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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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