1Spatial Plc: 2022 Final Results

27 April 2022

1Spatial, (AIM: SPA), a global leader in Location Master Data Management (LMDM) software and solutions, is pleased to announce audited final results for the year ended 31 January 2022.

·       Significant high-value contracts signed in FY 2022 combined with strong growing pipeline of prospects  

· Organic revenue growth with higher levels of recurring revenue achieved from new customer wins and   expansion contracts in all regions

·     Continued R&D investment in innovative solutions creating market leading Location Master Data Management ("LMDM") solution

Financial highlights

	31 January 2022 £m	31 January 2021 £m	Change %
Group revenue	27.0	24.6	+10
Recurring revenue	12.2	10.6	+15
Term licences revenue	2.9	1.1	+167
Group Total ARR*	13.4	10.7	+26
Term licences ARR*	4.1	1.6	+160
Committed services backlog	12.5	5.5	+129
Group gross profit	13.9	13.1	+6
Adjusted EBITDA*	4.2	3.6	+15
Adjusted EBITDA* margin (%)	15.5	14.8	+0.7pp
Operating profit/(loss)	0.4	(1.2)	n/a
Profit/(loss) before tax	0.2	(1.4)	n/a
Earnings/(loss) per share - basic and diluted (p)	0.2	(1.0)	n/a
Net cash***	3.2	4.3	-24

* Adjusted EBITDA is a company-specific measure which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items

** Annualised Recurring Revenue is the annualised value at the year-end of committed recurring contracts for term licences and support & maintenance

*** Net cash is gross cash less bank borrowings but excludes lease liabilities

Operational highlights and Outlook

· 37% revenue growth in the US at constant currency

· Reporting first Group profit before tax for over a decade

· Trading in the current financial year has started positively and, while cognisant of inflationary cost pressures, the Board remains confident in delivering results for FY 2023 in line with current expectations

Commenting on the results, 1Spatial CEO, Claire Milverton, said: "This year has been one of solid organic growth, fuelled by a number of landmark wins, including high profile and national level contracts in each of our target markets.

"It is extremely encouraging to see such positive early indicators of the success of our strategic growth plan. We have exited the year with increased levels of recurring revenues, an expanded customer base and a partner network stronger than we have ever had - all of which provide us with a valuable base on which to expand in the year ahead.

"With the validation and sharing of location data sitting at the heart of many areas of digital transformation, we are seeing a growing number of opportunities entering our sales pipeline across all our regions and markets. This healthy sales pipeline and increased levels of recurring revenue provide the Board with confidence that the Group's progress over the last year is set to continue in the coming year and beyond. "

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019.

Chairman's Report

1Spatial has enjoyed a successful first year of its three-year growth plan. Expansion has been seen in all parts of the business, delivering across all three of our strategic growth pillars: Innovation, Customer Relationships and Smart Partnerships. We have seen substantial financial growth, exceeding our revenue and sales forecasts for the year, which has provided a solid basis for long-term success.

Digital transformation, combined with government initiatives such as increased infrastructure investment and the launch of sustainability programmes, are driving a substantial need for data management tools, particularly those capable of managing complex location data. With its enterprise grade software and over 30 years' heritage in location data, 1Spatial sits at the heart of this rapidly increasing demand, as evidenced by the significant high-profile wins in the year, which in turn are elevating our profile on the global stage. These wins highlight the quality of 1Spatial's world-class technology and geospatial expertise, and the ability of the business to scale through the sale of repeatable business applications and software solutions.

Financials

Our key financial objectives for the year were to grow recurring revenues, while generating funds to be reinvested into the business. I am pleased to report that our financial performance exceeded expectations this year, with sales orders being considerably higher than our expectations. We have also returned to organic revenue growth, with increased revenue across all regions and sectors in which we operate. Our first recorded operating profit and profit before tax for over a decade represents a positive financial milestone and is particularly pleasing given the accelerated transition we are achieving in our business model towards term and SaaS based subscription licenses.

Operational successes

This year has been a year of investment for 1Spatial, to provide a platform for scalable growth as we develop our people and build out our technology offering. We are successfully building repeatability into our solutions and have invested in Cloud delivery, which will increase our addressable market significantly in future years. We have won several new landmark customers, including high profile and national level digital transformation initiatives and signed two of our largest ever deals. Growth in the US has been pivotal to this year's successes, which alongside our strengthened partnerships and substantial customer wins has significantly expanded our horizons of opportunity.

People

We have invested in the expansion of our senior leadership team to ensure we have the depth of management to deliver our strategy and have been delighted by the immediate positive impacts the new team members have made. Our priority continues to be the wellbeing of our teams around the world, providing them with the best environment to continue to deliver the high-quality service our customers expect of 1Spatial.

World events continue to be challenging and worrying for many. We do not have any operations in Russia or the Ukraine and no customers in those regions.

Environmental, Social and Governance (ESG)

Like many businesses, ESG is very important for 1Spatial as we strive to make the world safer, smarter and more sustainable for the future. Whilst we are still in the early stages of implementing ESG initiatives across the Group, we have already taken steps to address key areas within ESG over the past few years. During the year we engaged with a third party with expertise in this area, to help us consolidate all of our initiatives and define and create our full ESG strategy, which is set out in more detail in the Annual Report.

Given the nature of what we do, we have a low impact on the environment, but we are always aiming to improve and offset our carbon footprint by initiatives such as donating to the Woodland Trust to offset travel.

Outlook/Summary

We have entered the new financial year in a significantly stronger position. With a strong sales backlog and increased levels of recurring revenue, I am confident the Group's success over the past 12 months is set to continue.

We anticipate scalable growth in three key areas. Firstly, we expect the US to continue to accelerate in the coming years and become a substantial part of our Group revenues in the future. Secondly there is significant growth potential from new partnerships, targeting the government and large enterprise digital transformation opportunities. Thirdly, the commercialisation of our cloud-based platform planned in the second half of the year enabling us to launch Validation as a Service (VaaS) offerings and other targeted SaaS business applications such as 1Streetworks/TMPA should be a transformational opportunity for scalable growth.

The Board is confident that the inflationary pressures being felt by all businesses in the current environment are being well managed.

We believe the investments we have made over the past year in our people and technology position us well to take advantage of the huge opportunity that is ahead. The significant number and range of new wins in the year provides the Board with confidence that 1Spatial is in an excellent position to continue its upward trajectory and we expect a successful continuation of the execution of our growth strategy.

Finally, I would like to thank all our staff for their contribution and fortitude through the pandemic.

Andy Roberts

Non-Executive Chairman

CEO's Review

This year has been one of solid organic growth, fuelled by a number of landmark wins, including high profile and national level contracts in each of our target markets, as we conclude what has been a transformative first year of our three-year growth plan. We have expanded our product offering and delivered growth in revenues, term licence revenue, ARR and adjusted EBITDA as we successfully transition our business model. It is encouraging to see a strong performance in all regions, with growth in the UK and North America particularly noteworthy.

We help over 1,000 customers, spanning key sectors such as government, utilities and transportation make better business decisions and move towards a smarter world, through improved accuracy and sharing of location data. While this is already an extensive customer base, we believe, as leaders in location data validation and sharing, we are just at the start of our growth journey.

The demand for up-to-date location data has never been greater, due to the acceleration in digital transformation taking place across all industries. Location data is a vital element in the delivery of faster and safer services, and because it is increasingly being used as the main point of reference when connecting multiple systems, it needs to be accurate and shareable. Our rules engine, 1Integrate, and cloud portal, 1Data Gateway, are recognised, both by our customers and a growing number of influential partners, as powerful tools to ensure good quality data and trust when sharing data.

This fast-growing industry need has led to growth in our customer numbers and revenues and created a record pipeline of opportunities as we enter the new financial year.

Top line growth and a return to profits

The success of our strategy and the growth in our market can be seen in our strong financial performance during the year, particularly in H2 FY 2022, which has seen the Group secure its largest contracts to date, providing a strong platform for growth in future years.

I am pleased to report our first operating profit and profit before tax for over a decade, representing a significant shift from an operating loss of £1.2m in the prior year. We have seen organic growth in revenues, recurring revenues and adjusted EBITDA profit levels, whilst at the same time, increasing investment in the business as part of the three-year growth plan. Group revenue increased by 10% to £27.0m from £24.6m in FY 2021 with double-digit growth in recurring revenue year on year. The order book of committed revenue increased by 129% to £12.5m and term licence ARR increased by 160% to £4.1m.

US delivering on its promise

A key success is the Group's expansion across North America, which presents a major opportunity for the business going forward.

We have successfully sold and implemented 1Integrate and 1Data Gateway in key US States including California and Michigan. We secured several landmark contracts in the year, most notably four new wins with US States to support delivery of their Next Generation 911 Emergency Services system.

US legislation requires all States to upgrade their emergency services, building digital platforms and incorporating the use of GIS data, to support NG 911 services and ensure a modern and safe emergency response system. Key challenges to meeting these requirements have been the completeness and accuracy of the GIS data, the need to integrate other data from multiple sources such as road traffic information, and the fact that location data is constantly changing. Our Next Generation 911 solution, now being implemented in seven US States, ensures that emergency services are using validated,  integrated and up to date data and ultimately, that the teams on the ground are able to respond to incidents more quickly and with greater confidence in data quality.

Typical ARR per State for our NG911 solution is initially around US$0.1-0.2m and we expect total ARR for this solution across the US to grow to over $1m in FY23. We are growing our sales team to support this opportunity in other States.

Following the passing of a $2.2 trillion reconciliation bill in the US in November 2021, which includes $500 million of funding to support NG 911 deployments, alongside the digitalisation of 911 systems across America, we are seeing significant new opportunities where we can bring our unique technology and solutions to help providers achieve faster response times.

The development of our cloud platform means we will soon be able to offer a 'light version' NG911 SaaS solution aimed at the hundreds of counties and cities within each State, considerably increasing our addressable opportunity.

There is also sizeable opportunity for growth within each State by launching additional solutions, including for example Highway Performance Monitoring Systems (HPMS) and Crash Reporting. We have already seen success in Michigan where we have doubled the initial ARR through the upsell of additional solutions.

This all contributes to a high-margin medium-term opportunity, based around our own IP and channels to market, that can transform the economics of our US operation. Further out we have the opportunity for expansion into Canada and Latin America.

Major contract wins

In the UK, we have continued to deliver top and bottom line growth through new multi-year contracts with government bodies. These include an £8m multi-year contract in partnership with a consortium to deliver a significant digital transformation programme for a department of the UK Government, and a £6.5m contract for the UK Government's Geospatial Commission supporting Atkins to deliver the National Underground Asset Register. These contracts contribute £1.7m to Annualised Recurring Revenue.

Successes such as these, and the considerable size of our sales pipeline, give us the confidence to continue to invest in the business, to ensure we have the right structure to deliver on the growing opportunity as we move into the second year of our three-year growth plan. We have made a number of senior appointments across the Group to ready the business for this next phase of growth, expanded our sales and delivery teams and invested in the Cloud to increase our addressable market.

Strategic review

We are building our highly scalable business on three pillars: Innovation, Customer Relationships and Smart Partnerships and I am proud to say we made considerable progress against all three throughout the year.

1.  Innovation

Innovation lies at the heart of 1Spatial. We use our patented software to audit and automatically correct location data, keeping it accurate and up to date.  Our automated software is able to handle huge volumes of complex data allowing our customers not only to ensure accuracy but also save significant amounts of time and money, giving them the ability to solve complex challenges in the management of their spatial and non-spatial data.

During the year, we were granted a UK Patent for Modification and Validation of Spatial Data, recognising its power as a tool to ensure good quality data and facilitate trust when sharing data. The patent protects the use of 1Spatial's Rules Engine technology, which is used in 1Integrate, further strengthening the Group's international patent coverage, which includes a US patent for Modification and Validation of Spatial Data.

The 1Spatial Platform for Location Master Data Management can be split into two key areas:

· Data Management Solutions - Managing data to ensure it is correct, consistent and compliant

·  Business Applications - Utilising trusted data through business applications to solve specific business   challenges

Data management solutions

Key development initiatives during the year were to ensure that our solutions meet the rising demand for integration with a cloud-enabled world.  This also included improvements to data security and the ability to make our customer deployments simpler than ever.

The innovation in both 1Integrate and 1Data Gateway throughout the year have provided a vehicle for further growth and accessibility of our solutions and the development team continue to assess the products against both the customer and market needs so that we are always at the forefront in our market sectors.

1Integrate

1Integrate is our patented no-code rules engine - this continues to be enhanced to make it more powerful and more capable for automated data validation and processing. During the year 1Integrate was successfully upgraded to include access to more data types.  This included access to more data store formats and access to data over the web such as Esri's Web Feature Services.  1Integrate is also now packaged with a Repository Synchronisation Tool making it simpler for our customer teams to collaborate; and faster to build, test and deploy rules across the organisation.

We continued to add further support for 3D data which was used in a pilot project with a National Mapping Agency.  This pilot project was focused on automating the import of geospatial data into a 3D database, and automatically validating against the project's data specification using 1Integrate 3D. The rules inspect the building information, finding and correcting any overlaps, overhangs and any misalignments. The current and correct data was then loaded into the central databank, where the data was made available to the National Mapping Agency stakeholders.

1Data Gateway

1Data Gateway is our self-service web-portal for spatial data validation, processing and analytics. During the year we have made several upgrades including enhancements to our APIs, which allow systems to talk to each other, so our customers can analyse the results from 1Data Gateway with their own BI tools such as Esri ArcGIS Dashboard.

Business applications

We provide two types of business applications to meet our customer's needs. Applications can either plug directly into the 1Spatial Platform or alternatively can plug into the 1Spatial Platform whilst also utilising the benefits of the Esri technology.

Applications plugged directly into the 1Spatial Platform

This year we focused on the development of two types of applications on the 1Spatial Platform. These are Validation Applications and Specific Business Applications

· Validation Applications

These applications validate data to a pre-defined set of rules and provide back a report of the errors.  The first of these applications is NG911 and HPMS which are being sold in the US.  We also have identified a number of other similar solutions across our territories which will be brought to market in FY23.  We are also looking to deploy a number of these solutions to the 1Spatial cloud in FY23 so they can be offered as Validation as a Service (Vaas) solutions.

· Specific Business Applications

This year, we also focused on building targeted solutions on the platform, such as 1Streetworks (previously known as Traffic Management Plan Automation ("TMPA")), which is currently being tested at selected customers.

Both the Validation Applications (VaaS) and Specific Business Applications such as 1Streetworks should provide the Group with potential exciting new "go to" market models, lowering the price point for new customers onto the platform planned in the second half of FY23.

· Launch of 1Spatial cloud platform

We have now finalised the majority of the development on the 1spatial cloud platform which will allow us to sell the cloud solutions noted above.  The multi-tenancy SaaS platform will be more cost effective for 1Spatial as we will be managing fewer deployments and the elastic nature of the platform architecture is more cost efficient.

Applications using the benefits of Esri technology

During the year we have continued to invest in the business applications built on Esri technology.  These include ArcOpole Pro, the application to help local authorities manage assets and urban planning, and 1Water to manage Water Networks. In addition, we have also developed 1Telecomms this year which will address the Telecoms sector. These business applications provide solutions to targeted needs that are not fulfilled by the Esri Platform.

2.  Customer relationships

We continued to strengthen our relationships with existing customers throughout the year and secured new customer wins across all territories. Our aim is to be our customers' strategic partner and advisor in LMDM. We typically expand our customer relationships over time, as we identify additional areas our software and expertise can support our customers.

The success of our customer focus, combined with ongoing transition to term licencing, can be seen in the 26% growth in Annualised Recurring Revenue driven both by new customer wins and expansion of existing customer accounts.

Land and expand

The Group delivered new customer wins including multi-year licence contracts in the year across all regions, with the USA performing particularly well.

New customer wins include:

· National Underground Asset Register (NUAR) - Supporting the Government to build back better, greener   and levelling up the North - £6.5 million (£1.5m licence over 3 years).

· Department of the UK Government - Multi-year digital transformation programme - £8.0 million (£6.0m       licence over 5 years).

· HM Land Registry - Single digital register across England and Wales - £0.5 million (£0.4m licence over 3   years).

·Four new contracts for NG 911 solutions in the US, with the States of Montana, Georgia, Minnesota and Arizona, demonstrating 1Spatial's unique technology and the replicability of this solution. Each with ARR of average US$0.15 million plus services of US$0.1 million.

·    Our first term licence in France, with VINCI Highways, to supply 1Telecomms, a 1Spatial app built on the       Esri platform.

Customer expansion contracts in the period, included:

· Department of Environment, Food and Rural Affairs (DEFRA) to support the Land Management System,   operated DEFRA's Rural Payments Agency (RPA), in partnership with Version 1 - £1.2 million over 5       years.

· Another contract win with DEFRA and RPA to support its field collection system - £0.5 million(£0.4m             licence over 2 years).

·    Multi-year framework agreement with Land and Property Services in Northern Ireland in partnership with  Version 1, to support the Department of Finance's ongoing programme of Digital Transformation.

·    Managed service for a major utility organisation in France in support of the deployment of 1Water - €0.3 million.

·    Additional services and licences for Google Real Estate and Workplace Services - US$0.9 million(US$0.3m licence).

·    In France, 29 existing customers have completed or commenced migration from the Group's legacy Elyx platform, to  Esri-supported solutions, including 1Water.

3.  Smart partnerships

We believe partnerships will play an important role in providing us with the reach to capitalise on the opportunity ahead. We have secured many of our largest contracts via our partners this year.

In order to accelerate this new business channel, we hired a new Head of Global partners during the year.  Key focus areas in the year have been to identify and extend our relationships with large global corporates where location data management forms part of a larger customer bid and also to extend our technology partnership with Esri.

Large global corporates

We are increasingly being selected as the data integrity provider within a consortium, cleansing the data before passing it back through wider systems. The depth of our data domain expertise and the enterprise grade of our software means we are one of the few technology partners able to work on the scale that our partners need.

New partners we have won and commenced work with this year include Atkins, Qinetiq and Landmark. We also strengthened our longstanding partnership with both Version1 and Ordnance Survey.

Technology partnership - Esri

Our long-term partnership with Esri is a key differentiator for us in many markets and provides a major opportunity as we build our own IP solutions. Esri is the global market leader in GIS with a network of over 2,700 partners around the world. We were pleased to receive the prestigious "Web GIS Transformation Award' award at the global 2021 Esri Partner Conference. This award builds on the close collaboration between 1Spatial and Esri, with 1Spatial having received Esri Utility Network Management Specialty designation, recognising 1Spatial's knowledge and expertise within utilities and the implementation of Water Solutions. Last year 1Spatial announced the collaboration with Esri UK and Northern Gas Networks to lead the UK's first ArcGIS Utility Network Migration.

We continue to build 1Spatial business applications on the Esri platform and during FY23 we are looking to internationalise a number of these.

Corporate activity

We will continue to identify potential strategic and bolt-on acquisitions to complement our organic growth.

People

The success of our business is a tribute to our employees' commitment and knowledge. We are passionate about looking after our staff to ensure each individual can realise their potential. We continue to invest in our people, providing them with the tools and training to support and allow them to realise this, with clear alignment to our Group strategy.  During the year, following employee consultation, we launched our new 1Spatial values which we believe reflect the ethos of the company.  These values are: We Respect, We Innovate, We Collaborate, We Trust and We Care.

We have added new people to the senior team to enable us to capitalise on the significant growth opportunities in the market.  This includes a Global Chief Commercial Officer, Global Head of Marketing and Global Head of Partners.  We have also bolstered the development teams with new product owners and technical leads to ensure that we can align to our strategy to increase technology sales of both our core data management solutions as well as our business applications.

Communication with our staff and maintaining wellbeing is crucial, especially in the current macroeconomic environment. We actively promote the importance of mental health and as part of our commitment to their well-being, we rolled out initiatives such as well-being months, mental health awareness training, mental health first aiders and internal events and initiatives to encourage staff to take time out from their working day.

We are always looking at ways to ensure equality and diversity across our company and an inclusive, welcoming working environment for everyone.  Over the past year, we have created global initiatives to celebrate: International Women's Day, World Food Day, Diwali, Thanksgiving, Mental Health Awareness Week, Earth Day and Health and Happiness month.

The teams continue to show ingenuity and commitment day-to-day, for which the Board and I thank them wholeheartedly. Whilst we are much better connected across all geographies as a result of the pandemic requiring colleagues to connect online, we were delighted to hold our first face to face Group sales meeting since the start of the pandemic in Cambridgeshire in February 2022 with all regional managers and sales teams joining. The event was a huge success, setting us up for a successful FY23.

Strategic priorities for the year ahead

Our focus will remain on the three pillars of our growth strategy. We are now well positioned to capitalise on the opportunity in front of us, particularly with a focus on growth in North America, where we will invest in the expansion of our sales and marketing resources.

The expansion of the 1Spatial Cloud platform will be a key strategic focus for the Group as the platform will enable us to increase our addressable market and existing customer demand for web-based access to our solutions. We anticipate that this, alongside new Validation as a Service (VaaS) solutions and SaaS based solutions such as 1Streetworks/TMPA, will be transformational for the Group in future years.

We will continue to invest in the business and its people to support our expanded customer base, while maintaining our focus on the financial goals of increased revenue growth, underpinned by growing annual recurring revenue and continue our trajectory of increased profitability at adjusted EBITDA level and higher cash generation over the long-term.

Current trading and outlook

It is extremely encouraging to see such positive early indicators of the success of our strategic growth plan. We have exited the year with increased levels of recurring revenues, an expanded customer base and a partner network stronger than we have ever had - all of which provide us with a valuable base on which to expand in the year ahead.

Location data underpins decision-making in every state, country and government entity and commercial businesses today across the globe. With the validation and sharing of location data sitting at the heart of many areas of digital transformation, we are seeing a growing number of opportunities entering our sales pipeline across all our regions and markets.

This healthy sales pipeline and increased levels of recurring revenue provide the Board with confidence that the Group's progress over the last year is set to continue in the coming year and beyond.

Trading in the new financial year has begun positively and is in line with Board expectations, with several new contracts secured and growth in the sales pipeline.

While cognisant of inflationary cost pressures, the Board remains confident in delivering results for FY 2023 in line with current expectations.

We believe the investments we are making in our people and technology put us in the right place to capitalise on this supportive market backdrop, and we are confident in our ambition and ability to deliver on our key priorities.

Claire Milverton

Chief Executive Officer

CFO Review

Summary

The Group delivered a solid financial performance in the year, growing revenues, recurring revenues and adjusted EBITDA* profit levels, whilst increasing investment in the business as part of the three-year growth plan.  The Group has also reported its first operating profit and profit before tax for over a decade, representing a significant shift from an operating loss of £1.2m in the prior year.

Revenue

Group revenue increased by 10% (13% at constant currency) to £27.0m from £24.6m in FY 2021.

Recurring revenue

The business strategy is to grow revenue from repeatable business solutions on long-term contracts, including transitioning towards selling only recurring term licences, rather than one-off perpetual licences, aiming to increase the proportion of revenue from recurring term licences compared to services. As a result, the business achieved a growth in revenue of 13% (excluding the impact of the reduction in perpetual licence revenue), and recurring revenue, as a percentage of total revenue, increased to 45% (FY 2021: 43%).

Revenue by type is shown below:

Revenue by type
	FY 2022	FY 2021	% change
Recurring revenue **	12.18	10.60	15%
Services	12.36	11.10	11%
Revenue (excluding perpetual licences)	24.54	21.70	13%
Perpetual licences	2.49	2.90	(14%)
Total revenue	27.03	24.60	10%
Percentage of recurring revenue	45%	43%

* Adjusted EBITDA is a company-specific measure, which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items

** Recurring revenue comprises term licences and support and maintenance revenue.

ARR

The Annualised Recurring Revenue ("ARR") (annualised value at the year-end of committed recurring contracts for licences and support and maintenance) increased in the year by 26% (at constant currency) from £10.7m to £13.4m as at 31 January 2022. The growth rates varied by region as shown in the table below and in the regional revenue analysis with the UK/Ireland region growing at the fastest rate of 55%, boosted by the large strategic contract wins in H2 FY 2022. The Group increased term licence ARR by 160% to £4.1m (FY 2021: £1.6m). While some of this contracted revenue relates to future years beyond FY 2023, it forms a strong platform for recurring revenue for the business. The overall renewal rate improved to 93% (FY 2021: 90%).

ARR by region
	FY 2022	FY 2021	% growth
UK/Ireland	5.93	3.82	55%
Europe	4.79	4.71	2%
US	1.40	1.14	23%
Australia	1.32	1.01	31%
Total ARR	13.44	10.68	26%

Committed revenue

The level of committed revenue (revenue for future services, licences and support contracts contracted at the balance sheet date) increased significantly in the year from the business focus of extending the commitment periods and duration of contracts, as well as signing some higher value service contracts. The level of committed project services revenue increased by 129% (at constant currency) from £5.5m to £12.5m.

The strong pipeline of prospects, coupled with the increased ARR and committed revenue, means that the Group starts the current financial year with a higher proportion of current year revenue already committed at the start of the year and a strong likelihood of achieving further progress on its three year plan revenue growth targets. With the business focus on developing, marketing and selling repeatable software solutions under a SaaS model, there is an increased level of revenue visibility, which allows the Board to plan future investment with confidence.

Regional revenue

Revenue growth by region is shown in the table below:

Regional revenue
	FY 2022	FY 2021	% change	% change (constant fx)
UK/Ireland	9.93	8.44	18%	18%
Europe	10.88	11.15	(2%)	2%
US	3.72	2.91	28%	37%
Australia	2.50	2.10	19%	19%
Total revenue	27.03	24.60	10%	13%

Revenue (at constant currency) grew organically in all regions.  Revenue in the US, which now represents 14% of Group revenue (FY 2021: 12%), had the highest growth rate at 28% (37% at constant currency). It was also pleasing to see strong growth in the Australian region of 19%. The UK/Ireland region returned to growth with double-digit growth of 18%. Revenue in the European business grew organically by 2% at constant currency, having been impacted by the reduction in one-off legacy Elyx licences sold in FY 2021 as the business evolves towards more term licences.

Gross profit margin

The gross margin reduced to 52% compared to 53%, impacted partly by the Board's decision to increase sales and delivery capacity in order to aim to secure higher value contracts, and increased spending on R&D, which is included within the cost of sales. Furthermore, the prior year benefitted (within the cost of sales) from grants given by overseas governments (£0.3m) as part of business Covid-19 support schemes. On a like-for-like basis, (i.e. excluding the impact of this benefit), the gross margin was at a similar level to the prior year (52%). Going forward, the management team are focused on driving improvements to gross margin through revenue growth of higher margin term licences.

Adjusted EBITDA*

The adjusted EBITDA* increased by 15% to £4.2m from £3.6m in the prior year resulting in a higher EBITDA margin of 15.5% (FY 2021: 14.8%). Cost management remains an important focus and expenses are constantly reviewed to ensure the level is appropriate for the structure of the business during this growth phase.

Operating profit/(loss) and profit/(loss) before tax

The Group achieved an operating profit of £0.4m and profit before tax of £0.2m, representing a significant shift from an operating loss of £1.2m and loss before tax of £1.4m for the prior year.

Taxation

The net tax charge for the period was £43k (FY 2021: credit £0.3m).

Balance sheet

The Group's net assets increased to £15.1m at 31 January 2022 (2021: £14.7m),  mainly due to the overall profit after tax offset by currency losses in reserves.

Trade and other receivables increased in the year to £12.3m (FY 2021: £10.9m), mainly due to increased accrued income at year end following contract wins in Q4. Trade and other payables were at a similar level to the prior year at £13.3m (2021: £13.4m).

Cash flow

Operating cash inflow (before strategic, integration and other non-recurring items) reduced to £2.8m (2021: £4.2m) primarily due to the working capital requirements on larger contracts signed in H2. As part of the three-year growth plan, the Group invested free cash in expanding the sales and delivery team and cloud technology and this impacted the operating cash flow and free cash flow as shown below.

Operating cash flow		FY 2022	FY 2021
		£'000	£'000
Cash generated from operations		2,497	3,983
Add back: Cashflow on strategic, integration and other non-recurring items		294	173
Cash generated from operations before strategic, integration and other non-recurring items		2,791	4,156

Free cash flow		FY 2022	FY 2021
		£'000	£'000
Cash generated from operations before strategic, integration and other non-recurring items		2,791	4,156
Net interest paid		(134)	(179)
Net tax received		176	484
Expenditure on product development and intellectual property capitalised		(2,449)	(2,120)
Purchase of property, plant and equipment		(164)	(192)
Lease payments		(1,088)	(1,069)
Free cash flow before strategic, integration and other non-recurring items		(868)	1,080
Cashflow on strategic, integration and other non-recurring items		(294)	(173)
Free cash flow *		(1,162)	907

* Free cash flow is defined as net increase/ (decrease) in cash for the year before cash flows from the acquisition of subsidiaries, cash flows from new borrowings and repayments of borrowings and cash flow from new share issue.

Investment in R&D

Development costs capitalised in the year increased to £2.4m (FY 2021 £2.1m) as the business has increased its investment in its technology and business solutions.  Amortisation of development costs was £1.7m (FY 2021 £1.9m).

Financing

The Group's financial position is supported by long-term bank loans. At the end of January 2022, the remaining principal balance outstanding was £2.4m (2021: £3.0m). The amount repayable in FY 2023 is approximately €0.6m (£0.5m).  With a gross cash position of £5.6m at 31 January 2022 (FY 2021: £7.3m), a growing EBITDA and positive operating cash generation, the business is in a healthy financial position, which gives the Board the confidence to continue to invest in its three-year growth plan.

Going forward, the Board and management teams are focused on increasing revenues, in particular recurring revenues, whilst improving the Group's profitability and cash generation.

Andrew Fabian

Chief Financial Officer

Key Performance Indicators

Key income statement KPIs are set out below.  There are no non-financial KPIs.

	2022	2021	Change	Change
Revenue growth	£m	£m	£m	%
Term licence revenue	2.9	1.1	1.8	167%
Recurring revenue	12.2	10.6	1.6	15%
Total revenues	27.0	24.6	2.4	10%
Gross profit margin	52%	53%	-1%	-2%
Adjusted * EBITDA	4.2	3.6	0.6	15%
Profit/(loss) before tax	0.2	(1.4)	1.6	n/a
Free cash flow **	(1.2)	0.9	(2.1)	n/a
* Adjusted EBITDA is a company-specific measure which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items.
** Free cash flow is defined as net increase/(decrease) in cash for the year before cash flows from the acquisition of subsidiaries, cash flows from new borrowings and repayments of borrowings and cash flow from new share issue.

Environmental, Social and Governance

ESG - OUR FUTURE

At 1Spatial, supporting the environment, our people and our planet are fundamental to what drives us as a business. Our purpose of making the world safer, smarter and more sustainable underpins everything that we do.

Smarter data, smarter future

Environmental, Social and Governance (ESG) considerations are an important part of our sustainable growth strategy and commitment to Net Zero. These considerations are already reflected in the policies and principles that govern our business.

We are developing an ESG strategy that will set out our target outcomes and the actions we expect to take to deliver these. We believe ESG should be incorporated into our culture and decision-making at all levels, and aim to continuously measure, benchmark, monitor and report on our activities to the management team and Board.

Materiality assessment

We have actively engaged with our stakeholders in the first phase of ESG strategy development process. Their input will help us map and prioritise areas that are of high importance. These material issues will inform our strategic objectives and help us to track and report on our overall performance.

We consulted with the following stakeholder groups:

1.  Customers

2.  Employees

3.  Board members and senior management

4.  Shareholders

5.  Partners

6.  Suppliers  

The process

Firstly we conducted a preliminary desktop review, including a peer analysis, an assessment of our current practices, processes and policies, an industry benchmarking exercise and a customer requirements analysis to map the significant ESG issues in our industry.

Through this process we identified an initial list of 13 issues that are of high importance and relevance to our industry and business.

These issues are listed below, in no particular order of importance:

· Leadership and business ethics

· Employee experience

· Supply chain management

· Material use and waste

· Compliance and regulation

· Diversity, equality and inclusion

· Energy and climate impact

· Data privacy and security

· Environmental stewardship

· Health and safety

· Nurturing and developing talent

· Digital capabilities

· Community impact

The next step will be the prioritisation of a core set of issues that will guide the development of our ESG strategy, with associated goals and targets that will be communicated to our stakeholders.

Consolidated statement of comprehensive income

For the year ended 31 January 2022

	Note	2022 £'000	2021 £'000
Revenue	3	27,027	24,600
Cost of sales		(13,078)	(11,451)
Gross profit		13,949	13,149
Administrative expenses		(13,534)	(14,395)
		415	(1,246)
Adjusted EBITDA *		4,182	3,632
Less: depreciation		(198)	(202)
Less: depreciation on right of use asset	11	(989)	(1,106)
Less: amortisation and impairment of intangible assets	6	(2,254)	(2,806)
Less: share-based payment charge		(326)	(272)
Less: strategic, integration and other non-recurring items	4	-	(492)
Operating profit/(loss)		415	(1,246)
Finance income		14	39
Finance costs		(209)	(226)
Net finance cost		(195)	(187)
Profit/(loss) before tax		220	(1,433)
Income tax (charge)/credit	5	(43)	308
Profit/(loss) for the year		177	(1,125)
Profit/(loss) for the year attributable to:
Equity shareholders of the Parent		177	(1,125)
		177	(1,125)
Other comprehensive (expense)/income
Items that may subsequently be reclassified to profit or loss:
Actuarial gains/(losses) arising on defined benefit pension, net of tax		113	(15)
Exchange differences arising on translation of net assets of foreign operations		(246)	148
Other comprehensive (loss)/income for the year, net of tax		(133)	133
Total comprehensive gain/(loss) for the year		44	(992)
Total comprehensive gain/(loss) attributable to the
equity shareholders of the Parent		44	(992)

	Note	2022 £'000	2021 £'000
Loss per ordinary share attributable to the owners of the Parent during the year (expressed in pence per ordinary share):
Basic earnings/(loss) per share	15	0.2	(1.0)
Diluted earnings/(loss) per share	15	0.2	(1.0)
* Adjusted EBITDA is a company-specific measure which is calculated as operating profit/(loss) before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items (see note 4)

Consolidated statement of financial position As at 31 January 2022

	Note	2022 £'000	2021 £'000
Assets
Non-current assets
Intangible assets including goodwill	6	15,003	15,187
Property, plant and equipment		350	392
Right of use assets	11	1,747	2,694
Total non-current assets		17,100	18,273
Current assets
Trade and other receivables	7	12,271	10,890
Current income tax receivable		124	164
Cash and cash equivalents	8	5,623	7,278
Total current assets		18,018	18,332
Total assets		35,118	36,605
Liabilities
Current liabilities
Bank borrowings	9	(531)	(470)
Trade and other payables	10	(13,284)	(13,418)
Lease liabilities	11	(748)	(925)
Deferred consideration	12	(340)	-
Total current liabilities		(14,903)	(14,813)
Non-current liabilities
Bank borrowings	9	(1,861)	(2,542)
Lease liabilities	11	(976)	(1,743)
Deferred consideration	12	(27)	(390)
Defined benefit pension obligation		(1,276)	(1,606)
Deferred tax	13	(970)	(776)
Total non-current liabilities		(5,110)	(7,057)
Total liabilities		(20,013)	(21,870)
Net assets		15,105	14,735
Share capital and reserves
Share capital	14	20,150	20,150
Share premium account	14	30,479	30,479
Own shares held	14	(303)	(303)
Equity-settled employee benefits reserve		3,930	3,604
Merger reserve		16,465	16,465
Reverse acquisition reserve		(11,584)	(11,584)
Currency translation reserve		86	332
Accumulated losses		(43,641)	(43,931)
Purchase of non-controlling interest reserve		(477)	(477)
Total equity		15,105	14,735

Consolidated statement of changes in equity

For the year ended 31 January 2022 £'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 2020	20,150	30,479	(303)	3,332	16,465	(11,584)	184	(477)	(42,791)	15,455
Comprehensive loss
Loss for the year	-	-	-	-	-	-	-	-	(1,125)	(1,125)
Other comprehensive loss
Actuarial gains arising on defined benefit pension	-	-	-	-	-	-	-	-	(15)	(15)
Exchange differences on translating foreign operations	-	-	-	-	-	-	148	-	-	148
Total other comprehensive (loss)/income	-	-	-	-	-	-	148	-	(15)	133
Total comprehensive loss	-	-	-	-	-	-	148	-	(1,140)	(992)
Transactions with owners
Recognition of share-based payment expense	-	-	-	272	-	-	-	-	-	272
	-	-	-	272	-	-	-	-	-	272
Balance at 31 January 2021	20,150	30,479	(303)	3,604	16,465	(11,584)	332	(477)	(43,931)	14,735
Comprehensive profit/(loss)
Profit/(loss) for the year	-	-	-	-	-	-	-	-	177	177
Other comprehensive profit/(loss)
Actuarial gains arising on defined benefit pension	-	-	-	-	-	-	-	-	113	113
Exchange differences on translating foreign operations	-	-	-	-	-	-	(246)	-	-	(246)
Total other comprehensive (loss)/income	-	-	-	-	-	-	(246)	-	290	(133)
Total comprehensive loss	-	-	-	-	-	-	(246)	-	290	44
Transactions with owners
Recognition of share-based payment expense	-	-	-	326	-	-	-	-	-	326
	-	-	-	326	-	-	-	-	-	326
Balance at 31 January 2022	20,150	30,479	(303)	3,930	16,465	(11,584)	86	(477)	(43,641)	15,105

Consolidated statement of cash flows

For the year ended 31 January 2022

	Note	2022 £'000	2021 £'000
Cash flows from operating activities
Cash generated from operations	8 (a)	2,497	3,983
Interest received		12	39
Interest paid		(146)	(218)
Tax paid		(24)	-
Tax received		200	484
Net cash generated from operating activities		2,539	4,288
Cash flows from investing activities
Purchase of property, plant and equipment		(164)	(192)
Expenditure on development costs and other intangibles	6	(2,449)	(2,120)
Net cash used in investing activities		(2,613)	(2,312)
Cash flows from financing activities
New borrowings		-	1,800
Repayment of borrowings		(423)	(146)
Repayment of lease obligations	11	(1,088)	(1,069)
Payment of deferred consideration on acquisition	12	-	(585)
Net cash used in financing activities		(1,511)	-
Net (decrease)/increase in cash and cash equivalents		(1,585)	1,976
Cash and cash equivalents at start of year		7,278	5,108
Effects of foreign exchange on cash and cash equivalents		(70)	194
Cash and cash equivalents at end of year	8 (b)	5,623	7,278

Notes to the financial statements

For the year ended 31 January 2022

1. Basis of preparation

The preliminary information of 1Spatial plc have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The "requirements of the Companies Act 2006" here means accounts being prepared in accordance with "international accounting standards" as defined in section 474(1) of that Act, as it applied immediately before IP completion day (end of transition period), including where the company also makes use of standards which have been adopted for use within the United Kingdom in accordance with regulation 1(5) of the International Accounting Standards and European Public Limited Liability Company (Amendment etc.) (EU Exit) Regulations 2019. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

The results shown for the year ended 31 January 2022 and 31 January 2021 are audited. The consolidated financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts of the Company in respect of the financial year ended 31 January 2022 were approved by the Board of directors on 26 April 2022 and will be delivered to the Registrar of Companies in due course. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph nor any statement under Section 498 of the Companies Act 2006.

2. Going concern

The Board used as its basis for the going concern review the budget for the FY23 year, rolled out to 31 July 2023 using part of its forecast for FY 2024, so that a full 12-month period from the date of signing the FY22 Annual Report and Accounts is considered. Due to the uncertainty from potential macro-economic impacts, in addition to applying the normal sensitivities to cash flows, the going concern review also included a reverse-stress test to demonstrate that even if new business and renewals are severely impacted by further pandemic lockdowns, or global knock-on impacts from the war in Ukraine, the finances of the Group are in a robust position.

The year ended 31 January 2022 saw a record year for new business, including signing the two highest value contracts in the Group's history, and there was a strong performance in all regions. In addition, FY 2022 was a year of increased revenue, double-digit growth in recurring revenue, and increased adjusted EBITDA*, with a cash conversion of around 60%. Furthermore, ARR increased to £13.4m and committed service revenue increased to £12.5m. We have entered the new year with a record level of contracted future revenue, a wide range of customers in stable industry segments of Government, Utilities and Transport and growing proof of delivery in all regions. This provides a solid financial foundation for the achievement of the current year's revenue target.

The operating cash flow was positive but was impacted by working capital requirements on larger projects and the decision to invest in growing the business for the longer term. The Group started the current financial year on 1 February 2022 with cash of £5.6m and debt of £2.4m, giving net funds (before lease liabilities) of £3.2m.

The growth of the pipeline of new business opportunities, and accelerated win rate in recent months, provides the Board with confidence that 1Spatial is on a path of further profitable growth. The Board has concluded, after reviewing the work performed and detailed above, that the Group has adequate resources to continue in operation for at least 12 months from the date of approval of the financial statements.  Accordingly, they have adopted the going concern basis in preparing these financial statements.

3. Segmental information

The chief operating decision-maker has been identified as the Board of Directors, which makes the Group's strategic decisions. The Group is now focused on developing and selling repeatable solutions and recurring term licences globally, with associated support services.  As such, the Board considers that the Group operates with only one segment and one CGU under one global strategy and the results are accordingly presented as group results only.

The following table provides an analysis of the Group's revenue by type.

Revenue by type
	2022 £'000	2021 £'000
Term licences	2,940	1,100
Support & maintenance - own	7,350	7,800
Support & maintenance - third party	1,890	1,700
Recurring revenue	12,180	10,600
Services	12,357	11,100
Perpetual licences - own	800	1,400
Perpetual licences - third party	1,690	1,500
Total revenue	27,027	24,600

The Group's operations are located in the United Kingdom, Europe (Ireland, France and Belgium) the United States, Tunisia and Australia. The following table provides an analysis of the Group's revenue by geographical destination.

Revenue by region
	2022 £'000	2021 £'000
UK	8,903	7,160
Europe	11,583	11,460
US	3,721	2,908
Rest of World	2,820	3,072
Total revenue	27,027	24,600

The Board assesses the performance of the Group based on a measure of adjusted EBITDA.  Adjusted EBITDA is a company-specific measure which is calculated as operating loss before depreciation (including right of use asset depreciation), amortisation and impairment of intangible assets, share-based payment charge and strategic, integration, and other non-recurring items (see note 4). As these are non-GAAP measures, they should not be considered as replacements for IFRS measures. The Group's definition of these non-GAAP measures may not be comparable to other similarly titled measures reported by other companies.

The following table provides an analysis of the Group's revenue by country of domicile, split by whether the revenue is recognised at a point in time or over time.

	2022 £'000	2021 £'000
UK/Ireland	9,926	8,443
At a point in time	2,257	1,081
Over time	7,669	7,362
Europe	10,875	11,150
At a point in time	1,796	1,687
Over time	9,079	9,463
United States	3,721	2,908
At a point in time	1,286	987
Over time	2,435	1,921
Australia	2,505	2,099
At a point in time	1,040	742
Over time	1,465	1,357
	27,027	24,600

As at 31 January 2022, costs to obtain and fulfil a contract of £169,000 were included in other receivables (2021: £197,000). Amortisation of costs to obtain and fulfil a contract for the year ended 31 January 2022 were £54,000 (2021: £109,000). The Group has no significant concentration risk with no major customers representing more than 10% of Group revenue. (2021: nil).

The Group has significant contract balances (both assets and liabilities), which arise out of the ordinary course of its operations. Contract assets include accrued income, which arises where chargeable work is performed, and the revenue is recognised based upon satisfaction of performance obligations in advance of invoicing the client. This can arise because, particularly for some larger projects, client invoicing may be in stages and linked to project milestones. Once an invoice is raised then the related accrued income will be reduced by the invoiced amount.

Significant contract liabilities arise when a client has been invoiced annually in advance (for example, for annual support and maintenance contracts) and the revenue is recognised on a monthly basis over the year. In that case, the initial invoiced amount is fully deferred and then released to the profit and loss over the course of the contract.

The following table provides an analysis of the Group's non-current assets by location.

	2022 £'000	2021 £'000
UK/Ireland	6,800	6,772
Europe	7,645	8,741
United States	2,650	2,755
Rest of World	5	5
Total	17,100	18,273

4. Strategic, integration and other non-recurring items

There were no charges for strategic, integration and other non-recurring items, in the year .The following charges were included in this category for the prior year:

	2022 £'000	2021 £'000
Costs associated with the acquisition and integration of Geomap-Imagis	-	555
Net credits associated with the disposal of Enables IT	-	(63)
Total	-	492

There was a cash impact in FY 2022 of £294,000 (2021: £173,000) relating to the provision made in the prior year.

Amendments to Geomap-Imagis Share Purchase Agreement (SPA)

The final step in the integration of Geomap-Imagis ("G-I"), which was acquired in May 2019, was completed in March 2021. As part of the restructuring, two of the G-I founders and former directors left the business and the parties amended the original SPA as explained below.

Under the original terms, the Group agreed to pay the vendors consideration, which included €1,166,999 to be satisfied by the issue by 1Spatial of ordinary shares (the "Consideration Shares").

Of the consideration to be satisfied by the issue of the Consideration Shares, €726,459 was satisfied immediately upon Completion, with the balance of €440,540 originally to be satisfied on 30 March 2023 (the "Deferred Share Consideration Amount"). Accordingly, on Completion the Company issued to the vendors 1,902,686 new ordinary shares (the "Initial Consideration Shares"), subject to a lock up obligation until 31 December 2021.

In connection with completion of the integration of G-I, the Group entered into an Amendment Agreement with two GI founders and former directors in March 2021 to amend the terms of the original agreement primarily as follows:

· Release 1,765,173 of the Initial Consideration Shares (the "Released Shares") from the above-mentioned lock up           obligation; and

·pay out in cash to certain of the vendors, at the earlier date of 10 September 2022, €408,701 of the Deferred Share Consideration Amount.

The balance of consideration €31,839 is to be issued in shares on 30 March 2023.

5.  Income tax charge/(credit)

	2022 £'000	2021 £'000
Current tax
UK corporation tax on income for year	(172)	(187)
Foreign tax	40	73
Adjustments in respect of prior years	(19)	(268)
Total current tax credit	(151)	(382)
Deferred tax (note 13)
Origination and reversal in temporary differences	123	(111)
Effect of tax rate change on opening balance	71	11
Adjustments in respect of prior years	-	174
Total deferred tax charge	194	74
Total tax charge/(credit)	43	(308)

Factors affecting the tax charge/(credit) for the year:

The differences between the standard rate of corporation tax in the UK and the actual tax charge/(credit) are explained below:

	2022 £'000	2021 £'000
Profit/(loss) on ordinary activities before tax	220	(1,433)
Profit/(loss) on ordinary activities before tax multiplied by the effective rate of corporation tax in the UK of 19% (2021: 19%)	42	(272)
Effect of:
Expenses not deductible for tax purposes	55	22
Adjustment in respect of R&D tax credits	(238)	(191)
Effect of movement in deferred tax rate	71	27
Utilisation of losses not previously recognised for tax purposes	(348)	(170)
Deferred tax not recognised on losses carried forward	418	440
Adjustments in respect of prior years	(19)	(94)
Differences in tax rates applicable to overseas subsidiaries	37	(70)
Other differences	25	-
Total credit for year	43	(308)

The relevant deferred tax balances have been measured at 25% for the current year-end, being the tax rate enacted by the reporting date (2021: 19%).

A change to the UK corporation tax rate was substantively enacted as part of the Finance No. 2 Bill 2021 (on 24 May 2021) to increase the main rate of UK corporation tax to 25% with effect from 1 April 2023. As such, the relevant deferred tax balances for UK group companies have been measured at 25% for the current year-end, being the tax rate enacted by the reporting date (2021: 19%) for temporary differences expected to reverse after 1 April 2023.

6.  Intangible assets including goodwill

	Goodwill £'000	Brands £'000	Customers and related contracts £'000	Software £'000	Development costs £'000	Intellectual property £'000	Total £'000
Cost
At 1 February 2021	17,447	464	4,764	6,757	19,285	72	48,789
Additions	-	-	-	26	2,423	-	2,449
Effect of foreign exchange	(253)	(14)	(217)	(209)	(480)	-	(1,173)
At 31 January 2022	17,194	450	4,547	6,574	21,228	72	50,065
Accumulated impairment and amortisation
At 1 February 2021	11,548	252	3,641	4,696	13,454	11	33,602
Amortisation	-	42	153	360	1,693	6	2,254
Effect of foreign exchange	(218)	(3)	(154)	(98)	(321)	-	(794)
At 31 January 2022	11,330	291	3,640	4,958	14,826	17	35,062
Net book amount at 31 January 2022	5,864	159	907	1,616	6,402	55	15,003
Net book amount at 31 January 2021	5,899	212	1,123	2,061	5,831	61	15,187

The net book amount of development costs includes £6,402,000 (2021: £5,831,000) internally generated capitalised software development costs that meet the definition of an intangible asset.  The amortisation charge of £2,254,000 (2021: £2,806,000) is included in the administrative expenses in the statement of comprehensive income.

The key assumptions used in the value in use calculations were the pre-tax discounts rate applied (13%) and growth assumptions. Sales forecasts and their corresponding costs for the Group in relation to the business applications for the five-year period ending 31 January 2027 are forecast to increase by 9% p.a. overall. No impairment is required as no individual asset has a higher carrying value than its value in use.

	Goodwill £'000	Brands £'000	Customers and related contracts £'000	Software £'000	Development costs £'000	Website costs £'000	Intellectual property £'000	Total £'000
Cost
At 1 February 2020	17,291	452	4,579	6,487	16,932	30	66	45,837
Additions	-	-	-	75	2,039	-	6	2,120
Written-off	-	-	-	-	-	(30)		(30)
Effect of foreign exchange	156	12	185	195	314	-	-	862
At 31 January 2021	17,447	464	4,764	6,757	19,285	-	72	48,789
Accumulated impairment and amortisation
At 1 February 2020	11,363	204	3,113	4,185	11,374	30	8	30,277
Amortisation	-	47	422	445	1,889	-	3	2,806
Written-off	-	-	-	-	-	(30)	-	(30)
Effect of foreign exchange	185	1	106	66	191	-	-	549
At 31 January 2021	11,548	252	3,641	4,696	13,454	-	11	33,602
Net book amount at 31 January 2021	5,899	212	1,123	2,061	5,831	-	61	15,187

Impairment tests for goodwill

Goodwill is assessed for the Group as a whole as the Group operates with one segment and one CGU. The Group moved from two CGUs to one in FY 2021 as the Group manages its operations under one global strategy and the European acquisition in 2019 is now fully integrated into the business. All aspects of the business are focusing now on growing recurring revenue of repeatable solutions using technology that will be deployed globally under a single strategy. Products developed by regional development teams are marketed globally.

	2022				2021
Goodwill			Total £'000				Total £'000
Opening carrying value			5,899				5,928
Effect of foreign exchange			(35)				(29)
Closing carrying value			5,864				5,899

Basis for calculation of recoverable amount

The Group has prepared, and formally approved, a five-year plan for its CGU (based on a formal 2-year plan extended for three more projected years).  The detailed plan put together by the management team and the Board makes estimates for revenue and gross profit expectations.  This is from both contracted and pipeline revenue streams. It also takes account of historical success of winning new work and has been prepared in accordance with IAS 36: 'Impairment of Assets'.

The key assumptions used in the value in use calculations were the pre-tax discount rates applied (13%) and the growth assumptions.  Growth in sales and corresponding costs for the five-year period has been forecast at 9% and 7% per annum respectively.

The rates used in the above assumptions are consistent with management's knowledge of the industry and strategic plans going forward. The assumptions noted above have been given in terms of revenue and overhead percentage growth. For 2023 and subsequent years, the assumption has been provided in terms of growth on the prior year EBITDA. The terminal growth rate of 2% does not exceed the long-term growth rate for the business in which the CGUs operate.  The discount rate used is pre-tax and reflect specific risks relating to the Group.  The forecasts are most sensitive to changes in revenue and overhead assumptions (taken together as the EBITDA). However, there are no major changes to the key assumptions which would cause the goodwill to be impaired.

There would have to be a reduction in forecast EBITDA by 18% on average for the five year-period ending 31 January 2027) for the headroom to be removed.

7.  Trade and other receivables

Current	2022 £'000	2021 £'000
Trade receivables	4,895	5,607
Less: provision for impairment of trade receivables	(25)	(80)
	4,870	5,527
Other receivables	1,413	1,497
Prepayments and accrued income	5,988	3,866
	12,271	10,890

Below is a reconciliation of the movement in accrued income:

	2022 £'000	2021 £'000
At 1 February 2021	2,950	2,613
Accrued revenue invoiced in the year	(2,950)	(2,613)
Revenue accrued in the year	5,188	2,847
Foreign exchange difference	(113)	103
At 31 January 2022	5,075	2,950

The fair value of the Group's trade receivables and other receivables is the same as its book value stated above.  No interest is charged on overdue receivables.

At 31 January 2022, trade receivables of £3,653,000 (2021: £3,541,000) were fully performing.  Before accepting any new customer, the Group assesses the potential customer's credit quality and defines credit limits by customer.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets.  To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging.  The contract assets have similar risk characteristics to the trade receivables for similar types of contracts. The expected credit losses are based on the Group's historical credit losses which are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. The Group has identified gross domestic growth rates, unemployment rates and inflation rates as the key macroeconomic factors in the countries in which the Group operates.

At 31 January 2022, trade receivables of £1,242,000 (2021: £1,986,000) were past due but not impaired.  The ageing analysis of these customers is set out below.  There has been no change in the credit quality of these balances; they relate to customers where there is no history of default and are still considered fully recoverable.

The ageing of these receivables is as follows:

	2022 £'000	Weighted average loss rate	Impairment loss allowance £'000
Current	3,653	0.1%	3
Up to 3 months overdue	853	0.5%	4
3 to 6 months overdue	242	2.0%	5
6 to 12 months overdue	36	5.0%	2
> 12 months overdue	111	10.0%	11
	4,895		25

	2021 £'000	Weighted average loss rate	Impairment loss allowance £'000
Current	3,541	0.1%	4
Up to 3 months overdue	1,392	0.5%	7
3 to 6 months overdue	149	2.5%	4
6 to 12 months overdue	272	5.0%	14
> 12 months	253	20.0%	51
	5,607		80

As of 31 January 2022, trade receivables of £25,000 were impaired (2021: £80,000) and provided for.

The trade receivables above include performance retentions on long-term contracts.

8.  Cash and cash equivalents and notes to the consolidated statement of cash flows

	2022 £'000	2021 £'000
Cash at bank and in hand	5,623	7,278
	5,623	7,278

The fair value of the Group's cash and cash equivalents is the same as its book value stated above.

Notes to the consolidated statement of cash flows

(a) Cash generated from operations

	Note	2022 £'000	2021 £'000
Profit/(loss) before tax		220	(1,433)
Adjustments for:
Finance income		(14)	(39)
Finance cost		209	226
Depreciation		1,187	1,308
Amortisation of acquired intangibles		561	917
Amortisation and impairment of development costs		1,693	1,889
Share-based payment charge		326	272
Net foreign exchange movement		1	(34)
Increase in trade and other receivables		(1,784)	(655)
Increase in trade and other payables		206	1,446
(Decrease)/increase in defined benefit pension obligation		(108)	86
Cash generated from operations		2,497	3,983

		2022 £'000	2021 £'000
Cash generated from operations before strategic, integration and other non-recurring items		2,791	4,156
Cash flow on strategic, integration and other non-recurring items		(294)	(173)
Cash generated from operations		2,497	3,983

(b) Reconciliation of net cash flow to movement in net funds

	2022 £'000	2021 £'000
(Decrease)/increase in cash in the year	(1,585)	1,976
Changes resulting from cash flows	(1,585)	1,976
Net cash inflow in respect of new borrowings	-	(1,800)
Net cash outflow in respect of borrowings repaid	423	146
Effect of foreign exchange	127	57
Change in net funds	(1,035)	379
Net funds at beginning of year	4,266	3,887
Net funds at end of year	3,231	4,266
Analysis of net funds
Cash and cash equivalents classified as:
Current assets	5,623	7,278
Bank loans	(2,392)	(3,012)
Net funds at end of year	3,231	4,266

Net funds is defined as cash and cash equivalents net of bank loans. c) Reconciliation of movement in liabilities from financing activities
	Bank borrowings and leases due within 1 year	Bank borrowings and leases due after 1 year	Total
	£'000	£'000	£'000
Total debt (including lease liabilities) as at 1 February 2021	1,395	4,285	5,680
Borrowings at 1 February 2021	470	2,542	3,012
Repayment of borrowings	(423)	-	(423)
Foreign exchange difference	(47)	(150)	(197)
Borrowings before transfer	-	2,392	2,392
Transfer from due after 1 year to due within 1 year	531	(531)	-
Borrowings as at 31 January 2022	531	1,861	2,392
Lease liability at 1 February 2021	925	1,743	2,668
Cash movements:
Lease payments	(1,088)	-	(1,088)
Non-cash movements:
Additions in the year	109	-	109
Interest cost	85	-	85
Foreign exchange difference	(31)	(19)	(50)
Lease liability before transfer	-	1,724	1,724
Transfer from due after one year to due within one year	748	(748)	-
Lease liability as at 31 January 2022	748	976	1,724
Total debt (including lease liabilities) as at 31 January 2022	1,279	2,837	4,116

9.  Bank borrowings

	2022 £'000	2021 £'000
Current bank borrowings	531	470
Non-current bank borrowings	1,861	2,542
	2,392	3,012

Bank borrowings relate to bank loans in 1Spatial France totalling €2.87m (2021: €3.40m). Bank loan interest is charged on a fixed rate basis with interest rates ranging between 0% and 3.1%, included the related guarantee costs.

The loans are due for repayment over a five-year period to FY 2028, with a broadly even repayment pattern with approximately €0.6m (£0.5m) due for repayment in FY 2023. New borrowings in the year amounted to nil (2021: £1.8m). There are no financial covenants attached to the loans, nor is there any security applied. All loans are denominated in €.

10. Trade and other payables

Current
	2022 £'000	2021 £'000
Trade payables	2,227	1,736
Other taxation and social security	2,924	3,496
Other payables	534	852
Accrued liabilities	1,987	1,464
Deferred income	5,612	5,870
	13,284	13,418

The Directors consider that the book value of trade payables, taxation, other payables, accrued liabilities and deferred income approximates to their fair value at the reporting date.

Below is a reconciliation of the movement in deferred income:

	2022 £'000	2021 £'000
At 1 February 2021	5,870	4,918
Revenue recognised in the year	(5,870)	(4,918)
Revenue deferred at year end	5,636	5,719
Foreign exchange difference	(24)	151
At 31 January 2022	5,612	5,870

11. Leases

Right of use assets	£'000
At 1 February 2021	2,694
Additions	109
Depreciation	(989)
Foreign exchange difference	(67)
At 31 January 2022	1,747

	2022 £'000	2021 £'000
Buildings	1,522	2,428
Cars	185	216
Others	40	50
	1,747	2,694

Lease liabilities	£'000
At 1 February 2021	2,668
Additions	109
Interest cost	85
Cash paid	(1,088)
Foreign exchange difference	(50)
At 31 January 2022	1,724

	2022 £'000	2021 £'000
Current	748	925
Non-current	976	1,743
	1,724	2,668

Amounts recognised in profit or loss:

Depreciation charge of right of use assets	2022 £'000	2021 £'000
Buildings	866	970
Cars	96	104
Others	27	32
	989	1,106

12. Business combinations

On 7 May 2019, the Company entered into share purchase agreements to acquire the entire issued share capital of Geomap-Imagis Participations ("Geomap-Imagis") for a total consideration of €7.0m (the "Consideration"). Full details of the acquisition were provided in the Annual Report for the year ended 31 January 2020. As disclosed in note 4, there were some minor changes to the terms of the Share Purchase agreement were amended. As at 31 January 2022, a balance of €440,540 (£367,000) Consideration Shares remained outstanding €0.4m to be satisfied mainly in cash (£340,000) in September 2022, with the balance to be issued in shares on 30 March 2023 to a market value of €31,839 (£27,000).

13. Deferred tax

The following are the major deferred tax liabilities and (assets) recognised by the Group and movements thereon during the current year and prior reporting years.

	Tax losses £'000	Accelerated tax depreciation £'000	Intangibles £'000	Other temporary differences £'000	Total £'000
At 31 January 2020	(615)	-	1,476	(182)	679
Deferred tax (credit)/charge for year in profit or loss	53	-	(121)	142	74
DT charge/(credit) OCI	-	-	-	5	5
Foreign exchange difference	-	-	-	18	18
At 31 January 2021	(562)	-	1,355	(17)	776
Deferred tax charge /(credit) for year in profit or loss	17	-	188	(11)	194
DT charge/(credit) OCI	-	-	-	(25)	(25)
Foreign exchange difference	-	-	-	25	25
At 31 January 2022	(545)	-	1,543	(28)	970

Deferred income tax assets are recognised against tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable benefits is probable.  The Group did not recognise potential deferred tax assets of £4,432,000 (2021: £4,018,000) in respect of losses amounting to £17,930,000 (2021: £18,029,000) that can be carried forward against future taxable income, on the grounds that at the balance sheet date their utilisation is not considered probable.

The deferred tax balance is analysed as follows:

	Deferred tax asset £'000	Deferred tax liability £'000	Total £'000
Recoverable within 12 months	-	301	301
Recoverable after 12 months	-	1,242	1,242
Settled within 12 months	(98)	-	(98)
Settled after 12 months	(475)	-	(475)
	(573)	1,543	970

14. Share capital, share premium account and own shares held

Allotted and fully paid	2022 Number	2021 Number
Ordinary shares of 10p each	110,805,795	110,805,795
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 110,805,795 ordinary shares of 10p in issue, of which a total of 319,635 ordinary shares are held in treasury. Therefore, the total number of ordinary shares with voting rights is 110,486,160*. * In addition, there are deferred consideration shares with an approximate value of €0.03 million (€0.4m at 31 January 2021) due to be issued in March 2023, in relation to the Geomap-Imagis acquisition. See note 4.
	Number of shares	Allotted, called up and fully paid shares £'000	Share premium account £'000	Own shares held £'000
At 31 January 2021 and at 31 January 2022	337,505,673	20,150	30,479	(303)

There was no movement in share capital in the year.

Own shares

The Group has 319,635 ordinary shares of 10p each and 3,500,000 deferred shares with a nominal value of 4p each held in treasury.  The consideration paid was £0.3m.

15. Earnings/(loss) per ordinary share

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

	2022 £'000	2021 £'000
Profit/(loss) attributable to equity shareholders of the Parent	177	(1,125)

	2022 Number 000s	2021 Number 000s
Ordinary shares with voting rights	110,486	110,486
Deferred consideration payable in shares	58	1,394
Basic weighted average number of ordinary shares	110,544	111,880
Impact of share options/LTIPS	4,008	-
Diluted weighted average number of ordinary shares	114,552	111,880
	2022 Pence		2021 Pence
Basic earnings/(loss) per share	0.2		(1.0)
Diluted earnings/(loss) per share	0.2		(1.0)

There is no material difference between basic earnings per share and diluted earnings per share.

For the year ended 31 January 2021, basic loss per share and diluted loss per share are the same because the options are anti-dilutive. Therefore, they have been excluded from the calculation of diluted weighted average number of ordinary shares.

16. Availability of annual report and financial statements

Copies of the Company's full annual report and financial statements are expected to be posted to shareholders in due course and, once posted, will also be made available to download from the Company's website at www.1spatial.com.

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.