Recent contract wins underpin outlook
​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).
FY15 profit matched expectations despite a tough retail trading environment for all divisions. Underlying adjusted pre-tax profit was broadly in line y-o-y at £1.1m, excluding £0.4m of non-recurring costs in FY14.
Headline revenues were below forecast, mainly due to the impact of weaker GBP/EUR on German income and lower sales at 50% owned S&P+ relative to a strong FY14 bolstered by one very large contract. Basic EPS was 4.26p (FY14: 3.91p) and the recommended FY15 dividend 2.20p (FY14: 2.00p).
The two new UK clients underpin the outlook. SAL has an exclusive long-term contract to carry out promotional activities in Network Rail's UK stations and recently announced a new contract with British Land which provides access to one of the leading UK shopping centre and retail park portfolios.
The MPK roll out, from a virtual standing start last year, had 56 operational units at the year-end in UK and Germany, with a target of at least 80-90 by end FY16. In addition, the pilot project in France with Immochan will trial MPKs in five malls this year, and provide a possible expansion route into a valuable new market.
Overall, we expect this revenue to outweigh business reversals and margins to grow progressively as revenues scale up, due to increased focus on more profitable operations. The shares look attractive on a twice-covered 4% prospective FY16e yield, at 11.3x FY16e PER, falling to 9.7x in FY17e, on relatively cautious predicted earnings growth.
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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