TIDMAEO
RNS Number : 2909H
Aeorema Communications Plc
24 March 2020
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector:
Media
24 March 2020
Aeorema Communications plc ('Aeorema', the 'Company', or the
'Group')
Earnings Enhancing Acquisition of Eventful Limited
Aeorema Communications plc, the AIM-traded live events agency,
is pleased to announce the acquisition of the entire issued share
capital of Eventful Limited ("Eventful"), a boutique events and
incentive travel company, for a total consideration of up to
GBP479,692 to be satisfied in cash and ordinary shares in the
Company, GBP100,000 of the cash consideration being a performance
related earn-out (the "Acquisition").
The Group's decision to acquire Eventful is made in full
confidence, despite the challenging global situation unfolding due
to COVID-19. Eventful has a strong cash flow position with
significant revenue already confirmed or under discussion, and
necessary risk mitigation in place in terms of contract
cancellation fees (up to 90% in some instances). Eventful's
services have already proven to diversify and enhance the Group's
offering with valuable "black book" introductions and opportunities
for cross-selling well underway.
Eventful was founded in 2002 by Caroline Lumgair. Run by
Caroline, Eventful operates from London and assists clients with
venue sourcing, event planning, event design and event management.
Caroline and her team have established a loyal portfolio across
multiple industries including manufacturing, oil and gas,
professional services, luxury retail, entertainment and finance.
Eventful typically works with clients on boutique incentive events,
a differentiated client market to that of Cheerful Twentyfirst,
Aeorema's live events business.
Incentive travel events are designed to motivate or reward
employees and ultimately, increase corporate productivity and
sales. As the fastest growing sector of the business events
industry, with the highest per capita spend and the widest supply
chain, there is considerable opportunity for Eventful and now
Aeorema to capitalise on this expanding sector. Eventful gives
Aeorema an entry into the venue sourcing and incentive travel
events market - an area highly complementary to Cheerful
Twentyfirst's existing portfolio of clients and work, allowing for
an opportunity to further grow fee based revenue.
In addition, Eventful's v enue search contracts are typically
signed 12-18 months in advance, meaning conversations with
corporate clients start earlier. It is expected that this lead-time
will have an opportunistic ripple effect across the Group,
extending to creative live events agency Cheerful Twentyfirst.
The acquisition of Eventful will strengthen Aeorema's offering
and add to its existing blue-chip client base. Caroline and her
small team will move into Cheerful Twentyfirst's offices almost
immediately to reduce overheads and will be available to provide
specialist knowledge on the organisation of high-end internal
meetings, boutique conferences and training events of ranging
scale.
The total consideration payable to Ms. Lumgair for Eventful is
up to GBP479,692 to be satisfied as follows:
-- Consideration on completion of:
o GBP353,442 in cash; and
o 187,500 ordinary shares of 12.5p each in the Company at a
price of 14 pence per share being the closing mid price of the
Company's ordinary shares on 23 March 2020, the last practicable
date prior to completion of the Acquisition (the "Consideration
Shares");
It should be noted that the overall net outflow of cash on
completion is significantly less than GBP353,442 given there will
be an immediate inflow of cash in bank from Eventful of
GBP227,198.
-- Earn-out payments of:
o GBP50,000 in cash following the Company's year ending 30 June
2021, payable on the basis Eventful achieves the target revenue of
GBP200,000 (the 'Target Revenue') in the period; and
o GBP50,000 in cash following the Company's year ending 30 June
2022 payable on the basis Eventful achieves the Target Revenue in
the period.
Should Eventful's revenue for the financial year ending 30 June
2021 and 30 June 2022 fall below the Target Revenue, the earn-out
payments shall be reduced by an amount equal to the amount by which
the Target Revenue falls short (and so that if the revenue for
either financial year is GBP150,000 or less, the earn-out payment
for that financial year shall be zero).
The Acquisition will result in a number of operational synergies
and be immediately earnings enhancing. For the year ended 31 March
2019, unaudited accounts show that Eventful generated revenue of
GBP343,365 and a profit before tax of GBP96,335. As at 31 March
2019, net assets were GBP286,943 and cash balances were GBP164,053.
Unaudited management accounts for the ten months ended 31 January
2020 show that Eventful generated revenue of GBP202,069 and a
profit before tax of GBP50,311 and cash balances as at 23 March
2020, being the latest practicable date prior to completion, stood
at GBP227,198.
The Consideration Shares are subject to a 12-month lock in
following completion and orderly market provisions for six months
thereafter. The cash consideration will be paid using the Company's
robust cash reserves.
Mike Hale, Chairman, said: "We are delighted to have acquired
Eventful. Caroline, her team and her clients will be an excellent
addition to the Group. The Acquisition, which is immediately
earnings enhancing and is expected to grow fee based revenues, will
enable the Group to enter into the venue sourcing and incentive
travel events market, something we believe is very much linked to
the live events market in which Cheerful Twentyfirst is already
very successful. The incentive travel sector, a multi-billion pound
global market, needs specialist skills and knowledge which Eventful
will bring us. We will concentrate on delivering logistics and
value, in addition to creative and inventive solutions for our
clients.
"We believe the Acquisition is good value for money. Taking into
account the positive cash balances in Eventful, net profits of some
GBP96,000 for FY19, and on the assumption that both earn-out
payments of GBP50,000 each are paid, we believe we are making an
acquisition that is on a much lower valuation multiple than other
acquisitions we have seen in our sector.
"The Acquisition will also allow us to grow our presence in the
boutique events category. Eventful has a number of clients for
which they run smaller events and being able to offer this service
more widely creates significant growth potential. The Acquisition
also provides Cheerful Twentyfirst and Eventful with the
opportunity to join forces when tendering for new clients, and
working with existing, clients where the combination of the two
companies' skills will be highly complementary.
"Notwithstanding the unchartered territory in which we find
ourselves with the current COVID-19 virus outbreak, we believe
Aeorema is well placed to weather this storm, particularly with our
strong cash balance. Strengthening and adding to the Company's
offerings to current and new clients at this time supports our
business model and long term strategy of enhancing the services we
provide to grow the Group."
Caroline Lumgair, Founder of Eventful Limited, commented: "I am
delighted to be joining Aeorema's established and respected live
events agency. The synergies to be gained from the Acquisition will
benefit present and future clients of both Cheerful Twentyfirst and
Eventful and, with my team, I look forward to helping Aeorema
Communications enter the venue sourcing and incentive travel events
markets."
Issue of Equity
As part of the consideration payable for Eventful, the Company
will issue the Consideration Shares.
Application will be made for the Consideration Shares, which
will rank pari passu with the Company's existing ordinary shares,
to be admitted to trading on AIM ("Admission"). It is expected that
Admission will occur on or around 30 March 2020.
Upon Admission, the Company will have 9,238,000 Ordinary Shares
in issue with no shares held in treasury. This is the total number
of voting rights in the Company and may be used by shareholders as
the denominator for the calculations by which they determine if
they are required to notify their interest in, or change to their
interest in, the Company under the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.
**ENDS**
For further information visit www.aeorema.com or contact:
Mike Hale Aeorema Communications Tel: +44 (0) 20
plc 7291 0444
John Depasquale Allenby Capital Limited Tel: +44 (0)20
/ Liz Kirchner (Nominated Adviser 3328 5656
and Broker)
Catherine Leftley St Brides Partners Tel: +44 (0) 20
Ltd 7236 1177
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END
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