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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 57.50 | 55.00 | 60.00 | 57.50 | 57.50 | 57.50 | 66 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Television Broadcast Station | 20.23M | 757k | 0.0794 | 7.24 | 5.48M |
TIDMAEO
RNS Number : 3068T
Aeorema Communications Plc
14 November 2023
The information contained within this announcement is deemed by the Company to constitute inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
14 November 2023
Aeorema Communications plc
("Aeorema", the "Company" or the "Group")
Final Results
Proposed 50% increase in final dividend
Record revenue and profit
Aeorema Communications plc (AIM: AEO), a leading strategic communications group, is pleased to announce its audited results for the year ended 30 June 2023.
Highlights
-- Record operational and financial performance:
o Revenue up 66% to GBP20.2 million (2022: GBP12.2 million)
o Profit before tax up 25% to GBP1.0 million (2022: GBP0.8 million)
-- Strong balance sheet maintained - current cash balance of GBP1.9 million -- Proposed 50% increase in final dividend to 3 pence per share (2022: 2 pence per share) -- Winner of multiple industry awards
-- Investment in business instrumental in growth, retention of clients and increased scope of work
o Cheerful Twentyfirst - creative brand experience agency
-- 100% client retention and average year-on-year increase in revenue of 47% across flagship clients
o Cheerful Twentyfirst Inc. - North American creative brand experience agency
-- Key talent hires, including appointment of US President, André Shahrdar
-- Most successful year to date and significant ground broken with new logo brands
o Eventful - events and incentives agency
-- Year-on-year revenue growth of 140%
-- Returned to profitability
For further information contact:
Andrew Harvey Aeorema Communications Tel: +44 (0) 20 7291 0444 plc John Depasquale / Liz Allenby Capital Limited Tel: +44 (0)20 3328 5656 Kirchner / Lauren Wright (Nominated Adviser & (Corporate Finance) Broker) Kelly Gardiner / Jos Pinnington (Sales & Corporate Broking) Paul Dulieu / Isabel St Brides Partners Ltd aeorema@stbridespartners.co.uk de Salis (Financial PR)
Chairman's Statement
I am incredibly proud to report record-breaking revenue of GBP20.2m and our first ever seven figure profit before tax ("PBT") of GBP1.045m for the year ended 30 June 2023. Since the new management team took over in late 2017, our business has grown dramatically with revenue increasing more than fivefold and profit quadrupling. This has been achieved while navigating a pandemic, which brought much of the global events industry to its knees and tough economic conditions. This achievement is testament to the dedication and hard work of our talented employees, the loyalty of our clients, and the strategic vision of our leadership team. I would therefore like to thank them all for their belief in Aeorema.
We have invested heavily in the business to ensure we continue our momentum both in EMEA and North America. As we celebrate our remarkable revenue growth, our underlying profitability this year has underpinned a deliberate strategy to reinvest a substantial portion of our earnings back into the structure and foundations of our business. Much of this expenditure is one-off in nature and leaves us well positioned to take advantage of the many opportunities we see in our high value and global sector. Hence, the net profit margin for FY 2023 belies the underlying strong fundamentals of our business and depth of client relationships and work.
We have invested in our team in a tight labour market whilst enduring a spike in recruitment costs, and we have strengthened our HR team to support our increasingly global team going forwards. We have also upscaled our IT infrastructure including better project management and accountancy tools, designed to enhance the reporting processes across our growing business. We have also continued to invest in our US office, including the recruitment of key team members, and continue to build brand recognition in North America while developing key client relationships for future US-focused work.
All of these areas of investments have already begun to yield positive results. They are enhancing our efficiencies and ability to respond to changing market dynamics, to provide more strategic and creative solutions, expand our client base, strengthen client relationships and maintain the high-quality standards our clients have come to know and appreciate from Aeorema.
The business continues to move at pace, and we have achieved these record financial results two years ahead of our internal targets and our internal five year plan that was set out at the height of the pandemic in 2020. Looking ahead, we see significant opportunities in EMEA and North America and the opportunity to increase the work we undertake for existing clients as well as new ones and to establish a presence at additional major "tent pole" events.
At an operating company level, our core Cheerful Twentyfirst business remains strong and our strategy to invest in our team which commenced last year is proving successful as we continue to both retain global brands and expand the scope of work we are doing for them. Alongside this, our Sales and Marketing team is achieving great success bringing in fantastic brands within many sectors including professional services, technology, media and marketing.
Meanwhile, we are delighted that Eventful has returned to profit and, under the new leadership of Claire Gardner, who has been with the business for 12 years, there is great excitement about what Eventful can achieve over the coming years.
Looking forward, we are now consolidating the results of our recent investments and creating a strong platform for further growth across the Group. We believe that this provides the potential for our 2024 financial year to be another record year for the Group, albeit one which we expect will be heavily weighted towards our second half as many brands are delaying projects and pushing them into the first half of calendar year 2024; the second half of our financial year. Nonetheless, we expect a strong year overall and, as contracts are signed and projects scheduled, the greater clarity will allow us to update the market.
We have a robust cash position as at the date of this announcement of GBP1.9million and I am delighted to confirm that we are proposing a final dividend for the year, reflecting the growth we have achieved and the confidence we have for the future. The dividend proposed is 3 pence per share (a 50% increase on the dividend paid in 2022 of 2 pence per share). Subject to the proposed dividend being approved by shareholders at the forthcoming Annual General Meeting, it will be paid on 19 January 2024 with a record date of 22 December 2023 and an ex-dividend date of 21 December 2023.
We remain open to acquisition opportunities that are priced sensibly, are the right fit for our organisation and that can deliver value for our shareholders.
I have never been so positive about the future of Aeorema. Cheerful Twentyfirst is robust and ever growing, Eventful is thriving and, under the new leadership of André Shahrdar in our US office, we believe we can achieve great things in North America.
In closing, I would like to extend once more a big thank you to our amazing management team, our dedicated, brilliant and talented teams at Cheerful Twentyfirst and Eventful and our wonderful and loyal investors. Your unwavering support and commitment has been instrumental in making this year a resounding success.
Mike Hale
Chairman
13 November 2023
Chief Executive Officer's Report
This has been another exceptional year, achieved through the delivery of extremely creative and consistently high-quality work for our clients, coupled with the commercial agility to develop new markets around the world.
Within the last few months alone, Cheerful Twentyfirst, our creative brand experience agency, has delivered events and experiences in New York, Austin, Tokyo, Brussels, London, Paris, Berlin and of course, Cannes, France. I am hugely pleased with the new ways we are working to delight our clients and build our agency brands across the globe. Creativity and our strong CSR (Corporate Social Responsibility) ethos is at the heart of what we do, but it is our expertise and experience in enabling our clients to communicate effectively with their audiences which has seen us become not only a leading operator but also thought leaders in our industry.
After 12 years at Cannes Lions, June 2023 was our busiest year ever. At this marketing and advertising industry 'tent pole' event we partnered with the most ambitious global brands to deliver seven world class, award nominated, client activations. A particular highlight was the Sport Beach activation we created with Stagwell Global, a multi-billion-dollar NASDAQ listed company. Built on shifting sands, the unique 420 capacity sports stadium brought fans out of the stands and onto the court itself to break down barriers and build long-lasting partnerships for marketers, brands and athletes alike. With over 5,000 guests attending this activation, AdWeek called Sport Beach a "total game changer" for how brands can connect with audiences through events. I'm very proud of the dynamic experiential strategy we adopted, and it has become a cornerstone for ongoing success into 2024.
Our strength in brand experience and activation continues to drive new interest and offer new opportunities. We are modelling new revenue growth streams on the back of our repeated success at Cannes Lions, as we apply our expertise at more 'tentpole' events around the world. In tandem, we continue to see significant growth in our strategic consultancy offering, which has opened new revenue streams within our businesses and introduced new skill sets into our teams.
Achieving our internal five-year revenue goals two-years earlier than expected has, in a large part, been down to our Client Services team. It has been a pleasure to see this part of the business thrive, having moved to an account-based model in 2021. The purpose of this change was to strengthen client relationships, secure repeat work and retain client contracts. I'm delighted to say that this has proved very successful, with us achieving 100% client retention, and an average year-on-year increase in revenue of 47% across our flagship clients.
In addition to our people and profit successes, our dedication to creative excellence has not gone unnoticed within our industry. This year, we had the honour of being named Global Agency of the Year at the C&IT Awards, alongside Creative Team of the Year for the fifth year running at the CN Agency Awards. A real highlight was being awarded the coveted Grand Prix award for the first time as the overall winner of the night at the events and communications industry's prestigious micebook Awards 2023. These accolades are testament to the hard work and commitment of our talented teams and reinforce our position as a leader in our field.
Further afield, our North American arm, Cheerful Twentyfirst Inc., has reported its most successful year to date. After only three years in the North American market, we've broken significant ground with new logo brands and key talent hires. The most exciting being the appointment of our US President, André Shahrdar, who joined in May 2023 and who we believe will be instrumental in our future growth and success in the North American market.
Eventful, our events and incentives agency, has had an excellent 12 months too, reporting year-on-year revenue growth of 140%. The synergy between Eventful and Cheerful Twentyfirst continues to strengthen and open opportunities for cross-client introductions and joint projects. This is particularly the case following the completion of three global events that used both agencies services. The promotion of Claire Gardiner to Managing Director of Eventful in May 2023, having joined in 2011, is also hugely pleasing. I have no doubt that under her guidance we will continue to innovate and deliver extraordinary experiences for our clients, and I look forward to seeing what the next year brings for Eventful.
Across the Group, the investment we have made in our businesses and teams has been instrumental in our growth. This includes significant expansion in our HR and operations capability, which played key roles in implementing new infrastructure and systems to significantly improved processes and efficiencies. Key systems include, the implementation and global roll out of Scoro; our custom project management software, our submission to Ecovadis; an internationally recognised sustainability certification, and achieving ISO 27001; an international standard for information security, for our data security protocols. These initiatives, alongside strengthened HR support for our now 70+ full time staff, are already delivering a great return on investment. This includes stronger scoring during procurement exercises with target brands, and a greater ability to track time and productivity, which enables us to operate more cost effectively. Culturally, the Aeorema Group has also never been stronger, which is an important factor for a people centred business such as ours.
I couldn't be prouder of the remarkable accomplishments of our dedicated team, which we have expanded to include some of the best talent in the industry. We have not only met, but have exceeded our goals, and our agency brands are now recognised on a global scale.
I want to extend my heartfelt thanks to every member of the Aeorema Communications family for making this year an outstanding one. Your contributions and dedication are the driving force behind our success. I would also like to thank all of our shareholders for their continued support and belief in Aeorema, which is a very special company.
Thank you once again, for joining us on this journey.
Steve Quah
CEO
13 November 2023
Strategic Report
The Board presents its Strategic Report on the Group for the year ended 30 June 2023.
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 GBP20,230,231 (2022: GBP12,207,253), operating profit was GBP1,092,920 (2022: GBP871,176) and profit before taxation was GBP1,045,960 (2022: GBP843,564).
The Group had net assets of GBP2,814,356 at the year-end (2022: GBP2,253,564) and net current assets of GBP1,761,557 (2022: GBP1,466,109).
The year ended 30 June 2023 was a highly successful year, with the Group achieving the highest revenue and profit before tax in its history. The Group experienced high growth with its two largest existing clients (refer to note 2) and won new business with a range of clients including the Group's largest brand activation at Cannes Lions International Festival of Creativity 2023 (refer to note 2).
Eventful Limited experienced a record year both in terms of revenue, up 138% (2022: 1,110% increase) compared with the previous year, and profits before tax of GBP205,559 (2022: GBP37,845 loss before tax). The year ended 30 June 2023 represented the first full year since the outbreak of COVID-19 which was unaffected by the pandemic and subsequent travel and social distancing restrictions. As a consequence, there was strong demand from clients to return to in-person events leading to a higher volume of enquiries and bookings compared with the previous year.
Cheerful Twentyfirst, Inc. continued to grow its revenue, up 13% (2022: 630% increase) compared with the previous year. However, investment in new hires, the office and business development and marketing meant that overall profits before tax were GBP317,467 compared with GBP716,075 in the previous year. The Group hired a new President for Cheerful Twentyfirst, Inc. who is tasked with growing the subsidiary's presence in the United States of America.
The Group's headcount grew during the year, hiring on average eight more employees compared with the previous year. These hires included roles essential to ensuring the Group continues to successfully deliver high quality events, including a Technical Director focused on supplier procurement and improving margins. The Group also invested in a number of roles necessary to support the client facing operations and facilitate future growth, including finance, human resources and IT.
The Group's gross profit margin has decreased from 25% in 2022 to 21% in 2023. In part the reduction is a consequence of the Stagwell Cannes Lions activation, a significant build project which historically has lower gross profit margins. However, this event does not account for the entire reduction and management's focus for the year ending 30 June 2024 is on improving the Group's gross profit margin.
Looking ahead, the Group has not currently experienced any difficulties associated with the ongoing war in Ukraine and conflict in Israel, the cost of living crisis or global economic struggles. Demand throughout the Group's trading subsidiaries remains strong, with new clients and projects in the pipeline for the coming year. However, the Board remain acutely aware of the economic difficulties faced both in the UK and globally, and continues to evaluate its investment plans, resourcing and future forecasts on a regular basis.
Key performance indicators
Year 2023 2022 2021 2020 GBP GBP GBP GBP ----------- ----------- ---------- ---------- Revenue 20,230,231 12,207,253 5,094,518 5,475,425 ----------- ----------- ---------- ---------- Operating profit / (loss) 1,092,920 871,176 (188,105) (175,043) ----------- ----------- ---------- ---------- Profit / (loss) before taxation 1,045,960 843,564 (159,698) (217,924) ----------- ----------- ---------- ----------
The Group experienced a 66% increase (2022: 140% increase) in revenue during the year.
Event revenue increased by 77% (2022: 160% increase) in comparison with the previous year. This increase was due in large part to the new client account model approach implemented in previous years and the introduction of client focused account directors which has allowed the Group to develop closer client relationships and grow the number and size of events delivered year on year. As a result of this account model initiative and a focus on marketing, the Group delivered its highest number of and largest ever events at The Cannes Lions International Festival of Creativity, including the new brand activation for Stagwell.
Film revenue decreased by 6% (2022: 52% increase) in comparison with the previous year. This reduction was largely due to a number of one off film projects in the previous year.
Cash ows
Net cash inflow from operating activities was GBP1,456,588 compared with a net cash inflow of GBP921,695 for the year ended 30 June 2022. The cash position increased by GBP729,683 to GBP2,444,100 (2022: increase by GBP612,704 to GBP1,714,417).
Capital expenditure
Total capital expenditure, including expenditure on tangible assets, was GBP325,027 compared with GBP179,475 for the year ended 30 June 2022.
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 24 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 27.
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
13 November 2023
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Notes 2023 2022 GBP GBP Continuing operations Revenue 2 20,230,231 12,207,253 Cost of sales (15,896,463) (9,169,691) --------------------------------------- ------ ------------ Gross profit 4,333,768 3,037,562 Other income 3 - 3,743 Administrative expenses (3,240,848) (2,170,129) ------ ------------- ------------ Operating profit 4 1,092,920 871,176 --------------------------------------- ------ ------------ Finance income 5 215 241 Finance costs 6 (47,175) (27,853) --------------------------------------- ------ ------------ Profit before taxation 1,045,960 843,564 Taxation 7 (288,780) (204,222) ------ ------------- ------------ Profit for the year 757,180 639,342 Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translation of foreign entities (119,547) 42,347 Other comprehensive income for the year (119,547) 42,347 Total comprehensive income for the year attributable to owners of the parent 637,633 681,689 Profit per ordinary share: Total basic earnings per share 10 8.04398p 6.92078p Total diluted earnings per share 10 6.83499p 5.80797p --------------------------------------- ------ ------------
The notes below are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2023
Notes Group Company 2023 2022 2023 2022 GBP GBP GBP GBP Non-current assets Intangible assets 11 566,431 568,931 - - Property, plant and equipment 12 428,509 222,479 - - Right-of-use assets 13 696,986 823,772 - - Investments in subsidiaries 14 - - 1,293,568 1,229,148 Deferred taxation 8 14,844 25,925 - - ------------ ------------ ---------- ---------- Total non-current assets 1,706,770 1,641,107 1,293,568 1,229,148 Current assets Trade and other receivables 15 3,502,522 3,130,035 713,588 689,332 Cash and cash equivalents 16 2,444,100 1,714,417 135,548 1,532 Total current assets 5,946,622 4,844,452 849,136 690,864 Total assets 7,653,392 6,485,559 2,142,704 1,920,012 Current liabilities Trade and other payables 17 (3,882,938) (2,960,221) (104,459) (143,721) Bank loans 18 (83,333) (83,333) - - Lease liabilities 19 (109,058) (121,999) - - Current tax payable (74,736) (177,790) - - Provisions 20 (35,000) (35,000) - - ------------ ------------ ---------- ---------- Total current liabilities (4,185,065) (3,378,343) (104,459) (143,721) Non-current liabilities Bank loans 18 (27,778) (111,111) - - Lease liabilities 19 (612,693) (738,041) - - Provisions 20 (13,500) (4,500) - - ------------ ------------ ---------- ---------- Total non-current liabilities (653,971) (853,652) - - ------------ ------------ ---------- ---------- Total liabilities (4,839,036) (4,231,995) (104,459) (143,721) Net assets 2,814,356 2,253,564 2,038,245 1,776,291 Equity Share capital 21 1,192,250 1,154,750 1,192,250 1,154,750 Share premium 21,876 9,876 21,876 9,876 Merger reserve 16,650 16,650 16,650 16,650 Other reserve 233,375 168,956 233,375 168,956 Capital redemption reserve 257,812 257,812 257,812 257,812 Foreign translation reserve (88,244) 31,303 - - Retained earnings 1,180,637 614,217 316,282 168,247 ------ ------------ ------------ ---------- ---------- Equity attributable to owners of the parent 2,814,356 2,253,564 2,038,245 1,776,291 ------ ------------ ------------ ---------- ----------
The notes below are an integral part of these financial statements.
The profit for the financial year of the holding company was GBP338,795 (2022: GBP148,184).
The financial statements were approved and authorised by the board of directors on 13 November 2023 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 2023
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 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 Comprehensive income for the year, net of tax - - - - - - 757,180 757,180 Dividend paid - - - - - - (190,760) (190,760) Foreign currency translation - - - - - (119,547) - (119,547) Share-based payment - - - 64,419 - - - 64,419 Share issue 37,500 12,000 - - - - - 49,500 At 30 June 2023 1,192,250 21,876 16,650 233,375 257,812 (88,244) 1,180,637 2,814,356 ------------------
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 24.
Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following redemption or purchase of a company's own shares.
Foreign translation reserve represents the accumulated gain or loss resulting from the translation of financial statements denominated in a foreign currency into the Group's reporting currency.
The notes below are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 30 June 2023
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 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 Comprehensive income for the year, net of tax - - - - - 338,795 338,795 Dividend paid - - - - - (190,760) (190,760) Share-based payment - - - 64,419 - - 64,419 Share issue 37,500 12,000 - - - - 49,500 At 30 June 2023 1,192,250 21,876 16,650 233,375 257,812 316,282 2,038,245
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 24.
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 below are an integral part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Notes Group 2023 2022 GBP GBP ------ ---------- ---------- Net cash flow from operating activities 26 1,456,588 921,695 Cash flows from investing activities Finance income 5 215 241 Purchase of property, plant and equipment 12 (325,027) (179,475) Repayment of leasing liabilities (177,500) (74,201) Cash used in investing activities (502,312) (253,435) Cash flows from financing activities Repayment of borrowings (83,333) (55,556) Dividends paid to owners of the company (190,760) - Shares issued 49,500 - ---------- ---------- Cash used in financing activities (224,593) (55,556) Net increase in cash and cash equivalents 729,683 612,704 Cash and cash equivalents at beginning of year 1,714,417 1,101,713 ---------- ---------- Cash and cash equivalents at end of year 2,444,100 1,714,417 ------------------------------------------- ---------- ----------
The notes below are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2023
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 27. 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 are the new accounting standards or amendments applicable for 30 June 2023 yearend, which are effective for accounting periods beginning on or after 1 January 2022.
-- Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards-Subsidiary
-- Amendment to IFRS 9 Financial Instruments-Fees in the '10 per cent' Test for Derecognition of Financial Liabilities
-- Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37) -- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) -- Reference to the Conceptual Framework (Amendments to IFRS 3)
The Group does not believe that there is a material impact on the financial statements from the adoption of these standards.
Future standards in place but not yet effective
The following new standards, amendments or interpretations to existing standards adopted in the United Kingdom, and are mandatory for the Group's accounting periods beginning on or after 1 January 2023 are as follows:
-- 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); and
-- Definition of Accounting Estimates (Amendments to IAS 8).
The Group did not early adopt the above new standards, amendments, or interpretations for 30 June 2023 yearend.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2023. 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 24 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 11 on goodwill impairment and note 13 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 2023 there is only a single reportable segment.
All revenue represents sales to external customers. Three customers (2022: two) are defined as major customers by revenue, contributing more than 10% of the Group revenue.
2023 2022 GBP GBP ---------- ---------- Customer One 3,015,981 1,916,827 Customer Two 2,474,089 - Customer Three 2,258,852 1,816,883 Major customers in the current year 7,748,922 3,733,710 ---------- ----------
The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:
Geographical market 2023 2022 GBP GBP --------------------- ----------- United Kingdom 11,491,547 7,586,982 United States 6,821,433 4,150,179 Rest of the World 1,917,251 470,092 20,230,231 12,207,253 --------------------- ----------- 2023 2022 GBP GBP ------------------------------------------------ ----------- Revenue from contracts with customers - Events 17,915,369 10,135,172 Revenue from contracts with customers - Film 1,675,186 1,785,367 Other revenue 639,676 286,714 Total revenue 20,230,231 12,207,253 ------------------------------------------------ -----------
Contract assets and liabilities from contracts with customers have been recognised as follows:
2023 2022 GBP GBP -------- Deferred income 809,774 839,326 Accrued income 1,350,233 875,002 ---------- --------
Deferred income at the beginning of the period has been recognised as revenue during the period. Deferred income carried forward at the year end will be recognised within the next year.
3 Other income
Other income 2023 2022 GBP GBP --------------------------------------------- ------ Coronavirus job retention scheme government grant - 1,168 Business interruption payment grant - 2,575 - 3,743 --------------------------------------------- ------
During the prior 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: 2023 2022 GBP GBP -------------------------------------------------- ---------- Cost of sales Depreciation of fixtures, fittings and equipment 75,521 54,101 Amortisation of intangible assets 2,500 2,500 Staff costs (see note 23) 3,060,948 2,135,136 Administrative expenses Depreciation of right-of-use assets 126,786 82,361 Depreciation of leasehold land and buildings 34,243 1,935 (Profit) / loss on foreign exchange differences 31,888 14,465 Fees payable to the Company's auditor in respect of: Audit of the Company's annual accounts 12,600 7,842 Audit of the Company's subsidiaries 23,366 26,694 Interest on lease liabilities 39,212 21,191 Staff costs (see note 23) 1,321,451 1,107,745 ---------- ----------
5 Finance income
Finance income 2023 2022 GBP GBP ------------------------ ----- Bank interest received 215 241 ------------------------ -----
6 Finance costs
Finance costs 2023 2022 GBP GBP ------------------------------------------------- ------- Coronavirus business interruption loan interest 7,963 6,662 Lease interest 39,212 21,191 47,175 27,853 ------------------------------------------------- -------
7 Taxation
2023 2022 GBP GBP ---------------------------------------------------- --------- The tax charge comprises: Current tax Current year 277,699 232,206 --------- 277,699 232,206 Deferred tax (see note 8) Current year 11,081 (27,984) --------- 11,081 (27,984) Total tax charge in the statement of comprehensive income 288,780 204,222 Factors affecting the tax charge for the year Profit on ordinary activities before taxation from continuing operations 1,045,960 843,564 Profit on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 20.5% (2022: 19%) 214,422 160,277 Effects of: Non-deductible expenses 74,358 43,945 74,358 43,945 Total tax charge 288,780 204,222 ---------------------------------------------------- ---------
The Group has estimated losses of GBP375,762 (2022: GBP685,568) available to carry forward against future trading profits. Losses totalling GBP375,762 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.
8 Deferred taxation
Group 2023 2022 GBP GBP ----------------------------------------------- --------- Property, plant and equipment temporary differences (83,481) (39,435) Temporary differences 98,325 55,823 Tax losses - 9,537 --------- 14,844 25,925 At 1 July 25,925 (2,059) Transfer to Statement of Comprehensive Income (11,081) 27,984 At 30 June 14,844 25,925 ----------------------------------------------- ---------
9 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 GBP338,795 (2022: GBP148,184).
10 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:
2023 2022 GBP GBP ----------- ----------- Basic earnings per share Profit for the year attributable to owners of the Company 757,180 639,342 Basic weighted average number of shares 9,413,000 9,238,000 Dilutive potential ordinary shares: Employee share options 1,665,000 1,770,000 Diluted weighted average number of shares 11,078,000 11,008,000 ----------- -----------
11 Intangible fixed assets
Intellectual Group Goodwill Property Total GBP GBP GBP -------------------------------- ------------- Cost At 30 June 2021 2,927,486 10,000 2,937,486 At 30 June 2022 2,927,486 10,000 2,937,486 At 30 June 2023 2,927,486 10,000 2,937,486 Impairments and amortisation At 30 June 2021 2,363,138 2,917 2,366,055 Charge for the year - 2,500 2,500 At 30 June 2022 2,363,138 5,417 2,368,555 Charge for the year - 2,500 2,500 At 30 June 2023 2,363,138 7,917 2,371,055 Net book value At 30 June 2021 564,348 7,083 571,431 At 30 June 2022 564,348 4,583 568,931 At 30 June 2023 564,348 2,083 566,431 ---------- ------------- ----------
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 2023-24 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 3% 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 15,646,053 (712,679) 27,618,896 11,118,210 Carrying amount in financial statements 365,154 365,154 365,154 365,154 Difference 15,280,899 (1,077,833) 27,253,742 10,753,056 ----------- ------------ ----------- Discount Discount Rate of Rate of Eventful Limited 3% Growth 0% Growth 5% 15% GBP GBP GBP GBP ---------- --------- Value in use calculations 563,932 (798.256) 796,692 460,377 Carrying amount in financial statements 199,194 199,194 199,194 199,194 Difference 364,738 (997,450) 597,498 261,183 ---------- ---------- --------- Discount Discount Rate of Rate of Combined 4% Growth 0% Growth 5% 15% GBP GBP GBP GBP ------------ ----------- Value in use calculations 16,209,985 (1,510,935) 28,415,588 11,578,587 Carrying amount in financial statements 564,348 564,348 564,348 564,348 Difference 15,645,637 (2,075,283) 27,851,240 11,014,239 ----------- ------------ -----------
12 Property, plant and equipment
Leasehold Fixtures, Group land fittings Total and buildings and equipment GBP GBP GBP --------------------------- -------------- Cost 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 Additions 154,068 170,959 325,027 Disposals - (72,449) (72,449) Foreign exchange movement - (143) (143) At 30 June 2023 252,889 403,262 656,151 Depreciation 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 Charge for the year 34,243 75,521 109,764 Eliminated on disposal - (63,308) (63,308) Foreign exchange movement - (51) (51) At 30 June 2023 36,178 191,464 227,642 Net book value At 30 June 2021 - 103,477 103,477 At 30 June 2022 96,886 125,593 222,479 At 30 June 2023 216,711 211,798 428,509 -------------- -------------- ---------
13 Right-of-use assets
Leasehold Group Property GBP ---------- Cost At 30 June 2021 18,995 Additions 887,138 Disposals (18,995) At 30 June 2022 887,138 At 30 June 2023 887,138 Depreciation At 30 June 2021 - Charge for the year 82,361 Disposals (18,995) At 30 June 2022 63,366 Charge for the year 126,786 At 30 June 2023 190,152 Net book value At 30 June 2021 18,995 At 30 June 2022 823,772 At 30 June 2023 696,986 ----------
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 previous 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.
14 Non-current assets - Investments
Company Shares in subsidiary GBP --------------------- Cost At 30 June 2021 3,866,466 Increase in respect of share-based payments 56,895 At 30 June 2022 3,923,361 Increase in respect of share-based payments 64,419 Incorporation of subsidiary 1 At 30 June 2023 3,987,781 Provision At 30 June 2021 2,694,213 At 30 June 2022 2,694,213 At 30 June 2023 2,694,213 Net book value At 30 June 2021 1,172,253 At 30 June 2022 1,229,148 At 30 June 2023 1,293,568 ---------------------
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings Country of Profit / (loss) before tax for the Net assets year ended at year Shares 30 June ended 30 Registration held 2023 June 2023 or incorporation Class % GBP GBP ------------------ ---------- ---- ------------ ----------- England and Aeorema Limited Wales Ordinary 100 781,754 1,097,075 England and Eventful Limited Wales Ordinary 100 205,559 140,109 Twentyfirst Limited England and (Dormant) Wales Ordinary 100 - 1,362 Cheerful Twentyfirst, United States Inc. of America Ordinary 100 317,467 424,412 Cheerful Twentyfirst B.V. The Netherlands Ordinary 100 (9,427) (7,635) ------------------ ---------- ---- ------------ -----------
During the year 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 Strawinskylaan 569, 1077 XX, Amsterdam.
15 Trade and other receivables
Group Company 2023 2022 2023 2022 GBP GBP GBP GBP ---------- -------- Trade receivables 1,649,905 1,980,121 - - Related party receivables - - 689,087 666,017 Other receivables 170,188 78,536 8,819 14,982 Prepayments and accrued income 1,682,429 1,071,378 15,682 8,333 3,502,522 3,130,035 713,588 689,332 ---------- ---------- --------
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 GBP308,531 (2022: GBP694,325) were past due but not impaired. These amounts are still considered recoverable. The ageing of these trade receivables is as follows:
Group 2023 2022 GBP GBP -------- Less than 90 days overdue 160,286 566,605 More than 90 days overdue 148,245 127,720 308,531 694,325 -------- --------
16 Cash at bank and in hand
Group Company 2023 2022 2023 2022 GBP GBP GBP GBP ---------- ------ Bank balances 2,444,100 1,714,417 135,548 1,532 2,444,100 1,714,417 135,548 1,532 ---------- ---------- ------
17 Trade and other payables
Group Company 2023 2022 2023 2022 GBP GBP GBP GBP ------------------------------ ---------- -------- Trade payables 1,587,052 796,671 21,604 5,411 Related party payables - - 67,355 67,355 Taxes and social security costs 36,528 466,847 - - Other payables 121,581 124,737 - 50,000 Accruals and deferred income 2,137,777 1,571,966 15,500 20,955 3,882,938 2,960,221 104,459 143,721 ------------------------------ ---------- --------
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.
18 Bank Loans
2023 2022 GBP GBP -------- Bank Loan Current 83,333 83,333 Non-current 27,778 111,111 111,111 194,444 -------- --------
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 GBP7,963 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.
19 Leases
The balance sheet shows the following amounts relating to leases:
Group 2023 2022 GBP GBP ---------- Right-of-use assets Buildings 696,986 823,772 696,986 823,772 ---------- ---------- Group 2023 2022 GBP GBP -------- Lease liabilities Current 109,058 121,999 Non-current 612,693 738,041 721,751 860,040 -------- -------- Group 2023 2022 GBP GBP -------- -------- Maturity analysis - contractual undiscounted cash flows Less than one year 142,000 213,000 One to five years 639,000 710,000 More than five years - 71,000 781,000 994,000 -------- -------- Group 2023 2022 GBP GBP ------------------------------- ------- Interest on lease liabilities 39,212 21,191 39,212 21,191 ------- -------
20 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 Charged to statement of comprehensive income 9,000 9,000 At 30 June 2023 48,500 48,500 ---------------- -------- Leasehold Total Group dilapidations GBP GBP ------------- -------- Current 35,000 35,000 Non-current 13,500 13,500 48,500 48,500 ---------------- --------
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.
21 Share capital
2023 2022 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 2021 9,238,000 1,154,750 At 30 June 2022 9,238,000 1,154,750 Shares issued during the year 300,000 37,500 At 30 June 2023 9,538,000 1,192,250 ---------------------------- ----------------
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 24 for details of share options outstanding.
22 Directors' emoluments
Salary, Salary, fees, bonuses fees, bonuses and benefits and benefits in kind in kind Pensions Pensions Total Total 2023 2022 2023 2022 2023 2022 GBP GBP GBP GBP GBP GBP --------------- --------------- --------- --------- -------- -------- M Hale - - - - - - S Haffner 16,250 15,000 - - 16,250 15,000 R Owen 20,000 20,000 - - 20,000 20,000 S Quah 219,375 151,057 9,375 7,500 228,750 158,557 A Harvey 165,000 112,377 7,657 6,172 172,657 118,549 H Luffman 16,250 4,558 - - 16,250 4,558 436,875 302,992 17,032 13,672 453,907 316,664 --------------- --------------- --------- --------- -------- --------
The remuneration of directors of the Company is set out below.
During the year M Hale waived his right to fees of GBP15,000 (2022: 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 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 25).
23 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees Group Company 2023 Number 2022 Number 2023 Number 2022 Number Administration and production 63 55 5 5 ------------ ------------ ------------
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:
Employment costs Group Company 2023 2022 2023 2022 GBP GBP GBP GBP ---------- ------- Wages and salaries 3,759,340 2,827,204 52,500 39,558 Social security costs 429,412 294,872 - - Pension costs 129,228 63,910 - - Share-based payments 64,419 56,895 - - 4,382,399 3,242,881 52,500 39,558 ---------- ---------- -------
24 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:
Number Number of Exercise of options options 2022 Date of grant price Exercise period 2023 From To --------- ---------------- -------------- ------------ -------------- 25 April 2013 16.5p 25 April 2016 24 April 2023 - 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 2021 31.0p 5 November 2023 29 April 2031 200,000 200,000 29 April 2021 50.0p 5 November 2023 29 April 2031 200,000 200,000 29 April 2021 70.0p 5 November 2023 29 April 2031 200,000 200,000 23 May 2022 60.0p 23 May 2025 23 May 2032 100,000 150,000 19 October 19 October 2022 71.0p 19 October 2025 2032 110,000 - 1,530,000 1,770,000 --------- ---------------- -------------- ------------ --------------
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 2023 2023 2022 2022 GBP GBP ---------- ------------------ ---------- ------------------ Outstanding at beginning of the year 1,770,000 0.40 1,920,000 0.37 Granted during the year 110,000 0.71 150,000 0.60 Cancelled during the year (50,000) (0.60) (300,000) (0.50) Exercised during the year (300,000) (0.17) - - Outstanding at end of the year 1,530,000 0.48 1,770,000 0.40 ---------- ------------------ ---------- ------------------ Exercisable at the end of the year 720,000 0.28 1,020,000 0.25 ---------- ------------------ ---------- ------------------
The exercise price of options outstanding at the year-end was GBP0.481 (2022: GBP0.404) and their weighted average contractual life was 6.8 years (2022: 6.5 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:
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 -------------- 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 -------------- 19 October Grant date 2022 Model used Black-Scholes Share price at grant date 71.0p Exercise price 71.0p Contractual life 10 years Risk free rate 3.87% Expected volatility 177.03% Expected dividend rate 0% Fair value option 26.581p --------------
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:
2023 2022 GBP GBP ---------------------------- ------- Share-based payment charge 64,419 56,895 ---------------------------- -------
25 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:
2023 2022 GBP GBP ----------------------------------- -------- Amounts owed by subsidiaries Total amount owed by subsidiaries 689,087 666,017 Amounts owed to subsidiaries Total amount owed to subsidiaries 67,355 67,355 -------- --------
Aeorema Limited
The company received dividends totalling GBP350,000 during the year (2022: GBP125,000) from its subsidiary, Aeorema Limited. The company transferred a VAT receivable of GBP33,245 (2022: GBP17,424) 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 GBP36,250 (2022: GBP24,558).
Aeorema Limited paid expenses totalling GBP237,135 (2022: GBP114,052) on behalf of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of GBP186,800 to Aeorema Communications plc (2022: GBP10,000).
Cheerful Twentyfirst, Inc.
The company received dividends totalling GBP150,000 during the year (2022: GBP125,000) from its subsidiary, Cheerful Twentyfirst, Inc.
Eventful Limited
The company received dividends totalling GBP100,000 during the year (2022: GBP25,000) from its subsidiary, Eventful Limited.
Compensation of key management
The compensation of key management (including directors) of the Group is as follows:
2023 2022 GBP GBP ------------------------------ -------- Short-term employee benefits 442,158 302,991 Post-employment benefits 17,032 13,672 459,190 316,663 -------- --------
The share options held by directors of the Company are disclosed in note 22. During the year, a charge of GBP49,905 (2022: GBP49,905) was recognised in the Consolidated Statement of Comprehensive Income in respect of these share options.
During the year S Quah received an interest-free loan of GBP40,000 (2022: GBPnil). 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 2023 2022 GBP GBP Aeorema Communications plc 16,250 15,000 Aeorema Limited 11,450 9,650 27,700 24,650 ------------------------------------------ -------
At the year end, the Group had an outstanding trade payable balance to Harris and Trotter LLP of GBP5,000 (2022: GBP5,630).
26 Cash flows
Group 2023 2022 GBP GBP ---------- ------------ Cash flows from operating activities Profit / (loss) before taxation 1,045,960 843,564 Depreciation of property, plant and equipment 109,764 56,036 Depreciation of right-of-use assets 126,786 82,361 Amortisation of intangible fixed assets 2,500 2,500 Loss on disposal of fixed assets 9,141 4,646 Share-based payment expense 64,419 56,895 Finance income (215) (241) Interest on lease liabilities 39,212 21,191 Exchange rate differences on translation (119,455) 42,138 1,278,112 1,109,090 Increase in trade and other payables 931,716 1,557,234 Decrease in trade and other receivables (372,487) (1,700,972) Taxation paid (380,753) (43,657) Cash generated from operating activities 1,456,588 921,695 ----------------------------------------------- ------------
27 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 2023 2022 2023 2022 GBP GBP GBP GBP ---------- ---------- ---------- Financial Assets Trade and other receivables 3,170,326 2,933,659 589,087 666,017 Cash and cash equivalents 2,444,100 1,714,417 135,548 1,532 Investments in subsidiaries - - 1,293,567 1,229,148 Total 5,614,426 4,648,076 2,018,202 1,896,697 Financial Liabilities Trade and other payables 1,819,744 1,115,852 88,959 122,766 Accruals 1,328,001 732,640 17,000 20,955 Total 3,147,745 1,848,492 105,959 143,721 ---------- ---------- ---------- ----------
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 2023 was GBP1,649,905 (2022: GBP1,980,121). 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 Group 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 GBP3,147,899 (2022: GBP2,327,501).
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 GBP2,444,100 (2022: GBP1,714,417). 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 GBP2,814,356 (2022: GBP2,253,564).
28 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were GBP129,228 (2022: GBP63,910). At the end of the reporting period GBP17,475 (2022: GBP12,021) of contributions were due in respect of the period.
29 Dividends
In respect of the current year, the directors propose that a final dividend of 3 pence per share (2022: 2 pence) be paid to shareholders on 19 January 2024. 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 December 2023. The total estimated dividend to be paid is GBP286,140. The payment of this dividend will not have any tax consequences for the Group.
30 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 2023 the Company had no potential liability under the terms of the registration.
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(END) Dow Jones Newswires
November 14, 2023 02:00 ET (07:00 GMT)
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