REG - Aeorema Comms Plc - Final Results <Origin Href="QuoteRef">AEO.L</Origin> - Part 1
RNS Number : 4286UAeorema Communications Plc16 October 2014Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
16 October 2014
Aeorema Communications plc ('Aeorema' or 'the Company')
Final Results
Aeorema Communications plc, the AIM-traded live events agency, announces its results for the year ended 30 June 2014.
Overview
Positive progress made towards building the Group as a leading provider of live events
Increased profits before tax from continuing operations to 504,841 (2013: 358,864)
Increased revenues to 4,764,584 (2013: 3,992,751)
Cash at bank and in hand of 1,620,895 (2013: 1,581,790)
Recommend dividend payment of 2p - plus special 3p dividend to return cash to shareholders (2013: dividend payment: 1.5p and special dividend: nil)
Secured preferred supplier status positions with leading financial clients
A new single brand, Cheerful 21st, and an associated website is being developed to reflect future strategy to become the live event agency of choice
Chairman's Statement
Aeorema continues to build its position as a leading provider of live events by exploiting the strengths of its team and bringing new innovative ideas and products effectively to life.
During the year under review, we signed a number of deals, increasing both market share and profitability. We were particularly pleased to win a three year contract worth over 2 million with an existing technology client to run a live event at the annual Cannes Lions advertising festival. We ran the first of these events this year, which was a great success. Furthermore, Aeorema extended and won new roster positions with key organisations in the financial services industry. Notably, we also created several 'bid' films for clients, which resulted in them winning major projects.
I believe that organisations choose to work with Aeorema for various reasons. Firstly, we provide both new and existing customers with award-winning solutions using the latest technologies and interactive platforms; during the year we won several awards at the event industry's two major ceremonies - Eventia and Livecom. Secondly, our clients choose us because they know we are committed to their success, have the reputation for encouraging them to push boundaries, provide seamless, progressive, solutions and help them to stand out in a crowded market now, and into the future.
It is inspiring to see the way our team works together and strives for ways to improve our collective performance. Throughout the year, their commitment, talent and integrity have led to the delivery of remarkable results. Post period end, we strengthened this team with the appointment of Steve Garvey as our new CEO. Steve's 25 years' experience in corporate communications, which saw him work for a number of cutting edge businesses in the sector, will be invaluable as we take Aeorema into a new phase of growth.
Our emphasis now is on enabling Aeorema to achieve its full potential by continuing to excite our clients with superb concepts and exceptional end results. Our five year plan is to become 'the' live events agency of choice, with a strong focus on innovation. To this end, we are launching a new single brand, Cheerful 21st, as well as a website, with a focus on live events. We intend to continue to grow our business organically, expanding both revenues and profits. Importantly, we signed a new five-year lease on our office in the West End, which is large enough to support this growth.
The results for the year show a profit before taxation from continuing operations of 504,841 (2013: 358,864) on revenue of 4,764,584 (2013: 3,992,751). We remain cash positive with cash at bank and in hand of 1,620,895 (2013: 1,581,790).
The Board is proposing a dividend of 2 pence per share to be paid on 21 November 2014 to shareholders on the register on 24 October 2014. This has increased substantially from last year's dividend of 1.5p and additionally, in light of our strong cash position at the year end, the Board is delighted to propose a special dividend of 3 pence per share to be paid on 21 November 2014 to shareholders on the register on 24 October 2014. The ex-dividend date for both the final dividend and the special dividend will be 23 October 2014.
On behalf of the board, I would like to thank our team for their hard work during the past year. Our thanks also go to our shareholders, whose continued support of Aeorema has helped us achieve record levels of performance in the year to June 2014.
M Hale
Chairman
14 October 2014
For further information visit www.aeorema.com or contact:
Gary Fitzpatrick
Aeorema Communications plc
Tel: 020 7291 0444
Mark Percy/Catherine Leftley/David Banks
Cantor Fitzgerald Europe
Tel: 020 7894 7000
Elisabeth Cowell/ Charlotte Heap
St Brides Media & Finance Ltd
Tel: 020 7236 1177
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2014
Notes
2014
2013
As restated
Continuing operations
Revenue
2
4,764,584
3,992,751
Cost of sales
(2,794,629)
(2,253,321)
Gross profit
1,969,955
1,739,430
Administrative expenses
(1,465,520)
(1,434,769)
Operating Profit
3
504,435
304,661
Gain recognised on disposal of former subsidiary
24
-
54,021
Finance income
4
406
195
Finance expense
4
-
(13)
Profit before taxation
504,841
358,864
Taxation
5
(89,145)
(79,087)
Profit for the year from continuing operations
415,696
279,777
Discontinued operations
Loss for the period from discontinued operations
7
-
(16,276)
Total comprehensive income for the year attributable to owners of the parent
415,696
263,501
Profit per ordinary share:
Basic
From continuing operations
From discontinued operations
Total basic earnings per share
9
5.02290p
-
5.02290p
3.4809p
(0.2025p)
3.2784p
Diluted
From continuing operations
From discontinued operations
Total diluted earnings per share
9
4.55487p
-
4.55487p
3.25117p
(0.18914p)
3.06203p
There were no other comprehensive income items.Statement of Financial Position
As at 30 June 2014
Notes
Group
Company
2014
2013
2014
2013
Non-current assets
Intangible assets
10
365,154
365,154
-
-
Property, plant and equipment
11
67,449
77,040
-
-
Deferred taxation
6
24,145
8,277
-
-
Investments in subsidiaries
12
-
-
553,196
538,307
Total non-current assets
456,748
450,471
553,196
538,307
Current assets
Inventories
2,674
2,675
-
-
Trade and other receivables
13
1,475,921
606,557
357,873
468,462
Cash and cash equivalents
14
1,620,895
1,581,790
734,628
782,780
Total current assets
3,099,490
2,191,022
1,092,501
1,251,242
Total assets
3,556,238
2,641,493
1,645,697
1,789,549
Current liabilities
Trade and other payables
15
(1,589,007)
(1,140,377)
(89,730)
(282,081)
Net assets
1,967,231
1,501,116
1,555,967
1,507,468
Equity
Share capital
16
1,079,688
1,004,688
1,079,688
1,004,688
Merger reserve
17
16,650
16,650
16,650
16,650
Other reserve
18
19,500
-
19,500
-
Share-based payment reserve
110,972
96,083
110,972
96,083
Capital redemption reserve
257,812
257,812
257,812
257,812
Retained earnings
482,609
125,883
71,345
132,235
Equity attributable to owners of the parent
1,967,231
1,501,116
1,555,967
1,507,468
Statement of Changes in Equity
For the year ended 30 June 2014
Group
Share capital
Merger reserve
Other reserve
Share-based payment reserve
Capital redemption reserve
Retained earnings
Total equity
At 1 July 2012
1,004,688
16,650
-
76,268
257,812
(137,618)
1,217,800
Comprehensive income for the year, net of tax
-
-
-
-
-
263,501
263,501
Share-based payments
-
-
-
19,815
-
-
19,815
At 30 June 2013
1,004,688
16,650
-
96,083
257,812
125,883
1,501,116
At 1 July 2013
1,004,688
16,650
-
96,083
257,812
125,883
1,501,116
Comprehensive income for the year, net of tax
-
-
-
-
-
415,696
415,696
Tax credit relating to share option scheme
-
-
-
-
-
61,594
61,594
Dividends paid
-
-
-
-
-
(120,564)
(120,564)
Shares issued in the period
75,000
-
19,500
-
-
-
94,500
Share-based payments
-
-
-
14,889
-
-
14,889
At 30 June 2014
1,079,688
16,650
19,500
110,972
257,812
482,609
1,967,231
Company
Share capital
Merger reserve
Other reserve
Share- based payment reserve
Capital redemption reserve
Retained earnings
Total equity
At 1 July 2012
1,004,688
16,650
-
76,268
257,812
(548,586)
806,832
Comprehensive income for the year, net of tax
-
-
-
-
-
680,821
680,821
Share-based payments
-
-
-
19,815
-
-
19,815
At 30 June 2013
1,004,688
16,650
-
96,083
257,812
132,235
1,507,468
At 1 July 2013
1,004,688
16,650
-
96,083
257,812
132,235
1,507,468
Comprehensive income for the year, net of tax
-
-
-
-
-
59,674
59,674
Dividends paid
-
-
-
-
-
(120,564)
(120,564)
Shares issued in the period
75,000
-
19,500
-
-
-
94,500
Share-based payments
-
-
-
14,889
-
-
14,889
At 30 June 2014
1,079,688
16,650
19,500
110,972
257,812
71,345
1,555,967
Statement of Cash Flows
For the year ended 30 June 2014
Notes
Group
Company
2014
2013
2014
2013
Net cash flow from operating activities
25
106,751
847,834
(152,338)
493,244
Cash flows from investing activities
Finance income
406
195
250
138
Purchase of property, plant and equipment
11
(41,988)
(51,335)
-
-
Proceeds from sale of property, plant and equipment
-
44,875
-
-
Dividends received by the Company
-
-
130,000
-
Disposal of subsidiary (net of cash disposed)
24
-
(16,421)
-
-
Cash (used) / generated in investing activities
(41,582)
(22,686)
130,250
138
Cash flows from financing activities
Proceeds of share issue
94,500
-
94,500
-
Dividends paid to owners of the Company
(120,564)
-
(120,564)
-
Cash used in financing activities
(26,064)
-
(26,064)
-
Net increase/(decrease) in cash and cash equivalents
39,105
825,148
(48,152)
493,382
Cash and cash equivalents at beginning of year
1,581,790
756,642
782,780
289,398
Cash and cash equivalents at end of year
14
1,620,895
1,581,790
734,628
782,780
Notes to the consolidated financial statements
For the year ended 30 June 2014
1 Accounting policies
Aeorema Communications plc is a public limited company incorporated in the United Kingdom. The Company is domiciled in the United Kingdom and its principal place of business is Moray House, 23/31 Great Titchfield Street, London W1W 7PA. The Company's Ordinary Shares are traded on the AIM Market.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
Going concern
The Group's business activities, together with the factors likely to affect its future development and performance are set out in the review of business contained in the Chairman's Statement. The Group's financial statements show details of its financial position including, in note 26, details of its financial instruments and exposure to risk.
After reviewing the Group's budget for the next financial year, other medium term plans and considering the risks outlined in note 26, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.
Basis of Preparation
The Group's financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The following new standards, amendments to standards and interpretations, applied for the first time from 1 July 2013.
IFRS 1 (Amended) 'First-time Adoption of International Financial Reporting Standards', effective 1 January 2013.
IFRS 7 'Financial Instruments: Disclosures', effective 1 January 2013.
IFRS 10 'Consolidated Financial Statements', effective 1 January 2013.
IFRS 11 'Joint Arrangements', effective 1 January 2013.
IFRS 12 'Disclosure of Interests in Other Entities', effective 1 January 2013.
IFRS 13 'Fair Value Measurement', effective 1 January 2013.
IAS 1 (Amended) 'Presentation of Other Comprehensive Income', effective 1 January 2013.
IAS 16 (Amended) 'Property, Plant and Equipment', effective 1 January 2013.
IAS 19 (Amended) 'Employee Benefits', effective 1 January 2013.
IAS 27 (Revised) 'Separate Financial Statements', effective 1 January 2013.
IAS 28 (Revised) 'Investments in Associates and Joint Ventures', effective 1 January 2013.
IAS 32 (Amended) 'Financial Instruments: Presentation', effective 1 January 2013.
IAS 34 (Amended) 'Interim Financial Reporting', effective 1 January 2013.
IFRIC 20 'Stripping Costs in the Production Phase of a Surface Mine', effective 1 January 2013.
The adoption of these revised and amended standards has not impacted on the Annual Report and Financial Statements.
Adopted IFRSs not yet applied
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2013 and have not been adopted early by the Group:
IFRS 2 (Amended) 'Share-Based Payments', effective 1 July 2014.
IFRS 3 (Amended) 'Business Combinations', effective 1 July 2014.
IFRS 7 (Amended) 'Financial Instruments: Disclosures', effective 1 January 2015.
IFRS 8 (Amended) 'Operating Segments', effective 1 July 2014.
IFRS 9 'Financial Instruments', effective 1 January 2018.
IFRS 11 (Amended) 'Accounting for Acquisitions of Interests in Joint Operations', effective 1 July 2016.
IFRS 14 'Regulatory Deferral Accounts', effective 1 July 2016.
IFRS 15 'Revenue for Contracts with Customers', effective 1 July 2017.
'Investment Entities' (Amendments to IFRS 10, IFRS 12 and IAS 27) effective 1 January 2014.
IAS 16 (Amended) 'Property, Plant and Equipment', effective 1 July 2014.
IAS 19 (Amended) 'Employee Benefits', effective 1 July 2014.
IAS 24 (Amended) 'Related Party Disclosures', effective 1 July 2014.
IAS 27 (Amended) 'Separate Financial Statements', effective 1 January 2016.
IAS 32 (Amended) 'Financial Instruments: Presentation- Offsetting Financial Assets and Financial Liabilities', effective 1 January 2014.
IAS 36 (Amended) 'Recoverable Amounts Disclosures for Non-Financial Assets', effective 1 January 2014.
IAS 38 (Amended) 'Intangible Assets', effective 1 July 2014.
IAS 39 (Amended) 'Novation of Derivatives and Continuation of Hedge Accounting', effective 1 January 2014.
IAS 40 (Amended) 'Investment Property', effective 1 January 2014.
'Clarification of Acceptable Methods of Depreciation and Amortisation' (Amendments to IAS 16 and IAS 38) effective 1 January 2016.
'Agriculture: Bearer Plants' (Amendments to IAS 16 and IAS 41) effective 1 January 2016.
IFRIC Interpretation 21 'Levies', effective 1 January 2014.
Management does not believe that the application of these standards, where applicable, will have an impact on the financial statements, except for the requirement of additional disclosures.
Presentation
The Directors have determined that wages and salaries relating to production personnel previously disclosed in the Consolidated Statement of Comprehensive Income within Cost of Sales should now be reflected as Administrative Expenses, in order to more accurately reflect the nature of these costs. Accordingly, an amount of 739,679 (2013: 572,169) has been reclassified to present these expenses in a consistent manner.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2014. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. Subsidiaries are fully consolidated from the date on which control is transferred until the date that such 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. Revenue is measured at the fair value of consideration received taking into account any trade discounts and volume rebates. Revenue for all business segments is recognised when the Group has earned the right to receive consideration for its services.
Intangible assets - goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill acquired represents the excess of the fair value of the consideration and associated costs over the fair value of the identifiable net assets acquired.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. At the date of acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory company level as the case may be, for the purpose of impairment testing and is tested at least annually for impairment. On subsequent disposal or termination of a business acquired, the profit or loss on termination is calculated after charging the carrying value of any related goodwill.
Property, plant and equipment
Property, plant and equipment is stated in the financial statements at cost less accumulated depreciation and any impairment value. Depreciation is provided to write off the cost less estimated residual value of property, plant and equipment over its expected useful life (which is reviewed at least at each financial year end), as follows:
Leasehold land and buildings
straight line over the life of the lease (5 years)
Fixtures, fittings and equipment
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 income statement 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 income statement in those expense categories consistent with the function of the impaired asset.
Operating leases
Rentals under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Trade and other receivables
Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, of 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.
Finance income
Financial 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.
Pension costs
The Group does not operate a pension scheme for its employees. It does however, make contributions to the private pension arrangements of certain employees. These arrangements are of the money purchase type and the amount charged to the Statement of Comprehensive Income represents the contributions payable by the Group for the period.
Financial instruments
The Group does not enter into derivative transactions and does not trade in financial instruments. Financial assets and liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group's equity instruments comprise 'share capital' in the Statement of Financial Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the reporting period. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the Statement of Comprehensive Income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based on the historical share price volatility for the Company. Further information is given in note 22 to the financial statements.
Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS required management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances. Information about such judgements and estimation is contained in the accounting policies and / or notes to the financial statements and the key areas are summarised below:
a) Depreciation rates are based on the estimated useful lives and residual value of the assets involved.
b) The impairment review of goodwill is based on the estimation of future cash flows and discount rates in order to calculate the present value of the cash flows.
c) The Group operates share incentive schemes as detailed in note 22. In order to calculate the annual charge in accordance with IFRS 2, management are required to make a number of assumptions and include, amongst others, volatility and expected life of options.
d) An allowance for uncollectable trade receivables is estimated based on a combination of aging analysis and any specific, known troubled customer accounts.
2 Revenue and segment information
The Company 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 period ending 30 June 2014 there is only a single reportable segment.
All revenue represents sales to external customers. Three customers (2013: one) are defined as major customers by revenue, contributing more than 10% of the Group revenue.
2014
2013
Customer one
1,214,324
1,217,332
Customer two
809,290
-
Customer three
571,188
-
Major customers
2,594,802
1,217,332
The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:
Geographical market
2014
2013
2014
2013
2014
2013
2014
2013
UK
UK
Europe
Europe
Rest of the World
Rest of the World
Total
Total
Revenue
4,493,297
3,803,651
262,306
1,752
8,981
187,348
4,764,584
3,992,751
All non-current assets are based in the UK.
3 Operating profit
Operating profit is stated after charging:
2014
2013
Depreciation of property, plant and equipment
51,579
35,934
Profit on disposal of property, plant and equipment
-
44,875
Fees payable to the Company's auditor in respect of:
Audit of the Company's annual accounts
6,000
6,000
Audit of the Company's subsidiaries
11,500
11,500
Staff costs (see note 21)
1,029,306
1,001,550
Operating leases - land and buildings
77,596
91,438
4 Finance income and expenses
Finance income
2014
2013
Bank interest received
406
195
Finance expenses
2014
2013
Other interest payable
-
13
5 Taxation
2014
2013
The tax charge comprises:
Current tax
Prior period adjustment
234
-
Current year
104,779
67,652
105,013
67,652
Deferred tax
Current year
(15,868)
11,435
(15,868)
11,435
Total tax charge in the statement of comprehensive income
89,145
79,087
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations
504,841
358,864
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 23% (2013: 20%)
116,113
82,539
Effects of:
Non-deductible expenses
(1,114)
12,494
Income that is exempt from taxation
-
(22,745)
Depreciation, impairment losses and disposals
11,863
8,130
Capital allowances
(11,617)
(8,671)
Share-based payment
3,424
7,785
Losses utilised
-
(9,505)
Share options exercised
(12,167)
-
Marginal relief
(1,723)
(2,375)
Prior period adjustment
234
-
Deferred tax asset movement
(15,868)
11,435
(26,968)
(3,452)
Total taxation charge
89,145
79,087
The Group has estimated losses of 375,762 (2013: 375,762) available to carry forward against future trading profits. These losses are in Aeorema Communications plc which is not currently making taxable profits as all trading is undertaken by its subsidiary Aeorema Limited.
6 Deferred taxation
2014
2013
Property, plant and equipment temporary differences
(5,174)
(1,094)
Temporary differences
29,319
9,371
24,145
8,277
At 1 July
8,277
19,712
Transfer to Statement of Comprehensive Income
15,868
(11,435)
At 30 June
24,145
8,277
The deferred tax asset is expected to be utilised given the return to profitability and future trading prospects.
7 Discontinued Operations
On 7 December 2012 the Group disposed of its 100% subsidiary ST16 Limited, which carried out Viral Film operations. ST16 Limited was sold to its directors, S Crofts and J Stinton for proceeds of 5. Details of the assets and liabilities disposed of, and the calculation of the profit or loss on disposal, are disclosed in note 24.
The loss from the discontinued operation included in the profit for the previous year is set out below.
2014
2013
Loss for the year from discontinued operations
Revenue
-
69,002
Expenses
-
(85,278)
Loss for the year from discontinued operations attributable to owners of the company
-
(16,276)
Cash flows from discontinued operations
Net cash outflows from operating activities
-
(90,006)
Net cash inflows from investing activities
-
51,319
Net cash outflows
-
(38,687)
8 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company's Statement of Comprehensive Income has not been included in these financial statements. The retained profit for the financial year of the holding company was 59,674 (2013: 680,821).
9 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used and dilutive earnings per share computations:
2014
2013
Basic earnings per share
Profit for the year attributable to owners of the Company
415,696
263,501
Loss for the period from discontinued operations used in the calculation of basic earnings per share from discontinued operations
-
16,276
Earnings used in the calculation of basic earnings per share from continuing operations
415,696
279,777
Basic weighted average number of shares
8,276,021
8,037,500
Dilutive potential ordinary shares:
Employee share options850,380
567,915
Diluted weighted average number of shares
9,126,401
8,605,415
10 Intangible fixed assets
Group
Goodwill
Cost
At 1 July 2012
2,805,963
Disposal of subsidiary
(77,671)
At 30 June 2013
2,728,292
At 30 June 2014
2,728,292
Impairment and amortisation
At 1 July 2012
2,440,809
Eliminated on disposal
(77,671)
At 30 June 2013
2,363,138
At 30 June 2014
2,363,138
Net book value
At 1 July 2012
365,154
At 30 June 2013
365,154
At 30 June 2014
365,154
Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited (formerly Cheerful Scout Productions Limited).
Impairment - Aeorema Limited (formerly Cheerful Scout Productions Limited)
Goodwill has been tested for impairment based on its future value in use. Future value has been calculated on a discounted cash flow basis using the 2015 budgeted figures as approved by the Board of Directors extended for a period to 5 years and discounted at a rate of 10%. It has been assumed that future growth will be at 1.5%. Using these assumptions, which are based upon past experience, there was no impairment in the year.
Management has assessed the sensitivity of the recoverable amounts in the key assumptions to be as follows: a five percentage increase in the discount rate would reduce the recoverable amount by 326,000 and a one percentage fall in future growth would reduce the recoverable amount by 342,000. However, in both cases there would still be no indication of impairment of goodwill.
11 Property, plant and equipment
Group
Leasehold land
Fixtures, fittings
Total
and buildings
and equipment
Cost
At 1 July 2012
157,063
889,890
1,046,953
Additions
24,034
27,301
51,335
Disposals
(157,063)
(90,870)
(247,933)
Derecognised on disposal of a subsidiary
-
(5,254)
(5,254)
At 30 June 2013
24,034
821,067
845,101
Additions
-
41,988
41,988
At 30 June 2014
24,034
863,055
887,089
Depreciation
At 1 July 2012
153,838
827,187
981,025
Eliminated on disposal of assets
(157,063)
(90,870)
(247,933)
Eliminated on disposal of a subsidiary
-
(965)
(965)
Charge for the year
8,426
27,508
35,934
At 30 June 2013
5,201
762,860
768,061
Charge for the year
16,104
35,475
51,579
At 30 June 2014
21,305
798,335
819,640
Net book value
At 1 July 2012
3,225
62,703
65,928
At 30 June 2013
18,833
58,207
77,040
At 30 June 2014
2,729
64,720
67,449
The gross carrying amount of fully depreciated property, plant and equipment still in use is nil (2013: nil) in relation to leasehold land and buildings and 735,908 (2013: 696,292) in relation to fixtures, fittings and equipment.
12 Non-current assets - Investments
Company
Shares in subsidiary
Cost
At 1 July 2012
3,306,981
Increase in respect of share based payments
12,039
Disposal of subsidiary
(86,500)
At 30 June 2013
3,232,520
Increase in respect of share based payments
14,889
At 30 June 2014
3,247,409
Provision
At 1 July 2012
2,780,713
Disposal of subsidiary
(86,500)
At 30 June 2013
2,694,213
At 30 June 2014
2,694,213
Net book value
At 1 July 2012
526,268
At 30 June 2013
538,307
At 30 June 2014
553,196
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings
Country of
Shares held
registration
or incorporation
Class
%
Aeorema Limited (formerly Cheerful Scout Productions Limited)
England and Wales
Ordinary
100
Twentyfirst Limited
England and Wales
Ordinary
100
The principal activity of these undertakings for the last relevant financial year was as follows:
Company
Principal activity
Aeorema Limited (formerly Cheerful Scout Productions Limited)
Provision of business communication services
Twentyfirst Limited
Non-trading
13 Trade and other receivables
Group
Company
2014
2013
2014
2013
Trade receivables
1,401,432
526,982
-
-
Related party receivables
-
-
353,337
457,863
Other receivables
19,084
20,516
-
6,180
Prepayments and accrued income
55,405
59,059
4,536
4,419
1,475,921
606,557
357,873
468,462
All trade and other receivables are expected to be recovered within 12 months of the end of the reporting period. The fair value of trade and other receivables is the same as the carrying values shown above.At the year end, trade receivables of 344,096 (2013: 262,488) were past due but not impaired. These relate to a number of customers for whom there is no significant change in credit quality and the amounts are still considered recoverable. The ageing of these trade receivables is as follows:
Group
2014
2013
Less than 90 days
317,802
239,164
More than 90 days
26,294
23,324
344,096
262,488
14 Cash and cash equivalents
Group
Company
2014
2013
2014
2013
Bank balances
1,620,895
1,581,790
734,628
782,780
Cash and cash equivalents
1,620,895
1,581,790
734,628
782,780
Cash and cash equivalents in the statement of cash flows
1,620,895
1,581,790
734,628
782,780
15 Trade and other payables
Group
Company
2014
2013
2014
2013
Trade payables
902,860
686,742
1,656
11,114
Related party payables
-
-
67,355
197,355
Taxes and social security costs
301,004
186,474
1,369
250
Other payables
43,842
160
-
-
Accruals and deferred income
341,301
267,001
19,350
73,362
1,589,007
1,140,377
89,730
282,081
All trade and other payables are expected to be settled within 12 months of the end of the reporting period. The fair value of trade and other payables is the same as the carrying values shown above.
16 Share capital
2014
2013
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
At 1 July 2012
8,037,500
1,004,688
At 30 June 2013
8,037,500
1,004,688
Issue of shares
600,000
75,000
At 30 June 2014
8,637,500
1,079,688
19,500 share options were exercised just before the year end with the shares being issued on 2 July 2014.
See note 22 for details of share options outstanding.
17 Merger reserve
Merger reserve
At 1 July 2012
16,650
At 30 June 2013
16,650
At 30 June 2014
16,650
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.
18 Other reserve
Subscriptions received reserve
At 1 July 2012
-
At 30 June 2013
-
Exercise of options
19,500
At 30 June 2014
19,500
On 16 June 2014 104,000 share options were exercised and fully paid for at 18.75p each. The shares were allotted on 2 July 2014. For the earnings per share note these shares are treated as issued on the exercise date. This reserve holds the funds at the year end. The reserve is not distributable.
19 Financial commitments
Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
Group
Land and Buildings
2014
2013
Not later than one year
10,417
-
Later than one year and not later than five years
-
62,500
20 Directors' emoluments
The remuneration of Directors of the Company is set out below.
Salary or fees
Salary or fees
Pensions
Pensions
Total
Total
2014
2013
2014
2013
2014
2013
P Litten
65,000
50,000
59,834
52,483
124,834
102,483
G Fitzpatrick
52,885
50,000
59,834
52,483
112,719
102,483
M Hale
-
-
-
-
-
-
S Garbutta
3,000
1,500
-
-
3,000
1,500
R Owen
7,500
7,500
-
-
7,500
7,500
S Quah (appointed 15 April 2013)
133,000
25,296
-
-
133,000
25,296
261,385
134,296
119,668
104,966
381,053
239,262
The share options held by directors who served during the year are summarised below:
Name
Grant date
Number awarded
Exercise price
Earliest exercise price
Expiry date
S Quah
20 July 2010
300,000
12.50p
20 July 2013
19 July 2020
S Quah
25 April 2013
300,000
16.50p
25 April 2016
24 April 2023
G Fitzpatrick exercised 64,000 shares on 16 June 2014 at 18.75p each resulting in a gain of 31,200.
Fees for S Garbutta are charged by Harris & Trotter LLP, a firm in which he is a member. See note 23.
21 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees
2014
2013
As restated
Number
Number
Administration and production
19
17
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:
Employment costs
2014
2013
Wages and salaries
821,680
782,230
Social security costs
72,897
94,367
Pension costs
119,840
105,138
Share-based payments
14,889
19,815
1,029,306
1,001,550
22 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 grant
Exercise price
Exercise period
Number of options 2014
Number of options 2013
From
To
28 October 2004
18.75p
28 October 2007
27 October 2014
9,000
113,000
20 July 2010
12.5p
20 July 2013
19 July 2020
300,000
1,200,000
25 April 2013
16.5p
25 April 2016
24 April 2023
300,000
300,000
609,000
1,613,000
Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:
Number of options
Weighted average exercise price
Number of options
Weighted average exercise price
2014
2014
2013
2013
Outstanding at beginning of the year
1,613,000
0.11
1,943,000
0.09
Lapsed during the year
(300,000)
(0.13)
(630,000)
(0.23)
Granted during the year
-
-
300,000
0.17
Exercised during the year
(704,000)
(0.13)
Outstanding at end of the year
609,000
0.15
1,613,000
0.11
Exercisable at the end of the year
309,000
0.13
113,000
0.19
The exercise price of options outstanding at the year-end ranged between 0.125 and 0.1875 (2013: 0.125 and 0.2325) and their weighted average contractual life was 7.7 years (2013: 7.7 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
28 October 2004
20 July 2010
9 March 2012
25 April 2013
Model used
Binomial
Black-Scholes
Black-Scholes
Black-Scholes
Share price at grant date
16.25p
8.75p
23.25p
16.5p
Exercise price
18.75p
8.75p
23.25p
16.5p
Contractual life
10 years
10 years
10 years
10 years
Risk free rate
6%
0.5%
0.5%
0.5%
Expected volatility
43%
100%
105%
104%
Expected dividend rate
0%
0%
0%
0%
Fair value option
5.9868p
7.779p
21.053p
14.889p
The expected volatility is determined by calculating the historical volatility of the company's share price over the last three years. The risk free rate is the office Bank of England base rate. The expected dividend rate is zero as the company has not paid dividends in the past.
The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based payment plans:
2014
2013
Share-based payment charge
14,889
19,815
23 Related party transactions
The Group has a related party relationship with its subsidiaries and its directors. Details of transactions between the Company and its subsidiaries are as follows:
2014
2013
Management fees charged by subsidiaries to Aeorema Communications plc
Aeorema Limited (formerly Cheerful Scout Productions Limited)
-
102,483
Amounts owed by subsidiaries
Total amount owed by subsidiaries
353,337
457,863
Amounts owed to subsidiaries
Total amount owed to subsidiaries
67,355
197,355
The compensation of key management (including directors) of the Group is as follows:
2014
2013
Short-term employee benefits
297,687
119,176
Post-employment benefits
119,668
104,966
Share based payment expense
14,889
4,353
432,244
228,495
Aeorema Communications plc is a guarantor for a lease entered into by Aeorema Limited (formerly Cheerful Scout Productions Limited), its subsidiary undertaking.
Harris and Trotter LLP is a firm in which S Garbutta is a member. The amounts charged to the Group for professional services is as follows:
Harris and Trotter LLP - charged during the year
2014
2013
Aeorema Communications plc
15,000
17,071
Aeorema Limited (formerly Cheerful Scout Productions Limited)
22,325
7,200
Twentyfirst Limited
-
7,200
ST16 Limited
-
1,600
37,325
33,071
24 Disposal of a subsidiary
On 7 December 2012 the Group disposed of its 100% subsidiary ST16 Limited, which carried out Viral Film operations.
Consideration received
2014
2013
Consideration received in cash and cash equivalents
-
5
-
5
Analysis of assets and liabilities over which control was lost
2014
2013
Current assets
Cash and cash equivalents
-
16,426
Trade and other receivables
-
11,700
Non-current assets
Property, plant and equipment
-
4,289
Current liabilities
Trade and other payables
-
(86,431)
Net liabilities disposed of
-
(54,016)
Gain on disposal of subsidiary
2014
2013
Consideration received
-
5
Net liabilities disposed of
-
54,016
-
54,021
Net cash outflow on disposal of subsidiary
2014
2013
Consideration received in cash and cash equivalents
-
5
Less: Cash and cash equivalent balances disposed of
-
(16,426)
-
(16,421)
25 Cash flows
Group
Company
2014
2013
2014
2013
Cash flows from operating activities
Profit after taxation
415,696
263,501
59,674
680,821
Tax expense recognised in Consolidated Statement of Comprehensive Income
89,145
79,087
Depreciation
51,579
35,934
-
-
Profit on disposal of property, plant and equipment
-
(44,875)
-
-
Profit on disposal of subsidiary
-
(54,021)
Share-based payment
14,889
19,815
-
7,776
Impairment of investment in subsidiaries
-
-
-
(20,000)
Dividends received by the Company
-
-
(130,000)
-
Finance income
(406)
(195)
(250)
(138)
570,903
299,246
(70,576)
668,459
Increase / (decrease) in trade and other payables
448,630
272,572
(192,351)
240,986
(Increase) / decrease in trade and other receivables
(869,364)
201,285
110,589
(416,201)
Changes in working capital due to disposal of subsidiary:
- Trade and other receivables
- Trade and other payables
-
-
(11,700)
86,431
-
-
Taxation paid
(43,418)
-
-
-
Cash generated / (used) from operating activities
106,751
847,834
(152,338)
493,244
26 Financial instruments
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 2014 was 1,401,432 (2013: 526,982). Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. At the year end, the credit quality of trade receivables is considered to be satisfactory.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to meet its liabilities when they fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid resources to meets its obligations of 1,589,007 (2013: 1,140,377).
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 was 1,620,895 (2013: 1,581,790). 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 Group Statement of Changes in Equity. At the year end, total equity was 1,967,231 (2013: 1,501,116).
Fair value of financial assets
The Group's book value of the financial assets equates to their fair values.
27 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were 119,840 (2013: 105,138). At the end of the reporting period 24,998 (2013: 17,948) of contributions were due in respect of the period. The amounts were paid subsequent to the end of the reporting period.
28 Dividends
On the 29 November 2013 an enhanced maiden dividend of 1.5 pence per share (total dividend 120,564) was paid to holders of fully paid ordinary shares.
In respect of the current year, the directors propose that a final dividend of 2 pence per share and a special dividend of 3 pence per share be paid to shareholders on 21 November 2014. 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 24 October 2014. The total estimated dividend to be paid is 437,525. The payment of this dividend will not have any tax consequences for the Group.
29 Control
There is no overall controlling party.
30 Notice of AGM
The Annual General Meeting of Aeorema Communications plc will be held at Moray House, 23-31 Great Titchfield Street, London W1W 7PA on 19 November 2014 at 10.30am. A formal notice of AGM along with the Annual Report and Accounts for the year ended 30 June 2014 will be sent to shareholders and will be available on the Company's website www.aeorema.com in due course.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR MABATMBJBBLI
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