Spaceandpeople (LSE:SAL) — Interim Results

0:01 Good afternoon, ladies and gentlemen. Welcome to the SPACEANDPEOPLE PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it is appropriate to do so. Before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from SPACEANDPEOPLE PLC. Nancy, good afternoon. Good afternoon, and welcome to our results presentation.

0:48 As has been described, we're just gonna be talking about our interim financial statements in this presentation. And the first slide is just a picture of one of our activations, which was a promotion for Rubicon drinks, and was a climbing wall outside Kings Cross Station, and they also sampled a 100,000 drinks during that time. Anybody who doesn't know us, we are the SPACEANDPEOPLE group. We match brands, retailers, and promoters with their target audience across The UK and Europe, set up by myself and a person called Matthew Bending in 2000, listed in 2004. We are market leaders in the sale of venue space across The UK and Germany.

1:34 In 2023, we build £15,000,000 across our business. We've got now 66 members, was 59 at the beginning of the year. Our staff are based in London, Glasgow, and Hamburg. And as we will talk about later in the presentation, we're the exclusive agency representing Network Rail across all its activity on Concourse base. We're also at the forefront of developing new products for our operators such as Rockup and Popup, and we'll talk a bit about that later in the presentation. And during the period that I'm gonna talk about, the first six months of the year, we also, set up a data driven sales tool called Core, which is an insights database which will drive new business onto our service.

2:22 If I can hand over to Gregor to talk about your results. Hey. Good afternoon, everyone. Just looking at a few graphs showing the performance compared to the the past couple of first half years, you'll see that our gross profitability has been improving, and improved quite significantly this year, compared to the first half of twenty twenty three. That in turn led to a very significant decrease in our operating loss, as you'll have been able to see from the interim results, down to roughly a 150,000. For the first half. And what is traditionally our much quieter half of the year compared to when we do our peak trading in the second half.

3:08 That has resulted in the EPS for the the group being significantly better than it has been in the past as well, all on the correct trajectory, and we we feel that it's a strong performance in the first half year compared to what we were expecting. It also shows that our net cash position has improved in a linear fashion for the last couple of years as we continue to repay our debt and generate more cash from trading at the position of each June for twenty two, twenty three, twenty four getting better. And we continue to repay our debt as we as expected even since then. If people are checking back to previous year's results and wondering why revenue figures have been restated, we changed our revenue recognition policy at the end of twenty twenty three for the UK kiosk division, and we started to show that as net revenue rather than gross with the cost of sales in the past. So I can see that one of the questions already asked was about the comparative numbers.

4:17 It's just because they were rebased in order to match. No difference in terms of how that drops down to our gross profit or our earnings for the year. So if we can talk about our operational highlights, obviously, all divisions performed well in h one. Our brand experience business was up 98% year on year. We continue to roll out our full service retail product, and there's a picture of that on the left hand side, which is Iris Art based in Westfield. And we had good kiosk expansion in Germany. A lot of people were asking us this. We were delighted to sign a new five or we will be signing, but it's agreed a new five year contract with Network Rail, which gives us until September 2029.

5:08 And along with that, we also won the Southeast Trains contract for the same period. We also, at the same time, renewed our major contract in Germany, which is the base of all our German business until 2029 as well, and we grew the number of retail units that we put into those centers. One thing that we have done this year as well, we used to run the promotions business in Germany, and we stopped doing that in 2017. We have actually employed someone to start exploring the promotions business again. That is booking BrandX business into Germany and into Europe generally. So that is a a new part of the business for the German team. If we look at UK performance, that was very strong, up 40%, as I said before, driven by a 96% increase in brand experience.

6:01 Booking brands such as Tesla, Chanel, Samsung, so big UK brands going into centers. The first quarter was quite quiet, but actually the second quarter really made up for that. It was incredibly strong, an awful lot of brands booking outdoors over the summer months. Similarly, we've doubled our kiosk revenue of number of rock up and pop up units in the first six months of the year, and we're looking to continue with that, particularly in some of the major London venues such as Westfield, Trafford, and Bluewater. And aligned with that was obviously a bit of an increase in admin expenses, and we employed people to support the growth in sales.

6:47 And, of course, we had additional commission costs because we were selling so much space. In Germany, as Nancy mentioned, delighted to renew the BCE contract for another five years. That's the bedrock of business there, and it it gives us greater access going forward to all of their mouths. So we're currently trading 20 more units. We've traded in h one twenty more units on average than we had the previous year and up 24% revenue. We have been focused on expanding relationships out with ECE. So we've had great positive discussions with CLEPEOPLE, URW, and Hood and others. And that has given us access to more European growth. So selling their MALs in Germany, but also selling their MALs across Europe.

7:41 As Nancy mentioned, we've we've hired the BrandX salesperson who is focused on on BrandX across Europe and promotions, and the picture there is Cadillac. We've had numerous electric car promotions across the state in in Germany. We did our first brand x booking for Playmobil in a mall just outside Paris for by Euro Disney, which was a great success. And we've won our first exclusive mall, so kind of mirroring our model in The UK where we exclusively manage all aspects of commercialization for a shopping center owner, in this case, Eurofund. So we take that centrally in exactly a week or a week and a day on the October 1.

8:27 So we'll be managing all promotions, exhibitions, advertising, brand experiences into that center. So, obviously, when we look at the outlook for the business and looking forward to h two, we will continue to roll out our rock up and pop up service both in The UK and overseas. We're obviously delighted to have that network rail contract, and you can see the scale of the activations, and that's the other fiftieth anniversary on the right. These are huge concourse dominating brand activations that we're running. And, obviously, Andrew alluded to the fact that we are expanding internationally now working with a number of overseas property companies using Germany as a base for that, but hopefully bringing brand experiences and retail into other countries around Germany.

9:24 We're looking currently at The Netherlands, Luxembourg, Czech Republic, Austria, and possibly France, Spain, and Portugal moving forward. So here is the Playmobil promotion that Andrew alluded to that took place in Valdurope. So overall, we've had a really good start to 2024, and that performance did continue over the summer months. It's not just the brand experience division that's performing well. All our divisions are performing well. And, obviously, people were worried about the NR and ECE contracts. Both of those have now been extended for a further five years. We're really focusing now on reducing our debts and improving our balance sheet, but also continuing with the good sales that we've had so far this year.

10:18 Excellent. Have a couple of sheets of them just showing the this the highlights of the income statement and also the cash flow forecast, the cash flow statement, sorry, that's in there. We've had a number of questions since we've come online, and some of them are asking further questions on the the the results of the business. So, probably, I can address those through the questions that that have been asked rather than going through these last two slides in any great detail. We we'll also be available to take any other questions that come after the close of the presentation as well. Hey. Nancy and Andrew, we've had some questions, a lot of good questions, and I think I'll just go through those with you. If if you don't mind, the first one will probably point to both of you, maybe you first, Nancy. But Rob m has asked, with the continued success of rock up and pop up kiosks in The UK and Germany, what feedback has the company received from retailers and landlords in these markets and other opportunities to introduce this concept in additional countries or new types of venues?

11:32 Yeah. Okay. I'll deal with The UK business first. And from a landlord perspective, very much welcomed, and we're bringing new and different products into centers. Our job is to be at the bottom of the retail escalator. People or customers, retailers that come on to our rock up and pop up service, come on at the base of the escalator. Our whole aim is for them to eventually invest in their own kiosk and then ultimately be a unit taker at the center. So UK landlords are very pleased to welcome our service and have done so with open arms. That's why we're in centers such as Tracer, Westfield, Bluewater, etcetera. From the retailer's point of view, as you would expect, it's a brand new business. We've had some huge successes, and we've also had some who haven't done so well.

12:21 But if I can name one, it's the Just Be Honey business, which started off with one retail kiosk in Trafford. The guy had only sold out the boot of a car before and is now in five major UK centers permanently. So, yeah, varying results, but many of them doing extremely well from it. And the third part of that question was, can we do this in Europe? The answer is absolutely yes. And we have just started to look at retailers who we can do that for. Thanks, Nancy. Another question that comes has come in is what material impact, if any, will the resolution of train strikes have on our business? A positive one. The brand experience market was was interrupted.

13:10 It led to bookings being moved and canceled and also uncertainty from brand x agencies who were debating whether to choose a station as a venue or perhaps a city center or a shopping center or another venue. So the resolution of strikes the the strikes is is great news for us. Okay. Thanks, Andrew. There's been a number of questions along the similar lines, so I'll just pick the the highlights out of that for me to answer more around the the numbers and the the results. One of the questions is that could we explain the £830,000 increase in the receivables balance? Yep. That that's fairly straightforward to explain. June 24 was one of the best months that we've had in trading in The UK for a very long time, remarkably buoyant for the time of year as well.

14:08 And that just led to at the end of June, we were owed a significant amount of money for activity that had happened in that month. So it very much increased compared to what we'd seen in June the previous year. That receivable has come in since the half year end, so there's there's no risk to that. It's just as a result of better trading that we've seen that, happen. Another one that's been asked, So two questions that are probably similar to link. Somebody's asking about the net liabilities on our balance sheet, overall or the net current liabilities. Very much the focus of the board of the company that we address that. We took out significant borrowing during the pandemic, and we're in the process of repaying that just now through good cash flow, but also returning to profitability and driving profits in the business.

15:10 That will be our focus for the next few years as well as just driving that to strengthen the balance sheet. And one of the other questions which kinda goes hand in hand with that is I'm being asked about when there's likely to be a resumption in dividend. Although we have historically been a dividend paying company, and we're keen to return to that in the future, for the time being, that's not our main focus. We you will see that we have negative distributable reserves just now, and we we're not intending to try and convert any of our share premium, for the time being, into distributable reserves in order to pay a dividend. We see that it's very much in the company's best interest to improve the balance sheet strength, repay the debt before we get back to there. So much as we are focused on doing that in the future, it certainly won't be in the next couple of years.

16:07 There's also a number of questions as well with people asking how trading has gone since the half year numbers, what q three has looked like, and people looking for some steer on what bookings are looking like in q four if we can see them. Nancy, do you want to answer that? Yeah. So, I mean, we are on target in q three. As we've, I think, previously covered before, 40% of our promotions income or or 45% of our promotions income is booked very late in the day, of six to eight weeks before it activates, which makes q four difficult for us to predict at the moment. However, we are we are feeling positive about the market in general. So, yeah, I mean, without giving a forecast, we are we do have a positive outlook on the business for q four.

17:02 Okay. Thank you. So so I've seen some other questions come in at the bottom as well around about the CBILLS debt that we have and how we are paying that. You'll see from our accounts, we're repaying that at the rate of £322,000 of capital repayment every year, and we've been paying it down in line with that over the last few years. There comes a point in early twenty twenty seven where we have a final pay down, which would be £500,000 at that time, and we would hope to repay that debt, if not before then, certainly, at that point. We are not constrained by our debt and anything we want to do. We currently operate with substantial headroom.

17:51 We also have significant overdraft facilities of three quarters of million pounds, which we never we never go into. We haven't utilized them at all since we since we took them out. So we have plenty of headroom, and we anticipate having even more headroom by the time that comes around. We're paying somebody's asked what we're paying on them. I think the the relevant information's contained within our accounts, especially twenty twenty three year end accounts, and nothing much has or nothing has changed since then in terms of what the rates are on them. We're being asked if we are confident in hitting our full year targets. I think the answer is yes. We are feeling positive about the end of the year.

18:41 Yep. I would say so. We as you've mentioned, Nancy, we'll get more visibility as the as the year progresses, especially into October, and and then to the start of November. And if we've got any information that we want to or or need to update the market with, we will do it at, you know, at the earliest point that we can. The the analysts have have talked about that in terms of what their forecasts are, and they just see potential movement on the upside rather than on the downside now. We haven't felt the need to contradict them on that at all. I think that's it in terms of the questions that we've got. So Perfect. Greg and Nancy, Andrew, if I may just jump back in there. Thank you very much indeed for being so generous of your time and addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended and just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform.

19:46 But, Nancy, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. I think my closing comments will be, it is great to have signed our two benchmark contracts for a further five years. That has been achieved in this this half. It's also great to be making strides in Europe, and we hope to continue that work in the second half of the year. Well, we are continuing in the second half half of the year and into 2025. And as Greg and I have both said, we do feel positive about the end of the year without giving too much detail away. We are feeling like we're on track for our end of year.

20:34 But most of all, I'd like to thank you all for joining, and I hope that this has been a useful session for you. Thank you very much. Perfect. Nancy, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of SPACEANDPEOPLE PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.