Spaceandpeo's (LONDON:SAL) interim results are as expected, with profit before tax around breakeven (H114: loss of £253k). There are only minor changes to our full year expectations following adjustments early in September post the Network Rail contract award and a more cautious stance on prospects for FY16 contract renewals. The pilot project announced today with Immochan (the shopping centre arm of major international retailer Auchan) is small scale, but if successful, further broadens the business base. The valuation is now starting to reflect achievements to date, but not necessarily the scale of the emerging opportunity.
Clarity of direction
The group now has a clear vision of its growth strategy: adding new customers(Network Rail, Immochan); increasing the value per site; and improving commission rates. Immochan designs and manages 370 shopping centres in 12 countries, including 106 in France. The initial trial is with three French centres. With a decline in the numbers of ‘traditional’ Retail Mobile Units in both the UK and Germany, the group has developed and marketed its Mobile Promotion Kiosks (MPK), which give a better, more flexible retail option and deliver an improved margin. On promotional activity, the scale of the Network Rail opportunity more than compensates for reduced prospects on some specific contracts. S&P+, working directly with media planners and agencies, has not matched last year’s performance but has greatly improved the quality of its business, now working with around twenty clients.
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