PROMOTIONAL group SpaceandPeople saw shares surge by 49 per cent in early trading yesterday before losing some of the gains after the group predicted it would return to sustainable profit in 2017.

After warning on profits in January, the group reported a pre-tax loss of £225,000, reversing a £1m profit the previous year. The loss follows a 15 per cent drop in revenue to £9.7m as the cost of sales also increased.

The revenue dip stemmed largely from the loss of a contract in Germany with shopping centre group ECE, which saw country revenue fall 62 per cent. The group has restructured its remaining contracts with ECE to more realistically reflect revenue sharing and costs at the lower level.

The closure of its S&P+ joint venture, and a pilot in France also made an impact.

In the UK, the group has cut costs to allow it to trade profitably on a lower revenue base.

“These decisions will allow the executive team to focus on the core UK business where there are promising signs of early growth in 2017,” said chairman Charles Hammond.

SpaceandPeople owns and operates spaces within shopping centres, which are used to house retail merchandising units (RMU) and mobile promotional kiosks (MPK).

UK retail sales were up four per cent following an increase in outdoor and food retailing business.

In the UK, the group has highlighted a “good start” to its retail division in 2017, and said its ongoing contract with Network Rail contract has offered further opportunities. A new contract with British Land, along with a contract to deliver commercialisation space in airports will also help drive revenue.

Chief executive Matthew Bending said the presence of the firm’s units in a number of new and important venues. “[This] means we are in a strong and growing position in our market, and there is still considerable scope to grow further,” he said.