1Spatial Plc Placing, Acquisition & Agreement with Esri (2969Y)

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RNS Number : 2969Y

1Spatial Plc

08 May 2019

8 May 2019

1Spatial plc (AIM: SPA)

("1Spatial", the "Company", and together with its subsidiaries, the "Group")

Placing, Acquisition of Geomap-Imagis and Agreement with Esri

Introduction

1Spatial, the global geospatial software and solutions company, is pleased to announce that the Group has entered into two separate share purchase agreements (each a "SPA") to acquire the entire issued share capital of Geomap-Imagis Participations ("Geomap-Imagis") (the "Acquisition"), for total consideration of EUR7.0 million (the "Consideration"). As at 6 May 2019, the business had net cash of approximately EUR1.9 million. In order to fund the cash element of the Consideration, 1Spatial also announces a placing to raise GBP3.1 million (gross) (the "Placing") through the issue of 9,871,220 new ordinary shares in the capital of the Company (the "Placing Shares") at a price of 31.5 pence per share (the "Placing Price"), a discount of approx. 5 per cent. to the closing middle market price on 7 May 2019.

Alongside and in conjunction with the Acquisition, 1Spatial France and 1Spatial Belgium (together, "1Spatial Europe") has entered into a new partnership agreement with Esri Inc. ("Esri") (the "Partnership Agreement").

The Company believes that the Partnership Agreement, combined with the Acquisition, will be of significant benefit to the Company's existing European customers in providing them with access to Esri's market leading global GIS platform. In addition to being immediately earnings enhancing, the acquisition offers a combination of specialised vertical business applications and significant 'know-how' in the Group's target sectors, which can be delivered through the combination of 1Spatial Europe and Geomap-Imagis.

HIGHLIGHTS

- New strategy for 1Spatial France and 1Spatial Belgium division, bringing alignment to the Group's strategy to be a software-enabled solutions provider where location and geospatial data is key, with the goal to become a leader in Location Master Data Management

- Acquisition of entire share capital of geospatial software solutions company Geomap-Imagis for a total consideration of EUR7.0 million

- Geomap-Imagis offers strong strategic fit with the Group - the acquisition is highly synergistic and is expected to be immediately earnings enhancing

- New agreement signed with Esri, strengthening and broadening the ongoing Group's global partnership with Esri and the distributor community

- Esri agreement offers 1Spatial Europe's existing customers the benefit of access to Esri's world leading GIS platform, while retaining the Group's specialised business applications and extensive know-how

- Oversubscribed Placing to raise GBP3.1 million (gross) to partially fund the cash consideration due in respect of the Acquisition

Claire Milverton, CEO of 1Spatial, commented:

"We are delighted to announce this new partnership with our global partner Esri and the acquisition of Geomap-Imagis. The deal is immediately earnings enhancing and will significantly strengthen our customer proposition and align our French and Belgian businesses with the strategy of the wider Group as a solution provider with a focus on industry aligned business applications and Location Master Data Management.

Geomap-Imagis operates within 1Spatial's existing markets and is an Esri Gold partner. The acquisition will provide a number of vertically focussed software business applications and will add a new vertical in Facilities Management, an area where we see great potential for our Location Master Data Management offering. We expect to be able to achieve a range of strategic synergies and it offers substantial land and expand potential, in-line with our stated strategy. We look forward to welcoming the Geomap-Imagis employees and customers to the Group"

Gilles Camus, Director General of Geomap-Imagis, commented:

"We are very pleased to have agreed the deal with 1Spatial, a company that has a customer base, technology platform and a cultural vision very similar to ours.

The deal with 1Spatial will give Geomap-Imagis the financial and organisational structure to grow in our current market in France as well as leverage our vertically focussed business applications globally".

Jack Dangermond, CEO of Esri, commented:

"This agreement is great news for our continued global partnership and especially for our customers who will benefit from this deeper alliance. We are always looking for opportunities to bring the innovative capabilities of geospatial technology to a broader array of users, especially in growing areas like facilities management."

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For further information, please contact:

1Spatial plc 01223 420 414

Andrew Roberts / Claire Milverton / Nicole Payne

N+1 Singer 020 7496 3000

Shaun Dobson / Lauren Kettle (Corporate Finance)

Tom Salvesen / Mia Gardner (Corporate Broking)

FTI Consulting LLP 020 3727 1000

Dwight Burden / Alex Le May

LEI Code: 213800VG7OZYQES6PN67

The Acquisition

Geomap-Imagis is a geospatial solutions company with a head office in Nimes, southern France, dedicated to providing business applications to the key sectors of Transport, Government, Utilities (including Telecoms) and Facilities Management vertical markets.

Combined with the 1Spatial Europe business, the Board considers there to be significant benefits of the Acquisition to its French and Belgian business, as well as for the enlarged group. These benefits include:

- Aligned customer vertical markets in Government, Utilities, Transport and Facilities Management;

- Aligns to Group's global strategy of being a technology enabled, business applications and solutions provider to the geospatial market in its chosen key vertical sectors;

   -     Increased scale and market access to customers; 

- Strengthening the Group's existing solutions portfolio with additional technology-based solutions and business applications;

- Stronger links with key global partner Esri for increased market access and development of international software solutions;

   -     Access to a skilled management team and workforce with domain expertise; 

- An existing customer base of over 500, providing significant cross-selling and land and expand opportunities for the enlarged group

In the year to 31 December 2018, Geomap-Imagis generated revenues of EUR7.7m, adjusted EBITDA of EUR0.8m and profit after tax of EUR0.6m. The company employs 66 members of staff across two offices in France and has a 61-man flexible offshore workforce in Tunisia.

Agreement with Esri

In early 2017 the Company undertook a full strategic review in order to develop a clear direction for growth within the Group; the result of which was the adoption of a strategy to focus on Geospatial sector solutions and business applications, and the Group's Location Master Data Management SaaS platform.

While this strategy has been adopted with ever-increasing success in the UK, USA and Australia, in 1Spatial Europe the Group's platform and go-to-market strategy differs slightly, and it has become increasingly clear to the Board that to realign the direction of the division with the rest of the business organically would require significant further investment. Furthermore, 1Spatial Europe has historically more often found itself in direct competition with Esri in its French-speaking regions, which is in contrast with the rest of the Group, where it considers itself to be a strategic global partner.

The Partnership Agreement with Esri enables 1Spatial Europe's existing clients, should they wish, to migrate to an Esri platform while remaining retained customers of the Company. The terms of Partnership Agreement also provide for training for the 1Spatial team on the Esri software products, in order to facilitate the smooth migration of existing clients. The migration of 1Spatial Europe customers will enable the division to redirect its focus to the development of analytic software and business tools, assisted and accelerated through the addition of Geomap-Imagis.

The Share Purchase Agreements

The first SPA, between 1Spatial, its wholly owned subsidiary 1Spatial France SAS ("1Spatial France"), and certain individual shareholders (the "Majority Vendors"), relates to 80 per cent. of the voting rights of Geomap-Imagis (the "Majority SPA") and the second SPA, between 1Spatial France and Esri France, relates to the remaining 20 per cent. of the voting rights of Geomap-Imagis (the "Esri SPA"). The SPAs have been entered into concurrently and are inter-conditional.

Under the terms of the Majority SPA, the Group shall pay to the Majority Vendors total consideration of EUR5,600,136, of which EUR4,433,137 is to be satisfied in cash (the "Majority Cash Consideration") by 1Spatial France with the balance of EUR1,166,999 to be satisfied by the issue by 1Spatial of new ordinary shares in the capital of the Company (the "Consideration Shares").

Of the Majority Cash Consideration, EUR4,024,135 is to be paid by 1Spatial France to the Majority Vendors immediately upon completion of the Acquisition ("Completion"), with the balance of EUR409,002 to be held in escrow until the first anniversary of Completion.

Of the consideration to be satisfied by the issue of the Consideration Shares, EUR726,459 will be satisfied immediately upon Completion and the balance of EUR440,540 will be satisfied on 30 March 2023. Accordingly, the Company has issued, conditional on Completion, 1,902,686 new ordinary shares (the "Initial Consideration Shares") at an effective price of 32.68 pence per Initial Consideration Share. The Initial Consideration Shares are subject to a lock up obligation until 31 December 2021.

Under the terms of the Esri SPA, 1Spatial France shall pay cash consideration of EUR1.4 million; half upon Completion and half no later than 13 months following the Completion date (The "Second Installment"). 1Spatial has granted a guarantee to Esri France to secure the payment of the Second Installment.

The cash consideration payable under the terms of the SPAs will be funded from proceeds of the oversubscribed GBP3.1 million Placing and the Company's existing cash resources. In addition, as at 6 May 2019, Geomap-Imagis had net cash of approximately EUR1.9 million. Following admission of the Initial Consideration Shares and the Placing Shares, the Initial Consideration Shares will represent 1.72 per cent. of 1Spatial's enlarged voting share capital.

Financial Results

The Group expects to release its financial results for the year ended 31 January 2019 on 14 May 2019. As confirmed in its trading update in March 2019, the Group traded in line with expectations in FY19, and in its financial results expects to confirm the following;

 
                                                             FY18      FY19 
                                                           (GBPm)    (GBPm) 
 Revenue*                                                    16.9      17.6 
            Solutions business revenues                      10.6      12.2 
            GIS business revenues                             6.3       5.6 
            GIS business revenues - IFRS 15 adjustment          -     (0.2) 
 
 Gross Profit                                                 8.9       9.2 
            Gross profit margin                               53%       52% 
 
 Adjusted EBITDA                                              0.4       1.2 
 Adjusted EBITDA margin                                        2%        7% 
 

* As adjusted in FY19 for the impact of IFRS15

On a like-for-like basis at constant currency, revenues in FY19 increased by GBP0.9 million to GBP17.8 million, however following the implementation of IFRS 15 ('Revenue from Contracts with Customers') resulted in negative adjustments of GBP0.2 million to the Group's FY19 GIS service revenues, giving Group adjusted revenue for the year of GBP17.6 million.

In the year, the Group saw licence revenues increase by 12 per cent. to GBP2.8 million (FY18: GBP2.5 million), services revenues increase by 11 per cent. to GBP8.0 million (FY18: GBP7.2 million) and support and maintenance revenues decrease by 3 per cent. to GBP7.0 million (FY18: GBP7.2 million).

The Placing

The Company has raised GBP3.1 million (gross) through the conditional allotment of the Placing Shares at the Placing Price, which represents a discount of approx. 5 per cent. to the closing middle market price on 7 May 2019, being the latest Business Day prior to the release of this announcement.

Pursuant to the terms of a placing agreement entered into between the Company and N+1 Singer in relation to the Placing (the "Placing Agreement"), N+1 Singer has conditionally agreed to use its reasonable endeavours, as agent for the Company, to place the Placing Shares with certain institutional and other investors. The Placing has not been underwritten.

The Placing Agreement contains warranties from the Company in favour of N+1 Singer in relation to, inter alia, relating to the Group and its business. In addition, the Company has agreed to indemnify N+1 Singer in relation to certain liabilities it may incur in respect of the Placing. N+1 Singer has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event that any of the warranties given to N+1 Singer in the Placing Agreement are untrue or inaccurate in any respect; the failure of the Company to comply in any material respect with its obligations under the Placing Agreement; the occurrence of a force majeure event or a material adverse change affecting the condition, the earnings or business affairs or prospects of the Group as a whole, whether or not arising in the usual course of business or; any statement contained in the Placing Agreement in relation to the Placing is or has become untrue.

Admission

Application has been made for the Placing Shares to be admitted to trading on AIM, with dealings expected to commence at 8 a.m. on 10 May 2019. Application will be made for the Initial Consideration Shares to be admitted to trading on AIM, with dealings expected to commence at 8 a.m. on 15 May 2019. Following the issue and admission of both the Placing Shares and the Initial Consideration Shares, the Company will have a total of 110,805,795 ordinary shares of 10p each ("Ordinary Shares") in issue, including 319,635 Ordinary Shares held in treasury. Accordingly, the total issued share capital with voting rights following admission of both the Placing Shares and the Initial Consideration Shares will be 110,486,160.

About 1Spatial

1Spatial is a technology-enabled solutions provider supplying vertically-focused business applications to industry sectors where the accuracy of location and geospatial data is key. It is a global leader in managing geospatial data, with the goal to be a market leader in Location Master Data Management.

1Spatial provides its customers with business-focused applications where there is a reliance on location or geospatial data. It delivers real value by using its patented 1Integrate tool to ensure that the underlying data is current, complete and consistent through the use of automated processes. This ensures that decisions are always based on the highest quality information available.

Our global clients include national mapping and land management agencies, utilities, transportation organisations, government departments, emergency services, defence and census bureaus.

Today - as location data from smartphones, the Internet of Things and great lakes of commercial Big Data increasingly drive commercial decision-making - our technology is used by a wide range of commercial and government organisations from utilities and transport businesses, to facilities management companies.

1Spatial plc is AIM-listed, headquartered in Cambridge, UK, with operations in the UK, Ireland, France, Belgium, Australia and USA.

For more information visit www.1spatial.com

About Geomap-Imagis

Geomap-Imagis is a geospatial software solutions provider focussed on key markets of Transporation, Government, Utilities (including telecommunications) and Facilities Management. The company provides solutions which include ready to market business applications which are Esri platform compliant but also interoperable with other software such as CAD and BIM.

The company's approach is customer orientated with the focus on the customer needs for the business applications. The company has significant Esri and domain expertise and provides solutions which include software, consultancy, training, integration and support.

The Company's primary market is in France with its Head office in Nimes and an offshore facility in Tunisia.

About Esri

Founded in 1969 and headquartered in Redlands, California, Esri is the global market leader in geographic information system (GIS) software, location intelligence, and mapping. The company offers Esri Geospatial Cloud, the most powerful geospatial cloud available, to help customers unlock the full potential of data to improve operational and business results. Today, Esri software is deployed in more than 350,000 organizations including 90 of the Fortune 100 companies, all 50 state governments, more than half of all counties (large and small), and 87 of the Forbes Top 100 Colleges in the U.S., as well as all 15 executive departments of the U.S. Government and dozens of independent agencies. With its pioneering commitment to geospatial information technology, Esri engineers the most advanced solutions for digital transformation, the Internet of Things (IoT), and advanced analytics.

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May 08, 2019 02:00 ET (06:00 GMT)