Share Name Share Symbol Market Type Share ISIN Share Description
Aeorema Communications Plc LSE:AEO London Ordinary Share GB00B4QHH456 ORD 12.5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 35.50 34.00 37.00 35.50 35.50 35.50 100 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Media 4.8 0.1 0.6 63.4 3

Aeorema Communications Plc Final Results

30/09/2019 7:00am

UK Regulatory (RNS & others)


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Aeorema Communications Plc

30 September 2019

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media

30 September 2019

Aeorema Communications plc ("Aeorema", the "Company" or the "Group")

Final Results

Aeorema Communications plc, the AIM-traded live events agency, announces its audited results for the year ended 30 June 2019. The Company's annual general meeting ("AGM") is expected to be held in mid-November and a separate announcement will be made in due course to confirm postage of the Annual Report and Accounts for the year ended 30 June 2019 and the notice of AGM to shareholders, as well as availability of the documents on the Company's website www.aeorema.com.

Financial Highlights

   --    Revenues of GBP6,765,280, a year-on-year increase of 40% (2018: GBP4,820,167) 

-- Profit before exceptional items of GBP374,399, a year-on-year increase of 29% (2018: GBP289,650)

-- GBPnil exceptional items (2018: GBP231,357) resulting in profit after tax of GBP288,323 (2018: GBP50,405)

   --    Maintained strong cash position with GBP2.2 million in the bank (as at 30 June 2019) 
   --    Proposed final dividend payment of 1p (2018: 0.75p) 

Operational Highlights

-- Aeorema reinforced its position as a market leader in the execution of creative and differentiated live events

-- Events included annual partner conferences, a leadership event and several events at Cannes Lions Festival

-- New client wins include a leading global law firm, several technology firms and an established confectionery brand

   --    Further key appointments made in the period to further enhance the Company and its offering 

The Board has agreed that Steve Quah and Andrew Harvey's titles should change from Joint Managing Directors to Chief Executive Officer and Managing Director, with immediate effect, in order to better reflect their roles within the business.

For further information visit www.aeorema.com or contact:

 
 Mike Hale                 Aeorema Communications    Tel: +44 (0) 20 7291 
                            plc                                      0444 
 John Depasquale / Liz     Allenby Capital Limited    Tel: +44 (0)20 3328 
  Kirchner                  (Nominated Adviser                       5656 
                            and Broker) 
 Gaby Jenner / Catherine   St Brides Partners        Tel: +44 (0) 20 7236 
  Leftley                   Ltd                                      1177 
 

Chairman's Statement

In the first full year under new management, I am pleased to report a strong financial performance for the financial year ended 30 June 2019. Revenue has increased 40% to GBP6,765,280 (2018: GBP4,820,167) and the Group has increased profitability reporting an operating profit pre-exceptional items of GBP374,399 representing a 29% increase on 2018 (2018: GBP289,650) and profit before taxation of GBP375,010 (2018: GBP58,685). The Group's cash position remains robust at GBP2.2 million (2018: GBP1.4 million). The profitability and the maintained cash position of the Group has led to the Board to propose a full year dividend of 1.0 pence per share (2018: 0.75 pence) to be paid to shareholders on the register on 22 November 2019. The ex-dividend date will be 21 November 2019. Subject to the proposed dividend being approved by shareholders at the forthcoming AGM, it will be paid on 16 December 2019.

The Group reinforced its strong market reputation for execution of creative and differentiated live events through the successful delivery of several noteworthy events. This includes four client projects delivered at the Cannes Lions International Festival of Creativity including a stand-out event hosted on behalf of a global business-focussed media company that attracted high praise across the event. I am also proud of the smaller scale corporate events successfully undertaken including partner meetings for a global law firm organised in the United States and an innovative, unique event hosted at the Bristol waterfront in outdoor, temporary venues. Further to this, a highly successful senior management event was completed for a new client in London operating within the technology and manufacturing sector. The Group has made additional key executive appointments during the year with a view to maintaining and expanding client relationships.

Whilst the Group has delivered an unusually high number of low profit margin events during the year, new events to be delivered in 2020 are expected to have higher gross profit margins. Despite this, the Group has delivered a highly successful and profitable year. The Group is also continuing to invest in new hires with the aim of reducing its use of freelancers.

We are pleased with the ongoing development and contributions made by our film production and experiential businesses. The Group produced a variety of award nominated films during the year which continued to showcase the Group's creativity. The Group has recently appointed a new Director of Client Partnerships, Andrew Zanelli-King, who is responsible for growing the film business. Andrew has a proven track record of helping film businesses expand at various companies and has an established network of contacts within the industry. The experiential business continues to grow with several small events delivered during the year.

Outlook

Focus remains on sustaining client relationships and effective client acquisition to ensure that a robust pipeline of business is in place. To this end, I am confident of future growth having already secured new client wins in the current financial year including a leading global law firm, a number within the technology sector and a high-profile, established confectionery brand. Another upcoming highlight is set to be the execution of an extraordinary event at MIPCOM in Cannes, an annual trade show for entertainment content, in October for a global media brand.

We continue to invest in the Group and its success through making key appointments and view this as integral to the creation of a dividend-paying, financially healthy business operating at the forefront of the industry. Committed to the continued growth of the Group, we continue to assess potentially value accretive, complementary opportunities as they are presented to the Group. To maintain a reputation for executing highly creative live events it is important that innovation remains at the core of what we do. Therefore, in line with this, we strive to remain dynamic and adaptive to changes within the industry.

It is testament to the strength of Aeorema's core business and established relationships that we have been able to successfully advance our strategy of enhancing the offering that we can provide our clients during the financial year. The notable increase in revenue and profit reported in the period validates this strategy and provides confidence for the Board as we continue to look to ways to grow and improve your Group, with margins maintained at an acceptable level.

Finally, I would like to take the opportunity to thank all employees for their hard work and commitment, as well as our shareholders for their continued support.

M Hale

Chairman

27 September 2019

Chief Executive Officer's Report

It's been another outstanding year and I am incredibly proud of what our operating business, Cheerful Twentyfirst, has achieved. Our talented and dedicated team has once again raised the bar for our wonderful clients who continue to trust us to deliver game changing live events, brand experiences and impactful on-screen content.

I look forward to fulfilling my new role as CEO, developing and delivering the overall vision of the Company. Andrew Harvey will remain in the role of Managing Director and oversee all operational elements of the business. We will both continue to play important roles in developing key accounts and winning new business, and we now have an amazing senior team that will continue to grow the business.

There have been so many highlights in the last financial year. Our reputation continues to grow at the Cannes Lions International Festival of Creativity. This year we delivered a record number of projects for our clients, including a project which was widely regarded as one of the best brand activations ever conceived and delivered in Cannes.

As part of our growth strategy I am delighted that we have taken our unique Cannes experience into MIPCOM Cannes for the first time. In October 2019 we will be delivering an unimaginable brand activation for a global media client with the world watching! It's a 3-year project which encapsulates the ambition, creativity and pure guts of our Company.

Our delivery in the world of Trade Marketing and B2B events was further enhanced this year at DMEXCO, MWC and SIBOS. With the support of our new key hires over the last 18 months we continue to expand in this exciting space and significantly add new recurring revenue streams to our business.

Once again, we continue to grow our reputation within the senior leadership conference space, and we have recently won four new clients for the year ahead within professional services, law, confectionery and tech. Although budgets remain competitive, clients are still looking for that unique creative and robust delivery that we are trusted and known for - game changing events.

We have also seen growth for the second consecutive year within our Moving Image division. Content plays such a critical role in what we do, and we are committed to growing this part of the business dramatically over the coming years. To support this ambition, we have hired Client Partnerships Director Andrew Zanelli-King, who has an enviable reputation in our industry with a fantastic track record of success and we can't wait to see the effect he has on Cheerful Twentyfirst.

All this is further underpinned by us moving up 13 places in the C&IT UKs Top 50 agency 2019 list. I look forward to building on this success in 2020.

All this would not have been achieved without our amazing team, our great clients and our committed investors - thank you.

S Quah

CEO

27 September 2019

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2019

 
                                       Notes          2019          2018 
                                                       GBP           GBP 
 
 Continuing operations 
 
   Revenue                               2       6,765,280     4,820,167 
 Cost of sales                                 (4,584,117)   (3,033,514) 
------------------------------------  ------                ------------ 
 Gross profit                                    2,181,163     1,786,653 
 Administrative expenses                       (1,806,764)   (1,497,003) 
                                      ------  ------------  ------------ 
 
   Operating profit pre-exceptional 
   items                                 3         374,399       289,650 
------------------------------------  ------                ------------ 
 Exceptional items                       4               -     (231,357) 
------------------------------------  ------                ------------ 
 Operating profit post 
  exceptional items                                374,399        58,293 
------------------------------------  ------                ------------ 
 Finance income                          5             611           392 
 Profit before taxation                            375,010        58,685 
 Taxation                                6        (86,687)       (8,280) 
                                      ------  ------------  ------------ 
 Profit and total comprehensive 
  income for the year 
  attributable to owners 
  of the parent                                    288,323        50,405 
 
   Profit per ordinary 
   share: 
 
   Total basic earnings 
   per share                              9       3.18571p      0.55693p 
 Total diluted earnings 
  per share                              9        3.14129p      0.53906p 
------------------------------------  ------                ------------ 
 

There were no other comprehensive income items.

The notes are an integral part of these financial statements.

Statement of Financial Position

As at 30 June 2019

 
                                  Notes             Group                    Company 
                                                 2019          2018        2019        2018 
                                                  GBP           GBP         GBP         GBP 
                                 ------  ------------  ------------  ----------  ---------- 
 Non-current assets 
 Intangible assets                 10         365,154       365,154           -           - 
 Property, plant and equipment     11          58,071        37,044           -           - 
 Deferred taxation                  7               -         2,254           -           - 
 Investments in subsidiaries       12               -             -     614,751     580,490 
                                         ------------  ------------  ----------  ---------- 
 Total non-current assets                     423,225       404,452     614,751     580,490 
 Current assets 
 Trade and other receivables       13       1,612,345     1,106,292     977,427     995,874 
 Cash and cash equivalents         14       2,211,161     1,437,904       3,606           - 
                                         ------------  ------------  ----------  ---------- 
 Total current assets                       3,823,506     2,544,196     981,033     995,874 
                                         ------------                ----------  ---------- 
 Total assets                               4,246,731     2,948,648   1,595,784   1,576,364 
 
 Current liabilities 
 Bank loans and overdrafts         16               -       (1,590)           -     (1,590) 
 Trade and other payables          15     (2,247,214)   (1,274,979)    (88,397)   (102,647) 
 Current tax payable                         (74,616)       (9,412)           -           - 
                                         ------------  ------------  ----------  ---------- 
 Total current liabilities                (2,321,830)   (1,285,981)    (88,397)   (104,237) 
 Non-current liabilities 
 Deferred taxation                  7         (7,529)             -           -           - 
                                         ------------  ------------  ----------  ---------- 
 Total non-current liabilities                (7,529)             -           -           - 
                                         ------------  ------------  ----------  ---------- 
 Total liabilities                        (2,329,359)             -           -           - 
 
 Net assets                                 1,917,372     1,662,667   1,507,387   1,472,127 
                                         ------------  ------------  ----------  ---------- 
 
 Equity 
 Share capital                     17       1,131,313     1,131,313   1,131,313   1,131,313 
 Share premium                                  7,063         7,063       7,063       7,063 
 Merger reserve                                16,650        16,650      16,650      16,650 
 Other reserve                                 34,261             -      34,261           - 
 Capital redemption reserve                   257,812       257,812     257,812     257,812 
 Retained earnings                            470,273       249,829      60,288      59,289 
                                         ------------  ------------  ----------  ---------- 
 Equity attributable to 
  owners of the parent                      1,917,372     1,662,667   1,507,387   1,472,127 
                                 ------  ------------  ------------  ----------  ---------- 
 

The notes are an integral part of these financial statements.

The profit for the financial year of the holding company was GBP68,878 (loss in 2018: GBP176,778).

Consolidated Statement of Changes in Equity

For the year ended 30 June 2019

 
                                                                          Capital 
                        Share                     Merger      Other    redemption    Retained 
 Group                capital   Share premium    reserve    reserve       reserve    earnings   Total equity 
                          GBP             GBP        GBP        GBP           GBP         GBP            GBP 
-----------------              --------------  ---------  ---------  ------------  ----------  ------------- 
 At 1 July 2017     1,131,313           7,063     16,650          -       257,812     244,677      1,657,515 
 
   Comprehensive 
   income for 
   the year, net 
   of tax                   -               -          -          -             -      50,405         50,405 
 Dividends paid             -               -          -          -             -    (45,253)       (45,253) 
 At 30 June 
  2018              1,131,313           7,063     16,650          -       257,812     249,829      1,662,667 
 
   Comprehensive 
   income for 
   the year, net 
   of tax                   -               -          -          -             -     288,323        288,323 
 Dividends paid             -               -          -          -             -    (67,879)       (67,879) 
 Share-based 
  payment                   -               -          -     34,261             -           -         34,261 
 At 30 June 
  2019              1,131,313           7,063     16,650     34,261       257,812     470,273      1,917,372 
----------------- 
 

Share premium represents the value of shares issued in excess of their list price.

In accordance with section 612 of the Companies Act 2006, the premium on ordinary shares issued in relation to acquisitions is recorded as a merger reserve. The reserve is not distributable.

Other reserve represents equity settled share-based employee remuneration, as detailed in note 21.

Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following redemption or purchase of a company's own shares.

The notes are an integral part of these financial statements.

Company Statement of Changes in Equity

For the year ended 30 June 2019

 
                                                                           Capital 
                        Share                     Merger       Other    redemption    Retained 
 Company              capital   Share premium    reserve     reserve       reserve    earnings   Total equity 
                          GBP             GBP        GBP         GBP           GBP         GBP            GBP 
                   ----------  --------------  ---------  ----------  ------------  ----------  ------------- 
 
 At 1 July 2017     1,131,313           7,063     16,650           -       257,812     281,320      1,694,158 
 Comprehensive 
  income for 
  the year, net 
  of tax                    -               -          -           -             -   (176,778)      (176,778) 
 
 Dividends paid             -               -          -           -             -    (45,253)       (45,253) 
 At 30 June 
  2018              1,131,313           7,063     16,650           -       257,812      59,289      1,472,127 
 
   Comprehensive 
   income for 
   the year, net 
   of tax                   -               -          -           -             -      68,878         68,878 
 
 Dividends paid             -               -          -           -             -    (67,879)       (67,879) 
 Share-based 
  payment                   -               -          -      34,261             -           -         34,261 
 At 30 June 
  2019              1,131,313           7,063     16,650      34,261       257,812      60,288      1,507,387 
 

Share premium represents the value of shares issued in excess of their list price.

In accordance with section 612 of the Companies Act 2006, the premium on ordinary shares issued in relation to acquisitions is recorded as a merger reserve. The reserve is not distributable.

Other reserve represents equity settled share-based employee remuneration, as detailed in note 21.

Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following redemption or purchase of a company's own shares.

The notes are an integral part of these financial statements.

Statement of Cash Flows

For the year ended 30 June 2019

 
                                      Notes           Group                  Company 
                                                   2019        2018        2019        2018 
                                                    GBP         GBP         GBP         GBP 
                                     ------  ----------  ----------  ----------  ---------- 
 Net cash flow from operating 
  activities                           23       890,846   (389,918)   (126,930)   (415,534) 
 
 Cash flows from investing 
  activities 
 Finance income                         5           611         392           5          17 
 Purchase of property, plant 
  and equipment                        11      (48,731)    (26,119)           -           - 
 Dividends received by the 
  Company                                             -           -     200,000           - 
 Cash (used) / generated in 
  investing activities                         (48,120)    (25,727)     200,005          17 
 
 Cash flows from financing 
  activities 
 Dividends paid to owners of 
  the Company                                  (67,879)    (45,253)    (67,879)    (45,253) 
                                             ----------  ----------  ----------  ---------- 
 Cash used in financing activities             (67,879)    (45,253)    (67,879)    (45,253) 
 
 Net increase / (decrease) 
  in cash and cash equivalents                  774,847   (460,898)       5,196   (460,770) 
 Cash and cash equivalents 
  at beginning of year                        1,436,314   1,897,212     (1,590)     459,180 
                                             ----------  ----------  ----------  ---------- 
 Cash and cash equivalents 
  at end of year                              2,211,161   1,436,314       3,606     (1,590) 
-----------------------------------          ----------  ----------  ----------  ---------- 
 

Cash and cash equivalents

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of the Statement of Financial Position amounts:

 
                              Notes           Group               Company 
                                           2019        2018    2019      2018 
                                            GBP         GBP     GBP       GBP 
                             ------  ----------  ----------  ------  -------- 
 Cash and cash equivalents     14     2,211,161   1,437,904   3,606         - 
 Bank overdraft                16             -     (1,590)       -   (1,590) 
                                      2,211,161   1,436,314   3,606   (1,590) 
--------------------------- 
 

The notes are an integral part of these financial statements.

Notes to the consolidated financial statements

For the year ended 30 June 2019

1 Accounting policies

Aeorema Communications plc is a public limited company incorporated in the United Kingdom and registered in England and Wales. The Company is domiciled in the United Kingdom and its principal place of business is Moray House, 23/31 Great Titchfield Street, London, W1W 7PA. The Company's Ordinary Shares are traded on the AIM Market.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

The presentation currency is GBP sterling.

Going concern

The Group's business activities, together with the factors likely to affect its future development and performance are set out in the review of business contained in the Chairman's Statement. The Group's financial statements show details of its financial position including, in note 24, details of its financial instruments and exposure to risk.

After reviewing the Group's budget for the next financial year, other medium term plans and considering the risks outlined in note 24, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.

Basis of preparation

The Group's financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The following new standards, amendments to standards and interpretations have been applied for the first time from 1 July 2018. Their adoption has not had a material impact on the financial statements:

   --    IFRS 9 'Financial Instruments', effective 1 January 2018; 
   --    IFRS 15 'Revenue for Contracts with Customers', effective 1 January 2018; 

-- IFRS 2 'Classification and Measurement of Share-Based Payment Transactions', effective 1 January 2018.

Future standards in place but not yet effective

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 July 2019 have been adopted early.

The following standards and amendments are not yet applied at the date of authorisation of these financial statements:

   --    IFRS  16 - Leases (effective 1 January 2019); 
   --    Annual Improvements to IFRS Standards 2015 - 2017 Cycle (effective 1 January 2019); 
   --    IAS 12 - Income taxes (effective 1 January 2019); 
   --    Definition of Material (Amendments to IAS 1 and IAS 8) (effective 1 January 2020); and 
   --    Definition of a Business (Amendments to IFRS 3) (effective 1 January 2020). 

The Group does not believe that there would have been a material impact on the financial statements from early adoption of these standards / interpretations.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2019. Subsidiaries are all entities (including structured entities) over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are consolidated until the date that control ceases.

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.

The merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006.

Revenue

Revenue represents amounts (excluding value added tax) derived from the provision of services to third party customers in the course of the Group's ordinary activities.

As a result of providing these services, the Group may from time to time receive commissions from other third parties. These commissions are included within revenue on the same basis as that arising from the contract with the underlying third party customer.

The revenue and profits recognised in any period are based on the satisfaction of performance obligations and an assessment of when control is transferred to the customer.

For most contracts with customers, there is a single distinct performance obligation and revenue is recognised when the event has taken place or control of the content or video has been transferred to the customer.

Where a contract contains more than one distinct performance obligation (multiple film productions, or a project involving both build construction and event production) revenue is recognised as each performance obligation is satisfied.

The transaction price is substantially agreed at outset of the contract, along with a project brief and payment schedule (full payment in arrears for smaller contracts; part payment(s) in advance and final payment in arrears for significant contracts).

Due to the detailed nature of project briefs agreed in advance for significant contracts, management do not consider that significant estimates or judgements are required to distinguish the performance obligation(s) within a contract.

For contracts to prepare multiple film productions, the transaction price is allocated to constituent performance obligations using an output method in line with agreements with the customer.

For other contracts with multiple performance obligations, management's judgement is required to allocate the transaction price for the contract to constituent performance obligations using an input method using detailed budgets which are prepared at outset and subsequently revised for actual costs incurred and any changes to costs expected to be incurred.

The Group does not consider any disaggregation of revenue from contracts with customers necessary to depict how the nature, amount, timing and uncertainty of the Group 's revenue and cash flows are affected by economic factors.

Where payments made are greater than the revenue recognised at the reporting date, the Group recognises deferred income (a contract liability) for this difference. Where payments made are less than the revenue recognised at the reporting date, the Group recognises accrued income (a contract asset) for this difference.

A receivable is recognised in relation to a contract for amounts invoiced, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

At each reporting date, the Group assesses whether there is any indication that accrued income assets may be impaired by assessing whether it is possible that a 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 value of an assets exceeds its recoverable amount, the asset is considered impaired and is written down to is recoverable amount.

Intangible assets - goodwill

All business combinations are accounted for by applying the acquisition method. Goodwill acquired represents the excess of the fair value of the consideration and associated costs over the fair value of the identifiable net assets acquired.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. At the date of acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory company level as the case may be, for the purpose of impairment testing and is tested at least annually for impairment. On subsequent disposal or termination of a business acquired, the profit or loss on termination is calculated after charging the carrying value of any related goodwill.

Property, plant and equipment

Property, plant and equipment is stated in the financial statements at cost less accumulated depreciation and any impairment value. Depreciation is provided to write off the cost less estimated residual value of property, plant and equipment over its expected useful life (which is reviewed at least at each financial year end), as follows:

 
  Leasehold land and buildings       Straight line over the life of the 
                                      lease (three years) 
 Fixtures, fittings and equipment   Straight line over four years 
                                   ------------------------------------ 
 

Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the year that the asset is derecognised.

Fully depreciated assets still in use are retained in the financial statements.

Impairment

The carrying amounts of the Group's assets are reviewed at each period end to determine whether there is any indication of impairment. If any such indication exists, the assets' recoverable amount is estimated. For goodwill and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each annual period end date and whenever there is an indication of impairment.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.

Operating leases

Rentals under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

The Group leases office facilities under operating leases. The lease typically runs for a period of 5 years, with a break cause in year 3. The Group is restricted from entering into any sub-lease arrangements.

Investments

Fixed asset investments are stated at cost less provision for diminution in value.

Trade and other receivables

Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any provision for impairment.

Trade and other payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

Cash and cash equivalents

Cash comprises, for the purpose of the Statement of Cash Flows, cash in hand and deposits payable on demand. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. Cash equivalents normally have a date of maturity of 3 months or less from the acquisition date.

Bank loans and overdrafts comprise amounts due on demand.

Finance income

Finance income consists of interest receivable on funds invested. It is recognised in the Statement of Comprehensive Income as it accrues.

Taxation

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; the differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets and liabilities are not discounted.

Pension costs

The Group operates a pension scheme for its employees. It also makes contributions to the private pension arrangements of certain employees. These arrangements are of the money purchase type and the amount charged to the Statement of Comprehensive Income represents the contributions payable by the Group for the period.

Financial instruments

The Group does not enter into derivative transactions and does not trade in financial instruments. Financial assets and liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provision of the instrument.

Equity

An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group's equity instruments comprise 'share capital' in the Statement of Financial Position.

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the reporting period. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the Statement of Comprehensive Income.

Share-based awards

The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.

The fair value is estimated using option pricing models and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based on the historical share price volatility for the Company. Further information is given in note 21 to the financial statements.

Exceptional items

Exceptional items are one off, material items outside the normal course of business which are not related to the Group's trading activities.

Significant judgements and estimates

The preparation of the Group's financial statements in conforming with IFRS required management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances. Information about such judgements and estimation is contained in the accounting policies and / or notes to the financial statements. There are no critical judgements that the directors have made in the process of applying the Group's accounting policies.

2 Revenue and segment information

The Group uses several factors in identifying and analysing reportable segments, including the basis of organisation, such as differences in products and geographical areas. The Board of directors, being the Chief Operating Decision Makers, have determined that for the year ending 30 June 2019 there is only a single reportable segment.

All revenue represents sales to external customers. Five customers (2018: four) are defined as major customers by revenue, contributing more than 10% of the Group revenue.

 
                                             2019        2018 
                                              GBP         GBP 
                                       ----------  ---------- 
 Customer One                           1,342,594     617,576 
 Customer Two                             951,189     886,981 
 Customer Three                           905,578           - 
 Customer Four                            794,599     493,766 
 Customer Five                            778,834           - 
                                       ----------  ---------- 
 Major customers in the current year    4,772,794   1,998,323 
                                       ---------- 
 Major customers in prior year                      1,114,846 
                                                   ---------- 
                                                    3,113,169 
                                       ----------  ---------- 
 

The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:

 
 Geographical 
  market              2019        2018     2019     2018      2019      2018        2019        2018 
                                                              Rest      Rest 
                                                            of the    of the 
                        UK          UK   Europe   Europe     World     World       Total       Total 
                       GBP         GBP      GBP      GBP       GBP       GBP         GBP         GBP 
  Revenue        6,693,163   4,774,107   61,764   31,531    10,353    14,529   6,765,280   4,820,167 
 
 
                                                2019        2018 
                                                 GBP         GBP 
---------------------------------------               ---------- 
 Revenue from contracts with customers     6,696,305   4,786,777 
 Other revenue                                68,975      33,390 
 Total revenue                             6,765,280   4,820,167 
---------------------------------------               ---------- 
 

Contract assets and liabilities from contracts with customers have been recognised as follows:

 
                       2019      2018 
                        GBP       GBP 
                             -------- 
 Deferred income    333,305    40,278 
 Accrued income     245,989   252,111 
                   --------  -------- 
 

Deferred income at the beginning of the period has been recognised as revenue during the period.

3 Operating profit

 
 Operating profit is stated after charging 
  or crediting:                                           2019        2018 
                                                           GBP         GBP 
--------------------------------------------------              ---------- 
 Cost of sales 
 Depreciation of fixtures, fittings and equipment       21,525      15,327 
 Administrative expenses 
 Depreciation of leasehold, land and building                -       5,089 
 Loss on foreign exchange differences                    9,229       6,902 
 Fees payable to the Company's auditor in respect 
  of: 
   Audit of the Company's annual accounts                6,000       7,500 
   Audit of the Company's subsidiaries                  17,000      21,000 
 Staff costs (see note 20)                           1,221,559   1,081,153 
 Operating leases - land and buildings                  91,000      91,000 
                                                    ----------  ---------- 
 

4 Exceptional items

Items that are material either because of their size or their nature, or that are non-recurring, are considered as exceptional. During the year, the Group incurred expenditure totalling GBPnil (2018: GBP231,357 in relation to the departure of its two founders, Peter Litten and Gary Fitzpatrick, from the Board of directors). This cost has been included in the consolidated Statement of Comprehensive Income as an operating exceptional cost.

5 Finance income

 
 Finance income            2019   2018 
                            GBP    GBP 
------------------------         ----- 
 Bank interest received     611    392 
------------------------         ----- 
 

6 Taxation

 
                                                          2019      2018 
                                                           GBP       GBP 
----------------------------------------------------            -------- 
 The tax charge comprises: 
 
 Current tax 
 Prior period adjustment                                 2,288   (1,739) 
 Current year                                           74,616     9,412 
                                                                -------- 
 
                                                        76,904     7,673 
 Deferred tax (see note 7) 
 Current year                                            9,783       607 
                                                                -------- 
                                                         9,783       607 
 
 Total tax charge in the statement of comprehensive 
  income                                                86,687     8,280 
 Factors affecting the tax charge for the 
  year 
 Profit on ordinary activities before taxation 
  from continuing operations                           375,010    58,685 
 Profit on ordinary activities before taxation 
  multiplied by standard rate 
 of UK corporation tax of 19% (2018: 19%)               71,252    11,150 
 Effects of: 
 Non-deductible expenses                                13,147   (1,131) 
 Prior period adjustment                                 2,288   (1,739) 
 
                                                        15,435   (2,870) 
 Total tax charge                                       86,687     8,280 
----------------------------------------------------            -------- 
 

The Group has estimated losses of GBP375,762 (2018: GBP375,762) available to carry forward against future trading profits. These losses are in Aeorema Communications plc which is not currently making taxable profits as all trading is undertaken by its subsidiary Aeorema Limited, therefore no deferred tax asset has been recognised.

7 Deferred taxation

 
                                                           2019      2018 
                                                            GBP       GBP 
-----------------------------------------------------            -------- 
 Property, plant and equipment temporary differences    (8,555)   (4,016) 
 Temporary differences                                    1,026     6,270 
                                                                 -------- 
                                                        (7,529)     2,254 
 At 1 July                                                2,254     2,861 
 Transfer to Statement of Comprehensive Income          (9,783)     (607) 
 At 30 June                                             (7,529)     2,254 
-----------------------------------------------------            -------- 
 

8 Profit attributable to members of the parent company

As permitted by section 408 of the Companies Act 2006, the parent Company's Statement of Comprehensive Income has not been included in these financial statements.

9 Earnings per ordinary share

Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used and dilutive earnings per share computations:

 
                                              2019        2018 
                                               GBP         GBP 
                                        ----------  ---------- 
 Basic earnings per share 
 Profit for the year attributable 
  to owners of the Company                 288,323      50,405 
 
 Basic weighted average number of 
  shares                                 9,050,500   9,050,500 
  Dilutive potential ordinary shares: 
   Employee share options                  127,987     300,000 
 Diluted weighted average number of 
  shares                                 9,178,487   9,350,500 
                                        ----------  ---------- 
 

10 Intangible fixed assets

 
 Group                           Goodwill 
                                      GBP 
----------------------------- 
 Cost 
 At 1 July 2017                 2,728,292 
 At 30 June 2018                2,728,292 
 At 30 June 2019                2,728,292 
 Impairment and amortisation 
 At 1 July 2017                 2,363,138 
 At 30 June 2018                2,363,138 
 At 30 June 2019                2,363,138 
 Net book value 
 At 1 July 2017                   365,154 
 At 30 June 2018                  365,154 
 At 30 June 2019                  365,154 
----------------------------- 
 

Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited.

Impairment - Aeorema Limited

Goodwill has previously been tested for impairment based on its future value in use resulting in the carrying value above. The future value was calculated on a discounted cash flow basis using the 2018-19 budgeted figures as approved by the Board of directors, extended in perpetuity to calculate the terminal value and discounted at a rate of 10%. It was assumed that future growth would be between 1.5% and 2%. Since then, the assets and liabilities of the Group relating to the goodwill have, together with the profit of the same, increased and it is unlikely that an updated calculation would result in a further impairment of goodwill. Consequently, the annual impairment test has been completed by reference to previous calculations.

11 Property, plant and equipment

 
                               Leasehold 
 Group                              land   Fixtures, fittings      Total 
                           and buildings        and equipment 
                                     GBP                  GBP        GBP 
------------------------                  ------------------- 
 Cost 
 At 1 July 2017                   58,536               95,052    153,588 
 Additions                             -               26,119     26,119 
 Disposals                             -              (2,141)    (2,141) 
 At 30 June 2018                  58,536              119,030    177,566 
 Additions                             -               48,731     48,731 
 Disposals                             -             (29,112)   (29,112) 
 At 30 June 2019                  58,536              138,649    197,185 
  Depreciation 
  At 1 July 2017                  53,447               68,800    122,247 
 Charge for the year               5,089               15,327     20,416 
 Eliminated on disposal                -              (2,141)    (2,141) 
  At 30 June 2018                 58,536               81,986    140,522 
 Charge for the year                   -               21,525     21,525 
 Eliminated on disposal                -             (22,933)   (22,933) 
  At 30 June 2019                 58,536               80,578    139,114 
 Net book value 
 At 1 July 2017                    5,089               26,252     31,341 
 At 30 June 2018                       -               37,044     37,044 
 At 30 June 2019                       -               58,071     58,071 
                          --------------  -------------------  --------- 
 

12 Non-current assets - Investments

 
 Company                                Shares in subsidiary 
                                                         GBP 
                                       --------------------- 
 Cost 
 At 1 July 2017                                    3,274,703 
 At 30 June 2018                                   3,274,703 
  Increase in respect of share-based 
   payments                                           34,261 
 At 30 June 2019                                   3,308,964 
 Provision 
 At 1 July 2017                                    2,694,213 
 At 30 June 2018                                   2,694,213 
 At 30 June 2019                                   2,694,213 
 Net book value 
 At 1 July 2017                                      580,490 
 At 30 June 2018                                     580,490 
 At 30 June 2019                                     614,751 
                                       --------------------- 
 

Holdings of more than 20%

The Company holds more than 20% of the share capital of the following companies:

 
                                                      Shares 
 Subsidiary undertakings          Country of           held 
                                  registration 
                                                     ----------  ---- 
                                  or incorporation    Class         % 
                                 ------------------  ----------  ---- 
                                  England and 
 Aeorema Limited                   Wales              Ordinary    100 
                                  England and 
 Twentyfirst Limited (Dormant)     Wales              Ordinary    100 
                                 ------------------  ----------  ---- 
 

The registered address of Aeorema Limited and Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB.

13 Trade and other receivables

 
                                           Group                Company 
                                        2019        2018      2019      2018 
                                         GBP         GBP       GBP       GBP 
                                              ----------            -------- 
 Trade receivables                 1,156,689     693,725         -         - 
 Related party receivables                 -           -   960,063   981,850 
 Other receivables                    38,280      25,870     4,910     4,718 
 Prepayments and accrued income      417,376     386,697    12,454     9,306 
                                   1,612,345   1,106,292   977,427   995,874 
                                  ----------  ----------            -------- 
 

All trade and other receivables are expected to be recovered within 12 months of the end of the reporting period. The fair value of trade and other receivables is the same as the carrying values shown above.

At the year end, trade receivables of GBP32,616 (2018: GBP34,324) were past due but not impaired. These relate to a number of customers for whom there is no significant change in credit quality and the amounts are still considered recoverable. The ageing of these trade receivables is as follows

 
                                   Group 
                                2019     2018 
                                 GBP      GBP 
                                      ------- 
 Less than 90 days overdue     9,339        - 
 More than 90 days overdue    23,277   34,324 
                              32,616   34,324 
                             -------  ------- 
 

14 Cash at bank and in hand

 
                          Group             Company 
                       2019        2018    2019   2018 
                        GBP         GBP     GBP    GBP 
                             ----------          ----- 
 Bank balances    2,211,161   1,437,904   3,606      - 
                  2,211,161   1,437,904   3,606      - 
                 ----------  ----------          ----- 
 

15 Trade and other payables

 
                                         Group               Company 
                                      2019        2018     2019      2018 
                                       GBP         GBP      GBP       GBP 
------------------------------              ----------           -------- 
 Trade payables                  1,258,646     736,442    7,043    13,257 
 Related party payables                  -           -   67,355    67,355 
 Taxes and social security 
  costs                            388,869     220,825        -         - 
 Other payables                     59,677       1,541        -         - 
 Accruals and deferred income      540,022     316,171   13,999    22,035 
                                 2,247,214   1,274,979   88,397   102,647 
------------------------------              ----------           -------- 
 

All trade and other payables are expected to be settled within 12 months of the end of the reporting period. The fair value of trade and other payables is the same as the carrying values shown above.

16 Loans

An analysis of the maturity of loans is given below:

 
                                   Group         Company 
                                2019    2018   2019    2018 
                                 GBP     GBP    GBP     GBP 
----------------------------          ------         ------ 
 Amounts falling due within 
  one year or on demand: 
 Bank overdrafts                   -   1,590      -   1,590 
                                   -   1,590      -   1,590 
                                      ------         ------ 
 

17 Share capital

 
                                       2019              2018 
                                        GBP               GBP 
-------------------------------              ---------------- 
 Authorised 
 28,000,000 Ordinary shares 
  of 12.5p each                   3,500,000         3,500,000 
 
 
 Allotted, called up and fully 
  paid                               Number   Ordinary shares 
                                                          GBP 
-------------------------------              ---------------- 
 At 1 July 2017                   9,050,500         1,131,313 
 At 30 June 2018                  9,050,500         1,131,313 
 At 30 June 2019                  9,050,500         1,131,313 
-------------------------------              ---------------- 
 

Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the company.

See note 21 for details of share options outstanding.

18 Financial commitments

Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:

 
 Group                          Land and Buildings       Other 
                                   2019        2018    2019   2018 
                                    GBP         GBP     GBP    GBP 
 Not later than one year         15,167      91,000     987      - 
 Later than one year and 
  not later than five years           -      15,167   4,111      - 
 Total                           15,167     106,167   5,098      - 
----------------------------             ----------  ------  ----- 
 

19 Directors' emoluments

 
                       Salary,         Salary, 
                         fees,           fees, 
                       bonuses         bonuses                         Compensation   Compensation 
                  and benefits    and benefits                             for loss       for loss 
                       in kind         in kind   Pensions   Pensions      of office      of office     Total     Total 
                          2019            2018       2019       2018           2019           2018      2019      2018 
                           GBP             GBP        GBP        GBP            GBP            GBP       GBP       GBP 
                --------------  --------------  ---------  ---------  -------------  -------------  --------  -------- 
 P Litten*                   -          12,167          -     33,590              -         70,000         -   115,757 
 G 
  Fitzpatrick*               -           8,111          -     17,019              -         50,000         -    75,130 
 M Hale                 20,000          25,000          -          -              -              -    20,000    25,000 
 S Haffner              15,000          15,000          -          -              -              -    15,000    15,000 
 R Owen                 20,000          25,000          -          -              -              -    20,000    25,000 
 S Quah                122,004         100,000        925        493              -              -   122,929   100,493 
 A Harvey               91,352          80,625      1,533        665              -              -    92,885    81,290 
                       268,356         265,903      2,458     51,767              -        120,000   270,814   437,670 
                --------------  --------------  ---------  ---------  -------------  -------------  --------  -------- 
 

The remuneration of directors of the Company is set out below.

* Resigned as directors 13 September 2017

The share options held by directors who served during the year are summarised below:

 
                                            Exercise   Earliest exercise 
 Name         Grant date   Number awarded      price                date   Expiry date 
 
                25 April                                                      24 April 
 S Quah             2013          300,000     16.50p       25 April 2016          2023 
 
               22 August                                     17 November     22 August 
 S Quah             2018          300,000     29.00p                2020          2028 
 
               22 August                                     17 November     22 August 
 A Harvey           2018          300,000     29.00p                2020          2028 
            ------------  ---------------  ---------  ------------------  ------------ 
 

Fees for S Haffner are charged by Harris & Trotter LLP, a firm in which he is a member (see note 22).

20 Employee information

The average monthly number of employees (including directors) employed by the Group during the year was:

 
  Number of employees                       Group                      Company 
                                  2019 Number   2018 Number   2019 Number   2018 Number 
 
 Administration and production             21            18             5             7 
                                 ------------  ------------                ------------ 
 

The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:

 
 Employment costs                 Group               Company 
                               2019        2018     2019     2018 
                                GBP         GBP      GBP      GBP 
                                     ----------           ------- 
 Wages and salaries       1,068,710     922,969   55,000   65,000 
 Social security costs      105,471     101,250        -        - 
 Pension costs               13,117      56,934        -        - 
 Share-based payments        34,261           -        -        - 
                          1,221,559   1,081,153   55,000   65,000 
                         ----------  ----------           ------- 
 

21 Share-based payments

The Group operates an EMI share option scheme for key employees. Options are granted to key employees at an exercise price equal to the market price of the Company's shares at the date of grant. Options are exercisable from the third anniversary of the date of grant and lapse if they remain unexercised at the tenth anniversary or upon cessation of employment. The following option arrangements exist over the Company's shares:

 
 Date of      Exercise                                     Number of       Number of 
  grant          price         Exercise period          options 2019    options 2018 
                                 From             To 
             ---------  -------------  -------------  --------------  -------------- 
 25 April                    25 April       24 April 
  2013           16.5p           2016           2023         300,000         300,000 
 22 August                17 November      22 August 
  2018           29.0p           2020           2028         600,000               - 
 14 June 
  2019           26.0p   14 June 2022   14 June 2029         120,000               - 
                                                           1,020,000         300,000 
             ---------  -------------  -------------  --------------  -------------- 
 

Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:

 
                                                                                 Weighted 
                             Number of   Weighted average   Number of    average exercise 
                               options     exercise price     options               price 
                                  2019               2019        2018                2018 
                                                      GBP                             GBP 
                            ----------  -----------------  ----------  ------------------ 
 Outstanding at beginning 
  of the year                  300,000               0.17     300,000                0.17 
 Granted during the 
  year                         720,000               0.29           -                   - 
 Outstanding at end 
  of the year                1,020,000               0.25     300,000                0.17 
                            ----------  -----------------  ----------  ------------------ 
 Exercisable at the 
  end of the year              300,000               0.17     300,000                0.17 
                            ----------  -----------------  ----------  ------------------ 
 

The exercise price of options outstanding at the year-end was GBP0.250 (2018: GBP0.165) and their weighted average contractual life was 7.6 years (2018: 4.8 years). In 2019, options were granted on 22 August 2018 and 14 June 2019. The aggregate of the estimated fair values of the options granted on those dates is GBP104,041.

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value as determined at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. The estimated fair value of the options is measured using an option pricing model. The inputs into the model are as follows:

 
 Grant date                   25 April 2013 
 Model used                   Black-Scholes 
 Share price at grant date    16.5p 
 Exercise price               16.5p 
 Contractual life             10 years 
 Risk free rate               0.5% 
 Expected volatility          104% 
 Expected dividend rate       0% 
 Fair value option            14.889p 
                             -------------- 
 
 
                              22 August 
 Grant date                    2018 
 Model used                   Black-Scholes 
 Share price at grant date    29.0p 
 Exercise price               29.0p 
 Contractual life             10 years 
 Risk free rate               0.75% 
 Expected volatility          40.33% 
 Expected dividend rate       0% 
 Fair value option            14.800p 
                             -------------- 
 
 
 Grant date                   14 June 2019 
 Model used                   Black-Scholes 
 Share price at grant date    26.0p 
 Exercise price               26.0p 
 Contractual life             10 years 
 Risk free rate               0.75% 
 Expected volatility          40.33% 
 Expected dividend rate       0% 
 Fair value option            12.894p 
                             -------------- 
 

The expected volatility is determined by calculating the historical volatility of the Company's share price over the last three years. The risk free rate is the official Bank of England base rate.

The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based payment plans:

 
                                2019   2018 
                                 GBP    GBP 
---------------------------           ----- 
 Share-based payment charge   34,261      - 
---------------------------           ----- 
 

22 Related party transactions

The Group has a related party relationship with its subsidiaries and its key management personnel (including directors). Details of transactions between the Company and its subsidiaries are as follows:

 
                                         2019      2018 
                                          GBP       GBP 
-----------------------------------            -------- 
 Amounts owed by subsidiaries 
 Total amount owed by subsidiaries    960,063   981,850 
 Amounts owed to subsidiaries 
 Total amount owed to subsidiaries     67,355    67,355 
                                     --------  -------- 
 

The company received dividends during the year of GBP200,000 (2018: GBPnil) from its subsidiary, Aeorema Limited. The company transferred a VAT receivable of GBP22,810 (2018: GBP15,155) to Aeorema Limited due to being part of a common VAT group.

Aeorema Limited transferred a net amount of expenses to Aeorema Communications plc during the year of GBP40,000 (2018: GBP58,050).

Aeorema Limited paid expenses totalling GBP121,718 (2018: GBP132,203) on behalf of Aeorema Communications plc during the year.

During the year, Aeorema Limited made a net transfer of cash of GBP82,879 to Aeorema Communications plc (2018: GBP413,911 from Aeorema Communications plc to Aeorema Limited).

The compensation of key management (including directors) of the Group is as follows:

 
                                    2019      2018 
                                     GBP       GBP 
------------------------------            -------- 
 Short-term employee benefits    294,997   309,786 
 Post-employment benefits          2,458    51,767 
 Termination benefits                  -   120,000 
                                 297,455   481,553 
                                --------  -------- 
 

The share options held by directors of the Company are disclosed in note 19. During the year, a charge of GBP33,761 (2018: GBPnil) was recognised in the Consolidated Statement of Comprehensive Income in respect of these share options.

Harris and Trotter LLP is a firm in which S Haffner is a member. The amounts charged to the Group for professional services is as follows:

 
  Harris and Trotter LLP - charged during 
   the year                                    2019     2018 
                                                GBP      GBP 
 Aeorema Communications plc                  15,000   15,000 
 Aeorema Limited                             11,850   25,995 
                                             26,850   40,995 
------------------------------------------           ------- 
 

At the year end, the Group had an outstanding trade payable balance to Harris and Trotter LLP of GBP4,500 (2018: GBP6,174).

23 Cash flows

 
                                           Group                  Company 
                                        2019        2018        2019        2018 
                                         GBP         GBP         GBP         GBP 
                                  ----------  ----------  ----------  ---------- 
 Cash flows from operating 
  activities 
 Profit before taxation              375,010      58,685      68,878   (176,778) 
 Depreciation                         21,525      20,416           -           - 
 Dividends received by the 
  Company                                  -           -   (200,000)           - 
 Loss on disposal of fixed 
  assets                               6,179           -           -           - 
 Share-based payment expense          34,261           -           -           - 
 Finance income                        (611)       (392)         (5)        (17) 
                                     436,364      78,709   (131,127)   (176,795) 
 Increase / (decrease) in trade 
  and other payables                 972,235   (340,624)    (14,250)       8,474 
 (Increase) / decrease in trade 
  and other receivables            (506,053)    (98,700)      18,447   (247,213) 
 Taxation paid                      (11,700)    (29,303)           -           - 
 Cash generated / (used) from 
  operating activities               890,846   (389,918)   (126,930)   (415,534) 
--------------------------------              ----------  ----------  ---------- 
 

24 Financial instruments

Financial instruments recognised in the consolidated statement of financial position

All financial instruments are recognised initially at their fair value and subsequently measured at amortised cost.

 
                                        Group                  Company 
                                     2019        2018        2019        2018 
                                      GBP         GBP         GBP         GBP 
                               ----------              ----------  ---------- 
 Financial Assets 
 Trade and other receivables    1,487,328     987,811     960,063     981,850 
 Cash and cash equivalents      2,211,161   1,437,904       3,606           - 
 Investments in subsidiaries            -           -     614,751     580,490 
 Total                          3,698,489   2,425,715   1,578,420   1,562,340 
 Financial Liabilities 
 Trade and other payables       1,318,322     779,851      74,398      82,202 
 Accruals                         206,716     275,893      13,999      22,035 
 Total                          1,525,038   1,055,744      88,397     104,237 
                               ----------  ----------  ----------  ---------- 
 

The Group is exposed to risks that arise from its use of financial instruments. There have been no significant changes in the Group's exposure to financial instrument risk, its objectives, policies and processes for managing those from previous periods. The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables, cash and cash equivalents and trade and other payables.

Credit risk

Credit risk arises principally from the Group's trade receivables. It is the risk that the counterparty fails to discharge its obligation in respect of the instrument. The maximum exposure to credit risk at 30 June 2019 was GBP1,156,689 (2018: GBP693,725). Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. At the year end, the credit quality of trade receivables is considered to be satisfactory.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to meet its liabilities when they fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid resources to meets its obligations of GBP1,988,522 (2018: GBP1,244,113).

Market risk

Market risk arises from the Group's use of interest bearing financial instruments. It is the risk that the fair value of future cash flows of a financial instrument will fluctuate. At the year end, the cash and cash equivalents of the Group net of bank overdrafts was GBP2,211,161 (2018: GBP1,436,314). The Group ensures that its cash deposits earn interest at a reasonable rate.

Capital risk

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern while maximising the return to stakeholders. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity. At the year end, total equity was GBP1,917,372 (2018: GBP1,662,667).

25 Pension costs defined contribution

The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were GBP13,117 (2018: GBP56,934). At the end of the reporting period GBP1,605 (2018: GBPnil) of contributions were due in respect of the period.

26 Dividends

On the 11 January 2019 a final dividend of 0.75 pence per share (total dividend GBP67,879) was paid to holders of fully paid ordinary shares.

In respect of the current year, the directors propose that a final dividend of 1 pence per share be paid to shareholders on 16 December 2019. The dividends are subject to approval by shareholders at the Annual General Meeting and have not been included as liabilities in these consolidated financial statements. The proposed dividends are payable to all shareholders on the Register of Members on 22 November 2019. The total estimated dividend to be paid is GBP90,505. The payment of this dividend will not have any tax consequences for the Group.

27 Contingent liability

Company

The Company is a member of a group VAT registration with all other companies in the Aeorema Communications group and, under the terms of the registration, is jointly and severally liable for the VAT payable by all members of the group. At 30 June 2019 the Company had no potential liability under the terms of the registration.

28 Control

There is no overall controlling party.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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September 30, 2019 02:00 ET (06:00 GMT)

1 Year Aeorema Communications Chart

1 Year Aeorema Communications Chart

1 Month Aeorema Communications Chart

1 Month Aeorema Communications Chart
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