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| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 0.80% | 63.00 | 61.00 | 65.00 | 63.00 | 62.50 | 62.50 | 66,612 | 13:01:42 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Television Broadcast Station | 20.23M | 757k | 0.0794 | 7.93 | 6.01M |
From Apr 2022 to Apr 2024
TIDMAEO
RNS Number : 2206G
Aeorema Communications Plc
14 November 2022
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
14 November 2022
Aeorema Communications plc ('Aeorema' or 'the Company' or 'the Group')
Final Results
Aeorema Communications plc, a leading strategic communications group based in London, New York City and Amsterdam, is pleased to announce its audited results for the year ended 30 June 2022, a period in which record revenue and profits have been reported.
Highlights
-- Record operational and financial performance:
o Revenue up 140% to GBP12.2 million (2021: GBP5.09m)
o Profit before tax of GBP843,564 (2021: loss of GBP159,698)
-- Adapting and developing of the Group's service offering to become an integrated agency with a bespoke event offering spanning live, virtual, and hybrid experiences, resulting in an incredibly flexible business model
-- Demand for live events returning, with the addition of lucrative consultancy services, including a sustainability consultancy offering going forward
-- New office in Amsterdam opened to support the global growth strategy, adding to the Group's current offices in London and New York
-- Loyal, international blue-chip client base, spanning a broad range of sectors where we are seeing commitment to increasing numbers of longer-term contracts
-- A number of significant award wins during the period and post-period end including Global Agency of the Year at the C&IT Awards
Hot Features
Premium
-- Strong cash balance of GBP1.7 million
-- Dividend policy reinstated with proposed final dividend payment of 2p per share
For further information visit www.aeorema.com or contact:
Aeorema Communications
Andrew Harvey plc +44 (0)20 7291 0444
John Depasquale/F reddie
Wooding (Corporate Finance) Allenby Capital Limited
Kelly Gardiner (Nominated Adviser
(Sales and Corporate Broking) and Broker) +44 (0)20 3328 5656
Catherine Leftley/Charlotte St Brides Partners info@stbridespartners.co.uk
Page Ltd (Financial PR)
Chairman's Statement
The year under review has proved to be a record period for Aeorema and I am delighted to report on our best ever financial performance, which includes a 140% increase in revenue and an impressive swing back to profitability. This is an incredible achievement and is arguably all the more impressive given the global backdrop during the period. This milestone achievement is testament to the skill set of our team, who have adapted and developed our service offering to become an integrated agency, reflecting evolving market demands and underpinning the innovative nature of our business.
Whilst our Company initially grew as providers of immersive, live event experiences, global changes motivated our team to find new ways to operate and help our clients engage and communicate with their target audiences. As an integrated agency, our bespoke event offering spans live, virtual, and hybrid experiences. That said, it is encouraging to have seen a significant return to the demand for live events, a trend which we anticipate will continue. We have also leveraged the significant knowledge and experience of our team in providing high level consultancy services, which help clients maximise and deliver on their communication strategies, and we continue to identify new ways to support our clients. A critical sustainability consulting offering will be a key focus moving forward. As a result, we now have an incredibly flexible business model, with clear value and proven resilience.
Importantly, the diversification of our business has helped support a loyal, international blue-chip client base, spanning a broad range of sectors, including finance, professional services, advertising, IT, gaming, fashion, fintech, and beverages, where we are seeing commitment to increasing numbers of longer-term contracts. In support of this and our global growth strategy, post period end we were delighted to open a new office in Amsterdam, adding to our current offices in London and New York. We are already realising the benefits of this increased global footprint and will continue to seek additional growth opportunities to continue to build our global market position and service offering.
During the period we were delighted to welcome Hannah Luffman to the board as a Non-Executive Director of the Company, making her one of the youngest ever females to join a listed company board of directors in the UK. With over 15 years' commercial and strategic marketing experience working with a number of large and blue-chip companies such as Google UK, InterContinental Hotels Group, Boots and Soap&Glory, Hannah brings a wealth of industry knowledge and contacts, which is already proving beneficial as we look to raise the profile for Aeorema's global network, with a particular focus on North America.
Whilst we are naturally delighted to have welcomed many new clients during the period, we are also honoured to continue to be working with many regularly returning customers. This, I believe, highlights the quality of our offering.
Looking ahead, we remain confident in our strengthened market position, with a strong pipeline of event activity that sees us solidly into 2023. Our diverse service offering, combined with an expanded geographical operating presence, means we are poised to continue a positive growth trajectory.
We have a robust cash position at the date of this announcement of GBP1.9million. I am also delighted to confirm that we will be returning to paying a dividend for the year, reflecting the growth we have experienced and the confidence we have for the future. The dividend declared is 2 pence per share (last declared dividend 2019: 1 pence per share), which will be paid to shareholders on the register on 23 December 2022. The ex-dividend date will be 22 December 2022. Subject to the proposed dividend being approved by shareholders at the forthcoming Annual General Meeting, it will be paid on 20 January 2023.
Finally, I would like to extend my sincere thanks to our shareholders for their continued support and vision. We look forward to the growth opportunities ahead and are committed to delivering on these for the benefit of all.
Mike Hale
Chairman
11 November 2022
Chief Executive Officer's Report
We have had an exceptional year. Our exemplary creative and strategic insight, consistent high quality of work and commercial agility means I am incredibly proud to be reporting on the most successful year to date for Aeorema, both operationally and financially.
Excitingly, our shift to an integrated agency model and client partnership approach has opened up opportunities to work on long-term communications strategies over multiple event and film touchpoints. We continue to see significant growth in our strategic consultancy offering, which has opened new revenue streams within our business and introduced new skill sets into our teams. Evolving our revenue streams to meet the growing needs of our clients is a continued focus in our five-year strategy for global expansion.
We are already seeing the strength of our increasing global reach, working with leading brands on annual communications campaigns that span multiple regions and with delivery in multiple markets. We opened our office in New York in September 2020 to support our global client base and with a US foothold, our ambitions now turn to developing and growing this presence significantly. This is a key focus for the group and will require continued investment; thanks to our strong balance sheet we are in a good position to make strategic decisions when opportunities arise.
Looking to EMEA, we already have a strong presence thanks to our headquarters in London. After increased demand and activity in continental Europe, we were delighted to establish a new office in Amsterdam post period end in August 2022. We are naturally keen to maximise the business opportunities available to us and this Amsterdam office provides us with an increased operational presence and expanded team to better meet the growing demands of our European client base, whilst also targeting new business opportunities. The new office also underpins our commitment to minimising our environmental impact by enabling us to deliver projects through local teams and equipment, in line with our 2022 Corporate Social Responsibility programme.
Balancing people, planet and profit continues to be a focus across our business. We felt it was crucial to be an early adopter and to establish a formal structure and approach around emissions measurement, especially as environmental targets become an increasingly high priority both globally and for our clients. In April 2022, we launched our client carbon measurement programme which includes advance impact forecasting and actual emissions reporting, supported by sustainability consultancy to guide reduction, mitigation and offsetting of our carbon footprint. We're pleased to say training for this programme has now been fully implemented internally, with measurement complete on multiple client projects. We have also been thrilled to appoint a Sustainability Director to oversee our continued work in understanding and implementing sustainable best practice, alongside increasing momentum behind sustainable event practice in the industry. We continue to be viewed as an industry leader in this space.
Our experience and vocal industry presence across sustainability, leadership, innovation and creativity has strengthened our industry reputation as thought-leaders. We've quickly become an agency-to-watch and it's a momentum we plan to nurture.
I am pleased to report a number of significant award wins during the period and post-period end. Most recently, this included winning Global Agency of the Year at the C&IT Awards, as well as Creative Team of the Year for four consecutive years at the Conference News Awards, the biggest annual gathering and celebration of event management agencies in the UK. These exemplary accolades come alongside a handful of wins across our delivery disciplines, including winning 'Best Corporate Film' at the Campaign and PR Week Brand Film Awards, which is dubbed the most prestigious awards ceremony for the UK PR industry.
These award wins give rightful credit to the incredible skill set of our team, which we continue to invest in as we continue to build our business. These investments, among others in global operations, process, and office spaces, come at a pivotal time to set up the agency for further growth and success in the future, and have been a fruitful exercise in retaining (and recruiting) the industry's best talent.
Eventful Limited ('Eventful'), our venue sourcing and incentive travel agency, is showing promising results and optimism for growth in the next twelve months. Following the inevitable impact of restrictions during 2020/21, I am pleased to share that bookings have more than matched historic numbers, with a record pipeline in place for 22/23, and I am cautiously confident that Eventful will see a return to profitability.
Despite the continued global economic and political uncertainty, we remain confident in the opportunities ahead. We have proven the strength and value of our business and have a clear strategy in place to continue our upward growth trajectory as we take advantage of our enhanced global presence and strengthened team. Alongside this organic growth, we will continue to assess additional strategic growth opportunities that could materially enhance our business offering and build our market reach. With this incredibly strong financial performance and a growing blue-chip client base we are ideally positioned to further build our business.
My deepest thank you to our team, our clients and our shareholders for your continued support and I look forward to continuing Aeorema's journey with you as we build on this exciting phase of growth.
Steve Quah
CEO
11 November 2022
Strategic Report
The Board presents its Strategic Report on the Group for the year ended 30 June 2022.
Principal activities
Aeorema Communications plc does not trade but incurs professional fees associated with its listing on the London Stock Exchange. Aeorema Limited (trading as Cheerful Twentyfirst) and Cheerful Twentyfirst, Inc. are live events agencies with film capabilities that specialise in devising and delivering corporate communication solutions. Eventful Limited is a consultative, high-touch service, assisting clients with venue sourcing, event management and incentive travel.
Business review
The results for the year show revenue was GBP12,207,253 (2021: GBP5,094,518), operating profit pre-exceptional items was GBP871,176 (2021: GBP188,105 loss) and profit before taxation was GBP843,564 (2021: GBP159,698 loss).
The Group had net assets of GBP2,253,564 at the year-end (2021: GBP1,514,980) and net current assets of GBP1,466,109 (2021: GBP1,019,047).
The year ended 30 June 2022 was a very successful year, with the Group achieving its highest revenue and profits before taxation in its history. The year, although still partially affected by the COVID-19 pandemic, witnessed the return of in-person events, especially in the second half of the financial year with the return of The Cannes Lions International Festival of Creativity. The Group experienced high growth with its two largest existing clients (refer to note 2) and won new business with a range of clients operating in sectors such as fintech, media and technology.
The significant growth during the year from both new and existing clients meant the Group employed on average 18 more employees compared with the previous year. These hires included roles essential to ensure the Group continued to successfully deliver high quality events. The Group also hired a new strategic director and additional account directors to support existing and new client accounts. These hires form part of the Group's strategic focus on growing both existing and new client accounts through the provision of more strategic and creative content services, rather than focusing solely on event production services. This shift in focus has not only allowed the Group to bill more time, and as a consequence improve gross profit margins, up from 23% in 2021 to 25% in 2022, but also grow client accounts as the Group becomes more involved in the clients' decision making processes. This has allowed the Group to deliver more and larger events and moving image projects.
Eventful Limited was significantly affected by the impact of the COVID-19 pandemic and continued to encounter difficulties caused by the pandemic in the first half of the year. However, the Company experienced an uplift in demand during the second half of the financial year as in-person events made a return and the Company delivered its first incentive travel events for new clients.
Cheerful Twentyfirst, Inc. experienced a very strong year. The Company built upon its successful first year of trading, growing existing client accounts and winning several new clients operating in sectors such as technology and media.
Looking ahead, the Group has not experienced any difficulties associated with the war in Ukraine, cost of living crisis or political uncertainties in the UK. However, the Board remain acutely aware of the economic difficulties faced both in the UK and globally, and continue to evaluate the investment plans, resourcing and future forecasts on a daily basis.
Key performance indicators
Year 2022 2021 2020 2019
GBP GBP GBP GBP
----------- ---------- ---------- ----------
Revenue 12,207,253 5,094,518 5,475,425 6,765,280
----------- ---------- ---------- ----------
Operating profit / (loss)
pre-exceptional items 871,176 (188,105) (175,043) 384,483
----------- ---------- ---------- ----------
Profit / (loss) before
taxation 843,564 (159,698) (217,924) 382,244
----------- ---------- ---------- ----------
The Group experienced a 140% increase in revenue during the year.
Event revenue increased by 160% in comparison with the previous year. This increase was due in large part to two factors. Firstly, as previously explained, the Group has shifted towards a client account model with greater emphasis on building existing and new client accounts, compared with a project by project model used in previous years. This has allowed the Group to develop client relationships and grow the number and size of events delivered. Secondly, the return of in-person events during the year, especially in the Group's historically busiest month of June. The Group delivered its most ever events at The Cannes Lions International Festival of Creativity. In the previous couple of years, Cannes Lions has been cancelled as a consequence of the COVID-19 pandemic.
Film revenue grew by 52% in comparison with the previous year. This growth was partly a consequence of the significant growth in events delivered during the year and the demand for films and motion graphics on these events. The moving image department also experienced high growth on solely moving image projects. The Group delivered several large moving image projects for new clients during the year, including clients introduced by Eventful Limited.
Eventful Limited experienced a 1110% increase in revenue during the year, compared with the previous year. The company was hugely affected by the COVID-19 pandemic, but, as demand for in-person events and incentive travel returned the company experienced significant growth in client enquiries.
Cash ows
Net cash inflow from operating activities was GBP921,695 compared with a net cash outflow of GBP708,814 for the year ended 30 June 2021. The cash position increased by GBP612,704 to GBP1,714,417 (2021: GBP1,101,713).
Capital expenditure
Total capital expenditure, including expenditure on tangible assets, was GBP179,475 compared with GBP59,179 for the year ended 30 June 2021.
Employees
Our priority is to attract and retain talented employees and to harness their creativity to drive growth through development and delivery of services that bring value to our customers' business operations.
We continue to focus on ensuring that the performance of staff is measured against clear, business focused objectives and behavioural criteria through continual appraisals.
Reward
The Group benchmarks employee salaries against the market and reviews salaries annually to ensure that we are paying at a level to attract and retain high-quality employees.
Key employees are offered access to a share option scheme, further details of which are provided in note 25 to the financial statements.
Equal opportunities
We are committed to ensuring equal opportunities for our staff. We have introduced training which covers equal opportunities legislation and best practice. Our policy in respect of employment of disabled persons is the same as that relating to all other employees in matters of training, career development and promotion. Should employees become disabled during the course of their employment, we will make every effort to make reasonable adjustments to their working environment to enable their continued employment.
Safety, health and environment
The commitment and participation of all employees is vital to efficient and effective occupational risk control. In order to meet our responsibility to protect the environment, staff and the business, the Group continues to focus on maintaining a risk aware culture.
We believe the Group maintains a low environmental impact. We therefore continue to work on the potential environmental impacts of energy consumption, waste and travel.
Directors' policies for managing principal risks
There is an ongoing process for identifying, evaluating and managing the significant risks faced by the business. Risk reviews are undertaken regularly by the respective business areas throughout the year to identify and assess the key risks associated with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are linked to customer dependency. Though the Group has a very diverse customer base in certain market sectors, key customers can represent a significant amount of revenue (see note 2). Key customer relationships are closely monitored but the loss of a key client could have an adverse effect on the Group's performance. Further details of risks, uncertainties and financial instruments are contained in note 28.
Key risks of a non--financial nature
The Group is operating in a highly competitive global market that is undergoing continual change. The Group's ability to respond to many competitive factors including, but not limited to technological innovations, product quality, customer service and employment of qualified personnel will be key in the achievement of its objectives, but its ultimate success will depend on the purchase spends of its customers and the buoyancy of the market.
On behalf of the Board
S Haffner
Director
11 November 2022
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Notes 2022 2021
GBP GBP
Continuing operations
Revenue 2 12,207,253 5,094,518
Cost of sales (9,169,691) (3,912,376)
--------------------------------------------- ------ ------------
Gross profit 3,037,562 1,182,142
Other income 3 3,743 61,651
Administrative expenses (2,170,129) (1,431,898)
------ ------------ ------------
Operating profit / (loss) pre-exceptional
items 4 871,176 (188,105)
--------------------------------------------- ------ ------------
Exceptional income 5 - 50,000
--------------------------------------------- ------ ------------
Operating profit / (loss) post
exceptional items 871,176 (138,105)
--------------------------------------------- ------ ------------
Finance income 6 241 489
Finance costs 7 (27,853) (22,082)
--------------------------------------------- ------ ------------
Profit / (loss) before taxation 843,564 (159,698)
Taxation 8 (204,222) (5,228)
------ ------------ ------------
Profit / (loss) for the year 639,342 (164,926)
Other comprehensive income
Items that may be reclassified
to profit of loss
Exchange differences on translation
of foreign entities 42,347 (11,044)
Other comprehensive income for
the year 42,347 (11,044)
Total comprehensive income for
the year attributable to owners
of the parent 681,689 (175,970)
Profit / (loss) per ordinary share:
Total basic earnings per share 11 6.92078p (1.78529)p
Total diluted earnings per share 11 5.80797p (1.78529)p
--------------------------------------------- ------ ------------
The notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2022
Notes Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Non-current assets
Intangible assets 12 568,931 571,431 - -
Property, plant and
equipment 13 222,479 103,477 - -
Right-of-use assets 14 823,772 18,995 - -
Investments in subsidiaries 15 - - 1,229,148 1,172,253
Deferred taxation 9 25,925 - - 30,253
------------ ------------ ---------- ----------
Total non-current assets 1,641,107 693,903 1,229,148 1,202,506
Current assets
Trade and other receivables 16 3,130,035 1,429,064 689,332 532,875
Cash and cash equivalents 17 1,714,417 1,101,713 1,532 5,844
Current tax receivable - 10,758 - -
------------ ---------- ----------
Total current assets 4,844,452 2,541,535 690,864 538,719
------------ ---------- ----------
Total assets 6,485,559 3,235,438 1,920,012 1,741,225
Current liabilities
Trade and other payables 18 (2,960,221) (1,417,467) (143,721) (139,760)
Bank loans 19 (83,333) (54,089) - -
Lease liabilities 20 (121,999) (25,912) - -
Current tax payable (177,790) - - -
Provisions 21 (35,000) (25,020) - -
------------ ------------ ---------- ----------
Total current liabilities (3,378,343) (1,522,488) (143,721) (139,760)
Non-current liabilities
Bank loans 19 (111,111) (195,911) - -
Lease liabilities 20 (738,041) - - -
Deferred taxation 9 - (2,059) - -
Provisions 21 (4,500) - - -
------------ ------------ ---------- ----------
Total non-current liabilities (853,652) (197,970) - -
------------ ------------ ---------- ----------
Total liabilities (4,231,995) (1,720,458) (143,721) (139,760)
Net assets 2,253,564 1,514,980 1,776,291 1,601,465
Equity
Share capital 22 1,154,750 1,154,750 1,154,750 1,154,750
Share premium 9,876 9,876 9,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 168,956 112,061 168,956 112,061
Capital redemption reserve 257,812 257,812 257,812 257,812
Foreign translation
reserve 31,303 (11,044) - -
Retained earnings 614,217 (25,125) 168,247 50,316
------ ------------ ------------ ---------- ----------
Equity attributable
to owners of the parent 2,253,564 1,514,980 1,776,291 1,601,465
------ ------------ ------------ ---------- ----------
The notes are an integral part of these financial statements.
The profit for the financial year of the holding company was GBP148,184 (2021: GBP79,179 loss).
The financial statements were approved and authorised by the board of directors on 11 November 2022 and were signed on its behalf by
A Harvey S Haffner Director Director
Company Registration No. 04314540
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Capital Foreign
Share Share Merger Other redemption translation Retained Total
Group capital premium reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP GBP
------------------ --------- --------- --------- ------------ ------------- ---------- ----------
At 30 June
2020 1,154,750 9,876 16,650 81,358 257,812 - 139,801 1,660,247
Comprehensive
income for
the year, net
of tax - - - - - - (164,926) (164,926)
Foreign currency
translation - - - - - (11,044) - (11,044)
Share-based
payment - - - 30,703 - - - 30,703
At 30 June
2021 1,154,750 9,876 16,650 112,061 257,812 (11,044) (25,125) 1,514,980
Comprehensive
income for
the year, net
of tax - - - - - - 639,342 639,342
Foreign currency
translation - - - - - 42,347 - 42,347
Share-based
payment - - - 56,895 - - - 56,895
At 30 June
2022 1,154,750 9,876 16,650 168,956 257,812 31,303 614,217 2,253,564
------------------
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 25.
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 2022
Capital
Share Share Merger Other redemption Retained
Company capital premium reserve reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
---------- --------- --------- ---------- ------------ ---------- -------------
At 30 June
2020 1,154,750 9,876 16,650 81,358 257,812 129,495 1,649,941
Comprehensive
income for
the year, net
of tax - - - - - (79,179) (79,179)
Share-based
payment - - - 30,703 - - 30,703
At 30 June
2021 1,154,750 9,876 16,650 112,061 257,812 50,316 1,601,465
Comprehensive
income for
the year, net
of tax - - - - - 117,931 117,931
Share-based
payment - - - 56,895 - - 56,895
At 30 June
2022 1,154,750 9,876 16,650 168,956 257,812 168,247 1,776,291
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 25.
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.
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Notes Group
2022 2021
GBP GBP
------ ---------- ----------
Net cash flow from operating activities 27 921,695 (708,814)
Cash flows from investing activities
Finance income 6 241 489
Purchase of property, plant and equipment 13 (179,475) (59,179)
Repayment of leasing liabilities (74,201) (102,000)
Cash used in investing activities (253,435) (160,690)
Cash flows from financing activities
Repayment of borrowings (55,556) -
Proceeds from borrowings - 250,000
---------- ----------
Cash used in financing activities (55,556) 250,000
Net (decrease) / increase in cash
and cash equivalents 612,704 (619,504)
Cash and cash equivalents at beginning
of year 1,101,713 1,721,217
---------- ----------
Cash and cash equivalents at end
of year 1,714,417 1,101,713
------------------------------------------- ---------- ----------
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
2022 2021 2022 2021
GBP GBP GBP GBP
------ ---------- ---------- ------ ------
Cash and cash equivalents 17 1,714,417 1,101,713 1,532 5,844
1,714,417 1,101,713 1,532 5,844
---------------------------
The notes are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2022
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 87 New Cavendish Street, London, W1W 6XD. 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 Board have reviewed the Group's detailed forecasts for the next financial year, other medium term plans, the impact of the war in Ukraine, the cost of living crisis and economic and political uncertainties both in the UK and globally, as well as considering the risks outlined in note 28. After doing so, 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 and company financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK
The following new standards, amendments to standards and interpretations have been applied for the first time from 1 July 2021. Their adoption has not had a material impact on the financial statements:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
-- Covid-19-Related Rent Concessions beyond 30 June 2021 - (Amendment to IFRS 16)
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 Company's accounting periods beginning on or after 1 July 2022 have been adopted early.
The following standards and amendments are not yet endorsed in the UK at the date of authorisation of these financial statements:
-- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) -- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16) -- Annual Improvements 2018-2020 Cycle -- Reference to the Conceptual Framework (Amendments to IFRS 3) -- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Classification of Liabilities as Current or Non-current - Deferral of Effective Date (Amendment to IAS 1)'
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
-- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
-- Definition of Accounting Estimates (Amendments to IAS 8)
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 2022. 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 the 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 asset exceeds its recoverable amount, the asset is considered impaired and is written down to its 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.
Intangible assets - other
Intangible assets are stated in the financial statements at cost less accumulated amortisation and any impairment value. Amortisation is provided to write off the cost less estimated residual value of intangible assets over its expected useful life (which is reviewed at least at each financial year end), as follows:
Intellectual property 25% straight line
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 amortised assets still in use are retained in the financial statements.
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
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.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
Leases
In applying IFRS 16, for all leases (except as noted below), the Group:
a) recognises right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present value of future lease payments;
b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the statement of cash flows.
Lease incentives (e.g. free rent period) are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive liability, amortised as a reduction of rental expense on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts.
For short--term leases (lease term of 12 months or less) and leases of low-value assets (such as photocopiers), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within administrative expenses in the consolidated statement of comprehensive income.
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.
Government grants
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred 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 25 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 affect 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. For critical judgements that the directors have made in the process of applying the Group's accounting policies, see note 12 on goodwill impairment and note 14 on discount rate used to calculate right of use assets and lease liability.
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 2022 there is only a single reportable segment.
All revenue represents sales to external customers. Two customers (2021: three) are defined as major customers by revenue, contributing more than 10% of the Group revenue.
2022 2021
GBP GBP
---------- ----------
Customer One 1,916,827 1,211,409
Customer Two 1,816,883 338,377
Major customers in the current year 3,733,710 1,549,786
Major customers in prior year 1,206,346
----------
2,756,132
---------- ----------
The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:
Geographical market 2022 2021
GBP GBP
--------------------- ----------
United Kingdom 7,586,982 3,907,873
United States 4,150,179 1,055,096
Rest of the World 470,092 131,549
12,207,253 5,094,518
--------------------- ----------
2022 2021
GBP GBP
------------------------------------------------ ----------
Revenue from contracts with customers - Events 10,135,172 3,917,481
Revenue from contracts with customers - Film 1,785,367 1,177,037
Other revenue 286,714 -
Total revenue 12,207,253 5,094,518
------------------------------------------------ ----------
Contract assets and liabilities from contracts with customers have been recognised as follows:
2022 2021
GBP GBP
--------
Deferred income 839,326 384,598
Accrued income 875,002 169,955
-------- --------
Deferred income at the beginning of the period has been recognised as revenue during the period.
3 Other income
Other income 2022 2021
GBP GBP
--------------------------------------------- -------
Coronavirus job retention scheme government
grant 1,168 56,501
Business interruption payment grant 2,575 5,150
3,743 61,651
--------------------------------------------- -------
During the year the Group received government grants under the UK government's coronavirus job retention scheme and the coronavirus business interruption loan scheme.
4 Operating profit
Operating profit is stated after charging
or crediting: 2022 2021
GBP GBP
-------------------------------------------------- ----------
Cost of sales
Depreciation of fixtures, fittings and equipment 54,101 40,885
Amortisation of intangible assets 2,500 2,500
Staff costs (see note 24) 2,135,136 1,287,342
Administrative expenses
Depreciation of right-of-use assets 82,361 91,092
Depreciation of leasehold land and buildings 1,935 -
(Profit) / loss on foreign exchange differences 14,465 13,401
Fees payable to the Company's auditor in
respect of:
Audit of the Company's annual accounts 7,842 6,000
Audit of the Company's subsidiaries 26,694 20,622
Interest on lease liabilities 21,191 16,932
Staff costs (see note 24) 1,107,745 837,847
---------- ----------
5 Exceptional items
Items that are material either because of their size or their nature, or that are non-recurring, are considered as exceptional. The exceptional income in the year ended 30 June 2021 totalling GBP50,000 included in the consolidated Statement of Comprehensive Income relates to the contingent consideration totalling GBP100,000 which forms part of the overall consideration for Eventful Limited in the year ended 30 June 2020. Eventful Limited failed to meet the target set in the purchase agreement for the year ending 30 June 2021 and therefore the contingent consideration related to the year ended 30 June 2021 has been moved to the consolidated Statement of Comprehensive Income as exceptional income. The remaining contingent consideration totalling GBP50,000 is included in the Statement of Financial Position.
6 Finance income
Finance income 2022 2021
GBP GBP
------------------------ -----
Bank interest received 241 489
------------------------ -----
7 Finance costs
Finance costs 2022 2021
GBP GBP
------------------------------------------------- -------
Coronavirus business interruption loan interest 6,662 5,150
Lease interest 21,191 16,932
27,853 22,082
------------------------------------------------- -------
8 Taxation
2022 2021
GBP GBP
---------------------------------------------------- ----------
The tax charge comprises:
Current tax
Current year 232,206 (4,442)
----------
232,206 (4,442)
Deferred tax (see note 9)
Current year (27,984) 9,670
----------
(27,984) 9,670
Total tax charge in the statement of comprehensive
income 204,222 5,228
Factors affecting the tax charge for the
year
Profit / (loss) on ordinary activities before
taxation from continuing operations 843,564 (159,698)
Profit / (loss) on ordinary activities before
taxation multiplied by standard rate
of UK corporation tax of 19% (2021: 19%) 160,277 (30,343)
Effects of:
Non-deductible expenses 43,945 15,021
Tax on foreign subsidiaries - 20,550
43,945 35,571
Total tax charge 204,222 5,228
---------------------------------------------------- ----------
The Group has estimated losses of GBP685,568 (2021: GBP685,568) available to carry forward against future trading profits. Losses totalling GBP635,371 are in Aeorema Communications plc which is not currently making taxable profits, as all trading is undertaken by its subsidiaries Aeorema Limited, Eventful Limited and Cheerful Twentyfirst, Inc., therefore no deferred tax asset has been recognised in respect of this amount.
9 Deferred taxation
2022 2021
GBP GBP
----------------------------------------------- ---------
Property, plant and equipment temporary
differences (39,435) (16,826)
Temporary differences 55,823 (25,023)
Tax losses 9,537 39,790
---------
25,925 (2,059)
At 1 July (2,059) 7,611
Transfer to Statement of Comprehensive Income 27,984 (9,670)
At 30 June 25,925 (2,059)
----------------------------------------------- ---------
10 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. The profit for the financial year of the holding company was GBP148,184 (2021: GBP79,179 loss).
11 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.
1. 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. In view of the group loss for the year, options to subscribe for ordinary shares in the company are anti-dilutive and therefore diluted earnings per share information is presented in line with basic earnings per share.
The following reflects the income and share data used and dilutive earnings per share computations:
2022 2021
GBP GBP
----------- -----------
Basic earnings per share
(Loss) / profit for the year attributable
to owners of the Company 639,342 (164,926)
Basic weighted average number of
shares 9,238,000 9,238,000
Dilutive potential ordinary shares:
Employee share options 1,770,000 1,920,000
Diluted weighted average number
of shares 11,008,000 11,158,000
----------- -----------
12 Intangible fixed assets
Intellectual
Group Goodwill Property Total
GBP GBP GBP
-------------------------------- -------------
Cost
At 30 June 2020 2,927,486 10,000 2,937,486
At 30 June 2021 2,927,486 10,000 2,937,486
At 30 June 2022 2,927,486 10,000 2,937,486
Impairments and amortisation
At 30 June 2020 2,363,138 417 2,363,555
Charge for the year - 2,500 2,500
At 30 June 2021 2,363,138 2,917 2,363,555
Charge for the year - 2,500 2,500
At 30 June 2022 2,363,138 5,417 2,366,055
Net book value
At 30 June 2020 564,348 9,583 573,931
At 30 June 2021 564,348 7,083 571,431
At 30 June 2022 564,348 4,583 568,931
---------- ------------- ----------
Goodwill arose for the Group on consolidation of its subsidiaries, Aeorema Limited and Eventful Limited.
Impairment - Aeorema Limited and Eventful Limited
Goodwill arises on acquisition of a business combination and represents the difference between the fair value of the consideration paid and the aggregate fair value of identifiable assets and liabilities acquired. Goodwill is tested annually for impairment, goodwill is impaired when the value in use exceeds the net asset value of the group's cash generating units (CGUs).The CGUs represent Aeorema Limited and Eventful Limited, being the lowest level within the group at which goodwill is monitored for internal management purposes.
The value in use has been calculated on a discounted cash flow basis using the 2022-23 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 is assumed that future growth will be 2% for venue sourcing activities and 4% for event and moving image production activities. Using these assumptions, which are based on past experience and future expectations, the recoverable amount of goodwill of GBP2,673,773 was determined to be higher than its carrying value, hence no impairment in the year.
Sensitivity Analysis
If the assumptions used in the impairment review were changed to greater extent than as presented in the following table, the changes would, in isolation, lead to impairment loss being recognised for 0% growth rate.
Discount Discount
Rate of Rate of
Aeorema Limited 4% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
------------- ----------
Value in use calculations 1,796,220 (25,553,571) 2,979,797 1,411,761
Carrying amount in financial
statements 365,154 365,154 365,154 365,154
Difference 1,431,066 (25,918,725) 2,614,643 1,046,607
---------- ------------- ----------
Discount Discount
Rate of Rate of
Eventful Limited 2% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
---------- ---------
Value in use calculations 841,553 (134,627) 1,379,307 629,102
Carrying amount in financial
statements 199,194 199,194 199,194 199,194
Difference 642,359 (333,821) 1,180,113 429,908
---------- ---------- ---------
Discount Discount
Rate of Rate of
Combined 2% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
------------- ----------
Value in use calculations 2,637,773 (25,688,198) 4,349,104 2,040,863
Carrying amount in financial
statements 564,348 564,348 564,348 564,348
Difference 2,109,425 (26,252,546) 3,794,756 1,476,515
---------- ------------- ----------
13 Property, plant and equipment
Leasehold Fixtures,
Group land fittings Total
and buildings and equipment
GBP GBP GBP
--------------------------- --------------
Cost
At 30 June 2020 58,536 173,182 231,718
Additions - 59,179 59,179
Disposals - (3,354) (3,354)
At 30 June 2021 58,536 229,007 287,543
Additions 98,821 80,654 179,475
Disposals (58,536) (5,095) (63,631)
Foreign exchange movement - 329 329
At 30 June 2022 98,821 304,895 403,716
Depreciation
At 30 June 2020 58,536 87,230 145,766
Charge for the year - 40,885 40,885
Eliminated on disposal - (2,585) (2,585)
At 30 June 2021 58,536 125,530 184,066
Charge for the year 1,935 54,101 56,036
Eliminated on disposal (58,536) (449) (58,985)
Foreign exchange movement - 120 120
At 30 June 2022 1,935 179,302 181,237
Net book value
At 30 June 2020 - 85,952 85,952
At 30 June 2021 - 103,477 103,477
At 30 June 2022 96,886 125,593 222,479
-------------- -------------- ---------
14 Right-of-use assets
Leasehold
Group Property
GBP
----------
Cost
At 30 June 2020 455,436
Lease modification adjustment (436,441)
At 30 June 2021 18,995
Additions 887,138
Disposals (18,995)
At 30 June 2022 887,138
Depreciation
At 30 June 2020 75,906
Charge for the year 91,092
Lease modification adjustment (166,998)
At 30 June 2021 -
Charge for the year 82,361
Disposals (18,995)
At 30 June 2022 63,366
Net book value
At 30 June 2020 379,530
At 30 June 2021 18,995
At 30 June 2022 823,772
----------
The right-of-use asset addition during the year relates to the Group's leasehold property at 87 New Cavendish Street, London, W1W 6XD. The Group entered the new leasehold in January 2022.
The right-of-use asset is calculated on the assumption that the Group will remain in the premises for the duration of the 7 year lease agreement. A discount rate of 5% was used to calculate the right-of use asset. 5% was considered an appropriate rate based on the Group's weighted average cost of capital.
The disposal during the year relates to the Group's leasehold property at Moray House, 23-31 Great Titchfield Street, London, W1W 7PA. The Group left the premises in September 2021.
15 Non-current assets - Investments
Company Shares in subsidiary
GBP
---------------------
Cost
At 30 June 2020 3,835,753
Increase in respect of share-based
payments 30,703
Acquisition of subsidiary 10
At 30 June 2021 3,866,466
Increase in respect of share-based
payments 56,895
At 30 June 2022 3,923,361
Provision
At 30 June 2020 2,694,213
At 30 June 2021 2,694,213
At 30 June 2022 2,694,213
Net book value
At 30 June 2020 1,141,540
At 30 June 2021 1,172,253
At 30 June 2022 1,229,148
---------------------
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
Eventful Limited Wales Ordinary 100
England and
Twentyfirst Limited (Dormant) Wales Ordinary 100
United States
Cheerful Twentyfirst, Inc. of America Ordinary 100
Cheerful Twentyfirst B.V. The Netherlands Ordinary 100
------------------ ---------- ----
Post year end the Group formed Cheerful Twentyfirst B.V., a Dutch company based in Amsterdam. Aeorema Communications plc holds 100% of the share capital in Cheerful Twentyfirst B.V.
The registered address of Aeorema Limited, Eventful Limited and Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB. The registered address of Cheerful Twentyfirst, Inc. is 85 Broad Street, Floor 16, New York, NY, 10004. The registered address of Cheerful Twentyfirst B.V. is Herengracht 500, 1017 CB, Amsterdam.
16 Trade and other receivables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
---------- --------
Trade receivables 1,980,121 964,490 - -
Related party receivables - - 666,017 517,003
Other receivables 78,536 93,015 14,982 3,872
Prepayments and accrued income 1,071,378 371,559 8,333 12,000
3,130,035 1,429,064 689,332 532,875
---------- ---------- --------
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.
Trade and other receivables are assessed for impairment based upon the expected credit losses model. The credit losses historically incurred have been immaterial and as such the risk profile of the trade receivables has not been presented.
At the year end, trade receivables of GBP694,325 (2021: GBP76,504) were past due but not impaired. These amounts are still considered recoverable. The ageing of these trade receivables is as follows:
Group
2022 2021
GBP GBP
-------
Less than 90 days overdue 566,605 39,419
More than 90 days overdue 127,720 37,085
694,325 76,504
-------- -------
17 Cash at bank and in hand
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
---------- ------
Bank balances 1,714,417 1,101,713 1,532 5,844
1,714,417 1,101,713 1,532 5,844
---------- ---------- ------
18 Trade and other payables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
------------------------------ ---------- --------
Trade payables 796,671 492,163 5,411 5,395
Related party payables - - 67,355 67,365
Taxes and social security
costs 466,847 310,148 - -
Other payables 124,737 91,002 50,000 50,000
Accruals and deferred income 1,571,966 524,154 20,955 17,000
2,960,221 1,417,467 143,721 139,760
------------------------------ ---------- --------
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.
19 Bank Loans
2022 2021
GBP GBP
--------
Bank Loan
Current 83,333 54,089
Non-current 111,111 195,911
194,444 250,000
-------- --------
On 15 October 2020 the company received a Floating Rate Basis Coronavirus Business Interruption Loan (CBIL) of GBP250,000 from Barclays Bank UK PLC to cover the company's working capital commitments during the COVID-19 pandemic. For the first twelve months interest on the loan is paid by the UK government, after this point interest will be paid at a margin of 2.28%, in addition to monthly capital repayments of GBP6,944 to the final repayment date of 15 October 2024.
Under IFRS 9, the loan should be initially recognised at fair value and subsequently accounted for at amortised cost. However, the difference between the nominal value and fair value is not material, therefore the full nominal value of the loan is recognised with the interest charge for the period of GBP6,662 being charged to profit and loss. This is offset by the equal amount of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the company's present and future assets.
20 Leases
The balance sheet shows the following amounts relating to leases:
Group 2022 2021
GBP GBP
---------
Right-of-use assets
Buildings 823,772 18,995
823,772 18,995
---------- ---------
Group 2022 2021
GBP GBP
-------
Lease liabilities
Current 121,999 25,912
Non-current 738,041 -
860,040 25,912
-------- -------
Group 2021
GBP
---------------------------------------------- --------
Maturity analysis - contractual undiscounted
cash flows
Less than one year 213,000
One to five years 710,000
More than five years 71,000
994,000
---------------------------------------------- --------
Group 2022 2021
GBP GBP
------------------------------- -------
Interest on lease liabilities 21,191 16,932
21,191 16,932
------- -------
21 Provisions
Leasehold Total
Group dilapidations
GBP GBP
---------------------------------------------- --------
At 1 July 2021 25,020 25,020
Charged to statement of comprehensive income 14,480 14,480
At 30 June 2022 39,500 39,500
---------------- --------
Leasehold Total
Group dilapidations
GBP GBP
------------- --------
Current 35,000 25,020
Non-current 4,500 -
39,500 25,020
---------------- --------
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease.
22 Share capital
2022 2021
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 30 June 2020 9,238,000 1,154,750
At 30 June 2021 9,238,000 1,154,750
At 30 June 2022 9,238,000 1,154,750
---------------------------- ----------------
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 25 for details of share options outstanding.
23 Directors' emoluments
Salary, Salary,
fees, bonuses fees, bonuses
and benefits and benefits
in kind in kind Pensions Pensions Total Total
2022 2021 2022 2021 2022 2021
GBP GBP GBP GBP GBP GBP
--------------- --------------- --------- --------- -------- --------
M Hale - - - - - -
S Haffner 15,000 15,000 - - 15,000 15,000
R Owen 20,000 20,000 - - 20,000 20,000
S Quah 151,057 139,268 7,500 5,000 158,557 144,268
A Harvey 112,377 103,653 6,172 4,000 118,549 107,653
H Luffman 4,558 - - - 4,558 -
302,992 277,921 13,672 9,000 316,664 286,921
--------------- --------------- --------- --------- -------- --------
The remuneration of directors of the Company is set out below.
During the year M Hale waived his right to fees of GBP15,000 (2021: GBP15,000)
The share options held by directors who served during the year are summarised below:
Number Exercise Earliest
Name Grant date awarded price exercise 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
29 April 5 November 29 April
S Quah 2021 100,000 31.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 31.00p 2023 2031
29 April 5 November 29 April
S Quah 2021 100,000 50.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 50.00p 2023 2031
29 April 5 November 29 April
S Quah 2021 100,000 70.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 70.00p 2023 2031
------------ --------- --------- --------------- ------------
Fees for S Haffner are charged by Harris & Trotter LLP, a firm in which he is a member (see note 26).
24 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees Group Company
2022 Number 2021 Number 2022 Number 2021 Number
Administration and production 55 37 5 5
------------ ------------ ------------
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:
Employment costs Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
---------- -------
Wages and salaries 2,827,204 1,846,938 39,558 35,000
Social security costs 294,872 205,253 - -
Pension costs 63,910 42,295 - -
Share-based payments 56,895 30,703 - -
3,242,881 2,125,189 39,558 35,000
---------- ---------- -------
25 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 2022 options 2021
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 600,000 600,000
14 June 2019 26.0p 14 June 2022 14 June 2029 120,000 120,000
29 April 5 November 29 April
2021 31.0p 2023 2031 200,000 300,000
29 April 5 November 29 April
2021 50.0p 2023 2031 200,000 300,000
29 April 5 November 29 April
2021 70.0p 2023 2031 200,000 300,000
23 May 2022 60.0p 23 May 2025 23 May 2032 150,000 -
1,770,000 1,920,000
--------- ------------- ------------- -------------- --------------
During the year H Luffman ended her employment with Aeorema Limited. As a result, the share options that she received during the previous year were cancelled.
Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:
Weighted Weighted
Number of average exercise Number of average exercise
options price options price
2022 2022 2021 2021
GBP GBP
---------- ------------------ ---------- ------------------
Outstanding at beginning
of the year 1,920,000 0.37 1,020,000 0.25
Granted during the
year 150,000 0.60 900,000 0.50
Cancelled during the
year (300,000) (0.50) - -
Outstanding at end
of the year 1,770,000 0.40 1,920,000 0.37
---------- ------------------ ---------- ------------------
Exercisable at the
end of the year 1,020,000 0.25 900,000 0.25
---------- ------------------ ---------- ------------------
The exercise price of options outstanding at the year-end was GBP0.404 (2021: GBP0.369) and their weighted average contractual life was 6.5 years (2021: 7.6 years).
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 22 August 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
---------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 31.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 30.060p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 50.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.943p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 70.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.845p
--------------
Grant date 23 May 2022
Model used Black-Scholes
Share price at grant date 60.0p
Exercise price 60.0p
Contractual life 10 years
Risk free rate 2.31%
Expected volatility 175.63%
Expected dividend rate 0%
Fair value option 59,707p
--------------
The expected volatility is determined by calculating the historical volatility of the parent company's share price. For the share options issued prior to the year ended 30 June 2021 the historical volatility of the parent company's share price is calculated over the last three years. For share options issued after 1 July 2021 the historical volatility is calculated over the last 10 years. The method used to determine the historical volatility of the parent company's share price changed in the prior year as a consequence of the COVID-19 pandemic. The impact of the COVID-19 pandemic on the parent company's share price was significant and not considered an appropriate measure of the parent company's share price volatility. The extension of the period to 10 years was considered appropriate. The risk free rate is based on the yield from gilt strip government bonds with a similar life to the expected life of the options.
The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based payment plans:
2022 2021
GBP GBP
---------------------------- -------
Share-based payment charge 56,895 30,703
---------------------------- -------
26 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:
2022 2021
GBP GBP
----------------------------------- --------
Amounts owed by subsidiaries
Total amount owed by subsidiaries 666,017 517,003
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,365
-------- --------
Aeorema Limited
The company received dividends totalling GBP125,000 during the year (2021: GBPNil) from its subsidiary, Aeorema Limited. The company transferred a VAT receivable of GBP17,424 (2021: GBP19,221) 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 GBP24,558 (2021: GBP20,000).
Aeorema Limited paid expenses totalling GBP114,052 (2021: GBP113,352) on behalf of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of GBP10,000 to Aeorema Communications plc (2021: GBP10,000).
Cheerful Twentyfirst, Inc.
The company received dividends totalling GBP125,000 during the year (2021: GBPNil) from its subsidiary, Cheerful Twentyfirst, Inc.
Eventful Limited
The company received dividends totalling GBP25,000 during the year (2021: GBPNil) from its subsidiary, Eventful Limited.
The compensation of key management (including directors) of the Group is as follows:
2022 2021
GBP GBP
------------------------------ --------
Short-term employee benefits 302,991 277,921
Post-employment benefits 13,672 9,000
316,663 286,921
-------- --------
The share options held by directors of the Company are disclosed in note 23. During the year, a charge of GBP49,905 (2021: GBP21,002) was recognised in the Consolidated Statement of Comprehensive Income in respect of these share options.
During the previous year S Quah received an interest-free loan of GBP10,000. At the year end, GBP10,000 (2021: GBP10,000) was outstanding.
Harris and Trotter LLP is a firm in which S Haffner is a member. The amounts charged to the Group for professional services are as follows:
Harris and Trotter LLP - charged during
the year 2022 2021
GBP GBP
Aeorema Communications plc 15,000 15,000
Aeorema Limited 9,650 12,850
24,650 27,850
------------------------------------------ -------
At the year end, the Group had an outstanding trade payable balance to Harris and Trotter LLP of GBP6,840 (2021: GBP5,630).
27 Cash flows
Group
2022 2021
GBP GBP
------------ ----------
Cash flows from operating activities
Profit / (loss) before taxation 843,564 (159,698)
Depreciation of property, plant and equipment 56,036 40,885
Depreciation of right-of-use assets 82,361 91,092
Amortisation of intangible fixed assets 2,500 2,500
Loss on disposal of fixed assets 4,646 769
Share-based payment expense 56,895 30,703
Finance income (241) (489)
Interest on lease liabilities 21,191 16,932
Exchange rate differences on translation 42,138 (11,044)
Revaluation of right-to-use asset - (5,311)
1,109,090 6,339
Increase / (decrease) in trade and other
payables 1,557,234 191,244
(Increase) / decrease in trade and other
receivables (1,700,972) (831,592)
Taxation paid (43,657) (74,805)
Cash generated / (used) from operating
activities 921,695 (708,814)
----------------------------------------------- ----------
28 Financial instruments
Financial instruments recognised in the consolidated statement of financial position
All financial instruments are recognised initially at their transaction cost and subsequently measured at amortised cost.
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
---------- ---------- ----------
Financial Assets
Trade and other receivables 2,933,659 1,227,460 666,017 517,003
Cash and cash equivalents 1,714,417 1,101,713 1,532 5,844
Investments in subsidiaries - - 1,229,148 1,172,253
Total 4,648,076 2,329,173 1,896,697 1,695,100
Financial Liabilities
Trade and other payables 1,115,852 833,165 122,766 122,760
Accruals 732,640 139,555 20,955 17,000
Total 1,848,492 972,720 143,721 139,760
---------- ---------- ---------- ----------
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 2022 was GBP1,980,121 (2021: GBP964,490). 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. The credit risk associated with trade receivables is minimal as invoices are based on contractual agreements with long-standing customers. Credit losses historically incurred by the Company have consequently been immaterial.
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 GBP2,327,501 (2021: GBP1,036,700).
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 GBP1,714,417 (2021: GBP1,101,713). 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 GBP2,253,564 (2021: GBP1,514,980).
29 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were GBP63,910 (2021: GBP41,946). At the end of the reporting period GBP12,021 (2021: GBP9,237) of contributions were due in respect of the period.
30 Dividends
As a consequence of the COVID-19 pandemic, the Board decided that no final dividend would be paid to shareholders for the year ended 30 June 2021.
In respect of the current year, the directors propose that a final dividend of 2 pence per share be paid to shareholders on 20 January 2023. 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 23 December 2022. The total estimated dividend to be paid is GBP184,760. The payment of this dividend will not have any tax consequences for the Group.
31 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 2022 the Company had no potential liability under the terms of the registration.
**ENDS**
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END
FR BJBJTMTTBBIT
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November 14, 2022 02:00 ET (07:00 GMT)
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