REG - Aeorema Comms Plc - Final Results
14/11/2022 07:00
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RNS Number : 2206G Aeorema Communications Plc 14 November 2022
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
14 November 2022
Aeorema Communications plc ('Aeorema' or 'the Company' or 'the Group')
Final Results
Aeorema Communications plc, a leading strategic communications group based in
London, New York City and Amsterdam, is pleased to announce its audited
results for the year ended 30 June 2022, a period in which record revenue and
profits have been reported.
Highlights
• Record operational and financial performance:
o Revenue up 140% to £12.2 million (2021: £5.09m)
o Profit before tax of £843,564 (2021: loss of £159,698)
• Adapting and developing of the Group's service
offering to become an integrated agency with a bespoke event offering spanning
live, virtual, and hybrid experiences, resulting in an incredibly flexible
business model
• Demand for live events returning, with the addition of
lucrative consultancy services, including a sustainability consultancy
offering going forward
• New office in Amsterdam opened to support the global growth
strategy, adding to the Group's current offices in London and New York
• Loyal, international blue-chip client base, spanning a broad
range of sectors where we are seeing commitment to increasing numbers of
longer-term contracts
• A number of significant award wins during the period and
post-period end including Global Agency of the Year at the C&IT Awards
• Strong cash balance of £1.7 million
• Dividend policy reinstated with proposed final
dividend payment of 2p per share
For further information visit www.aeorema.com (http://www.aeorema.com/)
or contact:
Andrew Harvey Aeorema Communications plc +44 (0)20 7291 0444
John Depasquale/Freddie Wooding (Corporate Finance) Allenby Capital Limited (Nominated Adviser and Broker) +44 (0)20 3328 5656
Kelly Gardiner
(Sales and Corporate Broking)
Catherine Leftley/Charlotte Page St Brides Partners Ltd (Financial PR) info@stbridespartners.co.uk
Chairman's Statement
The year under review has proved to be a record period for Aeorema and I am
delighted to report on our best ever financial performance, which includes a
140% increase in revenue and an impressive swing back to profitability. This
is an incredible achievement and is arguably all the more impressive given the
global backdrop during the period. This milestone achievement is testament
to the skill set of our team, who have adapted and developed our service
offering to become an integrated agency, reflecting evolving market demands
and underpinning the innovative nature of our business.
Whilst our Company initially grew as providers of immersive, live event
experiences, global changes motivated our team to find new ways to operate and
help our clients engage and communicate with their target audiences. As an
integrated agency, our bespoke event offering spans live, virtual, and hybrid
experiences. That said, it is encouraging to have seen a significant return to
the demand for live events, a trend which we anticipate will continue. We have
also leveraged the significant knowledge and experience of our team in
providing high level consultancy services, which help clients maximise and
deliver on their communication strategies, and we continue to identify new
ways to support our clients. A critical sustainability consulting offering
will be a key focus moving forward. As a result, we now have an incredibly
flexible business model, with clear value and proven resilience.
Importantly, the diversification of our business has helped support a loyal,
international blue-chip client base, spanning a broad range of sectors,
including finance, professional services, advertising, IT, gaming, fashion,
fintech, and beverages, where we are seeing commitment to increasing numbers
of longer-term contracts. In support of this and our global growth strategy,
post period end we were delighted to open a new office in Amsterdam, adding to
our current offices in London and New York. We are already realising the
benefits of this increased global footprint and will continue to seek
additional growth opportunities to continue to build our global market
position and service offering.
During the period we were delighted to welcome Hannah Luffman to the board as
a Non-Executive Director of the Company, making her one of the youngest ever
females to join a listed company board of directors in the UK. With over 15
years' commercial and strategic marketing experience working with a number of
large and blue-chip companies such as Google UK, InterContinental Hotels
Group, Boots and Soap&Glory, Hannah brings a wealth of industry knowledge
and contacts, which is already proving beneficial as we look to raise the
profile for Aeorema's global network, with a particular focus on North
America.
Whilst we are naturally delighted to have welcomed many new clients during the
period, we are also honoured to continue to be working with many regularly
returning customers. This, I believe, highlights the quality of our offering.
Looking ahead, we remain confident in our strengthened market position, with a
strong pipeline of event activity that sees us solidly into 2023. Our diverse
service offering, combined with an expanded geographical operating presence,
means we are poised to continue a positive growth trajectory.
We have a robust cash position at the date of this announcement of
£1.9million. I am also delighted to confirm that we will be returning to
paying a dividend for the year, reflecting the growth we have experienced and
the confidence we have for the future. The dividend declared is 2 pence per
share (last declared dividend 2019: 1 pence per share), which will be paid to
shareholders on the register on 23 December 2022. The ex-dividend date will be
22 December 2022. Subject to the proposed dividend being approved by
shareholders at the forthcoming Annual General Meeting, it will be paid on 20
January 2023.
Finally, I would like to extend my sincere thanks to our shareholders for
their continued support and vision. We look forward to the growth
opportunities ahead and are committed to delivering on these for the benefit
of all.
Mike Hale
Chairman
11 November 2022
Chief Executive Officer's Report
We have had an exceptional year. Our exemplary creative and strategic insight,
consistent high quality of work and commercial agility means I am incredibly
proud to be reporting on the most successful year to date for Aeorema, both
operationally and financially.
Excitingly, our shift to an integrated agency model and client partnership
approach has opened up opportunities to work on long-term communications
strategies over multiple event and film touchpoints. We continue to see
significant growth in our strategic consultancy offering, which has opened new
revenue streams within our business and introduced new skill sets into our
teams. Evolving our revenue streams to meet the growing needs of our clients
is a continued focus in our five-year strategy for global expansion.
We are already seeing the strength of our increasing global reach, working
with leading brands on annual communications campaigns that span multiple
regions and with delivery in multiple markets. We opened our office in New
York in September 2020 to support our global client base and with a US
foothold, our ambitions now turn to developing and growing this presence
significantly. This is a key focus for the group and will require continued
investment; thanks to our strong balance sheet we are in a good position to
make strategic decisions when opportunities arise.
Looking to EMEA, we already have a strong presence thanks to our headquarters
in London. After increased demand and activity in continental Europe, we were
delighted to establish a new office in Amsterdam post period end in August
2022. We are naturally keen to maximise the business opportunities available
to us and this Amsterdam office provides us with an increased operational
presence and expanded team to better meet the growing demands of our European
client base, whilst also targeting new business opportunities. The new office
also underpins our commitment to minimising our environmental impact by
enabling us to deliver projects through local teams and equipment, in line
with our 2022 Corporate Social Responsibility programme.
Balancing people, planet and profit continues to be a focus across our
business. We felt it was crucial to be an early adopter and to establish a
formal structure and approach around emissions measurement, especially as
environmental targets become an increasingly high priority both globally and
for our clients. In April 2022, we launched our client carbon measurement
programme which includes advance impact forecasting and actual emissions
reporting, supported by sustainability consultancy to guide reduction,
mitigation and offsetting of our carbon footprint. We're pleased to say
training for this programme has now been fully implemented internally, with
measurement complete on multiple client projects. We have also been thrilled
to appoint a Sustainability Director to oversee our continued work in
understanding and implementing sustainable best practice, alongside increasing
momentum behind sustainable event practice in the industry. We continue to be
viewed as an industry leader in this space.
Our experience and vocal industry presence across sustainability, leadership,
innovation and creativity has strengthened our industry reputation as
thought-leaders. We've quickly become an agency-to-watch and it's a momentum
we plan to nurture.
I am pleased to report a number of significant award wins during the period
and post-period end. Most recently, this included winning Global Agency of the
Year at the C&IT Awards, as well as Creative Team of the Year for four
consecutive years at the Conference News Awards, the biggest annual gathering
and celebration of event management agencies in the UK. These exemplary
accolades come alongside a handful of wins across our delivery disciplines,
including winning 'Best Corporate Film' at the Campaign and PR Week Brand Film
Awards, which is dubbed the most prestigious awards ceremony for the UK PR
industry.
These award wins give rightful credit to the incredible skill set of our team,
which we continue to invest in as we continue to build our business. These
investments, among others in global operations, process, and office spaces,
come at a pivotal time to set up the agency for further growth and success in
the future, and have been a fruitful exercise in retaining (and recruiting)
the industry's best talent.
Eventful Limited ('Eventful'), our venue sourcing and incentive travel agency,
is showing promising results and optimism for growth in the next twelve
months. Following the inevitable impact of restrictions during 2020/21, I am
pleased to share that bookings have more than matched historic numbers, with a
record pipeline in place for 22/23, and I am cautiously confident that
Eventful will see a return to profitability.
Despite the continued global economic and political uncertainty, we remain
confident in the opportunities ahead. We have proven the strength and value of
our business and have a clear strategy in place to continue our upward growth
trajectory as we take advantage of our enhanced global presence and
strengthened team. Alongside this organic growth, we will continue to assess
additional strategic growth opportunities that could materially enhance our
business offering and build our market reach. With this incredibly strong
financial performance and a growing blue-chip client base we are ideally
positioned to further build our business.
My deepest thank you to our team, our clients and our shareholders for your
continued support and I look forward to continuing Aeorema's journey with you
as we build on this exciting phase of growth.
Steve Quah
CEO
11 November 2022
Strategic Report
The Board presents its Strategic Report on the Group for the year ended 30
June 2022.
Principal activities
Aeorema Communications plc does not trade but incurs professional fees
associated with its listing on the London Stock Exchange. Aeorema Limited
(trading as Cheerful Twentyfirst) and Cheerful Twentyfirst, Inc. are live
events agencies with film capabilities that specialise in devising and
delivering corporate communication solutions. Eventful Limited is a
consultative, high-touch service, assisting clients with venue sourcing, event
management and incentive travel.
Business review
The results for the year show revenue was £12,207,253 (2021: £5,094,518),
operating profit pre-exceptional items was £871,176 (2021: £188,105 loss)
and profit before taxation was £843,564 (2021: £159,698 loss).
The Group had net assets of £2,253,564 at the year-end (2021: £1,514,980)
and net current assets of £1,466,109 (2021: £1,019,047).
The year ended 30 June 2022 was a very successful year, with the Group
achieving its highest revenue and profits before taxation in its history. The
year, although still partially affected by the COVID-19 pandemic, witnessed
the return of in-person events, especially in the second half of the financial
year with the return of The Cannes Lions International Festival of Creativity.
The Group experienced high growth with its two largest existing clients (refer
to note 2) and won new business with a range of clients operating in sectors
such as fintech, media and technology.
The significant growth during the year from both new and existing clients
meant the Group employed on average 18 more employees compared with the
previous year. These hires included roles essential to ensure the Group
continued to successfully deliver high quality events. The Group also hired a
new strategic director and additional account directors to support existing
and new client accounts. These hires form part of the Group's strategic focus
on growing both existing and new client accounts through the provision of more
strategic and creative content services, rather than focusing solely on event
production services. This shift in focus has not only allowed the Group to
bill more time, and as a consequence improve gross profit margins, up from 23%
in 2021 to 25% in 2022, but also grow client accounts as the Group becomes
more involved in the clients' decision making processes. This has allowed the
Group to deliver more and larger events and moving image projects.
Eventful Limited was significantly affected by the impact of the COVID-19
pandemic and continued to encounter difficulties caused by the pandemic in the
first half of the year. However, the Company experienced an uplift in demand
during the second half of the financial year as in-person events made a return
and the Company delivered its first incentive travel events for new clients.
Cheerful Twentyfirst, Inc. experienced a very strong year. The Company built
upon its successful first year of trading, growing existing client accounts
and winning several new clients operating in sectors such as technology and
media.
Looking ahead, the Group has not experienced any difficulties associated with
the war in Ukraine, cost of living crisis or political uncertainties in the
UK. However, the Board remain acutely aware of the economic difficulties faced
both in the UK and globally, and continue to evaluate the investment plans,
resourcing and future forecasts on a daily basis.
Key performance indicators
Year 2022 2021 2020 2019
£ £ £ £
Revenue 12,207,253 5,094,518 5,475,425 6,765,280
Operating profit / (loss) pre-exceptional items 871,176 (188,105) (175,043) 384,483
Profit / (loss) before taxation 843,564 (159,698) (217,924) 382,244
The Group experienced a 140% increase in revenue during the year.
Event revenue increased by 160% in comparison with the previous year. This
increase was due in large part to two factors. Firstly, as previously
explained, the Group has shifted towards a client account model with greater
emphasis on building existing and new client accounts, compared with a project
by project model used in previous years. This has allowed the Group to develop
client relationships and grow the number and size of events delivered.
Secondly, the return of in-person events during the year, especially in the
Group's historically busiest month of June. The Group delivered its most ever
events at The Cannes Lions International Festival of Creativity. In the
previous couple of years, Cannes Lions has been cancelled as a consequence of
the COVID-19 pandemic.
Film revenue grew by 52% in comparison with the previous year. This growth was
partly a consequence of the significant growth in events delivered during the
year and the demand for films and motion graphics on these events. The moving
image department also experienced high growth on solely moving image projects.
The Group delivered several large moving image projects for new clients during
the year, including clients introduced by Eventful Limited.
Eventful Limited experienced a 1110% increase in revenue during the year,
compared with the previous year. The company was hugely affected by the
COVID-19 pandemic, but, as demand for in-person events and incentive travel
returned the company experienced significant growth in client enquiries.
Cashflows
Net cash inflow from operating activities was £921,695 compared with a net
cash outflow of £708,814 for the year ended 30 June 2021. The cash position
increased by £612,704 to £1,714,417 (2021: £1,101,713).
Capital expenditure
Total capital expenditure, including expenditure on tangible assets, was
£179,475 compared with £59,179 for the year ended 30 June 2021.
Employees
Our priority is to attract and retain talented employees and to harness their
creativity to drive growth through development and delivery of services that
bring value to our customers' business operations.
We continue to focus on ensuring that the performance of staff is measured
against clear, business focused objectives and behavioural criteria through
continual appraisals.
Reward
The Group benchmarks employee salaries against the market and reviews salaries
annually to ensure that we are paying at a level to attract and retain
high-quality employees.
Key employees are offered access to a share option scheme, further details of
which are provided in note 25 to the financial statements.
Equal opportunities
We are committed to ensuring equal opportunities for our staff. We have
introduced training which covers equal opportunities legislation and best
practice. Our policy in respect of employment of disabled persons is the same
as that relating to all other employees in matters of training, career
development and promotion. Should employees become disabled during the course
of their employment, we will make every effort to make reasonable adjustments
to their working environment to enable their continued employment.
Safety, health and environment
The commitment and participation of all employees is vital to efficient and
effective occupational risk control. In order to meet our responsibility to
protect the environment, staff and the business, the Group continues to focus
on maintaining a risk aware culture.
We believe the Group maintains a low environmental impact. We therefore
continue to work on the potential environmental impacts of energy consumption,
waste and travel.
Directors' policies for managing principal risks
There is an ongoing process for identifying, evaluating and managing the
significant risks faced by the business. Risk reviews are undertaken regularly
by the respective business areas throughout the year to identify and assess
the key risks associated with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are linked to customer
dependency. Though the Group has a very diverse customer base in certain
market sectors, key customers can represent a significant amount of revenue
(see note 2). Key customer relationships are closely monitored but the loss of
a key client could have an adverse effect on the Group's performance. Further
details of risks, uncertainties and financial instruments are contained in
note 28.
Key risks of a non‑financial nature
The Group is operating in a highly competitive global market that is
undergoing continual change. The Group's ability to respond to many
competitive factors including, but not limited to technological innovations,
product quality, customer service and employment of qualified personnel will
be key in the achievement of its objectives, but its ultimate success will
depend on the purchase spends of its customers and the buoyancy of the market.
On behalf of the Board
S Haffner
Director
11 November 2022
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Notes 2022 2021
£ £
Continuing operations
2 12,207,253 5,094,518
Revenue
Cost of sales (9,169,691) (3,912,376)
Gross profit 3,037,562 1,182,142
Other income 3 3,743 61,651
Administrative expenses (2,170,129) (1,431,898)
4 871,176 (188,105)
Operating profit / (loss) pre-exceptional items
Exceptional income 5
- 50,000
Operating profit / (loss) post exceptional items 871,176 (138,105)
Finance income 6 241 489
Finance costs 7 (27,853) (22,082)
Profit / (loss) before taxation 843,564 (159,698)
Taxation 8 (204,222) (5,228)
Profit / (loss) for the year 639,342 (164,926)
42,347 (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 42,347 (11,044)
Total comprehensive income for the year attributable to owners of the parent 681,689 (175,970)
Profit / (loss) per ordinary share:
6.92078p (1.78529)p
Total basic earnings per share 11
Total diluted earnings per share 11 5.80797p (1.78529)p
The notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2022
Notes Group Company
2022 2021 2022 2021
£ £ £ £
Non-current assets
Intangible assets 12 568,931 571,431 - -
Property, plant and equipment 13 222,479 103,477 - -
Right-of-use assets 14 823,772 18,995 - -
Investments in subsidiaries 15 - - 1,229,148 1,172,253
Deferred taxation 9 25,925 - - 30,253
Total non-current assets 1,641,107 693,903 1,229,148 1,202,506
Current assets
Trade and other receivables 16 3,130,035 1,429,064 689,332 532,875
Cash and cash equivalents 17 1,714,417 1,101,713 1,532 5,844
Current tax receivable - 10,758 - -
Total current assets 4,844,452 2,541,535 690,864 538,719
Total assets 6,485,559 3,235,438 1,920,012 1,741,225
Current liabilities
Trade and other payables 18 (2,960,221) (1,417,467) (143,721) (139,760)
Bank loans 19 (83,333) (54,089) - -
Lease liabilities 20 (121,999) (25,912) - -
Current tax payable (177,790) - - -
Provisions 21 (35,000) (25,020) - -
Total current liabilities (3,378,343) (1,522,488) (143,721) (139,760)
Non-current liabilities
Bank loans 19 (111,111) (195,911) - -
Lease liabilities 20 (738,041) - - -
Deferred taxation 9 - (2,059) - -
Provisions 21 (4,500) - - -
Total non-current liabilities (853,652) (197,970) - -
Total liabilities (4,231,995) (1,720,458) (143,721) (139,760)
Net assets 2,253,564 1,514,980 1,776,291 1,601,465
Equity
Share capital 22 1,154,750 1,154,750 1,154,750 1,154,750
Share premium 9,876 9,876 9,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 168,956 112,061 168,956 112,061
Capital redemption reserve 257,812 257,812 257,812 257,812
Foreign translation reserve 31,303 (11,044) - -
Retained earnings 614,217 (25,125) 168,247 50,316
Equity attributable to owners of the parent 2,253,564 1,514,980 1,776,291 1,601,465
The notes are an integral part of these financial statements.
The profit for the financial year of the holding company was £148,184 (2021:
£79,179 loss).
The financial statements were approved and authorised by the board of
directors on 11 November 2022 and were signed on its behalf by
A
Harvey
S Haffner
Director
Director
Company Registration No. 04314540
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Group Share capital Share premium Merger reserve Other reserve Capital redemption reserve Foreign translation reserve Retained earnings Total equity
£ £ £ £ £ £ £ £
At 30 June 2020 1,154,750 9,876 16,650 81,358 257,812 - 139,801 1,660,247
- - - - - - (164,926) (164,926)
Comprehensive income for the year, net of tax
Foreign currency translation - - - - - (11,044) - (11,044)
Share-based payment - - - 30,703 - - - 30,703
At 30 June 2021 1,154,750 9,876 16,650 112,061 257,812 (11,044) (25,125) 1,514,980
- - - - - - 639,342 639,342
Comprehensive income for the year, net of tax
Foreign currency translation - - - - - 42,347 - 42,347
Share-based payment - - - 56,895 - - - 56,895
At 30 June 2022 1,154,750 9,876 16,650 168,956 257,812 31,303 614,217 2,253,564
Share premium represents the value of shares issued in excess of their list
price.
In accordance with section 612 of the Companies Act 2006, the premium on
ordinary shares issued in relation to acquisitions is recorded as a merger
reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee remuneration, as
detailed in note 25.
Capital redemption reserve represents a statutory non-distributable reserve
into which amounts are transferred following redemption or purchase of a
company's own shares.
The notes are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 30 June 2022
Company Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
Other reserve
£ £ £ £ £ £ £
At 30 June 2020 1,154,750 9,876 16,650 81,358 257,812 129,495 1,649,941
- - - - (79,179) (79,179)
Comprehensive income for the year, net of tax
-
Share-based payment - - - 30,703 - - 30,703
At 30 June 2021 1,154,750 9,876 16,650 112,061 257,812 50,316 1,601,465
- - - - 117,931 117,931
Comprehensive income for the year, net of tax
-
Share-based payment - - - 56,895 - - 56,895
At 30 June 2022 1,154,750 9,876 16,650 168,956 257,812 168,247 1,776,291
Share premium represents the value of shares issued in excess of their list
price.
In accordance with section 612 of the Companies Act 2006, the premium on
ordinary shares issued in relation to acquisitions is recorded as a merger
reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee remuneration, as
detailed in note 25.
Capital redemption reserve represents a statutory non-distributable reserve
into which amounts are transferred following redemption or purchase of a
company's own shares.
The notes are an integral part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Notes Group
2022 2021
£ £
Net cash flow from operating activities 27 921,695 (708,814)
Cash flows from investing activities
Finance income 6 241 489
Purchase of property, plant and equipment 13 (179,475) (59,179)
Repayment of leasing liabilities (74,201) (102,000)
Cash used in investing activities (253,435) (160,690)
Cash flows from financing activities
Repayment of borrowings (55,556) -
Proceeds from borrowings - 250,000
Cash used in financing activities (55,556) 250,000
Net (decrease) / increase in cash and cash equivalents 612,704 (619,504)
Cash and cash equivalents at beginning of year 1,101,713 1,721,217
Cash and cash equivalents at end of year 1,714,417 1,101,713
Cash and cash equivalents
The amounts disclosed on the Statement of Cash Flows in respect of cash and
cash equivalents are in respect of the Statement of Financial Position
amounts:
Notes Group Company
2022 2021 2022 2021
£ £ £ £
Cash and cash equivalents 17 1,714,417 1,101,713 1,532 5,844
1,714,417 1,101,713 1,532 5,844
The notes are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2022
1 Accounting policies
Aeorema Communications plc is a public limited company incorporated in the
United Kingdom and registered in England and Wales. The Company is domiciled
in the United Kingdom and its principal place of business is 87 New Cavendish
Street, London, W1W 6XD. The Company's Ordinary Shares are traded on the AIM
Market.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
The presentation currency is £ sterling.
Going concern
The Board have reviewed the Group's detailed forecasts for the next financial
year, other medium term plans, the impact of the war in Ukraine, the cost of
living crisis and economic and political uncertainties both in the UK and
globally, as well as considering the risks outlined in note 28. After doing
so, the Directors, at the time of approving the financial statements, have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and have therefore used the
going concern basis in preparing the financial statements.
Basis of Preparation
The Group and company financial statements have been prepared under the
historical cost convention and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the UK
The following new standards, amendments to standards and interpretations have
been applied for the first time from 1 July 2021. Their adoption has not had a
material impact on the financial statements:
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16).
· Covid-19-Related Rent Concessions beyond 30 June 2021 - (Amendment to
IFRS 16)
Future standards in place but not yet effective
No new standards, amendments or interpretations to existing standards that
have been published and that are mandatory for the Company's accounting
periods beginning on or after 1 July 2022 have been adopted early.
The following standards and amendments are not yet endorsed in the UK at the
date of authorisation of these financial statements:
· Classification of Liabilities as Current or Non-Current (Amendments
to IAS 1)
· Property, Plant and Equipment - Proceeds before Intended Use
(Amendments to IAS 16)
· Annual Improvements 2018-2020 Cycle
· Reference to the Conceptual Framework (Amendments to IFRS 3)
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS
37)
· Classification of Liabilities as Current or Non-current - Deferral of
Effective Date (Amendment to IAS 1)'
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
· Definition of Accounting Estimates (Amendments to IAS 8)
The Group does not believe that there would have been a material impact on the
financial statements from early adoption of these standards / interpretations.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to 30 June 2022. Subsidiaries are all
entities (including structured entities) over which the Group has control.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are consolidated until the date that control
ceases.
Intra-group transactions, balances and unrealised gains and losses on
transactions between group companies are eliminated.
The merger reserve is used where more than 90% of the shares in a subsidiary
are acquired and the consideration includes the issue of new shares by the
Company, thereby attracting merger relief under the Companies Act 2006.
Revenue
Revenue represents amounts (excluding value added tax) derived from the
provision of services to third party customers in the course of the Group's
ordinary activities.
As a result of providing these services, the Group may from time to time
receive commissions from other third parties. These commissions are included
within revenue on the same basis as that arising from the contract with the
underlying third party customer.
The revenue and profits recognised in any period are based on the satisfaction
of performance obligations and an assessment of when control is transferred to
the customer.
For most contracts with customers, there is a single distinct performance
obligation and revenue is recognised when the event has taken place or control
of the content or video has been transferred to the customer.
Where a contract contains more than one distinct performance obligation
(multiple film productions, or a project involving both build construction and
event production) revenue is recognised as each performance obligation is
satisfied.
The transaction price is substantially agreed at the outset of the contract,
along with a project brief and payment schedule (full payment in arrears for
smaller contracts; part payment(s) in advance and final payment in arrears for
significant contracts).
Due to the detailed nature of project briefs agreed in advance for significant
contracts, management do not consider that significant estimates or judgements
are required to distinguish the performance obligation(s) within a contract.
For contracts to prepare multiple film productions, the transaction price is
allocated to constituent performance obligations using an output method in
line with agreements with the customer.
For other contracts with multiple performance obligations, management's
judgement is required to allocate the transaction price for the contract to
constituent performance obligations using an input method using detailed
budgets which are prepared at outset and subsequently revised for actual costs
incurred and any changes to costs expected to be incurred.
The Group does not consider any disaggregation of revenue from contracts with
customers necessary to depict how the nature, amount, timing and uncertainty
of the Group's revenue and cash flows are affected by economic factors.
Where payments made are greater than the revenue recognised at the reporting
date, the Group recognises deferred income (a contract liability) for this
difference. Where payments made are less than the revenue recognised at the
reporting date, the Group recognises accrued income (a contract asset) for
this difference.
A receivable is recognised in relation to a contract for amounts invoiced, as
this is the point in time that the consideration is unconditional because only
the passage of time is required before the payment is due.
At each reporting date, the Group assesses whether there is any indication
that accrued income assets may be impaired by assessing whether it is possible
that a revenue reversal will occur. Where an indicator of impairment exists,
the Group makes a formal estimate of the asset's recoverable amount. Where
the carrying value of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
Intangible assets - goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill acquired represents the excess of the fair value of the
consideration and associated costs over the fair value of the identifiable net
assets acquired.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. At the date of acquisition, the goodwill is allocated to
cash generating units, usually at business segment level or statutory company
level as the case may be, for the purpose of impairment testing and is tested
at least annually for impairment. On subsequent disposal or termination of a
business acquired, the profit or loss on termination is calculated after
charging the carrying value of any related goodwill.
Intangible assets - other
Intangible assets are stated in the financial statements at cost less
accumulated amortisation and any impairment value. Amortisation is provided to
write off the cost less estimated residual value of intangible assets over its
expected useful life (which is reviewed at least at each financial year end),
as follows:
Intellectual property 25% straight line
Any gain or loss arising on the derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement of Comprehensive Income in the year that
the asset is derecognised.
Fully amortised assets still in use are retained in the financial statements.
Property, plant and equipment
Property, plant and equipment is stated in the financial statements at cost
less accumulated depreciation and any impairment value. Depreciation is
provided to write off the cost less estimated residual value of property,
plant and equipment over its expected useful life (which is reviewed at least
at each financial year end), as follows:
Leasehold land and buildings Straight line over the life of the lease
Fixtures, fittings and equipment Straight line over four years
Any gain or loss arising on the derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement of Comprehensive Income in the year that
the asset is derecognised.
Fully depreciated assets still in use are retained in the financial
statements.
Impairment
The carrying amounts of the Group's assets are reviewed at each period end to
determine whether there is any indication of impairment. If any such
indication exists, the assets' recoverable amount is estimated. For goodwill
and intangible assets that have an indefinite useful life and intangible
assets that are not yet available for use, the recoverable amount is estimated
at each annual period end date and whenever there is an indication of
impairment.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the Statement of Comprehensive Income in those expense
categories consistent with the function of the impaired asset.
Investments
Fixed asset investments are stated at cost less provision for diminution in
value.
Leases
In applying IFRS 16, for all leases (except as noted below), the Group:
a) recognises right-of-use assets and lease liabilities in the statement of
financial position, initially measured at the present value of future lease
payments;
b) recognises depreciation of right-of-use assets and interest on lease
liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal portion (presented
within financing activities) and interest (presented within operating
activities) in the statement of cash flows.
Lease incentives (e.g. free rent period) are recognised as part of the
measurement of the right-of-use assets and lease liabilities whereas under IAS
17 they resulted in the recognition of a lease incentive liability, amortised
as a reduction of rental expense on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance
with IAS 36 Impairment of Assets. This replaces the previous requirement to
recognise a provision for onerous lease contracts.
For short‑term leases (lease term of 12 months or less) and leases of
low-value assets (such as photocopiers), the Group has opted to recognise a
lease expense on a straight-line basis as permitted by IFRS 16. This expense
is presented within administrative expenses in the consolidated statement of
comprehensive income.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently measured at amortised cost less any provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, cash in hand
and deposits payable on demand. Cash equivalents are short-term highly liquid
investments that are readily convertible to known amounts of cash and that are
subject to an insignificant risk of changes in value. Cash equivalents
normally have a date of maturity of 3 months or less from the acquisition
date.
Bank loans and overdrafts comprise amounts due on demand.
Finance income
Finance income consists of interest receivable on funds invested. It is
recognised in the Statement of Comprehensive Income as it accrues.
Taxation
Income tax on the profit or loss for the periods presented comprises current
and deferred tax. Current tax is the expected tax payable on the taxable
income for the year, using rates enacted or substantively enacted at the end
of the reporting period, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided
for: the initial recognition of goodwill; the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a
business combination; the differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the end of the reporting
period.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the assets can be
utilised. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also makes
contributions to the private pension arrangements of certain employees. These
arrangements are of the money purchase type and the amount charged to the
Statement of Comprehensive Income represents the contributions payable by the
Group for the period.
Financial instruments
The Group does not enter into derivative transactions and does not trade in
financial instruments. Financial assets and liabilities are recognised on the
Statement of Financial Position when the Group becomes a party to the
contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct issue costs. The Group's
equity instruments comprise 'share capital' in the Statement of Financial
Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange ruling at the end of the
reporting period. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to the
Statement of Comprehensive Income.
Government grants
Government grants are recognised based on the accrual model and are measured
at the fair value of the asset received or receivable. Grants are classified
as relating either to revenue or to assets. Grants relating to revenue are
recognised in income over the period in which the related costs are
recognised. Grants relating to assets are recognised over the expected useful
life of the asset. Where part of a grant relating to an asset is deferred, it
is recognised as deferred income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled
share based payments are measured at fair value (excluding the effect of
non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on
factors such as the exercise price, expected volatility, option price and risk
free interest rate. The fair value is then amortised through the Statement of
Comprehensive Income on a straight-line basis over the vesting period.
Expected volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 25 to the
financial statements.
Exceptional items
Exceptional items are one off, material items outside the normal course of
business which are not related to the Group's trading activities.
Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS
required management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts in the financial statements.
These judgements and estimates are based on management's best knowledge of the
relevant facts and circumstances. Information about such judgements and
estimation is contained in the accounting policies and / or notes to the
financial statements. For critical judgements that the directors have made in
the process of applying the Group's accounting policies, see note 12 on
goodwill impairment and note 14 on discount rate used to calculate right of
use assets and lease liability.
2 Revenue and segment information
The Group uses several factors in identifying and analysing reportable
segments, including the basis of organisation, such as differences in products
and geographical areas. The Board of directors, being the Chief Operating
Decision Makers, have determined that for the year ending 30 June 2022 there
is only a single reportable segment.
All revenue represents sales to external customers. Two customers (2021:
three) are defined as major customers by revenue, contributing more than 10%
of the Group revenue.
2022 2021
£ £
Customer One 1,916,827 1,211,409
Customer Two 1,816,883 338,377
Major customers in the current year 3,733,710 1,549,786
Major customers in prior year 1,206,346
2,756,132
The geographical analysis of revenue from continuing operations by
geographical location of customer is as follows:
Geographical market 2022 2021
£ £
United Kingdom 7,586,982 3,907,873
United States 4,150,179 1,055,096
Rest of the World 470,092 131,549
12,207,253 5,094,518
2022 2021
£ £
Revenue from contracts with customers - Events 10,135,172 3,917,481
Revenue from contracts with customers - Film 1,785,367 1,177,037
Other revenue 286,714 -
Total revenue 12,207,253 5,094,518
Contract assets and liabilities from contracts with customers have been
recognised as follows:
2022 2021
£ £
Deferred income 839,326 384,598
Accrued income 875,002 169,955
Deferred income at the beginning of the period has been recognised as revenue
during the period.
3 Other income
Other income 2022 2021
£ £
Coronavirus job retention scheme government grant 1,168 56,501
Business interruption payment grant 2,575 5,150
3,743 61,651
During the year the Group received government grants under the UK government's
coronavirus job retention scheme and the coronavirus business interruption
loan scheme.
4 Operating profit
Operating profit is stated after charging or crediting: 2022 2021
£ £
Cost of sales
Depreciation of fixtures, fittings and equipment 54,101 40,885
Amortisation of intangible assets 2,500 2,500
Staff costs (see note 24) 2,135,136 1,287,342
Administrative expenses
Depreciation of right-of-use assets 82,361 91,092
Depreciation of leasehold land and buildings 1,935 -
(Profit) / loss on foreign exchange differences 14,465 13,401
Fees payable to the Company's auditor in respect of:
Audit of the Company's annual accounts 7,842 6,000
Audit of the Company's subsidiaries 26,694 20,622
Interest on lease liabilities 21,191 16,932
Staff costs (see note 24) 1,107,745 837,847
5 Exceptional items
Items that are material either because of their size or their nature, or that
are non-recurring, are considered as exceptional. The exceptional income in
the year ended 30 June 2021 totalling £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 year ended 30 June 2020. Eventful Limited failed to meet the
target set in the purchase agreement for the year ending 30 June 2021 and
therefore the contingent consideration related to the year ended 30 June 2021
has been moved to the consolidated Statement of Comprehensive Income as
exceptional income. The remaining contingent consideration totalling £50,000
is included in the Statement of Financial Position.
6 Finance income
Finance income 2022 2021
£ £
Bank interest received 241 489
7 Finance costs
Finance costs 2022 2021
£ £
Coronavirus business interruption loan interest 6,662 5,150
Lease interest 21,191 16,932
27,853 22,082
8 Taxation
2022 2021
£ £
The tax charge comprises:
Current tax
Current year 232,206 (4,442)
232,206 (4,442)
Deferred tax (see note 9)
Current year (27,984) 9,670
(27,984) 9,670
Total tax charge in the statement of comprehensive income 204,222 5,228
Factors affecting the tax charge for the year
Profit / (loss) on ordinary activities before taxation from continuing 843,564 (159,698)
operations
Profit / (loss) on ordinary activities before taxation multiplied by standard
rate
of UK corporation tax of 19% (2021: 19%) 160,277 (30,343)
Effects of:
Non-deductible expenses 43,945 15,021
Tax on foreign subsidiaries - 20,550
43,945 35,571
Total tax charge 204,222 5,228
The Group has estimated losses of £685,568 (2021: £685,568) available to
carry forward against future trading profits. Losses totalling £635,371 are
in Aeorema Communications plc which is not currently making taxable profits,
as all trading is undertaken by its subsidiaries Aeorema Limited, Eventful
Limited and Cheerful Twentyfirst, Inc., therefore no deferred tax asset has
been recognised in respect of this amount.
9 Deferred taxation
2022 2021
£ £
Property, plant and equipment temporary differences (39,435) (16,826)
Temporary differences 55,823 (25,023)
Tax losses 9,537 39,790
25,925 (2,059)
At 1 July (2,059) 7,611
Transfer to Statement of Comprehensive Income 27,984 (9,670)
At 30 June 25,925 (2,059)
10 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company's
Statement of Comprehensive Income has not been included in these financial
statements. The profit for the financial year of the holding company was
£148,184 (2021: £79,179 loss).
11 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year.
1. Diluted earnings per share are calculated by dividing the profit
or loss attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares. In view of the group
loss for the year, options to subscribe for ordinary shares in the company are
anti-dilutive and therefore diluted earnings per share information is
presented in line with basic earnings per share.
The following reflects the income and share data used and dilutive earnings
per share computations:
2022 2021
£ £
Basic earnings per share
(Loss) / profit for the year attributable to owners of the Company 639,342 (164,926)
Basic weighted average number of shares 9,238,000 9,238,000
1,770,000 1,920,000
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares 11,008,000 11,158,000
12 Intangible fixed assets
Group Goodwill Intellectual Total
Property
£ £ £
Cost
At 30 June 2020 2,927,486 10,000 2,937,486
At 30 June 2021 2,927,486 10,000 2,937,486
At 30 June 2022 2,927,486 10,000 2,937,486
Impairments and amortisation
2,363,138 417 2,363,555
At 30 June 2020
Charge for the year - 2,500 2,500
2,363,138 2,917 2,363,555
At 30 June 2021
Charge for the year - 2,500 2,500
2,363,138 5,417 2,366,055
At 30 June 2022
Net book value
At 30 June 2020 564,348 9,583 573,931
At 30 June 2021 564,348 7,083 571,431
At 30 June 2022 564,348 4,583 568,931
Goodwill arose for the Group on consolidation of its subsidiaries, Aeorema
Limited and Eventful Limited.
Impairment - Aeorema Limited and Eventful Limited
Goodwill arises on acquisition of a business combination and represents the
difference between the fair value of the consideration paid and the aggregate
fair value of identifiable assets and liabilities acquired. Goodwill is tested
annually for impairment, goodwill is impaired when the value in use exceeds
the net asset value of the group's cash generating units (CGUs).The CGUs
represent Aeorema Limited and Eventful Limited, being the lowest level within
the group at which goodwill is monitored for internal management purposes.
The value in use has been calculated on a discounted cash flow basis using the
2022-23 budgeted figures as approved by the Board of directors, extended in
perpetuity to calculate the terminal value and discounted at a rate of 10%. It
is assumed that future growth will be 2% for venue sourcing activities and 4%
for event and moving image production activities. Using these assumptions,
which are based on past experience and future expectations, the recoverable
amount of goodwill of £2,673,773 was determined to be higher than its
carrying value, hence no impairment in the year.
Sensitivity Analysis
If the assumptions used in the impairment review were changed to greater
extent than as presented in the following table, the changes would, in
isolation, lead to impairment loss being recognised for 0% growth rate.
Aeorema Limited 4% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 1,796,220 (25,553,571) 2,979,797 1,411,761
Carrying amount in financial statements 365,154 365,154 365,154 365,154
Difference 1,431,066 (25,918,725) 2,614,643 1,046,607
Eventful Limited 2% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 841,553 (134,627) 1,379,307 629,102
Carrying amount in financial statements 199,194 199,194 199,194 199,194
Difference 642,359 (333,821) 1,180,113 429,908
Combined 2% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 2,637,773 (25,688,198) 4,349,104 2,040,863
Carrying amount in financial statements 564,348 564,348 564,348 564,348
Difference 2,109,425 (26,252,546) 3,794,756 1,476,515
13 Property, plant and equipment
Group Leasehold land Fixtures, fittings Total
and buildings and equipment
£ £ £
Cost
At 30 June 2020 58,536 173,182 231,718
Additions - 59,179 59,179
Disposals - (3,354) (3,354)
At 30 June 2021 58,536 229,007 287,543
Additions 98,821 80,654 179,475
Disposals (58,536) (5,095) (63,631)
Foreign exchange movement - 329 329
At 30 June 2022 98,821 304,895 403,716
Depreciation
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
Charge for the year 1,935 54,101 56,036
Eliminated on disposal (58,536) (449) (58,985)
Foreign exchange movement - 120 120
1,935 179,302 181,237
At 30 June 2022
Net book value
At 30 June 2020 - 85,952 85,952
At 30 June 2021 - 103,477 103,477
At 30 June 2022 96,886 125,593 222,479
14 Right-of-use assets
Group Leasehold Property
£
Cost
At 30 June 2020 455,436
Lease modification adjustment (436,441)
At 30 June 2021 18,995
Additions 887,138
Disposals (18,995)
At 30 June 2022 887,138
Depreciation
At 30 June 2020 75,906
Charge for the year 91,092
Lease modification adjustment (166,998)
At 30 June 2021 -
Charge for the year 82,361
Disposals (18,995)
At 30 June 2022 63,366
Net book value
At 30 June 2020 379,530
At 30 June 2021 18,995
At 30 June 2022 823,772
The right-of-use asset addition during the year relates to the Group's
leasehold property at 87 New Cavendish Street, London, W1W 6XD. The Group
entered the new leasehold in January 2022.
The right-of-use asset is calculated on the assumption that the Group will
remain in the premises for the duration of the 7 year lease agreement. A
discount rate of 5% was used to calculate the right-of use asset. 5% was
considered an appropriate rate based on the Group's weighted average cost of
capital.
The disposal during the year relates to the Group's leasehold property at
Moray House, 23-31 Great Titchfield Street, London, W1W 7PA. The Group left
the premises in September 2021.
15 Non-current assets - Investments
Company Shares in subsidiary
£
Cost
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
56,895
Increase in respect of share-based payments
At 30 June 2022 3,923,361
Provision
At 30 June 2020 2,694,213
At 30 June 2021 2,694,213
At 30 June 2022 2,694,213
Net book value
At 30 June 2020 1,141,540
At 30 June 2021 1,172,253
At 30 June 2022 1,229,148
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following
companies:
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
Cheerful Twentyfirst B.V. The Netherlands Ordinary 100
Post year end the Group formed Cheerful Twentyfirst B.V., a Dutch company
based in Amsterdam. Aeorema Communications plc holds 100% of the share capital
in Cheerful Twentyfirst B.V.
The registered address of Aeorema Limited, Eventful Limited and Twentyfirst
Limited is 64 New Cavendish Street, London, W1G 8TB. The registered address of
Cheerful Twentyfirst, Inc. is 85 Broad Street, Floor 16, New York, NY, 10004.
The registered address of Cheerful Twentyfirst B.V. is Herengracht 500, 1017
CB, Amsterdam.
16 Trade and other receivables
Group Company
2022 2021 2022 2021
£ £ £ £
Trade receivables 1,980,121 964,490 - -
Related party receivables - - 666,017 517,003
Other receivables 78,536 93,015 14,982 3,872
Prepayments and accrued income 1,071,378 371,559 8,333 12,000
3,130,035 1,429,064 689,332 532,875
All trade and other receivables are expected to be recovered within 12 months
of the end of the reporting period. The fair value of trade and other
receivables is the same as the carrying values shown above.
Trade and other receivables are assessed for impairment based upon the
expected credit losses model. The credit losses historically incurred have
been immaterial and as such the risk profile of the trade receivables has not
been presented.
At the year end, trade receivables of £694,325 (2021: £76,504) were past due
but not impaired. These amounts are still considered recoverable. The ageing
of these trade receivables is as follows:
Group
2022 2021
£ £
Less than 90 days overdue 566,605 39,419
More than 90 days overdue 127,720 37,085
694,325 76,504
17 Cash at bank and in hand
Group Company
2022 2021 2022 2021
£ £ £ £
Bank balances 1,714,417 1,101,713 1,532 5,844
1,714,417 1,101,713 1,532 5,844
18 Trade and other payables
Group Company
2022 2021 2022 2021
£ £ £ £
Trade payables 796,671 492,163 5,411 5,395
Related party payables - - 67,355 67,365
Taxes and social security costs 466,847 310,148 - -
Other payables 124,737 91,002 50,000 50,000
Accruals and deferred income 1,571,966 524,154 20,955 17,000
2,960,221 1,417,467 143,721 139,760
All trade and other payables are expected to be settled within 12 months of
the end of the reporting period. The fair value of trade and other payables is
the same as the carrying values shown above.
19 Bank Loans
2022 2021
£ £
Bank Loan
Current 83,333 54,089
Non-current 111,111 195,911
194,444 250,000
On 15 October 2020 the company received a Floating Rate Basis Coronavirus
Business Interruption Loan (CBIL) of £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
£6,662 being charged to profit and loss. This is offset by the equal amount
of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the company's
present and future assets.
20 Leases
The balance sheet shows the following amounts relating to leases:
Group
2022 2021
£ £
Right-of-use assets
Buildings
823,772 18,995
823,772 18,995
Group
2022 2021
£ £
Lease liabilities
Current 121,999 25,912
Non-current 738,041 -
860,040 25,912
Group
2021
£
Maturity analysis - contractual undiscounted cash flows
Less than one year 213,000
One to five years 710,000
More than five years 71,000
994,000
Group
2022 2021
£ £
Interest on lease liabilities 21,191 16,932
21,191 16,932
21 Provisions
Group
Leasehold dilapidations Total
£ £
At 1 July 2021 25,020 25,020
Charged to statement of comprehensive income 14,480 14,480
At 30 June 2022 39,500 39,500
Group
Leasehold dilapidations Total
£ £
Current 35,000 25,020
Non-current 4,500 -
39,500 25,020
Leasehold dilapidations relate to the estimated cost of returning a leasehold
property to its original state at the end of the lease in accordance with the
lease terms. The main uncertainty relates to estimating the cost that will be
incurred at the end of the lease.
22 Share capital
2022 2021
£ £
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 30 June 2020 9,238,000 1,154,750
At 30 June 2021 9,238,000 1,154,750
At 30 June 2022 9,238,000 1,154,750
Holders of these shares are entitled to dividends as declared from time to
time and are entitled to one vote per share at general meetings of the
company.
See note 25 for details of share options outstanding.
23 Directors' emoluments
Salary, fees, bonuses and benefits in kind Salary, fees, bonuses and benefits in kind Pensions Pensions Total Total
2022 2021 2022 2021 2022 2021
£ £ £ £ £ £
M Hale - - - - - -
S Haffner 15,000 15,000 - - 15,000 15,000
R Owen 20,000 20,000 - - 20,000 20,000
S Quah 151,057 139,268 7,500 5,000 158,557 144,268
A Harvey 112,377 103,653 6,172 4,000 118,549 107,653
H Luffman 4,558 - - - 4,558 -
302,992 277,921 13,672 9,000 316,664 286,921
The remuneration of directors of the Company is set out below.
During the year M Hale waived his right to fees of £15,000 (2021: £15,000)
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
2022 Number 2021 Number 2022 Number 2021 Number
Administration and production 55 37 5 5
The aggregate payroll costs of these employees charged in the Statement of
Comprehensive Income was as follows:
Employment costs Group Company
2022 2021 2022 2021
£ £ £ £
Wages and salaries 2,827,204 1,846,938 39,558 35,000
Social security costs 294,872 205,253 - -
Pension costs 63,910 42,295 - -
Share-based payments 56,895 30,703 - -
3,242,881 2,125,189 39,558 35,000
25 Share-based payments
The Group operates an EMI share option scheme for key employees. Options are
granted to key employees at an exercise price equal to the market price of the
Company's shares at the date of grant. Options are exercisable from the third
anniversary of the date of grant and lapse if they remain unexercised at the
tenth anniversary or upon cessation of employment. The following option
arrangements exist over the Company's shares:
Date of grant Exercise price Exercise period Number of options 2022 Number of options 2021
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 200,000 300,000
29 April 2021 50.0p 5 November 2023 29 April 2031 200,000 300,000
29 April 2021 70.0p 5 November 2023 29 April 2031 200,000 300,000
23 May 2022 60.0p 23 May 2025 23 May 2032 150,000 -
1,770,000 1,920,000
During the year H Luffman ended her employment with Aeorema Limited. As a
result, the share options that she received during the previous year were
cancelled.
Details of the number of share options and the weighted average exercise price
outstanding during the year are as follows:
Number of options Weighted average exercise price Number of options Weighted average exercise price
2022 2022 2021 2021
£ £
Outstanding at beginning of the year 1,920,000 0.37 1,020,000 0.25
Granted during the year 150,000 0.60 900,000 0.50
Cancelled during the year (300,000) (0.50) - -
Outstanding at end of the year 1,770,000 0.40 1,920,000 0.37
Exercisable at the end of the year 1,020,000 0.25 900,000 0.25
The exercise price of options outstanding at the year-end was £0.404 (2021:
£0.369) and their weighted average contractual life was 6.5 years (2021: 7.6
years).
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value as determined at the grant date of equity-settled
share-based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. The
estimated fair value of the options is measured using an option pricing model.
The inputs into the model are as follows:
Grant date 22 August 2018
Model used Black-Scholes
Share price at grant date 29.0p
Exercise price 29.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 14.800p
Grant date 14 June 2019
Model used Black-Scholes
Share price at grant date 26.0p
Exercise price 26.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 12.894p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 31.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 30.060p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 50.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.943p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 70.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.845p
Grant date 23 May 2022
Model used Black-Scholes
Share price at grant date 60.0p
Exercise price 60.0p
Contractual life 10 years
Risk free rate 2.31%
Expected volatility 175.63%
Expected dividend rate 0%
Fair value option 59,707p
The expected volatility is determined by calculating the historical volatility
of the parent company's share price. For the share options issued prior to the
year ended 30 June 2021 the historical volatility of the parent company's
share price is calculated over the last three years. For share options issued
after 1 July 2021 the historical volatility is calculated over the last 10
years. The method used to determine the historical volatility of the parent
company's share price changed in the prior year as a consequence of the
COVID-19 pandemic. The impact of the COVID-19 pandemic on the parent company's
share price was significant and not considered an appropriate measure of the
parent company's share price volatility. The extension of the period to 10
years was considered appropriate. The risk free rate is based on the yield
from gilt strip government bonds with a similar life to the expected life of
the options.
The Group recognised the following charges in the Statement of Comprehensive
Income in respect of its share-based payment plans:
2022 2021
£ £
Share-based payment charge 56,895 30,703
26 Related party transactions
The Group has a related party relationship with its subsidiaries and its key
management personnel (including directors). Details of transactions between
the Company and its subsidiaries are as follows:
2022 2021
£ £
Amounts owed by subsidiaries
Total amount owed by subsidiaries 666,017 517,003
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,365
Aeorema Limited
The company received dividends totalling £125,000 during the year (2021:
£Nil) from its subsidiary, Aeorema Limited. The company transferred a VAT
receivable of £17,424 (2021: £19,221) to Aeorema Limited due to being part
of a common VAT group.
Aeorema Limited transferred a net amount of expenses to Aeorema Communications
plc during the year of £24,558 (2021: £20,000).
Aeorema Limited paid expenses totalling £114,052 (2021: £113,352) 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 (2021: £10,000).
Cheerful Twentyfirst, Inc.
The company received dividends totalling £125,000 during the year (2021:
£Nil) from its subsidiary, Cheerful Twentyfirst, Inc.
Eventful Limited
The company received dividends totalling £25,000 during the year (2021:
£Nil) from its subsidiary, Eventful Limited.
The compensation of key management (including directors) of the Group is as
follows:
2022 2021
£ £
Short-term employee benefits 302,991 277,921
Post-employment benefits 13,672 9,000
316,663 286,921
The share options held by directors of the Company are disclosed in note 23.
During the year, a charge of £49,905 (2021: £21,002) was recognised in the
Consolidated Statement of Comprehensive Income in respect of these share
options.
During the previous year S Quah received an interest-free loan of £10,000. At
the year end, £10,000 (2021: £10,000) was outstanding.
Harris and Trotter LLP is a firm in which S Haffner is a member. The amounts
charged to the Group for professional services are as follows:
Harris and Trotter LLP - charged during the year 2022 2021
£ £
Aeorema Communications plc 15,000 15,000
Aeorema Limited 9,650 12,850
24,650 27,850
At the year end, the Group had an outstanding trade payable balance to Harris
and Trotter LLP of £6,840 (2021: £5,630).
27 Cash flows
Group
2022 2021
£ £
Cash flows from operating activities
Profit / (loss) before taxation 843,564 (159,698)
Depreciation of property, plant and equipment 56,036 40,885
Depreciation of right-of-use assets 82,361 91,092
Amortisation of intangible fixed assets 2,500 2,500
Loss on disposal of fixed assets 4,646 769
Share-based payment expense 56,895 30,703
Finance income (241) (489)
Interest on lease liabilities 21,191 16,932
Exchange rate differences on translation 42,138 (11,044)
Revaluation of right-to-use asset - (5,311)
1,109,090 6,339
Increase / (decrease) in trade and other payables 1,557,234 191,244
(Increase) / decrease in trade and other receivables (1,700,972) (831,592)
Taxation paid (43,657) (74,805)
Cash generated / (used) from operating activities 921,695 (708,814)
28 Financial instruments
Financial instruments recognised in the consolidated statement of financial
position
All financial instruments are recognised initially at their transaction cost
and subsequently measured at amortised cost.
Group Company
2022 2021 2022 2021
£ £ £ £
Financial Assets
Trade and other receivables 2,933,659 1,227,460 666,017 517,003
Cash and cash equivalents 1,714,417 1,101,713 1,532 5,844
Investments in subsidiaries - - 1,229,148 1,172,253
Total 4,648,076 2,329,173 1,896,697 1,695,100
Financial Liabilities
Trade and other payables 1,115,852 833,165 122,766 122,760
Accruals 732,640 139,555 20,955 17,000
Total 1,848,492 972,720 143,721 139,760
The Group is exposed to risks that arise from its use of financial
instruments. There have been no significant changes in the Group's exposure to
financial instrument risk, its objectives, policies and processes for managing
those from previous periods. The principal financial instruments used by the
Group, from which financial instrument risk arises, are trade receivables,
cash and cash equivalents and trade and other payables.
Credit risk
Credit risk arises principally from the Group's trade receivables. It is the
risk that the counterparty fails to discharge its obligation in respect of the
instrument. The maximum exposure to credit risk at 30 June 2022 was
£1,980,121 (2021: £964,490). Trade receivables are managed by policies
concerning the credit offered to customers and the regular monitoring of
amounts outstanding for both time and credit limits. The credit risk
associated with trade receivables is minimal as invoices are based on
contractual agreements with long-standing customers. Credit losses
historically incurred by the Company have consequently been immaterial.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to meet its liabilities
when they fall due. The Group monitors cash flow on a regular basis. At the
year end, the Group has sufficient liquid resources to meets its obligations
of £2,327,501 (2021: £1,036,700).
Market risk
Market risk arises from the Group's use of interest bearing financial
instruments. It is the risk that the fair value of future cash flows of a
financial instrument will fluctuate. At the year end, the cash and cash
equivalents of the Group net of bank overdrafts was £1,714,417 (2021:
£1,101,713). The Group ensures that its cash deposits earn interest at a
reasonable rate.
Capital risk
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern while maximising the return to
stakeholders. The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued share capital,
reserves and retained earnings as disclosed in the Consolidated Statement of
Changes in Equity. At the year end, total equity was £2,253,564 (2021:
£1,514,980).
29 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension
plans. Contributions payable by the Group for the year were £63,910 (2021:
£41,946). At the end of the reporting period £12,021 (2021: £9,237) of
contributions were due in respect of the period.
30 Dividends
As a consequence of the COVID-19 pandemic, the Board decided that no final
dividend would be paid to shareholders for the year ended 30 June 2021.
In respect of the current year, the directors propose that a final dividend of
2 pence per share be paid to shareholders on 20 January 2023. The dividends
are subject to approval by shareholders at the Annual General Meeting and have
not been included as liabilities in these consolidated financial statements.
The proposed dividends are payable to all shareholders on the Register of
Members on 23 December 2022. The total estimated dividend to be paid is
£184,760. The payment of this dividend will not have any tax consequences for
the Group.
31 Contingent liability
Company
The Company is a member of a group VAT registration with all other companies
in the Aeorema Communications group and, under the terms of the registration,
is jointly and severally liable for the VAT payable by all members of the
group. At 30 June 2022 the Company had no potential liability under the terms
of the registration.
**ENDS**
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