SpaceandPeople to shutter S&P+ after disappointing trading

SpaceandPeople reported solid trading in its core and retail businesses on Friday, but flagged the closure of its S&P+ business after some seriously disappointing trading.

The AIM-traded firm said UK and German retail operations are performing in line with expectations, with an increase in venues in the UK as well as a strong pipeline in varying stages of discussion.

It said its reinvigorated POP Retail offer has seen good traction, hitting internal budgets, with the Mobile Promotions Kiosk also seeing success having achieved its 75th installation.

The group’s core UK and German promotion businesses are also trading in line with expectations, with the board expressing pleasure with the revenues being generated under the new Network Rail and British Land contracts.

However, the S&P+ division - which the board said operates in a “niche sector” distinct from the group’s core businesses - has been significantly curtailed and has insufficient prospects in the short and medium term to be profitable.

“S&P+ had planned to book substantial business deals in June which they had been working on for some time,” the board said in a statement.

“These deals have been both delayed and cancelled entirely by clients.

“This has resulted in considerable cash flow constraints for the S&P+ business and the board of SpaceandPeople, which owns 51% of S&P+, does not consider it prudent to continue funding the venture beyond that already provided,” it explained.

It said the closure of S&P+ will have an effect on the group’s consolidated results in 2016, with the loan of £0.43m provided by SpaceandPeople written off as well as around £50k of intercompany debts, resulting in a one-off loss of £0.28m.

The anticipated £0.18m profit that S&P+ was to have contributed will now be a loss of £0.2m, the board said, though it would not have a negative cash impact on the group and the core business will continue to be cash generative.

“Obviously, we are very disappointed about this outcome and understand the impact this will have on the employees of S&P+,” said SpaceandPeople CEO Matthew Bending.

“However, the core UK and German promotions and retail businesses are trading in line with our internal expectations and we are very happy with the development of the MPK programme, the rejuvenation of "POP Retail" and the strong pipeline of UK venues with whom we are in discussion about joining our service.

“We do not see the decision on closing S&P+ as having any negative effect on the core business,” Bending reiterated.