SpaceandPeople PLC Pre-Close Trading Update (6022T)
09 January 2017 - 6:00PM
UK Regulatory
TIDMSAL
RNS Number : 6022T
SpaceandPeople PLC
09 January 2017
SpaceandPeople plc
("SpaceandPeople" or the "Group")
Pre-Close Trading Update
SpaceandPeople, (AIM:SAL) the retail, promotional and brand
experience specialist, today issues a pre-close trading update
ahead of its preliminary results for the year ended 31 December
2016, which will be released on 27 March 2017.
Trading during the key month of December was poorer than
expected. Revenues for the year from the promotional divisions and
the German retail division were in line with management
expectations, however, Retail Merchandising Unit ("RMU") sales were
significantly lower than had been anticipated with demand over the
normally lucrative Christmas period being particularly weak.
Revenue from the Mobile Promotion Kiosk ("MPK") business was lower
than had been budgeted as the roll out of units to new venues was
delayed from the fourth quarter of 2016 into 2017 due to site
availability, although this still represented a 138% increase on
the previous year at GBP1.6 million (2015: GBP656k). Overall,
revenue for the year was GBP700k lower than expected at GBP10.2
million and the impact of this on the profitability of the Group is
a reduction of approximately GBP425k from market expectations.
Additionally, the Group has decided to make provisions for the
restructuring of both the UK and German retail divisions with
GBP90k of restructuring costs and GBP150k of provision for
potential bad debts as we enter the final year of our contract with
ECE.
Therefore, the Group expects the results for 2016 to be close to
break even before non-recurring costs and discontinued operations
and a loss of circa GBP650k after recognising all costs.
Non-recurring costs and discontinued operations:
Closure of S&P+ Ltd GBP400k
MPK France pilot GBP125k
Restructuring costs GBP175k
Total GBP700k
The net cash position at the year-end was GBP250k (2015:
GBP723k).
New Venues
Whilst the market landscape is challenging, the Group has been
awarded several new venue gains in December, including the:
-- Bromley Shopping Centre (formerly Intu Bromley) following it
being acquired by one of our clients;
-- Land Securities Leisure portfolio of 15 venues;
-- Kirkgate Shopping Centre in Bradford;
-- addition of London Bridge, Euston and Paddington to our
portfolio of Network Rail stations following the completion of
their renovations and reconfiguration of space allowing
commercialisation activities to take place; and
-- renewal of our promotional contract with MEC in Germany until December 2017.
There are a number of further potential gains in the pipeline
and the ability to grow the UK business further is strong.
Outlook for 2017
The Board is confident that the addition of these new venues
will deliver increased revenue to the UK divisions in 2017,
however, forecasts for 2017 have also taken account of the fact
there are a few venues whose contracts are due to be renewed during
2017 and provision has been made to account for the possibility
that these may not all be renewed.
Over recent years there has been a decline in the scale of the
RMU businesses in both the UK and Germany. We are taking action to
replace lost business, especially in the UK and we have also
reduced the cost base of these divisions to mitigate the effect on
profitability. We are not budgeting for any recovery in the UK
retail business in 2017 and our expectation is that revenue in the
German retail division will decline in what is the final year of
the existing contract with ECE as we are phasing out unprofitable
units.
During 2016 the Group undertook a major cost reduction
programme. Although this incurred costs in 2016 it has materially
reduced the running costs of the business going forward.
Costs:
Reduction in payroll due to GBP650k
streamlined management and
headcount reductions to reflect
the reduced size of the retail
divisions
Overhead reductions due to GBP100k
savings in IT, travel and logistics
Non-recurring costs of S&P+ GBP700k
closure, French MPK pilot and
restructuring
Total GBP1,450k
The effect of the new contract wins, whilst taking account of
potential contract losses and declining German retail revenues as
well as the benefits arising from the closure of S&P+ and the
restructuring programming undertaken provides the Board with
sufficient confidence that the Group will not only return to
profitability in 2017 but will also meet existing broker
expectations for 2017.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Contact details:
SpaceandPeople Plc 0845 241 8215
Matthew Bending, Gregor Dunlay
Cantor Fitzgerald Europe 020 7894 7000
David Foreman, Will Goode (Corporate Finance)
David Banks, Richard Sloss (Sales)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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