REG - Aeorema Comms Plc - Final Results
11/11/2024 07:00
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RNS Number : 6069L Aeorema Communications Plc 11 November 2024
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Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media
11 November 2024
Aeorema Communications plc
('Aeorema', 'the Company' or 'the Group')
Final Results
Aeorema Communications plc (AIM: AEO), a leading strategic communications
group, is pleased to announce its audited results for the year ended 30 June
2024 ("FY2024").
OVERVIEW
• Reported record revenue of £20.3m and a profit before tax ('PBT') of
£437,000 for the financial year ending 30 June 2024 (FY2023: £20.2m and
£1.0m respectively)
• Investments made in recent years have helped the Group respond to market
shifts and strengthen client relationships.
• Expanded presence into Austin, Texas: a growing technology hub, targeting U.S.
domestic events like SXSW.
• Maintained a strong cash position with £1.7m in the bank at the date of this
announcement.
• Proposing a final dividend of 3 pence per share (FY2023: 3 pence per share),
pending shareholder approval.
POST PERIOD END
• Began implementing a cost-reduction and rebalancing programme to create a more
efficient and focused operating model.
• Secured foothold at the Global Economic Forum in Davos in January 2025, which
is expected to open new opportunities and widen access to financial and
professional service sectors.
• Continued growth at Cannes Lions International Festival of Creativity 2025
("Cannes Lions"). Expecting exceptional project retention year on year, net
new client wins and further embedding across client and local partnerships.
For further information on the Company please visit www.aeorema.com
(http://www.aeorema.com/) or 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 / Joscelin Pinnington (Sales & Corporate Broking)
Paul Dulieu / Isabel de Salis St Brides Partners Ltd aeorema@stbridespartners.co.uk
(Financial PR)
CHAIRMAN'S STATEMENT
I am pleased to present my Chairman's Statement for the financial year ended
30 June 2024.
Despite a challenging economic climate, Aeorema has demonstrated resilience
and agility, supported by the strong foundation we have built in recent years.
This year, we report revenue of £20.3m and a profit before tax ('PBT') of
£437,000, compared with £20.2m and £1.0m respectively for last year. This
reduction in PBT reflects industry-wide margin pressures driven by a
combination of high inflation on third-party costs, wage inflation, and talent
shortages, with client budgets unable to absorb these increased costs in the
short term. However, it should be noted that our final results show a slight
improvement on the figures we forecast in our recent trading update, which
reflects an improving trend observed towards the end of the financial year.
In response to the challenges faced during the year, we have undertaken
necessary adjustments to align our operating model with current market
realities. This includes developing a programme to reduce and rebalance costs
between the first and second halves of our financial year, and improve
operational efficiency. We began implementing this programme after the year
end and I am pleased to report that it is already delivering benefits and
putting us in a stronger financial position with a more focused, efficient
operating model. The full benefit of this programme is expected to be realised
by the end of the financial year ending 30 June 2025.
During the year, our clients have faced difficult market conditions which have
shifted their approach to project planning. Some have postponed projects,
while others have experienced prolonged decision-making processes.
Nonetheless, Aeorema's resilience and the investments made in recent years
have allowed us to enhance efficiencies, respond to market shifts, offer more
strategic and creative solutions, and deepen relationships with our loyal and
growing client base. Throughout, we have maintained the high standards of
service that our clients expect and trust which is a testament to the hard
work and adaptability of our talented employees, and the strong and
experienced leadership of our senior team. I would like to thank everyone for
their support and contributions during the year.
Cannes Lions continues to be a cornerstone of our success. Early signs
indicate that the 2025 event will once again see us delivering best-in-class
creative activations in the South of France for multiple returning clients,
further strengthening our leadership at this premier industry gathering.
Building on our success at Cannes Lions, we are focused on expanding our
strategic and creative offerings to other key events, which allow us to
showcase our expertise on a global stage and deepen our impact within the
industry.
Accordingly, we are excited to announce that, for the first time, we will have
a presence at the Global Economic Forum in Davos in January 2025. Securing a
foothold at this prestigious global event is a significant milestone for
Aeorema, and we anticipate it will provide further opportunities.
The U.S. market is a continued priority for Aeorema and our U.S. team at
Cheerful Twentyfirst Inc. works closely with our UK team. This has resulted in
the Group securing an impressive roster of U.S. based clients which, we feel,
fully justifies the cost of us entering the U.S market. In addition to our New
York office, we have recently established a presence in Austin, Texas, a
vibrant technology hub that aligns with our capabilities. Austin also hosts
South by Southwest ('SXSW'), an annual conglomeration of parallel film,
interactive media, music and conferences, and presents another growing global
event where we see considerable opportunities.
As we approach the second half of the new financial year, we await the
finalisation of several contracts and the scheduling of new opportunities. We
will update the market as developments unfold.
Aeorema has maintained a strong cash position, with cash balances of £1.7m as
of the date of this announcement. Consequently, I am delighted to propose a
final dividend of 3 pence per share, reflecting the progress we've made in
difficult markets and our confidence in the future. We also remain open to
sensibly priced acquisition opportunities that align with our business and
deliver value to our shareholders. Subject to shareholder approval at the
upcoming Annual General Meeting ("AGM"), the dividend will be paid on 20
January 2025, with a record date of 27 December 2024 and an ex-dividend date
of 24 December 2024.
As previously announced, Hannah Luffman, a Non-Executive Director of the
Company, will also be stepping down from the Board ahead of the Company's 2024
AGM. Having originally joined the Company in May 2020, Hannah was appointed to
the Board in December 2021, and it has been a pleasure working with her. On
behalf of myself and the Board, I would like to thank Hannah for her hard work
and contribution to Aeorema's growth over the last few years. We wish her all
the best in her future endeavours.
In closing, while economic pressures persist for many of our clients, we
anticipate greater stability in the near term, especially after key national
elections in our biggest operating markets. We are therefore cautiously
optimistic for FY2025 and believe that the most uncertain times may be behind
us. Finally, I would like to thank our investors for their ongoing trust and
support. We look forward to the year ahead with increased confidence as we
continue to build on the strong platform we have established in recent years.
Mike Hale
Chairman
8 November 2024
CHIEF EXECUTIVE'S REPORT
As our Chairman noted, this has been a period of significant change, not only
for our company but also for our clients. Many have faced economic challenges
and uncertainties, resulting in adjustments to project planning and scheduling
across the board including some postponements and prolonged decision-making
processes. Despite this, we remain cautiously optimistic as we head into 2025,
confident that our adaptability and innovation will allow us to thrive in this
evolving environment.
Building on our successes in the UK and Europe, our North American division
has made solid progress. Working in conjunction with our UK team, our presence
in the U.S. has allowed us to add several new blue-chip clients to our
portfolio and enable us to meet their requirements in both North America and
Europe. I want to acknowledge the tenacity and creativity of our team during
this period and express my sincere thanks for their outstanding contributions,
which have been instrumental in driving this success.
Our unique offerings at the major industry event Cannes Lions continue to be a
source of immense pride, and we see strong potential for growth in this space,
not just for Cannes Lions but also for other major tentpole events in 2025 and
beyond. These events allow us to showcase our creative capabilities on a
global stage, and we expect to build on our successes with new and exciting
opportunities on the horizon. One such opportunity is at Davos, which,
although smaller in scale than Cannes Lions, represents a significant
milestone for us.
In the B2E (Business-to-Employee) conference space, we continue to deliver
exceptional work for our clients. Although this market has seen some
fluctuations, we anticipate a return to normal levels of activity by
2025/2026. Our ability to navigate these market shifts and consistently
deliver high-quality experiences, positions us well for the future.
This year, we have also seen recognition for our achievements through winning
several prestigious industry awards. Cheerful Twentyfirst was honoured to win
the Experiential Agency Team of the Year award in the Experience category at
the renowned Drum Awards Festival. In partnership with Stagwell Inc. (NASDAQ:
STGW) and TEAM., Cheerful Twentyfirst was also awarded Best Outdoor Activation
at the 22nd Ex Awards in Las Vegas for our exceptional work on the Sport Beach
activation at Cannes Lions 2023. These accolades underscore our commitment to
excellence and innovation, and I am incredibly proud of all the work our team
has accomplished.
Within our Group, our cross-agency offering continues to enrich projects and
client relationships. Eventful, our boutique venue sourcing and events
management agency, deserves recognition and thanks for a significant increase
in collaboration and cross-pollination of client projects. Under its
Managing Director Claire Gardner, our elevated collaboration has allowed
both agencies to seamlessly blend insights and expertise, and supported the
expansion of services within the Group. We recognise the Eventful team's hard
work and dedication in making this synergy possible, which lays the foundation
for continued success and mutual growth.
On the corporate responsibility front, we are equally proud of our ongoing
sustainability initiatives, highlighted by achieving our Silver EcoVadis
accreditation, which reflects our commitment to ethical and sustainable
business practices. As part of our roadmap to Net Zero, we will be joining the
Science Based Targets initiative ("SBTi") to support our development of a
target-based carbon reduction strategy and look forward to sharing this with
you. In 2025, we also plan to publish an update to our Corporate Social
Responsibility ("CSR") charter to continue to share the CSR goals and
guideposts that form our mission to operate in an environmentally and socially
responsible way. As mentioned previously, our CSR strategy is not only a key
focus internally but is also a critical part of decision making when our
clients are awarding contracts.
In conclusion, our strong client partnerships, innovative event offerings, and
commitment to sustainability place us in an excellent position for continued
success in FY2025 and beyond. I would also like to thank our shareholders for
their ongoing support and look forward to updating the market on our progress
as FY2025 progresses.
Steve Quah
CEO
8 November 2024
STRATEGIC REPORT
The Board presents its Strategic Report on the Group for the year ended 30
June 2024.
Principal activities
Aeorema Communications plc does not trade but incurs professional fees
associated with its listing on the London Stock Exchange's AIM Market. 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. Collectively all of these businesses are
referred to as the "Group".
Business review
The results for the year show revenue was £20,288,799 (2023: £20,230,231),
operating profit was £440,748 (2023: £1,092,920) and profit before taxation
was £436,928 (2023: £1,045,960).
The Group had net assets of £2,805,725 at the year-end (2023: £2,814,356)
and net current assets of £1,875,372 (2023: £1,761,557).
The year ended 30 June 2024 was a challenging year, with the Group's revenue
in line with the previous year, but profit before tax down significantly.
Aeorema Limited (t/a Cheerful Twentyfirst) had a successful year, achieving
its highest revenue and profit before tax in its history. It delivered a
record number of activations at Cannes Lions International Festival of
Creativity ("Cannes Lions") in June 2024, including its largest ever brand
activation for Stagwell and TEAM (refer to note 2), building upon the success
in the previous year. It also delivered a number of events throughout the year
for a range of new clients in the professional services, AdTech and marketing
sectors. As a consequence of the growth in revenue, Aeorema Limited's profits
before tax increased 12% to £877,486 compared with £781,754 in the previous
year.
Cheerful Twentyfirst, Inc's revenue was down 57% (2023: 13% increase) compared
with the previous year, not because of performance challenges but largely due
to a shift in where revenue was recorded. Fewer events took place in the U.S.
compared to the previous year, and for insurance reasons all Cannes Lions
contracts for US clients were managed through Aeorema Limited (t/a Cheerful
Twentyfirst) in 2024 (rather than Cheerful Twentyfirst Inc., as was the case
in 2023). Due to these changes and continued investment in the US operation,
including employing a US President, Cheerful Twentyfirst Inc. reported an
overall loss before tax of £176,631 for the year, compared with a £317,467
profit before tax in the previous year.
Eventful Limited experienced a difficult year both in terms of revenue, which
was down 12% (compared with the previous year (2023: 138% increase), and
profits before tax of £13,139 (2023: £205,559). The year ended 30 June 2023
represented the first full year that was unaffected by the global pandemic and
associated travel and social distancing restrictions. Eventful Limited
therefore experienced a surge in demand in 2023. However, for the year ended
30 June 2024 demand returned to 'normal' levels with a reduction in client
spending.
The Group's gross profit margin has decreased from 21% in 2023 to 19% in 2024.
As noted in the Chairman's Statement, the reduction in gross profit margin is
a consequence of industry wide inflationary pressures on third party costs and
wages, and pressure from clients on budgets.The Group also hired, on average,
an additional eleven employees compared with the previous year, putting
further pressure on the Groups margins.
Looking ahead, the Board has identified that it needs to reduce costs and has
implemented an ongoing programme to significantly reduce and rebalance costs,
including a reduction in headcount (both direct and indirect). The reduction
in costs has been implemented to drive growth in profits and efficiencies,
with its full benefit expected to materialise by the end of the financial year
ending 30 June 2025.
Key performance indicators
Year 2024 2023 2022 2021
£ £ £ £
Revenue 20,288,799 20,230,231 12,207,253 5,094,518
Operating profit / (loss) 440,748 1,092,920 871,176 (188,105)
Profit / (loss) before taxation 436,928 1,045,960 843,564 (159,698)
The Group's revenue was in line with the previous year. During the year the
Group's largest client accounted for 19% of revenue (2023: 12%), and its three
largest clients accounted for 38% of revenue (2023: 38%). Please refer to note
2.
Event revenue increased by 2% when compared with the previous year (2023: 77%
increase). The Group delivered a record number of activations at Cannes Lions
in 2024, including the activation for Stagwell and TEAM. The Group also
delivered a number of large events for both existing and new clients.
Film revenue decreased by 15% when compared with the previous year (2023: 6%
decrease). This was due to a number of large projects in the previous year not
being repeated in the current year.
Cashflows
Net cash inflow from operating activities was £1,205,470 compared with a net
cash inflow of £1,456,588 for the year ended 30 June 2023. The cash position
increased by £675,253 to £3,119,353 (2023: increase by £729,683 to
£2,444,100).
Capital expenditure
Total capital expenditure, including expenditure on tangible assets, was
£54,711 compared with £325,027 for the year ended 30 June 2023.
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 23 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, a key customer 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 26.
Key risks of a nonfinancial 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
8 November 2024
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
Notes 2024 2023
£ £
Continuing operations
Revenue 2 20,288,799 20,230,231
Cost of sales (16,513,827) (16,016,766)
Gross profit 3,774,972 4,213,465
Administrative expenses (3,334,224) (3,120,545)
Operating profit 3 440,748 1,092,920
Finance income 4 35,967 215
Finance costs 5 (39,787) (47,175)
Profit before taxation 436,928 1,045,960
Taxation 6 (140,221) (288,780)
Profit for the year 296,707 757,180
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign entities (88,632) (119,547)
Other comprehensive income for the year (88,632) (119,547)
Total comprehensive income for the year attributable to owners of the 208,075 637,633
parent
Profit per ordinary share:
Total basic earnings per share 9 3.11078p 8.04398p
Total diluted earnings per share 9 2.68976p 6.83499p
The notes on pages 30 to 57 are an integral part of these financial
statements.
Consolidated Statement of Financial Position
As at 30 June 2024
Notes Group Company
2024 2023 2024 2023
£ £ £ £
Non-current assets
Intangible assets 10 564,348 566,431 - -
Property, plant and equipment 11 344,827 428,509 - -
Right-of-use assets 12 570,182 696,986 - -
Investments in subsidiaries 13 - - 1,363,002 1,293,568
Deferred taxation 7 - 14,844 - -
Total non-current assets 1,479,357 1,706,770 1,363,002 1,293,568
Current assets
Trade and other receivables 14 4,422,020 3,502,522 832,531 713,588
Cash and cash equivalents 15 3,119,353 2,444,100 117,816 135,548
Total current assets 7,541,373 5,946,622 950,347 849,136
Total assets 9,020,730 7,653,392 2,313,349 2,142,704
Current liabilities
Trade and other payables 16 (5,371,049) (3,882,938) (114,107) (104,459)
Bank loans 17 (27,778) (83,333) - -
Lease liabilities 18 (113,201) (109,058) - -
Current tax payable (118,973) (74,736) - -
Provisions 19 (35,000) (35,000) - -
Total current liabilities (5,666,001) (4,185,065) (114,107) (104,459)
Non-current liabilities
Bank loans 17 - (27,778) - -
Lease liabilities 18 (500,814) (612,693) - -
Provisions 19 (22,500) (13,500) - -
Deferred taxation 7 (25,690) - - -
Total non-current liabilities (549,004) (653,971) - -
Total liabilities (6,215,005) (4,839,036) (114,107) (104,459)
Net assets 2,805,725 2,814,356 2,199,242 2,038,245
Equity
Share capital 20 1,192,250 1,192,250 1,192,250 1,192,250
Share premium 21,876 21,876 21,876 21,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 302,809 233,375 302,809 233,375
Capital redemption reserve 257,812 257,812 257,812 257,812
Foreign translation reserve (176,876) (88,244) - -
Retained earnings 1,191,204 1,180,637 407,845 316,282
Equity attributable to owners of the parent 2,805,725 2,814,356 2,199,242 2,038,245
The notes on pages 30 to 57 are an integral part of these financial
statements.
The profit for the financial year of the holding company was £377,703 (2023:
£338,795).
The financial statements were approved and authorised by the board of
directors on 8 November 2024 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 2024
Group Share capital Share premium Merger reserve Other reserve Capital redemption reserve Foreign translation reserve Retained earnings Total equity
£ £ £ £ £ £ £ £
At 30 June 2022 1,154,750 9,876 16,650 168,956 257,812 31,303 614,217 2,253,564
Comprehensive income for the year, net of tax - - - - - - 757,180 757,180
Dividend paid - - - - - - (190,760) (190,760)
Foreign currency translation - - - - - (119,547) - (119,547)
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
Comprehensive income for the year, net of tax - - - - - - 296,707 296,707
Dividend paid - - - - - - (286,140) (286,140)
Foreign currency translation - - - - - (88,632) - (88,632)
Share-based payment - - - 69,434 - - - 69,434
At 30 June 2024 1,192,250 21,876 16,650 302,809 257,812 (176,876) 1,191,204 2,805,725
Share premium represents the value of shares issued in excess of their nominal
value.
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 reserves represent equity settled share-based employee remuneration, as
detailed in note 23.
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 on pages 30 to 57 are an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 30 June 2024
Company Share capital Share premium Merger reserve Other reserve Capital redemption reserve Retained earnings Total equity
£ £ £ £ £ £ £
At 30 June 2022 1,154,750 9,876 16,650 168,956 257,812 168,247 1,776,291
Comprehensive income for the year, net of tax - - - - 338,795 338,795
-
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
Comprehensive income for the year, net of tax - - - - - 377,703 377,703
Dividend paid - - - - - (286,140) (286,140)
Share-based payment - - - 69,434 - - 69,434
At 30 June 2024 1,192,250 21,876 16,650 302,809 257,812 407,845 2,199,242
Share premium represents the value of shares issued in excess of their nominal
value.
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 reserves represent equity settled share-based employee remuneration, as
detailed in note 23.
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 on pages 30 to 57 are an integral part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
Notes Group
2024 2023
£ £
Net cash flow from operating activities 25 1,205,470 1,456,588
Cash flows from investing activities
Finance income 4 35,967 215
Purchase of property, plant and equipment 11 (54,711) (325,027)
Repayment of leasing liabilities (142,000) (177,500)
Cash used in investing activities (160,744) (502,312)
Cash flows from financing activities
Repayment of borrowings (83,333) (83,333)
Dividends paid to owners of the company (286,140) (190,760)
Shares issued - 49,500
Cash used in financing activities (369,473) (224,593)
Net increase in cash and cash equivalents 675,253 729,683
Cash and cash equivalents at beginning of year 2,444,100 1,714,417
Cash and cash equivalents at end of year 3,119,353 2,444,100
Debt analysis At 1 July 2023 Cashflow At 30 June 2024
£ £ £
Net Cash
Cash at bank and in hand 2,444,100 675,253 3,119,353
2,444,100 675,253 3,119,353
Debt
Debts falling due within one year 83,333 (55,555) 27,778
Debts falling due after one year 27,778 (27,778) -
111,111 (83,333) 27,778
The notes on pages 30 to 57 are an integral part of these financial
statements.
Notes to the consolidated financial statements
For the year ended 30 June 2024
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 has reviewed the Group's detailed forecasts for the next financial
year, other medium term plans, the impact of the war in Ukraine and conflict
in the Middle East, and economic and political uncertainties both in the UK
and globally, as well as considering the risks outlined in note 26. 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 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 2024 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 2024 year end.
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 2025 are as follows:
● Lack of Exchangeability (Amendments to IAS 21)
● Classification and Measurement of Financial Instruments (Amendment
to IFRS 9 and IFRS 7)
The Group did not early adopt the above new standards, amendments, or
interpretations for 30 June 2025 year end.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to 30 June 2024. 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 does 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.
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 23 to the
financial statements.
Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS
required management to make judgements, estimates and assumptions that 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 10 on
goodwill impairment and note 12 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 2024 there
is only a single reportable segment.
All revenue represents sales to external customers. One customer (2023: three)
is defined as major customers by revenue, contributing more than 10% of the
Group revenue.
2024 2023
£ £
Customer One 3,833,237 2,474,089
Major customers in the current year 3,833,237 2,474,089
Major customers in the prior year 5,274,833
7,748,922
The geographical analysis of revenue from continuing operations by
geographical location of customer is as follows:
Geographical market 2024 2023
£ £
United Kingdom 8,905,513 11,491,547
United States 3,580,432 6,821,433
Rest of the World 7,802,854 1,917,251
20,288,799 20,230,231
2024 2023
£ £
Revenue from contracts with customers - Events 18,360,490 17,915,369
Revenue from contracts with customers - Film 1,418,029 1,675,186
Other revenue 510,280 639,676
Total revenue 20,288,799 20,230,231
Contract assets and liabilities from contracts with customers have been
recognised as follows:
2024 2023
£ £
Deferred income 1,500,546 809,774
Accrued income 1,672,081 1,350,233
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 Operating profit
Operating profit is stated after charging or crediting: 2024 2023
£ £
Cost of sales
Depreciation of fixtures, fittings and equipment 97,891 75,521
Amortisation of intangible assets 2,083 2,500
Staff costs (see note 22) 3,432,192 3,181,251
Administrative expenses
Depreciation of right-of-use assets 126,804 126,786
Depreciation of leasehold land and buildings 39,214 34,243
(Profit) / loss on foreign exchange differences 73,171 31,888
Fees payable to the Company's auditor in respect of:
Audit of the Company's annual accounts 14,000 12,600
Audit of the Company's subsidiaries 33,163 23,366
Interest on lease liabilities 34,264 39,212
Staff costs (see note 22) 1,605,180 1,201,148
4 Finance income
Finance income 2024 2023
£ £
Bank interest received 35,967 215
5 Finance costs
Finance costs 2024 2023
£ £
Coronavirus business interruption loan interest 5,523 7,963
Lease interest 34,264 39,212
39,787 47,175
6 Taxation
2024 2023
£ £
The tax charge comprises:
Current tax
Current year 99,687 277,699
99,687 277,699
Deferred tax (see note 7)
Current year 40,534 11,081
40,534 11,081
Total tax charge in the statement of comprehensive income 140,221 288,780
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations 436,928 1,045,960
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 25% (2023: 20.5%) 109,232 214,422
Effects of:
Non-deductible expenses 30,989 74,358
30,989 74,358
Total tax charge 140,221 288,780
The Group has estimated losses of £375,762 (2023: £375,762) 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.
Effective 1 April 2023, the enacted tax rate increased to 25%.
7 Deferred taxation
Group 2024 2023
£ £
Property, plant and equipment temporary differences 59,613 (83,481)
Temporary differences (85,303) 98,325
(25,690) 14,844
At 1 July 14,844 25,925
Transfer to Statement of Comprehensive Income (40,534) (11,081)
At 30 June (25,690) 14,844
8 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company's
Statement of Comprehensive Income has not been included in these financial
statements. The profit for the financial year of the holding company was
£377,703 (2023: £338,795).
9 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit or loss
attributable to owners of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used and dilutive earnings
per share computations:
2024 2023
£ £
Basic earnings per share
Profit for the year attributable to owners of the Company 296,707 757,180
Basic weighted average number of shares 9,538,000 9,413,000
Dilutive potential ordinary shares:
Employee share options
1,493,000 1,665,000
Diluted weighted average number of shares 11,031,000 11,078,000
10 Intangible fixed assets
Group Goodwill Intellectual Total
Property
£ £ £
Cost
At 30 June 2022 2,927,486 10,000 2,937,486
At 30 June 2023 2,927,486 10,000 2,937,486
At 30 June 2024 2,927,486 10,000 2,937,486
Impairments and amortisation
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
Charge for the year - 2,083 2,083
At 30 June 2024 2,363,138 10,000 2,373,138
Net book value
At 30 June 2022 564,348 4,583 568,931
At 30 June 2023 564,348 2,083 566,431
At 30 June 2024 564,348 - 564,348
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
2024-25 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 1% for venue sourcing activities and 3%
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 £12,975,301 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 3% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 12,269,423 9,621,639 22,102,599 8,560,433
Carrying amount in financial statements 365,154 365,154 365,154 365,154
Difference 11,904,269 9,256,485 21,737,445 8,195,279
Eventful Limited 1% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 705,878 622,209 1,180,557 513,486
Carrying amount in financial statements 199,194 199,194 199,194 199,194
Difference 506,684 423,015 981,363 314,292
Combined 4% Growth 0% Growth Discount Rate of 5% Discount Rate of 15%
£ £ £ £
Value in use calculations 12,975,301 10,243,848 23,283,156 9,073,919
Carrying amount in financial statements 564,348 564,348 564,348 564,348
Difference 12,410,953 9,679,500 22,718,808 8,509,571
11 Property, plant and equipment
Group Leasehold land Fixtures, fittings Total
and buildings and equipment
£ £ £
Cost
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
Additions 4,524 50,187 54,711
Disposals - (1,344) (1,344)
At 30 June 2024 257,413 452,105 709,518
Depreciation
At 30 June 2022 1,935 179,302 181,237
Charge for the year 34,243 75,521 109,764
Eliminated on disposal - (63,308) (63,308)
Foreign exchange movement - (51) (51)
At 30 June 2023 36,178 191,464 227,642
Charge for the year 39,214 97,891 137,105
Eliminated on disposal - (56) (56)
At 30 June 2024 75,392 289,299 364,691
Net book value
At 30 June 2022 96,886 125,593 222,479
At 30 June 2023 216,711 211,798 428,509
At 30 June 2024 182,021 162,806 344,827
12 Right-of-use assets
Group Leasehold Property
£
Cost
At 30 June 2022 887,138
At 30 June 2023 887,138
At 30 June 2024 887,138
Depreciation
At 30 June 2022 63,366
Charge for the year 126,786
At 30 June 2023 190,152
Charge for the year 126,804
At 30 June 2024 316,956
Net book value
At 30 June 2022 823,772
At 30 June 2023 696,986
At 30 June 2024 570,182
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.
13 Non-current assets - Investments
Company Shares in subsidiary
£
Cost
At 30 June 2022 3,923,361
Increase in respect of share-based payments 64,419
Incorporation of subsidiary 1
At 30 June 2023 3,987,781
Increase in respect of share-based payments 69,434
At 30 June 2024 4,057,215
Provision
At 30 June 2022 2,694,213
At 30 June 2023 2,694,213
At 30 June 2024 2,694,213
Net book value
At 30 June 2022 1,229,148
At 30 June 2023 1,293,568
At 30 June 2024 1,363,002
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 2024 Net assets at year ended 30 June 2024
Registration
or incorporation Class %
£ £
Aeorema Limited England and Wales Ordinary 100 877,486 1,253,042
Eventful Limited England and Wales Ordinary 100 13,139 101,788
Twentyfirst Limited (Dormant) England and Wales Ordinary 100 - 1,362
Cheerful Twentyfirst, Inc. United States of America Ordinary 100 (176,631) 296,666
Cheerful Twentyfirst B.V. The Netherlands Ordinary 100 (4,767) (13,949)
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.
14 Trade and other receivables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade receivables 1,608,713 1,649,905 - -
Related party receivables - - 811,427 689,087
Other receivables 413,560 170,188 5,951 8,819
Prepayments and accrued income 2,399,747 1,682,429 15,153 15,682
4,422,020 3,502,522 832,531 713,588
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 £139,047 (2023: £308,531) were past
due but not impaired. These amounts are still considered recoverable. The
ageing of these trade receivables is as follows:
Group
2024 2023
£ £
Less than 90 days overdue 4,892 160,286
More than 90 days overdue 134,155 148,245
139,047 308,531
15 Cash at bank and in hand
Group Company
2024 2023 2024 2023
£ £ £ £
Bank balances 3,119,353 2,444,100 117,816 135,548
3,119,353 2,444,100 117,816 135,548
16 Trade and other payables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade payables 2,127,981 1,587,052 27,203 21,604
Related party payables - - 67,355 67,355
Taxes and social security costs 3,316 36,528 - -
Other payables 118,158 121,581 - -
Accruals and deferred income 3,121,594 2,137,777 19,549 15,500
5,371,049 3,882,938 114,107 104,459
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.
17 Bank Loans
2024 2023
£ £
Bank Loan
Current 27,778 83,333
Non-current - 27,778
27,778 111,111
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.
18 Leases
The balance sheet shows the following amounts relating to leases:
Group 2024 2023
£ £
Right-of-use assets
Buildings 570,182 696,986
570,182 696,986
Group 2024 2023
£ £
Lease liabilities
Current 113,201 109,058
Non-current 500,814 612,693
614,015 721,751
Group 2024 2023
£ £
Maturity analysis - contractual undiscounted cash flows
Less than one year 142,000 142,000
One to five years 497,000 639,000
More than five years - -
639,000 781,000
Group 2024 2023
£ £
Interest on lease liabilities 34,264 39,212
34,264 39,212
19 Provisions
Group
Leasehold dilapidations Total
£ £
At 1 July 2022 39,500 39,500
Charged to statement of comprehensive income 9,000 9,000
At 30 June 2023 48,500 48,500
Charged to statement of comprehensive income 9,000 9,000
At 30 June 2024 57,500 57,500
Group
Leasehold dilapidations Total
£ £
Current 35,000 35,000
Non-current 22,500 22,500
57,500 57,500
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.
20 Share capital
2024 2023
£ £
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 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
At 30 June 2024 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 23 for details of share options outstanding.
21 Directors' emoluments
The remuneration of directors of the Company is set out below.
Salary, fees, bonuses and benefits in kind Salary, fees, bonuses and benefits in kind Pensions Pensions Total Total
2024 2023 2024 2023 2024 2023
£ £ £ £ £ £
M Hale - - - - - -
S Haffner 20,000 16,250 - - 20,000 16,250
R Owen 20,000 20,000 - - 20,000 20,000
S Quah 243,231 219,375 10,000 9,375 253,231 228,750
A Harvey 179,487 165,000 8,000 7,657 187,487 172,657
H Luffman 20,000 16,250 - 20,000 16,250
482,718 436,875 18,000 17,032 500,718 453,907
During the year M Hale waived his right to fees of £20,000 (2023: £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 24).
22 Employee information
The average monthly number of employees (including directors) employed by the
Group during the year was:
Number of employees Group Company
2024 Number 2023 Number 2024 Number 2023 Number
Administration and production 74 63 5 5
The aggregate payroll costs of these employees charged in the Statement of
Comprehensive Income was as follows:
Employment costs Group Company
2024 2023 2024 2023
£ £ £ £
Wages and salaries 4,272,587 3,759,340 60,000 52,500
Social security costs 524,751 429,412 - -
Pension costs 170,600 129,228 - -
Share-based payments 69,434 64,419 - -
5,037,372 4,382,399 60,000 52,500
23 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 2024 Number of options 2023
From To
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 100,000 100,000
19 October 2022 71.0p 19 October 2025 19 October 2032 110,000 110,000
11 October 2023 78.5p 11 October 2026 11 October 2033 240,000 -
1,770,000 1,530,000
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
2024 2024 2023 2023
£ £
Outstanding at beginning of the year 1,530,000 0.48 1,770,000 0.40
Granted during the year 240,000 0.79 110,000 0.71
Cancelled during the year - - (50,000) (0.60)
Exercised during the year - - (300,000) (0.17)
Outstanding at end of the year 1,770,000 0.52 1,530,000 0.48
Exercisable at the end of the year 1,320,000 0.41 720,000 0.28
The exercise price of options outstanding at the year-end was £0.519 (2023:
£0.481) and their weighted average contractual life was 6.3 years (2023: 6.8
years).
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value as determined at the grant date of equity-settled
share-based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. The
estimated fair value of the options is measured using an option pricing model.
The inputs into the model are as follows:
Grant date 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 0.00%
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 0.00%
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 0.00%
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 0.00%
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 0.00%
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 0.00%
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 0.00%
Fair value option 26.581p
Grant date 11 October 2023
Model used Black-Scholes
Share price at grant date 78.5p
Exercise price 78.5p
Contractual life 10 years
Risk free rate 4.33%
Expected volatility 146.09%
Expected dividend rate 3.00%
Fair value option 77.184p
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:
2024 2023
£ £
Share-based payment charge 69,434 64,419
24 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:
2024 2023
£ £
Amounts owed by subsidiaries
Total amount owed by subsidiaries 811,427 689,087
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,355
Aeorema Limited
The company received dividends totalling £550,000 during the year (2023:
£350,000) from its subsidiary, Aeorema Limited. The company transferred a VAT
receivable of £42,088 (2023: £33,245) 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 £40,000 (2023: £36,250).
Aeorema Limited paid expenses totalling £242,634 (2023: £237,135) on behalf
of Aeorema Communications plc during the year.
During the year, Aeorema Limited made a net transfer of cash of £37,113 to
Aeorema Communications plc (2023: £186,800).
Cheerful Twentyfirst, Inc.
The company received dividends totalling £50,000 during the year (2023:
£150,000) from its subsidiary, Cheerful Twentyfirst, Inc.
Eventful Limited
The company received dividends totalling £50,000 during the year (2023:
£100,000) from its subsidiary, Eventful Limited.
Compensation of key management
The compensation of key management (including directors) of the Group is as
follows:
2024 2023
£ £
Short-term employee benefits 482,718 442,158
Post-employment benefits 18,000 17,032
500,718 459,190
The share options held by directors of the Company are disclosed in note 23.
During the year, a charge of £17,501 (2023: £49,905) 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 £50,000. At
the year end £10,000 was outstanding (2023: £10,000).
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 2024 2023
£ £
Aeorema Communications plc 20,000 16,250
Aeorema Limited 14,400 11,450
34,400 27,700
At the year end, the Group had an outstanding trade payable balance to Harris
and Trotter LLP of £6,000 (2023: £5,000).
25 Cash flows
Group
2024 2023
£ £
Cash flows from operating activities
Profit / (loss) before taxation 436,928 1,045,960
Depreciation of property, plant and equipment 137,105 109,764
Depreciation of right-of-use assets 126,804 126,786
Amortisation of intangible fixed assets 2,083 2,500
Loss on disposal of fixed assets 1,288 9,141
Share-based payment expense 69,434 64,419
Finance income (35,967) (215)
Interest on lease liabilities 34,264 39,212
Exchange rate differences on translation (88,632) (119,455)
683,307 1,278,112
Increase in trade and other payables 1,497,111 931,716
Increase in trade and other receivables (919,497) (372,487)
Taxation paid (55,451) (380,753)
Cash generated from operating activities 1,205,470 1,456,588
26 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
2024 2023 2024 2023
£ £ £ £
Financial Assets
Trade and other receivables 3,694,354 3,170,326 811,428 589,087
Cash and cash equivalents 3,119,353 2,444,100 117,816 135,548
Investments in subsidiaries - - 1,363,002 1,293,567
Total 6,813,707 5,614,426 2,292,246 2,018,202
Financial Liabilities
Trade and other payables 2,273,917 1,819,744 94,557 88,959
Accruals 1,621,048 1,328,001 19,550 17,000
Total 3,894,965 3,147,745 114,107 105,959
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 2024 was
£1,608,713 (2023: £1,649,905). 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 meet its obligations of
£3,989,476 (2023: £3,147,899).
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 £3,119,353 (2023:
£2,444,100). 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 £2,805,725 (2023:
£2,814,356).
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 £170,429 (2023:
£129,228). At the end of the reporting period £8,779 (2023: £17,475) 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 (2023: 3 pence) be paid to shareholders on 20 January 2025.
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 27 December 2024. 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 2024 the Company had no potential liability under the terms
of the registration.
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