group going forwards and included streamlining the business into two core units, the alignment of the Group to better meet market needs, and creation of an organisational structure that provides clear responsibilities and accountability.
The financial performance in this half year provides clear evidence that the turnaround plan is working. 
Our strategy
1Spatial is a software solutions provider and global leader in managing geospatial data. We work with our clients to deliver real value by making data current, complete and consistent through the use of automated processes; ensuring that decisions are always based on the highest quality information available. Our own software architectures are 'Open' which allows us to integrate with other vendors' technology and enables us to provide the most appropriate solution to our clients. 
Our key focus is across three sectors, namely Land Management, Utilities and Transportation and we operate globally but have offices in the UK, US, France, Belgium, Ireland and Australia. 
During the period, we have continued to develop and deliver our world-class technology, increase our market reach and cemented strategic relationships with key partners to ensure that we deliver the right solutions to our clients. We have continued to invest in sales and marketing ensuring that these investments are aligned to our strategy. 
Financial performance
Revenue growth
Our enhanced sales team helped deliver revenue growth in all geographies, and, the quality of this revenue has improved with a higher proportion of licence revenue driving additional service revenues. 
The Group's revenue mix continued to improve in the first half. Revenues were up 19 per cent. in the higher-margin Geospatial business (1.3m on a like-for-like basis, at constant currency), and Enables IT sales reduced by 1m as we chose to move away from lower-margin hardware revenue.
Our sales strategy focuses on both growing existing accounts, and building new relationships across our key verticals; Land Management, Utilities and Transport. During the period, the majority of growth in revenue was derived from existing customers. Post period end, new contracts have been secured for new customers such as NGN (UK), FHWA (US), NOAA (US), reflecting the sales execution efforts made in the first half.
As well as growing revenues, it is also key that we maintain our recurring support and maintenance revenues; initiatives have been put in place during the period to ensure this is achieved. 
Cost savings
During the period, we have delivered on our plan to reduce costs by 1.1m (8 per cent.) - this equates to 2.2m annualised costs. These costs also include the cost of capitalised development. We now believe that the cost structure is much better aligned with the current business needs.
Gross profit
Gross profit in the period improved from 39 per cent. to 43 per cent. even after significantly less direct costs were capitalised, in the period (0.5m compared to 1.9m in H1 2016/17). This improvement is due to better project management on professional service contracts and increased high-margin software sales in the period.
Adjusted EBITDA and cash flow
The actions to grow quality revenues and reduce costs resulted in a transition from an adjusted EBITDA loss (on a like-for-like basis) of 0.4m in the prior period to a profit of 0.3m. This has also resulted in a positive impact on cash, with a cash inflow from operations of 0.2m (after cash one-off costs of 0.5m) compared with a cash outflow from operations in the prior period of 0.9m.
Overall net cash flow has shown a 2.7m positive swing year-on-year (outflow of 0.3m compared to an outflow of 3m in H1 2016/17). The net cash balance at 31 July 2017 was 0.3m (31 January 2017: 0.6m). The overdraft facility of 3m was renewed in May 2017.
Loss for the period
Loss after tax of 1.4m for the period is significantly reduced (year ended 31 January 2017: 18.3m loss, H1 2016/17 loss: 2.1m). This loss is the adjusted EBITDA figure less depreciation, amortisation and impairment, strategic, integration, other one-off items, share-based payment charges, net finance costs and income tax.
Balance sheet
The net asset position at 31 July 2017 is 8.5m, down from 9.2m at 31 January 2017. The balance of non-current assets remains the same at 13.0m as a result of acquiring control of Sitemap Ltd in the period (0.2m intangibles on acquisition), net of amortisation of existing intangible assets. No further goodwill arises on acquisition of the final 27 per cent. of 1Spatial Inc. Net current assets are down by 0.8m, 0.3m of this is cash and the remainder is working capital. The line item "other components of equity" arose on the acquisition of the final 27 per cent. of 1Spatial Inc. after eliminating non-controlling interest.
Outlook
The key objective for the management team for the remainder of the year to 31 January 2018 is to ensure that the Group's realigned focus and revised strategy continues to drive cash generation and profitable adjusted EBITDA, as well as follow through on key strategic initiatives which will boost revenue growth.
The second half of the year has started well and whilst there are always challenges in any business and in particular during a turnaround year, we are confident of meeting full year expectations.
Looking forward
1Spatial is well-positioned in a fast-growing part of the market and has developed a unique patented technology to deliver targeted solutions to our existing and potential customers. 
A May 2017 report by market analyst P&S Market Research estimates the size of the global GIS software, services and hardware market at $9.0bn and forecasts that it will grow at a 10.1 per cent. CAGR to reach $17.5bn by 2023. To ensure that we are positioned at the forefront of this sector, we continue to invest in our technology platform and make it accessible to other vendors - a key element of our strategy for scalable revenue growth to reach a growing addressable market. 
We have a strong and focussed management team, which combined with our in-depth subject matter expertise and technology-led solutions and services, gives the business the opportunity to develop into a significant force in the market.
Looking ahead, we are well placed to grow a substantial, profitable and cash-generative business over the long term.
Condensed consolidated statement of comprehensive income
Six months ended 31 July 2017
Unaudited
Audited
Unaudited
Six months ended
31 July 2017
Year ended
31 January 2017
Six months ended
31 July 2016
*Restated
Continuing operations
Note
'000
'000
'000
Revenue
12,150
22,065
11,893
Cost of sales
(6,913)
(12,386)
(7,281)
Gross profit 
5,237
9,679
4,612
Administrative expenses
(6,476)
(25,129)
(6,470)
(1,239)
(15,450)
(1,858)
Adjusted* EBITDA
303
(407)
40
Less: depreciation
(203)
(452)
(222)
Less: amortisation and impairment of intangible assets
(660)
(11,408)
(948)
Less: share-based payment charge
(118)
(566)
(355)
Less: strategic, integration and other one-off items
7
(561)
(2,617)
(373)
Operating loss
(1,239)
(15,450)
(1,858)
Finance income
42
176
177
Finance cost
(76)
(208)
(110)
Net finance (cost)/income
(34)
(32)
67
Share of net loss of associates accounted for using the equity method
-
(266)
(237)
Loss before tax
(1,273)
(15,748)
(2,028)
Income tax credit
72
988
20
Loss for the period from continuing operations
(1,201)
(14,760)
(2,008)
Discontinued operations
Loss for the year from discontinued operations (attributable to equity holders of the company)
(184) 
(3,542) 
(106)
Loss for the period attributable to:
Equity shareholders of the parent 
(1,385)
(18,423)
(2,193)
Non-controlling interest 
-
121
79
 
(1,385)
(18,302)
(2,114)
Other comprehensive loss
Items that may subsequently be reclassified to profit or loss:
Actuarial gains arising on defined benefit pension, net of tax
-
(36)
-
Exchange differences on translating foreign operations
311
281
615
Other comprehensive loss for the period, net of tax
311
245
615
Total comprehensive loss
(1,074)
(18,057)
(1,499)
Total comprehensive loss attributable to:
Equity shareholders of the parent 
(1,074)
18,169
(1,578)
Non-controlling interest 
-
112
79
 
(1,074)
(18,057)
(1,499)
Total comprehensive loss attributable to equity shareholders of the Parent arises from:
Continuing operations
(1,126)
(14,258)
(1,302)
Discontinued operations
52
(3,799)
(197)
 
(1,074)
(18,057)
(1,499)
* Restated to classify Enables IT Inc., Storage Fusion Limited and Avisen UK Limited as discontinued operations.
Loss per ordinary share from continuing and discontinued operations attributable to the owners of the parent during the year (expressed in pence per ordinary share):
Basic loss per share
4
(0.18)
(2.53)
(0.30)
From continuing operations
(0.16)
(2.04)
(0.29)
From discontinued operations
(0.02)
(0.49)
(0.01)
Diluted loss per share
4
(0.18)
(2.53)
(0.30)
From continuing operations
(0.16)
(2.04)
(0.29)
From continuing operations
(0.02)
(0.49)
(0.01)
* Adjusted for strategic, integration and other exceptional items and share-based payment (note 7).
Condensed consolidated statement of financial position A
As at 31 July 2017a0
Unaudited
Audited
Unaudited
As at
31 July 2017
As at
31 January 2017
As at
31 July 2016
Note
'000
'000
'000
Assets
Non-current assets
Investments
9
25
-
-
Intangible assets including goodwill
12,116
11,968
22,813
Property, plant and equipment
779
1,057
1,577
Interests in associates
10
-
-
29
Other non-current assets
9
100
-
-
Total non-current assets
13,020
13,025
24,419
Current assets
Inventories
-
-
16
Trade and other receivables
11
6,045
8,929
9,952
Current income tax receivable
-
-
8
Cash and cash equivalents
2,293
1,285
2,482
Total current assets
8,338
10,214
12,458
Assets of disposal group classified as held for sale
 9
-
547
-
Total assets
21,358
23,786
36,877
Liabilities
Current liabilities
Bank Borrowings
(1,953)
(681)
(118)
Trade and other payables
12
(9,712)
(12,072)
(9,481)
Current income tax liabilities
(23)
(23)
(17)
Obligations under finance lease
-
(11)
-
Provisions
(249)
(242)
(221)
Total current liabilities
(11,937)
(13,029)
(9,837)
Non-current liabilities
Obligations under finance lease
-
(53)
-
Defined benefit pension obligation
(640)
(614)
(507)
Deferred tax
(314)
(421)
(1,085)
Total non-current liabilities
(954)
(1,088)
(1,592)
Liabilities of disposal group classified as held for sale
9
-
(447)
-
Total liabilities
(12,891)
(14,564)
(11,429)
Net assets
8,467
9,222
25,448
Share capital and reserves
Share capital
13
16,705
16,449
16,449
Share premium account
22,931
22,931
22,931
Own shares held
(303)
(303)
(303)
Equity-settled employee benefits reserve
3,373
3,254
3,045
Merger reserve
16,030
15,347
15,347
Reverse acquisition reserve
(11,584)
(11,584)
(11,584)
Currency translation reserve
169
(142)
183
Accumulated losses
(38,377)
(36,992)
(20,726)
Other components of equity
(477)
-
-
Equity attributable to shareholders of the parent company
8,467
8,960
25,342
Non-controlling interests
-
262
106
Total equity
8,467
9,222
25,448
Condensed consolidated statement of changes in equity
Period ended 31 July 2017
'000
Share capital
Share premium
account
Own shares held
Equity-settled employee benefits reserve
Merger reserve
Reverse acquisition reserve
Currency translation reserve
Other components of equity *
Accumulated losses
Total **
Non-
controlling
interest
Total
equity
Balance at 1 February 2016
16,223
22,264
(306)
2,688
15,347
(11,584)
(432)
-
(18,533)
25,667
-
25,667
Comprehensive income/(loss)
Loss for the year
-
-
-
-
-
-
-
-
(18,423)
(18,423)
121
(18,302)
Other comprehensive income/(loss)
Actuarial losses arising on defined benefit pension
-
-
-
-
-
-
-
-
(36)
(36)
-
(36)
Exchange differences on translating foreign operations
-
-
-
-
-
-
290
-
-
290
(9)
281
Total other comprehensive income/(loss)
-
-
-
-
-
-
290
-
(36)
254
(9)
245
Total comprehensive income/(loss)
-
-
-
-
-
-
290
-
(18,459)
(18,169)
112
(18,057)
Transactions with owners recognised directly in equity
Exercise of share options
-
11
3
-
-
-
-
-
-
14
-
14
Proceeds from shares issued net of share issue costs of 23k
226
656
-
-
-
-
-
-
-
882
-
882
Recognition of share-based payments
-
-
-
566
-
-
-
-
-
566
-
566
226
667
3
566
-
-
-
-
-
1,462
-
1,462
Transactions with non-controlling interest
Non-controlling interest arising on acquisition
-
-
-
-
-
-
-
-
-
-
150
150
Balance at 31 January 2017 (Audited)
16,449
22,931
(303)
3,254
15,347
(11,584)
(142)
-
(36,992)
8,960
262
9,222
Comprehensive income/(loss)
Loss for the period
-
-
-
-
-
-
-
-
(1,385)
(1,385)
-
(1,385)
Other comprehensive income/(loss)
Exchange differences on translating foreign operations
-
-
-
-
-
-
311
-
-
311
-
311
Total other comprehensive income
-
-
-
-
-
-
311
-
-
311
-
311
Total comprehensive income/(loss)
-
-
-
-
-
-
311
-
(1,385)
(1,074)
-
(1,074)
Transactions with owners recognised directly in equity
Issue of shares to acquire remaining interest in Sitemap Ltd (Note 13)
56
-
-
-
144
-
-
-
-
200
-
200
Acquisition of shares in 1Spatial Inc. (Note 13)
200
-
-
-
539
-
-
(477)
-
262
(262)
-
Recognition of share-based payments 
-
-
-
119
-
-
-
-
-
119
-
119
256
-
-
119
683
-
-
(477)
-
581
(262)
319
Balance at 31 July 2017 (Unaudited)
16,705
22,931
(303)
3,373
16,030
(11,584)
169
(477)
(38,377)
8,467
-
8,467
 
* Other components of equity arose through the acquisition of further shares in 1Spatial Inc. 
** Total equity attributable to the equity shareholders of the parent.
Condensed consolidated statement of changes in equity
Period ended 31 July 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 *
Non-
controlling
interest
Total
equity
Balance at 1 February 2016
16,223
22,264
(306)
2,688
15,347
(11,584)
(432)
(18,533)
25,667
-
25,667
Comprehensive income/(loss)
Loss for the period
-
-
-
-
-
-
-
(2,193)
(2,193)
79
(2,114)
Other comprehensive income/(loss)
Exchange differences on translating foreign operations
-
-
-
-
-
-
615
-
615
-
615
Total other comprehensive loss
-
-
-
-
-
-
615
-
615
-
615
Total comprehensive loss
-
-
-
-
-
-
615
(2,193)
(1,578)
79
(1,499)
Transactions with owners recognised directly in equity
Exercise of share options
-
11
3
-
-
-
-
-
14
-
14
Issue of share capital
226
656
-
-
-
-
-
-
882
-
882
Recognition of share-based payments
-
-
-
357
-
-
-
-
357
-
357
226
667
3
357
-
-
-
-
1,253
-
1,253
Transactions with non-controlling interest
Non-controlling interest arising on acquisition
-
-
-
-
-
-
-
-
-
27
27
-
-
-
-
-
-
-
-
-
27
27
Balance at 31 July 2016 (Unaudited)
16,449
22,931
(303)
3,045
15,347
(11,584)
183
(20,726)
25,342
106
25,448
* Total equity attributable to the equity shareholders of the parent.
Condensed consolidated statement of cash flows 
Period ended 31 July 2017
ended 31 July 2010
Unaudited
Audited
Unaudited
31 July 2017
31 January 2017
31 July 2016
Note
'000
'000
'000
Cash flows from operating activities
Cash generated from/(used in) operations
a)
220
(1061)
(1,306)
Interest received
-
3
23
Interest paid
(74)
(169)
(77)
Tax received
66
425
420
Net cash generated from/(used in) operating activities
212
(802)
(940)
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)
15
(852)
(852)
Cash disposed with subsidiary
-
(48)
-
Purchase of property, plant and equipment
(58)
(574)
(251)
Expenditure on product development and intellectual property capitalised
(547)
(3,552)
(1,935)
Proceeds from sale of property, plant and equipment
139
84
82
Net cash used in investing activities
(451)
(4,942)
(2,956)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital
-
896
896
Repayment of borrowings
(64)
-
-
Net cash (used in)/generated from financing activities
(64)
896
896
Net decrease in cash and cash equivalents
(303)
(4,848)
(3,000)
Cash and cash equivalents at start of period
604
4,996
4,996
Less cash and cash equivalents in assets held for sale
-
(51)
-
Effects of foreign exchange on cash and cash equivalents
39
507
368
Cash and cash equivalents at end of period
340
604
2,364
Notes to the condensed consolidated statement of cash flows
a) Cash generated from/(used in) operations
Unaudited
Audited
Unaudited
As at
31 July 2017
As at 31 January 2017
As at
31 July 2016
'000
'000
'000
Loss before tax including discontinued operations
(1,521)
(19,455)
(2,101)
Adjustments for:
Share of net loss of associates
-
266
237
Net finance (income)/cost
74
176
(63)
Depreciation
203
795
296
Amortisation and impairment
660
14,445
1,175
Share-based payment charge
118
566
355
Loss on disposal of property, plant and equipment
10
33
32
Gain on bargain purchase
(9)
-
-
Loss on disposal of assets held for sale
199
-
-
Increase in inventories
-
-
(16)
Decrease in trade and other receivables
3,026
2,233
1,876
(Decrease)/Increase in trade and other payables
(2,578)
538
(2,356)
Increase/(Decrease) in provisions
7
(155)
(202)
Increase in defined benefit pension obligation
-
41
-
Net foreign exchange movement
31
(544)
(539)
Cash generated from/(used in) operations
220
(1,061)
(1,306)
b) Reconciliation of net cash flow to movement in net funds
Unaudited
Audited
Unaudited
As at
31 July 2017
As at 31 January 2017
As at
31 July 2016
'000
'000
'000
Decrease in cash in the period
(303)
(4,848)
(3,000)
Changes resulting from cash flows
(303)
(4,848)
(3,000)
Less cash and cash equivalents in assets held for sale
-
(51)
-
Effect of foreign exchange
39
507
368
Change in net funds
(264)
(4,392)
(2,632)
Net funds at beginning of period
604
4,996
4,996
Net funds at end of period
340
604
2,364
Analysis of net funds
Cash and cash equivalents classified as:
Current assets
2,293
1,285
2,482
Bank and other loans
(1,953)
(681)
(118)
Net funds at end of period
340
604
2,364
Notes to the Interim Financial Statements
1. Principal activity
1Spatial plc is a public limited company which is listed on the AIM London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is Tennyson House, Cambridge Business Park, Cowley Road, Cambridge, CB4 0WZ. The registered number of the Company is 5429800. 
The principal activity of the Group is the development and sale of IT software along with related consultancy and support. The principal activity of the Company is that of a parent holding company which manages the Group's strategic direction and underlying subsidiaries.
2. Basis of preparation
The condensed consolidated interim financial information for the six months ended 31 July 2017, has been prepared in accordance with the accounting policies that are expected to be adopted in the Group's full financial statements for the year ended 31 January 2018 and are not expected to be significantly different to those set out in the Group's audited financial statements for the year ended 31 January 2017.
The financial information for the half years ended 31 July 2017 and 31 July 2016 is neither audited nor reviewed and does not constitute statutory financial statements within the meaning of section 434(3) of the Companies Act 2006 for 1Spatial plc or for any of the entities comprising the 1Spatial Group. Statutory financial statements for the preceding financial year ended 31 January 2017 were filed with the Registrar and included an unqualified auditors' report.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed consolidated financial statements.
3. Taxation
The tax expense on the result for the six months ended 31 July 2017 is based on the estimated tax rates in the jurisdictions in which the Group operates, for the year ending 31 January 2018.
4. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
Unaudited
Audited
Unaudited
As at
31 July 2017
As at
31 January 2017
As at
31 July 2016
'000
'000
'000
Loss attributable to equity holders of the Parent
(1,385)
(18,423)
(2,193)
Less Loss from discontinued operations
(184)
(3,542)
(106)
Loss from continuing operations
(1,201)
(14,881)
(2,087)
Adjustments:
Profit attributable to non-controlling interest
-
121
79
Income tax credit
(72)
(988)
(20)
Net finance cost/(income)
34
32
(67)
Share of net loss of associates accounted for using the equity method
-
266
237
Depreciation
203
452
222
Amortisation and impairment of intangible assets
660
11,408
948
Share-based payment charge
118
566
355
Strategic, integration and other one-off items
561
2,617
373
Adjusted EBITDA from continuing operations
303
(407)
40
Number
Number
Number
000s
000s
000s
Basic weighted average number of ordinary shares
753,925
728,895
719,604
Impact of options and warrants
-
-
306
Diluted weighted average number of ordinary shares
753,925
728,985
719,910
Unaudited
Audited
Unaudited
As at
31 July 2017
As at
31 January 2017
As at
31 July 2016
Pence
Pence
pence
Basic loss per share
(0.18)
(2.53)
(0.30)
- from continuing operations
(0.16)
(2.04)
(0.29)
- from discontinued operations
(0.02)
(0.49)
(0.01)
Diluted loss per share
(0.18)
(2.53)
(0.30)
- from continuing operations
(0.16)
(2.04)
(0.29)
- from discontinued operations
(0.02)
(0.49)
(0.01)
Basic Adjusted EBITDA per share
0.02
(0.54)
0.04
- from continuing operations
0.04
(0.06)
0.01
- from discontinued operations
(0.02)
(0.49)
0.03
Diluted Adjusted EBITDA per share
0.02
(0.54)
0.04
- from continuing operations
0.04
(0.06)
0.00
- from discontinued operations
(0.02)
(0.49)
0.04
5. Dividends
No dividend is proposed for the six months ended 31 July 2017 (31 January 2017: nil; 31 July 2016: nil).
6. Segmental information
31 July 2017
Central costs
'000
Geospatial
'000
IT Managed Services
'000
Total
'000
Revenue
-
8,563
3,587
12,150
Cost of sales
-
(4,200)
(2,713)
(6,913)
Gross profit
-
4,363
874
5,237
Administrative expenses
(1,572)
(4,405)
(499)
(6,476)
Adjusted EBITDA
(803)
873
233
303
Less: depreciation
(15)
(110)
(78)
(203)
Less: amortisation and impairment of intangible assets
-
(612)
(48)
(660)
Less: share-based payment charge
(98)
(20)
-
(118)
Less: strategic, integration and other one-off items
(656)
(173)
268
(561)
Total operating (loss)/profit
(1,572)
(42)
375
(1,239)
Finance income
-
42
-
42
Finance cost
(47)
(26)
(3)
(76)
Net finance (cost) / income
(47)
16
(3)
(34)
(Loss)/profit before tax
(1,619)
(26)
372
(1,273)
Tax 
-
63
9
72
(Loss)/profit for the period from continuing operations
(1,619)
37
381
(1,201)
Loss for the period from discontinued operations
-
-
(184)
(184)
(Loss)/profit for the period
(1,619)
37
197
(1,385)
31 January 2017
Central costs
'000
Geospatial
'000
IT Managed Services
'000
Total
'000
Revenue
-
15,133
6,932
22,065
Cost of sales
-
(6,868)
(5,518)
(12,386)
Gross profit
-
8,265
1,414
9,679
Administrative expenses
(5,157)
(18,758)
(1,214)
(25,129)
Adjusted EBITDA
(2,352)
1,478
467
(407)
Less: depreciation
(57)
(240)
(155)
(452)
Less: amortisation and impairment of intangible assets
-
(11,323)
(85)
(11,408)
Less: share-based payment charge
(550)
(16)
-
(566)
Less: strategic, integration and other one-off items
(2,198)
(392)
(27)
(2,617)
Total operating (loss)/profit
(5,157)
(10,493)
200
(15,450)
Finance income
-
176
-
176
Finance cost
(116)
(85)
(7)
(208)
Net finance (cost) / income
(116)
91
(7)
(32)
Share of net loss of associates accounted for using the equity method
-
(39)
(227)
(266)
Loss before tax
(5,273)
(10,441)
(34)
(15,748)
Tax 
-
1,081
(93)
988
Loss for the period from continuing operations
(5,273)
(9,360)
(127)
(14,760)
Loss for the period from discontinued operations
-
-
(3,542)
(3,542)
Loss for the period
(5,273)
(9,360)
(3,669)
(18,302)
6. Segmental information (continued)
31 July 2016
Central costs
'000
Geospatial
'000
IT Managed Services
'000
Total
'000
Revenue
-
7,229
4,664
11,893
Cost of sales
-
(3,448)
(3,833)
(7,281)
Gross profit
-
3,781
831
4,612
Administrative expenses
(1,763)
(4,054)
(653)
(6,470)
Adjusted EBITDA
(1,183)
908
315
40
Less: depreciation
(28)
(119)
(75)
(222)
Less: amortisation and impairment of intangible assets
-
(907)
(41)
(948)
Less: share-based payment charge
(275)
(80)
-
(355)
Less: strategic, integration and other one-off items
(277)
(75)
(21)
(373)
Total operating (loss)/profit
(1,763)
(273)
178
(1,858)
Finance income
-
177
-
177
Finance cost
(52)
(53)
(5)
(110)
Net finance (cost) / income
(52)
124
(5)
67
Share of net loss of associates accounted for using the equity method
-
(40)
(197)
(237)
Loss before tax
(1,815)
(189)
(24)
(2,028)
Tax 
-
12
8
20
Loss for the period from continuing operations
(1,815)
(177)
(16)
(2,008)
Loss for the period from discontinued operations
-
-
(106)
(106)
Loss for the year
(1,815)
(177)
(122)
(2,114)
7. 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 period:
Six months ended
31 July 2017
Year ended
31 January 2017
Six months ended
31 July 2016
'000
'000
'000
Costs associated with corporate transactions and other strategic costs
82
228
124
Restructuring and redundancy costs
549
844
197
Loan- write-backs
(44)
-
-
Integration costs associated with Enables IT and 1Spatial Inc. business
-
121
-
System development costs
105
Provision for amount receivable from Sitemap Ltd
-
1,334
-
Group rationalisation costs
-
-
26
Other
(26)
(15)
26
Total
561
2,617
373
8. Business combinations
On the 11 April 2017, the Group acquired the 51 per cent. of Sitemap Ltd that it did not already own for 200,000 in shares. The company's investment in Sitemap to date has funded the development of a solution which locates and visualises sites which best fit commercial and residential property developer needs.
The following table summarises the consideration paid for the Sitemap Ltd non-controlling interests and the fair value of assets acquired and liabilities at the acquisition date:
'000
Value of consideration - issue of equity instruments
200
Total purchase consideration
200
Provisional fair values of assets and liabilities at the date of acquisition:
Intangible assets
200
Property, plant and equipment
2
Cash and cash equivalents
15
Trade and other receivables
6
Trade and other payables
(14)
Total identifiable net assets
209
- Attributable to non-controlling interests
-
- Attributable to equity shareholders of the parent
209
Gain on bargain purchase
(9)
Total consideration
200
Satisfied by:
- Equity instruments (5,524,862 ordinary shares of 1Spatial plc)
200
Total consideration payable in shares
200
Net cash outflow arising on acquisition
- Cash consideration
-
- Less: cash and cash equivalents acquired
15
15
9. Investments
Investments are carried at fair value through profit or loss.
As at
31 July 2017
As at
31 January 2017
As at
31 July 2016
'000
'000
'000
Non-listed investments
25
-
-
A 19.9 per cent. share of Enables IT Inc., with a fair value of 25,000, remains within investments following the part disposal of the previously wholly-owned entity.
A 80.1 per cent. share of Enables IT Inc. was sold on 3 March 2017 to the management of the company for a deferred consideration of 100,000 payable in 2019. The amount payable has been included within other non-current assets.
As at 31 January 2017, the assets and liabilities of the disposal group were classified as held for sale and the results of the company classified as discontinued operations in the current and comparative period.
10. Interests in associates
Investments in associates are stated at cost less provision for any impairment and are accounted for using the equity method.
As at
31 July 2017
As at
31 January 2017
As at
31 July 2016
'000
'000
'000
Carrying value recognised in the statement of financial position
-
-
29
Share of net loss recognised in the statement of comprehensive income
-
266
237
The associates of the Group in the period are set out below:
Name
Principal activity
Place of incorporation (or registration) and operation
Proportion of ownership interest
%
Proportion of voting power held
%
31 July 2017
31 January 2017
31 July 2016
31 July 2017
31 January 2017
31 July 2016
Sitemap Ltd
Location-based software
(Note 1)
United Kingdom
100%
49%
49%
100%
49%
49%
1Spatial Inc.
Location-based software
(Note 2)
United States
100%
73%
73%
100%
73%
73%
Note 1: A 49 per cent. share of Sitemap Ltd was first acquired on 30 January 2015 and brought a new, although complementary, opportunity to the Group in its potential to generate revenue from data services. On the 11 April 2017, the Group acquired the remaining 51 per cent. of Sitemap Ltd that it did not already own for a consideration payable in shares, taking the Group's total holding in Sitemap Ltd to 100 per cent.
Note 2: 1Spatial Inc. - 47 per cent. of the sole US-based distributor of 1Spatial geospatial products and solutions across the Americas was first acquired on 3 February 2015 by 1Spatial Holdings Limited (a wholly-owned subsidiary of 1Spatial plc) to provide 1Spatial with long-term security of its Americas distribution channel, and ensure continuity of service to key customers. On the 29 February 2016, the Group acquired a further 26 per cent. shareholding in 1Spatial Inc., taking the total shareholding up to 73 per cent.. On 11 April 2017, the Group exercised its call option to acquire a further 27 per cent. of 1Spatial Inc., payable in shares, taking the Group's total holding in 1Spatial Inc. to 100 per cent.
1Spatial Inc. became a subsidiary from 26 February 2016 and was included as part of consolidated results from that date.
Summarised financial information for associates
The financial information reflects the amounts presented in the financial statements of the associate (and not the Group's share of those amounts).
Summarised statement of financial position
Sitemap Ltd
As at
11 April 2017
31 January 2017
'000
'000
Note 1
Current assets
21
54
Non-current assets
202
1,055
Current liabilities
(14)
(1,395)
Net liabilities
(209)
(286)
 
Note 1 - Sitemap Ltd's information shown here is as at 11 April 2017 (not 31 July 2017) when it ceased to be an associate and became a subsidiary of the Group.
Summarised statement of comprehensive income
Sitemap Ltd
For the period ended
11 April 2017
31 January 2017
'000
'000
Note 1
Revenue
-
-
Gross profit
-
(120)
Administrative expenses
(876)
(274)
Adjusted EBITDA
(1)
(124)
Depreciation
(1)
(4)
Amortisation of intangible assets
(18)
(111)
Strategic, integration and other one-off items *
(856)
(155)
Operating loss
(876)
(394)
Tax credit
74
-
Total comprehensive expense **
(802)
(394)
Share of associate - equity method ***
-
(193)
Note 1 - Sitemap Ltd's information for the period shown above is for the period that it was an associate - being 1 February to 11 April 2017.
* Strategic, integration and other one-off items comprise the write-off of intangible assets prior to 1Spatial plc gaining control of Sitemap Ltd. 
** Excludes write-off of inter-company loan balances prior to acquisition.
*** 1Spatial plc discontinued recognising its share of losses after these exceeded its interest in Sitemap Ltd.
11. Trade and other receivables
As at
31 July 2017
As at
31 January 2017
Current
'000
'000
Trade receivables
2,208
5,552
Less: provision for impairment of trade receivables
(20)
(626)
2,188
4,926
Other taxes and social security
215
144
Other receivables
1,415
1,278
Prepayments and accrued income
2,227
2,581
6,045
8,929
12. Trade and other payables
As at
31 July 2017
As at
31 January 2017
Current
'000
'000
Trade payables
1,739
1,824
Other taxation and social security
1,914
2,350
Other payables
594
566
Accrued liabilities
1,099
1,254
Deferred income
4,366
6,078
9,712
12,072
13. Share capital
As at
31 July 2017
As at
31 January 2017
'000
'000
Allotted, called up and fully paid
763,652,144 (Jan 2017: 738,135,558) ordinary shares of 1p each
7,637
7,381
226,699,878 (Jan 2017: 226,699,878) deferred shares of 4p each
9,068
9,068
16,705
16,449
On 11 April 2017, the Group acquired the remaining 27% of 1Spatial Inc. for 739,000 payable in shares in accordance with the terms set out in the share purchase agreement. 19,991,724 shares were issued for the remaining interest.
On 11 April 2017, the Group acquired the 51% of Sitemap Ltd that it did not already own for 200,000 in shares. 5,524,862 shares we issued for the remaining interest.

This information is provided by RNS
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