REG - Aeorema Comms Plc - Final Results
15/11/2021 07:05
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RNS Number : 3067S Aeorema Communications Plc 15 November 2021
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Regulation 11 of the
Market Abuse Regulations (Amendment) (EU Exit) Regulations 2019/310 ("MAR").
With the publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the public domain.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
15 November 2021
Aeorema Communications plc ('Aeorema' or 'the Company' or 'the Group')
Final Results
Aeorema Communications plc, the AIM-traded live events agency, announces its
audited results for the year ended 30 June 2021.
Overview
· Repositioned the Company into providing virtual online conferences
and events in place of our traditional activities of live events
· Experiencing unprecedented demand for bespoke services from a wide
range of major blue chip clients across a range of industries
· Revenues of £5,094,518 (2020: £5,475,425)
· Loss after taxation of £164,926 (2019: loss of £197,427)
· Return to profitability during last 3 months of H2 2021
· H1 2022 revenues are anticipated to be greater than any prior
interim period on record
· Robust cash position of £1.3 million as at the date of this
announcement
For further information visit www.aeorema.com (http://www.aeorema.com) or
contact:
Mike Hale Aeorema Communications plc +44 (0)20 7291 0444
John Depasquale / Allenby Capital Limited (Nominated Adviser and Broker) +44 (0)20 3328 5656
Liz Kirchner (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Catherine Leftley/ Selina Lovell St Brides Partners Ltd info@stbridespartners.co.uk
(Financial PR)
Chairman's Statement
I am truly excited to report on a year of transition which reflects the way in
which your Company has successively navigated the uncharted waters of COVID-19
and the effective shutdown of World economies.
In fact, we were one of the industries that was hardest hit. Clearly, in a
Covid-19 world, demand after March 2020 disappeared as event after event was
cancelled. For further information and analysis about the impact of COVID-19
on the Group during the year ended 30 June 2021 please see the business review
in the Strategic Report.
As I've previously stated, huge credit goes to our talented team of
specialised executives who took the opportunity early on, in the void that had
been created, to turn their talent inwards and reposition the Company into
providing virtual online conferences and events in place of our traditional
activities of live events. We also made a strategic shift to providing
consultancy services and engaging with clients at a higher advisory level on
their communications strategies.
As a consequence, I am delighted to report that the success of this
repositioning has meant that we are experiencing unprecedented demand for our
bespoke services from a wide range of major blue chip clients spread across a
diverse range of industries. We have also taken the opportunity to add talent
to our team which has enhanced our skillset and offering.
A further benefit that flows to us from implementing this strategy is that we
are not affected by the supply chain and distribution problems and
inflationary pressures commonly being cited on a regular basis by other
companies as a reason to issue profit warnings.
I am greatly encouraged by the development of our virtual online business
coupled with the fact that we should inevitably see further growth as and when
our industry returns to staging live conferences and events alongside the
virtual online offering which will clearly remain a viable option, now it has
been introduced and in light of a greater drive to reduce carbon emissions as
a result of business travel.
The outlook for the first six months of the new financial year is very strong.
We remain on track to report record revenues for H1 2022, greater than any
prior interim period on record, and are confident of growth in revenues for
the full year ending 30 June 2022.
The cash position as at the date of this announcement is £1.3 million. As we
come out strongly of this challenging period the board will continue to
monitor progress, but at this point it is too soon to comment on future
dividends.
I want to thank our shareholders for their support through the most difficult
period in the Company's history and look forward to rewarding them for this
support.
Mike Hale
Chairman, 12 November 2021
Chief Executive Officer's Report
Successful and enduring growth after a period of change is a rewarding
reflection on the tenacity within our Group. It fills me with pride to
consider the last twelve months, where, despite the difficulties faced,
Aeorema Communications has strategically developed more than in any previous
years.
We have spent the last year cementing and building on our expertise in
multi-format and virtual events. Our foundations in video communications,
alongside raw in-house talent in broadcast and content production, put us in
exceptional stead in the virtual event environment.
Our growing consultative and strategic approach has also placed Cheerful
Twentyfirst in a leading position to support our client roster across
disciplines. At the intersection of live events, on demand content and remote
audiences, we are in a very strong position to leverage account growth and
multi-service communication planning into 2022 and onwards.
Our continued commitment to exceptional client service levels saw Cheerful
Twentyfirst adapt to a defined account-led approach this year. This shift has
reinforced client partnerships and made communications strategy paramount to
how we do business.
Our inherent creativity proved once again to be a cut above the rest. The
agency was awarded Creative Team of the Year for the third year running, an
accolade that reflects the calibre of ideas within our walls and something we
continue to invest in. Our winning card, that same imaginative spark has been
a driving force for year-on-year growth in our moving image, content and
creative divisions.
Internationally, our US team continues to grow in line with client demand in
North America. We now have staff based in New York City and LA, with both
teams expected to continue to grow in 2022.
We were delighted to add a plethora of new clients across diverse sectors
globally including finance, professional services, advertising, IT, fashion,
Fintech, and beverages. Most recently, we have also added a gaming giant to
our client roster. These recent client wins pay heed to our diversification
strategy and shift to innovative, hybrid solutions tailored to client
requirements.
Venue sourcing and luxury events agency Eventful was inevitably impacted by
the restrictions on live events and travel but they have been successful in
cross-selling complementary services across Group clients. Their successful
integration into the business has delivered a number of new clients, with
their order book already seeing venue bookings and enquiries into next year
and onwards. As confidence in live event formats return, we anticipate this
success to grow proportionally.
Outlook
We are entering a new phase as a global workforce and a pioneer agency
challenging traditional ways of work. Our team will continue to operate with a
flexible approach to remote working, but we see the office space as our key
hub for community, brainstorm and idea generation, and team engagement. As our
headcount ticks over into the low 50's, we're also investing in a new office
space that can facilitate our team to work at its best.
The momentum generated by hard work, constant innovation and a tenacity to
adapt has seen new green shoots across the Group. The agency continues to
develop as the preferred partner for a growing roster of global, leading
brands.
ESG remains at the heart of how we work. This year, we launched our first ever
CSR (Corporate Social Responsibility) charter, pledging to enact real change
across sustainability, diversity, ethical practice and industry engagement. We
are committing now and forever to cultivating a culture of understanding and
action-driven impact.
My most sincere thank you to our clients for your trust and partnership in the
last twelve months.
And to our team, you have shown what it looks like to work with a fire in your
heart and a twinkle in your eye. I could not be prouder of what we are
building together.
Steve Quah
CEO, 12 November 2021
Strategic Report
Business review
The results for the year show revenue was £5,094,518 (2020: £5,475,425),
operating loss pre-exceptional items was £188,105 (2020: £175,043) and loss
before taxation was £159,698 (2020: £217,924). The Group had net assets of
£1,514,980 at the year-end (restated 2020: £1,660,247) and net current
assets of £1,019,047 (restated 2020: £938,932).
The year ended 30 June 2021 was a year significantly affected by the COVID-19
pandemic. International lockdowns, restrictions on national and international
travel and social distancing measures imposed by Governments worldwide meant
all live face-to-face events were either postponed or cancelled. The Group
recognised the potential of virtual events during this period and made the
pivot from producing live events to virtual events. The first few months
proved very challenging, however, with the introduction of the Group's own
virtual event platform, KIT, the Group's industry leading creative expertise
and growing experience of producing and delivering virtual events the Group
experienced an upturn in demand and revenue.
The Group delivered virtual events for both new and existing clients. The new
clients include those operating across sectors such as finance, professional
services, oil & gas, advertising, IT, fashion, Fintech, technology and
beverages.
During the year the gross profit margin increased to 23% (restated 2020: 15%)
and the gross profit was £1,182,142 (2020: £824,176). The increase in the
gross profit margin was as a consequence of the company delivering virtual
events rather than face-to-face events. Virtual events require more in-house
time producing content, including motion graphics, film and design, and
offering strategic consultancy. Face-to-face events usually have higher levels
of direct costs including audio visual, set and stage which are all third
party costs that reduce the margin. During the year the Group also received
cancellation fees totalling £262,035 from a global media company in respect
of the MIPCOM event held annually in October in Cannes.
Growing demand from both new and existing clients combined with the labour
intensive nature of virtual events meant the Group hired on average 9 more
employees compared with the previous year. These roles largely included
project/production managers, project co-ordinators, designers (including
digital) and digital solutions managers to ensure the Group continued to
successfully deliver high quality events.
Eventful Limited was significantly affected by the impact of the COVID-19
pandemic throughout the year. Eventful Limited's core business operates within
the hospitality and travel industry, offering venue sourcing and travel
incentive services. The company struggled to generate demand while
restrictions remained in place. As restrictions in the UK began to ease and
the economy reopened in the latter months of the financial year the company
experienced an increase in client enquiries for venues post year end.
Cheerful Twentyfirst, Inc. was formed on 1 July 2020 and became a 100% owned
subsidiary of Aeorema Communications plc. The Board were keen for the Group to
have a presence in the United States and the creation of a New York based
subsidiary provided the perfect opportunity to expand the Group's operations
in a new and exciting market. The company had a very successful first year of
trading, producing virtual events and films for several new and existing
clients in the United States, growing its headcount and moving into a new
office shortly after the year end.
The Group has used the support provided by the UK government, including the
Coronavirus job retention scheme, tax deferrals and the Coronavirus business
interruption loan scheme to maintain a strong cash position despite the impact
of COVID-19 on the business during the financial year. Despite the new clients
and virtual events the Group has won, the challenges created by the social and
economic impact of COVID-19 remain severe. The Board recognises the challenges
facing the Group, and is actively monitoring the situation on a daily basis
and is prepared to reduce overheads should this become necessary.
Key performance indicators
Year 2021 2020 2019 2018
£ £ £ £
Revenue 5,094,518 5,475,425 6,765,280 4,820,167
Operating (loss) / profit pre-exceptional items (188,105) (175,043) 384,483 299,735
(Loss) / profit before taxation (159,698) (217,924) 382,244 61,629
The Group experienced a 7% decrease in revenue during the year. The Group
produced two large events in January 2020 prior to the onset of the COVID-19
pandemic. These two events had a significant impact on revenue in the prior
year. Due to COVID-19 no events on a similar scale were held in the year ended
30 June 2021. Although demand steadily increased throughout the financial
year, including the delivery of large events in May and June, these could not
replace the revenue lost as a consequence of the COVID-19 pandemic.
Event revenue decreased by 16% in comparison with the previous year. This was
due to the factors mentioned above. The decrease in Aeorema Limited was 22%,
however, this fall in revenue was offset by the growth in Cheerful
Twentyfirst, Inc.
Film revenue grew by 64% in comparison with the previous year. This growth was
largely due to the higher amount of film and motion graphics content that is
required to produce and deliver virtual events compared with live face-to-face
events and the film content produced by Cheerful Twentyfirst, Inc. The growth
was 45% in Aeorema Limited compared with the previous year.
Eventful Limited experienced a 92% decrease in revenue during the year,
compared with the previous 15 month period. The fall in revenue was a
consequence of the COVID-19 pandemic and the subsequent impact on the
hospitality and travel industry.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Notes 2021 2020
£ £
As restated
Continuing operations
2 5,094,518 5,475,425
Revenue
Cost of sales (3,912,376) (4,651,249)
Gross profit 1,182,142 824,176
Other income 3 61,651 82,601
Administrative expenses (1,431,898) (1,081,820)
4 (188,105) (175,043)
Operating (loss) / profit pre-exceptional items
Exceptional income 5
Exceptional costs 50,000 -
- (23,184)
Operating (loss) / profit post exceptional items (138,105) (198,227)
Finance income 6 489 556
Finance costs 7 (22,082) (20,253)
(Loss) / profit before taxation (159,698) (217,924)
Taxation 8 (5,228) 20,497
(Loss) / profit for the year (164,926) (197,427)
(11,044) -
Other comprehensive income
Items that may be reclassified to profit of loss
Exchange differences on translation of foreign entities
Other comprehensive income for the year (11,044) -
Total comprehensive income for the year attributable to owners of the parent (175,970) (197,427)
(Loss) / profit per ordinary share:
(1.78529)p (2.16920)p
Total basic earnings per share 11
Total diluted earnings per share 11 (1.78529)p (2.16920)p
The notes are an integral part of these financial statements.
Statement of Financial Position
As at 30 June 2021
Notes Group Company
2021 2020 2021 2020
£ £ £ £
As restated
Non-current assets
Intangible assets 12 571,431 573,931 - -
Property, plant and equipment 13 103,477 85,952 - -
Right-of-use assets 14 18,995 379,530 - -
Investments in subsidiaries 15 - - 1,172,253 1,141,540
Deferred taxation - 7,611 30,253 30,253
Total non-current assets 693,903 1,047,024 1,202,506 1,171,793
Current assets
Trade and other receivables 16 1,429,064 597,497 532,875 657,986
Cash and cash equivalents 17 1,101,713 1,721,217 5,844 11,298
Current tax receivable 10,758 - - -
Total current assets 2,541,535 2,318,714 538,719 669,284
Total assets 3,235,438 3,365,738 1,741,225 1,841,077
Current liabilities
Trade and other payables 18 (1,417,467) (1,226,222) (139,760) (191,136)
Bank loans 19 (54,089) - -
Lease liabilities 20 (25,912) (85,070) - -
Current tax payable - (68,490) - -
Provisions 21 (25,020) - - -
Total current liabilities (1,522,488) (1,379,782) (139,760) (191,136)
Non-current liabilities
Bank loans 19 (195,911) - - -
Lease liabilities 20 - (300,689) - -
Deferred taxation 9 (2,059) - - -
Provisions 21 - (25,020) - -
Total non-current liabilities (197,970) (325,709) - -
Total liabilities (1,720,458) (1,705,491) (139,760) -
Net assets 1,514,980 1,660,247 1,601,465 1,649,941
Equity
Share capital 22 1,154,750 1,154,750 1,154,750 1,154,750
Share premium 9,876 9,876 9,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 112,061 81,358 112,061 81,358
Capital redemption reserve 257,812 257,812 257,812 257,812
Retained earnings (36,169) 139,801 50,316 129,495
Equity attributable to owners of the parent 1,514,980 1,660,247 1,601,465 1,649,941
The notes are an integral part of these financial statements.
The loss for the financial year of the holding company was £79,179 (2020:
£159,712 profit).
The financial statements were approved and authorised by the board of
directors on 12 November 2021 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 2021
Group Share capital Share premium Merger reserve Other reserve Capital redemption reserve Retained earnings Total equity
£ £ £ £ £ £ £
At 30 June 2019 1,131,313 7,063 16,650 34,261 257,812 439,414 1,886,513
- - - - - (197,427) (197,427)
Comprehensive income for the year, net of tax
Dividends paid - - - - - (90,505) (90,505)
Share-based payment - - - 47,097 - - 47,097
Share issue 23,437 2,813 - - - - 26,250
Prior year adjustment - - - - - (11,681) (11,681)
At 30 June 2020 1,154,750 9,876 16,650 81,358 257,812 139,801 1,660,247
- - - - - (175,970) (175,970)
Comprehensive income for the year, net of tax
Dividends paid - - - - - - -
Share-based payment - - - 30,703 - - 30,703
At 30 June 2021 1,154,750 9,876 16,650 112,061 257,812 (36,169) 1,514,980
Share premium represents the value of shares issued in excess of their list
price.
In accordance with section 612 of the Companies Act 2006, the premium on
ordinary shares issued in relation to acquisitions is recorded as a merger
reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee remuneration, as
detailed in note 25.
Capital redemption reserve represents a statutory non-distributable reserve
into which amounts are transferred following redemption or purchase of a
company's own shares.
The notes are an integral part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Notes Group
2021 2020
£ £
Net cash flow from operating activities 27 (708,814) (99,006)
Cash flows from investing activities
- (128,331)
Payment for Acquisition of Subsidiary, net of cash acquired
Finance income 6 489 556
Purchase of intangible assets 12 - (10,000)
Purchase of property, plant and equipment 13 (59,179) (61,400)
Repayment of leasing liabilities (102,000) (101,258)
Cash (used) / generated in investing activities (160,690) (300,433)
Cash flows from financing activities
Dividends paid to owners of the Company - (90,505)
Proceeds from borrowings 250,000 -
Cash used in financing activities 250,000 (90,505)
Net (decrease) / increase in cash and cash equivalents (619,504) (489,944)
Cash and cash equivalents at beginning of year 1,721,217 2,211,161
Cash and cash equivalents at end of year 1,101,713 1,721,217
Cash and cash equivalents
The amounts disclosed on the Statement of Cash Flows in respect of cash and
cash equivalents are in respect of the Statement of Financial Position
amounts:
Notes Group Company
2021 2020 2021 2020
£ £ £ £
Cash and cash equivalents 17 1,101,713 1,721,217 5,844 11,298
1,101,713 1,721,217 5,844 11,298
The notes are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2021
1 Accounting policies
Aeorema Communications plc is a public limited company incorporated in the
United Kingdom and registered in England and Wales. The Company is domiciled
in the United Kingdom and its principal place of business is Moray House,
23/31 Great Titchfield Street, London, W1W 7PA. The Company's Ordinary Shares
are traded on the AIM Market.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
The presentation currency is £ sterling.
Going concern
The COVID-19 pandemic had a significant impact on the Group. International
lockdowns, disruption to international travel and social distancing measures
all meant that no face-to-face events could take place during the year.
Aeorema Limited and Cheerful Twentyfirst, Inc. adapted successfully and
produced virtual events for both existing and new clients throughout the year.
Due to the nature of virtual events Aeorema Limited and Cheerful Twentyfirst,
Inc. increased their staff numbers to help deliver the events. The moving
image department experienced growing demand and continued producing
eye-catching films and content for both stand-alone projects and virtual
events.
Eventful Limited was severely impacted by the pandemic. The company, unlike
Aeorema Limited and Cheerful Twentyfirst, Inc. was not in a position to pivot
towards virtual offerings due to the nature of its business. The hospitality
and travel industry as a whole was affected and Eventful Limited experienced a
sharp decline in demand for its services. The reduction in COVID-19
restrictions in the latter months of the year ended 30 June 2021 led to
Eventful Limited receiving a steady increase in enquiries for venue sourcing
and incentive travel services. This increase has continued post year end.
The Group continued to utilise the Coronavirus job retention scheme during the
year, furloughing several employees (see note 3). The Group arranged payment
plans with HMRC on a number of outstanding tax liabilities and obtained a
Coronavirus Business Interruption Loan of £250,000 (see note 19) to manage
the Group's working capital and cash reserves.
After reviewing the Group's detailed forecasts for the next financial year,
other medium term plans and considering the risks outlined in note 28, 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 European Union.
The following new standards, amendments to standards and interpretations have
been applied for the first time from 1 July 2020. Their adoption has not had a
material impact on the financial statements:
· Definition of Material (Amendments to IAS 1 and IAS 8) (effective 1
January 2020); and
· Definition of a Business (Amendments to IFRS 3) (effective 1
January 2020).
Future standards in place but not yet effective
No new standards, amendments or interpretations to existing standards that
have been published and that are mandatory for the Company's accounting
periods beginning on or after 1 July 2021 have been adopted early.
The following standards and amendments are not yet applied at the date of
authorisation of these financial statements:
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16).
The Group does not believe that there would have been a material impact on the
financial statements from early adoption of these standards / interpretations.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to 30 June 2021. 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 assets exceeds its recoverable amount, the asset is
considered impaired and is written down to is recoverable amount.
Intangible assets - goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill acquired represents the excess of the fair value of the
consideration and associated costs over the fair value of the identifiable net
assets acquired.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. At the date of acquisition, the goodwill is allocated to
cash generating units, usually at business segment level or statutory company
level as the case may be, for the purpose of impairment testing and is tested
at least annually for impairment. On subsequent disposal or termination of a
business acquired, the profit or loss on termination is calculated after
charging the carrying value of any related goodwill.
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 (five 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.
Investments
Fixed asset investments are stated at cost less provision for diminution in
value.
Leases
In applying IFRS 16, for all leases (except as noted below), the Group:
a) recognises right-of-use assets and lease liabilities in the statement of
financial position, initially measured at the present value of future lease
payments;
b) recognises depreciation of right-of-use assets and interest on lease
liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal portion (presented
within financing activities) and interest (presented within operating
activities) in the statement of cash flows.
Lease incentives (e.g. free rent period) are recognised as part of the
measurement of the right-of-use assets and lease liabilities whereas under IAS
17 they resulted in the recognition of a lease incentive liability, amortised
as a reduction of rental expense on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance
with IAS 36 Impairment of Assets. This replaces the previous requirement to
recognise a provision for onerous lease contracts.
For short‑term leases (lease term of 12 months or less) and leases of
low-value assets (such as photocopiers), the Group has opted to recognise a
lease expense on a straight-line basis as permitted by IFRS 16. This expense
is presented within administrative expenses in the consolidated statement of
comprehensive income.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently measured at amortised cost less any provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, cash in hand
and deposits payable on demand. Cash equivalents are short-term highly liquid
investments that are readily convertible to known amounts of cash and that are
subject to an insignificant risk of changes in value. Cash equivalents
normally have a date of maturity of 3 months or less from the acquisition
date.
Bank loans and overdrafts comprise amounts due on demand.
Finance income
Finance income consists of interest receivable on funds invested. It is
recognised in the Statement of Comprehensive Income as it accrues.
Taxation
Income tax on the profit or loss for the periods presented comprises current
and deferred tax. Current tax is the expected tax payable on the taxable
income for the year, using rates enacted or substantively enacted at the end
of the reporting period, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided
for: the initial recognition of goodwill; the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a
business combination; the differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the end of the reporting
period.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the assets can be
utilised. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also makes
contributions to the private pension arrangements of certain employees. These
arrangements are of the money purchase type and the amount charged to the
Statement of Comprehensive Income represents the contributions payable by the
Group for the period.
Financial instruments
The Group does not enter into derivative transactions and does not trade in
financial instruments. Financial assets and liabilities are recognised on the
Statement of Financial Position when the Group becomes a party to the
contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct issue costs. The Group's
equity instruments comprise 'share capital' in the Statement of Financial
Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange ruling at the end of the
reporting period. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to the
Statement of Comprehensive Income.
Government grants
Government grants are recognised based on the accrual model and are measured
at the fair value of the asset received or receivable. Grants are classified
as relating either to revenue or to assets. Grants relating to revenue are
recognised in income over the period in which the related costs are
recognised. Grants relating to assets are recognised over the expected useful
life of the asset. Where part of a grant relating to an asset is deferred, it
is recognised as deferred income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled
share based payments are measured at fair value (excluding the effect of
non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on
factors such as the exercise price, expected volatility, option price and risk
free interest rate. The fair value is then amortised through the Statement of
Comprehensive Income on a straight-line basis over the vesting period.
Expected volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 25 to the
financial statements.
Reclassification of wages
The Board of Directors have determined that due to the change in the business
towards more labour intensive virtual events, it is appropriate to reallocate
wages directly associated with the production of events and films from
administrative expenses to cost of sales. The previous year's comparative
figures have been restated.
Holiday pay accrual
A holiday pay accrual has been recognised for the first time due to the
increase in staff costs, the impact of the COVID-19 pandemic and the
subsequent shift by employees taking more annual leave post year end. A prior
year adjustment totalling £39,552 has been made to recognise holiday pay
accruals not included in prior periods. An adjustment of £27,871 has been
made for the year ended 30 June 2019 and an adjustment of £11,681 has been
made in the year ending 30 June 2020. The retained earnings brought forward at
30 June 2019 have been restated to be £439,414 (previously £467,285) and the
retained earning brought forward at 30 June 2020 have been restated to be
£139,801 (previously £179,353). This adjustment can be seen in the
Consolidated Statement of Changes in Equity.
Exceptional items
Exceptional items are one off, material items outside the normal course of
business which are not related to the Group's trading activities.
Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS
required management to make judgements, estimates and assumptions that effect
the application of policies and reported amounts in the financial statements.
These judgements and estimates are based on management's best knowledge of the
relevant facts and circumstances. Information about such judgements and
estimation is contained in the accounting policies and / or notes to the
financial statements. There are no critical judgements that the directors have
made in the process of applying the Group's accounting policies.
2 Revenue and segment information
The Group uses several factors in identifying and analysing reportable
segments, including the basis of organisation, such as differences in products
and geographical areas. The Board of directors, being the Chief Operating
Decision Makers, have determined that for the year ending 30 June 2021 there
is only a single reportable segment.
All revenue represents sales to external customers. Three customers (2020:
four) are defined as major customers by revenue, contributing more than 10% of
the Group revenue.
2021 2020
£ £
Customer One 1,211,409 -
Customer Two 738,320 585,636
Customer Three 468,026 276,386
Major customers in the current year 2,417,755 862,022
Major customers in prior year 2,879,430
3,741,452
The geographical analysis of revenue from continuing operations by
geographical location of customer is as follows:
Geographical market 2021 2020 2021 2020 2021 2020 2021 2020
UK UK USA USA Rest of the World Rest of the World Total Total
£ £ £ £ £ £ £ £
3,907,873 5,255,473 1,055,096 143,515 131,549 76,437 5,094,518 5,475,425
Revenue
2021 2020
£ £
Revenue from contracts with customers - Events 3,917,481 4,704,730
Revenue from contracts with customers - Film 1,177,037 715,620
Other revenue - 55,075
Total revenue 5,094,518
5,475,425
Contract assets and liabilities from contracts with customers have been
recognised as follows:
2021 2020
£ £
Deferred income 384,598 293,281
Accrued income 169,955 49,890
Deferred income at the beginning of the period has been recognised as revenue
during the period.
3 Other income
Other income 2021 2020
£ £
Coronavirus job retention scheme government grant 56,501 82,601
Business interruption payment grant 5,150 -
61,651 82,601
During the year the Group received government grants under the UK government's
coronavirus job retention scheme and the coronavirus business interruption
loan scheme.
4 Operating profit
Operating profit is stated after charging or crediting: 2021 2020
£ £
Cost of sales
Depreciation of fixtures, fittings and equipment 40,885 31,871
Amortisation of intangible assets 2,500 417
Administrative expenses
Depreciation of right-of-use assets 91,092 89,392
(Profit) / loss on foreign exchange differences 13,401 (726)
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 20,622 19,000
Interest on lease liabilities 16,932 20,253
Staff costs (see note 24) 2,125,189 1,570,373
5 Exceptional items
Items that are material either because of their size or their nature, or that
are non-recurring, are considered as exceptional. The exceptional income
totalling £50,000 included in the consolidated Statement of Comprehensive
Income relates to the contingent consideration totalling £100,000 which forms
part of the overall consideration for Eventful Limited in the previous year.
Eventful Limited failed to meet the target set in the purchase agreement for
the year ending 30 June 2021 and therefore the contingent consideration
related to the year ended 30 June 2021 has been moved to the consolidated
Statement of Comprehensive Income as exceptional income. The remaining
contingent consideration totalling £50,000 is included in the Statement of
Financial Position.
6 Finance income
Finance income 2021 2020
£ £
Bank interest received 489 556
7 Finance costs
Finance costs 2021 2020
£ £
Coronavirus business interruption loan interest 5,150 -
Lease interest 16,932 20,253
22,082 20,253
8 Taxation
2021 2020
£ £
The tax charge comprises:
Current tax
Current year (4,442) (5,357)
(4,442) (5,357)
Deferred tax (see note 9)
Current year 9,670 (15,140)
9,670 (15,140)
Total tax charge in the statement of comprehensive income 5,228 (20,497)
Factors affecting the tax charge for the year
Profit / (loss) on ordinary activities before taxation from continuing (159,698) (217,924)
operations
Profit / (loss) on ordinary activities before taxation multiplied by standard
rate
of UK corporation tax of 19% (2020: 19%) (30,343) (41,406)
Effects of:
Non-deductible expenses 15,021 20,909
Tax on foreign subsidiaries 20,550 -
35,571 20,909
Total tax charge 5,228 (20,497)
The Group has estimated losses of £526,350 (2020: £375,762) available to
carry forward against future trading profits. Losses totalling £476,152 are
in Aeorema Communications plc which is not currently making taxable profits,
as all trading is undertaken by its subsidiaries Aeorema Limited, Eventful
Limited and Cheerful Twentyfirst, Inc., therefore no deferred tax asset has
been recognised in respect of this amount.
9 Deferred taxation
2021 2020
£ £
Property, plant and equipment temporary differences (16,826) (13,978)
Temporary differences (25,023) (8,664)
Tax losses 39,790 30,253
(2,059) 7,611
At 1 July 7,611 (7,529)
Transfer to Statement of Comprehensive Income (9,670) 15,140
At 30 June (2,059) 7,611
10 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company's
Statement of Comprehensive Income has not been included in these financial
statements.
11 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares. In view of the group
loss for the year, options to subscribe for ordinary shares in the company are
anti-dilutive and therefore diluted earnings per share information is
presented in line with basic earnings per share.
The following reflects the income and share data used and dilutive earnings
per share computations:
2021 2020
£ £
Basic earnings per share
(Loss) / profit for the year attributable to owners of the Company (164,926) (197,427)
Basic weighted average number of shares 9,238,000 9,101,356
1,920,000 1,020,000
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares 11,158,000 10,121,356
12 Intangible fixed assets
Group Goodwill Intellectual Total
Property
£ £ £
Cost
At 30 June 2019 2,728,292 - 2,728,292
Acquisitions 199,194 10,000 209,194
At 30 June 2020 2,927,486 10,000 2,937,486
At 30 June 2021 2,927,486 10,000 2,937,486
Impairments and amortisation
2,363,138 - 2,363,138
At 30 June 2019
Charge for the year - 417 -
2,363,138 417 2,363,555
At 30 June 2020
Charge for the year - 2,500 2,500
2,363,138 2,917 2,366,055
At 30 June 2021
Net book value
At 30 June 2019 365,154 - 365,154
At 30 June 2020 564,348 9,583 573,931
At 30 June 2021 564,348 7,083 571,431
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
2021-22 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
2.50% for event and moving image production activities. Using these
assumptions, which are based on past experience and future expectations, there
was no impairment in the year.
13 Property, plant and equipment
Group Leasehold land Fixtures, fittings Total
and buildings and equipment
£ £ £
Cost
At 30 June 2019 58,536 138,649 197,185
Additions - 59,591 59,591
Acquisition of subsidiary - 1,809 1,809
Disposals - (26,867) (26,867)
At 30 June 2020 58,536 173,182 231,718
Additions - 59,179 59,179
Disposals - (3,354) (3,354)
At 30 June 2021 58,536 229,007 287,543
Depreciation
58,536 80,578 139,114
At 30 June 2019
Charge for the year - 31,871 31,871
Eliminated on disposal - (25,219) (25,219)
58,536 87,230 145,766
At 30 June 2020
Charge for the year - 40,885 40,885
Eliminated on disposal - (2,585) (2,585)
58,536 125,530 184,066
At 30 June 2021
Net book value
At 30 June 2019 - 58,071 58,071
At 30 June 2020 - 85,952 85,952
At 30 June 2021 - 103,477 103,477
14 Right-of-use assets
Group Leasehold
£
Cost
At 30 June 2019 404,574
455,436
Additions
Disposals (404,574)
At 30 June 2020 455,436
Lease modification adjustment (436,441)
At 30 June 2021 18,995
Depreciation
At 30 June 2019 391,088
Charge for the year 89,392
Eliminated on disposal (404,574)
At 30 June 2020 75,906
Charge for the year 91,092
Lease modification adjustment (166,998)
At 30 June 2021 -
Net book value
At 30 June 2019 13,486
At 30 June 2020 379,530
At 30 June 2021 18,995
The right-of-use asset relates to the Group's leasehold property at Moray
House, 23-31 Great Titchfield Street, London, W1. In March 2021 the Group gave
notice to its landlords of its intent to vacate the premises. Under the terms
of the lease agreement the Group is required to give a minimum of 6 months'
notice and therefore the Group is scheduled to leave the premises on 9
September 2021.
The right-of-use asset was calculated on the assumption that the Group would
remain in the premises for the duration of the 10 year lease agreement.
However, due to the Group's intent to vacate the premises early and with only
just over 2 months remaining on the lease at the year end the right-of-use
asset has been modified.
The valuation of the right of use asset is adjusted at the lease modification
date, and the present value of future lease payments adjusted for depreciation
to the year end. The corresponding lease liability modification is recognised
in note 20.
15 Non-current assets - Investments
Company Shares in subsidiary
£
Cost
At 30 June 2019 3,308,964
47,097
Increase in respect of share-based payments
Acquisition of subsidiary 479,692
At 30 June 2020 3,835,753
30,703
Increase in respect of share-based payments
Acquisition of subsidiary 10
At 30 June 2021 3,866,466
Provision
At 30 June 2019 2,694,213
At 30 June 2020 2,694,213
At 30 June 2021 2,694,213
Net book value
At 30 June 2019 614,751
At 30 June 2020 1,141,540
At 30 June 2021 1,172,253
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
Eventful Limited England and Wales Ordinary 100
Twentyfirst Limited (Dormant) England and Wales Ordinary 100
Cheerful Twentyfirst, Inc. United States of America Ordinary 100
During the year the Group formed Cheerful Twentyfirst, Inc., a US company
based in New York. Aeorema Communications plc holds 100% of the share capital
in Cheerful Twentyfirst, Inc.
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.
16 Trade and other receivables
Group Company
2021 2020 2021 2020
£ £ £ £
Trade receivables 964,490 306,198 - -
Related party receivables - - 517,003 641,134
Other receivables 93,015 76,112 3,872 5,002
Prepayments and accrued income 371,559 215,187 12,000 11,850
1,429,064 597,497 532,875 657,986
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 £76,504 (2020: £157,239) were past due
but not impaired. These amounts are still considered recoverable. The ageing
of these trade receivables is as follows:
Group
2021 2020
£ £
Less than 90 days overdue 39,419 33,712
More than 90 days overdue 37,085 123,527
76,504 157,239
17 Cash at bank and in hand
Group Company
2021 2020 2021 2020
£ £ £ £
Bank balances 1,101,713 1,721,217 5,844 11,298
1,101,713 1,721,217 5,844 11,298
18 Trade and other payables
Group Company
2021 2020 2021 2020
£ £ £ £
As restated
Trade payables 492,163 209,770 5,395 6,001
Related party payables - - 67,365 67,355
Taxes and social security costs 310,148 381,777 - -
Other payables 91,002 113,582 50,000 100,000
Accruals and deferred income 524,154 521,093 17,000 17,780
1,417,467 1,226,222 139,760 191,136
All trade and other payables are expected to be settled within 12 months of
the end of the reporting period. The fair value of trade and other payables is
the same as the carrying values shown above.
19 Bank Loans
2021 2020
£ £
Bank Loan
Current 54,089 -
Non-current 195,911 -
250,000 -
On 15 October 2020 the company received a Floating Rate Basis Coronavirus
Business Interruption Loan (CBIL) of £250,000 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 £6,944 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
£5,150 being charged to the profit and loss, this is offset by the equal
amount of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the company's
present and future assets.
20 Leases
The balance sheet shows the following amounts relating to leases:
Group
2021 2020
£ £
Right-of-use assets
Buildings
18,995 379,530
18,995 379,530
Group
2021 2020
£ £
Lease liabilities
Current 25,912 85,070
Non-current - 300,689
25,912 385,759
21 Provisions
Group
Leasehold dilapidations Total
£ £
At 1 July 2020 25,020 25,020
Charged to statement of comprehensive income - -
At 30 June 2021 25,020 25,020
Group
Leasehold dilapidations Total
£ £
Current 25,020 -
Non-current - 25,020
25,020 25,020
Leasehold dilapidations relate to the estimated cost of returning a leasehold
property to its original state at the end of the lease in accordance with the
lease terms. The main uncertainty relates to estimating the cost that will be
incurred at the end of the lease.
22 Share capital
2021 2020
£ £
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 2019 9,050,500 1,131,313
At 30 June 2020 9,238,000 1,154,750
At 30 June 2021 9,238,000 1,154,750
Holders of these shares are entitled to dividends as declared from time to
time and are entitled to one vote per share at general meetings of the
company.
See note 25 for details of share options outstanding.
23 Directors' emoluments
Salary, fees, bonuses and benefits in kind Salary, fees, bonuses and benefits in kind Pensions Pensions Total Total
2021 2020 2021 2020 2021 2020
£ £ £ £ £ £
M Hale - 13,333 - - - 13,333
S Haffner 15,000 14,250 - - 15,000 14,250
R Owen 20,000 19,333 - - 20,000 19,333
S Quah 139,268 146,050 5,000 6,469 144,268 152,519
A Harvey 103,653 112,643 4,000 5,219 107,653 117,862
277,921 305,609 9,000 11,688 286,921 317,297
The remuneration of directors of the Company is set out below.
During the year M Hale waived his right to fees of £15,000 (2020: £1,667)
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
S Quah 22 August 2018 300,000 29.00p 17 November 2020 22 August 2028
A Harvey 22 August 2018 300,000 29.00p 17 November 2020 22 August 2028
S Quah 29 April 2021 100,000 31.00p 5 November 2023 29 April 2031
A Harvey 29 April 2021 100,000 31.00p 5 November 2023 29 April 2031
S Quah 29 April 2021 100,000 50.00p 5 November 2023 29 April 2031
A Harvey 29 April 2021 100,000 50.00p 5 November 2023 29 April 2031
S Quah 29 April 2021 100,000 70.00p 5 November 2023 29 April 2031
A Harvey 29 April 2021 100,000 70.00p 5 November 2023 29 April 2031
Fees for S Haffner are charged by Harris & Trotter LLP, a firm in which he
is a member (see note 26).
24 Employee information
The average monthly number of employees (including directors) employed by the
Group during the year was:
Number of employees Group Company
2021 Number 2020 Number 2021 Number 2020 Number
Administration and production 37 28 5 5
The aggregate payroll costs of these employees charged in the Statement of
Comprehensive Income was as follows:
Employment costs Group Company
2021 2020 2021 2020
£ £ £ £
Wages and salaries 1,846,938 1,333,194 35,000 46,917
Social security costs 205,253 159,082 - -
Pension costs 42,295 31,000 - -
Share-based payments 30,703 47,097 - -
2,125,189 1,570,373 35,000 46,917
25 Share-based payments
The Group operates an EMI share option scheme for key employees. Options are
granted to key employees at an exercise price equal to the market price of the
Company's shares at the date of grant. Options are exercisable from the third
anniversary of the date of grant and lapse if they remain unexercised at the
tenth anniversary or upon cessation of employment. The following option
arrangements exist over the Company's shares:
Date of grant Exercise price Exercise period Number of options 2021 Number of options 2020
From To
25 April 2013 16.5p 25 April 2016 24 April 2023 300,000 300,000
22 August 2018 29.0p 17 November 2020 22 August 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 300,000 -
29 April 2021 50.0p 5 November 2023 29 April 2031 300,000 -
29 April 2021 70.0p 5 November 2023 29 April 2031 300,000 -
1,920,000 1,020,000
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
2021 2021 2020 2020
£ £
Outstanding at beginning of the year 1,020,000 0.25 1,200,000 0.25
Granted during the year 900,000 0.50 - -
Outstanding at end of the year 1,920,000 0.37 1,020,000 0.25
Exercisable at the end of the year 900,000 0.25 300,000 0.17
The exercise price of options outstanding at the year-end was £0.369 (2020:
£0.250) and their weighted average contractual life was 7.6 years (2020: 6.6
years).
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value as determined at the grant date of equity-settled
share-based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. The
estimated fair value of the options is measured using an option pricing model.
The inputs into the model are as follows:
Grant date 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
Grant date 22 August 2018
Model used Black-Scholes
Share price at grant date 29.0p
Exercise price 29.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 14.800p
Grant date 14 June 2019
Model used Black-Scholes
Share price at grant date 26.0p
Exercise price 26.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 12.894p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 31.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 30.060p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 50.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.943p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 70.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.845p
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
during the year ended 30 June 2021 the historical volatility is calculated
over the last 10 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:
2021 2020
£ £
Share-based payment charge 30,703 47,097
26 Related party transactions
The Group has a related party relationship with its subsidiaries and its key
management personnel (including directors). Details of transactions between
the Company and its subsidiaries are as follows:
2021 2020
£ £
Amounts owed by subsidiaries
Total amount owed by subsidiaries 517,003 641,134
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,365 67,355
The company received no dividends during the year (2020: £300,000) from its
subsidiary, Aeorema Limited. The company transferred a VAT receivable of
£19,221 (2020: £22,977) 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 £20,000 (2020: £27,667).
Aeorema Limited paid expenses totalling £113,352 (2020: £503,734) on behalf
of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of £10,000 to
Aeorema Communications plc (2020: £110,505).
The compensation of key management (including directors) of the Group is as
follows:
2021 2020
£ £
Short-term employee benefits 277,921 305,609
Post-employment benefits 9,000 11,688
286,921 317,297
The share options held by directors of the Company are disclosed in note 23.
During the year, a charge of £21,002 (2020: £41,556) was recognised in the
Consolidated Statement of Comprehensive Income in respect of these share
options.
During the year A Harvey received an interest-free loan of £10,000. At the
year end, £10,000 (2020: £Nil) was outstanding.
During the year S Quah received an interest-free loan of £10,000. At the year
end, £10,000 (2020: £Nil) 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 is as follows:
Harris and Trotter LLP - charged during the year 2021 2020
£ £
Aeorema Communications plc 15,000 14,250
Aeorema Limited 12,850 14,700
27,850 28,950
At the year end, the Group had an outstanding trade payable balance to Harris
and Trotter LLP of £5,630 (2020: £5,640).
27 Cash flows
Group
2021 2020
£ £
Cash flows from operating activities
Profit / (loss) before taxation (159,698) (217,924)
Depreciation of property, plant and equipment 40,885 31,871
Depreciation of right-of-use assets 91,092 89,392
Amortisation of intangible fixed assets 2,500 417
Loss on disposal of fixed assets 769 1,648
Share-based payment expense 30,703 47,097
Finance income (489) (556)
Interest on lease liabilities 16,932 20,253
Exchange rate differences on translation (11,044) -
Revaluation of right-to-use asset (5,311) -
6,339 (27,802)
Increase / (decrease) in trade and other payables 191,244 (1,075,254)
(Increase) / decrease in trade and other receivables (831,592) 1,014,847
Taxation paid (74,805) (10,797)
Cash generated / (used) from operating activities (708,814) (99,006)
28 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
2021 2020 2021 2020
£ £ £ £
Financial Assets
Trade and other receivables 1,227,460 432,202 517,003 641,134
Cash and cash equivalents 1,101,713 1,721,217 5,844 11,298
Investments in subsidiaries - - 1,166,593 1,141,540
Total 2,329,173 2,153,419 1,689,440 1,793,972
Financial Liabilities
Trade and other payables 833,165 734,131 122,760 173,356
Accruals 139,555 227,812 17,000 17,780
Total 972,720 961,943 139,760 191,136
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 2021 was £964,490
(2020: £306,198). Trade receivables are managed by policies concerning the
credit offered to customers and the regular monitoring of amounts outstanding
for both time and credit limits. The credit risk associated with trade
receivables is minimal as invoices are based on contractual agreements with
long-standing customers. Credit losses historically incurred by the Company
have consequently been immaterial.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to meet its liabilities
when they fall due. The Group monitors cash flow on a regular basis. At the
year end, the Group has sufficient liquid resources to meets its obligations
of £1,036,700 (2020: £1,407,185).
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 £1,101,713 (2019:
£1,721,217). 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 £1,514,980 (restated
2020: £1,660,247).
29 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension
plans. Contributions payable by the Group for the year were £41,946 (2020:
£31,000). At the end of the reporting period £9,237 (2020: £5,608) of
contributions were due in respect of the period.
30 Dividends
As a consequence of the ongoing COVID-19 pandemic, the Board have decided that
no final dividend will be paid to shareholders.
31 Contingent liability
Company
The Company is a member of a group VAT registration with all other companies
in the Aeorema Communications group and, under the terms of the registration,
is jointly and severally liable for the VAT payable by all members of the
group. At 30 June 2021 the Company had no potential liability under the terms
of the registration.
32 Control
There is no overall controlling party.
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