REG - SpaceandPeople PLC - Final results for the year ended 31 December 2022
30/05/2023 07:15
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RNS Number : 8837A SpaceandPeople PLC 30 May 2023
SpaceandPeople plc
("SpaceandPeople" or the "Group")
Final Results for the year ended 31 December 2022
SpaceandPeople (AIM:SAL) the retail, promotional and brand experience
specialist, is pleased to announce its final results for the year ended 31
December 2022.
Financial Highlights
· Revenue of £5.5 million (2021: £4.0 million and 2020: £2.8
million)
· Operating loss of £9k (2021: profit of £0.15 million and 2020:
loss of £3.57 million)
· EBITDA before government grant support of £0.3 million (2021:
negative £0.1 million)
· Basic Loss per Share before non-recurring charges and
discontinued operation of 11.0p (2021: earnings of 8.8p)
· Cash at the year-end of £1.9 million (2021: £1.4 million). Cash
available (including undrawn facilities) at the year-end of £2.6 million
(2021: £2.1 million)
Operational Highlights
· Continued recovery in both UK and German markets
· Launch of Rock Up and Pop Up kiosk programme
· First kiosks operational in Austria
Chair's Statement
2022 witnessed the end of the lockdowns that had so affected your company over
the last few years and I again wish to thank all of our staff and management
across the business for their hard work and support in 2022 as well as their
continued commitment to the Group.
While profitability was slightly lower compared with the prior year, this
masks a significant return to top line growth across the UK and German
businesses as operations returned to closer to pre-pandemic norms. The focus
on ensuring the business was in the best shape it could be for the recovery
has been rewarded in the shape of the revenue growth achieved of 38% to
£5.5m. At a profit level, the significant levels of government support seen
in prior years were phased out and have been offset by the contribution from
the revenue increase resulting in operating performance being almost break
even for the year.
Key business developments and the financial performance of the Group are
covered in more detail in Nancy Cullen's CEO Report and Gregor Dunlay's
Operating and Financial Review.
Management is clear on the strategic growth opportunities in the UK and Europe
and there is the necessary capital, resource, skills and ambition within the
business to achieve these. A major focus in 2023 will be on retaining the
Group's contract to provide services to Network Rail, which it is anticipated
will be re-tendered during 2023.
Your business is a strongly cash generative one which has limited capital
expenditure needs and, as I noted last year, we will look to return to paying
dividends at a suitably prudent time when reserves permit.
There have been a number of changes in the composition of your Board with John
Scott and Michael Brown joining as non-executive directors, bringing extensive
relevant experience in the retail and marketing sectors. I would also like
to thank Steve Curtis, who steps down at the upcoming Annual General Meeting,
for his significant contribution to the Group across his nine years on the
Board. I would again like to thank all colleagues for their support and
input throughout the year and hope to continue that success in growing the
business in the year ahead.
George Watt
Chair
26 May 2023
Chief Executive Officer's Review
Introduction
I write this report with huge sense of relief as it is my first time as Chief
Executive that our figures have only been slightly affected by Covid. I am
also happy to report that these results show strong revenue growth and have
been accomplished this year without the substantial levels of government
support that were received in 2021. This represents a major achievement for
this business which was so badly affected by lockdowns during the pandemic.
During the year we have built back business strongly in the UK and Germany to
the point where, in December 2022, the UK promotional business experienced its
strongest sales month on record as well as introducing a new product to our
market which is already showing good growth potential.
We are also starting to look at European expansion and, in October 2022
installed the first of our mall kiosks in Austria, using our German business
as the hub for this operation.
UK
Trading started relatively slowly in 2022 across both the UK and German
businesses due to fears over the new omicron variant of Covid which affected
both our retail and brand businesses. However, unlike 2021, this was short
lived and by the end of Q1 we began to see demand build back positively across
all sectors.
Our brand business was badly affected by Covid in 2020 and 2021 and has taken
some time to rebuild to 2019 levels, however, a long hot summer led to
multiple requests from brands for outdoor sites and then, during the second
half of 2022, we recorded some of the best revenues that we have seen in the
23 year history of SpaceandPeople. This business is an important and high
profile aspect of our work and therefore seeing demand for this media build
back has been significant for both our client venues and for SpaceandPeople.
We also launched our new website www.experientialspace.co.uk
(https://experientialspace.co.uk/) in January 2022. This is an online platform
enabling media buyers and agencies to view our venues, promotional sites,
prices, demographics and footfall in real time. This is proving to be a
successful planning tool for agency clients and we look forward to providing
further enhanced services for brand and media agencies over the coming 12
months.
The mall retail business has remained steady since our venues reopened post
Covid and has proved remarkably resilient in the face of competition presented
by vacant shop units. Many of the operators that were trading pre Covid have
remained in the malls and we have been delighted to see so many new concepts
in retail now taking mall space - this includes products, services and
food/drink retailing.
We were excited to roll out our new retail solution aimed at stimulating new
and online retail businesses to trial physical retail. Rock Up and Pop Up
offers a complete solution to nascent retailers providing them with an
end-to-end retail solution including a fully designed and installed kiosk,
space at top UK Shopping Centres and, if required, retail staff. At the end of
2022, we had three kiosks trading and we are looking to expand this service
throughout 2023 and beyond. As at the date of this report we have four kiosks
in operation with a further four being installed in June 2023. The Rock Up
service allows us to appeal to a whole new generation of retailers with the
ultimate aim of creating new long-term retail unit tenants at our clients'
centres.
During the year we also renewed our ISO 9001,14001 and 45001 accreditations
which relate to the quality of our business processes, operational expertise
and management. SpaceandPeople's rigour relating to compliance is unique in
our marketplace and our absolute attention to providing venues with compliant,
timely and detailed paperwork is something that offers our client venues
real reassurance regarding the quality of bookings that take place in their
venues.
Germany
Our German business was significantly affected by Covid restrictions and the
emergence of the omicron variant in January 2022. However, similar to the UK,
it built the retail business back in 2022 with overall revenue of £1.3
million (2021: £0.9 million).
With business returning to more normal levels, we started looking at European
expansion and, during the year, began our first trial within Austria with an
initial two retail units with ECE. We are now in discussions with other
property companies in respect of the Austrian opportunity.
We are ever mindful of the cost impact of our operations in both countries and
in 2022 our German team moved into cheaper, central Hamburg offices which
contributed to a £0.2 million reduction in administration costs.
Outlook
It has been fantastic to see revenues grow back in both the UK and Germany
after a prolonged period of turbulence for SpaceandPeople. We have rebuilt the
business, won significant new venues, developed new products and produced a
near break-even operating result without the support of Government money, so
there is much to celebrate.
I am also delighted that we significantly added to our team in the year -
recruiting additional staff across both marketing and sales enabling us to
continue to service our venue base.
We have started 2023 in a strong position with the staffing, venue opportunity
and business structure in place to continue our drive to dominate the UK
market and to continue to grow across Europe with our new business concepts.
SpaceandPeople throughout its 23-year history has been a strong and resilient
business and we are able, in 2023, to continue this growth trajectory
without adding significantly to our cost base. We look to 2023 and beyond with
confidence.
Nancy Cullen
Chief Executive Officer
26 May 2023
Operating and Financial Review
We were pleased to see a gradual return to more normal trading conditions
during 2022 compared with the "stop/start" nature of lockdowns and
restrictions that had continued into 2021. At the start of 2022, promoter
sentiment was still affected by the government messaging in December 2021 that
pandemic cases were surging again, even though venues remained open. In
Germany, the requirement to wear facemasks and provide proof of vaccination
continued into the Spring of 2022, again, acting as a constraint on the return
to normal trading. Thankfully, as the year progressed, these issues did not
recur and confidence in booking promotions returned both in the UK and
Germany.
Although the effects of the pandemic dissipated during the year, retailers and
promoters were not immune to increased costs, wage inflation and interest rate
increases. This had a material effect on a number of retailers, especially
those who sell lifestyle products. One of the benefits of the Group's business
model is that we are focused on refreshing the offer in the venues we trade
with on a regular basis. The sales teams and venue managers work hard to
replace traders who are struggling or are no longer attractive to the venues
and therefore look to mitigate the risk from business failure. The Group has
been prudent in recognising revenue from traders who are potentially
distressed.
Pleasingly, the positive effect of not having any lockdowns and restrictions
outweighed more recent macroeconomic challenges and revenue increased by 38%
to £5.5 million and gross profit increased by 37% to £3.9 million, with all
business areas performing significantly better than in 2021.
An operating loss before non-recurring charges of £9k in 2022 is slightly
lower than the profit of £0.15 million achieved in 2021, however, this was
achieved with £0.61 million less of Covid salary support and grants and
demonstrates the continued resurgence of business without continued reliance
on government support.
Revenue
Revenue generated in 2022 was £5.5 million, which was £1.5 million (38%)
higher than in the previous year. This was made up as follows:
2022 2021
£ million £ million Movement
UK promotions 3.0 2.1 +43%
UK retail 1.2 1.0 +20%
German combined 1.3 0.9 +44%
Total 5.5 4.0 +38%
UK promotional revenue was up 43% to £3.0 million compared with the previous
year and was almost back to pre-pandemic levels. Revenue from retailers who do
not use our kiosks is included within this revenue stream. This revenue stream
showed good growth, with retailers being able to trade without interruption
throughout 2022. Our Brand Experience business has taken longer to recover due
to longer development lead times for promotional activity than for retail
bookings. This area of spend also has to be attracted back to our industry,
having been diverted to other channels during the pandemic. Customer
acquisition business has been the slowest to recover as many of the operators
in this area have been constrained by staff availability and the impact of
inflationary pressures and cost of living increases.
In the UK retail division, Retail Merchandising Unit ("RMU") revenue increased
by 35% from the previous year primarily due to the absence of lockdowns.
The Mobile Promotions Kiosk ("MPK") element of UK retail revenue continued to
face headwinds with charity and customer acquisition bookings being
significantly lower due to macro-economic factors. Revenue was 4% down as a
result.
Within the retail division, the new Rock Up and Pop Up concept delivered £41k
of revenue from a standing start during the year and this is forecast to grow
significantly through 2023 and beyond as this method of retailing surpasses
traditional RMU trading.
Despite restrictions in Germany being eased more slowly than in the UK,
revenue recovered well to £1.3 million, which was 44% up on 2021 and also
above the pre-pandemic revenue of £1.0 million achieved in 2019. This was due
to there being an average of 78 kiosks operational during 2022 compared with
56 in 2021 and 53 in 2019.
Administrative Expenses
Administrative expenses increased by £0.6 million from the previous year to
£4.1 million. This was almost exclusively as a result of increased staff
costs, with additional staff, a return to commission and bonus targets being
met and wage inflation caused by the competitive landscape for attracting good
quality staff.
Other Operating Income
In 2022, other income in relation to fees generated by the business increased
by 11% to £0.15 million. The other component is government grants and salary
support in relation to the pandemic. This dropped to £0.06 million in 2022,
all arising in Germany, compared with £0.67 million that had been received
during 2021.
Operating Results
During 2022, the Group made an operating loss before non-recurring charges of
£9k. Although this is lower than the operating profit of £0.15 million
achieved in 2021, it was achieved with £0.6 million less government support
and showed an underlying improvement of £0.4 million in the Group's
profitability.
Non-recurring Charges
As at 31 December 2022, the Group recognised an impairment in the carrying
value of the goodwill in relation to the UK Retail cash generating unit
("CGU") of £1.5 million. The principal reasons for this are the increased
borrowing costs of the Group as a result of bank base rate increases during
2022 which caused a significant increase in the discount factor used in
relation to future cash flows along with a slight decrease in the anticipated
growth rate due to macro-economic factors. The underlying profitability and
cash forecasts for this CGU were consistent with previous expectations. This
is explained more fully in note 12 to the financial statements.
Basic Earnings per Share excluding non-recurring costs and discontinued
operations was a loss of (11.0)p (2021: profit per share 8.8p).
Cash Flow
The Group cash inflow from operations was £1.1 million (2021: inflow of £0.8
million). This was due to positive EBITDA of £0.3 million with the remainder
being due to movements in working capital. As at the end of 2022, the Group
had drawn down £1.5 million of its banking facilities (2021: £1.8 million).
With the gross cash position being £0.5 million higher at the end of 2022
than 2021 at £1.9 million (2021: £1.4 million), this resulted in net cash
being £0.4 million (2021: net borrowings of £0.4 million).
Gregor Dunlay
Chief Financial Officer
26 May 2023
Strategic Review
Key Performance Indicators
The main financial key performance indicators are profit before taxation and
non-recurring costs, EBITDA and cash headroom. During the year, the loss
before taxation and non-recurring costs was £0.1 million (2021: profit of
£0.1 million) and available cash at 31 December 2022 was £2.63 million
(2021: £2.13 million). This is comprised of gross cash of £1.88 million and
overdraft facilities of £0.75 million. Basic EPS before non-recurring costs
and discontinued operations was a loss of 11.0p (2021: profit of 8.8p).
The Group continually monitors several key areas:
· revenue against target and prior period;
· profitability against target and prior period;
· venue acquisition, performance and attrition;
· promoter and operator types compared with historic bookings; and
· commission and occupancy rates.
2022 2021
Revenue (£ million) 5.5 4.0
Operating (loss) / profit before non-recurring costs (£ million) (0.0) 0.2
Basic (loss) / earnings per share before non-recurring costs and discontinued (11.0) 8.8
operation (p)
Average number of Retail Merchandising Units (RMUs) 115 79
Average number of Mobile Promotions Kiosks (MPKs) 38 24
Consolidated Statement of Comprehensive Income
For the 12 months ended 31 December 2022
Notes
12 months to 12 months to
31 December 2022 31 December 2021
£'000 £'000
Continuing Operations
Revenue 4 5,529 4,020
Cost of sales 4 (1,644) (1,211)
Gross profit 3,885 2,809
Administration expenses 4 (4,101) (3,456)
Other operating income 5 207 800
Operating (loss) / profit before non-recurring charges (9) 153
Non-recurring charges 8 (1,500) -
Operating (loss) / profit (1,509) 153
Finance costs 9 (116) (78)
(Loss) / profit before taxation (1,625) 75
Taxation 10 (89) 97
(Loss) / profit after taxation (1,714) 172
Profit from discontinued operation - 12
(Loss) / profit for the period (1,714) 184
Other comprehensive income
Foreign exchange differences on translation of foreign operations (25) (38)
Total comprehensive income for the period (1,739) 146
Earnings per share
Basic - before non-recurring charges and discontinued operation 23 (11.0)p 8.8p
Basic - after non-recurring charges and discontinued operation 23 (88.4)p 9.4p
Diluted - before non-recurring charges and discontinued operation 23 (11.0)p 8.3p
Diluted - after non-recurring charges and discontinued operation 23 (88.4)p 8.9p
Consolidated Statement of Financial Position
At 31 December 2022
Notes 31 December 2022 31 December 2021
£'000 £'000
Assets
Non-current assets:
Goodwill 12 5,381 6,881
Property, plant & equipment 13 545 690
Deferred tax asset 15 208 297
6,134 7,868
Current assets:
Trade & other receivables 14 2,524 2,196
Current tax receivable - 6
Cash & cash equivalents 16 1,885 1,380
4,409 3,582
Total assets 10,543 11,450
Liabilities
Current liabilities:
Trade & other payables 17 5,591 4,339
Borrowings repayable within one year 18 322 297
Lease liabilities 19 180 189
6,093 4,825
Non-current liabilities:
Borrowings repayable after one year 18 1,158 1,481
Lease liabilities 19 240 308
1,398 1,789
Total liabilities 7,491 6,614
Net assets 3,052 4,836
Equity
Share capital 21 195 195
Share premium 4,868 4,868
Special reserve 233 233
Own shares held 25 (50) -
Retained earnings (2,194) (460)
Total equity 3,052 4,836
Consolidated Statement of Cash Flows
For the 12 months ended 31 December 2022
Notes 12 months to 12 months to
31 December 2022 31 December 2021
£'000 £'000
Cash flows from operating activities
Cash generated from operations 1,216 680
Interest paid 9 (116) (78)
Taxation 6 177
Net cash inflow / (outflow) from operating activities 1,106 779
Cash flows from investing activities
Purchase of property, plant & equipment 13 (87) (80)
Purchase of own shares 25 (50) -
Net cash outflow from investing (137) (80)
activities
Cash flows from financing activities
Proceeds from new Bank facility - 1,000
Bank facility payments (298) (972)
Payment of lease obligations 19 (166) (186)
Net cash (outflow) / inflow from (464) (158)
financing activities
Increase / (decrease) in cash and cash equivalents 505 541
Cash and cash equivalents at beginning of 1,380 839
Period
Cash and cash equivalents at end of 16 1,885 1,380
period
Reconciliation of operating profit to net
cash flow from operating activities
Operating (loss) / profit (1,509) 153
Goodwill impairment 12 1,500 -
Loss on disposal (6) (28)
Depreciation of property, plant & 13 332 375
Equipment
Effect of foreign exchange rate moves (25) (33)
(Increase) in receivables (328) (271)
Increase in payables 1,252 484
Cash inflow from operating activities 1,216 680
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2022
Share Share Special Own Retained Non- Total
capital premium reserve Shares held Earnings Controlling interest equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 195 4,868 233 - (587) (24) 4,685
Comprehensive
income:
Foreign currency
translation - - - - (38) - (38)
Profit for the period - - - - 184 - 184
Total comprehensive - - - - 146 - 146
income
Other movement - - - - (24) 24 -
Equity settled share-based payment - - - - 5 - 5
At 31 December 2021 195 4,868 233 - (460) - 4,836
Comprehensive
income:
Foreign currency
translation - - - - (25) - (25)
Loss for the period - - - - (1,714) - (1,714)
Total comprehensive - - - - (1,739) - (1,739)
income
Purchase of own shares - - - (50) - - (50)
Equity settled share-based payment - - - - 5 - 5
At 31 December 2022 195 4,868 233 (50) (2,194) - 3,052
Notes to the Financial Statements
For the 12 months ended 31 December 2022
1. General information
SpaceandPeople plc is a public company limited by shares incorporated and
domiciled in Scotland (registered number SC212277) which is listed on AIM
(dealing code SAL). The principal activities of the company and its
subsidiaries (the Group) and the nature of its operations are set out in the
Directors Report.
2. Basis of preparation
The Group's financial statements have been prepared under the historical cost
convention as described in the accounting policies set out in note 3 below.
These accounting policies are consistent with those in the previous year. The
financial statements are presented in Sterling, which is the functional
currency of the Group and are rounded to thousands (£'000).
Compliance Statement
These financial statements have been prepared in accordance with UK adopted
International accounting standards (UK-adopted IAS).
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 loan. Management
information tools including budgets and cash flow forecasts are used to
monitor and manage current and future liquidity.
The current and future financial position of the Group, including its cash
flows and liquidity, continue to be reviewed by the Directors. They take a
prudent view on the continuing recovery in the Group's business post Covid and
in light of current inflationary and other macroeconomic factors impacting on
the business, its customers and suppliers. They have also considered the
Group's ability to withstand the loss of key contracts and any mitigating
actions that would be available to them.
The Group has term loans in place that mature in 2025 and 2027 along with
overdraft facilities available until 2024. Financial covenants are in place
that reflect the current and budgeted trading position and the Directors are
confident of renewing the overdraft facilities in the normal course of
business.
The Group continues to manage its cash flows prudently and the Directors are
confident that the current resources and available funding facilities will
provide sufficient headroom to meet the forecast cash requirements whilst
remaining within its financial covenants.
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
Onerous Contracts - Cost of Fulfilling a Contract (Amendment to IAS 37) Annual periods beginning on or after 1 January 2022 There is no material impact on the financial statements.
Annual Improvements to IFRS Standards 2018 - 2020 Annual periods beginning on or after 1 January 2022 There is no material impact on the financial statements.
Property, Plant and Equipment: Proceeds Before Intended Use Annual periods beginning on or after 1 January 2022 There is no material impact on the financial statements.
(Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3) Annual periods beginning on or after 1 January 2022 There is no material impact on the financial statements.
The following amendments will be introduced in future periods
Title Implementation Effect on Group
IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance Contracts Annual periods beginning on or after 1 January 2023 No material impact to the financial statements anticipated.
Disclosure of Accounting Policies (Amendments to IAS 1
and IFRS Practice Statement 2) Annual periods beginning on or after 1 January 2023 Material rather than significant accounting policies will be disclosed.
Definition of Accounting Estimate (Amendments to IAS 8)
Annual periods beginning on or after 1 January 2023 No material impact to the financial statements anticipated.
Deferred Tax Related to Assets and Liabilities Arising from
a Single Transaction (Amendments to IAS 12 Income Taxes) Annual periods beginning on or after 1 January 2023 No material impact to the financial statements anticipated.
Lease liability in a Sale and Leaseback (Amendments to IFRS 16)
Annual periods beginning on or after 1 January 2024 No material impact to the financial statements anticipated.
Non-current Liabilities with Covenants (Amendments to IAS 1)
Annual periods beginning on or after 1 January 2024 An impact assessment will be carried out in due course.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
Annual periods beginning on or after 1 January 2024 An impact assessment will be carried out in due course.
Management anticipates that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of the
pronouncement.
3. Accounting policies
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 within administration expenses.
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.
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 the relevant performance obligation is satisfied.
The performance obligation is considered to occur when the promotional or
retail booking event takes place. This performance obligation is satisfied
over the period of the booked event. Revenue does not contain a financing
component nor any element of variable consideration.
Promotion divisions
Revenue in the UK promotion division is recognised over the period the
promotion event takes place and is agreed by all parties. This policy is
adopted as our contractual right to commission income is crystallised at this
point. Payment of a deposit is typically due when the booking is made with the
balance payable 30 days prior to the promotion taking place or in instalments
if the promotion is of a duration longer than 30 days.
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 with performance obligations. Payment is due in advance on a
monthly basis.
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.
Government assistance
Grants from the government are recognised at their fair value where there is a
reasonable assurance that the grant will be received and the Group will comply
with all attached conditions. Grants received in are reported within other
operating income.
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 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.
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 underlying 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.
Taxation
The tax credit or expense represents the sum of tax and deferred tax currently
recoverable or payable. Tax currently recoverable or payable is based on the
taxable loss or profit for the period. The Group's asset or 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.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the
Balance Sheet where there is a legally enforceable right to offset the
recognised amounts.
Trade and other receivables
Trade and other receivables where payment is due within one year do not
constitute a financing transaction and are recorded at original invoice value
less an allowance for any uncollectable amounts.
If payment is due after more than one year or if there is any other indication
of a financing transaction, trade and other receivables are recorded initially
at fair value less attributable transaction costs. In this situation, fair
value is equal to the amount expected to be received, discounted at a
market-related interest rate.
All trade and other receivables are subsequently measured at amortised cost,
net of impairment.
The Group recognises lifetime ECL (expected credit losses) for trade
receivables, which are estimated by reference to past default experience of
the debtor and an analysis of the debtor's current financial position,
adjusted for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including the time value of
money where appropriate.
The Group writes off a receivable when there is information indicating that
the debtor is in severe financial difficulty and there is no realistic
prospect of recovery. Write offs are recognised 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
considered in arriving at the fair value at grant date.
Pensions
The Group pays contributions to the personal pension schemes of the majority
of employees. Contributions are charged to the income statement in the period
in which they fall due.
Borrowing costs
Borrowing costs are amortised over the duration of the loan and recognised
throughout the term of the loan.
Employee Benefit Trust
The Company has an established Employee Benefit Trust ("EBT") to which it is
the sponsoring entity. Notwithstanding the legal duties of the trustees, the
Company considers that it has 'de facto' control. The EBT is accounted for as
assets and liabilities of the Company and is included in the financial
statements. The Company's equity instruments held by the EBT are accounted for
as if they were the Company's own equity and are treated as treasury shares
("Own Shares Held"). No gain or loss is recognised in profit or loss or other
comprehensive income on the purchase, sale or cancellation of the Company's
own equity held by the EBT.
Non-recurring charges
Non-recurring charges are items that have been separately identified to
provide a better indication of the Group's underlying operational performance.
They are separately identified as a result of their magnitude, incidence or
nature.
Further details are disclosed in note
(https://severfield.annualreport2022.com/our-financials/notes-to-the-consolidated-financial-statements/5-non-underlying-items)
8 to the financial statements.
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 impairment of goodwill,
impairment of the value of investment in subsidiaries 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.
4. Segmental reporting
The Group splits its business into two main areas, being promotions and
retail. The retail business is further sub-divided into both UK and German
territories. The Group maintains its head office in Glasgow and has a
subsidiary office in Hamburg, Germany. The Group has determined that these,
along with head office functions, 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.
Segment assets include goodwill, property, plant and equipment, receivables
and operating cash. Head office assets include deferred tax and head office
right of use assets. Segment liabilities comprise operating liabilities. Head
office liabilities include corporate borrowings.
Prior year amounts have been re-presented in a format consistent with the
current year that reflects the basis of the entity's internal management
reporting that has been used by the Group to monitor the performance of
segments.
Segment revenues and Promotion Retail Retail Head Group
Results UK UK Germany Office
for 12 months to £'000 £'000 £'000 £'000 £'000
31 December 2022
Segment Revenue 3,011 1,236 1,282 - 5,529
Cost of sales - (830) (814) - (1,644)
Administrative expenses excluding depreciation (2,006) (123) (635) (1,005) (3,769)
Other revenue - - 207 - 207
Depreciation (61) (95) (9) (167) (332)
Segment Operating profit / (loss) 944 188 31 (1,172) (9)
Non-recurring costs - (1,500) - - (1,500)
Finance costs - - - (116) (116)
Segment profit / (loss) 944 (1,312) 31 (1,455) (1,625)
before taxation
Segment assets and Promotion Retail Retail Head Group
liabilities UK UK Germany Office
as at 31 December 2022 £'000 £'000 £'000 £'000 £'000
Total segment assets 3,151 6,117 674 601 10,543
Total segment liabilities (4,651) (503) (430) (1,907) (7,491)
Total segment net assets (1,500) 5,614 244 (1,306) 3,052
Segment revenues and Promotion Retail Retail Head Other Group
Results UK UK Germany Office
for 12 months to £'000 £'000 £'000 £'000 £'000 £'000
31 December 2021
Segment Revenue 2,132 1,022 866 - - 4,020
Cost of sales - (701) (510) - - (1,211)
Administrative expenses excluding depreciation (1,382) (152) (774) (773) - (3,081)
Other revenue 126 - 674 - - 800
Gain associated with discontinued operations - - - - 12 12
Depreciation (38) (107) (38) (192) - (375)
Segment Operating profit / (loss) including discontinued operations 838 62 218 (965) 12 165
Finance costs - - - (78) - (78)
Segment profit / (loss) 838 62 218 (1,043) 12 87
before taxation including discontinued operations
Segment assets and Promotion Retail Retail Head Group
liabilities UK UK Germany Office
as at 31 December 2021 £'000 £'000 £'000 £'000 £'000
Total segment assets 2,439 7,617 750 644 11,450
Total segment liabilities (3,339) (640) (443) (2,192) (6,614)
Total segment net assets (900) 6,977 307 (1,548) 4,836
5. Other operating income
Other operating income is comprised of:
12 months to 12 months to
December 2022 December 2021
£'000 £'000
Government grants 60 668
Ancillary charges 147 132
207 800
6. Operating profit / (loss)
The operating profit / (loss) is stated after charging:
12 months to 12 months to
December 2022 December 2021
£'000 £'000
Impairment of goodwill 1,500 -
Depreciation of property, plant and equipment 165 183
Depreciation of right of use assets 167 192
Auditor's remuneration:
Fees payable for:
Audit of Company 36 32
Audit of subsidiary undertakings 19 18
Audit related services 9 10
Tax compliance 5 10
Other tax services 10 4
Other services 5 5
84 80
Directors' remuneration 702 554
7. Staff costs
The average number of employees in the Group during the period was as follows:
12 months to 12 months to
December 2022 December 2021
Executive Directors 3 3
Non-executive Directors 3 3
Administration 17 16
Telesales 19 19
Commercial 4 3
Maintenance 6 6
52 50
12 months to 12 months to
December 2022 December 2021
£'000 £'000
Wages and salaries 2,329 1,785
Social Security costs 311 198
Pensions 98 112
2,738 2,095
8. Non-recurring charges
12 months to 12 months to December 2021
December 2022 £,000
£'000
Impairment of UK Retail CGU 1,500 -
1,500 -
Please refer to note 12 for further information.
9. Finance income and costs
12 months to 12 months to
December 2022 December 2021
£'000 £'000
Finance costs:
Interest payable on borrowings 77 30
Interest payable on lease obligations 39 48
116 78
10. Taxation
12 months to 12 months to
December 2022 December 2021
£'000 £'000
Current tax expense:
Current tax on profits/(losses) for the year - -
Adjustment for under/(over) provision in prior periods - (7)
Total current tax - (7)
Deferred tax:
Charge in respect of change of rate - (66)
Charge in respect of temporary timing differences 89 (24)
Total deferred tax 89 (90)
Income tax charge / (credit) as reported in the income statement 89 (97)
The tax assessed for the period differs to the standard rate of corporation
tax in the UK. The differences are explained below:
12 months to 12 months to
December 2022 December 2021
£'000 £'000
(Loss) / profit on ordinary activities before tax (1,625) 75
(Loss) / profit on ordinary activities at the standard rate of corporation tax
in the UK of 19% (2021: 19%)
(309) 14
Tax effect of:
- Adjustment for (over)/under provision in prior periods - (7)
- Over provision of deferred tax 61 -
- Use of recognised losses 45 -
- Disallowable items 300 1
- Change in tax rates substantively enacted - (66)
- Use of tax losses previously not recognised (8) (39)
Income tax charge / (credit) as reported in the Income Statement 89 (97)
11. Dividends
No dividends were paid during the current or prior year. The Directors do not
recommend a final dividend for 2022 (2021: £nil).
12. Goodwill
Cost £'000
At 31 December 2020 8,225
Additions -
At 31 December 2021 8,225
Additions -
At 31 December 2022 8,225
Accumulated impairment losses
At 31 December 2020 1,344
Charge for the period -
At 31 December 2021 1,344
Charge for the period 1,500
At 31 December 2022 2,844
Net book value
At 31 December 2020 6,881
At 31 December 2021 6,881
At 31 December 2022 5,381
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 are an identifiable CGU and the carrying amount of Goodwill is
allocated against this CGU.
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 11.84% (2021 - 7.83%).
This discount rate includes appropriate adjustments to reflect, in the
Directors' judgement, the market risk and specific risk of the CGU. It is
derived from the Group's weighted average cost of capital. Changes in the
discount rate compared to the prior year reflect the latest market assumptions
for the risk-free rate, equity risk premium and the cost of debt.
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 1.65% (2021 - 1.7%).
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.
Impairment testing resulted in a reduction to the estimated recoverable amount
of goodwill. The related goodwill impairment loss of £1.5m for 2022 has been
included in non-recurring charges.
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 11.84%, for each further
movement of 1% an impairment loss of £0.462 million would be recognised and
written off against goodwill.
If the annual growth rate beyond 2022, used in the cash flow projection, is
decreased by 0.25% an impairment loss of £0.166 million would be recognised
and written off against goodwill.
13. Property, plant and equipment
The Group movement in property, plant & equipment assets was:
Cost Plant & equipment Fixture & fittings Computer equipment Right of use assets property Right of use assets plant & equipment Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 3,061 295 823 822 161 5,162
Additions 52 4 34 - 8 98
Disposals (10) - - (82) (15) (107)
Forex - (3) - (2) - (5)
At 31 December 2021 3,103 296 857 738 154 5,148
Additions 39 16 32 124 44 255
Disposals - - - (151) - (151)
At 31 December 2022 3,142 312 889 711 198 5,252
Depreciation Plant & equipment Fixture & fittings Computer equipment Right of use assets property Right of use assets plant & equipment Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 2,767 280 794 200 93 4,134
Charge for the period 155 8 20 153 39 375
Depreciation on disposals - - - (36) (15) (51)
At 31 December 2021 2,922 288 814 317 117 4,458
Charge for the period 128 8 29 142 25 332
Depreciation on disposals - - - (83) - (83)
At 31 December 2022 3,050 296 843 376 142 4,707
Net book value Plant & equipment Fixture & fittings Computer equipment Right of use assets property Right of use assets plant & equipment Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 294 15 29 622 68 1,028
At 31 December 2021 181 8 43 421 37 690
At 31 December 2022 92 16 46 335 56 545
The right of use lease liabilities are secured against the right of use
assets.
14. Trade and other receivables
31 December 2022 31 December 2021
£'000 £'000
Net trade debtors 2,052 1,587
Other debtors 337 324
Prepayments 135 285
Total 2,524 2,196
Amounts falling due after more than one year included above are: 79 79
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. No interest is charged on outstanding trade receivables. The
carrying amount of trade and other receivables approximates the fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses on trade receivables which applies a credit risk percentage based upon
historical risk of default adjusted for forward looking estimates against
receivables that are grouped into age brackets. To measure the expected credit
losses, trade receivables were considered on a days past due basis.
Trade receivables are written off where there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery
include the failure of a debtor to enter into a repayment plan with the Group
and a failure to make agreed contractual payments. Impairment losses on trade
receivables are presented as net impairment losses within operating profit.
Subsequent recoveries of any amounts are credited against the same line item.
31 December 2022 31 December 2021
£'000 £'000
Trade debtors 2,823 2,238
Loss allowance (771) (650)
Net trade debtors 2,052 1,587
Movement in loss allowance:
31 December 2022 31 December 2021
£'000 £'000
1 January 650 1,197
Additional provisions 225 291
Utilised or released (104) (838)
31 December 771 650
The Directors do not believe that there is a significant concentration of
credit risk within the trade receivables balance on customers or geographical
location.
As of 31 December 2022, trade receivables of £1.6 million (2021: £1.1
million) were past due, but not impaired. The ageing analysis of those debtors
is as follows:
0 - 30 Days 31 - 60 Days 61 Days + Total
£'000 £'000 £'000 £'000
Net amount at 31 December 2022 204 65 1,345 1,614
Net amount at 31 December 2021 140 78 878 1,095
15. Deferred tax
31 December 2022 31 December 2021
£'000 £'000
Deferred tax assets:
Deferred tax asset to be recognised after less than 12 months
Deferred tax asset to be recognised after more than 12 months - -
208 297
Deferred tax asset 208 297
Split as follows:
Fixed asset timing differences (5) 24
Tax losses 202 263
Other 11 10
Deferred tax asset 208 297
Movement in the year:
At 1 January 297 207
Adjustment in respect of losses (61) -
Change in tax rate substantively enacted - 66
Charge in respect of temporary timing differences on property, plant and
equipment
(29) 24
Other movements
1 -
At 31 December 208 297
The Finance Bill 202 was substantively enacted on 24 May 2021 changing the
main rate of corporation tax from 19% to 25% after 1 April 2023. The closing
deferred tax asset has been measured in accordance with the rate substantively
enacted at the Balance Sheet date that would be expected to apply on reversal
of the timing differences.
The Group expects to fully utilise the UK deferred tax asset recognised
against future taxable profits as the future growth strategy for the business
is realised.
Deferred tax is not recognised in respect of tax losses in Germany due to
uncertainty over when they will be recovered against the reversal of deferred
tax liabilities or future taxable profits. This is an unrecognised deferred
tax asset of £260k (2021: £291k).
16. Cash and cash equivalents
31 December 2022 31 December 2021
£'000 £'000
Cash at bank and on hand 1,885 1,380
1,885 1,380
17. Trade and other payables
31 December 2022 31 December 2021
Amounts payable within one year £'000 £'000
Trade creditors 335 200
Other creditors 3,457 2,351
Social Security and other taxes 447 157
Accrued expenses 838 1,088
Deferred income 514 543
Total 5,591 4,339
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.
18. Other borrowings
31 December 2022 31 December 2021
£'000 £'000
Bank facilities:
Payable within one year 322 297
Payable after one year 1,158 1,481
1,480 1,778
As at 31 December 2022, SpaceandPeople plc had £1.48 million (2021: £1.78
million) of CBILS term loans, £0.56 million of which expire in April 2025 and
£0.92 million expire in January 2027. SpaceandPeople plc also had £0.75
million of overdraft facilities of which £nil was used as at 31 December 2022
(2021: £nil). The bank facilities are secured by floating charge over the
Group's assets and are subject to interest between 3.25% to 3.8% plus base.
19. Leases
Amounts recognised in the balance sheet:
The balance sheet shows the following amounts relating to leases:
31 December 2022 31 December 2021
£'000 £'000
Right of use assets
Property 335 421
Plant and equipment 56 37
391 458
Lease liabilities
Current 180 189
Non-current 240 308
Total 420 497
Amounts recognised in the statement of profit or loss:
The statement of profit or loss shows the following amounts relating to
leases:
12 months to December 2022 12 months to December 2021
£'000 £'000
Depreciation charge of right of use assets
Property 142 153
Plant and equipment 25 39
167 192
Interest expense on lease liabilities 39 48
Below is a reconciliation of changes in liabilities arising from financing
activities:
1 January Cash New Other 31 December 2022
2022 flows Leases
£'000 £'000 £'000 £'000 £'000
Current lease liabilities 189 (166) 55 102 180
Non-current lease liabilities 308 - 113 (181) 240
Total liabilities from financing activities 497 (166) 168 (79) 420
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.
The company does not face a significant liquidity risk with regard to its
lease liabilities and these are monitored as part of the overall process of
managing cash flows. There are no leases subject to variable lease payment
terms.
20. 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 equivalent to 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. The Group
is aware that customers' financial strength may have been adversely affected
by the Covid pandemic and current economic circumstances and endeavours to
work with them and our venue partners to provide appropriate discounts and
payment plans to enable them to continue to trade and repay any amounts owed
in an agreed manner. The Group does not routinely offer extended credit terms
to the majority of 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. The following tables outline the Group's
contractual maturity of its financial liabilities:
Carrying amount On Demand/within one year Within 1-2 years Within 2-5 years Over 5 years
2022 £'000 £'000 £'000 £'000 £'000
Borrowings 1,480 322 322 836 -
Lease liabilities 420 180 157 83 -
Trade and other payables 5,591 5,591 - - -
Total 7,491 6,093 479 919 -
Carrying amount On Demand/within one year Within 1-2 years Within 2-5 years Over 5 years
2021 £'000 £'000 £'000 £'000 £'000
Borrowings 1,778 297 322 634 525
Lease liabilities 497 189 162 146 -
Trade and other payables 4,339 4,339 - - -
Total 6,614 4,825 484 780 525
Borrowing facilities - As at the balance sheet date, the Group has agreed
facilities of £2.23 million, of which £1.48 million was utilised at the year
end. 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 CBILS term
loans of £1.48 million. All financial liabilities will be financed from
existing cash reserves and operating cash flows.
Interest rate risk - The Group is exposed to interest rate risk through the
impact of rate changes on interest-bearing borrowings. The interest rates and
terms of repayment are disclosed in note 18 to the financial statements.
Except as outlined above, the company has no significant interest-bearing
assets and liabilities. The company does not use any derivative instruments to
reduce its economic exposure to changes in interest rates. An increase or
decrease of 1% in interest rate during the year would have resulted in
movement of £15k to the Income Statement.
Foreign currency risk - The Group is exposed to moderate foreign exchange risk
primarily from Euros due to its German operation 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. A 5% change in the Euro rate at the year-end would have resulted
in an additional gain or loss of £26k.
21. Called up share capital
Allotted, issued and fully paid 31 December 2022 31 December 2021
Class Nominal value
Ordinary 10p (2021 - 1p) £ 195,196 195,196
Number 1,951,957 19,519,563
On 13 June 2022 the company carried out a consolidation of the Company's
ordinary share capital, resulting in every 10 existing ordinary shares of 1
pence each being consolidated into 1 new ordinary share of 10 pence each.
Conversion ratio of Existing ordinary shares 10 Existing Ordinary Shares: 1 New Ordinary Shares
Opening number of shares in issue at 1p 19,519,563
Issue of shares prior to consolidation at 1p 7
Total number of shares prior to consolidation at 1p 19,519,570
Closing number of shares in issue following consolidation at 10p 1,951,957
22. 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.
23. Earnings per share
12 months to 12 months to 12 months to
31 December 2022 31 December 2021 31 December 2021
Pence per share Pence per share restated for share consolidation Pence per share
Basic earnings / (loss) per share
Before non-recurring charges and discontinued operation (11.0)p 8.8p 0.9p
After non-recurring charges and discontinued operation (88.4)p 9.4p 0.9p
Diluted earnings / (loss) per share
(11.0)p 8.3p 0.8p
Before non-recurring charges and discontinued operation
After non-recurring charges and discontinued operation (88.4)p 8.9p 0.9p
Calculation of before non-recurring and discontinued operations
12 months to 12 months to 12 months to
31 December 2022 31 December 2021 restated for share consolidation 31 December 2021
£'000 £'000 £'000
(Loss) / profit after tax for the period (1,714) 184 184
Non-recurring charges 1,500 - -
Discontinued operation - (12) (12)
(Loss) / profit after tax for the period before non-recurring charges (214) 172 172
Weighted average number of shares 31 December 2022 31 December 2021 restated for share consolidation 31 December 2021
'000 '000 '000
Weighted average number of ordinary shares for the purpose of basic 1,939 1,952 19,520
earnings per share
Weighted average number of ordinary shares for the purpose of diluted 2,077 2,075 20,752
earnings per share
The weighted average number of shares is calculated as follows:
12 months to 12 months to 12 months to
31 December 2022 31 December 2021 restated for share consolidation 31 December 2021
'000 '000 '000
Weighted average number of shares in issue during the period 1,952 1,952 19,520
Impact from purchase of own shares 28 September 2022 (13) - -
Weighted average number of ordinary shares 1,939 1,952 19,520
Weighted average number of ordinary shares used in the calculation of basic 137 123 1,232
earnings per share deemed to be
issued for no consideration in respect
of employee options
Weighted average number of ordinary shares used in the calculation of 2,076 2,075 20,752
diluted earnings per share
As set out in note 24, there were share options outstanding as at 31 December
2022 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 in
the year to 31 December 2022, as the loss for this year has an anti-dilutive
effect.
24. 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 183,350 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 24,350 12 January 2018 - 12 January 2025 474p
30 June 2021 83,000 30 June 2024 - 30 June 2031 125p
24 August 2022 76,000 24 August 2025 - 24 August 2032 102.5p
The movement in the number of options outstanding under the scheme over the
period is as follows:
12 months to 12 months to
31 December 2022 31 December 2021
Number of options outstanding as at the beginning of the period 1,101,000 1,300,818
Number of options in issue following share consolidation 110,100 -
Granted 76,000 855,000
Lapsed - (254,818)
Forfeited (2,750) (800,000)
Number of options outstanding as at the end of the period 183,350 1,101,000
Weighted average exercise price 162p 20.3p
The number of options outstanding and the weighted average exercise price
should the share consolidation have applied in 2021 would have been 110,100
and 203p respectively.
The total share-based payment charge for the year, calculated in accordance
with IFRS2 on share-based payments, was £5k (2021: £5k).
25. Own shares held
The Group has shares held by the Spaceandpeople plc Employee Benefit Trust for
the purpose of issuing shares under the company's share option scheme.
Number of shares £'000
Opening balance 1 January 2021 and closing balance 31 December 2021 - -
Acquisition of shares by Employee Benefit Trust 49,405 50
Closing balance 31 December 2022 49,405 50
Contact details:
SpaceandPeople Plc 0845 241 8215
Nancy Cullen, Gregor Dunlay
Zeus (Nominated Adviser and Broker) 0203 829 5000
David Foreman, Jamie Peel, Ed Beddows
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