TIDMSAL
RNS Number : 2962R
SpaceandPeople PLC
29 June 2020
SpaceandPeople plc
("SpaceandPeople" or the "Company")
Final results for the year ended 31 December 2019
SpaceandPeople (AIM:SAL) the retail, promotional and brand
experience specialist, is pleased to announce its final results for
the year ended 31 December 2019.
Financial Highlights
Gross revenue of GBP17.3 million (2018: GBP18.8 million)
Net revenue of GBP7.7 million (2018: GBP8.1 million)
Operating profit before non-recurring costs of GBP0.1million
(2018: restated loss of GBP0.05 million)
Basic Earnings per Share before non-recurring costs of 0.4p
(2018: (1.7)p) with no non-recurring costs in 2019
Net cash at year end of GBP0.5 million (2018: GBP0.8
million)
Operational Highlights
New RMU agreements with German shopping centre groups
Successful introduction of Activate! concept in the UK
Revival of the German retail division
Hammerson and ASDA contract wins
Extension to NRIL contract
Chairman's Statement
Whilst this report and accounts cover the period ended 31
December 2019, it is the period since mid-March this year which has
dominated events not just at your company but also the global
economy.
It is against this backdrop that we report on last year which
had a number of positive outcomes including a return to
profitability, contract renewals in the UK and significant progress
in Germany.
During the first half of 2020 management's focus has been on
ensuring the business survives the impact of COVID-19 and the
lockdown measures which have been imposed by government to control
the pandemic. As we now begin to emerge from these it is unclear
how quickly and fully the economies of the UK and Germany will
recover. Priorities have therefore been on cost control, cash
management and ensuring the business is in the strongest possible
shape for the uncertain future we face. Matthew Bending's CEO
report covers these in more detail, but accessing additional
financing through CBILS and making use of government furloughing
schemes to strengthen the Group's financial position, keeping in
close contact with property groups and customers and identifying
innovative new products have all been successfully progressed.
During these challenging times, it is my pleasure to welcome two
new Directors to the Board. Andrew Keiller has been a key member of
the management team since joining SpaceandPeople in 2012 and his
appointment to the Board as Client Services Director brings
important insight into our client relationships. Graham Bird has
known SpaceandPeople for some time through his involvement with
Gresham House and is a valuable addition to the non-executive side
of the Board.
There have also been a number of hard decisions which we have
had to make, including not proposing a dividend for the year in
order to preserve the Group's cash.
On behalf of my board colleagues, I would like to thank all
staff and management across the business for their hard work in
2019 and the challenging months of 2020 to date. It is much
appreciated.
George Watt
Chairman
26 June 2020
Chief Executive Officer's Review
Introduction
As you might expect, I would like to start my review with a
summary of the risks that coronavirus poses to the business, the
actions we are taking to mitigate the material impact that is
currently being felt, and the ongoing risks.
It is very clear that the pandemic has had a profound impact on
the economies of the countries in which we operate and that our
major clients in both retail and transport have been at the centre
of it.
Our revenue streams stopped completely and abruptly in the UK,
Germany and India during March 2020. As I write this, the majority
of UK and German shopping centres are reopening, but with lower
footfall at present. This has led to significant issues in our
business that will continue for some time to come.
Decreased footfall and the need for social distancing restrict
the appeal of promotions and the availability of space and of
people in both Shopping Centres and Railway Stations. As a result,
the business has prepared for a substantive downturn in sales for
the duration of the pandemic and beyond by conserving cash,
reducing overheads, cancelling discretionary expenditure and
obtaining additional funding.
At this time it is extremely difficult to calculate the medium
to long term effects that this virus will have on our business, as
both the retail and transport sectors are not running normally in
any sense at the moment.
Our current thoughts are that:
-- any return to shopping malls must be safe and work practices
reflect new health and safety demands;
-- the availability of venues and space within those venues will
be constrained and regionally variable to allow normal
operations;
-- retail operators will be the first to want to return to
venues and will accommodate all necessary working practices in
order to do so; and
-- Brand Experience and customer engagement activities will be
slower to return to normal as the effects of social distancing can
impact on the effectiveness of these activities.
As a business, we took immediate action to respond to the
economic risks arising from the UK and Germany wide lockdowns.
Initially, all staff were quickly mobilised to work remotely from
home, we cancelled the proposed dividend and immediately produced
reforecasts which enabled us to apply swiftly for the
Government-backed Coronavirus Business Interruption Loan Scheme
("CBILS"), where we successfully accessed a GBP1 million
five-year-term loan through this scheme in addition to our existing
facilities. Inclusive of the CBILS loan, the group has access to
GBP2.25 million of bank facilities, through a combination of
committed facilities and overdraft. As at 31 May 2020, GBP1.75
million was drawn and the Group had GBP1.54 million of cash.
We are also now making use of the Job Retention Scheme ("JRS")
to furlough the majority of our UK staff and we are using the
equivalent German scheme to furlough staff there. As we come out of
this period, we will take further appropriate measures to ensure
that the running costs of the business are appropriate for the
scale of the business going forward.
We are clear, however, about our strategy; we have to ensure
that we remain relevant to landlords and space users. We are
adapting quickly and effectively as circumstances develop and from
the beginning of the pandemic, we identified three key stages to
survival.
Pause - Emerge - Thrive
Pause
The first stage was to ensure that the business took all
possible measures to operate efficiently and conserve cash during
the pandemic while striving to meet our commitments to venues,
promoters, retailers and all other stakeholders in the
business.
This has been achieved through a number of actions. We have
taken advantage of state assistance wherever possible, including
salary support schemes, the business interruption loan scheme and
tax authority payment holidays. We have cancelled all discretionary
expenditure including non-essential capital purchases and have
sought to reduce overheads wherever possible, for example, by
reducing office lease costs and suspending minimum income guarantee
payments. We have also cancelled the proposed final dividend for
2019 which alone has allowed us to retain almost GBP150k of cash.
It was very encouraging through this initial phase that we retained
the support of our key clients, promoters, retailers and lenders
and we are grateful to them for this.
Emerge
The main thought behind the Emerge phase of our strategy is
that, as we begin to come out of lockdown, the immediate needs of
our business as well as the needs of our partners will be very
different to the way we normally operate. Cashflow will be a
constraint for a number of parties and the continued need for
social distancing and enhanced health and safety requirements will
change the way we all operate. The availability of space within
venues will also be curtailed and altered.
A key part of the Emerge phase of our strategy is a concept
called "Revive". Clients have experienced an increase in empty shop
units in their venues and we have been actively engaging with them
to help fill these empty units with operators who either cannot
currently use the mall space due to the need for social distancing,
are looking for a route to sell significant levels of stock that
has built up during the lockdown period, or are looking to move
into a new business model (mainly retailers looking to take
advantage of the rates holiday and turnover only deals). This is
intended to be a temporary solution until venues and operators get
back on track and it has been well received by property clients and
a new breed of short term retailers who are looking to trial
conventional brick and mortar shopping locations, maybe for the
first time. We believe that landlord/retailer relationship have to
evolve, as old retailers disappear and new retailers decide whether
to go online or take units in malls. I am confident that
traditional shopping can thrive again, but finding innovative
retailers requires an approach that is not delivered by traditional
leasing agents.
From a standing start, we have brought over 50 new retailers to
the attention of UK landlords, offering attractive models for empty
units on short term leases. These new retailers will have an
opportunity to become established whilst being helped by the
non-domestic rates assistance into 2021. This is a creative and
dynamic concept and shows that SpaceandPeople are yet again at the
forefront of delivering innovation to UK malls. This will also be a
key component of the Thrive phase of our strategy.
Thrive
Through cost reductions, amended business practices, enhanced
liquidity, IT improvements and innovation we have already put in
place a number of the key components of our Thrive strategy. Once
we are more aware of the commercial landscape and the needs and
aspirations of our clients and promoters, we know that we will be
able to adapt in a rapid and flexible way in order to assist and
get business booming again.
Despite the difficulties of this period, it has inspired us to
innovate, remodel our business and prepare to take advantage of the
opportunities it presents.
2019 Performance
For us, 2019 was a year in which considerable effort was
required to maintain performance and I am pleased to report that we
returned to profitability during the year. Although overall gross
revenue decreased from GBP18.8 million to GBP17.3 million, net
revenue showed a more modest decline from GBP8.1 million to GBP7.7
million. Despite this, planned cost savings enabled us to return to
an operating profit of GBP0.1 million, compared with a GBP0.05
million operating loss (before non-recurring items) in 2018. The
environment in UK shopping centres was challenging with a macro
backdrop of multiple retailer failures and commercial property
increasingly under a negative spotlight, exacerbated by
considerable uncertainty from Brexit. However, despite this
landscape we managed to move to profitability and had some notable
highlights.
I was delighted that Hammerson decided to re-join our service
during 2019 and this will allow us to generate additional revenue
in both our UK promotions and retail divisions. It was also great
to have LandSec and M&G Investments, two major clients, extend
long standing contracts. We also added notable individual venues
such as Victoria Place Shopping Centre in London and delivered new
concepts such as Activate!
Activate!
The Activate! programme developed as a result of one of our
major clients wanting more enlivenment than was commercially
available and to be a closer partner to educational, artistic and
voluntary organisations. They challenged us to make these
organisations aware of the opportunities that are available and to
get them excited about how the correct high footfall space could
enable them to engage with the public in a way that was totally new
for them. We have engaged with museums, art galleries, orchestras
and local education institutions amongst others, to introduce them
to using previously prohibitively expensive promotion space as
fantastic recruiting grounds for their engagement programmes. We
achieved nearly 30 Activate! campaigns in 2019 from a standing
start with notable users such as the Imperial War Museum, South
Bank, Natural History Museum, and interactive life drawing classes.
It has been tremendously well received by clients, promoters and
the public alike. We see the expansion of this concept as being an
essential part of rejuvenating the shopping mall offer in the
future and we currently have a significant pipeline of interested
users when malls and stations return to normal operations.
UK Promotions
The UK promotional division delivered Brand Experience and
national retail revenues that were similar or slightly improved
compared with 2018, which is commendable given the challenges the
UK shopping centres industry faced during the year. It is
interesting to note that the number of Brand Experience bookings
transacted during 2019 increased dramatically compared with 2018,
with one client seeing the number of days utilised increase by 20%.
However, the average value of each booking was lower than in the
past and, as a result, revenue remained fairly static.
UK Retail
Within the UK retail division, the average number of Mobile
Promotions Kiosks reduced from 60 in 2018 to 54 during 2019. This
was a result of the sale of some venues to landlords with whom we
do not currently trade. The Retail Merchandising Unit business also
suffered as, in the run up to Christmas, there was a lack of demand
in some of the locations in which we had units available. These
issues affected revenue which decreased from GBP3.1 million in 2018
to GBP2.8 million. At present, it is difficult to predict what
demand will be in 2020 once venues are fully reopened, but we are
working hard to rebuild this business.
Germany
In Germany we saw the expected cessation of almost all
promotional revenue as we continued our focus on building the
retail business. 2019 began with the final removal of a number of
RMUs from ECE malls after the Christmas trading period. During the
first half of 2019, discussions were held with ECE and other venue
owners and it was anticipated that the number of RMUs in operation
would begin to recover over the summer period. Negotiations took
longer than anticipated and the roll-out of additional units did
not commence until the final quarter of the year. This renewed
approach to RMUs from our key German clients led to the number of
units operating in November and December 2019 increasing to 120 and
on more attractive terms than before. We have a strong pipeline of
excellent locations and new retailers for 2020 and beyond who are
keen to start trading when possible.
We had anticipated that in 2020, the German retail division
would achieve an average of between 80 and 100 RMUs in operation
with higher revenue and lower rents generating improved profits.
Although this is not now possible, the good news is that footfall
in German malls has already returned to around 80% of normal and we
currently have 69 units deployed.
Outlook
As a result of the actions we have taken already, we are able to
plan for the future rather than just firefighting current
problems.
We envisage that pop up, kiosk and Revive retail in the UK and
Germany will be prime income drivers seeing the majority of
activity coming back in by the end of the year. Brand Experience,
local business and MPK bookings are likely to be slower and we do
not anticipate them returning to normal levels until during
2021.
We are fortunate that we have an established pipeline of
concepts such as Software as a Service (SaaS) that we will roll out
this year. Our SaaS system has already been developed and I am
pleased to say we are actively engaged with one of our major
clients to roll this out during 2020. Our SaaS product is an asset
management tool designed to allow users to manage activity
throughout their venues in real time. It will link marketing,
commercialisation and retail asset management simultaneously,
improving communication and management oversight and providing
security of operations. We believe that this product is unique in
our market and we see it as a positive opportunity to monetise our
knowledge and experience beyond being viewed as being rewarded
solely for delivering sales.
The return to work will be a stop-start process in the UK in
particular and the physical safety of staff and customers will be
paramount. We would not be discussing the future with any
positivity if it were not for the efforts of the staff and
management of SpaceandPeople, our clients, operators and countless
other people working selflessly to get through this period. I am
grateful for all their efforts and the help that they have
provided.
Matthew Bending
Chief Executive Officer
26 June 2020
Operating and Financial Review
The principal focus of the Group during 2019 was to continue the
concentration of efforts on our core business units of promotions,
Retail Merchandising Units ("RMUs") and Mobile Promotions Kiosks
("MPKs") in both the UK and Germany.
Group revenue was 4% lower than in the previous year, due in
large part to a 20% reduction in German retail revenue as the Group
adopted a new strategic approach for this division, which was
partially offset by a 5% increase in UK promotional revenue.
Despite the decrease in net revenue, the Group delivered an
operating profit of GBP0.1 million compared with an operating loss
before non-recurring costs of GBP0.05 million in 2018. This was as
a result of an 8% reduction in administration expenses compared
with 2018.
UK Retail revenue fell by 7%, as a result of a 22% drop in the
average number of RMUs and MPKs in operation compared with 2018.
This was anticipated in the main as specific contracts came to an
end.
Revenue
Revenue generated in 2019 was GBP7.7 million, which was GBP0.3
million (4%) lower than in the previous year.
UK promotional revenue increased by 5% compared with 2018, to
GBP3.5 million. While trading in the usual revenue streams was
broadly comparable with 2018, the increase resulted from new
revenue streams such as Activate! and consultancy fees and the
exceptionally warm summer of 2018, coinciding with the football
World Cup not being repeated during 2019.
UK retail revenue fell by 7% to GBP2.8 million in 2018, with RMU
revenue down 20% and MPK revenue down 4%. The average number of
RMUs in operation in the UK fell by 32%, however, average income
per RMU increased significantly as a result of both increased rent
in RMUs that remained in situ and significantly higher than average
rents on new RMU locations. The reduction of 10% in MPK numbers was
partially offset by a 5% increase in average rental values.
German promotional revenue decreased by 15% compared with the
previous year to GBP0.3 million as a result of a number of
long-term bookings coming to an end. The remainder of these
bookings will come to an end during 2020 and it is not anticipated
that this division will generate any significant new business for
the foreseeable future.
Revenue in the German retail division fell by 20% as a result of
a 37% drop in the average number of RMUs in operation during the
year to 53 RMUs (2018: 84 RMUs). This was due to the ending of the
previous agreement with ECE in January 2019, which was not renewed
until late 2019, leading to a low number of RMUs being in use for
the majority of the year. The number of RMUs in operation at the
end of 2019 had risen again to 80 units.
Administrative Expenses
Due to a continued focus to drive efficiency in the business,
administrative expenses reduced again in 2019. The 8% reduction of
GBP0.4 million followed a GBP0.3 million (5%) reduction in the
previous year. With the termination of significant office lease
costs occurring in 2020, we will look to continue this trend.
The average number of people employed in the business fell by 12
to 80 in 2019. This was primarily due to a reduction in the number
of telesales and commercial staff from 52 to 41, following the
wind-down of the German promotional business and a decrease in the
number of UK commercial staff.
Profit
The operating profit of GBP0.1 million represented an
improvement of GBP0.4 million on the previous year (2018: loss of
GBP0.3 million).
Basic Earnings per Share ("EPS") increased to 0.4p (2018:
negative 1.7p). Fully diluted EPS increased to 0.3p (2018: negative
1.5p). Basic EPS is calculated as profit after tax and before
non-recurring costs attributable to the owners of the Company
divided by the weighted average number of shares in issue during
the year which was 19,519,563 (2018: 19,519,563). Fully diluted EPS
also takes into account the number of shares that would be issued
on the exercise of outstanding share options. The weighted average
number of shares used to calculate the diluted EPS was 20,990,883
(2018: 21,548,024).
Cash Flow
The Group cash inflow from operating activities was GBP0.2
million (2018: outflow of GBP1.4 million). This was due to EBITDA
being GBP0.6 million. During the year GBP0.6 million was added to
non-current assets as the addition of GBP0.6 million of right of
use leased assets was capitalised on the balance sheet in
accordance with IFRS 16. A dividend of GBP0.1 million was also paid
during the year. As at the end of 2019, the Group had drawn down
GBP0.75 million of its banking facility resulting in the gross cash
position being GBP0.4 million higher at the end of 2019 than 2018,
and the net cash position being GBP0.3 million lower.
Prior Period Adjustment
In January 2020, management discovered that there had been an
error in the collection of revenue receivable by the Company in
relation to one client. This error related to both the year to 31
December 2019 and the earlier period. As a result of this, a
correction has been made to the comparative year revenue, accruals
and corporation tax charge, with revenue increasing by GBP118k and
a corporation tax charge of GBP22k. The client has subsequently
cash settled the full amount.
COVID-19
On 19 March 2020, the Group announced its previously proposed
final dividend of 0.75p per share at the upcoming Annual General
Meeting was being removed as a result of actions being taken to
protect the business and preserve cash as a result of COVID-19.
In addition to the cancellation of the dividend, the Group has
taken advantage of the JRS in the UK and the equivalent scheme in
Germany in order to furlough the majority of staff during this
period. Actions were also carried out with our clients, retailers
and promoters to suspend payments where appropriate and to support
each other through this period in as best a manner as possible. The
Group has also accessed a GBP1.0 million five-year term loan
through CBILS which provides significant headroom and certainty for
the business going forward.
Gregor Dunlay
Chief Financial Officer
26 June 2020
Consolidated Statement of Comprehensive Income
For the 12 months ended 31 December 2019
Notes
12 months to 12 months to
31 December '19 31 December '18
as restated
GBP'000 GBP'000
Revenue 4 7,735 8,057
Cost of sales 4 (2,865) (2,886)
Gross profit 4,870 5,171
Administration expenses (4,955) (5,360)
Other operating income 175 136
Operating profit/(loss)
before non-recurring costs 90 (53)
Non-recurring costs 8 - (244)
Operating profit/(loss) 90 (297)
---------------- ----------------
Finance income 4 7
Finance costs 9 (23) (7)
Profit/(loss) before taxation 71 (297)
---------------- ----------------
Taxation 10 (21) (304)
Profit/(loss) after taxation 50 (601)
-------------- --------------
Other comprehensive income
Foreign exchange differences
on
translation of foreign
operations (21) (5)
Total comprehensive income
for the period 29 (606)
-------------- --------------
Profit/(loss) for the
year attributable to:
Owners of the Company 68 (578)
Non-controlling interests (18) (23)
-------------- --------------
50 (601)
-------------- --------------
Total comprehensive income
for the
period attributable to:
Owners of the Company 47 (583)
Non-controlling interests (18) (23)
-------------- --------------
Total comprehensive income
for the 29 (606)
-------------- --------------
Period
Earnings/(loss) per share 25
Basic - Before non-recurring
costs 0.4p (1.7)p
Basic - After non-recurring
costs 0.4p (3.0)p
Diluted - Before non-recurring
costs 0.3p (1.5)p
Diluted - After non-recurring
costs 0.3p (2.7)p
Consolidated Statement of Financial Position
At 31 December 2019
Notes 31 December '19 31 December '18
as restated
GBP'000 GBP'000
Assets
Non-current assets:
Goodwill 13 7,981 7,981
Other intangible assets 14 - 4
Property, plant & equipment 15 894 849
8,875 8,834
Current assets:
Trade & other receivables 17 3,428 3,553
Cash & cash equivalents 18 1,227 843
---------------- ----------------
4,655 4,396
Total assets 13,530 13,230
---------------- ----------------
Liabilities
Current liabilities:
Trade & other payables 19 3,259 3,559
Current tax payable 19 82 219
3,341 3,778
Non-current liabilities:
Deferred tax liabilities 16 (3) 101
Lease liabilities 21 160 -
Other borrowings 20 750 -
907 101
Total liabilities 4,248 3,879
---------------- ----------------
Net assets 9,282 9,351
---------------- ----------------
Equity
Share capital 23 195 195
Share premium 4,868 4,868
Special reserve 233 233
Retained earnings 3,771 3,822
Equity attributable to
owners of the 9,067 9,118
Company
Non-controlling interest 215 233
---------------- ----------------
Total equity 9,282 9,351
---------------- ----------------
The financial statements were approved by the Board of Directors
and authorised for issue on 26 June 2020.
Signed on behalf of the Board of Directors by:
M J Bending - Director
Consolidated Statement of Cash Flows
For the 12 months ended 31 December 2019
Notes 12 months to 12 months to
31 December '19 31 December '18
as restated
GBP'000 GBP'000
Cash flows from operating
activities
Cash generated from operations 252 (1,367)
Interest received 9 4 7
Interest paid 9 (23) (7)
Taxation (262) (51)
Net cash outflow from
operating (29) (1,418)
activities
---------------- ----------------
Cash flows from investing
activities
Purchase of intangible
assets 14 (1) -
Purchase of property,
plant & equipment 15 (47) (107)
Net cash outflow from
investing (48) (107)
activities
---------------- ----------------
Cash flows from financing
activities
Bank facility drawn 750 -
Payment of finance lease (191) -
obligations
Dividends paid 12 (98) (293)
---------------- ----------------
Net cash inflow/(outflow)
from 461 (293)
financing activities
---------------- ----------------
Increase/(decrease) in
cash and cash equivalents 384 (1,818)
Cash and cash equivalents
at beginning of 843 2,661
Period
---------------- ----------------
Cash and cash equivalents
at end of 18 1,227 843
period
---------------- ----------------
Reconciliation of operating
profit to net
cash flow from operating
activities
Operating profit/(loss) 90 (297)
Write off of goodwill 13 - 244
Amortisation of intangible
assets 14 5 11
Depreciation of property,
plant & 15 551 405
equipment
Effect of foreign exchange
rate moves (13) (5)
(Increase) / decrease
in receivables 125 (304)
Decrease in payables (506) (1,421)
------ --------
Cash inflow/(outflow)
from operating activities 252 (1,367)
------ --------
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2019
Share Share Special Retained Non- Total
capital premium reserve Earnings controlling equity
GBP'000 GBP'000 GBP'000 GBP'000 interest GBP'000
GBP'000
At 31 December
2017 195 4,868 233 4,698 256 10,250
Comprehensive
income:
Foreign currency
translation - - - (5) - (5)
Loss for the
period as restated
* - - - (578) (23) (601)
-------- -------- -------- --------- ------------ --------
Total comprehensive - - - (583) (23) (606)
income
Transactions
with
owners:
Dividends paid - - - (293) - (293)
-------- -------- -------- --------- ------------ --------
Total transactions
with - - - (293) - (293)
owners
As at 31 December
2018 as restated
* 195 4,868 233 3,822 233 9,351
-------- -------- -------- --------- ------------ --------
As at 31 December
2018 as originally
stated 195 4,868 233 3,726 233 9,255
-------- -------- -------- --------- ------------ --------
Prior period
adjustment - - - 96 - 96
-------- -------- -------- --------- ------------ --------
Restated total
equity as at
31 December 2018 195 4,868 233 3,822 233 9,351
-------- -------- -------- --------- ------------ --------
Comprehensive
income:
Foreign currency
translation - - - (21) - (21)
Profit/(loss)
for the period - - - 68 (18) 50
---- ------ ---- ------ ----- ------
Total comprehensive - - - 47 (18) 29
income
Transactions
with
owners:
Dividends paid - - - (98) - (98)
---- ------ ---- ------ ----- ------
Total transactions
with - - - (98) - (98)
owners
At 31 December
2019 195 4,868 233 3,771 215 9,282
---- ------ ---- ------ ----- ------
* See note 7 for details regarding the restatement as the result of an error.
Notes to the Financial Statements
For the 12 months ended 31 December 2019
1. General information
SpaceandPeople plc is a public limited company incorporated and
domiciled in Scotland (registered number SC212277) which is listed
on AIM (dealing code SAL).
2. Basis of preparation
The Group's financial statements for the period ended 31
December 2019 and for the comparative period ended 31 December 2018
have been prepared on a going concern basis under the historical
cost convention in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU)
and International Financial Reporting Interpretations Committee
(IFRIC) interpretations, and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Going Concern
The Directors are required to prepare the statutory financial
statements on the going concern basis unless it is inappropriate to
presume that the group will continue in business. In satisfaction
of this responsibility the Directors have considered the Group 's
ability to meet its liabilities as they fall due.
The Group meets its day to day cash requirements through working
capital management and the use of existing bank overdraft and
revolving credit facilities. Management information tools including
budgets and cash flow forecasts are used to monitor and manage
current and future liquidity.
The Group also pays special attention to the recent COVID-19
outbreak and the associated impact on the business, which is
detailed within the Chief Executive Officer's Review. This
includes:
- The availability of venues and space to sell on behalf of our customers
- Interruption to operations due to an absence of staff for a
period due to either contracting the virus or measures taken to
contain an outbreak in our offices;
- A fall in revenue and decreased cash flow due to lower general
economic activity throughout the UK and Germany.
Although it is not possible to reliably estimate the length or
severity of the outbreak, at the date of signing, the restrictions
on mobility are easing and non-essential shops and retail areas are
starting to re-open. However, the Group acknowledges this could
change suddenly depending on how the situation evolves and whether
there are interruptions to business or supply as detailed
above.
The current and future financial position of the Group, its cash
flows and liquidity position have been reviewed by the Directors.
They have taken a very prudent view on the likely gradual recovery
in each of the Group's divisions and have stress tested these
assumptions to ensure that cash flows and liquidity are
sufficiently robust to allow the Group to continue to trade during
this period.
The Group is managing its cash flows prudently through a number
of methods, including:
-- The Job Retention Scheme ("JRS") in the UK and the German equivalent for staff based there;
-- Implementing planned and additional overhead reductions as timeously as possible;
-- Accessing a GBP1.0 million term loan through the CBIL scheme;
-- Agreeing the deferral of VAT and PAYE with HMRC;
-- Suspension of minimum income guarantees with landlords;
-- Cancellation of the proposed final dividend; and
-- Halting planned capital expenditure.
As a result of reduced trading following the COVID-19 outbreak
the Group's bankers agreed to waive existing lending covenants for
quarters 2 and 3. New covenants are currently being negotiated with
the bank and while at the date of signing these have still to be
finalized, the Group's bankers have expressed their desire to
continue to support the business and are working towards agreeing
appropriate covenants that will reflect the new trading environment
anticipated after COVID-19.
The Directors are confident that the additional funding
facilities and support from our bankers will provide sufficient
headroom to meet the forecast cash requirements, having considered
any additional requirements as a result of trading being lower than
the revised forecasts and further mitigation that they could put in
place to counter this (specifically in relation to the COVID-19
pandemic). The Group's current and long-term forecast outlook has
provided further assurance to the Directors regarding its financial
position.
As such, the Directors consider that it is appropriate to
prepare the financial statements on the going concern basis.
Accounting developments
New and revised IFRSs applied
Title Implementation Effect on Group
IFRS 15 - "Revenue Annual periods beginning There is no effect
from Contracts with on or after 1 January on the Group financial
Customers" 2019 statements as a result
of the implementation
of this standard.
IFRS 16 - "Leases" Annual periods beginning The new standard requires
on or after 1 January capitalisation of
2019 all leasing agreements
with durations exceeding
12 months, whereas
the previous regulations
only required capitalisation
of finance leases.
The right-of-use asset
and liability to be
recognised for each
leasing agreement
is the present value
of the lease payments.
The Group has adopted
IFRS 16 retrospectively
from 1 January 2019
using the modified
retrospective approach,
as permitted under
the specific transitional
provisions in the
standard. As such,
the comparative information
presented for 2018
has not been restated.
This is detailed in
note 21.
The following amendments will be introduced in future
periods
Title Implementation Effect on Group
Amendments to 'References Annual periods beginning The Board does not
to the Conceptual on or after 1 January anticipate any material
Framework in IFRS 2020 impact on the financial
Standards' statements.
Interest Rate Benchmark Annual periods beginning The Board does not
Reform (Amendments on or after 1 January anticipate any impact
to IFRS 9, IAS 39 2020 on the financial statements.
and IFRS 7)
Definition of a Business Annual periods beginning The Board does not
(Amendments to IFRS on or after 1 January anticipate any impact
3) 2020 on the financial statements.
Definition of Material Annual periods beginning The Board does not
(Amendments to IAS on or after 1 January anticipate any impact
1 and IAS 8) 2020 on the financial statements.
Management anticipates that the standards and interpretations in
issue, but not yet effective will be adopted in the financial
statements when they become effective and currently foresee no
material impact by the adoptions on the financial statements of the
Group in the period of initial application. However, this will be
assessed further upon implementation.
3. Accounting policies
Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
period are included in the consolidated statement of comprehensive
income from the effective date of acquisition and up to the
effective date of disposal, as appropriate. Total comprehensive
income of subsidiaries is attributed to the owners of the Company
and to the non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Goodwill
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units (or groups of
cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount of any
goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the
unit. Any impairment loss of goodwill is recognised directly in the
consolidated statement of comprehensive income. An impairment loss
recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
The Group's policy for goodwill arising on the acquisition of an
associate is described below.
Investments in subsidiaries
The parent Company's investments in subsidiary undertakings are
included in the Company statement of financial position at cost,
less provision for any impairment in value.
Revenue
Revenue is measured at the fair value of consideration received
or receivable. Revenue is shown net of value-added tax, rebates and
discounts and after eliminating intergroup sales. Revenue is
recognised when the amount of revenue can be measured reliably, it
is probable that future economic benefits will flow to the Group
and when any specific delivery criteria have been met.
Promotion divisions
Revenue in the UK and German promotion divisions is recognised
at the point at which bookings, including future dated bookings,
are agreed by all parties. This policy is adopted as our
contractual right to commission income is crystallised at this
point.
Retail divisions
Revenue in the UK and German retail divisions is recognised in
the month during which the booking takes place. This is due to the
requirement to match the revenue stream with the rental cost
incurred with the landlord.
Commission
Revenue from commission receivable while acting as agent is
recognised when the following conditions are satisfied;
- Contract is agreed with promoter / merchant
- Venue acceptance of contract
- Invoice issued and no further input anticipated
Acting as principal
Revenue from agreements where we act as principal i.e. renting
space from venues and reselling to promoters and operators, is
recognised as gross revenue receivable by us, with the
corresponding amount payable to the venue owner being recognised in
cost of sales.
Leasing income
Revenue from leasing activities is recognised on a straight-line
basis over the term of the lease.
Licence fees
Licence fee revenue is recognised on an accrual basis in
accordance with the substance of the relevant agreement.
Interest income
Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the asset's net carrying
amount on initial recognition.
Leasing
IFRS 16 requires capitalisation of all leasing agreements with
duration exceeding 12 months, whereas the previous regulations only
required capitalisation of finance leases. The right-of-use asset
and liability to be recognised for each leasing agreement is the
present value of the lease payments.
The Group has adopted IFRS 16 retrospectively from 1 January
2019 using the modified retrospective approach, as permitted under
the specific transitional provisions in the standard. As such, the
comparative information presented for 2018 has not been
restated.
The Group applied the following practical expedients as
permitted by the standard on transition:
-- non recognition of right of use assets and liabilities for
leases of low value or for which the lease term ends within 12
months of the date of transition
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- the exclusion of initial direct costs for the measurement of
the right of use asset at the date of initial application
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
On transition the Group recognised lease liabilities in relation
to leases classified as operating leases under the principles of
IAS 17 Leases. These were measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate as at 1 January 2019.
The associated right of use assets were measured at the amount
equal to the lease liability, adjusted for any prepaid or accrued
lease payments relating to that lease recognised on balance sheet
as at 31 December 2018. There were no onerous lease contracts that
required an adjustment to the right of use assets at the date of
initial application.
At inception, the Group assesses whether a contract is, or
contains, a lease within the scope of IFRS 16. A contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. Where a tangible asset is acquired through a lease,
the Group recognises a right-of-use asset and a lease liability at
the lease commencement date. Right-of-use assets are included
within property, plant and equipment.
The right-of-use asset is initially measured at cost, which
comprises the present value of minimum lease payments determined at
the inception of the lease. The right-of-use asset is subsequently
depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same
basis as those of other property, plant and equipment. The
right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease
liability.
The lease liability is initially measured at the present value
of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Lease payments included in the measurement of the
lease liability comprise fixed payments, variable lease payments
that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that
the Group is reasonably certain to exercise, such as the exercise
price under a purchase option, lease payments in an optional
renewal period, or penalties for early termination of a lease.
The lease liability is remeasured when there is a change in:
future lease payments arising from a change in an index or rate;
the Group's estimate of the amount expected to be payable under a
residual value guarantee; or the Group's assessment of whether it
will exercise a purchase, extension or termination option. When the
lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use
asset, or is recorded in profit or loss if the carrying amount of
the right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less, or for leases of low-value assets
including IT equipment. The payments associated with these leases
are recognised in profit or loss on a straight-line basis over the
lease term.
The Group has made judgements in adopting IFRS 16 such as
identifying contracts in scope for IFRS 16, determining the
interest rate used for the discounting of future cashflows, and the
determining lease terms where the lease has extension or
termination options.
Property, plant & equipment
Depreciation is provided at the annual rates below in order to
write off each asset over its estimated useful life.
Plant & equipment - 12.5% of cost
Fixtures & fittings - 25% of cost
Computer equipment - 25% of cost
Computer software - 33% of cost
Property, plant & equipment is stated at cost less
accumulated depreciation to date.
Intangible assets
Website development costs
The Group capitalises all costs directly attributable to further
developing its websites, while costs which relate to on-going
maintenance are expensed as they arise. The capitalised costs are
depreciated over three years.
Patents and trademarks
The costs of obtaining patents and trademarks are capitalised
and written off over the economic life of the asset acquired.
Impairment of non-current assets
The need for any non-current asset impairment is assessed by
comparison of the carrying value of the asset against the higher of
realisable value and the value in use or, in the case of intangible
assets, the anticipated future cash flows arising from the
asset.
Taxation
The tax expense represents the sum of tax currently payable and
deferred tax. Tax currently payable is based on the taxable profit
for the period. The Group's liability for current tax is calculated
using rates that have been enacted or substantially enacted at the
balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
computation of taxable profits and is accounted for using the
liability method. Deferred tax liabilities are recognised for all
temporary timing differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition, other
than in a business combination, of other assets and liabilities in
a transaction that affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted at the
balance sheet date. Deferred tax is charged or credited in the
income statement, except when it relates to items charged or
credited in other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
Foreign exchange
Items included in the Group's financial statements are measured
using Pounds Sterling, which is the currency of the primary
economic environment in which the Group operates and is also the
Group's presentational currency.
Transactions denominated in foreign currencies are translated
into Sterling at the rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are translated at the rates at that date.
These translation differences are dealt with in the profit and loss
account.
The income and expenditure of overseas operations are translated
at the average rates of exchange during the period. Monetary items
on the balance sheet are translated into Sterling at the rate of
exchange ruling on the balance sheet date and fixed assets at
historical rates. Exchange difference arising are treated as a
movement in reserves.
Financial instruments
Financial assets and liabilities are recognised in the Group's
balance sheet when it becomes a party to the contractual provisions
of the instrument.
Trade and other receivables
Trade and other receivables are carried at original invoice
value less an allowance for any uncollectable amounts. An allowance
for bad debts is made when there is objective evidence that the
Group will not be able to collect the debts. Bad debts are written
off in the income statement when identified.
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at
cost and comprise cash in hand, cash at bank and deposits with
banks.
Trade and other payables
Trade and other payables are carried at amortised costs and
represent liabilities for goods or services provided to the Group
prior to the period end that are unpaid and arise when the Group
becomes obliged to make future payments in respect of these goods
and services.
Equity instruments
Equity instruments issued by the Group are recorded at the
proceeds received, net of direct issue costs.
Share based payments
The Group operates a number of equity settled share-based
payment schemes under which share options are issued to certain
employees. The fair value determined at the grant date of the
equity settled share-based payment, where material, is expensed on
a straight-line basis over the vesting period. For schemes with
only market-based performance conditions, those conditions are
taken into account in arriving at the fair value at grant date.
Pensions
The Group pays contributions to the personal pension schemes of
certain employees. Contributions are charged to the income
statement in the period in which they fall due.
Critical accounting judgements and estimates
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of income and
expenditure during the period. Although these estimates are based
on management's best knowledge of current events and actions,
actual results may differ from those estimates. IFRS also requires
management to exercise its judgement in the process of applying the
Group's accounting policies.
The areas where significant judgements and estimates have been
made in the preparation of these financial statements are the
useful lives and impairment of non-current and intangible assets,
impairment of the value of investment in associates and taxation.
Explanations of the methodology and the resultant assumptions are
detailed in the relevant accounting policies above and the
respective notes to the financial statements.
Borrowing costs
Borrowing costs are amortised over the duration of the loan and
recognised throughout the term of the loan.
4. Segmental reporting
The Group maintains its head office in Glasgow and a subsidiary
office in Hamburg, Germany. These are reported separately. In
addition, the retail business, now trading as POP Retail, has an
office in London and a subsidiary in Germany. The Group has
determined that these are the principal operating segments as the
performance of these segments is monitored separately and reviewed
by the Board.
The following tables present revenues, results and asset and
liability information regarding the Group's two core business
segments - Promotional Sales and Retail, split by geographic area,
after licence fees and management charges made between Group
companies. The Other segment incorporates SpaceandPeople India.
Segment revenues Promotion Promotion Retail Retail Head Other Group
and
Results UK Germany UK Germany Office
for 12 months GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
to
31 December '19
Revenue 3,519 312 2,839 993 - 72 7,735
Cost of sales - - (2,160) (705) - - (2,865)
Administrative
expenses (2,436) (303) (272) (986) (841) (117) (4,955)
Other revenue - 74 - 101 - - 175
Segment operating
profit/(loss) 1,083 83 407 (597) (841) (45) 90
Finance income - - - - - 4 4
Finance costs (23) - - - - - (23)
Segment profit/(loss) 1,060 83 407 (597) (841) (41) 71
before taxation
------------ ------------ --------- --------- -------- -------- --------
Segment assets Promotion Promotion Retail Retail Other Group
and
liabilities UK Germany UK Germany
as at 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
'19
Total segment
assets 7,225 285 4,714 738 568 13,530
Total segment
liabilities (2,897) (72) (764) (489) (26) (4,248)
Total net assets 4,328 213 3,950 249 542 9,282
---------- ---------- -------- -------- -------- --------
Segment revenues Promotion Promotion Retail Retail Head Other Group
and results
for
12 months UK Germany UK Germany Office
to
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
'18
as restated
Revenue 3,356 369 3,062 1,236 - 34 8,057
Cost of sales - - (2,252) (634) - - (2,886)
Administrative
expenses (2,609) (582) (316) (934) (830) (89) (5,360)
Other revenue - 60 - 76 - - 136
Non-recurring
costs (244) - - - - - (244)
Segment operating
profit/(loss) 503 (153) 494 (256) (830) (55) (297)
Finance income - - - - - 7 7
Finance costs (7) - - - - - (7)
Segment profit/(loss) 496 (153) 494 (256) (830) (48) (297)
before taxation
-------- ---------- -------- -------- -------- -------- --------
Segment assets Promotion Promotion Retail Retail Other Group
and
liabilities UK Germany UK Germany
as at 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
'18
as restated
Total segment
assets 6,819 469 4,676 599 667 13,230
Total segment
liabilities (1,968) (495) (1,051) (316) (49) (3,879)
Total net assets 4,851 (26) 3,625 283 618 9,351
---------- ---------- -------- -------- -------- --------
5. Operating profit/(loss)
The operating profit/(loss) is stated after charging:
12 months 12 months
to to
December '19 December '18
GBP'000 GBP'000
Motor vehicle leasing * - 56
Property leases * - 240
Amortisation of intangible
assets 5 11
Depreciation of property,
plant and equipment 350 405
Depreciation of right of 201 -
use assets
------------- -------------
556 712
------------- -------------
Auditor's remuneration:
Fees payable for:
Audit of Company 23 25
Audit of subsidiary undertakings 17 19
Tax services 13 4
Other services 18 25
------------- -------------
71 73
------------- -------------
Directors' remuneration 525 532
------------- -------------
* 2019 disclosed in note 21
6. Staff costs
The average number of employees in the Group during the period
was as follows:
12 months 12 months
to to
December '19 December '18
Executive Directors 3 3
Non-executive Directors 2 3
Administration 27 27
Telesales 33 40
Commercial 8 12
Maintenance 7 7
------------- -------------
80 92
------------- -------------
12 months 12 months
to to
December '19 December '18
GBP'000 GBP'000
Wages and salaries 2,960 3,212
Social Security costs 361 440
Pensions 75 208
------------- -------------
3,396 3,860
------------- -------------
Details of Directors' emoluments, including details of share
option schemes, are given in the remuneration report on pages 22 to
23. These disclosures form part of the audited financial statements
of the Group.
7. Prior period adjustment
A prior period adjustment has been recorded to reflect the
impact of revenue under recognised in the previous period as a
result of a material error in the application of contract terms in
the revenue calculation. The full amount of this revenue has been
recovered.
As such an adjustment has been made to include the comparative
years revenue, accruals and corporation tax. Revenue was increased
by GBP118k with a corresponding tax effect of GBP22k giving a net
impact of GBP96k in the prior period. In January 2020, management
identified an error in the calculation of revenue receivable in
respect of the year to 31 December 2019 and the earlier period. As
such a correction has been made to the comparative year revenue,
accruals and corporation tax. Revenue has increased by GBP118k with
a corporation tax effect of GBP22k.
8. Non-recurring costs
During the prior period, the Group took the decision to write
off GBP244k, being the carrying value of the goodwill relating to
SpaceandPeople India Pvt Ltd as the level of profitability in that
company no longer supported the valuation.
9. Finance income and costs
12 months 12 months to
to
December '19 December '18
GBP'000 GBP'000
Finance income:
Interest receivable 4 7
Finance costs:
Interest payable (23) (7)
10. Taxation
12 months 12 months
to to
December December '18
'19 as restated
GBP'000 GBP'000
Current tax expense:
Current tax on profits for the year 130 106
Adjustment for under/(over) provision
in prior periods (4) 13
---------- -------------
Total current tax 126 119
Foreign tax:
Current tax on foreign income for 46 -
the period
Adjustment for under/(over) provision
in prior periods (47) 175
---------- -------------
Total foreign tax (1) 175
Deferred tax:
Charge in respect of temporary timing
differences (19) 10
Adjustment for under/(over) provision
in prior periods (85) -
---------- -------------
Total deferred tax (104) 10
Income tax expense as reported in
the Income Statement 21 304
---------- -------------
The tax assessed for the period is lower than the standard rate
of corporation tax in the UK. The differences are explained
below:
12 months 12 months
to to
December December '18
'19 as restated
GBP'000 GBP'000
Profit/(loss) on ordinary activities
before tax 71 (297)
---------- -------------
Profit on ordinary activities at
the standard rate of corporation
tax in
the UK of 19% (2018: 19%)
Jan - Dec 2018: 19% - (57)
Jan - Dec 2019: 19% 13 -
Tax effect of:
- Adjustment for (over)/under provision
in prior periods (136) 188
- Disallowable items 5 173
- Tax losses 139 -
Income tax expense as reported in
the Income Statement 21 304
---------- -------------
11. Profit for the period
The Company has taken advantage of the exemption allowed under
Section 408 of the Companies Act 2006 and has not presented its own
Income Statement in these financial statements. The Group profit
for the period includes a Company profit after tax and before
dividends of GBP159k after the incorporation of all UK head office
costs (2018 restated loss: GBP382k) which is dealt with in the
financial statements of the parent Company.
12. Dividends
12 months to 12 months to
December '19 December '18
GBP'000 GBP'000
Paid during the period 98 293
Recommended final dividend - 98
Equity - The Directors do not recommend a final dividend for
2019 (2018: 0.50p).
13. Goodwill
Cost GBP'000
At 31 December 2017 8,225
Additions -
--------
At 31 December 2018 8,225
Additions -
--------
At 31 December 2019 8,225
--------
Accumulated impairment losses
At 31 December 2017 -
Charge for the period 244
----
At 31 December 2018 244
Charge for the period -
At 31 December 2019 244
----
Net book value
At 31 December 2017 8,225
------
At 31 December 2018 7,981
------
At 31 December 2019 7,981
------
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating units (CGUs) that are expected
to benefit from that business combination. The Directors consider
that the businesses of the UK Retail sub group and SpaceandPeople
India Pvt Limited are identifiable CGUs and the carrying amount of
Goodwill is allocated against these CGUs. During 2018 it was
decided that the value of the goodwill in SpaceandPeople India Pvt
Limited of GBP244,000 should be impaired in full. Goodwill for the
UK Retail sub group remains unchanged at GBP7,981,000.
The recoverable amount of the cash generating unit was
determined based on value-in-use calculations, covering a detailed
forecast, followed by an extrapolation of expected cash flows based
on the targeted and expected growth rate over the next five years
followed by a terminal factor determined by management.
The present value of the future cash flows is then calculated
using a discount rate of 7.38%. This discount rates include
appropriate adjustments to reflect, in the directors judgement, the
market risk and specific risk of the GGU.
The growth rate utilised in calculation of the terminal factor
is based on expected inflationary growth in the UK beyond the
period of forecasting. The growth rate used was 1.5%.
Cash flow projections during the budget period are based on an
average growth in EBITDA which the Directors consider to be
conservative given the plans for the businesses and the potential
increased returns particularly in relation to the pipeline of new
business opportunities, offset by the short and medium term issues
caused by COVID-19. The discount rates reflect appropriate
adjustments relating to market risk and specific risk factors of
each CGU.
The estimate of recoverable amount for the CGU is sensitive to
the discount rate, the cash flow projections and the growth
rate.
If the discount rate used is increased beyond 7.0%, for each
further movement of 1% an impairment loss of GBP0.5 million would
have to be recognised and written off against goodwill.
If the annual growth rate beyond 2021, used in the cash flow
projection, is decreased below 3.5%, for each further movement of
1% an impairment loss of GBP0.2 million would have to be recognised
and written off against goodwill.
14. Other intangible assets
Cost Website Product Patents Total
&
development development trademarks
GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 284 137 115 536
Additions - - - -
At 31 December
2018 284 137 115 536
Additions - - 1 1
------------ ------------ ----------- --------
At 31 December
2019 284 137 116 537
------------ ------------ ----------- --------
Amortisation Website Product Patents Total
&
Development development Trademarks
GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 284 137 100 521
Charge for the
period - - 11 11
At 31 December
2018 284 137 111 532
Charge for the
period - - 5 5
------------ ------------ ----------- --------
At 31 December
2019 284 137 116 537
------------ ------------ ----------- --------
Net book value Website Product Patents Total
&
development Development Trademarks
GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 - - 15 15
------------- ------------- ----------- --------
At 31 December
2018 - - 4 4
------------- ------------- ----------- --------
At 31 December - - - -
2019
------------- ------------- ----------- --------
15. Property, plant and equipment
The Group movement in property, plant & equipment assets
was:
Cost Plant Fixture Computer Right Right of Total
& equipment & fittings equipment of use use assets
assets plant &
property equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 3,048 277 674 - - 3,999
Additions 6 9 92 - - 107
At 31 December
2018 3,054 286 766 - - 4,106
Additions on application
of IFRS 16 - - - 243 85 328
Additions - 4 43 177 52 276
Forex (8) - - - - (8)
------------- ------------ ----------- ---------- ------------ --------
At 31 December
2019 3,046 290 809 420 137 4,702
------------- ------------ ----------- ---------- ------------ --------
Depreciation Plant & Fixture Computer Right Right of Total
equipment & fittings equipment of use use assets
assets plant &
property equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 2,061 253 538 - - 2,852
Charge for the
period 292 10 103 - - 405
At 31 December
2018 2,353 263 641 - - 3,257
Charge for the
period 243 12 95 156 45 551
----------- ------------ ----------- ---------- ------------ --------
At 31 December
2019 2,596 275 736 156 45 3,808
----------- ------------ ----------- ---------- ------------ --------
Net book value Plant & Fixture Computer Right Right of Total
equipment & fittings equipment of use use assets
assets plant &
property equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 987 24 136 - - 1,147
----------- ------------ ----------- ---------- ------------ --------
At 31 December
2018 701 23 125 - - 849
----------- ------------ ----------- ---------- ------------ --------
At 31 December
2019 450 15 73 264 92 894
----------- ------------ ----------- ---------- ------------ --------
The right of use lease liabilities are secured against the right
of use assets.
16. Deferred tax
31 31
December December
'19 '18
GBP'000 GBP'000
Deferred tax liability:
Deferred tax liability to
be recognised after more
than 12 months
44 101
Deferred tax assets:
Deferred tax asset to be
recognised after less than
12 months (47) -
Deferred tax (asset)/liability (3) 101
==================== ====================
At 1 January 2019 101 91
Debit / (Credit) in respect
of losses - -
Adjustment in respect of
previous year (85) -
Charge in respect of temporary
timing differences on property,
plant and equipment (19) 10
At 31 December 2019 (3) 101
==================== ====================
17. Trade and other receivables
31 December 31 December
'19 '18
GBP'000 GBP'000
Trade debtors 2,840 2,700
Other debtors 339 476
Prepayments 249 377
Total 3,428 3,553
============ ============
Amounts falling due
after more than one
year included above
are: 417 412
The maximum exposure to credit risk at the balance sheet date is
the carrying amount of receivables detailed above. The Group does
not hold any collateral as security.
The Directors do not believe that there is a significant
concentration of credit risk within the trade receivables balance.
As of 31 December 2019, trade receivables of GBP1.2 million (2018:
GBP0.9 million) were past due but not impaired.
The ageing of trade debtors:
Current 0 - 30 31 - 60 61 Days Total
Days Days +
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 December '19 1,640 487 227 486 2,840
31 December '18 1,754 359 177 410 2,700
18. Cash and cash equivalents
31 December 31 December
'19 '18
GBP'000 GBP'000
Cash at bank and
on hand 1,227 843
1,227 843
============ ============
19. Trade and other payables
31 December 31 December
'19 '18
as restated
GBP'000 GBP'000
Trade creditors 419 442
Other creditors 1,391 1,285
Lease liabilities 206 -
Social Security and
other taxes 301 240
Accrued expenses 657 1,225
Deferred income 285 367
Trade and other payables 3,259 3,559
Corporation tax 82 219
------------ -------------
Total 3,341 3,778
============ =============
All trade and other payables are short term. The carrying values
of trade and other payables are considered to be a reasonable
approximation of fair value.
20. Other borrowings
31 December 31 December
'19 '18
GBP'000 GBP'000
Bank loan:
Greater than one 750 -
year
------------ ------------
750 -
============ ============
As at 31 December 2019, SpaceandPeople plc had drawn down
GBP0.75 million (2018: GBPnil) of its agreed bank revolving credit
facility of GBP1.0 million which expires in October 2021. In
addition, SpaceandPeople plc has a GBP0.25 million overdraft
facility of which GBPnil was used as at 31 December 2019 (2018:
GBPnil).
21. Right of use assets and liabilities
Impact of adopting IFRS 16
In calculating the lease liability to be recognised on
transition, the Group used a weighted average borrowing rate of
7.38% at 1 January 2019. Below is a reconciliation of the Group's
operating lease commitment at 31 December 2018 to the lease
liability recognised on adoption of IFRS 16 on 1 January 2019:
Lease liabilities recognised (GBP'000)
Operating lease commitments at 31 December 2018 as
disclosed in the Group's consolidated financial statements 383
Discounted using the incremental borrowing rate at
1 January 2019 (55)
----------------
Lease liability recognised at 1 January 2019 328
Of which are:
Current lease liabilities 198
Non-current lease liabilities 130
The change in accounting policy increased Right of Use assets by
GBP0.3m and increased lease liabilities by GBP0.3m at 1 January
2019.
2019 - Right of use assets & lease liabilities
Net book Lease liability
value of
assets
GBP'000 GBP'000
Motor vehicles 93 97
Buildings 263 269
---------- ----------------
356 366
========== ================
Amounts recognised in the consolidated statement of profit or
loss
Depreciation Interest
charges expense
GBP'000 GBP'000
Motor vehicles 45 7
Buildings 156 3
------------- ---------
201 10
============= =========
Total operating lease payments due until the end of the lease,
or the first break clause, total GBP366k (2018: GBP383k).
An analysis of these payments due is as follows:
2019 2018
GBP'000 GBP'000
Total lease payments
falling due:
Within one year 206 256
Within two to five
years 160 127
-------- --------
366 383
======== ========
Below is a reconciliation of changes in liabilities arising from
financing activities:
1 January Cash New Other 31 December
2019 flows Leases 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Current lease liabilities 198 (224) 69 163 206
Non-current lease liabilities 130 - 160 (130) 160
---------- -------- -------- -------- ------------
Total liabilities from
financing activities 328 (224) 229 33 366
========== ======== ======== ======== ============
The "Other" column includes the effect of reclassification of
non-current leases to current due to the passage of time, the
effect of the disposal of lease assets with their related creditors
and the effect of the unwinding of the discounted ROU creditors
over time.
22. Financial instruments and risk management
The Group has no material financial instruments other than cash,
current receivables and liabilities, in both this and the prior
period, all of which arise directly from its operations. The net
fair value of its financial assets and liabilities is the same as
their carrying value as detailed in the balance sheet and related
notes.
Credit risk - The Group's credit risk relates to its receivables
and is managed by undertaking regular credit evaluations of its
customers.
Liquidity risk - The Group usually operates a cash-generative
business and has significant cash headroom. The Directors consider
the funding structure to be adequate for the Group's current
funding requirements and this is expected to strengthen during
future years.
Borrowing facilities - As at the balance sheet date, t he Group
has agreed facilities of GBP1.25 million, of which GBP0.75 million
was utilised at the year end. Since the year end the Group has
agreed a further GBP1.0 million facility through the CBILS. These
facilities are secured by a floating charge.
Financial assets - These comprise cash at bank and in hand. All
bank deposits are floating rate.
Financial liabilities - These include short-term creditors and a
revolving credit facility of GBP1 million, of which GBP0.75 million
was utilised at the year end. All financial liabilities will be
financed from existing cash reserves and operating cash flows.
Foreign currency risk - The Group is exposed to foreign exchange
risk primarily from Euros due to its German operations and Euro
denominated licensing income as detailed in note 4 - Segmental
Reporting. The Group monitors its foreign currency exposure and
manages the position where appropriate. In addition, the Group has
investments in a subsidiary in India.
23. Called up share capital
Allotted, issued and fully paid 31 December 31 December
'19 '18
Class Nominal
value
Ordinary 1p GBP 195,196 195,196
Number 19,519,563 19,519,563
24. Related party transactions
Compensation of key management personnel
Key management personnel of the Group are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Group, directly or
indirectly. Key management of the Group are therefore considered to
be the directors of SpaceandPeople plc. There were no transactions
with the key management, other than their emoluments, which are set
out in the remuneration report on pages 22 to 23.
25. Earnings per share
12 months to 12 months to
31 December '19 31 December '18
as restated
Pence per share Pence per share
Basic earnings/(loss) per
share
Before non-recurring costs 0.4p (1.7)p
After non-recurring costs 0.4p (3.0)p
Diluted earnings/(loss) per
share
0.3p (1.5)p
Before non-recurring costs
0.3p (2.7)p
After non-recurring costs
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
12 months to 12 months to
31 December '19 31 December '18
as restated
GBP'000 GBP'000
Profit/(loss) after tax for
the period attributable to
owners of the Company 68 (578)
Non-recurring items
Profit/(loss) after tax for
the period before non-recurring - 244
costs attributable to owners
of the company 68 (334)
12 months to 12 months to
31 December '19 31 December '18
'000 '000
Weighted average number of
ordinary shares 19,520 19,520
for the purposes of basic
earnings per share
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
12 months to 12 months to
31 December '19 31 December '18
GBP'000 GBP'000
Profit/(loss) after tax for
the period attributable to
owners of the Company 68 (578)
Non-recurring items
Profit/(loss) after tax for
the period before non-recurring - 244
costs attributable to owners
of the company 68 (334)
12 months to 12 months to
31 December '19 31 December '18
'000 '000
Weighted average number of
ordinary shares 20,991 21,548
for the purposes of diluted
earnings per share
The weighted average number of ordinary shares for the purposes
of diluted earnings per share reconciles to the weighted average
number of ordinary shares used in the calculation of basic earnings
per share as follows.
12 months to 12 months to
31 December '19 31 December '18
'000 '00
Weighted average number of
shares in issue 19,520 19,520
during the period
Weighted average number of
ordinary shares 1,471 2,028
used in the calculation of
basic earnings per
share deemed to be issued
for no
consideration in respect
of employee options
Weighted average number of
ordinary shares 20,991 21,548
used in the calculation
of diluted earnings per
Share
As set out in notes 26 and 27, there are share options and a
SAYE scheme outstanding as at 31 December 2019 which, if exercised,
would increase the number of shares in issue. However, the diluted
loss per share is the same as the basic loss per share, as the loss
for the year has an anti-dilutive effect.
26. Share options
The Group has established a share option scheme that senior
executives and certain eligible employees are entitled to
participate in at the discretion of the Board which is advised on
such matters by the Remuneration Committee.
In aggregate, share options have been granted under the share
option scheme over 1,815,325 ordinary shares exercisable within the
dates and at the exercise prices shown below, being the market
value at the date of the grant.
Date of grant Number Option period Price
12 January 2015 415,325 12 January 2018 - 12 January 47.4p
2025
27 March 2017 300,000 29 March 2020 - 27 March 22.0p
2027
1 July 2019 1,000,000 1 July 2022 - 1 July 2029 12.0p
1 October 2022 - 1 October
1 October 2019 100,000 2029 13.5p
The movement in the number of options outstanding under the
scheme over the period is as follows:
12 months 12 months
to to
31 December 31 December
'19 '18
Number of options outstanding as at
the beginning of the period 769,325 1,885,522
Granted 1,100,000 -
Lapsed - (1,016,197)
Forfeited (54,000) (100,000)
------------ ------------
Number of options outstanding as at
the end of the period 1,815,325 769,325
In total, 1,815,325 options were outstanding at 31 December 2019
(769,325 at 31 December 2018) with a weighted average exercise
price of 21.8p (35.8p at 31 December 2018).
The total share-based payment charge for the year, calculated in
accordance with IFRS2 on share-based payments, was GBPnil (2018:
GBPnil).
27. Save As You Earn Scheme
The Group has a Save As You Earn ("SAYE") scheme that all UK
based employees are entitled to participate in. The scheme runs for
three years from 1 July 2017 with the opportunity to buy shares at
a price of 19.5p, a 20% discount on the average closing share price
on the three working days from 20 to 24 April 2017.
Share options have been granted under the SAYE scheme over
59,072 ordinary shares exercisable within the dates and at the
exercise prices shown below, being the market value at the date of
the grant.
Date of grant Number Option period Price
1 July 2020 - 31 December
18 May 2017 59,072 2020 19.5p
The movement in the number of options outstanding under the
scheme over the period is as follows:
12 months 12 months
to to
31 December 31 December
'19 '18
Number of options outstanding as at
the beginning of the period 376,604 675,200
Granted - -
Lapsed - (21,677)
Forfeited (317,532) (276,919)
------------ ------------
Number of options outstanding as at
the end of the period 59,072 376,604
In total, 59,072 options were outstanding at 31 December 2019
(376,604 at 31 December 2018) with an average exercise price of
19.5p (19.5p at 31 December 2018).
The total share-based payment charge for the year, calculated in
accordance with IFRS2 on share-based payments, was GBPnil (2018:
GBPnil).
28. Events after the balance sheet date
As at the time of issuing this report, the COVID-19 pandemic has
had a significant effect on the Group which is explained in the
Chief Executive Officer's Review on pages 7 to 10 and in the
accounting policies. The Group does not consider this to be an
adjusting event as the COVID-19 pandemic occurred after the year
end and consequently there is no impact on the Group's 2019
results. At this time, the directors do not consider it possible to
quantify any impact on the carrying value of assets or liabilities
that would result in a non-adjusting post balance sheet event.
The effects of lockdown, social distancing and travel
restrictions are having a material impact on the Group's ability to
generate revenue during 2020. The Group has implemented business
continuity plans with staff, lenders and clients and has sufficient
resources to allow it to continue to trade effectively during this
period. As part of these plans the business accessed a GBP1m
five-year loan through the Coronavirus Business Interruption Loan
Scheme.
For further information, contact:
SpaceandPeople Plc 0845 241 8215
Matthew Bending, Gregor Dunlay
Cantor Fitzgerald Europe 020 7894 7000
David Foreman, Will Goode (Corporate
Finance)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FZGZVGRKGGZZ
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June 29, 2020 02:00 ET (06:00 GMT)
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