Aeorema Communications Share Discussion Threads

[rndm355] 26/1/2016 12:46

Even a fairly weak scenario such as Ramas outlined above would permit a 5% dividend yield on today's price without hurting the company's financial strength in any way.

Obviously I will be delighted if the promise of a stronger H2 bears fruit but if the worst happens and major contract(s) are lost then cost control to protect the asset backing will be required but I do believe that Hale & the team can be trusted to do that. They pay themselves very very little in salary and own most of the shares themselves, so I think this is an unusual situation for AIM in that they are extremely well aligned with us and are responsible long-term stewards of this admittedly volatile and lumpy business.

On social media they have indicated that they have been very busy in recent months including in January, so the "risk" of a decent performance this year is still there based on available information. And you know there is also the possibility that the business might actually develop over time - the combination of all their brands and employees under one roof makes a lot of sense to me and should improve the long-term underlying value of the business.

[ramas] 26/1/2016 12:20

The facts are you are paying today about an 8p premium or £700k for a business that last year produced 350k profits, that's a pe of 2. We also know Mike Hales style is not to over promise. Let's say it's a disastrous year and we get same numbers in h2 as h1 that's still 160k pretax or almost 1.5p eps after tax which would likely be distributed as a dividend. Point I'm making as always is media is lumpy - average the last 3 years earnings assuming this year as above and its 3.5p, however it's clear sentiment will be low for the time being which is understandable from a high level view.

[rndm355] 26/1/2016 12:12

There is evidence of cost control. Gross margin increased from 48.4% to 50% and admin expenses only went up by £13k. If they've been wrong-footed by a few clients then that's actually a decent performance in my book. The compensation of key management fell considerably from already low levels, from £200k to £142k.

[the grim reaper1] 26/1/2016 11:55

Look at the facts

22 October 2015
"During the year and as part of our growth strategy, we recruited several new team members to focus on new business development and strengthen our capabilities in design and content. These appointments will each be pivotal in supporting our growth in the year ahead."

Today 3 months later

""Our strategy has been to focus on what is within our power to manage or influence and to create a resilient company that is well positioned for growth once the economy inevitably picks up again. We are therefore keeping costs down, and doing what we do best: innovate."

So he is clearly saying that in October the economy had not picked up even though they had a growth strategy? What does he mean by controlling costs? Recruit then make redundant 3 months later? Hardly "innovating" is it

No clue, clutching at straws, conflicting reports

Bargepole

[clocktower] 26/1/2016 11:21

susiebe, They are still cautious in respect of profit growth as you post, which suggests they do not expect to even meet last years lower results. Cutting costs = cutting corners, cutting staff maybe = one off costs.

I have suggested I was expecting this to fall to 20p since the last results and while I thought it had long term value I have recently started to question this also.

My portfolio has been hit this year along with the market in general but I remain in a very strong cash position fortunately.

However I now think I will be able to buy these sub 20p by the time of the next results.

[ramas] 26/1/2016 11:19

Your risk is currently 8p the rest is backed by cash and aim she'll value , remember this company will make money this year eve if it closes the door today.

[rndm355] 26/1/2016 11:17

Finally managed to get £1k in at 27.5p

[a2584728] 26/1/2016 11:15

Not for me too much risk.

[themattbarnes] 26/1/2016 11:12

£21k sold and £4.8k bought since the news. A few panic sellers shook out from stops and the drop.

No concerns here.

[rndm355] 26/1/2016 11:10

Can't get quoted anything less than 29p to buy unfortunately, anybody else had any luck? I should have been quoted around 27.5p if the prices were real.

[boffster] 26/1/2016 11:07

The nature of the business means that revenues and profits are going to fluctuate a lot from one half to the next.

[susiebe] 26/1/2016 11:03

 "Our strategy has been to focus on what is within our power to manage or influence and to create a resilient company that is well positioned for growth once the economy inevitably picks up again.  We are therefore keeping costs down, and doing what we do best: innovate.  This has been the lifeblood of the Company since its inception 20 years ago and is the reason business and industry leaders turn to us. We are pleased to be working with some new clients but existing clients have, in some cases, lowered budgets or cancelled events.  The new website is opening up opportunities and we are embracing social media as a marketing tool, with good results. We have a robust balance sheet with £1,372,589 cash in the bank and revenue generation of £1,591,114.  During the six months we achieved a pre-tax profit of £80,476.  Operational costs were £715,202. Overall, the team deserve our thanks for their achievements during a tough period.  We are encouraged both by our business opportunities and the start we have made to the current year but, given the economic environment, we remain cautious in respect of profit growth."Looking at the positives1.Keeping costs down2. Industry leaders turn to us3.New website opening up opportunities4.Working with new clients.5.Embracing social media with good results6. robust balance sheet7 Encouraged by business opportunities.Therefore very happy to buy more and very wary of posters trying to talk down the share price

[ramas] 26/1/2016 10:43

I'm going to let the sells flush through the system ... Anything close to 20p values the enterprise at zero which is plain bonkers but let's see where we get to .....

[clocktower] 26/1/2016 10:38

Maybe directors buying to support the share price - they did this last time it dropped like a bullet only for it to fall further for a time. L2 a big stronger now but for how long?

[clocktower] 26/1/2016 10:33

If sales and budgets continue to fall I doubt they will keep the dividend at the current level or even pay one if they fail to pick up events and business from older clients who are clearly cutting back from the statement they have made.

L2 looking very weak - last mm on 27p then big drop.

[themattbarnes] 26/1/2016 10:28

Looks OK to me. Trade receivables down and cash position up.Second half historically a stronger half, dividend I imagine will be inline with ly so great top up opportunity today

[ramas] 26/1/2016 10:26

Agreed disappointing but not disastrous . Profits down from 100k to 80k but appear worse due to additional 10k tax charge. Tax is what profitable businesses pay. Your 20p will place nil value to the business representing 14p cash and notional shell value of 6p ie 20p. I have revised my expectations down to 3p eps for the year and 3p dividend , so worse case a flat year and some potential upside if they win a large bid or two. Let's see where the selling takes us ....

[the grim reaper1] 26/1/2016 10:21

Run to the Hills Boys!

[clocktower] 26/1/2016 10:19

When you get a statement like this you have to be concerned:

"We are pleased to be working with some new clients but existing clients have, in some cases, lowered budgets or cancelled events."

New clients but are they smaller clients and I expect they have to provide more for less - cancelled events an lower budgets are the big warning signs imo.

[clocktower] 26/1/2016 10:06

20p here we come. Results very poor, all promises but will they bear fruit - I doubt it.

[ramas] 22/1/2016 11:29

Interestingly I was speaking to the owner of a small private business today circa £2m turnover and embarrassingly high profit margins. Similar business landscape and business is .....booming. Now it's unfair to suggest the exact same is happening at AEO but I am inclined to think it's a good indicator of a reasonable trading statement in a months time ..... Imodyor

[clocktower] 21/1/2016 12:01

ramas, I suspect there has been a realisation that it was undervalued for some time, based upon historical figures.

[ramas] 21/1/2016 11:01

Interesting buying of late .... News ahoy maybe ?