Playing the long game
​SpaceandPeople's (SAL) underlying first-half performance was broadly in line with H1'15, excluding costs associated with closing S&P+ and running the MPK pilot project in France. SAL reported a £0.17m adjusted H1'16 pre-tax loss (H1'15: £0.06m profit) from continuing operations. The decline vs the comparable period mainly relates to declines within German operations as contracts fell away, and the c £0.1m upfront costs of the pilot MPK project for Immochan in France.
Future growth pivots upon the UK MPK and Pop Up kiosk programmes, while SAL will continue to source and develop new products with client appeal. In order to offset a more uncertain retail backdrop the group has decided to step up investment in its MPK programme next year.
The statement referred a more subdued trading period since the half-year end, which SAP believes is in common with the experience of other retail related businesses. We take a cautious view of the short-term UK retailing environment, particularly as Brexit adds uncertainty to the economic outlook. We have cut our FY'16 and FY'17 forecasts which puts the shares on an 11.6x prospective FY'17e EPS. We expect the group to have net cash at the end of the current year, and invest in the acceleration of the UK MPK roll out to underpin prospects for FY17 and beyond.
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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