REG - Aeorema Comms Plc - Final Results
14/11/2023 07:15
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RNS Number : 3068T Aeorema Communications Plc 14 November 2023
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Abuse (Amendment) (EU Exit) Regulations 2019/310.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
14 November 2023
Aeorema Communications plc
("Aeorema", the "Company" or the "Group")
Final Results
Proposed 50% increase in final dividend
Record revenue and profit
Aeorema Communications plc (AIM: AEO), a leading strategic communications
group, is pleased to announce its audited results for the year ended 30 June
2023.
Highlights
· Record operational and financial performance:
o Revenue up 66% to £20.2 million (2022: £12.2 million)
o Profit before tax up 25% to £1.0 million (2022: £0.8 million)
· Strong balance sheet maintained - current cash balance of £1.9
million
· Proposed 50% increase in final dividend to 3 pence per share (2022: 2
pence per share)
· Winner of multiple industry awards
· Investment in business instrumental in growth, retention of clients
and increased scope of work
o Cheerful Twentyfirst - creative brand experience agency
§ 100% client retention and average year-on-year increase in revenue of 47%
across flagship clients
o Cheerful Twentyfirst Inc. - North American creative brand experience agency
§ Key talent hires, including appointment of US President, André Shahrdar
§ Most successful year to date and significant ground broken with new logo
brands
o Eventful - events and incentives agency
§ Year-on-year revenue growth of 140%
§ Returned to profitability
For further information contact:
Andrew Harvey Aeorema Communications plc Tel: +44 (0) 20 7291 0444
John Depasquale / Liz Kirchner / Lauren Wright Allenby Capital Limited Tel: +44 (0)20 3328 5656
(Corporate Finance) (Nominated Adviser & Broker)
Kelly Gardiner / Jos Pinnington
(Sales & Corporate Broking)
Paul Dulieu / Isabel de Salis St Brides Partners Ltd aeorema@stbridespartners.co.uk
(Financial PR)
Chairman's Statement
I am incredibly proud to report record-breaking revenue of £20.2m and our
first ever seven figure profit before tax ("PBT") of £1.045m for the year
ended 30 June 2023. Since the new management team took over in late 2017, our
business has grown dramatically with revenue increasing more than fivefold and
profit quadrupling. This has been achieved while navigating a pandemic, which
brought much of the global events industry to its knees and tough economic
conditions. This achievement is testament to the dedication and hard work of
our talented employees, the loyalty of our clients, and the strategic vision
of our leadership team. I would therefore like to thank them all for their
belief in Aeorema.
We have invested heavily in the business to ensure we continue our momentum
both in EMEA and North America. As we celebrate our remarkable revenue growth,
our underlying profitability this year has underpinned a deliberate strategy
to reinvest a substantial portion of our earnings back into the structure and
foundations of our business. Much of this expenditure is one-off in nature and
leaves us well positioned to take advantage of the many opportunities we see
in our high value and global sector. Hence, the net profit margin for FY 2023
belies the underlying strong fundamentals of our business and depth of client
relationships and work.
We have invested in our team in a tight labour market whilst enduring a spike
in recruitment costs, and we have strengthened our HR team to support our
increasingly global team going forwards. We have also upscaled our IT
infrastructure including better project management and accountancy tools,
designed to enhance the reporting processes across our growing business. We
have also continued to invest in our US office, including the recruitment of
key team members, and continue to build brand recognition in North America
while developing key client relationships for future US-focused work.
All of these areas of investments have already begun to yield positive
results. They are enhancing our efficiencies and ability to respond to
changing market dynamics, to provide more strategic and creative solutions,
expand our client base, strengthen client relationships and maintain the
high-quality standards our clients have come to know and appreciate from
Aeorema.
The business continues to move at pace, and we have achieved these record
financial results two years ahead of our internal targets and our internal
five year plan that was set out at the height of the pandemic in 2020. Looking
ahead, we see significant opportunities in EMEA and North America and the
opportunity to increase the work we undertake for existing clients as well as
new ones and to establish a presence at additional major "tent pole" events.
At an operating company level, our core Cheerful Twentyfirst business remains
strong and our strategy to invest in our team which commenced last year is
proving successful as we continue to both retain global brands and expand the
scope of work we are doing for them. Alongside this, our Sales and Marketing
team is achieving great success bringing in fantastic brands within many
sectors including professional services, technology, media and marketing.
Meanwhile, we are delighted that Eventful has returned to profit and, under
the new leadership of Claire Gardner, who has been with the business for 12
years, there is great excitement about what Eventful can achieve over the
coming years.
Looking forward, we are now consolidating the results of our recent
investments and creating a strong platform for further growth across the
Group. We believe that this provides the potential for our 2024 financial year
to be another record year for the Group, albeit one which we expect will be
heavily weighted towards our second half as many brands are delaying projects
and pushing them into the first half of calendar year 2024; the second half of
our financial year. Nonetheless, we expect a strong year overall and, as
contracts are signed and projects scheduled, the greater clarity will allow us
to update the market.
We have a robust cash position as at the date of this announcement of
£1.9million and I am delighted to confirm that we are proposing a final
dividend for the year, reflecting the growth we have achieved and the
confidence we have for the future. The dividend proposed is 3 pence per share
(a 50% increase on the dividend paid in 2022 of 2 pence per share). Subject to
the proposed dividend being approved by shareholders at the forthcoming Annual
General Meeting, it will be paid on 19 January 2024 with a record date of 22
December 2023 and an ex-dividend date of 21 December 2023.
We remain open to acquisition opportunities that are priced sensibly, are the
right fit for our organisation and that can deliver value for our
shareholders.
I have never been so positive about the future of Aeorema. Cheerful
Twentyfirst is robust and ever growing, Eventful is thriving and, under the
new leadership of André Shahrdar in our US office, we believe we can achieve
great things in North America.
In closing, I would like to extend once more a big thank you to our amazing
management team, our dedicated, brilliant and talented teams at Cheerful
Twentyfirst and Eventful and our wonderful and loyal investors. Your
unwavering support and commitment has been instrumental in making this year a
resounding success.
Mike Hale
Chairman
13 November 2023
Chief Executive Officer's Report
This has been another exceptional year, achieved through the delivery of
extremely creative and consistently high-quality work for our clients, coupled
with the commercial agility to develop new markets around the world.
Within the last few months alone, Cheerful Twentyfirst, our creative brand
experience agency, has delivered events and experiences in New York, Austin,
Tokyo, Brussels, London, Paris, Berlin and of course, Cannes, France. I am
hugely pleased with the new ways we are working to delight our clients and
build our agency brands across the globe. Creativity and our strong CSR
(Corporate Social Responsibility) ethos is at the heart of what we do, but it
is our expertise and experience in enabling our clients to communicate
effectively with their audiences which has seen us become not only a leading
operator but also thought leaders in our industry.
After 12 years at Cannes Lions, June 2023 was our busiest year ever. At this
marketing and advertising industry 'tent pole' event we partnered with the
most ambitious global brands to deliver seven world class, award nominated,
client activations. A particular highlight was the Sport Beach activation we
created with Stagwell Global, a multi-billion-dollar NASDAQ listed company.
Built on shifting sands, the unique 420 capacity sports stadium brought fans
out of the stands and onto the court itself to break down barriers and build
long-lasting partnerships for marketers, brands and athletes alike. With over
5,000 guests attending this activation, AdWeek called Sport Beach a "total
game changer" for how brands can connect with audiences through events. I'm
very proud of the dynamic experiential strategy we adopted, and it has become
a cornerstone for ongoing success into 2024.
Our strength in brand experience and activation continues to drive new
interest and offer new opportunities. We are modelling new revenue growth
streams on the back of our repeated success at Cannes Lions, as we apply our
expertise at more 'tentpole' events around the world. In tandem, we continue
to see significant growth in our strategic consultancy offering, which has
opened new revenue streams within our businesses and introduced new skill sets
into our teams.
Achieving our internal five-year revenue goals two-years earlier than expected
has, in a large part, been down to our Client Services team. It has been a
pleasure to see this part of the business thrive, having moved to an
account-based model in 2021. The purpose of this change was to strengthen
client relationships, secure repeat work and retain client contracts. I'm
delighted to say that this has proved very successful, with us achieving 100%
client retention, and an average year-on-year increase in revenue of 47%
across our flagship clients.
In addition to our people and profit successes, our dedication to creative
excellence has not gone unnoticed within our industry. This year, we had the
honour of being named Global Agency of the Year at the C&IT Awards,
alongside Creative Team of the Year for the fifth year running at the CN
Agency Awards. A real highlight was being awarded the coveted Grand Prix award
for the first time as the overall winner of the night at the events and
communications industry's prestigious micebook Awards 2023. These accolades
are testament to the hard work and commitment of our talented teams and
reinforce our position as a leader in our field.
Further afield, our North American arm, Cheerful Twentyfirst Inc., has
reported its most successful year to date. After only three years in the North
American market, we've broken significant ground with new logo brands and key
talent hires. The most exciting being the appointment of our US President,
André Shahrdar, who joined in May 2023 and who we believe will be
instrumental in our future growth and success in the North American market.
Eventful, our events and incentives agency, has had an excellent 12 months
too, reporting year-on-year revenue growth of 140%. The synergy between
Eventful and Cheerful Twentyfirst continues to strengthen and open
opportunities for cross-client introductions and joint projects. This is
particularly the case following the completion of three global events that
used both agencies services. The promotion of Claire Gardiner to Managing
Director of Eventful in May 2023, having joined in 2011, is also hugely
pleasing. I have no doubt that under her guidance we will continue to innovate
and deliver extraordinary experiences for our clients, and I look forward to
seeing what the next year brings for Eventful.
Across the Group, the investment we have made in our businesses and teams has
been instrumental in our growth. This includes significant expansion in
our HR and operations capability, which played key roles in implementing new
infrastructure and systems to significantly improved processes and
efficiencies. Key systems include, the implementation and global roll out of
Scoro; our custom project management software, our submission to Ecovadis; an
internationally recognised sustainability certification, and achieving ISO
27001; an international standard for information security, for our data
security protocols. These initiatives, alongside strengthened HR support for
our now 70+ full time staff, are already delivering a great return on
investment. This includes stronger scoring during procurement exercises with
target brands, and a greater ability to track time and productivity, which
enables us to operate more cost effectively. Culturally, the Aeorema Group has
also never been stronger, which is an important factor for a people centred
business such as ours.
I couldn't be prouder of the remarkable accomplishments of our dedicated team,
which we have expanded to include some of the best talent in the industry. We
have not only met, but have exceeded our goals, and our agency brands are now
recognised on a global scale.
I want to extend my heartfelt thanks to every member of the Aeorema
Communications family for making this year an outstanding one. Your
contributions and dedication are the driving force behind our success. I would
also like to thank all of our shareholders for their continued support and
belief in Aeorema, which is a very special company.
Thank you once again, for joining us on this journey.
Steve Quah
CEO
13 November 2023
Strategic Report
The Board presents its Strategic Report on the Group for the year ended 30
June 2023.
Principal activities
Aeorema Communications plc does not trade but incurs professional fees
associated with its listing on the London Stock Exchange. Aeorema Limited
(trading as Cheerful Twentyfirst) and Cheerful Twentyfirst, Inc. are live
events agencies with film capabilities that specialise in devising and
delivering corporate communication solutions. Eventful Limited is a
consultative, high-touch service, assisting clients with venue sourcing, event
management and incentive travel.
Business review
The results for the year show revenue was £20,230,231 (2022: £12,207,253),
operating profit was £1,092,920 (2022: £871,176) and profit before taxation
was £1,045,960 (2022: £843,564).
The Group had net assets of £2,814,356 at the year-end (2022: £2,253,564)
and net current assets of £1,761,557 (2022: £1,466,109).
The year ended 30 June 2023 was a highly successful year, with the Group
achieving the highest revenue and profit before tax in its history. The Group
experienced high growth with its two largest existing clients (refer to note
2) and won new business with a range of clients including the Group's largest
brand activation at Cannes Lions International Festival of Creativity 2023
(refer to note 2).
Eventful Limited experienced a record year both in terms of revenue, up 138%
(2022: 1,110% increase) compared with the previous year, and profits before
tax of £205,559 (2022: £37,845 loss before tax). The year ended 30 June 2023
represented the first full year since the outbreak of COVID-19 which was
unaffected by the pandemic and subsequent travel and social distancing
restrictions. As a consequence, there was strong demand from clients to return
to in-person events leading to a higher volume of enquiries and bookings
compared with the previous year.
Cheerful Twentyfirst, Inc. continued to grow its revenue, up 13% (2022: 630%
increase) compared with the previous year. However, investment in new hires,
the office and business development and marketing meant that overall profits
before tax were £317,467 compared with £716,075 in the previous year. The
Group hired a new President for Cheerful Twentyfirst, Inc. who is tasked with
growing the subsidiary's presence in the United States of America.
The Group's headcount grew during the year, hiring on average eight more
employees compared with the previous year. These hires included roles
essential to ensuring the Group continues to successfully deliver high quality
events, including a Technical Director focused on supplier procurement and
improving margins. The Group also invested in a number of roles necessary to
support the client facing operations and facilitate future growth, including
finance, human resources and IT.
The Group's gross profit margin has decreased from 25% in 2022 to 21% in 2023.
In part the reduction is a consequence of the Stagwell Cannes Lions
activation, a significant build project which historically has lower gross
profit margins. However, this event does not account for the entire reduction
and management's focus for the year ending 30 June 2024 is on improving the
Group's gross profit margin.
Looking ahead, the Group has not currently experienced any difficulties
associated with the ongoing war in Ukraine and conflict in Israel, the cost of
living crisis or global economic struggles. Demand throughout the Group's
trading subsidiaries remains strong, with new clients and projects in the
pipeline for the coming year. However, the Board remain acutely aware of the
economic difficulties faced both in the UK and globally, and continues to
evaluate its investment plans, resourcing and future forecasts on a regular
basis.
Key performance indicators
Year 2023 2022 2021 2020
£ £ £ £
Revenue 20,230,231 12,207,253 5,094,518 5,475,425
Operating profit / (loss) 1,092,920 871,176 (188,105) (175,043)
Profit / (loss) before taxation 1,045,960 843,564 (159,698) (217,924)
The Group experienced a 66% increase (2022: 140% increase) in revenue during
the year.
Event revenue increased by 77% (2022: 160% increase) in comparison with the
previous year. This increase was due in large part to the new client account
model approach implemented in previous years and the introduction of client
focused account directors which has allowed the Group to develop closer client
relationships and grow the number and size of events delivered year on year.
As a result of this account model initiative and a focus on marketing, the
Group delivered its highest number of and largest ever events at The Cannes
Lions International Festival of Creativity, including the new brand activation
for Stagwell.
Film revenue decreased by 6% (2022: 52% increase) in comparison with the
previous year. This reduction was largely due to a number of one off film
projects in the previous year.
Cashflows
Net cash inflow from operating activities was £1,456,588 compared with a net
cash inflow of £921,695 for the year ended 30 June 2022. The cash position
increased by £729,683 to £2,444,100 (2022: increase by £612,704 to
£1,714,417).
Capital expenditure
Total capital expenditure, including expenditure on tangible assets, was
£325,027 compared with £179,475 for the year ended 30 June 2022.
Employees
Our priority is to attract and retain talented employees and to harness their
creativity to drive growth through development and delivery of services that
bring value to our customers' business operations.
We continue to focus on ensuring that the performance of staff is measured
against clear, business focused objectives and behavioural criteria through
continual appraisals.
Reward
The Group benchmarks employee salaries against the market and reviews salaries
annually to ensure that we are paying at a level to attract and retain
high-quality employees.
Key employees are offered access to a share option scheme, further details of
which are provided in note 24 to the financial statements.
Equal opportunities
We are committed to ensuring equal opportunities for our staff. We have
introduced training which covers equal opportunities legislation and best
practice. Our policy in respect of employment of disabled persons is the same
as that relating to all other employees in matters of training, career
development and promotion. Should employees become disabled during the course
of their employment, we will make every effort to make reasonable adjustments
to their working environment to enable their continued employment.
Safety, health and environment
The commitment and participation of all employees is vital to efficient and
effective occupational risk control. In order to meet our responsibility to
protect the environment, staff and the business, the Group continues to focus
on maintaining a risk aware culture.
We believe the Group maintains a low environmental impact. We therefore
continue to work on the potential environmental impacts of energy consumption,
waste and travel.
Directors' policies for managing principal risks
There is an ongoing process for identifying, evaluating and managing the
significant risks faced by the business. Risk reviews are undertaken regularly
by the respective business areas throughout the year to identify and assess
the key risks associated with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are linked to customer
dependency. Though the Group has a very diverse customer base in certain
market sectors, key customers can represent a significant amount of revenue
(see note 2). Key customer relationships are closely monitored but the loss of
a key client could have an adverse effect on the Group's performance. Further
details of risks, uncertainties and financial instruments are contained in
note 27.
Key risks of a non‑financial nature
The Group is operating in a highly competitive global market that is
undergoing continual change. The Group's ability to respond to many
competitive factors including, but not limited to technological innovations,
product quality, customer service and employment of qualified personnel will
be key in the achievement of its objectives, but its ultimate success will
depend on the purchase spends of its customers and the buoyancy of the market.
On behalf of the Board
S Haffner
Director
13 November 2023
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Notes 2023 2022
£ £
Continuing operations
2 20,230,231 12,207,253
Revenue
Cost of sales (15,896,463) (9,169,691)
Gross profit 4,333,768 3,037,562
Other income 3 - 3,743
Administrative expenses (3,240,848) (2,170,129)
4 1,092,920 871,176
Operating profit
Finance income 5 215 241
Finance costs 6 (47,175) (27,853)
Profit before taxation 1,045,960 843,564
Taxation 7 (288,780) (204,222)
Profit for the year 757,180 639,342
(119,547) 42,347
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign entities
Other comprehensive income for the year (119,547) 42,347
Total comprehensive income for the year attributable to owners of the parent 637,633 681,689
Profit per ordinary share:
8.04398p 6.92078p
Total basic earnings per share 10
Total diluted earnings per share 10 6.83499p 5.80797p
The notes below are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2023
Notes Group Company
2023 2022 2023 2022
£ £ £ £
Non-current assets
Intangible assets 11 566,431 568,931 - -
Property, plant and equipment 12 428,509 222,479 - -
Right-of-use assets 13 696,986 823,772 - -
Investments in subsidiaries 14 - - 1,293,568 1,229,148
Deferred taxation 8 14,844 25,925 - -
Total non-current assets 1,706,770 1,641,107 1,293,568 1,229,148
Current assets
Trade and other receivables 15 3,502,522 3,130,035 713,588 689,332
Cash and cash equivalents 16 2,444,100 1,714,417 135,548 1,532
Total current assets 5,946,622 4,844,452 849,136 690,864
Total assets 7,653,392 6,485,559 2,142,704 1,920,012
Current liabilities
Trade and other payables 17 (3,882,938) (2,960,221) (104,459) (143,721)
Bank loans 18 (83,333) (83,333) - -
Lease liabilities 19 (109,058) (121,999) - -
Current tax payable (74,736) (177,790) - -
Provisions 20 (35,000) (35,000) - -
Total current liabilities (4,185,065) (3,378,343) (104,459) (143,721)
Non-current liabilities
Bank loans 18 (27,778) (111,111) - -
Lease liabilities 19 (612,693) (738,041) - -
Provisions 20 (13,500) (4,500) - -
Total non-current liabilities (653,971) (853,652) - -
Total liabilities (4,839,036) (4,231,995) (104,459) (143,721)
Net assets 2,814,356 2,253,564 2,038,245 1,776,291
Equity
Share capital 21 1,192,250 1,154,750 1,192,250 1,154,750
Share premium 21,876 9,876 21,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 233,375 168,956 233,375 168,956
Capital redemption reserve 257,812 257,812 257,812 257,812
Foreign translation reserve (88,244) 31,303 - -
Retained earnings 1,180,637 614,217 316,282 168,247
Equity attributable to owners of the parent 2,814,356 2,253,564 2,038,245 1,776,291
The notes below are an integral part of these financial statements.
The profit for the financial year of the holding company was £338,795 (2022:
£148,184).
The financial statements were approved and authorised by the board of
directors on 13 November 2023 and were signed on its behalf by
A Harvey
S Haffner
Director
Director
Company Registration No. 04314540
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Group Share capital Share premium Merger reserve Other reserve Capital redemption reserve Foreign translation reserve Retained earnings Total equity
£ £ £ £ £ £ £ £
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 - - - - - 42,347 - 42,347
translation
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
- - - - - - 757,180 757,180
Comprehensive income for the year, net of tax
Dividend paid - - - - - - (190,760) (190,760)
Foreign currency - - - - - (119,547) - (119,547)
translation
Share-based payment - - - 64,419 - - - 64,419
Share issue 37,500 12,000 - - - - - 49,500
At 30 June 2023 1,192,250 21,876 16,650 233,375 257,812 (88,244) 1,180,637 2,814,356
Share premium represents the value of shares issued in excess of their list
price.
In accordance with section 612 of the Companies Act 2006, the premium on
ordinary shares issued in relation to acquisitions is recorded as a merger
reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee remuneration, as
detailed in note 24.
Capital redemption reserve represents a statutory non-distributable reserve
into which amounts are transferred following redemption or purchase of a
company's own shares.
Foreign translation reserve represents the accumulated gain or loss resulting
from the translation of financial statements denominated in a foreign currency
into the Group's reporting currency.
The notes below are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 30 June 2023
Company Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
Other reserve
£ £ £ £ £ £ £
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
- - - - 338,795 338,795
Comprehensive income for the year, net of tax
-
Dividend paid - - - - - (190,760) (190,760)
Share-based payment - - - 64,419 - - 64,419
Share issue 37,500 12,000 - - - - 49,500
At 30 June 2023 1,192,250 21,876 16,650 233,375 257,812 316,282 2,038,245
Share premium represents the value of shares issued in excess of their list
price.
In accordance with section 612 of the Companies Act 2006, the premium on
ordinary shares issued in relation to acquisitions is recorded as a merger
reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee remuneration, as
detailed in note 24.
Capital redemption reserve represents a statutory non-distributable reserve
into which amounts are transferred following redemption or purchase of a
company's own shares.
The notes below are an integral part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Notes Group
2023 2022
£ £
Net cash flow from operating activities 26 1,456,588 921,695
Cash flows from investing activities
Finance income 5 215 241
Purchase of property, plant and equipment 12 (325,027) (179,475)
Repayment of leasing liabilities (177,500) (74,201)
Cash used in investing activities (502,312) (253,435)
Cash flows from financing activities
Repayment of borrowings (83,333) (55,556)
Dividends paid to owners of the company (190,760) -
Shares issued 49,500 -
Cash used in financing activities (224,593) (55,556)
Net increase in cash and cash equivalents 729,683 612,704
Cash and cash equivalents at beginning of year 1,714,417 1,101,713
Cash and cash equivalents at end of year 2,444,100 1,714,417
The notes below are an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 30 June 2023
1 Accounting policies
Aeorema Communications plc is a public limited company incorporated in the
United Kingdom and registered in England and Wales. The Company is domiciled
in the United Kingdom and its principal place of business is 87 New Cavendish
Street, London, W1W 6XD. The Company's Ordinary Shares are traded on the AIM
Market.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
The presentation currency is £ sterling.
Going concern
The Board have reviewed the Group's detailed forecasts for the next financial
year, other medium term plans, the impact of the war in Ukraine, the cost of
living crisis and economic and political uncertainties both in the UK and
globally, as well as considering the risks outlined in note 27. After doing
so, the Directors, at the time of approving the financial statements, have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and have therefore used the
going concern basis in preparing the financial statements.
Basis of Preparation
The Group and company financial statements have been prepared under the
historical cost convention and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the UK
The following are the new accounting standards or amendments applicable for 30
June 2023 yearend, which are effective for accounting periods beginning on or
after 1 January 2022.
· Amendment to IFRS 1 First-time Adoption of International Financial
Reporting Standards-Subsidiary
· Amendment to IFRS 9 Financial Instruments-Fees in the '10 per cent'
Test for Derecognition of Financial Liabilities
· Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS
37)
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
· Reference to the Conceptual Framework (Amendments to IFRS 3)
The Group does not believe that there is a material impact on the financial
statements from the adoption of these standards.
Future standards in place but not yet effective
The following new standards, amendments or interpretations to existing
standards adopted in the United Kingdom, and are mandatory for the Group's
accounting periods beginning on or after 1 January 2023 are as follows:
· Classification of Liabilities as Current or Non-current - Deferral
of Effective Date (Amendment to IAS 1);
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12); and
· Definition of Accounting Estimates (Amendments to IAS 8).
The Group did not early adopt the above new standards, amendments, or
interpretations for 30 June 2023 yearend.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to 30 June 2023. Subsidiaries are all
entities (including structured entities) over which the Group has control.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are consolidated until the date that control
ceases.
Intra-group transactions, balances and unrealised gains and losses on
transactions between group companies are eliminated.
The merger reserve is used where more than 90% of the shares in a subsidiary
are acquired and the consideration includes the issue of new shares by the
Company, thereby attracting merger relief under the Companies Act 2006.
Revenue
Revenue represents amounts (excluding value added tax) derived from the
provision of services to third party customers in the course of the Group's
ordinary activities.
As a result of providing these services, the Group may from time to time
receive commissions from other third parties. These commissions are included
within revenue on the same basis as that arising from the contract with the
underlying third party customer.
The revenue and profits recognised in any period are based on the satisfaction
of performance obligations and an assessment of when control is transferred to
the customer.
For most contracts with customers, there is a single distinct performance
obligation and revenue is recognised when the event has taken place or control
of the content or video has been transferred to the customer.
Where a contract contains more than one distinct performance obligation
(multiple film productions, or a project involving both build construction and
event production) revenue is recognised as each performance obligation is
satisfied.
The transaction price is substantially agreed at the outset of the contract,
along with a project brief and payment schedule (full payment in arrears for
smaller contracts; part payment(s) in advance and final payment in arrears for
significant contracts).
Due to the detailed nature of project briefs agreed in advance for significant
contracts, management do not consider that significant estimates or judgements
are required to distinguish the performance obligation(s) within a contract.
For contracts to prepare multiple film productions, the transaction price is
allocated to constituent performance obligations using an output method in
line with agreements with the customer.
For other contracts with multiple performance obligations, management's
judgement is required to allocate the transaction price for the contract to
constituent performance obligations using an input method using detailed
budgets which are prepared at outset and subsequently revised for actual costs
incurred and any changes to costs expected to be incurred.
The Group does not consider any disaggregation of revenue from contracts with
customers necessary to depict how the nature, amount, timing and uncertainty
of the Group's revenue and cash flows are affected by economic factors.
Where payments made are greater than the revenue recognised at the reporting
date, the Group recognises deferred income (a contract liability) for this
difference. Where payments made are less than the revenue recognised at the
reporting date, the Group recognises accrued income (a contract asset) for
this difference.
A receivable is recognised in relation to a contract for amounts invoiced, as
this is the point in time that the consideration is unconditional because only
the passage of time is required before the payment is due.
At each reporting date, the Group assesses whether there is any indication
that accrued income assets may be impaired by assessing whether it is possible
that a revenue reversal will occur. Where an indicator of impairment exists,
the Group makes a formal estimate of the asset's recoverable amount. Where
the carrying value of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
Intangible assets - goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill acquired represents the excess of the fair value of the
consideration and associated costs over the fair value of the identifiable net
assets acquired.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. At the date of acquisition, the goodwill is allocated to
cash generating units, usually at business segment level or statutory company
level as the case may be, for the purpose of impairment testing and is tested
at least annually for impairment. On subsequent disposal or termination of a
business acquired, the profit or loss on termination is calculated after
charging the carrying value of any related goodwill.
Intangible assets - other
Intangible assets are stated in the financial statements at cost less
accumulated amortisation and any impairment value. Amortisation is provided to
write off the cost less estimated residual value of intangible assets over its
expected useful life (which is reviewed at least at each financial year end),
as follows:
Intellectual property 25% straight line
Any gain or loss arising on the derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement of Comprehensive Income in the year that
the asset is derecognised.
Fully amortised assets still in use are retained in the financial statements.
Property, plant and equipment
Property, plant and equipment is stated in the financial statements at cost
less accumulated depreciation and any impairment value. Depreciation is
provided to write off the cost less estimated residual value of property,
plant and equipment over its expected useful life (which is reviewed at least
at each financial year end), as follows:
Leasehold land and buildings Straight line over the life of the lease
Fixtures, fittings and equipment Straight line over four years
Any gain or loss arising on the derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement of Comprehensive Income in the year that
the asset is derecognised.
Fully depreciated assets still in use are retained in the financial
statements.
Impairment
The carrying amounts of the Group's assets are reviewed at each period end to
determine whether there is any indication of impairment. If any such
indication exists, the assets' recoverable amount is estimated. For goodwill
and intangible assets that have an indefinite useful life and intangible
assets that are not yet available for use, the recoverable amount is estimated
at each annual period end date and whenever there is an indication of
impairment.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the Statement of Comprehensive Income in those expense
categories consistent with the function of the impaired asset.
Investments
Fixed asset investments are stated at cost less provision for diminution in
value.
Leases
In applying IFRS 16, for all leases (except as noted below), the Group:
a) recognises right-of-use assets and lease liabilities in the statement of
financial position, initially measured at the present value of future lease
payments;
b) recognises depreciation of right-of-use assets and interest on lease
liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal portion (presented
within financing activities) and interest (presented within operating
activities) in the statement of cash flows.
Lease incentives (e.g. free rent period) are recognised as part of the
measurement of the right-of-use assets and lease liabilities whereas under IAS
17 they resulted in the recognition of a lease incentive liability, amortised
as a reduction of rental expense on a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in accordance
with IAS 36 Impairment of Assets. This replaces the previous requirement to
recognise a provision for onerous lease contracts.
For short‑term leases (lease term of 12 months or less) and leases of
low-value assets (such as photocopiers), the Group has opted to recognise a
lease expense on a straight-line basis as permitted by IFRS 16. This expense
is presented within administrative expenses in the consolidated statement of
comprehensive income.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently measured at amortised cost less any provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, cash in hand
and deposits payable on demand. Cash equivalents are short-term highly liquid
investments that are readily convertible to known amounts of cash and that are
subject to an insignificant risk of changes in value. Cash equivalents
normally have a date of maturity of 3 months or less from the acquisition
date.
Bank loans and overdrafts comprise amounts due on demand.
Finance income
Finance income consists of interest receivable on funds invested. It is
recognised in the Statement of Comprehensive Income as it accrues.
Taxation
Income tax on the profit or loss for the periods presented comprises current
and deferred tax. Current tax is the expected tax payable on the taxable
income for the year, using rates enacted or substantively enacted at the end
of the reporting period, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided
for: the initial recognition of goodwill; the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a
business combination; the differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the end of the reporting
period.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the assets can be
utilised. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also makes
contributions to the private pension arrangements of certain employees. These
arrangements are of the money purchase type and the amount charged to the
Statement of Comprehensive Income represents the contributions payable by the
Group for the period.
Financial instruments
The Group does not enter into derivative transactions and does not trade in
financial instruments. Financial assets and liabilities are recognised on the
Statement of Financial Position when the Group becomes a party to the
contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct issue costs. The Group's
equity instruments comprise 'share capital' in the Statement of Financial
Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange ruling at the end of the
reporting period. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to the
Statement of Comprehensive Income.
Government grants
Government grants are recognised based on the accrual model and are measured
at the fair value of the asset received or receivable. Grants are classified
as relating either to revenue or to assets. Grants relating to revenue are
recognised in income over the period in which the related costs are
recognised. Grants relating to assets are recognised over the expected useful
life of the asset. Where part of a grant relating to an asset is deferred, it
is recognised as deferred income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled
share based payments are measured at fair value (excluding the effect of
non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on
factors such as the exercise price, expected volatility, option price and risk
free interest rate. The fair value is then amortised through the Statement of
Comprehensive Income on a straight-line basis over the vesting period.
Expected volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 24 to the
financial statements.
Exceptional items
Exceptional items are one off, material items outside the normal course of
business which are not related to the Group's trading activities.
Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS
required management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts in the financial statements.
These judgements and estimates are based on management's best knowledge of the
relevant facts and circumstances. Information about such judgements and
estimation is contained in the accounting policies and / or notes to the
financial statements. For critical judgements that the directors have made in
the process of applying the Group's accounting policies, see note 11 on
goodwill impairment and note 13 on discount rate used to calculate right of
use assets and lease liability.
2 Revenue and segment information
The Group uses several factors in identifying and analysing reportable
segments, including the basis of organisation, such as differences in products
and geographical areas. The Board of directors, being the Chief Operating
Decision Makers, have determined that for the year ending 30 June 2023 there
is only a single reportable segment.
All revenue represents sales to external customers. Three customers (2022:
two) are defined as major customers by revenue, contributing more than 10% of
the Group revenue.
2023 2022
£ £
Customer One 3,015,981 1,916,827
Customer Two 2,474,089 -
Customer Three 2,258,852 1,816,883
Major customers in the current year 7,748,922 3,733,710
The geographical analysis of revenue from continuing operations by
geographical location of customer is as follows:
Geographical market 2023 2022
£ £
United Kingdom 11,491,547 7,586,982
United States 6,821,433 4,150,179
Rest of the World 1,917,251 470,092
20,230,231 12,207,253
2023 2022
£ £
Revenue from contracts with customers - Events 17,915,369 10,135,172
Revenue from contracts with customers - Film 1,675,186 1,785,367
Other revenue 639,676 286,714
Total revenue 20,230,231 12,207,253
Contract assets and liabilities from contracts with customers have been
recognised as follows:
2023 2022
£ £
Deferred income 809,774 839,326
Accrued income 1,350,233 875,002
Deferred income at the beginning of the period has been recognised as revenue
during the period. Deferred income carried forward at the year end will be
recognised within the next year.
3 Other income
Other income 2023 2022
£ £
Coronavirus job retention scheme government grant - 1,168
Business interruption payment grant - 2,575
- 3,743
During the prior year the Group received government grants under the UK
government's coronavirus job retention scheme and the coronavirus business
interruption loan scheme.
4 Operating profit
Operating profit is stated after charging or crediting: 2023 2022
£ £
Cost of sales
Depreciation of fixtures, fittings and equipment 75,521 54,101
Amortisation of intangible assets 2,500 2,500
Staff costs (see note 23) 3,060,948 2,135,136
Administrative expenses
Depreciation of right-of-use assets 126,786 82,361
Depreciation of leasehold land and buildings 34,243 1,935
(Profit) / loss on foreign exchange differences 31,888 14,465
Fees payable to the Company's auditor in respect of:
Audit of the Company's annual accounts 12,600 7,842
Audit of the Company's subsidiaries 23,366 26,694
Interest on lease liabilities 39,212 21,191
Staff costs (see note 23) 1,321,451 1,107,745
5 Finance income
Finance income 2023 2022
£ £
Bank interest received 215 241
6 Finance costs
Finance costs 2023 2022
£ £
Coronavirus business interruption loan interest 7,963 6,662
Lease interest 39,212 21,191
47,175 27,853
7 Taxation
2023 2022
£ £
The tax charge comprises:
Current tax
Current year 277,699 232,206
277,699 232,206
Deferred tax (see note 8)
Current year 11,081 (27,984)
11,081 (27,984)
Total tax charge in the statement of comprehensive income 288,780 204,222
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations 1,045,960 843,564
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 20.5% (2022: 19%) 214,422 160,277
Effects of:
Non-deductible expenses 74,358 43,945
74,358 43,945
Total tax charge 288,780 204,222
The Group has estimated losses of £375,762 (2022: £685,568) available to
carry forward against future trading profits. Losses totalling £375,762 are
in Aeorema Communications plc which is not currently making taxable profits,
as all trading is undertaken by its subsidiaries Aeorema Limited, Eventful
Limited and Cheerful Twentyfirst, Inc., therefore no deferred tax asset has
been recognised in respect of this amount.
8 Deferred taxation
Group 2023 2022
£ £
Property, plant and equipment temporary differences (83,481) (39,435)
Temporary differences 98,325 55,823
Tax losses - 9,537
14,844 25,925
At 1 July 25,925 (2,059)
Transfer to Statement of Comprehensive Income (11,081) 27,984
At 30 June 14,844 25,925
9 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company's
Statement of Comprehensive Income has not been included in these financial
statements. The profit for the financial year of the holding company was
£338,795 (2022: £148,184).
10 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used and dilutive earnings
per share computations:
2023 2022
£ £
Basic earnings per share
Profit for the year attributable to owners of the Company 757,180 639,342
Basic weighted average number of shares 9,413,000 9,238,000
1,665,000 1,770,000
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares 11,078,000 11,008,000
11 Intangible fixed assets
Group Goodwill Intellectual Total
Property
£ £ £
Cost
At 30 June 2021 2,927,486 10,000 2,937,486
At 30 June 2022 2,927,486 10,000 2,937,486
At 30 June 2023 2,927,486 10,000 2,937,486
Impairments and amortisation
2,363,138 2,917 2,366,055
At 30 June 2021
Charge for the year - 2,500 2,500
2,363,138 5,417 2,368,555
At 30 June 2022
Charge for the year - 2,500 2,500
2,363,138 7,917 2,371,055
At 30 June 2023
Net book value
At 30 June 2021 564,348 7,083 571,431
At 30 June 2022 564,348 4,583 568,931
At 30 June 2023 564,348 2,083 566,431
Goodwill arose for the Group on consolidation of its subsidiaries, Aeorema
Limited and Eventful Limited.
Impairment - Aeorema Limited and Eventful Limited
Goodwill arises on acquisition of a business combination and represents the
difference between the fair value of the consideration paid and the aggregate
fair value of identifiable assets and liabilities acquired. Goodwill is tested
annually for impairment, goodwill is impaired when the value in use exceeds
the net asset value of the group's cash generating units (CGUs).The CGUs
represent Aeorema Limited and Eventful Limited, being the lowest level within
the group at which goodwill is monitored for internal management purposes.
The value in use has been calculated on a discounted cash flow basis using the
2023-24 budgeted figures as approved by the Board of directors, extended in
perpetuity to calculate the terminal value and discounted at a rate of 10%. It
is assumed that future growth will be 3% for venue sourcing activities and 4%
for event and moving image production activities. Using these assumptions,
which are based on past experience and future expectations, the recoverable
amount of goodwill of £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 15,646,053 (712,679) 27,618,896 11,118,210
Carrying amount in financial statements 365,154 365,154 365,154 365,154
Difference 15,280,899 (1,077,833) 27,253,742 10,753,056
Eventful Limited 3% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 563,932 (798.256) 796,692 460,377
Carrying amount in financial statements 199,194 199,194 199,194 199,194
Difference 364,738 (997,450) 597,498 261,183
Combined 4% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 16,209,985 (1,510,935) 28,415,588 11,578,587
Carrying amount in financial statements 564,348 564,348 564,348 564,348
Difference 15,645,637 (2,075,283) 27,851,240 11,014,239
12 Property, plant and equipment
Group Leasehold land Fixtures, fittings Total
and buildings and equipment
£ £ £
Cost
At 30 June 2021 58,536 229,007 287,543
Additions 98,821 80,654 179,475
Disposals (58,536) (5,095) (63,631)
Foreign exchange movement - 329 329
At 30 June 2022 98,821 304,895 403,716
Additions 154,068 170,959 325,027
Disposals - (72,449) (72,449)
Foreign exchange movement - (143) (143)
At 30 June 2023 252,889 403,262 656,151
Depreciation
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
Charge for the year 34,243 75,521 109,764
Eliminated on disposal - (63,308) (63,308)
Foreign exchange movement - (51) (51)
36,178 191,464 227,642
At 30 June 2023
Net book value
At 30 June 2021 - 103,477 103,477
At 30 June 2022 96,886 125,593 222,479
At 30 June 2023 216,711 211,798 428,509
13 Right-of-use assets
Group Leasehold Property
£
Cost
At 30 June 2021 18,995
Additions 887,138
Disposals (18,995)
At 30 June 2022 887,138
At 30 June 2023 887,138
Depreciation
At 30 June 2021 -
Charge for the year 82,361
Disposals (18,995)
At 30 June 2022 63,366
Charge for the year 126,786
At 30 June 2023 190,152
Net book value
At 30 June 2021 18,995
At 30 June 2022 823,772
At 30 June 2023 696,986
The right-of-use asset addition during the year relates to the Group's
leasehold property at 87 New Cavendish Street, London, W1W 6XD. The Group
entered the new leasehold in January 2022.
The right-of-use asset is calculated on the assumption that the Group will
remain in the premises for the duration of the 7 year lease agreement. A
discount rate of 5% was used to calculate the right-of use asset. 5% was
considered an appropriate rate based on the Group's weighted average cost of
capital.
The disposal during the previous year relates to the Group's leasehold
property at Moray House, 23-31 Great Titchfield Street, London, W1W 7PA. The
Group left the premises in September 2021.
14 Non-current assets - Investments
Company Shares in subsidiary
£
Cost
At 30 June 2021 3,866,466
56,895
Increase in respect of share-based payments
At 30 June 2022 3,923,361
64,419
Increase in respect of share-based payments
Incorporation of subsidiary 1
At 30 June 2023 3,987,781
Provision
At 30 June 2021 2,694,213
At 30 June 2022 2,694,213
At 30 June 2023 2,694,213
Net book value
At 30 June 2021 1,172,253
At 30 June 2022 1,229,148
At 30 June 2023 1,293,568
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following
companies:
Subsidiary undertakings Country of Shares held Profit / (loss) before tax for the year ended 30 June 2023 Net assets at year ended 30 June 2023
Registration
or incorporation Class %
£ £
Aeorema Limited England and Wales Ordinary 100 781,754 1,097,075
Eventful Limited England and Wales Ordinary 100 205,559 140,109
Twentyfirst Limited England and Wales Ordinary 100 - 1,362
(Dormant)
Cheerful Twentyfirst, Inc. United States of America Ordinary 100 317,467 424,412
Cheerful Twentyfirst B.V. The Netherlands Ordinary 100 (9,427) (7,635)
During the year the Group formed Cheerful Twentyfirst B.V., a Dutch company
based in Amsterdam. Aeorema Communications plc holds 100% of the share capital
in Cheerful Twentyfirst B.V.
The registered address of Aeorema Limited, Eventful Limited and Twentyfirst
Limited is 64 New Cavendish Street, London, W1G 8TB. The registered address of
Cheerful Twentyfirst, Inc. is 85 Broad Street, Floor 16, New York, NY, 10004.
The registered address of Cheerful Twentyfirst B.V. is Strawinskylaan 569,
1077 XX, Amsterdam.
15 Trade and other receivables
Group Company
2023 2022 2023 2022
£ £ £ £
Trade receivables 1,649,905 1,980,121 - -
Related party receivables - - 689,087 666,017
Other receivables 170,188 78,536 8,819 14,982
Prepayments and accrued income 1,682,429 1,071,378 15,682 8,333
3,502,522 3,130,035 713,588 689,332
All trade and other receivables are expected to be recovered within 12 months
of the end of the reporting period. The fair value of trade and other
receivables is the same as the carrying values shown above.
Trade and other receivables are assessed for impairment based upon the
expected credit losses model. The credit losses historically incurred have
been immaterial and as such the risk profile of the trade receivables has not
been presented.
At the year end, trade receivables of £308,531 (2022: £694,325) were past
due but not impaired. These amounts are still considered recoverable. The
ageing of these trade receivables is as follows:
Group
2023 2022
£ £
Less than 90 days overdue 160,286 566,605
More than 90 days overdue 148,245 127,720
308,531 694,325
16 Cash at bank and in hand
Group Company
2023 2022 2023 2022
£ £ £ £
Bank balances 2,444,100 1,714,417 135,548 1,532
2,444,100 1,714,417 135,548 1,532
17 Trade and other payables
Group Company
2023 2022 2023 2022
£ £ £ £
Trade payables 1,587,052 796,671 21,604 5,411
Related party payables - - 67,355 67,355
Taxes and social security costs 36,528 466,847 - -
Other payables 121,581 124,737 - 50,000
Accruals and deferred income 2,137,777 1,571,966 15,500 20,955
3,882,938 2,960,221 104,459 143,721
All trade and other payables are expected to be settled within 12 months of
the end of the reporting period. The fair value of trade and other payables is
the same as the carrying values shown above.
18 Bank Loans
2023 2022
£ £
Bank Loan
Current 83,333 83,333
Non-current 27,778 111,111
111,111 194,444
On 15 October 2020 the company received a Floating Rate Basis Coronavirus
Business Interruption Loan (CBIL) of £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
£7,963 being charged to profit and loss. This is offset by the equal amount
of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the company's
present and future assets.
19 Leases
The balance sheet shows the following amounts relating to leases:
Group
2023 2022
£ £
Right-of-use assets
Buildings
696,986 823,772
696,986 823,772
Group
2023 2022
£ £
Lease liabilities
Current 109,058 121,999
Non-current 612,693 738,041
721,751 860,040
Group
2023 2022
£ £
Maturity analysis - contractual undiscounted cash flows
Less than one year 142,000 213,000
One to five years 639,000 710,000
More than five years - 71,000
781,000 994,000
Group
2023 2022
£ £
Interest on lease liabilities 39,212 21,191
39,212 21,191
20 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
Charged to statement of comprehensive income 9,000 9,000
At 30 June 2023 48,500 48,500
Group
Leasehold dilapidations Total
£ £
Current 35,000 35,000
Non-current 13,500 13,500
48,500 48,500
Leasehold dilapidations relate to the estimated cost of returning a leasehold
property to its original state at the end of the lease in accordance with the
lease terms. The main uncertainty relates to estimating the cost that will be
incurred at the end of the lease.
21 Share capital
2023 2022
£ £
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 2021 9,238,000 1,154,750
At 30 June 2022 9,238,000 1,154,750
Shares issued during the year 300,000 37,500
At 30 June 2023 9,538,000 1,192,250
Holders of these shares are entitled to dividends as declared from time to
time and are entitled to one vote per share at general meetings of the
company.
See note 24 for details of share options outstanding.
22 Directors' emoluments
Salary, fees, bonuses and benefits in kind Salary, fees, bonuses and benefits in kind Pensions Pensions Total Total
2023 2022 2023 2022 2023 2022
£ £ £ £ £ £
M Hale - - - - - -
S Haffner 16,250 15,000 - - 16,250 15,000
R Owen 20,000 20,000 - - 20,000 20,000
S Quah 219,375 151,057 9,375 7,500 228,750 158,557
A Harvey 165,000 112,377 7,657 6,172 172,657 118,549
H Luffman 16,250 4,558 - - 16,250 4,558
436,875 302,992 17,032 13,672 453,907 316,664
The remuneration of directors of the Company is set out below.
During the year M Hale waived his right to fees of £15,000 (2022: £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 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 25).
23 Employee information
The average monthly number of employees (including directors) employed by the
Group during the year was:
Number of employees Group Company
2023 Number 2022 Number 2023 Number 2022 Number
Administration and production 63 55 5 5
The aggregate payroll costs of these employees charged in the Statement of
Comprehensive Income was as follows:
Employment costs Group Company
2023 2022 2023 2022
£ £ £ £
Wages and salaries 3,759,340 2,827,204 52,500 39,558
Social security costs 429,412 294,872 - -
Pension costs 129,228 63,910 - -
Share-based payments 64,419 56,895 - -
4,382,399 3,242,881 52,500 39,558
24 Share-based payments
The Group operates an EMI share option scheme for key employees. Options are
granted to key employees at an exercise price equal to the market price of the
Company's shares at the date of grant. Options are exercisable from the third
anniversary of the date of grant and lapse if they remain unexercised at the
tenth anniversary or upon cessation of employment. The following option
arrangements exist over the Company's shares:
Date of grant Exercise price Exercise period Number of options 2023 Number of options 2022
From To
25 April 2013 16.5p 25 April 2016 24 April 2023 - 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 200,000 200,000
29 April 2021 50.0p 5 November 2023 29 April 2031 200,000 200,000
29 April 2021 70.0p 5 November 2023 29 April 2031 200,000 200,000
23 May 2022 60.0p 23 May 2025 23 May 2032 100,000 150,000
19 October 2022 71.0p 19 October 2025 19 October 2032 110,000 -
1,530,000 1,770,000
Details of the number of share options and the weighted average exercise price
outstanding during the year are as follows:
Number of options Weighted average exercise price Number of options Weighted average exercise price
2023 2023 2022 2022
£ £
Outstanding at beginning of the year 1,770,000 0.40 1,920,000 0.37
Granted during the year 110,000 0.71 150,000 0.60
Cancelled during the year (50,000) (0.60) (300,000) (0.50)
Exercised during the year (300,000) (0.17) - -
Outstanding at end of the year 1,530,000 0.48 1,770,000 0.40
Exercisable at the end of the year 720,000 0.28 1,020,000 0.25
The exercise price of options outstanding at the year-end was £0.481 (2022:
£0.404) and their weighted average contractual life was 6.8 years (2022: 6.5
years).
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value as determined at the grant date of equity-settled
share-based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. The
estimated fair value of the options is measured using an option pricing model.
The inputs into the model are as follows:
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
Grant date 19 October 2022
Model used Black-Scholes
Share price at grant date 71.0p
Exercise price 71.0p
Contractual life 10 years
Risk free rate 3.87%
Expected volatility 177.03%
Expected dividend rate 0%
Fair value option 26.581p
The expected volatility is determined by calculating the historical volatility
of the parent company's share price. For the share options issued prior to the
year ended 30 June 2021 the historical volatility of the parent company's
share price is calculated over the last three years. For share options issued
after 1 July 2021 the historical volatility is calculated over the last 10
years. The method used to determine the historical volatility of the parent
company's share price changed in the prior year as a consequence of the
COVID-19 pandemic. The impact of the COVID-19 pandemic on the parent company's
share price was significant and not considered an appropriate measure of the
parent company's share price volatility. The extension of the period to 10
years was considered appropriate. The risk free rate is based on the yield
from gilt strip government bonds with a similar life to the expected life of
the options.
The Group recognised the following charges in the Statement of Comprehensive
Income in respect of its share-based payment plans:
2023 2022
£ £
Share-based payment charge 64,419 56,895
25 Related party transactions
The Group has a related party relationship with its subsidiaries and its key
management personnel (including directors). Details of transactions between
the Company and its subsidiaries are as follows:
2023 2022
£ £
Amounts owed by subsidiaries
Total amount owed by subsidiaries 689,087 666,017
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,355
Aeorema Limited
The company received dividends totalling £350,000 during the year (2022:
£125,000) from its subsidiary, Aeorema Limited. The company transferred a VAT
receivable of £33,245 (2022: £17,424) to Aeorema Limited due to being part
of a common VAT group.
Aeorema Limited transferred a net amount of expenses to Aeorema Communications
plc during the year of £36,250 (2022: £24,558).
Aeorema Limited paid expenses totalling £237,135 (2022: £114,052) on behalf
of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of £186,800 to
Aeorema Communications plc (2022: £10,000).
Cheerful Twentyfirst, Inc.
The company received dividends totalling £150,000 during the year (2022:
£125,000) from its subsidiary, Cheerful Twentyfirst, Inc.
Eventful Limited
The company received dividends totalling £100,000 during the year (2022:
£25,000) from its subsidiary, Eventful Limited.
Compensation of key management
The compensation of key management (including directors) of the Group is as
follows:
2023 2022
£ £
Short-term employee benefits 442,158 302,991
Post-employment benefits 17,032 13,672
459,190 316,663
The share options held by directors of the Company are disclosed in note 22.
During the year, a charge of £49,905 (2022: £49,905) was recognised in the
Consolidated Statement of Comprehensive Income in respect of these share
options.
During the year S Quah received an interest-free loan of £40,000 (2022:
£nil). 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 2023 2022
£ £
Aeorema Communications plc 16,250 15,000
Aeorema Limited 11,450 9,650
27,700 24,650
At the year end, the Group had an outstanding trade payable balance to Harris
and Trotter LLP of £5,000 (2022: £5,630).
26 Cash flows
Group
2023 2022
£ £
Cash flows from operating activities
Profit / (loss) before taxation 1,045,960 843,564
Depreciation of property, plant and equipment 109,764 56,036
Depreciation of right-of-use assets 126,786 82,361
Amortisation of intangible fixed assets 2,500 2,500
Loss on disposal of fixed assets 9,141 4,646
Share-based payment expense 64,419 56,895
Finance income (215) (241)
Interest on lease liabilities 39,212 21,191
Exchange rate differences on translation (119,455) 42,138
1,278,112 1,109,090
Increase in trade and other payables 931,716 1,557,234
Decrease in trade and other receivables (372,487) (1,700,972)
Taxation paid (380,753) (43,657)
Cash generated from operating activities 1,456,588 921,695
27 Financial instruments
Financial instruments recognised in the consolidated statement of financial
position
All financial instruments are recognised initially at their transaction cost
and subsequently measured at amortised cost.
Group Company
2023 2022 2023 2022
£ £ £ £
Financial Assets
Trade and other receivables 3,170,326 2,933,659 589,087 666,017
Cash and cash equivalents 2,444,100 1,714,417 135,548 1,532
Investments in subsidiaries - - 1,293,567 1,229,148
Total 5,614,426 4,648,076 2,018,202 1,896,697
Financial Liabilities
Trade and other payables 1,819,744 1,115,852 88,959 122,766
Accruals 1,328,001 732,640 17,000 20,955
Total 3,147,745 1,848,492 105,959 143,721
The Group is exposed to risks that arise from its use of financial
instruments. There have been no significant changes in the Group's exposure to
financial instrument risk, its objectives, policies and processes for managing
those from previous periods. The principal financial instruments used by the
Group, from which financial instrument risk arises, are trade receivables,
cash and cash equivalents and trade and other payables.
Credit risk
Credit risk arises principally from the Group's trade receivables. It is the
risk that the counterparty fails to discharge its obligation in respect of the
instrument. The maximum exposure to credit risk at 30 June 2023 was
£1,649,905 (2022: £1,980,121). Trade receivables are managed by policies
concerning the credit offered to customers and the regular monitoring of
amounts outstanding for both time and credit limits. The credit risk
associated with trade receivables is minimal as invoices are based on
contractual agreements with long-standing customers. Credit losses
historically incurred by the Group have consequently been immaterial.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to meet its liabilities
when they fall due. The Group monitors cash flow on a regular basis. At the
year end, the Group has sufficient liquid resources to meets its obligations
of £3,147,899 (2022: £2,327,501).
Market risk
Market risk arises from the Group's use of interest bearing financial
instruments. It is the risk that the fair value of future cash flows of a
financial instrument will fluctuate. At the year end, the cash and cash
equivalents of the Group net of bank overdrafts was £2,444,100 (2022:
£1,714,417). The Group ensures that its cash deposits earn interest at a
reasonable rate.
Capital risk
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern while maximising the return to
stakeholders. The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued share capital,
reserves and retained earnings as disclosed in the Consolidated Statement of
Changes in Equity. At the year end, total equity was £2,814,356 (2022:
£2,253,564).
28 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension
plans. Contributions payable by the Group for the year were £129,228 (2022:
£63,910). At the end of the reporting period £17,475 (2022: £12,021) of
contributions were due in respect of the period.
29 Dividends
In respect of the current year, the directors propose that a final dividend of
3 pence per share (2022: 2 pence) be paid to shareholders on 19 January 2024.
The dividends are subject to approval by shareholders at the Annual General
Meeting and have not been included as liabilities in these consolidated
financial statements. The proposed dividends are payable to all shareholders
on the Register of Members on 22 December 2023. The total estimated dividend
to be paid is £286,140. The payment of this dividend will not have any tax
consequences for the Group.
30 Contingent liability
Company
The Company is a member of a group VAT registration with all other companies
in the Aeorema Communications group and, under the terms of the registration,
is jointly and severally liable for the VAT payable by all members of the
group. At 30 June 2023 the Company had no potential liability under the terms
of the registration.
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