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Aeorema Communications Plc  -  AEO   

Final Results

Released 11:15 10-Nov-2017

RNS Number : 1795W
Aeorema Communications Plc
10 November 2017
 

Aeorema Communications plc / Index: AIM / Epic: AEO / Sector: Media

10 November 2017

Aeorema Communications plc ('Aeorema' or 'the Company')

Final Results and Notice of AGM

 

Aeorema Communications plc, the AIM-traded live events agency, announces its audited results for the year ended 30 June 2017.  The Company also gives notice that its Annual General Meeting ('AGM') will be held at 11.30am on 7 December 2017 at Moray House, 23-31 Great Titchfield Street, London, W1W 7PA.  A formal notice of AGM along with the Annual Report and Accounts for the year ended 30 June 2017 will be sent to shareholders and will be available on the Company's website www.aeorema.com in due course.

 

Overview

·     Profits before tax from continuing operations of £248,887 (2016: £340,165)

·     Revenues of £4,156,592 (2016: £4,583,050)

·     Cash at bank and in hand of £1,897,212 (2016: £1,427,723)

·     Recommend final dividend payment of 0.5p per share (2016: 2p)

 

Chairman's Statement

Further to the 13 September 2017 trading update, the Company announces revenue of £4,156,592 and pre-tax profits of £248,887 for the year ended 30 June 2017.  Reported pre-tax Profits are down on the preceding year as a result of a written off investment of £90,000 in a new, proprietary, interactive database, Imaginarium.   Imaginarium gives customers access to hundreds of creative technologies and ideas and will help the Company's events division, Cheerful Twentyfirst, to be more innovative and creative in pitching for clients.  We believe this investment provides the Company with the first database of its kind in the events business and will, we anticipate, stand us apart from our competitors.  The database now needs minimal additional expenditure to continually update.  There may be other revenue generating opportunities for the technology, which we are currently exploring. 

 

During the year, the Company ran a number of cutting edge corporate events for blue-chip clients both in the UK and in Europe including a well-received event at Cannes Lions, the international festival of creativity.   In tandem with this, our high-margin video division delivered a steady stream of projects for long-standing clients. 

 

Post year end, the Company underwent a major change when its two founders, Peter Litten and Gary Fitzpatrick, stepped down from the board; I would like to reiterate our thanks to them for their 21 years of input and leadership.  At the same time, their shares were placed with a broad spread of new investors and Steve Quah and Andrew Harvey were promoted to the role of Joint Managing Directors. 

 

The board is very supportive of the new management team and believes that the Company is well positioned and has the resources and skills to build a much stronger business: it has a stable, creative and motivated team; and the market dynamics are robust given the growing trend for big brands to use events to re-engage with their clients and employees on a more personal level.

Additionally, Aeorema has a healthy balance sheet with £1,897,212 in cash at year end (2016: £1,427,723).  The Board is proposing a final dividend of 0.5 pence per share (2016: 2 pence per share) to be paid to shareholders on the register on 15 December 2017.  The ex-dividend date will be on 14 December 2017.  Subject to the proposed dividend being approved by shareholders at the AGM, it will be paid on 12 January 2018.  Despite a strong operational performance and balance sheet, the proposed dividend is lower compared to the previous year in order to preserve cash balances in anticipation of future development initiatives that the Board intends to undertake in order to build further value for shareholders.  This includes considering complementary investment within the business to help capture potential organic growth opportunities and exploring potential acquisition opportunities.

 

Finally, I would like to welcome the new shareholders and thank the current shareholders for their continued support.  I look to the future with confidence as the Company embarks on a new, exciting phase in its development. 

 

M Hale

Chairman

9 November 2017

 

 

 For further information visit www.aeorema.com or contact:

 

Mike Hale

Aeorema Communications plc

Tel: +44 (0) 20 7291 0444

Marc Milmo / Catherine Leftley

Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker)

Tel: +44 (0) 20 7894 7000

Jeremy Porter / John Depasquale / Liz Kirchner

Allenby Capital Limited (Joint Broker)

Tel: +44 (0)20 3328 5656

Isabel de Salis / Charlotte Page

St Brides Partners Ltd   

Tel: +44 (0) 20 7236 1177

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2017

 

Notes

2017

2016

 

 

£

£

 

 

 

 

Continuing operations

 

 

 

 

Revenue

2

4,156,592

4,583,050

Cost of sales

 

(2,495,487)

(2,779,903)

Gross profit

 

1,661,105

1,803,147

Administrative expenses

 

(1,412,737)

(1,463,899)

Operating Profit

3

248,368

339,248

Finance income

4

519

917

Profit before taxation

 

248,887

340,165

Taxation

5

(37,284)

(66,663)

Profit and total comprehensive income for the year attributable to owners of the parent

 

211,603

 

273,502

 

 

Profit per ordinary share:

 

 

 

 

Total basic earnings per share

 

8

2.33803p

3.02195p

Total diluted earnings per share

8

2.26301p

2.92500p


There were no other comprehensive income items.


The notes included below are an integral part of these financial statements.

 

 

Statement of Financial Position

As at 30 June 2017

 

Notes

Group

 

Company

 

 

 

2017

2016

2017

2016

 

 

£

£

£

£

Non-current assets

 

 

 

 

 

Intangible assets

9

365,154

365,154

-

-

Property, plant and equipment

10

31,341

60,259

-

-

Deferred taxation

6

2,861

6,075

-

-

Investments in subsidiaries

11

-

-

580,490

580,490

Total non-current assets

 

399,356

431,488

580,490

580,490

Current assets

 

 

 

 

 

Trade and other receivables

12

1,007,592

1,174,337

748,661

807,418

Cash and cash equivalents

13

1,897,212

1,427,723

459,180

469,923

Total current assets

 

2,904,804

2,602,060

1,207,841

1,277,341

Total assets

 

3,304,160

3,033,548

1,788,331

1,857,831

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

14

(1,615,603)

(1,340,583)

(94,173)

(98,805)

Current tax payable

14

(31,042)

(66,043)

-

-

Total current liabilities

 

(1,646,645)

(1,406,626)

(94,173)

(98,805)

Net assets

 

1,657,515

1,626,922

1,694,158

1,759,026

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

15

1,131,313

1,131,313

1,131,313

1,131,313

Share premium

16

7,063

7,063

7,063

7,063

Merger reserve

17

16,650

16,650

16,650

16,650

Capital redemption reserve

 

257,812

257,812

257,812

257,812

Retained earnings

 

244,677

214,084

281,320

346,188

Equity attributable to owners of the parent

 

1,657,515

1,626,922

1,694,158

1,759,026

 

The notes included below are an integral part of these financial statements.

 

The retained profit for the financial year of the holding company was £116,142 (2016: £821,663).

 

The financial statements were approved and authorised by the board of directors on 9 November 2017 and were signed on its behalf by

 

S Quah, Director                                                                              

S Haffner, Director

Company Registration No. 04314540

 

 

Consolidated Statement of Changes in Equity

For the year ended 30 June 2017

Group

Share capital

Share premium

Merger reserve

Capital redemption reserve

Retained earnings

Total equity

 

£

£

£

£

£

£

At 1 July 2015

1,131,313

7,063

16,650

257,812

471,202

1,884,040

 

Profit and total comprehensive income for the year, net of tax

-

-

-

-

273,502

273,502

Dividends paid

-

-

-

-

(543,030)

(543,030)

Share-based payments

-

-

-

-

12,410

12,410

At 30 June 2016

1,131,313

7,063

16,650

257,812

214,084

1,626,922

 

Profit and total comprehensive income for the year, net of tax

-

-

-

-

211,603

211,603

Dividends paid

-

-

-

-

(181,010)

(181,010)

At 30 June 2017

1,131,313

7,063

16,650

257,812

244,677

1,657,515

 

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.

 

Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares.

 

The notes included below are an integral part of these financial statements.

 

 

Company Statement of Changes in Equity

For the year ended 30 June 2017

Company

Share capital

Share premium

Merger reserve

Capital redemption reserve

Retained earnings

Total equity

 

£

£

£

£

£

£

At 1 July 2015

1,131,313

7,063

16,650

257,812

55,145

1,467,983

Comprehensive income for the year, net of tax

-

-

-

-

821,663

821,663

Dividends paid

-

-

-

-

(543,030)

(543,030)

Share-based payments

-

-

-

-

12,410

12,410

At 30 June 2016

1,131,313

7,063

16,650

257,812

346,188

1,759,026

 

Comprehensive income for the year, net of tax

-

-

-

-

116,142

116,142

Dividends paid

-

-

-

-

(181,010)

(181,010)

At 30 June 2017

1,131,313

7,063

16,650

257,812

281,320

1,694,158

 

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.

 

Capital redemption reserve represents a statutory non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares.

 

The notes included below are an integral part of these financial statements.

 

 

Statement of Cash Flows

For the year ended 30 June 2017

 

Notes

Group

 

Company

 

 

 

2017

2016

2017

2016

 

 

£

£

£

£

Net cash flow from operating activities

23

672,516

450,608

(29,846)

(545,174)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Finance income

 

519

917

113

254

Purchase of property, plant and equipment

10

(22,536)

(39,225)

-

-

Dividends received by the Company

 

-

-

200,000

900,000

Cash (used) / generated in investing activities

 

(22,017)

(38,308)

200,113

900,254

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Dividends paid to owners of the Company

 

(181,010)

(543,030)

(181,010)

(543,030)

Cash used in financing activities

 

(181,010)

(543,030)

(181,010)

(543,030)

 

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

469,489

(130,730)

(10,743)

(187,950)

Cash and cash equivalents at beginning of year

 

1,427,723

1,558,453

469,923

657,873

Cash and cash equivalents at end of year

13

1,897,212

1,427,723

459,180

469,923

 

The notes included below are an integral part of these financial statements.

 

 

Notes to the consolidated financial statements

For the year ended 30 June 2017

 

1 Accounting policies

Aeorema Communications plc is a public limited company incorporated in the United Kingdom. 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.

 

Going concern

The Group's business activities, together with the factors likely to affect its future development and performance are set out in the review of business contained in the Chairman's Statement. The Group's financial statements show details of its financial position including, in note 24, details of its financial instruments and exposure to risk.

 

After reviewing the Group's budget for the next financial year, other medium-term plans and considering the risks outlined in note 24, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.

 

Basis of Preparation

The Group's financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The following new standards, amendments to standards and interpretations, applied for the first time from 1 July 2016. Their adoption has not had a material impact on the financial statements:

·     IAS 1 (Amended), 'Disclosure Initiative', effective 1 January 2016.

·     IAS 27 (Amended), 'Equity Method in Separate Financial Statements', effective 1 January 2016.

·     IAS 16 and IAS 38 (Amended), 'Clarification of Acceptable Methods of Depreciation and Amortisation' effective 1 January 2016.

·     IFRS 11 (Amended), 'Accounting for Acquisitions of Interests in Joint Operations', effective 1 January 2016.

·     Annual Improvements to IFRSs 2012 - 2014 Cycle, effective 1 January 2016.

 

Adopted IFRSs not yet applied

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2016 and have not been adopted early by the Group:

·     IFRS 9 'Financial Instruments', effective 1 January 2018.

·     IFRS 15 'Revenue for Contracts with Customers', effective 1 January 2018.

·     IFRS 16 'Leases', effective 1 January 2019

·     IAS 7 (Amended), 'Statement of Cash Flows', effective 1 January 2017

 

Management are currently assessing the impact they may have on future reporting periods.

 

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2017. 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 deconsolidated from 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. Revenue is measured at the fair value of consideration received taking into account any trade discounts and volume rebates. Revenue for all business segments is recognised when the Group has earned the right to receive consideration for its services.

 

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.

 

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 (three 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.

 

Operating leases

Rentals under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

 

The group leases office facilities under operating leases. The lease typically runs for a period of 5 years, with a break clause in year 3. The group is restricted from entering into any sub-lease arrangements.

 

Investments

Fixed asset investments are stated at cost less provision for diminution in value.

 

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, of 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.

 

Finance income

Financial income consists of interest receivable on funds invested. It is recognised in the Statement of Comprehensive Income as it accrues.

 

Taxation

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is provided on temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; the differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets and liabilities are not discounted.

 

Pension costs

The Group operates a pension scheme for its employees. It also makes contributions to the private pension arrangements of certain employees. These arrangements are of the money purchase type and the amount charged to the Statement of Comprehensive Income represents the contributions payable by the Group for the period.

 

Financial instruments

The Group does not enter into derivative transactions and does not trade in financial instruments. Financial assets and liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provision of the instrument.

 

Equity

An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group's equity instruments comprise 'share capital' in the Statement of Financial Position.

 

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the reporting period. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the Statement of Comprehensive Income.

 

Share-based awards

The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.

 

The fair value is estimated using option pricing models and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based on the historical share price volatility for the Company. Further information is given in note 21 to the financial statements.

 

Significant judgements and estimates

The preparation of the Group's financial statements in conforming with IFRS required management to make judgements, estimates and assumptions that 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.

 

 

2 Revenue and segment information

The Company 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 period ending 30 June 2017 there is only a single reportable segment.

 

All revenue represents sales to external customers. Two customers (2016: two) are defined as major customers by revenue, contributing more than 10% of the Group revenue.

 

 

2017

2016

 

£

£

Customer one

722,825

-

Customer two

715,074

819,443

Customer three

35,916

1,006,510

Major customers

1,473,815

1,825,953

 

The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:

 

Geographical

2017

2016

2017

2016

2017

2016

2017

2016

Market

UK

UK

Europe

Europe

Rest of the World

Rest of the World

Total

Total

 

£

£

£

£

£

£

£

£

 

Revenue

4,089,412

3,410,154

29,589

66,990

37,591

1,105,906

4,156,592

4,583,050

 

All non-current assets are based in the UK.

 

 

3 Operating profit

 

Operating profit is stated after charging or crediting:

2017

2016

 

£

£

Cost of sales

 

 

Depreciation of property, plant and equipment

21,577

21,910

Administrative expenses

 

 

Depreciation of property, plant and equipment

29,877

22,191

(Profit)/Loss on foreign exchange differences

(426)

(2,307)

Fees payable to the Company's auditor in respect of:

 

 

   Audit of the Company's annual accounts

7,500

7,500

   Audit of the Company's subsidiaries

20,000

20,000

Staff costs (see note 20)

918,336

1,029,928

Operating leases - land and buildings

91,000

91,000

 

4 Finance income

Finance income

2017

2016

 

£

£

Bank interest received

519

917

 

 

 

 

 

5 Taxation

 

2017

2016

 

£

£

The tax charge comprises:

 

 

 

 

 

Current tax

 

 

 

Prior period adjustment

3,028

291

Current year

31,042

66,043

 

 

 

 

34,070

66,334

Deferred tax (see note 6)

 

 

Current year

3,214

329

 

3,214

329

Total tax charge in the statement of comprehensive income

37,284

66,663

Factors affecting the tax charge for the year

 

 

Profit on ordinary activities before taxation from continuing operations

248,887

340,165

Profit on ordinary activities before taxation multiplied by standard rate

 

 

of UK corporation tax of 19.75% (2016: 20%)

49,155

68,033

Effects of:

 

 

Non-deductible expenses

8,086

1,764

Research and development claim

(22,985)

-

Other adjustments

-

(3,425)

Marginal relief

-

-

Prior period adjustment

3,028

291

 

(11,871)

(1,370)

Total tax charge

37,284

66,663

 

The Group has estimated losses of £375,762 (2016: £375,762) available to carry forward against future trading profits. These losses are in Aeorema Communications plc which is not currently making taxable profits as all trading is undertaken by its subsidiary Aeorema Limited, therefore no deferred tax asset has been recognised.

 

The Finance Act 2016 included legislation to reduce the main rate of corporation tax from 20% to 19% from 1 April 2017 and to 17% from 1 April 2020. These rate reductions were substantively enacted by the balance sheet date and therefore included in these consolidated financial statements. Temporary differences have been remeasured using the enacted tax rates that are expected to apply when the liability is settled, or the asset is realised.

 

 

6 Deferred taxation

 

2017

2016

 

£

£

Property, plant and equipment temporary differences

(2,269)

(5,681)

Temporary differences

5,130

11,756

 

2,861

6,075

At 1 July

6,075

6,404

Transfer to Statement of Comprehensive Income

(3,214)

(329)

At 30 June

2,861

6,075

 

The deferred tax asset is expected to be utilised given the continued profitability and future trading prospects.

 

 

7 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.

 

 

8 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:

 

 

2017

2016

 

£

£

Basic earnings per share

 

 

Profit for the year attributable to owners of the Company

211,603

273,502

 

 

 

Basic weighted average number of shares

9,050,500

9,050,500

 

Dilutive potential ordinary shares:
Employee share options

300,000

300,000

Diluted weighted average number of shares

9,350,500

9,350,500

 

 

9 Intangible fixed assets

Group

Goodwill

 

£

Cost

 

At 1 July 2015

2,728,292

At 30 June 2016

2,728,292

At 30 June 2017

2,728,292

Impairment and amortisation

 

At 1 July 2015

2,363,138

At 30 June 2016

2,363,138

At 30 June 2017

2,363,138

Net book value

 

At 1 July 2015

365,154

At 30 June 2016

365,154

At 30 June 2017

365,154

 

Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited.

 

Impairment - Aeorema Limited

Goodwill has been tested for impairment based on its future value in use. Future value has been calculated on a discounted cash flow basis using the 2017-18 budgeted figures as approved by the Board of Directors extended for a period to 5 years and discounted at a rate of 10%. It has been assumed that future growth will be 2%. Using these assumptions, which are based upon past experience, there was no impairment in the year. The value in use exceeds the carrying value by £508,988.

 

Management has assessed the sensitivity of the recoverable amounts in the key assumptions to be as follows: a five percentage increase in the discount rate would reduce the recoverable amount by £103,449 and a one percentage fall in future growth would reduce the recoverable amount by £515,154. Reducing the future growth rate would indicate an impairment of £6,166 and increasing the discount rate would indicate no impairment. In any case management is satisfied with the carrying value of goodwill.      

 

 

10 Property, plant and equipment

Group

Leasehold land

Fixtures, fittings

Total

 

and buildings

and equipment

 

 

£

£

£

Cost

 

 

 

At 30 June 2015

17,761

301,944

319,705

Additions

36,537

2,688

39,225

Disposals

-

(160,562)

(160,562)

At 30 June 2016

54,298

144,070

198,368

Additions

4,238

18,298

22,536

Disposals

-

(67,316)

(67,316)

At 30 June 2017

58,536

95,052

153,588

 

Depreciation

 

 

 

At 30 June 2015

1,379

253,191

254,570

Charge for the year

22,191

21,910

44,101

Eliminated on disposal

-

(160,562)

(160,562)

At 30 June 2016

23,570

114,539

138,109

Charge for the year

29,877

21,577

51,454

Eliminated on disposal

-

(67,316)

(67,316)

At 30 June 2017

53,447

68,800

122,247

 

Net book value

 

 

 

At 1 July 2015

16,382

48,753

65,135

At 30 June 2016

30,728

29,531

60,259

At 30 June 2017

5,089

26,252

31,341

 

 

11 Non-current assets - Investments

Company

Shares in subsidiary

 

£

Cost

 

At 1 July 2015

3,262,293

Increase in respect of share based payments

12,410

At 30 June 2016

3,274,703

At 30 June 2017

3,274,703

Provision

 

At 1 July 2015

2,694,213

At 30 June 2016

2,694,213

At 30 June 2017

2,694,213

Net book value

 

At 1 July 2015

568,080

At 30 June 2016

580,490

At 30 June 2017

580,490

 

Holdings of more than 20%

The Company holds more than 20% of the share capital of the following companies:

Subsidiary undertakings

Country of

Shares held

 

 

registration

 

 

 

or incorporation

Class

%

Aeorema Limited

England and Wales

Ordinary

100

Twentyfirst Limited

England and Wales

Ordinary

100

 

The registered address of Aeorema Limited and Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB.

 

 

12 Trade and other receivables

 

Group

Company

 

2017

2016

2017

2016

 

£

£

£

£

Trade receivables

810,908

1,038,669

-

-

Related party receivables

-

-

743,037

802,543

Other receivables

19,166

19,585

-

-

Prepayments and accrued income

177,518

116,083

5,624

4,875

 

1,007,592

1,174,337

748,661

807,418


All trade and other receivables are expected to be recovered within 12 months of the end of the reporting period. The fair value of trade and other receivables is the same as the carrying values shown above.

 

At the year end, trade receivables of £61,560 (2016: £36,232) were past due but not impaired. These relate to a number of customers for whom there is no significant change in credit quality and the amounts are still considered recoverable. The ageing of these trade receivables is as follows:

 

 

Group

 

2017

2016

 

£

£

Less than 90 days overdue

61,560

27,190

More than 90 days overdue

-

9,042

 

61,560

36,232

 

 

13 Cash and cash equivalents

 

Group

Company

 

2017

2016

2017

2016

 

£

£

£

£

Bank balances

1,897,212

1,427,723

459,180

469,923

Cash and cash equivalents

1,897,212

1,427,723

459,180

469,923

 

 

 

 

 

Cash and cash equivalents in the statement of cash flows

1,897,212

1,427,723

459,180

469,923

 

 

14 Trade and other payables

 

Group

Company

 

2017

2016

2017

2016

 

£

£

£

£

Trade payables

1,012,687

663,797

7,380

6,950

Related party payables

-

-

67,355

67,355

Taxes and social security costs

284,415

177,985

-

-

Other payables

7,529

14,614

-

-

Accruals and deferred income

342,014

550,230

19,438

24,500

 

1,646,645

1,406,626

94,173

98,805

 

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.

 

15 Share capital

 

 

2017

2016

 

£

£

Authorised

 

 

28,000,000 Ordinary shares of 12.5p each

3,500,000

3,500,000

 

 

 

 

 

 

Allotted, called up and fully paid

Number 

Ordinary shares 

 

 

£

At 1 July 2015

9,050,500

1,131,313

At 30 June 2016

9,050,500

1,131,313

At 30 June 2017

9,050,500

1,131,313

 

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 21 for details of share options outstanding.

 

 

16 Share Premium

 

Share Premium

 

£

At 1 July 2015

7,063

 

At 30 June 2016

7,063

 

At 30 June 2017

7,063

 

Share premium represents the value of shares issued in excess of their list price.

 

 

17 Merger reserve

 

Merger reserve

 

£

At 1 July 2015

16,650

 

At 30 June 2016

16,650

 

At 30 June 2017

16,650

 

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.

 

 

18 Financial commitments

 

Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:

 

Group

Land and Buildings

 

2017

2016

 

£

£

Not later than one year

91,000

91,000

Later than one year and not later than five years

106,167

15,167

Total

197,167

106,167

 

19 Directors' emoluments

 

The remuneration of Directors of the Company is set out below.

 

Salary, bonus or fees

Salary, bonus or fees

Pensions

Pensions

Total

Total

 

2017

2016

2017

2016

2017

2016

 

£

£

£

£

£

£

P Litten

60,000

77,000

33,554

39,932

93,554

116,932

G Fitzpatrick

40,000

40,000

7,562

18,272

47,562

58,272

M Hale

10,000

10,000

-

-

10,000

10,000

S Garbutta

-

5,000

-

-

-

5,000

S Haffner

15,000

7,500

-

-

15,000

7,500

R Owen

10,000

10,000

-

-

10,000

10,000

S Quah

90,000

115,000

155

-

90,155

115,000

 

225,000

264,500

41,271

58,204

266,271

322,704

 

The share options held by directors who served during the year are summarised below:

Grant date

Number awarded

Exercise price

Earliest exercise date

Expiry date

 

 

 

 

 

 

S Quah

25 April 2013

300,000

16.50p

25 April 2016

24 April 2023

 

Fees for S Garbutta and S Haffner are charged by Harris & Trotter LLP, a firm in which they are members. See note 22.

 

 

20 Employee information

 

The average monthly number of employees (including directors) employed by the Group during the year was:

Number of employees

Group

Company

 

 

2017 Number

2016 Number

2017 Number

2016 Number

 Administration and production

20

20

6

6

 

The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:

Employment costs

Group

Company

 

2017

£

2016

£

2017

£

2016

£

Wages and salaries

788,365

871,534

35,000

32,500

Social security costs

85,708

86,409

-

-

Pension costs

44,263

59,575

-

-

Share-based payments

-

12,410

-

-

 Total

918,336

1,029,928

35,000

32,500

 

 

21 Share-based payments

The Group operates an EMI share option scheme for key employees. Options are granted to key employees at an exercise price equal to the market price of the Company's shares at the date of grant. Options are exercisable from the third anniversary of the date of grant and lapse if they remain unexercised at the tenth anniversary or upon cessation of employment. The following option arrangements exist over the Company's shares:

Date of grant

Exercise price

Exercise period

 

Number of options 2017

Number of options 2016

 

 

From

To

 

 

25 April 2013

16.5p

25 April 2016

24 April 2023

300,000

300,000

 

 

 

 

300,000

300,000

 

Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:

 

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

 

2017

2017

2016

2016

 

 

£

 

£

Outstanding at beginning of the year

300,000

0.17

300,000

0.17

Outstanding at end of the year

300,000

0.17

300,000

0.17

Exercisable at the end of the year

300,000

0.17

300,000

0.17

 

The exercise price of options outstanding at the year end was £0.165 (2016: £0.165) and their weighted average contractual life was 5.8 years (2016: 6.8 years).

 

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value as determined at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. The estimated fair value of the options is measured using an option pricing model. The inputs into the model are as follows:

Grant date

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

 

The expected volatility is determined by calculating the historical volatility of the company's share price over the last three years. The risk free rate is the official Bank of England base rate.

 

The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based payment plans:

 

2017

2016

 

£

£

Share-based payment charge

-

12,410

 

 

22 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:

 

2017

2016

 

£

£

Amounts owed by subsidiaries

 

 

Total amount owed by subsidiaries

743,037

802,543

Amounts owed to subsidiaries

 

 

Total amount owed to subsidiaries

67,355

67,355

 

 

 

The company received dividends during the year of £200,000 (2016: £900,000) from its subsidiary Aeorema Limited. The company transferred a VAT receivable of £10,200 (2016: £14,810) to Aeorema Limited due to being part of a common VAT group.

 

Aeorema Limited transferred a net amount of expenses to Aeorema Communications plc during the year of £38,700 (2016: £7,317).

 

Aeorema Limited paid expenses totalling £49,996 (2016: £nil) on behalf of Aeorema Communications plc during the year.

 

During the year, Aeorema Limited made a net transfer of cash of £181,010 (2016: £443,030) to Aeorema Communications plc.

 

The compensation of key management (including directors) of the Group is as follows:

 

2017

2016

 

£

£

Short-term employee benefits

251,204

287,317

Post-employment benefits

41,271

58,204

Share based payment expense

-

12,410

 

292,475

357,931

 

Harris and Trotter LLP is a firm in which S Haffner and S Garbutta are members. The amount charged to the Group for professional services is as follows:

 Harris and Trotter LLP - charged during the year

2017

2016

 

£

£

Aeorema Communications plc

15,000

12,500

Aeorema Limited

7,850

15,060

 

22,850

27,560

 

At the year end, the group had an outstanding trade payable balance to Harris and Trotter LLP of £5,640 (2016: £6,600).

 

 

23 Cash flows

 

Group

Company

 

2017

2016

2017

2016

 

£

£

£

£

Cash flows from operating activities

 

 

 

 

Profit before taxation

248,887

340,165

116,141

821,663

Depreciation

51,454

44,101

-

-

Share-based payment

-

12,410

-

-

Dividends received by the Company

-

-

(200,000)

(900,000)

Finance income

(519)

(917)

(113)

(254)

 

299,822

395,759

(83,972)

(78,591)

Increase / (decrease) in trade and other payables

275,021

(71,760)

(4,631)

12,699

(Increase) / decrease in trade and other receivables

166,745

178,061

58,757

(479,282)

Taxation paid

(69,072)

(51,452)

-

-

Cash generated / (used) from operating activities

672,516

450,608

(29,846)

(545,174)

 

 

24 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

 

2017

£

2016

£

2017

£

2016

£

Loans and receivables

 

 

 

 

Trade and other receivables

847,525

1,070,627

743,037

802,543

Cash and cash equivalents

1,897,212

1,427,723

459,180

469,923

Investments in subsidiaries

-

-

580,490

580,490

Total

2,744,737

2,498,350

1,782,707

1,852,956

Other financial liabilities

 

 

 

 

Trade and other payables

1,020,216

678,411

74,735

74,305

Accruals

236,068

439,956

19,440

24,500

Total

1,256,284

1,118,367

94,175

98,805

 

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 2017 was £810,908 (2016: £1,038,669). Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. At the year end, the credit quality of trade receivables is considered to be satisfactory.

 

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to meet its liabilities when they fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid resources to meets its obligations of £1,540,698 (2016: £1,296,626).

 

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 was £1,897,212 (2016: £1,427,723). 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 Group Statement of Changes in Equity. At the year end, total equity was £1,657,515 (2016: £1,626,922).

 

 

25 Pension costs defined contribution

The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were £44,263 (2016: £59,575). At the end of the reporting period £nil (2016: £12,880) of contributions were due in respect of the period.

 

26 Dividends

On the 25 November 2016 a final dividend of 2 pence per share (total dividend £181,010) was paid to holders of fully paid ordinary shares.

 

In respect of the current year, the directors propose that a final dividend of 0.5 pence per share be paid to shareholders on 12 January 2018. 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 15 December 2017. The total estimated dividend to be paid is £45,253. The payment of this dividend will not have any tax consequences for the Group.

 

 

27 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 2017 the company had no potential liability under the terms of the registration.

 

 

29 Control

There is no overall controlling party.


This information is provided by RNS
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