1
SMARTSPACE SOFTWARE PLC
Annual Report
for the Year Ended
31 January 2021
Year Ended 31 January 2021 CONTENTS
HIGHLIGHTS
Our Customers and Partners..................................................................... 4
What we do ....................................................................................................... 5
Our History ......................................................................................................... 6
Our Customers ................................................................................................. 7
Key Highlights ................................................................................................... 8
STRATEGIC REPORT
Chairman’s statement ................................................................................... 9
Strategic report: Strategy and operational review ........................ 12
Strategic report: Financial review ..........................................................16
Strategic report: Principal risks ............................................................. 20
Strategic report: s172 statement ............................................................22
GOVERNANCE
Company information and advisers .....................................................28
Directors and Officers .................................................................................29
Remuneration report .................................................................................. 30
Audit Committee report ............................................................................32
Corporate Governance report ............................................................... 34
Directors’ report ............................................................................................38
FINANCIAL STATEMENTS
Independent auditor’s report to the members
of SmartSpace Software plc ....................................................................42
Consolidated statement of comprehensive income ................... 48
Consolidated balance sheet .................................................................... 49
Consolidated statement of changes in equity .................................51
Consolidated statement of cash flows ...............................................52
Notes to the consolidated financial statements ............................53
Parent Company balance sheet .............................................................97
Parent Company statement of changes in equity ....................... 98
Parent Company statement of cash flows....................................... 99
Notes to the Parent Company financial statements ................. 100
4
SmartSpace Software PLC Annual Report
OUR C USTOMERS AND PART NE RS
Customers
USA
UK
Australia
New Zealand
Canada
Netherlands
36%
20%
18%
12%
5%
1%
Ireland
Germany
Singapore
Italy
ROW
1%
1%
1%
1%
4%
Customers
UK
Australia
ROW
64%
34%
2%
Partners
UK
Australia
Far East
Americas
(excluding US)
59%
22%
9%
10%
OUR OFFICES
SwipedOn
Space Connect
Anders & Kern
1/115 The Strand
Tauranga
New Zealand
Norderstedt House
James Carter Road
Norderstedt House
James Carter Road
Mildenhall
UK
Mildenhall
UK
5
WHAT WE DO
SmartSpace Software Plc develops and sells SaaS software solutions to help clients manage their workspaces.
We do this by offering cloud-based SaaS software solutions and complementary hardware to allow:
Desk booking
Meeting room management
Visitor management
Analytics
We differentiate ourselves by offering products that are fast to deploy and easily configured by our customers
or partners.
OPERATI NG BU SIN ESSES:
Products/
Services
SaaS Visitor Management
Software (VMS) and desk
management software
SaaS Integrated Workplace
Software
Distribution of Smart
workplace solutions
Includes Meeting Room
Booking, Desk Management &
Visitor Management
Hardware & software sales
Meeting room, workplace
sensors design and install
Market
Global
Global
UK
Small single-site business to
multi-location Fortune 500
businesses
Small to medium size
businesses (up to 1500
employees per location)
Sales Model
Direct
Channel
Channel
Deal size
Average ARR per client
NZ$1,200
Average ARR per client
£8,000
Varies
Employees
35
16
14
Location
Tauranga, New Zealand
Mildenhall, UK
Mildenhall, UK
Austin, Texas
Year Ended 31 January 2021 6
SmartSpace Software PLC Annual Report
OUR HISTORY
2000
Started life as an AIM company called Coms with a business offering telecoms
and IT infrastructure services.
2013
Acquired Redstone, a major provider of System Integration and IT managed service
business, along with a number of other companies in the animation and telecoms sectors.
2014
Developed our first software solution to help a client manage their desk utilisation.
2015
Restructured the group and divested or closed a number of subsidiaries, exited
the telecoms market.
2016
Accelerated our investment in our space management software, acquired ConnectIB
to enable us to scale our software development capability. Renamed Coms plc to
RedstoneConnect plc with a focus on systems integration, managed services and a
growing software division.
2017
Acquired Anders & Kern, based in Mildenhall who had over 10 years’ experience in
supplying meeting room management technology and implementation.
2018
June 2018 disposed of the systems integration and managed services divisions to focus on
software specialising in space management.
July 2018 renamed RedstoneConnect as SmartSpace Software plc.
October 2018 acquired SwipedOn, a leading SaaS provider of visitor management software.
2019
November 2019 acquired Space Connect, a self-service SaaS workspace
management platform
2020
August 2020 disposed of Enterprise software division to allow focus on
SaaS sales to the SME and mid-market
2021
May 2021 over 4,700 SaaS customers in more than 6,900 locations
Year Ended 31 January 2021
Year Ended 31 January 2021
7
77
OUR CUSTO MERS
Year Ended 31 January 2021 8
SmartSpace Software PLC Annual Report
KEY HIG HLIG HTS
Group recurring revenue
0
0
0
£
’
2500
2000
1500
1000
500
0
FY2019
FY2020
FY2021
SaaS revenue
Other Recurring revenue
SwipedOn Customers, Locations and ARR
r
e
b
m
u
N
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
6.0
5.0
4.0
3.0
2.0
1.0
0
$
Z
N
O ct-18
Ja n-19
A pr-19
J ul-19
O ct-19
Ja n-2 0
A pr-2 0
J ul-2 0
O ct-2 0
Ja n-21
ARR
Customers
Locations
SwipedOn Key metrics over time
Customers (no)
Locations (no)
Annual recurring revenue
- ARR (NZ$m)
Average revenue per
user/month - ARPU (NZ$)
Revenue churn (%)
CAC (NZ$)
LTV (NZ$)
LTV/CAC
Jan 19
Jan 20
Jan 21
2,713
3,590
3,896
5,280
4,735
6,741
N$1.9m
$3.6m
$5.2m
$57.60
$77.85
$91.90
5.32%
$1,207
4.25%
$1,144
6.85%
$1,687
$6,701
$8,373
$8,588
5.6x
7.3x
5.1x
18%
ARPU
Growth
FY21
43.4%
ARR
Growth
FY21
1,883
New Locations
added
FY21
1,352
New customers
added
FY21
9
CH A IRMAN’S STATEMENT
OVERVIEW
I am pleased to report a year of good progress for the
Group in its transition to a cloud-based SaaS business
focusing on software which is easy to implement and
operate. As I reported last year the Board had taken a
decision to sell the enterprise software division in early
2020 and the disposal of that division was completed
on 13 August 2020. Following this the Group has
three operating entities; SwipedOn, Space Connect and
Anders & Kern.
Our progress has been set against the backdrop of
Covid-19 and the impact that it has had on the UK
and our other markets around the world. During the
pandemic, the Group’s primary concern has been the
health and safety of its employees, customers, and
stakeholders, and a range of measures were put in
place to protect them as well as mitigate the financial
impact on the Group. Throughout the lockdowns our
UK offices were temporarily closed and where possible
staff worked from home. Where this was not possible,
the Group utilised the UK Government’s Coronavirus
Job Retention Scheme to furlough employees.
After Covid-19 first impacted, the Group reacted
immediately by changing our development priorities
to focus on providing functionality within our solutions
that help customers manage their covid-related issues.
It is a testament to the Group’s agile ways of working
that both SwipedOn and Space Connect were able
to offer such functionality within a few weeks of the
pandemic first hitting.
generation meeting room
panel, the Evoko Naso, was
launched in December 2020.
We hope that Naso will provide the
Group with a significant new revenue stream as we
progress through FY22.
Anders & Kern (“A+K”) has added additional workspace
focussed hardware to its product lines to complement
the Group’s software solutions which it is also now
selling. Covid-19 lockdowns during the year restricted
sales volumes in A+K, however the business is well
placed to support office re-openings through provision
of both workplace hardware and software solutions.
SALE OF ENTERPRISE SOFTWARE
DIVISION
In line with the Board’s strategy of focusing the
software business on a SaaS model, SmartSpace
completed the sale of SmartSpace Global Ltd together
with certain contracts of its US subsidiary (which
comprised the Enterprise software division) on 13
August 2020 to Four Winds Interactive. The initial
consideration was £4.6m, paid in cash on completion,
and a further deferred payment of £0.3m which was
received in May 2021. The Enterprise software division
had 38 employees and operated out of two locations.
Its revenues for the year ended 31 January 2020 were
£2.2m and the operating loss of the business in that
period was £5.8m. At the date of sale, the net assets
disposed of were £4.3m (see note 15).
DEVELOPMENT OF THE GROUP’S
BUSINESS
PEOPLE
During the year ended 31 January 2021, the Company
made significant progress in developing its SaaS
business. SwipedOn grew its annual recurring revenues
by 43% during the year to NZ$5.2m (£2.7m), and, at
31 January 2021, had 4,735 customers operating out
of 6,741 locations (2020: 3,896 customers in 5,280
locations). This positive momentum continued post
year end with SwipedOn increasing its ARR, ARPU and
its total number of customers in the first quarter of
FY22.
Space Connect offers a full range of cloud-based
space management software which is sold through the
Company’s international distributor network. Amongst
others, our distribution network includes Softcat in the
UK and Esco in the Far East. A white label version of
Space Connect, provided through our partner’s next
Despite the challenging economic backdrop, SwipedOn
and Space Connect continued to hire to support
SmartSpace’s growth ambitions. As the world exited
the first wave of Covid-19 lockdowns and businesses
returned to work, we increased our resources in
New Zealand as we prepared to centralise all of
our development resource in one location. We also
added senior talent to our sales team in New Zealand
and recruited further sales resources in the UK.
Recognising the impact of Covid-19 on the Group and
the fact that most UK staff were placed on furlough
for long periods, the Board decided that no senior
management bonuses would be paid in respect of the
year ended 31 January 2021.
During what has been a difficult year for everybody, I
would like to thank all our staff who have adapted well
to new ways of working, and to those staff who have
Year Ended 31 January 2021 10
been furloughed during the year for their patience and
continuing commitment to the success of the Group.
ANNUAL GENERAL MEETING
The Board will shortly be sending out a notice of
Annual General Meeting which unfortunately due to
ongoing restrictions will have to be a closed meeting
once again. I would urge shareholders to email any
questions they may have to investors@smartspaceplc.
com and to send in proxies so their votes on the
resolutions contained in the notice of meeting will be
counted.
FUTURE DEVELOPMENTS AND OUTLOOK
Since the period end we have seen continued demand
for our products in markets that have succeeded in
containing the impact of Covid-19, in particular in
Australia and New Zealand. We expect this trend
to continue in our larger markets as they reopen,
particularly in the US, UK and Canada. Following the
announcement of the roadmap out of lockdown in the
UK there has been a noticeable increase in activity, and
we are seeing similar trends in the US and Canada, with
this momentum continuing each month.
A key priority for SmartSpace in this coming year
will be to grow ARPU and ARR from our existing
customers. We intend to focus our sales efforts on
customers where there are opportunities to increase
revenue through multi-location deployments and the
sale of add-on modules. The launch of SwipedOn desks
gives us a great opportunity to increase ARPU and
we will only need a relatively small penetration of our
customer base to have a significant impact on ARR.
Growth in location numbers will be an increasingly
important measure of our success.
It is also our intention to increase the market for our
products by entering new geographic markets. Even
though we have SwipedOn customers in 73 countries
our focus has been primarily on the English-language
version. We intend to launch a local language version
of SwipedOn in at least one new geography as we
complete the development work scheduled in our
product roadmap which is required to make SwipedOn
fully multilingual.
We have made considerable progress building our
indirect partner network for Space Connect and again
we expect this momentum to continue this year. Many
of our partners, including Softcat and ProAV, have
defined offerings as part of their “Return To the Office”
(RTO) initiatives. Our solutions are a key part of these
RTO solutions. We will continue to grow our partner
network for Space Connect in existing markets as well
as expand our partner network in APAC and North
America.
The early signs of progress with Evoko Naso are
encouraging. The feedback on Naso from the Evoko
partner network around the globe is positive and we
are pleased to be able to recognise our first revenues
from Naso after a significant period of investment. As
part of the Evoko Partner Network in the UK, A+K have
signed their first orders for Naso and we anticipate that
that demand will grow around the world as countries
come out of their various states of lockdown and
employees return to the office. The Board are further
encouraged by Evoko’s internal sales projections for
Naso, supported by a prospect list which includes a
number of significant deals with well-known brand
names.
Covid-19 has changed working practices and many
businesses have indicated plans to reduce their real
estate. This will result in more people than available
desks which, in turn, creates a significant opportunity
for SmartSpace. Managing the process of desk and
meeting room booking without software can be very
difficult and our technology addresses this issue. As
businesses reopen there will also be a greater need
for systems to manage visitors to their buildings.
The SmartSpace range of products help our clients
create Covid-19 safe environments by managing social
distancing in the workplace; providing employee,
contractor and visitor contact tracing; and office
hygiene. We expect this increased demand for these
solutions will create sizeable opportunities for the
Group.
Our business is focused on building our SaaS revenue
with two well-defined software offerings. The disposal
of our Enterprise business has allowed us to focus on
growing these businesses as well ensuring we have
sufficient cash to execute on our plans. With such a
large addressable market for our products across the
globe we are in an ideal position to capitalise on the
opportunities.
As ever, there is a lot going on, but with SwipedOn
being cash generative for the first time in FY21 and
momentum building in Space Connect, I am excited for
our prospects during 2021/22.
Guy van Zwanenberg
Chairman
7 May 2021
SmartSpace Software PLC Annual Report Year Ended 31 January 2021
11
SPAC E CON NE CT CASE STUDY:
CI TYFIBRE
CityFibre is investing £4 billion to build brand new, world-
class digital infrastructure to serve 8 million premises
across 100 UK towns and cities. Its future proof, ‘whole city’
full fibre networks bring fresh choice for local authorities,
consumer and business ISPs, while providing the ultimate
foundation for next generation 5G deployments and smart
city ambitions.
As well as delivering transformational gigabit-capable
broadband services to homes and businesses today,
CityFibre’s infrastructure already provides the connectivity
for thousands of critical healthcare, education and
community sites across the UK. This includes hospitals, GP
surgeries, care homes, community buildings, schools and
council offices.
The business challenge
CityFibre prioritised creating a safe working environment
for the return of specific employees who had been granted
key worker status due to their role in the full fibre network
rollout, or for those where it would be safer to work from
the office than from home. Strict rules were implemented
which defined who would be allowed to use the offices, the
safe capacity of each office and which desks were able to be
used in order to maintain social distancing. To achieve this,
CityFibre’s initial requirement was to implement a system
that would allow staff to book desks from an estate of just
over 400 bookable desk spaces across 25 locations and to
be able to report on who had attended the offices. Cityfibre’s
deployment has since grown to over 800 desks.
The Solution
Within a period of 2.5 weeks, Space Connect deployed
their cloud-based desk management solution and fulfilled
all of CityFibre’s requirements as outlined above, across all
locations.
The solution encompasses:
• Single Sign-On
• Interactive Mapping
• Unlimited user access
• Unlimited locations
• Resource Booking
• Analytics and Reporting
• iOS / Android Smartphone App
• Interactive Web Application
“We were impressed by
how quick and easy Space
Connect’s desk booking
system was to roll out to all
CityFibre employees, the
system is so intuitive that
people started using it as
soon as it became available,
without us having to
formally train them on how
to use it.”
Paul Smerkinich, CityFibre
12
STR ATEGIC REPORT: STRAT EGY
AND O PERATIONAL REVIEW
The Directors present their strategic report on the
Group for the year ended 31 January 2021:
BUSINESS MODEL, PURPOSE AND
STRATEGY
The Group’s business model is to provide cloud-
based flexible workspace software including desk,
meeting room and visitor management solutions for
the SME and mid-market, to enable an international
client base to optimise the use of their real estate and
other workspaces. The Group’s products are easy to
implement, configure and operate making them ideally
suited to SMEs but also larger companies looking
for simple but effective solutions for their space
management. The Group also provides complementary
hardware solutions which integrate with the Group’s
software solutions.
The Board believes that technology driven changes in
working practices continues to generate demand from
all industry sectors. The onset of Covid-19 has further
increased the need for technology to enable companies
to control the use of meeting rooms and desks more
effectively as well as manage visitors to their premises.
The Board has set the following strategic priorities:
• to focus on delivering pure SaaS revenues where
the Group is not overly exposed to one market or a
particular customer;
• to develop technology-led intellectual property to
help mid-market companies optimise use of their
corporate real estate focussing on rooms, desks
and visitors and to provide businesses with a means
to implement and manage Covid-19 policies in the
workplace;
• to develop new sales channels to market our
software solutions by establishing a global network
of channel partners;
• to bring together the technologies of Space Connect
and SwipedOn in order to offer a complete solution
to both customer bases and therefore maximise
revenue per user from our customer lists;
• to continue with a strategy of both organic and
acquisitive growth both in our domestic market and
overseas; and
• to deliver higher quality earnings which will, in turn,
improve cash generation.
We believe the office real estate
market will continue to evolve as
working practices change and there is greater use
of technology in the office space which businesses
provide for their employees. Faced with challenges
of rising costs of office space in major global cities
and the requirement to provide Covid-19 safe offices,
businesses are increasingly looking for ways in which
they can improve the return on investment from their
corporate real estate and the demand for technology
solutions to address these challenges is growing
internationally. Many businesses have indicated that
they plan to reduce their real estate footprint following
lockdown. This change will stimulate demand for
SmartSpace solutions which will allow employees
to book desks for times they are in the office and to
coordinate meetings between participants in the office
and those working remotely. The strategy is to focus
on developing our software to take advantage of the
opportunities afforded by this fast-growing market.
REVIEW OF THE CONTINUING BUSINESS
During the financial year ended 31 January 2021
the Group made progress towards achieving its
strategic goals. The Group completed the disposal
of its enterprise software division in August 2020.
The enterprise software business faced many
challenges including long sales cycles and high levels
of investment in developing the enterprise product.
Accordingly, the Board decided it would be better
to focus on the SME and mid-market as the capital
employed in the enterprise software business could
be better deployed in creating value for shareholders
through investing in the growth of the Group’s other
businesses. Following the disposal there are three
operating companies in the Group.
SwipedOn, our visitor management software, acquired
in October 2018, had another good year despite the
impact of the pandemic on its major markets. Initially
trading in March and April was affected by the onset of
Covid-19 with a decline in new customer sign-ups and
an increase in churn but the business quickly adapted
its product strategy to add visitor pre-screening and
contactless entry functionality to facilitate customers
in introducing Covid-19 secure strategies for their
reception areas. As the initial lockdowns ended last
summer and businesses re-opened we saw an upsurge
in demand, particularly in Australia and New Zealand
(where lockdown restrictions eased relatively more
quickly than in other nations) with new customer sign-
SmartSpace Software PLC Annual Report 13
ups returning to pre Covid-19 levels before a second
and third lockdown in the UK in November and January
respectively resulted in a slightly quieter last quarter.
The SwipedOn customer acquisition model is based
on offering a 14 day free trial period where customers
are provided access to the full features of the product.
There are currently three packages with tiered pricing
based on functionality and number of locations with
a series of optional add-on modules covering SMS
messaging, deliveries and catering. During FY21 the
emphasis of our software development changed as
we developed Covid-19 specific functionality including
contactless sign-in and pre-screening questionnaires.
With Covid-19 there is an increased requirement for
businesses to maintain contact details for all visitors to
their premises for the purposes of in-company contact
tracing.
As a fast-growing SaaS business, SwipedOn measures
its performance on established metrics for such
businesses. The table below sets out a selection of
these key measures.
SwipedOn key
performance indicators
31 Jan 2021 31 Jan 2020
Number of customers
4,735
Number of customer locations
6,741
Locations per customer
1.42
3,896
5,280
1.36
Monthly average revenue
per user (ARPU)
Annual recurring revenue
(ARR)
NZ$92
NZ$78
NZ$5.22m
NZ$3.64m
Annual revenue churn
6.85%
4.25%
12 month average customer
acquisition cost (CAC)
Lifetime value to customer
acquisition cost (LTV:CAC)
NZ$1,687
NZ$1,144
6.0
7.6
During FY21 SwipedOn added 1,354 new customers
(FY20 1,473) resulting in a net increase in customers of
21.5% from 3,896 to 4,735. This increase coupled with
the sale of add-on modules and the increase in the
average number of locations per customer has led to a
18% increase in ARPU (average revenue per customer
per month) over the course of the year, and an increase
of 43% in the ARR (annual recurring revenue) at the
end FY21 to NZ$5.22m from NZ$3.64m at the end of
FY20. One of the strengths of the business is a very
high level of customer satisfaction with a high NPS
score (Net Promoter Score) leading to an average
annual revenue churn of only 6.85% during FY21 despite
the pandemic.
well as direct marketing costs has increased primarily
because of the increasing popularity of some Google
Ad words. The Company continually reviews the
effectiveness of its marketing spend including the
consideration of alternative delivery channels in order
to minimise CAC. The customer lifetime value (LTV) to
CAC ratio remains at a very healthy level of 6.0 (2020:
7.6).
Space Connect has been advancing on two fronts.
We have established new indirect sales channels for
Space Connect through a network of partners to allow
Space Connect to generate fast growing high margin
revenues. During FY21 the company signed a number
of distribution agreements allowing partners to resell
its integrated workplace management solution. This
included an agreement with Softcat, one of the UK’s
leading System Integrators and an agreement with
ESCO, a major AV (audio visual) integrator in the
Far East. During the year the company signed deals
with Softcat customers which are already delivering
significant ARR. We have also received our first
order through ESCO and we are engaged with other
prospects in Asia including clients out of the ESCO
India office.
In December 2020 Evoko announced the release
of Naso, its next generation meeting room solution.
Naso is Evoko’s first panel to offer not only meeting
room functionality but also desk booking and visitor
management. Space Connect has worked with Evoko
as its exclusive software partner to create the Naso
software suite utilising Space Connect’s meeting room,
desk and visitor management solutions. Space Connect
will receive a licence fee for each panel sold together
with a share of ongoing SaaS software revenue for any
add on meeting room, desk or visitor management
licences sold. The first panels were shipped in
December 2020 with £22,000 of revenue being
recognised in the year ended 31 January 2021.
The third arm of the Group’s business is Anders & Kern
(“A+K”), our specialist distributor and integrator of AV
solutions such as meeting room booking solutions,
workplace sensors and digital signage. The Company
operates solely in the UK and the closure of offices and
business premises during the various lockdowns has
reduced order intake significantly during FY21. During
these quieter periods the Company took steps to
reduce its operating costs through closing its office and
utilising the Government’s Coronavirus Job Retention
Scheme to furlough the majority of employees. A+K’s
network of 200 resellers is key to the development of
the market for Space Connect in the UK. In preparation
for the easing of Covid-19 restrictions in the UK, A+K
has added a number additional workspace focussed
product lines to its portfolio, primarily to complement
the Group’s software solutions.
The average CAC (Customer Acquisition Cost) which
includes the costs of all sales and marketing staff as
The financial performance of the Group for the year is
covered in more detail in the Financial Review.
Year Ended 31 January 2021
14
SOFTWARE DEVELOPMENT
During the year we invested £1.3million in further
enhancing the software solutions of our continuing
businesses. This included the development of location-
based settings and new add-on modules including
SwipedOn Desks alongside Covid-19 functionality such
as contactless entry.
Space Connect has developed and released additional
features to help customers manage and implement
their workplace Covid-19 policies. These features
include tools to help users to enforce social distancing
in offices, record and manage office sanitisation, and
contact tracing of employees and visitors.
As we move into FY22 the Group intends to centralise
all software development in New Zealand to drive
enhanced functionality and bring together the
technologies of SwipedOn and Space Connect. Having
a centralised development team will offer greater
opportunities for our staff to develop their skills, whilst
also allowing the Group to benefit from a consistent
approach to software development. Over recent years
New Zealand has had a strong focus on developing its
software industry and as a result has a great talent pool
to draw upon. Employment costs are competitive with
other similarly developed jurisdictions.
OUTLOOK
Whilst the ongoing pandemic continues to create
uncertainty for the Group, the Board is optimistic for
the Group’s prospects for FY22 and beyond. Our
markets in Australia and New Zealand remain strong
and the US has also held up well. In the UK we
have seen a noticeable increase in activity since the
Government published its route map out of lockdown.
As businesses reopen and staff return to the office,
customers are turning their attention to preparation
for returning to the office in a controlled and Covid-19
secure manner, which the Company’s products are
ideally poised to assist with. We have already received
increased Space Connect orders for projects that had
been delayed during the most recent lockdown.
Our focus for the current year is to maintain
momentum in both ARR and ARPU growth. During
these Covid-19 affected times we are focussing our
sales efforts on higher value customers in the mid-
market where there is potential for revenue expansion
through cross-selling and multiple location sales.
Reflecting the increased functionality of SwipedOn,
we implemented a price increase for new customers
on 1st February 2021 and we expect this to have a
significant beneficial impact on ARPU this year. This
strategy is already bearing fruit and has resulted in an
8.3% increase ARPU to $99.3 in the first 3 months of
FY22. In the same 3-month period ARR has grown by
9% to $5.7m. In the first quarter of FY22 we added 180
new customers, which is less than the average number
of new customers in FY21 but the average number
of locations per customer was 1.8 compared with 1.5
last year. This included a 49-location deal with a new
Canadian client in February 2021. We have seen healthy
expansion revenue for other significant SwipedOn
customers. We are also engaged with our first
customers for our recently launched SwipedOn Desks
product and are encouraged by both the feedback and
the potential ARPU value of these clients. SwipedOn’s
churn has stabilised and at the beginning of May had
not risen above the levels reported above.
From a standing start we have built an exciting pipeline
of opportunities for Space Connect through developing
our sales channels in the UK, the Far East and Australia.
We are approaching 40 confirmed customers in Space
Connect with an average ARR of £10k each. In March
we reported an increase in interest following the
announce of the roadmap out of lockdown for the UK.
This momentum has continued and the Space Connect
pipeline has nearly doubled since February to £1.1m
of ARR. At the same time Space Connect continues
to win expansion revenue from existing customers as
they deploy across their estates. Our main partners,
including Softcat and ProAV have been promoting
specific RTO solutions to their customers and Space
Connect is part of that offer. There is increasing press
coverage of companies adopting a ‘hybrid working’
model which entails staff spending some time working
in the office and some time working from home. This
will allow companies to reduce their expensive real
estate footprint but with more staff than desks an
efficient and easy-to use desk booking system a pre-
requisite for hybrid working to function effectively.
It is this growing requirement that Space Connect is
seeking to fill and nearly all the customers to whom we
sell, do not have existing systems in place. In addition
to building our channel pipeline, we are working closely
with Evoko on a number of significant opportunities
with major international brands. Now that there is a
clear pathway to returning to the office, we expect the
recent momentum to continue.
We have now started to plan and, in some cases,
deploy A+K projects that had been put on hold during
the current lockdown. We have recognised this revenue
in March and April 2021. There has been a considerable
uptick in interest from A+K partners, in particular for
desk management solutions. A+K distributes Evoko
products and the sales team are undertaking an
increasing number of demonstrations of Evoko Naso
which has resulted in a rapidly building sales pipeline.
We have a huge opportunity ahead of us. Thanks to
the hard work from our colleagues and partners we are
now well positioned to utilise our momentum going
forward to build recurring revenues.
Frank Beechinor
Chief Executive Officer
7 May 2021
SmartSpace Software PLC Annual Report Year Ended 31 January 2021
15
SWIPEDON C ASE STUDY:
PEN N Y LANE
BUI LDERS
Based in Garston, Liverpool UK, Penny Lane Builders (PLB)
is a general building contractor who specialise in property
development, refurbishment, repairs and maintenance for social
housing clients throughout North West England. With a team of
over 200 staff, PLB are currently subscribed to the Enterprise
plan, and have rolled out SwipedOn across six of their worksites.
We spoke to them about the challenges the company has faced
in 2020 and how the SwipedOn sign in app has helped facilitate a
COVID-secure workplace, whilst safeguarding the health and safety
of their employees.
Prior to SwipedOn, PLB operated a manual timesheet process
due to the varied staff categories across their operations. When
COVID-19 hit, the need for a contactless sign in solution to manage
site entry was paramount.
Not only that, but the protection of employees’ health was vital.
Rather than introducing completely new software to comply
with increased safety measures, it made sense for the company
to leverage SwipedOn features, including visitor screening,
contactless sign in, visitor approvals and the employee companion
app, SwipedOn Pocket, which allows employees to safely sign in
using their smartphones.
The Highest Priorities
When looking for a visitor management system, PLB‘s highest
priorities were ease of use and having the ability to operate
compliant work sites, which meant reducing non-essential contact.
SwipedOns contactless sign in feature, for both visitors and
employees, was the perfect fit for reducing non-essential contact
along with helping the business remain compliant with data privacy
legislation.
The system’s intuitive design meant that it met PLB criteria
around ease of use; both the web dashboard and iPad application
have been created with the user at the forefront of design and
development. Admins, employees and visitors alike are able to
navigate SwipedOn efficiently and with ease.
CHALLENGES
RESULTS
• The ability to operate during
the COVID-19 pandemic
• A way to reduce non-essential
contact
• Keeping accurate records of
both visitors and employees
who have been on site
• A way to screen potentially
high risk individuals before
entering the premises
• Effective procedures that allow
the business to operate during
COVID-19
• Site management efficiencies
including knowing who is - or
has been - on a given site at
any give time
• Improved environmental goals
by reducing paper use
• Easily carry out contact tracing,
with accurate reporting
SwipedOn reacted
quickly to the pandemic,
pivoting product
development to facilitate
contactless sign in and
the ability to ask visitors
and employees crucial
screening questions prior
to entering the premises.
16
STR ATEGIC REPORT:
F INAN CI AL REVIEW
OVERVIEW
In January 2020 the Board decided to commence a
process to dispose of its investment in the Group’s
Enterprise software division. After delays caused by
Covid-19 the process completed in August 2020. As a
result, the business segment has been classified as a
disposal group with the financial performance for both
the current and comparative periods being included
within discontinued activities in the income statement.
REVENUE
Whilst recurring revenues increased by £0.9m to £2.4m
(2020: £1.5m) driven by increased customer numbers
and ARPU, overall revenue for the Group decreased
by £0.45m to £4.63m (2020: £5.08m) as a result of
Covid-19 lockdowns significantly impacting Anders &
Kern.
The key to growing value in a SaaS business is to grow
the Annual Recurring Revenue (“ARR”) and there are
several key performance indicators for ARR which the
management team monitor in their quest to grow ARR
as quickly as possible. The ARR grew by 50% to £3.0m
(2020: £2.0m) and was driven primarily by growth in
ARR in SwipedOn.
The first key driver to ARR growth is new customer
bookings. In FY21 SwipedOn added 1,354 new
software customers with an ARR of £0.93m, a great
performance in the face of the global pandemic and
the impact it had on business around the world. Space
Connect also added 8 new customers in the lockdown
interrupted period from launching with partners in
August 2020 to the year end. The second driver is
monthly Average Revenue Per User (“ARPU”). For
SwipedOn we saw this increase by 18% to NZ$92 (2020
NZ$78). Due to a strengthening of the New Zealand
Dollar, ARPU has increased by 26% when measured in
pounds sterling. The monthly ARPU for Space Connect
at the end of FY21 was approximately £1,100. The third
driver is customer attrition or churn which requires
us to understand why customers leave and identify
actions we can take to minimise both the number of
customers that leave and the impact of those leavers
on ARR. For SwipedOn our annual customer churn for
FY21 was 11.8% (FY20 7.5%) and annual revenue churn
was 6.85% (FY20: 4.25%) with a churn ARR of £0.16m.
The increase in churn is attributable to the impact
of Covid-19 and largely involved small customers
with only one location. Finally, ARR growth can be
measured through Net Revenue Retention (“NRR”)
which measures how well we are
doing with our existing customers.
For SwipedOn NRR was 105% (FY20: 128%) meaning
revenue from existing customers grew. The slower
growth in NRR is largely attributable to the impact of
Covid-19.
During the year Space Connect developed its channel
partner distribution network with the first partner sales
taking place in August 2020. Whilst good momentum
was initially established the Covid-19 lockdowns from
November onwards hampered our ability to make
further sales. As businesses have begun to prepare for
workplace re-opening, we have seen renewed customer
activity. Space Connect completed the development of
a white label version of its software which was released
for sale by our strategic partner generating the first
licencing revenues in December 2020. The Space
Connect distribution channel now has 22 resellers
engaged covering UK, APAC, Australia and New
Zealand, North America and South America.
Revenue from Anders & Kern reduced during the year
as a result of the Covid-19 lockdowns.
The breakdown of Group revenues generated by
continuing operations is as follows
Recurring revenues
- SwipedOn
- Space Connect
- Anders & Kern
2021
2020
£’000
£’000
2,124
1,305
119
151
16
139
Total recurring revenue
2,394
1,460
Hardware revenue
- SwipedOn
- Space Connect
- Anders & Kern
17
-
20
17
1,994
3,406
Total hardware revenue
2,011
3,443
Other revenue
224
179
Total revenue
4,629
5,082
SmartSpace Software PLC Annual Report
Year Ended 31 January 2021
17
Recurring revenue comprises contractual fees for
ongoing software and services including SaaS, hosting
and software support. Non-recurring revenue is all
revenue other than recurring revenue and for the
continuing group, primarily comprises hardware.
ADMINISTRATIVE EXPENSES
Administrative expenses on continuing operations have
increased by 26% to £5.4m (2020: £4.3m) as detailed
in the table below.
GROSS PROFIT
Despite a fall in revenue gross profit increased by
28% to £2.65m (FY20: £2.07m), and our gross margin
improved from 41% to 57% driven by the increase
in high margin SaaS revenues as a proportion of
total revenues. SaaS revenue made up 52% of total
revenue compared to 29% in the prior year. As part
of the disposal of SmartSpace Global it was agreed
that sales would continue to be made with no margin
to SmartSpace Global by Anders & Kern until the
end of FY21. Sales to SmartSpace Global during the
year amounted to £934,000. When these sales are
excluded Anders & Kern made a 30% margin which
is comparable to recent prior periods. If these sales
are excluded from the Group revenue, then the overall
gross margin for the year is 72% (FY20: 51%)
2021
2020
£’000
£’000
Research and development
1,319.
758.
Less capitalised development
(290)
(112)
Research and development costs
not capitalised
1,029.
646.
Staff and contractor costs excluding
those relating to R&D
2,267.
1,770.
Sales, general and administrative
expenses
1,605.
1,403.
Share based payment charge
150.
88.
Depreciation and amortisation
375.
201.
Reorganisation and transformation
costs
Total
-.
199.
5,426.
4,307.
Administrative expenses have increased by £1.1m of
which £0.8m relates to the inclusion of Space Connect
for the full year in FY21 compared with the last three
months in FY20. The balance of the increase relates
to increased SwipedOn marketing and staff costs as
the business grows. Financial support from the UK
government through the Job Retention Scheme was
received during FY21 with £104,000 being offset
against staff costs. No bonus payments were made to
executive directors during the year.
ADJUSTED LBITDA
Adjusted LBITDA is the loss for the year from
continuing operations before net finance costs,
tax, depreciation, amortisation, reorganisation and
transactional items, impairment charges and share
based payment charge. Adjusted LBITDA was £2.12m
(FY20: £1.67m) with the increase arising as a result
of the increased administrative expenses offset by
a higher gross profit, further details of which are
explained above.
18
TAXATION
The taxation credit on continuing operations of
£612,000 results from counteracting effects of a tax
charge from the de-recognition of deferred tax assets
on losses which the Group no longer believe will be
recoverable and credit from the tax benefit obtained
from transferring the ownership of intellectual property
of Space Connect from Australia to the UK. The Group
has recognised £1.3m of deferred tax assets relating to
£6.1m of losses available to carry forward.
EARNINGS PER SHARE
The loss per share from continuing operations was
7.54p (FY20: loss per share 8.05p) and the total loss
per share was 7.98p compared with loss per share of
41.7p for FY20.
The adjusted loss per share from continuing operations
which excludes the after-tax impact of discontinued
operations, exceptional items, share-based payments
and the amortisation of intangible assets recognised on
acquisition was 6.59p (FY20: loss per share 6.67p).
INTANGIBLE ASSETS AND GOODWILL
Intangible assets comprise £8.7m of goodwill (2020:
£8.2m), £0.9m (2020: £0.7m) internally generated
software, and £1.6m (2020: £1.7m) of other intangibles
acquired as part of business combinations. Software
development costs largely relating to the completion
of development of Space Connect’s white label
product amounting to £302,000 were capitalised. An
amortisation charge of £272,000 was recorded against
intangible assets; internally generated software is
amortised over 3 years and intangible assets acquired
through business combinations are amortised over
10 years. Intangible assets denominated in currencies
other than pounds sterling increased in value by
£684,000 due to movements in exchange rates.
FINANCIAL POSITION
Other financial assets at amortised cost of £328,000
(2020: £116,000) include the remaining disposal
consideration on the sale of SmartSpace Global
Limited. These proceeds are expected to be received in
the first half of FY22.
Current tax receivables of £101,000 (2020: £33,000)
relate to tax credits which the Group receives for
qualifying research and development activities.
Contract liabilities of £1,129,000 (2020: £641,000)
relate to SaaS subscriptions received in advance by
SwipedOn and Space Connect which are spread over
the period to which they relate.
Borrowings amount to £413,000 (2020: £401,000) of
which £382,000 (2020: £401,000) relate to a mortgage
on the Group’s freehold property in Mildenhall where
Anders & Kern are based, together with a Covid-19
support loan provided by the New Zealand government
of £31,000 (2020: £nil). The mortgage was due for
repayment in January 2021 and therefore was classified
as a current liability in the prior period. The mortgage
was extended for a further 2 years and is therefore now
split between current and non-current liabilities. The
Covid-19 support loan is interest free and will be repaid
in FY22.
SmartSpace Software PLC Annual Report 19
CASH FLOW
Cash and cash equivalents increased during the year by
£1,929,000 (2020: decrease £5,466,000). A net cash
outflow from operating activities of £1,438,000 (2020:
£5,776,000) comprised of an outflow from continuing
operating activities of £1,671,000 and an inflow from
discontinued activities of £233,000. The net cash inflow
from investing activities of £3,441,000 (2020: outflow
£2,807,000) included £4,167,000 cash received for the
disposal of SmartSpace Global Limited net of costs
incurred offset by £683,000 of capitalised internal
software development costs of which £302,000 related
to continuing operations and £381,000 discontinued
operations. Cash outflow from financing activities
amounted to £86,000 (2020: inflow £3,137,000) as
payments were made against the finance leases and
property mortgage.
DISCONTINUED ACTIVITIES
Prior to the impact of the release of impairments, the
loss from discontinued operations after tax amounted
to £1,470,000 (2020: £5,304,000). This loss was offset
by the reversal of an impairment of £1,470,000 made
in FY20. A loss on disposal of SmartSpace Global of
£124,000 representing the difference between the
disposal consideration and net assets disposed of was
also recorded (see note 15 for details).
DIVIDEND POLICY
The Group reported a retained loss of £2,255,000
(FY20: loss of £9,882,000), which has been transferred
to reserves. At 31 January 2021, the Group had retained
earnings of £11,701,000 (FY20: £13,956,000). The
Board considers that it is in shareholders’ best interests
to retain resources in the Group. However, should it
become apparent in the next 24 months that not all
of the available resources are required, the Board will
consider implementing a distribution policy or return of
capital to shareholders.
Bruce Morrison
Chief Financial Officer
7 May 2021
Year Ended 31 January 2021 20
STR ATEGIC REPORT:
PR INCIPAL RISKS
PRINCIPAL RISKS AND UNCERTAINTIES
The Group could potentially be affected by a number
of uncertainties and risks that are not wholly within its
control. These uncertainties and risks, together with
an explanation for how such uncertainties and risks
are managed and the key mitigations available to the
Group are described below.
IMPACTS OF COVID-19
The full long-term economic implications of the
Covid-19 pandemic are not yet known. Workspaces
throughout the world have been closed and a severe
global economic recession resulted in FY21. Supply
chains and transportation networks continue to be
disrupted which may impact future performance of the
business. In order to mitigate these risks government
financial support has been received in the UK and New
Zealand. Employees have been successfully working
from home and expense reduction initiatives have
been implemented. Whilst the ability of customers
to pay for products may impact future revenues, the
Board believes that technology will be a key part of the
solution to Covid-19 related challenges, and its products
will form a key part of the solution to social distancing
challenges within workspaces and beyond. Covid-19
is rapidly changing the way businesses work which
the Group is addressing by adding Covid-19 related
functionality to its products. The Board therefore
considers that the economic impact of Covid-19 is
significantly mitigated.
CHANGES RESULTING FROM THE UK’S
EXIT FROM THE EUROPEAN UNION
The Board continues to monitor its operations as
a result of the UK’s exit from the European Union
(“Brexit”). Whilst only a small proportion of Group
revenues arise in the European Union, a significant
amount of inventory is sourced from suppliers located
in the EU. New border controls resulting from Brexit
have led to import delays, but have not as of yet had a
material impact on operations. The Group mitigates the
risks associated with Brexit on financial performance by
expanding the business outside of the European Union.
The Board believes that smart software technologies
will resonate with clients anywhere in the world and
therefore Brexit is not a material concern.
RELIANCE ON KEY PERSONNEL AND
MANAGEMENT
The success of the Group will rely upon attracting and
retaining the right calibre of talent and the loss of key
staff would be detrimental to the Group. The Group
operates an active talent and development programme.
The Group continuously monitors and develops this
programme to meet the ambitious requirements of
the business and utilises a number of tools to retain
its senior management including an annual bonus and
long-term incentive plans.
Year Ended 31 January 2021
21
POST-ACQUISITION RISK
The Board’s stated strategy is to grow the Group both
organically and, where appropriate, by acquisition.
Integrating new acquisitions involves risk resulting from
poor communication, inadequate business processes,
loss of staff, loss of clients and other factors. Therefore,
integration risk is assessed and managed by both
Executive Directors and senior management.
GOING CONCERN
The Group continues to make losses as a result of its
current lack of critical mass. The Board has taken steps
to reduce the Group’s overhead base and the recent
sale of the Enterprise software division has realised
capital which the Board expects will be sufficient to
support the Group until it becomes cash generative
without further recourse to shareholders. On this basis,
the Group’s accounts have been prepared on the going
concern basis.
TECHNOLOGICAL CHANGE AND
COMPETITION
The pace of technological advancement in today’s
world is apparent, affecting all aspects of life, and the
Group’s products target a market which is evolving at a
considerable pace. Failure to keep pace with innovation
or to develop the wrong solutions could lead to a loss
in revenue and increased development costs. We will
continue to consult with our clients to understand
their requirements and research the market to ensure
we focus our product development programme on
the most relevant software which is competitive in the
global market. The risk should we fail to build upon
recent investment in software is considerable, and
therefore identifying increased product functionality
and differentiation will ensure we manage and mitigate
this risk.
SALES AND CHANNEL DEVELOPMENT
Key to our future success will be developing successful
channels to market. Productising our software offering
is crucial to ensuring a successful channel strategy;
ease of sale and installation are both key components
to ensure partner adoption. Failure to develop channels
to market is likely to impact our ability to scale the
business. Recent and ongoing investment will ensure
we have products to share with channel partners along
with the necessary training and installation support.
ACCREDITATIONS AND INDUSTRY
STANDARDS
Industry standards are constantly changing with
data and cyber security being key concerns for most
organisations. Ensuring the Group is planning and
maintaining its accreditations will mitigate the risks
associated with ever changing high standards of
practice.
IP PROTECTION
Our intellectual property is one of our key assets, and
loss thereof could result in us losing our competitive
advantage. Maintaining contractual disciplines and
vetting who we choose to share any level of object
or source code, product knowledge and wherewithal
and general secrets of how we operate are constantly
monitored and reviewed. Confidentiality is a key
component to managing this risk and the Group has
legally binding agreements to ensure this is robust and
maintained.
22
STR ATEGIC REPORT:
s172 STATEMENT
This section serves as our section 172 statement and
forms part of the Strategic Report and should be read
in conjunction with the Corporate Governance Report.
Under Section 172 of the Companies Act 2006 the
Directors have a duty to promote the success of
the Group over the long term for the benefit of its
shareholders as a whole having regard to a range of
other key stakeholders’ interests. The Directors must
have regard (amongst other matters), to:
• the likely consequences of any decision in the long
term;
• the interests of the Group’s employees;
• the need to foster the Group’s business relationships
with suppliers, customers and others;
• the impact of the Group’s operations on the
community and the environment;
• the desirability of the Group maintaining a reputation
for high standards of business conduct;
• and the need to act fairly with members of the
Company.
Information on our key stakeholders including why we
engage, the type of engagement, and issues relevant to
each stakeholder group, are set out on page 26.
The Board is responsible for the overall direction of
the Group. It focuses primarily upon strategic issues
and is responsible for the Group’s long-term success.
It sets the Group’s strategy, oversees the allocation of
resources and monitors the performance of the Group,
to ensure that the Group is structured appropriately
for the challenges and opportunities of the future. In
performing these duties, the Board is focused on the
sustainability of the Group in the long term. The Board
recognises the need for the Group to have effective
engagement with, and encourage participation from, all
key stakeholders to promote these long-term interests.
Typically, in a company such as SmartSpace, the
Directors fulfil their duties partly through a governance
framework that delegates day-to-day decision
making to the employees of the Company. The Board
recognises that such delegation needs to be part of
a robust governance structure which covers how we
engage with our stakeholders and how the Board
assures itself that the governance structure and
systems of controls continue to be robust.
The Chairman, with the assistance of the Company
Secretary, sets the agenda for each Board meeting
to ensure the requirements of Section 172 are always
considered and met through a combination of the
following:
• Standing agenda points and papers considered at
each meeting with the CEO and CFO presenting
updates on the financial overview, operational
progress, business development, strategic progress
and investor relations. The Board also considers
relevant corporate governance and compliance
matters.
• Formal consideration of any factors which are
relevant to major decisions taken by the Board
throughout the year.
• Review of topics through the risk management
process and other standard Audit Committee and
Remuneration Committee agenda items.
LIKELY CONSEQUENCES OF ANY
DECISION IN THE LONG TERM
The Board considers the long-term consequences
of the decisions it makes, focussing on the interests
of relevant stakeholders as appropriate. Examples of
activities the Board undertook during the last financial
year to meet its obligations under Section 172 include
the following:
• The Board considered its Section 172 responsibilities
in respect of the progression of the Group’s strategy
and its 2021 budget proposals including the likely
long-term consequences of decisions being taken on
restructuring and the impact that would have on the
workforce, suppliers and customers;
• The Board oversaw the integration of Space Connect
into the Group together with its progress towards a
full launch of its products through the distribution
channels which have been established.
• The Board undertook a review of its strategy and
decided that the best way to deliver shareholder
value was to focus on delivering SaaS solutions to
the SME market. The nature of an enterprise software
division did not fit with this strategy and the Board
decided to dispose of the enterprise software division
which it successfully completed in August 2020.
• To mitigate the financial impact of Covid-19,
the Group took a number of steps across the
business to reduce costs and preserve cash. These
included a recruitment freeze, curtailment of all
discretionary spend and the office closures referred
to above. In addition, the Group took advantage
of the Coronavirus Job Retention Scheme under
which we furloughed a number of employees,
and which helped us avoid making the majority of
these employees redundant. SwipedOn also took
advantage of some of the funding initiatives from the
New Zealand Government.
SmartSpace Software PLC Annual Report
GI VI NG BACK
Giving back is part of our culture
For every SwipedOn customer we
sign we plant a tree
So far we have we have planted
over 6000 native species trees in
16 locations around New Zealand.
The project is managed by Trees
that Count, a local not for profit.
Supporting charitable
organisations around the Globe
We provide our software free or at
a discount to selected charities.
6,000+
Trees funded from
customer subscriptions
16+
Locations around
New Zealand
24
INTERESTS OF THE GROUP’S EMPLOYEES
• During FY20 the Company undertook its inaugural
employee engagement exercise. The Board oversaw
this process which started with an employee survey
following which the Board received feedback on the
results and considered what this indicated about the
culture of the Group. Following the recent sale of the
Enterprise software business, the Group will revisit
employee engagement in the light of a slimmed down
workforce.
• The Board considered its Section 172 responsibilities
in respect of the impact of the Covid-19 pandemic.
The primary concern of the Board during this difficult
time was the health and safety of our employees,
customers and other stakeholders. Having
considered the guidance set out by governments in
the territories in which the Group has operations, a
range of measures were put in place to protect our
employees. The Group closed a number of its offices
and where possible all employees worked from home.
THE NEED TO FOSTER THE GROUP’S
BUSINESS RELATIONSHIPS WITH
SUPPLIERS, CUSTOMERS AND OTHERS
• The Executive Directors held regular meetings with the
management of each operating subsidiary at which
progress with customer relationships was reviewed.
A monthly report was produced, highlighting the
key performance metrics for managing customer
satisfaction being customer churn rate and net
promoter score. Trends were analysed and the likely
cause of those trends identified.
The monthly reports were tabled at Group Board
Meetings and any issues highlighted by the CEO in his
report.
• The relationships with Group’s key suppliers and
partners are maintained by the management of each
operating subsidiary supported by the Executive
Directors. Management and Executive Directors
maintained regular communication with partners
throughout the lockdown period, to ensure that both
long and short term expectations continued to be met.
THE IMPACT OF THE GROUP’S
OPERATIONS ON THE COMMUNITY AND
THE ENVIRONMENT
• The Group considers its actions and the likely effect
that they may have on the environment and seeks to
mitigate any negative impact wherever practicable.
Through the various procedures and systems it
operates, the Group complies with health and safety
and environmental legislation relevant to its activities.
• As part of our commitment to the environment and
as a marketing drive we have a commitment to plant
a tree for every new SwipedOn customer. These trees
are located at 16 locations around New Zealand. We
believe that protecting our environment is a job for
all of us. Handled by a local charity, Trees that Count,
we believe by replacing native species trees will help
restore and enhance the environment, encourage
biodiversity, clean air and waterways and make a
difference to climate change. So far, we have funded
over 4,800 trees.
• In addition, we also seek to support local charitable
organisations in the markets we serve by providing
our software free of charge or a significant discount.
Charities we have helped in this way include
Leicestershire Search and Rescue. We positively
encourage charities to approach us for support.
THE DESIRABILITY OF THE GROUP
MAINTAINING A REPUTATION FOR HIGH
STANDARDS OF BUSINESS CONDUCT
• The Group has a culture which emphasises that
business should be conducted honestly, fairly and
with due respect for others. We expect honesty
and truthfulness from our employees as a matter of
course and Directors and employees are required at all
times to act with integrity and good conscience. This
requirement is set out in the employee handbook.
• SmartSpace seeks to pay suppliers in accordance with
agreed terms.
• Further details are set out in the Corporate
Governance Report on pages 34 to 37.
THE NEED TO ACT FAIRLY WITH MEMBERS
OF THE GROUP
• The primary focus of the Board’s business decisions
is on ensuring the long-term sustainability of the
Group. The Board recognises that in seeking long-term
profitability the Group is reliant on the support of all of
its stakeholders.
• In making capital allocation decisions during FY21,
the Board was cognisant of the need to balance the
interests of different stakeholders. Decisions on the
Group’s approach to working capital, investment
opportunities, R&D and investment in people during
the year, were considered against this backdrop.
• Our decision to sell the Enterprise software division
was a means of avoiding the need to raise additional
capital and focus our efforts on laying the foundations
to get the Group to a position where we can make
dividend payments
SmartSpace Software PLC Annual Report Year Ended 31 January 2021
25
SWIPEDON C ASE STUDY:
LEI CESTERSHIRE
SEARC H & RESCUE
Leicestershire Search and Rescue (LeicSAR) are a lowland
search and rescue unit in England, United Kingdom. The primary
role of the organisation is to provide specialist resources to
Leicestershire’s emergency services to assist in the search and
rescue of vulnerable and missing people in the Leicestershire
area, while also providing support to neighbouring teams in other
counties. With 50 volunteers, LeicSAR provides an important
service to the community and therefore requires a quick and easy
way for volunteers and visitors to sign in and out of the unit, so
they can swiftly continue with emergencies. We caught up with
operations manager and trustee Nick, to find out how SwipedOn
has transformed their people management process.
What were the challenges LeicSAR faced prior to implementing a
digital sign-in solution?
A manual paper sign in process presented a number of issues.
Firstly paper based information had limited security around
the data. Secondly reporting the hours our team provided to
Leicestershire Police as volunteers was time consuming. The last
and most important issue we had was around the time it took to
sign in, with only one paper based document it delayed our team
members signing in when arriving at incidents.
What were your company’s highest priorities when you were
looking for a visitor management solution?
The key priority when moving to a digital system was speed,
accuracy and efficiency. Understanding who we have signed in at
any one time is vital for search management.
Why did you choose SwipedOn?
I researched the market before choosing Swipedon. It was the
constant development of the products that really swayed us.
And what are the three key features of SwipedOn which prove
most beneficial for LeicSAR?
Email notifications, employee in-out and remember frequent
visitors.
CHALLENGES
RESULTS
• Paper based methods were
• Speedy sign-in process,
time consuming for signing in
• Calculating reports for the
local police was a long and
laborious process
• Limited security with
data privacy using paper
processes
allowing team members to
reach emergencies quicker
• Accurate records of who has
attended specific incidents
which can be provided to
police
• Data is now stored securely
in the cloud system and only
admins can access
“The solution has become
part of our COVID-19
strategy, keeping our
members safe at all times.
The addition of SwipedOn
Pocket has enabled an
even more efficient sign in
and out process.”
Nick C. / Operations Manager &
Trustee, Leicestershire Search & Rescue
26
SmartSpace Software PLC Annual Report
OUR STAKEHOLDERS
Why we engage
Types of engagement undertaken
Issues relevant to the
stakeholder group
Our people
• Continual focus on the health and safety of all employees.
• Personal
The dedication of our people and
their drive for results are the most
significant contributors to our
future success.
• Regular performance reviews and staff surveys
• Competitive remuneration strategy.
Customers
• We provide customer support through our help desks
Engaging with customers helps us
to understand their needs, identify
opportunities and challenges
and plan the future direction and
development of our software
and interaction with our customers through our account
management.
• We survey customers on their likely take up of add-on modules
and functionality, and their views regarding development priorities.
development.
• Remuneration
strategy.
• Health and safety.
• Diversity and
inclusion.
• Customer
satisfaction.
• Innovation
and product
development.
• We monitor our net promoter score to ensure we maintain the
• Product reliability.
highest standards in our products and services.
• Product support.
• We survey lost customers to identify areas for improvement.
Suppliers and partners
• Regular interaction with our outsource partners including weekly
• Product
Maintaining a flexible workforce
through the use of contractors
is vital to the success of the
business. Consistent and reliable
cloud service providers are a
prerequisite for our business.
Strong partnership agreements
are important to distributing the
Group’s products and creating
integrations for customers
Investors
Continued access to funding is
vital to the performance of the
business. We work to ensure
our investors have a clear
understanding of our strategy,
performance and objectives
stand ups and the use of shared platforms such as Microsoft
Teams, Microsoft Sharepoint and shared development tools such
as Jira and Confluence.
development
• Hosting
• The Group uses Microsoft Azure and Amazon Web Services who
are the market leaders providing the highest level of service.
• The Group regularly reviews its partners’ performance and terms
and conditions
• The Group’s Investor Relations Strategy managed by the CEO and
CFO includes regular meetings with key and prospective investors.
• Financial
performance
• Governance and
transparency
• Directors’
remuneration
• Board performance
• The Company’s Annual Report provides an overview of the Group
and regular announcements and press releases are published to
provide updates on the Group’s performance and progress.
• The AGM normally provides shareholders with an opportunity to
directly engage with the Board. With Covid-19 restrictions our
channel of communication is limited to retail investors emailing
questions and video conference meetings with institutional
investors.
• The Group has signed up to use the Investor Meet Company
platform to deliver live, interactive management presentations to
current and prospective shareholders regardless of the number of
shares they own.
• There is an ongoing dialogue with the Company’s analysts to
address enquiries and promote the business.
Communities
• Planting of a tree for each new SwipedOn customer
We are committed to maintaining
positive relationships with the
communities in which we operate.
• Provision of free or discounted software to charities or not for
profit organisations
• Operational
performance
• Ethics
The Strategic Report, comprising the Strategy and Operational
Review, Financial Review and Principal Risks was approved by
the Board on 7 May 2021 and signed on its behalf by:
Frank Beechinor
Chief Executive Officer
7 May 2021
Year Ended 31 January 2021
27
28
SmartSpace Software PLC Annual Report
COM PANY IN FOR MATI ON
AND A DVISERS
REGISTERED OFFICE
Norderstedt House
James Carter Road,
Mildenhall,
Bury St. Edmunds,
IP28 7RQ
Company Number
5332126
COMPANY ADVISERS
Nominated adviser and broker
N+1 Singer
Bartholomew Lane
London
EC2N 2AX
Auditor
RSM UK Audit LLP
Chartered Accountants & Statutory Auditors
170 Midsummer Boulevard
Milton Keynes
MK9 1BP
Registrar
Share Registrars Ltd
The Courtyard
17 West Street
Farnham
GU9 7DR
Banker
Barclays Bank Plc
1 Churchill Place
London
E14 5HP
Year Ended 31 January 2021
29
DIREC TORS AN D OFFI CER S
Guy van Zwanenberg
(Chairman)
Bruce Morrison
(Chief Financial Officer)
Guy joined the Board on
9 March 2015 as a Non-
Executive Director, a role
which he maintained until
June 2018 when he stepped
into the Chairman’s role.
Guy is also Chairman of the
Remuneration Committee and
Nomination Committee and a member of the Audit
Committee. Guy has more than 40 years’ experience
in industry and practice. He qualified as a Chartered
Accountant with Grant Thornton and then spent three
years working with James Gulliver. Guy subsequently
moved to become UK Finance Director of an American
computer accessory company which was taken public
in 1989. In 1991, he established his own interim financial
management business and has since been involved in
a number of SME businesses providing strategic and
financial help. Guy joined Gamingking PLC in 1998
on a part-time basis as Finance Director and became
Company Secretary and Non-Executive Director in
2006, remaining until May 2013. He joined Quixant plc
as a Non-Executive in March 2013 as part of the float
team. Guy is both a Fellow of The Institute of Chartered
Accountants in England and Wales and a Chartered
Director.
Frank Beechinor
(Chief Executive Officer)
Frank was appointed chairman
of the Board on 10 July 2014
and led the Board and led
the business through its
restructuring from what was
then Coms plc. He became Chief
Executive Officer in July 2018
with the aim of leading SmartSpace
Software plc to become a market leader in space
management technology. He has significant corporate
experience, particularly in the software industry and
building SaaS businesses. Frank is a co-founder of
Cadence Performance Ltd. Frank was previously
founder and CEO of OneClick HR plc from 1997 to 2011
and Non-Executive Chairman of dotDigital Group plc
from May 2011 to March 2019.
Bruce has over 25 years’
commercial experience
in finance strategy and
accounting, fundraising,
M&A and disposals. Bruce
was most recently Group
Finance Director at Bond
International Software plc,
where he led a successful divestment of all operations,
with £55 million returned to shareholders. He held
this role for 13 years. ACA qualified, Bruce started his
career as a Chartered Accountant with KPMG in audit
and transaction advisory work before transitioning
to FD and CFO roles for publicly listed and private
organisations in IT, media and leisure. This included
eight years as FD of Wembley Stadium Limited, which
owned and operated the Wembley Complex including
the Stadium, Arena and Conference and Exhibition
Centre. Bruce then spent over three years with Radio
First plc where he was involved in securing a multi-
million-pound institutional investment and joint venture
agreements for the operation of new radio stations on a
digital platform.
Diana Dyer Bartlett
(Non-Executive Director)
Diana was appointed to the
Board in October 2013 and
is Chairman of the Audit
Committee and a member
of the Remuneration and
Nominations Committees.
Diana acted as interim FD
of the Company between
the end of 2014 and September 2015.
After qualifying as a chartered accountant with Deloitte
Haskins & Sells, Diana spent five years in investment
banking with Hill Samuel Bank. Since then she has held
a number of roles as finance director of various venture
capital and private equity backed businesses and listed
companies involved in software, financial services,
renewable energy and coal mining. She was also
company secretary of Tullett Prebon plc and Collins
Stewart Tullett plc. Diana is currently a non-executive
Director and Chairman of the Audit Committee of
Smithson Investment Trust plc, Mid Wynd International
Investment Trust plc and Schroder British Opportunities
Trust plc.
30
SmartSpace Software PLC Annual Report
REMU NERATION REPORT
THE REMUNERATION COMMITTEE
REMUNERATION PACKAGE
The Company’s remuneration policy is the responsibility
of the Remuneration Committee which comprised Guy
van Zwanenberg (Non-Executive Chairman) and Diana
Dyer Bartlett (Non-Executive Director) during the year.
There are four components to the remuneration
package, namely base salary and benefits, bonus,
pension arrangements and long-term incentive
arrangements:
GENERAL POLICY
The Company’s policy is to provide remuneration
packages for Executive Directors which aims to attract
and retain high quality executives and which link their
reward to the Group’s performance.
• The base salaries of the Executive Directors were
set at levels considered to be appropriate when they
entered into service agreements with the Company.
The base salaries are reviewed by the Remuneration
Committee annually and any increases are awarded
having regard to performance and salary levels
in comparable organisations. Benefits which may
include car allowance and private health insurance
are not pensionable.
• The Executive Directors are entitled to a discretionary
bonus provided the Company achieves its targets for
the financial year.
• The Company contributes to money purchase
pension arrangements, and private medical insurance
and death in service benefit are also provided.
• The Company has established an unapproved share
option scheme and an Enterprise Management
Incentive (EMI) share option scheme in which the
Directors may participate.
DIRECTORS’ REMUNERATION
The remuneration of the Directors who held office during the year was:
Salary and
fees
Taxable
benefits
Long-term
incentive
schemes
Pension
related
benefits
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Guy van Zwanenberg
Frank Beechinor
Bruce Morrison
Diana Dyer Bartlett
60
220
150
40
60
220
150
40
Total
470
470
-
19
12
-
31
-
8
11
-
19
2
63
3
4
2
64
-
4
72
70
-
2
7
-
9
-
-
6
-
6
62
62
304
292
172
44
167
44
582
565
31
SHARE OPTIONS AWARDED DURING THE YEAR
The following share option was awarded to the Directors during the year:
Director
Scheme
Instrument
Number of ordinary
shares of 10p each
Exercise
price
Grant
date
Expiry
date
Bruce Morrison
EMI scheme
Share Option
125,000
92.5p
23/10/2020
23/10/2030
The option has an exercise price of 92.5p per share, vests three years from the date of grant and once vested is exercisable
at any time up to ten years after the date of grant. Vesting is subject to performance conditions whereby the average mid-
market closing share price of the Company’s ordinary shares in any 90 day period in the period to 23 October 2023 is at
or above certain defined levels as follows:
Share price
Percentage of
options exercisable
£1.50
£2.50
£3.50
£4.50
£5.00
15%
31%
54%
77%
100%
The Directors held the following outstanding options at 31 January 2021:
Director
Instrument
Number of ordinary
shares of 10p each
Exercise
price
Grant
date
Expiry
date
Guy van Zwanenberg
Share Option
30,000
92.0p
11/12/2015
11/12/2025
Frank Beechinor
Frank Beechinor
Bruce Morrison
Diana Dyer Bartlett
Share Option
Share Option
Share Option
Share Option
100,000
92.0p
11/12/2015
11/12/2025
550,000
94.0p
17/10/2018
17/10/2028
125,000
92.5p
23/10/2020
23/10/2030
70,000
92.0p
11/12/2015
11/12/2025
None of the Directors had any beneficial interest in the shares of any subsidiary companies.
The movement on Directors’ share options during the year is set out below:
2021
2020
Number Weighted average
exercise price
Number Weighted average
exercise price
Outstanding at start of year
Granted during the year
Forfeited during the year
Ceasing to be a director
750,000
125,000
-
-
93.47p
92.50p
-
-
750,000
93.47p
-
-
-
-
-
-
Outstanding at end of year
875,000
93.33p
750,000
93.47p
Exercisable at end of year
Exercised during year
-
-
-
-
-
-
-
-
There have been no further options granted since the end of the financial year.
Year Ended 31 January 2021
32
AUDI T COMMITTEE REPORT
The Audit Committee is comprised of Diana Dyer
Bartlett (chair of the Committee) and Guy van
Zwanenberg. Both Diana Dyer Bartlett and Guy
van Zwanenberg have recent and relevant financial
experience by virtue of their senior financial roles and
both hold a professional accountancy qualification. The
Audit Committee has a number of responsibilities set
out in its terms of reference, which were last reviewed
and updated in April 2019. The responsibilities include
reviewing the annual and interim reports, discussing
findings from the external auditors, considering the
suitability and effectiveness of the internal control
processes, recommending the appointment and
remuneration of the auditor, and considering any
non-audit services to be provided by the auditor, and
determining the Group’s whistleblowing and anti-
bribery policies. There were two audit committee
meetings during the year, each of which were attended
by both Committee members. Executive Directors and
the Group’s auditors may be invited to attend all or part
of any meetings. The Committee also meets with the
Group’s external auditor without the presence of the
Executive Directors.
RSM UK Audit LLP were appointed as auditors for the
first time for the year ended 31 January 2020 and were
re-appointed at the Company’s annual general meeting
on 30 October 2020. The audit engagement partner is
named Richard Bartlett-Rawlings.
MEETINGS AND BUSINESS
In advance of the audit of the Group’s financial
statements, the Audit Committee met to review the
audit plan as presented by RSM UK Audit LLP. The
plan set out the proposed scope of work, the audit
approach, materiality and identified areas of audit
risk and was compliant with the Ethical Standards for
Auditors issued by the Financial Reporting Council.
Prior to commencing its audit work, RSM UK Audit LLP
confirmed in writing the safeguards in place to ensure
its independence and objectivity and the Committee
discussed how the auditor proposed to demonstrate
its professional scepticism in the audit process. The
auditor’s quality control processes were also discussed.
Audit fees are disclosed in note 23 to the consolidated
financial statements. RSM UK Audit LLP did not provide
any non-audit services.
At its meeting to discuss the annual report and financial
statements, the Audit Committee confirmed that in its
opinion, the annual report and financial statements,
taken as a whole, are fair, balanced and understandable.
The Audit Committee noted that the financial
statements had been prepared consistently, with no
significant changes in accounting policies compared
with the previous year.
The Group reports a number of alternative performance
measures which are not in accordance with the
reporting requirements of IFRS. These include Loss for
the year from continuing operations before net finance
costs, tax, depreciation, amortisation, reorganisation
and transactional items, impairment charges and share
based payment charge (“LBITDA”), annual recurring
revenue (“ARR”), and monthly average revenue per user
(“ARPU”). The Audit Committee has reviewed these
to ensure they are appropriate and that in each case
the reason for their use is clearly explained; they are
reconciled to the equivalent IFRS figure; and they are
not given prominence over the equivalent IFRS figure.
In reviewing and making its recommendation that the
Annual Report and Financial Statements be approved
by the Board, the Audit Committee has taken into
consideration the following significant issues and
judgement areas:
(a) Carrying value of goodwill and other intangible
fixed assets
At 31 January 2021 the carrying value of goodwill
and other intangible assets relating to the Group’s
continuing activities was £11,222,000 (2020:
£10,508,000). The Audit Committee reviewed in
detail the judgements taken in the impairment
review performed to determine whether there was
any indication that those assets had suffered any
impairment. The Audit Committee considers the
key judgements in the impairment review to be the
discount rate and revenue growth rates used in the
Value in Use calculations. Following a review of the
impact of the sensitivities performed by management
on the discount rate and revenue growth rate in
the Value in Use calculations, the Audit Committee
considered that the calculations performed were
reasonable and no impairment charge was required.
(b) Going concern
As the Group’s software businesses build their SaaS
customer bases the Group continues to be loss making.
The losses incurred are controlled, predictable and
planned to allow the business to continue to grow. The
proceeds from the disposal of the Group’s Enterprise
software division, which in the past was incurring the
most significant losses and had the least predictable
revenue growth, are now being utilised to invest in
SmartSpace Software PLC Annual Report growing the SaaS customer base for both SwipedOn
and Space Connect. In the short term the Group will
continue to be loss-making. As reported in the Strategic
Report, SwipedOn has continued to grow despite the
worldwide disruption caused by the Covid-19 pandemic
and has started to generate cash. Space Connect
products were made fully available during the year
and new distribution agreements signed to generate
revenues and accordingly this business is not yet cash
generative. The Audit Committee has considered the
Group forecasts which underpin the presumption
that the accounts should be prepared under the
going concern principle and the impact that Covid-19
could have on the Group in future. In particular it has
considered a scenario whereby the SaaS business does
not achieve any growth in the next twelve months
together with the mitigations available to the Group. On
this basis, the Audit Committee was able to advise the
Board that it was reasonable to prepare the accounts
on a going concern basis.
(c) Disposal of SmartSpace Global Limited
The accounting for the disposal of SmartSpace Global
was non-routine and complicated by significant
provisions for impairment of that company’s assets
made in the FY20 accounts. The Audit Committee
considered the treatment of the disposal and was
satisfied that it had been recorded in the financial
statements in accordance with IFRS 5.
33
RISK MANAGEMENT AND INTERNAL
CONTROLS
The Audit Committee has responsibilities for reviewing
the Group’s risk management and internal controls.
It reviewed the Group’s risk register which includes
the measures to manage risk and mitigations and the
summary of principal risks set out in the Strategic
Report. It also adopted a risk appetite statement in
relation to its principal risks.
INTERNAL AUDIT
The Audit Committee considered whether an internal
audit function was required and concluded that, owing
to the Group’s size, this was not appropriate at this
stage.
EXTERNAL AUDITOR
In its review of the effectiveness of the audit process,
the Audit Committee considered:
• the auditor’s fulfilment of the agreed audit plan;
• the level and effectiveness of challenge provided by
the auditor;
• the audit quality control arrangements, including
the stages of review of the Annual Report, the time
spent by the audit partner and whether any issues
identified during the audit had been dealt with on a
timely basis;
• the changes to the auditor’s audit approach and
work which demonstrated the auditor’s professional
scepticism; and
• the report arising from the audit itself.
The Audit Committee was satisfied with the auditor’s
independence and the effectiveness of the audit
process, together with the degree of diligence and
professional scepticism brought to bear and that the
auditor provided effective independent challenge in
carrying out its responsibilities.
RSM UK Audit LLP have indicated their willingness
to continue to act as auditor to the Company for
the forthcoming year and a resolution for their re-
appointment will be proposed at the Annual General
Meeting, as well as a resolution to seek approval of the
auditor’s remuneration.
Diana Dyer Bartlett
Chairman, Audit Committee
7 May 2021
Year Ended 31 January 2021 34
CO R PORATE
GOV ERNANC E REPORT
COMPLIANCE WITH CORPORATE
GOVERNANCE PRINCIPLES
As an AIM listed company the Board recognises the
importance of applying sound corporate governance
principles in managing the Group. The Group adopted
the QCA Corporate Governance Code (“the “QCA
code”) on 28 September 2018 as a benchmark to
measuring our performance against good governance
principles. This report shows how we apply the QCA
Code’s 10 guiding principles in practice.
1. Establish a strategy and business model which
promote long-term value for shareholders
The business model and strategy of the Group are set
out in the strategic report on pages 12 to 26.
The Group’s strategy and business model are
developed by the Chief Executive Officer and his senior
management team and approved by the Board. The
management team, led by the Chief Executive Officer,
is responsible for implementing the strategy and
managing the business at an operational level.
The Group’s immediate key strategic priorities to drive
future growth are as follows:
• to focus on delivering pure SaaS revenues where
the Group is not overly exposed to one market or
customer;
• to develop technology-led intellectual property to
help SME companies optimise use of their corporate
real estate focussing on rooms, desks and visitors
and provides businesses with a means to implement
and manage Covid-19 policies in the workplace;
• to develop new sales channels to market for our
software solutions by establishing a global network
of channel partners;
• to bring together the technologies of Space Connect
and SwipedOn in order to offer a complete solution
to both customer bases and therefore maximise
revenue per user from our customer lists;
• to continue with a strategy of both organic and
acquisitive growth both in our domestic market and
overseas; and
• to deliver higher quality earnings which will, in turn,
improve cash generation.
An evaluation of the potential risks and uncertainties of
the Group is set out on pages 20 to 21.
2. Seek to understand and meet shareholder needs
and expectations
The Group seeks to maintain a regular dialogue with
both existing and potential shareholders in order
to communicate the Group’s strategy and progress
and to understand the needs and expectations of
shareholders.
Beyond the annual general meeting, the Chief
Executive Officer, Chief Financial Officer and, where
appropriate, other members of the Board and senior
management team meet with investors and analysts to
obtain feedback regarding the market’s expectations of
the Group.
The Group’s investor relations activities encompass
dialogue with both institutional and private investors.
Private shareholders – the main forum for private
shareholders to engage with the Board is at the
Company’s AGM where the Board makes itself available
for shareholders to ask questions. Public health
restrictions will require that the meeting is closed to
shareholders this year, and therefore shareholders are
encouraged to submit questions via email to investors@
smartspaceplc.com. The notice of AGM is sent to
shareholders at least 21 days before the meeting is due
to be held. At the meeting, shareholders vote on each
resolution and the meeting is advised of the number of
proxy votes for, against and withheld on each resolution.
The outcome of the AGM is subsequently announced
via RNS and published on the Company’s website.
Institutional shareholders – the Directors consider
that it is important that its institutional shareholders
understand the business and that their expectations
are in accordance with those of the Board. Members
of the Board engage with institutional shareholders
following the announcement of the annual and interim
results explaining the results and the Board’s vision
for the future. These meetings are arranged by the
Company’s FCA regulated nominated adviser and
broker, who will follow up with investors following the
meetings and provide anonymised feedback to the
Board. Additionally, ad hoc meetings are attended
as requested by existing and potential institutional
investors.
The Board will consider all feedback received from
shareholders whether at the AGM, during face-to-
face meetings with institutional investors, or from its
nominated adviser following those meetings. It reviews
analysts’ notes to ensure they accord broadly with the
Board’s expectations.
SmartSpace Software PLC Annual Report The Group also endeavours to maintain a dialogue
and keep shareholders informed through its public
announcements and Company website. SmartSpace’s
website provides not only information specifically
relevant to investors (such as the Group’s Annual
Report and investor presentations) but also regarding
the nature of the business itself with considerable detail
regarding the services it provides and the manner in
which it carries on its business.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term
success
The Group is aware of its corporate social
responsibilities and the need to maintain effective
working relationships across a range of stakeholder
groups, which include the Group’s employees, partners,
customers, suppliers, and regulatory authorities. The
Group’s operations take account of the requirement
to balance the needs of all of these stakeholder
groups while maintaining focus on the Board’s primary
responsibility to promote the success of the Group
for the benefit of its members as a whole. The Group
endeavours to take account of feedback received
from stakeholders, making amendments to working
arrangements and operational plans where appropriate
and where such amendments are consistent with the
Group’s long-term strategy.
The Group considers its actions and likely effect that
they may have on the environment and seeks to
mitigate any negative impact wherever practicable.
Through the various procedures and systems it
operates, the Group complies with health and safety
and environmental legislation relevant to its activities.
35
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
The Board approves an annual budget which identifies
the opportunities to develop the Group’s business
as well as the resources required to implement its
strategy. The Board reviews progress against budgets
and forecasts on a regular basis to ensure the Group’s
performance is on target or actions identified if it is not.
It also evaluates the impact of key risks and assesses
the resources required to mitigate such risks.
The Board is responsible for the systems of risk
management and internal control and for reviewing
their effectiveness. The internal controls are designed
to manage rather than eliminate risk and provide
reasonable but not absolute assurance against material
misstatement or loss. Through the activities of the
Audit Committee, the effectiveness of these internal
controls is reviewed annually.
A summary of the principal risks and uncertainties
facing the Group, as well as mitigating actions, is set
out on in the strategic report on pages 20 to 21. The
Group maintains insurance cover as part of its risk
management programme.
The senior management team meet at least monthly to
consider new risks and opportunities presented to the
Group, making recommendations to the Board where
necessary.
5. Maintain the Board as a well-functioning,
balanced team led by the Chair
SmartSpace’s Board consists of four directors, two of
whom are non-executive directors. On an annual basis
each Director seeks re-election at the annual general
meeting.
The Group does not have a director designated as
a Senior Independent Director. In light of the size of
the Board, and the Group’s stage of development, the
Board does not consider it necessary to appoint a
Senior Independent Director.
Directors’ biographies are set out on page 29.
The Board is responsible to the shareholders for the
proper management of the Group and meets at least
ten times a year to set the overall direction and strategy
of the Group, to review technological, operational and
financial performance and to advise on management
appointments. Executive directors are employed on
a full-time basis whilst non-executive directors are
required to attend board and committee meetings, and
are encouraged to be involved in specific workshops,
meetings or seminars in line with their areas of
expertise. All key operational and investment decisions
are subject to board approval as required by the
Company’s schedule of matters reserved for the Board.
Year Ended 31 January 2021 36
A summary of board and committee meetings held in the year ended 31 January 2021, and directors’ attendance records,
is set out below:
Board Meetings
Audit Committee Meetings
Remuneration Committee Meetings
Guy van Zwanenberg
Frank Beechinor
Diana Dyer Bartlett
Bruce Morrison
27 / 27
27 / 27
25 / 27
27 / 27
2/2
n.a.
2/2
n.a.
1/1
n.a.
1/1
n.a.
Board meetings were held on a weekly basis from the
commencement of the Covid-19 pandemic through to
the point at which SmartSpace Global was disposed
of, at which point they returned to a regular monthly
schedule.
The Board adheres to the QCA Code’s recommendations
that a Board should have at least two independent
non-executive directors. Both Non-Executive directors
are regarded as independent under the QCA Code’s
guidance for determining such independence.
The Non-Executive directors are remunerated by way
of an agreed monthly fee. In 2015 they were granted
share options under the Company’s Unapproved
Share Option Scheme, at a time when the Company
had trading difficulties and required substantial board
intervention but had limited funds. The options are not
deemed to be significant enough to impact the Non-
Executives’ independence and were granted following a
shareholder consultation process.
6. Ensure that between them, the Directors have
the necessary up-to-date experience, skills and
capabilities
The Board considers its Directors to have experience
in areas critical to the long-term future success of the
Group, covering a deep understanding of technology,
corporate strategy, finance and investment. The
Directors’ biographies are set out on page 29.
The Board regularly reviews the composition of the
Board to ensure that it has the necessary breadth and
depth of skills to support the ongoing development of
the Group. Both Non-executive Directors have served
on the Board for a number of years and the Board is
starting the process of developing a succession plan.
7. Evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement
Currently there is no formal board performance
evaluation procedure, but the Board does discuss
its operational efficiency as well as that of individual
Directors on a regular basis. As the business grows,
consideration will be given to adopting a more formal
process.
8. Promote a corporate culture that is based on
ethical values and behaviours
The Board seeks to maintain the highest standards
of integrity in the conduct of the Group’s operations.
An open culture is encouraged within the Group, with
regular communications to staff regarding the Group’s
progress. The senior management team regularly
monitors the Group’s cultural environment and seeks to
address any concerns that may arise from time to time.
The Group has in place a whistleblowing policy which
is reviewed on a regular basis. All staff are made aware
of their responsibilities in regard to market abuse and
registers are maintained in regard to insiders.
The Group is committed to providing a safe
environment for its staff and all other parties for which
the Group has a legal or moral responsibility.
These core beliefs are reinforced by senior
management. Normally town hall and other similar
meetings are carried out, however these were
suspended during lock down but will resume when
practical.
9. Maintain governance structures and processes
that are fit for purpose and support good decision
making by the Board
The Board has overall responsibility for promoting the
success of the Group. The Executive Directors have day-
to-day responsibility for the operational management
of the Group’s activities. The Non-Executive directors
are responsible for bringing independent and objective
judgement to board decisions.
There is a clear separation of the roles of Chief
Executive Officer and Non-Executive Chairman. The
Chairman is responsible for overseeing the running
of the Board, ensuring that no individual or group
dominates the Board’s decision-making and ensuring
the Non-Executive directors are properly briefed
on matters. The Chairman has overall responsibility
for corporate governance matters in the Group. The
Chief Executive Officer has the responsibility for
implementing the strategy of the Board and managing
the day-to-day business activities of the Group. The
Company Secretary is responsible for ensuring that
Board procedures are followed, and applicable rules and
regulations are complied with.
SmartSpace Software PLC Annual Report
37
The Board has established Audit, Remuneration and
Nominations Committees with formally delegated
duties and responsibilities, and which comprise Non-
Executive directors only, with executive directors
attending by invitation.
Diana Dyer Bartlett chairs the Audit Committee, Guy
van Zwanenberg chairs the Remuneration Committee
and the Nominations Committee.
The Audit Committee normally meets twice a year
and at other times if necessary. The Audit Committee
recommends the appointment, scope and fees of the
external auditor, discusses issues that arise from the
audit, reviews the reports of the external auditors and
internal control procedures and considers any financial
statements before their publication. The external
auditor attends meetings as required by the Audit
Committee to consider any issues arising from the audit
and the auditor’s work. The audit partner meets the
Audit Committee without the Executive Directors being
present at least once a year.
The Remuneration Committee, which meets as
required, but at least once a year, agrees the terms and
conditions, including annual remuneration, of Executive
Directors and reviews such matters for other senior
personnel including their participation in long term
incentive schemes. It also supervises the Company’s
share incentive schemes and sets performance
conditions for share options granted under the
schemes.
The Nominations Committee meets periodically as
required.
10. Communicate how the Group is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Group places a high priority on regular
communications with its various stakeholder groups
and aims to ensure that all communications concerning
the Group’s activities are clear, fair and accurate. The
Company’s website is regularly updated, and users can
register to be alerted when announcements are posted
onto the website.
The Group’s financial reports, regulatory news
announcements and notices of general meetings,
can be found in the investor relations section of the
Company’s website.
The Group provides detailed results of shareholder
voting on its website.
Year Ended 31 January 2021 38
SmartSpace Software PLC Annual Report
DIR EC TORS’ REPORT
The Directors present their Annual Report on the affairs
of the Group, together with the financial statements
and independent auditor’s report for the year ended
31 January 2021. The corporate governance report
on pages 34 to 37 forms part of this report. The
Company’s full name is SmartSpace Software plc (“the
Company”), company number 05332126. SmartSpace
Software plc is a public limited company, listed on
the AIM market of The London Stock Exchange and
domiciled in the United Kingdom. The address of its
registered office is given on page 28.
PRINCIPAL ACTIVITIES
During the year the Group’s principal activities were the
development and sale of software products together
with the sale and installation of audio-visual hardware
products. The Group’s software activities are all cloud
based.
RESULTS AND DIVIDEND
The results for the year are set out in the consolidated
statement of comprehensive income on page 48. The
Directors do not recommend payment of a dividend
(2020: £nil).
REVIEW OF THE BUSINESS
A review of the business of the Group, together
with comments on future developments is given in
the Strategic Report including a description of the
principal risks and uncertainties facing the Group on
pages 12 to 26.
RESEARCH AND DEVELOPMENT
As a result of the disposal of the Group Enterprise
software division expenditure on research and
development significantly reduced to £1,319,000 in
2021 (2020: £3,772,000) out of which £302,000 was
capitalised under IAS 38 “Intangible Assets”. The Group
intends to continue to invest in the development of its
SwipedOn and Space Connect software platforms to
further enhance their capabilities. In the opinion of the
Directors these investments will maintain and generate
significant revenues in future years.
FINANCIAL RISK MANAGEMENT
Details of the Group’s financial risk management
objectives and policies are set out in note 13 to the
financial statements.
GOING CONCERN
The Group’s business activities and performance, and
the financial position of the Group, its cash flows and
borrowing facilities, together with the factors likely
to affect its future development, performance and
position, are explained in the Strategic Report. Analysis
of the Group’s key risks is also set out in the Strategic
Report. Further information regarding the assessment
of going concern is in note 24 to the consolidated
financial statements.
After making appropriate enquiries, the Directors
consider that the Company and the Group have
adequate resources to continue in operational existence
for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing
the financial statements.
POST BALANCE SHEET EVENTS
In accordance with the share purchase agreement
(SPA) for the acquisition of SpaceConnect Pty Limited
in November 2019, SmartSpace Software PLC issued
the remaining 675,411 retention consideration shares to
Pope Family Investments Pty Ltd on 30 April 2021. The
shares were held back for a period of 18 months to be
set off against any claims under the SPA, of which none
were made. The shares were ordinary shares with a par
value of 10 pence each. Following the allotment Pope
Family Investments Pty Ltd held 7.0% of the issued
share capital.
DIRECTORS
The Directors who held office during the year were as
follows:
Guy van Zwanenberg
Non-Executive Chairman
Frank Beechinor
Chief Executive
Bruce Morrison
Chief Financial Officer
Diana Dyer Bartlett
Non-Executive Director
39
EMPLOYMENT MATTERS
The Group places considerable value on the
involvement of its employees and has continued to
keep them informed on matters affecting them as
employees and on the various factors affecting the
performance of the Group. This is achieved through
formal and informal meetings. Covid-19 has required
our employees to adapt quickly to home working,
and in certain circumstances being furloughed. As
lockdowns have eased formal procedures have been
put in place to allow a return to a Covid-19 secure
workplace.
The Group operates an EMI and LTIP share option
scheme which is open to all employees.
The Group has continued to give full and fair
consideration to applications made by disabled
persons, having regard to their respective aptitudes and
abilities, and to ensure that they benefit from training
and career development programmes in common with
all employees. The Group has continued its policy of
employee involvement by making information available
to employees through the medium of frequent staff
meetings, together with personal appraisals and
feedback sessions.
SHARE CAPITAL
Details of the Company’s share capital are disclosed in
note 10 to the consolidated financial statements.
FINANCIAL INSTRUMENTS
Details of the use of financial instruments by the
Company and its subsidiary undertakings are disclosed
in note 8 to the consolidated financial statements.
DIRECTORS’ SHAREHOLDINGS AND
SHARE INTERESTS
At 31 January 2021 the Directors’ shareholdings were:
Director
Ordinary shares of 10p each
2021
2020
No.
No.
Guy van Zwanenberg
30,000
30,000
Frank Beechinor
Bruce Morrison
Diana Dyer Bartlett
90,000
90,000
27,356
-
40,000
40,000
Details of Directors’ share option holdings at the end
of the year are set out in the Remuneration Report on
pages 30 and 31.
DIRECTORS’ INDEMNITIES
The Directors have been granted an indemnity from
the Company to the extent permitted by law in
respect of liabilities incurred as a result of their office
which remains in force at the date or this report. The
Company maintains directors and officers’ liability
insurance.
RE-ELECTION OF DIRECTORS
In accordance with principles of the QCA Code all
Directors are retiring and seeking re-election at the
annual general meeting.
SUBSTANTIAL SHAREHOLDINGS
The following interests in 3% or more of the issued
ordinary share capital had been notified to the
Company:
Shareholder
Number of shares
at 31 January 2021
% Holding at
31 January 2021
Number of shares
at 30 April 2021
% Holding at
30 April 2021
JO Hambro Capital Management
Alto Invest
Interactive Investor
Hargreaves Lansdown Asset Management
Herald Investment Management
Patronus Partners
Pope Family Investments Pty Ltd
IG Markets
Close Asset Management
Hadleigh J Ford
3,115,000
2,580,262
2,534,166
2,490,286
2,240,780
1,864,512
1,350,823
1,090,294
1,066,300
1,048,838
11.02
9.13
8.97
8.81
7.93
6.60
4.78
3.86
3.77
3.71
3,115,000
2,520,262
2,534,166
2,490,286
2,240,780
1,864,512
2,026,234
1,090,294
1,066,300
1,048,838
10.77
8.71
8.76
8.61
7.75
6.44
7.00
3.77
3.69
3.63
Year Ended 31 January 2021
40
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group
and company financial statements for each financial
year. The Directors have elected under company law
and the AIM Rules of the London Stock Exchange to
prepare the Group financial statements in accordance
with international accounting standards in conformity
with the requirements of the Companies Act 2006
and have elected under company law to prepare the
Company financial statements in accordance with
international accounting standards in conformity with
the requirements of the Companies Act 2006 and
applicable law.
The Group and Company financial statements are
required by law and international accounting standards
in conformity with the requirements of the Companies
Act 2006 to present fairly the financial position of the
Group and the Company and the financial performance
of the group. The Companies Act 2006 provides in
relation to such financial statements that references
in the relevant part of that Act to financial statements
giving a true and fair view are references to their
achieving a fair presentation.
Under company law the directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
group and the Company and of the profit or loss of the
Group for that period.
In preparing each of the Group and Company financial
statements, the directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgements and accounting estimates that
are reasonable and prudent;
c. state whether they have been prepared in
accordance with international accounting standards
in conformity with the requirements of the
Companies Act 2006.
d. prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Company will continue in
business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and the Company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and
enable them to ensure that the financial statements
comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding
the assets of the group and the company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
LISTING
The Company’s ordinary shares have been traded
on London’s AIM Market since 6 September 2006.
N+1 Singers are the Company’s Nominated Adviser
and Broker. The closing mid-market share price at 29
January 2021 was 127.5 pence (31 January 2020: 31.0
pence). At 6 May 2021, being the latest practicable date
before the signing of this document, the closing mid-
market share price was 142.5 pence.
SmartSpace Software PLC Annual Report 41
PUBLICATION OF FINANCIAL STATEMENTS
The Company’s financial statements will be
made available on the Company’s website www.
smartspaceplc.com. The maintenance and integrity of
the website is the responsibility of the Directors. The
Directors’ responsibility also extends to the financial
statements contained therein. Shareholders who would
like to receive a copy of the financial statements by
post, should apply to the Company Secretary at the
Company’s registered office.
ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held
on 17 June 2021. Public health restrictions relating
to Covid-19 will require that the meeting is closed
to Shareholders, and therefore we encourage all
Shareholders to appoint the Chairman as their proxy.
AUDITOR
So far as the Directors are aware, there is no relevant
audit information (as defined by section 418 of the
Companies Act 2006) of which the Company’s auditor
is unaware, and each director has taken all the steps
that he/she ought to have taken as a director in order
to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditor
is aware of that information.
In accordance with section 485 of the Companies Act
2006, a resolution proposing that RSM UK Audit LLP
be re-appointed as auditor will be put to the Annual
General Meeting.
STRATEGIC REPORT
The Company has chosen in accordance with
Companies Act 2006, s.414C(11) to set out in the
Company’s strategic report information required by
Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008, Sch. 7 to
be contained in the directors’ report. It has done so
in respect of financial risk management objectives
and policies, future developments and stakeholder
engagement.
The Report of the Directors was approved by the Board
on 7 May 2021.
By order of the Board
Kristian Shaw
Company Secretary
7 May 2021
Year Ended 31 January 2021 42
IN D EPENDENT AUDITOR ’S R E PO RT TO TH E
M EMBERS OF SMARTSPACE SO FTWARE PLC
OPINION
We have audited the financial statements of
SmartSpace Software plc (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended
31 January 2021 which comprise the consolidated
statement of comprehensive income, the consolidated
balance sheet, the consolidated statement of changes
in equity, the consolidated statement of cash flows,
the parent company balance sheet, the parent
company statement of changes in equity, the parent
company statement of cash flows and notes to the
financial statements, including significant accounting
policies. The financial reporting framework that has
been applied in their preparation is applicable law and
International Accounting Standards in conformity with
the requirements of the Companies Act 2006 and,
as regards the parent company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to SME listed entities and we have fulfilled
our other ethical responsibilities in accordance
with these requirements. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING
CONCERN
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis
of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the
directors’ assessment of the group’s and parent
company’s ability to continue to adopt the going
concern basis of accounting included:
• obtaining an understanding of management’s going
concern evaluation
• the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 January 2021 and of the group’s loss
for the year then ended;
• assessing the information used in the going concern
assessment for consistency with management’s plan
and information obtained through our other audit
work
• the group financial statements have been properly
• challenging the major assumptions in management’s
prepared in accordance with International
Accounting Standards in conformity with the
requirements of the Companies Act 2006;
• the parent company financial statements have been
properly prepared in accordance with International
Accounting Standards in conformity with the
requirements of the Companies Act 2006 and as
applied in accordance with the Companies Act 2006;
and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in
the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are
independent of the group and parent company in
accordance with the ethical requirements that are
forecasts, and checking the construction of the
forecasts
• conducting independent stress testing to determine
the conditions under which the Group could
potentially experience a liquidity shortfall.
Based on the work we have performed, we have
not identified any material uncertainties relating
to events or conditions that, individually or
collectively, may cast significant doubt on the
group’s or the parent company’s ability to continue
as a going concern for a period of at least twelve
months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report.
SmartSpace Software PLC Annual Report 43
Summary of our audit approach
Key audit matters
Group
• Divestment of SmartSpace Global
• Goodwill impairment
Parent Company
There are no key audit matters relating to parent financial statements
Materiality
Group
• Overall materiality: £101,000 (2020: £90,000)
• Performance materiality: £75,900 (2020: £67,500)
Parent Company
• Overall materiality: £42,100 (2020: £47,200)
• Performance materiality: £31,500 (2020: £35,400)
Scope
Our audit procedures covered 98% of revenue, 99% of net assets and 96% of
profit before tax.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
group financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the
allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the group financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Divestment accounting and compliance with IFRS 5
Key audit matter
description
How the matter
was addressed in
the audit
During the year the Group sold its subsidiary, Smartspace Global Limited, and the details are
set out in note 15 to the financial statements. The disposal is subject to the requirements of
IFRS 5 ‘Non-current assets held for sale and discontinued operations’ and this was significant
to our audit because the standard is complex, and the transaction is non-routine. The areas
of complexity include the valuation of the assets and liabilities sold, the identification of
income and expenses attributable to the disposal, the cut-off point for transactions, and the
presentation requirements for discontinued operations.
Our audit procedures included:
• Reviewing the sale agreement to assess whether the accounting treatment for the disposal
is consistent with the terms of the agreement;
• Evaluation of the disclosures and presentation of the results of Smartspace Global Limited
as a discontinued operation up to the date of sale; and
• Testing whether the income and expenses attributed to the disposal are appropriate and
consistent with the results of the operation disposed of.
Year Ended 31 January 2021 44
Impairment of goodwill and intangibles under IAS 36
Key audit matter
description
The Group currently holds significant intangible and goodwill balances (£11.2m) relating to
the subsidiary entities. Management have assessed the recoverable amounts of the cash
generating units to which these balances are allocated through using cash flow forecasts
and discounted cash flow models, each of which require a high degree of management
judgement.
The accounting policy in respect of goodwill and intangible assets is on page 94 and the
disclosures are on pages 69 and 70.
How the matter
was addressed in
the audit
In auditing the recoverable amount of the cash generating units to which goodwill
and intangible assets are allocated we have performed the following procedures over
managements value in use calculations:
• Challenged the reasonableness of assumptions used through both assessing the discount
rate applied, historical growth rates and also assessing the performance of the businesses
post year end;
• Reviewed management’s ability to accurately forecast performance through comparison
of historic performance against forecast;
• Performed sensitivity analysis to understand and take account of reasonably possible
outcomes;
• Consulted with internal valuation experts; and
• Performed tests to assess the integrity and mechanical accuracy of the underlying model.
OUR APPLICATION OF MATERIALITY
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing,
and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the
financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the
qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as
follows:
Overall materiality
£101,000
Group
Parent company
£42,100
Basis for determining overall
materiality
Rationale for benchmark
applied
5% of adjusted losses “LBITDA”
3% of expenditure
LBITDA considered to be appropriate
benchmark as key KPI reported in the
consolidated financial statements.
Expenses taken to ensure appropriate
consideration of costs.
Performance materiality
£75,900
£31,500
Basis for determining
performance materiality
Reporting of misstatements to
the Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £5,000
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
Misstatements in excess of £2,100 and
misstatements below that threshold
that, in our view, warranted reporting
on qualitative grounds.
SmartSpace Software PLC Annual Report 45
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The group consists of 11 components, located in the following countries;
• United Kingdom
• USA
• Australia
• New Zealand
The coverage achieved by our audit procedures was:
Number of
components
Revenue
Total assets
Loss before tax
Full scope audit
Specific audit procedures
Total
5
1
6
98%
–
98%
99%
–
99%
96%
–
96%
Analytical procedures at group level were performed for the remaining 5 components.
Of the above, full scope audits for 1 component and specific audit procedures for 1 component were undertaken by
component auditors.
OTHER INFORMATION
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. The
directors are responsible for the other information
contained within the annual report. Our opinion on
the financial statements does not cover the other
information and, except to the extent otherwise
explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS
PRESCRIBED BY THE COMPANIES ACT
2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not
identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
Year Ended 31 January 2021 46
• adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns;
or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’
responsibilities statement set out on page 40, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view, and for such internal control
as the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the group’s and the
parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the directors either intend to
liquidate the group or the parent company or to
cease operations, or have no realistic alternative but
to do so.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
THE EXTENT TO WHICH THE AUDIT WAS
CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD
Irregularities are instances of non-compliance with laws
and regulations. The objectives of our audit are to
obtain sufficient appropriate audit evidence regarding
compliance with laws and regulations that have a direct
effect on the determination of material amounts and
disclosures in the financial statements, to perform
audit procedures to help identify instances of non-
compliance with other laws and regulations that may
have a material effect on the financial statements, and
to respond appropriately to identified or suspected
non-compliance with laws and regulations identified
during the audit.
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement
of the financial statements due to fraud, to obtain
sufficient appropriate audit evidence regarding the
assessed risks of material misstatement due to fraud
through designing and implementing appropriate
responses and to respond appropriately to fraud or
suspected fraud identified during the audit.
However, it is the primary responsibility of
management, with the oversight of those charged with
governance, to ensure that the entity’s operations are
conducted in accordance with the provisions of laws
and regulations and for the prevention and detection of
fraud.
In identifying and assessing risks of material
misstatement in respect of irregularities, including
fraud, the group audit engagement team and
component auditors:
• obtained an understanding of the nature of
the industry and sector, including the legal and
regulatory frameworks that the group and parent
company operate in and how the group and parent
company are complying with the legal and regulatory
framework;
• inquired of management, and those charged with
governance, about their own identification and
assessment of the risks of irregularities, including any
known actual, suspected or alleged instances of fraud;
• discussed matters about non-compliance with
laws and regulations and how fraud might occur
including assessment of how and where the financial
statements may be susceptible to fraud
All relevant laws and regulations identified at a Group
level and areas susceptible to fraud that could have
a material effect on the financial statements were
communicated to component auditors. Any instances
of non-compliance with laws and regulations identified
and communicated by a component auditor were
considered in our audit approach.
SmartSpace Software PLC Annual Report 47
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement team included:
IFRS and Companies
Act 2006
Review of the financial statement disclosures and testing to supporting documentation;
and
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance
regulations
Inspection of advice received from external tax advisors; and
Input from a tax specialist was obtained regarding the tax impact of cross-border
transactions.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Management override
of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are indicative
of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Richard Bartlett-Rawlings FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
The Pinnacle, 170 Midsummer Boulevard
Milton Keynes, Buckinghamshire, MK9 1BP
7 May 2021
Year Ended 31 January 2021 48
SmartSpace Software PLC Annual Report
CO NSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Note
Year ended.
Year ended
31 January 2021. 31 January 2020
£’000.
£’000
Continuing operations
Revenue from contracts with customers
4
Costs of sale of goods
Costs of providing services
Gross profit
Administrative expenses
Net impairment losses on financial and contract assets
13(b)
Other income
Operating loss
Adjusted LBITDA*
Reorganisation and transactional items
Depreciation
Amortisation
Impairment of financial asset
Share based payment charge
Operating loss
Finance income
Finance costs
Loss before tax
Taxation
Loss for the year after tax
Loss for the year from discontinued operations
Loss for the year
Other comprehensive income
Exchange differences on translation of foreign operations
Total other comprehensive income
3(b)
6(e)
6(a)
6(a)
13(b)
6(b)
6(d)
6(d)
7
15
10(c)
4,629.
(1,695)
(283)
2,651.
(5,426)
(72)
130.
(2,717)
(2,120)
-.
(103)
(272)
(72)
(150)
5,082
(2,743)
(271)
2,068
(4,307)
(205)
79
(2,365)
(1,672)
(199)
(79)
(122)
(205)
(88)
(2,717)
(2,365)
1.
(27)
(2,743)
612.
(2,131)
(124)
(2,255)
643.
643.
11
(23)
(2,377)
468
(1,909)
(7,973)
(9,882)
(576)
(576)
Total comprehensive loss attributable to the owners of the group
(1,612)
(10,458)
Basic loss per share
Continuing operations
Discontinued operations
Total
Diluted loss per share
Continuing operations
Discontinued operations
Total
21
21
21
21
(7.54p)
(0.44p)
(7.98p)
(7.54p)
(0.44p)
(7.98p)
(8.05p)
(33.65p)
(41.70p)
(8.05p)
(33.65p)
(41.70p)
* Loss for the year from continuing operations before net finance costs, tax, depreciation, amortisation, reorganisation and transactional items,
impairment charges and share based payment charge.
The accompanying notes are an integral part of these consolidated financial statements.
CO NSOLIDATED BALANCE S HE E T
Note
31 January 2021
31 January 2020
£’000
£’000
49
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Contract assets
Trade and other receivables
Other financial assets at amortised cost
Current tax receivable
Prepayments
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Total assets
LIABILITIES
Non-current liabilities
Borrowings
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Contract liabilities
Other tax liabilities
Borrowings
Lease liabilities
9(a)
9(b)
9(c)
9(d)
9(e)
4(b)
8(a)
8(b)
9(f)
8(c)
15(c)
8(e)
9(b)
8(d)
4(b)
8(e)
9(b)
Liabilities directly associated with assets classified as held for sale
15(c)
Total current liabilities
Total liabilities
NET ASSETS
683
156
11,222
1,389
13,450
89
4
550
328
101
114
4,516
5,702
-
5,702
19,152
355
110
465
826
1,129
341
58
63
2,417
-
2,417
2,882
693
164
10,508
848
12,213
345
31
475
116
33
67
2,587
3,654
6,480
10,134
22,347
-
133
133
975
641
258
401
46
2,321
2,113
4,434
4,567
16,270
17,780
continued overleaf
Year Ended 31 January 2021
50
CO NSOLIDATED BALANCE S HE E T (continued )
EQUITY
Capital and reserves attributable to equity shareholders
Share capital
Share premium
Other reserves
Retained earnings
Total equity
10(a)
10(a)
10(b)
10(c)
2,826
3,830
(2,087)
11,701
16,270
2,826
3,830
(2,832)
13,956
17,780
The accompanying notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 7 May 2021.
They were signed on its behalf by:
Bruce Morrison
Chief Financial Officer
SmartSpace Software plc, Company Number: 5332126
SmartSpace Software PLC Annual Report
51
CO NSOLIDATED STATEMENT
OF CHANGES IN EQU ITY
At 31 January 2019
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Issue of ordinary shares as consideration for
a business combination
Issue of ordinary shares for cash consideration
Share issue costs
Space Connect acquisition deferred share
issue consideration
Share-based payment expense
- continuing operations
Share-based payment expense
- discontinued operations
At 31 January 2020
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Share-based payment expense
- continuing operations
Share-based payment expense
- discontinued operations
Note
Share
capital
Share
premium
Other
reserves
Retained
earnings
£’000
£’000
£’000
£’000
Total
£’000
2,216
1,058
(3,702)
23,838
23,410
-
-
-
135
475
-
-
-
-
-
-
-
-
2,967
(195)
-
-
-
-
(9,882)
(9,882)
(576)
(576)
-
(576)
(9,882)
(10,458)
844
-
-
489
88
25
-
-
-
-
-
-
979
3,442
(195)
489
88
25
2,826
3,830
(2,832)
13,956
17,780
-
-
-
-
-
-
-
-
-
-
-
(2,255)
(2,255)
643
-
643
643
(2,255)
(1,612)
150
(48)
-
-
150
(48)
20
20
20
20
At 31 January 2021
2,826
3,830
(2,087)
11,701
16,270
The accompanying notes are an integral part of these consolidated financial statements.
Year Ended 31 January 2021
52
CO NSOLIDATED STATEMENT OF
C ASH FLOWS
Cash from operating activities
Cash consumed by operations
Interest received
Interest paid
Income taxes received
Note
Year ended
Year ended
31 January 2021 31 January 2020
£’000
£’000
11
(1,791)
(5,899)
1
(42)
394
61
(76)
138
Net cash outflow from operating activities
(1,438)
(5,776)
Cash flows from investing activities
Payments for the acquisition of subsidiary (net of cash acquired)
Payments for property, plant and equipment
Payment of software development costs
Proceeds from disposal of subsidiary (net of cash disposed)
15
Net cash from investing activities
Cash flows from financing activities
Proceeds from issues of share capital (net of issue costs)
Proceeds from borrowings
Repayment of borrowings
Principal elements of lease payments
Net cashflow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
8(c)
-
(44)
(682)
4,167
3,441
-
31
(19)
(98)
(86)
1,917
2,587
12
4,516
(1,589)
(280)
(1,688)
750
(2,807)
3,247
-
(25)
(85)
3,137
(5,446)
8,053
(20)
2,587
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with maturity of three
months or less, as adjusted for any bank overdrafts.
The accompanying notes are an integral part of these consolidated financial statements.
SmartSpace Software PLC Annual Report
NOT ES TO THE CONS OLIDATE D
F INAN CI AL STATEMENTS
53
Unless otherwise indicated, the segment information
reported on the following pages does not include
any amounts for discontinued operations, which are
described in more detail in note 15.
The operating board primarily uses an adjusted
measure of earnings before interest, tax, depreciation
and amortisation (EBITDA) to assess the performance
of the operating segments. However, the operating
board also receives information about the segments
revenues and assets on a monthly basis. Information
about segment revenue is disclosed in note 4.
3(b) Adjusted LBITDA
Adjusted LBITDA excludes discontinued operations
and the effects of significant items of income and
expenditure which might have an impact on the quality
of earnings, such as reorganisation and transactional
costs and impairment of assets. It also excludes the
effects of equity-settled share-based payments.
Interest income and finance costs are not allocated to
segments, because this type of activity is driven by
the central treasury function which manages the cash
position of the Group.
Year ended 31 Year ended 31
January 2021 January 2020
£’000
£’000
Software
Space Connect
SwipedOn
Hardware
Anders & Kern
Central operating costs
Total adjusted EBITDA
(646)
(195)
(84)
(1,195)
(2,120)
(114)
(554)
284.
(1,288)
(1,672)
1. SIGNIFICANT CHANGES IN THE
CURRENT REPORTING PERIOD
The financial position and performance of the Group
was particularly affected by the following events
and transactions that happened during the reporting
period:
• The sale of the Group’s investment in SmartSpace
Global Limited which was classified as held for sale in
the last financial year.
• The global Covid-19 pandemic which impacted
revenue and costs in the Group’s operations.
2. GENERAL INFORMATION
SmartSpace Software plc is a company incorporated
and domiciled in England and Wales under the
Companies Act 2006 and listed on the AIM market
of The London Stock Exchange. The address of the
registered office is given on page 28.
The principal activities of the Company and its
subsidiaries (the Group) are set out in note 16 and in
the strategic report on pages 12 to 26.
The financial statements are presented in pounds
sterling as that is the currency of the primary economic
environment in which the Group operates. Foreign
operations are included in accordance with the policies
set out in note 24.
3. OPERATING SEGMENTS
3(a) Description of segments and principal
activities
The Group’s operating board, consisting of the Chief
Executive Officer, Chief Financial Officer and Chief
Operating Officer, examines the Group’s performance
from a product perspective and has identified three
reportable segments of its business:
SwipedOn – based in New Zealand provides the
sale and support of self-service visitor management
software to customers throughout the world.
Space Connect – based in the UK provides the sale and
support of self-service space management software
through a network of partners, distributors and resellers
to customers throughout the world
Anders & Kern – based in the UK makes sales of
hardware and related integration services to customers
in the UK.
Year Ended 31 January 2021
54
3(c) Segmental financial performance
Year ended 31 January 2021
Space
Connect
Swiped
On
Central
Anders operating
costs
& Kern
Total
£’000
£’000
£’000
£’000
£’000
Revenue from contracts with customers
192
2,161
2,271
Costs of sale of goods
Costs of providing services
Gross profit
Administrative expenses
Impairment losses on financial and contract assets
Other income
Operating loss
Adjusted LBITDA*
Depreciation
Amortisation
Impairment of financial assets
Share based payment charge
Operating loss
Finance income
Finance costs
Loss before tax
Taxation
Loss after tax
Year ended 31 January 2020
Revenue from contracts with customers
Costs of sale of goods
Costs of providing services
Gross profit
Administrative expenses
Impairment losses on financial and contract assets
Other income
Operating (loss) / profit
Adjusted (LBITDA)/ EBITDA*
Reorganisation and transactional items
Depreciation
Amortisation
Impairment of financial assets
Share based payment charge
Operating (loss) / profit
Finance income
Finance costs
(Loss) / profit before tax
Taxation
Loss after tax
1
(4)
(16)
(1,680)
(196)
189
1,949
(83)
508
5
-
-
5
4,629
(1,695)
(283)
2,651
(1,011)
(2,441)
(648)
(1,326)
(5,426)
-
-
(822)
(646)
(3)
(171)
-
(2)
(18)
130
(380)
(195)
(66)
(80)
(18)
(21)
-
-
(54)
-
(72)
130
(140)
(1,375)
(2,717)
(84)
(22)
(21)
-
(13)
(1,195)
(2,120)
(12)
-
(54)
(103)
(272)
(72)
(114)
(150)
(822)
(380)
(140)
(1,375)
(2,717)
-
(102)
(924)
832
(92)
1
(12)
-
(12)
-
99
1
(27)
(391)
(152)
(1,276)
(2,743)
16
46
(282)
612
(375)
(106)
(1,558)
(2,131)
Space
Connect
Swiped
On
Central
Anders operating
costs
& Kern
Total
£’000
£’000
£’000
£’000
£’000
39
(2)
-
37
1,358
3,685
(22)
(2,719)
(192)
1,144
(79)
887
-
-
-
-
5,082
(2,743)
(271)
2,068
(176)
(1,899)
(656)
(1,576)
(4,307)
-
-
(139)
(114)
-
(1)
(24)
-
-
(139)
-
(30)
(169)
(55)
(224)
(9)
79
(685)
(554)
-
(45)
(77)
(9)
-
(685)
1
(178)
(862)
238
(624)
-
-
231
284
-
(24)
(21)
-
(8)
(196)
(205)
-
79
(1,772)
(2,365)
(1,288)
(1,672)
(199)
(9)
-
(196)
(80)
(199)
(79)
(122)
(205)
(88)
231
(1,772)
(2,365)
-
(14)
217
6
10
199
11
(23)
(1,563)
(2,377)
279
468
223
(1,284)
(1,909)
* (Loss)/profit for the year from continuing operations before net finance costs, tax, depreciation, amortisation, reorganisation and transactional items,
impairment charges and share based payment charge.
SmartSpace Software PLC Annual Report
3(d) Segment assets
Space Connect
SwipedOn
Anders & Kern
Segment assets
Assets relating to discontinued operations
Unallocated assets
Total assets
*Other than contract assets and deferred tax assets
55
31 January 2021
Segment
assets
Additions to non-
current assets*
31 January 2020
Segment Additions to non-
assets
current assets*
£’000
4,884
6,687
2,640
14,211
-
4,941
19,152
£’000
294
64
12
370
-
7
£’000
3,502
6,130
3,302
12,934
6,480
2,933
377
22,347
£’000
114
249
1
364
2,666
10
3,040
Discontinued activities are comprised of SmartSpace Global which was reclassified to discontinued activities for the year
ended 31 January 2020 and subsequently disposed of during the year ended 31 January 2021, details of which can be
found in note 15.
For the purpose of monitoring segment performance and allocating resource between segments, the Group’s Chief
Executive Officer monitors the tangible, intangible and financial assets attributable to each segment. All assets are
allocated to reportable segments with the exception of cash held by the Parent Company, other financial assets (except
for trade and other receivables) and tax assets. Goodwill has been allocated to reportable segments as described in note
9(c).
The total of non-current assets other than deferred tax assets broken down by location of assets is shown as follows:
UK
Australia
New Zealand
Total assets
31 January 2021
31 January 2020
£’000
6,124
3
5,934
12,061
£’000
2,492
3,242
5,631
11,365
Intellectual property relating to Space Connect has been transferred within the Group from an Australian based subsidiary
to a UK based subsidiary.
3(e) Segment liabilities
Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the
operations of the segment.
31 January 2021
31 January 2020
Space Connect
SwipedOn
Anders & Kern
Segment liabilities
Liabilities relating to discontinued operations
Unallocated
Total liabilities
£’000
171
1,460
996
2,627
-
255
2,882
£’000
22
887
1,437
2,346
2,113
108
4,567
Year Ended 31 January 2021
56
Discontinued activities are comprised of SmartSpace Global which was reclassified to discontinued activities for the year
ending 31 January 2020 and subsequently disposed of during the year ending 31 January 2021, details of which can be
found in note 15.
3(f) Revenue by customer geographical location
Year ended 31 January 2021
UK
USA
Australia
New Zealand
Canada
Sweden
Rest of the world
Total
Year ended 31 January 2020
UK
USA
Australia
New Zealand
Canada
Rest of the world
Total
Space
Connect
Swiped
On
£’000
£’000
34
-
135
-
-
23
-
304
974
475
214
151
-
43
Anders
& Kern
£’000
2,213
-
-
-
-
-
58
192
2,161
2,271
Central
£’000
5
-
-
-
-
-
-
5
Space
Connect
Swiped
On
Anders
& Kern
Central
£’000
£’000
£’000
£’000
-
-
-
39
-
-
190
613
299
134
95
27
3,591
-
-
-
-
94
39
1,358
3,685
-
-
-
-
-
-
-
Total
£’000
2,556
974
610
214
151
23
101
4,629
Total
£’000
3,781
613
299
173
95
121
5,082
4. REVENUE FROM CONTRACTS WITH CUSTOMERS
4(a) Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major
product lines and geographical regions.
Year ended 31 January 2021
Space Connect
UK New Zealand
Swiped On Anders & Kern Central
UK
UK
Total
Segment revenue
Timing of revenue recognition
At a point in time
Over time
£’000
192
74
118
192
£’000
2,161
36
2,125
2,161
£’000
£’000
£’000
2,271
5
4,629
2,120
151
2,271
5
-
5
2,235
2,394
4,629
SmartSpace Software PLC Annual Report
Year ended 31 January 2020
Space Connect
Australia New Zealand
Swiped On Anders& Kern
UK
Central
UK
Segment revenue
Timing of revenue recognition
At a point in time
Over time
£’000
39
23
16
39
£’000
1,358
54
1,304
1,358
£’000
£’000
3,685
3,536
149
3,685
-
-
-
-
57
Total
£’000
5,082
3,613
1,469
5,082
Revenues from external customers come from the sale of software as a service, the sale of software licences, the sale of
professional services and the sale of hardware. The revenue from the sale of software as a service and software licences
relates to the Group’s intellectual property owned by SwipedOn and Space Connect. No single customer represents 10 per
cent or more of the Group’s total revenues.
4(b) Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Current contract assets
Software
Loss allowance
Total current contract assets
31 January 2021
31 January 2020
£’000
£’000
4
-
4
31
-
31
Current contract liabilities
31 January 2021
31 January 2020
Software
Hardware
Total contract liabilities
Contract liability movement
At 31 January 2019
Transfer to discontinued activities
Recognised as revenue in period
New contract liabilities
At 31 January 2020
Recognised as revenue in period
New contract liabilities
At 31 January 2021
£’000
1,055
74
1,129
£’000
561
80
641
£’000
754
(182)
(572)
641
641
(641)
1,129
1,129
The Group expects all of the deferred revenue as of 31 January 2021 to be recognised during the next reporting period.
Unsatisfied contracts
The following table shows unsatisfied performance obligations resulting from fixed-price software as a service contracts
and software support agreements:
Aggregate amount of the transaction price allocated to software as a service agreements
and software support agreements that are partially or fully unsatisfied as at 31 January
1,055
641
31 January
2021
31 January
2020
£’000
£’000
Year Ended 31 January 2021
58
4(c) Accounting policies
The Group has a number of different types of
contractual arrangements and consequently applies
a variety of methods of revenue recognition, based
on the principles set out in IFRS 15 Revenue from
Contracts with Customers. The revenue and profit in
any period are based on the delivery of performance
obligations and an assessment of when control is
transferred to the customer.
Revenue is recognised when the performance
obligation in a contract has been performed (so ‘point
in time’ recognition) or over time as the performance
obligation is transferred to the customer.
For contracts where the Group does not provide the
final services judgement is applied as to whether the
Group is acting as a principal or agent. Where the
Group controls the goods or services before they are
transferred to the customer a principal relationship is
considered to be in place, and revenue is recognised
gross. Where the Group arranges for the goods or
services to be provided by another party without the
Group taking control over those goods or services the
relationship is considered to be that of an agent, and
the revenue is recognised net of cost of sales.
The transaction price, being the amount to which the
Group expects to be entitled and has rights to under
the contract, is allocated to the identified performance
obligations.
For each performance obligation, the Group determines
if revenue will be recognised over time or at a point in
time. Where the Group recognises revenue over time
for long-term contracts, this is in general due to the
Group performing and the customer simultaneously
receiving and consuming the benefits provided over the
life of the contract. For each performance obligation
to be recognised over time, the Group applies a
revenue recognition method that faithfully depicts
the Group’s performance in transferring control of
the goods or services to the customer. This decision
requires assessment of the real nature of the goods
or services that the Group has promised to transfer to
the customer. The Group applies the relevant output
or input method consistently to similar performance
obligations in other contracts.
If performance obligations in a contract do not meet
the over time criteria, the Group recognises revenue at
a point in time (see below for further details).
The Group disaggregates revenue from contracts with
customers by reporting segment and timing of transfer
of goods and services as management believe this best
depicts how the nature, amount, timing and uncertainty
of the Group’s revenue and cash flows are affected by
economic factors.
Sale of software as a service
The Group offers its software as a service hosted in
the cloud. Under terms of the contract, the customer
receives the right to access the software for an agreed
period of time. To the extent that the customer has
been invoiced in excess of the value of services
received to date a contract liability for the provision of
the software as a service is recognised at the time of
sale. Management considers that revenue is recognised
over time as the service is delivered until the point that
the agreement expires.
Revenue invoiced during the reporting period which
relates to future periods is classified as deferred income
contract liabilities on the balance sheet.
The software comprises a number of different modules
which can be sold as a bundle at the outset or
separately if a customer chooses to take a subscription
at a later date. Additional modules will continue to be
developed and offered as part of the initial product
offering or sold separately to existing customers who
have not subscribed to that module.
Sale of software licences
The Group sells software licences which allow
customers to use the software in their own environment
which results in a transfer of control to the customer
at a point in time. Revenue is recognised in full at
the point of delivery to the customer as the risk and
rewards of the licences have transferred at that point
to the buyer and the Group does not retain managerial
involvement or effective control over the software or
the licences.
Sale of professional services
The Group sells professional services comprising
project management, implementation, configuration
and support services. These services can be purchased
in advance and used by customers when required
and revenue is recognised at a point in time when the
service has been provided.
Hardware and Systems Integration
The Group sells hardware through Anders & Kern or
as part of a contract for software through its software
division. Revenue is recognised at the point when
the performance obligation is fulfilled, usually when
the hardware is delivered to the customer. Where
installation services are sold alongside the hardware,
revenue from those installation services is recognised
when those services are delivered.
Contract assets and liabilities
Where the Group provides software as a service
or software support agreements, customers often
pay in advance for a service to be delivered over
time. Where payments made are greater than the
revenue recognised at the period end date, the Group
recognises a deferred income contract liability for this
difference. Where payments made are less than the
revenue recognised at the period end date, the Group
recognises an accrued income contract asset for this
difference.
SmartSpace Software PLC Annual Report 59
At each reporting date, the Group assesses whether there
is any indication that accrued income contract assets may
be impaired by considering whether the revenue remains
highly probable that no revenue reversal will occur. Where
an indicator of impairment exists, the Group makes a
formal estimate of the asset’s recoverable amount. Where
the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written
down to its recoverable amount.
5. MATERIAL PROFIT OR LOSS ITEMS
The Group has identified a number of items which are
material due to the significance of their nature and/or
amount. These are listed separately to provide a better
understanding of the financial performance of the Group.
Year ended
Year ended
31 January 2021 31 January 2020
£’000
£’000
The following items have been credited / (expensed) to the consolidated statement
of comprehensive income:
Reorganisation and transactional costs
Impairment of financial assets
Government grants
- UK Government Job Retention Scheme for continuing operations
- UK Government Job Retention Scheme for discontinued operations
- New Zealand Callaghan Growth grant
- New Zealand Internship grant
-
(72)
104
140
112
17
(199)
(205)
-
-
67
13
Research and development not capitalised
(1,017)
(628)
Result from discontinued activities (see note 15)
- Loss after tax on discontinued activities – SmartSpace Global
- Impairment of disposal group to fair value less costs to sell (note 15)
- Reversal of impairment of disposal group (note 15)
- Loss on disposal of discontinued operations
(1,470)
-
1,470
(124)
(5,304)
(2,669)
-
-
5(a) Result from discontinued activities
In January 2020 the board decided to commence a process to dispose of the Group’s investment in SmartSpace
Global Limited. A buyer was identified and in August 2020 the sale was executed. The profit on disposal and loss from
discontinued activities takes into account the impairments recorded in the year ending 31 January 2020.
5(b) Impairment of financial assets
Part of the consideration for the disposal of the Systems Integration and Managed Services Divisions in June 2018 was
retained by the purchaser for working capital purposes relating to a specific contract asset in respect of a customer
contract which was due to be recovered after the completion of the sale. At 31 January 2021 £1.75m out of £2.0m has been
paid to the Group, £196,000 was provided for in the year ending 31 January 2020 and the remaining £54,000 provided
for in the year ending 31 January 2021. A further £18,000 of impairments to financial assets were recorded during the year
ending 31 January 2021 relating to the Group’s continuing operations as described in note 13.
Year Ended 31 January 2021
60
6. OTHER INCOME AND EXPENSE ITEMS
This note includes an analysis of expenses by nature and a breakdown of the items included in ‘finance income and costs’.
Information about specific profit and loss items is disclosed in the related balance sheet notes.
6(a) Breakdown of expenses by nature
Inventories sold
Employee benefits and expenses net of government grants (see note 6b)
Contractor fees
Depreciation
Amortisation
Marketing
Business combination costs
Other expenses
Less: capitalised employee and contractor costs
Total cost of sales and administrative expenses
6(b) Employee benefits and expenses
Wages and salaries net of government grants
Share based payments (see note 20)
Social security costs
Pension costs
Total remuneration
6(c) Average number of people employed
Sales
Software development and technical support
Administrative
Total employees
Year ended
31 January 2021
Year ended
31 January 2020
£’000
1,630
3,308
441
103
272
768
-
1,172
(290)
7,404
£’000
2,691
2,486
161
79
122
595
199
1,101
(113)
7,321
Year ended
31 January 2021
Year ended
31 January 2020
£’000
2,890
150
179
89
£’000
2,186
88
152
60
3,308
2,486
Year ended
31 January 2021
Year ended
31 January 2020
No.
12
30
12
54
No.
9
20
19
48
SmartSpace Software PLC Annual Report
6(d) Finance income and cost
Finance income
Interest income from financial assets held for cash management
Finance income
Finance cost
Interest charges on bank loans
Interest charges on lease liabilities
Other interest charges
Finance costs expenses
Net finance costs
6(e) Reorganisation and transactional
Transactional costs
61
Year ended
Year ended
31 January 2021 31 January 2020
£’000
£’000
1
1
(12)
(11)
(4)
(27)
(26)
11
11
(14)
(8)
(1)
(23)
(12)
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
-
-
199
199
In 2020 transactional items include the costs involved with the acquisition of SpaceConnect Pty Limited.
7. TAXATION
This note provides an analysis of the Group’s income tax expense, and shows what amounts are recognised directly
in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant
estimates made in relation to the Group’s tax position.
7(a) Income tax expense
Current tax
Current tax benefit for the year
Total current tax benefit
Deferred tax
Origination and reversal of temporary differences
Adjustments in respect of earlier years
Impact of change in UK corporation tax rate
Remeasurement of temporary differences
Total deferred tax benefit
Income tax benefit
Income tax benefit is attributable to:
Loss from continuing operations
Loss from discontinued operations
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
(103)
(103)
(977)
(98)
(67)
591
(551)
(654)
(612)
(42)
(654)
(514)
(514)
(406)
(2)
(1)
-
(409)
(923)
(468)
(455)
(923)
Year Ended 31 January 2021
62
7(b) Numerical reconciliation of income tax expense to prima facie tax payable
Year ended
Year ended
31 January 2021 31 January 2020
Loss from continuing operations before income tax expense
Loss from discontinued operations before income tax expense
Tax at the UK corporation tax rate of 19 % (2020: 19%)
Tax effects of amounts which are not deductible in calculating taxable income:
Non-deductible expenses
Effect of non-taxable income
Effect of different tax rates for loss utilisation / overseas rates
Research and development relief
Tax losses not recognised as assets
Adjustment from prior year
Utilisation of previously unrecognised tax losses
Foreign currency translation of loan to subsidiary
Tax benefit from intergroup transfer of intellectual property
Derecognition of tax losses
Effect of change in tax rates
Income tax benefit
7(c) Amounts recognised directly in equity
There are no amounts of tax recognised directly in equity.
£’000
(2,743)
(166)
(2,909)
(553)
80
(114)
(38)
(30)
97
(98)
-
116
(638)
591
(67)
(654)
£’000
(2,377)
(8,429)
(10,806)
(2,053)
474
(4)
7
(223)
898
(2)
(19)
-
-
-
(1)
(923)
7(d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Continuing operations
Discontinued operations
Potential tax benefit at 19% (2020: 17%)
Year ended
31 January 2021
Year ended
31 January 2020
£’000
3,476
-
660
£’000
-
5,228
889
See note 9(d) for information about recognised tax losses and significant judgements made in relation to them.
7(e) Unrecognised temporary differences
Temporary differences relating to investments in subsidiaries for which deferred
tax liabilities have not been recognised: Foreign currency translation
Potential deferred tax liability
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
(472)
(90)
(147)
(25)
Temporary differences of £472,000 (2020: £147,000) have arisen as a result of the translation of the Group’s subsidiaries
in New Zealand and Australia. A deferred tax liability has not been recognised because the liability will only crystallise in
the event of the disposal of the subsidiaries, and no such disposal is expected in the foreseeable future.
SmartSpace Software PLC Annual Report
8. FINANCIAL ASSETS AND LIABILITIES
This note provides information about the Group’s financial instruments including:
• An overview of all financial instruments held by the Group;
• specific information about each type of financial instrument;
• accounting policies;
• information about determining the fair value of the instruments, including judgements and estimation uncertainty
63
involved.
The Group has the following financial instruments:
Financial assets
Financial assets at amortised cost:
Trade receivables and other receivables
Other financial assets at amortised cost
Cash and cash equivalents
Notes
31 January 2021
31 January 2020
£’000
£’000
8(a)
8(b)
8(c)
550
328
4,516
5,394
475
116
2,587
3,178
Financial liabilities
Notes
31 January 2021
31 January 2020
Financial liabilities at amortised cost:
Trade and other payables
Lease liabilities
Borrowings
£’000
£’000
8(d)
9(b)
8(e)
826
173
413
975
179
401
1,412
1,555
The Group’s exposure to various risks associated with the financial instruments is discussed in note 13. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets
mentioned above.
8(a) Trade receivables and other receivables
Trade receivables
Other receivables
Classification of trade receivables
31 January 2021
31 January 2020
£’000
£’000
468
82
550
475
-
475
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables
are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing
components, in which case they are recognised at fair value. The Group holds trade receivables with the objective of
collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest
method. Details about the Group’s impairment policy and the calculation of the loss allowance are provided in note 13.
Fair value of trade receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
Impairment and risk exposure
Information about the impairment of trade receivables and the Group’s exposure to credit risk, foreign currency risk and
interest rate risk can be found in note 13.
Year Ended 31 January 2021
64
8(b) Other financial assets at amortised cost
These amounts generally arise from transactions outside the usual operating activities of the Group and include
consideration due on the disposal of SmartSpace Global (see note 15).
Subsidiary disposal consideration
Other receivables
Impairment and risk exposure
31 January 2021
31 January 2020
£’000
£’000
327
1
328
54
62
116
Note 13 sets out information about the impairment of financial assets and the Group’s exposure to credit risk.
8(c) Cash and cash equivalents
Current assets
Cash at bank and in hand
31 January 2021
31 January 2020
£’000
£’000
4,516
2,587
The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year.
8(d) Trade and other payables
Current liabilities
Trade payables
Payroll liabilities
Accrued expenses
Other payables
31 January 2021
31 January 2020
£’000
£’000
279
12
344
191
826
695
6
218
56
975
Trade payables are unsecured and usually paid within 30 days of recognition.
The carrying amounts of trade and other payables are considered to be the same as their fair values due to their short-
term nature.
8(e) Borrowings
Government support loans
Bank loans
Total borrowings
31 January 2021
Current Non-Current
£’000
£’000
31
27
58
-
355
355
Total
£’000
31
382
413
31 January 2020
Current Non-Current
£’000
£’000
-
401
401
-
-
-
Total
£’000
-
401
401
Secured liabilities and assets pledged as security
The bank loan of £382,000 (2020: £401,000) is secured by a mortgage over the associated freehold land and building.
Fair value
For all the borrowings, the fair values are not materially different from their carrying amount since the interest payable on
those borrowings is either close to current market rates or the borrowings are of a short-term nature.
Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in note 13.
SmartSpace Software PLC Annual Report
65
9. NON-FINANCIAL ASSETS AND LIABILITIES
This note provides information about the Group’s non-financial assets and liabilities, including specific information about
each type of non-financial asset and non-financial liability and information about determining the fair value of assets and
liabilities including judgements and estimation uncertainty involved.
9(a) Property, plant and equipment
Freehold
land &
buildings
Leasehold Fixtures &
fittings
improvements
Plant &
machinery
Office
equipment
Total
£’000
£’000
£’000
£’000
£’000
£’000
At 31 January 2019
Cost
Accumulated depreciation
Net book amount
Year ending 31 January 2020
Opening net book amount
Additions
Acquisition of subsidiary
Disposals
Depreciation charge
Additions – disposal group
Disposals – disposal group
Depreciation charge – disposal group
Transfer to disposal group
Foreign exchange impact
Closing net book amount
At 31 January 2020
Cost
Accumulated depreciation
Net book amount
Year ending 31 January 2021
649
(23)
626
626
-
-
-
(13)
-
-
-
-
-
613
649
(36)
613
Opening net book amount
613
Additions
Disposals
Depreciation charge
Foreign exchange impact
Closing net book amount
At 31 January 2021
Cost
Accumulated depreciation
Net book amount
Leased assets
-
-
(13)
-
600
649
(49)
600
-
-
-
-
-
-
-
-
56
-
(5)
(51)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
(7)
3
3
-
-
-
-
-
-
-
-
-
36
(29)
7
7
-
-
-
(3)
-
-
-
-
-
3
4
13
(10)
3
3
-
-
(2)
-
1
13
(12)
1
13
(9)
4
4
-
-
(2)
-
2
13
(11)
2
257
(106)
151
952
(165)
787
151
787
49
4
(1)
(31)
175
(9)
(81)
49
4
(1)
(47)
231
(9)
(86)
(185)
(236)
1
73
1
693
126
801
(53)
73
73
44
(2)
(108)
693
693
44
(2)
(37)
(54)
2
2
80
683
154
829
(74)
(146)
80
683
Leased assets are presented as a separate line item in the balance sheet, see note 9(b) for details.
Year Ended 31 January 2021
66
Non-current assets pledged as security
Refer to note 22 for information on non-current assets pledged as security by the Group.
Depreciation methods and useful lives
Depreciation is provided so as to write off to the cost or valuation of assets (other than freehold land) less their estimated
residual values over their expected useful economic lives using the straight-line method on the following bases
• Fixtures and fittings
• Plant and machinery
• Office equipment
• Leasehold improvements
• Freehold buildings
4-5 years
4-5 years
3-4 years
5 years
50 years
See note 24 for the other accounting policies relevant to property, plant and equipment.
9(b) Leases
This note provides information for leases where the Group is a lessee.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Lease Improvements
Buildings
£’000
£’000
Total
£’000
At 31 January 2019
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 January 2020
Opening net book amount
Additions
Depreciation
Additions – disposal group
Depreciation charge – disposal group
Transfer to disposal group
Foreign exchange impact
Closing net book amount
At 31 January 2020
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 January 2021
Opening net book amount
Additions
Depreciation
Foreign exchange impact
Closing net book amount
At 31 January 2021
Cost or fair value
Accumulated depreciation
Net book amount
-
-
-
-
-
-
-
350
(37)
(313)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
195
(32)
530
(42)
(488)
1
164
195
(31)
164
164
31
(49)
10
156
240
(84)
156
-
-
-
-
-
195
(32)
880
(79)
(801)
1
164
195
(31)
164
164
31
(49)
10
156
240
(84)
156
SmartSpace Software PLC Annual Report
Lease liabilities
Current
Non-current
67
31 January 2021
31 January 2020
£’000
£’000
63
110
173
46
133
179
(ii) Amounts recognised in the statement of comprehensive income
The statement of comprehensive income shows the following amounts relating to leases:
Depreciation charge on right-of-use assets
Buildings – continuing operations
Buildings – discontinued operations
Interest expense (included in finance costs)
Expense relating to short-term leases (included in administrative expenses)
Expense relating to leases of low value assets (included in administrative expenses)
31 January 2021
31 January 2020
£’000
£’000
49
-
49
11
25
-
32
79
111
8
109
-
The total cash outflow for all leases within continuing activities in the year ended 31 January 2021 was £57,000 (2020:
£134,000). The incremental borrowing rate used in calculating lease liabilities in continuing operations is 5.3% (2020: 6.6%).
(iii) The Group’s leasing activities and how these are accounted for
The Group leases office space. Rental contracts are for fixed periods of 4 to 10 years. Contracts may contain both lease
and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components
based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
• amounts expected to be payable by the Group under residual value guarantees
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases of the Group, the lessee’s incremental borrowing rate is used, being the
rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group,
which does not have recent third-party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security.
Year Ended 31 January 2021
68
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life.
Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT
equipment and small items of office furniture.
(iv) Extension and termination options
Extension and termination options are included in leases across the Group. These are used to maximise operational
flexibility in terms of managing the assets used in the Group’s operations. The extension and termination options held are
exercisable only by the Group and not by the lessor.
SmartSpace Software PLC Annual Report 9(c) Intangible assets
Internally
Goodwill
generated Customer
contracts
software
69
Brand
assets
Intellectual
property
Total
£’000
£’000
£’000
£’000
£’000
£’000
At 31 January 2019
Cost
7,134
3,302
Accumulated amortisation and impairment
-
(965)
Net book amount
7,134
2,337
Year ended 31 January 2020
812
(212)
600
307
(9)
298
1,081
12,636
(198)
(1,384)
883
11,252
Opening net book amount
7,134
2,337
600
298
883
11,252
Additions
-
130
Acquisition of subsidiary
2,336
Amortisation charge
Additions – disposal group
Amortisation charge – disposal group
-
-
-
-
(3)
1,558
(868)
-
-
(21)
-
(61)
Impairment – disposal group
(835)
(1,083)
(367)
Transfer to disposal group
-
(1,413)
Exchange differences
Closing net book amount
At 31 January 2020
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 31 January 2021
Opening net book amount
Additions
Amortisation charge
Exchange differences
(470)
8,165
8,165
-
8,165
8,165
-
-
555
-
658
661
(3)
658
658
302
(77)
-
-
-
-
130
993
3,329
(30)
(68)
(122)
-
-
-
-
(19)
249
286
(37)
-
1,558
(63)
(992)
(384)
(2,669)
-
(1,413)
(76)
(565)
1,285
10,508
1,363
10,682
(78)
(174)
-
-
151
207
(56)
151
249
1,285
10,508
151
249
1,285
10,508
-
-
-
302
(21)
(30)
(144)
(272)
-
17
112
684
Closing net book amount
8,720
883
130
236
1,253
11,222
At 31 January 2021
Cost
Accumulated amortisation and impairment
Net book amount
Amortisation methods and useful lives
8,720
-
8,720
964
(81)
883
207
306
1,486
11,683
(77)
(70)
(233)
(461)
130
236
1,253
11,222
The Group amortises intangible assets with a limited useful life, using the straight-line method over the following periods:
• Internally generated software
• Customer contracts
• Intellectual property
• Brand asset
3 years
10 years
10 years
10 years
See note 24(p) for the other accounting policies relevant to intangible assets and note 24(j)) for the Group’s policy
regarding impairments.
Year Ended 31 January 2021
70
Customer contracts
The customer contracts were acquired as part of a business combinations. They are recognised at their fair value at the
date of acquisition and they are subsequently amortised on a straight-line basis, based on the timing of projected cash
flows of the contracts over their estimated useful lives.
Significant estimate: useful life of the Group’s acquired intangible assets
The Group has acquired a number of intangible assets as part of its acquisitions of Anders & Kern Limited in May 2017,
SwipedOn Limited in October 2018, and SpaceConnect Pty Limited in November 2019. At 31 January 2021 the carrying
amount of these assets was £1,619,000 (2020: £1,685,000). The Group estimates the useful life of the acquired intangibles
to be 10 years based on their expectation of the period over which the Group will continue to derive benefit from such
assets. However, the actual useful life might be longer or shorter than 10 years depending on customer attrition, technical
innovation or competitor actions. If the estimated useful life was only five years, the carrying amount would be £1,239,000
at 31 January 2021.
Impairment tests for goodwill
Goodwill is monitored by management at an entity level.
A segment-level summary of the goodwill is presented below:
Space Connect
SwipedOn
Anders & Kern
Net book amount
31 January 2021
31 January 2020
£’000
2,445
5,131
1,144
8,720
£’000
2,222
4,799
1,144
8,165
Goodwill on consolidation has been allocated for impairment testing purposes between the cash-generating units
(“CGUs”) and these CGU’s aligned to the Group’s segments. There are three CGU’s, Swiped On, Space Connect and
Anders & Kern.
The recoverable amount of the CGU aligned to the SwipedOn division is based on ‘value in use’ calculations using cash
flow projections approved by the Directors covering a four-year period with a terminal growth rate of 2% thereafter. The
projections are based on the assumption that the Group can realise projected revenue growth of 74% in 2022, 76% in
2023, 42% in 2024 and 22% in 2025. If the projected sales do not materialise there is a risk that the total value of intangible
assets would be impaired, firstly against goodwill and then against other intangible assets. If revenues were below 47% of
those forecast then an impairment would be required.
The projections for the CGU aligned to the Anders & Kern division are based on revenue returning to 90% of pre Covid-19
levels over a four year period whilst maintaining a established gross margin of 32%. The calculation of terminal value has
utilised growth rates of 2% from year 5 onwards. Sensitivity analysis indicates that if revenue were below 92% of those
forecast an impairment would be required.
The projections for the CGU aligned to the Space
Connect division are based on revenues being
generated from products that were released during
the year with continued growth in these revenues
over the next 5 years. Should revenues grow at a
rate below 28% of that forecast, then an impairment
may be required.
A discount rate of 13.95% (2020: 14.07%) has been
used for the CGU value in use calculations. This
rate takes into consideration a market participant’s
cost of capital, the expected rate of return and
various risks relating to the CGU. At the year end,
based on these assumptions there is no indication
of impairment in the remaining goodwill. Sensitivity
analysis indicates that the discount rate may be
expected to fluctuate by up to 2.5% which has been
shown not to give rise to an impairment charge for
any CGU.
SmartSpace Software PLC Annual Report
71
9(d) Deferred tax balances
Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
1,268
1,385
31 January 2021 31 January 2020
£’000
£’000
Property plant and equipment and Intangible assets
General provision
Employee benefits
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
42
9
70
1,389
-
1,389
-
-
46
1,431
(583)
848
The deferred tax assets include an amount of £719,000 which relates to carry-forward tax losses of SmartSpace Software
plc. The Group has concluded that the deferred tax asset will be recoverable using the estimated future taxable income
based on the approved business plans and budgets for the Group. The Group is expected to generate taxable income
from 2023 onwards. The losses can be carried forward indefinitely. Deferred tax losses have been calculated using a tax
rate of 19% which was the rate expected to be applicable when the benefit would be realised.
Deferred tax asset movement
Share
based
payments
PP&E and
Intangible
assets
General
provision
£’000
£’000
£’000
At 31 January 2020
Income / (expense) to profit and loss
Exchange differences
At 31 January 2021
46
24
-
70
-
75
(33)
42
-
9
-
9
Tax
losses
£’000
Total
£’000
1,385
1,431
(139)
22
(31)
(11)
1,268
1,389
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Property, plant and equipment
Intangible assets
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
31 January 2021 31 January 2020
£’000
£’000
-
-
-
-
-
37
546
583
(583)
-
Year Ended 31 January 2021
72
Deferred tax liability movement
At 31 January 2019
Expense to profit and loss – continuing activities
Income to profit and loss – discontinued activities
Acquisition of subsidiary
Transfer to disposal group
Exchange differences
At 31 January 2020
Credit to profit and loss
Exchange differences
At 31 January 2021
9(e) Inventories
Finished goods – at cost
Accelerated tax .
depreciation .
£’000 .
762
99
(47)
283
(507)
(7)
583
(581)
(2)
-
Total.
£’000.
762
99
(47)
283
(507)
(7)
583
(581)
(2)
-
31 January 2021
31 January 2020
£’000
89
£’000
345
Inventories recognised as an expense during the year ended 31 January 2021 amounted to £1,630,000 (2020: £2,692,000).
These were included in cost of sales and the cost of providing other services. A stock provision amounting to £99,000 was
made during the year and allocated to the loss on disposal of SmartSpace Global as the items provided for were no longer
of use due to the disposal.
9(f) Prepayments
Prepayments
10. EQUITY
31 January 2021
31 January 2020
£’000
114
£’000
67
10(a) Share capital and share premium
31 January 2021
31 January 2020
31 January 2021 31 January 2020
Number
Number
£’000
£’000
Allotted, called up and fully paid:
Ordinary shares of 10p each
28,255,823
28,255,823
2,826
2,826
Movement in ordinary shares
At 31 January 2019
Shares issued in cash placing
Shares issued for acquisition
At 31 January 2020
At 31 January 2021
Shares
issued
Number
Price (p)
22,157,413
4,747,587
1,350,823
28,255,823
28,255,823
72.5
72.5
Share
capital
£’000
2,216
475
135
2,826
2,826
Share
premium
Merger
reserve
£’000
£’000
1,058
2,772
-
3,830
3,830
-
-
844
844
844
Total
£’000
3,274
3,247
979
7,500
7,500
SmartSpace Software PLC Annual Report
73
Ordinary shares
Ordinary shares have a par value of 10 pence. They entitle the holder to participate in dividends, and to share in the
proceeds of winding up the Company in proportion to the number of shares held.
On a show of hands, every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote;
and on a poll, each share is entitled to one vote. The Company does not have a limited amount of authorised capital.
Options
Information relating to employee share options including details of options issued, exercised and forfeited during the
financial year and options outstanding at the end of the reporting period, is set out in note 20.
10(b) Other reserves
Acquisition
deferred
Merger acquisition Translation consideration
reserve
reserve
Reverse
reserve
reserve
Share
option
reserve
Total
other
reserves
£’000
£’000
£’000
£’000
£’000
£’000
At 31 January 2019
Currency translation differences
Other comprehensive income
-
-
-
Transactions with owners in their capacity as owners:
Issue of ordinary shares as consideration
for a business combination
844
Space Connect acquisition deferred
share issue consideration
Share-based payment expense -
continuing operations
Share-based payment expense
- discontinued operations
-
-
-
(4,236)
-
-
-
-
-
-
406
(576)
(576)
-
-
-
-
-
-
-
-
489
-
-
128
(3,702)
-
-
-
-
88
25
(576)
(576)
844
489
88
25
At 31 January 2020
844
(4,236)
(170)
489
241
(2,832)
Currency translation differences
Other comprehensive income
-
-
Transactions with owners in their capacity as owners:
Share-based payment expense -
continuing operations
Share-based payment expense
- discontinued operations
-
-
-
-
-
-
643
643
-
-
-
-
-
-
-
-
643
643
150
150
(48)
(48)
At 31 January 2021
844
(4,236)
473
489
343
(2,087)
Nature and purpose of other reserves
The merger reserve is used when a share issue is undertaken, and merger relief is available. The conditions for merger relief
are when the consideration for shares in another company includes issued shares of the acquirer and on completion of the
transaction, the company issuing the shares will have secured at least 90% equity holding in the acquiree. The acquisition
of SpaceConnect Pty Limited in November 2019 met the conditions for merger relief and was therefore accounted for
under the merger relief provisions.
The reverse acquisition reserve arose on the reverse takeover of SmartSpace Software plc by Coms.com Limited in the
year ended 31 January 2007. Under reverse acquisition accounting an adjustment within shareholders’ funds is required
to eliminate the cost of acquisition in the issuing company’s books, and introduce a notional cost of acquiring the smaller
issuing company based on the fair value of its shares and an adjustment is required to show the share capital of the legal
parent in the consolidated balance sheet rather than that of the deemed acquirer. Both adjustments have been included in
the reverse acquisition reserve.
Year Ended 31 January 2021
74
Foreign currency translation comprises exchange differences arising on the translation of foreign controlled entities which
are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative
amount is reclassified to profit or loss when the net investment is disposed of.
The acquisition deferred consideration reserve relates to deferred share consideration for the acquisition of subsidiaries.
The share-based payments reserve is used to recognise the grant date fair value of options issued to employees but not
exercised.
10(c) Retained earnings
The movements in retained earnings were as follows:
Balance at 1 February
Net loss for the period
Balance at 31 January
31 January 2021 31 January 2020
£’000
13,956
(2,255)
11,701
£’000
23,838
(9,882)
13,956
SmartSpace Software PLC Annual Report
11. CASH FLOW INFORMATION
11(a) Cash generated from operations
Loss before income tax from continuing operations
Adjustments for:
Depreciation and amortisation
Non-cash employee benefit expense – share-based payments
Net loss on sale of non-current assets
Finance costs - net
Credit loss
Net exchange differences
Change in operating assets and liabilities of continuing operations
Movement in trade and other receivables
Movement in contract assets
Movement in inventories
Movement in prepayments
Movement in trade creditors
Movement in other creditors
Movement in contract liabilities
Movement in other provisions
Cash consumed by continuing operations
Loss before income tax from discontinued operations
Adjustments for:
Depreciation and amortisation
Impairment of intangible assets
Non-cash employee benefit expense – share-based payments
Net gain on sale of non-current assets
Finance costs – net
Credit losses
Net exchange differences
Loss on sale of discontinued operations
Change in operating assets and liabilities of discontinued operations
Movement in trade and other receivables
Movement in contract assets
Movement in prepayments
Movement in trade creditors
Movement in other creditors
Movement in contract liabilities
Cash consumed by discontinued operations
Cash consumed by operations
75
31 January 2021 31 January 2020
£’000
(2,743)
£’000
(2,377)
375
150
2
25
72
3
(14)
29
157
(43)
(371)
280
439
-
(1,639)
(166)
-
(1,470)
(47)
9
16
(46)
2
124
697
437
(407)
274
248
177
(152)
(1,791)
201
88
1
12
205
(1)
98
(30)
19
(15)
72
(208)
91
(5)
(1,849)
(8,429)
1,157
2,669
25
7
2
31
(23)
-
479
97
(139)
(113)
(629)
816
(4,050)
(5,899)
Year Ended 31 January 2021
76
11(b) Net debt reconciliation
This section sets out an analysis of net cash and the movements in net cash for each of the periods presented.
31 January 2021 31 January 2020
Cash and cash equivalents
Borrowings
Lease liabilities in continuing activities
Net cash
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net cash
Cash/bank overdraft.
Borrowings.
At 31 January 2019
New leases
Cashflows
Transfer to disposal group
Effect of foreign exchange rate movements
At 31 January 2020
New leases
Cashflows – continuing operations
Cashflows – discontinued operations
Effect of foreign exchange rate movements
At 31 January 2021
11(c) Non-cash investing and financing activities
£’000.
8,053
-
(5,446)
-
(20)
2,587
-
(2,053)
3,970
12
4,516
£’000.
(426)
-
25
-
-
(401)
-
(12)
-
-
(413)
£’000
4,516
(413)
(173)
3,930
4,516
(173)
(413)
3,930
Leases.
£’000.
-
(1,084)
85
814
6
(179)
(31)
49
-
(12)
(173)
£’000
2,587
(401)
(179)
2,007
2,587
(179)
(401)
2,007
Total.
£’000.
7,627
(1,084)
(5,336)
814
(14)
2,007
(31)
(2,016)
3,970
-
3,930
Acquisition of right of use assets by means of lease
Deferred partial settlement of business combination through share issue
Partial settlement of business combination through share issue
31 January 2021
31 January 2020
£’000
31
-
-
£’000
1,075
466
979
12. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which
are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information
about each of these estimates and judgements is included in other notes, together with information about the basis of
calculation for each affected line item in the financial statements.
SmartSpace Software PLC Annual Report
77
12(a) Critical estimates
The areas involving critical estimates are:
• estimated useful lives of intangible assets (see note
9(c))
• Impairment testing of goodwill (see note 9(c))
12(b) Critical judgements
The areas involving critical judgements are:
• recognition of deferred tax asset for carried-forward
tax losses (see note 9(d))
13. FINANCIAL RISK MANAGEMENT
This note explains the Group’s exposure to financial
risks and how these risks could affect the Group’s future
financial performance. Current year profit and loss
information has been included where relevant to add
further context.
13(a) Market risk
Foreign currency risk
The group has a translation exposure risk relating to
operations in New Zealand where SwipedOn use New
Zealand dollars. On consolidation, assets and liabilities of
foreign undertakings are translated into sterling at year
end exchange rates. The results of foreign undertakings
are translated into sterling at average rates of exchange
for the year. Foreign exchange differences arising on
the translation of foreign undertakings are recognised
directly in a separate component of equity, the
translation reserve, until the business units are disposed
of. Should the New Zealand Dollar strengthen or weaken
by 10% against pounds sterling then the value of the
Group’s net assets will respectively increase or decrease
by £523,000 (2020: £467,000). There is no profit or
loss impact of these transactions as they are recognised
within other comprehensive income. As the Group has
no plans to dispose of the asset in the foreseeable future
and the exposure is a non-cash item the Board have
no plans to hedge this translation exposure. See note
3(d) and 3(e) for details of assets and liabilities held by
SwipedOn and denominated in New Zealand dollars.
Cash flow and fair value interest rate risk
The Group’s borrowings comprise a mortgage and
interest free government Covid-19 support loan.
The mortgage is held with Barclays, secured on the
associated freehold land and buildings, and carries a
variable rate of interest dependent upon the Bank of
England base rate. As the Group maintains cash reserves
in excess of the borrowings value the interest rate risk is
not considered significant.
13(b) Credit risk
Credit risk arises from cash and cash equivalents, cash
flows of debt investments carried at amortised cost and
credit exposures to customers including outstanding
receivables.
Risk management
For banks and financial institutions, only independently
rated parties with a minimum rating of ‘A’ are accepted.
For trade receivables, management focuses strongly
on working capital management and the collection of
due invoices. Regular reports of overdue invoices are
circulated amongst senior management and the Board
reviews debtor days each month as part of the monthly
reporting cycle. The risk with any one customer is limited
by constant review of debtor balances and amounts
receivable on contracts and action to resolve any issues
preventing discharge of obligations.
Security
The Group does not obtain security for trade receivables.
Impairment of financial assets
The Group has three types of assets that are subject to
the expected credit loss model:
• trade receivables for the sale of goods and services;
• contract assets relating to the software contracts;
• other financial assets carried at amortised cost.
While cash and cash equivalents are also subject to
the impairment requirements of IFRS 9, the identified
impairment loss was immaterial.
Trade receivables
The Group applies the IFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and
contract assets.
To measure expected credit losses, trade receivables
and contract assets have been grouped based on
shared credit risk characteristics and days past due date.
The contract assets relate to uninvoiced provision of
software have substantially the same risk characteristics
as the trade receivables for the same types of contract.
The Group has therefore concluded that the expected
loss rates for trade receivables are a reasonable
approximation of the loss rates for contract assets. The
expected loss rates are based on the payment profiles
of sales over a period of 24 months before 31 January
2021 and the corresponding historical credit losses
experienced within this period. The historical loss rates
are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The
Group has identified global and country specific GDP
to be the most relevant factor, and accordingly adjusts
the historical loss rates based on expected changes
to this factor. On that basis the loss allowance at 31
January 2021 was determined as follows for both trade
receivables and contract assets:
Year Ended 31 January 2021 78
31 January 2021
Current
1 -30
31 – 60
days past days past
due
due
61 – 90
days past
due
91 -180
181 – 360
days past days past
due
due
Expected loss rate (%)
0.2%
0.9%
1.6%
16.7%
8.3%
79.1%
Total
1.7%
Gross carrying amount
– trade receivables (£’000)
Gross carrying amount
– contract assets (£’000)
Loss allowance – trade receivables
Loss allowance – contract assets
266
99
83
2
1
-
1
1
-
1
1
-
9
0
2
-
16
3
476
0
1
-
0
2
-
4
8
-
The closing loss allowances for trade receivables and contract assets as at 31 January 2021 reconcile to the opening loss
allowances as follows:
At 1 February
Transferred to disposal group
Increase in loss allowance recognised in profit
or loss during the year
Receivables written off during the year as uncollectible
At 31 January
Contract assets
2021
£’000
-
-
-
-
-
2020
£’000
19
(19)
-
-
-
Trade receivables
2020
2021
£’000
£’000
-
-
18
(10)
8
12
(12)
9
(9)
-
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment
plan with the Group and the failure to make contracted payments.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit.
Subsequent recoveries of previously written off amounts are credited against the same line item.
Other financial assets at amortised cost
Other financial assets at amortised cost comprise contingent consideration and other receivables. Assessments of
significant increases in credit loss risk and assumptions about the risk of default are made in determining the expected
credit loss rates from these assets.
Net impairment losses on financial and contract assets recognised in profit or loss
During the year the following losses were recognised in profit or loss in relation to impaired financial assets:
Impairment losses
Movement in loss allowance for trade receivables and contract assets
Impairment losses on other financial assets
Net impairment losses on financial and contract assets
2021
£’000
18
54
72
2020
£’000
9
196
205
13(c) Liquidity risk
Liquidity risk is the risk that the Group cannot meet financial liabilities when they fall due. The Group’s policy for managing
liquidity risk is to ensure that the business has enough financial resources to carry out its day-to-day activities at any point
in time. Management believes that the cash resources on hand, together with future forecast profits of the business, more
than cover the resources needed to meet the financial liabilities of the Group.
SmartSpace Software PLC Annual Report
79
Maturity of financial liabilities
The tables below analyse all of Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances because the impact of discounting is not significant.
Contractual maturity of
financial liabilities
At 31 January 2021
Less than
6 months
Between
1 and 2
years
6-12
months
Between
2 and 5
years
Over
5 years
Carrying
amount
Total
Trade payables
Borrowings
Lease liabilities
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
249
44
31
324
30
14
33
77
-
355
68
423
-
-
41
41
-
-
-
-
279
413
173
865
279
413
173
865
Contractual maturity of
financial liabilities
At 31 January 2020
Less than
6 months
Between
1 and 2
years
6-12
months
Between
2 and 5
years
Over
5 years
Total
Carrying
amount
Trade payables
Borrowings
Lease liabilities
Total
£’000
£’000
£’000
£’000
£’000 £’000
£’000
695
13
23
731
-
388
23
411
-
-
49
49
-
-
84
84
-
-
-
-
695
401
179
695
401
179
1,275
1,275
14. CAPITAL MANAGEMENT
14(a) Risk management
The Group considers its capital to comprise its ordinary share capital,
share premium account, other reserves and retained earnings. A
summary of the amounts of capital in each of these categories is
shown in the consolidated statement of changes in equity on page 51.
In managing its capital, the Group’s primary objective is to provide a
return for its equity shareholders through capital growth. The Group
has £413,000 (2020 £401,000) of debt representing a gearing ratio of
3% (2020: 2%). Going forward the Group will balance capital risk and
return at an acceptable level and also to maintain a sufficient funding
base to enable the Group to meet its working capital and strategic
investment needs. In making decisions to adjust its capital structure
to achieve these aims, either through new share issues or the issue of
debt, the Group considers not only its short-term position but also
its long-term operational and strategic objectives. There have been
no other significant changes to the Group’s management objectives,
policies and processes in the year nor has there been any change in
what the Group considers to be capital.
14(b) Dividends
The Group does not currently pay a dividend.
Year Ended 31 January 2021
80
15. DISCONTINUED OPERATIONS
15(a) Description
In January 2020 the Board resolved to initiate a process to dispose of the Group’s investment in SmartSpace Global
Limited (“SSG disposal group”). A buyer was identified and the disposal completed in August 2020. The financial
performance of the SSG disposal group is therefore reported in discontinued activities for the current and prior period.
Assets and directly associate liabilities of the SSG disposal group are included within assets held for sale for the
prior period. The sale and purchase agreement contains warranties and indemnities by the Company as is usual for a
transaction of this nature. Liabilities or provisions relating to warranty items are only recorded when the business is made
aware of any warranty claims made by the acquiring entity. As at the balance sheet date no claims had been raised under
these warranties, although claims could be made up until 13 August 2027.
15(b) Financial performance and cash flow information
The financial performance and cash flow information relating to the disposal group are presented below. Information
relating to SmartSpace Global relates to the period to the date of disposal being 13 August 2020.
Revenue
Expenses
Loss before income tax
Income tax benefit
Loss after tax
Reversal of impairment / (impairment) of assets in disposal group
Loss after income tax and impairments of discontinued operations
Loss on disposal of subsidiary after income tax
Net loss attributable to discontinued operations
Net cash inflow from operating activities
Net cash inflow / (outflow) from investing activities
Net cash outflow from financing activities
Net increase in cash generated by discontinued operations
13 August 2020
31 January 2020
Year ended
£’000
819
(2,331)
(1,512)
42
(1,470)
1,470
-
(124)
(124)
£’000
2,183
(7,942)
(5,759)
455
(5,304)
(2,669)
(7,973)
-
(7,973)
13 August 2020
31 January 2020
Year ended
£’000
233
3,786
(49)
3,970
£’000
2,319
(1,257)
(68)
994
SmartSpace Software PLC Annual Report
15(c) Assets and liabilities of disposal group
Assets classified as held for sale
Property, plant and equipment
Right-of-use assets
Intangible assets
Contract assets
Trade and other receivables
Other financial assets at amortised cost
Prepayments
Cash and cash equivalents
81
At date of disposal
13 August 2020
31 January 2020
£’000
£’000
227
801
3,265
1,726
797
32
600
199
236
801
1,413
2,134
880
821
195
-
Total assets of disposal group held for sale
7,647
6,480
Liabilities directly associated with assets classified as held for sale
Lease liabilities
Trade and other payables
Contract liabilities
Total liabilities of disposal group held for sale
Net assets of disposal group
15(d) Details of sale of subsidiary
Cash consideration received
Cash consideration receivable
Total disposal consideration
Carrying amount of net assets sold
Gain on sale before costs
Costs incurred on disposal
Loss on disposal
(763)
(997)
(1,175)
(2,935)
4,712
(812)
(304)
(997)
(2,113)
4,367
Year ended
31 January 2021
Year ended
31 January 2020
£’000
4,605
327
4,932
(4,712)
220
(344)
(124)
£’000
-
-
-
-
-
-
-
Cash consideration receivable of £327,000 was contingent on SmartSpace Global receiving payment of R&D tax credits
from HMRC and was received after the year end.
Year Ended 31 January 2021
82
16. INTERESTS IN OTHER ENTITIES
The Group’s subsidiaries at 31 January 2021 are set out below. Unless otherwise stated they have share capital consisting
solely of ordinary shares, and the proportion of ownership interests held equals the voting rights held by the Group. The
country of incorporation is also their principal place of operation.
Name
Registered office
Country
Proportion of
ownership
interest
Proportion of Principal
activity
voting power
business
held
Holding
company
Software
sales
Software
development
and sales
Holding
company
Software
development
and sales
Easter Road Holdings Limited
Anders + Kern (U.K.) Limited
SmartSpace Software Limited
SwipedOn Inc
SwipedOn Limited
Norderstedt House
James Carter Road,
Mildenhall,
Bury St. Edmunds,
England, IP28 7RQ
Norderstedt House
James Carter Road,
Mildenhall,
Bury St. Edmunds,
England, IP28 7RQ
115 The Strand,
Tauranga, 3110,
New Zealand
651 N Broad St,
Suite 206, Middletown
New Castle,
Delaware USA
115 The Strand,
Tauranga, 3110,
New Zealand
UK
100%
100%
Holding
company
UK
100%
100%
Hardware and
software sales
New Zealand
100%
100%
USA
100%
100%
New Zealand
100%
100%
Smartspace Software Pty Limited Nexia Sydney, Level 16, Australia
100%
100%
Space Connect Limited
1 Market Street,
Sydney, NSW, 2000
Norderstedt House
James Carter Road,
Mildenhall,
Bury St. Edmunds,
England, IP28 7RQ
UK
100%
100%
Space Connect Pty Limited
Nexia Sydney, Level 16, Australia
1 Market Street,
Sydney, NSW, 2000
100%
100%
Software
All subsidiary undertakings are included in the consolidation.
17. COMMITMENTS
17(a) Capital commitments
There were no capital commitments at 31 January 2021 (2020: £nil).
18. EVENTS OCCURRING AFTER THE END OF THE REPORTING PERIOD
In accordance with the share purchase agreement for the acquisition of SpaceConnect Pty Limited in November 2019,
SmartSpace Software PLC issued the remaining 675,411 retention consideration shares to Pope Family Investments Pty Ltd
on 30 April 2021. The shares were held back for a period of 18 months to be set off against any claims under the SPA, of
which none were made. The shares were ordinary shares with a par value of 10 pence each.
SmartSpace Software PLC Annual Report
83
19. RELATED PARTY TRANSACTIONS
19(a) Subsidiaries
Interests in subsidiaries are set out in note 16.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. The transactions between the parent and the subsidiaries during the year represent
transfers of cash between the companies and management fees.
19(b) Key management personnel compensation
Short term employment benefits
Post-employment benefits
Share-based payments
19(c) Directors
Aggregate emoluments
Company contributions to money purchase pension schemes
Taxable benefits
Long term incentives
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
720
18
106
844
641
15
105
761
Year ended
31 January 2021
Year ended
31 January 2020
£’000
470
9
31
72
582
£’000
484
6
19
70
579
Detailed remuneration including the highest paid
director disclosures are provided in the Directors’
remuneration section in the remuneration report
on pages 30 and 31.
Directors’ fees
Directors fees of £40,000 (2020: £40,000)
were charged by Warspite Limited, a company
connected to Diana Dyer Bartlett, in respect of
services provided by Diana Dyer Bartlett; £nil
(2020: £nil) was outstanding at the year end.
Directors fees of £60,000 (2020: £60,000) were
charged by VZ Limited, a company connected
to Guy van Zwanenberg, in respect of services
provided by Guy van Zwanenberg; £nil (2020:
£6,067) was outstanding at the year end.
Year Ended 31 January 2021
84
20. SHARE BASED PAYMENTS
The Group operates two equity settled share-based payments plans: an EMI scheme and an Unapproved share scheme.
During the year the Group issued options over 332,500 ordinary shares under the Group’s EMI scheme (2020: nil) and
over 570,000 ordinary shares under the Unapproved share scheme (2020: nil).
The EMI and unapproved share option schemes incorporate the same general terms and conditions, with the EMI scheme
benefiting from certain tax advantages. Options are granted under the plans for no consideration and carry no dividend or
voting rights. When exercisable each option converts into one ordinary share.
The exercise price of the options is based on the closing price on the day immediately preceding the grant.
The Group also issued cash settled options as described in 20(c).
20(a) Equity settled employee option plans
Set out below are the summaries of options granted under the plans:
31 January 2021
31 January 2020
Number
Weighted average
exercise price
Number
Weighted average
exercise price
Outstanding at start of the year
1,484,015
107p
1,730,473
Granted during the year
Forfeited during the year
Outstanding at end of year
Exercisable at end of year
902,500
(230,015)
2,156,500
40,000
92.5p
103p
101p
500p
-
(246,458)
1,484,015
40,000
106p
-
100p
107p
500p
No options expired during the periods covered by the above tables.
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Date granted
12 June 2013
Expiry date
11 June 2023
Type
Price per share
Share options
31 January
2021
Share options
31 January
2020
Warrants
500.00 p
40,000
11 December 2015
10 December 2025
Options
92.00 p
200,000
1 December 2016
1 July 2026
Options
1 February 2017
1 September 2027
Options
127.00 p
127.00 p
-
-
31 July 2018
30 July 2028
Options
101.25 p
129,000
17 October 2018
16 October 2028
Options
23 October 2020
22 October 2030
Options
94.00 p
92.50 p
885,000
902,500
40,000
200,000
11,093
1,422
346,500
885,000
-
2,156,500
1,484,015
The outstanding options at the year-end have an exercise price in the range of 92 pence to 500 pence (2020: 92 pence to
500 pence).
The weighted average remaining contractual life of the share options outstanding at the year end is 8 years and 2 months
(2020: 8 years 1 month).
20(b) Fair value of equity settled options granted
Options granted to Directors of the Group included share price performance conditions whilst those issued to other
employees did not contain any performance criteria. The fair value at the grant date for options without performance
conditions is determined using the Black-Scholes model, whilst options that contain market-based performance
conditions are valued using a Monte Carlo simulation of the calculations underlying the Black-Scholes model. Details of
the performance conditions can be found in the remuneration report on page 31. These calculations take into account
the exercise price, the term of the option, the share price at the date of grant and expected volatility of the underlying
share, the expected dividend yield and the risk free rate for the term of the option. The expected price volatility is based
on historical share price volatility over a period of time equal to the option vesting period being 3 years. The assessed fair
value of options granted during the year ended 31 January 2021 was 40.8p for those without performance conditions and
27.7p for those with performance conditions.
SmartSpace Software PLC Annual Report
The model inputs for the options granted during the year were:
Model input
Grant date
Option price
Dividend yield
Vesting period (years)
Assumed volatility at date of grant
Risk-free discount rate
Expected life of option
Fair value per option – without performance criteria
Fair value per option – with performance criteria
Share price at grant
85
23 October 2020
92.50p
Nil
3 years
68%
-0.1%
3 years
40.8p
27.7p
92.5p
The expense recognised in continuing operations for equity-settled share-based payments during the year to 31 January
2021 was £150,000 (2020: £88,000).
20(c) Cash settled share-based payments
As part of the disposal of SmartSpace Global Limited the Group issued 50,000 cash settled share options to a former
employee who was involved in the disposal process. The options were issued on 13 August 2020, had an exercise price
of 101.25p, and are available for exercise at any point between 31 July 2021 and 31 July 2029. The options were valued
using the Black-Scholes model with assumed volatility of 77%, risk free interest rate of -0.1%, exercise price of 101.25p and
current share price at the reporting date of 127.5p. The expected price volatility is based on historical share price volatility
over a period of time equal to the expected period of time before the options are exercised. An expense was recorded in
discontinued operations relating to these options of £30,707.
21. LOSS PER SHARE
21(a) Basic loss per share
Attributable to the ordinary equity holders of the Company:
From continuing operations
From discontinued operations
Total basic loss per share
21(b) Diluted loss per share
Attributable to the ordinary equity holders of the Company:
From continuing operations
From discontinued operations
Total diluted loss per share
Year ended
31 January 2021
Year ended
31 January 2020
Pence
Pence
(7.54p)
(0.44p)
(7.98p)
(8.05p)
(33.65p)
(41.70p)
Year ended
31 January 2021
Year ended
31 January 2020
Pence
Pence
(7.54p)
(0.44p)
(7.98p)
(8.05p)
(33.65p)
(41.70p)
Year Ended 31 January 2021
86
21(c) Reconciliation of earnings used in calculating earnings per share
Earnings per share data is based on the Group loss for the year and the weighted average number of ordinary shares in
issue.
Basic (loss) / earnings per share
Loss attributable to the ordinary equity holders of the Company:
From continuing operations
From discontinued operations
Diluted (loss) / earnings per shares
Loss attributable to the ordinary equity holders of the Company:
From continuing operations
From discontinued operations
21(d) Weighted average number of shares used as the denominator
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
(2,131)
(124)
(2,255)
(2,131)
(124)
(2,255)
(1,909)
(7,973)
(9,882)
(1,909)
(7,973)
(9,882)
Year ended
31 January 2021
Year ended
31 January 2020
Number
Number
Weighted average number of shares used as the denominator in calculating
basic earnings per share
28,255,823
23,694,546
Adjustments for calculation of diluted earnings per share
Options
-
-
Weighted average number of shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
28,255,823
23,694,546
21(e) Information concerning the classification of securities
Options
Options granted to employees under the Group’s share option
schemes are considered to be potential ordinary shares. Whilst
options are never included in the determination of basic
earnings per share, they are included in the calculation of
diluted earnings per share if considered dilutive. Details relating
to the options are set out in note 20.
At 31 January 2021 options are considered antidilutive and
therefore not included in the calculation of diluted earnings per
share. These options could potentially be dilutive in the future.
SmartSpace Software PLC Annual Report
21(f) Alternative measure of earnings per share
Loss for the year
Adjustment to basic (loss)/earnings:
Reorganisation and transactional costs
Tax credit on reorganisation and transactional costs
Amortisation of acquired intangibles
Deferred tax credit on amortisation of acquired intangibles
Share based payment charge
Deferred tax credit on share-based payment charge
Adjusted (loss)/earnings attributable to owners of the Company
Number of shares
87
Year ended
31 January 2021
Year ended
31 January 2020
£’000
(2,131)
-
-
194
(48)
150
(28)
(1,863)
No.
£’000
(1,909)
199
(38)
119
(23)
88
(17)
(1,581)
No.
Weighted average ordinary shares in issue
28,255,823
23,694,546
Weighted average potential diluted shares in issue
28,255,823
23,694,546
Adjusted (loss)/earnings per share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
(6.59p)
(6.59p)
(6.67p)
(6.67p)
22. ASSETS PLEDGED AS SECURITY
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Non-current
Freehold land and buildings
31 January 2021
31 January 2020
£’000
£’000
600
613
23. AUDITORS’ REMUNERATION
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s
auditors and its associates.
Fees payable to the Company’s auditors for the audit of Parent Company and
consolidated financial statements:
– Audit fees in relation to the year ended 31 January 2019
– Audit fees in relation to the year ended 31 January 2020
– Audit fees in relation to the year ended 31 January 2021
Fees payable to Company’s auditors for other services:
– Audit of subsidiary financial statements for the year ended 31 January 2019
– Audit of subsidiary financial statements for the year ended 31 January 2020
– Audit of subsidiary financial statements for the year ended 31 January 2021
Audit-related assurance services
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
-
14
57
-
-
24
-
95
6
46
-
1
25
-
-
78
Year Ended 31 January 2021
88
24. SIGNIFICANT ACCOUNTING POLICIES
24(a) Basis of preparation
Compliance with IFRS
The consolidated financial statements of the
SmartSpace Software plc group have been prepared in
accordance with International Accounting Standards in
conformity with the Companies Act 2006.
Historical cost convention
The financial statements have been prepared under the
historical cost convention except for the following:
• certain financial assets and liabilities including cash
settled share-based payments,
• assets held for sale which are measured at fair value
less costs to sell, and
• equity settled share-based payments in the scope of
IFRS 2 which are measured at fair value
Historical cost is generally based on the fair value
of the consideration given in exchange for goods
and services. Fair value is the price that would be
received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants
at the measurement date, regardless of whether
that price is directly observable or estimated using
another valuation technique. In estimating the fair
value of an asset or liability, the Group takes into
account the characteristics of the asset or liability, if
market participants would take those characteristics
into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/
or disclosure purposes in these consolidated financial
statements is determined on such a basis except for
share-based payment transactions that are within the
scope of IFRS 2.
Standards and interpretations not yet applied by the
Group
For the purposes of the preparation of these
consolidated financial statements, the Group has
applied all standards and interpretations that are
effective for accounting periods beginning on or after
1 February 2020. There was no significant impact of
new standards and interpretations adopted in the year,
which include:
• Amendments to References to Conceptual
Framework in IFRS Standards - effective 1 Jan 2020
• Definition of a Business (Amendments to IFRS 3) -
effective 1 Jan 2020
• Definition of Material (Amendments to IAS 1 and IAS
8) – effective 1 Jan 2020
• Interest Rate Benchmark Reform (Amendments to
IFRS 9, IAS 39 and IFRS 7) – effective 1 Jan 2020
No new standards, amendments or interpretations
to existing standards that have been published
and that are mandatory for the Group’s accounting
periods beginning on or after 1 February 2021, or later
periods, have been adopted early. The new standards
and interpretations are not expected to have any
significant impact on the financial statements when
applied.
Going concern
The financial statements are prepared on a going
concern basis notwithstanding that the Group has
reported an operating loss of £2,717,000 for the year
to 31 January 2021 (2020: £2,365,000 loss) and net
cash outflow from continuing operating activities of
£1,639,000 (2020: £1,849,000).
At 31 January 2021 the Group had £4.5m of gross cash
with three operating segments and a central overhead
to support. Cash forecasts for each segment and the
consolidated Group have been prepared for a period
of twelve months from the date of signing the balance
sheet.
The SwipedOn division has continued to grow
throughout the Covid-19 pandemic both in terms
customers and revenue. The Directors are confident
that growth will continue in the future. SwipedOn
is currently cash generative at current levels of
investment in new customer acquisition and product
development. Whilst the Directors believe that
SwipedOn will continue to perform well throughout the
Covid-19 pandemic, stress tests have taken into account
the possibility of reductions in new customer signups
and increased customer churn.
During the year ended 31 January 2021 Space Connect
commenced sales through a distribution channel and
through licensed sales of a white label version of its
product. The Covid-19 lockdown prevented these
sales from developing as planned, however sales are
expected to return once businesses re-open their
workplaces. By the end of the year ended 31 January
2022 Space Connect is expected to be cash-generative.
Overall the Directors believe that Covid-19 will have
a positive impact on Space Connect however stress
tests have taken into account scenarios whereby sales
growth and new customer and distributor wins occur at
a much reduced rate.
The Anders & Kern division which is focussed
exclusively on UK based customers experienced
significant reductions in sales volume due to the
nationwide Covid-19 lockdown. The business took
advantage of the UK Government’s Job Retention
Scheme by furloughing a large proportion of its
workforce. When lockdown restrictions ease sales are
expected to recover. Forecasts for the Anders & Kern
division have assumed that over a period of 12 months
sales will return to normal levels. Stress tests have
included the possibility that sales remain subdued for
the entire forecast period together with appropriate
cost reductions.
SmartSpace Software PLC Annual Report 89
On the basis of these consolidated forecasts and stress
tests, the Directors believe that the Group can continue
to operate within the resources currently available to it
over the forecast period.
Based on the above, the Directors believe it remains
appropriate to prepare the Group and parent company
financial statements on the going concern basis.
24(b) Principles of consolidation
fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill),
less liabilities of the subsidiary and any non-controlling
interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are
accounted for as if the Group had directly disposed of
the related assets and liabilities of the subsidiary (i.e.
reclassified to profit or loss or transferred to another
category of equity as specified/permitted by applicable
IFRSs).
Subsidiaries
Equity method
Subsidiaries are all entities over which the Group has
control. The Group controls an entity where the Group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct activities of
the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
The acquisition method is used to account for business
combinations by the Group (refer to note 24(i)).
Inter-company transactions, balances and unrealised
gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated, unless
the transaction provides evidence of an impairment
of the transferred asset. Accounting policies for
subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the
Group.
When the Group loses control of a subsidiary, the
gain or loss on disposal recognised in profit or loss is
calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the
Under the equity method of accounting, the
investments are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of
the post-acquisition profits or losses of the investee
in profit or loss, and the Group’s share of movements
in other comprehensive income of the investee in
other comprehensive income. Dividends receivable
or receivable from associates or joint ventures are
recognised as a reduction in the carrying amount of the
investment.
Where the Group’s share of losses in an equity
accounted investment equals or exceeds its interest
in the entity, including any other unsecured long term
receivables, the Group does not recognise further
losses, unless it has incurred obligations or made
payments on behalf of the other entity.
Unrealised gains on transactions between the Group
and associates and joint ventures are eliminated to
the extent of the Group’s interest in these entities.
Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the
asset transferred.
Year Ended 31 January 2021 90
Reverse acquisition accounting
The acquisition of Coms.com Limited in the year
ended 31 January 2007 was accounted for as a reverse
acquisition of SmartSpace Software plc by Coms.
com Limited. The consolidated financial statements
prepared following the reverse takeover were issued
in the name of SmartSpace Software plc, but they are
a continuance of the financial statements of Coms.
com Limited. Therefore, the assets and liabilities of
Coms.com Limited were recognised and measured in
the consolidated financial statements at their pre-
combination carrying values. The financial statements
reflect the continuance of the financial statements of
Coms.com Limited.
The retained earnings and other equity balances
recognised in these consolidated financial statements
at the time of the acquisition were the retained
earnings and other equity balances of Coms.com
Limited immediately before the business combination.
Under reverse acquisition accounting:
• an adjustment within shareholders’ funds is required
to eliminate the cost of acquisition in the issuing
company’s books, and introduce a notional cost of
acquiring the smaller issuing company based on the
fair value of its shares
• an adjustment is required to show the share capital
of the legal parent in the consolidated balance sheet
rather than that of the deemed acquirer.
Both adjustments have been included in the reverse
acquisition reserve.
Merger reserve
The merger reserve is used when a share issue
is undertaken and merger relief is available. The
conditions for merger relief are when the consideration
for shares in another company includes issued shares of
the acquirer and on completion of the transaction, the
company issuing the shares will have secured at least
90% equity holding in the acquiree.
24(c) Segment reporting
Operating segments are reported in a manner
consistent with internal reporting provided to the chief
operating decision maker.
The Board of SmartSpace Software plc has appointed
an operating board which assesses the financial
performance and position of the Group, and makes
strategic decisions. The operating board which has
been identified as being the chief operating decision
maker, consists of the Chief Executive Officer, Chief
Financial Officer and the Chief Operating Officer.
24(d) Foreign currency translation
Functional and presentation currency
The individual financial statements of each group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of each
entity are expressed in pounds sterling which is also
the presentation currency for the consolidated and
company financial statements. The functional currency
of the Company is pounds sterling.
Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such
transactions, and from the translation of monetary
assets and liabilities denominated in foreign currencies
at year end exchange rates, are generally recognised
in profit or loss. They are deferred in equity if they are
attributable to part of the net investment in a foreign
operation.
Foreign exchange gains and losses that relate to
borrowings are presented in the statement of profit or
loss, within finance costs. All other foreign exchange
gains and losses are presented in the statement of
profit or loss on a net basis, within ‘other gains/losses’.
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss.
SmartSpace Software PLC Annual Report Group companies
24(g) Income tax
91
The income tax expense or credit for the period is the
tax payable on the current period’s taxable income,
based on the applicable income tax rate for each
jurisdiction, adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and
to unused tax losses.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries
where the Company and its subsidiaries and associates
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions, where appropriate, on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is provided in full, using the liability
method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, deferred
tax liabilities are not recognised if they arise from
the initial recognition of goodwill. Deferred income
tax is also not accounted for it if arises from initial
recognition of an asset or liability in a transaction other
than a business combination that, at the time of the
transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted
or substantially enacted by the end of the reporting
period and are expected to apply when the related
deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are only recognised if it is probable
that future taxable amounts will be available to utilise
those temporary differences and losses.
Results and financial position of foreign operations
(none of which has the currency of a hyper-inflationary
economy) that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities for each balance sheet
presented are translated at the closing rate at the
date of that balance sheet;
• income and expenses for each statement of profit
or loss and statement of comprehensive income are
translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at
the dates of the transactions); and
• all resulting exchange differences are recognised in
other comprehensive income.
On translation, exchange differences arising from the
translation of any net investment in foreign entities,
and of borrowings and other financial instruments
designated as hedges of such investments, are
recognised in other comprehensive income. When a
foreign operation is sold or any borrowings forming
part of the net investment are repaid, the associated
exchange differences are reclassified to profit or loss, as
part of the gain or loss on sale.
Exchange rates used are as follows:
Average exchange rate for
1 New Zealand Dollar into
Pounds Sterling
Closing exchange rate for
1 New Zealand Dollar into
Pounds Sterling
31 January 31 January
2020
2021
0.5089
0.5143
0.5250
0.4911
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
24(e) Revenue recognition
The accounting policies for the Group’s revenue from
contracts with customers are explained in note 4.
24(f) Government grants
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. Where applicable government
grants are offset against the expenditure to which they
relate.
Year Ended 31 January 2021
92
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount
and tax bases of investments in foreign operations
where the Company is able to control the timing of the
reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced to the extent
that 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 or substantively 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 comprehensive income.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of
the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they
relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
24(h) Leases
The accounting policies for the Group’s leases is
described in note 9(b)
24(i) Business combinations
The acquisition method of accounting is used for
all business combinations regardless of whether
equity instruments or other assets are acquired.
The consideration transferred for the acquisition of
subsidiaries comprises:
• fair values of the assets transferred;
• liabilities incurred to the former owners of the
acquired business;
• equity interests issued by the Group;
• fair value of any asset or liability resulting from a
contingent consideration arrangement;
• fair value of any pre-existing equity interest in the
subsidiary.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their
fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity, on
an acquisition-by-acquisition basis, either at fair value
or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets.
Acquisition-related costs are recognised in profit or loss
as incurred.
The excess of the:
• consideration transferred;
• the amount of any non-controlling interest in the
acquired entity; and
• the acquisition date fair value of any previous equity
interest in the acquired entity
over the fair value of the net identifiable assets
acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets
of the business acquired, the difference is recognised
directly in profit or loss as a bargain purchase.
SmartSpace Software PLC Annual Report Where settlement of any part of cash consideration
is deferred, the amounts payable in the future are
discounted to their present value at the date of
exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which
a similar borrowing could be obtained from an
independent financier under comparable terms and
conditions.
Contingent consideration is classified either as equity
or as a financial liability. Amounts classified as financial
liability are subsequently remeasured to fair value, with
changes in value recognised in profit or loss.
If the business combination is achieved in stages,
the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date. Any
gains or losses realised from such remeasurement are
recognised in profit or loss.
24(j) Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the
carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not
generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested
for impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-
generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a
re-valued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss been
recognised for the asset/cash-generating unit in prior
years. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
93
24(k) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions
and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.
24(l) Trade receivables
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using
the effective interest method, less loss allowance. See
note 8(a) for further information about the Group’s
accounting for trade receivables and note 13(b) for a
description of the Group’s impairment policies.
24(m) Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost comprises materials and, where
applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to
their present location and condition. Cost is calculated
using the weighted average method. Net realisable
value represents the estimated selling price less all
estimated costs of completion and costs to be incurred
in marketing, selling and distribution.
24(n) Financial assets
Classification
The Group classifies its financial assets in the following
measurement categories:
• those to be measured subsequently at fair value
(either through other comprehensive income or
through profit or loss)
• those to be measured at amortised cost.
The classification depends on the entity’s business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will be recorded either in profit or loss or in other
comprehensive income.
Measurement
At initial recognition the Group measures a financial
asset at its fair value plus in the case of a financial
asset not at fair value through profit or loss (FVPL),
transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of
financial assets carried at FVPL are expensed in profit
or loss.
Impairment
The Group assesses, on a forward-looking basis, the
expected credit losses associated with its financial
assets carried at amortised cost. The impairment
methodology applied depends on whether there has
been a significant increase in credit risk.
Year Ended 31 January 2021 94
For trade receivables, the Group applies the simplified
approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition
of the receivables, see note 13(b) for further details.
the goodwill arose. The units or groups of units are
identified at the lowest level at which goodwill is
monitored for internal management purposes, being
the operating segments (note 3).
24(o) Property, plant and equipment
Property, plant and equipment is stated at historical
cost less depreciation. Historical cost includes
expenditure that is directly attributable of the
acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Group and the cost of the item can be measured
reliably. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in
which they are incurred.
The depreciation methods and periods used by the
Group are disclosed in note 9(a).
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each
reporting period.
The carrying value is assessed annually and any
impairment is charged to the income statement.
Gains or losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss. When revalued assets are
sold, it is group policy to transfer any amounts included
in other reserves in respect of those assets to retained
earnings.
An item of property or plant is derecognised upon
disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
The gain or loss arising on the disposal or scrappage of
an asset is determined as the difference between sales
proceeds and the carrying value of the asset and is
recognised in income.
24(p) Intangible assets
Goodwill
Goodwill is measured as described in note 24(i).
Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is not amortised but it
is tested for impairment annually or more frequently
if events or changes in circumstances indicated
that it might be impaired, and is carried as cost less
accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash- generating units for
the purpose of impairment testing. The allocation is
made to those cash-generating units that are expected
to benefit from the business combination in which
Internally generated intangible assets - Research and
development
Expenditure on research activities is recognised as an
expense in the period in which it is incurred.
Internally-generated intangible assets arising from the
development (or from the development phase on an
internal project) are recognised only if all the following
conditions are met:
• an asset is created that can be identified (such as
software and new processes);
• it is probable that the asset created will generate
future economic benefits;
• the development cost of the asset can be measured
reliably;
• an intention to complete the intangible asset and use
or sell it;
• ability to use or sell the intangible asset, and
• the availability of adequate technical financial and
other resources to complete the development and to
use or sell the intangible asset.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure from
the date when the intangible asset first meets the
recognition criteria listed above. Where no internally-
generated intangible asset can be recognised,
development expenditure is recognised in profit or loss
in the period in which it is incurred.
Subsequent to initial recognition internally generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses on
the same basis as intangible assets that are acquired
separately.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination
and recognised separately from goodwill are initially
recognised at their fair value at the acquisition date
(which is regarded as their cost).
Subsequent to initial recognition intangible assets
acquired in a business combination are reported at
cost less accumulated amortisation and accumulated
impairment losses on the same basis as intangible
assets that are acquired separately.
Amortisation methods and periods
Refer to note 9(c) for details about amortisation
methods and periods used by the Group for intangible
assets. Amortisation is charged to profit or loss and
included within administrative expenses.
SmartSpace Software PLC Annual Report 24(q) Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of
the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12
months after the reporting period. They are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
24(r) Borrowings
Borrowings are initially recognised at their fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on
the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case the fee is deferred until the draw-
down occurs. To the extent that there is no evidence
that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the
facility to which relates.
Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying value of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting
period.
95
24(s) Cost of sale of goods and cost of providing
services
Cost of sale of goods represents the cost of hardware
together with delivery cost supplied to customers.
Cost of providing services represents the cost of
providing professional services such as implementation,
configuration training and project management.
24(t) Borrowing costs
Borrowing costs are expensed in the period in which
they are incurred.
24(u) Provisions
A provision is recognised in the balance sheet when the
Group has a present legal or constructive obligation
as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle
the obligation. If the effect is material, provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects the current market
assessment of the time value of money and, where
appropriate, the risks specific to the liability.
24(v) Employment benefits
Short- term obligations
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating sick
leave that are expected to settle within 12 months of
the end of the period in which the employees render
the related services are recognised in respect of
employees’ services up to the end of the reporting
period and are measured at the amounts expected to
be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in
the balance sheet.
Post- employment obligations
Payments to defined contribution retirement benefit
schemes are recognised as an expense when
employees have rendered services entitling them to the
contributions. Payments to state-managed retirement
benefit schemes are dealt with as payments to defined
contribution schemes where the Group’s obligations
under the schemes are equivalent to those arising in a
defined contribution retirement benefit scheme. The
Group has no further payment obligations once the
contributions have been paid.
Year Ended 31 January 2021 96
Share-based payments
24(x) Dividends
Equity-settled share-based payments to employees and
others providing similar services are measured at the
fair value of the equity instruments at the grant date.
The fair value excludes the effect of non-market based
vesting conditions. Details regarding the determination
of the fair value of equity settled transactions are set
out in note 20.
Where share options are awarded to employees, the
fair value of the option is calculated at the date of grant
and is subsequently charged to the income statement
over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of
equity instruments expected to vest at the balance
sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the
number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative
expense is not adjusted for failure to achieve a market
vesting condition.
Fair value is measured using an appropriate option
pricing model. The expected life used in the model
has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Where equity instruments are granted to persons other
than employees, the consolidated income statement
is charged with the fair value of goods and services
received.
24(w) Contributed equity
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction net of tax
from the proceeds.
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of
the reporting period.
24(y) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to the owners of the Company,
excluding any costs of servicing equity other than
ordinary shares;
• by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:
• the after-tax effect of interest and other financing
costs associated with dilutive potential ordinary
shares; and
• the weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
24(z) Rounding of amounts
All amounts disclosed in the financial statements and
notes have been rounded off to the nearest thousand
pounds sterling unless otherwise stated.
25. CHANGE IN ACCOUNTING POLICIES
There were no changes to accounting policies during
the year ended 31 January 2021.
SmartSpace Software PLC Annual Report PA RENT COMPANY BALANC E S H EE T
Note
31 January 2021 31 January 2020
£’000
£’000
97
ASSETS
Non-current assets
Investments
Property, plant and equipment
Financial assets at amortised cost
Deferred tax assets
Total non-current assets
Current assets
Prepayments
Financial assets at amortised cost
Other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Other tax liabilities
Total current liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves attributable to equity shareholders
Share capital
Share premium
Other reserves
Retained earnings
Total equity
2(b)
2(a)
1(a)
3
1(a)
1(a)
1(b)
4(a)
4(a)
4(b)
4(c)
3,567
10
9,385
791
13,753
30
328
1
3,781
4,140
17,893
184
72
256
256
4,894
16
12,151
1,067
18,128
53
85
54
638
830
18,958
129
34
163
163
17,637
18,795
2,826
3,830
1,677
9,304
17,637
2,826
3,830
1,574
10,565
18,795
The accompanying notes are an integral part of these financial statements.
As permitted by Section 408 of the Companies Act 2006 no separate Parent company profit and loss account
has been included in these financial statements. The Parent company loss for the period was £1,261,000 (2020:
£9,768,000).
The financial statements were approved by the Board of Directors and authorised for issue on 7 May 2021.
They were signed on its behalf by:
Bruce Morrison
Chief Financial Officer
Company Number: 5332126
Year Ended 31 January 2021
98
PA RENT COMPANY STATEME NT
OF CHANGES IN EQU ITY
Share
capital
Share
premium
Other Retained
earnings
reserves
At 31 January 2019
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Issue of ordinary shares as consideration for a
business combination
Proceeds from shares issued
Share issue costs
Space Connect acquisition deferred share
issue consideration
Share based payment charge
Share based payment charged to subsidiaries
At 31 January 2020
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Share based payment charge – continuing operations
Share based payment charge – discontinued operations
Share based payment charged to subsidiaries
£’000
2,216
-
-
135
475
-
-
-
-
£’000
1,058
-
-
-
2,967
(195)
-
-
-
£’000
£’000
Total
£’000
128
20,333
23,735
-
-
(9,768)
(9,768)
(9,768)
(9,768)
844
-
-
489
80
33
-
-
-
-
-
-
979
3,442
(195)
489
80
33
2,826
3,830
1,574
10,565
18,795
-
-
-
-
-
-
-
-
-
-
-
-
(1,261)
(1,261)
(1,261)
(1,261)
135
(47)
15
-
-
-
135
(47)
15
At 31 January 2021
2,826
3,830
1,677
9,304
17,637
The accompanying notes are an integral part of these financial statements.
SmartSpace Software PLC Annual Report
99
PA RENT COMPANY STATEME NT
OF CASH FLOWS
Cash flows from operating activities
Cash consumed in operations
Interest received
Interest paid
Income tax paid
Note
Year ended
Year ended
31 January 2021 31 January 2020
£’000
£’000
5
(1,210)
(1,664)
-
(1)
(5)
10
(1)
-
Net cash outflow from operating activities
(1,216)
(1,655)
Cash flows from investing activities
Payment for property, plant and equipment
Proceeds from disposal of subsidiary
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issues of share capital (net of issue costs)
Loans issued to subsidiary companies
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.
(7)
4,366
4,359
-
-
-
3,143
638
3,781
(10)
750
740
3,247
(8,916)
(5,669)
(6,584)
7,222
638
Year Ended 31 January 2021
100
NOT ES TO THE PARENT CO MPANY
FINA N CIAL STATEMENTS
1. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
This note provides information about the Company’s financial instruments including:
• an overview of all financial instruments held by the Company;
• specific information about each type of financial instrument;
• accounting policies;
• information about determining the fair value of the instruments including judgements and estimation uncertainty
involved.
The Company holds the following financial instruments:
Financial assets
31 January 2021
31 January 2020
Financial assets at amortised cost
Cash and cash equivalents
£’000
9,714
3,781
13,495
£’000
12,290
638
12,928
Financial liabilities
31 January 2021
31 January 2020
Trade and other payables
£’000
184
184
£’000
129
129
The Company’s exposure to various risks associated with the financial instruments is discussed in note 7. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets
mentioned above.
1(a) Financial assets at amortised cost
Classifications of financial assets at amortised cost
The Company classifies its financial assets at amortised cost only if both the following criteria are met:
• the asset is held within a business whose objective is to collect the contractual cash flows; and
• the contractual terms give rise to cash flows that are solely payments of principal and interest.
Financial assets at amortised cost include the following debt investments:
Loans to subsidiary
Intercompany balances
Other financial assets at amortised cost
Other receivables
31 January 2021
Non-current
Current
£’000
£’000
Total
£’000
31 January 2020
Current Non-current
£’000
£’000
Total
£’000
-
-
328
1
329
3,816
3,816
5,569
5,569
-
-
328
1
-
-
85
54
6,060
6,060
6,091
6,091
-
-
85
54
9,385
9,714
139
12,151
12,290
SmartSpace Software PLC Annual Report
101
Loans to subsidiary
In 2019 the Company issued a loan to its subsidiary,
SmartSpace Software Limited Pty. The loan is unsecured and
repayable at 90 days’ notice. Interest accrues daily at a rate
of 5% per annum. Through the sale of intellectual property to
other group companies the loan was repaid in full during the
year ended 31 January 2021.
In 2018 the Company issued a loan to its subsidiary
SmartSpace Software Limited. The loan is unsecured, interest
free and repayable at 90 days’ notice. The fair value of the loan
is the amortised cost.
As management do not intend to demand repayment of the
loan in the next year the loan has been classified as non-
current. Further information relating to loans to related parties
is set out in note 9.
Intercompany balances
The intercompany balances arise from goods and services and
funding provided to or from subsidiary companies, are interest
free and repayable on demand. As management do not intend
to demand repayment of the intercompany balance in the next
year the balance has been classified as non-current. Fair value
of the intercompany balances is the amortised cost.
Impairment and risk exposure
At 31 January 2020 the Company had an intercompany balance due from SmartSpace Global Limited of £12.3m. An
impairment charge of £8,028,000 was recorded in relation to losses expected to arise as part of the disposal of this
subsidiary in the financial year ended 31 January 2021. As part of the disposal transactions the full value of the loan was
written off prior to the disposal of SmartSpace Global in August 2020. Note 7 sets out further information about the
impairment of financial assets and the Company’s exposure to credit risk.
Loans to subsidiaries are denominated in New Zealand dollars. As a result, the Company has an exposure to foreign
currency risk when the loan is repaid.
Other financial assets at amortised cost
These amounts generally arise from transactions outside the usual operating activities of the Company and include the
contingent consideration on disposal of subsidiaries.
1(b) Trade and other payables
Current liabilities
Trade payables
Payroll liabilities
Accrued expenses
Other payables
31 January 2021
31 January 2020
£’000
£’000
48
5
98
33
184
53
4
71
1
129
The carrying amounts of trade and other payables are considered to be the same as their fair values.
Year Ended 31 January 2021
102
2. NON-FINANCIAL ASSETS AND LIABILITIES
This note provides information about the Company’s non-financial assets and liabilities, including specific information
about each type of non-financial asset and non-financial liability and information about determining the fair value of assets
and liabilities including judgements and estimation uncertainty involved.
2(a) Property, plant and equipment
Office equipment
£’000
At 31 January 2020
Cost or fair value
Accumulated depreciation
Net book amount
Year ending 31 January 2020
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 31 January 2020
Cost or fair value
Accumulated depreciation
Net book amount
Year ending 31 January 2021
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 31 January 2021
Cost or fair value
Accumulated depreciation
Net book amount
33
(17)
16
16
10
-
(10)
16
33
(17)
16
16
8
(2)
(12)
10
21
(11)
10
Depreciation is provided so as to write off the cost or valuation of assets less their estimated residual values over their
expected useful economic lives using the straight-line method on the following bases
• Office equipment
3-4 years
SmartSpace Software PLC Annual Report
2(b) Investment in subsidiaries
Shares in group undertakings
Balance at 1 February
Disposal of SmartSpace Global Limited
Balance at 31 January
103
31 January 2021
31 January 2020
£’000
£’000
4,894
(1,327)
3,567
4,894
-
4,894
Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid. Details of subsidiary
undertakings can be seen in note 16 of the Group financial statements.
3. DEFERRED TAX
Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Share based payments
Deferred tax assets
31 January 2021
31 January 2020
£’000
£’000
721
70
791
1,022
45
1,067
The Company has concluded that deferred tax assets relating to carried forward tax losses will be recoverable against
future earnings through the use of UK corporation tax group relief provisions.
Movements
Share based payments
Tax losses
£’000
£’000
24
21
45
25
70
764
258
1,022
(301)
721
Total
£’000
788
279
1,067
(276)
791
At 31 January 2019
Credited to profit and loss
At 31 January 2020
Charged to profit and loss
At 31 January 2021
4. EQUITY
4(a) Share capital and share premium
Allotted, called up and fully paid:
31 January 2021
31 January 2020
31 January 2021
31 January 2020
Number
Number
£’000
£’000
Ordinary shares of 10p each
28,255,823
28,255,823
2,826
2,826
Year Ended 31 January 2021
104
Movement in ordinary shares
At 31 January 2019
Shares issued for acquisition
Shares issued for cash
At 31 January 2020
At 31 January 2021
Shares issued
Number
Price (p)
22,157,413
4,747,587
1,350,823
28,255,823
28,255,823
72.5
72.5
Share
capital
Share Merger
premium Reserve
Total
£’000
2,216
475
135
2,826
2,826
£’000
£’000
1,058
2,772
-
-
3,274
3,247
-
844
979
3,830
3,830
844
7,500
844
7,500
Full details of the ordinary shares including movements during the current and prior years, are included in note 10(a) to
the consolidated accounts.
4(b) Other reserves
Acquisition deferred
consideration reserve
At 31 January 2019
Transactions with owners in their capacity as owners:
Shares issued for acquisition
Space Connect acquisition deferred share
issue consideration
Share-based payment expense
Share-based payment charged to subsidiaries
At 31 January 2020
Transactions with owners in their capacity as owners:
Share-based payment expense
Share-based payment expense – discontinued operations
£’000
-
489
-
-
489
-
-
Merger
reserve
£’000
-
844
-
-
-
Share option
reserves
Total other
reserves
£’000
128
-
-
80
33
£’000
128
844
489
80
33
844
241
1,574
-
-
135
(32)
344
135
(32)
1,677
At 31 January 2021
489
844
Nature and purpose of other reserves
The merger reserve is used when a share issue is undertaken and merger relief is available. The conditions for merger relief
are when the consideration for shares in another company includes issued shares of the acquirer and on completion of the
transaction, the Company issuing the shares will have secured at least 90% equity holding in the acquiree.
The acquisition deferred consideration reserve relates to deferred share consideration for the acquisition of subsidiaries.
The share-based payments reserve is used to recognise the grant date fair value of options issued to employees but not
exercised.
4(c) Retained earnings
The movements in retained earnings were as follows:
Balance at 1 February
Net loss for the period
Balance at 31 January
31 January 2021
31 January 2020
£’000
10,565
(1,261)
9,304
£’000
20,333
(9,768)
10,565
SmartSpace Software PLC Annual Report
5. CASH FLOW INFORMATION
5(a) Cash generated from operations
Loss before income tax
Adjustments for:
Depreciation
Non-cash employee benefit expense – share-based payments
Credit loss
Impairment of intercompany balance
Gain on disposal of subsidiary
Gain on sale of non-current assets
Net exchange differences
Finance costs - net
Change in operating assets and liabilities:
Movement in financial assets at amortised cost
Movement in other operating assets
Movement in trade payables
Movement in other operating liabilities
Movement in provisions
Cash used in operations
5(b) Net cash reconciliation
105
Year ended
31 January 2021
Year ended
31 January 2020
£’000
(979)
12
103
54
-
291
2
-
1
29
22
(5)
(740)
-
£’000
(10,024)
10
80
196
8,028
-
-
408
(38)
(77)
(14)
43
(271)
(5)
(1,210)
(1,664)
The Company does not have any debt therefore net cash is comprised of cash and cash equivalents only.
Year Ended 31 January 2021
106
6. EMPLOYEE INFORMATION
6(a) Employee benefits expense
Wages and salaries
Share based payments
Social security costs
Pension costs
Total remuneration
6(b) Average number of people employed
Administration
Total employees
Year ended
31 January 2021
Year ended
31 January 2020
£’000
649
80
83
22
834
£’000
634
80
103
19
836
Year ended
31 January 2021
Year ended
31 January 2020
No.
4
4
No.
6
6
Details of directors remuneration including the highest paid director are provided in the Directors’ remuneration report on
pages 30 and 31.
7. FINANCIAL RISK MANAGEMENT
The Company’s exposure to financial risks is managed as part of the Group. Full details about how the Group’s exposure
to financial risks and how these risks could affect the Group’s future financial performance are given in note 13 to the
consolidated financial statements. Information specific to the Company is given below.
7(a) Credit risk
Credit risk arises from cash balances and contractual cash flows of debt investments and other receivables carried at
amortised cost.
Risk management
Credit risk is managed on a Group basis. For banks and institutions only independently rated parties with a minimum
rating of ‘A’ are accepted.
Impairment of loan to subsidiary
The loan to subsidiary is unsecured, interest free and repayable on demand after 3 months notice. The loan is denominated
in New Zealand dollars and therefore subject to currency fluctuations. As the subsidiary is not expected to be able to
repay on such a demand, other recovery strategies such as payment over time are considered. After taking into account
these recovery strategies and possible non-recovery scenarios management have concluded the expected credit losses
are not material.
Balances due from related companies
The Company provides funding to its subsidiaries through short term intercompany receivables. The loans are unsecured,
interest free and repayable on demand. Where liquid assets are not immediately available to repay the full amount due,
management consider other recovery strategies including payment over time through cash generated from operations.
After taking into account these recovery strategies and possible non-recovery scenarios management have concluded the
expected credit losses are not material.
SmartSpace Software PLC Annual Report
107
7(b) Liquidity risk
Management monitors rolling forecasts of the Company’s cash balance on the basis of expected cash flows.
Maturity of financial liabilities
The tables below analyse the Company’s financial liabilities into relevant maturity groups based on their contractual
maturities.
The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances as the impact of discounting is not significant.
Contractual maturity
of financial liabilities
At 31 January 2021
Trade and other payables
Total
Contractual maturity
of financial liabilities
At 31 January 2020
Trade and other payables
Total
Less than
6 months
£’000
153
153
Less than
6 months
£’000
124
124
6-12
months
£’000
31
31
6-12
months
£’000
-
-
Total
£’000
184
184
Total
£’000
124
124
Carrying
amount
£’000
184
184
Carrying
amount
£’000
124
124
8. CAPITAL MANAGEMENT
The capital of the Company is managed as part of the capital of the Group as a whole. Full details are contained in note 13
to the consolidated financial statements.
9. RELATED PARTY TRANSACTIONS
9(a) Transactions with related parties
The following transactions occurred with related parties:
Sales and purchases of services
Provision of services to subsidiary undertakings
Other transactions
Subscription for new ordinary shares
Year ended
31 January 2021
Year ended
31 January 2020
£’000
£’000
-
-
145
4,421
9(b) Outstanding balances arising from sales and purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Receivables
Subsidiary undertakings
31 January 2021
31 January 2020
£’000
£’000
5,569
6,091
Year Ended 31 January 2021
108
9(c) Loans to subsidiary undertaking
Loan to subsidiaries
At 1 February 2020
Repayments
Withholding tax incurred
Interest charged
Impact of foreign currency exchange rate movement
At 31 January 2021
Loan to subsidiaries
At 1 February 2019
Cash advanced
Interest charged
Impact of foreign currency exchange rate movement
At 31 January 2020
No loss allowance was recognised in expense.
9(d) Terms and conditions
31 January 2021
SmartSpace
Software Pty
SmartSpace
Software Ltd
£’000
£’000
2,484
(2,879)
-
101
294
-
3,576
-
(5)
-
245
3,816
31 January 2020
SmartSpace
Software Pty
SmartSpace
Software Ltd
£’000
£’000
-
2,589
29
(134)
2,484
3,840
-
-
(264)
3,576
Total
£’000
6,060
(2,879)
(5)
101
539
3,816
Total
£’000
3,840
2,589
29
(398)
6,060
The loan to SmartSpace Software Pty Limited was unsecured and repayable at 90 days’ notice. Interest accrues at a rate
of 5% per annum.
The loan to SmartSpace Software Limited is unsecured and repayable at 90 days’ notice and is interest free.
10. INFORMATION INCLUDED IN THE NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
Some of the information included in the notes to the consolidated financial statements is directly relevant to the financial
statements of the Company. Please see the following:
Note 16
Note 18
Note 19(b)
Note 19(c)
Note 20
Note 23
-
-
-
-
-
-
Interest in other entities
Events occurring after the end of the reporting period
Related party transactions: Key management personnel
Related party transactions: Directors
Share based payments
Auditors’ remuneration
SmartSpace Software PLC Annual Report
109
11. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This note provides a list of the significant accounting
policies adopted in the preparation of these financial
statements to the extent they have not already been
disclosed in the other notes above. These policies have
been consistently applied to all the years presented,
unless otherwise stated.
11(a) Basis of preparation
Compliance with IFRS
The financial statements of SmartSpace Software plc
have been prepared in accordance with International
Accounting Standards in conformity with the
Companies Act 2006.
Historical cost convention
The financial statements have been prepared under
the historical cost convention except for contingent
consideration payable which is measured at fair value.
Standards and interpretations not yet applied by the
Company
Certain new accounting standards and interpretations
have been published that are not mandatory for the
year end 31 January 2021 and have not been early
adopted by the Company. None of these are expected
to have a material impact on the Company in the
current or future reporting periods and on foreseeable
future transactions. Standards and interpretations
adopted in the year had no significant impact (See note
24(a) of the Group financial statements).
Going concern
The ability of the Parent Company to continue as
a going concern is contingent upon the ongoing
viability of the Group. The financial statements for
the Group and the Parent Company are prepared on a
going concern basis notwithstanding that the Group
has reported an operating loss of £2,717,000 for the
year to 31 January 2021 (2020: £2,365,000 loss), net
cash outflow from continuing operating activities of
£1,639,000 (2020: £1,849,000).
At 31 January 2021 the Group had £4.5m of gross cash,
three operating segments and a central overhead to
support. Cash forecasts for each segment and the
consolidated group have been prepared for a period
of twelve months from the date of signing the balance
sheet.
These forecasts take into account the Group’s
assessment of the likely impacts of the Covid-19
pandemic together known levels of governmental
support. Furthermore the forecasts have been stress
tested to take into account varying degrees of
reductions in customer purchases and subscriptions,
delays in product launches and new sales wins, and
extended customer payment days.
On the basis of this review, the Directors believe that
the Group and the Parent Company will continue to
operate within the resources currently available to it
over the forecast period.
Based on the above, the Directors believe it remains
appropriate to prepare the Group and Parent company
Financial statements on the going concern basis.
Year Ended 31 January 2021 110
11(b) Investment in subsidiaries
Investment in subsidiaries are held at cost less
accumulated impairment losses.
11(c) Functional and presentation currency
The financial statements are prepared in pounds
sterling which is the Company’s functional and
presentation currency. All transactions undertaken
by the Company are denominated in pounds sterling
other than the loans to SmartSpace Software Limited
and SmartSpace Software Pty Limited which are
denominated in New Zealand dollar and Australian
dollars respectively.
11(d) Income tax
The income tax expense or credit for the period is the
tax payable on the current period’s taxable income
based on the applicable income tax rate for the
jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and
to unused tax losses.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the UK.
Management periodically evaluates positions taken
in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
established provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred
income tax is also not accounted for if it arises from the
initial recognition of an asset or liability in a transaction
other than a business combination that at the time of
the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted
or substantively enacted by the end of the reporting
period and are expected to apply when the related
deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised only if it is probable
that future taxable amounts will be available to utilise
those temporary losses.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances
relate to the same taxation authority. Current tax assets
and liabilities are offset where the entity has a legally
enforceable right to offset and intends to settle on a
net basis, or to realise the asset and settle the liability
simultaneously.
Current and deferred tax is recognised in profit or
loss except to the extent that it relates to items
recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity,
respectively.
11(e) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and short term equivalents includes
cash on hand, deposit held at call with financial
institutions, other short-term, highly liquid investments
with original maturities of three months that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
11(f) Financial assets
Classification
The Company classifies its financial assets in the
following measurement categories:
• those to be measured subsequently at fair value
(either through other comprehensive income or
through profit or loss)
• those to be measured at amortised cost.
The classification depends on the entity’s business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will be recorded either in profit or loss or in other
comprehensive income.
SmartSpace Software PLC Annual Report Measurement
At initial recognition the Company measures a financial
asset at its fair value plus in the case of a financial
asset not at fair value through profit or loss (FVPL),
transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of
financial assets carried at FVPL are expensed in profit
or loss.
Impairment
The Company assesses, on a forward-looking basis,
the expected credit losses associated with its financial
assets carried at amortised cost. The impairment
methodology applied depends on whether there has
been a significant increase in credit risk.
11(g) Property, plant and equipment
Property, plant and equipment is stated at historical
cost less depreciation. Historical cost includes
expenditure that is directly attributable of the
acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Company and the cost of the item can be measured
reliably. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in
which they are incurred.
The depreciation methods and periods used by the
Company are disclosed in note 2(a).
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each
reporting period.
The carrying value is assessed annually and any
impairment is charged to the income statement.
Gains or losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss.
An item of property or plant is derecognised upon
disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
The gain or loss arising on the disposal or scrappage of
an asset is determined as the difference between sales
proceeds and the carrying value of the asset and is
recognised in income.
11(h) Trade and other payables
These amounts represent liabilities for goods and
services provided to the Company prior to the end
of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented as
111
current liabilities unless payment is not due within 12
months after the reporting period. They are recognised
initially at their fair value and subsequently measured
as amortised cost using the effective interest method.
11(i) Employment benefits
Short- term obligations
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating sick
leave that are expected to settle within 12 months of
the end of the period in which the employees render
the related services are recognised in respect of
employees’ services up to the end of the reporting
period and are measured at the amounts expected to
be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in
the balance sheet.
Post- employment obligations
Payments to defined contribution retirement benefit
schemes are recognised as an expense when
employees have rendered services entitling them to the
contributions. Payments to state-managed retirement
benefit schemes are dealt with as payments to defined
contribution schemes where the Company’s obligations
under the schemes are equivalent to those arising in a
defined contribution retirement benefit scheme. The
Company has no further payment obligations once the
contributions have been paid.
Year Ended 31 January 2021 112
Share-based payments
11(j) Contributed equity
Equity-settled share-based payments to employees and
other providing similar services are measured at the
fair value of the equity instruments at the grant date.
The fair value excludes the effect of non-market based
vesting conditions. Details regarding the determination
of the fair value of equity settled transactions are set
out in note 20 to the consolidated financial statements.
Where share options are awarded to employees, the
fair value of the option is calculated at the date of grant
and is subsequently charged to the income statement
over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of
equity instruments expected to vest at the balance
sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the
number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative
expense is not adjusted for failure to achieve a market
vesting condition.
Fair value is measured using an appropriate option
pricing model. The expected life used in the model
has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Where equity instruments are granted to persons other
than employees, the consolidated income statement
is charged with the fair value of goods and services
received.
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction net of tax
from the proceeds.
11(k) Dividends
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of
the reporting period.
11(l) Rounding of amounts
All amounts disclosed in the financial statements and
notes have been rounded off to the nearest thousand
pounds sterling unless otherwise stated.
12. EVENTS OCCURRING AFTER THE END
OF THE REPORTING PERIOD
See note 18 of the Group financial statements for events
occurring after the end of the reporting period.
13. CHANGE IN ACCOUNTING POLICIES
There are no changes to report.
SmartSpace Software PLC Annual Report