TIDMAEO
RNS Number : 3067S
Aeorema Communications Plc
15 November 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Regulation 11 of the Market Abuse Regulations (Amendment) (EU
Exit) Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector:
Media
15 November 2021
Aeorema Communications plc ('Aeorema' or '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 2021.
Overview
-- Repositioned the Company into providing virtual online
conferences and events in place of our traditional activities of
live events
-- Experiencing unprecedented demand for bespoke services from a
wide range of major blue chip clients across a range of
industries
-- Revenues of GBP5,094,518 (2020: GBP5,475,425)
-- Loss after taxation of GBP164,926 (2019: loss of GBP197,427)
-- Return to profitability during last 3 months of H2 2021
-- H1 2022 revenues are anticipated to be greater than any prior interim period on record
-- Robust cash position of GBP1.3 million as at the date of this announcement
For further information visit www.aeorema.com or contact:
Aeorema Communications
Mike Hale plc +44 (0)20 7291 0444
John Depasquale /
Liz Kirchner (Corporate
Finance) Allenby Capital Limited
Kelly Gardiner (Sales (Nominated Adviser
and Corporate Broking) and Broker) +44 (0)20 3328 5656
Catherine Leftley/ St Brides Partners info@stbridespartners.co.uk
Selina Lovell Ltd
(Financial PR)
Chairman's Statement
I am truly excited to report on a year of transition which
reflects the way in which your Company has successively navigated
the uncharted waters of COVID-19 and the effective shutdown of
World economies.
In fact, we were one of the industries that was hardest hit.
Clearly, in a Covid-19 world, demand after March 2020 disappeared
as event after event was cancelled. For further information and
analysis about the impact of COVID-19 on the Group during the year
ended 30 June 2021 please see the business review in the Strategic
Report.
As I've previously stated, huge credit goes to our talented team
of specialised executives who took the opportunity early on, in the
void that had been created, to turn their talent inwards and
reposition the Company into providing virtual online conferences
and events in place of our traditional activities of live events.
We also made a strategic shift to providing consultancy services
and engaging with clients at a higher advisory level on their
communications strategies.
As a consequence, I am delighted to report that the success of
this repositioning has meant that we are experiencing unprecedented
demand for our bespoke services from a wide range of major blue
chip clients spread across a diverse range of industries. We have
also taken the opportunity to add talent to our team which has
enhanced our skillset and offering.
A further benefit that flows to us from implementing this
strategy is that we are not affected by the supply chain and
distribution problems and inflationary pressures commonly being
cited on a regular basis by other companies as a reason to issue
profit warnings.
I am greatly encouraged by the development of our virtual online
business coupled with the fact that we should inevitably see
further growth as and when our industry returns to staging live
conferences and events alongside the virtual online offering which
will clearly remain a viable option, now it has been introduced and
in light of a greater drive to reduce carbon emissions as a result
of business travel.
The outlook for the first six months of the new financial year
is very strong. We remain on track to report record revenues for H1
2022, greater than any prior interim period on record, and are
confident of growth in revenues for the full year ending 30 June
2022.
The cash position as at the date of this announcement is GBP1.3
million. As we come out strongly of this challenging period the
board will continue to monitor progress, but at this point it is
too soon to comment on future dividends.
I want to thank our shareholders for their support through the
most difficult period in the Company's history and look forward to
rewarding them for this support.
Mike Hale
Chairman, 12 November 2021
Chief Executive Officer's Report
Successful and enduring growth after a period of change is a
rewarding reflection on the tenacity within our Group. It fills me
with pride to consider the last twelve months, where, despite the
difficulties faced, Aeorema Communications has strategically
developed more than in any previous years.
We have spent the last year cementing and building on our
expertise in multi-format and virtual events. Our foundations in
video communications, alongside raw in-house talent in broadcast
and content production, put us in exceptional stead in the virtual
event environment.
Our growing consultative and strategic approach has also placed
Cheerful Twentyfirst in a leading position to support our client
roster across disciplines. At the intersection of live events, on
demand content and remote audiences, we are in a very strong
position to leverage account growth and multi-service communication
planning into 2022 and onwards.
Our continued commitment to exceptional client service levels
saw Cheerful Twentyfirst adapt to a defined account-led approach
this year. This shift has reinforced client partnerships and made
communications strategy paramount to how we do business.
Our inherent creativity proved once again to be a cut above the
rest. The agency was awarded Creative Team of the Year for the
third year running, an accolade that reflects the calibre of ideas
within our walls and something we continue to invest in. Our
winning card, that same imaginative spark has been a driving force
for year-on-year growth in our moving image, content and creative
divisions.
Internationally, our US team continues to grow in line with
client demand in North America. We now have staff based in New York
City and LA, with both teams expected to continue to grow in
2022.
We were delighted to add a plethora of new clients across
diverse sectors globally including finance, professional services,
advertising, IT, fashion, Fintech, and beverages. Most recently, we
have also added a gaming giant to our client roster. These recent
client wins pay heed to our diversification strategy and shift to
innovative, hybrid solutions tailored to client requirements.
Venue sourcing and luxury events agency Eventful was inevitably
impacted by the restrictions on live events and travel but they
have been successful in cross-selling complementary services across
Group clients. Their successful integration into the business has
delivered a number of new clients, with their order book already
seeing venue bookings and enquiries into next year and onwards. As
confidence in live event formats return, we anticipate this success
to grow proportionally.
Outlook
We are entering a new phase as a global workforce and a pioneer
agency challenging traditional ways of work. Our team will continue
to operate with a flexible approach to remote working, but we see
the office space as our key hub for community, brainstorm and idea
generation, and team engagement. As our headcount ticks over into
the low 50's, we're also investing in a new office space that can
facilitate our team to work at its best.
The momentum generated by hard work, constant innovation and a
tenacity to adapt has seen new green shoots across the Group. The
agency continues to develop as the preferred partner for a growing
roster of global, leading brands.
ESG remains at the heart of how we work. This year, we launched
our first ever CSR (Corporate Social Responsibility) charter,
pledging to enact real change across sustainability, diversity,
ethical practice and industry engagement. We are committing now and
forever to cultivating a culture of understanding and action-driven
impact.
My most sincere thank you to our clients for your trust and
partnership in the last twelve months.
And to our team, you have shown what it looks like to work with
a fire in your heart and a twinkle in your eye. I could not be
prouder of what we are building together.
Steve Quah
CEO, 12 November 2021
Strategic Report
Business review
The results for the year show revenue was GBP5,094,518 (2020:
GBP5,475,425), operating loss pre-exceptional items was GBP188,105
(2020: GBP175,043) and loss before taxation was GBP159,698 (2020:
GBP217,924). The Group had net assets of GBP1,514,980 at the
year-end (restated 2020: GBP1,660,247) and net current assets of
GBP1,019,047 (restated 2020: GBP938,932).
The year ended 30 June 2021 was a year significantly affected by
the COVID-19 pandemic. International lockdowns, restrictions on
national and international travel and social distancing measures
imposed by Governments worldwide meant all live face-to-face events
were either postponed or cancelled. The Group recognised the
potential of virtual events during this period and made the pivot
from producing live events to virtual events. The first few months
proved very challenging, however, with the introduction of the
Group's own virtual event platform, KIT, the Group's industry
leading creative expertise and growing experience of producing and
delivering virtual events the Group experienced an upturn in demand
and revenue.
The Group delivered virtual events for both new and existing
clients. The new clients include those operating across sectors
such as finance, professional services, oil & gas, advertising,
IT, fashion, Fintech, technology and beverages.
During the year the gross profit margin increased to 23%
(restated 2020: 15%) and the gross profit was GBP1,182,142 (2020:
GBP824,176). The increase in the gross profit margin was as a
consequence of the company delivering virtual events rather than
face-to-face events. Virtual events require more in-house time
producing content, including motion graphics, film and design, and
offering strategic consultancy. Face-to-face events usually have
higher levels of direct costs including audio visual, set and stage
which are all third party costs that reduce the margin. During the
year the Group also received cancellation fees totalling GBP262,035
from a global media company in respect of the MIPCOM event held
annually in October in Cannes.
Growing demand from both new and existing clients combined with
the labour intensive nature of virtual events meant the Group hired
on average 9 more employees compared with the previous year. These
roles largely included project/production managers, project
co-ordinators, designers (including digital) and digital solutions
managers to ensure the Group continued to successfully deliver high
quality events.
Eventful Limited was significantly affected by the impact of the
COVID-19 pandemic throughout the year. Eventful Limited's core
business operates within the hospitality and travel industry,
offering venue sourcing and travel incentive services. The company
struggled to generate demand while restrictions remained in place.
As restrictions in the UK began to ease and the economy reopened in
the latter months of the financial year the company experienced an
increase in client enquiries for venues post year end.
Cheerful Twentyfirst, Inc. was formed on 1 July 2020 and became
a 100% owned subsidiary of Aeorema Communications plc. The Board
were keen for the Group to have a presence in the United States and
the creation of a New York based subsidiary provided the perfect
opportunity to expand the Group's operations in a new and exciting
market. The company had a very successful first year of trading,
producing virtual events and films for several new and existing
clients in the United States, growing its headcount and moving into
a new office shortly after the year end.
The Group has used the support provided by the UK government,
including the Coronavirus job retention scheme, tax deferrals and
the Coronavirus business interruption loan scheme to maintain a
strong cash position despite the impact of COVID-19 on the business
during the financial year. Despite the new clients and virtual
events the Group has won, the challenges created by the social and
economic impact of COVID-19 remain severe. The Board recognises the
challenges facing the Group, and is actively monitoring the
situation on a daily basis and is prepared to reduce overheads
should this become necessary.
Key performance indicators
Year 2021 2020 2019 2018
GBP GBP GBP GBP
---------- ---------- ---------- ----------
Revenue 5,094,518 5,475,425 6,765,280 4,820,167
---------- ---------- ---------- ----------
Operating (loss) / profit
pre-exceptional items (188,105) (175,043) 384,483 299,735
---------- ---------- ---------- ----------
(Loss) / profit before
taxation (159,698) (217,924) 382,244 61,629
---------- ---------- ---------- ----------
The Group experienced a 7% decrease in revenue during the year.
The Group produced two large events in January 2020 prior to the
onset of the COVID-19 pandemic. These two events had a significant
impact on revenue in the prior year. Due to COVID-19 no events on a
similar scale were held in the year ended 30 June 2021. Although
demand steadily increased throughout the financial year, including
the delivery of large events in May and June, these could not
replace the revenue lost as a consequence of the COVID-19
pandemic.
Event revenue decreased by 16% in comparison with the previous
year. This was due to the factors mentioned above. The decrease in
Aeorema Limited was 22%, however, this fall in revenue was offset
by the growth in Cheerful Twentyfirst, Inc.
Film revenue grew by 64% in comparison with the previous year.
This growth was largely due to the higher amount of film and motion
graphics content that is required to produce and deliver virtual
events compared with live face-to-face events and the film content
produced by Cheerful Twentyfirst, Inc. The growth was 45% in
Aeorema Limited compared with the previous year.
Eventful Limited experienced a 92% decrease in revenue during
the year, compared with the previous 15 month period. The fall in
revenue was a consequence of the COVID-19 pandemic and the
subsequent impact on the hospitality and travel industry.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Notes 2021 2020
GBP GBP
As restated
--------------------------------------------- ------ ------------
Continuing operations
Revenue 2 5,094,518 5,475,425
Cost of sales (3,912,376) (4,651,249)
--------------------------------------------- ------ ------------
Gross profit 1,182,142 824,176
Other income 3 61,651 82,601
Administrative expenses (1,431,898) (1,081,820)
------ ------------ ------------
Operating (loss) / profit pre-exceptional
items 4 (188,105) (175,043)
--------------------------------------------- ------ ------------
Exceptional income 50,000 -
Exceptional costs 5 - (23,184)
--------------------------------------------- ------ ------------
Operating (loss) / profit post
exceptional items (138,105) (198,227)
--------------------------------------------- ------ ------------
Finance income 6 489 556
Finance costs 7 (22,082) (20,253)
--------------------------------------------- ------ ------------
(Loss) / profit before taxation (159,698) (217,924)
Taxation 8 (5,228) 20,497
------ ------------ ------------
(Loss) / profit for the year (164,926) (197,427)
Other comprehensive income
Items that may be reclassified
to profit of loss
Exchange differences on translation
of foreign entities (11,044) -
Other comprehensive income for
the year (11,044) -
Total comprehensive income for
the year attributable to owners
of the parent (175,970) (197,427)
(Loss) / profit per ordinary share:
Total basic earnings per share 11 (1.78529)p (2.16920)p
Total diluted earnings per share 11 (1.78529)p (2.16920)p
--------------------------------------------- ------ ------------
The notes are an integral part of these financial
statements.
Statement of Financial Position
As at 30 June 2021
Notes Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
As restated
Non-current assets
Intangible assets 12 571,431 573,931 - -
Property, plant and equipment 13 103,477 85,952 - -
Right-of-use assets 14 18,995 379,530 - -
Investments in subsidiaries 15 - - 1,172,253 1,141,540
Deferred taxation - 7,611 30,253 30,253
------------ ------------- ---------- ----------
Total non-current assets 693,903 1,047,024 1,202,506 1,171,793
Current assets
Trade and other receivables 16 1,429,064 597,497 532,875 657,986
Cash and cash equivalents 17 1,101,713 1,721,217 5,844 11,298
Current tax receivable 10,758 - - -
------------ ---------- ----------
Total current assets 2,541,535 2,318,714 538,719 669,284
------------ ---------- ----------
Total assets 3,235,438 3,365,738 1,741,225 1,841,077
Current liabilities
Trade and other payables 18 (1,417,467) (1,226,222) (139,760) (191,136)
Bank loans 19 (54,089) - -
Lease liabilities 20 (25,912) (85,070) - -
Current tax payable - (68,490) - -
Provisions 21 (25,020) - - -
------------ ------------- ---------- ----------
Total current liabilities (1,522,488) (1,379,782) (139,760) (191,136)
Non-current liabilities
Bank loans 19 (195,911) - - -
Lease liabilities 20 - (300,689) - -
Deferred taxation 9 (2,059) - - -
Provisions 21 - (25,020) - -
------------ ------------- ---------- ----------
Total non-current liabilities (197,970) (325,709) - -
------------ ------------- ---------- ----------
Total liabilities (1,720,458) (1,705,491) (139,760) -
Net assets 1,514,980 1,660,247 1,601,465 1,649,941
Equity
Share capital 22 1,154,750 1,154,750 1,154,750 1,154,750
Share premium 9,876 9,876 9,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 112,061 81,358 112,061 81,358
Capital redemption reserve 257,812 257,812 257,812 257,812
Retained earnings (36,169) 139,801 50,316 129,495
------ ------------ ------------- ---------- ----------
Equity attributable to
owners of the parent 1,514,980 1,660,247 1,601,465 1,649,941
------ ------------ ------------- ---------- ----------
The notes are an integral part of these financial
statements.
The loss for the financial year of the holding company was
GBP79,179 (2020: GBP159,712 profit).
The financial statements were approved and authorised by the
board of directors on 12 November 2021 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 2021
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
2019 1,131,313 7,063 16,650 34,261 257,812 439,414 1,886,513
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
Prior year
adjustment - - - - - (11,681) (11,681)
At 30 June
2020 1,154,750 9,876 16,650 81,358 257,812 139,801 1,660,247
Comprehensive
income for
the year, net
of tax - - - - - (175,970) (175,970)
Dividends paid - - - - - - -
Share-based
payment - - - 30,703 - - 30,703
At 30 June
2021 1,154,750 9,876 16,650 112,061 257,812 (36,169) 1,514,980
-----------------
Share premium represents the value of shares issued in excess of
their list price.
In accordance with section 612 of the Companies Act 2006, the
premium on ordinary shares issued in relation to acquisitions is
recorded as a merger reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee
remuneration, as detailed in note 25.
Capital redemption reserve represents a statutory
non-distributable reserve into which amounts are transferred
following redemption or purchase of a company's own shares.
The notes are an integral part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Notes Group
2021 2020
GBP GBP
------ ---------- ----------
Net cash flow from operating activities 27 (708,814) (99,006)
Cash flows from investing activities
Payment for Acquisition of Subsidiary,
net of cash acquired - (128,331)
Finance income 6 489 556
Purchase of intangible assets 12 - (10,000)
Purchase of property, plant and equipment 13 (59,179) (61,400)
Repayment of leasing liabilities (102,000) (101,258)
Cash (used) / generated in investing
activities (160,690) (300,433)
Cash flows from financing activities
Dividends paid to owners of the Company - (90,505)
Proceeds from borrowings 250,000 -
---------- ----------
Cash used in financing activities 250,000 (90,505)
Net (decrease) / increase in cash
and cash equivalents (619,504) (489,944)
Cash and cash equivalents at beginning
of year 1,721,217 2,211,161
---------- ----------
Cash and cash equivalents at end
of year 1,101,713 1,721,217
------------------------------------------- ---------- ----------
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
2021 2020 2021 2020
GBP GBP GBP GBP
------ ---------- ---------- ------ -------
Cash and cash equivalents 17 1,101,713 1,721,217 5,844 11,298
1,101,713 1,721,217 5,844 11,298
---------------------------
The notes are an integral part of these financial
statements.
Notes to the consolidated financial statements
For the year ended 30 June 2021
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.
International lockdowns, disruption to international travel and
social distancing measures all meant that no face-to-face events
could take place during the year. Aeorema Limited and Cheerful
Twentyfirst, Inc. adapted successfully and produced virtual events
for both existing and new clients throughout the year. Due to the
nature of virtual events Aeorema Limited and Cheerful Twentyfirst,
Inc. increased their staff numbers to help deliver the events. The
moving image department experienced growing demand and continued
producing eye-catching films and content for both stand-alone
projects and virtual events.
Eventful Limited was severely impacted by the pandemic. The
company, unlike Aeorema Limited and Cheerful Twentyfirst, Inc. was
not in a position to pivot towards virtual offerings due to the
nature of its business. The hospitality and travel industry as a
whole was affected and Eventful Limited experienced a sharp decline
in demand for its services. The reduction in COVID-19 restrictions
in the latter months of the year ended 30 June 2021 led to Eventful
Limited receiving a steady increase in enquiries for venue sourcing
and incentive travel services. This increase has continued post
year end.
The Group continued to utilise the Coronavirus job retention
scheme during the year, furloughing several employees (see note 3).
The Group arranged payment plans with HMRC on a number of
outstanding tax liabilities and obtained a Coronavirus Business
Interruption Loan of GBP250,000 (see note 19) to manage the Group's
working capital and cash reserves.
After reviewing the Group's detailed forecasts for the next
financial year, other medium term plans and considering the risks
outlined in note 28, the Directors, at the time of approving the
financial statements, have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future and have therefore used the going concern basis
in preparing the financial statements.
Basis of Preparation
The Group and company financial statements have been prepared
under the historical cost convention and in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
The following new standards, amendments to standards and
interpretations have been applied for the first time from 1 July
2020. Their adoption has not had a material impact on the 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).
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 2021 have
been adopted early.
The following standards and amendments are not yet applied at
the date of authorisation of these financial statements:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
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 2021.
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 applying IFRS 16, for all leases (except as noted below), the
Group:
a) recognises right-of-use assets and lease liabilities in the
statement of financial position, initially measured at the present
value of future lease payments;
b) recognises depreciation of right-of-use assets and interest
on lease liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within operating activities) in the statement of cash
flows.
Lease incentives (e.g. free rent period) are recognised as part
of the measurement of the right-of-use assets and lease liabilities
whereas under IAS 17 they resulted in the recognition of a lease
incentive liability, amortised as a reduction of rental expense on
a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in
accordance with IAS 36 Impairment of Assets. This replaces the
previous requirement to recognise a provision for onerous lease
contracts.
For short--term leases (lease term of 12 months or less) and
leases of low-value assets (such as photocopiers), the Group has
opted to recognise a lease expense on a straight-line basis as
permitted by IFRS 16. This expense is presented within
administrative expenses in the consolidated statement of
comprehensive income.
Trade and other receivables
Trade and other receivables are stated initially at fair value
and subsequently measured at amortised cost less any provision for
impairment.
Trade and other payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows,
cash in hand and deposits payable on demand. Cash equivalents are
short-term highly liquid investments that are readily convertible
to known amounts of cash and that are subject to an insignificant
risk of changes in value. Cash equivalents normally have a date of
maturity of 3 months or less from the acquisition date.
Bank loans and overdrafts comprise amounts due on demand.
Finance income
Finance income consists of interest receivable on funds
invested. It is recognised in the Statement of Comprehensive Income
as it accrues.
Taxation
Income tax on the profit or loss for the periods presented
comprises current and deferred tax. Current tax is the expected tax
payable on the taxable income for the year, using rates enacted or
substantively enacted at the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination; the differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the end of the reporting period.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets and
liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also
makes contributions to the private pension arrangements of certain
employees. These arrangements are of the money purchase type and
the amount charged to the Statement of Comprehensive Income
represents the contributions payable by the Group for the
period.
Financial instruments
The Group does not enter into derivative transactions and does
not trade in financial instruments. Financial assets and
liabilities are recognised on the Statement of Financial Position
when the Group becomes a party to the contractual provision of the
instrument.
Equity
An equity instrument is a contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs. The Group's equity instruments
comprise 'share capital' in the Statement of Financial
Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into sterling at the rates of exchange
ruling at the end of the reporting period. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are taken to the Statement of
Comprehensive Income.
Government grants
Government grants are recognised based on the accrual model and
are measured at the fair value of the asset received or receivable.
Grants are classified as relating either to revenue or to assets.
Grants relating to revenue are recognised in income over the period
in which the related costs are recognised. Grants relating to
assets are recognised over the expected useful life of the asset.
Where part of a grant relating to an asset is deferred, it is
recognised as deferred income.
Share-based awards
The Group issues equity settled payments to certain employees.
Equity settled share based payments are measured at fair value
(excluding the effect of non-market based vesting conditions) at
the date of grant.
The fair value is estimated using option pricing models and is
dependent on factors such as the exercise price, expected
volatility, option price and risk free interest rate. The fair
value is then amortised through the Statement of Comprehensive
Income on a straight-line basis over the vesting period. Expected
volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 25
to the financial statements.
Reclassification of wages
The Board of Directors have determined that due to the change in
the business towards more labour intensive virtual events, it is
appropriate to reallocate wages directly associated with the
production of events and films from administrative expenses to cost
of sales. The previous year's comparative figures have been
restated.
Holiday pay accrual
A holiday pay accrual has been recognised for the first time due
to the increase in staff costs, the impact of the COVID-19 pandemic
and the subsequent shift by employees taking more annual leave post
year end. A prior year adjustment totalling GBP39,552 has been made
to recognise holiday pay accruals not included in prior periods. An
adjustment of GBP27,871 has been made for the year ended 30 June
2019 and an adjustment of GBP11,681 has been made in the year
ending 30 June 2020. The retained earnings brought forward at 30
June 2019 have been restated to be GBP439,414 (previously
GBP467,285) and the retained earning brought forward at 30 June
2020 have been restated to be GBP139,801 (previously GBP179,353).
This adjustment can be seen in the Consolidated Statement of
Changes in Equity.
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 2021 there is only a
single reportable segment.
All revenue represents sales to external customers. Three
customers (2020: four) are defined as major customers by revenue,
contributing more than 10% of the Group revenue.
2021 2020
GBP GBP
---------- ----------
Customer One 1,211,409 -
Customer Two 738,320 585,636
Customer Three 468,026 276,386
Major customers in the current year 2,417,755 862,022
Major customers in prior year 2,879,430
----------
3,741,452
---------- ----------
The geographical analysis of revenue from continuing operations
by geographical location of customer is as follows:
Geographical
market 2021 2020 2021 2020 2021 2020 2021 2020
Rest Rest
of the of the
UK UK USA USA World World Total Total
GBP GBP GBP GBP GBP GBP GBP GBP
Revenue 3,907,873 5,255,473 1,055,096 143,515 131,549 76,437 5,094,518 5,475,425
2021 2020
GBP GBP
------------------------------------------------ ------------
Revenue from contracts with customers - Events 3,917,481 4,704,730
Revenue from contracts with customers - Film 1,177,037 715,620
Other revenue - 55,075
Total revenue 5,094,518 5,475,425
------------------------------------------------ ------------
Contract assets and liabilities from contracts with customers
have been recognised as follows:
2021 2020
GBP GBP
--------
Deferred income 384,598 293,281
Accrued income 169,955 49,890
-------- --------
Deferred income at the beginning of the period has been
recognised as revenue during the period.
3 Other income
Other income 2021 2020
GBP GBP
--------------------------------------------- -------
Coronavirus job retention scheme government
grant 56,501 82,601
Business interruption payment grant 5,150 -
61,651 82,601
--------------------------------------------- -------
During the year the Group received government grants under the
UK government's coronavirus job retention scheme and the
coronavirus business interruption loan scheme.
4 Operating profit
Operating profit is stated after charging
or crediting: 2021 2020
GBP GBP
-------------------------------------------------- ----------
Cost of sales
Depreciation of fixtures, fittings and equipment 40,885 31,871
Amortisation of intangible assets 2,500 417
Administrative expenses
Depreciation of right-of-use assets 91,092 89,392
(Profit) / loss on foreign exchange differences 13,401 (726)
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 20,622 19,000
Interest on lease liabilities 16,932 20,253
Staff costs (see note 24) 2,125,189 1,570,373
---------- ----------
5 Exceptional items
Items that are material either because of their size or their
nature, or that are non-recurring, are considered as exceptional.
The exceptional income totalling GBP50,000 included in the
consolidated Statement of Comprehensive Income relates to the
contingent consideration totalling GBP100,000 which forms part of
the overall consideration for Eventful Limited in the previous
year. Eventful Limited failed to meet the target set in the
purchase agreement for the year ending 30 June 2021 and therefore
the contingent consideration related to the year ended 30 June 2021
has been moved to the consolidated Statement of Comprehensive
Income as exceptional income. The remaining contingent
consideration totalling GBP50,000 is included in the Statement of
Financial Position.
6 Finance income
Finance income 2021 2020
GBP GBP
------------------------ -----
Bank interest received 489 556
------------------------ -----
7 Finance costs
Finance costs 2021 2020
GBP GBP
------------------------------------------------- -------
Coronavirus business interruption loan interest 5,150 -
Lease interest 16,932 20,253
22,082 20,253
------------------------------------------------- -------
8 Taxation
2021 2020
GBP GBP
---------------------------------------------------- ----------
The tax charge comprises:
Current tax
Current year (4,442) (5,357)
----------
(4,442) (5,357)
Deferred tax (see note 9)
Current year 9,670 (15,140)
----------
9,670 (15,140)
Total tax charge in the statement of comprehensive
income 5,228 (20,497)
Factors affecting the tax charge for the
year
Profit / (loss) on ordinary activities before
taxation from continuing operations (159,698) (217,924)
Profit / (loss) on ordinary activities before
taxation multiplied by standard rate
of UK corporation tax of 19% (2020: 19%) (30,343) (41,406)
Effects of:
Non-deductible expenses 15,021 20,909
Tax on foreign subsidiaries 20,550 -
35,571 20,909
Total tax charge 5,228 (20,497)
---------------------------------------------------- ----------
The Group has estimated losses of GBP526,350 (2020: GBP375,762)
available to carry forward against future trading profits. Losses
totalling GBP476,152 are in Aeorema Communications plc which is not
currently making taxable profits, as all trading is undertaken by
its subsidiaries Aeorema Limited, Eventful Limited and Cheerful
Twentyfirst, Inc., therefore no deferred tax asset has been
recognised in respect of this amount.
9 Deferred taxation
2021 2020
GBP GBP
----------------------------------------------- ---------
Property, plant and equipment temporary
differences (16,826) (13,978)
Temporary differences (25,023) (8,664)
Tax losses 39,790 30,253
---------
(2,059) 7,611
At 1 July 7,611 (7,529)
Transfer to Statement of Comprehensive Income (9,670) 15,140
At 30 June (2,059) 7,611
----------------------------------------------- ---------
10 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the
parent Company's Statement of Comprehensive Income has not been
included in these financial statements.
11 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit
or loss attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit
or loss attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would have been
issued on the conversion of all dilutive potential ordinary shares
into ordinary shares. In view of the group loss for the year,
options to subscribe for ordinary shares in the company are
anti-dilutive and therefore diluted earnings per share information
is presented in line with basic earnings per share.
The following reflects the income and share data used and
dilutive earnings per share computations:
2021 2020
GBP GBP
----------- -----------
Basic earnings per share
(Loss) / profit for the year attributable
to owners of the Company (164,926) (197,427)
Basic weighted average number of
shares 9,238,000 9,101,356
Dilutive potential ordinary shares:
Employee share options 1,920,000 1,020,000
Diluted weighted average number of
shares 11,158,000 10,121,356
----------- -----------
12 Intangible fixed assets
Intellectual
Group Goodwill Property Total
GBP GBP GBP
-------------------------------- -------------
Cost
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
At 30 June 2021 2,927,486 10,000 2,937,486
Impairments and amortisation
At 30 June 2019 2,363,138 - 2,363,138
Charge for the year - 417 -
At 30 June 2020 2,363,138 417 2,363,555
Charge for the year - 2,500 2,500
At 30 June 2021 2,363,138 2,917 2,366,055
Net book value
At 30 June 2019 365,154 - 365,154
At 30 June 2020 564,348 9,583 573,931
At 30 June 2021 564,348 7,083 571,431
---------- ------------- ----------
Goodwill arose for the Group on consolidation of its
subsidiaries, Aeorema Limited and Eventful Limited.
Impairment - Aeorema Limited and Eventful Limited
Goodwill arises on acquisition of a business combination and
represents the difference between the fair value of the
consideration paid and the aggregate fair value of identifiable
assets and liabilities acquired. Goodwill is tested annually for
impairment, goodwill is impaired when the value in use exceeds the
net asset value of the group's cash generating units (CGUs).The
CGUs represent Aeorema Limited and Eventful Limited, being the
lowest level within the group at which goodwill is monitored for
internal management purposes.
The value in use has been calculated on a discounted cash flow
basis using the 2021-22 budgeted figures as approved by the Board
of directors, extended in perpetuity to calculate the terminal
value and discounted at a rate of 10%. It is assumed that future
growth will be 3% for venue sourcing activities and 2.50% 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.
13 Property, plant and equipment
Leasehold
Group land Fixtures, fittings Total
and buildings and equipment
GBP GBP GBP
--------------------------- -------------------
Cost
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
Additions - 59,179 59,179
Disposals - (3,354) (3,354)
At 30 June 2021 58,536 229,007 287,543
Depreciation
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
Charge for the year - 40,885 40,885
Eliminated on disposal - (2,585) (2,585)
At 30 June 2021 58,536 125,530 184,066
Net book value
At 30 June 2019 - 58,071 58,071
At 30 June 2020 - 85,952 85,952
At 30 June 2021 - 103,477 103,477
-------------- ------------------- ---------
14 Right-of-use assets
Group Leasehold
GBP
----------
Cost
At 30 June 2019 404,574
Additions 455,436
Disposals (404,574)
At 30 June 2020 455,436
Lease modification adjustment (436,441)
At 30 June 2021 18,995
Depreciation
At 30 June 2019 391,088
Charge for the year 89,392
Eliminated on disposal (404,574)
At 30 June 2020 75,906
Charge for the year 91,092
Lease modification adjustment (166,998)
At 30 June 2021 -
Net book value
At 30 June 2019 13,486
At 30 June 2020 379,530
At 30 June 2021 18,995
----------
The right-of-use asset relates to the Group's leasehold property
at Moray House, 23-31 Great Titchfield Street, London, W1. In March
2021 the Group gave notice to its landlords of its intent to vacate
the premises. Under the terms of the lease agreement the Group is
required to give a minimum of 6 months' notice and therefore the
Group is scheduled to leave the premises on 9 September 2021.
The right-of-use asset was calculated on the assumption that the
Group would remain in the premises for the duration of the 10 year
lease agreement. However, due to the Group's intent to vacate the
premises early and with only just over 2 months remaining on the
lease at the year end the right-of-use asset has been modified.
The valuation of the right of use asset is adjusted at the lease
modification date, and the present value of future lease payments
adjusted for depreciation to the year end. The corresponding lease
liability modification is recognised in note 20.
15 Non-current assets - Investments
Company Shares in subsidiary
GBP
---------------------
Cost
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
Increase in respect of share-based
payments 30,703
Acquisition of subsidiary 10
At 30 June 2021 3,866,466
Provision
At 30 June 2019 2,694,213
At 30 June 2020 2,694,213
At 30 June 2021 2,694,213
Net book value
At 30 June 2019 614,751
At 30 June 2020 1,141,540
At 30 June 2021 1,172,253
---------------------
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
United States
Cheerful Twentyfirst, Inc. of America Ordinary 100
------------------ ---------- ----
During the year the Group formed Cheerful Twentyfirst, Inc., a
US company based in New York. Aeorema Communications plc holds 100%
of the share capital in Cheerful Twentyfirst, Inc.
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.
16 Trade and other receivables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
-------- --------
Trade receivables 964,490 306,198 - -
Related party receivables - - 517,003 641,134
Other receivables 93,015 76,112 3,872 5,002
Prepayments and accrued income 371,559 215,187 12,000 11,850
1,429,064 597,497 532,875 657,986
---------- -------- --------
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 GBP76,504 (2020:
GBP157,239) were past due but not impaired. These amounts are still
considered recoverable. The ageing of these trade receivables is as
follows:
Group
2021 2020
GBP GBP
--------
Less than 90 days overdue 39,419 33,712
More than 90 days overdue 37,085 123,527
76,504 157,239
------- --------
17 Cash at bank and in hand
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
---------- -------
Bank balances 1,101,713 1,721,217 5,844 11,298
1,101,713 1,721,217 5,844 11,298
---------- ---------- -------
18 Trade and other payables
Group Company
2021 2020 2021 2020
GBP
GBP As restated GBP GBP
------------------------------ ------------- --------
Trade payables 492,163 209,770 5,395 6,001
Related party payables - - 67,365 67,355
Taxes and social security
costs 310,148 381,777 - -
Other payables 91,002 113,582 50,000 100,000
Accruals and deferred income 524,154 521,093 17,000 17,780
1,417,467 1,226,222 139,760 191,136
------------------------------ ------------- --------
All trade and other payables are expected to be settled within
12 months of the end of the reporting period. The fair value of
trade and other payables is the same as the carrying values shown
above.
19 Bank Loans
2021 2020
GBP GBP
-------
Bank Loan
Current 54,089 -
Non-current 195,911 -
250,000 -
-------- -------
On 15 October 2020 the company received a Floating Rate Basis
Coronavirus Business Interruption Loan (CBIL) of GBP250,000 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 GBP6,944 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 GBP5,150
being charged to the profit and loss, this is offset by the equal
amount of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the
company's present and future assets.
20 Leases
The balance sheet shows the following amounts relating to
leases:
Group 2021 2020
GBP GBP
----------
Right-of-use assets
Buildings 18,995 379,530
18,995 379,530
--------- ----------
Group 2021 2020
GBP GBP
--------
Lease liabilities
Current 25,912 85,070
Non-current - 300,689
25,912 385,759
------- --------
21 Provisions
Leasehold Total
Group dilapidations
GBP GBP
---------------------------------------------- --------
At 1 July 2020 25,020 25,020
Charged to statement of comprehensive income - -
At 30 June 2021 25,020 25,020
---------------- --------
Leasehold Total
Group dilapidations
GBP GBP
------------- --------
Current 25,020 -
Non-current - 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.
22 Share capital
2021 2020
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 2019 9,050,500 1,131,313
At 30 June 2020 9,238,000 1,154,750
At 30 June 2021 9,238,000 1,154,750
------------------------------- ----------------
Holders of these shares are entitled to dividends as declared
from time to time and are entitled to one vote per share at general
meetings of the company.
See note 25 for details of share options outstanding.
23 Directors' emoluments
Salary, Salary,
fees, bonuses fees, bonuses
and benefits and benefits
in kind in kind Pensions Pensions Total Total
2021 2020 2021 2020 2021 2020
GBP GBP GBP GBP GBP GBP
--------------- --------------- --------- --------- -------- --------
M Hale - 13,333 - - - 13,333
S Haffner 15,000 14,250 - - 15,000 14,250
R Owen 20,000 19,333 - - 20,000 19,333
S Quah 139,268 146,050 5,000 6,469 144,268 152,519
A Harvey 103,653 112,643 4,000 5,219 107,653 117,862
277,921 305,609 9,000 11,688 286,921 317,297
--------------- --------------- --------- --------- -------- --------
The remuneration of directors of the Company is set out
below.
During the year M Hale waived his right to fees of GBP15,000
(2020: GBP1,667)
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
29 April 5 November 29 April
S Quah 2021 100,000 31.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 31.00p 2023 2031
29 April 5 November 29 April
S Quah 2021 100,000 50.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 50.00p 2023 2031
29 April 5 November 29 April
S Quah 2021 100,000 70.00p 2023 2031
29 April 5 November 29 April
A Harvey 2021 100,000 70.00p 2023 2031
------------ --------------- --------- ------------------ ------------
Fees for S Haffner are charged by Harris & Trotter LLP, a
firm in which he is a member (see note 26).
24 Employee information
The average monthly number of employees (including directors)
employed by the Group during the year was:
Number of employees Group Company
2021 Number 2020 Number 2021 Number 2020 Number
Administration and production 37 28 5 5
------------ ------------ ------------
The aggregate payroll costs of these employees charged in the
Statement of Comprehensive Income was as follows:
Employment costs Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
---------- -------
Wages and salaries 1,846,938 1,333,194 35,000 46,917
Social security costs 205,253 159,082 - -
Pension costs 42,295 31,000 - -
Share-based payments 30,703 47,097 - -
2,125,189 1,570,373 35,000 46,917
---------- ---------- -------
25 Share-based payments
The Group operates an EMI share option scheme for key employees.
Options are granted to key employees at an exercise price equal to
the market price of the Company's shares at the date of grant.
Options are exercisable from the third anniversary of the date of
grant and lapse if they remain unexercised at the tenth anniversary
or upon cessation of employment. The following option arrangements
exist over the Company's shares:
Exercise Number of Number of
Date of grant price Exercise period options 2021 options 2020
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
29 April 5 November 29 April
2021 31.0p 2023 2031 300,000 -
29 April 5 November 29 April
2021 50.0p 2023 2031 300,000 -
29 April 5 November 29 April
2021 70.0p 2023 2031 300,000 -
1,920,000 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
2021 2021 2020 2020
GBP GBP
---------- ------------------ ---------- ------------------
Outstanding at beginning
of the year 1,020,000 0.25 1,200,000 0.25
Granted during the
year 900,000 0.50 - -
Outstanding at end
of the year 1,920,000 0.37 1,020,000 0.25
---------- ------------------ ---------- ------------------
Exercisable at the
end of the year 900,000 0.25 300,000 0.17
---------- ------------------ ---------- ------------------
The exercise price of options outstanding at the year-end was
GBP0.369 (2020: GBP0.250) and their weighted average contractual
life was 7.6 years (2020: 6.6 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
--------------
Grant date 22 August 2018
Model used Black-Scholes
Share price at grant date 29.0p
Exercise price 29.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 14.800p
---------------
Grant date 14 June 2019
Model used Black-Scholes
Share price at grant date 26.0p
Exercise price 26.0p
Contractual life 10 years
Risk free rate 0.75%
Expected volatility 40.33%
Expected dividend rate 0%
Fair value option 12.894p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 31.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 30.060p
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 50.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.943p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 70.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.845p
--------------
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
during the year ended 30 June 2021 the historical volatility is
calculated over the last 10 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:
2021 2020
GBP GBP
---------------------------- -------
Share-based payment charge 30,703 47,097
---------------------------- -------
26 Related party transactions
The Group has a related party relationship with its subsidiaries
and its key management personnel (including directors). Details of
transactions between the Company and its subsidiaries are as
follows:
2021 2020
GBP GBP
----------------------------------- --------
Amounts owed by subsidiaries
Total amount owed by subsidiaries 517,003 641,134
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,365 67,355
-------- --------
The company received no dividends during the year (2020:
GBP300,000) from its subsidiary, Aeorema Limited. The company
transferred a VAT receivable of GBP19,221 (2020: GBP22,977) 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 GBP20,000 (2020:
GBP27,667).
Aeorema Limited paid expenses totalling GBP113,352 (2020:
GBP503,734) on behalf of Aeorema Communications plc during the
year.
During the year, Aeorema Limited made a net transfer of cash of
GBP10,000 to Aeorema Communications plc (2020: GBP110,505).
The compensation of key management (including directors) of the
Group is as follows:
2021 2020
GBP GBP
------------------------------ --------
Short-term employee benefits 277,921 305,609
Post-employment benefits 9,000 11,688
286,921 317,297
-------- --------
The share options held by directors of the Company are disclosed
in note 23. During the year, a charge of GBP21,002 (2020:
GBP41,556) was recognised in the Consolidated Statement of
Comprehensive Income in respect of these share options.
During the year A Harvey received an interest-free loan of
GBP10,000. At the year end, GBP10,000 (2020: GBPNil) was
outstanding.
During the year S Quah received an interest-free loan of
GBP10,000. At the year end, GBP10,000 (2020: GBPNil) was
outstanding.
Harris and Trotter LLP is a firm in which S Haffner is a member.
The amounts charged to the Group for professional services is as
follows:
Harris and Trotter LLP - charged during
the year 2021 2020
GBP GBP
Aeorema Communications plc 15,000 14,250
Aeorema Limited 12,850 14,700
27,850 28,950
------------------------------------------ -------
At the year end, the Group had an outstanding trade payable
balance to Harris and Trotter LLP of GBP5,630 (2020: GBP5,640).
27 Cash flows
Group
2021 2020
GBP GBP
---------- ------------
Cash flows from operating activities
Profit / (loss) before taxation (159,698) (217,924)
Depreciation of property, plant and equipment 40,885 31,871
Depreciation of right-of-use assets 91,092 89,392
Amortisation of intangible fixed assets 2,500 417
Loss on disposal of fixed assets 769 1,648
Share-based payment expense 30,703 47,097
Finance income (489) (556)
Interest on lease liabilities 16,932 20,253
Exchange rate differences on translation (11,044) -
Revaluation of right-to-use asset (5,311) -
6,339 (27,802)
Increase / (decrease) in trade and other
payables 191,244 (1,075,254)
(Increase) / decrease in trade and other
receivables (831,592) 1,014,847
Taxation paid (74,805) (10,797)
Cash generated / (used) from operating
activities (708,814) (99,006)
----------------------------------------------- ------------
28 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
2021 2020 2021 2020
GBP GBP GBP GBP
---------- ---------- ----------
Financial Assets
Trade and other receivables 1,227,460 432,202 517,003 641,134
Cash and cash equivalents 1,101,713 1,721,217 5,844 11,298
Investments in subsidiaries - - 1,166,593 1,141,540
Total 2,329,173 2,153,419 1,689,440 1,793,972
Financial Liabilities
Trade and other payables 833,165 734,131 122,760 173,356
Accruals 139,555 227,812 17,000 17,780
Total 972,720 961,943 139,760 191,136
---------- ---------- ---------- ----------
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 2021 was GBP964,490 (2020:
GBP306,198). Trade receivables are managed by policies concerning
the credit offered to customers and the regular monitoring of
amounts outstanding for both time and credit limits. The credit
risk associated with trade receivables is minimal as invoices are
based on contractual agreements with long-standing customers.
Credit losses historically incurred by the Company have
consequently been immaterial.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to meet its liabilities when they fall due. The Group
monitors cash flow on a regular basis. At the year end, the Group
has sufficient liquid resources to meets its obligations of
GBP1,036,700 (2020: GBP1,407,185).
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 GBP1,101,713 (2019: GBP1,721,217). 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 GBP1,514,980 (restated 2020:
GBP1,660,247).
29 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal
pension plans. Contributions payable by the Group for the year were
GBP41,946 (2020: GBP31,000). At the end of the reporting period
GBP9,237 (2020: GBP5,608) of contributions were due in respect of
the period.
30 Dividends
As a consequence of the ongoing COVID-19 pandemic, the Board
have decided that no final dividend will be paid to
shareholders.
31 Contingent liability
Company
The Company is a member of a group VAT registration with all
other companies in the Aeorema Communications group and, under the
terms of the registration, is jointly and severally liable for the
VAT payable by all members of the group. At 30 June 2021 the
Company had no potential liability under the terms of the
registration.
32 Control
There is no overall controlling party.
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END
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November 15, 2021 02:00 ET (07:00 GMT)
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