SpaceandPeople back into profit and positive earnings per share

SpaceandPeople plc (LON:SAL) the retail, promotional and brand experience specialist, has announced its final results for the year ended 31 December 2021.  

Financial Highlights

·       Revenue of £4.0 million (2020: £2.8 million and 2019: £7.7 million)

·       Operating profit of £0.2 million (2020: loss of £3.6 million and 2019: profit of £0.1 million)

·       Basic Earnings per Share before non-recurring costs and discontinued operation of 0.9p (2020: loss of 7.2p and 2019: profit of 0.3p)

·       Borrowings net of cash at year end of £0.4 million with available facilities of £2.5 million (2020: net borrowings of £0.9 million)

Operational Highlights

·       Multi-year contract renewal with major client ECE in Germany

·       Extension of relationship with Landsec through to 2026

·       Demonstrated resilience of the business with successful bounce-back each time restrictions were lifted

·       Refinancing of banking facilities for a longer period of time

Post Year End Highlights

·       Extension of Network Rail agreement until 2023

Chair’s Statement

After another year of pandemic-induced disruption, I would like firstly to thank all of our staff and management across the business for their hard work and support in 2021 as well as their continued commitment to the Group.

We have focussed on ensuring the business is in the best shape it can be for the recovery which is now under way while dealing with the government-imposed restrictions in the UK and Germany. The difficult decisions that were made during this period have left a more resilient business which has a robust balance sheet and stable, committed finance facilities. The biggest impacts were felt in 2020’s results through non-recurring charges in the income statement with no similar charges in the year we are now reporting on.

Growth returned to the business in 2021, as we expected, but remained below pre-pandemic levels despite new venue wins and we look forward to a more normal year of trading in 2022. However, a significant milestone was achieved last year with the move back into profit and positive earnings per share.

Key business developments and the financial performance of the Group are covered in more detail in Nancy Cullen’s CEO Report and Gregor Dunlay’s Operating and Financial Review.

Management is clear on the strategic growth opportunities in the UK and Germany and there is the necessary capital, resource, skills and ambition within the business to achieve these.

Your business is a cash generative one which has limited capital expenditure needs and we will look to return to paying dividends at a suitably prudent time. We will keep you informed of progress towards this over upcoming reporting periods.

Finally, I would like to thank my Board colleagues for their support and input throughout the year and to congratulate again the SpaceandPeople team for all that they have achieved in 2021. In particular, I would like to thank Graham Bird, who has chosen to retire from the Board at the forthcoming AGM, for his invaluable support and insight as a director during an extremely turbulent time.

George Watt

Chair

22 April 2022

Chief Executive Officer’s Review

Introduction

2021 was yet another challenging year for the business – we started the year in lockdown with the earliest venues to open being English shopping centres in April 2021 and the latest being German shopping malls which opened fully during May 2021. Thankfully, venues remained open for the rest of the year in the UK, but the announcement regarding the new omicron variant of covid in November 2021 had a profound effect on our business in November and December and many of our retail clients suffered from poor Christmas sales due to diminished footfall. In Germany, our shopping centre venues also remained open, but customers visiting centres were subjected to vaccine passport checks before they entered each store which had a detrimental effect on footfall.

Once again, I am indebted to our staff and senior team in both the UK and Germany for their tenacity and tolerance over what has been another very challenging year for them and to my fellow Directors for their resilience after another year of difficult trading conditions.

A Year of Recovery

UK

Overall, 2021 was a year of recovery from the challenging circumstances that we found ourselves in during 2020, when the majority of our venues were closed for up to four months and train station footfall plummeted as a result of lockdowns and subsequent working from home advice. For the most part, footfall recovered well in 2021 post the April reopening and until November we were recording strong footfall levels in both the UK and Germany and business across all sectors that we represent was returning. Unfortunately for the business, the publicity surrounding the omicron variant of covid created an immediate slow-down in both demand for space and venue footfall and we received a number of cancellations to pre-planned bookings at a critical time of year. Our retail clients who continued to trade throughout this period also reported poor trading figures as a result of low footfall in their venues.

In the UK, of all our revenue streams, the Brand Experience business suffered the most. In 2021, many agencies chose alternative media (in preference to live events), outdoor venues (due to social distancing) or postponed campaigns until 2022. This affected revenue across the full portfolio of venues that we represent. I am very pleased to report, however, that after a slow start to 2022, business levels in this sector are now recovering well.

In the retail sector business demand remained strong, in part due to our vastly expanded network of venues, but also due to the variety of retail options that we offer short-term retailers. It has been encouraging to see new products and services continue to take space at our venues and the appetite for pop-up retail continues unabated. Specific trends such as the increase in pet ownership has also resulted in the growth of new product categories including pet food subscription promotions and accessories kiosks. This year we have exciting plans for an expansion of our Pop-Up Shop concept which we hope will drive increased demand from both new and on-line retailers.

During the year we were also delighted to sign a contract extension with Landsec, one of our most important property partners, for the provision of experiential activity and short-term retailing. This agreement which covers 35 shopping centres, retail parks and leisure destinations was extended until 2026.

Germany

Our German business was affected significantly by lockdowns and the emergence of the omicron variant. Shopping malls in Germany were permitted to reopen by May and remained open throughout the rest of the year, however, as soon as the omicron variant news was announced, malls required all customers to show their vaccination status before entering any shops which had a significant negative effect on footfall. At the end of March 2022, Germany removed all restrictions including compulsory mask wearing. This was the first time that all restrictions had been fully lifted since March 2020.

We did have significant good news during the year in that the German management team successfully negotiated a new contract with ECE for a further five years. The number of RMUs included in the new agreement is a minimum of 58 in 30 shopping centres, with the aim of agreeing further venues and RMUs throughout the contract period. This new agreement also allows us to trade in ECE malls without large minimum guarantees. During the year we also trialled new venues for our products introducing our first RMU into Hauptbahnhof Hamburg station. We will be monitoring sales here with a view to expanding our train station network or introducing additional retail into this site.

Outlook

2021, although a marked improvement on 2020, was not without its challenges both at the beginning and at the very end of the year and the business has yet again had to build back from very difficult circumstances. I am pleased to report however that we are now seeing business levels returning and footfall in our venues continuing to grow. This has been helped by the removal of working from home advice and by the phasing out of covid testing. January and February remained affected in both the UK and Germany, but we are now seeing a revival in business interest across all sectors in which we operate. At the start of March 2022, we were delighted to announce that our partnership with Network Rail had been extended for a further year. As footfall in stations continues to grow during 2022, this relationship will be fundamental to the recovery in revenue, which combined with a renewed focus on our key sectors, a committed and highly motivated management team and vastly reduced overheads will see improved operating profitability in 2022 even given the impact of current general economic factors.

Nancy Cullen

Chief Executive Officer

22 April 2022

Operating and Financial Review

2021 saw the Group return to profitability despite another stop / start year characterised by continuing periods of lockdown and government advice to restrict interaction in both the UK and Germany, not always concurrently.

With this having been the case for some time now, the business was much better prepared to react to closures and reopenings, but it still made planning and forward selling extremely challenging.

Despite these issues, revenue increased by 43% to £4.0 million primarily reflecting less time spent in lockdown. Along with a 15% reduction in cost of sales and a 19% reduction in administration expenses (excluding non-recurring costs), this led to a return to profitability following the extreme challenges of 2020.

Revenue

Revenue generated in 2021 was £4.0 million, which was £1.2 million (43%) higher than in the previous year. This was made up as follows:

2021£ million 2020£ million Movement 
UK promotions 2.10.8+162%
UK retail 1.00.9+11%
German combined 0.91.1-18%
Total4.02.8+43%

The increase in total revenue was primarily due to there being longer periods of time during 2021 than in the previous year when venues were open and able to accept bookings and activity as well as the gradual recovery in sentiment for both venues and promoters.

UK promotional revenue was up 162% to £2.1 million compared with the previous year, although this was still 39% below that achieved in 2019. The increase from the previous year was as a result of Brand Experience activity and kiosk retailing experiencing encouraging recoveries, although Brand Experience activity still remained some way behind 2019 levels as brands and agencies remained cautious of face-to-face engagement.

In the UK retail division, Retail Merchandising Unit (“RMU”) revenue recovered slightly from the previous year. RMU retailers were some of the first operators to return to venues each time restrictions were lifted, however, a number of RMUs remained out of operation in some venues as the need to maintain social distancing meant that RMUs in compromised positions had to be removed from service for significant periods of time.

The Mobile Promotions Kiosk (“MPK”) element of UK retail revenue continued to be supressed during 2021. Revenue was 5% lower than in the previous year due to a material decline in activity from the charity sector where face to face engagement remained difficult.

German revenue fell by 18% to £0.9 million with a corresponding reduction in cost of sales. The profile of the periods of lockdown in Germany differed from the UK with venues locked down from the start of 2021 until the end of May and with trade slow to recover through June. In the previous year, Germany had only gone into lockdown from the middle of March until the start of May, so was significantly less affected than the UK.

Administrative Expenses

Administrative expenses declined by £0.8 million from the previous year to £3.5 million. This was as a result of the reduction in staff costs where £0.7 million was saved with the reduction in the average number of staff employed falling from 69 to 50. This follows the £0.6 million reduction in administrative expenses achieved in the prior year and marks the completion of the cost reduction plan put in place at the start of the pandemic.

Other Operating Income

As was the case in the previous year, other operating income mainly comprised coronavirus business support provided by both the UK and German governments by way of staff cost support and government compensation for loss of profitability in Germany.

Operating Profit

During 2021, the Group returned to an operating profit position of £0.2 million, which although in itself is modest, marked a substantial turnaround following the operating loss of £3.6 million in the previous period.

Basic Earnings per Share (“EPS”) improved to 0.9p (2020: loss per share 17.2p) and fully diluted EPS improved to 0.9p (2020: loss per share 17.2p). Basic EPS is calculated as profit after tax and attributable to the owners of the Company divided by the weighted average number of shares in issue during the year which was 19,519,563 (2020: 19,519,563).

Basic EPS excluding non-recurring costs and discontinued operations improved to 0.9p (2020: negative 7.2p).

Fully diluted EPS excluding non-recurring costs and discontinued operations improved to 0.8p (2020: negative 17.2p).

Fully diluted EPS also takes into account the number of shares that would be issued on the exercise of outstanding share options. The weighted average number of shares used to calculate the diluted EPS was 20,752,108 (2020: 19,519,563).

Cash Flow

The Group cash inflow from operations was £0.8 million (2020: outflow of £1.1 million). This was due to positive EBITDA of £0.5 million and a £0.2 million corporation tax receipt. As at the end of 2021, the Group had drawn down £1.78 million of its banking facilities (2020: £1.75 million). With the gross cash position being £0.5 million higher at the end of 2021 than 2020 at £1.4 million (2020: £0.8 million), this resulted in borrowings net of cash being £0.4 million (2020: £0.9 million).

Gregor Dunlay

Chief Financial Officer

22 April 2022

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Share on facebook
    Facebook
    Share on twitter
    Twitter
    Share on linkedin
    LinkedIn

    More articles like this

    Lookers Plc

    Lookers shares are still undervalued says Zeus

    Lookers plc (LON:LOOK) has released an H1 trading update reporting a continuation of strong performance year to date. H1 2022 underlying PBT is expected to be c. £45m and Management anticipate full year PBT will also be ahead

    SysGroup plc

    SysGroup analyst Zeus forecast a 39.0% increase in revenue in FY23

    SysGroup plc (LON:SYS) is an award-winning provider of managed IT services, cyber security, cloud hosting and IT consultancy. The Group offers investors an attractive business model with high recurring revenue and a diversified customer base. SysGroup is competitively

    AFC Energy

    AFC Energy’s long term opportunity remains vast says Zeus

    AFC Energy plc (LON:AFC) has signed an agreement with another leading UK construction/infrastructure player, this time in Kier Group. We believe this further endorses our long term thesis that AFC will play an active role in encouraging the

    Inchcape

    Inchcape performance exceeding expectations says Zeus

    Inchcape plc (LON:INCH) has released another positive trading update, with performance exceeding expectations so far this year. This follows on from a positive Q1 update on 28 April. Through quarterly improvement in Distribution volumes and operating margin, the

    boohoo Plc

    Boohoo Group analyst Zeus sees a strong performance in Q1

    ¨ Q1 financial highlights: Boohoo Group plc (LON:BOO) revenue of £445.7m is -8.3% YOY vs. a strong comp (Q1 FY22 revenue +32.1%), in line with Zeus’s forecast and management’s previously stated guidance. Gross sales growth remained positive +9%

    AssetCo plc

    AssetCo performs better than forecasts says Zeus

    AssetCo plc (LON:ASTO) has just completed its acquisition of River and Mercantile Group “RMG”, which has resulted in an increase in shares in issue from 8.4m to 14.4m. RMG has an “established and well-respected equities team that manages

    Tatton Asset Management Plc

    Tatton Asset Management meeting or beating Zeus forecasts

    Tatton Asset Management plc (LON:TAM) results to March 2022 are in line with its April trading update, confirming profitable growth with high retention. Headlines are: ¨ Assets under management (“AUM”) rose 26.1% to £11.34bn (2021: £8.99bn) £1,277m net

    Castings plc

    Castings Plc outlook underpinned by new platforms says Zeus

    Castings plc (LON:CGS) FY22 results show a marked recovery on the pandemic impacted FY21 numbers with volumes broadly in line with pre-Covid levels, albeit c.5% below FY19 peak. Revenue increased 29.5% to £148.6m (FY21: £114.7m) with adj operating

    OnTheMarket Plc

    OnTheMarket “delivering on expectations” says Zeus

    OnTheMarket plc (LON:OTMP) full year results to January 2022 are in line with the February trading update: ¨ 32% rise in revenue to £30.4m (FY21: £23.0m); ¨ 12% rise in Group adjusted operating profit to £2.7m (FY21: £2.4m);

    DWF Group Plc

    DWF Group is significantly undervalued says Zeus

    DWF Group plc (LON:DWF) has announced it is on track to deliver our FY22 adjusted PBT forecast despite some challenges particularly on utilisation during H2. Lock up days also continue to fall, and we sense increasing confidence in

    No more posts to show