Interim Results

RNS Number : 2438C

SpaceandPeople PLC

28 September 2018

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

28 September 2018

SpaceandPeople plc

("SpaceandPeople" or the "Group")

Interim Results for the 6 months to 30 June 2018

SpaceandPeople (AIM:SAL), the retail, promotional and brand experience specialist which facilitates and manages the sale of promotional and retail merchandising space in shopping centres and other high footfall venues, announces interim results for the six months ended 30 June 2018.

Highlights o  Consolidated net revenue £3.85m (2017: £4.80m) - Down £0.95m - 20% o  Retail division (UK and Germany) revenue fell £0.38m but contribution before tax increased £0.09m to £0.28m o  Promotions division (UK and Germany) revenue fell £0.57m and contribution before tax fell £0.47m to £0.04m o  Group loss before taxation £0.09m (2017: profit £0.17m) - Down £0.26m.  However, new revenue strategies and cost savings actioned in the first half, together with the Group's activities being second half weighted, mean the Board expects to generate a profit of not less than £0.2m for the full year o  Net cash outflow from operating activities £1.72m (2017: inflow £0.49m) o  Net cash of £0.51m (2017: £0.78m) o  Basic earnings per share (0.40)p (2017: 0.73p)

Contact details:

SpaceandPeople Plc	0845 241 8215
Matthew Bending, Gregor Dunlay
Cantor Fitzgerald Europe	020 7894 7000
David Foreman, Will Goode

Chief Executive's Interim Operating Statement

We went into 2018 on the back of a strong performance in 2017 with the key objective of winning new clients following the recruitment of additional client and venue focused resources. We also had the aim of extending our PopUp concept into new venues during 2018. I am happy to report that we are making progress on both of these objectives with momentum now being established. However, progress, although positive, has not occurred as quickly as we had originally anticipated. I remain confident that we will be on plan for new business and kiosks by the end of this year.

As I mentioned in my report for the year to December 2017, experiential sales in the UK had been slower than expected at the start of 2018. Unfortunately, this trend continued with adverse weather conditions in two quarters and the diversion of the World Cup. These events have had an adverse effect on footfall in Germany and the UK and a reduction of advertising spend in the UK, that said we have seen sales return to anticipated sales levels in Q3.

Revenue has reduced by 20% in the first half of 2018 compared with the previous year. Some of this reduction was anticipated in the UK retail and German promotional divisions, however the fall in UK promotional and German retail revenue was disappointing.

Divisional review

The UK

As I mentioned above, promotional revenue in the UK was lower in the first half of 2018 compared with the previous year. The 19% reduction was predominantly in the Brand Experience department. Two significant campaigns that we enabled in 2017 rebooked at significantly lower volumes in 2018 plus tactical advertising spend was diverted away from Experiential campaigns up to and during the World cup.

Revenue in the retail and MPK division was 12% lower than in 2017 due to the removal of a number of units from venues and a lower sales volume for MPK's. Although revenue fell, the contribution margin of this division increased significantly from 6% to 25%, as several of the units that were removed had not been making a profit.

Germany

The retail division saw a reduction in the number of RMUs from 94 units at the start of 2018 to 53 at the end of June. This reduction in units was as a result of the agreement with ECE for the extension of the contract into 2018, where an agreed number of RMUs were removed from some centres during the first quarter of 2018. This reduction happened earlier in the year than had been anticipated and an element of forecasted revenue was lost as a result. Additionally, average occupancy of the RMUs in the first half of the year was poorer than had been expected. The cause of this has been identified and we are putting in place new contracts with operators to address this going forward. Overall, the German RMU division made a loss of £0.08m in the first half year (2017: profit of £0.09m). The team in Germany are working hard to deliver POP Up units in the second half of the year and they are also trialling units with potential new venues.

The promotions division saw revenue fall to £0.20m (2017: £0.43m) and profitability drop to a loss of £0.1m (2017: profit of £0.02m). This was as a result of the remaining long-term contracts with ECE coming to an end with no new long-term contracts being concluded to replace them. As stated previously, we were aware of the impending loss of this revenue stream and the size of the team in this division has now been reduced substantially while they seek new opportunities.

Outlook

The focus during the second half of 2018 is to get back on track with UK promotional revenue and continue to develop the PopUp business in both the UK and Germany. We are currently having positive conversations with multiple venue owners both in the UK and Germany and we feel that although the reduced revenue in 2018 is a setback, it does not structurally undermine our strategy of new venue acquisition and product solutions to our venue owners.

There have been a number of cost savings achieved in the year so far, mostly through a decrease in headcount. This will result in a like for like reduction in overheads of £0.3m in 2019 compared with 2018. The group is now properly resourced for the scale of the current business, but also has the ability to develop new business opportunities for the future.

As a result of the slower than expected first half year along with the reduced expectations for Popup units in the second half of the year, the Board has revised market expectations for the full year to being an operating profit of £0.2m, down from the previous expectation of £1.0 million.

We are confident that we can regain sales momentum for next year which combined with the costs savings already identified. Our 2019 forecasts being unchanged despite the lower than anticipated 2018 outturn.

 The group will generate a profit this year and it is the Board's intention to maintain our dividend policy.

Matthew Bending

27 September 2018

Independent Review Report to SpaceandPeople plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' Responsibilities

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

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

Our Responsibility

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

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 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 Audit Services

Chartered Accountants

Statutory Auditors

Titanium 1

King's Inch Place

Renfrew

PA4 8WF

Date:  27 September 2018

Consolidated Group Statement of Comprehensive Income

For the 6 months ended 30 June 2018

	Notes			6 months to   30 June '18 (Unaudited) £'000		6 months to 30 June '17 (Unaudited) £'000		12 months to   31 December '17 (Audited) £'000
Revenue	5			3,851		4,804		9,995
Cost of sales				(1,276)		(1,743)		(3,389)
Gross profit Administration expenses				2,575 (2,733)		3,061 (2,979)		6,606 (5,640)
Other operating income				69		110		210
Operating (loss) / profit before non-recurring costs				(89)		192		1,176
Operating (loss) / profit				(89)		192		1,176
Finance income Finance costs				1 -		- (19)		12 (35)
(Loss) / profit before taxation				(88)		173		1,153
Taxation				-		(36)		(237)
(Loss) / profit after taxation from continuing operations				(88)		137		916
(Loss) / profit after taxation Other comprehensive income				(88)		137		916
Foreign exchange differences on translation of foreign operations				8		21		3
Total comprehensive income for the period				(80)		158		919

(Loss) / profit attributable to:
Owners of the Company Non-controlling interests				(77) (11)		143 (6)		930 (14)
				(88)		137		916

Total comprehensive income for the period attributable to:
Owners of the Company Non-controlling interests				(69) (11)		164 (6)		933 (14)
				(80)		158		919

Earnings per share	13
Basic Diluted			(0.40)p (0.35)p		0.73p 0.67p		4.8p 4.3p

Consolidated Group Statement of Financial Position

At 30 June 2018

	Notes		30 June '18 (Unaudited) £'000		30 June '17 (Unaudited) £'000		31 December '17  (Audited) £'000
Assets
Non-current assets:
Goodwill	6		8,225		8,225		8,225
Other intangible assets	7		9		21		15
Property, plant & equipment	8		1,026		1,431		1,147
			9,260		9,677		9,387
Current assets:
Trade & other receivables			3,180		3,067		3,367
Cash & cash equivalents	9		512		1,781		2,661
			3,692		4,848		6,028
Total assets			12,952		14,525		15,415
Liabilities
Current liabilities:
Trade & other payables			3,095		4,060		5,120
Current tax receivable			(111)		(111)		(46)
			2,984		3,949		5,074
Non-current liabilities:
Deferred tax liabilities			91		90		91
Long term loan	10		-		1,000		-
			91		1,090		91
Total liabilities			3,075		5,039		5,165
Net assets			9,877		9,486		10,250
Equity
Share capital	12		195		195		195
Share premium			4,868		4,868		4,868
Special reserve			233		233		233
Retained earnings			4,336		3,926		4,698
Equity attributable to owners of the Company			9,632		9,222		9,994
Non-controlling Interest			245		264		256
Total equity			9,877		9,486		10,250

Consolidated Group Statement of Cash Flows

For the 6 months ended 30 June 2018

	Notes		6 months to   30 June '18 (Unaudited) £'000		6 months to   30 June '17 (Unaudited) £'000		12 months to                31 December '17 (Audited) £'000
Cash flows from operating activities
Cash inflow / (outflow) from operations			(1,660)		509		2,559
Interest received			1		-		12
Interest paid			-		(19)		(35)
Taxation			(65)		(1)		(136)
Net cash inflow / (outflow) from operating activities			(1,724)		489		2,400
Cash flows from investing activities
Purchase of intangible assets			-		(8)		(12)
Purchase of property, plant & equipment	8		(132)		(84)		(111)
Net cash outflow from investing activities			(132)		(92)		(123)
Cash flows from financing activities
Bank facility (repaid) / received	10		-		(200)		(1,200)
Dividends paid	12		(293)		-		-
Net cash outflow from financing activities			(293)		(200)		(1,200)
Increase / (decrease) in cash and cash equivalents			(2,149)		197		1,077
Cash at beginning of period			2,661		1,584		1,584
Cash at end of period	9		512		1,781		2,661

Reconciliation of operating profit to net cash flow from operating activities
Operating (loss) / profit			(89)		192		1,176
Amortisation of intangible assets			6		8		18
Depreciation of property, plant & equipment			253		211		522
Effect of foreign exchange rate moves			8		21		6
(Increase) / decrease in receivables			187		283		(17)
Increase / (decrease) in payables			(2,025)		(206)		854
Cash flow from operating activities			(1,660)		509		2,559

Consolidated Group Statement of Changes in Equity

For the 6 months ended 30 June 2018

6 months to 30 June '18	Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Non-controlling Interest £'000		Total equity £'000
At 1 January '18	195		4,868		233		4,698		256		10,250
Foreign currency translation	-		-		-		8		-		8
Dividends	-		-		-		(293)		-		(293)
Profit / (loss) for the period	-		-		-		(77)		(11)		(88)
At 30 June '18	195		4,868		233		4,336		245		9,877

6 months to 30 June '17	Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Non-controlling Interest £'000		Total equity £'000
At 1 January '17	195		4,868		233		3,762		270		9,328
Foreign currency translation	-		-		-		21		-		21
Profit / (loss) for the period	-		-		-		143		(6)		137
At 30 June '17	195		4,868		233		3,926		264		9,486

12 months to 31 December '17	Share capital £'000		Share premium £'000		Special reserve  £'000		Retained earnings £'000		Non-controlling Interest £'000		Total equity £'000
At 1 January '17	195		4,868		233		3,762		270		9,328
Foreign currency translation	-		-		-		3		-		3
Profit / (loss) for the period	-		-		-		933		(14)		919
At 31 December '17	195		4,868		233		4,698		256		10,250

Notes to the financial statements

For the 6 months ended 30 June 2018

1.         General information

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

This condensed consolidated interim financial information has been reviewed, but not audited, by the auditors, and their independent review is set out earlier in 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 2017 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 27 September 2018.  

2.         Basis of preparation

This condensed consolidated interim financial information for the 6 months ended 30 June 2018 has been prepared in accordance with IAS 34 'Interim financial reporting'. The condensed consolidated interim financial information should be read in conjunction with the financial statements of the Group for the period ending 31 December 2017 which were prepared on a going concern basis under the historical cost convention in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

3.          Accounting policies

The accounting policies adopted in the preparation of the condensed consolidated interim financial information are consistent with those applied in the financial statements of the Group for the year ended 31 December 2017.

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 POP Retail Limited and Retail Profile Europe GmbH.

5.         Segmental reporting

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

The following table presents revenue and profit and loss information regarding the Group's two business segments - Promotional Sales and Retail, split by geographic area. Other segment represents the Groups investments in SpaceandPeople India.

	Promotions UK £'000	Promotions Germany £'000	Retail  UK £'000	Retail Germany £'000	Head Office £'000	Other £'000	Group £'000
6 months to 30 June '18
Revenue	1,465	199	1,447	722	-	18	3,851
Segment profit/(loss) before tax	156	(107)	361	(77)	(394)	(27)	(88)
6 months to 30 June '17
Revenue	1,802	429	1,652	900	-	21	4,804
Segment  profit/(loss) before tax	489	16	106	90	(513)	(15)	173
12 months to        31 December '17
Revenue	3,695	807	3,438	1,993	-	62	9,995
Segment  profit/(loss) before tax	1,950	(19)	401	163	(1,307)	(35)	1,153

6.         Goodwill

Net book value	6 months to 30 June '18 £'000	6 months to 30 June '17 £'000	12 months to 31 December '17 £'000
Opening balance	8,225	8,225	8,225
Closing balance	8,225	8,225	8,225

7. Other intangible assets

Net book value	6 months to 30 June '18 £'000	6 months to 30 June '17 £'000	12 months to 31 December '17 £'000
Opening balance	15	21	21
Additions	-	8	12
Amortisation	(6)	(8)	(18)
Closing balance	9	21	15

8.         Property, plant and equipment

Net book value	6 months to 30 June '18 £'000	6 months to 30 June '17 £'000	12 months to 31 December '17 £'000
Opening balance	1,147	1,558	1,558
Additions	132	84	111
Disposals	-	-	-
Depreciation	(253)	(211)	(522)
Closing balance	1,026	1,431	1,147

9.         Cash & cash equivalents

	30 June '18 £'000	30 June '17 £'000	31 December '17 £'000
Cash at bank and on hand	512	1,781	2,661
	512	1,781	2,661

10.       Non-current liabilities

As at 30 June 2018, SpaceandPeople had not drawn down any (June 2017: £1.0m) of its agreed long-term revolving credit facility of £1 million (2017: £1 million) which is repayable by 31 July 2019.

11.       Dividends

	30 June '18 £'000	30 June '17 £'000	31 December '17 £'000
Paid during the period	293	-	-

12.       Called up share capital

Allotted, issued and fully paid			30 June '18	30 June '17	31 December '17
Class	Nominal value
Ordinary	1p	£	195,196	195,196	195,196
		Number	19,519,563	19,519,563	19,519,563

13.       Earnings per share

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

	30 June '18 £'000	30 June '17 £'000	31 December '17 £'000
Profit / (loss) after taxation attributable to owners of the company	(77)	143	930

Weighted average number of shares in issue during the period	'000	'000	'000
-       1p ordinary shares	19,520	19,520	19,520
-       Share options	2,550	1,858	2,320
-       Diluted ordinary shares	22,070	21,378	21,840

SpaceandPeople plc

2^nd Floor

100 West Regent Street

Glasgow

G2 2QD

Telephone:            0845 2418215

Email:                     [e-mail]

www.spaceandpeople.com

 

END

 

 

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