SpaceandPeople plc (LON: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, has announced interim results for the six months ended 30 June 2021.
Highlights
Financial
- Consolidated net revenue up 2.5% to £1.10m (H1 2020: £1.08m) as venues remained closed for a large part of H1 2021.
- Group loss before taxation of £0.27m (H1 2020: loss of £2.13m).
- Net cash outflow from operating activities of £0.13m (H1 2020: outflow £0.34m).
- Facility headroom at 30 June 2021 of £1.51m (June 2020: £2.23m) and £1.35m at 23 September 2021 (September 2020: £1.58m).
- Basic loss per share of 0.7p (H1 2020: loss per share 8.3p).
Operational
- Business again effectively ceased for most of the first half of the year with venues reopening during April and May in the UK and June in Germany.
- Good signs of recovery in UK promotional revenue in the UK driven by kiosk retail bookings.
- Agreement of multi-year extension to the retail agreement with ECE in Germany, tailored to maximise the opportunities arising from the re-opening of non-essential retail.
- Portfolio of venues is significantly larger than pre-pandemic and the resulting opportunities as business recovers are positive.
- Successful application for a further £1.00m of term loan and £0.50m of overdraft facility under CBIL Scheme bring total borrowing of £1.90m of term loans and £0.75m of overdraft facilities.
Chief Executive’s Interim Operating Statement
Having reached the first anniversary of my appointment as CEO of SpaceandPeople, I am delighted to see the emergence of our business from the challenges that it has faced over the last eighteen months. Although the reopening of our venue partners over the past few months has come too late to have any significant impact on our ability to trade during the first half of 2021, I am encouraged by the speed with which our pop-up retail business has rebounded in both the UK and Germany and by the growing pipeline of business in our promotions division.
Once again, I must thank our incredible staff for dealing with the challenges and problems created by the closure of nearly all our venues and to our property clients for their understanding and support whilst we build the business back into their venues.
Trading during the period
2021 started with lockdowns across both the UK and Germany, with no visible end date. As a result of this, our revenue levels remained at almost zero for the first quarter of the year with the only mitigating factor being the Covid-19 vaccination programme roll out in the UK which gave some hope to a successful reopening in Spring. The outlook in Germany was slightly poorer with a slower vaccination rollout and a more cautious government approach to the re-opening of the retail sector.
The welcome news that non-essential retail in England would reopen in mid-April and a few weeks later in Wales and Scotland meant we could recommence booking activity in March and we quickly bought the UK staff who had remained on furlough back into the business. In the UK, it was encouraging to see an immediate bounce back in pop up retail bookings, however, revenue from brand experience events and customer acquisition activity, particularly in indoor locations, has been slower to build back to pre-pandemic levels, although I am encouraged to see a steady growth in these areas since the start of the summer. Demand for pop up retail, however, has remained positive and strong in the UK and we have brought several new retail concepts to market that have continued to expand over the year. These include pet related offers such as pet food bakeries and pet accessories reflecting the broader trend towards pet ownership over the last 12 months.
In Germany, lockdown was not lifted until June and therefore, over the period under review we recorded practically no revenue from operational activity. The staff in Germany have remained on the German equivalent of furlough for longer than their colleagues in the UK.
Although Group revenue was only marginally higher in the first half of 2021 compared with the first half of 2020, the action taken to reduce cost of sales and administrative expenses along with the availability of government support through job retention schemes and support grants meant that losses before non-recurring costs were reduced by £1.37 million to £0.25 million (2020: £1.62 million).
This situation has meant that the Group continued to experience negative cashflows from operations during the first half of 2021, however, as previously notified, we were able to refinance using the UK government CBILS programme, which has given the business the cash headroom that it required to maintain trading during the lockdown period and also return quickly to normal once restrictions were lifted. We have also received substantial support of £0.4 million from the German government through their Covid-19 support grants which has enabled us to maintain a strong cash position throughout the period and to date.
Outlook
In the UK, which was the first of our territories to return from lockdown, business is recovering well. With our enhanced venue portfolio, now including a number of former Intu venues, and refocussed teams targeting new opportunities, we are making good progress towards rebuilding business back to and beyond pre-pandemic levels.
Brand experience business, which represents around 40% of our UK promotional revenue in a typical year, has been the slowest aspect of our business to return and has been understandably focussed on external venues for the immediate post lockdown period. However, we are now increasingly starting to book internal venues. Critically railway stations, which have been slow to see passengers return, are now busy and accepting bookings. The lockdown period has meant that in this sector, a whole new generation of agency clients have set up resulting in a need to boost both our marketing and sales presence to maximise the opportunities for us and our clients.
As mentioned above, short-term retail business has recovered well and many retailers returned to venues as soon as restrictions were lifted. We are also seeing new entrants in this market, with smaller retailers looking for short-term opportunities to support their on-line presence.
Since Germany retail reopened, we have RMUs trading again in all our venues. This is very encouraging as the scale of the opportunity available to us in Germany is significantly larger following the expansion of our agreement with ECE, our largest shopping centre client in Germany, earlier this year.
Overall, given the circumstances, I am encouraged to see the way in which business is coming back into venues across all our sales divisions and we are delighted that the country looks to be staying open for business moving forward. We have ambitious plans for building new business across our divisions which focuses on the delivery of opportunities for promoters and retailers to deploy their activity swiftly and efficiently through our unrivalled list of exclusive venues.
I look forward to the future with optimism as my belief is that our business, which is predicated on flexible and short-term solutions for brands and retailers, will be increasingly relevant and attractive in the new retail and promotional landscape.
Nancy Cullen
24 September 2021
