Source - LSE Regulatory
RNS Number : 3067S
Aeorema Communications Plc
15 November 2021
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Regulation 11 of the Market Abuse Regulations (Amendment) (EU Exit) Regulations 2019/310 ("MAR").  With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

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

 

15 November 2021

 

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

 

Final Results

 

Aeorema Communications plc, the AIM-traded live events agency, announces its audited results for the year ended 30 June 2021.

 

Overview

·    Repositioned the Company into providing virtual online conferences and events in place of our traditional activities of live events

·    Experiencing unprecedented demand for bespoke services from a wide range of major blue chip clients across a range of industries

·    Revenues of £5,094,518 (2020: £5,475,425)

·    Loss after taxation of £164,926 (2019: loss of £197,427)

·    Return to profitability during last 3 months of H2 2021

·    H1 2022 revenues are anticipated to be greater than any prior interim period on record

·    Robust cash position of £1.3 million as at the date of this announcement

 

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

 

Mike Hale

 

 

Aeorema Communications plc

+44 (0)20 7291 0444

John Depasquale /

Liz Kirchner (Corporate Finance)

Kelly Gardiner (Sales and Corporate Broking)

 

Allenby Capital Limited (Nominated Adviser and Broker)

+44 (0)20 3328 5656

Catherine Leftley/ Selina Lovell

St Brides Partners Ltd   

(Financial PR)

info@stbridespartners.co.uk

 

 

 

 

 

 

 

 

Chairman's Statement

 

I am truly excited to report on a year of transition which reflects the way in which your Company has successively navigated the uncharted waters of COVID-19 and the effective shutdown of World economies.

 

In fact, we were one of the industries that was hardest hit. Clearly, in a Covid-19 world, demand after March 2020 disappeared as event after event was cancelled. For further information and analysis about the impact of COVID-19 on the Group during the year ended 30 June 2021 please see the business review in the Strategic Report.

 

As I've previously stated, huge credit goes to our talented team of specialised executives who took the opportunity early on, in the void that had been created, to turn their talent inwards and reposition the Company into providing virtual online conferences and events in place of our traditional activities of live events. We also made a strategic shift to providing consultancy services and engaging with clients at a higher advisory level on their communications strategies.

 

As a consequence, I am delighted to report that the success of this repositioning has meant that we are experiencing unprecedented demand for our bespoke services from a wide range of major blue chip clients spread across a diverse range of industries. We have also taken the opportunity to add talent to our team which has enhanced our skillset and offering.

 

A further benefit that flows to us from implementing this strategy is that we are not affected by the supply chain and distribution problems and inflationary pressures commonly being cited on a regular basis by other companies as a reason to issue profit warnings.

 

I am greatly encouraged by the development of our virtual online business coupled with the fact that we should inevitably see further growth as and when our industry returns to staging live conferences and events alongside the virtual online offering which will clearly remain a viable option, now it has been introduced and in light of a greater drive to reduce carbon emissions as a result of business travel.

 

The outlook for the first six months of the new financial year is very strong. We remain on track to report record revenues for H1 2022, greater than any prior interim period on record, and are confident of growth in revenues for the full year ending 30 June 2022.

 

The cash position as at the date of this announcement is £1.3 million. As we come out strongly of this challenging period the board will continue to monitor progress, but at this point it is too soon to comment on future dividends.

 

I want to thank our shareholders for their support through the most difficult period in the Company's history and look forward to rewarding them for this support.

 

Mike Hale

Chairman, 12 November 2021

 

Chief Executive Officer's Report

Successful and enduring growth after a period of change is a rewarding reflection on the tenacity within our Group. It fills me with pride to consider the last twelve months, where, despite the difficulties faced, Aeorema Communications has strategically developed more than in any previous years.

 

We have spent the last year cementing and building on our expertise in multi-format and virtual events. Our foundations in video communications, alongside raw in-house talent in broadcast and content production, put us in exceptional stead in the virtual event environment.

 

Our growing consultative and strategic approach has also placed Cheerful Twentyfirst in a leading position to support our client roster across disciplines. At the intersection of live events, on demand content and remote audiences, we are in a very strong position to leverage account growth and multi-service communication planning into 2022 and onwards.

 

Our continued commitment to exceptional client service levels saw Cheerful Twentyfirst adapt to a defined account-led approach this year. This shift has reinforced client partnerships and made communications strategy paramount to how we do business.

 

Our inherent creativity proved once again to be a cut above the rest. The agency was awarded Creative Team of the Year for the third year running, an accolade that reflects the calibre of ideas within our walls and something we continue to invest in. Our winning card, that same imaginative spark has been a driving force for year-on-year growth in our moving image, content and creative divisions.

 

Internationally, our US team continues to grow in line with client demand in North America. We now have staff based in New York City and LA, with both teams expected to continue to grow in 2022.

 

We were delighted to add a plethora of new clients across diverse sectors globally including finance, professional services, advertising, IT, fashion, Fintech, and beverages.  Most recently, we have also added a gaming giant to our client roster.  These recent client wins pay heed to our diversification strategy and shift to innovative, hybrid solutions tailored to client requirements.

 

Venue sourcing and luxury events agency Eventful was inevitably impacted by the restrictions on live events and travel but they have been successful in cross-selling complementary services across Group clients. Their successful integration into the business has delivered a number of new clients, with their order book already seeing venue bookings and enquiries into next year and onwards. As confidence in live event formats return, we anticipate this success to grow proportionally. 

 

 

 

Outlook

We are entering a new phase as a global workforce and a pioneer agency challenging traditional ways of work. Our team will continue to operate with a flexible approach to remote working, but we see the office space as our key hub for community, brainstorm and idea generation, and team engagement. As our headcount ticks over into the low 50's, we're also investing in a new office space that can facilitate our team to work at its best. 

 

The momentum generated by hard work, constant innovation and a tenacity to adapt has seen new green shoots across the Group. The agency continues to develop as the preferred partner for a growing roster of global, leading brands.

 

ESG remains at the heart of how we work. This year, we launched our first ever CSR (Corporate Social Responsibility) charter, pledging to enact real change across sustainability, diversity, ethical practice and industry engagement. We are committing now and forever to cultivating a culture of understanding and action-driven impact.

 

My most sincere thank you to our clients for your trust and partnership in the last twelve months.

 

And to our team, you have shown what it looks like to work with a fire in your heart and a twinkle in your eye. I could not be prouder of what we are building together.

 

Steve Quah

CEO, 12 November 2021

 

 

Strategic Report

 

Business review

The results for the year show revenue was £5,094,518 (2020: £5,475,425), operating loss pre-exceptional items was £188,105 (2020: £175,043) and loss before taxation was £159,698 (2020: £217,924). The Group had net assets of £1,514,980 at the year-end (restated 2020: £1,660,247) and net current assets of £1,019,047 (restated 2020: £938,932).

 

The year ended 30 June 2021 was a year significantly affected by the COVID-19 pandemic. International lockdowns, restrictions on national and international travel and social distancing measures imposed by Governments worldwide meant all live face-to-face events were either postponed or cancelled. The Group recognised the potential of virtual events during this period and made the pivot from producing live events to virtual events. The first few months proved very challenging, however, with the introduction of the Group's own virtual event platform, KIT, the Group's industry leading creative expertise and growing experience of producing and delivering virtual events the Group experienced an upturn in demand and revenue.

 

The Group delivered virtual events for both new and existing clients. The new clients include those operating across sectors such as finance, professional services, oil & gas, advertising, IT, fashion, Fintech, technology and beverages.

 

During the year the gross profit margin increased to 23% (restated 2020: 15%) and the gross profit was £1,182,142 (2020: £824,176). The increase in the gross profit margin was as a consequence of the company delivering virtual events rather than face-to-face events. Virtual events require more in-house time producing content, including motion graphics, film and design, and offering strategic consultancy. Face-to-face events usually have higher levels of direct costs including audio visual, set and stage which are all third party costs that reduce the margin. During the year the Group also received cancellation fees totalling £262,035 from a global media company in respect of the MIPCOM event held annually in October in Cannes.

Growing demand from both new and existing clients combined with the labour intensive nature of virtual events meant the Group hired on average 9 more employees compared with the previous year. These roles largely included project/production managers, project co-ordinators, designers (including digital) and digital solutions managers to ensure the Group continued to successfully deliver high quality events. 

 

Eventful Limited was significantly affected by the impact of the COVID-19 pandemic throughout the year. Eventful Limited's core business operates within the hospitality and travel industry, offering venue sourcing and travel incentive services. The company struggled to generate demand while restrictions remained in place. As restrictions in the UK began to ease and the economy reopened in the latter months of the financial year the company experienced an increase in client enquiries for venues post year end.

 

Cheerful Twentyfirst, Inc. was formed on 1 July 2020 and became a 100% owned subsidiary of Aeorema Communications plc. The Board were keen for the Group to have a presence in the United States and the creation of a New York based subsidiary provided the perfect opportunity to expand the Group's operations in a new and exciting market. The company had a very successful first year of trading, producing virtual events and films for several new and existing clients in the United States, growing its headcount and moving into a new office shortly after the year end. 

 

The Group has used the support provided by the UK government, including the Coronavirus job retention scheme, tax deferrals and the Coronavirus business interruption loan scheme to maintain a strong cash position despite the impact of COVID-19 on the business during the financial year. Despite the new clients and virtual events the Group has won, the challenges created by the social and economic impact of COVID-19 remain severe. The Board recognises the challenges facing the Group, and is actively monitoring the situation on a daily basis and is prepared to reduce overheads should this become necessary.

 

Key performance indicators

 

Year

2021

2020

2019

2018

 

£

 

£

 

£

 

£

 

Revenue

5,094,518

5,475,425

6,765,280

4,820,167

Operating (loss) / profit pre-exceptional items

(188,105)

(175,043)

384,483

299,735

(Loss) / profit before taxation

(159,698)

(217,924)

382,244

61,629

 

The Group experienced a 7% decrease in revenue during the year. The Group produced two large events in January 2020 prior to the onset of the COVID-19 pandemic. These two events had a significant impact on revenue in the prior year. Due to COVID-19 no events on a similar scale were held in the year ended 30 June 2021. Although demand steadily increased throughout the financial year, including the delivery of large events in May and June, these could not replace the revenue lost as a consequence of the COVID-19 pandemic.

 

Event revenue decreased by 16% in comparison with the previous year. This was due to the factors mentioned above. The decrease in Aeorema Limited was 22%, however, this fall in revenue was offset by the growth in Cheerful Twentyfirst, Inc.

 

Film revenue grew by 64% in comparison with the previous year. This growth was largely due to the higher amount of film and motion graphics content that is required to produce and deliver virtual events compared with live face-to-face events and the film content produced by Cheerful Twentyfirst, Inc. The growth was 45% in Aeorema Limited compared with the previous year.

 

Eventful Limited experienced a 92% decrease in revenue during the year, compared with the previous 15 month period. The fall in revenue was a consequence of the COVID-19 pandemic and the subsequent impact on the hospitality and travel industry.

 

Consolidated Statement of Comprehensive Income 

For the year ended 30 June 2021

 

 

Notes

2021

2020

 

 

£ 

£ 

 

 

 

As restated

Continuing operations

 

 

 

 

Revenue

2

5,094,518

5,475,425

Cost of sales

 

(3,912,376)

(4,651,249)

Gross profit

 

1,182,142

824,176

Other income

3

61,651

82,601

Administrative expenses

 

(1,431,898)

(1,081,820)

 

Operating (loss) / profit pre-exceptional items

4

(188,105)

(175,043)

Exceptional income

 

Exceptional costs

5

 

 

50,000

 

-

 

 

-

 

(23,184)

Operating (loss) / profit post exceptional items

 

(138,105)

(198,227)

Finance income

6

489

556

Finance costs

7

(22,082)

(20,253)

(Loss) / profit before taxation

 

(159,698)

(217,924)

Taxation

8

(5,228)

20,497

(Loss) / profit for the year

 

(164,926)

(197,427)

 

Other comprehensive income

Items that may be reclassified to profit of loss

 

Exchange differences on translation of foreign entities

 

(11,044)

-

Other comprehensive income for the year

 

(11,044)

-

Total comprehensive income for the year attributable to owners of the parent

 

(175,970)

(197,427)

 

(Loss) / profit per ordinary share:

 

 

 

 

Total basic earnings per share

 

11

(1.78529)p

(2.16920)p

Total diluted earnings per share

11

(1.78529)p

(2.16920)p


The notes are an integral part of these financial statements.

 

Statement of Financial Position

As at 30 June 2021

 

 

Notes

Group

Company

 

 

2021

2020

2021

2020

 

 

£

£

As restated

£

£

Non-current assets

 

 

 

 

 

Intangible assets

12

571,431

573,931

-

-

Property, plant and equipment

13

103,477

85,952

-

-

Right-of-use assets

14

18,995

379,530

-

-

Investments in subsidiaries

15

-

-

1,172,253

1,141,540

Deferred taxation

 

-

7,611

30,253

30,253

Total non-current assets

 

693,903

1,047,024

1,202,506

1,171,793

Current assets

 

 

 

 

 

Trade and other receivables

16

1,429,064

597,497

532,875

657,986

Cash and cash equivalents

17

1,101,713

1,721,217

5,844

11,298

Current tax receivable

 

10,758

-

-

-

Total current assets

 

2,541,535

2,318,714

538,719

669,284

Total assets

 

3,235,438

3,365,738

1,741,225

1,841,077

Current liabilities

 

 

 

 

 

Trade and other payables

18

(1,417,467)

(1,226,222)

(139,760)

(191,136)

Bank loans

19

(54,089)

-

-

 

Lease liabilities

20

(25,912)

(85,070)

-

-

Current tax payable

 

-

(68,490)

-

-

Provisions

21

(25,020)

-

-

-

Total current liabilities

 

(1,522,488)

(1,379,782)

(139,760)

(191,136)

Non-current liabilities

 

 

 

 

 

Bank loans

19

(195,911)

-

-

-

Lease liabilities

20

-

(300,689)

-

-

Deferred taxation

9

(2,059)

-

-

-

Provisions

21

-

(25,020)

-

-

Total non-current liabilities

 

(197,970)

(325,709)

-

-

Total liabilities

 

(1,720,458)

(1,705,491)

(139,760)

-

Net assets

 

1,514,980

1,660,247

1,601,465

1,649,941

Equity

 

 

 

 

 

Share capital

22

1,154,750

1,154,750

1,154,750

1,154,750

Share premium

 

9,876

9,876

9,876

9,876

Merger reserve

 

16,650

16,650

16,650

16,650

Other reserve

 

112,061

81,358

112,061

81,358

Capital redemption reserve

 

257,812

257,812

257,812

257,812

Retained earnings

 

(36,169)

139,801

50,316

129,495

Equity attributable to owners of the parent

 

1,514,980

1,660,247

1,601,465

1,649,941

 

The notes are an integral part of these financial statements.

 

The loss for the financial year of the holding company was £79,179 (2020: £159,712 profit).

 

The financial statements were approved and authorised by the board of directors on 12 November 2021 and were signed on its behalf by

A Harvey                                               S Haffner

Director                                                Director

 

Company Registration No. 04314540

Consolidated Statement of Changes in Equity

For the year ended 30 June 2021

 

Group

Share capital

Share premium

Merger reserve

Other reserve

Capital redemption reserve

Retained earnings

Total equity

 

£

£

£

£

£

£

£

At 30 June 2019

1,131,313

7,063

16,650

34,261

257,812

439,414

1,886,513

 

Comprehensive income for the year, net of tax

-

-

-

-

-

(197,427)

(197,427)

Dividends paid

-

-

-

-

-

(90,505)

(90,505)

Share-based payment

-

-

-

47,097

-

-

47,097

Share issue

23,437

2,813

-

-

-

-

26,250

Prior year adjustment

-

-

-

-

-

(11,681)

(11,681)

At 30 June 2020

1,154,750

9,876

16,650

81,358

257,812

139,801

1,660,247

 

Comprehensive income for the year, net of tax

-

-

-

-

-

(175,970)

(175,970)

Dividends paid

-

-

-

-

-

-

-

Share-based payment

-

-

-

30,703

-

-

30,703

At 30 June 2021

1,154,750

9,876

16,650

112,061

257,812

(36,169)

1,514,980

 

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

 

In accordance with section 612 of the Companies Act 2006, the premium on ordinary shares issued in relation to acquisitions is recorded as a merger reserve. The reserve is not distributable.

 

Other reserve represents equity settled share-based employee remuneration, as detailed in note 25.

 

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

 

The notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows

For the year ended 30 June 2021

 

Notes

Group

 

 

 

2021

2020

 

 

£

 

£

 

Net cash flow from operating activities

27

(708,814)

(99,006)

 

 

 

 

Cash flows from investing activities

 

 

 

 

Payment for Acquisition of Subsidiary, net of cash acquired

 

-

(128,331)

Finance income

6

489

556

Purchase of intangible assets

12

-

(10,000)

Purchase of property, plant and equipment

13

(59,179)

(61,400)

Repayment of leasing liabilities

 

(102,000)

(101,258)

Cash (used) / generated in investing activities

 

(160,690)

(300,433)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid to owners of the Company

 

-

(90,505)

Proceeds from borrowings

 

250,000

-

Cash used in financing activities

 

250,000

(90,505)

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

 

(619,504)

(489,944)

Cash and cash equivalents at beginning of year

 

1,721,217

2,211,161

Cash and cash equivalents at end of year

 

1,101,713

1,721,217

 

Cash and cash equivalents

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of the Statement of Financial Position amounts:

 

Notes

Group

 

Company

 

 

 

2021

2020

2021

2020

 

 

£

£

£

£

Cash and cash equivalents

17

1,101,713

1,721,217

5,844

11,298

 

 

1,101,713

1,721,217

5,844

11,298

 

The notes are an integral part of these financial statements.

 

 

 

 

Notes to the consolidated financial statements

For the year ended 30 June 2021

 

1 Accounting policies

Aeorema Communications plc is a public limited company incorporated in the United Kingdom and registered in England and Wales. The Company is domiciled in the United Kingdom and its principal place of business is Moray House, 23/31 Great Titchfield Street, London, W1W 7PA. The Company's Ordinary Shares are traded on the AIM Market.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

 

The presentation currency is £ sterling.

 

Going concern

The COVID-19 pandemic had a significant impact on the Group. International lockdowns, disruption to international travel and social distancing measures all meant that no face-to-face events could take place during the year. Aeorema Limited and Cheerful Twentyfirst, Inc. adapted successfully and produced virtual events for both existing and new clients throughout the year. Due to the nature of virtual events Aeorema Limited and Cheerful Twentyfirst, Inc. increased their staff numbers to help deliver the events. The moving image department experienced growing demand and continued producing eye-catching films and content for both stand-alone projects and virtual events.

 

Eventful Limited was severely impacted by the pandemic. The company, unlike Aeorema Limited and Cheerful Twentyfirst, Inc. was not in a position to pivot towards virtual offerings due to the nature of its business. The hospitality and travel industry as a whole was affected and Eventful Limited experienced a sharp decline in demand for its services. The reduction in COVID-19 restrictions in the latter months of the year ended 30 June 2021 led to Eventful Limited receiving a steady increase in enquiries for venue sourcing and incentive travel services. This increase has continued post year end.

The Group continued to utilise the Coronavirus job retention scheme during the year, furloughing several employees (see note 3). The Group arranged payment plans with HMRC on a number of outstanding tax liabilities and obtained a Coronavirus Business Interruption Loan of £250,000 (see note 19) to manage the Group's working capital and cash reserves.

 

After reviewing the Group's detailed forecasts for the next financial year, other medium term plans and considering the risks outlined in note 28, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.

 

Basis of Preparation

The Group and company financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The following new standards, amendments to standards and interpretations have been applied for the first time from 1 July 2020. Their adoption has not had a material impact on the financial statements:

 

·     Definition of Material (Amendments to IAS 1 and IAS 8) (effective 1 January 2020); and

·     Definition of a Business (Amendments to IFRS 3) (effective 1 January 2020).

 

Future standards in place but not yet effective

 

No new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the Company's accounting periods beginning on or after 1 July 2021 have been adopted early.

 

The following standards and amendments are not yet applied at the date of authorisation of these financial statements:

 

·      Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).

 

The Group does not believe that there would have been a material impact on the financial statements from early adoption of these standards / interpretations.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2021. Subsidiaries are all entities (including structured entities) over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are consolidated until the date that control ceases.

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.

 

The merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006.

 

Revenue

Revenue represents amounts (excluding value added tax) derived from the provision of services to third party customers in the course of the Group's ordinary activities. 

 

As a result of providing these services, the Group may from time to time receive commissions from other third parties.  These commissions are included within revenue on the same basis as that arising from the contract with the underlying third party customer.

 

The revenue and profits recognised in any period are based on the satisfaction of performance obligations and an assessment of when control is transferred to the customer.

 

For most contracts with customers, there is a single distinct performance obligation and revenue is recognised when the event has taken place or control of the content or video has been transferred to the customer.

 

Where a contract contains more than one distinct performance obligation (multiple film productions, or a project involving both build construction and event production) revenue is recognised as each performance obligation is satisfied.

 

The transaction price is substantially agreed at the outset of the contract, along with a project brief and payment schedule (full payment in arrears for smaller contracts; part payment(s) in advance and final payment in arrears for significant contracts).

 

Due to the detailed nature of project briefs agreed in advance for significant contracts, management do not consider that significant estimates or judgements are required to distinguish the performance obligation(s) within a contract.

 

For contracts to prepare multiple film productions, the transaction price is allocated to constituent performance obligations using an output method in line with agreements with the customer.

 

For other contracts with multiple performance obligations, management's judgement is required to allocate the transaction price for the contract to constituent performance obligations using an input method using detailed budgets which are prepared at outset and subsequently revised for actual costs incurred and any changes to costs expected to be incurred.

 

The Group does not consider any disaggregation of revenue from contracts with customers necessary to depict how the nature, amount, timing and uncertainty of the Group's revenue and cash flows are affected by economic factors.

 

Where payments made are greater than the revenue recognised at the reporting date, the Group recognises deferred income (a contract liability) for this difference. Where payments made are less than the revenue recognised at the reporting date, the Group recognises accrued income (a contract asset) for this difference.

 

A receivable is recognised in relation to a contract for amounts invoiced, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

 

At each reporting date, the Group assesses whether there is any indication that accrued income assets may be impaired by assessing whether it is possible that a revenue reversal will occur. Where an indicator of impairment exists, the Group makes a formal estimate of the asset's recoverable amount.  Where the carrying value of an assets exceeds its recoverable amount, the asset is considered impaired and is written down to is recoverable amount.

 

 

Intangible assets - goodwill

All business combinations are accounted for by applying the acquisition method. Goodwill acquired represents the excess of the fair value of the consideration and associated costs over the fair value of the identifiable net assets acquired.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. At the date of acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory company level as the case may be, for the purpose of impairment testing and is tested at least annually for impairment. On subsequent disposal or termination of a business acquired, the profit or loss on termination is calculated after charging the carrying value of any related goodwill.

 

Intangible assets - other

Intangible assets are stated in the financial statements at cost less accumulated amortisation and any impairment value. Amortisation is provided to write off the cost less estimated residual value of intangible assets over its expected useful life (which is reviewed at least at each financial year end), as follows:

 

 

Intellectual property

 

25% straight line

 

 

Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the year that the asset is derecognised.

 

Fully amortised assets still in use are retained in the financial statements.

 

Property, plant and equipment

Property, plant and equipment is stated in the financial statements at cost less accumulated depreciation and any impairment value. Depreciation is provided to write off the cost less estimated residual value of property, plant and equipment over its expected useful life (which is reviewed at least at each financial year end), as follows:

 

 

Leasehold land and buildings

 

Straight line over the life of the lease (five years)

 

Fixtures, fittings and equipment

Straight line over four years

 

Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the year that the asset is derecognised.

 

Fully depreciated assets still in use are retained in the financial statements.

 

Impairment

The carrying amounts of the Group's assets are reviewed at each period end to determine whether there is any indication of impairment. If any such indication exists, the assets' recoverable amount is estimated. For goodwill and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each annual period end date and whenever there is an indication of impairment.

 

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.

 

Investments

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

 

Leases

In applying IFRS 16, for all leases (except as noted below), the Group:

a) recognises right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present value of future lease payments;

b) recognises depreciation of right-of-use assets and interest on lease liabilities in the statement of profit or loss; and

c) separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the statement of cash flows.

Lease incentives (e.g. free rent period) are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive liability, amortised as a reduction of rental expense on a straight-line basis.

Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts.

For short‑term leases (lease term of 12 months or less) and leases of low-value assets (such as photocopiers), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within administrative expenses in the consolidated statement of comprehensive income.

 

Trade and other receivables

Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any provision for impairment.

 

Trade and other payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

 

Cash and cash equivalents

Cash comprises, for the purpose of the Statement of Cash Flows, cash in hand and deposits payable on demand. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. Cash equivalents normally have a date of maturity of 3 months or less from the acquisition date.

Bank loans and overdrafts comprise amounts due on demand.

 

Finance income

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

 

Taxation

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

 

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

 

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

 

Pension costs

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

 

Financial instruments

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

 

Equity

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

 

 

Foreign currency translation

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

 

Government grants

Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income.

 

Share-based awards

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

 

The fair value is estimated using option pricing models and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based on the historical share price volatility for the Company. Further information is given in note 25 to the financial statements.

 

Reclassification of wages

The Board of Directors have determined that due to the change in the business towards more labour intensive virtual events, it is appropriate to reallocate wages directly associated with the production of events and films from administrative expenses to cost of sales. The previous year's comparative figures have been restated.

 

Holiday pay accrual

A holiday pay accrual has been recognised for the first time due to the increase in staff costs, the impact of the COVID-19 pandemic and the subsequent shift by employees taking more annual leave post year end. A prior year adjustment totalling £39,552 has been made to recognise holiday pay accruals not included in prior periods. An adjustment of £27,871 has been made for the year ended 30 June 2019 and an adjustment of £11,681 has been made in the year ending 30 June 2020. The retained earnings brought forward at 30 June 2019 have been restated to be £439,414 (previously £467,285) and the retained earning brought forward at 30 June 2020 have been restated to be £139,801 (previously £179,353). This adjustment can be seen in the Consolidated Statement of Changes in Equity.

 

Exceptional items

Exceptional items are one off, material items outside the normal course of business which are not related to the Group's trading activities.

 

Significant judgements and estimates

The preparation of the Group's financial statements in conforming with IFRS required management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances. Information about such judgements and estimation is contained in the accounting policies and / or notes to the financial statements. There are no critical judgements that the directors have made in the process of applying the Group's accounting policies.

 

2 Revenue and segment information

The Group uses several factors in identifying and analysing reportable segments, including the basis of organisation, such as differences in products and geographical areas. The Board of directors, being the Chief Operating Decision Makers, have determined that for the year ending 30 June 2021 there is only a single reportable segment.

 

 

 

 

 

 

 

All revenue represents sales to external customers. Three customers (2020: four) are defined as major customers by revenue, contributing more than 10% of the Group revenue.

 

2021

2020

 

£

£

Customer One

1,211,409

-

Customer Two

738,320

585,636

Customer Three

468,026

276,386

Major customers in the current year

2,417,755

862,022

Major customers in prior year

 

2,879,430

 

 

3,741,452

 

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

Geographical market

2021

2020

2021

2020

2021

2020

2021

2020

 

UK

UK

USA

USA

Rest of the World

Rest of the World

Total

 

£

£

£

£

£

£

£

 

Revenue

3,907,873

5,255,473

1,055,096

143,515

131,549

76,437

5,094,518

5,475,425

 

 

2021

2020

 

£

£

Revenue from contracts with customers - Events

3,917,481

4,704,730

Revenue from contracts with customers - Film

1,177,037

715,620

Other revenue

-

55,075

Total revenue

5,094,518

 

 

5,475,425

 

Contract assets and liabilities from contracts with customers have been recognised as follows:

 

 

2021

2020

 

£

£

Deferred income

384,598

293,281

Accrued income

169,955

49,890

 

Deferred income at the beginning of the period has been recognised as revenue during the period.

 

3 Other income

Other income

2021

2020

 

£

£

Coronavirus job retention scheme government grant

56,501

82,601

Business interruption payment grant

5,150

-

 

 

 

 

61,651

82,601

 

During the year the Group received government grants under the UK government's coronavirus job retention scheme and the coronavirus business interruption loan scheme.

 

4 Operating profit

Operating profit is stated after charging or crediting:

2021

2020

 

£

 

£

 

Cost of sales

 

 

Depreciation of fixtures, fittings and equipment

40,885

31,871

Amortisation of intangible assets

2,500

417

Administrative expenses

 

 

Depreciation of right-of-use assets

91,092

89,392

(Profit) / loss on foreign exchange differences

13,401

(726)

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

 

 

   Audit of the Company's annual accounts

6,000

6,000

   Audit of the Company's subsidiaries

20,622

19,000

Interest on lease liabilities

16,932

20,253

Staff costs (see note 24)

2,125,189

1,570,373

 

5 Exceptional items

Items that are material either because of their size or their nature, or that are non-recurring, are considered as exceptional. The exceptional income totalling £50,000 included in the consolidated Statement of Comprehensive Income relates to the contingent consideration totalling £100,000 which forms part of the overall consideration for Eventful Limited in the previous year. Eventful Limited failed to meet the target set in the purchase agreement for the year ending 30 June 2021 and therefore the contingent consideration related to the year ended 30 June 2021 has been moved to the consolidated Statement of Comprehensive Income as exceptional income. The remaining contingent consideration totalling £50,000 is included in the Statement of Financial Position.  

 

6 Finance income

Finance income

2021

2020

 

£

£

Bank interest received

489

556

 

7 Finance costs

 

Finance costs

2021

2020

 

£

£

Coronavirus business interruption loan interest

5,150

-

Lease interest

16,932

20,253

 

 

 

 

22,082

20,253

 

8 Taxation

 

2021

2020

 

£

 

£

 

The tax charge comprises:

 

 

 

 

 

Current tax

 

 

 

Current year

(4,442)

(5,357)

 

 

 

 

(4,442)

(5,357)

Deferred tax (see note 9)

 

 

Current year

9,670

(15,140)

 

9,670

(15,140)

 

 

 

Total tax charge in the statement of comprehensive income

5,228

(20,497)

Factors affecting the tax charge for the year

 

 

Profit / (loss) on ordinary activities before taxation from continuing operations

(159,698)

(217,924)

Profit / (loss) on ordinary activities before taxation multiplied by standard rate

 

 

of UK corporation tax of 19% (2020: 19%)

(30,343)

(41,406)

Effects of:

 

 

Non-deductible expenses

15,021

20,909

Tax on foreign subsidiaries

20,550

-

 

 

 

 

35,571

20,909

Total tax charge

5,228

(20,497)

 

The Group has estimated losses of £526,350 (2020: £375,762) available to carry forward against future trading profits. Losses totalling £476,152 are in Aeorema Communications plc which is not currently making taxable profits, as all trading is undertaken by its subsidiaries Aeorema Limited, Eventful Limited and Cheerful Twentyfirst, Inc., therefore no deferred tax asset has been recognised in respect of this amount.

 

9 Deferred taxation

 

2021

2020

 

£

£

Property, plant and equipment temporary differences

(16,826)

(13,978)

Temporary differences

(25,023)

(8,664)

Tax losses

39,790

30,253

 

(2,059)

7,611

At 1 July

7,611

(7,529)

Transfer to Statement of Comprehensive Income

(9,670)

15,140

At 30 June

(2,059)

7,611

 

10 Profit attributable to members of the parent company

As permitted by section 408 of the Companies Act 2006, the parent Company's Statement of Comprehensive Income has not been included in these financial statements.

 

11 Earnings per ordinary share

Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year.

 

Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into ordinary shares. In view of the group loss for the year, options to subscribe for ordinary shares in the company are anti-dilutive and therefore diluted earnings per share information is presented in line with basic earnings per share.

The following reflects the income and share data used and dilutive earnings per share computations:

 

 

2021

2020

 

£

£

 

Basic earnings per share

 

 

(Loss) / profit for the year attributable to owners of the Company

(164,926)

(197,427)

 

 

 

Basic weighted average number of shares

9,238,000

9,101,356

 

Dilutive potential ordinary shares:
Employee share options

1,920,000

1,020,000

Diluted weighted average number of shares

11,158,000

10,121,356

 

 

 

 

 

12 Intangible fixed assets

Group

Goodwill

Intellectual

Property

Total

 

£

£

£

Cost

 

 

 

At 30 June 2019

2,728,292

-

2,728,292

Acquisitions

199,194

10,000

209,194

At 30 June 2020

2,927,486

10,000

2,937,486

At 30 June 2021

2,927,486

10,000

2,937,486

 

 

Impairments and amortisation

 

 

 

 

At 30 June 2019

2,363,138

-

2,363,138

Charge for the year

-

417

-

 

At 30 June 2020

2,363,138

417

2,363,555

Charge for the year

-

2,500

2,500

 

At 30 June 2021

2,363,138

2,917

2,366,055

Net book value

 

 

 

At 30 June 2019

365,154

-

365,154

At 30 June 2020

564,348

9,583

573,931

At 30 June 2021

564,348

7,083

571,431

 

Goodwill arose for the Group on consolidation of its subsidiaries, Aeorema Limited and Eventful Limited.

 

Impairment - Aeorema Limited and Eventful Limited

 

Goodwill arises on acquisition of a business combination and represents the difference between the fair value of the consideration paid and the aggregate fair value of identifiable assets and liabilities acquired. Goodwill is tested annually for impairment, goodwill is impaired when the value in use exceeds the net asset value of the group's cash generating units (CGUs).The CGUs represent Aeorema Limited and Eventful Limited, being the lowest level within the group at which goodwill is monitored for internal management purposes.

 

 

 

The value in use has been calculated on a discounted cash flow basis using the 2021-22 budgeted figures as approved by the Board of directors, extended in perpetuity to calculate the terminal value and discounted at a rate of 10%. It is assumed that future growth will be 3% for venue sourcing activities and 2.50% for event and moving image production activities. Using these assumptions, which are based on past experience and future expectations, there was no impairment in the year.

 

13 Property, plant and equipment

Group

Leasehold land

Fixtures, fittings

Total

 

and buildings

and equipment

 

 

£

£

£

Cost

 

 

 

At 30 June 2019

58,536

138,649

197,185

Additions

-

59,591

59,591

Acquisition of subsidiary

-

1,809

1,809

Disposals

-

(26,867)

(26,867)

At 30 June 2020

58,536

173,182

231,718

Additions

-

59,179

59,179

Disposals

-

(3,354)

(3,354)

At 30 June 2021

58,536

229,007

287,543

 

 

Depreciation

 

 

 

 

At 30 June 2019

58,536

80,578

139,114

Charge for the year

-

31,871

31,871

Eliminated on disposal

-

(25,219)

(25,219)

 

At 30 June 2020

58,536

87,230

145,766

Charge for the year

-

40,885

40,885

Eliminated on disposal

-

(2,585)

(2,585)

 

At 30 June 2021

58,536

125,530

184,066

Net book value

 

 

 

At 30 June 2019

-

58,071

58,071

At 30 June 2020

-

85,952

85,952

At 30 June 2021

-

103,477

103,477

 

 

14 Right-of-use assets

Group

Leasehold

 

£

Cost

 

At 30 June 2019

404,574

 

Additions

455,436

Disposals

(404,574)

At 30 June 2020

455,436

Lease modification adjustment

(436,441)

At 30 June 2021

18,995

Depreciation

 

At 30 June 2019

391,088

Charge for the year

89,392

Eliminated on disposal

(404,574)

At 30 June 2020

75,906

Charge for the year

91,092

Lease modification adjustment

(166,998)

At 30 June 2021

-

Net book value

 

At 30 June 2019

13,486

At 30 June 2020

379,530

At 30 June 2021

18,995

 

The right-of-use asset relates to the Group's leasehold property at Moray House, 23-31 Great Titchfield Street, London, W1. In March 2021 the Group gave notice to its landlords of its intent to vacate the premises. Under the terms of the lease agreement the Group is required to give a minimum of 6 months' notice and therefore the Group is scheduled to leave the premises on 9 September 2021.

 

The right-of-use asset was calculated on the assumption that the Group would remain in the premises for the duration of the 10 year lease agreement. However, due to the Group's intent to vacate the premises early and with only just over 2 months remaining on the lease at the year end the right-of-use asset has been modified.

 

The valuation of the right of use asset is adjusted at the lease modification date, and the present value of future lease payments adjusted for depreciation to the year end. The corresponding lease liability modification is recognised in note 20.

 

15 Non-current assets - Investments

Company

Shares in subsidiary

 

£

Cost

 

At 30 June 2019

3,308,964

 

Increase in respect of share-based payments

47,097

Acquisition of subsidiary

479,692

At 30 June 2020

3,835,753

 

Increase in respect of share-based payments

30,703

Acquisition of subsidiary

10

At 30 June 2021

3,866,466

Provision

 

At 30 June 2019

2,694,213

At 30 June 2020

2,694,213

At 30 June 2021

2,694,213

Net book value

 

At 30 June 2019

614,751

At 30 June 2020

1,141,540

At 30 June 2021

1,172,253

 

 

 

 

 

 

 

 

 

 

Holdings of more than 20%

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

Subsidiary undertakings

Country of

Shares held

 

 

registration

 

 

 

or incorporation

Class

%

Aeorema Limited

England and Wales

Ordinary

100

Eventful Limited

England and Wales

Ordinary

100

Twentyfirst Limited (Dormant)

England and Wales

Ordinary

100

Cheerful Twentyfirst, Inc.

United States of America

Ordinary

100

 

During the year the Group formed Cheerful Twentyfirst, Inc., a US company based in New York. Aeorema Communications plc holds 100% of the share capital in Cheerful Twentyfirst, Inc.

 

The registered address of Aeorema Limited, Eventful Limited and Twentyfirst Limited is 64 New Cavendish Street, London, W1G 8TB. The registered address of Cheerful Twentyfirst, Inc. is 85 Broad Street, Floor 16, New York, NY, 10004.

 

16 Trade and other receivables

 

Group

Company

 

2021

2020

2021

2020

 

£

£

£

£

Trade receivables

964,490

306,198

-

-

Related party receivables

-

-

517,003

641,134

Other receivables

93,015

76,112

3,872

5,002

Prepayments and accrued income

371,559

215,187

12,000

11,850

 

1,429,064

597,497

532,875

657,986


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

 

Trade and other receivables are assessed for impairment based upon the expected credit losses model. The credit losses historically incurred have been immaterial and as such the risk profile of the trade receivables has not been presented.

 

 

At the year end, trade receivables of £76,504 (2020: £157,239) were past due but not impaired. These amounts are still considered recoverable. The ageing of these trade receivables is as follows:

 

Group

 

2021

2020

 

£

£

Less than 90 days overdue

39,419

33,712

More than 90 days overdue

37,085

123,527

 

76,504

157,239

 

17 Cash at bank and in hand

 

Group

Company

 

2021

2020

2021

2020

 

£

£

£

£

Bank balances

1,101,713

1,721,217

5,844

11,298

 

1,101,713

1,721,217

5,844

11,298

 

18 Trade and other payables

 

Group

Company

 

2021

2020

2021

2020

 

£

 

£

As restated

£

 

£

 

Trade payables

492,163

209,770

5,395

6,001

Related party payables

-

-

67,365

67,355

Taxes and social security costs

310,148

381,777

-

-

Other payables

91,002

113,582

50,000

100,000

Accruals and deferred income

524,154

521,093

17,000

17,780

 

1,417,467

1,226,222

139,760

191,136

 

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

 

19 Bank Loans

 

 

 

2021

 

2020

 

£

£

 

Bank Loan

 

 

Current

54,089

-

Non-current

195,911

-

 

 

 

 

250,000

-

 

On 15 October 2020 the company received a Floating Rate Basis Coronavirus Business Interruption Loan (CBIL) of £250,000 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 £6,944 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 £5,150 being charged to the profit and loss, this is offset by the equal amount of government grant income being recognised.

 

The bank loan is secured by a fixed and floating charge over the company's present and future assets.

 

20 Leases

The balance sheet shows the following amounts relating to leases:

Group

 

2021

 

2020

 

£

£

 

Right-of-use assets

 

 

Buildings

 

18,995

 

379,530

 

 

 

 

18,995

379,530

 

Group

 

2021

 

2020

 

£

£

 

Lease liabilities

 

 

Current

25,912

85,070

Non-current

-

300,689

 

 

 

 

25,912

385,759

 

21 Provisions

Group

 

Leasehold dilapidations

 

Total

 

£

£

At 1 July 2020

25,020

25,020

 

 

 

Charged to statement of comprehensive income

-

-

 

 

 

At 30 June 2021

25,020

25,020

 

 

 

Group

 

Leasehold dilapidations

 

Total

 

£

£

Current

25,020

-

Non-current

-

25,020

 

 

 

 

25,020

25,020

 

Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease.

 

22 Share capital

2021

2020

 

£

£

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 2019

9,050,500

1,131,313

At 30 June 2020

9,238,000

1,154,750

At 30 June 2021

9,238,000

1,154,750

 

Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the company.

 

See note 25 for details of share options outstanding.

 

23 Directors' emoluments

 

Salary, fees, bonuses and benefits in kind

Salary, fees, bonuses and benefits in kind

Pensions

Pensions

Total

Total

 

2021

2020

2021

2020

2021

2020

 

£

£

£

£

£

£

M Hale

-

13,333

-

-

-

13,333

S Haffner

15,000

14,250

-

-

15,000

14,250

R Owen

20,000

19,333

-

-

20,000

19,333

S Quah

139,268

146,050

5,000

6,469

144,268

152,519

A Harvey

103,653

112,643

4,000

5,219

107,653

117,862

 

277,921

305,609

9,000

11,688

286,921

317,297

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

 

During the year M Hale waived his right to fees of £15,000 (2020: £1,667)

 

 

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

Name

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

S Quah

22 August 2018

300,000

29.00p

17 November 2020

22 August 2028

A Harvey

22 August 2018

300,000

29.00p

17 November 2020

22 August 2028

S Quah

29 April 2021

100,000

31.00p

5 November 2023

29 April 2031

A Harvey

29 April 2021

100,000

31.00p

5 November 2023

29 April 2031

S Quah

29 April 2021

100,000

50.00p

5 November 2023

29 April 2031

A Harvey

29 April 2021

100,000

50.00p

5 November 2023

29 April 2031

S Quah

29 April 2021

100,000

70.00p

5 November 2023

29 April 2031

A Harvey

29 April 2021

100,000

70.00p

5 November 2023

29 April 2031

 

Fees for S Haffner are charged by Harris & Trotter LLP, a firm in which he is a member (see note 26).

 

24 Employee information

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

 Number of employees

Group

Company

 

2021 Number

2020 Number

2021 Number

2020 Number

 

 

 

 

 

Administration and production

37

28

5

5

 

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

Employment costs

Group

Company

 

2021

2020

2021

2020

 

£

£

£

£

Wages and salaries

1,846,938

1,333,194

35,000

46,917

Social security costs

205,253

159,082

-

-

Pension costs

42,295

31,000

-

-

Share-based payments

30,703

47,097

-

-

 

2,125,189

1,570,373

35,000

46,917

 

25 Share-based payments

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

Date of grant

Exercise price

Exercise period

 

Number of options 2021

Number of options 2020

 

 

From

To

 

 

25 April 2013

16.5p

25 April 2016

24 April 2023

300,000

300,000

22 August 2018

29.0p

17 November 2020

22 August 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

300,000

-

29 April 2021

50.0p

5 November 2023

29 April 2031

300,000

-

29 April 2021

70.0p

5 November 2023

29 April 2031

300,000

-

 

 

 

 

1,920,000

1,020,000

 

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

 

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

 

2021

2021

2020

2020

 

 

£

 

£

Outstanding at beginning of the year

1,020,000

0.25

1,200,000

0.25

Granted during the year

900,000

0.50

-

-

Outstanding at end of the year

1,920,000

0.37

1,020,000

0.25

Exercisable at the end of the year

900,000

0.25

300,000

0.17

 

The exercise price of options outstanding at the year-end was £0.369 (2020: £0.250) and their weighted average contractual life was 7.6 years (2020: 6.6 years).

 

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

Grant date

25 April 2013

Model used

Black-Scholes

Share price at grant date

16.5p

Exercise price

16.5p

Contractual life

10 years

Risk free rate

0.5%

Expected volatility

104%

Expected dividend rate

0%

Fair value option

14.889p

 

Grant date

22 August 2018

Model used

Black-Scholes

Share price at grant date

29.0p

Exercise price

29.0p

Contractual life

10 years

Risk free rate

0.75%

Expected volatility

40.33%

Expected dividend rate

0%

Fair value option

14.800p

 

Grant date

14 June 2019

Model used

Black-Scholes

Share price at grant date

26.0p

Exercise price

26.0p

Contractual life

10 years

Risk free rate

0.75%

Expected volatility

40.33%

Expected dividend rate

0%

Fair value option

12.894p

 

Grant date

29 April 2021

Model used

Black-Scholes

Share price at grant date

30.5p

Exercise price

31.0p

Contractual life

10 years

Risk free rate

0.84%

Expected volatility

153.96%

Expected dividend rate

0%

Fair value option

30.060p

 

Grant date

29 April 2021

 

 

Model used

Black-Scholes

 

 

Share price at grant date

30.5p

 

 

Exercise price

50.0p

 

 

Contractual life

10 years

 

 

Risk free rate

0.84%

 

 

Expected volatility

153.96%

 

 

Expected dividend rate

0%

 

 

Fair value option

29.943p

 

       

 

Grant date

29 April 2021

Model used

Black-Scholes

Share price at grant date

30.5p

Exercise price

70.0p

Contractual life

10 years

Risk free rate

0.84%

Expected volatility

153.96%

Expected dividend rate

0%

Fair value option

29.845p

 

The expected volatility is determined by calculating the historical volatility of the parent company's share price. For the share options issued prior to the year ended 30 June 2021 the historical volatility of the parent company's share price is calculated over the last three years. For share options issued during the year ended 30 June 2021 the historical volatility is calculated over the last 10 years. The risk free rate is the official Bank of England base rate.

 

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

 

2021

2020

 

£

£

Share-based payment charge

30,703

47,097

 

26 Related party transactions

The Group has a related party relationship with its subsidiaries and its key management personnel (including directors). Details of transactions between the Company and its subsidiaries are as follows:

 

2021

2020

 

£

£

Amounts owed by subsidiaries

 

 

Total amount owed by subsidiaries

517,003

641,134

Amounts owed to subsidiaries

 

 

Total amount owed to subsidiaries

67,365

67,355

 

The company received no dividends during the year (2020: £300,000) from its subsidiary, Aeorema Limited. The company transferred a VAT receivable of £19,221 (2020: £22,977) to Aeorema Limited due to being part of a common VAT group.

 

Aeorema Limited transferred a net amount of expenses to Aeorema Communications plc during the year of £20,000 (2020: £27,667).

 

Aeorema Limited paid expenses totalling £113,352 (2020: £503,734) on behalf of Aeorema Communications plc during the year.

 

During the year, Aeorema Limited made a net transfer of cash of £10,000 to Aeorema Communications plc (2020: £110,505).

 

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

 

2021

2020

 

£

£

Short-term employee benefits

277,921

305,609

Post-employment benefits

9,000

11,688

 

286,921

317,297

 

The share options held by directors of the Company are disclosed in note 23. During the year, a charge of £21,002 (2020: £41,556) was recognised in the Consolidated Statement of Comprehensive Income in respect of these share options.

 

During the year A Harvey received an interest-free loan of £10,000. At the year end, £10,000 (2020: £Nil) was outstanding.

 

During the year S Quah received an interest-free loan of £10,000. At the year end, £10,000 (2020: £Nil) was outstanding.

 

Harris and Trotter LLP is a firm in which S Haffner is a member. The amounts charged to the Group for professional services is as follows:

 Harris and Trotter LLP - charged during the year

2021

2020

 

£

£

Aeorema Communications plc

15,000

14,250

Aeorema Limited

12,850

14,700

 

27,850

28,950

 

At the year end, the Group had an outstanding trade payable balance to Harris and Trotter LLP of £5,630 (2020: £5,640).

 

 

 

 

27 Cash flows

 

Group

 

2021

2020

 

£

 

£

 

Cash flows from operating activities

 

 

Profit / (loss) before taxation

(159,698)

(217,924)

Depreciation of property, plant and equipment

40,885

31,871

Depreciation of right-of-use assets

91,092

89,392

Amortisation of intangible fixed assets

2,500

417

Loss on disposal of fixed assets

769

1,648

Share-based payment expense

30,703

47,097

Finance income

(489)

(556)

Interest on lease liabilities

16,932

20,253

Exchange rate differences on translation

(11,044)

-

Revaluation of right-to-use asset

(5,311)

-

 

6,339

(27,802)

Increase / (decrease) in trade and other payables

191,244

(1,075,254)

(Increase) / decrease in trade and other receivables

(831,592)

1,014,847

Taxation paid

(74,805)

(10,797)

Cash generated / (used) from operating activities

(708,814)

(99,006)

 

 

 

 

 

 

 

 

28 Financial instruments

Financial instruments recognised in the consolidated statement of financial position

 

All financial instruments are recognised initially at their fair value and subsequently measured at amortised cost.

 

 

Group

Company

 

2021

£

2020

£

2021

£

2020

£

Financial Assets

 

 

 

 

Trade and other receivables

1,227,460

432,202

517,003

641,134

Cash and cash equivalents

1,101,713

1,721,217

5,844

11,298

Investments in subsidiaries

-

-

1,166,593

1,141,540

Total

2,329,173

2,153,419

1,689,440

1,793,972

Financial Liabilities

 

 

 

 

Trade and other payables

833,165

734,131

122,760

173,356

Accruals

139,555

227,812

17,000

17,780

Total

972,720

961,943

139,760

191,136

 

 

The Group is exposed to risks that arise from its use of financial instruments. There have been no significant changes in the Group's exposure to financial instrument risk, its objectives, policies and processes for managing those from previous periods. The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables, cash and cash equivalents and trade and other payables.

 

Credit risk

Credit risk arises principally from the Group's trade receivables. It is the risk that the counterparty fails to discharge its obligation in respect of the instrument. The maximum exposure to credit risk at 30 June 2021 was £964,490 (2020: £306,198). Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The credit risk associated with trade receivables is minimal as invoices are based on contractual agreements with long-standing customers. Credit losses historically incurred by the Company have consequently been immaterial.

 

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to meet its liabilities when they fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid resources to meets its obligations of £1,036,700 (2020: £1,407,185).

 

Market risk

Market risk arises from the Group's use of interest bearing financial instruments. It is the risk that the fair value of future cash flows of a financial instrument will fluctuate. At the year end, the cash and cash equivalents of the Group net of bank overdrafts was £1,101,713 (2019: £1,721,217). The Group ensures that its cash deposits earn interest at a reasonable rate.

 

Capital risk

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern while maximising the return to stakeholders. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity. At the year end, total equity was £1,514,980 (restated 2020: £1,660,247).

 

29 Pension costs defined contribution

The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were £41,946 (2020: £31,000). At the end of the reporting period £9,237 (2020: £5,608) of contributions were due in respect of the period.

 

30 Dividends

As a consequence of the ongoing COVID-19 pandemic, the Board have decided that no final dividend will be paid to shareholders.

 

 

31 Contingent liability

Company

The Company is a member of a group VAT registration with all other companies in the Aeorema Communications group and, under the terms of the registration, is jointly and severally liable for the VAT payable by all members of the group. At 30 June 2021 the Company had no potential liability under the terms of the registration.

 

32 Control

There is no overall controlling party.

 

 

 

 

 

 

 

 

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