Final Results

SPACEANDPEOPLE PLC ("SpaceandPeople" or the "Company") Final Results for the Year Ended 31 October 2006 16 January 2007 SpaceandPeople which facilitates and manages the sale of promotional space in malls and shopping centres announces results for the year ended 31 October 2006. Highlights · Billings up 30% from £7.4m to £9.6m · Turnover up 37% from £1,408,693 to £1,933,303 · Profits before tax up 48% from £307,000 to £455,000 · Dividend up 50% to 1.5p per share · Earnings per share up from 2.4p to 3.1p Chairman's Statement I am both pleased and proud to be able to report that the year ending 31st October, 2006, the second set of figures since we have been listed on AIM, has been the fourth year of significant and successive growth. These results are a clear indication that the development of bespoke sales teams specialising in different sectors of our business is creating real improvements in sales and profitability. The current financial year will see a continuation of that strategy. During the year we have also re- evaluated our commercial relationships and are now increasingly focused on the most profitable portfolios. The only disappointing factor in the trading year was that June and July did not meet our financial expectations. There is, nonetheless, a discernible demand for outdoor venues over the Summer months and we have therefore been seeking outdoor and leisure locations so that advertisers can book alternative types of venue for experiential marketing. We are currently in advanced talks with a portfolio of well known outdoor leisure destinations for Summer activities. During the year we announced that Hammerson France had joined our service and we now have a dedicated French team working in Glasgow to develop this business. We are also in advanced discussions with other overseas property portfolios. They include one of the largest shopping centre portfolios in Europe. I hope we will see positive movement on these fronts during this trading year. Your company has a great many strengths. We have an innovative new marketing model that has been successfully established across the UK and is now set on applying the body of knowledge and the associated techniques to other markets overseas. The company is managed by Nancy Cullen and Matt Bending who jointly developed the concept and are tireless in pursuing their commitment to its further exploitation. Their knowledge of the business and their sensitivity to its demands are unrivalled. The range of their commitment is all embracing - from a hands on grip of the minutiae of their own areas of the business - respectively site acquisition and advertising sales - to a dedicated drive to expand the geographic and intrinsic opportunities for growth. They are backed up by excellent teams dedicated to maximising the return on our commercial relationships. Dividend As a result of the success in 2006, the board is proposing the payment on 5 March 2007 of an interim dividend of 1.5p per share, up from 1p per share last year, to shareholders on the Register as at 26 January 2007 J J Arnold Chairman 11 January 2007 Chief Executives' Review SpaceandPeople has been operating for a little over five years and we have created a unique business from the evaluation, marketing and sales of venue mall space. Before 2001 there was no centralised, professional or structured approach to these activities as an advertising medium in its own right. We saw this opportunity and seized it. Today we represent most of the UK's prestige property owners with a combined weekly footfall in excess of 25 million. This represents a larger audience than that of Radio 1 and 2 combined and we are well placed to benefit from the fragmentation of media spend and the redirection of spend from traditional media. With the increased fragmentation of TV and declining media audiences, advertisers want to cut through and speak to their customers face to face. Historically this was done at trade shows, SpaceandPeople have brought it into the consumer environment predominantly in Shopping Malls. Seth Godin' a leading marketer in the USA sums it up when he says "Advertisers are going to have to learn how to deliver messages with frequency and low cost if they are to cope with the increasing competition for the consumer's attention." We believe we have captured a large area of fertile space in which to deliver those messages "with frequency and low cost" to consumers who have that wonderful commodity: time on their hands, in a buying frame of mind and receptive to new products and services. SpaceandPeople have been at the forefront of measuring the effectiveness of mall media especially when integrated with other media. In a survey for Siemens undertaken with SpaceandPeople when Live Brand experience was combined with in-mall plasma TV and digital marketing, sales and responses shot up by over 100%. We are in advanced talks with two property owners to roll out fully integrated live experience media packages in 2007. To complete the circle SpaceandPeople has developed a unique people measurement system that will enable advertisers to measure very accurately customer response remotely in real time. If this is done successfully we will be well on the way to achieving the marketeers Holy Grail, "Above the line awareness with below the line accountability". Matthew Bending Nancy Cullen 11 January 2007 Contact details Jeremy Arnold Chairman 0141 303 8360 Matthew Bending Joint Managing Director 0141 303 8360 Nancy Cullen Joint Managing Director 0141 303 8360 Profit and Loss Account For The Year Ended 31 October 2006 2006 2005 Notes £ £ TURNOVER 1,933,303 1,408,693 Administrative Expenses 1,519,012 1,119,589 _________ _________ 414,291 289,104 Other operating income 11,707 420 _______ _______ OPERATING PROFIT 3 426,078 289,524 Interest receivable and similar income 28,865 17,876 _______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 454,943 307,400 Tax on profit on ordinary activities 4 106,440 36,795 _______ _______ PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION 348,503 270,605 ======= ======= Earnings per ordinary share 18 3.1p 2.4p Diluted earnings per ordinary share 18 3.0p 2.3p The 2005 results have been restated under FR21 `Events after the Balance Sheet Date' for dividends declared after the end of the period. This is more fully disclosed in Note 1 to the accounts. CONTINUING OPERATIONS None of the company's activities were acquired or discontinued during the current and previous years. TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains or losses other than the profits for the current and previous. Balance Sheet 31 October 2006 2006 2005 Notes £ £ £ £ FIXED ASSETS: Intangible assets 7 - - Tangible assets 8 68,263 31,663 ________ ________ 68,263 31,663 CURRENT ASSETS: Debtors 9 728,739 493,489 Cash at bank and in hand 1,011,597 671,789 __________ ________ 1,740,336 1,165,278 CREDITORS: Amounts falling due within one year 10 951,265 574,110 ________ ________ NET CURRENT ASSETS: 789,071 591,168 _______ _______ TOTAL ASSETS LESS CURRENT LIABILITIES: £857,334 £622,831 ======== ======== CAPITAL AND RESERVES: Called up share capital 14 114,000 114,000 Special reserve 15 232,809 232,809 Profit and loss account 510,525 276,022 _______ _______ EQUITY SHAREHOLDERS' FUNDS 17 £857,334 £622,831 ======== ======== These financial statements were approved by the Board of Directors on 11 January 2007 Signed on behalf of the Board of Directors MJ Bending - Director Cash Flow Statement For The Year Ended 31 October 2006 Notes 2006 2005 £ £ Net cash inflow from operating activities 1 512,462 400,226 Returns on investments and servicing of finance 2 28,865 17,876 Taxation (35,235) - Capital expenditure and financial investment 2 (52,284) (28,740) Equity dividends paid (114,000) - _______ ______ 339,808 389,362 Financing 2 - 2,000 _______ ______ Increase in cash in the period £339,808 £391,362 ======= ======= Reconciliation of net cash flow to movement in net funds 3 Increase in cash in the period 339,808 391,362 _______ _______ Change in net funds resulting from cash flows 339,808 391,362 _______ _______ Movement in net funds in the period 339,808 391,362 Net funds at 1 November 671,789 280,427 _______ _______ Net funds at 31 October £1,011,597 £671,789 ========= ======== Notes to the Cash Flow Statement For The Year Ended 31 October 2006 1. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2006 2005 £ £ Operating profit 426,078 289,524 Depreciation charges 15,684 15,272 Loss on fixed asset investment - 5,001 Transfer of fixed asset investment - 4,667 Increase in debtors (235,250) (172,288) Increase in creditors 305,950 258,050 _______ _______ Net cash inflow from operating activities 512,462 400,226 ======= ======= 2. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT 2006 2005 £ £ Returns on investments and servicing of finance Interest received 28,865 17,876 _______ ______ Net cash inflow for returns on investments and servicing of finance 28,865 17,876 ====== ====== Capital expenditure and financial investment Purchase of tangible fixed assets (52,284) (29,075) Cash receipts - investment sales - 335 _____ _____ Net cash outflow for capital expenditure (52,284) (28,740) ====== ====== Financing Net cash receipt - share issue (I) - 2,000 _____ _____ Net cash inflow/(outflow) from financing - 2,000 ===== ===== (I) This represents £100,000 received from share issue less £98,000 of share and AIM listing costs paid from the proceeds of the issue. 3. ANALYSIS OF CHANGES IN NET FUNDS At 1.11.05 Cash flow At 31.10.06 £ £ £ Net cash: Cash at bank and in hand 671,789 339,808 1,011,597 _______ _______ _________ Total 671,789 339,808 1,011,597 ======= ======= ========= Analysed in Balance Sheet Cash at bank and in hand 671,789 1,011,597 _______ _________ 671,789 1,011,597 ======= ========= Notes to the Financial Statements For The Year Ended 31 October 2006 1. ACCOUNTING POLICIES The financial statements for the current year have been prepared under the historical cost convention and are in accordance with applicable accounting standards. CHANGES IN ACCOUTING POLICIES The particular accounting policies adopted are described below and have remained unchanged from the previous year apart from the adoption of the following financial reporting standards. FRS 21 - `Events after the Balance Sheet Date' The adoption of the Financial Reporting Standard No. 21 has resulted in a change in accounting policy in respect of proposed equity dividends. If the company declares dividends to the holders of equity instruments after the balance sheet date, the company does not recognise those dividends as a liability at the balance sheet date. The aggregate amount of equity dividends proposed before approval of the financial statements, which have not been shown as liabilities at the balance sheet date, are disclosed in the notes to the financial statements. Previously, proposed equity dividends were recorded as liabilities at the balance sheet date. This change in accounting policy has resulted in a prior year adjustment for the company. Shareholders' funds at 1 November 2005 have been increased by £114,000. For the year ended 31 October 2006, the change in accounting policy has resulted in an increase in the retained profit for the year of £114,000. The balance sheet at 31 October 2005 has been restated to reflect the de-recognition of a liability for the proposed equity dividend of £114,000 which has now been paid in the year to 31 October 2006. FRS 22 `Earnings per Share' FRS 22 has been adopted in full and has had no impact on the disclosure of earnings per share. FRS 25 `Financial Instruments - Presentation' The adoption of the presentational requirements of FR5 25 has had no impact of the financial statements. FRS 28 `Corresponding amounts' FRS 28 has been adopted. There is no impact on the disclosure included within the financial statements as it imposes the same requirement for comparatives as previously required by the Companies Act 1985. Turnover Turnover represents the invoiced value of services provided and commissions earned, in the UK net of value added tax. Patents and trademarks The costs of obtaining patents and trademarks are written off over the economic life of the asset acquired. Tangible fixed assets Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. Website development costs - 33.3% on cost Fixtures and fittings - 25% on cost Computer equipment - 25% on cost Hire purchase and leasing commitments Rentals paid under operating leases are charged to the profit and loss account as incurred. Website development costs The company capitalises all costs directly attributable to developing its website, while costs which relate to ongoing maintenance are expensed as they arise. Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. Foreign exchange Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates at that date. These translation differences are dealt with in the profit and loss account. Financial instruments Financial liabilities and equity instruments are classified according to the substance of the arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of the financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classified as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited directly to equity. 2. STAFF COSTS 2006 2005 £ £ Wages and salaries 815,668 608,423 Social security costs 83,048 61,979 ______ ______ 898,716 670,402 ====== ====== The average monthly number of employees during the year was as follows: 2006 2005 Directors 2 2 Administration 10 4 Telesales 18 16 __ __ 30 22 == == 3. OPERATING PROFIT The operating profit is stated after charging: 2006 2005 £ £ Motor vehicle leasing 8,654 4,963 Depreciation - owned assets 15,684 14,755 Loss on disposal of fixed assets - 5,001 Patents and trademarks written off - 517 Auditors' remuneration 5,600 4,000 Auditors' remuneration - non-audit fees 7,600 6,975 ===== ===== Directors' emoluments 147,248 123,728 ====== ======= 4. TAXATION Analysis of the tax charge The tax charge on the profit on ordinary activities for the year was as follows: 2006 2005 £ £ Current tax: UK corporation tax 108,000 36,795 Over provision (1,560) - ______ ______ Tax on profit on ordinary activities 106,440 36,795 ====== ====== UK corporation tax was charged at 30% during 2006 and 19% during 2005. Factors affecting the tax charge The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: 2006 2005 £ £ Profit on ordinary activities before tax 454,943 307,400 ====== ====== Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2005-19%) 136,483 58,406 Effects of: Expenses not deductible for tax purposes 6,490 10,180 Capital allowances in excess of depreciation (1,913) (15) Brought forward loss relief - (31,776) Marginal relief (33,060) - ______ _____ Current tax charge 108,000 36,795 ====== ====== 5. DIVIDENDS 2006 2005 £ £ Paid during the year Equity - 1p per ordinary share 114,000 - ======= ====== Proposed after the year end Equity - 1.5p per ordinary share (2005:1p) 171,000 114,000 ======= ======= 6. PRIOR YEAR ADJUSTMENTS The change in accounting policies, detailed in note 1, has resulted in a prior year adjustment of £114,000 in respect of equity dividends paid. 7. INTANGIBLE FIXED ASSETS Patents and Trademarks ___________ £ COST: At 1 November 2005 and 31 October 2006 5,913 ===== AMORTISATION: At 1 November 2005 and 31 October 2006 5,913 _____ NET BOOK VALUE: At 31 October 2006 and 31 October 2005 - ===== 8. TANGIBLE FIXED ASSETS Website Fixtures development and Computer costs fittings equipment Totals _________ _________ _________ _________ £ £ £ £ COST: At 1 November 2005 89,174 16,709 58,952 164,835 Additions 26,475 3,546 22,263 52,284 ______ ______ ______ ______ At 31 October 2006 115,649 20,255 81,215 217,119 ______ ______ ______ ______ DEPRECIATION: At 1 November 2005 88,739 7,154 37,279 133,172 Charge for year 590 4,733 10,361 15,684 ______ ______ ______ ______ At 31 October 2006 89,329 11,887 47,640 148,856 ______ ______ ______ ______ NET BOOK VALUE: At 31 October 2006 26,320 8,368 33,575 68,263 ====== ====== ====== ====== At 31 October 2005 435 9,555 21,673 31,663 ====== ====== ====== ====== 9. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2006 2005 £ £ Trade debtors 690,140 474,773 Other debtors 11,732 12,149 Prepayments 26,867 6,567 ______ ______ 728,739 493,489 ====== ====== 10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2006 2005 £ £ Trade creditors 83,863 50,506 Other creditors 474,445 320,641 Social security & other taxes 164,872 92,430 Taxation 108,000 36,795 Accrued expenses 120,085 73,738 _______ ______ 951,265 574,110 ======= ====== Trade creditors in the current and previous years have been further analysed to show a more detailed split of trade and other creditors for disclosure purposes. Other creditors represent the balance of sums due to shopping centres where the company provides an invoicing service. 11 OPERATING LEASE COMMITMENTS The following payments are committed to be paid within one year: Operating leases Land and Other buildings 2006 2005 2006 2005 £ £ £ £ Expiring: Within one year 16,905 8,905 1,863 - Between one and five years - - 4,830 ____ ____ ____ ____ 16,905 8,905 1,863 4,830 ==== ==== ==== ==== 12. SECURED DEBTS The following secured debts are included within creditors: 2006 2005 £ £ - - == == The company's bankers hold a bond and floating charge for all sums and obligations due or to become due. 13. FINANCIAL INSTRUMENTS The Company's financial instruments comprise cash, and various items such as trade debtors and trade creditors which rise directly from its operations. Short term debtors/creditors have been excluded form the following disclosures. 2006 2005 £ £ Financial Assets Cash at bank and in hand 1,011,597 671,789 Liquidity risk The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safe and profitably. Fair value The net fair value and carrying amounts approximate their carrying value. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and notes. 14.CALLED UP SHARE CAPITAL Authorised: Number: Class: Nominal 2006 2005 value: £ £ 15,000,000 Ordinary 1p 150,000 150,000 ======= ======= Allotted, issued and fully paid: Number: Class: Nominal 2006 2005 value: £ £ 11,400,000 Ordinary 1p 114,000 114,000 ======= ======= 15.SPECIAL RESERVE 2006 2005 £ £ Special Reserve 232,809 232,809 ======= ======= The Special Reserve was created following the cancellation of the share premium account. 16.TRANSACTIONS WITH DIRECTORS Directors fees During the period fees amounting to £15,083 (2005-£14,559)were paid to individuals for their services as directors. 17.RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005 £ £ Profit for the financial year 348,503 270,605 Dividends (114,000) - _______ _______ 234,503 270,605 New shares issued in year - 2,000 _______ ______ Net addition to shareholders' funds 234,503 272,605 Opening shareholders' funds (originally £508,831 before prior year adjustment of £114,000) 622,831 350,226 _______ _______ Closing shareholders' funds 857,334 622,831 ======= ======= Equity interests 857,334 622,831 ======= ======= 18. EARNINGS PER SHARE This is based on profit on ordinary activities after taxation for the year of £348,503 and on the weighted number of ordinary shares in issue throughout the year. 2006 2005 Basic ordinary shares 11,400,000 11,383,333 Diluted ordinary shares 11,610,500 11,546,333 It is considered that the non material difference between the average fair value of ordinary shares during the year and the average fair value of the shares under option deems it acceptable to treat the diluted number of shares as simply the ordinary shares in issue plus the number of shares under option. 19. SHARE OPTIONS The company has established an EMI Option Scheme under which the maximum number of Ordinary Shares exercisable that can be granted is restricted to such number of shares the aggregate market value of which cannot exceed £100,000 per employee at the date of grant. Senior executives and certain eligible employees are entitled to participate in the EMI Option Scheme at the discretion of the Board, which in the future will be advised on such matters by the Remuneration Committee. In aggregate Share Options have been granted under the EMI Option Scheme over 185,500 Ordinary Shares exercisable within the following dates and at the following exercise prices. 20,000 8 March 2007 - 7 March 2011 12.5p 110,000 27 September 2007 - 26 September 2011 15p 15,000 27 September 2007 - 26 September 2011 50p 36,500 30 October 2008 - 29 October 2012 50.5p 4,000 30 June 2009 - 30 June 2013 70p In addition, Share Options have been granted under an Unapproved Option Scheme over 25,000 Ordinary Shares exercisable within the following dates and at the following exercise price. 25,000 5 September 2009 - 5 September 2013 65p The Company's annual report and accounts for the year ended 31 October 2006, are available free of charge from the offices of ARM the Company, at 141 St James Road, Glasgow, G4 OLT for a period of one month from their publication.

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