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TIDMSPA
RNS Number : 7513C
1Spatial Plc
20 October 2015
20 October 2015
1Spatial plc (AIM: SPA)
("1Spatial", the "Group" or the "Company")
Interim Results for the six month period ended 31 July 2015
The Board of Directors of 1Spatial (the "Board"), the AIM Spatial Big Data company today announces the Group's unaudited interim results for the six month period ended 31 July 2015.
Highlights
Financial highlights
-- Revenues of GBP8.4m including recurring revenues of GBP3.6m (43%)
-- Client software maintenance renewal rate of 98%, with 614 new orders below US$1m across the group in the period
-- Improvement in gross profit margin from 52% to 56% reflecting focus on strong commercial management. Adjusted* EBITDA of GBP0.9m
-- Robust period-end net cash position of GBP6.4m
-- Growing pipeline of opportunities at high margins enhanced by growing strategic relationships with enterprise vendors.
-- Acquisition of 47 per cent of US distributor Laser Scan Inc. (LSI) in February for GBP1.5m allowing the Group to strengthen its position within this key market
-- Acquisition of Enables IT Group plc for GBP1.8m of shares enhancing the managed services and cloud services offering
-- Outlook for 2015 maintained
*Adjusted for strategic, integration, other one-off items and share-based payment charge
Operational highlights
-- Continued focus on R&D, further development of scalable open technology in order to: - Widen addressable market - Increase global reach - Quicken route to market - Enable integration with enterprise technology vendors -- Continued focus on important US markets - Segmentation of our US market into two divisions - Government and Corporate Commercial - Delivering on target on US Census contract - Increased investment focused sales and marketing execution - Enhancing relationships with key Federal Government Agencies -- Increase marketing activity to support revenue generation: - Participation and sponsorship of Esri User Conferences in the UK, Europe and US - Key business development activities around the Geospatial marketplace - Launch of 1Integrate for ArcGIS service
Post Period-End Highlights
Contract win of US$1m post period end to provide geospatial services to a US Federal Government Agency reflecting strengthening of US presence
Commenting on the results CEO, Marcus Hanke, said:
"The first half of this year has been one of significant operational progress on our stated aims. We are delighted to have developed a scalable, open product that we believe will secure future growth for the Group.
Revenues came in lower year-on-year due to a number of factors, therefore the full year results will have a greater weighting to the second half compared to previous years, but our pipeline remains strong and we expect to convert a good proportion of the opportunities over the next six months. In terms of profitability, our focus on higher margin work has improved our gross margin to record levels. The Board still expects to deliver growth in Adjusted* EBITDA for the full year to January 2016 in line with market expectations.
Looking ahead, the Board remains confident and believe that the Company's stated strategy positions 1Spatial for future, scalable growth in an exciting market space."
Business review
The Group reports revenue of GBP8.4m and Adjusted* EBITDA of GBP0.9m. These results are a reduction on the prior half year numbers; however, management believes the Group is still on track to meet full year expectations which is an overall increase on the prior year revenues and Adjusted* EBITDA.
The key reasons for the decline in revenues and Adjusted* EBITDA are the strengthening of the sterling against the euro and Australian dollar, a greater second half weighting of service delivery revenues due to re-deployment of manpower to development of 'Open' technology, an expected second half weighting of deals and licence revenue and the strategic exit from low-margin revenues in Australia.
The Group acquired Enables IT Group for GBP1.8m (valued as at 25 June 2015) of shares on 23 July 2015 and whilst this did not have an impact on the period under review, its revenues and results will be included in full year numbers to 31 January 2016.
The Group is still on track with its stated strategic objectives and has made significant progress in the period with the development of its 'open' technology; in particular the development of 1Integrate on the Esri platform, known as '1Integrate for ArcGIS' which it is set to launch in the second half of the year.
The Group enters the second half of the year with an order backlog and a healthy pipeline of sales opportunities, enhanced by the Esri relationship coupled with a strong balance sheet and cash position.
Corporate transactions
The Company has made two strategic investments in the period under review as summarise below:
Laser Scan Inc. (LSI)
On 3 February 2015, the Company acquired 47 per cent of Laser Scan Inc. (LSI) for a cash consideration of US$2.25m (GBP1.5m). LSI is the sole distributor for 1Spatial products and solutions across the Americas and the two companies have worked closely together on strategic accounts including the United States Census Bureau and the Brazilian Army. LSI's personnel already have expert knowledge of 1Spatial's solutions and this transaction will secure 1Spatial's American base, bringing additional opportunities and enabling growth across this significant market.
Under the terms of the sale and purchase agreement, 1Spatial has an option to acquire the remaining 53 per cent of the share capital of LSI in two tranches (on 1 February 2016 and 1 February 2017) for the total sum of US$2.55m, payable in cash or by the issue of new ordinary shares in 1Spatial. If this option is not exercised, the seller has the right to buy back the holding for US$1.125m, being 50 per cent of the original consideration.
Enables IT Group plc
On 23 July 2015, 1Spatial plc acquired 100% of Enables IT Group plc for GBP1.8m of shares (valued as at 25 June 2015). Enables IT Group is a leading provider of cloud computing, managed and professional services and was acquired in order to broaden and enhance the enlarged Group's managed services and cloud services offering.
The Group's solutions are often needed to work alongside and interoperate with the technology of other vendors. The 1Spatial Directors believe the ability to work seamlessly with other technologies is increasingly important and further developing this capability at a product level is an important area of focus for the 1Spatial Group. 1Spatial Group's strategy includes providing software solutions that are 'open' and which will work well with key vendors in the field including Esri. 1Spatial intends to use Enables IT's data centers and managed service solutions in both the UK and US to provide cost effective managed service and cloud services to 1Spatial Group's businesses. The transaction will also support the Group's growing need for a more formalised and structured internal IT department as the Group grows and moves into new markets and territories.
A number of other opportunities were identified during the period which would help 1Spatial satisfy its strategic ambition, a selection of which remains under review.
Strategy and performance
During this year, we have continued to develop and build upon our corporate strategy, determined in 2013. We have established new structures to support future growth, seized opportunities where they aligned with our strategy and reviewed areas that were not performing as expected. Where necessary, we have made changes to adapt to market or other external forces.
Progress has been made in all four strategy areas: product and service offerings, geographical coverage, organisational structure and brand.
Product and service offerings
At the heart of 1Spatial's strategy is the opportunity to capitalise on the Company's intellectual property - built up over forty years' expertise and innovation - through a platform and suite of off-the-shelf software products.
1Spatial's Unique Selling Point (USP) is its approach to Spatial Big Data; its quality, aggregation and enrichment. Our scalable software enables these processes to be automated, providing customers with efficiency savings and consistently high quality spatial data that they can sell onto their clients or use in their own internal processes.
The nature of 1Spatial's expertise means that our solutions are often found at the heart of complex installations, working alongside and interoperating with the technology of other vendors. The ability to work ever more seamlessly with other technologies is increasingly important. It is our intention to provide software solutions that are 'open' and which will work well with key vendors in the field. In line with this strategic objective, during the period we have put significant investment into our open technology and in particular the integration with the Esri platform.
We are seeing a greater need in the market to provide cloud and managed service offerings to our customers and we are looking to utilise Enables IT Group's product suite to facilitate this.
During the period we also continued to develop our data services platform known as Sitemap which leverages 'Open Data' opportunities. This is an exciting opportunity for the Group which we will continue to develop in the second half of the year with an anticipated commercialisation date of Q3 next financial year.
Geographical coverage
The Group's headquarters are in Cambridge, UK; our offices in France and Belgium cover French-speaking markets, especially in Africa. We also have an Asia-Pacific office in Sydney, Australia and an office in Ireland. We are supported by a global network of partners including those in the USA, Malaysia and Brazil.
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1Spatial's geographic reach continues to increase through acquisition, opening new offices and forging new partnerships. Our investment in LSI, discussed above, will strengthen 1Spatial's presence in the Americas and enable us to drive more opportunities there.
Organisational structure
We continue to review our organisational structures which are aligned to specific industry sectors (which support and are supported by the development of industry-specific applications).Key sectors for 1Spatial include utilities, national mapping and land registration agencies, telecommunications and defence.
1Spatial's professional services team is seen as a leader in spatial consultancy services and works with leading organisations and government bodies around the globe. Demand for geospatial data has never been greater. Data accuracy and the ability to manage multiple data sets are essential to effective and informed decision-making.
Our development team is now centred in our Cambridge headquarters where our product development roadmap is determined and we continue to draw on regional development expertise in other territories.
We are in the process of evolving the organisational structure in the second half of the year given the acquisition of Enables IT Group plc and the launch of our 1Integrate for ArcGIS solution.
Building the brand and creating demand
We continue and are consistent in our marketing and sales strategy along key industry sectors and focus countries. Marketing and sales are an important area of investment in the coming year, as we build the brand across target industries and geographies, and create the demand for existing and new products.
From a global perspective the US remains a key target market for us and with the addition of Enables IT, provides a further foothold in the market and product offerings. We will leverage our existing customer base in the US market across the Group and open cross-sell opportunities and customer reference to support our go-to market.
The Esri market is key for us as we build upon our awareness following the sponsorship and attendance at a number of key Esri user groups in the UK and the US. We are also sponsors of the forthcoming Esri Europe User Conference and Middle East and Africa conference providing exposure of our offering to thousands of Esri users, raising awareness and demand for 1Integrate for ArcGIS. There will also be local in-market targeted campaigns for 1Integrate for ArcGIS in the key UK and US markets in H2, to create demand.
Successful campaigns and participation in industry-focused global events has resulted in a pipeline of potential new customers and partners that the sales team will engage in the coming year. These targeted activities, improving our brand reach and establishing local sales structures are laying a solid foundation for development in the years to come and a healthy pipeline for the coming financial year.
Enables IT will undergo a brand refresh in H2, to gain consistency and alignment across their offices in the UK, US and South Africa. Also this will support the go-to-market plan and our opportunity to leverage their services and offerings across the wider Group.
Board and people
In January 2015 David Richards took on the role as interim Non-Executive Chairman following the retirement of Steve Berry. The Board is progressing its search for the right person as a replacement for Steve Berry but in the meantime, David Richards and Marcus Yeoman are still in a position to give 1Spatial the support it requires.
1Spatial's success, the business relationships it has built and the reputation it enjoys within the field of Spatial Big Data, is entirely due to its management team and employees across the world. 1Spatial people are approachable, smart, innovative and agile.
Financial performance
Income statement
The Group's revenues of GBP8.4m and Adjusted* EBITDA of GBP0.9m were lower year on year due to the below factors. The Board remains confident on hitting revenue targets for the full year:
Adjusted* Note Revenue EBITDA GBPm GBPm Prior half year to July 2014 10.1 1.2 Effect of foreign exchange rates in 2015 a. (0.7) (0.2) Australia exit of third-party revenues and service revenues b. (0.4) (0.0) Revenue reduction - timing and revenue recognition in 2015 c. (0.6) (0.1) Six months to July 2015 8.4 0.9 ======== ==========
a. Revenues and Adjusted* EBITDA from France, Belgium, Ireland and Australia have been adversely affected by foreign exchange movements as the sterling rate has strengthened against the euro and Australian dollar. This impact is GBP0.7m on revenues and GBP0.2m on Adjusted* EBITDA. Revenues at constant currency were down 11%.
b. The Group's Australian operation had a low-margin contract with a third party to distribute and support and maintain their software. The gross margin on this contract was worth 20% to the Group. This contract was exited in the prior year and therefore there is no equivalent revenue in this half year. In addition there were some services associated to this contract. Whilst the loss to revenue on this contract was GBP0.4m, the impact on the Adjusted* EBITDA was negligible.
c. Revenue reduction - timing and revenue recognition has an impact of GBP0.6m on revenues and GBP0.1m on Adjusted* EBITDA. There are two key elements to this line item as follows:
- Re-deployment of teams to focus on development of technology. Service revenue is
recognised on delivery of the services. During the period there has been a focus on the
development of the technology which has consequently led to less client work being carried out to fulfil existing orders.
- Perpetual licences. There is a reduction in perpetual licences sold in the period. The reason
for this is twofold; firstly there were a number of licence deals that were due to close in H1
that are now being delayed to H2. Secondly there is a trend of new deals in the market starting to take the form of annual licencing rather than perpetual licencing with annual support and maintenance. This is an industry trend and whilst may give a dip on short-term revenues and profit, will provide longer term straight-line revenues with greater visibility on earnings rather than the peaks and troughs of perpetual licencing.
A summary of the income statement to Adjusted* EBITDA level is set out below:
H1 2015 H2 2014 GBPm GBPm Revenue 8.4 10.1 Cost of sales (3.7) (4.9) Gross profit 4.7 5.3 ------ -------- Gross profit % 56% 52% Administrative expenses (3.8) (4.1) Adjusted* EBITDA 0.9 1.2 ------ --------
Whilst the revenue and gross profit are down when compared to the prior period last year, the overall gross profit percentage has improved to 56% which is a significant improvement on the prior year given the backdrop of reduced perpetual licence sales which are generally at a high margin. The improved gross profit percentage is as a result of strict commercial process and procedures being brought in across the Group and exiting from lower-margin reseller contracts as the business looks to deploy resources in the most value added areas. In January 2015 some restructuring took place in France and Belgium, which lowered overall cost base for this half year and has therefore had a positive impact although this has been offset by some increased cost in the UK to support the development strategy.
Our revenue streams continue to be licence fees, services and support and maintenance. The proportion that these streams represent of total revenue is approximately 15%, 42% and 43% (2014: 20%, 40% and 40%). The main reduction in the period is with respect to licence revenues as noted above in part c.). We still continue to maintain our strong support and maintenance revenue stream which provides good visibility on revenues and provides a strong customer base to build relationships and provide additional engagements.
Given the costs of the subsidiaries which are denominated in euros and Australian dollars as well as the revenues, there is some natural hedging which takes place thus reducing the impact on the overall Adjusted* EBITDA. In addition, the reduction in the Australian revenues has had minimal impact on Adjusted* EBITDA given the low margins of this revenue. So whilst there is a reduction in revenues of GBP1.7m in the period, the impact on Adjusted* EBITDA is only GBP0.3m.
A summary of the results from Adjusted* EBITDA to the loss for the period is set out below
2015 2014 GBPm GBPm Adjusted* EBITDA 0.9 1.2 Depreciation (0.1) (0.1) Amortisation and impairment of intangibles assets (0.8) (0.5) Share-based payments charge (0.5) (0.5) Exceptional items (0.8) (1.0) Operating loss (1.3) (0.7) ------ ------- Net finance costs (0.1) - Share of associates' loss (0.1) - Loss before tax (1.5) (0.7) ------ ------- Tax - (0.1) Loss for the period (1.5) (0.8) ------ -------
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Depreciation, amortisation and the share-based payment charges are in line with the previous period. The exceptional costs in the period mainly relate to professional costs for corporate transactions such as the LSI and Enables IT Group plc transactions. The amount of cost in relation to the corporate transactions is GBP0.4m.
In addition, during the period, a review was undertaken of the pension provision in France. A small provision was put in place at the time of acquisition but further investigations have identified that this provision should be higher and therefore an exceptional one-off additional amount of GBP0.2m has been provided. There are other costs of redundancy etc. of GBP0.2m.
Of the finance cost of GBP0.1m, GBP28k relates to interest paid on the Belgium loan. The remainder is foreign exchange losses arising on intercompany balances in overseas subsidiaries where the balances are denominated in GBP.
The share of associates' loss is in relation to Sitemap Ltd and LSI and information on these two associated undertakings is set out in note 9 to the half year statement. From an Adjusted EBITDA perspective, these businesses are break even.
Balance sheet
A summary of the balance sheet is set out below:
2015 2014 GBPm GBPm Non-current assets 20.6 16.3 Current assets 16.1 17.0 Current liabilities (11.2) (9.8) Non-current liabilities (2.2) (2.0) 23.3 21.5 ------- ------
The main reason for the overall increase in the various line items in the balance sheet is the inclusion of the Enables IT Group Ltd balance sheet at 31 July 2015. Whilst the full balance sheet is included in the half year statement, the results of Enables IT Group Ltd is minimal since it was only acquired shortly before the half year end.
Also included in non-current assets is GBP1.8m in relation to the investments in associated undertakings in Sitemap Ltd and LSI.
Cash flow
A reconciliation from Adjusted* EBITDA to cash is set out below:
GBPm Adjusted* EBITDA 0.9 Exceptional items paid (1.6) Working capital movements 0.1 Acquisition of LSI (1.5) Cash acquired with Enables IT Group Ltd 0.5 Capital expenditure including R&D (1.8) Issue of shares (Azini Capital) 1.9 Other (including warrant cash in) 0.1 Net cash outflow (1.4) Opening net cash 7.8 Closing net cash 6.4 ------
Whilst there was a net cash outflow in the period, the above summary details some of the key cash outflows which are strategically important for the Group including the transaction with LSI and the investment in the R&D activities. From a trading perspective the main cash outflow was the payment of exceptional costs which includes transaction costs in relation to the acquisitions and reorganisation costs of approximately GBP1.1m in relation to the France and Belgium businesses which were accrued in January 2015 but paid out in February 2015.
The Company was pleased to secure an investment from Azini Capital in May 2015 which strengthened the balance sheet position.
Conclusion
During the period, we have continued to develop and deliver our world-class technology, increased our market and global reach and cemented strategic relationships with key partners. We have also delivered Adjusted* EBITDA profits of GBP0.9m, which whilst behind the previous year, we still expect to be up year on year due to a second half weighting.
Post period end, we announced a contract win of US$1m post period end to provide geospatial services to a US Federal Government Agency.
Innovation remains important to us, with internal development and new intellectual property, such as that owned by Sitemap, continuing to strengthen our business. At the same time, we continue to evaluate potential strategic future acquisitions which would add value or new capabilities to the Group. We have solid foundations in place and clear objectives across the business. Our product offering is more defined and we look forward to working with our new associate, LSI, which will help us develop our presence in the important US market. Strategic partnerships, like the one with Esri, along with our move towards increased software interoperability and openness, will help us gain market share and growth in all markets.
Outlook
In our January 2015 annual report that the year ending 31 January 2016 we explained that this year will be one of consolidation and targeted investment to position the Group best for the future. We stated that we would continue to support our existing customers and develop the business along the lines discussed above; continuing to develop innovative, off-the-shelf software supported by our professional services, supporting strategically important industry sectors and exploiting opportunity across geographic markets.
We believe that it is vital for growth and future shareholder value that we make continued investment in our spatial software so that it can be seamlessly integrated with other vendor platforms. As a result of this investment, there will continue to be significant research and development costs during the second half of the year. Some revenue-generating resource will continue to be used during this development phase which will have an impact on revenue growth in the short-term; however, it is the opinion of the Board that this is a necessary investment to secure future scalable growth and value for the Group.
As anticipated, our revenue mix and cash outflow profile has continued to adapt and develop during the first half of the year - a trend we expect to continue for the rest of the financial year. We have a strong balance sheet and a significant secured order book, alongside a healthy pipeline of opportunities; which we expected to be weighted towards the second half of the year. Whilst these changes have had a detrimental impact on our headline figures in the first half, with revenue and Adjusted EBITDA slightly lower than expected, the Group is continually reviewing ways to mitigate against this; as a result seeing gross margins improving to record levels. The Board is encouraged by the progress made during the current financial year, remains confident on its expectations for the full year and looks forward to the future with confidence.
For further information, please contact:
020 3427 1Spatial plc 5004 Marcus Hanke / Claire Milverton 020 3727 FTI Consulting 1000 Dwight Burden / Alex Le May / Karen Tang 020 7496 N+1 Singer 3000 Shaun Dobson / Lauren Kettle
Notes to Editors:
About 1Spatial:
1Spatial manages the world's largest Spatial Big Data and works with users and creators of the largest geospatial databases, helping them collect, store, manage and interpret location-specific information.
1Spatial's clients include national mapping and cadastral agencies, utility and telecommunications companies, and government departments including emergency services, defence and census bureaus.
A leader in the field, 1Spatial has over forty years' experience and a record of continual innovation and development. Today, with an ever increasing reliance on spatial and location-critical data, demand for our expertise has never been greater.
1Spatial operates globally, and has a portfolio of customers both in the Commercial and Government sector, with headquarters in Cambridge, UK and offices in France, Belgium, Ireland and Australia. To find out more, visit www.1spatial.com
Condensed consolidated statement of comprehensive income Six months ended 31 July 2015 Unaudited Audited Unaudited Six months Year Six months ended ended ended 31 July 31 January 31 July 2015 2015 2014 ---------------------------------- ----- ----------- ------------ ------------- Note GBP'000 GBP'000 GBP'000 ---------------------------------- ----- ----------- ------------ ------------- Revenue 8,445 19,598 10,139 Cost of sales (3,738) (8,804) (4,877) ---------------------------------- ----- ----------- ------------ ------------- Gross profit 4,707 10,794 5,262 Administrative expenses (5,961) (12,260) (5,920) ---------------------------------- ----- ----------- ------------ ------------- (1,254) (1,466) (658) Adjusted* EBITDA 860 3,052 1,231 Less: depreciation (145) (267) (135) Less: amortisation and impairment of intangible assets (687) (1,183) (452) Less: share-based payment charge (489) (723) (355) Less: strategic, integration and other one-off items 7 (793) (2,345) (947) ---------------------------------- ----- ----------- ------------ ------------- Operating (loss)/profit (1,254) (1,466) (658) Finance income 38 30 19
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Finance costs (134) (86) (45) ---------------------------------- ----- ----------- ------------ ------------- Net finance costs (96) (56) (26) Share of net loss of associates accounted for using the equity method (139) - - (Loss)/Profit before tax (1,489) (1,522) (684) Income tax (charge)/credit (36) 5 (70) ---------------------------------- ----- ----------- ------------ ------------- (Loss)/Profit for the period (1,525) (1,517) (754) ================================== ===== =========== ============ ============= Loss for the period attributable to: Equity shareholders of the parent (1,525) (1,517) (754) Non-controlling interest - - - ---------------------------------- ----- ----------- ------------ ------------- (1,525) (1,517) (754) ================================== ===== =========== ============ ============= Other comprehensive loss Items that may subsequently be reclassified to profit or loss: Exchange differences on translating foreign operations (539) (316) (210) Other comprehensive loss for the period, net of tax (539) (316) (210) ================================== ===== =========== ============ ============= Total comprehensive loss (2,064) (1,833) (964) ================================== ===== =========== ============ ============= Total comprehensive loss attributable to: Equity shareholders of the parent (2,064) (1,833) (964) Non-controlling interest - - - ---------------------------------- ----- ----------- ------------ ------------- (2,064) (1,833) (964) ================================== ===== =========== ============ ============= * Adjusted for strategic, integration and other exceptional items and share-based payment (note 7). (Loss)/Earnings per ordinary share expressed in pence per ordinary share: Basic 4 (0.23) (0.23) (0.12) ================================== ===== =========== ============ =========== Diluted 4 (0.23) (0.23) (0.12) ================================== ===== =========== ============ =========== Adjusted earnings/(loss) per ordinary share expressed in pence per ordinary share: Basic 4 0.13 0.47 0.19 ================================== ===== =========== ============ =========== Diluted 4 0.13 0.45 0.18 ================================== ===== =========== ============ =========== Condensed consolidated statement of financial position As at 31 July 2015 Unaudited Audited Unaudited As at As at As at 31 July 31 January 31 July 2015 2015 2014 -------------------------------- ----- ---------- ------------ ---------- Note GBP'000 GBP'000 GBP'000 -------------------------------- ----- ---------- ------------ ---------- Assets Non-current assets Intangible assets including goodwill 17,210 14,729 14,615 Property, plant and equipment 1,569 552 1,729 Interests in associates 9 1,859 500 - Total non-current assets 20,638 15,781 16,344 -------------------------------- ----- ---------- ------------ ---------- Current assets Inventories 21 - 18 Trade and other receivables 8,364 7,453 6,848 Current income tax receivable - 134 42 Cash and cash equivalents 6,739 8,250 10,129 Assets classified as held for sale 927 994 - -------------------------------- ----- ---------- ------------ ---------- Total current assets 16,051 16,831 17,037 -------------------------------- ----- ---------- ------------ ---------- Total assets 36,689 32,612 33,381 -------------------------------- ----- ---------- ------------ ---------- Liabilities Current liabilities Trade and other payables (10,363) (8,301) (9,770) Current income tax liabilities (23) (22) (43) Borrowings (201) (242) (39) Provisions (606) (1,151) - Total current liabilities (11,193) (9,716) (9,852) -------------------------------- ----- ---------- ------------ ---------- Non-current liabilities Borrowings (179) (191) (258) Deferred tax (2,036) (1,697) (1,762) Total non-current liabilities (2,215) (1,888) (2,020) -------------------------------- ----- ---------- ------------ ---------- Total liabilities (13,408) (11,604) (11,872) Net assets 23,281 21,008 21,509 ================================ ===== ========== ============ ========== Share capital and reserves Share capital 10 16,223 15,572 15,572 Share premium account 22,376 20,608 20,608 Own shares held (306) (306) (306) Equity-settled employee benefits reserve 2,125 1,711 1,343 Merger reserve 15,404 13,900 13,900 Reverse acquisition reserve (11,584) (11,584) (11,584) Currency translation reserve (831) (292) (186) Accumulated losses (20,126) (18,601) (17,838) -------------------------------- ----- ---------- ------------ ---------- Total equity attributable to shareholders of the parent company 23,281 21,008 21,509 -------------------------------- ----- ---------- ------------ ---------- Condensed consolidated statement of changes in equity Period ended 31 July 2015 Equity-settled Share Own employee Reverse Currency Non- Share premium shares benefits Merger acquisition translation Accumulated Total controlling Total GBP'000 capital account held reserve reserve reserve reserve losses * interest equity Balance at 1 February 2014 15,572 20,608 (306) 988 13,900 (11,584) 24 (17,084) 22,118 - 22,118 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Comprehensive income/(loss) Loss for the year - - - - - - - (1,517) (1,517) - (1,517) Other comprehensive income/(loss) Exchange differences on translating foreign operations - - - - - - (316) - (316) - (316) Total other comprehensive loss - - - - - - (316) - (316) - (316) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Total comprehensive loss - - - - - - (316) (1,517) (1,833) - (1,833) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Transactions with owners Recognition of share-based payments - - - 723 - - - - 723 - 723 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- - - - 723 - - - - 723 - 723 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Balance at 31 January 2015
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(Audited) 15,572 20,608 (306) 1,711 13,900 (11,584) (292) (18,601) 21,008 - 21,008 =============== ======== ======== ======= =============== ======== ============ ============ ============ ======== ============= ======== Comprehensive income/(loss) Loss for the period - - - - - - - (1,525) (1,525) - (1,525) Other comprehensive income/(loss) Exchange differences on translating foreign operations - - - - - - (539) - (539) - (539) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Total other comprehensive loss - - - - - - (539) - (539) - (539) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Total comprehensive loss - - - - - - (539) (1,525) (2,064) - (2,064) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Transactions with owners Issue of share capital 651 1,768 - (75) 1,504 - - - 3,848 - 3,848 Recognition of share-based payments - - - 489 - - - - 489 - 489 651 1,768 - 414 1,504 - - - 4,337 - 4,337 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ -------- ------------- -------- Balance at 31 July 2015 (Unaudited) 16,223 22,376 (306) 2,125 15,404 (11,584) (831) (20,126) 23,281 - 23,281 =============== ======== ======== ======= =============== ======== ============ ============ ============ ======== ============= ========
* Total equity attributable to the equity shareholders of the parent.
Condensed consolidated statement of changes in equity Period ended 31 July 2014 Equity-settled Share Own employee Reverse Currency Non- Share premium shares benefits Merger acquisition translation Accumulated Total controlling Total GBP'000 capital account held reserve reserve reserve reserve losses * interest equity Balance at 1 February 2014 15,572 20,608 (306) 988 13,900 (11,584) 24 (17,084) 22,118 - 22,118 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ ------- ------------- -------- Comprehensive income/(loss) Loss for the period - - - - - - - (754) (754) - (754) Other comprehensive income/(loss) Exchange differences on translating foreign operations - - - - - - (210) - (210) - (210) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ ------- ------------- -------- Total other comprehensive loss - - - - - - (210) - (210) - (210) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ ------- ------------- -------- Total comprehensive loss - - - - - - (210) (754) (964) - (964) --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ ------- ------------- -------- Transactions with owners Recognition of share-based payments - - - 355 - - - - 355 - 355 - - - 355 - - - - 355 - 355 --------------- -------- -------- ------- --------------- -------- ------------ ------------ ------------ ------- ------------- -------- Balance at 31 July 2014 (Unaudited) 15,572 20,608 (306) 1,343 13,900 (11,584) (186) (17,838) 21,509 - 21,509 =============== ======== ======== ======= =============== ======== ============ ============ ============ ======= ============= ========
* Total equity attributable to the equity shareholders of the parent.
Condensed consolidated statement of cash flows Period ended 31 July 2015 Unaudited Audited Unaudited 31 July 31 January 31 July 2015 2015 2014 Note GBP'000 GBP'000 GBP'000 -------------------------------- ------ ---------- ----------- ---------- Cash flows from operating activities Cash (used in)/generated from operations a) (581) 379 442 Interest received 38 30 19 Interest paid (134) (86) (45) Tax received/(paid) 122 (21) (45) Net cash (used in)/generated from operating activities (555) 302 371 ---------------------------------------- ---------- ----------- ---------- Cash flows from investing activities Acquisition of subsidiaries (net of cash acquired) 465 - - Acquisition of interest in associate (1,498) (500) - Purchase of property, plant and equipment (550) (258) (152) Expenditure on product development capitalised (1,262) (2,363) (1,224) Proceeds from sale of property, plant and equipment 56 37 - Net cash used in investing activities (2,789) (3,084) (1,376) ---------------------------------------- ---------- ----------- ---------- Cash flows from financing activities Increase in borrowings - 38 - Repayment of borrowings (25) (47) (32) Net proceeds from issue of ordinary share capital 2,035 - - Net cash generated from/(used in) financing activities 2,010 (9) (32) ---------------------------------------- ---------- ----------- ---------- Net decrease in cash and cash equivalents (1,334) (2,791) (1,037) Cash and cash equivalents at start of period 8,250 11,165 11,165 Effects of foreign exchange on cash and cash equivalents (177) (124) 1 Cash and cash equivalents at end of period 6,739 8,250 10,129 ---------------------------------------- ---------- ----------- ---------- Notes to the condensed consolidated statement of cash flows a) Cash (used in)/generated from operations Unaudited Audited Unaudited As at As at As at 31 July 31 January 31 July 2015 2015 2014 GBP'000 GBP'000 GBP'000 ------------------------------------ ---------- ------------ ---------- Loss before tax (1,489) (1,522) (684) Adjustments for: Finance cost/(income) - net 96 56 26 Depreciation charge 145 267 135 Amortisation and impairment 687 1,183 452 Share-based payment charge 489 723 355 Loss on disposal of property, 18 - - plant and equipment (Increase)/decrease in inventories - 15 (3) Decrease/(Increase) in trade and other receivables (221) (1,020) 13 Increase/(Decrease) in trade and other payables 82 192 257 Increase/(Decrease) in provisions (545) 485 - Net foreign exchange movement 157 - (109) Cash (used in)/generated from continuing operations (581) 379 442
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------------------------------------ ---------- ------------ ---------- b) Reconciliation of net cash flow to movement in net funds Unaudited Audited Unaudited As at As at As at 31 July 31 January 31 July 2015 2015 2014 GBP'000 GBP'000 GBP'000 ------------------------------------ ---------- ------------ ---------- (Decrease)/Increase in cash in the year (1,334) (2,791) (1,037) Net cash inflow in respect of new borrowings - (38) - Net cash outflow in respect of borrowings repaid 25 47 32 ------------------------------------ ---------- ------------ ---------- Changes resulting from cash flows (1,309) (2,782) (1,005) Loans acquired with subsidiary - - - Effect of foreign exchange (149) (82) (8) ------------------------------------ ---------- ------------ ---------- Change in net funds (1,458) (2,864) (1,013) Net funds at beginning of period 7,817 10,681 10,845 ------------------------------------ Net funds at end of period 6,359 7,817 9,832 ------------------------------------ ---------- ------------ ---------- Analysis of net funds Cash and cash equivalents classified as: * Current assets 6,739 8,250 10,129 Bank and other loans (380) (433) (297) Net funds at end of period 6,359 7,817 9,832 ------------------------------------ ---------- ------------ ----------
Notes to the Interim Financial Statements
1. Principal activity
1Spatial plc is a public limited company which is listed on the AIM London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 40 Dukes Place, London, EC3A 7NH. The registered number of the Company is 5429800.
The principal activity of the Group is a management consultancy and software business that provides companies with advice and solutions in order to enhance overall profitability.
2. Basis of preparation
The condensed consolidated interim financial information for the six months ended 31 July 2015, has been prepared in accordance with the accounting policies that are expected to be adopted in the Group's full financial statements for the year ended 31 January 2016 and are not expected to be significantly different to those set out in the Group's audited financial statements for the year ended 31 January 2015.
The financial information for the half years ended 31 July 2015 and 31 July 2014 is neither audited nor reviewed and does not constitute statutory financial statements within the meaning of section 434(3) of the Companies Act 2006 for 1Spatial plc or for any of the entities comprising the 1Spatial Group. Statutory financial statements for the preceding financial year ended 31 January 2015 were filed with the Registrar and included an unqualified auditors' report.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed consolidated financial statements.
3. Taxation
The tax expense on the result for the six months ended 31 July 2015 is based on the estimated tax rates in the jurisdictions in which the Group operates, for the year ending 31 January 2016.
4. (Loss)/Earnings per share
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
Unaudited Audited Unaudited As at As at As at 31 July 31 January 31 July 2015 2015 2014 GBP'000 GBP'000 GBP'000 ---------------------------------- ---------- ------------ ---------- Loss attributable to equity holders (1,525) (1,517) (754) Adjustments: Income tax charge/(credit) 36 (5) 70 Net finance cost 96 56 26 Share of net loss of associates 139 - - Depreciation 145 267 135 Amortisation and impairment of intangible assets 687 1,183 452 Share-based payment charge 489 723 355 Strategic, integration and other one-off items 793 2,345 947 ---------------------------------- ---------- ------------ ---------- Adjusted EBITDA 860 3,052 1,231 Unaudited Audited Unaudited As at As at As at 31 July 31 January 31 July 2015 2015 2014 Pence Pence pence ---------------------------------- ---------- ------------ ---------- Basic earnings/(loss) per share (0.23) (0.23) (0.12) ---------------------------------- ---------- ------------ ---------- Diluted earnings/(loss) per share (0.23) (0.23) (0.12) ---------------------------------- ---------- ------------ ---------- Adjusted basic earnings/(loss) per share 0.13 0.47 0.19 ---------------------------------- ---------- ------------ ---------- Adjusted diluted earnings/(loss) per share 0.13 0.45 0.18 ---------------------------------- ---------- ------------ ---------- Number Number Number 000s 000s 000s --------------------------------- -------- -------- -------- Basic weighted average number of ordinary shares 666,666 650,415 650,415 Impact of options and warrants 4,004 22,970 22,970 Diluted weighted average number of ordinary shares 670,670 673,385 673,385 --------------------------------- -------- -------- --------
The information as at 31 July 2014 has been restated to include depreciation in the adjustments to the loss attributable to equity holders, so that the adjusted basic and diluted earnings per share are based on Adjusted EBITDA.
5. Dividends
No dividend is proposed for the six months ended 31 July 2015 (31 January 2015: nil; 31 July 2014: nil).
6. Segmental information
Central Cloud costs Geospatial Services Total 31 July 2015 GBP'000 GBP'000 GBP'000 GBP'000 Revenue - 7,415 1,030 8,445 Cost of sales - (3,195) (543) (3,738) ------------------------------ --------- ----------- ---------- --------- Gross profit - 4,220 487 4,707 Administrative expenses (1,986) (3,554) (421) (5,961) Adjusted EBITDA (1,135) 1,721 274 860 Less: depreciation (38) (101) (6) (145) Less: amortisation and impairment of intangible assets - (539) (148) (687) Less: share-based payment charge (430) (58) (1) (489) Less: strategic, integration and other one-off items (383) (357) (53) (793) ------------------------------ --------- ----------- ---------- --------- Operating (loss)/profit (1,986) 666 66 (1,254) Finance income 8 30 - 38 Finance costs (1) (132) (1) (134) ------------------------------ --------- ----------- ---------- --------- Net finance income / (costs) 7 (102) (1) (96) Share of net loss of associates (67) (72) - (139) (Loss)/profit before tax (2,046) 492 65 (1,489) Tax - (31) (5) (36) (Loss)/profit for the year (2,046) 461 60 (1,525) ------------------------------ --------- ----------- ---------- --------- Central Cloud costs Geospatial Services Total 31 January 2015 GBP'000 GBP'000 GBP'000 GBP'000 Revenue - 17,934 1,664 19,598 Cost of sales - (8,000) (804) (8,804) ------------------------------ --------- ----------- ---------- ---------
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Gross profit - 9,934 860 10,794 Administrative expenses (3,818) (7,758) (684) (12,260) Adjusted EBITDA (2,506) 5,105 453 3,052 Less: depreciation (26) (234) (7) (267) Less: amortisation and impairment of intangible assets - (1,084) (99) (1,183) Less: share-based payment charge (604) (129) 10 (723) Less: strategic, integration and other one-off items (682) (1,482) (181) (2,345) ------------------------------ --------- ----------- ---------- --------- Operating (loss)/profit (3,818) 2,176 176 (1,466) Finance income 25 5 - 30 Finance costs (2) (81) (3) (86) ------------------------------ --------- ----------- ---------- --------- Net finance income / (costs) 23 (76) (3) (56) (Loss)/profit before tax (3,795) 2,100 173 (1,522) Tax - (38) 43 5 (Loss)/profit for the year (3,795) 2,062 216 (1,517) ------------------------------ --------- ----------- ---------- --------- Central costs Geospatial Other Total 31 July 2014 GBP'000 GBP'000 GBP'000 GBP'000 Revenue - 9,375 764 10,139 Cost of sales - (4,417) (460) (4,877) ------------------------------ --------- ----------- --------- --------- Gross profit - 4,958 304 5,262 Administrative expenses (1,805) (3,798) (317) (5,920) Adjusted EBITDA (1,110) 2,262 79 1,231 Less: depreciation (12) (118) (5) (135) Less: amortisation and impairment of intangible assets - (452) - (452) Less: share-based payment charge (302) (65) 12 (355) Less: strategic, integration and other one-off items (381) (467) (99) (947) ------------------------------ --------- ----------- --------- --------- Operating (loss)/profit (1,805) 1,160 (13) (658) Finance income 16 3 - 19 Finance costs (1) (42) (2) (45) ------------------------------ --------- ----------- --------- --------- Net finance income / (costs) 15 (39) (2) (26) (Loss)/profit before tax (1,790) 1,121 (15) (684) Tax - (70) - (70) (Loss)/profit for the year (1,790) 1,051 (15) (754) ------------------------------ --------- ----------- --------- ---------
7. Strategic, integration and other one-off items
In accordance with the Group's policy for strategic, integration and other one-off items, the following charges were included in this category for the period:
Six months Six months ended Year ended ended 31 July 31 January 31 July 2015 2015 2014 GBP'000 GBP'000 GBP'000 ------------------------------------- ----------- ------------ ----------- Costs associated with corporate transactions and other strategic costs 410 514 93 Redundancy, relocation, rebranding and other integration costs 105 1,625 788 Provision for pension costs in 1Spatial France 217 - - Training and other costs associated with the implementation of the new ERP system 6 78 65 Other 55 128 1 ------------------------------------- ----------- ------------ Total 793 2,345 947 ------------------------------------- ----------- ------------ -----------
8. Business combinations
On 23 July 2015, 1Spatial plc acquired control of Enables IT Group plc (now Enables IT Group Limited) by acquiring 100% of its issued share capital for GBP1,812,878. Enables IT Group is a leading provider of cloud computing, managed and professional services and was acquired in order to broaden and enhance the enlarged group's managed services and cloud services offering.
The following table summarises the consideration paid for the Enables IT Group, the provisional fair value of assets acquired and liabilities assumed at the acquisition date:
GBP'000 Value of consideration - issue of equity instruments 1,813 -------- Total purchase consideration 1,813 ======== Intangible assets * Customer lists 1,410 Property, plant and equipment 704 Cash and cash equivalents 465 Inventories 35 Trade and other receivables 837 Current income tax receivables 1 Trade and other payables (2,347) Deferred tax liabilities (51) -------- Total identifiable net assets 1,054 Goodwill 759 -------- Total consideration 1,813 ======== Satisfied by: * Equity instruments (30,831,262 ordinary shares of 1Spatial plc) 1,813 -------- Total consideration transferred 1,813 ======== Net cash outflow arising on acquisition * Cash consideration - * Less: cash and cash equivalents acquired 465 -------- 465 ========
Acquisition-related costs (included in administrative expenses in the 1Spatial plc Statement of Comprehensive Income for the period ended 31 July 2015) amounted to GBP253,000.
9. Interests in associates
Set out below are the associates of the Group:
Place Proportion of of incorporation Proportion of voting power Principal (or registration) ownership interest held Name activity and operation % % 31 31 31 31 31 31 July January July July January July 2015 2015 2014 2015 2015 2014 Location-based software Sitemap (Note United Ltd 1) Kingdom 49% 49% - 49% 49% - Location-based Laser software Scan (Note United Inc. 2) States 47% - - 47% - -
Note 1: Sitemap Ltd was acquired on 30 January 2015, and brings a new, although complementary, opportunity to the Group in its potential to generate revenue from data services.
Note 2: Laser Scan Inc. ("LSI") - the sole US-based distributor of 1Spatial geospatial products and solutions across the Americas - was acquired on 3 February 2015 by 1Spatial Holdings Limited (a wholly-owned subsidiary of 1Spatial plc) to provide 1Spatial with long-term security of its Americas distribution channel, and ensure continuity of service to key customers. 47 per cent was acquired for cash consideration of US$2.25m.
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