TIDMAEO
RNS Number : 3979C
Aeorema Communications Plc
19 October 2020
The Information communicated within this announcement is deemed
to constitute 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
19 October 2020
Aeorema Communications plc ('Aeorema' , the ' Company' , or the
'Group')
Final Results
Aeorema Communications plc, the AIM-traded live events agency,
announces its audited results for the year ended 30 June 2020.
Overview
-- Earnings enhancing acquisition of Eventful Ltd.
o access to the venue sourcing and incentive travel events
market
o successful integration, diversifying and enhancing offering to
existing and new clients
-- Addition of Strategy Director and associated team in May
delivering results - focusing on brand strategy and
communications
-- An encouraging number of multi-national blue-chip client wins seen in 2020 so far
-- Virtual events offering expanded
-- Team adapting quickly and capitalising on an increasing
requirement for virtual and hybrid events
-- Post-period end, opening of an office in New York to service clients in North America
-- Revenues of GBP5,475,425 (2019: GBP6,765,280)
-- Operating loss (pre-exceptional items) of GBP175,043 (2019 profit restated: GBP384,483)
-- Maintained strong cash position - GBP1,721,217 at 30 June 2020
The Company's annual general meeting ("AGM") is expected to be
held in late November and a separate announcement will be made in
due course to confirm postage of the Annual Report and Accounts for
the year ended 30 June 2020 and the notice of AGM to shareholders,
as well as availability of the documents on the Company's website
www.aeorema.com .
**S**
For further information visit www.aeorema.com or contact:
Mike Hale Aeorema Communications Tel: +44 (0) 20 7291
plc 0444
John Depasquale / Liz Allenby Capital Limited Tel: +44 (0)20 3328
Kirchner (Corporate (Nominated Adviser and 5656
Finance) Broker)
Kelly Gardiner (Sales)
Catherine Leftley St Brides Partners Ltd Tel: +44 (0) 20 7236
1177
Chairman's Statement
This year saw a complete reshaping of the events business. It
went from live to virtual overnight. Our industry was faced with
event cancellations, national lock downs and global travel bans.
Despite these major challenges, I am pleased to report the Group
has finished the year in a strong, secure, and promising
position.
Notwithstanding the challenges we have all faced in recent
months with the COVID-19 pandemic, Aeorema has adapted quickly to
the changes in the live events industry and is now capitalising on
the increasing requirement for virtual and hybrid events.
The Group was able to make a first significant acquisition
within the year and diversify its operating businesses to meet the
requirements of the new environment.
In March, the Group acquired Eventful Ltd ("Eventful"). Eventful
provides venue sourcing, strategic event planning and management
and incentive travel services. The acquisition was immediately
earnings enhancing and gave Aeorema access to the venue sourcing
market which rounded out the Group's offering to clients. It also
opened doors to new clients and opportunities to cross-sell.
Despite the challenges I am pleased to report Eventful posted
profits before tax of GBP11,223 for the 3 month period
post-acquisition. The team recently launched a pioneer incentive
product that helps clients continue to use this strong motivation
tool and, despite the current travel challenges, this has had a
good initial client reaction.
The Group has made significant executive appointments during the
year. We also made some strategic hires from a highly successful
creative and award-winning brand experience agency delivering
events worldwide, including creating a new senior Strategy Director
role. This team gave us an opportunity to strengthen our brand
engagement and strategic skills and has diversified and enhanced
the offering to existing and new clients, as well as providing the
Group with a wider and valuable network of blue-chip contacts
across multiple industries, offering opportunities for
cross-selling. With the integration of the team complete and them
now working together sharing client relationships, some significant
introductions have been made which has led to some significant and
highly profitable work from a major multinational technology
client. Several other global clients are expected to follow due to
this new team's expertise.
As we have reported in recent months, we anticipated making a
loss for the year as a result of the postponement and cancellation
of a number of live events. We saw revenue decrease 19% to
GBP5,475,425 (2019: GBP6,765,280) resulting in an operating loss
(pre-exceptional items) of GBP175,043 (2019 profit: GBP384,483).
The Group's cash position remains strong with in excess of GBP1
million as at the date of this announcement. However, given
continuing uncertainties, the Board is not recommending the payment
of a full year dividend. It is the Board's intention to return to
paying dividends as soon as possible.
Outlook
As mentioned, there has been a major shift in traditional event
delivery and the ways clients communicate with their stakeholders.
Even ahead of the COVID-19 pandemic, it was clear that there were
going to be a number of changes to the live events industry and the
way live events were being run and staged. There was already an
increasing focus put on digital and hybrid events, particularly
with the desire for a more environmentally sustainable method of
running events, but the immediate impact of the COVID-19 pandemic
created an acceleration of the need for digital and hybrid events.
Aeorema, with its experience and ability to be agile, has been
quick to adapt.
We have introduced innovative ways of running virtual events and
making them more successful; we have launched a robust and flexible
technology platform to help run virtual events and this has had a
very positive response from clients; we have launched a New York
office to service our clients there and to enter the extremely
large USA events market - this office has already enabled us to win
projects that we would not have won without it. We will continue to
look for ways to help our clients in this environment and grow our
business and revenue and although we believe the physical events
business will return, it will be different with many hybrid
physical and virtual events. With our foundations, and the
exceptional hard work undertaken by every member of the team so far
this year, we are ideally positioned to be a leader in this new
market.
The Board and I want to congratulate and thank all the staff.
They have faced unique challenges with great energy and commitment.
They have protected cash flow and have also driven new initiatives.
They have contained costs and critically they have maintained
morale and creativity in the most trying of circumstances.
We also want to thank our shareholders. Your support has been
excellent and very much appreciated and we remain motivated by this
support to grow revenue and profit.
M Hale
Chairman
16 October 2020
Chief Executive Officer's Report
The Year of the Great Reset. This year we saw a complete shift
from traditional channels to virtual world communications. I am as
proud as ever of our Cheerful Twentyfirst and Eventful teams, who
were at the coal-face as live events were wiped off the board and
replaced with virtual briefs.
Our agencies embraced the pivot to virtual events like a new
pitch, exploring best practice and creative ways to break out of
the traditional mould and to build an experience to suit. The
enlarged team moved quickly and strategically to pioneer the rapid
shift to virtual and brought our clients with us along the way.
Through March, April and May we focused our agency approach on
supporting our clients through this transition, and developing
their trust with virtual and its opportunities. And there are so
many opportunities.
It is difficult to pick one highlight from this financial year.
I'm delighted to share several moments that stand out. The Cheerful
Twentyfirst agency rebrand in September 2019, where our new bold
colours and dynamic logo aligned our branding with our modern
agency values. We celebrated multiple major award wins, including
the Global Campaign Experience Awards and Creative Team of the Year
for the second year running. Our experiential projects with new
clients, who shared, "I've worked with different production
companies over the years, but Cheerful Twentyfirst is far and away
the best - words cannot describe how good you are." Then there is
our international work in Cannes during 2019, where we delivered a
revolutionary and sustainable brand activation that continues to
garner attention for innovation and creative flair to this day.
We have continued to invest in new offerings with the Eventful
team and new talent as we see the shape of the agency adapting to
virtual communications. Most notably, we welcomed our Strategy
Director, Hannah Luffman, alongside new senior appointments in
technical and creative. Hannah's reputation for client-work and
experience in audience engagement has proved invaluable to our
growth.
Outlook
Our delivery in the world of Virtual events has been enhanced by
the curation of our own robust platform. We believe we were the
first agency to curate a solution that holistically responded to
clients' needs: agency creative, communications strategy and
branding, packaged alongside a tried and tested platform offering.
Fondly named KIT, launched post-period end, the platform is a
sophisticated solution that hosts and delivers online events, with
refined engagement tools that address specific needs. The secure
technology is brandable and scalable, while giving users a
personalised experience. Since KIT's launch in September, we have
had many client requests for platform demonstrations.
Our expansion into the US was a historic moment for the agency.
In September 2020 we very proudly opened our New York office and
appointed New York talent. The expansion has already been highly
successful and looks to yield strong traction with current US
clients and in new opportunities. Within the first 10 business days
of opening, we secured three new clients with live projects already
underway on the East and West Coasts.
In equally as exciting news, our incentives business Eventful is
unveiling a luxury product that will charter a new course for
corporate rewards within the UK. In partnership with luxury hotels,
we see this new offering as a significant opportunity to lead the
way in restructuring and re-energising the local travel and
incentives market both locally and abroad.
The development of the Group's offering to now include strategy
and virtual experiences as chargeable avenues has reignited
opportunities across the board. Excitingly and off the back of
this, we are seeing bigger conversations and a bigger 'piece of the
pie' with returning and new clients alike. I am optimistic that the
momentum already seen in Q1 2020-2021 reflects continued positive
growth ahead for both operating businesses. A strong finish to a
challenging year, we continue to make waves in the UK and globally
as Game Changers in purpose, strategy, creative and value.
S Quah
CEO
16 October 2020
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2020
Notes 2020 2019
GBP GBP
Continuing operations
Revenue 2 5,475,425 6,765,280
Cost of sales (3,629,770) (4,584,117)
-------------------------- ------ ------------
Gross profit 1,845,655 2,181,163
Other income 3 82,601 -
Administrative expenses (2,103,299) (1,796,680)
------ ------------ ------------
Operating (loss) /
profit pre-exceptional
items 4 (175,043) 384,483
-------------------------- ------ ------------
Exceptional items 5 (23,184) -
-------------------------- ------ ------------
Operating (loss) /
profit post exceptional
items (198,227) 384,483
-------------------------- ------ ------------
Finance income 6 556 611
Finance costs (20,253) (2,850)
-------------------------- ------ ------------
(Loss) / profit before
taxation (217,924) 382,244
Taxation 7 20,497 (86,687)
------ ------------ ------------
(Loss) / profit and
total comprehensive
income for the year
attributable to owners
of the parent (197,427) 295,557
(Loss) / profit per
ordinary share:
Total basic earnings
per share 10 (2.16920)p 3.26564p
Total diluted earnings
per share 10 N/A 3.22011p
-------------------------- ------ ------------
There were no other comprehensive income items.
Statement of Financial Position
As at 30 June 2020
Notes Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
Non-current assets
Intangible assets 11 573,931 365,154 - -
Property, plant and equipment 12 85,952 58,071 - -
Right-of-use assets 13 379,530 13,486 - -
Investments in subsidiaries 14 - - 1,141,540 614,751
Deferred taxation 7,611 - 30,253 -
------------ ------------ ---------- ----------
Total non-current assets 1,047,024 436,711 1,171,793 614,751
Current assets
Trade and other receivables 15 597,497 1,612,345 657,986 977,427
Cash and cash equivalents 16 1,721,217 2,211,161 11,298 3,606
------------ ------------ ---------- ----------
Total current assets 2,318,714 3,823,506 669,284 981,033
------------ ---------- ----------
Total assets 3,365,738 4,260,217 1,841,077 1,595,784
Current liabilities
Trade and other payables 17 (1,186,670) (2,223,027) (191,136) (88,397)
Lease liabilities 18 (85,070) (16,475) - -
Current tax payable (68,490) (74,616) - -
------------ ------------ ---------- ----------
Total current liabilities (1,340,230) (2,314,118) (191,136) (88,397)
Non-current liabilities
Lease liabilities 18 (300,689) - - -
Deferred taxation 8 - (7,529) - -
Provisions 19 (25,020) (24,186) - -
------------ ------------ ---------- ----------
Total non-current liabilities (325,709) (31,715) - -
------------ ------------ ---------- ----------
Total liabilities (1,665,939) (2,345,833) - -
Net assets 1,699,799 1,914,384 1,649,941 1,507,387
------------ ------------ ---------- ----------
Equity
Share capital 20 1,154,750 1,131,313 1,154,750 1,131,313
Share premium 9,876 7,063 9,876 7,063
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 81,358 34,261 81,358 34,261
Capital redemption reserve 257,812 257,812 257,812 257,812
Retained earnings 179,353 467,285 129,495 60,288
------------ ------------ ---------- ----------
Equity attributable to
owners of the parent 1,699,799 1,914,384 1,649,941 1,507,387
------ ------------ ------------ ---------- ----------
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Capital
Share Merger Other redemption Retained
Group capital Share premium reserve reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
--------------------- -------------- --------- --------- ------------ ---------- -------------
At 30 June
2018 1,131,313 7,063 16,650 - 257,812 249,829 1,662,667
IFRS 16 adjustments - - - - - (10,222) (10,222)
Adjusted balance
at 1 July 2018 1,131,313 7,063 16,650 - 257,812 239,607 1,652,445
Comprehensive
income for
the year, net
of tax - - - - - 295,557 295,557
Dividends paid - - - - - (67,879) (67,879)
Share-based
payment - - - 34,261 - - 34,261
At 30 June
2019 1,131,313 7,063 16,650 34,261 257,812 467,285 1,914,384
Comprehensive
income for
the year, net
of tax - - - - - (197,427) (197,427)
Dividends paid - - - - - (90,505) (90,505)
Share-based
payment - - - 47,097 - - 47,097
Share issue 23,437 2,813 - - - - 26,250
At 30 June
2020 1,154,750 9,876 16,650 81,358 257,812 179,353 1,699,799
---------------------
The prior year adjustment relating to the first time adoption of
IFRS 16 is explained on pages 33 and 34 of the financial
statements.
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 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 29 to 55 of the financial statements are an
integral part of these financial statements.
Statement of Cash Flows
For the year ended 30 June 2020
Notes Group
2020 2019
GBP GBP
------ ---------- ----------
Net cash flow from operating activities 25 (99,006) 981,846
Cash flows from investing activities
Payment for Acquisition of Subsidiary,
net of cash acquired (128,331) -
Finance income 6 556 611
Purchase of intangible assets 11 (10,000) -
Purchase of property, plant and equipment 12 (61,400) (48,731)
Repayment of leasing liabilities (101,258) (91,000)
Dividends received by the Company - -
Cash (used) / generated in investing
activities (300,433) (139,120)
Cash flows from financing activities
Dividends paid to owners of the Company (90,505) (67,879)
---------- ----------
Cash used in financing activities (90,505) (67,879)
Net (decrease) / increase in cash
and cash equivalents (489,944) 774,847
Cash and cash equivalents at beginning
of year 2,211,161 1,436,314
---------- ----------
Cash and cash equivalents at end
of year 1,721,217 2,211,161
------------------------------------------- ---------- ----------
Cash and cash equivalents
The amounts disclosed on the Statement of Cash Flows in respect
of cash and cash equivalents are in respect of the Statement of
Financial Position amounts:
Notes Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
------ ---------- ---------- ------- ------
Cash and cash equivalents 16 1,721,217 2,211,161 11,298 3,606
1,721,217 2,211,161 11,298 3,606
---------------------------
Notes to the consolidated financial statements
For the year ended 30 June 2020
1 Accounting policies
Aeorema Communications plc is a public limited company
incorporated in the United Kingdom and registered in England and
Wales. The Company is domiciled in the United Kingdom and its
principal place of business is Moray House, 23/31 Great Titchfield
Street, London, W1W 7PA. The Company's Ordinary Shares are traded
on the AIM Market.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The presentation currency is GBP sterling.
Going concern
The COVID-19 pandemic had a significant impact on the Group. The
imposition of international lockdowns and subsequent disruption
caused to international travel meant that all physical events
between March and June 2020 were either postponed or cancelled.
Like most companies within the events industry, both Aeorema
Limited and Eventful Limited had the majority of their jobs either
cancelled or postponed until later in 2020 or early 2021. Aeorema
Limited successfully held a few virtual events for a key client as
a substitute for the physical events that could no longer take
place, and the moving image department continued to produce and
edit films remotely throughout the lockdown.
In response to the UK government's introduction of the
Coronavirus job retention scheme the Group furloughed several
employees (see note 3) and arranged deferrals and payment plans
with HMRC for several outstanding tax liabilities.
Although the COVID-19 pandemic resulted in all the Group's live
events being cancelled, including Cannes Lions, the pandemic has
created opportunities for the Group to expand its offering to
clients. The Group maintains its core businesses (physical events
and exhibitions, moving image and venue sourcing), however, the
Group has also shifted its focus towards providing virtual events
via online platforms for clients. The impact of the COVID-19
pandemic on social distancing and international travel may be
long-lasting, and the Group has successfully moved towards
providing virtual events, delivering several virtual events post
year end for both existing and new clients, with more in the
pipeline, as well as launching a new online platform which can be
used by clients to host their virtual events.
The Group has also expanded its operations by launching a new US
subsidiary, Cheerful Twentyfirst Inc. The Group has delivered
several events for US based clients and UK based clients with US
based subsidiaries. The opening of a US subsidiary offers the
Group's US based clients and new potential US clients the
opportunity to work with a company that operates in the same time
zone and can therefore provide an improved service and uses the
same currency. The opening of a new office in the US is already
proving successful with several new briefs received from US based
clients since the launch post year end.
After reviewing the Group's detailed forecasts for the next
financial year, other medium term plans and considering the risks
outlined in note 26, 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's financial statements have been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union, and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The following new standards, amendments to standards and
interpretations have been applied for the first time from 1 July
2019. Their adoption has not had a material impact on the financial
statements:
-- IFRS 9 'Financial Instruments', effective 1 January 2019;
-- Annual Improvements to IFRS Standards 2015 - 2017 Cycle (effective 1 January 2019);
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39
and IFRS 7) (effective 1 January 2020);
-- COVID-19-Related Rent Concessions (Amendment to IFRS 16) (Effective 1 June 2020).
The following new standards, amendments to standards and
interpretations have been applied for the first time from 1 July
2019 and their adoption have had a material impact on the financial
statements:
-- IFRS 16 'Leases', effective 1 January 2019 (see page 33 for more details).
Future standards in place but not yet effective
No new standards, amendments or interpretations to existing
standards that have been published and that are mandatory for the
Company's accounting periods beginning on or after 1 July 2020 have
been adopted early.
The following standards and amendments are not yet applied at
the date of authorisation of these financial statements:
-- Definition of Material (Amendments to IAS 1 and IAS 8) (effective 1 January 2020); and
-- Definition of a Business (Amendments to IFRS 3) (effective 1 January 2020).
The Group does not believe that there would have been a material
impact on the financial statements from early adoption of these
standards / interpretations.
Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 30 June 2020.
Subsidiaries are all entities (including structured entities) over
which the Group has control. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They
are consolidated until the date that control ceases.
Intra-group transactions, balances and unrealised gains and
losses on transactions between group companies are eliminated.
The merger reserve is used where more than 90% of the shares in
a subsidiary are acquired and the consideration includes the issue
of new shares by the Company, thereby attracting merger relief
under the Companies Act 2006.
Revenue
Revenue represents amounts (excluding value added tax) derived
from the provision of services to third party customers in the
course of the Group's ordinary activities.
As a result of providing these services, the Group may from time
to time receive commissions from other third parties. These
commissions are included within revenue on the same basis as that
arising from the contract with the underlying third party
customer.
The revenue and profits recognised in any period are based on
the satisfaction of performance obligations and an assessment of
when control is transferred to the customer.
For most contracts with customers, there is a single distinct
performance obligation and revenue is recognised when the event has
taken place or control of the content or video has been transferred
to the customer.
Where a contract contains more than one distinct performance
obligation (multiple film productions, or a project involving both
build construction and event production) revenue is recognised as
each performance obligation is satisfied.
The transaction price is substantially agreed at the outset of
the contract, along with a project brief and payment schedule (full
payment in arrears for smaller contracts; part payment(s) in
advance and final payment in arrears for significant
contracts).
Due to the detailed nature of project briefs agreed in advance
for significant contracts, management do not consider that
significant estimates or judgements are required to distinguish the
performance obligation(s) within a contract.
For contracts to prepare multiple film productions, the
transaction price is allocated to constituent performance
obligations using an output method in line with agreements with the
customer.
For other contracts with multiple performance obligations,
management's judgement is required to allocate the transaction
price for the contract to constituent performance obligations using
an input method using detailed budgets which are prepared at outset
and subsequently revised for actual costs incurred and any changes
to costs expected to be incurred.
The Group does not consider any disaggregation of revenue from
contracts with customers necessary to depict how the nature,
amount, timing and uncertainty of the Group's revenue and cash
flows are affected by economic factors.
Where payments made are greater than the revenue recognised at
the reporting date, the Group recognises deferred income (a
contract liability) for this difference. Where payments made are
less than the revenue recognised at the reporting date, the Group
recognises accrued income (a contract asset) for this
difference.
A receivable is recognised in relation to a contract for amounts
invoiced, as this is the point in time that the consideration is
unconditional because only the passage of time is required before
the payment is due.
At each reporting date, the Group assesses whether there is any
indication that accrued income assets may be impaired by assessing
whether it is possible that a revenue reversal will occur. Where an
indicator of impairment exists, the Group makes a formal estimate
of the asset's recoverable amount. Where the carrying value of an
assets exceeds its recoverable amount, the asset is considered
impaired and is written down to is recoverable amount.
Intangible assets - goodwill
All business combinations are accounted for by applying the
acquisition method. Goodwill acquired represents the excess of the
fair value of the consideration and associated costs over the fair
value of the identifiable net assets acquired.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. At the date of acquisition, the
goodwill is allocated to cash generating units, usually at business
segment level or statutory company level as the case may be, for
the purpose of impairment testing and is tested at least annually
for impairment. On subsequent disposal or termination of a business
acquired, the profit or loss on termination is calculated after
charging the carrying value of any related goodwill.
Intangible assets - other
Intangible assets are stated in the financial statements at cost
less accumulated amortisation and any impairment value.
Amortisation is provided to write off the cost less estimated
residual value of intangible assets over its expected useful life
(which is reviewed at least at each financial year end), as
follows:
Intellectual property 25% straight line
Any gain or loss arising on the derecognition of the asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the Statement of
Comprehensive Income in the year that the asset is
derecognised.
Fully amortised assets still in use are retained in the
financial statements.
Property, plant and equipment
Property, plant and equipment is stated in the financial
statements at cost less accumulated depreciation and any impairment
value. Depreciation is provided to write off the cost less
estimated residual value of property, plant and equipment over its
expected useful life (which is reviewed at least at each financial
year end), as follows:
Leasehold land and buildings Straight line over the life of the
lease (five years)
Fixtures, fittings and equipment Straight line over four years
-------------------------------------
Any gain or loss arising on the derecognition of the asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the Statement of
Comprehensive Income in the year that the asset is
derecognised.
Fully depreciated assets still in use are retained in the
financial statements.
Impairment
The carrying amounts of the Group's assets are reviewed at each
period end to determine whether there is any indication of
impairment. If any such indication exists, the assets' recoverable
amount is estimated. For goodwill and intangible assets that have
an indefinite useful life and intangible assets that are not yet
available for use, the recoverable amount is estimated at each
annual period end date and whenever there is an indication of
impairment.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of
Comprehensive Income in those expense categories consistent with
the function of the impaired asset.
Investments
Fixed asset investments are stated at cost less provision for
diminution in value.
Leases
In the current year, the Group, for the first time, has applied
IFRS 16 Leases. IFRS 16 introduces new or amended requirements with
respect to lease accounting. It introduces significant changes to
the lessee accounting by removing the distinction between operating
and finance leases and requiring the recognition of a right-of-use
asset and a lease liability at the lease commencement for all
leases, except for short-term leases and leases of low value
assets. The impact of the adoption of IFRS 16 on the Company's
financial statements is described below.
The date of initial application of IFRS 16 for the Company is 1
July 2019.
The Company has applied IFRS 16 using the full retrospective
approach, with restatement of the comparative information. The
application of IFRS 16 has resulted in the profit before taxation
for the year ended 30 June 2019 increasing by GBP7,234 to
GBP382,244 (previously GBP375,010). The application of IFRS 16 has
also resulted in the Group's net assets decreasing by GBP2,988 to
GBP1,914,384 (previously GBP1,917,372).
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were
off-balance-sheet.
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.
Exceptional items
Exceptional items are one off, material items outside the normal
course of business which are not related to the Group's trading
activities.
Significant judgements and estimates
The preparation of the Group's financial statements in
conforming with IFRS required management to make judgements,
estimates and assumptions that effect the application of policies
and reported amounts in the financial statements. These judgements
and estimates are based on management's best knowledge of the
relevant facts and circumstances. Information about such judgements
and estimation is contained in the accounting policies and / or
notes to the financial statements. There are no critical judgements
that the directors have made in the process of applying the Group's
accounting policies.
2 Revenue and segment information
The Group uses several factors in identifying and analysing
reportable segments, including the basis of organisation, such as
differences in products and geographical areas. The Board of
directors, being the Chief Operating Decision Makers, have
determined that for the year ending 30 June 2020 there is only a
single reportable segment.
All revenue represents sales to external customers. Four
customers (2019: five) are defined as major customers by revenue,
contributing more than 10% of the Group revenue.
2020 2019
GBP GBP
---------- ----------
Customer One 1,336,172 -
Customer Two 841,905 905,578
Customer Three 701,353 -
Customer Four 585,636 951,189
Major customers in the current year 3,465,066 1,856,767
Major customers in prior year 2,916,027
----------
4,772,794
---------- ----------
The geographical analysis of revenue from continuing operations
by geographical location of customer is as follows:
Geographical
market 2020 2019 2020 2019 2020 2019 2020 2019
Rest Rest
of the of the
UK UK Europe Europe World World Total Total
GBP GBP GBP GBP GBP GBP GBP GBP
Revenue 5,255,473 6,693,163 71,424 61,764 148,528 10,353 5,475,425 6,765,280
2020 2019
GBP GBP
--------------------------------------- ------------
Revenue from contracts with customers 5,420,350 6,696,305
Other revenue 55,075 68,975
Total revenue 5,475,425 6,765,280
--------------------------------------- ------------
Contract assets and liabilities from contracts with customers
have been recognised as follows:
2020 2019
GBP GBP
--------
Deferred income 293,281 333,305
Accrued income 49,890 245,989
-------- --------
Deferred income at the beginning of the period has been
recognised as revenue during the period.
3 Other income
Other income 2020 2019
GBP GBP
-------------------------------------------- -----
Coronavirus job retention scheme government
grant 82,601 -
-------------------------------------------- -----
During the year the Group received government grants under the
UK government's coronavirus job retention scheme.
4 Operating profit
Operating profit is stated after charging
or crediting: 2020 2019
GBP GBP
-------------------------------------------------- ----------
Cost of sales
Depreciation of fixtures, fittings and equipment 31,871 21,525
Amortisation of intangible assets 417 -
Administrative expenses
Depreciation of right-of-use assets 89,392 80,915
(Profit) / loss on foreign exchange differences (726) 9,229
Fees payable to the Company's auditor in respect
of:
Audit of the Company's annual accounts 6,000 6,000
Audit of the Company's subsidiaries 19,000 17,000
Interest on lease liabilities 20,253 2,850
Staff costs (see note 22) 1,570,373 1,221,559
---------- ----------
5 Exceptional items
Items that are material either because of their size or their
nature, or that are non-recurring, are considered as exceptional.
During the year, the Group incurred expenditure totalling GBP23,184
(2019: GBPnil) related to the acquisition of Eventful Limited. This
cost has been included in the consolidated Statement of
Comprehensive Income as an operating exceptional cost.
6 Finance income
Finance income 2020 2019
GBP GBP
------------------------ -----
Bank interest received 556 611
------------------------ -----
7 Taxation
2020 2019
GBP GBP
---------------------------------------------------- --------
The tax charge comprises:
Current tax
Prior period adjustment - 2,288
Current year (5,357) 74,616
--------
(5,357) 76,904
Deferred tax (see note 8)
Current year (15,140) 9,783
--------
(15,140) 9,783
Total tax charge in the statement of comprehensive
income (20,497) 86,687
Factors affecting the tax charge for the
year
Profit / (loss) on ordinary activities before
taxation from continuing operations (217,924) 382,244
Profit / (loss) on ordinary activities before
taxation multiplied by standard rate
of UK corporation tax of 19% (2019: 19%) (41,406) 72,626
Effects of:
Non-deductible expenses 20,909 11,773
Prior period adjustment - 2,288
20,909 14,061
Total tax charge (20,497) 86,687
---------------------------------------------------- --------
The Group has estimated losses of GBP375,762 (2019: GBP375,762)
available to carry forward against future trading profits. These
losses are in Aeorema Communications plc which is not currently
making taxable profits as all trading is undertaken by its
subsidiaries Aeorema Limited and Eventful Limited, therefore no
deferred tax asset has been recognised in respect of this
amount.
8 Deferred taxation
2020 2019
GBP GBP
----------------------------------------------- --------
Property, plant and equipment temporary
differences (13,978) (8,555)
Temporary differences (8,664) 1,026
Tax losses 30,253 -
--------
7,611 (7,529)
At 1 July (7,529) 2,254
Transfer to Statement of Comprehensive Income 15,140 (9,783)
At 30 June 7,611 (7,529)
----------------------------------------------- --------
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.
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. In view of the group loss for the year,
options to subscribe for ordinary shares in the company are
anti-dilutive and therefore diluted earnings per share information
is not presented.
The following reflects the income and share data used and
dilutive earnings per share computations:
2020 2019
GBP GBP
----------- -----------
Basic earnings per share
(Loss) / profit for the year attributable
to owners of the Company (197,427) 295,557
Basic weighted average number of
shares 9,101,356 9,050,500
Dilutive potential ordinary shares:
Employee share options 1,020,000 1,020,000
Diluted weighted average number of
shares 10,121,356 10,070,500
----------- -----------
11 Intangible fixed assets
Intellectual
Group Goodwill Property Total
GBP GBP GBP
-------------------------------- -------------
Cost
At 30 June 2018 2,728,292 - 2,728,292
At 30 June 2019 2,728,292 - 2,728,292
Acquisitions 199,194 10,000 209,194
At 30 June 2020 2,927,486 10,000 2,937,486
Impairments and amortisation
At 30 June 2018 2,363,138 - 2,363,138
At 30 June 2019 2,363,138 - 2,363,138
Charge for the year - 417 417
At 30 June 2020 2,363,138 417 2,363,555
Net book value
At 30 June 2018 365,154 - 365,154
At 30 June 2019 365,154 - 365,154
At 30 June 2020 564,348 9,583 573,931
---------- ------------- ----------
Goodwill arose for the Group on consolidation of its
subsidiaries, Aeorema Limited and Eventful Limited.
During the year the Company acquired 100% shareholding in
Eventful Limited. The goodwill on acquisition is formed as
follows;
GBP
---------
Assets acquired 91,036
Cash 225,111
Liabilities (35,649)
Total acquired 280,498
Cash consideration 353,442
Share issue consideration 26,250
Contingent consideration 100,000
Total consideration 479,692
Goodwill 199,194
---------
The Company incurred costs associated with the acquisition of
Eventful Limited of GBP23,184. These costs included legal and
professional fees and stamp duty. These costs have been included in
the consolidated Statement of Comprehensive Income as an operating
exceptional cost (see note 5).
For the period post-acquisition Eventful Limited had revenue of
GBP53,517 and a profit before taxation of GBP11,223. For the year
ended 30 June 2020 Eventful Limited had revenue of GBP255,688 and a
profit before taxation of GBP64,686.
Impairment - Aeorema Limited and Eventful Limited
Goodwill has been tested for impairment based on its future
value in use resulting in the carrying value above. The future
value has been calculated on a discounted cash flow basis using the
2020-21 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 revenue will return
to pre-COVID-19 levels for the year ended 30 June 2022 and future
growth will be 2% for venue sourcing activities and 5% for event
and moving image production activities. Using these assumptions,
which are based on past experience and future expectations, there
was no impairment in the year.
12 Property, plant and equipment
Leasehold
Group land Fixtures, fittings Total
and buildings and equipment
GBP GBP GBP
--------------------------- -------------------
Cost
At 30 June 2018 58,536 119,030 177,566
Additions - 48,731 48,731
Disposals - (29,112) (29,112)
At 30 June 2019 58,536 138,649 197,185
Additions - 59,591 59,591
Acquisition of subsidiary - 1,809 1,809
Disposals - (26,867) (26,867)
At 30 June 2020 58,536 173,182 231,718
Depreciation
At 30 June 2018 58,536 81,986 140,522
Charge for the year - 21,525 21,525
Eliminated on disposal - (22,933) (22,933)
At 30 June 2019 58,536 80,578 139,114
Charge for the year - 31,871 31,871
Eliminated on disposal - (25,219) (25,219)
At 30 June 2020 58,536 87,230 145,766
Net book value
At 30 June 2018 - 37,044 37,044
At 30 June 2019 - 58,071 58,071
At 30 June 2020 - 85,952 85,952
-------------- ------------------- ---------
13 Right-of-use assets
Group Leasehold
GBP
----------
Cost
At 30 June 2018 404,574
At 30 June 2019 404,574
Additions 455,436
Disposals (404,574)
At 30 June 2020 455,436
Depreciation
At 30 June 2018 310,173
Charge for the year 80,915
At 30 June 2019 391,088
Charge for the year 89,392
Eliminated on disposal (404,574)
At 30 June 2020 75,906
Net book value
At 30 June 2018 94,401
At 30 June 2019 13,486
At 30 June 2020 379,530
----------
14 Non-current assets - Investments
Company Shares in subsidiary
GBP
---------------------
Cost
At 30 June 2018 3,274,703
Increase in respect of share-based
payments 34,261
At 30 June 2019 3,308,964
Increase in respect of share-based
payments 47,097
Acquisition of subsidiary 479,692
At 30 June 2020 3,835,753
Provision
At 30 June 2018 2,694,213
At 30 June 2019 2,694,213
At 30 June 2020 2,694,213
Net book value
At 30 June 2018 580,490
At 30 June 2019 614,751
At 30 June 2020 1,141,540
---------------------
Holdings of more than 20%
The Company holds more than 20% of the share capital of the
following companies:
Shares
Subsidiary undertakings Country of held
registration
---------- ----
or incorporation Class %
------------------ ---------- ----
England and
Aeorema Limited Wales Ordinary 100
England and
Eventful Limited Wales Ordinary 100
England and
Twentyfirst Limited (Dormant) Wales Ordinary 100
------------------ ---------- ----
The registered address of Aeorema Limited, Eventful Limited and
Twentyfirst Limited is 64 New Cavendish Street, London, W1G
8TB.
15 Trade and other receivables
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
---------- --------
Trade receivables 306,198 1,156,689 - -
Related party receivables - - 641,134 960,063
Other receivables 76,112 38,280 5,002 4,910
Prepayments and accrued income 215,187 417,376 11,850 12,454
597,497 1,612,345 657,986 977,427
-------- ---------- --------
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.
At the year end, trade receivables of GBP157,239 (2019:
GBP32,616) were past due but not impaired. These amounts are still
considered recoverable. The ageing of these trade receivables is as
follows:
Group
2020 2019
GBP GBP
-------
Less than 90 days overdue 33,712 9,339
More than 90 days overdue 123,527 23,277
157,239 32,616
-------- -------
16 Cash at bank and in hand
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
---------- ------
Bank balances 1,721,217 2,211,161 11,298 3,606
1,721,217 2,211,161 11,298 3,606
---------- ---------- ------
17 Trade and other payables
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
------------------------------ ---------- -------
Trade payables 209,770 1,258,646 6,001 7,043
Related party payables - - 67,355 67,355
Taxes and social security
costs 381,777 388,869 - -
Other payables 113,582 59,677 100,000 -
Accruals and deferred income 481,541 515,835 17,780 13,999
1,186,670 2,223,027 191,136 88,397
------------------------------ ---------- -------
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 Leases
The balance sheet shows the following amounts relating to
leases:
Group 2020 2019
GBP GBP
---------
Right-of-use assets
Buildings 379,530 13,486
379,530 13,486
---------- ---------
Group 2020 2019
GBP GBP
-------
Lease liabilities
Current 85,070 16,475
Non-current 300,689 -
385,759 16,475
-------- -------
19 Provisions
Leasehold Total
Group dilapidations
GBP GBP
---------------------------------------------- --------
At 1 July 2019 24,186 24,186
Charged to statement of comprehensive income 834 834
At 30 June 2020 25,020 25,020
---------------- --------
Leasehold Total
Group dilapidations
GBP GBP
------------- --------
Current - -
Non-current 25,020 25,020
25,020 25,020
---------------- --------
Leasehold dilapidations relate to the estimated cost of
returning a leasehold property to its original state at the end of
the lease in accordance with the lease terms. The main uncertainty
relates to estimating the cost that will be incurred at the end of
the lease.
20 Share capital
2020 2019
GBP GBP
------------------------------- ----------------
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
GBP
------------------------------- ----------------
At 1 July 2018 9,050,500 1,131,313
At 30 June 2019 9,050,500 1,131,313
At 30 June 2020 9,238,000 1,154,750
------------------------------- ----------------
During the year 187,500 shares were issued as part of the
overall consideration for the acquisition of Eventful Limited.
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
Salary, Salary,
fees, bonuses fees, bonuses
and benefits and benefits
in kind in kind Pensions Pensions Total Total
2020 2019 2020 2019 2020 2019
GBP GBP GBP GBP GBP GBP
--------------- --------------- --------- --------- -------- --------
M Hale 13,333 20,000 - - 13,333 20,000
S Haffner 14,250 15,000 - - 14,250 15,000
R Owen 19,333 20,000 - - 19,333 20,000
S Quah 146,050 122,004 6,469 925 152,519 122,929
A Harvey 112,643 91,352 5,219 1,533 117,862 92,885
305,609 268,356 11,688 2,458 317,297 270,814
--------------- --------------- --------- --------- -------- --------
The remuneration of directors of the Company is set out
below.
The share options held by directors who served during the year
are summarised below:
Exercise Earliest exercise
Name Grant date Number awarded price date Expiry date
25 April 24 April
S Quah 2013 300,000 16.50p 25 April 2016 2023
22 August 17 November 22 August
S Quah 2018 300,000 29.00p 2020 2028
22 August 17 November 22 August
A Harvey 2018 300,000 29.00p 2020 2028
------------ --------------- --------- ------------------ ------------
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
2020 Number 2019 Number 2020 Number 2019 Number
Administration and production 28 21 5 5
------------ ------------ ------------
The aggregate payroll costs of these employees charged in the
Statement of Comprehensive Income was as follows:
Employment costs Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
---------- -------
Wages and salaries 1,333,194 1,068,710 46,917 55,000
Social security costs 159,082 105,471 - -
Pension costs 31,000 13,117 - -
Share-based payments 47,097 34,261 - -
1,570,373 1,221,559 46,917 55,000
---------- ---------- -------
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 Exercise Number of Number of
grant price Exercise period options 2020 options 2019
From To
--------- ------------- ------------- -------------- --------------
25 April 25 April 24 April
2013 16.5p 2016 2023 300,000 300,000
22 August 17 November 22 August
2018 29.0p 2020 2028 600,000 600,000
14 June
2019 26.0p 14 June 2022 14 June 2029 120,000 120,000
1,020,000 1,020,000
--------- ------------- ------------- -------------- --------------
Details of the number of share options and the weighted average
exercise price outstanding during the year are as follows:
Weighted Weighted
Number of average exercise Number of average exercise
options price options price
2020 2020 2019 2019
GBP GBP
---------- ------------------ ---------- ------------------
Outstanding at beginning
of the year 1,200,000 0.25 300,000 0.17
Granted during the
year - - 720,000 0.29
Outstanding at end
of the year 1,020,000 0.25 1,020,000 0.25
---------- ------------------ ---------- ------------------
Exercisable at the
end of the year 300,000 0.17 300,000 0.17
---------- ------------------ ---------- ------------------
The exercise price of options outstanding at the year-end was
GBP0.250 (2019: GBP0.250) and their weighted average contractual
life was 6.6 years (2019: 7.6 years).
Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value as determined at the grant
date of equity-settled share-based payments is expensed on a
straight line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. The estimated fair
value of the options is measured using an option pricing model. The
inputs into the model are as follows:
Grant date 25 April 2013
Model used Black-Scholes
Share price at grant date 16.5p
Exercise price 16.5p
Contractual life 10 years
Risk free rate 0.5%
Expected volatility 104%
Expected dividend rate 0%
Fair value option 14.889p
--------------
22 August
Grant date 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
--------------
The expected volatility is determined by calculating the
historical volatility of the Company's share price over the last
three years. The risk free rate is the official Bank of England
base rate.
The Group recognised the following charges in the Statement of
Comprehensive Income in respect of its share-based payment
plans:
2020 2019
GBP GBP
---------------------------- -------
Share-based payment charge 47,097 34,261
---------------------------- -------
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:
2020 2019
GBP GBP
----------------------------------- --------
Amounts owed by subsidiaries
Total amount owed by subsidiaries 641,134 960,063
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,355
-------- --------
The company received dividends during the year of GBP300,000
(2019: GBP200,000) from its subsidiary, Aeorema Limited. The
company transferred a VAT receivable of GBP22,977 (2019: GBP22,810)
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 GBP27,667 (2019:
GBP40,000).
Aeorema Limited paid expenses totalling GBP503,734 (2019:
GBP121,718) on behalf of Aeorema Communications plc during the
year.
During the year, Aeorema Limited made a net transfer of cash of
GBP110,505 to Aeorema Communications plc (2019: GBP82,879).
The compensation of key management (including directors) of the
Group is as follows:
2020 2019
GBP GBP
------------------------------ --------
Short-term employee benefits 338,293 294,997
Post-employment benefits 11,689 2,458
349,982 297,455
-------- --------
The share options held by directors of the Company are disclosed
in note 21. During the year, a charge of GBP41,556 (2019:
GBP33,761) was recognised in the Consolidated Statement of
Comprehensive Income in respect of these share options.
Harris and Trotter LLP is a firm in which S Haffner is a member.
The amounts charged to the Group for professional services is as
follows:
Harris and Trotter LLP - charged during
the year 2020 2019
GBP GBP
Aeorema Communications plc 14,250 15,000
Aeorema Limited 14,700 11,850
28,950 26,850
------------------------------------------ -------
At the year end, the Group had an outstanding trade payable
balance to Harris and Trotter LLP of GBP5,640 (2019: GBP4,500).
25 Cash flows
Group
2020 2019
GBP GBP
------------ ----------
Cash flows from operating activities
Profit / (loss) before taxation (217,924) 382,244
Depreciation of property, plant and equipment 31,871 21,525
Depreciation of right-of-use assets 89,392 80,915
Amortisation of intangible fixed assets 417 -
Dividends received by the Company - -
Loss on disposal of fixed assets 1,648 6,179
Share-based payment expense 47,097 34,261
Finance income (556) (611)
Interest on lease liabilities 20,253 2,851
(27,802) 527,364
Increase / (decrease) in trade and other
payables (1,075,254) 972,235
(Increase) / decrease in trade and other
receivables 1,014,847 (506,053)
Taxation paid (10,797) (11,700)
Cash generated / (used) from operating
activities (99,006) 981,846
----------------------------------------------- ----------
26 Financial instruments
Financial instruments recognised in the consolidated statement
of financial position
All financial instruments are recognised initially at their fair
value and subsequently measured at amortised cost.
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
---------- ---------- ----------
Financial Assets
Trade and other receivables 432,202 1,487,328 641,134 960,063
Cash and cash equivalents 1,721,217 2,211,161 11,298 3,606
Investments in subsidiaries - - 1,141,540 614,751
Total 2,153,419 3,698,489 1,793,972 1,578,420
Financial Liabilities
Trade and other payables 734,131 1,318,322 173,356 74,398
Accruals 188,260 206,716 17,780 13,999
Total 922,391 1,525,038 191,136 88,397
---------- ---------- ---------- ----------
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 2020 was GBP306,198 (2019:
GBP1,156,689). 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. At the year
end, the credit quality of trade receivables is considered to be
satisfactory.
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
GBP1,367,633 (2019: GBP1,960,169).
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 GBP1,721,217 (2019: GBP2,211,161). 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 GBP1,699,799 (2019:
GBP1,914,384).
27 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal
pension plans. Contributions payable by the Group for the year were
GBP31,000 (2019: GBP13,117). At the end of the reporting period
GBP5,608 (2019: GBP1,605) of contributions were due in respect of
the period.
28 Dividends
On the 12 December 2019 a final dividend of 1 pence per share
(total dividend GBP90,505) was paid to holders of fully paid
ordinary shares.
In respect of the current year, and as a consequence of the
ongoing COVID-19 pandemic, the Board have decided that no final
dividend will be paid to shareholders.
29 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 2020 the
Company had no potential liability under the terms of the
registration.
30 Post balance sheet events
On 1 July 2020 Cheerful Twentyfirst, Inc., a wholly owned
subsidiary of Aeorema Communications plc, was incorporated in the
United States of America.
31 Control
There is no overall controlling party.
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END
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(END) Dow Jones Newswires
October 19, 2020 02:00 ET (06:00 GMT)
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