SpaceandPeople plc (LON:SAL) secures, sells, and manages flexible space for brand experiences, short term promotions and retailing in high footfall venues for its customers, including in shopping centres and travel hubs. The Group has issued full year results to 31 December 2021; these are positive. Despite restrictions on trading during parts of the year due to COVID, revenue was up 43% (£4m), a small operating profit was recorded (£0.2m), cash from operations was positive (£0.8m) and net debt more than halved to £0.4m. The outlook statement is cautious but positive, activity levels are recovering in the UK and Germany, and operating profit is expected to improve year-on-year. That said, given inflationary headwinds and the impact this is having on consumer spending, we have decided not to provide forecasts at this stage. To sum up, the Group is recovering well and offers competitively priced and flexible marketing solutions for its customers, perhaps tailormade for a challenging demand environment. We expect to be able to provide an update on estimates prior to the half year results.
Full year trading update, a return to profit – 2021a was challenging but recorded a gradual recovery in trading. The year started in lockdown, but shopping centres in UK and Germany progressively opened through the spring. UK venues remained open for the rest of the year but restrictions relating to the Omicron variant impacted trading in the key November and December shopping period. In Germany, shopping centres also remained open, but customers were subject to vaccine passport checks which slowed footfall. That said, overall, higher activity levels lifted Group revenue to £4m (2020a: £2.8m, 2019a: £7.7m). With tight control of costs (e.g., £0.7m was saved by reducing the average number of employees from 69 to 50), the Group reported an operating profit of £0.2m (2020a: £3.6m loss, 2019a: £0.1m profit). The fundamentals also improved with a net cash inflow from operations of £0.8m (2020a: outflow of £1.1m). At year-end, SpaceandPeople had drawn £1.78m of its banking facilities (2020a: £1.75m). The gross cash position was £0.5m higher than 2020a, at £1.4m, and this resulted in net debt of £0.4m (2020a: £0.9m). Although these numbers are small, we note that the Group is now cash generative and capex requirements are minor. We have reviewed going concern statements, these appear reasonable to us. In summary, the Group has managed tough trading conditions well.
Outlook is cautious but positive – Management report that they are now seeing activity recover to pre-COVID levels, with footfall in customer venues continuing to grow. This has been helped by the removal of working from home advice and by the phasing out of COVID testing. At the start of March, the Group announced that its partnership with Network Rail in the UK had been extended for a further year to 2023. This follows important contract extensions signed during 2021a with UK property partner Landsec, and Germany shopping centre partner ECE. As discussed, costs have been reduced significantly and this should in time lead to sustainably higher operating margins. For 2022e, management state that they expect to see improved operating profit, although no explicit guidance is provided at this time. Dividend payments will resume when appropriate, and in the context of higher debt repayments going forward.
Zeus estimates remain suspended for the moment – We are mindful that consumer spending in the UK and Germany is being squeezed by widely reported inflationary pressures (see UK consumer confidence plunges to near-record low, Financial Times, 22 April 2022). SpaceandPeople offers flexible and competitively priced marketing solutions, and therefore should be somewhat protected from lower footfall. That said, as discussed with management, and given uncertainty with consumer demand, we believe it is too early in the trading year to provide forecasts for 2022e. We expect to be able to provide an update on estimates prior to the half year results.
|Shares in issue||19.5m|
|12m Trading Range||8p–17p|
|Next Event||Interims – September (est.)|
|Dec. y/e (£m)||2020a||2021e|
Source: Company data