The benefits of experience
The Group provides property owners with ways to capitalise upon the full commercial potential of retail assets. It markets, sells and administers free space in venues including shopping malls, garden and city centres, retail parks and travel hubs (over 750 venues with a weekly footfall of 70m).FY17 results confirmed the anticipated recovery vs FY16, attributed to a strategic focus on core UK and German operations. Appropriately for a business which capitalises upon footfall rather than underlying retail trends, brand experiences were SAL’s largest source of revenues last year. Client wins both during 2017 and post the year end have enhanced its venue portfolio and the potential attractions for major brands. SAL venues now include Network Rail, Broadgate Estates and an extended list of Landsec properties.
Profit before tax attributable to shareholders was £1.2m (FY16 £0.1m before non-recurring costs). That was driven by stronger performances by UK brand experiences, MPKs and German RMUs. Net revenue was 3% up at £10m, gross margin by 20% to £6.6m, which reflected administrative cost savings secured in FY16, maintained in FY17.
Operating profit was £1.2m, a £1.1m underlying improvement after non-recurring costs, as inherent operational gearing steered revenue growth to the operating line. There was a parallel improvement in underlying cashflow i.e. £2.4m net cash generated from operating activities (FY16: £0.4m). That enabled SAL to repay all outstanding debt. Year-end net cash was £2.66m, an underlying £1.6m improvement y o y, net of £0.7m due to clients, paid post the year end. A proposed 1.5p/share final dividend is equivalent to a 4.4% prospective yield.
FY18 should continue to benefit from recent refocus on core UK and German operations, plus ongoing efforts to work existing Retail Merchandising Units (RMU) and Mobile Promotions Kiosk (MPK) installations to improve occupancy and sales rates. The strategy aimed to establish more a diversified, sustainable revenue and profit base, less dependent on any single market or client. Both, combined with significant growth in brand experience revenues are features of the FY17 results and our forecasts.
SpaceandPeople is engaged in the marketing and selling of promotional and retail licensing space on behalf of shopping centres and other venues throughout the U.K. and Germany and also in India. Co.'s segments include promotional sales and retail, and other. Through its subsidiaries, Co. is involved in licensing of intellectual property, media, and leasing of retail merchandising units.
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