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SpaceandPeople PLC (SAL)

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Monday 24 March, 2014

SpaceandPeople PLC

Preliminary Results and Proposed Final Dividend

RNS Number : 9423C
SpaceandPeople PLC
24 March 2014
 



             

SpaceandPeople plc

("SpaceandPeople" and the "Company")

Preliminary Results and Proposed Final Dividend

SpaceandPeople, the retail, promotional and brand experience specialist, is pleased to announce its preliminary results for the 12 months ended 31 December 2013.

Financial Highlights

·      16% growth in gross sales to £35.0 million

 

·      12% growth in net sales to £14.6 million

 

·      12% increase in profit before tax attributable to shareholders to £2.62 million

 

·      19% increase in basic earnings per share to 10.11p

 

·      17% increase in proposed dividend to 4.10p

 

Operational Highlights

·      Revenue from UK promotional activity up 9%

 

·      Revenue from UK retail activity down 22%

 

·      Revenue from German promotional activity up 59%

 

·      Revenue from German retail activity up 52%

 

·      Cash of £2.1 million generated from operational activities resulting in a net cash increase of £1.1 million over the year and a net cash position of £1.9 million at the year end

 

·      Major new contract wins including St Pancras International, the Garden Centre Group, One New Change London and Corio GmbH

 

·      Over 14,000 unique promotions and kiosks delivered in over 750 venues during 2013 group wide

 

For further information, contact:

SpaceandPeople Plc

0845 241 8215

Matthew Bending, Gregor Dunlay

 




Cantor Fitzgerald Europe

020 7107 8000

David Foreman, Mark Percy (Nominated Adviser)


Richard Redmayne, Paul Jewell (Corporate Broking)


 

Chairman's Statement

I am pleased to present the annual results for 2013. 

 

Overview

 

The strength of the Group is demonstrated by the increased number of tender invitations and successful pitches, leading to some notable contract wins during the year, including iconic London venues such as St Pancras International and One New Change.

 

There is renewed activity in the UK shopping centre investment market and two of the Group's longstanding clients have been successfully acquiring schemes in 2013, which are providing profitable new revenue streams.  Although UK retail results are below expectations, the promotions side of the business has performed strongly.  The total number of venues has increased yet again to over 750 at the end of 2013, which bodes well for 2014.

 

Our German business continues to go from strength to strength and is a major contributor to Group profit.  The broadening client base is producing impressive growth and the exclusive deals with Corio and MEC have added 38 shopping centres to the German portfolio this year. Together with the continuing roll-out of mobile kiosks, this has contributed to a 52% increase in German retail revenue. 

 

Amery Capital successfully sold a significant shareholding in the Group during the year. This was primarily to existing investors, but the Group's broker has also attracted a significant number of new funds and retail investors during the year, increasing the liquidity and marketability of the shares and as well as resulting in a welcome reduction in the bid - offer spread.

 

Financial results

 

As alluded to above, Group revenue increased by 12% to £14.6 million and Group profit before tax attributable to shareholders increased by 12% to £2.62 million, primarily driven by the strength of the German retail business and the UK promotions business.

 

There was a 19% increase in basic earnings per share from 8.50p to 10.11p in 2013. 

 

The balance sheet remains strong with £1.89 million of net cash at the year end (up from £869k in 2012) and £2.09 million of cash on the balance sheet at the year end.  Together with a flexible borrowing facility of £2m with Lloyds, this provides the Group with considerable capacity to grow the business.

 

People

 

I would like to express my thanks to Christopher Stainforth who stepped down from the Board during the year, following the successful integration of Retail Profile within the Group, a major strategic acquisition that he played a pivotal role in. I would also like to thank Maurice Helfgott who has chosen to retire from the Board at the upcoming AGM. Maurice joined the Board when his company Amery Capital sold Retail Profile to SpaceandPeople in 2010. Over the past four years he has played a key role in ensuring the successful amalgamation of the two businesses and following the disposal of the majority of his shareholding in the Company during 2013 this is a natural point for him to retire. We wish both Christopher and Maurice well in their other ventures and thank them for their valuable contributions to the Group.

 

I am indebted to the senior management and the enthusiastic team that they lead for all they have accomplished during the year.

 

Dividend

 

Recognising the continued progress made by the Group, your Board is proposing a dividend of 4.10p per share, a 17% increase on the dividend for last year, payable on 25 April 2014 to all shareholders on the register on 4 April 2014.

 

Outlook

 

The UK remains a competitive and fluid marketplace, but broadening the business through the acquisition of additional high footfall venues such as garden centres and railway stations is providing new revenue streams that offer promising prospects for the coming year.  Together with the increasing contributions from the expanding overseas portfolio, they provide a platform for continued growth and we look forward to 2014 with confidence. 

 

David Henderson-Williams

Chairman

21 March 2014

Chief Executive Officer's Review

 

2013 was another successful year for the business with growth in revenues to customers of 16% leading to promotions/gross sales in excess of £35 million, net profit growth, significant positive changes to our shareholder register and a good return for investors. Adding in new product developments, India's improving performance, S&P+ gaining traction and the German retail team delivering strong growth provides me with plenty to say.

 

UK

 

I am pleased with UK growth in promotions of 9% as during the second half of 2012 our income was skewed by the inclusion of the Christmas sales period for the Intu group, an existing and important customer, who required our help to manage a transitional period in their promotional business. Venue growth has continued with the winning of contracts (including The Garden Centre Group, St Pancras International and One New Change) which are performing very well improved sales efficiencies and new management systems which mean that we will deliver strong growth in 2014. The pipeline for new venues has never been better and I am confident that we will continue to win more new business in 2014.

 

UK retail saw a significant fall in sales, as was disclosed in the interim report, which resulted in a fall in revenue of 22%, the majority of which was due to changes at just three venues. The lost revenue was due to three reasons: the process in some malls of switching mobile kiosks for fixed kiosks which led to a one-off period of down-time; the decline of some big buyers of space (notably gold buying) and an average loss of 31 kiosks.

 

I see continued challenges in this area in 2014. However, change brings innovation and opportunity and we have developed new services and products that will begin to improve results in this area during 2014 and beyond. I am pleased to say the development of our "Mobile Kiosk Lite" proposal, a lower cost, less intensively managed system on reconditioned units, our new range of innovative and market leading bespoke kiosks and the roll-out of a new concept for customer acquisition stands, unlocking a previously problematic revenue opportunity for venues, are really encouraging.

 

The downturn in our UK retail business has made us look not only at new product offerings, but also the company structure to ensure that we are adequately and properly resourced for the business and opportunities going forward. During the end of 2013 and the beginning of 2014, we embarked upon a reorganisation that will deliver considerable savings in our overheads going forward.

 

Germany

 

Turnover in the German promotions business grew by 59% due to the addition of both the MEC and Corio portfolios joining our service on enhanced revenue share deals compared with our aggregate historical commission rate. Most of this revenue growth however, is due to the type of new contracts being entered into, a number of which involved the company hiring space and selling this on, rather than simply receiving commission for the arrangement of sale of space by the shopping centres themselves. Using the contribution from these contracts normalised turnover grew by 5% compared to last year. Growth in sales in relation to these new clients will be demonstrated more fully from 2014 onwards as a number of long-term bookings that have already been confirmed are delivered. We have identified 75 new centres that we will be targeting for expansion in 2014, and I am pleased to say the team has started 2014 positively.

 

German retail has been a key driver for our business and will continue to be so going forward, with revenue growing by 52% during the year. The number of mobile kiosks in operation increased from 99 to 149 units during the year with the average number of units in operation increasing from 70 to 108. We see potential for a net gain of another 20 to 30 units during 2014, plus a full year of trading with the latecomers in 2013 all enabling this team's contribution to continue to grow.

 

India

 

During 2013 we have seen encouraging growth in the MacV retail operation, one of the Group's clients, which now has 11 kiosks operating and is trading profitably. It is anticipated that they will have 20 kiosks by the end of 2014 and we are looking at additional ways to grow the brand and the business. The promotions operation was restructured during the year with the intention of focusing mainly on the major opportunities in Mumbai and Delhi. This enabled us to reinvigorate the team whilst making cost savings of 50% of overheads in the second half of the year. Promotional sales were £169k during 2013, up 39% compared with the previous year, and the business broke even. We are budgeting for further growth in promotions and a return to profit in 2014.

 

S&P+

 

Following the well received launch of S&P+ early in 2013, the team have been working tirelessly to build their infrastructure, network and influence. They transacted their first promotions during 2013, notably a nationwide promotion for Cineworld, and have been working on significant high profile opportunities that should be completed during 2014. We are delighted with the progress that is being made. 

 

Future

 

SpaceandPeople continues to grow and, naturally, some departments are doing better than others.  Property groups continue to "wax and wane" regarding "in-house" or "outsourced solutions" with regard to mall revenue. We are at the forefront internationally for meeting new demands and creating ground-breaking products. We will always see some properties leave our service, but we continue to win more to offset them. The strength in the business is its innovation, diversity and flexibility. 

 

The drive to diversify revenue streams and territories to ensure that the company is not over-reliant on any one client or country has been a personal objective since the company's inception. This trait enables new departments and ideas breathing space to develop and it usually transpires that if one department is having a tough time, others are flying.

 

In my 2012 review, I mentioned how brands had started launching simultaneously in all our markets using all SpaceandPeople offices. The next logical step would be a multinational launch using one office and this year we created a library of European locations, translated terms and conditions and accurate floor plans while linking shopping mall availability in Germany, UK and France, which enabled us to do just that. The result was that a major video game and console manufacturer launched their new product in three countries through one office.  It worked so well that the brand is currently rebooking a pan-European campaign through us. During 2014, we will expand our network of affiliated venues, enabling seamless booking of locations in every capital in Europe. London is the dominant media budget holder in EMEA and offering this service strengthens their ability to manage more budgets. Without our diversity, this project would not have happened.

 

I am excited with our pipeline of new products, the depth of our customer base and our focus on the bottom line and I am confident 2014 will be another record year.

 

 

Matthew Bending

Chief Executive Officer

21 March 2014

 

 

Operating and Financial Review

 

Introduction

 

2013 has been another year of solid progress for the business with record levels of performance and results being delivered in line with projections and expectations.

 

During the year, we have been able to attract a number of prestigious and significant clients to engage our services and we have continued to invest in recruiting and training talented staff. We have also invested in the continued development of our systems in order to service these new clients as well as our existing clients to the fullest extent.

 

Revenue

 

During 2013, gross revenue generated on behalf of our clients was the highest we have achieved as a business so far at £35 million, which was a 16% increase compared with 2012. This increase resulted in net revenue earned by the Group being 12% higher than in the previous year at £14.6 million, again, the highest achieved so far.

 

Throughout 2013, most areas of the business performed well, with retail revenue in Germany growing by 52% to £2.99 million, net promotional revenue in the UK growing by 9% to £3.56 million and net promotional revenue in Germany growing by 59% to £3.11 million. It should be highlighted however, that a significant proportion of the increase in promotional revenue in Germany was due to the gross revenue being recognised in relation to business transacted with new clients due to the nature of those particular contractual arrangements. The associated costs have been accounted for within administrative expenses. On a like-for-like basis, promotional revenue from Germany rose by 5% compared with the previous year. This growth in the UK and Germany was achieved as a result of transacting more business with and on behalf of existing clients, winning significant new clients such as Corio GmbH, the Garden Centre Group, St Pancras International station and One New Change London, and achieving a higher aggregate rate of fees and commission for doing so. Despite achieving good results in most areas of the business, the UK retail arm did not perform as well as it has done previously with revenue falling by 22% to £4.49million. This reduction in the UK retail business was expected and was highlighted in the Chief Executive's Operating Statement in the 2013 Interim Results. The reduction in the UK retail business, while causing a decline in revenue of £1.25 million, had a lesser impact on the operating profit of £0.3 million as most of the fall in revenue was in relation to clients and locations that were only marginally profitable. Management are progressing a number of initiatives to reinvigorate this area of the business and increase revenue whilst maintaining good profit margins.

 

During the year, the Group booked over 14,000 promotions and retailers into over 750 venues which demonstrates the continued increase in the reach and diversity of the business.

 

Administrative expenses

 

Administrative expenses for the Group increased by 16% to £12.61 million. This was due primarily to the inclusion of payments made in relation to German promotional clients as mentioned above as well as costs of £611k associated with S&P+ Limited, which continues to be well received by agencies and is now beginning to attract large and influential customers. Other than this, administrative expenses in the Group were comparable with those in the previous year.

 

The average number of people employed, which now includes SpaceandPeople India and S&P+ increased by 40 to 139 from 99 in 2012.

 

Profit

 

Operating profit attributable to shareholders was slightly higher than 2012 at £2.46 million (2012: £2.43 million) despite increased investment in S&P+ and profit before taxation attributable to shareholders grew by 12% to £2.62 million.

 

The average rate of corporation tax across the Group was 27% compared with 30% in 2012. This decrease was as a result of licence fee and management charges between the parent company and its subsidiaries.

 

Basic EPS increased to 10.11p (2012: 8.50p), an increase of 19% and fully diluted EPS increased to 8.98p (2012: 7.78p), an increase of 15%. Basic EPS is calculated as profit after tax attributable to owners of the company divided by the weighted average number of shares in issue during the year, which was 19,492,416 (2012: 19,439,527). 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 21,945,327, (2012: 21,271,423).

 

Cash flow

 

The Group generated £2.07 million of net cash flow from operating activities during the year and in addition to returning £681k to shareholders by way of a dividend payment, also repaid £980k of borrowings.

 

Dividends

 

The Group is proposing a final dividend of 4.10p per share at the Annual General Meeting on 24 April 2014. If approved, this will be paid on 25 April 2014 and will be 17% higher than the dividend paid during 2013. This dividend would represent a distribution to shareholders of 41% of the basic EPS in the year, which is the same as in the previous year and in line with the Group's stated policy of maintaining dividend growth broadly in line with EPS growth.

 

Potential risks

 

Loss of client

 

During 2013, the Group continued to attract new clients including those mentioned above. It is the nature of high footfall venues that the ownership of a proportion of them will change occasionally. Indeed, during 2013, we have both gained and lost a number of venues as a result of our clients acquiring and disposing of them. We endeavour to ensure that we deliver an industry leading level of service and this has resulted in both the number of clients and venues we work with increasing during 2013. While the loss of a significant client would be unwelcome, it would not put either the results or the viability of the business at significant risk.

 

Loss of key personnel

 

The unexpected loss of a member of our senior management team could have a negative effect on the business in the short term, however, we have developed a large management team of twelve members who are encouraged and required to engage with and assist their colleagues in other areas of the business to ensure that understanding and exchange of ideas is a core element of their roles. This will ensure that the business would not be overly exposed while we sought to replace the member or reorganised the senior management structure.

 

System failure

 

Whilst no guarantees can be given that all possible eventualities are covered, the Group has comprehensive and strict policies and contingency plans concerning power outages, telecommunications failure, virus protection, hardware and software failure, frequent and full offsite backup of all data and disaster recovery. Contracts and service level agreements are in place with reputable suppliers to ensure that any disruption and risk to the business is kept to an absolute minimum. The adequacy and appropriateness of these policies and plans are reviewed on a regular basis.

 

Legal claims

 

The Group constantly reviews its exposure to possible legal claims and takes appropriate advice and action to protect both itself and its clients where any avoidable risk is identified, for example, by amending terms and conditions, service agreements, licences and risk assessments.

 

Summary and outlook

 

2013 was a successful year for the Group overall with growth in most areas more than compensating for areas where opportunities were fewer than in previous years. Revenue, profit, EPS and dividends are all at record levels again even as we continued to invest in the establishment of S&P+ as it begins to gain traction. Since the end of 2013 management has embarked upon a significant restructuring of the staff and management of the business which will lead to savings in overheads during 2014 with the full benefits being achieved from 2015 onwards. Along with anticipated growth in revenues, we are confident that this will ensure that the profitability of the Group will continue to increase in 2014 and beyond.

 

Gregor Dunlay

Chief Financial Officer

21 March 2014

 

Consolidated Group Statement of Comprehensive Income

For the 12 months ended 31 December 2013

 

 

               

Notes


12 months to

31 December '13

£'000


12 months to

31 December '12

£'000







Revenue

4


14,567


13,055







Administration expenses



(12,610)


(10,900)

Other operating income



322


216













Operating profit

5


2,279


2,371













Finance income

Finance costs

7

7


215

(55)


-

(97)







Profit before taxation



2,439


2,274







Taxation

8


(648)


(678)







Profit after taxation



1,791


1,596

 

Other comprehensive income












Foreign exchange differences on translation of foreign operations



(51)


(29)







Total comprehensive income for the period



1,740


1,567







Profit for the year attributable to:












Owners of the Company



1,971


1,654

Non-controlling interests



(180)


(58)




1,791


1,596

Total comprehensive income for the period attributable to:












Owners of the Company



1,920


1,625

Non-controlling interests



(180)


(58)

Total comprehensive income for the period



1,740


1,567

 

 

Earnings per share

 

23











 

Basic

 

 

Diluted



 

10.11p

 

 

8.98p


 

8.50p

 

 

7.78p







 

 

Consolidated Group Statement of Financial Position

At 31 December 2013

Company number SC212277


Notes


31 December '13

£'000


31 December '12

£'000

Assets






Non-current assets:






Goodwill

11


8,225


8,225

Other intangible assets

12


7


20

Property, plant & equipment

13


1,590


1,362




9,822


9,607

Current assets:






Trade & other receivables

15


5,137


3,839

Cash & cash equivalents

16


2,088


2,019




7,225


5,858







Total assets



17,047


15,465







Liabilities






Current liabilities:






Trade & other payables

17


6,260


5,069

Current tax payable

17


562


289

Other borrowings

18


205


455




7,027


5,813

Non-current liabilities:






Deferred tax liabilities

14


10


10

Long-term loan

18


-


730




10


740







Total liabilities



7,037


6,553

 

 






Net assets



10,010


8,912

 

 






Equity






Share capital

21


195


194

Share premium



4,868


4,830

Special reserve



233


233

Retained earnings



4,717


3,478







Equity attributable to owners of the Company



10,013


8,735

Non-controlling interest



(3)


177

Total equity



10,010


8,912

 

                                                                                                                                                      

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2014.

Signed on behalf of the Board of Directors by:

 

 

MJ Bending - Director

Consolidated Group Statement of Cash Flows

For the 12 months ended 31 December 2013

 


Notes

12 months to

31 December '13

£'000



12 months to

31 December '12

£'000

Cash flows from operating activities






Cash generated from operations


2,499



3,001

Interest paid

Taxation


(55)

(375)



(97)

(635)

Net cash inflow from operating activities


2,069



2,269







Cash flows from investing activities






Interest received

Purchase of intangible assets

 

12

215

(1)



-

(30)

Purchase of property, plant & equipment

13

(592)



(424)

Net cash (outflow) from investing activities


(378)



(454)







Cash flows from financing activities






Proceeds from issue of shares


39



14

Funding costs on acquisition of subsidiary, net of cash received


-



(168)

Repayment of bank loan / loan notes


(480)



(463)

Bank facility received  / (repaid)


(500)



235

Dividends paid

10

(681)



(564)

Net cash (outflow) from financing activities


(1,622)



(946)













Increase in cash and cash equivalents


69



869

Cash and cash equivalents at beginning of period


2,019



1,150

Cash and cash equivalents at end of period

16

2,088



2,019

 

 

Reconciliation of operating profit to net cash flow from operating activities






Operating profit


2,279



2,371

Amortisation of intangible assets

12

14



36

Depreciation of property, plant & equipment

13

364



310

Effect of foreign exchange rate moves


(51)



(29)

(Increase) / decrease in receivables


(1,298)



(497)

Increase / (decrease) in payables


1,191



810

Cash flow from operating activities


2,499



3,001

 

Group Statement of Changes in Equity

For the 12 months ended 31 December 2013

 

 

 


Share capital

£'000


Share premium £'000


Special reserve  £'000


Retained earnings £'000


Non-controlling interest £'000


Total equity

£'000














At 31 December 2011


194


4,816


233


2,417


-


7,660














Comprehensive income:













Foreign currency translation


-


-


-


(29)


-


(29)

Profit for the period


-


-


-


1,654


(58)


1,596

Total comprehensive income


-


-


-


1,625


(58)


1,567














Transactions with owners:













Shares issued

Dividends paid

Minority interest on acquisition


-

-

-


14

-

-


-

-

-


-

(564)

-


-

-

235


14

(564)

235

 

Total transactions with owners


-


14


-


(564)


235


(315)














At 31 December 2012


194


4,830


233


3,478


177


8,912

 

Comprehensive income:













Foreign currency

translation


-


-


-


(51)


-


(51)

Profit for the period


-


-


-


1,971


(180)


1,791

Total comprehensive income


-


-


-


1,920


(180)


1,740



























Shares issued

Dividends paid


1

-


38

-


-

-


-

(681)


-

-


39

(681)

Total transactions with owners


1


38


-


(681)


-


(642)

 

 













At 31 December 2013


195


4,868


233


4,717


(3)


10,010

               



Notes to the Financial Statements

For the 12 months ended 31 December 2013

 

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 2013 and for the comparative period ended 31 December 2012 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 part of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that SpaceandPeople has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

 

Future accounting developments

 

New and revised IFRSs applied with no material effect on the consolidated financial statements

 

Title

Effect on Group

 

IFRS7 - 'Financial Instruments' : Disclosures on Asset and Liability Offsetting

 

 

None

 

IFRS 13 - 'Fair Value Measurement'

 

 

None

 

IAS 19 - Amendments to 'Employee Benefits'

 

 

None

 

IAS 1 - Amendments to 'Presentation of Financial Statements': Presentation of Items of Other Comprehensive Income

 

None

 

Annual Improvements to IFRSs (2009-2011)

 

 

None

 

 

The following standard will be introduced in future periods

 

Title

Effect on Group

 

IFRS 9 - 'Financial Instruments'

 

 

None

 

IFRS 10 - 'Consolidated Financial Statements'

 

 

None

 

IFRS 12 - 'Disclosure of Interests in Other Entities'

 

 

None

 

IAS 27 - (Revised 2011) 'Separate Financial Statements'

 

 

None

 

IAS 28 - (Revised 2011) 'Investments in Associates and Joint Ventures'

 

 

None

 

IAS 32 - Amendments to 'Financial Instruments : Presentation': Offsetting Financial Assets and Financial Liabilities

 

 

None

 

IAS 36 - Amendments to 'Impairment of Assets'

 

 

None

 

Annual Improvements to IFRSs (2010-2012 and 2011-2013)

 

 

None

 

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 foresee currently 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.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree.  Acquisition-related costs are generally recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.  If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see above) 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.

 

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 administrative expenses.

 

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

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

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

 

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.

 

Foreign development - The Group capitalises costs relating to the development of its process and service in certain foreign markets. Costs are only capitalised where the Group considers that there is a clearly definable project and in each case a process is separately identifiable which has its own individual value. Costs are capitalised in relation to countries where there is a reasonable expectation that future revenues will exceed capitalised costs. Where the criteria for capitalisation are not met, costs are written off in the year incurred. Capitalised costs are written off over five 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.

 

Leasing commitments

 

Rentals paid under operating leases are charged against profit as incurred. The Group has no finance leases.

 

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis over the term of the relevant lease.

 

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 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 are carried in the balance sheet at cost and comprise cash in hand, cash at bank and deposits with banks.

 

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 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, Retail Profile 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 business segments - Promotional Sales and Retail, split by geographic area, before licence fees and management charges made between Group companies.

 

 

Segment revenues and results

for 12 months to

31 December '13

Promotion

UK

£'000

Promotion Germany

£'000

Retail

 UK

£'000

Retail

Germany

£'000

Head Office

£'000

Other

 

£'000

Group

 

£'000









Continuing operations revenue

3,566

3,106

4,489

2,994

-

412

14,567









Administrative expenses

(2,104)

(2,365)

(3,473)

(2,478)

(1,402)

(788)

(12,610)

Other revenue

-

111

-

202

-

9

322









Segment operating profit / (loss)

1,462

852

1,016

718

(1,402)

(367)

2,279

 

Finance income

Finance costs

 

-

-

 

-

-

 

215

(55)

 

-

-

 

-

-

 

-

-

 

215

(55)









Segment profit / (loss) before taxation

1,462

852

1,176

718

(1,402)

(367)

2,439









 

Segment assets and liabilities

as at 31 December '13

Promotion

UK

£'000

Promotion Germany

£'000

Retail

 UK

£'000

Retail

Germany

£'000

Other

 

£'000

Group

 

£'000








Total segment assets

5,753

3,049

5,445

2,140

660

17,047

Total segment liabilities

(1,625)

(1,248)

(1,997)

(1,557)

(610)

(7,037)

Total net assets

4,128

1,801

3,448

583

50

10,010

 

 

 

Segment revenues and results

for 12 months to

31 December '12

Promotion

UK

£'000

Promotion Germany

£'000

Retail

 UK

£'000

Retail

Germany

£'000

Head Office

£'000

Other

 

£'000

Group

 

£'000









Continuing operations revenue

3,269

1,958

5,739

1,967

-

122

13,055









Administrative expenses

(1,928)

(1,224)

(4,447)

(1,743)

(1,246)

(312)

(10,900)

Other revenue

-

32

-

113

-

71

216









Segment operating profit / (loss)

1,341

766

1,292

337

(1,246)

(119)

2,371

 

Finance costs

 

(8)

 

-

 

(89)

 

-

 

-

 

-

 

(97)









Segment profit / (loss) before taxation

1,333

766

1,203

337

(1,246)

(119)

2,274









 

Segment assets and liabilities

as at 31 December '12

Promotion

UK

£'000

Promotion Germany

£'000

Retail

 UK

£'000

Retail

Germany

£'000

Other

 

£'000

Group

 

£'000








Total segment assets

6,254

1,676

5,736

1,691

559

15,916

Total segment liabilities

(1,822)

(710)

(3,012)

(1,387)

(73)

(7,004)

Total net assets

4,432

966

2,724

304

486

8,912

 

 5.        Operating profit

The operating profit is stated after charging:


12 months to

 December '13

£'000

12 months to

December '12

£'000




Motor vehicle leasing

53

35

Property leases

287

203

Amortisation of intangible assets

14

36

Depreciation of property, plant and equipment

364

310


718

584

Auditor's remuneration:



Fees payable for:

Audit of Company

 

18

 

20

Audit of subsidiary undertakings

16

10

Tax services

4

3

Other services

9

26


47

59




Directors' remuneration

666

633

 

6.         Staff costs

The average number of employees in the Group during the period was as follows:


12 months to December '13

12 months to

 December '12

 

Executive Directors

6

6

Administration

27

20

Telesales

70

43

Commercial

27

20

Maintenance

9

10


139

99

 


12 months to December '13

£'000

12 months to

 December '12

£'000




Wages and salaries

4,354

3,642

Social Security costs

551

428

Pensions

26

18


4,931

4,088

 

Details of Directors' emoluments, including details of share option schemes, are given in the remuneration report. These disclosures form part of the audited financial statements of the Group.

 

7.         Finance income and costs


12 months to December '13

£'000

12 months to

December '12

£'000

 

Finance costs:



Interest received

Interest payable

215

(55)

-

(97)




Interest received represents the refund of interest previously paid on interest hedging products and the associated interest on overpayments.

8.         Taxation


12 months to December '13

£'000

12 months to

December '12

£'000

UK corporation tax:



Corporation tax

674

334

Adjustment in respect of prior period

170

(20)

Foreign tax:



Current tax on foreign income for the period

-

364

Adjustment in respect of prior period

(196)





Income tax expense as reported in the Income Statement

648

678

 

 

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The differences are explained below:

                               


12 months to December '13

£'000

12 months to

December '12

£'000




Profit on ordinary activities before tax

2,439

2,332

Profit on ordinary activities at the standard rate of corporation tax in the UK of 23.25% (2012: 24.5%)                                                              

                                                                Jan - Mar: 26% (2012)

                                                                Apr - Dec: 24% (2012)

                                                                Jan - Mar: 24% (2013)

                                                                Apr - Dec: 23% (2013)

 

   

 

 

 

 

144

423

 

 

 

571

Tax effect of:



-       Expenses not deductible for tax purposes

81

13

-       Difference due to foreign taxation rates

-

94




Income tax expense as reported in the Income Statement

648

678

 

9.         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 £1,528,208 after the incorporation of all UK head office costs (2012: £382,418) which is dealt with in the financial statements of the parent Company.

 

Company profit includes licence fee recharges back to both German companies during the period for the years 2012 and 2013.

 

10.       Dividends


12 months to

December '13

£'000

12 months to

December '12

£'000




Paid during the period

681

564

Recommended final dividend

800

681

 

Equity - 3.50p per ordinary share proposed and paid for 2012. Recommended final dividend for 2013 - 4.10p per ordinary share.

 

The recommended final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in the financial statements.

 

11.       Goodwill

 

Cost

£'000

At 31 December 2011

7,981

Additions

244

At  31 December 2012

8,225

Additions

-

At 31 December 2013

8,225

 

Accumulated impairment losses


At 31 December 2011

-

Charge for the period

-

At  31 December 2012

-

Charge for the period

-

At 31 December 2013

-

 

Net book value


At 31 December 2011

7,981

At  31 December 2012

8,225

At 31 December 2013

8,225

 

 

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 business of Retail Profile Holdings Limited is an identifiable CGU and the carrying amount of Goodwill is allocated against this CGU. No amortisation of the carrying value has been occurred at the financial statement review date. Goodwill for Retail Profile Holdings Limited remains unchanged at £7,981,000.

 

The recoverable amount of the cash generating unit is determined on a value in use calculation which uses cash flow projections based on financial budgets approved by the Board covering a 20 year period and a discount rate of 6% per annum. Cash flow projections during the budget period are based on no growth in EBITDA which the Directors consider to be very conservative given the plans for the business and the potential increased returns. The Directors believe that any reasonable possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit and that cash flow from this unit will continue in line with expectations for the foreseeable future. The discounted cash flows exceed the carrying value in Year 6.

 

On 4 June 2012, SpaceandPeople India Pvt Ltd, a company that was until this date an associated company of SpaceandPeople plc, issued a further 250,000 shares. This increased the total issued share capital of SpaceandPeople India Pvt Ltd to 1,083,642 shares. As a result of shares acquired at that time, the Company's shareholding increased to 564,973 shares. This represents 52.14% of SpaceandPeople India Pvt Ltd issued share capital and with effect from 4 June 2012; SpaceandPeople India Pvt Ltd became a subsidiary of the SpaceandPeople Group.

 

Since 4 June 2012, SpaceandPeople has acquired a further 112,380 shares in SpaceandPeople India Pvt Ltd, bringing its total shareholding to 677,353 shares, representing 62.51% of the issued share capital.

 

The fair value of the assets and liabilities of SpaceandPeople India Pvt Ltd recognised as a result of the acquisition are as follows:


£'000



Cash

284



Property, plant and equipment

28



Receivables

327



Payables

(56)



Net identifiable assets acquired

583



Less fair value of non-controlling interest

(219)



Fair value of assets acquired

364







Fair value of consideration

608



Goodwill

244



 

Prior to the acquisition of shares on 4 June 2012, the Company carried the investment in SpaceandPeople India Pvt Limited at £156k. The shares in June were acquired for £452k. The total cost and fair value of the consideration of the controlling interest at 30 June 2012 was £608k.

 

12. Other intangible assets

 

 

 

Cost

Website development

£'000

Product development

£'000

Patents & trademarks

£'000

 

Total

£'000






At 31 December 2011

284

137

10

431

Additions

-

-

30

30

At  31 December 2012

284

137

40

461

Additions

-

-

1

1

At 31 December 2013

284

137

41

462

 

 

 

Amortisation

Website development

£'000

Product development

£'000

Patents & trademarks

£'000

 

Total

£'000






At 31 December 2011

274

124

7

405

Charge for the period

10

13

13

36

At  31 December 2012

284

137

20

441

Charge for the period

-

-

14

14

At 31 December 2013

284

137

34

455

 

 

 

Net book value

Website development

Product development

Patents & trademarks

 

Total


£'000

£'000

£'000

£'000






At 31 December 2011

10

13

3

26

At  31 December 2012

-

-

20

20

At 31 December 2013

-

-

7

7

 

13.       Property, plant and equipment

The Group movement in property, plant & equipment assets was:

 

 

Cost

Plant & equipment

£'000

Fixture & fittings

£'000

Computer equipment

£'000

 

Total

£'000






At 31 December 2011

1,298

225

205

1,728

Acquired on acquisition

28

-

-

28

Additions

319

30

75

424

At  31 December 2012

1,645

255

280

2,180

Acquired on acquisition

Additions

-

426

-

3

-

163

-

592

At 31 December 2013

2,071

258

443

2,772

 

 

Depreciation

Plant & equipment

Fixture & fittings

Computer equipment

 

Total


£'000

£'000

£'000

£'000






At 31 December 2011

222

136

150

508

Charge for the period

256

25

29

310

At  31 December 2012

478

161

179

818

Charge for the period

247

47

70

364

At 31 December 2013

725

208

249

1,182

 

 

Net book value

Plant & equipment

Fixture & fittings

Computer equipment

 

Total


£'000

£'000

£'000

£'000






At 31 December 2011

1.076

89

55

1,220

At  31 December 2012

1,167

94

101

1,362

At 31 December 2013

1,346

50

194

1,590

 

14.       Deferred tax




31 December '13

£'000




31 December '12

£'000

 

Deferred tax liability:








Accelerated capital allowances



10




10

Movement on deferred tax position:








Opening balance



10




10

Released in the period



-




-

Closing balance



10




10









 

    There has been no movement in the deferred tax balance in the year.

 

15. Trade and other receivables

 




31 December '13

£'000




31 December '12

£'000









Trade debtors



4,329




3,218

Other debtors



203




24

Prepayments



269




400

Accrued revenue



336




197

Total



5,137




3,839

 

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 2013, trade receivables of £1,441k (2012: £1,083k) were past due but not impaired.

 

The ageing of trade debtors:

 


Current

£'000


0 - 30 Days

£'000


31 - 60 Days

£'000


61 Days +

£'000


Total

£'000

 

31 December '13

 

2,888


 

433


 

275


 

733


 

4,329











 

31 December '12

2,135


454


268


361


3,218











 

16. Cash and cash equivalents




31 December '13

£'000

 




31 December '12

£'000

Cash at bank and on hand



2,088




2,019




2,088




2,019

 

 








 

17.       Trade and other payables




31 December '13

£'000

 




31 December '12

£'000

Trade creditors



899




504

Other creditors



2,047




1,571

Social Security and other taxes



407




658

Accrued expenses



1,812




1,896

Deferred income



1,095




440

Trade and other payables



6,260




5,069

 

Corporation tax



 

562




 

289

 

Total



 

6,822




 

5,358

 

18.       Other borrowings




31 December '13

£'000

 




31 December '12

£'000

Bank loan


205


455

 



205


455

 

 

At 31 December 2013, Retail Profile Holdings Limited had a bank loan of £204,907 (2012: £684,592) all of which is included within current liabilities being repayable within 12 months (2012: £455,004). The loan is repayable in monthly instalments of £37,917 with interest at a fixed rate of 6.5%. The loan note is secured by a fixed and floating charge over the assets of SpaceandPeople and its subsidiaries.

In addition, as at 31 December 2013, SpaceandPeople plc had drawn down £nil (2012: £500,000) of its agreed bank facility of £2,000,000 (2012: £1,000,000).  This is part of a revolving credit facility with repayment due in July 2014

 

19.       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 operates a cash-generative business and holds net funds. The Directors consider the funding structure to be adequate for the Group's current funding requirements.

 

Borrowing facilities - The Group has an agreed facility of £2m, of which £nil was utilised at the year end, at a rate of 3.50% over base rate secured by an omnibus guarantee and set off agreement. The facility has not been drawn, but improves the financial flexibility of the Group.

 

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 £2,000,000 at 3.5% above base rate. See note 20 regarding details of outstanding Retail Profile Holdings Limited loan. 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 hedges the position where appropriate. In addition, the Group has investments in a subsidiary in India.

 

20.       Operating lease commitments

 

At the period end date, SpaceandPeople plc had outstanding commitments for future lease payments which fall due as follows:




31 December '13

£'000

 




31 December '12

£'000

Within 1 year

Between 2 and 5 years inclusive


3,172

5,978


2,253

3,534

 

 

21.       Called up share capital

 

Allotted,  issued and fully paid

31 December '13

31 December '12

Class

Nominal value




Ordinary

1p

£

195,196

194,581



Number

19,519,563

19,458,063

               

61,500 shares were issued in the year as part of the exercise of share options.

 

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, which are set out in the remuneration report.

 

23.       Earnings per share                                  


12 months to

31 December '13

Pence per share

12 months to

31 December '12

Pence per share

Basic earnings per share

Before non-recurring costs

 

 

10.11p

 

8.50p

 

 

Diluted earnings per share

Before non-recurring costs

 

 

 

8.98p

 

 

7.78p

 

 

 

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

31 December '13

£'000

12 months to

31 December '12

£'000

Profit after tax for the period attributable to owners of the Company

 

 

1,971

 

1,654











12 months to

31 December '13

'000

14 months to

31 December '12

'000

Weighted average number of ordinary shares for the purposes of basic earnings per share

 

19,492

 

19,440

 

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

31 December '13

£'000

12 months to

31 December '12

£'000

Profit after tax for the period attributable to owners of the Company

 

 

1,971

 

1,654








12 months to

31 December '13

'000

12 months to

31 December '12

'000

Weighted average number of ordinary shares for the purposes of diluted earnings per share

 

21,945

 

21,271

 

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

31 December '13

'000

12 months to

31 December '12

'000

 

Weighted average number of shares in issue during the period

 

19,492

19,440

Weighted average number of ordinary shares used

in the calculation of basic earnings per share

deemed to be issued for no consideration

in respect of employee options

 

2,453

1,831

Weighted average number of ordinary shares used

in the calculation of diluted earnings per share

 

21,945

21,271

 

24.       Share options

 

The Group has established a share option scheme under which the maximum number of ordinary shares exercisable that can be granted is restricted to such number of shares the aggregate market value of which cannot exceed £120,000 per employee at the date of grant.  Senior executives and certain eligible employees are entitled to participate in the scheme 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 2,452,911 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

 

16 January 2008


11,611


16 January 2011 - 15 January 2015


155p

14 January 2009


8,000


14 January 2012 - 13 January 2016


50p

1 June 2009


12,307


1 June 2012 - 30 May 2015


65p

22 October 2009


193,499


1 November 2012 - 31 October 2014


88.6p

22 October 2009

22 October 2009


193,499

194,665


1 November 2012 - 31 October 2014

1 November 2013 - 31 October 2014


88.6p

88.6p

21 May 2010


194,665


1 November 2013 - 31 October 2015


88.6p

21 May 2010


194,665


1 November 2014 - 31 October 2016


88.6p

27 March 2012

26 March 2013


720,000

730,000


27 March 2015 - 27 March 2022

26 March 2016 - 26 March 2023


70p

101p

 

 

 

The movement in the number of options outstanding under the scheme over the period is as follows:

 


12 months to

31 December '13

'000

12 months to

31 December '12

'000

 

Number of options outstanding as at the beginning of the period


1,983,076


1,281,076

Granted


730,000


730,000

Exercised


(61,500)


(27,000)

Forfeited


(198,665)


(1,000)

Number of options outstanding as at the end of the period


2,452,911


1,983,076

 








In total, 2,452,911 options were outstanding at 31 December 2013 (1,983, 076 at 31 December 2012) with a weighted average exercise price of 86.9p (81.1p at 31 December 2012).  Of these, 808,246 were exercisable (484,416 at 31 December 2012) with a weighted average exercise price of 88.8p (85.6p at 31 December 2012).

 

The Black Scholes model was used to obtain the fair value of the share options. The main assumptions made were as follows:

 

Option price                                                                          101p                       

Market price at grant of option                                          101p                       

Expected volatility                                                                                12.84%                   

Average expected vesting period from 31.12.13                              7 years   

Risk free rate                                                                          1%                          

Dividend yield                                                                       4%                          

 

The expected volatility was determined by calculating the historical volatility of the Company's share price over the last year.

 

Based on these assumptions, the average fair value per option granted in the year was 4.22p (1.11p at 31 December 2012).

 

The performance related conditions in respect of the 2,452,911 options that are subject to such conditions have been reflected by adjusting the number of options expected to vest based on the likelihood of the performance criteria being met.

 

The total share-based payment charge for the year, calculated in accordance with IFRS2 on share based payments, was £30,806 (2012: £19,426).No value has been included in the accounts for share options issued prior to 2012. The fair value of these options was assessed at the date of issue and deemed to such that no adjustment in the financial statements was required.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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