A Scottish shopping mall space marketing business is set for a hefty loss in its full year accounts for 2020.
Glasgow-based SpaceandPeople said in a trading update ahead of its results for the year ended December 31 that trading in the second half of last year “remained extremely challenging” amid a wave of lockdowns.
The promotional and pop-up retail space provider's news sent shares down 17 per cent in early trading.
It said in its statement to the London Stock Exchange the continued closure of venues led to the group having to credit and refund a significant amount of revenue that had already been recognised in previous years, and which would not ordinarily have been refundable had it not been for the "unprecedented closure of venues due to Covid".
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This also led to the need for "substantial credits" related to revenue recognised for bookings that were anticipated to continue past the year end date, it said.
It prompted the company to overhaul its revenue recognition policy in relation to promotional bookings, so that revenue will now only be recognised in the period in which the activity related to the booking takes place.
Previously, promotional revenue was recognised at the point at which a booking was contracted.
The company said the change brings the policy for promotional bookings in line with the revenue recognition policy applied by the retail segments of the group.
The unaudited consolidated loss before tax for the year is expected to be around £2.5 million, against a profit of £100,000 in 2019, under the revised revenue recognition policy.
The firm said the change had the effect of reducing the loss before taxation by £600,000, because of the exclusion of post year end revenue being “more than offset” by the corresponding adjustment made to include bookings that had previously been recognised in the prior year.
The Aim-listed firm's shares closed at 9.25p, down 7.5%.
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