Half Yearly Report

RNS Number : 5905Z
SpaceandPeople PLC
21 September 2015
 

SpaceandPeople plc

 

21 September 2015

 

SpaceandPeople plc

("SpaceandPeople" or the "Group")

 

Interim Results for the 6 months to 30 June 2015

 

SpaceandPeople (AIM:SAL), the retail, promotional and brand experience specialist which facilitates and manages the sale of promotional and retail merchandising space in shopping centres and other high footfall venues, announces interim results for the six months ended 30 June 2015.

 

 

Highlights

·      Profit after tax attributable to shareholders of £12k being £298k higher than the £286k loss in the prior period

 

·      Secured five year commercialisation deal with Network Rail in September 2015

 

·      Successful roll-out of Mobile Promotional Kiosk concept in UK and Germany delivering over £260k of income

 

·      £270k reduction in overheads as a result of restructuring process

 

·      Signed pilot project with Immochan in France commencing in 2016

 

·      Full year outlook in line with expectations

 

 

 

Contact details:

SpaceandPeople Plc

0845 241 8215

Matthew Bending, Gregor Dunlay


Cantor Fitzgerald Europe

020 7894 7000

David Foreman, Will Goode (Corporate Finance)


David Banks, Tessa Sillars (Corporate Broking)




 

Chief Executive's Interim Operating Statement

Introduction

The first half of 2015 has been a period of stability, consolidation and progression for the Group in response to the challenges of 2014. Each division has traded in line with our expectations and the restructuring process carried out during 2014 has been successful, delivering significant cost savings and operational efficiencies.

We have invested a large amount of time and effort securing a significant new contract with Network Rail as well as renewing our contracts with M&G Real Estate. The Network Rail portfolio is important for a number of reasons. The size and scope of the estate plus the fact the stations are being transformed into destinations in their own right with varied food and retail offerings, in dramatically nicer environments means dwell time and footfall are improving all the time. These are key determinants for brands in utilising these spaces. Combining this with our existing venue portfolio, SpaceandPeople will further enhance its position as the market leader in experiential marketing.

The roll-out of our new and innovative Mobile Promotions Kiosk ("MPK") concept in both the UK and Germany has been progressing well with 37 kiosks now in operation and with plans for this to be over 50 units by the end of the year, with further expansion in 2016. From a standing start MPKs have generated over £260k of income in the first half of 2015 with this expected to grow significantly in the remainder of the year, in 2016 and beyond.

The recent announcement of the agreement with Immochan to undertake a pilot in three of their largest centres in France is an important development as it allows us to market test MPKs with one of Europe's largest hypermarket and shopping centre groups, and will help us leverage the French market if the pilot is successful.

In my 2014 year-end review I explained the four key drivers of growth in the core areas of our business: gaining additional venues; selling more activity to each venue; driving higher prices to promoters and occupiers; and achieving a higher commission rate for our services. With Network Rail and Immochan having been announced recently as new clients we have made very significant progress on the first point; we are securing more brand experience events for our clients than in previous years which is desirable, high worth business; and with the roll-out of the MPK service we have managed to increase our blended commission rate by offering this attractive concept to our clients and promoters without the need for them to incur significant capital outlay for what to them would be short term promotions.

Financial Performance

Net revenue for the first half year was £6.0 million. Although this was £1.1 million lower than in 2014, it must be pointed out that in 2014, our S&P+ subsidiary delivered a £1.8 million one-off contract that has not been repeated in the first half of 2015. Despite this, the operating loss of £23k was £226k better than in 2014 and profit after tax attributable to the owners of the company of £12k was £298k better than 2014.

In addition to paying the final dividend of £390k in April 2015, the Group has invested over half a million pounds in fixed assets in the first half year, the majority of which was in relation to MPKs which were initially sourced in the UK, but are now being manufactured in China at a significantly lower price while maintaining a very high level of quality. Even with the dividend payment and the significant investment in assets, the cash position of the Group at the half year end and forecast cash flow going forward remain robust.

Operational Performance

Revenue for UK Promotions was £114k (7%) lower than in 2014 due to a loss of venues that had a change of management control such as Manchester Arndale as well as reduced opportunities for long term retail bookings with some existing clients. Operating profit, however, was up 32% to £80k due to lower costs.

Revenue from the German Promotional business was up £9k (1%) compared with 2014 due to additional work undertaken with some clients off-setting the reduced ability to book long-term deals with another client. Operating Profit was £191k better than in the first half of last year due to the significant staff cost savings resulting from the 2014 restructuring programme.

UK Retail revenue was £93k (6%) lower due to reduction in average number of RMUs from 136 to 126, being partially offset by the introduction of MPK income of £216k from an average of 18 units. Operating profit was up £39k to £27k, primarily due to improvement in gross margin.

German Retail revenue decreased by £109k (8%) due to reduction in number of Retail Merchandising Units ("RMUs") from 135 to 128, being partially offset by the introduction of MPK income of £47k from an average of 4 units. This deliberate reduction was mentioned in my 2014 full year CEO report as a means of increasing occupancy and driving higher margins. As a result operating profit was maintained at £60k.

Head office costs were £54k (8%) lower than in the corresponding previous period. This was due to savings in Directors' salaries and central overheads from the 2014 restructuring programme more than covering the £50k that has been spent in relation to securing the pilot agreement with Immochan in France.

Other revenue was down by £798k (38%) and operating profit down by £138k to a loss of £68k due to the very large transaction that S&P+ completed in the first half of last year not being repeated in 2015. This has been partially offset by a larger number of smaller transactions with a wider variety of clients during the first half of this year. Being less dependent on one large transaction is a positive development for this business and is a result of the work that their management team has put in to expand and engage with more media planning and buying agencies.

Outlook for the remainder of 2015

The autumn months of each year are a very important time for our business. Both retail and promotional customers increase activity in the lead up to the Christmas period and along with the continued roll-out of MPKs in the UK and Germany and the seamless delivery of business on our new contracts, is our primary focus.

With substantial new contracts commencing in the final quarter of the year, we have been augmenting and developing our sales and administration teams over the last few months to ensure that we deliver a full service of the highest standard to these clients from the very start. As such, the Group is committing significant resources ahead of these commencement dates. These set-up costs incurred in the current year will enable us to deliver the best possible outcome for the duration of these contracts.

Overall, we believe full year 2015 will be in line with expectations.

Fred Stirling

On a personal note it was with great sadness we heard that our Honorary Life President, Fred Stirling, passed away during August this year. Fred had been involved with SpaceandPeople from the very beginning, investing in and helping to develop the raw and unpolished concept and playing a key role in creating the business we are today. His wisdom, experience and guidance will be sadly missed.

Conclusion

Following the well documented challenges of 2014, the Group is now in a much more stable position. The restructuring of the Board and senior staff has been completed successfully and with new client contracts and product innovation we have enjoyed a good start to 2015 and look forward to achieving sustainable growth in the future.

 

 

 

 

Matthew Bending

18 September 2015

 

 

 

 

 

 

Independent Review Report to SpaceandPeople plc

 

Introduction

 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Directors' Responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules For Companies.

 

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.

 

Our Responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules For Companies.

 

 

 

 

 

 

 

Campbell Dallas LLP

Chartered Accountants

Statutory Auditors

Titanium 1

King's Inch Place

Renfrew

PA4 8WF

 

Date:  18 September 2015

 

 



Consolidated Group Statement of Comprehensive Income

For the 6 months ended 30 June 2015

 

 

 

               

Notes


6 months to
 30 June '15

(Unaudited)

£'000


6 months to 30 June '14

(Unaudited)

£'000


12 months to   31 December '14

(Audited)

£'000









Revenue

5


6,020


7,125


15,446









Cost of Sales



(2,638)


(3,528)


(5,839)

 

Gross Profit

 

Administration expenses



 

3,382

 

(3,536)


 

3,597

 

(3,806)


 

9,607

 

(8,696)

Other operating income



131


123


224









Operating (loss) / profit before non-recurring costs

 



(23)


(86)


1,135

Non-recurring costs

6


-


(163)


(391)









Operating Profit / (Loss)

5


(23)


(249)


744









Finance income



14


6


36

Finance costs



(14)


(10)


(18)









Profit / (Loss) before taxation



(23)


(253)


762









Taxation



-


-


(166)









Profit / (Loss) after taxation



(23)


(253)


596









Other comprehensive income








Foreign exchange differences on translation of foreign operations



 

(10)

 


 

(46)


 

(28)

 

Total comprehensive income for the period



(33)


(299)


568

 

Profit / (Loss) attributable to:








Owners of the Company

Non-controlling interests



12

(35)


(286)

33


456

140




(23)


(253)


596

 

Total comprehensive income for the period attributable to:








Owners of the Company

Non-controlling interests



2

(35)


(332)

33


428

140




(33)


(299)


568

 

 

Earnings per share

14















Basic

 

Diluted



0.06p

 

0.06p


(1.47p)

 

(1.30p)


2.34p

 

2.10p

















 

 

Consolidated Group Statement of Financial Position

At 30 June 2015

 


Notes


30 June '15

(Unaudited)

£'000


30 June '14

(Unaudited)

£'000


31 December '14

 (Audited)

£'000

Assets








Non-current assets:








Goodwill

7


8,225


8,225


8,225

Other intangible assets

8


28


11


18

Property, plant & equipment

9


1,701


1,499


1,374




9,954


9,735


9,617

Current assets:








Trade & other receivables



3,648


4,910


4,221

Cash & cash equivalents

10


1,028


1,261


2,115




4,676


6,171


6,336









Total assets



14,630


15,906


15,953









Liabilities








Current liabilities:








Trade & other payables



4,657


5,912


5,835

Current tax payable



(142)


(177)


(170)

Other borrowings

11


250


-


250




4,765


5,735


5,915

Non-current liabilities:








Deferred tax liabilities



10


10


10

Long term loan

11


500


1,250


250




510


1,260


260









Total liabilities



5,275


6,995


6,175

 

 








Net assets



9,355


8,911


9,778

 

 








Equity








Share capital

13


195


195


195

Share premium



4,868


4,868


4,868

Special reserve



233


233


233

Retained earnings



3,957


3,585


4,345









Equity attributable to owners of the Company



9,253


8,881


9,641

Non-controlling Interest



102


30


137

Total equity



9,355


8,911


9,778

 



 

Consolidated Group Statement of Cash Flows

For the 6 months ended 30 June 2015

 


Notes


6 months to   30 June '15

(Unaudited)

£'000


6 months to   30 June '14

(Unaudited)

£'000


12 months to
31 December '14

(Audited)

£'000

Cash flows from operating activities








Cash (outflow) / inflow from operations



(448)


(181)


1,687

Interest paid



(14)


(10)


(18)

Taxation



28


(739)


(898)

Net cash inflow / (outflow) from operating activities



(434)


(930)


771









Cash flows from investing activities

Interest received



 

14


 

6

 

 

 

36

Purchase of intangible assets



(15)


(15)


(30)

Purchase of property, plant & equipment

9


(512)


(133)


(245)

Net cash outflow from investing activities



(513)


(142)


(239)









Cash flows from financing activities








Repayment of bank loan

11


-


(205)


(205)

Bank facility received / (repaid)

11


250


1,250


500

Dividends paid

12


(390)


(800)


(800)

Net cash outflow from financing activities



(140)


245


(505)

















(Decrease) /  increase in cash and cash equivalents



(1,087)


(827)


27

Cash at beginning of period



2,115


2,088


2,088

Cash at end of period

10


1,028


1,261


2,115

 

 

Reconciliation of operating profit to net cash flow from operating activities








Operating (loss) / profit



(23)


(249)


744

Amortisation of intangible assets



5


11


19

Depreciation of property, plant & equipment



185


224


461

Effect of foreign exchange rate moves



(10)


(46)


(28)

(Increase) / decrease in receivables



573


227


916

Increase / (decrease) in payables



(1,178)


(348)


(425)

Cash flow from operating activities



(448)


(181)


1,687

 

 



 

Consolidated Group Statement of Changes in Equity

For the 6 months ended 30 June 2015

 

 

6 months to 30 June '15

Share capital

 

£'000


Share premium

 

£'000


Special reserve 

 

£'000


Retained earnings

 

£'000


Non-controlling

Interest

£'000


Total equity

 

£'000













At 1 January '15

195


4,868


233


4,345


137


9,778

Foreign currency translation

-


-


-


(10)


-


(10)

Profit / (loss) for the period

-


-


-


12


(35)


(23)

Dividends paid

-


-


-


(390)


-


(390)

At 30 June '15

195


4,868


233


3,957


102


9,355

 

 

 

6 months to 30 June '14

Share capital

 

£'000


Share premium

 

£'000


Special reserve 

 

£'000


Retained earnings

 

£'000


Non-controlling

Interest

£'000


Total equity

 

£'000













At 1 January '14

195


4,868


233


4,717


(3)


10,010

Foreign currency translation

-


-


-


(46)


-


(46)

(Loss) / Profit for the period

-


-


-


(286)


33


(253)

Dividends paid

-


-


-


(800)


-


(800)

At 30 June '14

195


4,868


233


3,585


30


8,911

 

 

 

12 months to 31 December '14

Share capital

 

£'000


Share premium

 

£'000


Special reserve 

 

£'000


Retained earnings

 

£'000


Non-controlling

Interest

£'000


Total equity

 

£'000













At 1 January '14

195


4,868


233


4,717


(3)


10,010

Foreign currency translation

-


-


-


(28)


-


(28)

Profit for the period

-


-


-


456


140


596

Dividends paid

-


-


-


(800)


-


(800)

At 31 December '14

195


4,868


233


4,345


137


9,778

 

 



 

Notes to the financial statements

For the 6 months ended 30 June 2015

 

1.          General information

 

SpaceandPeople plc is a limited liability company incorporated and domiciled in Scotland (registered number SC212277) which is listed on AIM (dealing code SAL).

This condensed consolidated interim financial information has been reviewed, but not audited, by the auditors, and their independent review is set out on page 3 of this report. It does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. The financial information for the 12 months to 31 December 2014 has been extracted from the statutory accounts for that period. These published accounts were reported on by the auditors without qualification or an emphasis of matter reference, and did not include a statement under section 498 of the Companies Act 2006, and have been delivered to the Registrar of Companies.

 

This condensed consolidated interim financial information was approved by the board on 18 September 2015.  

 

2.          Basis of preparation

 

This condensed consolidated interim financial information for the 6 months ended 30 June 2015 has been prepared in accordance with IAS 34 'Interim financial reporting'. The condensed consolidated interim financial information should be read in conjunction with the financial statements of the Group for the period ending 31 December 2014 which were prepared on a going concern basis under the historical cost convention in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

3.          Accounting policies

 

The accounting policies adopted in the preparation of the condensed consolidated interim financial information are consistent with those applied in the financial statements of the Group for the year ended 31 December 2014.

 

 

4.          Seasonality of operations

 

Due to the seasonal nature of the retail business, higher revenues and operating profits are usually expected in the second half of the year than in the first six months, particularly for subsidiary companies Retail Profile Europe Limited and Retail Profile Europe GmbH.



 

5.          Segmental reporting

 

The Group maintains its head office in Glasgow and an office in Hamburg, Germany. These are reported separately. The Group operates both Promotional Sales and Retail RMU businesses in both the UK and Germany. The Group has determined that these are the principal operating segments as the performance of these segments is monitored separately and reviewed by the board.

 

The following table presents revenue and profit and loss information regarding the Group's two business segments - Promotional Sales and Retail, split by geographic area.

Other segment represents the Groups investments in S&P+ and SpaceandPeople India.

 

 

 

Promotions

UK

 

£'000

Promotions Germany

 

£'000

Retail

RMUs

 UK

£'000

Retail

RMUs

Germany

£'000

Head

Office

 

£'000

Other

 

 

£'000

Group

 

 

£'000

6 months to

30 June '15








Revenue

1,425

612

1,417

1,237

-

1,329

6,020

Segment operating profit/(loss)

328

279

27

60

(649)

(68)

(23)









6 months to

30 June '14








Revenue

1,539

603

1,510

1,346

-

2,127

7,125

Segment operating profit/(loss)

248

88

(12)

60

(703)

70

(249)









12 months to  December '14








Revenue

3,603

2,507

3,277

2,988

-

3,071

15,446

Segment operating profit/(loss)

951

169

96

417

(1,183)

294

744









 

 

6.          Non-recurring costs

 

During the prior interim period, the Group took steps to reduce costs and streamline overheads, as a result non-recurring costs of £163k were incurred. This was as a result of redundancy costs (£88k) and the Group also made provision for possible retrospective costs in relation to UK centre costs (£75k.) No non-recurring costs occurred in the current period.

            

 

 

7.          Goodwill

 

 

 

Net book value

6 months to

30 June '15

£'000

6 months to

30 June '14

£'000

12 months to

31 December '14

£'000

Opening Balance

8,225

8,225

8,225

Closing Balance

8,225

8,225

8,225

 

 



 

8. Other intangible assets

 

 

Net book value

6 months to

30 June '15

£'000

6 months to

30 June '14

£'000

12 months to

31 December '14

£'000

Opening Balance

18

7

7

Additions

15

15

30

Amortisation

(5)

(11)

(19)

Closing Balance

28

11

18

 

 

 

9.          Property, plant and equipment

 

Net book value

6 months to

30 June '15

£'000

6 months to

30 June '14

£'000

12 months to

31 December '14

£'000

Opening Balance

1,374

1,590

1,590

Additions

512

133

245

Depreciation

(185)

(224)

(461)

Closing Balance

1,701

1,499

1,374

 

10.        Cash & cash equivalents

 

 

30 June '15

£'000

30 June '14

£'000

31 December '14

£'000





Cash at Bank and on hand

1,028

1,261

2,115


1,028

1,261

2,115

 

11.        Non-current liabilities

As at 30 June 2015, SpaceandPeople had drawn down £750k (June 2014: £1,250k) of its agreed bank facility of £2million. The amount drawn is part of a revolving credit facility of which £1million is repayable by 31 December 2015 and £1million is repayable by 31 July 2017.

 

 

12.        Dividends

 

 

30 June '15

£'000

30 June '14

£'000

31 December '14

£'000





Paid during the period

390

800

800





 

 

13.        Called up share capital

 

Allotted,  issued and fully paid

30 June '15

 

30 June '14

 

31 December '14

 

Class

Nominal value





Ordinary

1p

£

195,196

195,196

195,196



Number

19,519,563

19,519,563

19,519,563

 

 



 

14.        Earnings per share

 

Earnings per share has been calculated using the profit/ (loss) after taxation for the period and the weighted average number of shares in issue.

 


30 June '15

£'000

30 June '14

£'000

31 December '14

£'000

Profit / (loss) after taxation

12

(286)

456





 

 

 

Weighted average number of shares in issue during the period

 

'000

 

'000

 

'000

-       1p ordinary shares

19,520

19,492

19,520

-       Share options

1,883

2,453

2,188

-       Diluted ordinary shares

21,403

21,945

21,708

 

 

                                    




 

 

 

SpaceandPeople plc

2nd Floor

100 West Regent Street

Glasgow

G2 2QD

Telephone:            0845 2418215

Email:                     help@spaceandpeople.com

 

 

www.spaceandpeople.com

 

 


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