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This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
24 April 2024
1Spatial plc
("1Spatial", the "Group" or the "Company")
Final results for the year ended 31 January 2024
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 2024.
· | Group revenue increased 8% to £32.3 million, resulting in an annual increase of 15% in gross profit. |
· | Recurring revenue accounts for 56% of total revenues (FY 2023: 49%) driven by year-on year term licence revenue growth of 60% |
· | We launched our SaaS businesses in the period with £0.2 million of revenue generated from initial trials |
· | Annualised recurring revenue ('ARR') increased by 9% to £17.2 million |
· | Operating profit grew to approximately £1.4 million (FY 2023: £1.3 million) despite the increases in inflationary costs |
Financial highlights
| 31 January 2024 £m | 31 January 2023 £m | Change
% |
Group revenue | 32.3 | 30.0 | 8 |
Recurring revenue | 18.1 | 14.8 | 22 |
Term licences revenue | 8.3 | 5.2 | 60 |
SaaS solutions revenue | 0.2 | - | 100 |
Group total ARR* | 17.2 | 15.8 | 9 |
Term licences ARR | 7.7 | 5.6 | 38 |
|
| | |
Group gross profit | 17.9 | 15.5 | 15 |
Adjusted EBITDA** | 5.5 | 5.0 | 10 |
Adjusted EBITDA margin (%) | 17.0 | 16.7 | 0.3 |
Operating profit | 1.4 | 1.3 | 8 |
Profit before tax | 1.1 | 1.0 | 10 |
Earnings per share - basic (p) | 1.1 | 1.0 | 10 |
Earnings per share - diluted (p) | 1.0 | 0.9 | 11 |
Net cash*** | 1.1 | 3.1 | (65) |
* Annualised recurring revenue ('ARR') is the annualised value at the year-end of committed recurring contracts for term licences and support and maintenance.
** Adjusted EBITDA is a company-specific measure which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items.
*** Net cash is gross cash less bank borrowings.
Operational highlights
· | Our Enterprise business secured multi-year contracts across all of our key geographies, demonstrating the quality of our products and the strength of our customer relationships. | |
| o | The UK increased its footprint across the utilities sector, secured multi-year contract renewals with key customers and developed the collaboration with UK government agencies and strategic partners |
| o | The US continues to represent a significant opportunity for the Group. We now partner with 18 US states, following the addition of the State of Oregon in the year, and continue to develop expansion opportunities with existing customers |
| o | Europe has completed its transition from declining legacy software, winning considerable contracts at the end of the year, positioning the region for growth in FY 2025 |
· | Continued R&D investment in innovative solutions - launching two high-margin SaaS solutions, NG-9-1-1 and 1Streetworks, both targeting sizeable niche markets | |
· | 1Streetworks contract secured in February 2024 with UK Power Networks, with the opportunity to expand | |
· | Five NG-9-1-1 SaaS contracts secured |
Outlook
· | There has been a solid start to trading in the current financial year with a growing sales pipeline and two significant framework agreements secured, with the State of Texas and UK Cabinet Office |
· | Anticipate growing contribution in FY 2025 and beyond from 1Streetworks and NG-9-1-1 SaaS sales, which represent a significant avenue for margin growth and cash generation |
· | Measured additional investment in FY 2025 in US Enterprise and 1Streetworks sales teams, where we see considerable opportunity, based on our proven offerings and established customer relationships |
· | While cognisant of inflationary cost pressures, the Board remains confident in delivering further progress in FY 2025 with a further growth step up in FY 2026 as the Company benefits from the current ongoing investment |
Commenting on the update, 1Spatial CEO, Claire Milverton, said:
"The Group's financial performance this Year demonstrates the successful progress we are making towards transitioning to a high margin, recurring software licence business. Our strategic investments in product development across both the Enterprise and SaaS divisions are yielding positive results and unlocking new markets, providing excitement for the future. We will continue to invest in our US Enterprise and 1Streetworks sales teams to capture what we believe to be a considerable long-term growth opportunity.
We have had a solid start to trading in the new financial year. With a growing sales pipeline and increased levels of recurring revenue, the Board is confident in delivering further progress in FY 2025."
For further information, please contact:
1Spatial plc | 01223 420 414 |
Claire Milverton / Stuart Ritchie
| |
Liberum (Nomad and Broker) | 020 3100 2000 |
Max Jones / Edward Mansfield / Anake Singh
| |
Alma Strategic | 020 3405 0205 |
Caroline Forde / Hannah Campbell | 1spatial@almastrategic.co.uk |
1Spatial plc's LEI Number is: 213800VG7OZYQES6PN67
About 1Spatial plc
1Spatial plc is a global leader in providing Location Master Data Management ('LMDM') software and solutions, primarily to the Government, Utilities and Transport sectors. Our global clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments.
Today - as location data from smartphones, the Internet of Things and great lakes of commercial Big Data increasingly drive commercial decision-making - our technology drives efficiency and provides organisations with confidence in the data they use.
We unlock the value of location data by bringing together our people, innovative solutions, industry knowledge and our extensive customer base. We are striving to make the world more sustainable, safer and smarter for the future. We believe the answers to achieving these goals are held in data. Our 1Spatial Location Master Data Management (LMDM) platform incorporating our 1Integrate rules engine delivers powerful data solutions and focused business applications on-premise, on-mobile and in the cloud. This ensures data is current, complete, and consistent through the use of automated processes and always based on the highest quality information available.
1Spatial plc is AIM-listed, headquartered in Cambridge, UK, with operations in the UK, Ireland, USA, France, Belgium, Tunisia and Australia.
For more information visit www.1spatial.com
Chairman's Statement
1Spatial has maintained its growth trajectory in FY 2024, successfully continuing its transition to a business that has productised its valuable IP and data expertise into scalable software solutions, including SaaS and recurring revenues.
Our Enterprise business, which supports some of the world's largest organisations and government led initiatives in their major digital transformation initiatives, secured multi-year contracts in the year across all of our key geographies, clearly demonstrating the quality of our products and the strength of our customer relationships.
Through leveraging the revenue generated from the success of the Enterprise business, the Group has developed a scalable cloud platform and launched two high-margin SaaS solutions, NG-9-1-1 and 1Streetworks, both targeting sizeable niche markets, which has set the business up for accelerated future growth over the medium term.
It is evident that the reorganisation of the Group that has taken place over the last few years has now resulted in a business with the ability to grow across all markets. The UK continues to win and deliver on significant contracts for the UK government such as the National Underground Asset Register ("NUAR"). The US continues to represent a significant opportunity for the Group, building on the successes to date with the likes of Google and CalTrans, and we now have 18 US states as customers and a reinvigorated sales team into which we will continue to invest in FY 2025. Europe has completed its transition from declining legacy software and starting to move into growth, and Australia has likewise delivered an increasing level of proprietary software deals in the year.
The churn in our customer base is low, demonstrating the value our customers place not only on our offerings but also the support they receive from our knowledgeable team.
ESG and people
ESG is at the centre of 1Spatial's business; our products offer more sustainable, safer and smarter solutions. We revised our ESG strategy in 2023 and undertook a detailed carbon assessment, results of which are included in the ESG report. With the move back towards normal business travel, including general commuting and customer and supplier meetings, there has been an increase in carbon usage since last year, but we have a clear list of actions to reduce this to Net Zero by 2050.
As we position ourselves to scale, it is crucial we have the right people in place to execute our strategic priorities, and continuing to invest in our sales and marketing team is a key focus for the year ahead.
Summary and outlook
FY 2024 represented the tipping point in the business with recurring revenues now representing the majority of the business; alongside the successful commercial launch of two new SaaS products which each represent substantial opportunities. We have entered the new year with good momentum, as evidenced by the execution of the UKPN 1Streetworks contract and further Enterprise wins, and I am confident in our ability to deliver sustained growth and create long-term value for our shareholders.
Andy Roberts
Non-Executive Chairman
CEO Review
1Spatial's FY 2024 performance is testament to the Group's dedication to growth and innovation as we continue in our steady transition from a predominantly services led business towards higher margin, recurring software licences. Our strategic investments in product development and business expansion have yielded positive results, delivering revenue growth of 8% to £32.3m, with approximately 56% (FY2023: 49%) represented by recurring revenue. Within recurring revenues, software term licence revenue has increased by 60% to £8.3m (FY 2023: £5.2m) with double digit growth across the UK, US and Australia.
Building upon the strong foundation of our Enterprise business, we successfully introduced two high-margin SaaS solutions to the market in the year, which are already unlocking new markets, and we remain committed to developing our product portfolio to capture new opportunities and drive sustained growth.
The growing demand for up-to-date trusted location data presents extensive opportunities for 1Spatial. The global geospatial analytics market size is projected to grow from $79 billion in 2023 to $207 billion by 2030, at a CAGR of 14.7%. The significant growth of the market is mostly attributed to the increasing use of advanced technologies, such as AI, expert systems, machine learning and widespread adoption of 5G technology. All of these new advanced technologies depend on one thing - trusted, accurate and up to date data and that is what we enable at 1Spatial.
Our strategic positioning at the forefront of this transformation enables us to capitalise on emerging growth areas, as demonstrated by the recent UKPN 1Streetworks contract and NG-9-1-1 initiatives in the US.
I am extremely proud of the team's performance in FY 2024 which is enabling the successful transition to a business model centred around scalable software solutions. Looking forward we have scoped the market opportunity, the route to market and have the technology developed. Our focus is now on execution with investment in the near term to drive sales and secure the substantial opportunity ahead of us.
Successful launch and sales of SaaS solutions: 1Streetworks and NG-9-1-1
The expansion of the 1Spatial Cloud platform includes the launch of our multi-tenancy SaaS based solutions - 1Streetworks (formerly Traffic Management Plan Automation) and NG-9-1-1. These applications considerably increase our addressable market and provide the potential for significant expansion of high margin software revenue.
We believe the potential addressable markets for 1Streetworks and NG-9-1-1 are £400 million and $350 million respectively.
SaaS revenues generated in FY 2024 amounted to £0.2 million from initial trials with growth from both solutions anticipated in FY 2025 and beyond.
1Streetworks
1Streetworks automates the production of traffic management plans, diversion routing and asset inventory lists in the UK, producing a comprehensive, site-specific traffic management plan in just a few minutes. The solution is highly scalable, with high gross margins and an already enthusiastic reception from our target customers.
Currently, utility companies and contractors face the arduous task of designing compliant traffic management plans to secure permits for road works, navigating complex legal regulations outlined in the red book codes of practice. Traditional processes leave room for human error, inviting potential fines for non-compliance. 1Streetworks, powered by our patented rules engine 1Integrate, encodes the red book guidelines and is the first solution in the market to fully automate the production of traffic management plans, significantly shortening the time, effort and cost it takes to produce plans that are both consistent and compliant.
With the utilities sector being a primary target vertical for this product, we were delighted to report that, following successful completion of a trial, UK Power Networks signed an initial 12-month contract to use our 1Streetworks software to revolutionise streetworks planning, in January 2024. The contract will deliver a minimum of £0.34m of SaaS revenue with the potential for considerable expansion. UK Power Networks has 190,000km of cables and delivers thousands of streetworks every year across London, the South-East and East of England, to maintain safe and reliable power supplies to 19 million people.
We are now investing in the expansion of the 1Streetworks sales and marketing teams which will have incremental cost implications in FY 2025, with the benefits flowing through in FY 2026 and beyond. We have initiated a three-year plan based around expanding our service further into Tier 1 contractors, traffic management companies, local authorities and the transportation sector, in addition to utilities.
We also currently have four ongoing trials, with an additional ten expected to commence in the first half of the year. We anticipate that each 1Streetworks deal could potentially secure Annual Recurring Revenue ('ARR') ranging from £100k to £3 million depending on the sector and size of the end customer.
We have set ambitious revenue targets for 1Streetworks, including reaching £40 million in annual recurring SaaS revenues in the next five years, with the operational leverage of the platform delivering EBITDA margins far above the Group average.
NG-9-1-1
Our Public Safety NG-9-1-1 solution combines a powerful rules engine and data aggregator with a self-service cloud platform to support public safety entities with their data readiness needs. The launch of our cloud platform means we can now offer a "light version" of our NG-9-1-1 solution aimed at the counties and cities within each US state, significantly increasing our addressable opportunity. We secured five contract wins for this solution in the year and have further trials underway. The adoption of the product demonstrates the value offered to the customer and provides the Group with an opportunity to scale up into a significant market opportunity.
In the second half of the year, following customer feedback, the team worked on advancing our offering with an Esri integration, aimed at promoting the product's use across the Esri user base. We are now exploring a go-to-market strategy involving partner collaboration to complement our direct sales approach and accelerate growth across the US. This will provide wider market coverage of this key market.
With the potential addressable market of approximately $350 million ARR for our NG-9-1-1 SaaS solution, our refined sales approach has been designed to enable us to capitalise on this significant opportunity.
Innovation
As well as the launch of our first two SaaS solutions, we continue to innovate, augmenting the capabilities of our existing offerings and developing new products in response to needs of our customers. In H1 FY 2024, we developed additional rules-based cleansing applications leveraging the power of our 1Integrate rules engine to automate data ingestion for use on projects such as the National Underground Asset Register.
We continue to focus on extending our cloud capability. Core components that underpin our SaaS solutions and 1Integrate product have been enhanced to make even the most complex data supply chains even easier to manage, notably:
· | 1Integrate went through its next major release - v4.0. This introduced a brand-new user interface, expertly reworked for a smooth user experience and huge productivity gains. Building the rules that define the specific data processing tasks has never been faster. Its support for data and models was also extended to work with models like IFC, the Esri Utility Network Model and CAD, so we can offer more services and support to our Utilities, Government and Transport customers, as well as commercial customers like Google.
|
· | 1Data Gateway also went through similar UI and API improvements allowing us to improve the speed, consistency, and quality of how we release and deploy our world-class SaaS rules-based solutions (defined in 1Integrate) to our customers. How we repeatedly promote SaaS solutions through different environments has never been easier.
|
To further extend our reach of 1Data Gateway into the Esri customer base, we also launched 1Data Gateway for ArcGIS Pro, a revolutionary Data Quality add-in for Esri ArcGIS Pro (Esri's flagship desktop GIS). There is existing Esri integration with 1Data Gateway (e.g. with ArcGIS Dashboards) and 1Integrate (e.g. ArcGIS Feature Services). Now we have extended the integration further for Esri users who use ArcGIS Pro on the desktop.
Enterprise business expansion
The "Land and Expand" strategy is continuing to deliver organic growth, and alongside our 1Streetworks and NG-9-1-1 offerings, we believe the opportunity for 1Spatial has never been greater.
UK
In addition to the transformational opportunity presented by 1Streetworks in the UK, we also made good progress across our Enterprise business in the year.
We secured our first contract with Yorkshire Water Services for £650K. The contract was to replace the company's GIS platform technology and our team was selected to undertake the transformation project using Esri technology due to the significant experience we have in the sector.
We strengthened our relationship with Ordnance Survey Great Britain through a two-year contract renewal, worth approximately £1.5 million, and will see 1Spatial's specialist team provide software and support services to Ordnance Survey's Data Management System. We also secured a further software and services contract with existing customer Land and Property Services in conjunction with our partner Version1. Land and Property Services ('LPS') is a division within the Department of Finance ('DoF') in Northern Ireland who collect, process and manage land and property information.
In November 2023, the government announced that NUAR ('National Underground Asset Register') was made available across England and Wales and that MVP coverage will be expanded to Northern Ireland by spring 2024 with the platform becoming fully operational across the three nations by the end of 2025. NUAR is a digital map of underground pipes and cables expected to provide £5 billion of economic growth to England, Wales and Northern Ireland. We are extremely proud to have been an integral part of this successful project. It demonstrates our world leading geospatial capabilities and our ability to deliver on complex projects at scale. Our 1Spatial platform is responsible for transforming, validating, and maintaining the data from all contributing asset owners, demonstrating our world leading technology and skilled team.
In early FY 2025, we were selected by our long-standing partner CGI for inclusion in the Cabinet Office Strategic Delivery Partner ecosystem. Alongside CGI, we will be working with the Cabinet Office over a five-year period to deliver a range of digital, data and technology services and products in support of Cabinet Office Business Units.
US
During the year, the US continued to contribute to the Group's recurring revenue growth with a 23% increase compared to the prior year.
We secured our first contract with the State of Oregon using our 1Integrate and 1DataGateway products - the initial contract value is $0.4 million over two years with several future expansion opportunities. The Group now has 18 US States as customers, each with significant expansion potential.
We secured our second contract with the California Department of Transportation (Caltrans), in partnership with Rizing for $0.4 million ARR demonstrating our ability to execute on the opportunity. As the second contract with Caltrans, secured alongside Rizing, we are realising the strength of the long-standing partnership and demand for 1Spatial's unique technology.
We also expanded our existing contracts with Federal Highways and Google REWS during the year.
The Group also signed its first framework agreement with the state of Texas post-period end for our Software, Commercial Off-the-Shelf (COTS) and Related Services, through the Department of Information Resources (DIR). The DIR delivers technology solutions to state and local government entities within Texas to ensure the technology is secure, cost-effective and forward looking and this contract will enable all departments to procure 1Spatial's software and services without going to formal tender.
Europe
Our focus in Europe in FY 2024 has been to generate awareness for our new applications and to build a strong pipeline for future years, as demonstrated by the multi-year contract we secure with a leading Distribution System Operator for electricity and gas networks in Belgium, in January 2024. The contract is for geospatial data processing services using 1Spatial's 1Integrate product as well as the Group's geospatial data production services.
Also in Belgium, we secured an initial four-year contract with Société Walloon Des Eaux using our 1Water application. In France, we secured a three-year contract extension with a major European utility customer for 1Spatial's GIS Framework and 1Integrate products, extending the term from one year to three years.
In Germany, we secured a four-year contract with ATKIS-1Gen, a working group of ADV (Arbeitsgemeinschaft der Vermessungsverwaltungen der Laender) that coordinates surveying and mapping in Germany, focused on the development of a cloud-based generalisation product that will replace on-premise technology.
Australia
The Group secured its first 1Integrate licence contract in Australia winning Hunter Water, a state-owned corporation providing drinking water, wastewater, recycled water and storm water services to 500,000 people in the Lower Hunter Region in New South Wales. The contract is initially for six months carrying a value totalling AUS$200K with the possibility to extend.
Smart partnerships
Partnerships play a critical role in enabling us to secure new customers. During the year we continued to win work and deliver solutions alongside our trusted partners including Esri, CGI, Atkins Realis, Rizing, Qinetiq and Ordnance Survey.
The strengthening of our long-term partnership with Esri was of particular importance during the year, in terms of technology and providing enhanced go to market strategies across our SaaS offerings including NG-9-1-1. Esri is the global market leader in GIS with a network of over 2,700 partners around the world.
The past year's progress exemplifies our effective establishment of a partnership strategy with Esri on a global scale. Moving forward, our primary objectives include further identifying and nurturing relationships with major multinational corporations, particularly those where location data management is integral to broader customer bids.
ESG and People
We continue to make good progress with the development of our ESG strategy. In March 2022, we kicked off a stakeholder materiality assessment to determine the priority areas. We consulted with more than 150 customers, employees, Board members and senior management, shareholders, partners and suppliers to understand what areas are considered as most important for our stakeholders. We continue to develop these objectives through industry benchmarking, peer review and business consultations. Reporting on the key focus areas is included in the ESG section of this FY 2024 Annual Report.
During the first half of FY 2024, we started rolling out ISO27001 to all Group entities. Our UK operations were successfully accredited in March 2024 with further accreditations for other Group entities anticipated in FY 2025. As advised in the previous year, we have included additional carbon reporting across all Group entities in our ESG report and plan to increase the level of reporting in the FY 2025 Annual Report to demonstrate the progress that we have made.
Our people are critical to the success of the Group. We continue to invest in our people, providing them with the tools and training to support them and allow them to realise their potential. We actively encourage our people to pursue activities that help them in their day-to-day work life and offer a professional development allowance for them to use as they see fit. We firmly believe that investing in and empowering our people fosters loyalty, team spirit and engenders trust which are all to the benefit both the Group and its people. We support our people in their charitable activities and organise team and Company-wide events to recognise important milestones throughout the year such as mental health awareness.
Current trading and outlook
We had a good year with our Enterprise business, gaining more customers and sales worldwide and growing recurring revenue, setting us up for long-term success. With its patented rules engine, the Enterprise business has created the operating cash to fund the powerful SaaS solutions that target niche markets and have the potential to transform 1Spatial's financial profile.
In FY 2025, a key focus is to prioritise securing sales of our SaaS applications, recognising their transformative potential for driving growth. We will maintain consistent levels of product investment to ensure that our industry-leading cloud platform continues to deliver the best possible customer experience and product performance. Additionally, we will continue to invest in sales and marketing teams for 1Streetworks and develop an innovative partner-enabled approach for NG-9-1-1, aimed at accelerating our growth trajectory.
A second key focus is the enterprise opportunity in the US, where we see a considerable expansion opportunity, based on the strength of our offerings and existing customer relationships. We are therefore investing in further enterprise sales resource to enable a greater focus on achieving our ambitions of $1 million revenue per state.
The growth of the sales team to execute on the 1Streetworks and US opportunities will lead to a limited amount of incremental investment in the short term. We are confident that given our inherent scalable platform that attractive returns from this extra investment will start to be seen in FY 2026.
We have seen a solid start to trading in the new financial year, including the securing of two new framework agreements with the State of Texas and the UK Cabinet Office through our partner CGI. A growing sales pipeline, increased levels of recurring revenue and a good level of committed services revenue provide the Board with confidence in the Group's prospects.
Claire Milverton
Chief Executive Officer
CFO review
Delivering double-digit growth in recurring revenues and adjusted EBITDA
In FY 2024 the Group delivered solid growth in annual revenues with double digit growth in both recurring revenues and adjusted EBITDA. In spite of inflationary cost increases, we recorded an 8% increase in operating profit and a 10% increase in profit before tax. Increases in these key financial metrics have allowed the Group to continue to invest resources into our SaaS businesses and cloud platform.
Revenue
Group revenue increased by 8% to £32.3 million from £30.0 million in FY 2023.
Recurring revenue
The business strategy is to grow revenue from repeatable business solutions on long-term contracts by increasing sales of term licences (rather than one-off perpetual licences) and increasing the proportion of recurring revenue compared to services. As a result, excluding the impact of the reduction in perpetual licence revenue, the business achieved a year-on-year growth in total revenue of 9%. Recurring revenue, as a percentage of total revenue, increased to 56% (FY 2023: 49%).
Revenue by type |
| | |
| FY 2024 £m | FY 2023 £m | % change |
Recurring revenue | 18.11 | 14.76 | 23% |
Services | 12.93 | 13.60 | (5%) |
Revenue (excluding perpetual licences) | 31.04 | 28.36 | 9% |
Perpetual licences | 1.27 | 1.64 | (23%) |
Total revenue | 32.31 | 30.00 | 8% |
Percentage of recurring revenue | 56% | 49% | |
Annualised Recurring Revenue
The Annualised Recurring Revenue ('ARR') increased by 9% from £15.8 million to £17.2 million as at 31 January 2024 with ARR attributable to term licences growing by £2.1 million. The overall renewal rate for existing customers under contract decreased marginally to 93% (FY 2023: 94%) which still provides a strong platform for the current year.
ARR by region |
| | |
| FY 2024 £m | FY 2023 £m | % growth |
UK/Ireland | 7.24 | 6.51 | 11% |
Europe | 5.63 | 5.49 | 3% |
US | 2.54 | 2.22 | 14% |
Australia | 1.80 | 1.56 | 15% |
Total ARR | 17.21 | 15.78 | 9% |
Committed revenue
The level of committed services revenue, which has reduced since the start of the year as services revenue on the major projects we won last year is recognised, nevertheless remains high at approximately £10 million and provides strong revenue visibility, underpinning the Group's strong financial footing.
The combination of growing ARR, committed services revenue backlog and a strong pipeline of prospects means that the business is on track to make further progress on its revenue growth plan. With the business focus on developing and selling repeatable software solutions, there is an increased level of revenue visibility, which allows the Board to continue to invest with confidence.
Regional revenue
Regional revenue - point of origin |
| | |
| FY 2024 £m
| FY 2023 £m
| % change
|
UK/Ireland | 13.25 | 11.92 | 11% |
Europe | 11.03 | 11.01 | 0% |
US | 4.71 | 4.30 | 10% |
Australia | 3.32 | 2.77 | 20% |
Total revenue | 32.31 | 30.00 | 8% |
All operating regions recorded double-digit growth with the exception of Europe resulting in overall revenue growth of 8%. Revenue growth in the UK/Ireland and the US was driven by significant in year term licence sales to new and existing customers. In Australia, despite competitive pricing pressure, revenue grew by 20% and included our first 1Integrate licence sale in the territory. In Europe, revenue was impacted by the timing of closing contracts towards the end of the year. Although revenue was flat, the European operation successfully signed two significant multi-year contracts during FY 2024 with expected revenues of approximately €7.1 million to be recognised over the life of the contract. These wins give clear visibility of revenue into FY 2025 and beyond. Going forward, all regions will continue to focus on increasing term licence sales of proprietary technology and SaaS solutions.
Gross profit margin
The gross margin grew by 15% in value terms and by 3% compared to the prior year to a level of 55%. The Board approved expenditure increases in sales and delivery capacity in order to secure higher value contracts; and increased spending on R&D, which is included within the cost of sales, is expected to yield higher gross margins in future years. The in-year cost increases have been more than offset by increases in levels of recurring revenue which have had a positive impact on gross profit. Going forward, the management team will continue to focus on driving improvements to gross margin through revenue growth of higher margin term licences and SaaS solutions.
Adjusted EBITDA
The adjusted EBITDA increased by 10% to £5.5 million from £5.0 million in the prior year resulting in an increase in adjusted EBITDA margin to 17.0% (FY 2023: 16.7%). Inflationary cost increases have been more than offset by increases in levels of recurring revenue. Cost management remains an important focus and expenses are constantly reviewed to ensure the level is appropriate for the structure of the business during this growth phase.
Strategic, integration and other non-recurring items
Costs amounting to £0.7 million relate primarily to the restructuring of the European business during the year, which is expected to result in approximately £1 million of cash savings on an annualised basis.
Operating profit and profit before tax
The Group achieved an operating profit of £1.4 million (FY 2023: £1.3 million) and profit before tax of £1.1 million (FY 2023: £1.0 million), representing a further year of improved profitability for the Group at an operating and profit before tax level. The increase in gross profit was largely offset by increased headcount costs, amortisation charges, strategic items, interest charges and adverse FX movements resulting in a profit before tax figure consistent with the prior year.
Taxation
The net tax credit for the period was £123k (FY 2023: £14k).
Balance sheet
The Group's net assets increased to £18.3 million at 31 January 2024 (2023: £17.4 million), mainly due to the overall profit after tax adjusted for currency differences in reserves.
Trade and other receivables decreased in the year to £12.8 million (FY 2023: £14.2 million), mainly due to increased levels of receivable collections around year end. Trade and other payables decreased in the year to £14.0 million (FY 2023: £15.8 million) due primarily to the timing of payments around year end.
Cash flow
Operating cash inflow before strategic, integration and other non-recurring items was slightly lower than the prior year at £5.3 million due to adverse working capital movements resulting from the timing of payments around year-end with receipts of £0.7m immediately post year end. As a result, free cash flow declined by approximately £2.0m due to:
· £1.4m increased investment in R&D as the Group focusses on transition to enterprise / SaaS
· £0.6m increase in strategic, integration and other non-recurring items from European restructuring which is one off and will realise annualised savings of €1m
· £0.1m increased interest costs from RCF drawn down used to fund R&D and restructuring costs
The level of R&D spend for FY 2024 is expected to decrease in FY 2025 by approximately £0.5m with further reductions expected in future years as we continue to rationalise our product portfolio.
Operating cash flow |
| FY 2024 | FY 2023 |
| | £'000 | £'000 |
Cash generated from operations | | 4,618 | 5,352 |
Add back: Cash flow on strategic, integration and other non-recurring items | | 667 | 48 |
Cash generated from operations before strategic, integration and other non-recurring items | | 5,285 | 5,400 |
Free cash flow |
| FY 2023 | FY 2022 |
| | £'000 | £'000 |
Cash generated from operations before strategic, integration and other non-recurring items | | 5,285 | 5,400 |
Expenditure on product development and intellectual property capitalised | | (5,295) | (3,854) |
Lease payments | | (948) | (1,099) |
Net interest paid | | (355) | (210) |
Net tax received | | 140 | 179 |
Purchase of property, plant and equipment | | (67) | (163) |
Free cash flow before strategic, integration and other non-recurring items | | (1,240) | 253 |
Cash flow on strategic, integration and other non-recurring items | | (667) | (48) |
Free cash flow (outflow) | | (1,907) | 205 |
Investment in R&D
Development costs capitalised in the year increased to £5.3 million (FY 2023 £3.9 million) as the business has increased its investment in its technology and business solutions. The key areas where spending increased were on the cloud platform for solutions such as 1Streetworks in the UK and NG-9-1-1 in the US, and other technology such as 1Integrate, 1Data Gateway, 1Telecomms and 1Water. Amortisation of development costs was £2.0 million (FY 2023 £1.6 million).
Financing
The Group's financial position is supported by long-term bank loans, specifically a committed Revolving Credit Facility in the UK by 1Spatial plc ("RCF") and bank loans taken out by 1Spatial France during the COVID-19 pandemic ("French bank loans"). The RCF was put in place in June 2022 in response to an increase in the number of higher value sales contracts that the Group was entering into. The RCF is a £3 million 3-year committed facility priced on competitive terms. The French bank loans were taken out in 2020 in response to the COVID-19 pandemic and will be repaid over the next 3 years.
At the end of January 2024, the remaining principal balance outstanding on the Group's loans was £3.2 million (FY 2023: £2.0 million), with £1.9 million relating to the RCF and £1.3 million relating to the French bank loans. The amount repayable in FY 2025 is approximately €0.7 million (FY 2023: €0.7 million). In year investments made in the sales and product development functions continue to lay a strong foundation for future performance. Combined with the European restructuring and focus on a more discrete product portfolio, we have the resources to continue to grow. With a gross cash position of £4.3 million at 31 January 2024 (FY 2023: £5.0 million), undrawn liquidity on the committed RCF of £1.1 million, a growing adjusted EBITDA and positive operating cash generation, the business is in a healthy financial position, which gives the Board the confidence to continue to invest.
Alternative Performance Measures
Throughout this Annual Report, certain analyses include Alternative Performance Measures ('APMs') which are not defined by generally accepted accounting principles ('GAAP') as defined under UK-adopted international accounting standards or other generally accepted accounting principles. We believe this information, along with comparable GAAP measurements, is useful to investors because it provides a basis for measuring our operating performance. Our management and Board of Directors uses these financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Wherever appropriate and practical, we provide reconciliation to relevant GAAP measures.
APMs have been provided for the following reasons:
· | to present users of the Annual Report with a clear view of what we consider to be the results of our underlying operations, aiding the understanding of management analysis and enabling consistent comparisons over time |
· | to provide additional information to users of the Annual Report about our financial performance or financial position |
The following APMs appear in this annual report.
# | APM | Explanation of APM |
1 | Recurring revenue (s)
| Recurring revenue is the value of committed recurring contracts for term licences and support & maintenance recorded in the year. |
2 | Annualised recurring revenue ('ARR') | Annualised recurring revenue ('ARR') is the annualised value at the year-end of committed recurring contracts for term licences and support and maintenance. |
3 | Adjusted EBITDA
| Adjusted EBITDA is a company-specific measure which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items. |
4 | Operating cashflow
| Operating cashflow is a company-specific measure which is calculated as cash generated from operations excluding cash flow on strategic, integration and other non-recurring items. |
5 | Free cashflow
| Free cash flow is cash from operations after deducting cash outflows for interest, capital expenditure and lease payments. |
6 | Net cash | Net cash is gross cash less bank borrowings. |
7 | Available Liquidity | Available liquidity is the Group's gross cash balances less the undrawn element of the Group's revolving credit facility. Details of the revolving credit facility is more fully described in Note 1.1 to the consolidated financial statements. |
Stuart Ritchie
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 January 2024
|
Note | 2024 £'000 | 2023 £'000 |
| | | |
Revenue | 3 | 32,315 | 30,002 |
Cost of sales | | (14,389) | (14,504) |
Gross profit | | 17,926 | 15,498 |
Administrative expenses | | (16,514) | (14,244) |
| | 1,412 | 1,254 |
Adjusted EBITDA |
| 5,479 | 4,997 |
Less: depreciation | | (180) | (253) |
Less: depreciation on right of use asset | 11 | (787) | (1,056) |
Less: amortisation and impairment of intangible assets | 6 | (2,440) | (2,048) |
Less: share-based payment credit/(charge) | | 33 | (192) |
Less: strategic, integration and other non-recurring items | 4 | (693) | (194) |
Operating profit |
| 1,412 | 1,254 |
| | | |
Finance income | | 52 | 19 |
Finance costs | | (407) | (229) |
Net finance cost | | (355) | (210) |
| | | |
| | | |
Profit before tax | | 1,057 | 1,044 |
| | | |
Income tax credit | 5 | 123 | 14 |
| | | |
Profit for the year | | 1,180 | 1,058 |
| | | |
| | | |
Profit for the year attributable to: | | | |
Equity shareholders of the Parent | | 1,180 | 1,058 |
|
| 1,180 | 1,058 |
| | | |
Other comprehensive income | | | |
Items that may subsequently be reclassified to profit or loss: | |
|
|
Actuarial (loss)/gains arising on defined benefit pension, net of tax | | (43) | 162 |
Exchange differences arising on translation of net assets of foreign operations | | (196) | 415 |
Other comprehensive (loss)/income for the year, net of tax | | (239) | 577 |
Total comprehensive gain for the year | | 941 | 1,635 |
Total comprehensive gain attributable to the | | | |
equity shareholders of the Parent | | 941 | 1,635 |
| |
|
|
|
Note | 2024 £'000 | 2023 £'000 |
Earnings per Ordinary Share attributable to the owners of the Parent during the year (expressed in pence per Ordinary Share): | | | |
| | | |
Basic earnings per share | 15 | 1.1 | 1.0 |
Diluted earnings per share | 15 | 1.0 | 0.9 |
| | | |
|
Registered company number (England): 5429800
Consolidated statement of financial position
As at 31 January 2024
|
Note | 2024 £'000 | 2023 £'000 |
Assets | | | |
Non-current assets | | | |
Intangible assets including goodwill | 6 | 19,951 | 17,408 |
Property, plant and equipment | | 192 | 302 |
Right of use assets | 11 | 1,306 | 1,609 |
Restricted cash | | 75 | - |
Total non-current assets | | 21,524 | 19,319 |
| | | |
Current assets | | | |
Trade and other receivables | 7 | 12,770 | 14,151 |
Current income tax receivable | | - | 35 |
Cash and cash equivalents | 8 | 4,260 | 5,036 |
Total current assets | | 17,030 | 19,222 |
Total assets | | 38,554 | 38,541 |
| | | |
Liabilities | | | |
Current liabilities | | | |
Bank borrowings | 9 | (647) | (660) |
Trade and other payables | 10 | (14,004) | (15,797) |
Current income tax payable | | (99) | - |
Lease liabilities | 11 | (584) | (608) |
Deferred consideration | 12 | - | (28) |
Total current liabilities | | (15,334) | (17,093) |
| | | |
Non-current liabilities | | | |
Bank borrowings | 9 | (2,534) | (1,322) |
Lease liabilities | 11 | (820) | (1,077) |
Defined benefit pension obligation | | (1,222) | (1,154) |
Deferred tax | 13 | (337) | (544) |
Total non-current liabilities | | (4,913) | (4,097) |
Total liabilities | | (20,247) | (21,190) |
Net assets | | 18,307 | 17,351 |
| | | |
Share capital and reserves | | | |
Share capital | 14 | 20,155 | 20,155 |
Share premium account | 14 | 30,508 | 30,488 |
Own shares held | 14 | (14) | (139) |
Equity-settled employee benefits reserve | | 4,089 | 4,122 |
Merger reserve | | 16,465 | 16,465 |
Reverse acquisition reserve | | (11,584) | (11,584) |
Currency translation reserve | | 305 | 501 |
Accumulated losses | | (41,140) | (42,180) |
Purchase of non-controlling interest reserve | | (477) | (477) |
Total equity | | 18,307 | 17,351 |
| |
|
|
Consolidated statement of changes in equity
For the year ended 31 January 2024 £'000 | Share capital | Share premium account | Own shares held | Equity-settled employee benefits reserve | Merger reserve | Reverse acquisition reserve | Currency translation reserve | Purchase of non-controlling interest reserve | Accumulated losses | Total equity |
Balance at 31 January 2022 as restated | 20,150 | 30,479 | (303) | 3,930 | 16,465 | (11,584) | 86 | (477) | (43,236) | 15,510 |
Comprehensive profit | | | | | | | | | | |
Profit for the year | - | - | - | - | - | - | - | - | 1,058 | 1,058 |
Other comprehensive loss | | | | | | | | | | |
Actuarial gains arising on defined benefit pension | - | - | - | - | - | - | - | - | 162 | 162 |
Exchange differences on translating foreign operations | - | - | - | - | - | - | 415 | - | - | 415 |
Total other comprehensive (loss)/income | - | - | - | - | - | - | 415 | - | 162 | 577 |
Total comprehensive income | - | - | - | - | - | - | 415 | - | 1,220 | 1,635 |
Transactions with owners | | | | | | | | | | |
Recognition of share-based payment expense | - | - | - | 192 | - | - | - | - | - | 192 |
Issue of share capital | 5 | 9 | | | | | | | | 14 |
Transfer of treasury shares | | | 164 | | | | | | (164) | - |
| 5 | 9 | 164 | 192 | - | - | - | - | (164) | 206 |
Balance at 31 January 2023 | 20,155 | 30,488 | (139) | 4,122 | 16,465 | (11,584) | 501 | (477) | (42,180) | 17,351 |
Comprehensive profit | | | | | | | | | | |
Profit for the year | - | - | - | - | - | - | - | - | 1,180 | 1,180 |
Other comprehensive loss | | | | | | | | | | |
Actuarial loss arising on defined benefit pension | - | - | - | - | - | - | - | - | (43) | (43) |
Exchange differences on translating foreign operations | - | - | - | - | - | - | (196) | - | - | (133) |
Total other comprehensive loss | - | - | - | - | - | - | (196) | - | (43) | (176) |
Total comprehensive income | - | - | - | - | - | - | (196) | - | 1,054 | 921 |
Transactions with owners | | | | | | | | | | |
Recognition of share-based payment credit | - | - | - | (33) | - | - | - | - | - | (33) |
Issue of shares held in treasury (including exercise of share options) | - | 20 | 125 | | | | | | (97) | 48 |
| - | 20 | 125 | (33) | - | - | - | - | (97) | 15 |
Balance at 31 January 2024 | 20,155 | 30,508 | (14) | 4,089 | 16,465 | (11,584) | 305 | (477) | (41,140) | 18,307 |
Consolidated statement of cash flows
For the year ended 31 January 2024
| Note | 2024 £'000 | 2023 £'000 |
Cash flows from operating activities |
| | |
Cash generated from operations | 8 (a) | 4,674 | 5,352 |
Interest received |
| 52 | 19 |
Interest paid | | (407) | (229) |
Tax paid | | (35) | - |
Tax received Restricted cash | | 175 | 179 |
(75) | - | ||
Net cash generated from operating activities |
| 4,384 | 5,321 |
| | | |
Cash flows from investing activities | | | |
Purchase of property, plant and equipment | | (67) | (163) |
Expenditure on development costs and other intangibles | 6 | (5,295) | (3,854) |
Net cash used in investing activities |
| (5,362) | (4,017) |
| | | |
Cash flows from financing activities | | | |
Proceeds from loans and borrowings | | 1,900 | 500 |
Repayment of loans and borrowings | | (639) | (1,043) |
Repayment of lease obligations | 11 | (904) | (1,099) |
Payment of deferred consideration on acquisition | 12 | - | (352) |
Net proceeds from share issue | | 19 | 14 |
Net cash used in financing activities |
| 376 | (1,980) |
| | | |
Net decrease in cash and cash equivalents | | (602) | (676) |
Cash and cash equivalents at start of year | | 5,036 | 5,623 |
Effects of foreign exchange on cash and cash equivalents | | (174) | 89 |
Cash and cash equivalents at end of year | 8 (b) | 4,260 | 5,036 |
Notes to the financial statements
For the year ended 31 January 2023
1. Basis of preparation
The preliminary information of 1Spatial plc has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The consolidated financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
The results shown for the year ended 31 January 2024 and 31 January 2023 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 2024 were approved by the Board of directors on 23 April 2024 and will be delivered to the Registrar of Companies in due course. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph nor any statement under Section 498 of the Companies Act 2006.
2. Going concern
The Board used as its basis for the going concern review the budget for the FY 2025 year, rolled out to 30 April 2025 using part of its forecast for FY 2026, so that a full 12-month period from the date of signing the FY 2024 Annual Report (the 'Assessment Period') and Accounts is considered.
All operating regions recorded double-digit growth with the exception of Europe, which was flat compared to the prior year. Revenue growth in the UK/Ireland, the US and Australia was driven by significant in year term licence sales with new and existing customers. In Europe, revenue was impacted by the timing of closing contracts towards the end of the year. In spite of the revenue decrease, the European operation successfully signed two major separate multi-million Euro contracts towards the end of FY 2024 which gives clear visibility of revenue into FY 2025 and beyond. Going forward, all regions will continue to focus on increasing sales of higher margin owned technology sold as term licences.
FY 2024 was a year of increased revenue and operating profit as well as double-digit growth in recurring revenue and increased adjusted EBITDA. Metrics for future years are positive with Annualised Recurring Revenue ('ARR') increasing to approximately £17m (FY 2023: approximately £16m) driven primarily by term licence sales in the UK and the US. Additionally, the value of committed service orders going into FY 2025 remains strong at approximately £10m. We anticipate that revenue on these orders will be recognised in FY 2025. We entered the current year with a record level of contracted future revenue, a wide range of customers in stable industry segments of Government, Utilities and Transport and growing proof of delivery in all regions.
The operating cash flow generated in FY 2024 was positive but was impacted by working capital requirements on larger projects and the Group's decision to continue to invest in growing the business and its product offerings.
The Group started the current financial year on 1 February 2024 with cash of £4.3m plus the undrawn Revolving Credit Facility ('RCF') to give the Group Available Liquidity of approximately £5.4m.
Based on management's base case forecast the Group is able to meet liabilities as they fall due and operate within available facilities throughout the assessment period.
In addition to the base case, management also considered sensitivities in respect of potential stress tests, a reverse stress test and the mitigating actions available to management. The modelling of the downside scenarios assessed if there was a significant risk to the Group's liquidity. These scenarios make assumptions on revenue declines and costs savings in relation to people costs and other general operating costs.
Under the stress tests the Group is still able to meet liabilities as they fall due and operate within available facilities throughout the assessment period.
The reverse test was used to find what would be the level of revenue decline that would lead to insufficient liquidity in the Group before the end of the assessment period. The available liquidity would be breached only if revenues were 13% below management's forecast in the assessment period and no action was taken on costs. As a result of completing this assessment management considered the likelihood of the reverse stress test scenario arising to be remote. In reaching this conclusion management considered:
● Revenue - the revenue pipeline, the level of annual recurring revenue and the positive progress on SaaS sales
● Flexible cost base - a portion of the Group's costs are discretionary in nature
● The ability to reduce development expenditure if revenue growth is lower than forecast
The Directors continue to carefully monitor the current macroeconomic environment, and its impact on the on the operations, revenues and growth plans of the Group. The Group has not seen any significant impact on revenues from the impact increased inflation. The Group's most significant exposure to inflationary cost rises is from staff costs and Infrastructure services. The Group is only marginally exposed to changes in interest rates due to interest charged on the RCF. The interest rate for any drawn amounts on the RCF is 2.95% per annum over the Bank of England Sterling Overnight Index Average ('SONIA'). Interest on the French bank loans is charged on a fixed rate basis.
The Directors have also considered the conflict in Ukraine and Middle East, and whilst the impact on the Group is currently deemed nil, the Directors remain vigilant and ready to implement mitigation action in the event of any impact.
The Directors are also not aware of any significant matters that occur outside the going concern period that could reasonably possibly impact the going concern conclusion. While the RCF (which has a limit of £3m and was £1.9m drawn at year end) has an expiry date of 22 June 2025, the Directors are in advanced negotiations for both an extension of the term and an increase in the available facility. The increased facility is being sought to provide a secure line of liquidity as our SaaS businesses continue to grow.
The Board has concluded, after reviewing the work detailed above, that the Group has adequate resources to continue in operation for at least 12 months from the date of approval of the financial statements. Accordingly, they have adopted the going concern basis in preparing the 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 |
| | |
| 2024 £'000 | 2023 £'000 | |
Term licences | 8,311 | 5,167 | |
SaaS solutions | 154 | - | |
Support and maintenance - own | 6,764 | 6,727 | |
Support and maintenance - third party | 2,878 | 2,861 | |
Recurring revenue | 18,107 | 14,755 | |
Services | 12,935 | 13,601 | |
Perpetual licences - own | 397 | 393 | |
Perpetual licences - third party | 876 | 1,253 | |
Total revenue | 32,315 | 30,002 | |
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 |
| | |
| 2024 £'000 | 2023 £'000 | |
UK | 11,967 | 10,454 | |
Europe | 11,887 | 12,173 | |
US | 4,735 | 4,325 | |
Rest of World | 3,726 | 3,050 | |
Total revenue | 32,315 | 30,002 | |
The Board assesses the performance of the Group based on adjusted EBITDA. Adjusted EBITDA is a company-specific measure which is calculated as operating profit before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items (see note 4). As these are non-GAAP measures, they should not be considered as replacements for IFRS measures. The Group's definition of these non-GAAP measures may not be comparable to other similarly titled measures reported by other companies.
The following table provides an analysis of the Group's revenue by country of domicile of the selling entity, split by whether the revenue is recognised at a point in time or over time.
| 2024 £'000 | 2023 £'000 |
UK/Ireland | 13,252 | 11,921 |
At a point in time | 3,935 | 2,185 |
Over time | 9,317 | 9,736 |
Europe | 11,030 | 11,011 |
At a point in time | 2,160 | 2,011 |
Over time | 8,870 | 9,000 |
United States | 4,713 | 4,303 |
At a point in time | 2,613 | 2,159 |
Over time | 2,100 | 2,144 |
Australia | 3,320 | 2,767 |
At a point in time | 1,567 | 1,070 |
Over time | 1,753 | 1,697 |
| 32,315 | 30,002 |
Total revenue at a point in time | 10,275 | 7,425 |
Total revenue over time | 22,040 | 22,577 |
As at 31 January 2024, costs to obtain and fulfil a contract of £52,000 were included in other receivables (2023: £109,000). Amortisation of costs to obtain and fulfil a contract for the year ended 31 January 2024 were £67,000 (2023: £75,000). The Group has no significant concentration risk with no major customers representing more than 10% of Group revenue (2023: 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.
| 2024 £'000 | 2023 £'000 |
UK/Ireland | 9,455 | 7,790 |
Europe | 8,355 | 7,869 |
United States | 3,711 | 3,656 |
Rest of World | 3 | 4 |
Total | 21,524 | 19,319 |
4. Strategic, integration and other non-recurring items
In accordance with the Group's policy for strategic, integration and other non-recurring items, the following charges were included in this category for the year:
| 2024 £'000 | 2023 £'000 |
Restructuring | 693 | - |
Amounts paid relating to change of CFO | - | 194 |
Total | 693 | 194 |
Restructuring costs of £693,000 were incurred during FY 2024. These relate primarily to our European operation, including the removal of certain managerial positions across the region. Costs incurred include redundancy costs and related legal fees.
The cash impact in FY 2024 relating to the strategic, integration and other non-recurring items was £667,000 (2023: £48,000).
5. Income tax credit
| 2024 £'000 | 2023 £'000 |
Current tax | | |
UK corporation tax on income for year | 1 | (57) |
Foreign tax | 126 | 79 |
Adjustments in respect of prior years | (42) | (15) |
Total current tax charge | 85 | 7 |
Deferred tax (note 13) | | |
Origination and reversal in temporary differences | (208) | (58) |
Effect of tax rate change on opening balance | - | 38 |
Adjustments in respect of prior years | - | (1) |
Total deferred tax | (208) | (21) |
|
| |
Total tax credit | (123) | (14) |
Factors affecting the tax credit for the year:
The differences between the standard rate of corporation tax in the UK and the actual tax credit are explained below:
| 2024 £'000 | 2023 £'000 |
Profit on ordinary activities before tax | 1,057 | 1,044 |
|
|
|
Profit on ordinary activities before tax multiplied by the effective rate of corporation tax in the UK of 24.03% (2023: 19%) | 254 | 198 |
Effect of: | | |
Expenses not deductible for tax purposes | 15 | 96 |
Adjustment in respect of R&D tax credits | (280) | (312) |
Effect of movement in deferred tax rate | 6 | 38 |
Utilisation of losses not previously recognised for tax purposes | - | (66) |
Deferred tax not recognised on losses carried forward | (71) | 110 |
Adjustments in respect of prior years | (42) | (15) |
Differences in tax rates applicable to overseas subsidiaries | (3) | (47) |
Other differences | (2) | (16) |
Total tax credit for the year | (123) | (14) |
The relevant deferred tax balances have been measured at 25% for the current year-end, being the tax rate enacted by the reporting date (2023: 25%).
6. Intangible assets including goodwill
| Goodwill
£'000 | Brands
£'000 | Customers and related contracts £'000 | Software
£'000 | Development costs
£'000 | Intellectual property
£'000 | Total
£'000 |
Cost | | | | | | | |
At 1 February 2023 | 17,672 | 462 | 4,738 | 6,799 | 25,597 | 72 | 55,340 |
Additions | - | - | - | 1 | 5,283 | 11 | 5,295 |
Effect of foreign exchange | (223) | (7) | (108) | (105) | (372) | - | (815) |
At 31 January 2024 | 17,449 | 455 | 4,630 | 6,695 | 30,508 | 83 | 59,820 |
Accumulated impairment and amortisation | | | | | | | |
At 1 February 2023 | 11,517 | 318 | 3,933 | 5,294 | 16,847 | 23 | 37,932 |
Amortisation | - | 23 | 151 | 237 | 2,023 | 6 | 2,440 |
| | | | | | | |
Effect of foreign exchange | (108) | (3) | (87) | (66) | (239) | - | (503) |
At 31 January 2024 | 11,409 | 338 | 3,997 | 5,465 | 18,631 | 29 | 39,869 |
Net book amount at 31 January 2024 | 6,040 | 117 | 633 | 1,230 | 11,877 | 54 | 19,951 |
Net book amount at 31 January 2023 | 6,155 | 144 | 805 | 1,505 | 8,750 | 49 | 17,408 |
The net book amount of development costs includes £11,877,000 (2023: £8,750,000) internally generated capitalised software development costs that meet the definition of an intangible asset. The amortisation charge of £2,440,000 (2023: £2,048,000) is included in the administrative expenses in the statement of comprehensive income.
| Goodwill
£'000 | Brands
£'000 | Customers and related contracts £'000 | Software
£'000 | Development costs
£'000 | Intellectual property
£'000 | Total
£'000 |
Cost | | | | | | | |
At 1 February 2022 | 17,194 | 450 | 4,547 | 6,574 | 21,228 | 72 | 50,065 |
Additions | - | - | - | 39 | 3,815 | - | 3,854 |
Effect of foreign exchange | 478 | 12 | 191 | 186 | 554 | - | 1,421 |
At 31 January 2023 | 17,672 | 462 | 4,738 | 6,799 | 25,597 | 72 | 55,340 |
Accumulated impairment and amortisation | | | | | | |
|
At 1 February 2022 | 11,330 | 291 | 3,640 | 4,958 | 14,826 | 17 | 35,062 |
Amortisation | - | 22 | 149 | 227 | 1,644 | 6 | 2,048 |
Effect of foreign exchange | 187 | 5 | 144 | 109 | 377 | - | 822 |
At 31 January 2023 | 11,517 | 318 | 3,933 | 5,294 | 16,847 | 23 | 37,932 |
Net book amount at 31 January 2023 | 6,155 | 144 | 805 | 1,505 | 8,750 | 49 | 17,408 |
Net book amount at 31 January 2022 | 5,864 | 159 | 907 | 1,616 | 6,402 | 55 | 15,003 |
Impairment tests for goodwill
Goodwill is assessed for the Group as a whole as the Group operates with one segment and one CGU as the Group manages its operations under one global strategy. All aspects of the business are focusing now on growing recurring revenue of repeatable solutions using technology that will be deployed globally under a single strategy. Products developed by regional development teams are marketed globally.
| 2024 | | 2023 | ||||
Goodwill |
|
| Total £'000 |
|
|
| Total £'000 |
Opening carrying value | | | 6,155 | | | | 5,864 |
Effect of foreign exchange | | | (115) | | | | 291 |
Closing carrying value |
|
| 6,040 |
|
|
| 6,155 |
Basis for calculation of recoverable amount
The Group has prepared a five-year plan for its CGU (based on a formally approved one year plan extended for four more projected years). The detailed plan put together by the management team and the Board makes estimates for revenue and gross profit expectations. This is from both contracted and pipeline revenue streams. It also takes account of historical success of winning new work and has been prepared in accordance with IAS 36: "Impairment of Assets".
The key assumptions used in the value in use calculation were the pre-tax discount rate applied (14% (FY 2023: 14%)), revenue growth rates of 9.5% per annum and cost growth rates of 7% per annum for the five-year period from 1 February 2024 to the year ending 31 January 2029 and the EBITDA to cash conversion is assumed to be 60% or greater. The Board approved budget for the year ending 31 January 2025 was used as the basis for the Group's value in use calculation. Results for the next four years were calculated using the above assumptions to derive the Group's value in use. No impairment is required as no individual asset has a higher carrying value than its value in use.
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 2025 and subsequent years, the assumption has been provided in terms of growth on the prior year EBITDA. The terminal growth rate of 2% does not exceed the long-term growth rate for the business in which the CGUs operate. The discount rate used is pre-tax and reflects specific risks relating to the Group. The forecasts are most sensitive to changes in revenue and overhead assumptions (taken together as the EBITDA). However, there are no major changes to the key assumptions which would cause the goodwill to be impaired.
There would have to be a reduction in forecast EBITDA by 24% for each year of the five-year period ending 31 January 2029 for the headroom to be removed.
7. Trade and other receivables
Current | 2024 £'000 | 2023 £'000 |
Trade receivables | 4,423 | 4,992 |
Less: provision for impairment of trade receivables | (19) | (29) |
| 4,404 | 4,963 |
Other receivables | 1,338 | 2,044 |
Prepayments and accrued income | 7,028 | 7,144 |
| 12,770 | 14,151 |
Below is a reconciliation of the movement in accrued income:
| 2024 £'000 | 2023 £'000 |
At 1 February 2023 | 6,004 | 5,075 |
Accrued revenue invoiced in the year | (6,004) | (5,075) |
Revenue accrued in the year | 5,927 | 5,947 |
Foreign exchange difference | 69 | 57 |
At 31 January 2024 | 5,996 | 6,004 |
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 2024, trade receivables of £3,405,000 (2023: £3,698,000) were fully performing. Before accepting any new customer, the Group assesses the potential customer's credit quality and defines credit limits by customer.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts. The expected credit losses are based on the Group's historical credit losses which are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. The Group has identified gross domestic growth rates, unemployment rates, interest rates and inflation rates as the key macroeconomic factors in the countries in which the Group operates.
At 31 January 2024, trade receivables of £1,003,000 (2023: £1,269,000) 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:
| 2024 £'000 | Weighted average loss rate | Impairment loss allowance £'000 |
Current | 3,405 | 0.1% | 4 |
Up to 3 months overdue | 826 | 0.5% | 4 |
3 to 6 months overdue | 74 | 2.0% | 2 |
6 to 12 months overdue | 46 | 5.0% | 2 |
> 12 months overdue | 72 | 10.0% | 7 |
| 4,423 |
| 19 |
| 2023 £'000 | Weighted average loss rate | Impairment loss allowance £'000 |
Current | 3,698 | 0.1% | 4 |
Up to 3 months overdue | 1,029 | 0.5% | 5 |
3 to 6 months overdue | 98 | 2.0% | 2 |
6 to 12 months overdue | 10 | 5.0% | 1 |
> 12 months | 157 | 10.0% | 17 |
| 4,992 |
| 29 |
As of 31 January 2024, trade receivables of £19,000 were impaired (2023: £29,000) and provided for.
The trade receivables above include performance retentions on long-term contracts.
Movements on the Group provision for impairment of trade receivables are as follows:
| 2024 £'000 | 2023 £'000 |
At 1 February | 29 | 25 |
(Decrease) / increase | (10) | 4 |
At 31 January | 19 | 29 |
The other classes within trade and other receivables do not contain impaired assets and the Group expects to recover these in full. There are no financial assets whose terms have been renegotiated that would otherwise be past due or impaired.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable noted above. The Group does not hold any collateral as security.
8. Cash and cash equivalents and notes to the consolidated statement of cash flows
| 2024 £'000 | 2023 £'000 |
Cash at bank and in hand | 4,260 | 5,036 |
| 4,260 | 5,036 |
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 | 2024 £'000 | 2023 £'000 |
Profit before tax |
| 1,057 | 1,044 |
Adjustments for: |
| | |
Finance income | | (52) | (19) |
Finance cost | | 407 | 229 |
Depreciation | | 967 | 1,309 |
Amortisation of acquired intangibles | | 391 | 386 |
Amortisation and impairment of development costs | | 2,049 | 1,662 |
Share-based payment credit | | (33) | 192 |
Net foreign exchange movement | | - | - |
Decrease/(increase) in trade and other receivables | | 1,196 | (1,426) |
(Decrease)/increase in trade and other payables | | (1,314) | 1,963 |
Increase in defined benefit pension obligation | | 6 | 12 |
Cash generated from operations | | 4,674 | 5,352 |
|
| 2024 £'000 | 2023 £'000 |
Cash generated from operations before strategic, integration and other non-recurring items |
| 5,341 | 5,400 |
Cash flow on strategic, integration and other non-recurring items (note 4) |
| (667) | (48) |
Cash generated from operations | | 4,674 | 5,352 |
(b) Reconciliation of net cash flow to movement in net funds
| 2024 £'000 | 2023 £'000 |
(Decrease) in cash in the year | (602) | (676) |
Changes resulting from cash flows | (602) | (676) |
Net cash outflow in respect of borrowings repaid | 639 | 543 |
Net cash inflow in respect of new borrowings | (1,900) | |
Effect of foreign exchange | (112) | (44) |
Change in net funds | (1,975) | (177) |
Net funds at beginning of year | 3,054 | 3,231 |
Net funds at end of year | 1,079 | 3,054 |
| | |
Analysis of net funds | | |
Cash and cash equivalents classified as: | | |
Current assets | 4,260 | 5,036 |
Bank loans | (3,181) | (1,982) |
Net funds at end of year | 1,079 | 3,054 |
Net funds is defined as cash and cash equivalents net of bank loans (and excluding lease liabilities).
c) Reconciliation of movement in liabilities from financing activities |
|
| |
| Bank borrowings and leases due within 1 year | Bank borrowings and leases due after 1 year | Total |
| £'000 | £'000 | £'000 |
Total debt (including lease liabilities) as at 1 February 2023 | 1,268 | 2,399 | 3,667 |
|
|
|
|
Borrowings at 1 February 2023 | 660 | 1,322 | 1,982 |
Repayment of borrowings | (639) | - | (639) |
New borrowings | - | 1,900 | 1,900 |
Foreign exchange difference | (21) | (41) | (62) |
Borrowings before transfer | - | 3,181 | 3,181 |
Transfer from due after 1 year to due within 1 year | 647 | (647) | - |
Borrowings as at 31 January 2024 | 647 | 2,534 | 3,181 |
|
|
|
|
Lease liability at 1 February 2023 | 608 | 1,077 | 1,685 |
Cash movements: | | | |
Lease payments | (904) | - | (904) |
Non-cash movements: | | | |
Additions in the year | 199 | 315 | 514 |
Interest cost | 97 | - | 97 |
Foreign exchange difference | - | 12 | 12 |
Lease liability before transfer | - | 1,404 | 1,404 |
Transfer from due after one year to due within one year | 584 | (584) | - |
Lease liability as at 31 January 2024 | 584 | 820 | 1,404 |
| | | |
Total debt (including lease liabilities) as at 31 January 2024 | 1,231 | 3,354 | 4,585 |
9. Bank borrowings
| 2024 £'000 | 2023 £'000 |
Current bank borrowings | 647 | 660 |
Non-current bank borrowings | 2,534 | 1,322 |
| 3,181 | 1,982 |
Bank borrowings
Bank borrowings relate to amounts drawn on the Revolving Credit Facility ('RCF') amounting to £1.9m at 31 January 2024 (2023: £nil) together with bank loans taken out by 1Spatial France totalling €1.5m (2023: €2.25m) in 2020 during the COVID-19 pandemic ('French bank loans'). The interest rate for any drawn amounts on the RCF is 2.95% per annum over the Bank of England Sterling Overnight Index Average ('SONIA'). Interest on the French bank loans is charged on a fixed rate basis with interest rates ranging between 0% and 3.6%.
The French bank loans are due for repayment over the next three years with a broadly even repayment pattern. Approximately €0.7m (£0.6m) is due for repayment in FY 2025. There are no financial covenants attached to the loans, nor is there any security applied. All long-term loans are denominated in €.
There are certain covenants associated with the Revolving Credit Facility ('RCF') in relation to the maximum gearing of the Group. The RCF is denominated in GBP, the facility limit is £3m (2023: £3m) with an expiry date of 22 June 2025. The interest rate for any drawn amounts is 2.95% per annum over the Bank of England Sterling Overnight Index Average ('SONIA'). There is a commitment fee of 1.15% per annum of any undrawn part of the Facility.
10. Trade and other payables
Current | | |
| 2024 £'000 | 2023 £'000 |
Trade payables | 2,788 | 2,861 |
Other taxation and social security | 2,907 | 3,653 |
Other payables | 364 | 506 |
Accrued liabilities | 1,071 | 1,229 |
Deferred income | 6,874 | 7,548 |
| 14,004 | 15,797 |
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:
| 2024 £'000 | 2023 £'000 |
At 1 February | 7,548 | 5,612 |
Revenue recognised in the year | (7,548) | (5,612) |
Revenue deferred at year end | 6,950 | 7,460 |
Foreign exchange difference | (76) | 88 |
At 31 January | 6,874 | 7,548 |
11. Leases
Right of use assets | Total £'000 |
At 1 February 2023 | 1,609 |
Additions | 514 |
Depreciation | (787) |
Foreign exchange difference | (29) |
At 31 January 2024 | 1,306 |
| 2024 £'000 | 2023 £'000 |
Buildings | 1,104 | 1,490 |
Cars | 178 | 82 |
Others | 24 | 37 |
| 1,306 | 1,609 |
Lease liabilities |
Total £'000 |
At 1 February 2023 | 1,685 |
Additions | 514 |
Interest cost | 97 |
Cash paid | (904) |
Foreign exchange difference | 12 |
At 31 January 2024 | 1,404 |
| 2024 £'000 | 2023 £'000 |
Current | 584 | 608 |
Non-current | 820 | 1,077 |
| 1,404 | 1,685 |
Amounts recognised in profit or loss:
Depreciation charge of right of use assets
| 2024 £'000 | 2023 £'000 |
Buildings | 677 | 955 |
Cars | 99 | 88 |
Others | 11 | 13 |
| 787 | 1,056 |
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. The remaining balance payable at 31 January 2022 of €440,540 (equivalent to £380,000) was satisfied mainly in cash (£352,000) in September 2022, with the balance settled in 57,685 Ordinary Shares on 31 March 2023. These shares had a market value of €31,839 (£28,000) at the date of issue and were issued from treasury shares. There are no further elements of deferred consideration due to the former shareholders of Geomap-Imagis Participations ('Geomap-Imagis').
13. Deferred tax
The following are the major deferred tax liabilities and (assets) recognised by the Group and movements thereon during the current year and prior reporting years.
| Tax losses £'000 | Accelerated tax depreciation £'000 | Intangibles £'000 | Other temporary differences £'000 | Total £'000 |
At 31 January 2022 | (950) | - | 1,543 | (28) | 565 |
Deferred tax (credit)/charge for year in profit or loss | (77) | - | 76 | (20) | (21) |
DT credit OCI | - | - | - | 54 | 54 |
Foreign exchange difference | - | - | - | (54) | (54) |
At 31 January 2023 | (1,027) | - | 1,619 | (48) | 544 |
Deferred tax (credit) / charge for year in profit or loss | (231) | - | (6) | 30 | (207) |
DT charge OCI | - | - | - | 13 | 13 |
Foreign exchange difference | - | - | - | (13) | (13) |
At 31 January 2024 | (1,258) | - | 1,613 | (18) | 337 |
Deferred income tax assets are recognised against tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable benefits is probable. The Group did not recognise potential deferred tax assets of £3,194,000 (2023: £3,243,000) in respect of losses amounting to £12,965,000 (2022: £13,133,300) that can be carried forward against future taxable income, on the grounds that at the balance sheet date their utilisation is not considered probable. Losses have no expiry date.
The deferred tax balance is analysed as follows:
| Deferred tax asset £'000 | Deferred tax liability £'000 | Total £'000 |
Recoverable within 12 months | - | - | - |
Recoverable after 12 months | - | 1,613 | 1,613 |
Settled within 12 months | (18) | - | (18) |
Settled after 12 months | (1,258) | - | (1,258) |
| (1,276) | 1,613 | 337 |
14. Share capital, share premium account and own shares held
Allotted and fully paid | 2024 Number | 2023 Number |
Ordinary Shares of 10p each | 110,859,545 | 110,859,545 |
Deferred shares of 4p each | 226,699,878 | 226,699,878 |
Rights of shares
Ordinary Shares The Ordinary Shares all rank pari passu, have the right to participate in dividends and other distributions made by the Company, and to receive notice of, attend and vote at every general meeting of the Company. On liquidation, Ordinary Shareholders are entitled to participate in the assets available for distribution pro rata to the amount credited as paid up on such shares (excluding any premium).
Deferred shares The deferred shares do not carry voting rights or a right to receive a dividend. The holders of deferred shares will not have the right to receive notice of any general meeting of the Company, nor have any right to attend, speak or vote at any such meeting. The deferred shares will also be incapable of transfer (other than to the Company). In addition, holders of deferred shares will only be entitled to a payment on a return of capital or on a winding up of the Company after each of the holders of Ordinary Shares has received a payment of £1,000,000 in respect of each Ordinary Share. Accordingly, the deferred shares will have no economic value. No application will be made for the deferred shares to be admitted to trading on AIM nor to trading on any other stock or investment exchange.
Voting Rights 1Spatial Plc has 110,859,545 (2023: 110,859,545) Ordinary Shares of 10p in issue, of which a total of 15,399 (2023: 147,084) Ordinary Shares are held in treasury. Therefore, the total number of Ordinary Shares with voting rights is 110,844,146 (2023: 110,712,461). .
| ||||
| Number of shares
| Allotted, called up and fully paid shares £'000 | Share premium account £'000 | Own shares held £'000 |
At 31 January 2023 | 337,559,423 | 20,155 | 30,488 | (139) |
Share options exercised | 74,000 | - | 20 | - |
Geomap-Imagis deferred consideration shares | 57,685 |
|
|
|
Transfer of treasury shares | (131,685) | - | - | 125 |
At 31 January 2024 | 337,559,423 | 20,155 | 30,508 | (14) |
During the year, 74,000 Ordinary Shares were issued from Treasury shares for consideration of £19,610 in settlement of share options exercised.
Own shares
The Group has 15,399 (FY 2023: 147,084) Ordinary Shares of 10p each and 3,500,000 deferred shares with a nominal value of 4p each held in treasury. The original consideration paid was £0.3m. During the year 74,000 and 57,685 shares were transferred out of treasury to satisfy employee share awards and Geomap-Imagis deferred consideration, respectively.
15. Earnings per Ordinary Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.
| 2024 £'000
| 2023 £'000
|
Profit attributable to equity shareholders of the Parent | 1,180 | 1,058 |
| 2024 Number 000s | 2023 Number 000s | |
Ordinary Shares with voting rights | 110,860 | 110,712 | |
Deferred consideration payable in shares | - | 55 | |
Basic weighted average number of Ordinary Shares | 110,860 | 110,807 | |
Impact of share options/LTIPS | 1,842 | 2,845 | |
Diluted weighted average number of Ordinary Shares | 112,702 | 113,652 | |
|
|
| |
| 2024 Pence | 2023 Pence | |
|
|
| |
Basic earnings/ per share | 1.1 | 1.0 | |
Diluted earnings/ per share | 1.0 | 0.9 | |
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.
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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