Final Results

RNS Number : 1026D

SpaceandPeople PLC

17 March 2011

 



SpaceandPeople plc

PRELIMINARY CONSOLIDATED RESULTS FOR THE 14 MONTHS TO 31 DECEMBER 2010

SpaceandPeople plc ("SpaceandPeople" or the "Group" or "Company"), 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 preliminary results for the 14 months ended 31 December 2010.

On 21 May 2010, the Company announced it was changing its year end date from 31 October to 31 December. These results therefore include the results of SpaceandPeople for the 14 months to 31 December 2010 and those of Retail Profile Holdings Limited ("Retail Profile") from the date of acquisition on 24 May 2010 to 31 December 2010. The comparative figures are for the year to 31 October 2009.

Highlights

·      Consolidated group revenues up 189% to £7.77mn due to the success of the Retail Profile acquisition and excellent performance of the German business

·      Consolidated operating profits before non-recurring costs up 238% to £1.67mn

·      Basic earnings per share before non-recurring costs up 129% to 7.15p

·      Dividend increased by 30% to 2.60p

·      Now represent 374 venues in the UK and Germany with a weekly footfall of 47mn

·      SpaceandPeople Germany revenues up 96% to £1.24mn and operating profits up from £3.6k to £375k, its first substantial profit

·      Retail Profile Germany awarded an exclusive agreement to operate RMUs in ECE's German shopping centres

·      Recent promotional campaigns include the launch of Cycle Superhighways for Transport for London, Microsoft and the London Film Festival, EasyJet - new routes promotion, and the X-box 'Kinect' launch

Commenting on the results, Matthew Bending, Chief Executive Officer said:

"The Group has made huge progress over the period with the successful acquisition of Retail Profile, the first substantial profit from Germany and the first contract signed by Retail Profile in Germany, demonstrating the huge opportunity for  the enlarged Group to cross sell its services. 

SpaceandPeople is well positioned for the future and the Board is confident of the growth prospects in terms of both revenues and profitability in the current year."

Contact details

SpaceandPeople plc		0845 241 8215
Matthew Bending / Gregor Dunlay
Pelham Bell Pottinger		020 7861 3157
David Rydell / Francesca Tuckett
Seymour Pierce Limited		020 7107 8000
John Cowie / Stewart Dickson  (nominated adviser) Richard Redmayne / Paul Jewell (corporate broker)

The financial information has been extracted from the Company's audited financial statements for the period ended 31 December 2010. The Report of the Directors and Financial Statements for the period ended 31 December 2010 will be available on the Company's website and will be posted to shareholders shortly.

Chairman's Statement

Overview

This has been a tremendous 14 months for SpaceandPeople, with several important milestones achieved including the acquisition of Retail Profile Holdings Limited ('Retail Profile'), the signing of an exclusive Retail Merchandising Unit ('RMU') agreement with ECE Projektmanagement ('ECE'), the leading shopping centre management company in Germany, moving to a new head office in Glasgow, as well as the ten year anniversary of the Group.

Retail Profile was acquired on 24 May 2010 and its results are included in the Group's results from that date.  The Group is already seeing the commercial synergies from the acquisition through the ability to cross sell each other's services both in the UK and now in Germany. In November 2010 Retail Profile, through its subsidiary Retail Profile Europe GmbH, signed a seven year exclusive agreement with a subsidiary of ECE to install and operate RMUs across its German portfolio of major shopping centres. Germany is a major market for SpaceandPeople and the contract win by Retail Profile demonstrates the opportunity for successful cross selling across the enlarged Group. It is expected that Retail Profile Germany will contribute significantly to profit growth in future years.

Financial Results

Trading has been strong across all operating segments and in total, Group revenues for the 14 months to 31 December 2010 were up 189% over the previous reporting period (12 months to 31st October 2009) from £2.69mn to £7.77mn. Group operating profit before non-recurring costs rose by 238% from £493k to £1.67mn and basic earnings per share before non-recurring costs by 129% from 3.12p to 7.15p.  The substantial increase in revenues and profits illustrates the success of the Retail Profile acquisition, which also contributes significantly to these figures.

On an annualised basis, comparing the year to 31 December 2010 with the previous year and including Retail Profile for both years, revenues rose by 15% to £8.98mn and operating profit by 10% to £1.44mn.

Of particular note is the performance of SpaceandPeople Germany which, in only its third year of trading, produced its first substantial operating profit of £375k for the 14 months, up from £3.6k in the year to 31 October 2009. Revenues rose by 96% to £1.24mn as a result of signing a number of long term contracts with a major telecoms provider, the benefits of which will continue to be seen over the next two years.

The balance sheet remains strong with £1.40mn of cash generated from operations in the period and £1.98mn of cash at the year end.

People

During the period, as noted in the interim statement, the Board was strengthened by Maurice Helfgott and Martin Kemp (previously Chairman and MD respectively of Retail Profile), and Christopher Stainforth, who's vast City experience helped with the Retail Profile acquisition. Subsequent to the period end Gregor Dunlay joined the Board as the Group's first full time Chief Financial Officer.

I would also like to take this opportunity to thank our employees, mostly based in Glasgow, for their continuing efforts and commitment in driving the business over the last ten years.

Dividend

Recognising the continued progress made by the Group, your Board is proposing a dividend of 2.60p per share, an increase of 30% on last year, payable on 27 May 2011 to shareholders on the register on 31 March 2011.

Outlook

SpaceandPeople now represents 374 venues in the UK and Germany, up from 310 at the last year end, with a combined footfall of over 47mn customers per week. This is a powerful offer to both advertisers and merchandisers. As shopping centre owners suffer from vacancies as a result of the recession, the Group is well placed to help them meet their need to maximise revenue streams. As a result of this and the developments over the last year, the Group is well positioned for the future and we are confident of the future prospects for growth in both revenues and profitability in the current year.

David Henderson-Williams

Chairman

16 March 2011

Chief Executive Officer's Review

The past financial period has been a year of firsts for SpaceandPeople, the first acquisition, the first substantial profit from Germany, the first profits from India and the first 10 years in operation. In addition, there has been excellent growth in both the UK and German businesses, the winning of an exclusive seven year deal to supply RMUs to ECE throughout Germany, and a new head office.

The recession has impacted the market, particularly in the UK where shopping centre owners have generally seen an increase in vacant units. However, this has encouraged them to seek to maximise revenues from other sources and the Group has been able to help them in this.

UK

The SpaceandPeople UK business saw respectable revenue growth of 25% from £2.06mn in the previous financial year to £2.57mn. On an annualised basis this was an increase of 6%. However, operating profit before non-recurring costs fell from £489k to £270k due to the expanded cost base of the larger group in order to capitalise on future opportunities. A significant part of this was the move away from Strathclyde University Incubator (SUI) into new offices at 100 West Regent Street in Glasgow.  As a result of the move, the Group ceased using SUI's financial services function, and has invested in the appointment of several staff members. These include Gregor Dunlay, who was recently appointed to the role of Chief Financial Officer and who has already proved himself an essential part of the senior management team.

During the period, Retail Profile UK, which is only included from 24 May 2010, contributed £3.97mn to revenues and £1.02mn to operating profit. On an annualised basis, revenues were up 11% to £5.70mn and operating profit by 9% to £896k. At the period end it operated 233 RMUs in 44 centres, including 24 in which SpaceandPeople do not operate.

The UK  venue stream has been developing well with major wins at 8 major regional airports, Lasalle portfolio (16 shopping centres and 28 retail parks) and Silverburn, a major out of town shopping centre near Glasgow. In total SpaceandPeople now represents 297 venues with a footfall of 31mn customers per week. Recent promotional campaigns include the launch of Cycle Superhighways for Transport for London, Microsoft and the London Film Festival, Easyjet - new routes promotion, and the X-box 'Kinect' launch.

The acquisition of Retail Profile in May was a major step forward for the Group bringing new venues, new products, management skills and a strong reputation for customer service. From the outset, the Board and wider Group saw the growth potential of the combined businesses and which, I am happy to note, has already started to show benefits to the bottom line. In the current financial year both sales growth synergies and cost synergies are expected as a result of the business combination.

Germany

In Germany the Group saw many strong developments, not least a huge step forward in sales growth, and recognition must go to the team in Hamburg for this. SpaceandPeople Germany increased revenues by 96% from £632k last year to £1.24mn in the current period, and operating profits up from £3.6k to £375k. On an annualised basis, revenues were up 72% to £1.09mn and operating profit by over 88 times to £353k. The increase in revenues results from the signing of 3 year contracts for a number of centres by a major telecoms provider, the benefits of which will be further evident over the next two years. At the period end the Group managed 77 venues on behalf of ECE, up from 71 last year.

Building on this success, in November Retail Profile was awarded ECE's first RMU contract, and the Hamburg team have adapted well to the business changes this has produced. RMUs were in place in 2 centres in Hamburg by Christmas and the roll-out across other ECE centres throughout Germany has started with an expectation that there will be 200 RMUs in place by the end of 2012. The Board anticipates strong revenue and profit growth in the RMU business this year.

Russia

Revenues received from Retail Profile Russia, the independent Russian company with which Retail Profile has a licensing agreement and operates RMUs in shopping centres owned by MEGA in Russia have risen on an annualised basis by 62% on last year.

India

Our associate business in India, SpaceandPeople (India) in which the Group has a 49% interest, saw Paresh Khivesara and his team generate over £1mn in revenues to its venue clients. SpaceandPeople (India) produced a small loss over the period but has now traded profitably for the last 8 months. It now has 26 staff in 6 cities, represents 30 malls on an exclusive basis, and the sales and business development pipeline is strong. It is well placed to produce a profit in 2011.

Prospects

The New Year has started well and current trading is in line with expectations. The many developments and changes in the Group bode well for the future and give us confidence in the future growth in both revenues and profitability.

Matthew Bending

Chief Executive Officer

16 March 2011

Consolidated Group Statement of Comprehensive Income

For the 14 months ended 31 December 2010

	Notes		14 months to 31 December '10 £'000		12 months to 31 October '09 £'000
Revenue	4		7,772		2,690
Administration expenses			(6,116)		(2,197)
Other operating income			9		-
Operating profit before non-recurring costs	4		1,665		493
Non-recurring costs	5		(331)		-
Operating profit			1,334		493
Finance income	8		1		13
Finance costs	8		(75)		-
Profit before taxation			1,260		506
Taxation	9		(415)		(142)
Profit after taxation			845		364

Earnings per share	27
Basic - before non-recurring costs Basic - after non-recurring costs Diluted - before non-recurring costs			7.15p 5.38p 6.72p		3.12p 3.12p 3.08p
Diluted - after non-recurring costs			5.06p		3.08p

Profit after taxation			845		364
Foreign exchange differences on translation of foreign operations			(9)		26
Total comprehensive income for the period			836		390

Consolidated Group Statement of Financial Position

At 31 December 2010

	Notes		31 December '10 £'000		31 October '09 £'000
Assets
Non-current assets:
Goodwill	12		7,981		-
Investment in associates	14		156		118
Other intangible assets	15		88		168
Property, plant & equipment Deferred tax assets	16 17		666 203		52 -
			9,094		338
Current assets:
Trade & other receivables	18		2,642		1,418
Cash & cash equivalents	19		1,981		1,341
			4,623		2,759
Total assets			13,717		3,097
Liabilities
Current liabilities:
Trade & other payables	20		3,049		1,172
Current tax payable	20		493		132
Other borrowings	21		1,985		-
			5,527		1,304
Non-current liabilities:
Deferred tax liabilities	17		27		-
Long term loan	22		1,140		-
			1,167		-
Total liabilities			6,694		1,304
Net assets			7,023		1,793
Equity
Share capital	26		194		117
Share premium			4,816		266
Special reserve			233		233
Retained earnings			1,780		1,177
Shareholders equity			7,023		1,793

Company Statement of Financial Position

At 31 December 2010

	Notes		31 December '10 £'000		31 October '09 £'000
Assets
Non-current assets:
Investment in subsidiaries	12, 13		4,788		-
Loan notes	12, 13		1,728		-
Investment in associates	14		156		118
Other intangible assets	15		88		168
Property, plant & equipment Deferred tax assets	16 17		81 203		52 -
			7,044		338
Current assets:
Trade & other receivables	18		1,964		1,418
Cash & cash equivalents	19		452		1,341
			2,416		2,759
Total assets			9,460		3,097
Liabilities
Current liabilities:
Trade & other payables	20		1,240		1,172
Current tax payable	20		340		132
Other borrowings	21		1,530		-
Total liabilities			3,110		1,304
Net assets			6,350		1,793
Equity
Share capital	26		194		117
Share premium			4,816		266
Special reserve			233		233
Retained earnings			1,107		1,177
Shareholders equity			6,350		1,793

Consolidated Group Statement of Cash Flows

For the 14 months ended 31 December 2010

	Notes	14 months to 31 December '10 £'000			12 months to 31 October '09 £'000
Cash flows from operating activities
Cash generated from operations		1,688			352
Interest paid		(75)			-
Taxation		(210)			(175)
Net cash inflow from operating activities		1,403			177
Cash flows from investing activities
Interest received		1			13
Purchase of intangible assets	15	(2)			(11)
Purchase of property, plant & equipment	16	(355)			(7)
Cash paid on acquisition of subsidiary	13	(1,375)			-
Cash received on acquisition of subsidiary	13	561
Investment in associates	14	(86)			(22)
Net cash (outflow) from investing activities		(1,256)			(27)
Cash flows from financing activities
Proceeds from issue of shares	26	1,200			-
Funding costs on acquisition of subsidiary		(185)			-
Repayment of bank loan		(289)
Cash (paid) / received  on behalf of associate		-			(119)
Dividends paid	11	(233)			(233)
Net cash inflow (outflow) from financing activities		493			(352)
Increase / (decrease) in cash and cash equivalents		640			(202)
Cash at beginning of period		1,341			1,543
Cash at end of period		1,981			1,341

Reconciliation of operating profit to net cash flow from operating activities
Operating profit		1,334			493
Amortisation of intangible assets	15	82			71
Depreciation of property, plant & equipment	16	147			45
Effect of foreign exchange rate moves		(9)			26
Write off of investment in associate	14	47			-
(Increase) / decrease in receivables		(224)			(313)
Increase / (decrease) in payables		311			30
Cash flow from operating activities		1,688			352

Company Statement of Cash Flows

For the 14 months ended 31 December 2010

	Notes	14 months to 31 December '10 £'000			12 months to 31 October '09 £'000
Cash flows from operating activities
Cash generated from operations		3			352
Interest paid		(6)			-
Taxation		(130)			(175)
Net cash inflow (outflow) from operating activities		(133)			177
Cash flows from investing activities
Interest received		1			13
Purchase of intangible assets	15	(2)			(11)
Purchase of property, plant & equipment	16	(76)			(7)
Cash paid on acquisition of subsidiary	13	(1,375)			-
Investment in associates	14	(86)			(22)
Net cash (outflow) from investing activities		(1,538)			(27)
Cash flows from financing activities
Proceeds from issue of shares	26	1,200			-
Funding costs on acquisition of subsidiary		(185)			-
Cash (paid) / received on behalf of associate		-			(119)
Dividends paid	11	(233)			(233)
Net cash inflow (outflow) from financing activities		782			(352)
Increase / (decrease) in cash and cash equivalents		(889)			(202)
Cash at beginning of period		1,341			1,543
Cash at end of period		452			1,341

Reconciliation of operating profit to net cash flow from operating activities
Operating profit		314			493
Amortisation of intangible assets	15	82			71
Depreciation of property, plant & equipment	16	47			45
Effect of foreign exchange rate moves		(9)			26
Write off of investment in associate	14	47			-
(Increase) / decrease in receivables		(546)			(313)
Increase / (decrease) in payables		68			30
Cash flow from operating activities		3			352

Group Statement of Changes in Equity

For the 14 months ended 31 December 2010

14 months to 31 December '10			Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Total equity £'000
At 1  November 2009			117		266		233		1,177		1,793
Shares issued			77		4,735		-		-		4,812
Costs of issuing equity			-		(185)		-		-		(185)
Foreign currency translation			-		-		-		(9)		(9)
Profit for the period			-		-		-		845		845
Dividends paid			-		-		-		(233)		(233)
At 31 December 2010			194		4,816		233		1,780		7,023

12 months to 31 October '09			Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Total equity £'000
At 1 November 2008			117		266		233		1,020		1,636
Shares Issued			-		-		-		-		-
Costs of issuing equity			-		-		-		-		-
Foreign currency translation			-		-		-		26		26
Profit for the period			-		-		-		364		364
Dividends paid			-		-		-		(233)		(233)
At 31 October 2009			117		266		233		1,177		1,793

Company Statement of Changes in Equity

For the 14 months ended 31 December 2010

14 months to 31 December '10			Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Total equity £'000
At 1 November 2009			117		266		233		1,177		1,793
Shares issued			77		4,735		-		-		4,812
Costs of issuing equity			-		(185)		-		-		(185)
Foreign currency translation			-		-		-		(9)		(9)
Profit for the period			-		-		-		172		172
Dividends paid			-		-		-		(233)		(233)
At 31 December 2010			194		4,816		233		1,107		6,350

12 months to 31 October '09			Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Total equity £'000
At 1 November 2008			117		266		233		1,020		1,636
Shares issued			-		-		-		-		-
Costs of issuing equity			-		-		-		-		-
Foreign currency translation			-		-		-		26		26
Profit for the period			-		-		-		364		364
Dividends paid			-		-		-		(233)		(233)
At 31 October 2009			117		266		233		1,177		1,793

Notes to the financial statements

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).

On 21 May 2010, the Company announced it was changing its year end date from 31 October to 31 December. These results therefore include the results of SpaceandPeople for the fourteen months to 31 December 2010 and those of Retail Profile Holdings Limited ("Retail Profile") from the date of acquisition on 24 May 2010 to 31 December 2010. The comparative figures are for the twelve months to 31 October 2009.

2. Basis of preparation

The Group's financial statements for the period ended 31 December 2010 (14 months) and for the comparative year ended 31 October 2009 (12 months) have been 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 (EU) and International Financial Reporting Interpretations Committee (IFRIC) interpretations, and with those part of the Companies Act 2006 applicable to companies reporting under IFRS.

             3. Accounting policies

There have been no significant changes to accounting policies during the period.

4. Segmental reporting

The Group maintains its head office in Glasgow and a branch office in Hamburg, Germany. These are reported separately. In addition its newly acquired subsidiary, Retail Profile, has an office in London and has a licensing agreement 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 tables present revenue, profit and loss and asset and liability information regarding the Group's two business segments - Promotional Sales and Retail, split by geographic area:

Segment revenues and results for 14 months to 31 December '10	Promotion UK £'000	Promotion Germany £'000	Retail  UK £'000	Retail Germany £'000	Group £'000
Continuing operations revenue	2,568	1,237	3,945	22	7,772
Administrative expenses	(2,298)	(871)	(2,920)	(27)	(6,116)
Other revenue	-	9	-	-	9
Segment operating profit / (loss)	270	375	1,025	(5)	1,665
Non recurring costs	(331)	-	-	-	(331)
Segment operating profit / (loss)	(61)	375	1,025	(5)	1,334
Finance income	-	1	-	-	1
Finance costs	(6)	-	(69)	-	(75)
Segment profit / (loss) before Taxation	(67)	376	956	(5)	1,260
Income tax expense	(21)	(116)	(278)	-	(415)
Segment profit / (loss) for the Period	(88)	260	678	(5)	845

Segment assets and liabilities  as at 31 December '10	Promotion UK £'000	Promotion Germany £'000	Retail  UK £'000	Retail Germany £'000	Group £'000
Total segment assets	8,367	1,093	4,205	52	13,717
Total segment liabilities	(2,459)	(651)	(3,527)	(57)	(6,694)
Total net assets	5,908	442	678	(5)	7,023

Prior period comparative figures for segmental reporting are:

Segment revenues and results for 12 months to 31 October '09	Promotion UK £'000	Promotion Germany £'000	Group £'000
Continuing operations revenue	2,058	632	2,690
Administrative expenses	(1,569)	(628)	(2,197)
Segment operating profit / (loss)	489	4	493
Finance income	13	-	13
Segment profit / (loss) before Taxation	502	4	506
Income tax expense	(142)	-	(142)
Segment profit / (loss) for the Period	360	4	364

Segment assets and liabilities  as at 31 October '09	Promotion UK £'000	Promotion Germany £'000	Group £'000
Total segment assets	2,765	332	3,097
Total segment liabilities	(1,274)	(30)	(1,304)
Total net assets	1,491	302	1,793

 5. Non-recurring costs

During the period, SpaceandPeople (Hong Kong) Ltd was mothballed. As a result, the investment in that company of £47,364 and amounts due from it of £38,478 were written off. (See note 14)

In addition, expenses relating to the acquisition of Retail Profile Holdings Limited of £244,925 were charged against income, in line with IFRS 3 (revised).

             6. Operating profit

The Operating profit is stated after charging:

	14 months to  December '10 £'000	12 months to October '09 £'000
Motor vehicle leasing	27	16
Property leases	176	87
Foreign exchange gains / (losses)	7	(1)
Amortisation of intangible assets	82	71
Depreciation of property, plant and equipment	147	45
	439	218
Auditors remuneration:
Fees payable for: Audit of Company	17	12
Audit of subsidiary undertakings	10	-
Tax services	3	2
Corporate finance Other services	26 5	- 8
	61	22
Directors remunerations	333	234
Pensions	-	1
	333	235

The highest paid director received remuneration of £121,980 (2009 - £103,585)

7. Staff costs

The average number of employees in the Group during the period was as follows:

	14 months to December '10	12 months to  October '09
Executive directors	3	2
Administration	15	9
Telesales	22	24
Commercial	10	-
Maintenance	5	-
	55	35

	14 months to December '10 £'000	12 months to  October '09 £'000
Wages and salaries	2,126	1,145
Social Security costs	230	145
Pensions	1	2
	2,357	1,292

             8. Finance income and costs

	14 months to December '10 £'000	12 months to  October '09 £'000
Finance income:
Interest receivable	1	13
Finance costs:
Interest payable	(75)	-

9. Taxation

	14 months to December '10 £'000	12 months to October '09 £'000
UK corporation tax:
Corporation tax	307	142
Foreign tax:
Current tax on foreign income for the period	321	-
Deferred tax:
Relating to the origination of timing differences	(213)	-
Income tax expense as reported in the Income Statement	415	142

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The differences are explained below:

	14 months to December '10 £'000	12 months to October '09 £'000
Profit on ordinary activities before tax	1,260	506
Profit on ordinary activities at the standard rate of corporation tax in the UK of 28% (2009: 28%)	353	142
Tax effect of:
-       Expenses not deductible for tax purposes	58	-
-       Difference due to foreign taxation rates	13	-
-       Deferred tax	(9)	-
Income tax expense as reported in the Income Statement	415	142

10. Profit for the period

The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its own Income Statement in these financial statements. The Group profit for the period includes a Company profit after tax and before dividends of £171,842 (2009: £363,946) which is dealt with in the financial statements of the parent company.

             11. Dividends

	14 months to December '10 £'000	12 months to October '09 £'000
Paid during the period	233	233
Proposed	505	233

Equity - 2.00p per ordinary share proposed and paid for 2009. Proposed for 2010 - 2.60p per ordinary share

             12. Goodwill

Cost	£'000
At 31 October 2008	-
Additions	-
At  31 October 2009	-
Additional amounts arising from business combinations occurring during the period	3,933
Additions	4,048
At 31 December 2010	7,981

Accumulated impairment losses
At 31 October 2008	-
Charge for the period	-
At  31 October 2009	-
Charge for the period	-
At 31 December 2010	-

Net book value
At 31 October 2008	-
At  31 October 2009	-
At 31 December 2010	7,981

Goodwill acquired in a business combination is allocated at acquisition to the cash generating units (CGUs) that are expected to benefit from that business combination. The Directors consider that the business of Retail Profile Holdings Limited is the only identifiable CGU and the carrying amount of Goodwill is allocated in full against this CGU.

The recoverable amount of the cash generating unit is determined on a value in use calculation which uses cash flow projections based on financial budgets approved by the Board covering a 20 year period and a discount rate of 6% per annum. Cash flow projections during the budget period are based on a steady 5% growth in EBITDA which the Directors consider to be very conservative given the plans for the business and the potential increased returns. The Directors believe that any reasonable possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit. The discounted cash flows exceed the carrying value in Year 14.

Goodwill was calculated on the acquisition of Retail Profile Holdings Limited as follows:

	£'000
Consideration paid:
Share capital acquired	4,788
Loan notes acquired	1,728
Net identifiable assets acquired:	(2,468)
Goodwill	4,048

             13. Investment in subsidiaries

On 24 May 2010, the Company acquired 100% of the issued share capital of Retail Profile Holdings Limited, formerly Amery Capital III (RPEL) Limited, for a total consideration of £6,515,880 payable as follows:

	£'000
Shares in SpaceandPeople plc	3,611
Loan note	1,530
Cash	1,375
	6,516

The consideration of £6,516 acquired the following investment in Retail Profile Holdings Limited:

		£'000
Share Capital		4,788
Loan Note acquired		1,728
		6,516

IFRS 3 (revised) has been applied to this acquisition. As a result, acquisition costs of £244,925 have been included in the Consolidated Income Statement as non-recurring costs. These would previously have been included in the consideration.

The fair value of the assets and liabilities of Retail Profile Holdings Limited recognised as a result of the acquisition were as follows:

	£'000
Cash	561
Goodwill	3,933
Property, plant and equipment	406
Receivables	1,000
Payables	(1,565)
Taxation	17
Borrowings	(1,884)
Net identifiable assets acquired	2,468
Goodwill	4,048
	6,516

The goodwill is attributed to Retail Profile Holdings Limited's strong market position and profitability and cash generation from renting retail merchandising units (RMUs) in shopping centres, and commercial synergies expected to arise after the acquisition. On the date of acquisition, Retail Profile Holdings Limited operated 207 RMUs in 34 centres in the UK and has a licence agreement with Retail Profile Russia, an independent Russian company under which it receives licence income.

Retail Profile Holdings Limited contributed revenue of £3,967,162 and operating profit of £1,019,623 during the period from date of acquisition. If the acquisition had occurred on the 1 November 2009, consolidated revenues and operating profit for the Group for the 14 months to 31 December 2010 would have been £11,403,803 and £2,465,437 respectively.

Fixed Asset investments of the Company (or subsidiary undertaking where indicated *) include the following:

Name of subsidiary	Principal activity	Place of incorporation and operation	Proportion of ownership interest and voting power held the Group
			31 December '10	31 October '09
Retail Profile Holdings Limited	Leasing of Retail Merchandising Units	United Kingdom	100%	0%
* Retail Profile Europe Limited * Retail Products Limited * Retail Profile GmbH * Retail Profile Limited	(RMUs) Leasing of RMUs Leasing of RMUs Leasing of RMUs Dormant	United Kingdom United Kingdom Germany United Kingdom	100% 100% 100% 100%	0% 0% 0% 0%

14. Investment in Associates

Details of the Group's associates at the end of the reporting period are as follows:

Name of associate	Principal activity	Place of incorporation and operation	Proportion of ownership interest and voting power held by the Group
SpaceandPeople (Hong Kong) Limited	Dormant	Hong Kong	31 December '10 35.3%	31 October '09 35.3%
SpaceandPeople (India) Limited	Media	India	49%	47.1%

During the period, the board of SpaceandPeople (Hong Kong) Ltd decided that the company was not commercially viable at the moment, and it was mothballed. As a result, the investment of £47,364 has been written off, together with amounts due from the company of £38,478, as a non-recurring cost.

Also during the period, SpaceandPeople (India) Ltd undertook a further share placement in which SpaceandPeople plc participated by subscribing for 78,132 shares at £1.10. As a result of the placing, SpaceandPeople plc's stake in the company increased from 47.1% to 49.0%.

	31 December '10 £'000		31 October '09 £'000
SpaceandPeople (Hong Kong) Ltd	-		47
SpaceandPeople (India) Ltd	156		71
	156		118

Summarised financial information in respect of the Group's associates is set out below.

		31 December '10		31 October '09
		£'000		£'000
Revenue		215		23
Profit / (loss)		(19)		(120)
		31 December '10		31 October '09
		£'000		£'000
Total assets Total liabilities Net assets Group's share of net assets of associates SpaceandPeople (Hong Kong) Ltd		364 (160) 204 -		161 (76) 85 -
SpaceandPeople (India) Ltd		100		40
		100		40

        15. Other intangible assets - Group and Company

Cost	Website development £'000	Product development £'000	Patents & trademarks £'000	Total £'000
At 31 October 2008	271	137	6	414
Additions	11	-	-	11
At  31 October 2009	282	137	6	425
Additions	2	-	-	2
At 31 December 2010	284	137	6	427

Amortisation	Website development £'000	Product development £'000	Patents & trademarks £'000	Total £'000
At 31 October 2008	153	27	6	186
Charge for the period	44	27	-	71
At  31 October 2009	197	54	6	257
Charge for the period	50	32	-	82
At 31 December 2010	247	86	6	339

Net book value	Website development	Product development	Patents & trademarks	Total
	£'000	£'000	£'000	£'000
At 31 October 2008	118	110	-	228
At  31 October 2009	85	83	-	168
At 31 December 2010	37	51	-	88

16. Property, plant and equipment

The Group movement in property, plant and equipment assets was:

Cost	Plant and equipment £'000	Fixture & fittings £'000	Computer equipment £'000	Total £'000
At 31 October 2008	-	96	120	216
Additions	-	1	5	6
At  31 October 2009	-	97	125	222
Acquired on Retail Profile acquisition	351	47	8	406
Additions	266	73	16	355
At 31 December 2010	617	217	149	983

Depreciation	Plant and equipment	Fixture & fittings	Computer equipment	Total
	£'000	£'000	£'000	£'000
At 31 October 2008	-	41	84	125
Charge for the period	-	26	19	45
At  31 October 2009	-	67	103	170
Charge for the period	84	39	24	147
At 31 December 2010	84	106	127	317

Net book value	Plant and equipment	Fixture & fittings	Computer equipment	Total
	£'000	£'000	£'000	£'000
At 31 October 2008	-	55	36	91
At  31 October 2009	-	30	22	52
At 31 December 2010	533	111	22	666

The Company movement in property, plant and equipment assets was:

Cost		Fixture & fittings £'000	Computer equipment £'000	Total £'000
At 31 October 2008		96	120	216
Additions		1	5	6
At  31 October 2009		97	125	222
Additions		63	13	76
At 31 December 2010		160	138	298

Depreciation		Fixture & fittings £'000	Computer equipment £'000	Total £'000
At 31 October 2008		41	84	125
Charge for the period		26	19	45
At  31 October 2009		67	103	170
Charge for the period		29	18	47
At 31 December 2010		96	121	217

Net book value		Fixture & fittings £'000	Computer equipment £'000	Total £'000
At 31 October 2008		55	36	91
At  31 October 2009		30	22	52
At 31 December 2010		64	17	81

17. Deferred tax

	Group 31 December '10 £'000	Company 31 December '10 £'000	Company / Group   31 October '09 £'000
Deferred tax asset:
Tax charged on revenue not yet recognised	203	203	-

Deferred tax liability:
Accelerated capital allowances	27
Movement on deferred tax position
Opening balance	-	-	-
Acquired on acquisition	36	-	-
Released in the period	(9)	-	-
Closing balance	27	-	-

18. Trade and other receivables

	Group   31 December '10 £'000	Company   31 December '10 £'000	Company / Group 31 October '09 £'000
Trade debtors	2,137	1,847	1,327
Other debtors	77	96	25
Amounts due from associates	-	-	11
Other taxes	-	-	27
Prepayments	286	21	28
Accrued revenue	142	-	-
Total	2,642	1,964	1,418

19. Cash and Cash equivalents

	Group 31 December '10 £'000	Company 31 December '10 £'000	Company / Group 31 October '09 £'000
Cash at bank and on hand	1,981	452	1,341

20. Trade and other payables

	Group 31 December 2010 £'000	Company   31 December 2010 £'000	Company / Group 31 October 2009 £'000
Trade creditors	466	98	66
Other creditors	896	640	903
Social Security and other taxes	477	241	129
Accrued expenses	672	261	74
Deferred income	538	-	-
Trade and other payables	3,049	1,240	1,172
Corporation tax	493	340	132
Total	3,542	1,580	1,304

             21. Other Borrowings

As a part of the consideration for Retail Profile Holdings Limited, a loan note of £1,530,000 was issued to the vendors carrying a coupon of 3.5% over base rate per annum. The loan note is repayable on 31 October 2011 and is secured by a fixed and floating charge over the assets of Retail Profile Holdings Limited and its subsidiaries.

At 31 December 2010, Retail Profile Holdings Limited had a bank loan of £1,594,881 (of which £455,004 is included in current liabilities being repayable within 12 months) - See note 22.

	Group 31 December 2010 £'000	Company  31 December 2010 £'000	Company / Group 31 October 2009 £'000
Loan note	1,530	1,530	-
Bank loan	455	-	-
	1,985	1,530	-

22. Non-current liabilities

At 31 December 2010, Retail Profile Holdings Limited had a bank loan of £1,594,881 (of which £455,004 is included in current liabilities being repayable within 12 months) repayable in monthly instalments of £37,917 with interest at a fixed rate of 6.5% on £1,000,000 of the loan, and base rate, subject to a cap of 3%, plus a margin of 3% on the balance. The loan note is secured by a fixed and floating charge over the assets of Retail Profile Holdings Limited and its subsidiaries.

23. Financial instruments and risk management

The Group has no material financial instruments other than cash, current receivables and liabilities, in both this and the prior period, all of which arise directly from its operations. The net fair value of its financial assets and liabilities is the same as their carrying value as detailed in the balance sheet and related notes.

Credit risk - The Group's credit risk relates to its receivables and is managed by undertaking regular credit evaluations of its customers.

Financial assets - These comprise cash at bank and in hand. All bank deposits are floating rate.

Financial liabilities -These include short term creditors and an overdraft facility for £100,000 at 2.0% above base rate. See Note 22 regarding details of outstanding Retail Profile Holdings Limited Loan.

Foreign currency risk-The Group is exposed to foreign exchange risk primarily from Euros due to its German operations, and Euro denominated licencing income, the net assets of which are detailed in Note 4 Segmental Reporting. The Group does not hedge against currency depreciation. In addition, the Group has investments in associates in India

24. Operating lease commitments

At the period end date, SpaceandPeople plc had outstanding commitments for future lease payments which fall due as follows:

	Group 31 December 2010 £'000	Company   31 December 2010 £'000	Company / Group 31 October 2009 £'000
Within 1 year Between 2 and 5 years inclusive	152 3,783	42 149	47 18
Greater than 5 years	141	-	-

The increase in lease commitments is due to landlord rental agreements in place between Retail Profile and shopping centres.

25. Related party transactions

Non-executive directors' fees

During the period (14 months), fees amounting to £95,001 (2009 - £29,670) were paid to individuals for their services as non-executive directors as follows:

	14 months to 31 December '10	12 months to 31 October'09
	£'000	£'000
DA Henderson-Williams	10	10
RA Chadwick (as non-executive director)	14	12
RA Chadwick (on RP acquisition)	12	-
AP Stirling (paid to Friars Management Ltd)	8	8
M Helfgott (paid to Amery Capital Ltd)	17	-
	61	30

Transactions with key management personnel

Key management of the Group are considered to be the executive directors of the Group. There are no transactions with the directors other than their remuneration (see note 6) and interests in shares as shown in the Directors' report.

26. Called up share capital

Allotted,  issued and fully paid			31 December '10	31 October '09
Class	Nominal value
Ordinary	1p	£	194,311	116,566
		Number	19,431,063	11,656,579

On 24 May 2010, the Group issued 5,824,000 shares to the vendors of Retail Profile Holdings Limited, and a further 1,935,484 shares in a private placing, both at 62p, to part finance the acquisition.

In addition, on 29 June 2010, 15,000 employee share options were exercised at 15p

27. Earnings per share

	14 months to 31 December '10 Pence per share	12 months to 31 October '09 Pence per share
Basic earnings per share Before non-recurring costs After non-recurring costs	7.15 5.38	3.12 3.12
Diluted earnings per share Before non-recurring costs After non-recurring costs	6.72 5.06	3.08 3.08

Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

	14 months to 31 December '10 £'000	12 months to 31 October '09 £'000
Profit after tax for the period excluding non-recurring costs	1,123	364
Profit after tax for the period including non-recurring costs	845	364
	14 months to 31 December '10 '000	12 months to 31 October '09 '000
Weighted average number of ordinary shares for the purposes of basic earnings per share	15,707	11,657

Diluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:

	14 months to 31 December '10 £'000	12 months to 31 October '09 £'000
Profit after tax for the period excluding non-recurring costs	1,123	364
Profit after tax for the period including non-recurring costs	845	364
	14 months to 31 December '10 '000	12 months to 31 October '09 '000
Weighted average number of ordinary shares for the purposes of basic earnings per share	16,718	11,827

The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows.

	14 months to 31 December '10 '000	12 months to 31 October '09 '000
Weighted average number of shares in issue during the period	15,707	11,657
Weighted average number of ordinary shares used in the calculation of basic earnings per share Shares deemed to be issued for no consideration In respect of employee options	1,011	170
Weighted average number of ordinary shares used in the calculation of diluted earnings per share	16,718	11,827

28. Share options

The Group 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 is advised on such matters by the Remuneration Committee.

In aggregate, share options have been granted under the EMI option scheme over 90,418 ordinary shares exercisable within the dates and at the exercise prices shown below, being the market value at the date of the grant.

Date of grant		Number		Option period		Price
30 October 2005		14,000		30 October 2008 - 29 October 2012		50.5p
30 October 2006		20,500		30 October 2009 - 29 October 2013		75p
16 January 2008		11,611		16 January 2011 - 15 January 2015		155p
14 January 2009		32,000		14 January 2012 - 13 January 2016		50p
1 June 2009		12,307		1 June 2012 - 30 May 2015		65p

The movement in the number of options outstanding under the EMI option scheme over the period is as follows:

		14 months to 31 December '10		12 months to 31 October '09
Number of options outstanding as at the beginning of the period		139,966		90,707
Granted		-		62,307
Exercised		(15,000)		-
Forfeited		(34,548)		(13,048)
Number of options outstanding as at the end of the period		90,418		139,966

Share options have also been granted previously under an unapproved option scheme, to DA Henderson-Williams as shown below.

Date of grant		Number		Option period		Price
5 September 2006		25,000		5 September 2009 - 5 September 2013		65p

In addition, on 22 October 2009, 500,000 options were conditionally granted and a further 665,658 options conditionally granted on 21^st May 2010, half to an employee and half to C Stainforth, at a price of 88.6p. These options were granted in three tranches conditional on the Group achieving compound growth of 25% pa in basic earnings per share over the relevant performance period, as shown below.

Number		Option period		Performance period
386,998		1 November 2012 - 31 October 2014		1 November 2009 - 31 October 2012
389,330		1 November 2013 - 31 October 2015		1 November 2010 - 31 October 2013
389,330		1 November 2014 - 31 October 2016		1 November 2011 - 31 October 2014

In total 1,282,076 options were outstanding at 31 December 2010 (664,966 at 31 October 2009) with a weighted average exercise price of 86.9p (82.4p at 31 October 2009).  Of these, 59,500 were exercisable (86,790 at 31 October 2009) with a weighted average exercise price of 65.0p (56.2p at 31 October 2009).

The Black Scholes model was used to obtain the fair value of the share options. The main assumptions made were as follows:

Average option price                                                          86.9p

Average market price at grant of option                         68.0p

Expected volatility                                                              30%

Average expected vesting period from 31.12.10           3.5 years

Risk free rate                                                                        2%

Dividend yield                                                                      5%

The expected volatility was determined by calculating the historical volatility of the Company's share price over the last year.

Based on these assumptions, the average fair value per option was 0.7p. The performance related conditions in respect of the 1,165,658 options that are subject to such conditions have been reflected by adjusting the number of options expected to vest based on the likelihood of the performance criteria being met. This reduces the average fair value per option to 0.5p

www.spaceandpeople.com

 

END

 

 

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