Spaceandpeople (LSE:SAL) — Full Year Results

0:01 Good afternoon, and welcome to the SPACEANDPEOPLE PLC investor presentation. Throughout today's recorded presentation, attendees will be in listen only mode. Questions are encouraged and can be submitted via the Q and A tab situated on the right hand side of your screen. Before we begin, I'd just like to submit the following poll, which I kindly ask you to make your responses to. I'd now like to hand over to CEO Nancy Cullen. Nancy, good afternoon. Good afternoon. Thank you very much for the introduction. Today, we're gonna be talking about our 2025 full year results. And this is our presentation, a lovely picture of Just Egg doing a brand activation at Kings Cross to kick us off. For those of you who have joined this webinar and don't know what we do, I think many of you may well know SPACEANDPEOPLE.

0:49 We provide space and services to promote brands, sell products, and acquire customers in high venues across The UK and Europe. And this picture is of a typical activation for us. This is Lush working at Bray Head doing a face to face brand activation. Our business is driven by insights, and we are unique in our market in that we have a big live online database of results. So anybody booking with us is privy to anonymized results for any venue. We can, for example, tell you how many samples you will give away if you're an agency looking to do sampling in a station or a shopping center. We can tell you how many sign ups you will get if you're a company looking to acquire new customers. And we can tell you roughly what, retail sales you should expect from any venue in the country.

1:45 And this database, as I said, is proprietary software to us and, it's just recently won an award at the European, Marketing Awards. So moving on to our results for 2025. Can I hand over to you, Gregor, to talk about this? Yes. Thanks, Nancy. Good afternoon, everyone. Just some highlights to begin with on our 2025 results. They were very much in line with the revised expectations that we've given to the market during 2025 where we'd increased our projections for 2025 on the back of a very strong first half performance. You can see over the last four years, the graphs are all showing very good progress over that time.

2:31 Revenue continued to increase in in line with where we thought it would, up to just over 8,000,000 of net revenue to us. The the result of that is that our operating profit was up to just shy of £600,000, an over 70% increase on the previous year. Our profit before tax more than doubled up to round about £500,000 as well. We also managed to increase our cash position during the year. As a result of that, we are not particularly cash heavy business in terms of having to reinvest it into the business just now and as well as increasing our cash balance. We managed to repay all of the remaining bank loans that we had, from, back in COVID time when we took out a couple of CPL's loans at that point.

3:24 So it was it was a good watershed point for us to get beyond that. For the first time in a period of time as well, we had to recognize some tax on our, p and l, although that was covered by our deferred tax assets, so we didn't actually have to pay any tax over and don't anticipate anticipate doing so in 2026 either. But that still shows a significant improvement in basic EPS over this time as well. The financial highlights from the front end of our annual report shows that with revenue going up to £8,000,000 being a 20% increase in the previous year, that was across all divisions in our business, all of The UK areas, brand, promotion, retail, lock up and pop up, all grew, and cars all grew in the year as did revenue in our German business, and all of them helped contribute towards the increase in the profitability of the business.

4:29 On the cash position, although we repaid our CBILS loans during the year, we replaced them with an overdraft facility, which we didn't use in 2025, but it does give us significant headroom should we ever look to do something with it, in the future. Hi, Tina. I'm just gonna talk through, the main operational highlights, and we'll go into a bit more detail in the ensuing slides. But the basic highlights for the year were we had a really great brand experience performance particularly in the first half of the year. We saw growth across all our divisions, which we're absolutely delighted about. We expanded our USP, which is our rock up and pop up service, and we've brought in a new aspect to that called Engage.

5:20 We continue to make progress in terms of expanding into Europe. And more significantly, we made a big investment in people, in marketing, and in infrastructure That involved recruiting a new head of marketing and investing in his team. And we're gonna talk a bit more about this, but it we are looking and we started our investment in terms of a reimagineering of how we look online and how we work. So moving on to talk about UK performance. So the high brand sales we saw in q one two thousand twenty five were anomalous. It was led by very heavy spending from both the technology and the nicotine replacement sectors, but we were delighted with that. The year did then go to a more normalized performance in terms of brand.

6:13 We also saw growth in the cosmetics brand use of both face to face experiential and retail. We believe that is because of the noise that is ongoing in terms of the number of outlets there are selling cosmetic brands and the fact that there are multi brands on sale in each of these outlets. They are looking for a way of cutting through that. And by moving onto the malls or the rail concourses and talking direct to customers outside their stores, they seem to be getting better traction. So we talk we're talking about brands such as Charlotte Tilbury, Dior, all did brand experiences with us, all did retail with us during the year. We're also really interested in what's going on in acquisition sales. That's the promo sales division.

7:01 As you know, probably know the subscription market's up hugely. It's up 500% over the last ten years. We are seeing face to face acquisition sales being a big growth area of our business. It's not just about food boxes like HelloFresh. It's pet food subscription. It's coffee subscription. It's power. There has been very good growth across all those aspects contributing to a good growth in that division. And our USP product, Rock Up and Pop Up, which is a service where we supply everything to the retailer, delivered both variety and strong growth. We were really pleased to see major retail names entering this market.

7:47 And during the year, we saw names such as Thomas Savo, Mankind, Crocs, Lush, and Happy Socks, all take SPACEAN and our kiosk service. And also really interesting brands that are trending on TikTok, seem to be enjoying the ability to go omnichannel by using our pop up kiosks. And we saw Korean skincare brands, we saw Vive, and we saw permanent jewelry all taking space with Rockup during the year. I'm I'm now gonna hand over to Andrew who'll talk about German performance. Afternoon, everyone. The German business is predominantly retail where we supply the units for the retailers.

8:32 So that picture of Larisse is one of our our units over in in Germany. So net revenue grew by 16% in 2025. The market is fragmenting in Germany, and there are new players coming into the market, a couple from The UK, which is allowing us to work exclusively with MALS in a way that we do in The UK, which we hadn't previously in Germany. So we're delighted that we were awarded Gropes Sergeant, which is Berlin's largest shopping center. So the exclusive relationship means that if anyone wants to be in the mall in the shared areas in the mall space, they book through us, whether it's retail or brand experience or acquisition or even vending.

9:24 If they want to be in that MAL, they book through us. We're hopeful too that the the fragmentation of of mal ownership in Germany continues, which will allow us to to start working with more mal's exclusively. Given the retail basis and the fact we've got warehouses and workshops across Germany, we're able to offer a a new shop fitting service as well whereby we can do shop fitting or we can we supply vending furniture for ECE. So ECE wanted their vending machines in more prime locations in the middle of their shopping centers. So we provided the furniture to make them look attractive, and that's driven significant extra revenue from the vending machines. So that's been a great success, and they're rolling out more this year.

10:15 And finally, we're in increasing brand activity in Europe. So we've hired a a brand experience manager in Germany, and they're working in collaboration with the UK team to expand brand experiences across Europe. Thank you. Moving on to this year, a big project that we're undertaking within our office is our digital transformation. We recognize that it has been some time since we updated our systems, and we wanted to incorporate state of the art technology across, our internal systems, our customer facing systems, and we wanted to look at our brands. We've redeveloped our brand twice in the twenty six years, since SPACEANDPEOPLE started, so it was time for a refresh.

11:07 So three aspects as you can see from this. In terms of the brands, we will have a clearer proposition about what we do, a new identity, and a better, more consistent market presence. We're updating all of our internal systems, which will lead to a smoother experience and a quicker experience for customers. But it also in terms of the way we put bookings through our system, we're now linking up the marketing to the staff that are doing the bookings, to the compliance side, to accounts. That's also incorporated the use of HubSpot CRM, which enables us to carry out more sophisticated and mass marketing out to potential customers with better data quality.

11:57 You'll also be seeing a new website, a new digital platform, which has been specifically built with the buying customer in mind. They will be able to book their entire way online through our system, something which I believe is completely unique. And they will also be able to research venues online. It gives us twenty four seven access, so it means customers can book at any time of day through our system. And obviously, it incorporates lots of features, new AI features, and web chat. So we're really excited about this. It will be launching in q three of two thousand and twenty six. And then finally, moving on to outlook.

12:44 We are continuing to look at a increase in profitability this year. We're looking to increase profits by 50% again. And as you know, we work in two really exciting sectors which remain very relevant. In a world where everything is going towards automation, many companies are looking for the sort of counterweight to that and that is face to face marketing. And and that is why we're we're so excited about the future of space and people. Face to face activation still remain a very strong part of everyone's marketing strategy. And the other part of business that we're in is pop up retail. And as you know, retailers no longer sign off on twenty six year leases.

13:31 They definitely want flexibility. They want to be in mouse at times that suit them. And they're looking for complete solutions. They haven't always got the ability just to switch on in male retail. We've given them that ability. So we remain very confident about our products. I think it would be naive of me to sit here and say that we're not immune to the stuff that's going on external to space and people. And we're not immune to things that are going on in the wider geopolitical backgrounds. That can cause brands to turn marketing budgets on and off, and that could affect us moving forward. And also, it does mean that we could be subject some of our retailers could be subject to supply chain disruptions.

14:18 So whilst we feel very confident about the things that are within our control as a business, there are obviously some external factors that could affect us moving forward. That completes everything from the formal point of view in the presentation, but we're very happy to take questions. And I can see that there are some being put into the into the chat. So, Gregor, would you mind taking those? Think they're Yep. So couple of financial ones. The first question I see is we've been asked on dividends and share buybacks. They said, hi, guys. Good results. Can you please explain the technical issues around reinstating a dividend? Also, would you consider share buybacks are an alternative?

15:05 So we've put a comment in the I think it was the chair who made a comment this year in the report that we are not doing any dividends just now, and that's because we do get asked this question. So just to head that off, we are cash generative in the the group and in the the parent company just now, which is great, and I've been for a number of years now and will continue to be so. However, we're in a situation where due to writing down the carrying value of intangible assets that we had to do during the COVID period, that has put the, you know, the company into a negative distributable reserves position for the time being. We think it will take us probably about another two years of '26 and '27, to work our way through that to get to a position where we do have distributable reserves.

15:59 And going forward from there, the resumption of a dividend, we always used to pay pre COVID, will be back in the radar, and we will consult with our our board and shareholders about whether that is desirable at that time. But for the time being, we are precluded from doing it unless we converted some nondistributable reserves to that, but we're not considering doing that just now. On the point of share buybacks, we're in the same position because of that lack of distributable reserves. That precludes us from buying our own shares back as well. We started to do that before we went into the COVID period because we do have an EBT that we in the company, we look to buy shares back into to support the future share options that we'd be vesting.

16:52 But again, when the time comes, that would definitely be something that we would consider. The next question is one for Nancy, and the question is, with your industrial leadership hat on, what are advertising services saying about promotional and experiential as a segment to defend against AI and against the backdrop of weakening economic conditions? Okay. Generally, the thought is that there will continue to be growth in experiential marketing. I think I covered this off in my last slide, but I will re go over it. Couple of reasons for that. First of all, it's easy to turn on and turn off experiential activity, and we know that because we're at the the end of that process.

17:42 We get briefs in transacting the following week or the following month. We get very, very little lead time. It's a great tool if weakening in a weakening economic conditions to turn on and off. In that sense, it's a good it's a good media. The second reason that experiential will continue to grow is because of technology. The pictures and the stuff that is streamed from our sites is all used for social media amplification. So we're an important part of technology. But as I also said, brands are looking in a in a very technical and very a very online world. They're looking to get to reach out to people face to face. They're looking for authenticity.

18:28 And as we know, the younger generation are all looking for experiences. That's what they want to spend their money on. So I would say that this side of our business will continue to grow, and I can't see it stopping in the near future. And I hope that answers the question. Thanks, Nancy. The next question, I'm not sure whether Nancy or Andrew would want to answer this one. It's we're being asked, are you seeing any change in client behavior around campaign duration, scale, or pricing pressure? That's an interesting question, and I think the answer to that is no. We the only thing we have seen is the last minute nature of the brand business. We certainly are getting very short notice requests.

19:17 Sometimes we get, a brief in during the week that they want to translate later on that week. And I think that may be reflective of, the economic situation that we're in. And as I said, brand experience can be turned on very, very quickly if you want to. So no, no real change in the duration scale or pricing, but definitely in terms of the notice that brands give us in terms of what they want to do to executing that. Thanks, Nancy. The next question is one for Andrew, which is in Germany, can you talk more about the growth opportunity with the owners of Gropius Fasage and other property owners? Yes. A little bit. The the the opportunity with with exclusive malls is typically with our agreement with ECE, we place one or two retail opportunities in their malls. When we exclusively manage or exclusively work with a a landlord on a shopping center, we place everything in. So that could be up to 10 retail offers and then a brand experience site and acquisition site.

20:29 So the opportunity per mile is much greater. In terms of working with new owners, that's really up to them to to outline their strategy of whether they are looking to to invest in Germany more, I think. Thank you. Next question is would you consider acquisitions with the net cash? I can answer that one. We are we're always looking at opportunities to see if there's anything out there, both in our industry and also in anything which could be adjacent or tangential to us that we think would be a good thing for us. We we have looked at things in the past, but it hasn't been quite the right thing for us to do at that point. But, yes, we will certainly look to consider that as we go forward, whether it's using cash to do it or speaking to our shareholders if it's an opportunity to do something that improves the company's performance and the options going forward, we would definitely do that.

21:37 The next question is how many kiosks can the Daventry Hub realistically support? I'll take that one, I think, Greg. The the obvious answer to that is we don't really want it to support any. We'd rather lay around in shopping centers and stations making us money. There are obviously peaks and troughs. Q four, the run up to Christmas being our busiest time and probably q one, January, February, March being our quietest time. So there is sufficient space in in Daventry depending on the unit because we have different sizes and different uses for units. They could comfortably hold 40 or 50 units.

22:22 And we've just adjust the staffing levels according to the need. I mean, that that isn't an issue for us. If we get more demand for our keels, we'll just start the staffing levels to support that. Yes. Okay. The next question is, could automation reduce head count needs, or is it mainly a sales growth tool? It's it's both with sales growth planned in for this year, and our figures for this year aren't particularly driven by the new technology rollout at all. That will be something we would look to benefit from primarily from 2027 onwards. I think in the first instance, yes, we see it very much as a way for us to grow our revenue. Also, as we look to grow that revenue, what we would like to do is primarily have it that this revenue increase happens without the need for us to recruit additional staff just to support that. What we've been doing over the last year is recruiting a number of high quality staff that can help take us on that journey forward and help drive the business into new areas and with new professionalism.

23:33 So that's what we would definitely look to do, and that would improve our efficiency and improve the the transition from revenue through to profitability by doing that. The next question we have as well is, will the interest charge be lower this year than the 75,000 in 2025? If yes, by how much? Well, yes, we would look for the interest charge to be significantly lower. With having the the overdraft facility in place rather than a term loan where we were having to pay interest all the way through when we had it. Our view is that we would only ever use that overdraft facility if we had to. We would also, at times in the year, look to have money on deposit, which would be earning us interest rather than paying interest out.

24:21 While we we may or may not be in a position where we are breakeven on our interest cost, we would certainly look to be reducing it by, I would say, at least two thirds during this year compared to last year. Shall I take the next one? Yes. Who your One? Sorry? The inorganic growth one? No. The who are your competitors? Oh, sorry. I've missed that one. So, yeah, who are our competitors in The UK and Germany? There are lots of businesses in our market. All are a lot smaller than us, and all are slightly different to us, I believe. We are we have unique products. Rockup is a completely unique product in The UK.

25:10 And in Europe, I would suggest that the only competition comes from the owners themselves rather than any agency. So I hope that's helpful. I mean, obviously, some of our UK property developers have in house teams. So they're also, I suppose you could say, competitive to us. Okay. Do you want to take the next question too, Nancy? Can we scale the business more quickly acquisitions or buying teams or we are always looking at other companies and trying to work out whether they would be a quicker way to scale. And the answer is at the moment, there's nothing that we can see that is interesting to us, but we would never rule that out. Okay. And then the last question we have just now is, what do the board feel about the share price and what plans, if any, do have to increase the valuation from its current level?

26:09 So I can start with that one. Everybody can chip in if So they the our primary focus for the past number of years has been to improve the profitability of the business, increase earnings per share, and see a substantial increase in the share price over that period, which we have done over the last year. The share price has gone up quite significantly. It has come back down in the last couple of days because there appears to have been a large seller in the market, but we are comfortable that once that has been cleared, we should return to a more normalized level. As a board, we are always keen to engage with new potential shareholders or existing shareholders who are interested in taking more.

26:54 We will certainly be out this year looking to market the business and explain it to people at investor forums and things like that. And it's certainly very much a a focus of ours over the coming twelve months and beyond. Nancy, if you got anything you want to add to that? No. I mean, obviously, as you've said, we're gonna be doing an awful lot of marketing and promotion later on this year, and we will make sure that the investment community is also involved in those presentations. We're going through a big transformation over the next twelve months whilst we put in place this digital transformation. So I'm hoping that that will create quite a lot of excitement in the market about potential for SPACEANDPEOPLE.

27:48 Perfect. Thank you guys for answering those questions and for your presentation this afternoon. Before we ask investors to share their feedback, which I know is important to you, Nancy, if I could just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Thank you very much for joining this afternoon. It's Friday afternoon, so we appreciate your time. I hope you can see that we continue our growth trajectory and that we're excited about this year particularly because this is the year when we, as I've said several times, embark on a big digital transformation and a brand relaunch. And we look forward to speaking with you soon. Thank you very much. Brilliant. Thank you, guys, once again. Ladies and gentlemen, could I ask that you don't close the session just yet as you'll now be automatically redirected to a page to give your feedback, which helps the company better understand your views and expectations.

28:38 On behalf of the management team, we'd like to thank you for attending today's presentation. I wish you all a good afternoon. Thank you. Thank you.