REG - Aeorema Comms Plc - Final Results <Origin Href="QuoteRef">AEO.L</Origin> - Part 1

Aeorema CommunicationsAnnouncement

10/11/2017 11:20

RNS Number : 1795W
Aeorema Communications Plc
10 November 2017
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
10 November 2017
Aeorema Communications plc ('Aeorema' or 'the Company')
Final Results and Notice of AGM
Aeorema Communications plc, the AIM-traded live events agency, announces its audited results for the year ended 30 June 2017. The Company also gives notice that its Annual General Meeting ('AGM') will be held at 11.30am on 7 December 2017 at Moray House,23-31 Great Titchfield Street, London, W1W 7PA. A formal notice of AGM along with the Annual Report and Accounts for the year ended 30 June 2017 will be sent to shareholders and will be available on the Company's websitewww.aeorema.comin due course.
Overview
 Profits before tax from continuing operations of 248,887 (2016: 340,165)
 Revenues of 4,156,592 (2016: 4,583,050)
 Cash at bank and in hand of 1,897,212 (2016: 1,427,723)
 Recommend final dividend payment of 0.5p per share (2016: 2p)
Chairman's Statement
Further to the 13 September 2017 trading update, the Company announces revenue of 4,156,592 and pre-tax profits of 248,887 for the year ended 30 June 2017. Reported pre-tax Profits are down on the preceding year as a result of a written off investment of 90,000 in a new, proprietary, interactive database, Imaginarium. Imaginarium gives customers access to hundreds of creative technologies and ideas and will help the Company's events division, Cheerful Twentyfirst, to be more innovative and creative in pitching for clients. We believe this investment provides the Company with the first database of its kind in the events business and will, we anticipate, stand us apart from our competitors. The database now needs minimal additional expenditure to continually update. There may be other revenue generating opportunities for the technology, which we are currently exploring.
During the year, the Company ran a number of cutting edge corporate events for blue-chip clients both in the UK and in Europe including a well-received event at Cannes Lions, the international festival of creativity. In tandem with this, our high-margin video division delivered a steady stream of projects for long-standing clients.
Post year end, the Company underwent a major change when its two founders, Peter Litten and Gary Fitzpatrick, stepped down from the board; I would like to reiterate our thanks to them for their 21 years of input and leadership. At the same time, their shares were placed with a broad spread of new investors and Steve Quah and Andrew Harvey were promoted to the role of Joint Managing Directors.
The board is very supportive of the new management team and believes that the Company is well positioned and has the resources and skills to build a much stronger business: it has a stable, creative and motivated team; and the market dynamics are robust given the growing trend for big brands to use events to re-engage with their clients and employees on a more personal level.
Additionally, Aeorema has a healthy balance sheet with 1,897,212 in cash at year end (2016: 1,427,723). The Board is proposing a final dividend of 0.5 pence per share (2016: 2 pence per share) to be paid to shareholders on the register on 15 December 2017. The ex-dividend date will be on 14 December 2017. Subject to the proposed dividend being approved by shareholders at the AGM, it will be paid on 12 January 2018. Despite a strong operational performance and balance sheet, the proposed dividend is lower compared to the previous year in order to preserve cash balances in anticipation of future development initiatives that the Board intends to undertake in order to build further value for shareholders. This includes considering complementary investment within the business to help capture potential organic growth opportunities and exploring potential acquisition opportunities.
Finally, I would like to welcome the new shareholders and thank the current shareholders for their continued support. I look to the future with confidence as the Company embarks on a new, exciting phase in its development.
M Hale
Chairman
9 November 2017
For further information visit www.aeorema.com or contact:
Mike Hale
Aeorema Communications plc
Tel: +44 (0) 20 7291 0444
Marc Milmo / Catherine Leftley
Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker)
Tel: +44 (0) 20 7894 7000
Jeremy Porter / John Depasquale / Liz Kirchner
Allenby Capital Limited (Joint Broker)
Tel: +44 (0)20 3328 5656
Isabel de Salis / Charlotte Page
St Brides Partners Ltd
Tel: +44 (0) 20 7236 1177
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
Notes
2017
2016
Continuing operations
Revenue
2
4,156,592
4,583,050
Cost of sales
(2,495,487)
(2,779,903)
Gross profit
1,661,105
1,803,147
Administrative expenses
(1,412,737)
(1,463,899)
Operating Profit
3
248,368
339,248
Finance income
4
519
917
Profit before taxation
248,887
340,165
Taxation
5
(37,284)
(66,663)
Profit and total comprehensive income for the year attributable to owners of the parent
211,603
273,502
Profit per ordinary share:
Total basic earnings per share
8
2.33803p
3.02195p
Total diluted earnings per share
8
2.26301p
2.92500p

There were no other comprehensive income items.

The notes included below are an integral part of these financial statements.
Statement of Financial Position
As at 30 June 2017
Notes
Group
Company
2017
2016
2017
2016
Non-current assets
Intangible assets
9
365,154
365,154
-
-
Property, plant and equipment
10
31,341
60,259
-
-
Deferred taxation
6
2,861
6,075
-
-
Investments in subsidiaries
11
-
-
580,490
580,490
Total non-current assets
399,356
431,488
580,490
580,490
Current assets
Trade and other receivables
12
1,007,592
1,174,337
748,661
807,418
Cash and cash equivalents
13
1,897,212
1,427,723
459,180
469,923
Total current assets
2,904,804
2,602,060
1,207,841
1,277,341
Total assets
3,304,160
3,033,548
1,788,331
1,857,831
Current liabilities
Trade and other payables
14
(1,615,603)
(1,340,583)
(94,173)
(98,805)
Current tax payable
14
(31,042)
(66,043)
-
-
Total current liabilities
(1,646,645)
(1,406,626)
(94,173)
(98,805)
Net assets
1,657,515
1,626,922
1,694,158
1,759,026
Equity
Share capital
15
1,131,313
1,131,313
1,131,313
1,131,313
Share premium
16
7,063
7,063
7,063
7,063
Merger reserve
17
16,650
16,650
16,650
16,650
Capital redemption reserve
257,812
257,812
257,812
257,812
Retained earnings
244,677
214,084
281,320
346,188
Equity attributable to owners of the parent
1,657,515
1,626,922
1,694,158
1,759,026
The notes included below are an integral part of these financial statements.
The retained profit for the financial year of the holding company was 116,142 (2016: 821,663).
The financial statements were approved and authorised by the board of directors on 9 November 2017 and were signed on its behalf by
S Quah, Director 
S Haffner, Director
Company Registration No. 04314540
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Group
Share capital
Share premium
Merger reserve
Capital redemption reserve
Retained earnings
Total equity
At 1 July 2015
1,131,313
7,063
16,650
257,812
471,202
1,884,040
Profit and total comprehensive income for the year, net of tax
-
-
-
-
273,502
273,502
Dividends paid
-
-
-
-
(543,030)
(543,030)
Share-based payments
-
-
-
-
12,410
12,410
At 30 June 2016
1,131,313
7,063
16,650
257,812
214,084
1,626,922
Profit and total comprehensive income for the year, net of tax
-
-
-
-
211,603
211,603
Dividends paid
-
-
-
-
(181,010)
(181,010)
At 30 June 2017
1,131,313
7,063
16,650
257,812
244,677
1,657,515
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.
Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares.
The notes included below are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 30 June 2017
Company
Share capital
Share premium
Merger reserve
Capital redemption reserve
Retained earnings
Total equity
At 1 July 2015
1,131,313
7,063
16,650
257,812
55,145
1,467,983
Comprehensive income for the year, net of tax
-
-
-
-
821,663
821,663
Dividends paid
-
-
-
-
(543,030)
(543,030)
Share-based payments
-
-
-
-
12,410
12,410
At 30 June 2016
1,131,313
7,063
16,650
257,812
346,188
1,759,026
Comprehensive income for the year, net of tax
-
-
-
-
116,142
116,142
Dividends paid
-
-
-
-
(181,010)
(181,010)
At 30 June 2017
1,131,313
7,063
16,650
257,812
281,320
1,694,158
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.
Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares.
The notes included below are an integral part of these financial statements.
Statement of Cash Flows
For the year ended 30 June 2017
Notes
Group
Company
2017
2016
2017
2016
Net cash flow from operating activities
23
672,516
450,608
(29,846)
(545,174)
Cash flows from investing activities
Finance income
519
917
113
254
Purchase of property, plant and equipment
10
(22,536)
(39,225)
-
-
Dividends received by the Company
-
-
200,000
900,000
Cash (used) / generated in investing activities
(22,017)
(38,308)
200,113
900,254
Cash flows from financing activities
Dividends paid to owners of the Company
(181,010)
(543,030)
(181,010)
(543,030)
Cash used in financing activities
(181,010)
(543,030)
(181,010)
(543,030)
Net increase / (decrease) in cash and cash equivalents
469,489
(130,730)
(10,743)
(187,950)
Cash and cash equivalents at beginning of year
1,427,723
1,558,453
469,923
657,873
Cash and cash equivalents at end of year
13
1,897,212
1,427,723
459,180
469,923
The notes included below are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2017
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 24, details of its financial instruments and exposure to risk.
After reviewing the Group's budget for the next financial year, other medium-term plans and considering the risks outlined in note 24, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.
Basis of Preparation
The Group's financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The following new standards, amendments to standards and interpretations, applied for the first time from 1 July 2016. Their adoption has not had a material impact on the financial statements:
 IAS 1 (Amended), 'Disclosure Initiative', effective 1 January 2016.
 IAS 27 (Amended), 'Equity Method in Separate Financial Statements', effective 1 January 2016.
 IAS 16 and IAS 38 (Amended), 'Clarification of Acceptable Methods of Depreciation and Amortisation' effective 1 January 2016.
 IFRS 11 (Amended), 'Accounting for Acquisitions of Interests in Joint Operations', effective 1 January 2016.
 Annual Improvements to IFRSs 2012 - 2014 Cycle, effective 1 January 2016.
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 2016 and have not been adopted early by the Group:
 IFRS 9 'Financial Instruments', effective 1 January 2018.
 IFRS 15 'Revenue for Contracts with Customers', effective 1 January 2018.
 IFRS 16 'Leases', effective 1 January 2019
 IAS 7 (Amended), 'Statement of Cash Flows', effective 1 January 2017
Management are currently assessing the impact they may have on future reporting periods.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2017. 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 deconsolidated from 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. 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 (three years)
Fixtures, fittings and equipment
straight line over four years
Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the year that the asset is derecognised.
Fully depreciated assets still in use are retained in the financial statements.
Impairment
The carrying amounts of the Group's assets are reviewed at each period end to determine whether there is any indication of impairment. If any such indication exists, the assets' recoverable amount is estimated. For goodwill and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each annual period end date and whenever there is an indication of impairment.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.
Operating leases
Rentals under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.
The group leases office facilities under operating leases. The lease typically runs for a period of 5 years, with a break clause in year 3. The group is restricted from entering into any sub-lease arrangements.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
Trade and other receivables
Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, 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. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also makes contributions to the private pension arrangements of certain employees. These arrangements are of the money purchase type and the amount charged to the Statement of Comprehensive Income represents the contributions payable by the Group for the period.
Financial instruments
The Group does not enter into derivative transactions and does not trade in financial instruments. Financial assets and liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group's equity instruments comprise 'share capital' in the Statement of Financial Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the reporting period. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the Statement of Comprehensive Income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based on the historical share price volatility for the Company. Further information is given in note 21 to the financial statements.
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.
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 2017 there is only a single reportable segment.
All revenue represents sales to external customers. Two customers (2016: two) are defined as major customers by revenue, contributing more than 10% of the Group revenue.
2017
2016
Customer one
722,825
-
Customer two
715,074
819,443
Customer three
35,916
1,006,510
Major customers
1,473,815
1,825,953
The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:
Geographical
2017
2016
2017
2016
2017
2016
2017
2016
Market
UK
UK
Europe
Europe
Rest of the World
Rest of the World
Total
Total
Revenue
4,089,412
3,410,154
29,589
66,990
37,591
1,105,906
4,156,592
4,583,050
All non-current assets are based in the UK.
3 Operating profit
Operating profit is stated after charging or crediting:
2017
2016
Cost of sales
Depreciation of property, plant and equipment
21,577
21,910
Administrative expenses
Depreciation of property, plant and equipment
29,877
22,191
(Profit)/Loss on foreign exchange differences
(426)
(2,307)
Fees payable to the Company's auditor in respect of:
 Audit of the Company's annual accounts
7,500
7,500
 Audit of the Company's subsidiaries
20,000
20,000
Staff costs (see note 20)
918,336
1,029,928
Operating leases - land and buildings
91,000
91,000
4 Finance income
Finance income
2017
2016
Bank interest received
519
917
5 Taxation
2017
2016
The tax charge comprises:
Current tax
Prior period adjustment
3,028
291
Current year
31,042
66,043
34,070
66,334
Deferred tax (see note 6)
Current year
3,214
329
3,214
329
Total tax charge in the statement of comprehensive income
37,284
66,663
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations
248,887
340,165
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 19.75% (2016: 20%)
49,155
68,033
Effects of:
Non-deductible expenses
8,086
1,764
Research and development claim
(22,985)
-
Other adjustments
-
(3,425)
Marginal relief
-
-
Prior period adjustment
3,028
291
(11,871)
(1,370)
Total tax charge
37,284
66,663
The Group has estimated losses of 375,762 (2016: 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, therefore no deferred tax asset has been recognised.
The Finance Act 2016 included legislation to reduce the main rate of corporation tax from 20% to 19% from 1 April 2017 and to 17% from 1 April 2020. These rate reductions were substantively enacted by the balance sheet date and therefore included in these consolidated financial statements. Temporary differences have been remeasured using the enacted tax rates that are expected to apply when the liability is settled, or the asset is realised.
6 Deferred taxation
2017
2016
Property, plant and equipment temporary differences
(2,269)
(5,681)
Temporary differences
5,130
11,756
2,861
6,075
At 1 July
6,075
6,404
Transfer to Statement of Comprehensive Income
(3,214)
(329)
At 30 June
2,861
6,075
The deferred tax asset is expected to be utilised given the continued profitability and future trading prospects.
7 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.
8 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:
2017
2016
Basic earnings per share
Profit for the year attributable to owners of the Company
211,603
273,502
Basic weighted average number of shares
9,050,500
9,050,500
Dilutive potential ordinary shares:
Employee share options
300,000
300,000
Diluted weighted average number of shares
9,350,500
9,350,500
9 Intangible fixed assets
Group
Goodwill
Cost
At 1 July 2015
2,728,292
At 30 June 2016
2,728,292
At 30 June 2017
2,728,292
Impairment and amortisation
At 1 July 2015
2,363,138
At 30 June 2016
2,363,138
At 30 June 2017
2,363,138
Net book value
At 1 July 2015
365,154
At 30 June 2016
365,154
At 30 June 2017
365,154
Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited.
Impairment - Aeorema 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 2017-18 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 2%. Using these assumptions, which are based upon past experience, there was no impairment in the year. The value in use exceeds the carrying value by 508,988.
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 103,449 and a one percentage fall in future growth would reduce the recoverable amount by 515,154. Reducing the future growth rate would indicate an impairment of 6,166 and increasing the discount rate would indicate no impairment. In any case management is satisfied with the carrying value of goodwill.
10 Property, plant and equipment
Group
Leasehold land
Fixtures, fittings
Total
and buildings
and equipment
Cost
At 30 June 2015
17,761
301,944
319,705
Additions
36,537
2,688
39,225
Disposals
-
(160,562)
(160,562)
At 30 June 2016
54,298
144,070
198,368
Additions
4,238
18,298
22,536
Disposals
-
(67,316)
(67,316)
At 30 June 2017
58,536
95,052
153,588
Depreciation
At 30 June 2015
1,379
253,191
254,570
Charge for the year
22,191
21,910
44,101
Eliminated on disposal
-
(160,562)
(160,562)
At 30 June 2016
23,570
114,539
138,109
Charge for the year
29,877
21,577
51,454
Eliminated on disposal
-
(67,316)
(67,316)
At 30 June 2017
53,447
68,800
122,247
Net book value
At 1 July 2015
16,382
48,753
65,135
At 30 June 2016
30,728
29,531
60,259
At 30 June 2017
5,089
26,252
31,341
11 Non-current assets - Investments
Company
Shares in subsidiary
Cost
At 1 July 2015
3,262,293
Increase in respect of share based payments
12,410
At 30 June 2016
3,274,703
At 30 June 2017
3,274,703
Provision
At 1 July 2015
2,694,213
At 30 June 2016
2,694,213
At 30 June 2017
2,694,213
Net book value
At 1 July 2015
568,080
At 30 June 2016
580,490
At 30 June 2017
580,490
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
England and Wales
Ordinary
100
Twentyfirst Limited
England and Wales
Ordinary
100
The registered address of Aeorema Limited and Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB.
12 Trade and other receivables
Group
Company
2017
2016
2017
2016
Trade receivables
810,908
1,038,669
-
-
Related party receivables
-
-
743,037
802,543
Other receivables
19,166
19,585
-
-
Prepayments and accrued income
177,518
116,083
5,624
4,875
1,007,592
1,174,337
748,661
807,418

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 61,560 (2016: 36,232) 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
2017
2016
Less than 90 days overdue
61,560
27,190
More than 90 days overdue
-
9,042
61,560
36,232
13 Cash and cash equivalents
Group
Company
2017
2016
2017
2016
Bank balances
1,897,212
1,427,723
459,180
469,923
Cash and cash equivalents
1,897,212
1,427,723
459,180
469,923
Cash and cash equivalents in the statement of cash flows
1,897,212
1,427,723
459,180
469,923
14 Trade and other payables
Group
Company
2017
2016
2017
2016
Trade payables
1,012,687
663,797
7,380
6,950
Related party payables
-
-
67,355
67,355
Taxes and social security costs
284,415
177,985
-
-
Other payables
7,529
14,614
-
-
Accruals and deferred income
342,014
550,230
19,438
24,500
1,646,645
1,406,626
94,173
98,805
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.
15 Share capital
2017
2016
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 2015
9,050,500
1,131,313
At 30 June 2016
9,050,500
1,131,313
At 30 June 2017
9,050,500
1,131,313
Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the company
See note 21 for details of share options outstanding.
16 Share Premium
Share Premium
At 1 July 2015
7,063
At 30 June 2016
7,063
At 30 June 2017
7,063
Share premium represents the value of shares issued in excess of their list price.
17 Merger reserve
Merger reserve
At 1 July 2015
16,650
At 30 June 2016
16,650
At 30 June 2017
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 Financial commitments
Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
Group
Land and Buildings
2017
2016
Not later than one year
91,000
91,000
Later than one year and not later than five years
106,167
15,167
Total
197,167
106,167
19 Directors' emoluments
The remuneration of Directors of the Company is set out below.
Salary, bonus or fees
Salary, bonus or fees
Pensions
Pensions
Total
Total
2017
2016
2017
2016
2017
2016
P Litten
60,000
77,000
33,554
39,932
93,554
116,932
G Fitzpatrick
40,000
40,000
7,562
18,272
47,562
58,272
M Hale
10,000
10,000
-
-
10,000
10,000
S Garbutta
-
5,000
-
-
-
5,000
S Haffner
15,000
7,500
-
-
15,000
7,500
R Owen
10,000
10,000
-
-
10,000
10,000
S Quah
90,000
115,000
155
-
90,155
115,000
225,000
264,500
41,271
58,204
266,271
322,704
The share options held by directors who served during the year are summarised below:
Name
Grant date
Number awarded
Exercise price
Earliest exercise date
Expiry date
S Quah
25 April 2013
300,000
16.50p
25 April 2016
24 April 2023
Fees for S Garbutta and S Haffner are charged by Harris & Trotter LLP, a firm in which they are members. See note 22.
20 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees
Group
Company
2017 Number
2016 Number
2017 Number
2016 Number
Administration and production
20
20
6
6
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:
Employment costs
Group
Company
2017
2016
2017
2016
Wages and salaries
788,365
871,534
35,000
32,500
Social security costs
85,708
86,409
-
-
Pension costs
44,263
59,575
-
-
Share-based payments
-
12,410
-
-
Total
918,336
1,029,928
35,000
32,500
21 Share-based payments
The Group operates an EMI share option scheme for key employees. Options are granted to key employees at an exercise price equal to the market price of the Company's shares at the date of grant. Options are exercisable from the third anniversary of the date of grant and lapse if they remain unexercised at the tenth anniversary or upon cessation of employment. The following option arrangements exist over the Company's shares:
Date of grant
Exercise price
Exercise period
Number of options 2017
Number of options 2016
From
To
25 April 2013
16.5p
25 April 2016
24 April 2023
300,000
300,000
300,000
300,000
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
2017
2017
2016
2016
Outstanding at beginning of the year
300,000
0.17
300,000
0.17
Outstanding at end of the year
300,000
0.17
300,000
0.17
Exercisable at the end of the year
300,000
0.17
300,000
0.17
The exercise price of options outstanding at the year end was 0.165 (2016: 0.165) and their weighted average contractual life was 5.8 years (2016: 6.8 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
25 April 2013
Model used
Black-Scholes
Share price at grant date
16.5p
Exercise price
16.5p
Contractual life
10 years
Risk free rate
0.5%
Expected volatility
104%
Expected dividend rate
0%
Fair value option
14.889p
The expected volatility is determined by calculating the historical volatility of the company's share price over the last three years. The risk free rate is the official Bank of England base rate.
The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based payment plans:
2017
2016
Share-based payment charge
-
12,410
22 Related party transactions
The Group has a related party relationship with its subsidiaries and its key management personnel (including directors). Details of transactions between the Company and its subsidiaries are as follows:
2017
2016
Amounts owed by subsidiaries
Total amount owed by subsidiaries
743,037
802,543
Amounts owed to subsidiaries
Total amount owed to subsidiaries
67,355
67,355
The company received dividends during the year of 200,000 (2016: 900,000) from its subsidiary Aeorema Limited. The company transferred a VAT receivable of 10,200 (2016: 14,810) 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 38,700 (2016: 7,317).
Aeorema Limited paid expenses totalling 49,996 (2016: nil) on behalf of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of 181,010 (2016: 443,030) to Aeorema Communications plc.
The compensation of key management (including directors) of the Group is as follows:
2017
2016
Short-term employee benefits
251,204
287,317
Post-employment benefits
41,271
58,204
Share based payment expense
-
12,410
292,475
357,931
Harris and Trotter LLP is a firm in which S Haffner and S Garbutta are members. The amount charged to the Group for professional services is as follows:
Harris and Trotter LLP - charged during the year
2017
2016
Aeorema Communications plc
15,000
12,500
Aeorema Limited
7,850
15,060
22,850
27,560
At the year end, the group had an outstanding trade payable balance to Harris and Trotter LLP of 5,640 (2016: 6,600).
23 Cash flows
Group
Company
2017
2016
2017
2016
Cash flows from operating activities
Profit before taxation
248,887
340,165
116,141
821,663
Depreciation
51,454
44,101
-
-
Share-based payment
-
12,410
-
-
Dividends received by the Company
-
-
(200,000)
(900,000)
Finance income
(519)
(917)
(113)
(254)
299,822
395,759
(83,972)
(78,591)
Increase / (decrease) in trade and other payables
275,021
(71,760)
(4,631)
12,699
(Increase) / decrease in trade and other receivables
166,745
178,061
58,757
(479,282)
Taxation paid
(69,072)
(51,452)
-
-
Cash generated / (used) from operating activities
672,516
450,608
(29,846)
(545,174)
24 Financial instruments
Financial instruments recognised in the consolidated statement of financial position
All financial instruments are recognised initially at their fair value and subsequently measured at amortised cost.
Group
Company
2017
2016
2017
2016
Loans and receivables
Trade and other receivables
847,525
1,070,627
743,037
802,543
Cash and cash equivalents
1,897,212
1,427,723
459,180
469,923
Investments in subsidiaries
-
-
580,490
580,490
Total
2,744,737
2,498,350
1,782,707
1,852,956
Other financial liabilities
Trade and other payables
1,020,216
678,411
74,735
74,305
Accruals
236,068
439,956
19,440
24,500
Total
1,256,284
1,118,367
94,175
98,805
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 2017 was 810,908 (2016: 1,038,669). 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 1,540,698 (2016: 1,296,626).
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 1,897,212 (2016: 1,427,723). 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 1,657,515 (2016: 1,626,922).
25 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were 44,263 (2016: 59,575). At the end of the reporting period nil (2016: 12,880) of contributions were due in respect of the period.
26 Dividends
On the 25 November 2016 a final dividend of 2 pence per share (total dividend 181,010) was paid to holders of fully paid ordinary shares.
In respect of the current year, the directors propose that a final dividend of 0.5 pence per share be paid to shareholders on 12 January 2018. 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 15 December 2017. The total estimated dividend to be paid is 45,253. The payment of this dividend will not have any tax consequences for the Group.
27 Contingent Liability
Company
The company is a member of a group VAT registration with all other companies in the Aeorema Communications group and, under the terms of the registration, is jointly and severally liable for the VAT payable by all members of the group. At 30 June 2017 the company had no potential liability under the terms of the registration.
29 Control
There is no overall controlling party.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
FR BMBBTMBMBBTR