REG - SpaceandPeople PLC - Interim Results <Origin Href="QuoteRef">SAL.L</Origin>

SpaceandpeopleAnnouncement

25/09/2017 07:06

RNS Number : 5877R
SpaceandPeople PLC
25 September 2017
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.
SpaceandPeople plc
25 September 2017
SpaceandPeople plc
("SpaceandPeople" or the "Group")
Interim Results for the 6 months to 30 June 2017
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 2017.
Highlights
 Consolidated net revenue 4.804m (2016: 4.646m) - Up 158k - 3%
 Profit before taxation from continuing operations 173k (2016: loss 174k) - Up 347k
o UK promotions 489k (2016: 385k) - Up 104k 
o UK retail and MPK 106k (2016: (169k)) - Up 275k 
o German promotions 16k (2016: 145k) - Down 129k
o German retail 90k (2016: 1k) - Up 89k
o Head office and other (528k) (2016: (536k) - Up 8k
 Net cash inflow from operating activities 489k (2016: outflow 424k)
 Net cash of 781k (2016: negative 422k)
 Basic earnings per share 0.73p (2016: negative 2.96p)
Contact details:
SpaceandPeople Plc
0845 241 8215
Matthew Bending, Gregor Dunlay

Cantor Fitzgerald Europe
020 7894 7000
David Foreman, Will Goode (Corporate Finance)

Alexander Pollen (Sales)



Chief Executive's Interim Operating Statement
2017 is an important year for SpaceandPeople and its stakeholders, as it has to demonstrate that the focus on our core business is both sustainable and profitable. I am pleased to note the interim results confirm this. The reorganisation that was completed in late 2016, along with sales software upgrades, has enabled us to cut costs and improve productivity ensuring that each division is contributing positively to the Group.
The UK sales reorganisation and the bedding in of the Network Rail contract has enabled growth in the UK promotions division of 20% and within that growth in Brand Experience activity of 38%. The renegotiation of rents in the German retail business along with improvements in occupancy levels and average sales values has seen this division jump from breakeven in the first half of 2016 to a profit of 90k in the first half of this year.
The UK retail division saw a turnaround from a loss of 169k to a profit of 106k through the continued expansion of the Mobile Promotions Kiosk ("MPK") business, improved sales, improved productivity and headcount reductions. Overall, through our focusing on core divisions I am pleased to report we have turned a loss of 174k before discontinued operations in the first half of last year into a profit of 173k this year.
Divisional review
The UK 
The strong performance of the UK promotions division continued to be driven by large scale brand experience activity, as advertisers are increasingly convinced of the benefits of creating major set piece events which can be amplified through social media. Overall, revenues increased 20% to 1,802k (2016: 1,502k) and we booked activations for some notable new brands including Porsche in Glasgow and McLaren F1 in central London.
Our bespoke MPKs saw an increase in revenue of 50% to 991k (2016: 661k). The average number of units in operation increased by 19% from 62 in the first half of 2016 to 74 in the first half of 2017. As well as expanding into new venues we exited a number of venues where we were experiencing poorer occupancy and lower commission rates. The increase in like for like revenue was due to higher occupancy rates combined with achieving a higher average booking value. Increasing MPK numbers in the most suitable locations is a key objective of the team moving forward, having demonstrated this novel concept is both an attractive proposition to our clients and a profitable revenue stream.
UK RMUs
As a result of the sale of two significant venues by our clients, unit numbers retrenched from 123 to 92. Consequently, revenue declined by 17% from 801k to 661k. However, this department saw the largest restructuring of all divisions at the end of 2016 and therefore, the rebranded POP Retail division is now set to return to profitability in the second half of this year when it delivers the majority of its revenue. 
We expect to continue to improve profitability in the second half year as the visibility of forward sales is clear and the pipeline of new business is strong.
Germany
The retail division saw a planned reduction in the number of RMUs from 112 to 89, driven by a greater focus on the most profitable centres. Revenue dropped 16%, as a consequence, from 1,068k in 2016 to 900k in 2017. However, as a result of the positive renegotiation of our rental obligation and headcount reductions undertaken in 2016, operating profit improved from break even in 2016 to a profit of 90k in 2017. The new management team has focussed on new retailers and new product generation and has brought an energy and forward momentum to this division. The pipeline for the second half is encouraging. We are currently negotiating with our major client a new offer for 2018 and beyond and will update the market as appropriate in due course.
The promotions division saw revenue fall to 429k (2016: 544k) and profitability drop to 16k (2016: 145k) as long-term contracts were not renewed. We have been aware of the impending loss of this revenue stream for some time and the structure of the business has been amended to reflect this. The renewal of the overarching contract with their main client is also being negotiated currently and we will update the market accordingly.
The continuation of both divisions in Germany is dependent upon the successful renegotiation of the current contracts that end in January 2018. Although the Board is hopeful that these contracts will be renewed, if this were not the case, then closure costs would be limited and would not have a material impact on Group profitability going forward.
Outlook
The focus during the second half of 2017 will be to continue to drive our core UK market. We are in negotiation with several UK property companies which we hope will conclude before the end of the year. 
The UK retail division are in discussions with a number of new and interesting retailers and there are new products in the pipeline which we are optimistic will enable our UK retail business to continue its profitable growth trend. The large reorganisation at the end of 2016 saw headcount drop and profits improve and this has been helped by significant IT and CRM enhancements. The first half year results are encouraging and we look to carry this into the second half of the year. Cash generation has been strong in the first half of the year and this will continue in the second half. In addition, the Board remain confident the Group will meet market expectations for the full year and intend to recommence paying a dividend if this momentum is maintained.
Matthew Bending 
22 September 2017


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 2017 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 2017 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: 22 September 2017


Consolidated Group Statement of Comprehensive Income
For the 6 months ended 30 June 2017
 
Notes

6 months to
30 June '17
(Unaudited)
'000

6 months to 30 June '16
(Unaudited)
'000

12 months to 31 December '16
(Audited)
'000








Revenue
5

4,804

4,646

9,661








Cost of Sales


(1,743)

(1,725)

(4,133)
Gross Profit
Administration expenses


3,061
(2,979)

2,921
(3,220)

5,528
(5,618)
Other operating income


110

114

194








Operating profit / (loss) before non-recurring costs


192

(185)

104








Non-recurring costs


-

-

(289)
Operating Profit / (Loss)


192

(185)

(185)
Finance income
Finance costs


-
(19)

31
(20)

-
(40)








Profit / (Loss) before taxation


173

(174)

(225)








Taxation


(36)

-

(44)








Profit / (Loss) after taxation from continuing operations


137

(174)

(269)








Discontinued Operations
6

-

(552)

(543)
















Profit / (Loss) after taxation 
Other comprehensive income


137

(726)

(812)
Foreign exchange differences on translation of foreign operations


21

143

104
Total comprehensive income for the period


158

(583)

(708)
Profit / (Loss) attributable to:







Owners of the Company
Non-controlling interests


143
(6)

(578)
(148)

(660)
(152)



137

(726)

(812)
Total comprehensive income for the period attributable to:







Owners of the Company
Non-controlling interests


164
(6)

(435)
(148)

(556)
(152)



158

(583)

(708)
Earnings per share
14














Basic 
Diluted 


0.73p
0.67p

(2.96p)
(2.74p)

(3.38p)
(3.12p)
















Consolidated Group Statement of Financial Position
At 30 June 2017

Notes

30 June '17
(Unaudited)
'000

30 June '16
(Unaudited)
'000

31 December '16
(Audited)
'000
Assets







Non-current assets:







Goodwill
7

8,225

8,225

8,225
Other intangible assets
8

21

32

21
Property, plant & equipment
9

1,431

1,702

1,558



9,677

9,959

9,804
Current assets:







Trade & other receivables


3,067

3,685

3,350
Cash & cash equivalents
10

1,781

778

1,584



4,848

4,463

4,934








Total assets


14,525

14,422

14,738








Liabilities







Current liabilities:







Trade & other payables


4,060

3,807

4,266
Current tax receivable


(111)

(96)

(146)
Other borrowings
11

-

-

1,000



3,949

3,711

5,120
Non-current liabilities:







Deferred tax liabilities


90

58

90
Long term loan
11

1,000

1,200

200



1,090

1,258

290








Total liabilities


5,039

4,969

5,410







Net assets


9,486

9,453

9,328







Equity







Share capital
13

195

195

195
Share premium


4,868

4,868

4,868
Special reserve


233

233

233
Retained earnings


3,926

3,883

3,762








Equity attributable to owners of the Company


9,222

9,179

9,058
Non-controlling Interest


264

274

270
Total equity


9,486

9,453

9,328


Consolidated Group Statement of Cash Flows
For the 6 months ended 30 June 2017

Notes

6 months to
30 June '17
(Unaudited)
'000

6 months to
30 June '16
(Unaudited)
'000

12 months
to 31 December '16
(Audited)
'000
Cash flows from operating activities







Cash inflow / (outflow) from operations


509

(290)

335
Interest paid


(19)

(20)

(40)
Taxation


(1)

(114)

128
Net cash inflow / (outflow) from operating activities


489

(424)

423








Cash flows from investing activities
Interest received


-

31
-
Purchase of intangible assets


(8)

(23)

(25)
Purchase of property, plant & equipment
9

(84)

(300)

(308)
Net cash outflow from investing activities


(92)

(292)

(333)








Cash flows from financing activities







Bank facility (repaid) / received
11

(200)

200

200
Dividends paid
12

-

(429)

(429)
Net cash outflow from financing activities


(200)

(229)

(229)
















Increase / (Decrease) in cash and cash equivalents


197

(945)

(139)
Cash at beginning of period


1,584

1,723

1,723
Cash at end of period
10

1,781

778

1,584
Reconciliation of operating profit to net cash flow from operating activities







Operating profit / (loss) 


192

(185)

(185)
Operating (loss) from discontinued operations
Amortisation of intangible assets
6

-
8

(300)
8

(543)
16
Depreciation of property, plant & equipment


211

223

328
Effect of foreign exchange rate moves


21

143

104
Decrease in receivables


283

520

855
(Decrease) in payables


(206)

(699)

(240)
Cash flow from operating activities


509

(290)

335


Consolidated Group Statement of Changes in Equity
For the 6 months ended 30 June 2017
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
6 months to 30 June '16
Share capital
'000

Share premium 
'000

Special reserve 
'000

Retained earnings 
'000

Non-controlling 
Interest
'000

Total equity
'000












At 1 January '16
195

4,868

233

4,747

170

10,213
Foreign currency translation
-

-

-

143

-

143
(Loss) for the period
-

-

-

(578)

(148)

(726)
Elimination of non-controlling interest in S&P+
-

-

-

-

252

252
Dividends paid
-

-

-

(429)

-

(429)
At 30 June '16
195

4,868

233

3,883

274

9,453
12 months to 31 December '16
Share capital
'000

Share premium 
'000

Special reserve 
'000

Retained earnings 
'000

Non-controlling 
Interest
'000

Total equity
'000












At 1 January '16
195

4,868

233

4,747

170

10,213
Foreign currency translation
 -

-

-

104

-

104
(Loss) for the period
 -

-

-

(660)

(152)

(812)
Elimination of non-controlling interest in S&P+
-

-

-

-

252

252
Dividends paid
-

-

-

(429)

-

(429)
At 31 December '16
195

4,868

233

3,762

270

9,328


Notes to the financial statements
For the 6 months ended 30 June 2017
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 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 2016 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 22 September 2017. 
2. Basis of preparation
This condensed consolidated interim financial information for the 6 months ended 30 June 2017 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 2016 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 2016. 
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 '17







Revenue
1,802
429
1,652
900
-
21
4,804
Segment profit/(loss) before tax
489
16
106
90
(513)
(15)
173








6 months to 
30 June '16







Revenue
1,502
544
1,462
1,068
-
70
4,646
Segment profit/(loss) before
tax
385
145
(169)
1
(456)
(80)
(174)








12 months to
31 December '16







Revenue
3,185
917
3,244
2,226
-
89
9,661
Segment profit/(loss) before tax
1,340
(155)
(215)
(272)
(908)
(15)
(225)








6. Discontinued operations
During the prior period, the Group took decision to close its S&P+ business, which operated in a niche sector distinct from SpaceandPeople's core business. SpaceandPeople owned 51% of S&P+ and didn't consider it prudent to continue funding the venture beyond what had already been provided. 
 
Profit / (Loss) for the year from discontinued operations
6 months to 
30 June '17
'000
6 months to 
30 June '16
'000
12 months to 
31 December '16
'000
Revenue
Cost of Sales
Gross Profit
Administration expenses
-
-
-
-
487
(343)
144
(444)
487
(343)
144
(435)
Results from operating activities (net of tax) to date of disposal 
Non-controlling interest eliminated
(Loss) / profit for period from discontinued operations
-
-
-
(300)
(252)
(552)
(291)
(252)
(543)

7. Goodwill
Net book value
6 months to 
30 June '17
'000
6 months to 
30 June '16
'000
12 months to 
31 December '16
'000
Opening Balance
8,225
8,225
8,225
Closing Balance
8,225
8,225
8,225
8. Other intangible assets 
Net book value
6 months to 
30 June '17
'000
6 months to 
30 June '16
'000
12 months to 
31 December '16
'000
Opening Balance
21
17
17
Additions
8
23
25
Elimination of S&P+
-
-
(8)
Amortisation
(8)
(8)
(16)
Elimination of S&P+
-
-
3
Closing Balance
21
32
21
9. Property, plant and equipment
Net book value
6 months to 
30 June '17
'000
6 months to 
30 June '16
'000
12 months to 
31 December '16
'000
Opening Balance
1,558
1,625
 1,625
Additions
84
300
326
Disposals
-
- 
(18)
Elimination of S&P+
-
 -
(127)
Depreciation
(211)
(223)
(328)
Elimination of S&P+
-
 -
80
Closing Balance
1,431
1,702
1,558
10. Cash & cash equivalents
30 June '17
'000
30 June '16
'000
31 December '16
'000




Cash at Bank and on hand
1,781
778
1,584

1,781
778
1,584
11. Non-current liabilities
As at 30 June 2017, SpaceandPeople had drawn down 1.0 million(June 2016: 1.2m) of its agreed long-term bank facility of 1 million (2016: 2 million). The amount drawn is part of a revolving credit facility which is repayable by 31 July 2019. The additional short-term revolving credit facility of 1 million that was repayable by 31 July 2017 was fully repaid as at 30 June 2017.
12. Dividends
30 June '17
'000
30 June '16
'000
31 December '16
'000




Paid during the period
-
429
429






13. Called up share capital
Allotted, issued and fully paid
30 June '17
30 June '16
31 December '16
Class
Nominalvalue




Ordinary
1p
195,196
195,196
195,196


Number
19,519,563
19,519,563
19,519,563
14. Earnings per share
Earnings per share has been calculated using the profit / (loss) after taxation attributable to owners of the company for the period and the weighted average number of shares in issue.

30 June '17
'000
30 June '16
'000
31 December '16
'000
Profit / (loss) after taxation attributable to owners of the company
143
(578)
(660)




Weighted average number of shares in issue during the period
'000
'000
'000
- 1p ordinary shares
19,520
19,520
19,520
- Share options
1,858
1,562
1,649
- Diluted ordinary shares
21,378
21,082
21,169
  
SpaceandPeople plc
2nd Floor
100 West Regent Street
Glasgow
G2 2QD
Telephone: 0845 2418215
Email: help@spaceandpeople.com
www.spaceandpeople.com

This information is provided by RNS
The company news service from the London Stock Exchange
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