REG - 1Spatial Plc - Final Results
27/04/2022 07:16
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RNS Number : 4510J 1Spatial Plc 27 April 2022
27 April 2022
1Spatial plc
("1Spatial", the "Group" or the "Company")
Final results for the year ended 31 January 2022
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 2022.
· Significant high-value contracts signed in FY 2022 combined with
strong growing pipeline of prospects
· Organic revenue growth with higher levels of recurring revenue
achieved from new customer wins and expansion contracts in all regions
· Continued R&D investment in innovative solutions creating market
leading Location Master Data Management ("LMDM")
solution
Financial highlights
31 January 31 January Change
2022 2021
£m £m %
Group revenue 27.0 24.6 +10
Recurring revenue 12.2 10.6 +15
Term licences revenue 2.9 1.1 +167
Group Total ARR* 13.4 10.7 +26
Term licences ARR* 4.1 1.6 +160
Committed services backlog 12.5 5.5 +129
Group gross profit 13.9 13.1 +6
Adjusted EBITDA* 4.2 3.6 +15
Adjusted EBITDA* margin (%) 15.5 14.8 +0.7pp
Operating profit/(loss) 0.4 (1.2) n/a
Profit/(loss) before tax 0.2 (1.4) n/a
Earnings/(loss) per share - basic and diluted (p) 0.2 (1.0) n/a
Net cash*** 3.2 4.3 -24
*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
** Annualised Recurring Revenue is the annualised value at the year-end of
committed recurring contracts for term licences and support & maintenance
*** Net cash is gross cash less bank borrowings but excludes lease liabilities
Operational highlights and Outlook
· 37% revenue growth in the US at constant currency
· Reporting first Group profit before tax for over a decade
· Trading in the current financial year has started positively and,
while cognisant of inflationary cost pressures, the Board remains confident in
delivering results for FY 2023 in line with current expectations
Commenting on the results, 1Spatial CEO, Claire Milverton, said: "This year
has been one of solid organic growth, fuelled by a number of landmark wins,
including high profile and national level contracts in each of our target
markets.
"It is extremely encouraging to see such positive early indicators of the
success of our strategic growth plan. We have exited the year with increased
levels of recurring revenues, an expanded customer base and a partner network
stronger than we have ever had - all of which provide us with a valuable base
on which to expand in the year ahead.
"With the validation and sharing of location data sitting at the heart of many
areas of digital transformation, we are seeing a growing number of
opportunities entering our sales pipeline across all our regions and markets.
This healthy sales pipeline and increased levels of recurring revenue provide
the Board with confidence that the Group's progress over the last year is set
to continue in the coming year and beyond."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019.
For further information, please contact:
1Spatial plc 01223 420 414
Claire Milverton / Andrew Fabian
Liberum (Nomad and Broker) 020 3100 2000
Neil Patel / Cameron Duncan / Miquela Bezuidenhoudt
Alma PR 020 3405 0205
Caroline Forde / Justine James / Hannah Campbell 1spatial@almapr.co.uk
About 1Spatial plc
Unlocking the Value of Location Data
1Spatial plc is a global leader in providing Location Master Data Management
(LMDM) software, solutions and business applications, primarily to the
Government, Utilities and Transport sectors via the 1Spatial platform. Our
solutions ensure data governance, facilitating the efficient, effective and
sustainable operation of customers around the world. Our global clients
include national mapping and land management agencies, utility companies,
transportation organisations, government and defence departments.
Today, when using and sharing trusted data provides significant opportunities
for businesses and governments to deliver against important sustainability and
Net Zero goals, our vision is clear - to make the world safer, smarter and
more sustainable by unlocking the value in data, enabling better decisions and
greater insights.
The 1Spatial platform is a comprehensive set of data and system agnostic LMDM
software components which helps ensure master data is compliant, current,
complete, consistent, and coordinated - and that customers can be confident it
will remain that way as it evolves. It allows them to master their data on any
device, anywhere, anytime and can be deployed as SaaS in the cloud,
on-premise, or as a hybrid of both.
1Spatial plc is AIM-listed, headquartered in Cambridge, UK, with operations in
the UK, Ireland, USA, France, Belgium, Tunisia, and Australia.
www.1spatial.com (http://www.1spatial.com)
Chairman's Report
1Spatial has enjoyed a successful first year of its three-year growth plan.
Expansion has been seen in all parts of the business, delivering across all
three of our strategic growth pillars: Innovation, Customer Relationships and
Smart Partnerships. We have seen substantial financial growth, exceeding our
revenue and sales forecasts for the year, which has provided a solid basis for
long-term success.
Digital transformation, combined with government initiatives such as increased
infrastructure investment and the launch of sustainability programmes, are
driving a substantial need for data management tools, particularly those
capable of managing complex location data. With its enterprise grade software
and over 30 years' heritage in location data, 1Spatial sits at the heart of
this rapidly increasing demand, as evidenced by the significant high-profile
wins in the year, which in turn are elevating our profile on the global stage.
These wins highlight the quality of 1Spatial's world-class technology and
geospatial expertise, and the ability of the business to scale through the
sale of repeatable business applications and software solutions.
Financials
Our key financial objectives for the year were to grow recurring revenues,
while generating funds to be reinvested into the business. I am pleased to
report that our financial performance exceeded expectations this year, with
sales orders being considerably higher than our expectations. We have also
returned to organic revenue growth, with increased revenue across all regions
and sectors in which we operate. Our first recorded operating profit and
profit before tax for over a decade represents a positive financial milestone
and is particularly pleasing given the accelerated transition we are achieving
in our business model towards term and SaaS based subscription licenses.
Operational successes
This year has been a year of investment for 1Spatial, to provide a platform
for scalable growth as we develop our people and build out our technology
offering. We are successfully building repeatability into our solutions and
have invested in Cloud delivery, which will increase our addressable market
significantly in future years. We have won several new landmark customers,
including high profile and national level digital transformation initiatives
and signed two of our largest ever deals. Growth in the US has been pivotal to
this year's successes, which alongside our strengthened partnerships and
substantial customer wins has significantly expanded our horizons of
opportunity.
People
We have invested in the expansion of our senior leadership team to ensure we
have the depth of management to deliver our strategy and have been delighted
by the immediate positive impacts the new team members have made. Our priority
continues to be the wellbeing of our teams around the world, providing them
with the best environment to continue to deliver the high-quality service our
customers expect of 1Spatial.
World events continue to be challenging and worrying for many. We do not have
any operations in Russia or the Ukraine and no customers in those regions.
Environmental, Social and Governance (ESG)
Like many businesses, ESG is very important for 1Spatial as we strive to make
the world safer, smarter and more sustainable for the future. Whilst we are
still in the early stages of implementing ESG initiatives across the Group, we
have already taken steps to address key areas within ESG over the past few
years. During the year we engaged with a third party with expertise in this
area, to help us consolidate all of our initiatives and define and create our
full ESG strategy, which is set out in more detail in the Annual Report.
Given the nature of what we do, we have a low impact on the environment, but
we are always aiming to improve and offset our carbon footprint by initiatives
such as donating to the Woodland Trust to offset travel.
Outlook/Summary
We have entered the new financial year in a significantly stronger position.
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.
We anticipate scalable growth in three key areas. Firstly, we expect the US to
continue to accelerate in the coming years and become a substantial part of
our Group revenues in the future. Secondly there is significant growth
potential from new partnerships, targeting the government and large enterprise
digital transformation opportunities. Thirdly, the commercialisation of our
cloud-based platform planned in the second half of the year enabling us to
launch Validation as a Service (VaaS) offerings and other targeted SaaS
business applications such as 1Streetworks/TMPA should be a transformational
opportunity for scalable growth.
The Board is confident that the inflationary pressures being felt by all
businesses in the current environment are being well managed.
We believe the investments we have made over the past year in our people and
technology position us well to take advantage of the huge opportunity that is
ahead. The significant number and range of new wins in the year provides the
Board with confidence that 1Spatial is in an excellent position to continue
its upward trajectory and we expect a successful continuation of the execution
of our growth strategy.
Finally, I would like to thank all our staff for their contribution and
fortitude through the pandemic.
Andy Roberts
Non-Executive Chairman
CEO's Review
This year has been one of solid organic growth, fuelled by a number of
landmark wins, including high profile and national level contracts in each of
our target markets, as we conclude what has been a transformative first year
of our three-year growth plan. We have expanded our product offering and
delivered growth in revenues, term licence revenue, ARR and adjusted EBITDA as
we successfully transition our business model. It is encouraging to see a
strong performance in all regions, with growth in the UK and North America
particularly noteworthy.
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. While
this is already an extensive customer base, we believe, as leaders in location
data validation and sharing, we are just at the start of our growth journey.
The demand for up-to-date location data has never been greater, due to the
acceleration in digital transformation taking place across all industries.
Location data is a vital element in the delivery of faster and safer services,
and because it is increasingly being used as the main point of reference when
connecting multiple systems, it needs to be accurate and shareable. 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.
This fast-growing industry need has led to growth in our customer numbers and
revenues and created a record pipeline of opportunities as we enter the new
financial year.
Top line growth and a return to profits
The success of our strategy and the growth in our market can be seen in our
strong financial performance during the year, particularly in H2 FY 2022,
which has seen the Group secure its largest contracts to date, providing a
strong platform for growth in future years.
I am pleased to report our first operating profit and profit before tax for
over a decade, representing a significant shift from an operating loss of
£1.2m in the prior year. We have seen organic growth in revenues, recurring
revenues and adjusted EBITDA profit levels, whilst at the same time,
increasing investment in the business as part of the three-year growth plan.
Group revenue increased by 10% to £27.0m from £24.6m in FY 2021 with
double-digit growth in recurring revenue year on year. The order book of
committed revenue increased by 129% to £12.5m and term licence ARR increased
by 160% to £4.1m.
US delivering on its promise
A key success is the Group's expansion across North America, which presents a
major opportunity for the business going forward.
We have successfully sold and implemented 1Integrate and 1Data Gateway in key
US States including California and Michigan. We secured several landmark
contracts in the year, most notably four new wins with US States to support
delivery of their Next Generation 911 Emergency Services system.
US legislation requires all States to upgrade their emergency services,
building digital platforms and incorporating the use of GIS data, to support
NG 911 services and ensure a modern and safe emergency response system. Key
challenges to meeting these requirements have been the completeness and
accuracy of the GIS data, the need to integrate other data from multiple
sources such as road traffic information, and the fact that location data is
constantly changing. Our Next Generation 911 solution, now being implemented
in seven US States, ensures that emergency services are using validated,
integrated and up to date data and ultimately, that the teams on the
ground are able to respond to incidents more quickly and with greater
confidence in data quality.
Typical ARR per State for our NG911 solution is initially around US$0.1-0.2m
and we expect total ARR for this solution across the US to grow to over $1m in
FY23. We are growing our sales team to support this opportunity in other
States.
Following the passing of a $2.2 trillion reconciliation bill in the US in
November 2021, which includes $500 million of funding to support NG 911
deployments, alongside the digitalisation of 911 systems across America, we
are seeing significant new opportunities where we can bring our unique
technology and solutions to help providers achieve faster response times.
The development of our cloud platform means we will soon be able to offer a
'light version' NG911 SaaS solution aimed at the hundreds of counties and
cities within each State, considerably increasing our addressable opportunity.
There is also sizeable opportunity for growth within each State by launching
additional solutions, including for example Highway Performance Monitoring
Systems (HPMS) and Crash Reporting. We have already seen success in Michigan
where we have doubled the initial ARR 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.
Major contract wins
In the UK, we have continued to deliver top and bottom line growth through new
multi-year contracts with government bodies. These include an £8m multi-year
contract in partnership with a consortium to deliver a significant digital
transformation programme for a department of the UK Government, and a £6.5m
contract for the UK Government's Geospatial Commission supporting Atkins to
deliver the National Underground Asset Register. These contracts contribute
£1.7m to Annualised Recurring Revenue.
Successes such as these, and the considerable size of our sales pipeline, give
us the confidence to continue to invest in the business, to ensure we have the
right structure to deliver on the growing opportunity as we move into the
second year of our three-year growth plan. We have made a number of senior
appointments across the Group to ready the business for this next phase of
growth, expanded our sales and delivery teams and invested in the Cloud to
increase our addressable market.
Strategic review
We are building our highly scalable business on three pillars: Innovation,
Customer Relationships and Smart Partnerships and I am proud to say we made
considerable progress against all three throughout the year.
1. Innovation
Innovation lies at the heart of 1Spatial. We use our patented software to
audit and automatically correct location data, keeping it accurate and up to
date. Our automated software is able to handle huge volumes of complex data
allowing our customers not only to ensure accuracy 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.
During the year, we were granted a UK Patent for Modification and Validation
of Spatial Data, recognising its power as a tool to ensure good quality data
and facilitate trust when sharing data. The patent protects the use of
1Spatial's Rules Engine technology, which is used in 1Integrate, further
strengthening the Group's international patent coverage, which includes a US
patent for Modification and Validation of Spatial Data.
The 1Spatial Platform for Location Master Data Management can be split into
two key areas:
· Data Management Solutions - Managing data to ensure it is
correct, consistent and compliant
· Business Applications - Utilising trusted data through business
applications to solve specific business challenges
Data management solutions
Key development initiatives during the year were to ensure that our solutions
meet the rising demand for integration with a cloud-enabled world. This also
included improvements to data security and the ability to make our customer
deployments simpler than ever.
The innovation in both 1Integrate and 1Data Gateway throughout the year have
provided a vehicle for further growth and accessibility of our solutions and
the development team continue to assess the products against both the customer
and market needs so that we are always at the forefront in our market sectors.
1Integrate
1Integrate is our patented no-code rules engine - this continues to be
enhanced to make it more powerful and more capable for automated data
validation and processing. During the year 1Integrate was successfully
upgraded to include access to more data types. This included access to more
data store formats and access to data over the web such as Esri's Web Feature
Services. 1Integrate is also now packaged with a Repository Synchronisation
Tool making it simpler for our customer teams to collaborate; and faster to
build, test and deploy rules across the organisation.
We continued to add further support for 3D data which was used in a pilot
project with a National Mapping Agency. This pilot project was focused on
automating the import of geospatial data into a 3D database, and automatically
validating against the project's data specification using 1Integrate 3D. The
rules inspect the building information, finding and correcting any overlaps,
overhangs and any misalignments. The current and correct data was then loaded
into the central databank, where the data was made available to the National
Mapping Agency stakeholders.
1Data Gateway
1Data Gateway is our self-service web-portal for spatial data validation,
processing and analytics. During the year we have made several upgrades
including enhancements to our APIs, which allow systems to talk to each other,
so our customers can analyse the results from 1Data Gateway with their own BI
tools such as Esri ArcGIS Dashboard.
Business applications
We provide two types of business applications to meet our customer's 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
This year we focused on the development of two types of applications on the
1Spatial Platform. These are Validation Applications and Specific Business
Applications
· Validation Applications
These applications validate data to a pre-defined set of rules and provide
back a report of the errors. The first of these applications is NG911 and
HPMS which are being sold in the US. We also have identified a number of
other similar solutions across our territories which will be brought to market
in FY23. We are also looking to deploy a number of these solutions to the
1Spatial cloud in FY23 so they can be offered as Validation as a Service
(Vaas) solutions.
· Specific Business Applications
This year, we also focused on building targeted solutions on the platform,
such as 1Streetworks (previously known as Traffic Management Plan Automation
("TMPA")), which is currently being tested at selected customers.
Both the Validation Applications (VaaS) and Specific Business Applications
such as 1Streetworks should provide the Group with potential exciting new "go
to" market models, lowering the price point for new customers onto the
platform planned in the second half of FY23.
· Launch of 1Spatial cloud platform
We have now 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
During the year we have continued to invest in the business applications built
on Esri technology. These include ArcOpole Pro, the application to help
local authorities manage assets and urban planning, and 1Water to manage Water
Networks. In addition, we have also developed 1Telecomms this year which will
address the Telecoms sector. These business applications provide solutions to
targeted needs that are not fulfilled by the Esri Platform.
2. Customer relationships
We continued to strengthen our relationships with existing customers
throughout the year and secured new customer wins across all territories. Our
aim is to be our customers' strategic partner and advisor in LMDM. We
typically expand our customer relationships over time, as we identify
additional areas our software and expertise can support our customers.
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
The Group delivered new customer wins including multi-year licence contracts
in the year across all regions, with the USA performing particularly well.
New customer wins include:
· National Underground Asset Register (NUAR) - Supporting the
Government to build back better, greener and levelling up the North -
£6.5 million (£1.5m licence over 3 years).
· Department of the UK Government -
Multi-year digital transformation programme - £8.0 million (£6.0m
licence over 5 years).
· HM Land Registry - Single digital register across England and
Wales - £0.5 million (£0.4m licence over 3 years).
· Four new contracts for NG 911 solutions in the US, with the States
of Montana, Georgia, Minnesota and Arizona, demonstrating 1Spatial's unique
technology and the replicability of this solution. Each with ARR of average
US$0.15 million plus services of US$0.1 million.
· Our first term licence in France, with VINCI Highways, to supply
1Telecomms, a 1Spatial app built on the Esri platform.
Customer expansion contracts in the period, included:
· Department of Environment, Food and Rural Affairs (DEFRA) to
support the Land Management System, operated DEFRA's Rural Payments Agency
(RPA), in partnership with Version 1 - £1.2 million over 5 years.
· Another contract win with DEFRA and RPA to support its field
collection system - £0.5 million (£0.4m licence over 2
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.
· Additional services and licences for Google Real Estate and
Workplace Services - US$0.9 million (US$0.3m licence).
· In France, 29 existing customers have completed or commenced
migration from the Group's legacy Elyx platform, to Esri-supported
solutions, including 1Water.
3. Smart partnerships
We believe partnerships will play an important role in providing us with the
reach to capitalise on the opportunity ahead. We have secured many of our
largest contracts via our partners this year.
In order to accelerate this new business channel, we hired a new Head of
Global partners during the year. Key focus areas in the year have been to
identify and extend our relationships with large global corporates where
location data management forms part of a larger customer bid and also to
extend our technology partnership with Esri.
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 won and 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 were pleased to receive the prestigious "Web GIS
Transformation Award' award at the global 2021 Esri Partner Conference. This
award builds on the close collaboration between 1Spatial and Esri, with
1Spatial having received Esri Utility Network Management Specialty
designation, recognising 1Spatial's knowledge and expertise within utilities
and the implementation of Water Solutions. Last year 1Spatial announced the
collaboration with Esri UK and Northern Gas Networks to lead the UK's first
ArcGIS Utility Network Migration.
We continue to build 1Spatial business applications on the Esri platform and
during FY23 we are looking to internationalise a number of these.
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 are passionate about looking after our staff to ensure each
individual can realise their potential. We continue to invest in our people,
providing them with the tools and training to support and allow them to
realise this, with clear alignment to our Group strategy. During the year,
following employee consultation, we launched our new 1Spatial values which we
believe reflect the ethos of the company. These values are: We Respect, We
Innovate, We Collaborate, We Trust and We Care.
We have added new people to the senior team to enable us to capitalise on the
significant growth opportunities in the market. This includes a Global Chief
Commercial Officer, Global Head of Marketing and Global Head of Partners. We
have also bolstered the development teams with new product owners and
technical leads to ensure that we can align to our strategy to increase
technology sales of both our core data management solutions as well as our
business applications.
Communication with our staff and maintaining wellbeing is crucial, especially
in the current macroeconomic environment. We actively promote the importance
of mental health and as part of our commitment to their well-being, we rolled
out initiatives such as well-being months, mental health awareness training,
mental health first aiders and internal events and initiatives to encourage
staff to take time out from their working day.
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, World Food Day, Diwali, Thanksgiving, Mental Health Awareness
Week, Earth Day and Health and Happiness month.
The teams continue to show ingenuity and commitment day-to-day, for which the
Board and I thank them wholeheartedly. Whilst we are much better connected
across all geographies as a result of the pandemic requiring colleagues to
connect online, we were delighted to hold our first face to face Group sales
meeting since the start of the pandemic in Cambridgeshire in February 2022
with all regional managers and sales teams joining. The event was a huge
success, setting us up for a successful FY23.
Strategic priorities for the year ahead
Our focus will remain on the three pillars of our growth strategy. We are now
well positioned to capitalise on the opportunity in front of us, particularly
with a focus on growth in North America, where we will invest in the expansion
of our sales and marketing resources.
The expansion of the 1Spatial Cloud platform will be a key strategic focus for
the Group as the platform will enable us to increase our addressable market
and existing customer demand for web-based access to our solutions. We
anticipate that this, alongside new Validation as a Service (VaaS) solutions
and SaaS based solutions such as 1Streetworks/TMPA, will be transformational
for the Group in future years.
We will continue to invest in the business and its people to support our
expanded customer base, while maintaining our focus on the financial goals of
increased revenue growth, underpinned by growing annual recurring revenue and
continue our trajectory of increased profitability at adjusted EBITDA level
and higher cash generation over the long-term.
Current trading and outlook
It is extremely encouraging to see such positive early indicators of the
success of our strategic growth plan. We have exited the year with increased
levels of recurring revenues, an expanded customer base and a partner network
stronger than we have ever had - all of which provide us with a valuable base
on which to expand in the year ahead.
Location data underpins decision-making in every state, country and government
entity and commercial businesses today across the globe. With the validation
and sharing of location data sitting at the heart of many areas of digital
transformation, we are seeing a growing number of opportunities entering our
sales pipeline across all our regions and markets.
This healthy sales pipeline and increased levels of recurring revenue provide
the Board with confidence that the Group's progress over the last year is set
to continue in the coming year and beyond.
Trading in the new financial year has begun positively and is in line with
Board expectations, with several new contracts secured and growth in the sales
pipeline.
While cognisant of inflationary cost pressures, the Board remains confident in
delivering results for FY 2023 in line with current expectations.
We believe the investments we are making in our people and technology put us
in the right place to capitalise on this supportive market backdrop, and we
are confident in our ambition and ability to deliver on our key priorities.
Claire Milverton
Chief Executive Officer
CFO Review
Summary
The Group delivered a solid financial performance in the year, growing
revenues, recurring revenues and adjusted EBITDA* profit levels, whilst
increasing investment in the business as part of the three-year growth plan.
The Group has also reported its first operating profit and profit before tax
for over a decade, representing a significant shift from an operating loss of
£1.2m in the prior year.
Revenue
Group revenue increased by 10% (13% at constant currency) to £27.0m from
£24.6m in FY 2021.
Recurring revenue
The business strategy is to grow revenue from repeatable business solutions on
long-term contracts, including transitioning towards selling only recurring
term licences, rather than one-off perpetual licences, aiming to increase the
proportion of revenue from recurring term licences compared to services. As a
result, the business achieved a growth in revenue of 13% (excluding the impact
of the reduction in perpetual licence revenue), and recurring revenue, as a
percentage of total revenue, increased to 45% (FY 2021: 43%).
Revenue by type is shown below:
Revenue by type
FY 2022 FY 2021 % change
Recurring revenue ** 12.18 10.60 15%
Services 12.36 11.10 11%
Revenue (excluding perpetual licences) 24.54 21.70 13%
Perpetual licences 2.49 2.90 (14%)
Total revenue 27.03 24.60 10%
Percentage of recurring revenue 45% 43%
* 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
** Recurring revenue comprises term licences and support and maintenance
revenue.
ARR
The Annualised Recurring Revenue ("ARR") (annualised value at the year-end of
committed recurring contracts for licences and support and maintenance)
increased in the year by 26% (at constant currency) from £10.7m to £13.4m as
at 31 January 2022. The growth rates varied by region as shown in the table
below and in the regional revenue analysis with the UK/Ireland region growing
at the fastest rate of 55%, boosted by the large strategic contract wins in H2
FY 2022. The Group increased term licence ARR by 160% to £4.1m (FY 2021:
£1.6m). While some of this contracted revenue relates to future years beyond
FY 2023, it forms a strong platform for recurring revenue for the business.
The overall renewal rate improved to 93% (FY 2021: 90%).
ARR by region
FY 2022 FY 2021 % growth
UK/Ireland 5.93 3.82 55%
Europe 4.79 4.71 2%
US 1.40 1.14 23%
Australia 1.32 1.01 31%
Total ARR 13.44 10.68 26%
Committed revenue
The level of committed revenue (revenue for future services, licences and
support contracts contracted at the balance sheet date) increased
significantly in the year from the business focus of extending the commitment
periods and duration of contracts, as well as signing some higher value
service contracts. The level of committed project services revenue increased
by 129% (at constant currency) from £5.5m to £12.5m.
The strong pipeline of prospects, coupled with the increased ARR and committed
revenue, means that the Group starts the current financial year with a higher
proportion of current year revenue already committed at the start of the year
and a strong likelihood of achieving further progress on its three year plan
revenue growth targets. With the business focus on developing, marketing and
selling repeatable software solutions under a SaaS model, there is an
increased level of revenue visibility, which allows the Board to plan future
investment with confidence.
Regional revenue
Revenue growth by region is shown in the table below:
Regional revenue
FY 2022 FY 2021 % change % change (constant fx)
UK/Ireland 9.93 8.44 18% 18%
Europe 10.88 11.15 (2%) 2%
US 3.72 2.91 28% 37%
Australia 2.50 2.10 19% 19%
Total revenue 27.03 24.60 10% 13%
Revenue (at constant currency) grew organically in all regions. Revenue in
the US, which now represents 14% of Group revenue (FY 2021: 12%), had the
highest growth rate at 28% (37% at constant currency). It was also pleasing to
see strong growth in the Australian region of 19%. The UK/Ireland region
returned to growth with double-digit growth of 18%. Revenue in the European
business grew organically by 2% at constant currency, having been impacted by
the reduction in one-off legacy Elyx licences sold in FY 2021 as the business
evolves towards more term licences.
Gross profit margin
The gross margin reduced to 52% compared to 53%, impacted partly by the
Board's decision to increase sales and delivery capacity in order to aim to
secure higher value contracts, and increased spending on R&D, which is
included within the cost of sales. Furthermore, the prior year benefitted
(within the cost of sales) from grants given by overseas governments (£0.3m)
as part of business Covid-19 support schemes. On a like-for-like basis, (i.e.
excluding the impact of this benefit), the gross margin was at a similar level
to the prior year (52%). Going forward, the management team are focused on
driving improvements to gross margin through revenue growth of higher margin
term licences.
Adjusted EBITDA*
The adjusted EBITDA* increased by 15% to £4.2m from £3.6m in the prior year
resulting in a higher EBITDA margin of 15.5% (FY 2021: 14.8%). 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.
Operating profit/(loss) and profit/(loss) before tax
The Group achieved an operating profit of £0.4m and profit before tax of
£0.2m, representing a significant shift from an operating loss of £1.2m and
loss before tax of £1.4m for the prior year.
Taxation
The net tax charge for the period was £43k (FY 2021: credit £0.3m).
Balance sheet
The Group's net assets increased to £15.1m at 31 January 2022 (2021:
£14.7m), mainly due to the overall profit after tax offset by currency
losses in reserves.
Trade and other receivables increased in the year to £12.3m (FY 2021:
£10.9m), mainly due to increased accrued income at year end following
contract wins in Q4. Trade and other payables were at a similar level to the
prior year at £13.3m (2021: £13.4m).
Cash flow
Operating cash inflow (before strategic, integration and other non-recurring
items) reduced to £2.8m (2021: £4.2m) primarily due to the working capital
requirements on larger contracts signed in H2. As part of the three-year
growth plan, the Group invested free cash in expanding the sales and delivery
team and cloud technology and this impacted the operating cash flow and free
cash flow as shown below.
Operating cash flow FY 2022 FY 2021
£'000 £'000
Cash generated from operations 2,497 3,983
Add back: Cashflow on strategic, integration and other non-recurring items 294 173
Cash generated from operations before strategic, integration and other 2,791 4,156
non-recurring items
Free cash flow FY 2022 FY 2021
£'000 £'000
Cash generated from operations before strategic, integration and other 2,791 4,156
non-recurring items
Net interest paid (134) (179)
Net tax received 176 484
Expenditure on product development and intellectual property capitalised (2,449) (2,120)
Purchase of property, plant and equipment (164) (192)
Lease payments (1,088) (1,069)
Free cash flow before strategic, integration and other non-recurring items (868) 1,080
Cashflow on strategic, integration and other non-recurring items (294) (173)
Free cash flow * (1,162) 907
* 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.
Investment in R&D
Development costs capitalised in the year increased to £2.4m (FY 2021 £2.1m)
as the business has increased its investment in its technology and business
solutions. Amortisation of development costs was £1.7m (FY 2021 £1.9m).
Financing
The Group's financial position is supported by long-term bank loans. At the
end of January 2022, the remaining principal balance outstanding was £2.4m
(2021: £3.0m). The amount repayable in FY 2023 is approximately €0.6m
(£0.5m). With a gross cash position of £5.6m at 31 January 2022 (FY 2021:
£7.3m), a growing EBITDA and positive operating cash generation, the business
is in a healthy financial position, which gives the Board the confidence to
continue to invest in its three-year growth plan.
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.
Andrew Fabian
Chief Financial Officer
Key Performance Indicators
Key income statement KPIs are set out below. There are no non-financial
KPIs.
2022 2021 Change Change
Revenue growth £m £m £m %
Term licence revenue 2.9 1.1 1.8 167%
Recurring revenue 12.2 10.6 1.6 15%
Total revenues 27.0 24.6 2.4 10%
Gross profit margin 52% 53% -1% -2%
Adjusted * EBITDA 4.2 3.6 0.6 15%
Profit/(loss) before tax 0.2 (1.4) 1.6 n/a
Free cash flow ** (1.2) 0.9 (2.1) n/a
* 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.
** 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.
Environmental, Social and Governance
ESG - OUR FUTURE
At 1Spatial, supporting the environment, our people and our planet are
fundamental to what drives us as a business. Our purpose of making the world
safer, smarter and more sustainable underpins everything that we do.
Smarter data, smarter future
Environmental, Social and Governance (ESG) considerations are an important
part of our sustainable growth strategy and commitment to Net Zero. These
considerations are already reflected in the policies and principles that
govern our business.
We are developing an ESG strategy that will set out our target outcomes and
the actions we expect to take to deliver these. We believe ESG should be
incorporated into our culture and decision-making at all levels, and aim to
continuously measure, benchmark, monitor and report on our activities to the
management team and Board.
Materiality assessment
We have actively engaged with our stakeholders in the first phase of ESG
strategy development process. Their input will help us map and prioritise
areas that are of high importance. These material issues will inform our
strategic objectives and help us to track and report on our overall
performance.
We consulted with the following stakeholder groups:
1. Customers
2. Employees
3. Board members and senior management
4. Shareholders
5. Partners
6. Suppliers
The process
Firstly we conducted a preliminary desktop review, including a peer analysis,
an assessment of our current practices, processes and policies, an industry
benchmarking exercise and a customer requirements analysis to map the
significant ESG issues in our industry.
Through this process we identified an initial list of 13 issues that are of
high importance and relevance to our industry and business.
These issues are listed below, in no particular order of importance:
· Leadership and business ethics
· Employee experience
· Supply chain management
· Material use and waste
· Compliance and regulation
· Diversity, equality and inclusion
· Energy and climate impact
· Data privacy and security
· Environmental stewardship
· Health and safety
· Nurturing and developing talent
· Digital capabilities
· Community impact
The next step will be the prioritisation of a core set of issues that will
guide the development of our ESG strategy, with associated goals and targets
that will be communicated to our stakeholders.
Consolidated statement of comprehensive income
For the year ended 31 January 2022
Note 2022 2021
£'000 £'000
Revenue 3 27,027 24,600
Cost of sales (13,078) (11,451)
Gross profit 13,949 13,149
Administrative expenses (13,534) (14,395)
415 (1,246)
Adjusted EBITDA * 4,182 3,632
Less: depreciation (198) (202)
Less: depreciation on right of use asset 11 (989) (1,106)
Less: amortisation and impairment of intangible assets 6 (2,254) (2,806)
Less: share-based payment charge (326) (272)
Less: strategic, integration and other non-recurring items 4 - (492)
Operating profit/(loss) 415 (1,246)
Finance income 14 39
Finance costs (209) (226)
Net finance cost (195) (187)
Profit/(loss) before tax 220 (1,433)
Income tax (charge)/credit 5 (43) 308
Profit/(loss) for the year 177 (1,125)
Profit/(loss) for the year attributable to:
Equity shareholders of the Parent 177 (1,125)
177 (1,125)
Other comprehensive (expense)/income
Items that may subsequently be reclassified to profit or loss:
Actuarial gains/(losses) arising on defined benefit pension, net of tax 113 (15)
Exchange differences arising on translation of net assets of foreign (246) 148
operations
Other comprehensive (loss)/income for the year, net of tax (133) 133
Total comprehensive gain/(loss) for the year 44 (992)
Total comprehensive gain/(loss) attributable to the
equity shareholders of the Parent 44 (992)
Note 2022 2021
£'000 £'000
Loss per ordinary share attributable to the owners of the Parent during the
year (expressed in pence per ordinary share):
Basic earnings/(loss) per share 15 0.2 (1.0)
Diluted earnings/(loss) per share 15 0.2 (1.0)
* 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 (see
note 4)
Consolidated statement of financial position
As at 31 January 2022
Note 2022 2021
£'000 £'000
Assets
Non-current assets
Intangible assets including goodwill 6 15,003 15,187
Property, plant and equipment 350 392
Right of use assets 11 1,747 2,694
Total non-current assets 17,100 18,273
Current assets
Trade and other receivables 7 12,271 10,890
Current income tax receivable 124 164
Cash and cash equivalents 8 5,623 7,278
Total current assets 18,018 18,332
Total assets 35,118 36,605
Liabilities
Current liabilities
Bank borrowings 9 (531) (470)
Trade and other payables 10 (13,284) (13,418)
Lease liabilities 11 (748) (925)
Deferred consideration 12 (340) -
Total current liabilities (14,903) (14,813)
Non-current liabilities
Bank borrowings 9 (1,861) (2,542)
Lease liabilities 11 (976) (1,743)
Deferred consideration 12 (27) (390)
Defined benefit pension obligation (1,276) (1,606)
Deferred tax 13 (970) (776)
Total non-current liabilities (5,110) (7,057)
Total liabilities (20,013) (21,870)
Net assets 15,105 14,735
Share capital and reserves
Share capital 14 20,150 20,150
Share premium account 14 30,479 30,479
Own shares held 14 (303) (303)
Equity-settled employee benefits reserve 3,930 3,604
Merger reserve 16,465 16,465
Reverse acquisition reserve (11,584) (11,584)
Currency translation reserve 86 332
Accumulated losses (43,641) (43,931)
Purchase of non-controlling interest reserve (477) (477)
Total equity 15,105 14,735
Consolidated statement of changes in equity
For the year ended 31 January 2022 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 2020 20,150 30,479 (303) 3,332 16,465 (11,584) 184 (477) (42,791) 15,455
Comprehensive loss
Loss for the year - - - - - - - - (1,125) (1,125)
Other comprehensive loss
Actuarial gains arising on defined benefit pension - - - - - - - - (15) (15)
Exchange differences on translating foreign operations - - - - - - 148 - - 148
Total other comprehensive (loss)/income - - - - - - 148 - (15) 133
Total comprehensive loss - - - - - - 148 - (1,140) (992)
Transactions with owners
Recognition of share-based payment expense - - - 272 - - - - - 272
- - - 272 - - - - - 272
Balance at 31 January 2021 20,150 30,479 (303) 3,604 16,465 (11,584) 332 (477) (43,931) 14,735
Comprehensive profit/(loss)
Profit/(loss) for the year - - - - - - - - 177 177
Other comprehensive profit/(loss)
Actuarial gains arising on defined benefit pension - - - - - - - - 113 113
Exchange differences on translating foreign operations - - - - - - (246) - - (246)
Total other comprehensive (loss)/income - - - - - - (246) - 290 (133)
Total comprehensive loss - - - - - - (246) - 290 44
Transactions with owners
Recognition of share-based payment expense - - - 326 - - - - - 326
- - - 326 - - - - - 326
Balance at 31 January 2022 20,150 30,479 (303) 3,930 16,465 (11,584) 86 (477) (43,641) 15,105
Consolidated statement of cash flows
For the year ended 31 January 2022
Note 2022 2021
£'000 £'000
Cash flows from operating activities
Cash generated from operations 8 (a) 2,497 3,983
Interest received 12 39
Interest paid (146) (218)
Tax paid (24) -
Tax received 200 484
Net cash generated from operating activities 2,539 4,288
Cash flows from investing activities
Purchase of property, plant and equipment (164) (192)
Expenditure on development costs and other intangibles 6 (2,449) (2,120)
Net cash used in investing activities (2,613) (2,312)
Cash flows from financing activities
New borrowings - 1,800
Repayment of borrowings (423) (146)
Repayment of lease obligations 11 (1,088) (1,069)
Payment of deferred consideration on acquisition 12 - (585)
Net cash used in financing activities (1,511) -
Net (decrease)/increase in cash and cash equivalents (1,585) 1,976
Cash and cash equivalents at start of year 7,278 5,108
Effects of foreign exchange on cash and cash equivalents (70) 194
Cash and cash equivalents at end of year 8 (b) 5,623 7,278
Notes to the financial statements
For the year ended 31 January 2022
1. Basis of preparation
The preliminary information of 1Spatial plc have been prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006. The "requirements of the Companies Act 2006" here
means accounts being prepared in accordance with "international accounting
standards" as defined in section 474(1) of that Act, as it applied immediately
before IP completion day (end of transition period), including where the
company also makes use of standards which have been adopted for use within the
United Kingdom in accordance with regulation 1(5) of the International
Accounting Standards and European Public Limited Liability Company (Amendment
etc.) (EU Exit) Regulations 2019. 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 2022 and 31 January 2021 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 2022 were approved by the Board of directors
on 26 April 2022 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
FY23 year, rolled out to 31 July 2023 using part of its forecast for FY 2024,
so that a full 12-month period from the date of signing the FY22 Annual Report
and Accounts is considered. Due to the uncertainty from potential
macro-economic impacts, in addition to applying the normal sensitivities to
cash flows, the going concern review also included a reverse-stress test to
demonstrate that even if new business and renewals are severely impacted by
further pandemic lockdowns, or global knock-on impacts from the war in
Ukraine, the finances of the Group are in a robust position.
The year ended 31 January 2022 saw a record year for new business, including
signing the two highest value contracts in the Group's history, and there was
a strong performance in all regions. In addition, FY 2022 was a year of
increased revenue, double-digit growth in recurring revenue, and increased
adjusted EBITDA*, with a cash conversion of around 60%. Furthermore, ARR
increased to £13.4m and committed service revenue increased to £12.5m. We
have entered the new 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. This provides a
solid financial foundation for the achievement of the current year's revenue
target.
The operating cash flow was positive but was impacted by working capital
requirements on larger projects and the decision to invest in growing the
business for the longer term. The Group started the current financial year on
1 February 2022 with cash of £5.6m and debt of £2.4m, giving net funds
(before lease liabilities) of £3.2m.
The growth of the pipeline of new business opportunities, and accelerated win
rate in recent months, provides the Board with confidence that 1Spatial is on
a path of further profitable growth. The Board has concluded, after reviewing
the work performed and 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
2022 2021
£'000 £'000
Term licences 2,940 1,100
Support & maintenance - own 7,350 7,800
Support & maintenance - third party 1,890 1,700
Recurring revenue 12,180 10,600
Services 12,357 11,100
Perpetual licences - own 800 1,400
Perpetual licences - third party 1,690 1,500
Total revenue 27,027 24,600
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
2022 2021
£'000 £'000
UK 8,903 7,160
Europe 11,583 11,460
US 3,721 2,908
Rest of World 2,820 3,072
Total revenue 27,027 24,600
The Board assesses the performance of the Group based on a measure of adjusted
EBITDA. Adjusted EBITDA is a company-specific measure which is calculated as
operating 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 (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.
2022 2021
£'000 £'000
UK/Ireland 9,926 8,443
At a point in time 2,257 1,081
Over time 7,669 7,362
Europe 10,875 11,150
At a point in time 1,796 1,687
Over time 9,079 9,463
United States 3,721 2,908
At a point in time 1,286 987
Over time 2,435 1,921
Australia 2,505 2,099
At a point in time 1,040 742
Over time 1,465 1,357
27,027 24,600
As at 31 January 2022, costs to obtain and fulfil a contract of £169,000 were
included in other receivables (2021: £197,000). Amortisation of costs to
obtain and fulfil a contract for the year ended 31 January 2022 were £54,000
(2021: £109,000). 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.
2022 2021
£'000 £'000
UK/Ireland 6,800 6,772
Europe 7,645 8,741
United States 2,650 2,755
Rest of World 5 5
Total 17,100 18,273
4. Strategic, integration and other non-recurring items
There were no charges for strategic, integration and other non-recurring
items, in the year .The following charges were included in this category for
the prior year:
2022 2021
£'000 £'000
Costs associated with the acquisition and integration of Geomap-Imagis - 555
Net credits associated with the disposal of Enables IT - (63)
Total - 492
There was a cash impact in FY 2022 of £294,000 (2021: £173,000) relating to
the provision made in the prior year.
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 is to be issued in shares on 30 March
2023.
5. Income tax charge/(credit)
2022 2021
£'000 £'000
Current tax
UK corporation tax on income for year (172) (187)
Foreign 40 73
tax
Adjustments in respect of prior years (19) (268)
Total current tax credit (151) (382)
Deferred tax (note 13)
Origination and reversal in temporary differences 123 (111)
Effect of tax rate change on opening balance 71 11
Adjustments in respect of prior years - 174
Total deferred tax charge 194 74
Total tax charge/(credit) 43 (308)
Factors affecting the tax charge/(credit) for the year:
The differences between the standard rate of corporation tax in the UK and the
actual tax charge/(credit) are explained below:
2022 2021
£'000 £'000
Profit/(loss) on ordinary activities before tax 220 (1,433)
42 (272)
Profit/(loss) on ordinary activities before tax multiplied by the effective
rate of corporation tax in the UK of 19% (2021: 19%)
Effect of:
Expenses not deductible for tax purposes 55 22
Adjustment in respect of R&D tax credits (238) (191)
Effect of movement in deferred tax rate 71 27
Utilisation of losses not previously recognised for tax purposes (348) (170)
Deferred tax not recognised on losses carried forward 418 440
Adjustments in respect of prior years (19) (94)
Differences in tax rates applicable to overseas subsidiaries 37 (70)
Other differences 25 -
Total credit for year 43 (308)
The relevant deferred tax balances have been measured at 25% for the current
year-end, being the tax rate enacted by the reporting date (2021: 19%).
A change to the UK corporation tax rate was substantively enacted as part of
the Finance No. 2 Bill 2021 (on 24 May 2021) to increase the main rate of UK
corporation tax to 25% with effect from 1 April 2023. As such, the relevant
deferred tax balances for UK group companies have been measured at 25% for the
current year-end, being the tax rate enacted by the reporting date (2021: 19%)
for temporary differences expected to reverse after 1 April 2023.
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 2021 17,447 464 4,764 6,757 19,285 72 48,789
Additions - - - 26 2,423 - 2,449
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
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
Net book amount at 5,899 212 1,123 2,061 5,831 61 15,187
31 January 2021
The net book amount of development costs includes £6,402,000 (2021:
£5,831,000) internally generated capitalised software development costs that
meet the definition of an intangible asset. The amortisation charge of
£2,254,000 (2021: £2,806,000) is included in the administrative expenses in
the statement of comprehensive income.
The key assumptions used in the value in use calculations were the pre-tax
discounts rate applied (13%) and growth assumptions. Sales forecasts and their
corresponding costs for the Group in relation to the business applications for
the five-year period ending 31 January 2027 are forecast to increase by 9%
p.a. overall. No impairment is required as no individual asset has a higher
carrying value than its value in use.
Goodwill Brands Customers and Software Development Website costs Intellectual property Total
related contracts costs
£'000
£'000 £'000
£'000 £'000 £'000 £'000 £'000
Cost
At 1 February 2020 17,291 452 4,579 6,487 16,932 30 66 45,837
Additions - - - 75 2,039 - 6 2,120
Written-off - - - - - (30) (30)
Effect of foreign exchange 156 12 185 195 314 - - 862
At 31 January 2021 17,447 464 4,764 6,757 19,285 - 72 48,789
Accumulated impairment and amortisation
At 1 February 2020 11,363 204 3,113 4,185 11,374 30 8 30,277
Amortisation - 47 422 445 1,889 - 3 2,806
Written-off - - - - - (30) - (30)
Effect of foreign exchange 185 1 106 66 191 - - 549
At 31 January 2021 11,548 252 3,641 4,696 13,454 - 11 33,602
Net book amount at 5,899 212 1,123 2,061 5,831 - 61 15,187
31 January 2021
Impairment tests for goodwill
Goodwill is assessed for the Group as a whole as the Group operates with one
segment and one CGU. The Group moved from two CGUs to one in FY 2021 as the
Group manages its operations under one global strategy and the European
acquisition in 2019 is now fully integrated into the business. 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.
2022 2021
Goodwill Total Total
£'000 £'000
Opening carrying value 5,899 5,928
Effect of foreign exchange (35) (29)
Closing carrying value 5,864 5,899
Basis for calculation of recoverable amount
The Group has prepared, and formally approved, a five-year plan for its CGU
(based on a formal 2-year plan extended for three 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 (13%) and the growth assumptions. Growth in sales and
corresponding costs for the five-year period has been forecast at 9% and 7%
per annum respectively.
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 2023 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 reflect 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 18% on average for
the five year-period ending 31 January 2027) for the headroom to be removed.
7. Trade and other receivables
Current 2022 2021
£'000 £'000
Trade receivables 4,895 5,607
Less: provision for impairment of trade receivables (25) (80)
4,870 5,527
Other receivables 1,413 1,497
Prepayments and accrued income 5,988 3,866
12,271 10,890
Below is a reconciliation of the movement in accrued income:
2022 2021
£'000 £'000
At 1 February 2021 2,950 2,613
Accrued revenue invoiced in the year (2,950) (2,613)
Revenue accrued in the year 5,188 2,847
Foreign exchange difference (113) 103
At 31 January 2022 5,075 2,950
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 2022, trade receivables of £3,653,000 (2021: £3,541,000) 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 and inflation rates as the key macroeconomic
factors in the countries in which the Group operates.
At 31 January 2022, trade receivables of £1,242,000 (2021: £1,986,000) 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:
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 overdue 111 10.0% 11
4,895 25
2021 Weighted average loss rate Impairment loss allowance
£'000 £'000
Current 3,541 0.1% 4
Up to 3 months overdue 1,392 0.5% 7
3 to 6 months overdue 149 2.5% 4
6 to 12 months overdue 272 5.0% 14
> 12 months 253 20.0% 51
5,607 80
As of 31 January 2022, trade receivables of £25,000 were impaired (2021:
£80,000) and provided for.
The trade receivables above include performance retentions on long-term
contracts.
8. Cash and cash equivalents and notes to the consolidated statement of cash flows
2022 2021
£'000 £'000
Cash at bank and in hand 5,623 7,278
5,623 7,278
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 2022 2021
£'000 £'000
Profit/(loss) before tax 220 (1,433)
Adjustments for:
Finance income (14) (39)
Finance cost 209 226
Depreciation 1,187 1,308
Amortisation of acquired intangibles 561 917
Amortisation and impairment of development costs 1,693 1,889
Share-based payment charge 326 272
Net foreign exchange movement 1 (34)
Increase in trade and other receivables (1,784) (655)
Increase in trade and other payables 206 1,446
(Decrease)/increase in defined benefit pension obligation (108) 86
Cash generated from operations 2,497 3,983
2022 2021
£'000 £'000
Cash generated from operations before strategic, integration and other 2,791 4,156
non-recurring items
Cash flow on strategic, integration and other non-recurring items (294) (173)
Cash generated from operations 2,497 3,983
(b) Reconciliation of net cash flow to movement in net funds
2022 2021
£'000 £'000
(Decrease)/increase in cash in the year (1,585) 1,976
Changes resulting from cash flows (1,585) 1,976
Net cash inflow in respect of new borrowings - (1,800)
Net cash outflow in respect of borrowings repaid 423 146
Effect of foreign exchange 127 57
Change in net funds (1,035) 379
Net funds at beginning of year 4,266 3,887
Net funds at end of year 3,231 4,266
Analysis of net funds
Cash and cash equivalents classified as:
Current assets 5,623 7,278
Bank loans (2,392) (3,012)
Net funds at end of year 3,231 4,266
Net funds is defined as cash and cash equivalents net of bank loans.
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 2021 1,395 4,285 5,680
Borrowings at 1 February 2021 470 2,542 3,012
Repayment of borrowings (423) - (423)
Foreign exchange difference (47) (150) (197)
Borrowings before transfer - 2,392 2,392
Transfer from due after 1 year to due within 1 year 531 (531) -
Borrowings as at 31 January 2022 531 1,861 2,392
Lease liability at 1 February 2021 925 1,743 2,668
Cash movements:
Lease payments (1,088) - (1,088)
Non-cash movements:
Additions in the year 109 - 109
Interest cost 85 - 85
Foreign exchange difference (31) (19) (50)
Lease liability before transfer - 1,724 1,724
Transfer from due after one year to due within one year 748 (748) -
Lease liability as at 31 January 2022 748 976 1,724
Total debt (including lease liabilities) as at 31 January 2022 1,279 2,837 4,116
9. Bank borrowings
2022 2021
£'000 £'000
Current bank borrowings 531 470
Non-current bank borrowings 1,861 2,542
2,392 3,012
Bank borrowings relate to bank loans in 1Spatial France totalling €2.87m
(2021: €3.40m). Bank loan interest is charged on a fixed rate basis with
interest rates ranging between 0% and 3.1%, included the related guarantee
costs.
The loans are due for repayment over a five-year period to FY 2028, with a
broadly even repayment pattern with approximately €0.6m (£0.5m) due for
repayment in FY 2023. New borrowings in the year amounted to nil (2021:
£1.8m). There are no financial covenants attached to the loans, nor is there
any security applied. All loans are denominated in €.
10. Trade and other payables
Current
2022 2021
£'000 £'000
Trade payables 2,227 1,736
Other taxation and social security 2,924 3,496
Other payables 534 852
Accrued liabilities 1,987 1,464
Deferred income 5,612 5,870
13,284 13,418
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:
2022 2021
£'000 £'000
At 1 February 2021 5,870 4,918
Revenue recognised in the year (5,870) (4,918)
Revenue deferred at year end 5,636 5,719
Foreign exchange difference (24) 151
At 31 January 2022 5,612 5,870
11. Leases
Right of use assets £'000
At 1 February 2021 2,694
Additions 109
Depreciation (989)
Foreign exchange difference (67)
At 31 January 2022 1,747
2022 2021
£'000 £'000
Buildings 1,522 2,428
Cars 185 216
Others 40 50
1,747 2,694
Lease liabilities £'000
At 1 February 2021 2,668
Additions 109
Interest cost 85
Cash paid (1,088)
Foreign exchange difference (50)
At 31 January 2022 1,724
2022 2021
£'000 £'000
Current 748 925
Non-current 976 1,743
1,724 2,668
Amounts recognised in profit or loss:
Depreciation charge of right of use assets 2022 2021
£'000 £'000
Buildings 866 970
Cars 96 104
Others 27 32
989 1,106
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 were amended. As at 31
January 2022, a balance of €440,540 (£367,000) Consideration Shares
remained outstanding €0.4m to be satisfied mainly in cash (£340,000) in
September 2022, with the balance to be issued in shares on 30 March 2023 to a
market value of €31,839 (£27,000).
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 2020 (615) - 1,476 (182) 679
Deferred tax (credit)/charge for year in profit or loss 53 - (121) 142 74
DT charge/(credit) OCI - - - 5 5
Foreign exchange difference - - - 18 18
At 31 January 2021 (562) - 1,355 (17) 776
Deferred tax charge /(credit) for year in profit or loss 17 - 188 (11) 194
DT charge/(credit) OCI - - - (25) (25)
Foreign exchange difference - - - 25 25
At 31 January 2022 (545) - 1,543 (28) 970
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 £4,432,000 (2021: £4,018,000) in respect of losses amounting
to £17,930,000 (2021: £18,029,000) that can be carried forward against
future taxable income, on the grounds that at the balance sheet date their
utilisation is not considered probable.
The deferred tax balance is analysed as follows:
Deferred tax Deferred tax liability Total
asset £'000 £'000
£'000
Recoverable within 12 months - 301 301
Recoverable after 12 months - 1,242 1,242
Settled within 12 months (98) - (98)
Settled after 12 months (475) - (475)
(573) 1,543 970
14. Share capital, share premium account and own shares held
Allotted and fully paid 2022 2021
Number Number
Ordinary shares of 10p each 110,805,795 110,805,795
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 110,805,795 ordinary shares of 10p in issue, of which a
total of 319,635 ordinary shares are held in treasury. Therefore, the total
number of ordinary shares with voting rights is 110,486,160*.
* In addition, there are deferred consideration shares with an approximate
value of €0.03 million (€0.4m at 31 January 2021) due to be issued in
March 2023, in relation to the Geomap-Imagis acquisition. See note 4.
Number of shares Allotted, called up and fully paid shares Share Own shares held
£'000 premium £'000
account
£'000
At 31 January 2021 and at 31 January 2022 337,505,673 20,150 30,479 (303)
There was no movement in share capital in the year.
Own shares
The Group has 319,635 ordinary shares of 10p each and 3,500,000 deferred
shares with a nominal value of 4p each held in treasury. The consideration
paid was £0.3m.
15. Earnings/(loss) per ordinary share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss)
attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year.
2022 2021
£'000 £'000
Profit/(loss) attributable to equity shareholders of the Parent 177 (1,125)
2022 2021
Number Number
000s 000s
Ordinary shares with voting rights 110,486 110,486
Deferred consideration payable in shares 58 1,394
Basic weighted average number of ordinary shares 110,544 111,880
Impact of share options/LTIPS 4,008 -
Diluted weighted average number of ordinary shares 114,552 111,880
2022 2021
Pence Pence
Basic earnings/(loss) per share 0.2 (1.0)
Diluted earnings/(loss) per share 0.2 (1.0)
There is no material difference between basic earnings per share and diluted
earnings per share.
For the year ended 31 January 2021, basic loss per share and diluted loss per
share are the same because the options are anti-dilutive. Therefore, they have
been excluded from the calculation of diluted weighted average number of
ordinary shares.
16. 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.
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