1Spatial Plc (SPA) Earnings Call Transcript & Summary

Hi, thanks. Good afternoon, all and one, and welcome to the 1Streetworks' presentation. Well, we're delighted to have so many of you joining us on the call today. I think this will be an informative and exciting part of our history. And through the successful creation and commercialization of the 1Streetworks' SaaS offering, we have the opportunity here to transform the financial profile of 1Spatial, accelerating the group's transition from a services-led organization to a high-growth, high-margin Software as a Service business. Software is the emphasis here. As many of you will know, I've been involved in the evolution of several successful young software businesses, and my view is that 1Streetworks will form the key of 1Spatial's potential. It's innovative, it's unique, very hard to replicate. It delivers compelling margin and cash generation for our clients. And importantly, having built in the cloud, it's scalable with high gross margins as the application service scales. The signing of the first contract with U.K. Power Networks provided the team with really important learnings as to how to take the offering to market and make a good success of it. And we'd like to use this session basically to take you through those learnings and our plan for penetration of what is a considerable addressable market here in the U.K. The team and I look forward to taking your questions at the end of the session. And on that basis now, I'll hand over to Claire, who's the Chief Executive Officer for 1Spatial.

Thanks very much, Andy. So yes, we've got a packed agenda today, set out on the slide is what we're going to cover. So I'll be kicking off, and then the opportunity with 1Spatial and a short demonstration that will be carried out by Andy Fennell. Andy Fennell has been with 1Spatial for 2 years now. I brought him on to the team because of his expertise within the Streetworks roadworks industry and with experience in bringing new products to market. We've then got some customer case studies, specifically with U.K. Power Networks, and we've got Q&A with Paul Dooley. And then it's back to me and Stuart around our ambition, our FY '25 key priorities, financial framework and outlook. And as Andy said, we've got some Q&A. But just to kick off then, what is 1Streetworks? So I'm sure, unfortunately, this is a very familiar sight for everybody in the room. And I'm afraid to say it's just increasing and increasing all the time. And I'll then talk about the drivers for that in a moment. With those cones and traffic lights aren't just set out any old way. It's governed by this Red Book, this Code of Practice. And this is a legal requirement. If you don't comply with this, you can have serious fines or other implications. So if you want to dig up a hole in the road, you have to set out these cones and lights in compliance with that book. You have to send something called a Traffic Management Plan off to the local authorities, together with a permit to do that. And that is what we've created in 1Streetworks, an automatic plan. And there is a picture of it there. And what we have created is the first and only product in the market that's fully automated production of compliant traffic management plan. So currently in the market, it's very manual, it's very laborious, and it's really, really time consuming. What we've done is created a plan that's faster, cheaper, more accurate, and you can use it on a collaborative basis because it's all in the cloud. This really is transformational. So just to set some context about where 1Streetworks fits in the organization of 1Spatial and I'm sure many of you are familiar with this slide. So on the left hand side, we have our existing enterprise business. This provides the expertise, the software platform, the reputation, and actually, importantly, the financial resources. We've been using this enterprise business to fund the operating cash flows to fund our SaaS-based business over the last 5 years. And we've invested GBP 5 million into our SaaS-based businesses. Just coming back to the enterprise business. And our real key focus here has really been about growing annual recurring revenue. I'd just note, on the latest trading update, our annual recurring revenues were up 70%. And the key geography for our existing business is the U.S. So our existing business, we're really looking to get double-digit growth, and we want to use the continued financial resources and facilities we have to fund the ongoing journey that we have of these exciting SaaS businesses. But today is all about 1Streetworks. And again, something that you all have seen before, this is our 1Spatial platform. 1Streetworks is underpinned by our patented rules engine 1Integrate. And you can see how it's brought together. We bring in data, the bottom left there, some Ordnance Survey. That comes into our rules engine, we encode the Red rule book into our rules engine. And then we create a SaaS-based solution for 1Streetworks. It's really important to understand that this is underpinned by 1Integrate. What we have done is very, very hard. You need a spatially enabled rules engine. We deal with the most complex spatial data in the world. And that's why we've been able to do this. So we really have a fantastic competitive advantage here and a significant barrier to entry for anybody else trying to replicate. So I'd now like to hand over to Andy Fennell, who's going to talk more about the opportunity with 1Streetworks.

Thank you, Claire. Hello, everybody, I'm Andy Fennell. I'm going to spend a few minutes now talking you through the opportunity. The way I'm going to do that, I'm going to spend a few minutes talking about the size of the market. So for us at 1Streetworks, that's the number of plans that can be produced by the system within the market. I'm then going to talk about how the money works, so how we get paid, how the money flows out from government and regulatory bodies and into infrastructure, and ultimately results in roadworks on the road. And then I'm going to focus in a little bit on the electricity market. That's the case that you'll see later and demonstration, just to show you the impact we have on those organizations, how we improve their cycle time for the speed they can do work, which is important to them, and also the cash flow in their business and the efficiency of those organizations. I'll start you with a small example on the left-hand side if you could see few pictures. I think it's important what we recognize is that what the marketeers will show you, what the magazines will show you is bank of Tesla superchargers in car parks. That is not the reality for streetworks in the U.K. If we just take electrical vehicle charging, for example, the industry, the electrical supply companies have to build a significant amount of infrastructure in order to deliver on the governments aims. And they look like this. So the market a couple of years ago was about 2.5 million plans that drive all things like electrification of vehicles as well as telecom, broadband rollouts and fiber, who's driven that market in the last 12 months to about 4 million permits a year. So if you think you are seeing more roadworks on the roads and you're getting stuck at more traffic lights, you are. There are more. The disadvantage for you is that you have to wait longer, the advantage for us is that it's a real opportunity for us to drive the revenue line in the 1streetworks. And importantly, that work that's going on, on the ground, is underpinned by government money. And so that's a very nice stable revenue stream for us, a predictable. It operates on a cycle, a 5-year cycle, I'll talk about in a second. And important as well in there, the organizations that are responsible for delivering this work, they can't do so with the current process that exists. And lastly, on the slide, to Claire's point, we have built an application which is extremely difficult to copy. Underpinning that is the geospatial, the geographic rules engine that Claire mentioned earlier in the depth. So if we look at critical infrastructure in the U.K., such as funding efficiency that's what we're really interested in is the organizations that do work on the U.K. roads. And as a result of that they can work on the roadworks and they're regulated by the likes of Ofgem and Ofcom and it's funded by government typically on a 5-year cycle. And they call that a price control period. And the money that flows out of that is called determination, and it has a value, and that is then spent over that period. And within the electricity infrastructure market, that's GBP 22 billion over 5 years, and that period started last April. And that really underpins a lot of the work that we've done with U.K. Power Networks. Again, we'll talk about this in a little bit more detail. But what U.K. Power Networks has realized is that they can't deliver on a lot of their regulatory requirements without digitalizing their systems, improving efficiencies and making their business operate much more quickly. And that's also underpinned by Ofgem's aims. So what they would like to see is an electricity market, and this is the same for water and the other critical infrastructure utilities, one that is efficient, it drives innovation, better value for the taxpayers. And in the case of electricity, reduces the cost per kilowatt produced and delivered to the public. So that is really what's driving those industries. And as a result of that, they're driving programs internally, which play really well to the 1Streetworks flow. So if we look briefly at the electricity distribution market, we know there's DNOs, they have 2 jobs in the market. Their job is to either connect you the public or businesses to the electrical supply, and secondly, to keep lights on at those organizations would go to upgrades, and that reactive work for storm damage and also proactive works. And if you look at the graph on the right-hand side, here is another of the challenge that they face going through the current price control period. And that is that the KPI, the measures, the hurdles set by the regulator have increased significantly from the last period to this period. And what we've seen in our work with U.K. Power Networks is, without using applications such as 1Streetworks, they can't meet those regulatory hurdles. And again importantly, this is a sliding scale that we're looking at the moment at what's called BMoCS. But if a organization overperforms, money flows in from the regulator to those businesses, so that's straight onto the bottom line of those organizations, improved margin, cash flow, et cetera. Equally, if they underperform, money is taken away from them. So they have less money to do work with, they underperform and they lose money. But that's broadly how that market is operating, about 4 million works a year, underpinned by government money, pushed down to the regulators, and driven in terms of the market keeping those indicators and we play in that. So what I'm going to show you now is a video, this is LinkedIn content. So you will remember we made an announcement to the market a few weeks ago now, and the eagle-eyed amongst you will have seen, I hope, the LinkedIn article. But if you haven't, here is what UKPN has to say. This is one of the operatives had to say about use of the 1Streetworks product in their day-to-day job. [Presentation]

Thank you. And just before I run into the next demonstration of the application, so you can see what it is, what it does, how it works, I think it's important just for a couple of points out of what Tania said. So as at today in the market, based on conversations we have every day with the people that do work on the road, it typically takes about 5 days plus to get a traffic management plan turned around. What Tania said to you then is, in our application, it takes about 5. So that is the magnitude of the effect that we can have on the operational efficiencies in an organization, and that has a direct impact on the cash flow of the business, the delivery of their works, and ultimately the margins of those organizations. So without further ado, I'd just like to show you a demonstration. Thank you. This is the sign-on screen for the 1Streetworks application. As you should be able to see, we're running in a browser, in this case, this is Google Chrome. The application will run in any browser-enabled device. So it will run on desktops, laptops, MacBooks, but also tablets and mobile phones as long as they are browser-enabled. Before I log onto the system, I just want to give you a little bit of background about what you're looking at here. So the system is built in Microsoft Azure, and that's for the purpose of keeping it resilient, making sure it's up and running 24/7, 365 days a year. Because we have to use out there in reactive works that are doing work at 11:00 p.m. on a rainy November evening when a storm has blown through. The system is collaborative. So there is no limit to the number of users that can be collaborating on an activity in here. And that's really important. So typically in the market, the traffic management plan is the last thing that's done, and that's resulted in many job errors and job aborts, and fines, as mentioned earlier in the presentations. So philosophically, what this allows us to do is have anybody involved in the delivery of a piece of work inside the system with a live digital twin of the works that are going to happen. And it means we're going to start the planning phase much earlier in the delivery and make sure that any issues are identified and ironed out well before the cones get on the tarmac. So without further ado I'll sign-on to the system, and talk you through what you are seeing here. So we are streaming in Ordnance Survey master map data. So this is coming direct from Ordnance Survey in a live feed, and it is the most up-to-date Ordnance Survey mapping available for the streets of the U.K. And that is fundamentally important because, when we are doing delivery works, we need to make sure that we're using the latest data, so those works are safe. And traffic management really is about 2 things. It's about separating the public and the workforce and keeping both safe so they can go about their day-to-day business in safety. I'm just going to orientate you around the application. I'm not going to go into too much detail here as I'm aware that we have a bit of a time limit on this presentation. In the top right, is a lookup, so you can look up a location around the U.K. just by placing in, for example, the post code, like so, no prizes for guessing where I live. And it will return those for you. And then on the opposite side, we have a menu here top to bottom. I won't cover the first 3 buttons as that flips them up around and zooms in and out. But these are the ones that are important to delivery of work. So the first one of those is jump to location. So we've spoken a lot about reactive teams. And if you are stood at a road side, as I said, on a rainy day in the evening, and you click this button here, it will send to the map your location. So it's a very simple process then to draw the works area on the ground, press the button on the system, and to have a traffic management plan done for you in a couple of minutes. I'll just do the map back out for the purpose of the demonstration. Our next button is a location button. And we translate for location systems. Most infrastructure organizations operate on X and Ys. That's how they locate their assets, whether that's a electrical substation or a water valve, they run on X and Ys. But we also translate dynamically grid referencing, What3words and long and lat. And What3words is important in this process because many organizations now use that coordinate system to get teams to a place, less of an issue in built-up areas where post codes are very accurate. But if you're operating in any kind of rural environment where it's a mile or two between the next property, and the one you're working on, making sure that we can get teams accurate to a location is important. So we put a What3words address in there, and that means that you can run a satnav system, something like Waze or Google Maps, to get you to that location accurately. And that reduces the amount of errors and improves efficiency in the delivery. And it means that everybody gets to the right place at the right time to do the work. The next button up is around view options, and we use that when we're in the planning. And the last one is a layering system. So I'm just going to zoom in on Derby in the center here, just to show you a little bit more detail. And that will explain how our layering system works. So we can turn on a number of layers in the system, which aid in the planning process. So well before works happen, there are hazards or things on the road that you need to understand and design into your work. So if I just click on the first one, which is transportation, you can see here that we've now got bus stops identified around this area. And if we were in London and or Nottingham or any of the other areas that have tram systems then you would see the tram stops as well. But if we click on this, and this is important for the delivery teams, that bus-stop has a name. But importantly, it also has an ATCOCode and the NaPTAN code. And those codes are required if your works are over a bus stop or they affect the bus stop. When you're doing that bus stop suspension and you're moving that down the road, you need these codes. At the moment, and UKPN is a good example of this, the gangs that deliver the work, they waste about 20 to 30 hours a week trying to find that NaPTAN code having to drive to locations and look at them. So this system is already starting to deliver value even before you started actually drawing on the screen and saying, well, I'm going to do the traffic management. I won't take you for now through the rest of these layering systems, but if you ever want to get to a demonstration with me in a bit more detail, I'm more than happy to do that. We can also swap our base mapping. We can change color schemes but more importantly, we can flip between the Ordnance Survey road mapping data that you can see here, and we can turn on aerial imagery. And that's great if we want to get a better understanding of the real-world environment, if we're bringing cranes and those sort of things in, and we're trying to understand if there might be trees or other obstacles that might impinge on our progress. So back to our road map. Next, we can turn on permits. And this is important because, when we are planning works, we need to understand whether or not when we're planning might clash with other works that are happening. And for any of these permits, we can click on those and it will tell us an information about it. But probably the most important part of that really are the dates. And you can see here that 7 trends under Derby City Council are going to do some work between the 5th and the 7th of March. Okay. Let me just turn those permits off. And now I'm just going to show you how we do a plan. So if I kick on what I prepared earlier, and I've done that so that you don't have to spend a bit of time watching me key details into a planning portal. But the whole process end-to-end takes about 5 minutes, by the time you have arrived on site, located yourself, understood the environment and pressed go. And we add some additional data, things like pedestrian counts. And the reason we do that is because, the busier a road, the higher the form of traffic management. So it might be that on a small road we can get away with letting the traffic and the people sort themselves out. On a very busy road, we'll put traffic lights out, so we might have to put a pedestrian crossing, those sort of things. So I'm going to click auto-generate the draft now. And in the background, what is happening now is our system is going back to Ordnance Survey and it's pulling in what's called Web Feature Service data into the backend of the system. In that backend is also encoded the Red Book, that's the legislation as it applies to streetworks. And the system is doing thousands of computational assessments around the road geometry. It takes into consideration of traffic and pedestrian data we've given it, and it draws the minimum safe, compliant traffic management plan for this location at this time. If I compare that to the status quo, the way it's done in the market currently, the designers in the market using AutoCAD, it takes time to load this kind of data. They will generally recycle that. So they will use old plans. We often see plans out that have inaccurate road data on because they've used old mapping data they happen to have at hand. So one of the important things in 1Streetworks and really that underpins the safety message is it is as up-to-date as it can be and delivers the most accurate traffic management plan that can be done at that location. And this is going to take a couple more seconds, and then it's going to put out a traffic management layout for us. And there we go, that's put out quite a complex one, actually, a 5-way set of lights. So you don't see too many of those in the U.K. roads. Mostly what you'll come across are 2-way lights on roads, you're going to have to sit for a little while, this is quite complex. And really, that's reflective of how good the system is. It is capable of producing highly complex traffic management layouts across all of the U.K. roads, not the strategic road networks or not the motorways, but anywhere where street works is required in the U.K. And I'll end the demonstration there. There is a lot more to see in this application. And if anybody, as I said, would like a more thorough demonstration, I'm more than happy to speak at some point in the future. Next, I'd like to move on to a case study. Let me take you through how that applies in the real world to do jobs on the road, and I'll let you read some of this text yourselves, but I'll just talk to you in a summary around what's happening here. So this is an activity we did with U.K. Power Networks last year. We worked with their Small Connections team, and they're the people that will connect you to the mains when you need to install electrical vehicle charger or air source heat pumps or similar to that. And U.K. Power Networks is one of the biggest players in the U.K., so about 30% of the U.K. population. And they're split into 3 operating divisions. And that's important. We'll talk about that as we look at how we're going to build out streetworks this year, the revenue line, and then where we're going to go through into next year. When we engaged with that organization last year in their Small Connections team, they were failing their Ofgem measures. And if you remember my comment earlier, that cash flows out of their organization back to the regulator, so there's less cash in their business to run and operate that organization. And we ran about 10% of the new connections street works, so somewhere between 2,500 or so planned over a short period of time about 10 weeks with that organization. And we drove their performance measures. So you'll see them here as time to quote, time to connect, and customer service. But we drove all of those down below the threshold that drives the maximum cash into that business. And we put approximate numbers in here for you, and this would apply to any of the electricity companies in the U.K. But essentially, when we plan in 1Streetworks there is the opportunity to drive somewhere in the region of around about GBP 1,000 worth of value back into the business, of which north of GBP 800 is typically cash in from the regulators. So what that case study proved to us and proved to U.K. Power Networks is actually that shifting to the 1Streetworks application has a significant benefit on a number of levels for that business, not just in terms of customer service and getting their jobs done more efficiently and more quickly, but actually on the bottom line, is that operating [indiscernible]. So you've heard me talk about it. I think it's probably important now that we hear Paul Dooley talk about it, and we've been working with Paul for quite a while now. He's a real advocate of the system. Hence, he's willing to come to a forum like this and talk to you all about what we've been doing in that business. So I'll just run the video now, and you can hear Paul speak for himself.

We did a trial within our small services connections team. So their small services are domestic and nondomestic new services, so supplying up to 4 services per application, single phase, up to 3 phase, up to 100 amps. So just to give you a context of what it is. So if someone's building a new property, extensions, et cetera, so they do alterations, domestic and nondomestic properties as well. So a customer goes in, asks for a quotation. Surveyor goes out to the site and provides a quotation. And then obviously we can then schedule the job. It was good. We looked at things like average time to quote, average time to connect, which are the key measures on U.K. Power Networks, as well as a broad measure of customer service and how could we positively influence those. So we found that, certainly on the average time to quote, we saw some positive impacts on that. And also on the average time to connect. It was a bit more difficult to find the broad measure scoring element, but that is something that we know, if we can hit the other 2, that should feed the broad measure as well. I think it was well received, certainly within the small service department. It's a fast-paced moving piece, if you like, and we always akin our works to, you're fixing a car while it's moving along. It's that kind of scenario. It was well received. Team were enthusiastic. We've got some champions now within that team as well. And I can see the actual benefits of what we filed last year, so yes. And then we looked at today, could we use it in other departments? What else can we do next? So yes, positive. We approached for external funding to actually fund this 12-month program, which we were successful in. We looked at some of our other departments there, so things like highway services, Small Connections, the low-voltage proactive jointing teams, street lighting folks, et cetera, et cetera. So there's lots of other things that we need to engage within the business. Because of that, we've set up a steering group, combining representatives of those departments. What we found is actually we're not going to do this -- everything in one hit. That's just not practical or feasible. And so we've engaged with each of those teams individually over the last few weeks, starting with highway services and the disconnection team, and moving on to -- so linkbox team, so linkbox replacement team, and then the LV teams and so on and so on. So we're going to -- we're pitting them off steadily, and quite slowly, I would say. But that's a good thing. What we're finding is how we're engaging with those teams and then their feedback is actually we can engage with them in slightly different ways, and they can use your system in slightly different ways. And that's quite exciting. So from a small service point of view connections as we did last year, surveyor going out, et cetera, et cetera, that's one way of using the system. What we've discovered, say, with our linkbox program, well, we have a mapping layer of where our link boxes are, and we've got a set number of those to exchange over the year. So we can actually run your system slightly differently from a surveyor going out there. We can actually upload our data into your system and extract the plans en masse, if you like. And then we can do our survey from there. And that's just a different way of doing it, not the one we've thought of. So that was quite exciting. We had a job in Gillingham which would normally have come through as a road closure. And the scheduler within the office used 1Streetworks, put the job in. And it was returning a job with two-way lights, it was a bus route, and the road which could be maintained safely for the buses. So actually, it was a bit of a good news story. So we actually managed to safely and compliantly deliver that job without closing the road, because the mapping and everything else was suitable and compliant and allowed us to do so. So it's a real positive for the customer. It was a positive for us, and a positive for the local authority as well. So that was a really good news story. The other benefit, of course, of the accuracy as well as compliance and safety, is speed, so is how quickly can we produce scenarios compliantly, consistently, so we can actually improve what we're doing out on the public highway to reduce public dissatisfaction, if you like, in terms of disruption. So we are hopefully getting it right more times than we were before.

Okay. So I just to pick up on a couple of points Paul made before I run everybody through this slide that you can see in front of you, just around the Gillingham works that he spoke about, and what that actually does for 1Streetworks in terms of how we go to market. So Paul talked about Gillingham. He talked about the fact that we didn't have to put a road closure on. We managed to do what's called two-way lights. Again, [indiscernible] a few of those over the years, I'm sure. From a customer perspective, a road closure costs that customer about GBP 5,000. A set of 2-way lights costs that customer about GBP 500. So the impact it has on the price to the customer by being able to plan, replan, scenario plan, do things very agile, in an agile way, has a significant impact on our customer. What that drives is that customer service score. So when a customer gets a brilliant level of service and the cost brought down in that kind of way, they get a great BMoCS score and that feeds that money flowing through the organization. From a local highway authority perspective, it means that they don't have to put up with a road closure, the diversion, they don't have to divert the bus routes, all of those sorts of things. And that creates for us in 1Streetworks advocates in the highway authorities as well. So if you go and have a look at the U.K. Power Networks website, have a look at their news feeds, you'll see an article in there. And you will see a gentleman called Matt Goddard who runs all the street works in the Surrey area, saying basically that, saying that actually using the 1Streetworks system is better for the highway authorities as well as all of the other benefits that it delivers into the U.K. in this case the electricity supplier. So talking about what we're going to do with U.K. Power Networks over the coming months. We are currently working in what is on this page, on the left, Area 1, which is Southern Power Networks, so the operating organization down there. And that's where this 12-month license is focused. So the 12-month license is effectively 2 parts. One, it maintains access to the Small Connections team. So that was the case study and that continues to use the system, continue to hit their scores this year, great news. And we'll also work, as we go through the latter part of this year, with the other Small Connections team, in what we can see here as areas 2 and 3, and that is London area and the eastern area, including Cambridge, Ipswich. And then as Paul said we are also now rolling out into the other operational areas. And they're listed here from highway services down to highway operations. But essentially, we're working with each of those teams to make sure that 1Streetworks is implemented in the most effective way for those parts of the business. And you heard Paul talk about linkbox versus disconnections. We will make sure that it delivers the maximum value that we can for each of those operating business. What that allows us to do through the remainder of this year, as we get into sort of midyear, is have a really, really solid business case. And we are working with the heads of functions on this as we speak for the further rollout of 1Streetworks across U.K. Power Networks into a multiyear so that's our objective really and their objective too, shared objective. And we will pick up the rollout into London and Eastern Power Network as we get to the latter part of this year. And the reason we're doing it in that sort of order chronologically and over that period of time is this is a big organization that there's a lot of work. So we have to do this in a well managed, well controlled way that doesn't disrupt their business, which drives efficiencies, drives value and delivers brilliant results for them. And doing it that way will allow them to drive their business, also allows them to advocate for us, which is basically what we do. So if we look at the rest of the electric distribution in the U.K., then from our perspective, the U.K. Power Networks work that we've done very much will come to the blueprint for that industry. So all of the organizations you see here, everyone from Scottish and Southern, all the way down into National Grid down in the Southwest, and across the Midland, all of those organizations have the same measures. Now their operating models will be subtly different. So we're going to have to spend time with them understanding those. But we know, because we have a really good base of evidence now, that we can take their performance measures, the things that drive their operational efficiency, drive their cash flow, drive their performance, the thing that Ofgem wants them to drive and their leadership wants to drive, and we know it can impact that significantly for those organization. So that is our plan broadly for this year and into next, as well as the other sectors we operate in, but this specifically around the electricity companies, we are going to be in there really talking about the story that we've done for U.K. Power Networks and delivering benefit across that industry.

Right. I'm going to continue now with our ambition and our key priorities for FY '25. So our vision is to be the #1 provider of automated compliant traffic management planning. And currently, we are just doing this for low speed roads in the U.K., excludes the strategic road networks, which is higher speed roads, as Andy mentioned earlier on when in demo, so just the low speed roads. So our financial ambition for year 5 is to organically grow the revenues to GBP 40 million of annual recurring revenues and have a SaaS business EBITDA margin on that. And I think at this moment in time, we feel like that is an achievable target based on where we're looking to roll out our plans. And I suppose from my perspective, I would be disappointed if we didn't make that GBP 40 million. So we set out key target sectors that we're going to focus on in FY '25. So firstly, the utilities. As we've already talked about, we've got a really good advocate in U.K. Power Networks, but we've also got the gas, we've got water, we've got telco in that sector as well. We've then got the Tier 1 contractors. Now these Tier 1 contractors are real maintenance contractors. And they are the likes of the companies like [ Kia ] Milestone, previously [indiscernible]. They really helped build the infrastructure on behalf of the utilities. And then we have traffic management companies that actually put those cones on the ground, will do more broad traffic management as well as the plan. But they're really our 3 key sectors of focus during FY '25, and there are a number of other sectors such as local authorities, rail and transport for London that we're looking at in FY '26. But actually, by virtue of doing the work, there's a number of utilities, we are actually already talking to a number of the local authorities such as Surrey and Kent. So what are our key priorities in this financial year to get there. Well, firstly, it's to do that expansion work with U.K. Power Networks that Andy talked about a moment ago. I really enjoyed, as part of the work, going to make [indiscernible] and I'm really involved in a number of the meetings. And I specifically really enjoyed the last steering committee call that we had where I can't remember but it was linkbox, where one of the heads, her name was Vanessa, and she was talking about the training that our team has rolled out. And she said that she didn't take any notes during the training, but she went back to her desk because she thought, right, I'm going to do a plan of some roadworks work I did, that was fairly complicated, previously. So she said she went into the system, she did it, the plan came out, it was absolutely perfect to what she had done. And to me, that's brilliant. That's what we've been aiming for, and it's very exciting to hear. Yes, I'm going to be making sure that we really do nurture and work with U.K. Power Networks because it's just so important going forward. And then we're going to use that advocacy to help us with our sales and marketing more broadly. So the best marketing you can do is get your customers to do it for you. And obviously, we got to really use in U.K. Power Networks to help us with that. We're also going to expand by our sales team. So we're looking to take on 4 to 5 really good heavy-hitting sales people this year. We've got 1 already, and a number of others just about to take on. And we're now getting people approach us, because anybody sees what an exciting product this is and everybody wants to be involved in this. Obviously, continue to invest in marketing. We will go through some of the key events around the U.K. for streetworks and utilities during the course of the year. And then it is really important this year that we deliver trials and convert these into commercial contracts. So just to look into that a bit further, we've currently got 4 trials ongoing, and we've got visibility of another 10 to commence in the first half of the year. And we're really actively managing these opportunities. As we are targeting these specific key account planning to really manage risk. Now one of the lessons that we've really learned during the U.K. Power Networks is working with a regulated organization, it's very difficult to just go ahead, have a trial, and then land a big contract. You've got to work with them to do the business case for the next year's budget, which is what we're doing now. They do have pockets of money and innovation money they can find, so that's how we got the sort of GBP 350,000 12-month license that we spoke about earlier. So that's just an example in the utility where you have a specific buying cycle, but big lesson learned, we understand more how that's working now. But we're also working with, as I mentioned earlier, the Tier 1 contractors. But we haven't got a lot of good traction with them. Their buying cycles will be from our initial contact with them will be easier. So many are privately owned. And there's really strong reasons why that they would want to contract with us quite easy, a lot of them are really missing their SLAs, the time spent to get the traffic management done, 5, 10 days, and we can do it in minutes. So we see those as having good traction. So a planned approach but across the 3 key sectors that I talked about earlier, again, trying to go with some small, some medium and large organizations within those sectors as well. It is much easier to get a smaller license than a bigger license through approval lever. So as in the third bullet then, you're going to see some deals hopefully come through during the course of this year, next year. Even GBP 100,000 one will be good, but you will see up to hopefully GBP 3 million type annual recurring revenue deals coming through. So really exciting, really transformational. So really, what FY '25 is about is really building these foundations for the solid recurring revenues in FY '26. So now over to Stuart for the financial framework.

Thanks, Claire. So just to summarize the financial model based on what everybody said so far today. So this is our first pure SaaS offering. And at the moment, what we're doing is we're targeting about 10% of the addressable market over the next 5 years, which should lead to GBP 40 million or so annual recurring revenue. The margins that we're talking about in terms of this business is significantly higher than our existing enterprise business, GBP 10 million or so we will drive from very significant gross margin, EBITDA margin contribution, which should be transformative to the overall consolidated business. In terms of our investments to date, we've invested about GBP 5 million in the cloud platform. So that comprises the cloud platform itself that supports the 1Streetworks offering and our other SaaS solution and NG 9-1-1 in the U.S., for example. Going forward, we expect CapEx to be around GBP 500,000 approximately based on current run rate, based on the current low speed roads. As we expand out, it may increase. Currently, our plan over the next 24 months as we work on that area. As we continue to grow the revenues, that should translate into very significant cash generation as the adoption grows across the sector that we've been talking about. As I mentioned then, the expansion plans over the coming years will be funded through retained earnings. So if we're talking about other areas such as the high-speed networks and other geographies, and we've mentioned already Canada, which has that comparable data. But that will be funded through the cash generated from the low-speed roads offering that we're talking about today. As I mentioned then, the successful execution over the next 5 years will absolutely transform our group's financial metrics. And we should see double-digit growth in both gross margin percentage and EBITDA percentage over the next 5 years at a related level. This slide, some of you will be familiar with, which is adding a few points in there. So this slide effectively summarizes our revenue profile as it currently stands and where our ambition is in the future. But while there aren't any timescales associated with this, our ambition over the next 5 years is to get to a significant proportion of our revenue being generated from SaaS revenues and other recurring sources. So we're looking at a revenue profile in the next 5 years of 75-25 recurring and non-recurring revenue. The plan for the business is to focus really on, over the next 5 years, transition to a fully SaaS cloud-based model, and that will have a transformational impact on the margin of the overall consolidated group. What we've seen so far is we haven't seen very much in the way of SaaS revenue being recorded so far. To touch on the trading update that we gave yesterday, the revenue and EBITDA, which has a very little in the way of SaaS contribution in it, was in line with market forecasts, that's GBP 32.1 million and GBP 5.5 million, and also to touch on the cash position compared to the same time last year has decreased due to the planned investment that we've had. But it's notable that we've got adequate facilities to support on the future growth activities, notably the 1Streetworks activity. So that's really it on the financial side, so just hand back to Claire on the outlook.

Thanks, Stuart. So we just want to recap on the key points that have come up during the course of this presentation, and it really is an exciting outlook. So firstly, we've developed and commercialized a disruptive technology through our own resources to take advantage of that GBP 400 million market. U.K. Power Networks is a powerful advocate and has considerable expansion potential within its network. But Andy mentioned earlier, they are saving up to about GBP 1,000 per plan using our system. And looking at those BMoCS scores, I'm wondering how any of the other utilities are going to manage to achieve that given the current state of doing this sort of Streetworks planning and those KPIs that need to be achieved. We've got 4 trials in operation, with 10 more in discussions. As I mentioned a moment ago, we're really investing in our sales team to increase bandwidth and help maximize the revenue potential. And our 5-year ambition is to get to a GBP 40 million of annual recurring revenue. And I said earlier, I'll be really disappointed if we didn't get that over the next 5 years given the potential for some of the size of these contracts with utilities in terms of U.K. Power Networks doing 90,000 plans a year across the whole of U.K. As Stuart said, this really should drive a fantastic EBITDA margin and have the potential to transform the group. I think we're now onto the Q&A.

We'll go to [ Harry Evans ] at [indiscernible].

I guess it's a question about applicability. And out of the trials or U.K. Power Networks to date, I wonder whether there's been any relationship or where there has been greatest uptake for 1Streetworks in terms of whether customers are particularly using it for where complex plans are involved and/or all plans are involved. I'm just thinking to what extent -- I can completely understand how in the example of there were 5-way lights, okay, well, then it speeds the process up. But if there are 2-way lights, are customers going to use it? And therefore, question is, is the 4 million of roadworks really the TAM? Or is it actually a rather different number because of that? If you see where I'm coming from.

Yes. Okay. So I can't answer that very simply. You do not know the type of traffic management you need at the location until it has been planned. So what happens currently in the market is, when one of those 4 million pieces of work needs doing, a traffic management planner, an individual running an application, an AutoCAD, is approached, and they produce that plan. And that plan could be simple so what we call give and take, which is you get to decide who goes first, all the way through the more complex layouts. But you don't know that until you've assessed the site and drawn the plan. So every plan will get drawn. So the addressable market for Streetworks is every plan that is drawn, which is that 4 million. So no, the -- you won't see -- we shouldn't see people not having to use the system because they've got to get a compliant plan out, and they can't get a compliant plan out, certainly not at the volume they need, without being able to use a system like Streetworks to automate.

And we'll go to Anna Pugh of River Global.

A similar question to the one that you had already, but just around the GBP 40 million ARR, the 10% market share that implies. Could you just give some color as to what assumptions you've made to get to the 10%? How we should think about between the different categories, the size of the opportunity, in terms of how the addressable market split and how we should think about that other 90% that isn't being addressed?

Well, I would start with saying that, I just mentioned before, I think it's a prudent assumption we've made, that we can get to over 5 years. So if you look at U.K. Power Networks, which is 90,000 plans, we don't see any reason why over the course of the next few years we can't be doing all of their plans. It's a very sticky tool. It is really transformative. So I suppose, in a way, it was a prudent estimate of where we thought we could get to in terms of 10% of the market. No more further analysis I don't think in that, Stuart.

No. I mean Claire mentioned 9 million or 90,000 plans within U.K. Power Networks, and we had a slide up there previously with the 10 DNOs that we see across England and Scotland basically. So if you were to take a similar size one multiplied by 6, you'd come upto GBP 40 million. So we -- our target market is for the split of small, medium, large customers, but if you were to look at those 6 out of 10, you're almost approaching the GBP 40 million. So we think it's quite prudent.

Great. And I guess just in terms of the trials that you've had so far, other than the length of the sales cycle, is there any reason why people haven't been wanting to actually come back to a contract, or what's the kind of feedback that you've been having?

Yes, sure. It's interesting, is probably the best way to describe it. But as a case in point, on an earlier slide I showed, that the utilities were already engaging quite significant digital by default or operation efficiency drives, so there are a number of big capital programs operating in those organizations on an ongoing basis. And what we found with the number is, the answer has been yes, Streetworks is great and we want to do it, actually, we need to finish the rollout of SaaS or we need to finish implementing NetSuite from Oracle, those sorts of things. So typically, the challenge has been around the bandwidth in those organizations as opposed to the business case. And our philosophy when we've come to developing our sales really is to work with the organizations that are ready to go and are up for it, and we're able to drive it through. And if we have an honest conversation with the businesses and they say, we're not ready yet, then we don't try to enforce it to them. We very much back off, say, that's absolutely fine. We find the next one that is ready to go. So, yes, to build traction in the market for us to build the revenue lines and the profit lines we want in this business, we will work with the organizations that are ready to go. And those that we can prove the business case that are not quite there yet, we will just pause until they are.

Would you say also, Andy, that the adoption by U.K. Power Networks is really going to move the market? They are probably our most interesting and powerful.

It has been interesting. So when the -- when U.K. Power Networks put the press announcement out and when they posted on LinkedIn, feel free to have a read on the commentary. We got a flood of incoming from people we've spoken to previously actually. And I think that was very much reflective of 12 months ago, the question on people's lips with what is 1Streetworks, how does it work, how might it help us. And the narrative in the market has really changed now. So the conversation we're having with people now right now is right now we understand the value, we've seen what you've done in the U.K. Power Networks, how do you apply that to our business. And that inevitably will also have an impact on shortening those sales cycles a little. I'm not going to commit how much because I don't know at this stage. But certainly, we're not having the same conversations in the market now, much more around how do we get the benefit and the value, how do we implement, how do we trial.

Is there any risk of customers trying to develop their own solution internally? Or are you having any conversations like that?

We're not having conversations like that. And my background, Claire alluded to at the start, is 20 years in critical infrastructure, several years in traffic management. And it's definitely something we looked at when I worked in my previous company, which was the largest or is the largest traffic management business in the U.K. So what I would say is it's incredibly difficult to do, and you need a geospatial rules engine to do it. And to my knowledge, and I spent a lot of time looking at how is it, my previous employer, 1Spatial is the only people who -- are the only people, sorry, the company I now work for, that has the capabilities of doing that in the market.

We'll go Hayley Palmer at Canaccord.

Andy, I think you might have just kind of answered the latter part of my question in that previous question. Because I was just going to ask about, I guess, the education that's needed for the customers, because there's clearly a really strong ROI story there. But I guess where you're disrupting particularly legacy manual processes, sometimes it's difficult to kind of get people to move to automate the processes, just to understand whether there's a lot of market education that's needed for people to know that there's a solution out there. And then I guess also, who are the key stakeholders within these organizations that you're selling to? Because I can see a lot of heads within the organizations being attracted to this. Do you need all of those heads to sign off on it? Or is there kind of one main person that you need to get on board?

Okay, right. Let me answer the second part first. So U.K. Power Networks is a great example of the model. So ultimately, the economic buyer, the CFO signs off on these licenses, so the business case has to be robust and has to deliver results on the bottom line. So that's really the crux of it. But the purpose of these trials is to build that business case and demonstrate really quickly the benefit it gives. And that really allows us then to have a better conversation with the senior leadership within the organization, very much what we did with U.K. Power Networks, very well connected through the operational team all the way up to talk about this. So that has worked really well for us. In terms of education, let me answer that in 2 ways. One, in terms of the system itself, and Tania spoke about this, it is incredibly easy to use. And the benefit of that is the people that we show it to can understand really quickly actually how it inserts into their day to day job, and we spend time, like we did with U.K. Power Networks, doing a bit of business process analysis, so we can understand what the current state is and where we need to get it to. And that's not a particularly difficult piece of work to do, and certainly, U.K. Power Networks is very simple to understand how we would drive value. And then in the market, in terms of education, we put a huge amount of effort last year into our brand awareness and marketing. But the benefit of that actually for us as an organization is, by the time we got to sort of Christmas of last year, pretty much all of the industry players who needed to understand what we did, so whether that would be highways authorities, whether that would be utilities, the Tier 1s, all of them pretty much now know what 1Streetworks is and what it does. We're at that point and that would be publicity that we got from the U.K. Power Networks work that we publicized, as I said earlier, back in February it was now with them that again has changed our conversation.

And we've got a question from Richard Fowler at Raymond James.

Just thinking a little bit about risk. What risk, if any, do you improve, if the plan that your software produce or any plan that your software produces results in some road traffic accident or something, is that -- does that come back to your door? Or does that stay with your customer?

Okay. That's a really good question. So the model in 1Streetworks is no different than the model that operates in the industry today. And shortcut into the answer, the responsibility for the safe deployment of traffic management on the U.K. roads resides with the operatives, so the people in the trucks that put the cones on the ground. They have to always -- should always ensure that what they put on the ground is safe and manageable. If they have any concern, they either adjust that traffic management within a degree or two, or they have brought back job, they say it's not safe to continue. So whilst we produce a compliant traffic management plan in our system, that plan is then approved by both the local authority, so that the permitting authority as being appropriate to use that point, is also then approved by the customer and their qualified individuals, and lastly, the operative that puts on the ground is also qualified, makes that value judgment, is it safe on this day. And an example where it might not be safe on a day is, for example, somebody hired a stick outside their house, and that's now meant that it's compromised the working zone. It's taken us too judgment something. So they have to exercise common sense in the legislation when they install. So that's the answer. No change to the existing market dynamics. Ultimately, the operative is to make sure it's safe. There are multiple checks and balances as the plan goes to ground across the various authorizing parties.

In terms of feedback from your trials, is it generally there is the case that your plans worked in practice?

Yes, yes. And the example -- I mean, we have pictures as well of some of these. But yes, our plans go to ground. The authorities -- so if you look at commentary from people like Matt Goddard, I think what the authorities get is they get a higher level of consistency from the planning cycle out of Streetworks. It makes it much easier for them to assess whether or not that work is appropriate, and plans that go ahead are permitted more quickly. The work that we do in U.K. Power Networks, they haven't had any of the plans out in the system yet refused. And in fact, the only debate we've really had is when we said actually we can do this more efficiently out of the 1Streetworks system than you're currently proposing. And I could get into some of the behaviors in the industry more generally that drive some of the behaviors, but that's a conversation for another day.

Just a quick one for Claire. So the GBP 40 million of recurring revenues that you're looking for from this business, the whole thing is new to me. But that compares with the GBP 32 million of revenue you've just reported for the whole group. Is that -- am I right there?

So yes, we've got GBP 32 million in our enterprise business, and then the GBP 40 million of SaaS revenue will be on top.

Great, thanks very much. And that's the end of questions. Andy, do you have any closing remarks?

Just to say thanks to everybody. It's a very, very exciting time for us. And as you can see, the team are very, very committed to trying to get this 1Streetworks really embedded in the market. So may the force be with us. Thanks, everybody, for coming along.