The directors present the strategic report and financial statements for Space & Time Group Limited (the group) for the twelve months ended 30 June 2023.
The group delivered a year of strong trading growth despite the challenges of the macroeconomic climate continuing to play its part. UK interest rates reached levels not seen since 2008, and house price inflation per annum slowed from 6.4% in June 2022 to 1.7% by June 2023. As anticipated, this led to increased levels of spending amongst our key property clients, who contributed to a 17% increase in turnover in the year to £87,272,463 (2022: £74,880,195). Furthermore, the business continued its strategic expansion into new sectors, a large proportion being driven by clients in the global healthcare and pharmaceuticals industry with spending growing 118% compared to the previous year. This encouraging growth in activity led to Gross profit increasing in the year to £13,473,038 (2022: £11,402,284). RPI remained above 8% throughout the period however and this along with continued inflationary pressures within the labour market led to administration expenses, after other operating income, increasing year on year to £11,020,623, (2022: £10,143,363). Despite these exceptional cost pressures, the increased levels of business activity in the year meant the business delivered an overall increase in profit before tax for the year to £367,176 (2022: loss before tax £740,131).
Space & Time combines media and specialist technology solutions across the entire customer experience to create Growth Marketing outcomes for ambitious brand partners. During the year the group further evolved its strategy of providing technology-enabled solutions, launching several proprietary products to clients in the year and further developing its roadmap of relevant, first-to-market solutions.
The year ended 30 June 2023 was the second full year of trading of the group’ repositioning, which was unveiled to clients through the spring and early summer 2021 and to the wider market in August 2021. This repositioning saw the creation of our four divisions; Media, Technology, Performance Creative and Training, which innovate as specialist businesses with a raft of specialist solutions available to clients. These are interwoven by an operating model designed to maximise value to clients, ultimately led by our client experience team, overseeing our exemplary track record of building and retaining long-term client partnerships.
The anticipated commercial benefits of each of these changes have been realised through the year in facilitating deeper relationships with existing clients, additional value facilitated by the broader range of capabilities and solutions available, a large number of new business wins, and more robust profit margins spearheaded by our industry leading technology offering.
Our capability gives clients access to the entire customer experience by utilising our four strategic divisions:
Media
Our agnostic and omni-channel approach to media planning ensures we always create the most effective plans to deliver against our clients’ business needs and objectives. With fully in-house teams in Paid Search, Programmatic, Social Media, Amazon, Content, Research & Insights, Print, Audio/Visual and OOH, we are experts across all media channels, enabling clients to access the full extent of a client’s end customer journey.
Technology
Harnessing the power of tech and data, our specialist teams connect and visualise disparate data sources using a blend of artificial intelligence, machine learning and the group’s own intellectual property to create meaningful and actionable insights for clients to activate across their marketing campaigns and their entire technology ecosystem, accelerating business performance and intelligence at every level of a client’s organisation.
Performance Creative
Our team uses technology to drive enhanced campaign performance, personalised experiences, and increased automation through innovative and seamless creative production capability. We collaborate with existing creative partners, accelerate the performance of existing assets, or create ‘ground-up’ campaign ideation across Display, Social, DOOH, Video, Audio and Dynamic formats.
Training
We offer a range of bespoke training programmes to clients with in-house teams or brands looking to develop their own understanding of the marketing landscape. Programmes are delivered by our product specialists and held at the group’s offices, a 3rd party venue, remotely or at a client’s offices.
Awards won by our subsidiary, Space & Time Media Ltd in 2022-23 were:
Prolific North Tech Awards – shortlisted
Digital Transformation of the Year
Cloud Technology Provider of the Year
BIMA100
Eliette Cremer & Sharon Wright – BIMA100 Strategists & Consultants
GENCFO Digital Finance Function Awards
SME Finance Team of the Year
Artificial Intelligence
As a proven early-stage adopter of many AI driven technologies and machine learning capability, Space & Time has a deep understanding of effective, equitable and responsible use AI.
In the year and in line with significantly increased global attention on the topic, the group has accelerated its plan to develop a roadmap for AI into the future, focussing on GenAI, agency tooling, risk protection and measured performance implementation to ensure the technology is available to clients within a safe, commercial and scaleable framework.
Culture
The group places huge value on our talent and we have a number of initiatives that recognise this and enhance our staff’s general well-being and reiterates our commitment to social and environmental sustainability across the organisation.
Our continued investment in the group’s award-winning Space Academy training and development programme provides all staff with online bespoke learning pathways;
‘LaunchPad’, our talent attraction and induction programme, educates all new starters on our values as well as our stance and instructions for accessing our support programmes for mental health, wellbeing, training and personal development, Corporate Social Responsibility and introduces them to a ‘buddy’ and line manager that will oversee their growth in the company. This programme has been extremely successful during the year, with a high percentage of LaunchPad candidates offered permanent roles in the business at the end of their training programme;
Our flexible working policy continues to give staff greater flexibility and control of their work/life balance;
Our Diversity, Equality & Inclusion steering group continues to ensure that these issues are constantly reviewed and relevant actions taken where required;
Our Culture team regularly undertakes staff surveys to measure our diversity in terms of ethnicity, nationality, sexual preference, gender identification and disability. We monitor both gender pay equality and staff satisfaction. Our most recent survey indicated that 97% of staff agree that Space & Time is a “good place to work”;
As a Living Wage Employer, we are committed to ensuring that our staff and the staff of any suppliers we work with are paid commensurately with the relevant living wage; and
Our membership of Ad Net Zero highlights our ongoing commitment to reducing the carbon impact of the advertising industry.
Principal risks and uncertainties
The group regularly reviews business risk and aims to mitigate these risks wherever possible through its internal systems and controls and where appropriate, targeted staff training. The directors consider the group’s main commercial and financial risks to be:
Economic uncertainty
Whilst the macroeconomic climate has stabilised to some degree, in comparison with the significant number of economic shocks experienced in the previous financial year, sustained price inflation, continued labour market pressures and increased interest rates continue to present significant headwinds within the UK economy. The group has assessed the risks and the potential impact on the group as a result of these economic factors, and measures have been taken to mitigate such risks and their impact as far as possible. These include continued focus on sector diversification, reviews of commercial terms with existing clients to improve certainty around income streams, and ongoing prioritisation of internal talent development to improve staff retention and reduce costs. The group remains profitable since the year end and has sufficient cash resources for the foreseeable future. As a result, the directors believe that they have the ability to respond effectively to continued uncertainty and that the group will be able to continue to meet its liabilities as they fall due for a period of at least twelve months from the date of the approval of these financial statements.
In common with all businesses, the performance of the group will be influenced by the general economic environment. We closely monitor leading market indicators particularly for sectors that our major clients and suppliers operate within. In addition, we work closely with all our clients and suppliers to ensure that we remain informed of how their businesses are performing and the key challenges that they face. The group reforecasts, at a minimum, on a quarterly basis and closely monitors its cash flow. It has historically and will continue to act promptly and decisively to address its business operations and cost base as and when trading or cash flow circumstances dictate.
Client retention
As a growth marketing group, we enable our clients to secure optimal value from every part of the customer experience and their marketing investment. We form long-term partnerships through business empathy and commercial alignment, working across fully managed, hybrid or in-house models to deliver best-in-class expertise across media, technology, performance creative and training, driving market-beating long-term growth outcomes. We deliver this proactive approach every day, regularly monitoring and responding to our clients’ needs and their pre-agreed KPIs.
Credit and cash flow risk
The group, in common with all others, is potentially exposed to the risk of non-recovery of its debts. This risk is mitigated by credit checking and having credit limits in place for all customers. In addition, the group operates a robust credit control regime and wherever possible, credit insures its clients.
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet debts as they fall due. The group changed corporate banking partners from Lloyds to Barclays during the year, and now has a £6.5 million receivables finance facility in place with Barclays Bank PLC that provides appropriate working capital to meet the group’s day to day business needs. The group’s s long-term business forecasts support the view that the group will have adequate resources to meet its debts as they fall due for the foreseeable future and for at least twelve months from the date of signing of these financial statements.
Exchange rate fluctuations
A significant part of the group’s activity is UK based but for its material overseas trade it mitigates exchange rate risk to a greater extent by ensuring that its overseas customers settle, and their related suppliers are paid, via the group’s US Dollar and Euro bank accounts wherever possible.
Key performance indicators
The key performance indicators monitored by the directors are those that best demonstrate the financial performance and strength of the group. Specifically, we look at year on year trends in the profit and loss account, in turnover and gross profit margin and on the balance sheet, the level of net current assets and cash balances to monitor the financial health and liquidity of the group. In common with most businesses, the global legacy impact of COVID–19 and other macroeconomic events have had a material impact on the group’s key performance indicators in the current and prior year.
The group saw a 17% increase in turnover in the year to £87,272,463 (2022: £74,880,195). Gross profit increased by 18%, to £13,473,038 (2022: £11,402,284), driven by revenue growth from existing clients, new business wins and continued diversification of the company’s client base specifically within the global healthcare and pharmaceuticals industry. Administration expenses, after other operating income, saw a 9% increase year on year to £11,020,623 (2022: £10,143,363), driven predominantly by persistent labour market challenges and increased RPI related cost pressures more generally. This overall improved trading environment has meant profit before tax for the year increased by £1,107,307 to reach £367,176 (2022: loss before tax £740,131) as at the year end.
The tax charge for the year increased to £461,824 (2022: £245,805) as a result of the increased profit before tax.
The year-on-year improvement in trading delivered increased the working capital requirements of the group and saw cash at bank and in hand decrease by £416,590 year on year to £2,148,210 (2022: £2,564,800). Encouragingly, the group’s net current liabilities fell by 50% to £6,396,115 (2022: £12,725,988) as at 30 June 2023, primarily as a result of the Loan Note B renegotiation of terms in year as detailed in note 20 of these financial statements.
The directors have been encouraged by the improvements in trading, financial strength and cash generation of the group in the months that have followed the year end and whilst the economic climate remains challenging, there are reasonable grounds to expect the financial strength of the business to continue to improve for the rest of the next financial year.
The Board has a long-term growth strategy for the business to build strategic and commercial alignment with our clients’ own business objectives to ensure long-term value creation, growth and deeper partnerships. This coupled with our ubiquitous commercial approach means that we deliver for our clients truly integrated solutions designed to expedite and enhance growth opportunities across their entire marketing operation.
The group aims to be a highly relevant growth partner to its clients by ensuring our capability is aligned with the entire customer journey and the proprietary products offered significantly enhance their growth prospects, many of these being designed to be authentic to the specific industry and sector our clients operate in. This is a key component of the agency’s strategy to grow into new sectors and will play a key role in the Boards commitment to achieving future growth both organically and by acquisition.
The Board recognises the importance of the group’s wider stakeholders when performing their duties under Section 172(1) of the Companies Act and their duties to act in the way they consider, in good faith, would be most likely to promote the success of the group for the benefit of its members as a whole and in doing so have regard (amongst other matters) to:
The likely consequences of any decisions 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 environment.
The desirability of the group maintaining a reputation for high standards of business conduct.
The need to act fairly between members of the group.
The Board considers that all their decisions are taken with the long-term in mind, understanding that these decisions need to regard the interests of the group’s employees, its relationships with suppliers, customers, the communities and the environment in which it operates.
As a Board we fulfil our duties as follows:
Group repositioning
The group’s divisional restructure, implemented in Autumn 2021, is now embedded in our operational and reporting structures and has strengthened our strategic position for years to come. More recently, we have begun to target the consolidating of our market position in a number of industry verticals outside of the residential development sector, to support the ongoing diversification of our client portfolio, whilst ensuring that our property expertise is maintained.
Employees, Community and Environment
The group recognises the huge impact that our employees make and our commitment to other important initiatives. This is described fully in the ‘Culture’ paragraph, on Page 2 of these financial statements.
Clients & suppliers
Securing and retaining clients and suppliers is another core focus. Our approach to this is explained in the ‘Client Retention’ and Economic Uncertainty paragraphs on Page 3 of these financial statements.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The results for the year are set out on page 17. No ordinary dividends were paid during the year. The directors do not recommend payment of a final dividend.
Principal risks and uncertainties
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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 principal risks and uncertainties.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We recognise the necessity that businesses contribute to reducing global emissions and we intend to play our part, by doing more than the legal minimum. We also recognise the increasing importance placed by our clients on the carbon in their supply chain, and we seek to add value for them here as we do everywhere else in our long-term partnerships with them through our business empathy and commercial alignment with them. We have therefore chosen to outperform the 2050 target set by the UK government in 2019, and we will work to make the change as swiftly as possible.
Carbon emissions are classified as Scope1, 2 or 3. Scope 1 includes direct emissions from burning fossil fuels in, for instance, a gas boiler used to heat company premises. Scope 2 is made up of indirect emissions that a company is directly responsible for, such as burning fossil fuels for the generation of electricity or emissions from public transport journeys made on company business. Scope 3 are indirect emissions the company is indirectly responsible for up and down its value chain; it tends to be much wider and could include things such as emissions from the company’s use of cloud computing or employee commuting and home working.
During the reporting period the group made significant progress on understanding its footprint, including modelling legacy emissions for each year back to 2019, improving data capture opportunities to allow for more granular reporting moving forwards, and fulfilling the SECR framework for the first time.
Emissions were up year on year, reflecting the return to more “normal” ways of working post-COVID, however the group remains committed to a series of ambitious but realistic emissions pledges, those being:
Net zero across all three scopes by 2030 on a 90/10 basis using a 2019 base year.
Operational net zero ahead of this deadline.
Supporting clients to understand the carbon intensity of their chosen media and technology partners and consequently the emissions attributable to their campaigns.
With the capacity to capture and analyse emissions data now in place, the focus for the group will shift towards roadmapping its way towards meeting these ambitious targets: engaging with staff, landlords and key suppliers to increase transparency, improve reporting and, ultimately, drive down emissions.
With COVID-19 still impacting on ways of working and with formal workplace restrictions in place for some of the period, emissions during financial year 2022 were artificially depressed, giving rise to an increase in emissions year on year. The increase seen in financial year 2023 represents the first full year with a return to more normal operating protocols concerning meeting clients in-person, in-office working, albeit on a 3/2 hybrid basis and increased travel between offices.
Off-setting some of this increase in financial year 2023 was the relocation of our London head office to premises powered by 100% renewable electricity. Additionally, this was the first full year in which we had no on-premises computer servers following our migration to cloud computing in the spring of 2022.
Utilities emissions below are presented using a market-based attribution excluding the newer London office's usage entirely and whilst reduction in usage will also be an objective, increasing the business’s use of renewable energy is intended as key means of reducing our overall emissions.
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 and 2022 UK Government’s Conversion Factors for Company Reporting.
Itemised within Scope 3 indirect emissions are commuting emissions and homeworking emissions, modelled using responses to a staff survey conducted between July and September of 2023, with the results provided by 80 respondents applied on a percentage basis to the entire workforce. Since this is the first time the data was collected, the same survey has been used to understand commuter emissions for both financial year '23 and financial year '22, with financial year '22 data adjusted further to take account of 116 days during the period where due to the prevailing COVID-19 rules of the day our offices were closed to staff other than by exception.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £m revenue, giving the group a scalable understanding of its performance on this core metric as its growth plans are realised over the coming years.
Much of the focus during the period was on the capturing of more accurate and more granular data to facilitate the creation of a roadmap for carbon reduction. For example, the introduction of new fields for miles travelled or nights stayed within the coding tool for corporate credit cards or securing regular meter readings from landlords. Progress has also been made concerning an algebraic reporting model for the upstream Scope 3 emissions of our clients' media investments.
In addition, the following energy efficiency measures have been taken:
The search for a new Edinburgh office was begun in earnest during the year and is likely to conclude during financial year 2024. The current location has an EPC rating of E+ and improving on this value is one of the core criteria for the new premises.
A step challenge was introduced, inviting staff to compete to achieve the highest step count over a month. This is planned to be repeated periodically as part of a plan to reduce commuting carbon emissions.
Engagement with the company's Cycle 2 Work scheme continued, with six loans issued during the year.
A salary sacrifice EV car scheme was introduced, with one employee taking advantage of this during the year.
We have audited the financial statements of Space & Time Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the Group Profit and Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group 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 United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, 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.
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 and 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.
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 our 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.
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:
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.
As explained more fully in the Directors' Responsibilities Statement, 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 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks 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 to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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.
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £77,591 (2022 : £862,250 profit).
Space & Time Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 2nd Floor, 2 Old Street Yard, London, EC1Y 8AF.
The group consists of Space & Time Group Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements of Space & Time Group Limited are available from 2nd Floor, 2 Old Street Yard, London, EC1Y 8AF.
The consolidated group financial statements consist of the financial statements of the parent company Space & Time Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.
The group made a loss for the year of £94,648 (2022: £985,936 ) and as at the balance sheet date had net liabilities of £1,674,943 (2022: £1,114,341).
At the time of approving the financial statements, the directors have considered the fact that the group has continued to trade profitably throughout the period since its financial year end. In addition, the group’s long-term business forecasts support the view that the group will have adequate resources to continue its operations and to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements. As a result, the directors believe it appropriate for the financial statements to be prepared on a going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Media revenue is recognised when charges are made to clients, principally when advertisements appear in the media. Fees are recognised over the period of relevant assignments or agreements.
When the outcome of the transaction can be estimated reliably, turnover from advertising space and management of media work is recognised by reference to the stage of completion at the balance sheet date. Stage of completion is measured by reference to when services are rendered. Where the outcome cannot be measured reliably, turnover is recognised to the extent of expenses recognised that are recoverable.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the company / group financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the company / group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company / group holds a long-term interest and where the company / group has significant influence. The company / group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the company financial statements, investments in associates are accounted for at cost less impairment.
At each reporting period end 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 it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or 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 (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, 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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end 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. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The fair value of equity-settled share based payments to the employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period based on the company's estimate of shares or options that will eventually vest.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following estimates have had the most significant effect on amounts recognised in the financial statements.
In the normal course of business, the company makes an estimate of the amount and volume of media costs associated with each sale when the sale is ordered as well as any related rebates under the matching principle. These costs and rebates are reviewed periodically and adjusted where necessary.
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value. See note 12 for the carrying amount of the intangible assets and 1.5 for the useful economic lives for each class of asset.
The directors have completed a review of the trade debtor balances to determine balances which are unlikely to be received and a provision has been accounted for where necessary.
The investments held by the company are reviewed annually for impairment. If there is an indication of impairment, management will impair the asset to its recoverable amount.
The Directors have considered the carrying value of intercompany debtors at the reporting date. In establishing an appropriate provision, they have considered the on-going trading and net asset position of the respective companies as well as the nature of intercompany transactions, the ability of the group to vary these to ensure full recovery and the profitability of the group as a whole.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2022 - 7).
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 June 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Details of associates at 30 June 2023 are as follows:
Registered office addresses:
1 2nd Floor, 2 Old Street Yard, London, England, EC1Y 8AF
The group's bank holds a fixed and floating charge over all assets of the group in respect of an invoice discounting facility provided to the group.
Other loans relates to loan note B which is unsecured.
Loan note B with a carrying value of £7,668,704 was issued on 2 July 2018 at a nominal interest rate of 1.5% per annum for repayment in full by 1 July 2023. The loan note was amended in the year as described below. As at the year end, fair value was £4,999,764 (2022: £5,133,970).
On 5 March 2023 the group board approved amendments to the terms of the remaining loan notes. The key changes were an extension of their redemption date to 30 June 2025 and a change to the interest rate from a fixed 1.5% to a floating 1.75% over Bank of England base rate with effect from 1 July 2023.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At year end, the amounts outstanding in respect of pension contributions payable is £31,095 (2022: £37,141).
The A, B and C ordinary shares have attached to them voting, dividend and capital distribution rights. The E ordinary shares are held by the Employee Benefit Trust and have no dividends and voting rights.
The consideration paid by the Employee Benefit Trust for shares of the company is deducted from equity. Finance costs and administrative expenses incurred by the company in relation the Employee Benefit Trust are recognised on an accruals basis.
On 15 March 2023 an amended agreement was issued regarding the loan notes held in the company. As such the previous loan note instrument extinguished on this date and a new loan note instrument existed from that date due to the terms being substantially different. Therefore the capital contribution reserve has been transferred in full to retained earnings.
The options outstanding at 30 June 2023 had an exercise price of £1, and a remaining contractual life of 5 years. The calculated charge to the Profit and Loss account in respect of the unvested options is not material and has therefore not been included in these financial statements.
In the prior year, a group company had share options which lapsed. The disclosure for these options has not been included as there were no remaining options in that company at the end of the prior year or in the current year,
Company
Certain employees from the subsidiary undertakings hold options under Enterprise Management Incentive (EMI) Share Options Scheme to subscribe for shares in the Company at prices ranging from £1 per share. If options remain unexercised after a period of 10 years from the date of grant, the options expire.
The weighted average fair value of options granted in the year was determined using the Black-Scholes option pricing model. The Black-Scholes model is considered to apply the most appropriate valuation method due to the relatively short contractual lives of the options and the requirement to exercise within a short period after the employee becomes entitled to the shares (the “vesting date”).
The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.
Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option at grant date.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
No guarantees have been given or received.
As permitted by FRS 102 Section 33 "related party disclosures", the financial statements do not disclose transactions with the immediate parent company and wholly owned fellow subsidiaries on the basis that group financial statements are prepared.
During the year, the group had sales of £138,478 (2022: £144,426) and purchases of £781,731 (2022: £742,011) with EG Media Limited, a company of which Space & Time Media Limited own 45% of the share capital. During the year, EG Media Limited declared dividends totalling £45,000 (2022: £54,000) to Space & Time Media Limited, a group company. As at 30 June 2023, the group owed a net amount of £286,407 (2022: £350,690) to EG Media Limited.
During the year, the group had sales of £110,536 (2022: £321,574) and purchases of £5,340,507 (2022: £4,924,051) with Adgenda Media International Limited, a company in which Space & Time Media Limited owns 55% of the share capital. During the year, Adgenda Media International Limited declared dividends to Space & Time Media Limited totalling £302,500 (2022: £267,000). As at 30 June 2023, the group owed a net amount of £1,855,318 (2022: £1,125,650) to Adgenda Media International Limited.
During the period, Adgenda Media International Limited paid dividends totalling £232,977 (2022: £Nil) to B Williams, a director and shareholder of Adgenda Media International Limited. As at 30 June 2023, an amount of £123,750 (2022: £Nil) was owed by Adgenda Media International Limited to B Williams.
During the year, Adgenda Media International Limited paid dividends totalling £232,977 (2022: £Nil) to T Wilson, a director and shareholder of Adgenda Media International Limited. As at 30 June 2022, an amount of £123,750 (2022: £Nil) was owed by Adgenda Media International Limited to T Wilson.
All of the above transactions were at arm's length and no amounts were provided for or written off during the year.
At the year end, P Jones was owed a loan balance of £4,999,764 (2022: £5,133,970) by the company in relation to the management buy-out in the year ending 30 June 2019. Interest was being accrued on the loan at 1.5% per annum. During the year, interest of £83,660 (2022: £132,435) was accrued for on the loan. The loan is repayable in full by 30 June 2025. P Jones is a director and shareholder of the company.
On 15 March 2023 the group board approved amendments to the terms of the remaining loan notes. The key changes were an extension of their redemption date to 30 June 2025 and a change to the interest rate from a fixed 1.5% to a floating 1.75% over Bank of England base rate with effect from 1 July 2023. These changes provided additional long-term funding to the group for the foreseeable future.
At the year end, the company was owed £42,320 (2022: £42,320) by individuals who are directors and shareholders of the company. At the year end, the group was owed £165,245 (2022: £165,245) by these individuals.
The directors do not believe that there is a single controlling party.
We have restated the prior year accounts for the reclassification of bank interest payable. The reclassification better reflects the substance of the transactions and hence provides more appropriate information for users of the financial statements.