Interim Results for the 6 mths ended 30 June 2014

RNS Number : 3749R
SpaceandPeople PLC
11 September 2014
 

SpaceandPeople plc

 

11 September 2014

 

SpaceandPeople plc

("SpaceandPeople" or the "Group")

 

Interim Results for the 6 months to 30 June 2014

 

SpaceandPeople (AIM:SAL), the international experiential marketing and media group 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 2014.

 

 

Highlights

 

·      Net revenues up 7% to £7.1m

 

·      Operating profit before non-recurring costs down £743k to a loss of £86k

 

·      S&P+ Limited profitable in only its second year since start-up

 

·      Overhead reduction plan implemented

 

·      Contract renewals and new wins including ECE Projektmanagement throughout Germany and Grand Central in Birmingham

 

 


 

Contact details

 

SpaceandPeople plc

 

 

0845 241 8215

Matthew Bending

Gregor Dunlay

 


Cantor Fitzgerald Europe

020 7894 7000

David Foreman / Mark Percy (Corporate Finance)


Paul Jewell / Richard Redmayne (Corporate Broking)



 

 

Chief Executive's Interim Operating Statement

 

Introduction

 

The first half of 2014 has been a challenging period for the Group, with trading in a number of areas being slower than had been anticipated and a number of one-off costs being incurred. As a result of this, we issued a trading update in April 2014 explaining the reasons for our revised expectations. Since then, a number of areas have been trading in line with these revised expectations, but performance in other areas has been disappointing compared with our revised forecast and this is explained further in the operational performance review below.

 

Trading conditions in the first half year

 

In our update in April this year, we highlighted trading problems relating to four key areas of our business. These were:

 

·      UK promotions, where sales traction in new venues was slower than anticipated;

 

·      UK retail, where we saw increased restrictions on some retail categories available for us to sell;

 

·      German promotions, where there were delays in obtaining local authority permits to trade in new centres, resulting in lost sales opportunities for this year; and

 

·      German retail, where our roll-out plan was delayed throughout the year and we achieved lower than expected occupancy in the first six months of 2014.

 

These conditions have continued to weigh on our performance since April. In particular, although the German retail division has achieved higher sales than in the same period in 2013, it has experienced reduced occupancy of units which has resulted in a lower profit margin.

 

Financial performance

 

Net revenue for the first half was £7.1m, an increase of 7% compared with the first six months of 2013. Operating profit before non-recurring costs was £743k lower at a loss of £86k, due to a greater proportion of the net revenue being delivered by S&P+ Limited which is a lower margin area of the business. Profit after tax, but before non-recurring costs attributable to the owners of the company declined by £600k to a loss of £123k (2013: £477k profit).

 

The Group cash position at the half year end and forecasted cash flow going forward remain robust. The Group also repaid the final part of its bank term loan during the first half year.

 

Operational performance

 

Net revenue from UK Promotions declined 14% to £1,539k, due primarily to the Group no longer working with Intu Properties in this area. Operating profit before non-recurring costs rose £83k to £411k (+25%).

 

German Promotions revenue was down £495k to £603k, a fall of 45%. This was due to long term rental spaces within ECE malls being removed and the expected permits for other malls in our portfolio being delayed. Operating profit before non-recurring costs was 85% lower at £88k.

 

UK Retail saw revenue 32% lower at £1,510k. This was due to lower royalty income (down £175k) and the removal of 52 Mobile Kiosks at various centres. Operating profit reduced by £450k, resulting in a loss of £12k in the first half of the year.

 

German Retail successfully grew its revenue, recording an 8% increase to £1,346k due to further roll-out in ECE centres. However, operating profit fell £128k to £60k (-68%) due to lower occupancy reducing the gross margin percentage.

 

Other revenue was up £1,807k to £2,127k (+565%) due to S&P+ Limited, of which we own 51%, gaining significant new business compared with the same period in the previous year. Other operating profit before non-recurring costs was up £167k to £70k. A delay in the execution of a major project that S&P+ has been working on means that a significant element of its income and profit, which had been anticipated to be included in 2014, is likely to be deferred until next year.

 

We have streamlined our overheads, with head office costs £66k lower at £703k (-9%), as we began to see the benefits of our cost reductions. We incurred non-recurring costs of £163k in the first half year as a result of redundancy costs and a provision for possible retrospective non-domestic rates liabilities.

 

 

Our revised forecasts for 2014

 

As a result of the market conditions discussed above, we now expect full year net revenue for 2014 will be £16.1m, with profit before tax and non-recurring costs of between £800k and £1.0million and profit before tax but after non-recurring costs, of between £500k and £700k. We are providing a range at this point because much of the crucial Christmas trading period sales have yet to be transacted.

 

We have made annualised cost savings of £700k and the new revenue lines we established this year will deliver a better performance in 2015. Additionally, we are delighted to announce the following contracts:

·      SpaceandPeople GmbH has agreed a new three year contract with ECE Projektmanagement GmbH in Germany, to arrange promotions in their mall spaces until 31 December 2017. The extension allows us to continue our partnership with Europe's largest property group, and although more focussed on short term promotions it will enable us to grow our new innovative and well received customer connect system nationally.

 

·      SpaceandPeople plc in the UK is also pleased to announce that it has signed heads of terms in contemplation of being awarded an exclusive commercialisation contract with Grand Central Birmingham, due to open in September 2015. The opening of Grand Central and its flagship John Lewis store will coincide with the completion of Birmingham New Street Station which will transform rail travel for millions of passengers and provide a unique shopping and station experience. Many of the shops, restaurants and cafes already confirmed for the scheme will be new to the city, with an emphasis on quality retail and international dining.

 

Overall, the business is robust and profitable, cash flow is positive and the cash position is strong. The Company anticipates having in the region of £750k of net cash at the year-end, as well as a £2.0m long-term borrowing facility. The board therefore expect to be able to propose a dividend of 2.0p per share at the AGM, payable in April 2015.

 

Our priorities for the remainder of 2014

 

While conditions have been challenging this year, we have taken a number of actions during 2014 which will continue into 2015 and will help us return to profit growth next year. The management team have very clear priorities; sales improvement and cost reduction combined with improved venue acquisition.

 

In addition, we will continue to develop our Indian business, of which we own 62.5%. Paresh Khivesara and the team have improved revenues and reduced the regional sales teams, concentrating on Mumbai and Delhi as sales centres. The MacV Sunglasses brand which SpaceandPeople India exclusively represent, has grown to 20 kiosks as of the end of August and will help to deliver its projected budget for the year through enhanced management fees and consultancy.  We are also working with our licensee business in Russia to support their growth into new venues and new territories.

 

Board changes

 

David Henderson-Williams, who has been non-executive Chairman for eight years, will step down from the board on 11 September 2014. David helped us to grow the business by ensuring we focused on delivery to our shopping centre clients. He ensured continuity of delivery during this expansion and was instrumental in the acquisition of Retail Profile in 2010. We thank him for everything he has done and wish him well for the future. We expect to announce the appointment of a new Chairman imminently.

 

Steve Curtis joined the board as a non-executive director on 19 June 2014 bringing over 30 years of experience in the media industry and retail commercialisation in the UK and overseas. The insight and experience that he brings is already proving to be valuable to the development and growth of the business.

 

I am also pleased to announce that George Watt will be joining the board as a non-executive director on 11 September 2014. George is Chief Financial Officer at STV Group plc and has extensive City and media understanding. He will bring significant knowledge and skills to the board that will be of great value to the Group.

 

 

Conclusion

 

Despite the challenging sales environment this year, SpaceandPeople remains a robust business. Our rapid growth in recent years has made us Europe's largest provider of commercialisation revenue to our client shopping centres and we strive to continue to offer them the best service available.

 

We expect to deliver in excess of £32m of gross revenue for the full year and our cash position is strong. Our services are very much in demand and with our restructured business and streamlined cost base, we know how we will return to profit growth in 2015.

 

 

 

 

Matthew Bending

10 September 2014

 

Independent Review Report to SpaceandPeople plc

 

 

Introduction

 

We have been instructed by the company to review the financial information for the six months ended 30 June 2014 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 notes.  We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

 

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.

 

Review work performed

 

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." 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 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.

 

This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules of the London Stock Exchange and for no other purpose.  We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

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 interim report for the six months ended 30 June 2014 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:  10 September 2014

 

 

 

Consolidated Group Statement of Comprehensive Income

For the 6 months ended 30 June 2014

 

 

 

               

Notes


6 months to
30 June '14

(Unaudited)

£'000


6 months to 30 June '13

(Unaudited)

£'000


12 months to
31 December '13

(Audited)

£'000









Revenue

5


7,125


6,663


14,567









Cost of Sales



(3,528)


(2,063)


(4,023)

 

Gross Profit

 

Administration expenses



 

3,597

 

(3,806)


 

4,600

 

(4,029)


 

10,544

 

(8,587)

Other operating income



123


86


322









Operating profit before non-recurring costs

 

5


(86)


657


2,279

Non-recurring costs

6


(163)


-


-









Operating Profit / (Loss)



(249)


657


2,279









Finance income



6


-


215

Finance costs



(10)


(44)


(55)









Profit / (loss) before taxation



(253)


613


2,439









Taxation



0


(186)


(648)









Profit / (loss) after taxation



(253)


427


1,791









Other comprehensive income








Foreign exchange differences on translation of foreign operations



 

(46)


 

86


 

(51)

Total comprehensive income for the period



(299)


513


1,740

 

Profit / (loss) attributable to:








Owners of the Company

Non-controlling interests



(286)

33


477

(50)


1,971

(180)




(253)


427


1,791

 

Total comprehensive income for the period attributable to:








Owners of the Company

Non-controlling interests



(332)

33


563

(50)


1,920

(180)




(299)


513


1,740

 

 

Earnings per share

14















Basic

 

Diluted



(1.47p)

 

(1.30p)


2.45p

 

2.19p


10.11p

 

8.98p

















 

 

Consolidated Group Statement of Financial Position

At 30 June 2014

 


Notes


30 June '14

(Unaudited)

£'000


30 June '13

(Unaudited)

£'000


31 December '13

 (Audited)

£'000

Assets








Non-current assets:








Goodwill

7


8,225


8,225


8,225

Other intangible assets

8


11


14


7

Property, plant & equipment

9


1,499


1,444


1,590




9,735


9,683


9,822

Current assets:








Trade & other receivables



4,910


4,912


5,137

Cash & cash equivalents

10


1,261


1,795


2,088




6,171


6,707


7,225









Total assets



15,906


16,390


17,047









Liabilities








Current liabilities:








Trade & other payables



5,912


6,489


6,260

Current tax payable



(177)


126


562

Other borrowings



-


455


205




5,735


7,070


7,027

Non-current liabilities:








Deferred tax liabilities



10


10


10

Long term loan

11


1,250


532


-




1,260


542


10









Total liabilities



6,995


7,612


7,037

 

 








Net assets



8,911


8,778


10,010

 

 








Equity








Share capital

13


195


195


195

Share premium



4,868


4,859


4,868

Special reserve



233


233


233

Retained earnings



3,585


3,364


4,717









Equity attributable to owners of the Company



8,881


8,651


10,013

Non-controlling Interest



30


127


(3)

Total equity



8,911


8,778


10,010

 

Consolidated Group Statement of Cash Flows

For the 6 months ended 30 June 2014

 


Notes


6 months to
30 June '14

(Unaudited)

£'000


6 months to
30 June '13

(Unaudited)

£'000


12 months to
31 December '13

(Audited)

£'000

Cash flows from operating activities








Cash (outflow)/inflow from operations



(181)


1,250


2,499

Interest paid



(10)


(44)


(55)

Taxation



(739)


(349)


(375)

Net cash inflow / (outflow) from operating activities



(930)


857


2,069









Cash flows from investing activities

Interest received



 

6


 

-


 

215

Purchase of intangible assets



(15)


-


(1)

Purchase of property, plant & equipment

9


(133)


(236)


(592)

Net cash outflow from investing activities



(142)


(236)


(378)









Cash flows from financing activities








Proceeds from issue of shares



-


30


39

Repayment of bank loan

11


(205)


(198)


(480)

Bank facility received / (repaid)

11


1,250


-


(500)

Dividends paid

12


(800)


(677)


(681)

Net cash outflow from financing activities



245


(845)


(1,622)

















(Decrease)/increase in cash and cash equivalents



(827)


(224)


69

Cash at beginning of period



2,088


2,019


2,019

Cash at end of period

10


1,261


1,795


2,088

 

 

Reconciliation of operating profit to net cash flow from operating activities








Operating profit



(249)


657


2,279

Amortisation of intangible assets



11


6


14

Depreciation of property, plant & equipment



224


154


364

Effect of foreign exchange rate moves



(46)


86


(51)

(Increase)/ decrease in receivables



227


(1,073)


(1,298)

Increase / (decrease) in payables



(348)


1,420


1,191

Cash flow from operating activities



(181)


1,250


2,499

 

 

Consolidated Group Statement of Changes in Equity

For the 6 months ended 30 June 2014

 

 

6 months to 30 June '14

Share capital

£'000


Share premium £'000


Special reserve  £'000


Retained earnings £'000


Minority

Interest

£'000


Total equity

£'000













At 1 January '14

195


4,868


233


4,717


(3)


10,010

Foreign currency translation

-


-


-


(46)


-


(46)

Loss for the period

-


-


-


(286)


33


(253)

Dividends paid

-


-


-


(800)


-


(800)

At 30 June '14

195


4,868


233


3,585


30


8,911

 

 

 

6 months to 30 June '13

Share capital

£'000


Share premium £'000


Special reserve  £'000


Retained earnings £'000


Minority

Interest

£'000


Total equity

£'000













At 1 January '13

194


4,830


233


3,478


177


8,912

Shares issued

1


29


-


-


-


30

Foreign currency translation

-


-


-


86


-


86

Profit for the period

-


-


-


477


(50)


427

Dividends paid

-


-


-


(677)


-


(677)

At 30 June '13

195


4,859


233


3,364


127


8,778

 

 

 

12 months to 31 December '13

Share capital

£'000


Share premium £'000


Special reserve  £'000


Retained earnings £'000


Minority

Interest

£'000


Total equity

£'000













At 1 January '13

194


4,830


233


3,478


177


8,912

Shares issued

1


38


-


-


-


39

Foreign currency translation

-


-


-


(51)


-


(51)

Profit for the period

-


-


-


1,971


(180)


1,791

Dividends paid

-


-


-


(681)


-


(681)

At 31 December '13

195


4,868


233


4,717


(3)


10,010

 

 

Notes to the financial statements

For the 6 months ended 30 June 2014

 

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 2013 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 12 September 2014.  

 

2.          Basis of preparation

 

This condensed consolidated interim financial information for the 6 months ended 30 June 2014 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 Company for the period ending 31 December 2013 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 Company for the year ended 31 December 2013.

 

The comparative information in the consolidated income statement has been restated for the reallocation of certain costs from Administration Expenses to Cost of Sales. The reallocation of certain direct costs has been done to provide more reliable and relevant information regarding the nature of these costs.

 

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. In addition its subsidiary, Retail Profile, has an office in London and a subsidiary in 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. S&P+ contributed £2.0m of revenue included in 'Other' below.

 

 

 

Promotion

UK

£'000

Promotion Germany

£'000

Retail

 UK

£'000

Retail

Germany

£'000

Head

Office

£'000

Other

 

£'000

Group

 

£'000

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)









6 months to

30 June '13








Revenue

1,789

1,098

2,212

1,244

-

320

6,663

Segment operating profit/(loss)

328

569

438

188

(769)

(97)

657









12 months to  December '13








Revenue

3,566

3,106

4,489

2,994

-

412

14,567

Segment operating profit/(loss)

1,462

852

1,016

718

(1,402)

(367)

2,279









 

 

6.          Non-recurring costs

 

During the 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.)

 

7.          Goodwill

 

 

 

Net book value

6 months to

30 June '14

£'000

6 months to

30 June '13

£'000

12 months to

31 December '13

£'000

Opening Balance

8,225

8,225

8,225

Additions

-

-

-

Closing Balance

8,225

8,225

8,225

 

 

8. Other intangible assets

 

 

Net book value

6 months to

30 June '14

£'000

6 months to

30 June '13

£'000

12 months to

31 December '13

£'000

Opening Balance

7

20

20

Additions

15

-

1

Amortisation

(11)

(6)

(14)

Closing Balance

11

14

7

 

 

 

9.          Property, plant and equipment

 

Net book value

6 months to

30 June '14

£'000

6 months to

30 June '13

£'000

12 months to

31 December '13

£'000

Opening Balance

1,590

1,362

1,362

Additions

133

236

592

Depreciation

(224)

(154)

(364)

Closing Balance

1,499

1,444

1,590

 

10.        Cash & cash equivalents

 

 

30 June '14

£'000

30 June '13

£'000

31 December '13

£'000





Cash at Bank and on hand

1,261

1,795

2,088

Bank Overdraft

-

-

-


1,261

1,795

2,088

 

11.        Non-current liabilities

As at 30 June 2014, SpaceandPeople had drawn down £1,250k (June 2013: £500k) 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 '14

£'000

30 June '13

£'000

31 December '13

£'000





Paid during the period

800

677

681





 

 

13.        Called up share capital

 

Allotted,  issued and fully paid

30 June '14

 

30 June '13

 

31 December '13

 

Class

Nominal value





Ordinary

1p

£

195,196

195,036

195,196



Number

19,519,563

19,503,563

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 '14

£'000

30 June '13

£'000

31 December '13

£'000

Profit / (loss) after taxation

(286)

477

1,971




 

 

 

Weighted average number of shares in issue during the period

 

'000

 

'000

 

'000

-       1p ordinary shares

19,492

19,477

19,492

-       Share options

2,453

2,364

2,453

-       Diluted ordinary shares

21,945

21,841

21,945

 

 

                                    




 

 

 

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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