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1Spatial / IQ Holdings

  • BY: Andrew Hore |
  • POSTED: 01/10/2010 |

Location-based software and services provider 1Spatial is reversing into AIM-quoted shell IQ Holdings in a deal that will leave the company’s original shareholders with 10% of the company.

Shares in IQ, which sold off its market research businesses to Rivington Street earlier this year, rose by three-fifths to 0.08p each. That would value the enlarged group at £15.3m.

A consolidation of 1,000 existing IQ shares into one new share is planned. An all-share offer of 16.345 consolidated IQ shares for each 1Spatial share will give 1Spatial’s 29 shareholders 90% of the enlarged group. These shareholders are also getting a combined dividend of nearly £200,000 from 1Spatial, which has cash in the bank.

The company provides software and professional services to mapping companies plus application specific services to other customers. This helps the customers to manage data and make sure that it is as up to date and accurate as possible.

The software is a one-off sale with annual support revenues. The professional services revenues are generated from maintaining and supporting the software and data.

1Spatial’s clients include Ordnance Survey, Vodafone, eurographics and the Environment Agency. 1Spatial has helped the Environment Agency to efficiently update and validate its national Flood and Coastal Defence Database. 

The core of the business was part of fully listed Laser-Scan Holdings, which was acquired by AIM-quoted marine navigation products supplier Yeoman Group after a contested £14.1m bid in 2000. Yeoman, which was subsequently acquired by Trafficmaster, placed Laser Scan into administration in 2003. The administrator sold the business to its management in July 2003.

Management paid £45,000 for the assets and a commission of 5% on sales of the ongoing business for the first 12 months of operation subject to a claw-back of costs relating to past employees.

The buyout was headed by Dr Michael Sanderson, who was managing director at the time. He is now director of strategic management. Nic Snape took over as chief executive in January.

Management blames delayed contract decisions for a fall in revenues from £8.4m to £8.01m in the year to June 2010. Gross margins fell but 1Spatial reduced its admin costs. Pre-exceptional profit fell from £366,000 to £248,000. These figures do not include discontinued activities.

1Spatial has made four add-on acquisitions in recent years. It is interested in technologies that would add to its existing technology but new customer bases are likely to be the focus of acquisitions.

One of the reasons for floating is it gives 1Spatial the ability to make bigger acquisitions.

Australia is thought to offer the best growth potential and this will be a major focus of the company’s expansion plans. 1Spatial already has significant revenues outside of the UK but it wants to build them up further.

1Spatial considered floating around three years ago but it could not raise the cash that it wanted to. Management did start to run the company as though it was a quoted company so it is ready to be a quoted business.

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