CONSOLIDATED DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 2014
In ancient Greek drama, an apparently insoluble crisis was often
solved by the intervention of the gods who magically descended
onto the stage from the skies above.
The elaborate crane mechanisms that enabled this impressive
effect were known as aeorema.
Aeorema Communications Plc, Moray House, 23-31 Great Titchfield Street, London, W1W 7PA
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Contents
Overview
Chairman’s statement
Strategic report
Directors’ report
Independent auditors’ report
Consolidated statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the consolidated financial statements
Notice of Annual General Meeting
Company information
2
3
4-5
6-8
9-10
11
12
13
14
15 – 39
40 – 41
42
1
Aeorema Communications plc
Aeorema Communications plc, the AIM-traded live events agency, announces its results for the year ended 30 June
2014.
Overview
(cid:129) Positive progress made towards building the Group as a leading provider of live events
(cid:129) Increased profits before tax from continuing operations to £504,841 (2013: £358,864)
(cid:129) Increased revenues to £4,764,584 (2013: 3,992,751)
(cid:129) Cash at bank and in hand of £1,620,895 (2013: £1,581,790)
(cid:129) Recommend dividend payment of 2p - plus special 3p dividend to return cash to shareholders (2013: dividend
payment: 1.5p and special dividend: nil)
(cid:129) Secured preferred supplier status positions with leading financial clients
(cid:129) A new single brand, Cheerful 21st, and an associated website is being developed to reflect future strategy to become
the live event agency of choice
2
2
Chairman’s Statement
Aeorema continues to build its position as a leading provider of live events by exploiting the strengths of its team and
bringing new innovative ideas and products effectively to life.
During the year under review, we signed a number of deals, increasing both market share and profitability. We were
particularly pleased to win a three year contract worth over £2 million with an existing technology client to run a live
event at the annual Cannes Lions advertising festival. We ran the first of these events this year, which was a great
success. Furthermore, Aeorema extended and won new roster positions with key organisations in the financial services
industry. Notably, we also created several ‘bid’ films for clients, which resulted in them winning major projects.
I believe that organisations choose to work with Aeorema for various reasons. Firstly, we provide both new and existing
customers with award-winning solutions using the latest technologies and interactive platforms; during the year we won
several awards at the event industry’s two major ceremonies - Eventia and Livecom. Secondly, our clients choose us
because they know we are committed to their success, have the reputation for encouraging them to push boundaries,
provide seamless, progressive, solutions and help them to stand out in a crowded market now, and into the future.
It is inspiring to see the way our team works together and strives for ways to improve our collective performance.
Throughout the year, their commitment, talent and integrity have led to the delivery of remarkable results. Post period
end, we strengthened this team with the appointment of Steve Garvey as our new CEO. Steve’s 25 years’ experience in
corporate communications, which saw him work for a number of cutting edge businesses in the sector, will be
invaluable as we take Aeorema into a new phase of growth.
Our emphasis now is on enabling Aeorema to achieve its full potential by continuing to excite our clients with superb
concepts and exceptional end results. Our five year plan is to become ‘the’ live events agency of choice, with a strong
focus on innovation. To this end, we are launching a new single brand, Cheerful 21st, as well as a website, with a focus
on live events. We intend to continue to grow our business organically, expanding both revenues and profits.
Importantly, we signed a new five-year lease on our office in the West End, which is large enough to support this growth.
The results for the year show a profit before taxation from continuing operations of £504,841 (2013: £358,864) on
revenue of £4,764,584 (2013: £3,992,751). We remain cash positive with cash at bank and in hand of £1,620,895
(2013: £1,581,790).
The Board is proposing a dividend of 2 pence per share to be paid on 21 November 2014 to shareholders on the
register on 24 October 2014. This has increased substantially from last year’s dividend of 1.5p and additionally, in light
of our strong cash position at the year end, the Board is delighted to propose a special dividend of 3 pence per share to
be paid on 21 November 2014 to shareholders on the register on 24 October 2014. The ex-dividend date for both the
final dividend and the special dividend will be 23 October 2014.
On behalf of the board, I would like to thank our team for their hard work during the past year. Our thanks also go to our
shareholders, whose continued support of Aeorema has helped us achieve record levels of performance in the year to
June 2014.
M Hale
Chairman
14 October 2014
3
3
Strategic Report
For the year ended 30 June 2014
The directors present their Strategic Report on the Group for the year ended 30 June 2014.
Principal activities
Aeorema is a live events agency with film capabilities that specialises in devising and delivering corporate
communication solutions.
Business review
The results for the year show a profit before taxation from continuing operations of £504,841 (2013: £358,864). It is
proposed that the retained profit after taxation of £415,696 (2013: £263,501) is transferred to the Group's reserves.
Revenue for the year from continuing operations was £4,764,584 (2013: £3,992,751). The gross profit remained
consistent at 41% (2013: 44%) and gross profit from continuing operations was £1,969,955 (2013: £1,167,261).
Key Financial Highlights
Year
Continuing operations
Revenue
2014
£
2013
£
2012
£
2011
£
4,764,584
3,992,751
2,837,345
2,147,844
Profit / (loss) before taxation, impairment losses
and write off of development costs
504,841
358,864
41,399
(90,336)
Further information can be found within the Chairman's Statement on page 3.
Capital Expenditure
Total capital expenditure, including expenditure on tangible assets, was £41,988 compared with £51,335 last year.
Cashflows
Net cash inflow from operating activities was £106,751 compared with a net cash inflow of £847,834 for the year ended
30 June 2013, due to an increase in trade receivables, as a result of significant sales shortly before the year end. Total
cashflow, representing operating cashflow after taxation, interest, capital expenditure and financing activities, increased
by £39,105 compared with an increase of £825,148 last year.
Employees
Our priority is to attract and retain talented employees and to harness their creativity to drive growth through
development and delivery of services that bring value to our customers' business operations.
We continue to focus on ensuring that the performance of staff is measured against clear, business focused objectives
and behavioural criteria through continual appraisals.
Reward
The Group benchmarks employee salaries against the market and reviews salaries annually to ensure that we are
paying at a level to attract and retain high-quality employees.
Key employees are offered access to a share option scheme, further details of which are provided in note 22 to the
financial statements.
4
Strategic Report continued
For the year ended 30 June 2014
Equal Opportunities
We are committed to ensuring equal opportunities for our staff. We have introduced training which covers equal
opportunities legislation and best practice. Our policy in respect of employment of disabled persons is the same as that
relating to all other employees in matters of training, career development and promotion. Where employees become
disabled during the course of their employment, we make every effort to make reasonable adjustments to their working
environment to enable their continued employment.
Safety, Health and Environment
The commitment and participation of all employees is vital to efficient and effective occupational risk control. In order to
meet our responsibility to protect the environment, staff and the business, the Group continues to focus on maintaining
a risk aware culture.
We believe the Group maintains a low environmental impact. We therefore continue to work on the potential
environmental impacts of energy consumption, waste and travel.
Directors' Policies for Managing Principal Risks
There is an ongoing process for identifying, evaluating and managing the significant risks faced by the business. Risk
reviews are undertaken regularly by the respective business areas throughout the year to identify and assess the key
risks associated with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are with customer dependency. Though the Group has a very
diverse customer base in certain market sectors, key customers can represent a significant amount of revenue. Key
customer relationships are closely monitored but the loss of a key client could have adverse effect on the Group’s
performance. Further details of risks, uncertainties and financial instruments are contained in note 26.
Key risks of non financial nature
The Group is operating in a highly competitive global market that is undergoing continual change. The Group’s ability to
respond to many competitive factors including, but not limited to technological innovations, product quality, customer
service and employment of qualified personnel will be key in the achievement of its objectives, but its ultimate success
will depend on the purchase spends of its customers and the buoyancy in the market.
On behalf of the Board
S Garbutta
Director
14 October 2014
5
Directors’ Report
For the year ended 30 June 2014
The directors present their annual report and financial statements for the year ended 30 June 2014. The financial
statements are for Aeorema Communications plc (“the Company”) and its subsidiaries (together, “the Group”).
In accordance with section 414C of the Companies Act 2006, the company has produced a Strategic Report which is
set out on pages 4 to 5.
Directors
The following directors have held office since 1 July 2013:
P Litten
R Owen
S Garbutta
M Hale
G Fitzpatrick
S Quah
In accordance with regulation 122 of the Company's Articles of Association, one third of the directors retire by rotation,
or if their number is not three, or a multiple of three, the nearest to but not exceeding one third, and, being eligible, offer
themselves for re-election.
Dividends
The Board is proposing a dividend of 2 pence per share to be paid on 21 November 2014 to shareholders on the
register on 24 October 2014. This has increased substantially from last year’s dividend of 1.5p and additionally, in light
of our strong cash position at the year end, the Board is delighted to propose a special dividend of 3 pence per share to
be paid on 21 November 2014 to shareholders on the register on 24 October 2014. The ex-dividend date for both the
final dividend and the special dividend will be 23 October 2014.
Financial instruments
Details of financial instruments are given in note 26 to the accounts.
Non-current assets
The significant changes in non-current assets during the year are explained in notes 10 and 11 to the financial
statements. As pioneers in visual technologies, the Group has utilised its resources to develop unique and highly
innovative communications products.
Shareholdings
At 30 September 2014, the directors were aware that the following were the beneficial owners of 3% or more of the
Company's issued share capital:
Number of shares
Percentages held
P Litten
M Hale
Reverse Take-Over Investments Plc
B Smith
3,362,500
1,650,000
300,000
300,000
38.5
18.9
3.7
3.4
6
Directors’ Report continued
For the year ended 30 June 2014
R Owen is a director and has an interest in Reverse Take-Over Investments plc through its parent company Westside
Acquisitions plc. As civil partner of P Litten, G Fitzpatrick has a beneficial interest in 3,362,500 ordinary shares.
Corporate governance
Although not required to do so, the Company seeks within the practical confines of being a small company to comply
with a number of the principles of good governance and the UK Corporate Governance Code (“The Code") appended to
the Listing Rules of the Financial Services Authority.
The Board
The aim of the Board is to function at the head of the Company's management structures, leading and controlling its
activities and setting a strategy for enhancing shareholder value. The Board currently consists of three executive
directors and three non-executive directors. The Company does not have a Nomination Committee as such; the Board
collectively undertakes the functions of such a committee.
Future developments
On 1 July 2014 Mr S Garvey was appointed Director of Aeorema Limited and became Chief Executive Officer.
Internal control
The Board has overall responsibility for ensuring that the Group maintains systems and internal financial controls that
provide them with reasonable assurance regarding the financial information both for use within the business and for
external publication and that the assets are safeguarded.
Audit Committee
There is an Audit Committee consisting of the Chairman, and a non-executive director. The terms of reference of the
Audit Committee are to assist the Board in the discharge of its responsibilities for corporate governance, financial
reporting and internal control. Its duties include maintaining an appropriate relationship with the Company's auditors,
keeping under review the scope and the results of the audit and its effectiveness.
Remuneration Committee
The Remuneration Committee consists of two non-executive directors, Stephen Garbutta and Michael Hale, and a
meeting will be held no less than once a year. The Remuneration Committee is responsible for reviewing the
performance of the executives of the Company and for setting the scale and structure of their remuneration, paying due
regard to the interests of shareholders as a whole and the performance of the Company.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group and the Company have
adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the Group's financial statements.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the Company's auditors are unaware.
Additionally, they have taken all the necessary steps that they ought to have taken as directors in order to make
themselves aware of all the relevant audit information and to establish that the Company's auditors are aware of that
information.
7
Directors’ Report continued
For the year ended 30 June 2014
Auditor
On 31 October 2013 our auditors changed their name to Baker Tilly Audit Limited. Subsequently Baker Tilly Audit
Limited ceased trading on 31 March 2014. The directors, having been notified of the cessation of trade of Baker Tilly
Audit Limited, appointed Baker Tilly UK Audit LLP as auditor on 1 April 2014 to fill the casual vacancy. In accordance
with the Companies Act a resolution proposing the appointment of Baker Tilly UK Audit LLP will be put to the members.
Directors' responsibilities
The directors are responsible for preparing the Strategic Report and the Directors’ Report, and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The
directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in
accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (“EU”) and
have elected under company law to prepare the company financial statements in accordance with IFRS as adopted by
the EU.
The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the
group and the company and the financial performance of the group and the company. The Companies Act 2006
provides in relation to such financial statements that references in the relevant part of that Act to financial statements
giving a true and fair view are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and the company and of the profit or loss of the group and the
company for that period.
In preparing the group and company financial statements, the directors are required to:-
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state whether they have been prepared in accordance with IFRSs adopted by the EU;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group
and the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Aeorema Communications plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
S Garbutta
Director
14 October 2014
8
Independent Auditors’ Report
To the Members of Aeorema Communications plc
We have audited the Group and Parent Company financial statements (“the financial statements”) on pages 11 to 39.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’ Responsibilities Statement set out on page 8, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
http://www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion
– the financial statements give a true and fair view of the state of the Group’s and the Parent’s affairs as at 30 June
2014 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union
– the Parent’s financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the Companies Act 2006; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
9
Independent Auditors’ Report continued
To the shareholders of Aeorema Communications plc
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
– adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
– the Parent Company financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Ian Hughes (Senior Statutory Auditor)
For and on behalf of Baker Tilly UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
20 October 2014
10
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2014
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating Profit
Gain recognised on disposal of former subsidiary
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year from continuing operations
Discontinued operations
Loss for the period from discontinued operations
Total comprehensive income for the year
attributable to owners of the parent
Profit per ordinary share:
Basic
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted
From continuing operations
From discontinued operations
Total diluted earnings per share
Notes
2
3
24
4
4
5
7
9
9
2014
£
4,764,584
(2,794,629)
1,969,955
(1,465,520)
504,435
–
406
–
504,841
(89,145)
415,696
2013
As restated
£
3,992,751
(2,253,321)
1,739,430
(1,434,769)
304,661
54,021
195
(13)
358,864
(79,087)
279,777
–
(16,276)
415,696
263,501
5.02290p
–
5.02290p
4.55487p
–
4.55487p
3.4809p
(0.2025p)
3.2784p
3.25117p
(0.18914p)
3.06203p
There were no other comprehensive income items.
The notes on pages 15 to 39 are an integral part of these financial statements.
11
Statement of Financial Position
As at 30 June 2014
Notes
Group
Company
2014
£
2013
£
2014
£
2013
£
Non-current assets
Intangible assets
Property, plant and equipment
Deferred taxation
Investments in subsidiaries
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
10
11
6
12
13
14
365,154
365,154
67,449
24,145
–
77,040
8,277
–
–
–
–
–
–
–
553,196
538,307
456,748
450,471
553,196
538,307
2,674
2,675
–
–
1,475,921
606,557
357,873
468,462
1,620,895
1,581,790
734,628
782,780
3,099,490
2,191,022
1,092,501
1,251,242
3,556,238
2,641,493
1,645,697
1,789,549
Trade and other payables
15
(1,589,007)
( 1,140,377)
(89,730)
( 282,081)
Net assets
Equity
Share capital
Merger reserve
Other reserve
Share-based payment reserve
Capital redemption reserve
Retained earnings
1,967,231
1,501,116
1,555,967
1,507,468
16
17
18
1,079,688
1,004,688
1,079,688
1,004,688
16,650
19,500
16,650
–
16,650
19,500
16,650
–
110,972
96,083
110,972
96,083
257,812
257,812
257,812
257,812
482,609
125,883
71,345
132,235
Equity attributable to owners of the parent
1,967,231
1,501,116
1,555,967
1,507,468
The notes on pages 15 to 39 are an integral part of these financial statements.
The financial statements were approved and authorised by the board of directors on 14 October 2014 and were signed
on its behalf by
G Fitzpatrick, Director
S Garbutta, Director
Company Registration No. 04314540
12
Statement of Changes in Equity
For the year ended 30 June 2014
Group
Share
capital
£
Merger
reserve
£
Other
reserve
£
At 1 July 2012
1,004,688
16,650
Comprehensive income
for the year, net of tax
Share-based payments
–
–
–
–
At 30 June 2013
1,004,688
16,650
At 1 July 2013
1,004,688
16,650
Comprehensive income
for the year, net of tax
Tax credit relating to
share option scheme
Dividends paid
–
–
–
Shares issued in the period
75,000
Share-based payments
–
–
–
–
–
–
Share-
based
payment
reserve
£
Capital
redemption
reserve
£
Retained
earnings
£
Total
equity
£
76,268
257,812
(137,618) 1,217,800
–
19,815
–
–
263,501
263,501
–
19,815
96,083
257,812
125,883
1,501,116
96,083
257,812
125,883
1,501,116
–
–
–
–
–
415,696
415,696
61,594
61,594
(120,564)
( 120,564)
–
–
94,500
14,889
At 30 June 2014
1,079,688
16,650
19,500
110,972
257,812
482,609
1,967,231
–
14,889
Company
Share
capital
£
Merger
reserve
£
Other
reserve
£
At 1 July 2012
1,004,688
16,650
Comprehensive income
for the year, net of tax
Share-based payments
–
–
–
–
At 30 June 2013
1,004,688
16,650
At 1 July 2013
1,004,688
16,650
Comprehensive income for
the year, net of tax
Dividends paid
–
–
Shares issued in the period
75,000
Share-based payments
-
–
–
–
–
Share-
based
payment
reserve
£
Capital
redemption
reserve
£
Retained
earnings
£
Total
equity
£
76,268
257,812
(548,586)
806,832
–
19,815
–
–
680,821
680,821
–
19,815
96,083
257,812
132,235
1,507,468
96,083
257,812
132,235
1,507,468
–
–
–
–
59,674
59,674
(120,564)
( 120,564)
–
–
94,500
14,889
–
14,889
At 30 June 2014
1,079,688
16,650
19,500
110,972
257,812
71,345
1,555,967
The notes on pages 15 to 39 are an integral part of these financial statements.
13
–
–
–
–
–
–
–
–
19,500
–
–
–
–
–
–
–
19,500
–
–
–
–
–
–
–
Statement of Cash Flows
For the year ended 30 June 2014
Net cash flow from operating activities
25
106,751
847,834
(152,338)
493,244
Notes
Group
Company
2014
£
2013
£
2014
£
2013
£
Cash flows from investing activities
Finance income
406
195
250
138
Purchase of property, plant and equipment
11
(41,988)
( 51,335)
Proceeds from sale of property, plant and equipment
Dividends received by the Company
Disposal of subsidiary (net of cash disposed)
24
–
–
–
44,875
–
130,000
(16,421)
–
–
–
–
–
–
–
Cash (used) / generated in investing activities
(41,582)
( 22,686)
130,250
138
Cash flows from financing activities
Proceeds of share issue
Dividends paid to owners of the Company
Cash used in financing activities
94,500
(120,564)
(26,064)
–
–
–
94,500
(120,564)
(26,064)
–
–
–
Net increase / (decrease) in cash and cash equivalents
39,105
825,148
(48,152)
493,382
Cash and cash equivalents at beginning of year
1,581,790
756,642
782,780
289,398
Cash and cash equivalents at end of year
14
1,620,895
1,581,790
734,628
782,780
The notes on pages 15 to 39 are an integral part of these financial statements.
14
Notes to the Consolidated Financial Statements
For the year ended 30 June 2014
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 26, 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 26, the Directors, at the time of approving the financial statements, have a reasonable expectation that
the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore
used the going concern basis in preparing the financial statements.
Basis of Preparation
The Group’s financial statements have been prepared under the historical cost convention and in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The following new standards, amendments to standards and interpretations, applied for the first time from 1 July 2013.
(cid:129) IFRS 1 (Amended) ‘First-time Adoption of International Financial Reporting Standards’, effective 1 January 2013.
(cid:129) IFRS 7 ‘Financial Instruments: Disclosures’, effective 1 January 2013.
(cid:129) IFRS 10 ‘Consolidated Financial Statements’, effective 1 January 2013.
(cid:129) IFRS 11 ‘Joint Arrangements’, effective 1 January 2013.
(cid:129) IFRS 12 ‘Disclosure of Interests in Other Entities’, effective 1 January 2013.
(cid:129) IFRS 13 ‘Fair Value Measurement’, effective 1 January 2013.
(cid:129) IAS 1 (Amended) ‘Presentation of Other Comprehensive Income’, effective 1 January 2013.
(cid:129) IAS 16 (Amended) ‘Property, Plant and Equipment’, effective 1 January 2013.
(cid:129) IAS 19 (Amended) ‘Employee Benefits’, effective 1 January 2013.
(cid:129) IAS 27 (Revised) ‘Separate Financial Statements’, effective 1 January 2013.
(cid:129) IAS 28 (Revised) ‘Investments in Associates and Joint Ventures’, effective 1 January 2013.
(cid:129) IAS 32 (Amended) ‘Financial Instruments: Presentation’, effective 1 January 2013.
(cid:129) IAS 34 (Amended) ‘Interim Financial Reporting’, effective 1 January 2013.
(cid:129) IFRIC 20 ‘Stripping Costs in the Production Phase of a Surface Mine’, effective 1 January 2013.
The adoption of these revised and amended standards has not impacted on the Annual Report and Financial
Statements.
15
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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 2013 and have not been adopted early by the Group:
(cid:129) IFRS 2 (Amended) ‘Share-Based Payments’, effective 1 July 2014.
(cid:129) IFRS 3 (Amended) ‘Business Combinations’, effective 1 July 2014.
(cid:129) IFRS 7 (Amended) ‘Financial Instruments: Disclosures’, effective 1 January 2015.
(cid:129) IFRS 8 (Amended) ‘Operating Segments’, effective 1 July 2014.
(cid:129) IFRS 9 ‘Financial Instruments’, effective 1 January 2018.
(cid:129) IFRS 11 (Amended) ‘Accounting for Acquisitions of Interests in Joint Operations’, effective 1 July 2016.
(cid:129) IFRS 14 ‘Regulatory Deferral Accounts’, effective 1 July 2016.
(cid:129) IFRS 15 ‘Revenue for Contracts with Customers’, effective 1 July 2017.
(cid:129) ‘Investment Entities’ (Amendments to IFRS 10, IFRS 12 and IAS 27) effective 1 January 2014.
(cid:129) IAS 16 (Amended) ‘Property, Plant and Equipment’, effective 1 July 2014.
(cid:129) IAS 19 (Amended) ‘Employee Benefits’, effective 1 July 2014.
(cid:129) IAS 24 (Amended) ‘Related Party Disclosures’, effective 1 July 2014.
(cid:129) IAS 27 (Amended) ‘Separate Financial Statements’, effective 1 January 2016.
(cid:129) IAS 32 (Amended) ‘Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities’,
effective 1 January 2014.
(cid:129) IAS 36 (Amended) ‘Recoverable Amounts Disclosures for Non-Financial Assets’, effective 1 January 2014.
(cid:129) IAS 38 (Amended) ‘Intangible Assets’, effective 1 July 2014.
(cid:129) IAS 39 (Amended) ‘Novation of Derivatives and Continuation of Hedge Accounting’, effective 1 January 2014.
(cid:129) IAS 40 (Amended) ‘Investment Property’, effective 1 January 2014.
(cid:129) ‘Clarification of Acceptable Methods of Depreciation and Amortisation’ (Amendments to IAS 16 and IAS 38) effective
1 January 2016.
(cid:129) ‘Agriculture: Bearer Plants’ (Amendments to IAS 16 and IAS 41) effective 1 January 2016.
(cid:129) IFRIC Interpretation 21 ‘Levies’, effective 1 January 2014.
Management does not believe that the application of these standards, where applicable, will have an impact on the
financial statements, except for the requirement of additional disclosures.
Presentation
The Directors have determined that wages and salaries relating to production personnel previously disclosed in the
Consolidated Statement of Comprehensive Income within Cost of Sales should now be reflected as Administrative
Expenses, in order to more accurately reflect the nature of these costs. Accordingly, an amount of £739,679 (2013:
£572,169) has been reclassified to present these expenses in a consistent manner.
16
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30
June 2014. Subsidiaries are entities over which the Group has the power to control the financial and operating policies
so as to obtain benefits from their activities. Subsidiaries are fully consolidated from the date on which control is
transferred until the date that such 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 (5 years)
Fixtures, fittings and equipment
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 income statement in the year that the asset is
derecognised.
Fully depreciated assets still in use are retained in the financial statements.
17
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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 income statement 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.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
Inventories
Inventories are stated at the lower of cost and net realisable 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.
18
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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.
Pension costs
The Group does not operate a pension scheme for its employees. It does however, make 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 22 to the financial statements.
19
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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 and the key areas are summarised below:
a) Depreciation rates are based on the estimated useful lives and residual value of the assets involved.
b) The impairment review of goodwill is based on the estimation of future cash flows and discount rates in order to
calculate the present value of the cash flows.
c) The Group operates share incentive schemes as detailed in note 22. In order to calculate the annual charge in
accordance with IFRS 2, management are required to make a number of assumptions and include, amongst
others, volatility and expected life of options.
d) An allowance for uncollectable trade receivables is estimated based on a combination of aging analysis and any
specific, known troubled customer accounts.
20
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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 2014 there is only a single reportable segment.
All revenue represents sales to external customers. Three customers (2013: one) are defined as major customers by
revenue, contributing more than 10% of the Group revenue.
Customer one
Customer two
Customer three
Major customers
2014
£
1,214,324
809,290
571,188
2013
£
1,217,332
–
–
2,594,802
1,217,332
The geographical analysis of revenue from continuing operations by geographical location of customer is as follows:
Geographical market
2014
2013
2014
2013
UK
£
UK
£
Europe
£
Europe
£
2014
Rest of
the
World
£
2013
Rest of
the
World
£
2014
2013
Total
£
Total
£
Revenue
4,493,297 3,803,651
262,306
1,752
8,981
187,348 4,764,584 3,992,751
All non-current assets are based in the UK.
21
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
3 Operating profit
Operating profit is stated after charging
Depreciation of property, plant and equipment
Profit on disposal of property, plant and equipment
Fees payable to the Company’s auditor in respect of:
Audit of the Company’s annual accounts
Audit of the Company’s subsidiaries
Staff costs (see note 21)
Operating leases – land and buildings
4 Financial income and expenses
Finance income
Bank interest received
Finance expenses
Other interest payable
2014
£
2013
£
51,579
35,934
–
44,875
6,000
6,000
11,500
11,500
1,029,306 1,001,550
77,596
91,438
2014
£
406
2014
£
–
2013
£
195
2013
£
13
22
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
5 Taxation
The tax charge comprises:
Current tax
Prior period adjustment
Current year
Deferred tax
Current year
Total tax charge in the statement
of comprehensive income
Factors affecting the tax charge for the year
2014
£
2013
£
234
–
104,779
67,652
105,013
67,652
(15,868)
11,435
(15,868)
11,435
89,145
79,087
Profit on ordinary activities before taxation from continuing operations
504,841
358,864
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 23% (2013: 20%)
Effects of:
Non deductible expenses
Income that is exempt from taxation
Depreciation, impairment losses and disposals
Capital allowances
Share-based payment
Losses utilised
Share options exercised
Marginal relief
Prior period adjustment
Deferred tax asset movement
Total taxation charge
116,113
82,539
(1,114)
12,494
–
(22,745)
11,863
8,130
(11,617)
( 8,671)
3,424
7,785
–
( 9,505)
(12,167)
–
(1,723)
(2,375)
234
–
(15,868)
11,435
(29,968)
(3,452)
89,145
79,087
The Group has estimated losses of £375,762 (2013: £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.
23
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
6 Deferred taxation
Property, plant and equipment temporary differences
Temporary differences
At 1 July
Transfer to Statement of Comprehensive Income
At 30 June
2014
£
2013
£
(5,174)
(1,094)
29,319
24,145
9,371
8,277
8,277
19,712
15,868
(11,435)
24,145
8,277
The deferred tax asset is expected to be utilised given the return to profitability and future trading prospects.
7 Discontinued Operations
On 7 December 2012 the Group disposed of its 100% subsidiary ST16 Limited, which carried out Viral Film operations.
ST16 Limited was sold to its directors, S Crofts and J Stinton for proceeds of £5. Details of the assets and liabilities
disposed of, and the calculation of the profit or loss on disposal, are disclosed in note 24.
The loss from the discontinued operation included in the profit for the previous year is set out below.
Loss for the year from discontinued operations
Revenue
Expenses
Loss for the year from discontinued operations attributable to owners of the company
Cash flows from discontinued operations
Net cash outflows from operating activities
Net cash inflows from investing activities
Net cash outflows
2014
£
2013
£
–
–
–
–
–
–
69,002
(85,278)
(16,276)
(90,006)
51,319
(38,687)
24
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
8 Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company’s Statement of Comprehensive Income
has not been included in these financial statements. The retained profit for the financial year of the holding company
was £59,674 (2013: £680,821).
9 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:
2014
£
2013
£
Basic earnings per share
Profit for the year attributable to owners of the Company
415,696
263,501
Loss for the period from discontinued operations used in the calculation
of basic earnings per share from discontinued operations
–
16,276
Earnings used in the calculation of basic earnings per share from continuing operations
415,696
279,777
Basic weighted average number of shares
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares
8,276,021 8,037,500
850,380
567,915
9,126,401 8,605,415
25
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
10 Intangible fixed assets
Group
Cost
At 1 July 2012
Disposal of subsidiary
At 30 June 2013
At 30 June 2014
Impairment and amortisation
At 1 July 2012
Eliminated on disposal
At 30 June 2013
At 30 June 2014
Net book value
At 1 July 2012
At 30 June 2013
At 30 June 2014
Goodwill
£
2,805,963
(77,671)
2,728,292
2,728,292
2,440,809
(77,671)
2,363,138
2,363,138
365,154
365,154
365,154
Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited (formerly Cheerful Scout
Productions Limited).
Impairment – Aeorema Limited (formerly Cheerful Scout Productions 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 2015 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 at 1.5%. Using these
assumptions, which are based upon past experience, there was no impairment in the year.
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 £326,000 and a one percentage fall
in future growth would reduce the recoverable amount by £342,000. However, in both cases there would still be no
indication of impairment of goodwill.
26
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
11 Property, plant and equipment
Group
Cost
At 1 July 2012
Additions
Disposals
Derecognised on disposal of a subsidiary
At 30 June 2013
Additions
At 30 June 2014
Depreciation
At 1 July 2012
Eliminated on disposal of assets
Eliminated on disposal of a subsidiary
Charge for the year
At 30 June 2013
Charge for the year
At 30 June 2014
Net book value
At 1 July 2012
At 30 June 2013
At 30 June 2014
Leasehold land
and buildings
£
Fixtures, fittings
and equipment
£
157,063
24,034
(157,063)
-
24,034
–
24,034
153,838
(157,063)
-
8,426
5,201
16,104
21,305
3,225
18,833
2,729
889,890
27,301
(90,870)
(5,254)
821,067
41,988
863,055
827,187
(90,870)
(965)
27,508
762,860
35,475
798,335
62,703
58,207
64,720
Total
£
1,046,953
51,335
(247,933)
(5,254)
845,101
41,988
887,089
981,025
(247,933)
(965)
35,934
768,061
51,579
819,640
65,928
77,040
67,449
The gross carrying amount of fully depreciated property, plant and equipment still in use is £nil (2013: £nil) in relation
to leasehold land and buildings and £735,908 (2013: £696,292) in relation to fixtures, fittings and equipment.
27
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
Shares in subsidiary
£
3,306,981
12,039
(86,500)
3,232,520
14,889
3,247,409
2,780,713
(86,500)
2,694,213
2,694,213
526,268
538,307
553,196
12 Non-current assets – Investments
Company
Cost
At 1 July 2012
Increase in respect of share based payments
Disposal of subsidiary
At 30 June 2013
Increase in respect of share based payments
At 30 June 2014
Provision
At 1 July 2012
Disposal of subsidiary
At 30 June 2013
At 30 June 2014
Net book value
At 1 July 2012
At 30 June 2013
At 30 June 2014
28
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings
Aeorema Limited
(formerly Cheerful Scout Productions Limited)
Twentyfirst Limited
Country of
registration or
incorporation
England and Wales
England and Wales
Shares held
Class
Ordinary
Ordinary
%
100
100
The principal activity of these undertakings for the last relevant financial year was as follows:
Company
Principal activity
Aeorema Limited
(formerly Cheerful Scout Productions Limited)
Provision of business communication services
Twentyfirst Limited
Non-trading
13 Trade and other receivables
Trade receivables
Related party receivables
Other receivables
Prepayments and accrued income
Group
Company
2014
£
2013
£
1,401,432
526,982
2014
£
-
2013
£
-
-
-
353,337
457,863
19,084
20,516
–
55,405
59,059
4,536
6,180
4,419
1,475,921
606,557
357,873
468,462
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.
29
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
At the year end, trade receivables of £344,096 (2013: £262,488) 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:
Less than 90 days
More than 90 days
14 Cash and cash equivalents
Bank balances
Cash and cash equivalents
Group
2014
£
2013
£
317,802
239,164
26,294
23,324
344,096
262,488
Group
Company
2014
£
2013
£
2014
£
2013
£
1,620,895 1,581,790
734,628
782,780
1,620,895 1,581,790
734,628
782,780
Cash and cash equivalents in the statement of cash flows
1,620,895 1,581,790
734,628
782,780
15 Trade and other payables
Trade payables
Related party payables
Taxes and social security costs
Other payables
Group
Company
2014
£
2013
£
2014
£
2013
£
902,860
686,742
1,656
11,114
-
-
67,355
197,355
301,004
186,474
1,369
43,842
160
-
250
-
Accruals and deferred income
341,301
267,001
19,350
73,362
1,589,007 1,140,377
89,730
282,081
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.
30
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
16 Share capital
Authorised
2014
£
2013
£
28,000,000 Ordinary shares of 12.5p each
3,500,000
3,500,000
Allotted, called up and fully paid
At 1 July 2012
At 30 June 2013
Issue of shares
At 30 June 2014
Ordinary
shares
£
Number
8,037,500
1,004,688
8,037,500
1,004,688
600,000
75,000
8,637,500
1,079,688
£19,500 share options were exercised just before the year end with the shares being issued on 2 July 2014.
See note 22 for details of share options outstanding
17 Merger reserve
At 1 July 2012
At 30 June 2013
At 30 June 2014
Merger reserve
£
16,650
16,650
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.
31
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
18 Other reserve
At 1 July 2012
At 30 June 2013
Exercise of options
At 30 June 2014
Subscriptions received reserve
£
–
–
19,500
19,500
On 16 June 2014 104,000 share options were exercised and fully paid for at 18.75p each. The shares were allotted on
2 July 2014. For the earnings per share note these shares are treated as issued on the exercise date. This reserve holds
the funds at the year end. The reserve is not distributable.
19 Financial commitments
Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
Group
Not later than one year
Later than one year and not later than five years
20 Directors’ emoluments
The remuneration of Directors of the Company is set out below.
Land and Buildings
2014
£
10,417
2013
£
–
–
62,500
P Litten
G Fitzpatrick
M Hale
S Garbutta
R Owen
Salary or
Fees
2014
£
65,000
Salary or
Fees
2013
£
50,000
Pensions
2014
£
59,834
Pensions
2013
£
52,483
Total
2014
£
124,834
Total
2013
£
102,483
52,885
50,000
59,834
52,483
112,719
102,483
-
3,000
7,500
-
1,500
7,500
-
-
-
-
-
-
-
-
-
3,000
7,500
-
1,500
7,500
133,000
25,296
S Quah (appointed 15 April 2013)
133,000
25,296
261,385
134,296
119,668
104,966
381,053
239,262
32
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
The share options held by directors who served during the year are summarised below:
Name
S Quah
S Quah
Grant date
Number
awarded
20 July 2010
300,000
25 April 2013
300,000
Exercise
price
12.50p
16.50p
Earliest
exercise price
Expiry date
20 July 2013
19 July 2020
25 April 2016
24 April 2023
G Fitzpatrick exercised 64,000 shares on 16 June 2014 at 18.75p each resulting in a gain of £31,200.
Fees for S Garbutta are charged by Harris & Trotter LLP, a firm in which he is a member. See note 23.
21 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees
Administration and Production
2014
Number
2013
as restated
Number
19
17
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:
Employment costs
Wages and salaries
Social security costs
Pension costs
Share-based payments
2014
£
2013
£
821,680
782,230
72,897
94,367
119,840
105,138
14,889
19,815
1,029,306
1,001,550
33
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
22 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
From
To
Number
of options
2014
Number
of options
2013
28 October 2004
18.75p
28 October 2007
27 October 2014
9,000
113,000
20 July 2010
25 April 2013
12.5p
16.5p
20 July 2013
19 July 2020
300,000
1,200,000
25 April 2016
24 April 2023
300,000
300,000
609,000
1,613,000
Details of the number of share options and the weighted average exercise price outstanding during the year are as
follows:
Weighted
average
exercise
price
2014
£
Number
of options
2014
Number
of options
2013
Outstanding at beginning of the year
1,613,000
0.11
1,943,000
Lapsed during the year
Granted during the year
Exercised during the year
(300,000)
(0.13)
(630,000)
–
–
300,000
(704,000)
(0.13)
–
Outstanding at end of the year
609,000
0.15
1,613,000
Exercisable at the end of the year
309,000
0.13
113,000
Weighted
average
exercise
price
2013
£
0.09
(0.23)
0.17
–
0.11
0.19
The exercise price of options outstanding at the year-end ranged between £0.125 and £0.1875 (2013: £0.125 and
£0.2325) and their weighted average contractual life was 7.7 years (2013: 7.7 years).
34
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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:
28 October 2004
20 July 2010
9 March 2012
25 April 2013
Grant date
Model used
Share price at grant date
Exercise price
Contractual life
Risk free rate
Expected volatility
Expected dividend rate
Binomial
16.25p
18.75p
10 years
6%
43%
0%
Fair value option
5.9868p
Black-Scholes
Black-Scholes
Black-Scholes
8.75p
8.75p
10 years
0.5%
100%
0%
7.779p
23.25p
23.25p
10 years
0.5%
105%
0%
16.5p
16.5p
10 years
0.5%
104%
0%
21.053p
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 office Bank of England base rate. The expected dividend rate is zero as the
company has not paid dividends in the past.
The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-based
payment plans:
Share-based payment charge
2014
£
2013
£
14,889
19,815
35
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
23 Related party transactions
The Group has a related party relationship with its subsidiaries and its directors. Details of transactions between the
Company and its subsidiaries are as follows:
Management fees charged by subsidiaries to Aeorema Communications plc
Aeorema Limited (formerly Cheerful Scout Productions Limited)
–
102,483
2014
£
2013
£
Amounts owed by subsidiaries
Total amount owed by subsidiaries
Amounts owed to subsidiaries
Total amount owed to subsidiaries
The compensation of key management (including directors) of the Group is as follows:
Short-term employee benefits
Post-employment benefits
Share based payment expense
353,337
457,863
67,355
197,355
2014
£
2013
£
297,687
119,176
119,668
104,966
14,889
4,353
432,244
228,495
Aeorema Communications plc is a guarantor for a lease entered into by Aeorema Limited (formerly Cheerful Scout
Productions Limited), its subsidiary undertaking.
Harris and Trotter LLP is a firm in which S Garbutta is a member. The amounts charged to the Group for professional
services is as follows:
Harris and Trotter LLP – charged during the year
Aeorema Communications plc
Aeorema Limited (formerly Cheerful Scout Productions Limited)
Twentyfirst Limited
ST16 Limited
2014
£
15,000
22,325
–
–
2013
£
17,071
7,200
7,200
1,600
37,325
33,071
36
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
24 Disposal of a subsidiary
On 7 December 2012 the Group disposed of its 100% subsidiary ST16 Limited, which carried out Viral Film operations.
Consideration received
Consideration received in cash and cash equivalents
Analysis of assets and liabilities over which control was lost
Current assets
Cash and cash equivalents
Trade and other receivables
Non-current assets
Property, plant and equipment
Current liabilities
Trade and other payables
Net liabilities disposed of
Gain on disposal of subsidiary
Consideration received
Net liabilities disposed of
Net cash outflow on disposal of subsidiary
Consideration received in cash and cash equivalents
Less: Cash and cash equivalent balances disposed of
2014
£
–
–
2014
£
–
–
–
–
–
2014
£
–
–
–
2014
£
–
–
–
2013
£
5
5
2013
£
16,426
11,700
4,289
(86,431)
(54,016)
2013
£
5
54,016
54,021
2013
£
5
(16,426)
(16,421)
37
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
25 Cash flows
Cash flows from operating activities
Profit after taxation
Tax expense recognised in Consolidated Statement
of Comprehensive Income
Depreciation
Profit on disposal of property, plant and equipment
Profit on disposal of subsidiary
Share-based payment
Impairment of investment in subsidiaries
Dividend received by the Company
Finance income
Group
Company
2014
£
2013
£
2014
£
2013
£
415,696
263,501
59,674
680,821
89,145
79,087
51,579
35,934
–
–
(44,875)
(54,021)
14,889
19,815
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,776
(20,000)
(130,000)
–
(406)
(195)
(250)
(138)
570,903
299,246
(70,576
668,459
Increase / (decrease) in trade and other payables
448,630
272,572 (192,351) 240,986
(Increase) / decrease in trade and other receivables
(869,364) 201,285
110,589 (416,201)
Changes in working capital due to disposal of subsidiary:
Trade and other receivables
Trade and other payables
Taxation paid
–
–
(11,700)
86,431
(43,418)
–
–
–
–
–
–
–
Cash generated / (used) from operating activities
106,751
847,834 (152,338) 493,244
26 Financial instruments
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 2014 was £1,401,432 (2013:
£526,982). 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.
38
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2014
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 £1,589,007 (2013: £1,140,377).
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
£1,620,895 (2013: £1,581,790). 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 £1,967,231 (2013: £1,501,116).
Fair value of financial assets
The Group's book value of the financial assets equates to their fair values.
27 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group
for the year were £119,840 (2013: £105,138). At the end of the reporting period £24,998 (2013: £17,948) of
contributions were due in respect of the period. The amounts were paid subsequent to the end of the reporting period.
28 Dividends
On the 29 November 2013 an enhanced maiden dividend of 1.5 pence per share (total dividend £120,564) was paid to
holders of fully paid ordinary shares.
In respect of the current year, the directors propose that a final dividend of 2 pence per share and a special dividend of
3 pence per share be paid to shareholders on 21 November 2014. 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 24 October 2014.
The total estimated dividend to be paid is £437,525. The payment of this dividend will not have any tax consequences
for the Group.
29 Control
There is no overall controlling party.
39
Notice of Annual General Meeting
Aeorema Communications plc (Incorporated and registered in England and Wales with company number 4314540)
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Aeorema Communications plc will be held at Moray
House, 23-31 Great Titchfield Street, London W1W 7PA on 19th November 2014 at 10.30 a.m. for the transaction of
the following business:
As Ordinary Business to consider and, if thought fit, pass the following resolutions which will be proposed as Ordinary
Resolutions:
1. To receive and adopt the report of the directors of the Company and the audited accounts for the Company for the
year ended 30 June 2014.
2. To re-appoint Richard Owen as a Director of the Company, who retires in accordance with article 122 of the
Company’s Articles of Association.
3. To re-appoint Peter Litten as a Director of the Company, who retires in accordance with article 122 of the Company’s
Articles of Association.
4. To appoint Baker Tilly UK Audit LLP as auditors of the Company and to authorise the Directors to fix their
remuneration.
5. To declare a final dividend on the ordinary shares of 12.5 pence each in the capital of the Company for the year
ended 30 June 2014 of 2 pence per ordinary share.
As Special Business to consider and, if thought fit, pass the following resolutions of which Resolutions 6 and 7 will be
proposed as Ordinary Resolutions and Resolution 8 will be proposed as a Special Resolution:
6. That the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the
Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693(3) of the Act) on
the AIM Market of the London Stock Exchange plc of ordinary shares of 12.5 pence each in the capital of the
Company (“Ordinary Shares”) provided that:
(i)
the maximum number of Ordinary Shares hereby authorised to be purchased is 1,190,625 Ordinary Shares;
(ii) the minimum price which may be paid for an Ordinary Share is 1 pence;
(iii) the maximum price which shall be paid for an Ordinary Share shall be an amount equal to 105 per cent. of the
average middle market quotations taken from the AIM Appendix to the Daily Official List of the UKLA for the five
business days immediately preceding the day on which the Ordinary Share is contracted to be purchased;
(iv) unless renewed the authority hereby conferred shall expire on the earlier of the Company’s Annual General
Meeting in 2015 or eighteen months from the passing of this Resolution unless such authority is renewed,
varied or revoked prior to such time; and
(v) the Company may make a contract or contracts to purchase Ordinary Shares under the authority hereby
conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of
such authority and may make a purchase of Ordinary Shares in pursuance of any such contract or contracts.
7. That the directors of the Company be generally and unconditionally authorised pursuant to and in accordance with
section 551 of the Act to exercise all the powers of the Company to allot shares in the Company and/or to grant
rights to subscribe for, or to convert any security into, shares in the Company (“Rights”) up to a maximum nominal
amount of £1,000,000, provided that this authority shall expire at the end of the next annual general meeting of the
Company to be held after the date of the passing of this Resolution or, if earlier, fifteen months from the date of the
passing of this Resolution save that the Company may prior to the expiry of such period make any offer or
agreement which would or might require shares to be allotted or Rights to be granted after such expiry and the
directors of the Company shall be entitled to allot shares in the Company and to grant Rights pursuant to any such
offer or agreement as if this authority had not expired.
40
Notice of Annual General Meeting continued
Aeorema Communications plc (Incorporated and registered in England and Wales with company number 4314540)
8. That, subject to the passing of Resolution 7 set out above, the directors of the Company be empowered pursuant to
section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the
authority conferred on them by Resolution 7 above, as if section 561(1) of the Act did not apply to such allotment
provided this power shall be limited to:
(i)
the allotment of equity securities in connection with a rights issue, open offer or other offer of equity securities
open for acceptance for a period fixed by the directors of the Company to holders of equity securities on the
register on a fixed record date where the equity securities respectively attributable to the interests of such
holders are proportionate (as nearly as may be practicable) to their respective holdings of such equity securities
or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the
directors of the Company may deem necessary or expedient in relation to treasury shares, fractional entitlements
or legal or practical problems under the laws of, or the requirements of any recognised body or stock exchange
in, any territory or by virtue of shares being represented by depositary receipts or any other matter); and
(ii) the allotment to any person or persons (otherwise than pursuant to sub-paragraph (i) of this Resolution above)
of equity securities up to an aggregate nominal amount of £1,000,000;
provided that the power given by this Resolution shall expire at the end of the next annual general meeting of the
Company to be held after the date of the passing of this Resolution or, if earlier, fifteen months from the date of the
passing of this Resolution, save that the directors of the Company shall be entitled to make offers or agreements before
the expiry of such power which would or might require equity securities to be allotted after such expiry and the directors
of the Company shall be entitled to allot equity securities pursuant to any such offers or agreements as if the power
conferred hereby had not expired.
By order of the Board
Stephen Haffner
Company Secretary
Registered Office:
64 New Cavendish Street
London W1G 8TB
Dated: 14 October 2014
Notes:
(1) A member entitled to attend and vote at the above-mentioned annual general meeting (the "Meeting") is entitled to
appoint a proxy or proxies to exercise any or all of his rights to attend, speak and vote at the Meeting instead of him.
All members are entitled to attend and vote at the Meeting, whether or not they have returned a form of proxy.
(2) A Form of Proxy is enclosed for your use, if desired. The instrument appointing a proxy must reach the Company’s
registrars, PXS 1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF not less than 48 hours before the time of
holding of the Meeting.
(3) Pursuant to Regulation 41 of The Uncertificated Securities Regulations 2001, the Company specifies that only those
members of the Company on the register 48 hours before the time set for the Meeting shall be entitled to attend or
vote at the Meeting in respect of the number of shares registered in their name at the time. Changes to the register of
members after that time will be disregarded in determining the rights of any person to attend or vote at the Meeting.
(4) A copy of the register of Directors’ interests in shares in the Company and copies of the Directors’ service contracts
of more than one year’s duration will be available for inspection at the registered office of the Company during office
hours only on any weekday (excluding Saturdays, Sundays and public holidays) from the date of this notice until the
date of the Meeting and at the place of the Meeting for at least 15 minutes prior to and during the Meeting.
41
Company Information
Company Information
Directors
Secretary
Company number
Registered office
Financial advisers
Stockbrokers
Nominated adviser
Auditors
Solicitors
Bankers
(Non-Executive Chairman)
(Deputy Chairman and Creative Director)
(Chief Executive)
(Non-Executive)
(Non-Executive)
(Executive Director)
M Hale
P Litten
G Fitzpatrick
S Garbutta
R Owen
S Quah
S Haffner
04314540
64 New Cavendish Street
London, W1G 8TB
Harris & Trotter LLP
64 New Cavendish Street
London, W1G 8TB
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London, E14 5RB
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London, E14 5RB
Baker Tilly UK Audit LLP
25 Farringdon Street
London, EC4A 4AB
Howard Kennedy LLP
No.1 London Bridge
London SE1 9BG
Ross & Craig
12a Upper Berkeley Street
London, W1H 7PE
Barclays Bank plc
P O Box 32106
London, NW1 2ZH
Registrar and transfer office Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
42
Notes
43
Notes
44
CONSOLIDATED DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 2014
In ancient Greek drama, an apparently insoluble crisis was often
solved by the intervention of the gods who magically descended
onto the stage from the skies above.
The elaborate crane mechanisms that enabled this impressive
effect were known as aeorema.
Aeorema Communications Plc, Moray House, 23-31 Great Titchfield Street, London, W1W 7PA
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