Ahead of next week’s announcement of its Interim Results to end-July, due on Monday morning, 1Spatial (LON:SPA), one of the global leaders in Location Master Data Management software and solutions, yesterday informed the market of a significant $1.4m contract for the United States Forest Service. 

That is yet another key federal department as a client for the supplier of LMDM software, solutions and business applications. 

And it is another additional figure going on the group’s annual recurring revenues total, in this case some $300,000 yearly. 

Management Comment 

CEO Claire Milverton stated that: 

“We are proud to announce that we have been selected by the US Forest Service to improve their data governance.  

This significant contract marks a major milestone for our Company, as it represents our first engagement with this federal agency.  

Our patented rules engine, 1Integrate, combined with our innovative 1Data Gateway for ArcGIS Pro, offers a tailored solution to meet the USFS’s specific data management needs.  

We are confident in our ability to improve data accuracy, expedite processing, and ultimately support the agency’s mission of protecting and managing America’s forests and grasslands.” 

The Business 

Based in Cambridge, with operations in the UK, Ireland, USA, France, Belgium, Tunisia, and Australia, the group supplies primarily to Government, Utilities and Transport sectors via the 1Spatial platform and SaaS offerings.  

The group’s solutions ensure data governance, facilitating the efficient, effective and sustainable operation of customers around the world.  

1Spatial’s products allows the group’s various customers to master their data on any device, anywhere, anytime and can be deployed as SaaS in the cloud, on-premise, or as a hybrid of both.  

Globally the group’s clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments. 

Analyst View 

Analyst Dan Ridsdale at Edison Investment Research is looking for the current year, to end-January 2025, to show revenues of £35.8m (£32.3m), with EBITDA of £5.7m (£5.5m), with a standstill in earnings at 1.4p per share. 

For next year Edison goes for £38.7m revenues, £7.6m EBITDA, with 2.5p earnings per share. 

In My View 

Come next Monday we can expect both Panmure Liberum and new joint broker Cavendish Capital Markets to issue updated current and prospective year estimates for the group as it progresses globally. 

The group’s shares have been up to 77p this year, that was in May, shortly after the company presented to UK Investor attendees at our set of presentations at the London Stock Exchange. 

However, they had slipped away to a recent 51p Low, before yesterday’s contract news spurred a lift-up in the price to see them close at 61p. 

Market reaction could well be bettered next Monday, especially if there is further good news being announced. 

Adsure Services, the specialist business assurance provider, is about to reward shareholders with a dividend that equates to 5% of the current share price.

Having been approved at yesterday’s AGM, a 0.99p final dividend will be paid to shareholders on the register as of the ex-dividend date 17th October.

With Adsure Services shares trading at a mid-price of 20.5p, the 0.99p final dividend alone will provide investors with a 5% yield.

The company paid an interim dividend of 0.49p so the total dividend for the full year was 1.48p, implying a historic yield of 7.2%.

In addition to rewarding shareholders with a very respectable dividend, Adsure Services is rich with growth potential as it expands into new markets and develops proprietary Generative AI technology.

The company posted a robust set of full year result in July revealing a 33% increase in EBITDA and 72% jump in profit before tax.

“Our outlook is promising, and we have excellent visibility over our revenue in the years to come due to the long-term nature of our contracts, which deliver us recurring revenues,” said Kevin Limn, CEO of Adsure Services.

“We look forward to expanding our relationships with existing customers by providing them with additional services, while welcoming new customers. We are identifying new markets and expect to execute plans to enter these markets in the upcoming period.”

The FTSE 100 was marginally higher on Wednesday as defensive names provided support for the index amid softness in commodity companies.

It would be a little dramatic to label today’s move into defensive companies a broad rotation into safe havens away from cyclicals, but there is definitely a mild risk off tone within the FTSE 100 index.

Utility and pharmaceutical companies were among those heading up the leaderboard while banks and mining companies were having a weaker session.

The defensive nature of the FTSE 100 meant it looked set to outperform peer indices amid a slowdown in the China rally and questions about growth and interest rates creeping back into the narrative.

“The wave of enthusiasm which greeted the kitchen sink stimulus from the People’s Bank of China is ebbing away, given the lack of detail for further fiscal stimulus. Banks in China might be ready to lend, with lower rates and deposit requirements on offer, but if the demand isn’t there, it’s still set to hold back an economic rebound,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Investors had been hoping for more details on an expected fiscal stimulus, hoping tax breaks would reinvigorate consumers and companies to borrow, but the vague plan put on the table yesterday by authorities disappointed.”

Mondi was the top riser after announcing an acquisition of a Western European-focused Schumacher Packaging which is thought to increase Mondi’s capacity by over 1 billion square meters.

“Mondi has wasted no time in expanding its empire since pulling out of the race to buy rival packaging firm DS Smith earlier this year,” said Russ Mould, investment director at AJ Bell.

“It’s struck a deal to buy European assets from Schumacher Packaging, boosting its capacity to make sustainable packaging which is increasingly in demand from customers taking a more environmental approach to their business. The deal put Mondi near the top of the FTSE 100 leaderboard.”

Investors may be rubbing their eyes today with Rio Tinto also announcing an acquisition in a welcome change to the onslaught of overseas entities swooping in on UK companies.

Rio Tinto is bolstering its exposure to lithium through the acquisition of Arcadium Lithium in a $6.7bn deal.

“This is a classic attempt to buy the dip for Rio, snapping up some high-quality Lithium assets when spot prices are around 80% down on their highs,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown

“It’s a good time to shop for counter-cyclical assets, and this deal helps propel Rio’s lithium portfolio to new heights, with it already having exposure through its Rincon and Jadar projects. This so-called white gold, a key component in the energy transition with uses in areas like electric vehicles, is the material that differentiates Rio from key rivals like BHP.”

The Trading Update issued by the Greencore Group (LON:GNC) yesterday showed continued strong momentum in the convenience foods maker’s final quarter of its year. 

As well as upping its market guidance, it was positive enough in its content to see its shares close up nearly 9% better at 196p. 

And I believe that there is even more upside to go for. 

The Business 

As one of the leading manufacturers of convenience foods in the UK, it supplies all of the major supermarkets in the UK, as well as supplying convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.  

The Dublin-based Greencore Group has strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings. 

CEO Dalton Philips stated that: 

“The Greencore team delivered an outstanding performance with our FY24 results now expected to exceed current market expectations.  

Providing high-quality, fresh and healthy food to our customers every day is at the heart of what we do.  

As we enter the new financial year, our focus remains on making really great food, rebuilding our profitability, and positioning Greencore to be the UK’s leading convenience foods manufacturer.  

We’ll share more detail at our FY24 results in early December and will use our Capital Markets Day in early 2025 (5^th February) to outline our medium-term growth strategy.” 

The Trading Update 

Ahead of publishing its Final Results on Tuesday 3^rd December, the group stated that its like-for-like revenue growth for Q4 was up 3.7% year-on-year driving the year’s revenue growth up 3.4%.  

The group guided the market that it expects to report FY24 revenue of around £1.8bn.  

“Q4 LFL volume performance was encouraging given some of the seasonal factors encountered, with almost all categories experiencing some LFL volume growth. 

Profit conversion during Q4 was ahead of our expectation and the Group now anticipates FY24 Adjusted Operating Profit will be ahead of current market expectations and in a range of £95m-£97m. 

This was as a result of continued strong focus on improving returns across our portfolio, other commercial initiatives and enhancing operational efficiency for key areas, such as labour and waste, across our network.” 

Analyst Views 

Sector analysts Clive Black and Darren Shirley, at Shore Capital Markets, raised their estimates on the group, by 5% for the 2024 year and by 6% for the current year. 

They state that they are:  

“most excited by what management may speak to the medium-term direction of the Group; with the change programme costs in tow.  

Ongoing, such delivery implies further earnings progress, a new dividend policy to come and maybe some ideas to build the business too.  

There could be a lot to like, which should also support and maybe further expand its rating.  

Pleasing stuff.” 

Their estimates for the end-September 2024 year are now for revenues of £1,799m (£1,914m), with adjusted pre-tax profits of £74.0m (£55.5m), lifting earnings to 11.6p (8.9p) and paying a 3.9p (nil) dividend for the year. 

For the current 2025 year they see £1,835m sales, £78.5m profits, 12.6p earnings and a 4.2p per share dividend. 

The duo has figures for 2026 showing £1,873m revenues, £85.0m profits, 13.7p earnings and a 4.6p dividend. 

In My View 

In late March this year, I considered that this group was a real generator of value, and at 112.90p, that its shares were under-rated and offered a bargain to new investors. 

In late July, I commented that this group’s shares rated as being a very attractive medium-term growth investment, they were then 180p. 

Now at 196p the group is valued at £886m, that is up over 73% in just over six months. 

The dimensions of this group really are very impressive. 

On the basis of the analyst estimates, I am predicting that they will soon be trading in the 200p/225p price range – possibly within the next six months, before breaking even higher in price. 

Rio Tinto is seeking to bolster its lithium portfolio with the acquisition of Arcadium Lithium in an all cash deal after a period of weakness Arcadium shares.

The $5.85 per share deal presents a 93% premium to Arcadium Lithium’s share price 4th October.

Arcadium has built an attractive vertically integrated lithium business with assets ranging from the Salar del Hombre Muerto lithium salt brine facility in Argentina to the Naraha facility in Japan that converts lithium carbonate feedstock into purified battery-grade lithium hydroxide.

Although some may see the deal as opportunistic, it is fascinating in as far as Rio Tinto is one of very few diversified miners to make big in roads into lithium.

“This is a classic attempt to buy the dip for Rio, snapping up some high-quality Lithium assets when spot prices are around 80% down on their highs. It’s a good time to shop for counter-cyclical assets, and this deal helps propel Rio’s lithium portfolio to new heights, with it already having exposure through its Rincon and Jadar projects,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“This so-called white gold, a key component in the energy transition with uses in areas like electric vehicles, is the material that differentiates Rio from key rivals like BHP. 

“The price will be scrutinised, at a touch under 20% of where Arcadium was trading when the company was formed in January, it’s not quite a bargain, and investors in the commodity world tend to take a dim view of M&A at the best of times. Arcadium is currently free cash flow negative, due to low prices and high investment in new projects, so Rio will have some work to do if it wants to turn this into an accretive buy – and that won’t happen immediately.”