SPACEANDPEOPLE, the shopping centre marketing specialist, has highlighted growth in Germany and its UK promotions arm as it lifted pre-tax profits by 7.3% to £2.44 million.

The profit rise came in spite of a 22% fall in revenue from its UK retail operation, which sub-lets space to small or start-up companies, for the year to December 31.

Chief executive Matthew Bending said the sales fall reflected a tactical decision to withdraw from lower margin contracts with certain shopping centres.

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The drop in UK retail revenue was also attributed in three venues to the disruption caused by the switch from mobile kiosks to fixed kiosks, declining sales from big buyers of space, notably in gold buying, and an average loss of 31 kiosks.

Mr Bending said: "Although it was showing as a slightly tougher year in retail, it was due to our management, as opposed to external factors."

Mr Bending was buoyed by the group's overall performance, with revenue up 12% to £14.6m on the back of new contract wins with the Garden Centre Group and London venues St Pancras International and One New Change, a development by Land Securities.

Revenue from promotional activity in the UK, which covers the sale of advertising space, was up 9%, while in Germany promotional sales grew by 59% and retail sales by 52%. It added 38 centres to its German portfolio last year.

The company, which works with Buchanan Galleries and Silverburn in Glasgow, proposed a 17% increase in its shareholders' dividend to 4.10p.

Mr Bending said: "We have grown really well in our key markets, particularly in Germany and UK promotions, and we're bringing in new product offerings.

"We're confident 2014 will be better than 2013."

Mr Bending said a deal that was signed at the end of last year with the Garden Centre Group highlights a new approach by the business.

Stating that such deals offer "higher margin business" to SpaceandPeople, it will see it sell space to companies in 143 centres in England and Wales.

He said the company has a similar deal with Dobbies in Scotland, selling space to clients in the home-improvement market such as solar panel and window providers. Mr Bending said: "What's so attractive about it for advertisers is that it is still a very grey-powered demographic.

"To access that demographic is quite expensive to do and they are quite resistant to media messages. That's why a lot of brands want to be positioned in these centres - particularly after the Budget."

Shares in SpaceandPeople closed the day up 0.5p at 146.5p.