SpaceandPeople – business operations

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This SpaceandPeople (LSE:SAL) newsletter will examine the source of sales costs and profits. I’ll start with the basic data on income and cash balances in the past.

Revenue, profits and cash

£000s   2013   2014   2015   2016   2017   2018
Revenue 14,567 15,446 13,814 9,661 9,995 7,939
Cost of sales -4,023 -5,839 -5,685 -4,133 -3,389 -2,886
Gross profit 10,544 9,607 8,129 5,528 6,606 5,053
Administration costs -8,587 -8,696 -7,335 -5,618 -5,640 -5,360
Other operating income 322 224 295 194 210 136
Operating profit before non-recurring costs 2,279 1,135 1,068 104 1,176 -171
Non-recurring costs 0 -391 0 -289 0 -244
Operating profit   2,279   744   1,068   -185   1,176   -415
Finance net income 160 18 -28 -40 -35 0
Tax -648 -166 -197 -44 -237 -282
Profit after tax 1,791 596 864 -269 916 -697
Loss on discontinued 0 0 0 -543 0 0
Profit attributable to owners   1,971   456   831   -660   933   -697
Cash at year end 2,088 2,115 1,723 1,584 2,661 843

Observations:

  • Large decline in revenue and profits over six years, but only two years of losses (the £831,000 of exceptional item losses in 2016 and the 2018 exceptional item loss of £244,000 for the Indian goodwill write-off should really be apportioned to the prior years because the poor spending decisions were taken over a span of years, but not recognised until 2016 and 2018)
  • The average profit attributable to the shareholders is £472,333 over the six years 2013-18 (market capitalisation is £2.4m).
  • Cash holdings consistently high but fell to a six-year low of £843,000 in December 2018.

Cost control evidence

Spaceandpeople has lost many contracts with mall and other owners of high footfall property over the last six years, particularly in Germany.  Some of these customers have been replaced but not enough to stop sales and gross profit from halving.

The rational response of good managers to such large falls is to cut costs in order to remain profitable.  In the table below we have some evidence of the company cutting its cloth according to circumstances it finds itself in.

Number of staff and payments (£000s)

 

  2018   2017   2016   2015   2014   2013   2012
Executive directors 3 3 3 3 3 3 3
NE Directors 2 3 3 3 3 3 3
Administrators 27 32 30 32 26 27 20
Telesales 40 42 60 64 65 70 43
Commercial 12 10 15 24 25 27 20
Maintainance 7 9 7 6 7 9 10
Total workforce 92 99 118 132 129 139

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