The FTSE 100 was closing in on record highs on Friday after another upbeat session took the index within 1% of all-time record highs.

It’s the FTSE 100’s time to shine. After weeks of wallowing in mediocracy as US, German and Japanese equity indices broke to fresh record highs, London’s leading index is now within touching distance of setting new records.

The record high of 8,012 was set over a year ago, in February 2023, and the index has traded as low as 7,257 since then.

“After a stunning session on Thursday, the FTSE 100 continued its ascent at the end of the trading week with a 0.6% rise to 7,930. Little by little it is edging back towards the 8,000 mark which was hit in February 2023,” said Russ Mould, investment director at AJ Bell.

The Bank of England Governor’s suggestions that interest rates would soon be cut ignited a bumper rally in UK stocks yesterday, spilling over into a second session.

The FTSE 100 was up 0.5% at 7,929 at the time of writing after hitting highs of 7,960 earlier in the session.

“Upbeat statements in the UK and US helped heave the FTSE 100 up to the next level in Thursday’s trading, with the index closing at six-month highs. Positive momentum has continued with further gains squeezed out at the open,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“The overall mood remains better than at the start of the week, as Andrew Bailey suggested markets are right to expect more than one interest rate cut this year. His comments included a positive update on the latest inflationary markers, which showed things are remaining less sticky than feared.”

The gains were broad on Friday, with most industry sectors gaining on the day. Cyclical stocks were in favour, and strength was evident in banks and housebuilders. Miners missed out on the rally and were among the few stocks trading in the red.

Phoenix Group was the FTSE 100’s top gainer, surging over 8% after revamping its dividend policy as cash generation rose to over £2bn in 2023.

“Life insurer Phoenix is incredibly popular with retirees thanks to its generous dividends, and shareholders will be celebrating a near-8% rise in the share price after better-than-expected results and a positive outlook for cash generation and debt reduction,” Russ Mould said.

JD Sports was the biggest faller after UK retail sales declined in February. Next and Frasers Group also suffered.

Good Energy is scheduled to release full results on 26th March, and investors can look forward to another year of growth supported by increased customer numbers and the delivery of its strategy to make Good Energy an end-to-end energy services company.

Good Energy supplies its customers with 100% renewable energy generated from a base of around 2,000 UK-based clean energy generators. However, Good Energy is far from just an energy supplier.

Having identified consumer demand for the full suite of energy services and taking steps to divest its generation assets, the company has established a vertically integrated business model that services households through all stages of energy consumption.

Vertically integrated household energy services

In addition to supplying energy, the company provides environmentally conscious households with heat pumps, EV chargers, smart meters, and home batteries to store electricity generated from solar power. Good Energy also installs solar panels and facilitates the sale of excess energy back to the grid through the company’s smart export tariffs.

Vertical integration of household clean energy services affords Good Energy a competitive advantage that is integral to winning customers and creating shareholder value. As part of its strategy to become an end-to-end supplier of energy services, Good Energy has recently acquired one heat pump company and two solar installation companies to bolster the rollout to new customers.

Providing customers with solutions that help them generate, store, and even supply energy back to the grid has made Good Energy a one-stop shop that will, over time, help the shares command a higher valuation. Recent acquisitions in the sector and the value attributed to organisations with a diversified energy supply and storage model demonstrate this.

Increasing customer base

Good Energy has successfully grown its customer base, and new customer numbers will be in focus in the group’s upcoming results. The company has identified a total addressable market of 900,000 households it plans to target over the next two years which equates to up to a £10 billion market opportunity.

After recently launching Smart Export and Solar Savings propositions to 40,000 customers as of the end June 2023, the company said it expects to increase this to 75,000 by the end of the year. Should this be achieved, Good Energy will be a major player in the space. This is a major focus for Good Energy in the coming years.

The UK challenger energy company sector is certainly exciting, and Good Energy is one of the most exciting companies in it, both in terms of growth prospects and the opportunity for investors.

The group’s revenue jumped 45.6% to £156.1m in the first half of 2023 and profit after tax soared to £12.0m. EBITDA was £14.9m.

Anecdotal evidence of customer satisfaction from review sites and recognition by the industry press should not be overlooked. The company has a 4.8 Trust Pilot rating which significantly exceeds most of its competitors, by some margin. Good Energy has been ranked at the top of Which’s green energy rankings for three years in a row.

In a trading statement released last year, the company said trading head been ahead of expectations in the ten months to the end of October.

Should the company achieve a similar level of EBITDA growth in the second half as it did in the first half, it will trade at an attractive valuation given its current £57m market cap. Good Energy’s full-year results are set to value the company on an EV/EBITDA basis significantly below that of recent transactions in the space.

Good Energy shares have rallied this week, arguably in anticipation of a strong set of full-year results.

The UK Investor Magazine was delighted to welcome 1Spatial to our Investor Conference at the London Stock Exchange 13th March.

In this article, we feature geospatial SaaS company 1Spatial, summarising its investment case as presented by the team at last week’s event.

Key facts 1Spatial (LON:SPA)

Market capitalisation: £66m

Price: 59p

52-week high/low 65p / 44p

Analyst Target Price: 80p

Based in Cambridge, with some 350 employees globally, the highly innovative 1Spatial group, is a global leader that has been at the forefront of providing software to manage location data for over 30 years.

It provides Location Master Data Management software, solutions and business applications, primarily to the Government, Utilities and Transport sectors via the 1Spatial platform.

The group, which has operations in the UK, Ireland, USA, France, Belgium, Tunisia and Australia, helps its customers to make better business decisions by unlocking the value of location data.

The group’s user-friendly, no-code, cloud-enabled solutions and business applications facilitate automated data governance, while delivering increased efficiencies and significant cost-savings.

Its solutions ensure data governance, facilitating the efficient, effective and sustainable operation of customers around the world.

Three Main Platforms

The generator for the group’s development into two new markets is based upon its existing enterprise business – namely its Location Data Management software platform, which is the heart of 1Spatial and its competitive advantage.

The fast-developing other platforms are two new high gross margin Software as a Service (SaaS) platforms, which are cloud-based and fully scalable.

SaaS is a software licensing and delivery model, where software is licensed on a subscription basis and is centrally hosted.

1streetworks is a platform that can create a compliant traffic management plan in less than two minutes, requiring no specialist software or hardware, able to be accessed from anywhere, on any browser in real time by all stakeholders.

The 1Streetworks’ cloud-based SaaS solution is the first solution in the market to fully automate the production of traffic management plans, diversion routing and asset inventory lists and has the potential to fundamentally change the industry.

It is worth noting that there are some 4m roadworks a year on low-speed roads alone, which gives the group an addressable market worth over £400m in ARR.

Aimed at the US market, the NG9-1-1 (Emergency Services) platform is the next generation cloud service that enables counties and cities to cleanse their data, ensuring compliance with National Emergency Number Association standards and ensuring accuracy of location data for NG9-1-1 call routing.

Geospatial Data Analysis

Geospatial data analysis involves collecting, combining, and visualising various types of geospatial data which is used to model and represent how people, objects, and phenomena interact within space, as well as helping to make predictions based on trends in the relationships between places.

The company aims to solve the world’s most difficult geospatial challenges with its leading software and solutions, thereby enabling its customers to make better informed decisions saving money, saving time, saving lives and contributing to a more sustainable world.

The Geospatial Information Systems Market is currently worth $10bn, which is estimated to more than double by 2027 to $21bn, and secondly, the mainstream Master Data Management market, which is worth $16.6bn but estimated to triple by 2030 to $54bn.

The 1Spatial Platform

The 1Spatial platform is a comprehensive set of data and system agnostic LMDM software components which helps ensure master data is compliant, current, complete, consistent, and coordinated – and that customers can be confident it will remain that way as it evolves.

It allows them 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.

The 1Spatial Platform consists of a complete set of LMDM software components, which combine servers, portals, dashboards, software development kits, application

programming interface, data connectors, business-focussed applications, the patented 1Integrate rules engine and the 1Data Gateway self-service web portal.

Group Clients

The group works together with government, utility and transport sectors around the world to meet the green agenda, support the investment in infrastructure upgrades and help organisations implement strategies in response to the digital transformation taking place across all industries.

It collaborates with global partners on large-scale data transformation projects and tap into a broader network of prospective clients.

Globally the company’s 1,000 plus clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments.

The group’s key customers are located in over 25 countries across the globe.

In the UK & Ireland its clients include UK Power Networks, HS2, United Utilities, Ordnance Survey, the Department for Environment Food & Rural Affairs, and the Rural Payments Agency amongst hundreds of others.

In the US its fast-growing customers list includes Google, United States Census, Coltrans, and an increasing number of States Government bodies.

Included in its France & Belgium clients roll are EDF, VINCI, Veolia, Airbus, and Engie.

In Australia Hunter Water, Nova Systems, North East Water are amongst businesses on its clients list.

Its Partners

The company partners with major technology consultancies and GIS providers such as ESRI, CGI, Atkins, Version 1, QinetiQ, Atos, Infosys, Version1, VertiGIS Studio and Landmark.

Its partners include tech consultancies, systems integrators, software developers, professional services firms and geospatial specialists.

Recent Orders

The group continues to invest in its SaaS based solutions, notably 1Streetworks in the UK alongside NG911 in the US.

Trials for both these products have progressed well over the last 12 months, resulting in the first 12-month licence for 1Streetworks with UK Power Networks and five annual NG911 SaaS licences.

In late February this year following completion of a successful paid trial, the UK Power Networks gave the company a 12-month contract for its 1Streetworks Traffic Management Plan solution.

UK Power Networks has 190,000km of cables and delivers thousands of streetworks every year across London, the South-East and East of England, to maintain safe and reliable power supplies to 19m people.

The company has a further four paid trials currently in place, together with several additional paid trials due to commence in the first half of 2024 across utilities, highway authorities and traffic management organisations.

For the NG911 SaaS application, the company is exploring a partner-led go to market strategy to accelerate the growth, which will provide wider market coverage of this key market.

Going Forward

The group considers that the demand for location data has never been greater.

1Spatial sits right at the heart of significant growth opportunities across multiple sectors, enabling a smarter, safer and more sustainable world.

It has a valuable customer base, while it operates a scalable business model and is enjoying a strengthening financial position.

Targeting ARR Growth

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

The group’s existing enterprise business enjoys a 53% annual recurring revenue.

The potential for its two newer SaaS focussed businesses offers massive scope for very much higher ARR – with 80% being a near-term aim.

The group is focussed on growing recurring subscription term licences, its SaaS strategy and other recurring revenue from long-term contracts will continue to deliver revenue growth with improved gross margins.

Professional Shareholders List

Amongst the larger shareholders in the group’s equity Columbia Threadneedle Investments hold 19.94% of the group’s 110,859,545 shares in issue.

Others include Canaccord Genuity Fund Management (17.63%), Azini Capital Partners (12.37%), BGF Investment Management (6.25%), JO Hambro Capital Management (3.95%), Octopus Investments Nominees (3.71%), Herald Investment Management (3.56%), and Downing (3.02%).

Analyst Views

Ahead of the Final Results to end January this year, being announced on 24th April, analysts Andrew Ripper and Caspar Erskine at Liberum Capital have the shares of the group rated as a Buy, with a Target Price of 80p.

They estimate that the last year’s revenues were £32m (£30m) while its pre-tax profits were £2.2m (£1.8m), lifting earnings up to 2.0p (1.6p) per share, with no dividend being paid.

For the current year their figures suggest £35m in sales, £3.2m profits and 2.8p per share of earnings.

Analysts Max Hayes and Dan Ridsdale at Edison Investment Research have estimates for the 2024 results to show £32.1m sales, EBITDA of £5.5m (£5.0m), with earnings per share of 1.6p.

For the 2025 year to end January they have £35.2m revenues, £6.5m EBITDA and 2.3p of earnings.

The FTSE 100 hit the highest levels of 2024 on Thursday after the Federal Reserve and Bank of England kept rates on hold but hinted they were close to cutting interest rates.

UK equity bulls were out in force on Thursday as the FTSE 100 started the session higher following a strong session in the US in which the S&P 500 hit fresh record highs.

London’s leading index was 1.9% higher at the time of writing.

Perceived dovishness from the Federal Reserve sparked a risk-on sentiment on hopes we will soon see lower borrowing costs. Although the Fed didn’t provide a timeline for cuts, its language would suggest a rate cut very much on the cards this summer.

“Jerome Powell’s comment that ‘the risks of achieving our inflation goals are coming into better balance’ was enough to give the market confidence that we’ll soon see rate cuts, with three expected this year,” said Russ Mould, investment director at AJ Bell.

“It didn’t matter that yesterday’s decision was to leave rates untouched, the market is focused on what might happen next and any fears that the Fed might become even more stubborn over changing monetary policy appear to have been blown out of the water.”

The Federal Reserve passed the baton to the BoE, and focus shifted to lunchtime’s MPC decision, which was also to keep UK rates on hold. There was a notable shift in the voting behaviour, with two members who previously opted to hike rates rolling back their decision this time round and voting to keep rates on hold.

“The BoE produced few surprises this lunchtime, holding Bank Rate steady at 5.25%, as expected, though the decision did have more of a dovish tinge to it than that delivered in February,” said Michael Brown Senior Research Strategist at Pepperstone.

“While guidance that policy must remain ‘sufficiently restrictive for sufficiently long’ was maintained, the MPC are no longer as divided on the policy outlook, with the 2 hawks from last month now joining the majority of the MPC in voting for Bank Rate to be maintained. Furthermore, Governor Bailey indicated that “things are moving in the right direction” in terms of the inflation outlook, and thus the ability to begin to normalise policy.”

Broad rally

The gains for FTSE 100 companies were broad with 94 of the 100 constituents higher at the time of writing.

3i Group was the top riser after announcing a portfolio update highlighting a particularly strong start to the year for ‘Action’ as well as other portfolio companies. The update was well-received by investors and 3i shares were 7% higher at the time of writing.

Next shares gained 5% after releasing a customary strong set of results for 2023. Total sales rose 5.9% and profits gained 5%.

“Next is often considered a barometer of UK consumer sentiment and based on today’s update, consumers are ready to loosen the purse strings. Profits have risen 5% in the face of a tough, but improving, high inflation, high interest rate environment, showing that shoppers are back out there spending despite some uncertainty still lurking around,” said Adam Vettese, analyst at investment platform eToro.

Hikma was the top faller after losing the rights to its latest dividend.