1Spatial Holdings Regulatory News (SPA)

London, UK, 6 May 2016

Edison issues initiation on 1Spatial

1Spatial has significant expertise and IP in the field of geospatial data, supplying some of the largest and sophisticated users of geospatial data globally. Historically, client engagements involved creating bespoke solutions, but management is now transitioning the business to drive repeatable product sales. Investment in executing this transformation significantly compresses earnings over our forecast period, but should create a platform to deliver scalable, operationally geared growth. Recent progress in the US and partnerships with leading mapping players Esri and HERE strengthen the company's prospects for achieving this. We believe the current share price does not reflect this potential.

Our forecasts reflect the fact that investment in transforming the business model is negatively affecting FY17 EPS by at least 35%. Adjusting for this, we believe the valuation is substantially underpinned by the established businesses and that the company is establishing a strong platform to scale. Our DCF analysis suggests that penetrating a mere 0.22% of the global GIS user base would justify a 10p share price. We believe that positive newsflow regarding GIS partner customer uptake or new enterprise database partners are key catalysts for upside.

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