TIDMAEO
RNS Number : 3068T
Aeorema Communications Plc
14 November 2023
The information contained within this announcement is deemed by
the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations
2019/310.
Aeorema Communications plc / Index: AIM / Epic: AEO / Sector:
Media
14 November 2023
Aeorema Communications plc
("Aeorema", the "Company" or the "Group")
Final Results
Proposed 50% increase in final dividend
Record revenue and profit
Aeorema Communications plc (AIM: AEO), a leading strategic
communications group, is pleased to announce its audited results
for the year ended 30 June 2023.
Highlights
-- Record operational and financial performance:
o Revenue up 66% to GBP20.2 million (2022: GBP12.2 million)
o Profit before tax up 25% to GBP1.0 million (2022: GBP0.8
million)
-- Strong balance sheet maintained - current cash balance of GBP1.9 million
-- Proposed 50% increase in final dividend to 3 pence per share (2022: 2 pence per share)
-- Winner of multiple industry awards
-- Investment in business instrumental in growth, retention of
clients and increased scope of work
o Cheerful Twentyfirst - creative brand experience agency
-- 100% client retention and average year-on-year increase in
revenue of 47% across flagship clients
o Cheerful Twentyfirst Inc. - North American creative brand
experience agency
-- Key talent hires, including appointment of US President,
André Shahrdar
-- Most successful year to date and significant ground broken
with new logo brands
o Eventful - events and incentives agency
-- Year-on-year revenue growth of 140%
-- Returned to profitability
For further information contact:
Andrew Harvey Aeorema Communications Tel: +44 (0) 20 7291 0444
plc
John Depasquale / Liz Allenby Capital Limited Tel: +44 (0)20 3328 5656
Kirchner / Lauren Wright (Nominated Adviser &
(Corporate Finance) Broker)
Kelly Gardiner / Jos
Pinnington
(Sales & Corporate
Broking)
Paul Dulieu / Isabel St Brides Partners Ltd aeorema@stbridespartners.co.uk
de Salis (Financial PR)
Chairman's Statement
I am incredibly proud to report record-breaking revenue of
GBP20.2m and our first ever seven figure profit before tax ("PBT")
of GBP1.045m for the year ended 30 June 2023. Since the new
management team took over in late 2017, our business has grown
dramatically with revenue increasing more than fivefold and profit
quadrupling. This has been achieved while navigating a pandemic,
which brought much of the global events industry to its knees and
tough economic conditions. This achievement is testament to the
dedication and hard work of our talented employees, the loyalty of
our clients, and the strategic vision of our leadership team. I
would therefore like to thank them all for their belief in
Aeorema.
We have invested heavily in the business to ensure we continue
our momentum both in EMEA and North America. As we celebrate our
remarkable revenue growth, our underlying profitability this year
has underpinned a deliberate strategy to reinvest a substantial
portion of our earnings back into the structure and foundations of
our business. Much of this expenditure is one-off in nature and
leaves us well positioned to take advantage of the many
opportunities we see in our high value and global sector. Hence,
the net profit margin for FY 2023 belies the underlying strong
fundamentals of our business and depth of client relationships and
work.
We have invested in our team in a tight labour market whilst
enduring a spike in recruitment costs, and we have strengthened our
HR team to support our increasingly global team going forwards. We
have also upscaled our IT infrastructure including better project
management and accountancy tools, designed to enhance the reporting
processes across our growing business. We have also continued to
invest in our US office, including the recruitment of key team
members, and continue to build brand recognition in North America
while developing key client relationships for future US-focused
work.
All of these areas of investments have already begun to yield
positive results. They are enhancing our efficiencies and ability
to respond to changing market dynamics, to provide more strategic
and creative solutions, expand our client base, strengthen client
relationships and maintain the high-quality standards our clients
have come to know and appreciate from Aeorema.
The business continues to move at pace, and we have achieved
these record financial results two years ahead of our internal
targets and our internal five year plan that was set out at the
height of the pandemic in 2020. Looking ahead, we see significant
opportunities in EMEA and North America and the opportunity to
increase the work we undertake for existing clients as well as new
ones and to establish a presence at additional major "tent pole"
events.
At an operating company level, our core Cheerful Twentyfirst
business remains strong and our strategy to invest in our team
which commenced last year is proving successful as we continue to
both retain global brands and expand the scope of work we are doing
for them. Alongside this, our Sales and Marketing team is achieving
great success bringing in fantastic brands within many sectors
including professional services, technology, media and
marketing.
Meanwhile, we are delighted that Eventful has returned to profit
and, under the new leadership of Claire Gardner, who has been with
the business for 12 years, there is great excitement about what
Eventful can achieve over the coming years.
Looking forward, we are now consolidating the results of our
recent investments and creating a strong platform for further
growth across the Group. We believe that this provides the
potential for our 2024 financial year to be another record year for
the Group, albeit one which we expect will be heavily weighted
towards our second half as many brands are delaying projects and
pushing them into the first half of calendar year 2024; the second
half of our financial year. Nonetheless, we expect a strong year
overall and, as contracts are signed and projects scheduled, the
greater clarity will allow us to update the market.
We have a robust cash position as at the date of this
announcement of GBP1.9million and I am delighted to confirm that we
are proposing a final dividend for the year, reflecting the growth
we have achieved and the confidence we have for the future. The
dividend proposed is 3 pence per share (a 50% increase on the
dividend paid in 2022 of 2 pence per share). Subject to the
proposed dividend being approved by shareholders at the forthcoming
Annual General Meeting, it will be paid on 19 January 2024 with a
record date of 22 December 2023 and an ex-dividend date of 21
December 2023.
We remain open to acquisition opportunities that are priced
sensibly, are the right fit for our organisation and that can
deliver value for our shareholders.
I have never been so positive about the future of Aeorema.
Cheerful Twentyfirst is robust and ever growing, Eventful is
thriving and, under the new leadership of André Shahrdar in our US
office, we believe we can achieve great things in North
America.
In closing, I would like to extend once more a big thank you to
our amazing management team, our dedicated, brilliant and talented
teams at Cheerful Twentyfirst and Eventful and our wonderful and
loyal investors. Your unwavering support and commitment has been
instrumental in making this year a resounding success.
Mike Hale
Chairman
13 November 2023
Chief Executive Officer's Report
This has been another exceptional year, achieved through the
delivery of extremely creative and consistently high-quality work
for our clients, coupled with the commercial agility to develop new
markets around the world.
Within the last few months alone, Cheerful Twentyfirst, our
creative brand experience agency, has delivered events and
experiences in New York, Austin, Tokyo, Brussels, London, Paris,
Berlin and of course, Cannes, France. I am hugely pleased with the
new ways we are working to delight our clients and build our agency
brands across the globe. Creativity and our strong CSR (Corporate
Social Responsibility) ethos is at the heart of what we do, but it
is our expertise and experience in enabling our clients to
communicate effectively with their audiences which has seen us
become not only a leading operator but also thought leaders in our
industry.
After 12 years at Cannes Lions, June 2023 was our busiest year
ever. At this marketing and advertising industry 'tent pole' event
we partnered with the most ambitious global brands to deliver seven
world class, award nominated, client activations. A particular
highlight was the Sport Beach activation we created with Stagwell
Global, a multi-billion-dollar NASDAQ listed company. Built on
shifting sands, the unique 420 capacity sports stadium brought fans
out of the stands and onto the court itself to break down barriers
and build long-lasting partnerships for marketers, brands and
athletes alike. With over 5,000 guests attending this activation,
AdWeek called Sport Beach a "total game changer" for how brands can
connect with audiences through events. I'm very proud of the
dynamic experiential strategy we adopted, and it has become a
cornerstone for ongoing success into 2024.
Our strength in brand experience and activation continues to
drive new interest and offer new opportunities. We are modelling
new revenue growth streams on the back of our repeated success at
Cannes Lions, as we apply our expertise at more 'tentpole' events
around the world. In tandem, we continue to see significant growth
in our strategic consultancy offering, which has opened new revenue
streams within our businesses and introduced new skill sets into
our teams.
Achieving our internal five-year revenue goals two-years earlier
than expected has, in a large part, been down to our Client
Services team. It has been a pleasure to see this part of the
business thrive, having moved to an account-based model in 2021.
The purpose of this change was to strengthen client relationships,
secure repeat work and retain client contracts. I'm delighted to
say that this has proved very successful, with us achieving 100%
client retention, and an average year-on-year increase in revenue
of 47% across our flagship clients.
In addition to our people and profit successes, our dedication
to creative excellence has not gone unnoticed within our industry.
This year, we had the honour of being named Global Agency of the
Year at the C&IT Awards, alongside Creative Team of the Year
for the fifth year running at the CN Agency Awards. A real
highlight was being awarded the coveted Grand Prix award for the
first time as the overall winner of the night at the events and
communications industry's prestigious micebook Awards 2023. These
accolades are testament to the hard work and commitment of our
talented teams and reinforce our position as a leader in our
field.
Further afield, our North American arm, Cheerful Twentyfirst
Inc., has reported its most successful year to date. After only
three years in the North American market, we've broken significant
ground with new logo brands and key talent hires. The most exciting
being the appointment of our US President, André Shahrdar, who
joined in May 2023 and who we believe will be instrumental in our
future growth and success in the North American market.
Eventful, our events and incentives agency, has had an excellent
12 months too, reporting year-on-year revenue growth of 140%. The
synergy between Eventful and Cheerful Twentyfirst continues to
strengthen and open opportunities for cross-client introductions
and joint projects. This is particularly the case following the
completion of three global events that used both agencies services.
The promotion of Claire Gardiner to Managing Director of Eventful
in May 2023, having joined in 2011, is also hugely pleasing. I have
no doubt that under her guidance we will continue to innovate and
deliver extraordinary experiences for our clients, and I look
forward to seeing what the next year brings for Eventful.
Across the Group, the investment we have made in our businesses
and teams has been instrumental in our growth. This includes
significant expansion in our HR and operations capability, which
played key roles in implementing new infrastructure and systems to
significantly improved processes and efficiencies. Key systems
include, the implementation and global roll out of Scoro; our
custom project management software, our submission to Ecovadis; an
internationally recognised sustainability certification, and
achieving ISO 27001; an international standard for information
security, for our data security protocols. These initiatives,
alongside strengthened HR support for our now 70+ full time staff,
are already delivering a great return on investment. This includes
stronger scoring during procurement exercises with target brands,
and a greater ability to track time and productivity, which enables
us to operate more cost effectively. Culturally, the Aeorema Group
has also never been stronger, which is an important factor for a
people centred business such as ours.
I couldn't be prouder of the remarkable accomplishments of our
dedicated team, which we have expanded to include some of the best
talent in the industry. We have not only met, but have exceeded our
goals, and our agency brands are now recognised on a global
scale.
I want to extend my heartfelt thanks to every member of the
Aeorema Communications family for making this year an outstanding
one. Your contributions and dedication are the driving force behind
our success. I would also like to thank all of our shareholders for
their continued support and belief in Aeorema, which is a very
special company.
Thank you once again, for joining us on this journey.
Steve Quah
CEO
13 November 2023
Strategic Report
The Board presents its Strategic Report on the Group for the
year ended 30 June 2023.
Principal activities
Aeorema Communications plc does not trade but incurs
professional fees associated with its listing on the London Stock
Exchange. Aeorema Limited (trading as Cheerful Twentyfirst) and
Cheerful Twentyfirst, Inc. are live events agencies with film
capabilities that specialise in devising and delivering corporate
communication solutions. Eventful Limited is a consultative,
high-touch service, assisting clients with venue sourcing, event
management and incentive travel.
Business review
The results for the year show revenue was GBP20,230,231 (2022:
GBP12,207,253), operating profit was GBP1,092,920 (2022:
GBP871,176) and profit before taxation was GBP1,045,960 (2022:
GBP843,564).
The Group had net assets of GBP2,814,356 at the year-end (2022:
GBP2,253,564) and net current assets of GBP1,761,557 (2022:
GBP1,466,109).
The year ended 30 June 2023 was a highly successful year, with
the Group achieving the highest revenue and profit before tax in
its history. The Group experienced high growth with its two largest
existing clients (refer to note 2) and won new business with a
range of clients including the Group's largest brand activation at
Cannes Lions International Festival of Creativity 2023 (refer to
note 2).
Eventful Limited experienced a record year both in terms of
revenue, up 138% (2022: 1,110% increase) compared with the previous
year, and profits before tax of GBP205,559 (2022: GBP37,845 loss
before tax). The year ended 30 June 2023 represented the first full
year since the outbreak of COVID-19 which was unaffected by the
pandemic and subsequent travel and social distancing restrictions.
As a consequence, there was strong demand from clients to return to
in-person events leading to a higher volume of enquiries and
bookings compared with the previous year.
Cheerful Twentyfirst, Inc. continued to grow its revenue, up 13%
(2022: 630% increase) compared with the previous year. However,
investment in new hires, the office and business development and
marketing meant that overall profits before tax were GBP317,467
compared with GBP716,075 in the previous year. The Group hired a
new President for Cheerful Twentyfirst, Inc. who is tasked with
growing the subsidiary's presence in the United States of
America.
The Group's headcount grew during the year, hiring on average
eight more employees compared with the previous year. These hires
included roles essential to ensuring the Group continues to
successfully deliver high quality events, including a Technical
Director focused on supplier procurement and improving margins. The
Group also invested in a number of roles necessary to support the
client facing operations and facilitate future growth, including
finance, human resources and IT.
The Group's gross profit margin has decreased from 25% in 2022
to 21% in 2023. In part the reduction is a consequence of the
Stagwell Cannes Lions activation, a significant build project which
historically has lower gross profit margins. However, this event
does not account for the entire reduction and management's focus
for the year ending 30 June 2024 is on improving the Group's gross
profit margin.
Looking ahead, the Group has not currently experienced any
difficulties associated with the ongoing war in Ukraine and
conflict in Israel, the cost of living crisis or global economic
struggles. Demand throughout the Group's trading subsidiaries
remains strong, with new clients and projects in the pipeline for
the coming year. However, the Board remain acutely aware of the
economic difficulties faced both in the UK and globally, and
continues to evaluate its investment plans, resourcing and future
forecasts on a regular basis.
Key performance indicators
Year 2023 2022 2021 2020
GBP GBP GBP GBP
----------- ----------- ---------- ----------
Revenue 20,230,231 12,207,253 5,094,518 5,475,425
----------- ----------- ---------- ----------
Operating profit / (loss) 1,092,920 871,176 (188,105) (175,043)
----------- ----------- ---------- ----------
Profit / (loss) before
taxation 1,045,960 843,564 (159,698) (217,924)
----------- ----------- ---------- ----------
The Group experienced a 66% increase (2022: 140% increase) in
revenue during the year.
Event revenue increased by 77% (2022: 160% increase) in
comparison with the previous year. This increase was due in large
part to the new client account model approach implemented in
previous years and the introduction of client focused account
directors which has allowed the Group to develop closer client
relationships and grow the number and size of events delivered year
on year. As a result of this account model initiative and a focus
on marketing, the Group delivered its highest number of and largest
ever events at The Cannes Lions International Festival of
Creativity, including the new brand activation for Stagwell.
Film revenue decreased by 6% (2022: 52% increase) in comparison
with the previous year. This reduction was largely due to a number
of one off film projects in the previous year.
Cash ows
Net cash inflow from operating activities was GBP1,456,588
compared with a net cash inflow of GBP921,695 for the year ended 30
June 2022. The cash position increased by GBP729,683 to
GBP2,444,100 (2022: increase by GBP612,704 to GBP1,714,417).
Capital expenditure
Total capital expenditure, including expenditure on tangible
assets, was GBP325,027 compared with GBP179,475 for the year ended
30 June 2022.
Employees
Our priority is to attract and retain talented employees and to
harness their creativity to drive growth through development and
delivery of services that bring value to our customers' business
operations.
We continue to focus on ensuring that the performance of staff
is measured against clear, business focused objectives and
behavioural criteria through continual appraisals.
Reward
The Group benchmarks employee salaries against the market and
reviews salaries annually to ensure that we are paying at a level
to attract and retain high-quality employees.
Key employees are offered access to a share option scheme,
further details of which are provided in note 24 to the financial
statements.
Equal opportunities
We are committed to ensuring equal opportunities for our staff.
We have introduced training which covers equal opportunities
legislation and best practice. Our policy in respect of employment
of disabled persons is the same as that relating to all other
employees in matters of training, career development and promotion.
Should employees become disabled during the course of their
employment, we will make every effort to make reasonable
adjustments to their working environment to enable their continued
employment.
Safety, health and environment
The commitment and participation of all employees is vital to
efficient and effective occupational risk control. In order to meet
our responsibility to protect the environment, staff and the
business, the Group continues to focus on maintaining a risk aware
culture.
We believe the Group maintains a low environmental impact. We
therefore continue to work on the potential environmental impacts
of energy consumption, waste and travel.
Directors' policies for managing principal risks
There is an ongoing process for identifying, evaluating and
managing the significant risks faced by the business. Risk reviews
are undertaken regularly by the respective business areas
throughout the year to identify and assess the key risks associated
with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are
linked to customer dependency. Though the Group has a very diverse
customer base in certain market sectors, key customers can
represent a significant amount of revenue (see note 2). Key
customer relationships are closely monitored but the loss of a key
client could have an adverse effect on the Group's performance.
Further details of risks, uncertainties and financial instruments
are contained in note 27.
Key risks of a non--financial nature
The Group is operating in a highly competitive global market
that is undergoing continual change. The Group's ability to respond
to many competitive factors including, but not limited to
technological innovations, product quality, customer service and
employment of qualified personnel will be key in the achievement of
its objectives, but its ultimate success will depend on the
purchase spends of its customers and the buoyancy of the
market.
On behalf of the Board
S Haffner
Director
13 November 2023
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Notes 2023 2022
GBP GBP
Continuing operations
Revenue 2 20,230,231 12,207,253
Cost of sales (15,896,463) (9,169,691)
--------------------------------------- ------ ------------
Gross profit 4,333,768 3,037,562
Other income 3 - 3,743
Administrative expenses (3,240,848) (2,170,129)
------ ------------- ------------
Operating profit 4 1,092,920 871,176
--------------------------------------- ------ ------------
Finance income 5 215 241
Finance costs 6 (47,175) (27,853)
--------------------------------------- ------ ------------
Profit before taxation 1,045,960 843,564
Taxation 7 (288,780) (204,222)
------ ------------- ------------
Profit for the year 757,180 639,342
Other comprehensive income
Items that may be reclassified
to profit or loss
Exchange differences on translation
of foreign entities (119,547) 42,347
Other comprehensive income for
the year (119,547) 42,347
Total comprehensive income for
the year attributable to owners
of the parent 637,633 681,689
Profit per ordinary share:
Total basic earnings per share 10 8.04398p 6.92078p
Total diluted earnings per share 10 6.83499p 5.80797p
--------------------------------------- ------ ------------
The notes below are an integral part of these financial
statements.
Consolidated Statement of Financial Position
As at 30 June 2023
Notes Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
Non-current assets
Intangible assets 11 566,431 568,931 - -
Property, plant and equipment 12 428,509 222,479 - -
Right-of-use assets 13 696,986 823,772 - -
Investments in subsidiaries 14 - - 1,293,568 1,229,148
Deferred taxation 8 14,844 25,925 - -
------------ ------------ ---------- ----------
Total non-current assets 1,706,770 1,641,107 1,293,568 1,229,148
Current assets
Trade and other receivables 15 3,502,522 3,130,035 713,588 689,332
Cash and cash equivalents 16 2,444,100 1,714,417 135,548 1,532
Total current assets 5,946,622 4,844,452 849,136 690,864
Total assets 7,653,392 6,485,559 2,142,704 1,920,012
Current liabilities
Trade and other payables 17 (3,882,938) (2,960,221) (104,459) (143,721)
Bank loans 18 (83,333) (83,333) - -
Lease liabilities 19 (109,058) (121,999) - -
Current tax payable (74,736) (177,790) - -
Provisions 20 (35,000) (35,000) - -
------------ ------------ ---------- ----------
Total current liabilities (4,185,065) (3,378,343) (104,459) (143,721)
Non-current liabilities
Bank loans 18 (27,778) (111,111) - -
Lease liabilities 19 (612,693) (738,041) - -
Provisions 20 (13,500) (4,500) - -
------------ ------------ ---------- ----------
Total non-current liabilities (653,971) (853,652) - -
------------ ------------ ---------- ----------
Total liabilities (4,839,036) (4,231,995) (104,459) (143,721)
Net assets 2,814,356 2,253,564 2,038,245 1,776,291
Equity
Share capital 21 1,192,250 1,154,750 1,192,250 1,154,750
Share premium 21,876 9,876 21,876 9,876
Merger reserve 16,650 16,650 16,650 16,650
Other reserve 233,375 168,956 233,375 168,956
Capital redemption reserve 257,812 257,812 257,812 257,812
Foreign translation reserve (88,244) 31,303 - -
Retained earnings 1,180,637 614,217 316,282 168,247
------ ------------ ------------ ---------- ----------
Equity attributable
to owners of the parent 2,814,356 2,253,564 2,038,245 1,776,291
------ ------------ ------------ ---------- ----------
The notes below are an integral part of these financial
statements.
The profit for the financial year of the holding company was
GBP338,795 (2022: GBP148,184).
The financial statements were approved and authorised by the
board of directors on 13 November 2023 and were signed on its
behalf by
A Harvey S Haffner
Director Director
Company Registration No. 04314540
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Capital Foreign
Share Share Merger Other redemption translation Retained Total
Group capital premium reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP GBP
------------------ --------- --------- --------- ------------ ------------- ---------- ----------
At 30 June
2021 1,154,750 9,876 16,650 112,061 257,812 (11,044) (25,125) 1,514,980
Comprehensive
income for
the year, net
of tax - - - - - - 639,342 639,342
Foreign currency
translation - - - - - 42,347 - 42,347
Share-based
payment - - - 56,895 - - - 56,895
At 30 June
2022 1,154,750 9,876 16,650 168,956 257,812 31,303 614,217 2,253,564
Comprehensive
income for
the year, net
of tax - - - - - - 757,180 757,180
Dividend paid - - - - - - (190,760) (190,760)
Foreign currency
translation - - - - - (119,547) - (119,547)
Share-based
payment - - - 64,419 - - - 64,419
Share issue 37,500 12,000 - - - - - 49,500
At 30 June
2023 1,192,250 21,876 16,650 233,375 257,812 (88,244) 1,180,637 2,814,356
------------------
Share premium represents the value of shares issued in excess of
their list price.
In accordance with section 612 of the Companies Act 2006, the
premium on ordinary shares issued in relation to acquisitions is
recorded as a merger reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee
remuneration, as detailed in note 24.
Capital redemption reserve represents a statutory
non-distributable reserve into which amounts are transferred
following redemption or purchase of a company's own shares.
Foreign translation reserve represents the accumulated gain or
loss resulting from the translation of financial statements
denominated in a foreign currency into the Group's reporting
currency.
The notes below are an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 30 June 2023
Capital
Share Share Merger Other redemption Retained
Company capital premium reserve reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
---------- --------- --------- ---------- ------------ ---------- -------------
At 30 June
2021 1,154,750 9,876 16,650 112,061 257,812 50,316 1,601,465
Comprehensive
income for the
year, net of
tax - - - - - 117,931 117,931
Share-based
payment - - - 56,895 - - 56,895
At 30 June
2022 1,154,750 9,876 16,650 168,956 257,812 168,247 1,776,291
Comprehensive
income for the
year, net of
tax - - - - - 338,795 338,795
Dividend paid - - - - - (190,760) (190,760)
Share-based
payment - - - 64,419 - - 64,419
Share issue 37,500 12,000 - - - - 49,500
At 30 June
2023 1,192,250 21,876 16,650 233,375 257,812 316,282 2,038,245
Share premium represents the value of shares issued in excess of
their list price.
In accordance with section 612 of the Companies Act 2006, the
premium on ordinary shares issued in relation to acquisitions is
recorded as a merger reserve. The reserve is not distributable.
Other reserve represents equity settled share-based employee
remuneration, as detailed in note 24.
Capital redemption reserve represents a statutory
non-distributable reserve into which amounts are transferred
following redemption or purchase of a company's own shares.
The notes below are an integral part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Notes Group
2023 2022
GBP GBP
------ ---------- ----------
Net cash flow from operating activities 26 1,456,588 921,695
Cash flows from investing activities
Finance income 5 215 241
Purchase of property, plant and equipment 12 (325,027) (179,475)
Repayment of leasing liabilities (177,500) (74,201)
Cash used in investing activities (502,312) (253,435)
Cash flows from financing activities
Repayment of borrowings (83,333) (55,556)
Dividends paid to owners of the company (190,760) -
Shares issued 49,500 -
---------- ----------
Cash used in financing activities (224,593) (55,556)
Net increase in cash and cash equivalents 729,683 612,704
Cash and cash equivalents at beginning
of year 1,714,417 1,101,713
---------- ----------
Cash and cash equivalents at end
of year 2,444,100 1,714,417
------------------------------------------- ---------- ----------
The notes below are an integral part of these financial
statements.
Notes to the consolidated financial statements
For the year ended 30 June 2023
1 Accounting policies
Aeorema Communications plc is a public limited company
incorporated in the United Kingdom and registered in England and
Wales. The Company is domiciled in the United Kingdom and its
principal place of business is 87 New Cavendish Street, London, W1W
6XD. The Company's Ordinary Shares are traded on the AIM
Market.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The presentation currency is GBP sterling.
Going concern
The Board have reviewed the Group's detailed forecasts for the
next financial year, other medium term plans, the impact of the war
in Ukraine, the cost of living crisis and economic and political
uncertainties both in the UK and globally, as well as considering
the risks outlined in note 27. After doing so, the Directors, at
the time of approving the financial statements, have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and have therefore
used the going concern basis in preparing the financial
statements.
Basis of Preparation
The Group and company financial statements have been prepared
under the historical cost convention and in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the UK
The following are the new accounting standards or amendments
applicable for 30 June 2023 yearend, which are effective for
accounting periods beginning on or after 1 January 2022.
-- Amendment to IFRS 1 First-time Adoption of International
Financial Reporting Standards-Subsidiary
-- Amendment to IFRS 9 Financial Instruments-Fees in the '10 per
cent' Test for Derecognition of Financial Liabilities
-- Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
The Group does not believe that there is a material impact on
the financial statements from the adoption of these standards.
Future standards in place but not yet effective
The following new standards, amendments or interpretations to
existing standards adopted in the United Kingdom, and are mandatory
for the Group's accounting periods beginning on or after 1 January
2023 are as follows:
-- Classification of Liabilities as Current or Non-current -
Deferral of Effective Date (Amendment to IAS 1);
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12); and
-- Definition of Accounting Estimates (Amendments to IAS 8).
The Group did not early adopt the above new standards,
amendments, or interpretations for 30 June 2023 yearend.
Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 30 June 2023.
Subsidiaries are all entities (including structured entities) over
which the Group has control. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They
are consolidated until the date that control ceases.
Intra-group transactions, balances and unrealised gains and
losses on transactions between group companies are eliminated.
The merger reserve is used where more than 90% of the shares in
a subsidiary are acquired and the consideration includes the issue
of new shares by the Company, thereby attracting merger relief
under the Companies Act 2006.
Revenue
Revenue represents amounts (excluding value added tax) derived
from the provision of services to third party customers in the
course of the Group's ordinary activities.
As a result of providing these services, the Group may from time
to time receive commissions from other third parties. These
commissions are included within revenue on the same basis as that
arising from the contract with the underlying third party
customer.
The revenue and profits recognised in any period are based on
the satisfaction of performance obligations and an assessment of
when control is transferred to the customer.
For most contracts with customers, there is a single distinct
performance obligation and revenue is recognised when the event has
taken place or control of the content or video has been transferred
to the customer.
Where a contract contains more than one distinct performance
obligation (multiple film productions, or a project involving both
build construction and event production) revenue is recognised as
each performance obligation is satisfied.
The transaction price is substantially agreed at the outset of
the contract, along with a project brief and payment schedule (full
payment in arrears for smaller contracts; part payment(s) in
advance and final payment in arrears for significant
contracts).
Due to the detailed nature of project briefs agreed in advance
for significant contracts, management do not consider that
significant estimates or judgements are required to distinguish the
performance obligation(s) within a contract.
For contracts to prepare multiple film productions, the
transaction price is allocated to constituent performance
obligations using an output method in line with agreements with the
customer.
For other contracts with multiple performance obligations,
management's judgement is required to allocate the transaction
price for the contract to constituent performance obligations using
an input method using detailed budgets which are prepared at outset
and subsequently revised for actual costs incurred and any changes
to costs expected to be incurred.
The Group does not consider any disaggregation of revenue from
contracts with customers necessary to depict how the nature,
amount, timing and uncertainty of the Group's revenue and cash
flows are affected by economic factors.
Where payments made are greater than the revenue recognised at
the reporting date, the Group recognises deferred income (a
contract liability) for this difference. Where payments made are
less than the revenue recognised at the reporting date, the Group
recognises accrued income (a contract asset) for this
difference.
A receivable is recognised in relation to a contract for amounts
invoiced, as this is the point in time that the consideration is
unconditional because only the passage of time is required before
the payment is due.
At each reporting date, the Group assesses whether there is any
indication that accrued income assets may be impaired by assessing
whether it is possible that a revenue reversal will occur. Where an
indicator of impairment exists, the Group makes a formal estimate
of the asset's recoverable amount. Where the carrying value of an
asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
Intangible assets - goodwill
All business combinations are accounted for by applying the
acquisition method. Goodwill acquired represents the excess of the
fair value of the consideration and associated costs over the fair
value of the identifiable net assets acquired.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. At the date of acquisition, the
goodwill is allocated to cash generating units, usually at business
segment level or statutory company level as the case may be, for
the purpose of impairment testing and is tested at least annually
for impairment. On subsequent disposal or termination of a business
acquired, the profit or loss on termination is calculated after
charging the carrying value of any related goodwill.
Intangible assets - other
Intangible assets are stated in the financial statements at cost
less accumulated amortisation and any impairment value.
Amortisation is provided to write off the cost less estimated
residual value of intangible assets over its expected useful life
(which is reviewed at least at each financial year end), as
follows:
Intellectual property 25% straight line
Any gain or loss arising on the derecognition of the asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the Statement of
Comprehensive Income in the year that the asset is
derecognised.
Fully amortised assets still in use are retained in the
financial statements.
Property, plant and equipment
Property, plant and equipment is stated in the financial
statements at cost less accumulated depreciation and any impairment
value. Depreciation is provided to write off the cost less
estimated residual value of property, plant and equipment over its
expected useful life (which is reviewed at least at each financial
year end), as follows:
Leasehold land and buildings Straight line over the life of the
lease
Fixtures, fittings and equipment Straight line over four years
-------------------------------------
Any gain or loss arising on the derecognition of the asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the Statement of
Comprehensive Income in the year that the asset is
derecognised.
Fully depreciated assets still in use are retained in the
financial statements.
Impairment
The carrying amounts of the Group's assets are reviewed at each
period end to determine whether there is any indication of
impairment. If any such indication exists, the assets' recoverable
amount is estimated. For goodwill and intangible assets that have
an indefinite useful life and intangible assets that are not yet
available for use, the recoverable amount is estimated at each
annual period end date and whenever there is an indication of
impairment.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of
Comprehensive Income in those expense categories consistent with
the function of the impaired asset.
Investments
Fixed asset investments are stated at cost less provision for
diminution in value.
Leases
In applying IFRS 16, for all leases (except as noted below), the
Group:
a) recognises right-of-use assets and lease liabilities in the
statement of financial position, initially measured at the present
value of future lease payments;
b) recognises depreciation of right-of-use assets and interest
on lease liabilities in the statement of profit or loss; and
c) separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within operating activities) in the statement of cash
flows.
Lease incentives (e.g. free rent period) are recognised as part
of the measurement of the right-of-use assets and lease liabilities
whereas under IAS 17 they resulted in the recognition of a lease
incentive liability, amortised as a reduction of rental expense on
a straight-line basis.
Under IFRS 16, right-of-use assets are tested for impairment in
accordance with IAS 36 Impairment of Assets. This replaces the
previous requirement to recognise a provision for onerous lease
contracts.
For short--term leases (lease term of 12 months or less) and
leases of low-value assets (such as photocopiers), the Group has
opted to recognise a lease expense on a straight-line basis as
permitted by IFRS 16. This expense is presented within
administrative expenses in the consolidated statement of
comprehensive income.
Trade and other receivables
Trade and other receivables are stated initially at fair value
and subsequently measured at amortised cost less any provision for
impairment.
Trade and other payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows,
cash in hand and deposits payable on demand. Cash equivalents are
short-term highly liquid investments that are readily convertible
to known amounts of cash and that are subject to an insignificant
risk of changes in value. Cash equivalents normally have a date of
maturity of 3 months or less from the acquisition date.
Bank loans and overdrafts comprise amounts due on demand.
Finance income
Finance income consists of interest receivable on funds
invested. It is recognised in the Statement of Comprehensive Income
as it accrues.
Taxation
Income tax on the profit or loss for the periods presented
comprises current and deferred tax. Current tax is the expected tax
payable on the taxable income for the year, using rates enacted or
substantively enacted at the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination; the differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the end of the reporting period.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets and
liabilities are not discounted.
Pension costs
The Group operates a pension scheme for its employees. It also
makes contributions to the private pension arrangements of certain
employees. These arrangements are of the money purchase type and
the amount charged to the Statement of Comprehensive Income
represents the contributions payable by the Group for the
period.
Financial instruments
The Group does not enter into derivative transactions and does
not trade in financial instruments. Financial assets and
liabilities are recognised on the Statement of Financial Position
when the Group becomes a party to the contractual provision of the
instrument.
Equity
An equity instrument is a contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs. The Group's equity instruments
comprise 'share capital' in the Statement of Financial
Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into sterling at the rates of exchange
ruling at the end of the reporting period. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are taken to the Statement of
Comprehensive Income.
Government grants
Government grants are recognised based on the accrual model and
are measured at the fair value of the asset received or receivable.
Grants are classified as relating either to revenue or to assets.
Grants relating to revenue are recognised in income over the period
in which the related costs are recognised. Grants relating to
assets are recognised over the expected useful life of the asset.
Where part of a grant relating to an asset is deferred, it is
recognised as deferred income.
Share-based awards
The Group issues equity settled payments to certain employees.
Equity settled share based payments are measured at fair value
(excluding the effect of non-market based vesting conditions) at
the date of grant.
The fair value is estimated using option pricing models and is
dependent on factors such as the exercise price, expected
volatility, option price and risk free interest rate. The fair
value is then amortised through the Statement of Comprehensive
Income on a straight-line basis over the vesting period. Expected
volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 24
to the financial statements.
Exceptional items
Exceptional items are one off, material items outside the normal
course of business which are not related to the Group's trading
activities.
Significant judgements and estimates
The preparation of the Group's financial statements in
conforming with IFRS required management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts in the financial statements. These judgements
and estimates are based on management's best knowledge of the
relevant facts and circumstances. Information about such judgements
and estimation is contained in the accounting policies and / or
notes to the financial statements. For critical judgements that the
directors have made in the process of applying the Group's
accounting policies, see note 11 on goodwill impairment and note 13
on discount rate used to calculate right of use assets and lease
liability.
2 Revenue and segment information
The Group uses several factors in identifying and analysing
reportable segments, including the basis of organisation, such as
differences in products and geographical areas. The Board of
directors, being the Chief Operating Decision Makers, have
determined that for the year ending 30 June 2023 there is only a
single reportable segment.
All revenue represents sales to external customers. Three
customers (2022: two) are defined as major customers by revenue,
contributing more than 10% of the Group revenue.
2023 2022
GBP GBP
---------- ----------
Customer One 3,015,981 1,916,827
Customer Two 2,474,089 -
Customer Three 2,258,852 1,816,883
Major customers in the current year 7,748,922 3,733,710
---------- ----------
The geographical analysis of revenue from continuing operations
by geographical location of customer is as follows:
Geographical market 2023 2022
GBP GBP
--------------------- -----------
United Kingdom 11,491,547 7,586,982
United States 6,821,433 4,150,179
Rest of the World 1,917,251 470,092
20,230,231 12,207,253
--------------------- -----------
2023 2022
GBP GBP
------------------------------------------------ -----------
Revenue from contracts with customers - Events 17,915,369 10,135,172
Revenue from contracts with customers - Film 1,675,186 1,785,367
Other revenue 639,676 286,714
Total revenue 20,230,231 12,207,253
------------------------------------------------ -----------
Contract assets and liabilities from contracts with customers
have been recognised as follows:
2023 2022
GBP GBP
--------
Deferred income 809,774 839,326
Accrued income 1,350,233 875,002
---------- --------
Deferred income at the beginning of the period has been
recognised as revenue during the period. Deferred income carried
forward at the year end will be recognised within the next
year.
3 Other income
Other income 2023 2022
GBP GBP
--------------------------------------------- ------
Coronavirus job retention scheme government
grant - 1,168
Business interruption payment grant - 2,575
- 3,743
--------------------------------------------- ------
During the prior year the Group received government grants under
the UK government's coronavirus job retention scheme and the
coronavirus business interruption loan scheme.
4 Operating profit
Operating profit is stated after charging
or crediting: 2023 2022
GBP GBP
-------------------------------------------------- ----------
Cost of sales
Depreciation of fixtures, fittings and equipment 75,521 54,101
Amortisation of intangible assets 2,500 2,500
Staff costs (see note 23) 3,060,948 2,135,136
Administrative expenses
Depreciation of right-of-use assets 126,786 82,361
Depreciation of leasehold land and buildings 34,243 1,935
(Profit) / loss on foreign exchange differences 31,888 14,465
Fees payable to the Company's auditor in
respect of:
Audit of the Company's annual accounts 12,600 7,842
Audit of the Company's subsidiaries 23,366 26,694
Interest on lease liabilities 39,212 21,191
Staff costs (see note 23) 1,321,451 1,107,745
---------- ----------
5 Finance income
Finance income 2023 2022
GBP GBP
------------------------ -----
Bank interest received 215 241
------------------------ -----
6 Finance costs
Finance costs 2023 2022
GBP GBP
------------------------------------------------- -------
Coronavirus business interruption loan interest 7,963 6,662
Lease interest 39,212 21,191
47,175 27,853
------------------------------------------------- -------
7 Taxation
2023 2022
GBP GBP
---------------------------------------------------- ---------
The tax charge comprises:
Current tax
Current year 277,699 232,206
---------
277,699 232,206
Deferred tax (see note 8)
Current year 11,081 (27,984)
---------
11,081 (27,984)
Total tax charge in the statement of comprehensive
income 288,780 204,222
Factors affecting the tax charge for the
year
Profit on ordinary activities before taxation
from continuing operations 1,045,960 843,564
Profit on ordinary activities before taxation
multiplied by standard rate
of UK corporation tax of 20.5% (2022: 19%) 214,422 160,277
Effects of:
Non-deductible expenses 74,358 43,945
74,358 43,945
Total tax charge 288,780 204,222
---------------------------------------------------- ---------
The Group has estimated losses of GBP375,762 (2022: GBP685,568)
available to carry forward against future trading profits. Losses
totalling GBP375,762 are in Aeorema Communications plc which is not
currently making taxable profits, as all trading is undertaken by
its subsidiaries Aeorema Limited, Eventful Limited and Cheerful
Twentyfirst, Inc., therefore no deferred tax asset has been
recognised in respect of this amount.
8 Deferred taxation
Group 2023 2022
GBP GBP
----------------------------------------------- ---------
Property, plant and equipment temporary
differences (83,481) (39,435)
Temporary differences 98,325 55,823
Tax losses - 9,537
---------
14,844 25,925
At 1 July 25,925 (2,059)
Transfer to Statement of Comprehensive Income (11,081) 27,984
At 30 June 14,844 25,925
----------------------------------------------- ---------
9 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the
parent Company's Statement of Comprehensive Income has not been
included in these financial statements. The profit for the
financial year of the holding company was GBP338,795 (2022:
GBP148,184).
10 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit
or loss attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit
or loss attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would have been
issued on the conversion of all dilutive potential ordinary shares
into ordinary shares.
The following reflects the income and share data used and
dilutive earnings per share computations:
2023 2022
GBP GBP
----------- -----------
Basic earnings per share
Profit for the year attributable
to owners of the Company 757,180 639,342
Basic weighted average number of
shares 9,413,000 9,238,000
Dilutive potential ordinary shares:
Employee share options 1,665,000 1,770,000
Diluted weighted average number
of shares 11,078,000 11,008,000
----------- -----------
11 Intangible fixed assets
Intellectual
Group Goodwill Property Total
GBP GBP GBP
-------------------------------- -------------
Cost
At 30 June 2021 2,927,486 10,000 2,937,486
At 30 June 2022 2,927,486 10,000 2,937,486
At 30 June 2023 2,927,486 10,000 2,937,486
Impairments and amortisation
At 30 June 2021 2,363,138 2,917 2,366,055
Charge for the year - 2,500 2,500
At 30 June 2022 2,363,138 5,417 2,368,555
Charge for the year - 2,500 2,500
At 30 June 2023 2,363,138 7,917 2,371,055
Net book value
At 30 June 2021 564,348 7,083 571,431
At 30 June 2022 564,348 4,583 568,931
At 30 June 2023 564,348 2,083 566,431
---------- ------------- ----------
Goodwill arose for the Group on consolidation of its
subsidiaries, Aeorema Limited and Eventful Limited.
Impairment - Aeorema Limited and Eventful Limited
Goodwill arises on acquisition of a business combination and
represents the difference between the fair value of the
consideration paid and the aggregate fair value of identifiable
assets and liabilities acquired. Goodwill is tested annually for
impairment, goodwill is impaired when the value in use exceeds the
net asset value of the group's cash generating units (CGUs).The
CGUs represent Aeorema Limited and Eventful Limited, being the
lowest level within the group at which goodwill is monitored for
internal management purposes.
The value in use has been calculated on a discounted cash flow
basis using the 2023-24 budgeted figures as approved by the Board
of directors, extended in perpetuity to calculate the terminal
value and discounted at a rate of 10%. It is assumed that future
growth will be 3% for venue sourcing activities and 4% for event
and moving image production activities. Using these assumptions,
which are based on past experience and future expectations, the
recoverable amount of goodwill of GBP2,673,773 was determined to be
higher than its carrying value, hence no impairment in the
year.
Sensitivity Analysis
If the assumptions used in the impairment review were changed to
greater extent than as presented in the following table, the
changes would, in isolation, lead to impairment loss being
recognised for 0% growth rate.
Discount Discount
Rate of Rate of
Aeorema Limited 4% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
------------ -----------
Value in use calculations 15,646,053 (712,679) 27,618,896 11,118,210
Carrying amount in financial
statements 365,154 365,154 365,154 365,154
Difference 15,280,899 (1,077,833) 27,253,742 10,753,056
----------- ------------ -----------
Discount Discount
Rate of Rate of
Eventful Limited 3% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
---------- ---------
Value in use calculations 563,932 (798.256) 796,692 460,377
Carrying amount in financial
statements 199,194 199,194 199,194 199,194
Difference 364,738 (997,450) 597,498 261,183
---------- ---------- ---------
Discount Discount
Rate of Rate of
Combined 4% Growth 0% Growth 5% 15%
GBP GBP GBP GBP
------------ -----------
Value in use calculations 16,209,985 (1,510,935) 28,415,588 11,578,587
Carrying amount in financial
statements 564,348 564,348 564,348 564,348
Difference 15,645,637 (2,075,283) 27,851,240 11,014,239
----------- ------------ -----------
12 Property, plant and equipment
Leasehold Fixtures,
Group land fittings Total
and buildings and equipment
GBP GBP GBP
--------------------------- --------------
Cost
At 30 June 2021 58,536 229,007 287,543
Additions 98,821 80,654 179,475
Disposals (58,536) (5,095) (63,631)
Foreign exchange movement - 329 329
At 30 June 2022 98,821 304,895 403,716
Additions 154,068 170,959 325,027
Disposals - (72,449) (72,449)
Foreign exchange movement - (143) (143)
At 30 June 2023 252,889 403,262 656,151
Depreciation
At 30 June 2021 58,536 125,530 184,066
Charge for the year 1,935 54,101 56,036
Eliminated on disposal (58,536) (449) (58,985)
Foreign exchange movement - 120 120
At 30 June 2022 1,935 179,302 181,237
Charge for the year 34,243 75,521 109,764
Eliminated on disposal - (63,308) (63,308)
Foreign exchange movement - (51) (51)
At 30 June 2023 36,178 191,464 227,642
Net book value
At 30 June 2021 - 103,477 103,477
At 30 June 2022 96,886 125,593 222,479
At 30 June 2023 216,711 211,798 428,509
-------------- -------------- ---------
13 Right-of-use assets
Leasehold
Group Property
GBP
----------
Cost
At 30 June 2021 18,995
Additions 887,138
Disposals (18,995)
At 30 June 2022 887,138
At 30 June 2023 887,138
Depreciation
At 30 June 2021 -
Charge for the year 82,361
Disposals (18,995)
At 30 June 2022 63,366
Charge for the year 126,786
At 30 June 2023 190,152
Net book value
At 30 June 2021 18,995
At 30 June 2022 823,772
At 30 June 2023 696,986
----------
The right-of-use asset addition during the year relates to the
Group's leasehold property at 87 New Cavendish Street, London, W1W
6XD. The Group entered the new leasehold in January 2022.
The right-of-use asset is calculated on the assumption that the
Group will remain in the premises for the duration of the 7 year
lease agreement. A discount rate of 5% was used to calculate the
right-of use asset. 5% was considered an appropriate rate based on
the Group's weighted average cost of capital.
The disposal during the previous year relates to the Group's
leasehold property at Moray House, 23-31 Great Titchfield Street,
London, W1W 7PA. The Group left the premises in September 2021.
14 Non-current assets - Investments
Company Shares in subsidiary
GBP
---------------------
Cost
At 30 June 2021 3,866,466
Increase in respect of share-based
payments 56,895
At 30 June 2022 3,923,361
Increase in respect of share-based
payments 64,419
Incorporation of subsidiary 1
At 30 June 2023 3,987,781
Provision
At 30 June 2021 2,694,213
At 30 June 2022 2,694,213
At 30 June 2023 2,694,213
Net book value
At 30 June 2021 1,172,253
At 30 June 2022 1,229,148
At 30 June 2023 1,293,568
---------------------
Holdings of more than 20%
The Company holds more than 20% of the share capital of the
following companies:
Subsidiary undertakings Country of
Profit
/ (loss)
before tax
for the Net assets
year ended at year
Shares 30 June ended 30
Registration held 2023 June 2023
or incorporation Class % GBP GBP
------------------ ---------- ---- ------------ -----------
England and
Aeorema Limited Wales Ordinary 100 781,754 1,097,075
England and
Eventful Limited Wales Ordinary 100 205,559 140,109
Twentyfirst Limited England and
(Dormant) Wales Ordinary 100 - 1,362
Cheerful Twentyfirst, United States
Inc. of America Ordinary 100 317,467 424,412
Cheerful Twentyfirst
B.V. The Netherlands Ordinary 100 (9,427) (7,635)
------------------ ---------- ---- ------------ -----------
During the year the Group formed Cheerful Twentyfirst B.V., a
Dutch company based in Amsterdam. Aeorema Communications plc holds
100% of the share capital in Cheerful Twentyfirst B.V.
The registered address of Aeorema Limited, Eventful Limited and
Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB.
The registered address of Cheerful Twentyfirst, Inc. is 85 Broad
Street, Floor 16, New York, NY, 10004. The registered address of
Cheerful Twentyfirst B.V. is Strawinskylaan 569, 1077 XX,
Amsterdam.
15 Trade and other receivables
Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
---------- --------
Trade receivables 1,649,905 1,980,121 - -
Related party receivables - - 689,087 666,017
Other receivables 170,188 78,536 8,819 14,982
Prepayments and accrued income 1,682,429 1,071,378 15,682 8,333
3,502,522 3,130,035 713,588 689,332
---------- ---------- --------
All trade and other receivables are expected to be recovered
within 12 months of the end of the reporting period. The fair value
of trade and other receivables is the same as the carrying values
shown above.
Trade and other receivables are assessed for impairment based
upon the expected credit losses model. The credit losses
historically incurred have been immaterial and as such the risk
profile of the trade receivables has not been presented.
At the year end, trade receivables of GBP308,531 (2022:
GBP694,325) were past due but not impaired. These amounts are still
considered recoverable. The ageing of these trade receivables is as
follows:
Group
2023 2022
GBP GBP
--------
Less than 90 days overdue 160,286 566,605
More than 90 days overdue 148,245 127,720
308,531 694,325
-------- --------
16 Cash at bank and in hand
Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
---------- ------
Bank balances 2,444,100 1,714,417 135,548 1,532
2,444,100 1,714,417 135,548 1,532
---------- ---------- ------
17 Trade and other payables
Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
------------------------------ ---------- --------
Trade payables 1,587,052 796,671 21,604 5,411
Related party payables - - 67,355 67,355
Taxes and social security
costs 36,528 466,847 - -
Other payables 121,581 124,737 - 50,000
Accruals and deferred income 2,137,777 1,571,966 15,500 20,955
3,882,938 2,960,221 104,459 143,721
------------------------------ ---------- --------
All trade and other payables are expected to be settled within
12 months of the end of the reporting period. The fair value of
trade and other payables is the same as the carrying values shown
above.
18 Bank Loans
2023 2022
GBP GBP
--------
Bank Loan
Current 83,333 83,333
Non-current 27,778 111,111
111,111 194,444
-------- --------
On 15 October 2020 the company received a Floating Rate Basis
Coronavirus Business Interruption Loan (CBIL) of 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 GBP7,963
being charged to profit and loss. This is offset by the equal
amount of government grant income being recognised.
The bank loan is secured by a fixed and floating charge over the
company's present and future assets.
19 Leases
The balance sheet shows the following amounts relating to
leases:
Group 2023 2022
GBP GBP
----------
Right-of-use assets
Buildings 696,986 823,772
696,986 823,772
---------- ----------
Group 2023 2022
GBP GBP
--------
Lease liabilities
Current 109,058 121,999
Non-current 612,693 738,041
721,751 860,040
-------- --------
Group 2023 2022
GBP GBP
-------- --------
Maturity analysis - contractual undiscounted
cash flows
Less than one year 142,000 213,000
One to five years 639,000 710,000
More than five years - 71,000
781,000 994,000
-------- --------
Group 2023 2022
GBP GBP
------------------------------- -------
Interest on lease liabilities 39,212 21,191
39,212 21,191
------- -------
20 Provisions
Leasehold Total
Group dilapidations
GBP GBP
---------------------------------------------- --------
At 1 July 2021 25,020 25,020
Charged to statement of comprehensive income 14,480 14,480
At 30 June 2022 39,500 39,500
Charged to statement of comprehensive income 9,000 9,000
At 30 June 2023 48,500 48,500
---------------- --------
Leasehold Total
Group dilapidations
GBP GBP
------------- --------
Current 35,000 35,000
Non-current 13,500 13,500
48,500 48,500
---------------- --------
Leasehold dilapidations relate to the estimated cost of
returning a leasehold property to its original state at the end of
the lease in accordance with the lease terms. The main uncertainty
relates to estimating the cost that will be incurred at the end of
the lease.
21 Share capital
2023 2022
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 30 June 2021 9,238,000 1,154,750
At 30 June 2022 9,238,000 1,154,750
Shares issued during the
year 300,000 37,500
At 30 June 2023 9,538,000 1,192,250
---------------------------- ----------------
Holders of these shares are entitled to dividends as declared
from time to time and are entitled to one vote per share at general
meetings of the company.
See note 24 for details of share options outstanding.
22 Directors' emoluments
Salary, Salary,
fees, bonuses fees, bonuses
and benefits and benefits
in kind in kind Pensions Pensions Total Total
2023 2022 2023 2022 2023 2022
GBP GBP GBP GBP GBP GBP
--------------- --------------- --------- --------- -------- --------
M Hale - - - - - -
S Haffner 16,250 15,000 - - 16,250 15,000
R Owen 20,000 20,000 - - 20,000 20,000
S Quah 219,375 151,057 9,375 7,500 228,750 158,557
A Harvey 165,000 112,377 7,657 6,172 172,657 118,549
H Luffman 16,250 4,558 - - 16,250 4,558
436,875 302,992 17,032 13,672 453,907 316,664
--------------- --------------- --------- --------- -------- --------
The remuneration of directors of the Company is set out
below.
During the year M Hale waived his right to fees of GBP15,000
(2022: GBP15,000)
The share options held by directors who served during the year
are summarised below:
Number Exercise Earliest
Name Grant date awarded price exercise date Expiry date
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 25).
23 Employee information
The average monthly number of employees (including directors)
employed by the Group during the year was:
Number of employees Group Company
2023 Number 2022 Number 2023 Number 2022 Number
Administration and production 63 55 5 5
------------ ------------ ------------
The aggregate payroll costs of these employees charged in the
Statement of Comprehensive Income was as follows:
Employment costs Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
---------- -------
Wages and salaries 3,759,340 2,827,204 52,500 39,558
Social security costs 429,412 294,872 - -
Pension costs 129,228 63,910 - -
Share-based payments 64,419 56,895 - -
4,382,399 3,242,881 52,500 39,558
---------- ---------- -------
24 Share-based payments
The Group operates an EMI share option scheme for key employees.
Options are granted to key employees at an exercise price equal to
the market price of the Company's shares at the date of grant.
Options are exercisable from the third anniversary of the date of
grant and lapse if they remain unexercised at the tenth anniversary
or upon cessation of employment. The following option arrangements
exist over the Company's shares:
Number Number of
Exercise of options options 2022
Date of grant price Exercise period 2023
From To
--------- ---------------- -------------- ------------ --------------
25 April 2013 16.5p 25 April 2016 24 April 2023 - 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 2021 31.0p 5 November 2023 29 April 2031 200,000 200,000
29 April 2021 50.0p 5 November 2023 29 April 2031 200,000 200,000
29 April 2021 70.0p 5 November 2023 29 April 2031 200,000 200,000
23 May 2022 60.0p 23 May 2025 23 May 2032 100,000 150,000
19 October 19 October
2022 71.0p 19 October 2025 2032 110,000 -
1,530,000 1,770,000
--------- ---------------- -------------- ------------ --------------
Details of the number of share options and the weighted average
exercise price outstanding during the year are as follows:
Weighted Weighted
Number of average exercise Number of average exercise
options price options price
2023 2023 2022 2022
GBP GBP
---------- ------------------ ---------- ------------------
Outstanding at beginning
of the year 1,770,000 0.40 1,920,000 0.37
Granted during the
year 110,000 0.71 150,000 0.60
Cancelled during the
year (50,000) (0.60) (300,000) (0.50)
Exercised during the
year (300,000) (0.17) - -
Outstanding at end
of the year 1,530,000 0.48 1,770,000 0.40
---------- ------------------ ---------- ------------------
Exercisable at the
end of the year 720,000 0.28 1,020,000 0.25
---------- ------------------ ---------- ------------------
The exercise price of options outstanding at the year-end was
GBP0.481 (2022: GBP0.404) and their weighted average contractual
life was 6.8 years (2022: 6.5 years).
Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value as determined at the grant
date of equity-settled share-based payments is expensed on a
straight line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. The estimated fair
value of the options is measured using an option pricing model. The
inputs into the model are as follows:
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
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 31.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 30.060p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 50.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.943p
--------------
Grant date 29 April 2021
Model used Black-Scholes
Share price at grant date 30.5p
Exercise price 70.0p
Contractual life 10 years
Risk free rate 0.84%
Expected volatility 153.96%
Expected dividend rate 0%
Fair value option 29.845p
--------------
Grant date 23 May 2022
Model used Black-Scholes
Share price at grant date 60.0p
Exercise price 60.0p
Contractual life 10 years
Risk free rate 2.31%
Expected volatility 175.63%
Expected dividend rate 0%
Fair value option 59.707p
--------------
19 October
Grant date 2022
Model used Black-Scholes
Share price at grant date 71.0p
Exercise price 71.0p
Contractual life 10 years
Risk free rate 3.87%
Expected volatility 177.03%
Expected dividend rate 0%
Fair value option 26.581p
--------------
The expected volatility is determined by calculating the
historical volatility of the parent company's share price. For the
share options issued prior to the year ended 30 June 2021 the
historical volatility of the parent company's share price is
calculated over the last three years. For share options issued
after 1 July 2021 the historical volatility is calculated over the
last 10 years. The method used to determine the historical
volatility of the parent company's share price changed in the prior
year as a consequence of the COVID-19 pandemic. The impact of the
COVID-19 pandemic on the parent company's share price was
significant and not considered an appropriate measure of the parent
company's share price volatility. The extension of the period to 10
years was considered appropriate. The risk free rate is based on
the yield from gilt strip government bonds with a similar life to
the expected life of the options.
The Group recognised the following charges in the Statement of
Comprehensive Income in respect of its share-based payment
plans:
2023 2022
GBP GBP
---------------------------- -------
Share-based payment charge 64,419 56,895
---------------------------- -------
25 Related party transactions
The Group has a related party relationship with its subsidiaries
and its key management personnel (including directors). Details of
transactions between the Company and its subsidiaries are as
follows:
2023 2022
GBP GBP
----------------------------------- --------
Amounts owed by subsidiaries
Total amount owed by subsidiaries 689,087 666,017
Amounts owed to subsidiaries
Total amount owed to subsidiaries 67,355 67,355
-------- --------
Aeorema Limited
The company received dividends totalling GBP350,000 during the
year (2022: GBP125,000) from its subsidiary, Aeorema Limited. The
company transferred a VAT receivable of GBP33,245 (2022: GBP17,424)
to Aeorema Limited due to being part of a common VAT group.
Aeorema Limited transferred a net amount of expenses to Aeorema
Communications plc during the year of GBP36,250 (2022:
GBP24,558).
Aeorema Limited paid expenses totalling GBP237,135 (2022:
GBP114,052) on behalf of Aeorema Communications plc during the
year.
During the year, Aeorema Limited made a net transfer of cash of
GBP186,800 to Aeorema Communications plc (2022: GBP10,000).
Cheerful Twentyfirst, Inc.
The company received dividends totalling GBP150,000 during the
year (2022: GBP125,000) from its subsidiary, Cheerful Twentyfirst,
Inc.
Eventful Limited
The company received dividends totalling GBP100,000 during the
year (2022: GBP25,000) from its subsidiary, Eventful Limited.
Compensation of key management
The compensation of key management (including directors) of the
Group is as follows:
2023 2022
GBP GBP
------------------------------ --------
Short-term employee benefits 442,158 302,991
Post-employment benefits 17,032 13,672
459,190 316,663
-------- --------
The share options held by directors of the Company are disclosed
in note 22. During the year, a charge of GBP49,905 (2022:
GBP49,905) was recognised in the Consolidated Statement of
Comprehensive Income in respect of these share options.
During the year S Quah received an interest-free loan of
GBP40,000 (2022: GBPnil). At the year end, GBP10,000 (2021:
GBP10,000) was outstanding.
Harris and Trotter LLP is a firm in which S Haffner is a member.
The amounts charged to the Group for professional services are as
follows:
Harris and Trotter LLP - charged during
the year 2023 2022
GBP GBP
Aeorema Communications plc 16,250 15,000
Aeorema Limited 11,450 9,650
27,700 24,650
------------------------------------------ -------
At the year end, the Group had an outstanding trade payable
balance to Harris and Trotter LLP of GBP5,000 (2022: GBP5,630).
26 Cash flows
Group
2023 2022
GBP GBP
---------- ------------
Cash flows from operating activities
Profit / (loss) before taxation 1,045,960 843,564
Depreciation of property, plant and equipment 109,764 56,036
Depreciation of right-of-use assets 126,786 82,361
Amortisation of intangible fixed assets 2,500 2,500
Loss on disposal of fixed assets 9,141 4,646
Share-based payment expense 64,419 56,895
Finance income (215) (241)
Interest on lease liabilities 39,212 21,191
Exchange rate differences on translation (119,455) 42,138
1,278,112 1,109,090
Increase in trade and other payables 931,716 1,557,234
Decrease in trade and other receivables (372,487) (1,700,972)
Taxation paid (380,753) (43,657)
Cash generated from operating activities 1,456,588 921,695
----------------------------------------------- ------------
27 Financial instruments
Financial instruments recognised in the consolidated statement
of financial position
All financial instruments are recognised initially at their
transaction cost and subsequently measured at amortised cost.
Group Company
2023 2022 2023 2022
GBP GBP GBP GBP
---------- ---------- ----------
Financial Assets
Trade and other receivables 3,170,326 2,933,659 589,087 666,017
Cash and cash equivalents 2,444,100 1,714,417 135,548 1,532
Investments in subsidiaries - - 1,293,567 1,229,148
Total 5,614,426 4,648,076 2,018,202 1,896,697
Financial Liabilities
Trade and other payables 1,819,744 1,115,852 88,959 122,766
Accruals 1,328,001 732,640 17,000 20,955
Total 3,147,745 1,848,492 105,959 143,721
---------- ---------- ---------- ----------
The Group is exposed to risks that arise from its use of
financial instruments. There have been no significant changes in
the Group's exposure to financial instrument risk, its objectives,
policies and processes for managing those from previous periods.
The principal financial instruments used by the Group, from which
financial instrument risk arises, are trade receivables, cash and
cash equivalents and trade and other payables.
Credit risk
Credit risk arises principally from the Group's trade
receivables. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument. The maximum
exposure to credit risk at 30 June 2023 was GBP1,649,905 (2022:
GBP1,980,121). Trade receivables are managed by policies concerning
the credit offered to customers and the regular monitoring of
amounts outstanding for both time and credit limits. The credit
risk associated with trade receivables is minimal as invoices are
based on contractual agreements with long-standing customers.
Credit losses historically incurred by the Group have consequently
been immaterial.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to meet its liabilities when they fall due. The Group
monitors cash flow on a regular basis. At the year end, the Group
has sufficient liquid resources to meets its obligations of
GBP3,147,899 (2022: GBP2,327,501).
Market risk
Market risk arises from the Group's use of interest bearing
financial instruments. It is the risk that the fair value of future
cash flows of a financial instrument will fluctuate. At the year
end, the cash and cash equivalents of the Group net of bank
overdrafts was GBP2,444,100 (2022: GBP1,714,417). The Group ensures
that its cash deposits earn interest at a reasonable rate.
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern while maximising
the return to stakeholders. The capital structure of the Group
consists of equity attributable to equity holders of the parent,
comprising issued share capital, reserves and retained earnings as
disclosed in the Consolidated Statement of Changes in Equity. At
the year end, total equity was GBP2,814,356 (2022:
GBP2,253,564).
28 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal
pension plans. Contributions payable by the Group for the year were
GBP129,228 (2022: GBP63,910). At the end of the reporting period
GBP17,475 (2022: GBP12,021) of contributions were due in respect of
the period.
29 Dividends
In respect of the current year, the directors propose that a
final dividend of 3 pence per share (2022: 2 pence) be paid to
shareholders on 19 January 2024. The dividends are subject to
approval by shareholders at the Annual General Meeting and have not
been included as liabilities in these consolidated financial
statements. The proposed dividends are payable to all shareholders
on the Register of Members on 22 December 2023. The total estimated
dividend to be paid is GBP286,140. The payment of this dividend
will not have any tax consequences for the Group.
30 Contingent liability
Company
The Company is a member of a group VAT registration with all
other companies in the Aeorema Communications group and, under the
terms of the registration, is jointly and severally liable for the
VAT payable by all members of the group. At 30 June 2023 the
Company had no potential liability under the terms of the
registration.
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END
FR BJBTTMTTBTAJ
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November 14, 2023 02:00 ET (07:00 GMT)
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