1spatial Share Discussion Threads

[quazie12] 23/12/2014 23:55

Never heard so much utter nonsense in my entire life re Director sale. If there really is high Institutional demand let them buy in the market mate and get the share price up. Mr S be honest, you sold because you wanted the dough and conveniently someone managed to match your desire to sell with a big buyer, end of. What's worse is that nomads are happy to sign off on this clap trap daily. usual aim nonsense. It's not a credible exchange, rules are flaunted constantly, small shareholders are treated like mugs. I have sold out of this guff, adios and good luck to small shareholders, watch these rns's and take them with a pinch of salt.Q12

[tradeyodha] 23/12/2014 06:39

They do not have to publish am rns unless it reaches a certain threshold level.

[rxcbs01] 23/12/2014 06:17

So where's the buying RNS ??

[gleach23] 22/12/2014 21:49

Given your bullishness TradeYodha, if an institution wanted your shares would you sell them?

I retain a small holding here.

[tradeyodha] 22/12/2014 13:46

Mike Sanderson, a Director of the Company, sold on the same date 7,665,763 ordinary shares in the Company ("Ordinary Shares") at a price of 7 pence per share in order to satisfy institutional demand.Demand is rising

[tradeyodha] 22/12/2014 13:45

Director sold to allow institutions buy shares. Rns says it

[412069] 22/12/2014 11:05

So whys the director just sold 7m shares then. Down this go's yet again.

[tradeyodha] 22/12/2014 10:24

Institutions are after this stock. They can't get enough of this. Demand is rising. Soon it will rise.

[ptgint] 19/12/2014 16:04

That was 2 hefty buys today within minutes of one another.

[tsmith2] 17/11/2014 19:26

Creeping quietly up

[woodcutter] 06/11/2014 12:11

The worst examples of software companies operating on the capitalised development structure are games providers. They capitalise the costs in the hope the game will be a block buster and then over time they amortise the costs and make solid profits unfortunately they then have to plough the profits back in to generate the next game and if it doesn't sell, trouble!


If you want a real basket case take a look at MONI in 2007 they had 157m shares in issue, as of today they've got 1687m shares in issue and they still haven't made a profit. Their amortisation costs this year were £19.9m and the capitalised development was £21.3m. It nearly balances but can you imagine how much development cost has to be capitalised to get an amortisation charge of £19.9m. Their balance sheet intangibles are £287m!

woody

[woodcutter] 06/11/2014 11:52

Chickens............Correct. you can show a profit year on year for years and constantly be reducing your cash balance. LRM is a prime example.

However cash is king and if you continue to capitalise development costs and amortise them and the development costs are greater then the amortisation costs then you are burning cash. So either you come back to the market and raise more money or you go bust. LRM have been issuing fresh equity on a regular basis.

A brief simple example

P&L
Revenue £20m
Cost Of Sales £15m
admin costs £4m (in this is amortisation of £1m)
profit £1m

Cashflow statement
amortisation £1m
capitalised development costs £5m

so add back the amortisation, adjusted profit £2m looks great doesn't it!

But you spent £5m on development that's cash out of the business real profit is a loss of £3m. (£2m - £5m)

I'm not an accountant but i kind of think of the cashflow statement in two halves.

The top half is all about the cashflow related to the P&L and the bottom half is related to the balance sheet.

For SPA interims



If you scroll down to the cashflow statement

This is the P&L bit

a) cash used in operations

you'll find amortisation £452K and
cash generated from operations of £442K


now scroll back up to the first part of the cashflow statement

This is the balance sheet bit

cashflows from investing activities

you'll find expenditure on capitalised development costs £1224K

So they're telling us they generateed £442K of cash but they spent £1224K of cash on development and added it to the balance sheet intangibles. Hence the cash was depleted by £1m. Look at cash and cash equivalents at the beginning and end of the year in the cashflow statement.

So you can see why i don't like adjusted EBITDA which they quote as just over £1m in the P&L, it's meaningless. As you can see if you keep operating like this you eventually run out of cash.

The idea is to at some point get the major development costs out of the way and then just maintain the software with little or no development costs capitalised and then you start to generate cash like ASW.

Hope this helps.

Woody

[woodcutter] 06/11/2014 11:22

The bottom line is software companies at this stage of their development like SPA are very high risk investments. If you want to buy a safer software stock where the product development stage is completed and real profits are being generated as well as cash then look at ASW.

Recent interims show:
amortised £11m
development cost capitalised £1.7m

profit £6.1m
cash generated from ops £23.7m

aimho

woody

[yump] 06/11/2014 11:18

Thanks for that, I've printed it off to digest !

Presumably then, if the trend increases year on year in the 'wrong' way, the chickens could come home to roost at some point, in the same way that booking excessive revenue from future contracts into current revenue does.

Eventually something pops.

[mwaller] 06/11/2014 08:57

Thanks for posting the link Hastings. I think UK investors just don't understand real technology. Another example - If wandisco are such a basket case 'Oppenheimer' now have over 5%, how many UK tech companies have them on their share register? The above link is a SPA customer example on what is valuable about their prop - I made earlier using TOM TOM.Excerpt: Cambridge NewsBig data company 1Spatial has been working with No 1 AIDU (No 1 Aeronautical Information Documents Unit) on a chart database critical to mission and flight planning around the globe. No 1 AIDU was formed back in 1953 to provide the Royal Air Force with special aeronautical maps. Today it is at the forefront of air cartography world-wide and is part of the JFIG (Joint Forces Intelligence Group).The accuracy of geospatial data used for flight planning is key and updated every month. AIDU had a system where each chart was held in a separate database. Regular updates were consuming large amounts of time and left the system open to inconsistencies between charts.The idea was to create an easier way to maintain geospatial data, reducing the potential for inconsistencies, so Cambridge company 1Spatial was called in to sort things out, coming up with a single database covering the whole world.Corporal Richard Jennings of No 1 AIDU, said: "We make an amendment to the database once and regardless of how many charts include that item, the single chart covers all of them. And, we can change it today for whenever we want it to be effective.A good example is the 2012 London Olympics. We knew two or three years in advance that we would be imposing a three month Danger Area over certain locations where no-one would be able to fly.In the old system, we would have had to wait until that became effective, apply it to each individual chart and then remove it as and when the period had lapsed. With APS, we simply entered the information as soon as we knew – everything else happened automatically."AIDU's ability to respond to requests has improved. Data which previously took two staff a month to update can now be processed in just two days. Charts for any route in the world can now also be created in days rather than months.----Here is another excerpt from Investors Chronicle that recommend as SPECULATIVE BUY: INVESTORS CHRONICLE 1Spatial thinks big31 October 2014 While 1Spatial's (SPA) loss widened at the half-year stage, the group - which makes software that stores and interprets location-based data - is making progress. Revenue rose especially sharply, significantly reflecting the inclusion of the Star-Apic acquisition - that deal has opened the door to the French-speaking market. Admittedly, the increasing geographic focus has meant higher costs - reflecting rebranding and a need to boost global staff numbers - and administrative expenses jumped 47 per cent year on year to £5.9m.Currency headwinds also delivered a £210,000 hit. But a spate of contract wins, including one with the Ministry of Defence, has brought the order book to about £7m.What's more, and following the success of its US Census contract, management has plans to raise the group's profile in the US. In October, meanwhile, management also announced a strategic relationship with Esri, an international supplier of geographic information system software - it's global reach should present significant opportunities for 1Spatial. A number of further acquisition opportunities were also identified during the period and these remain under review. More generally, management plans to utilise the strong balance sheet to support growth and to continue with international expansion. Broker N+1 Singer expects full-year pre-tax profit of £1.3m, giving EPS of 0.1p (from a 0.4p loss in 2013-14), rising to 0.2p in 2016.IC VIEW: Despite dropping about a fifth since May, 1Spatial's shares still trade on 50 times full-year forecast earnings (adjusted for cash) - which is hardly a bargain. That said, there are no obvious peers with which to make comparisons and the longer-term growth potential does indeed look attractive. Speculative Buy--------All you skeptics - If you are so sure this is such a bad bet suggest you short. Good luck with that!

[hastings] 05/11/2014 18:03

hxxp://www.cambridge-news.co.uk/1Spatial-charts-globe/story-24188720-detail/story.html

[yump] 04/11/2014 20:05

Woodcutter

Thanks for explaining the capitalisation of costs issue. Its one of those things that I sometimes see, decide that I understand it and then a few months later don't. Quite often I miss out doing the check in the accounts as well !

I always check for repetition of exceptionals (ie. they aren't really exceptionals), but when it comes to amortisation etc. I tend to go a bit blank.

[woodcutter] 04/11/2014 18:46

An analogy.

If you are a manufactoring business you try and keep your capital spend on new machinery in line with the depreciation costs of your existing equipment. You don't capitalise your maintenance cost of the old machinery that's written off to the P&L.

I think SPA need to differentiate between what is geniune development of new software and what are upgrades to exising software, i think the lines are getting a little blurred.

aimho

woody

[woodcutter] 04/11/2014 18:38

Sometimes you just have to accept that a business isn't everyhting you'd expected it to be and i sold because of the poor growth in a sector that was supposed to be hot and the financials just don't back up the story i'm afraid.

Some figures from the last few years results, starting with the latest interims


2015 interims
Revenue £10.1m
Cost of Sales £4.88m
Amortisation £452K
Capitalised development costs £1.22m
% of COS capitalised 25%

2014 finals
Revenue £17.27m
Cost of Sales £9.06m
Amortisation £627K
Capitalised development costs £1.73m
% of COS capitalised 19%

2014 interims
Revenue £7.6m
Cost of Sales £3.91m
Amortisation £239K
Capitalised development costs £767K
% of COS capitalised 19.6%

2013 finals
Revenue £12.08m
Cost of Sales £6.97m
Amortisation £903K
Capitalised development costs £671K
% of COS capitalised 9.6%

2013 interims
Revenue £6.42m
Cost of Sales £3.67m
Amortisation £502K
Capitalised development costs £276K
% of COS capitalised 7.5%

2012 finals
Revenue £5.23m
Cost of Sales £3.37m
Amortisation £505K
Capitalised development costs £476K
% of COS capitalised 14%

I haven't posted the profit/loss figures as they're meaningless imv given the amount of labour capitalised.

Whilst accepting that the business had changed over this period the financials still tend to indicate the culture of jam tomorrow. Indeed it's getting worse as the amount of labour capitalised is increasing as a proportion of COS and is now consistantly greater than that being amortised. This kind of development spend can only result in one of two cashflow scenarios;

either they ultimately run out of cash or they raise more funds.

Incidentally the 2103 finals had an impairment charge that year of just over £2.5m draw your own conclusions!

For a product that is supposed to be out there in the market being sold there needs to be more control of the development costs. Yes i expect software upgrades and further development but if this is an annual event it shouldn't be capitalised but written off to the P&L.

You can have as many JV's and partnerships as you like but the financials don't lie. It's a long way from real profitability with the current growth rates aimho.

Woody a former SPA holder.

[mwaller] 04/11/2014 10:59

I don't know the other partners. I believe in 1Spatial and what they can do. I can give you 6 million reasons. Rather than ask a passive investor who writes stories - put a call into management and ask them yourself; you can share the answers on this board - we would be glad to hear.

[yump] 03/11/2014 15:43

mwaller

Why is it that your posts look like they are taken from some sort of promotional literature ?

eg.
"Esri can now start to have real conversations with their customers about their unique solution roadmap and offerings bringing their customers the best of both worlds."

I'm afraid that is just patent waffle in my book.

[fgump] 03/11/2014 13:46

Ok I just checked out the ESRI website and discovered that 1SPA are one of 23 partners. Question - why are 1spa any different to the rest of the partners? And what level of revenue do you expect to come form this relationship? Thanks,