Consolidated Directors’ Report
& Financial Statements
for the year ending 30th June 2018
1
Contents
2
4
7
8
11
15
19
20
21
22
23
24
48
50
52
Overview
Chairman's Statement
Joint Managing Directors' Statement
Strategic Report
Directors' Report
Independent Auditors' Report
Consolidated Statement of Comprehensive Income
Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Statement of Cash Flows
Notes to the Consolidated Financial Statements
Director Profiles
Notice of Annual General Meeting
Company Information
AEOREMA COMMUNICATIONS PLC
2
Overview
3
AEOREMA COMMUNICATIONS PLC 4
Chairman's Statement
The financial year ended 30 June 2018 was a pivotal
period for Aeorema. The two founder shareholders, Peter
Litten, Deputy Chairman and Creative Director, and Gary
Fitzpatrick, CEO, advised that they wanted to leave to
pursue other interests. The Board thanked them for 21
years of commitment to the Company and organised with
them the orderly placement of their entire shareholdings
equating to 38% of the Company's shares. This placement
of shares by the Company’s broker in September 2017
introduced an excellent group of new shareholders.
During the financial year ended 30 June 2018 the Group
successfully staged several large events for blue chip
clients in the UK, France, Italy and Germany. These events
included annual partner conferences for a top 4 account-
ancy firm, a top 10 law firm and a global management
consulting firm. The Group also staged a leadership event
for a global telecoms provider and an event for a global
newspaper publisher at the Cannes Lions International
Festival of Creativity, a global event for those working in
creative, communications, advertising and related fields.
The Group’s film production business continued to
develop during the year. The Group provided film content
for several of the large events mentioned above, as well
as, producing films for top 4 accountancy firms, a top 10
law firm, a large multinational technology company and a
multinational construction company. The films produced
included films for internal training, high level strategy
films and branded content. The film production business
continues to operate with high gross profit margins and
provides opportunities for the Group to showcase its
outstanding creativity.
The Board is delighted with the performance of the new
management team. The new team have made a number
of key appointments including a new creative director and
a director of experiential. These appointments are seen
as essential to ensure the Group maintains its creative
advantage and allow the Group to move into experiential
events. Experiential events use experiences to connect
brands with consumers. It is a form of event that is rapidly
growing in popularity and is an area of business which we
believe represents a significant and highly exciting growth
opportunity.
Many of these new shareholders are already investors in a
range of AIM micro-caps and the Board is grateful for their
support since this placement.
The Board appointed Steve Quah and Andrew Harvey as
joint Managing Directors in September 2017. Steve and
Andrew have been with the Company for a number of
years and have contributed significantly to the growth of
the Company. The Board fully endorses their vision for the
company.
The results for the financial year ended 30 June 2018
were good considering the challenges and distraction
of the management changes. Revenue was £4,820,167,
an increase of 16% on 2016/17 (£4,156,592). Profit was
£289,650 before exceptional items of £231,357, an increase
of 17% on 2016/17 (£248,368). The exceptional items were
in relation to the departure of its two founders, Peter
Litten and Gary Fitzpatrick, from the board of directors.
The Board is proposing a final dividend of 0.75 pence
(2016/17: 0.5 pence per share) to be paid to shareholders
on the register on 14 December 2018. The ex-dividend
date will be on 13 December 2018. Subject to the
proposed dividend being approved by shareholders at
the AGM, it will be paid on 11 January 2019. This is in line
with the Company’s policy of continuing to pay dividends
when possible. At the year-end the Group maintained
its strong cash position with £1,436,314 in the bank, net
of bank overdrafts. The Board is focused on using the
cash reserves to invest in new talent capable of driving
the business forward organically, as well as exploring
new acquisition opportunities which can help the Group
increase in scale and drive increased revenues and profits.
A E O R E M A C O M M U N I C AT I O N S P LC
5
Looking forward to the financial year ended 30 June 2019
and beyond the outlook is very positive. The strength
of the new team has led to an excellent series of new
business gains since the year end with both existing and
new clients. These gains include a major new client in
the technology sector and a new global brand within the
media sector. The Group continues to win new film pro-
duction projects and the appointment of Julian Staveley
as Experiential Director is also proving successful, with
the Group recently winning a roadshow event for a global
electronics company.
The Board wishes to thank the executive team and all
members of staff for their commitment and hard work.
The Board also wishes to thank its shareholders for their
continued support.
Mike Hale
Chairman
6 November 2018
6
A E O R E M A C O M M U N I C AT I O N S P LC
7
Joint Managing Directors' Statement
We are delighted to complete our first financial year as
Joint Managing Directors with a significant increase in
revenue. The focus of the senior team has been to drive
growth through strong account management and a
greater sales function.
The average growth in revenue from our top five clients
this financial year has been 29% and we would like to
thank our wonderful, dedicated team for working harder
than ever before to retain key accounts and continuing to
foster strong relationships with our fantastic clients.
We are also proud to deliver growth in our three main cli-
ent sectors of Professional Services, Telecommunications
and Media & Technology. We have added a significant new
client within Professional Services plus two new clients
in the Media & Technology sector. Looking ahead to the
current financial year we are confident of adding further
well-known brands within our core sectors.
Although some of our larger individual projects continue
to be repeated every two to three years, we have added
some new annual large-scale conferences to our calendar
and continue to seek out repeating six figure revenue
generating events to support our growth plan. We are
especially pleased to report that our pitch win ratio has
increased by approximately 40%.
We have invested within the technical support structure
of our business, but our biggest investment has been in
talent. We were delighted to make Julian Staveley our
first significant hire as Experiential Director and in 2018 we
have strengthened the team further with our new Creative
Director Simon Baird, experienced Project Manager
Natalie Richards and Senior Producer Jen Morris.
Simon has worked with some of the biggest brands in the
world and he is excited to be joining our talented Cheerful
Twentyfirst team and giving our own brand a vital update.
We aim to launch our new brand and website in early 2019.
We continue to keep a close eye on overheads, but to
match our ambition of organic growth going forwards we
are focused on bringing in the best talent to ensure our
clients continue to get the best service.
Finally, we would like to thank our amazing team, our
ambitious and loyal clients and our investors. We are
excited by the opportunities that lie ahead and as we grow
the business we are fully focused on delivering world class
projects that continue to be game changers for our clients.
Andrew Harvey
Joint Managing Director
Steve Quah
Joint Managing Director
6 November 2018
8
Strategic Report
The Board presents its Strategic Report on the Group for the year ended 30 June 2018.
Principal activities
Aeorema is a live events agency with film capabilities that specialises in devising and deliver-
ing corporate communication solutions.
Business review
In September 2017, Peter Litten and Gary Fitzpatrick, exited the group after 21 years. Despite
the change in management and associated costs, the Group experienced a strong year.
The results for the year show revenue was £4,820,167 (2017: £4,156,592), operating profit
pre-exceptional items was £289,650 (2017: £248,368) and profit before taxation was £58,685
(2017: £248,887).
The Group had net assets of £1,662,667 at the year-end (2017: £1,657,515) and net current
assets of £1,258,215 (2017: £1,258,159).
The demand for live events agencies capable of delivering large corporate events remained
high during the year, and the Group was able to use its creative expertise to win new clients,
as well as maintain its existing client base. Despite Brexit uncertainty, the outlook for the
financial year ended 30 June 2019 and beyond remains positive with several contracts for
large events and film productions already won.
During the year the gross profit margin reduced slightly to 37% (2017: 40%) and the gross
profit was £1,786,653 (2017: £1,661,105). The decrease in the gross profit margin was as a
consequence of increasing costs, due largely to using additional freelancers to cover the
higher volume of events and film productions undertaken during the financial year. There
were also several projects with deliverables with lower margins which affected the overall
profit margin. Management are keen to improve the gross profit margin and are therefore
investing in new talent capable of reducing the Group’s dependence on freelancers and
providing added value.
Key Performance Indicators
Year
Revenue
2018
£
2017
£
2016
£
2015
£
4,820,167
4,156,592
4,583,050
4,934,560
Operating profit pre-exceptional items
Profit before taxation
289,650
58,685
248,368
248,887
339,248
340,165
382,455
383,216
The Group experienced a 16% increase in revenue during the year, this was as a conse-
quence of strong growth in events’ revenue, up 18% in comparison with the previous year.
The growth in events’ revenue resulted from staging several new events for existing and new
clients from a variety of different industry sectors during the year.
9
Strategic Report Continued
Profit before taxation decreased by 76% in comparison with the previous year. This fall
in profit before taxation was largely as a consequence of the exceptional items, totalling
£231,357, associated with the departure of the two founding shareholders, Peter Litten
and Gary Fitzpatrick. The group had an operating profit before pre-exceptional items of
£289,650, a 17% increase compared with the previous year. The increase in operating profits
pre-exceptional items was as a consequence of strong growth in events revenue and a
reduction in staff costs due to the departure of Peter Litten and Gary Fitzpatrick during the
year.
The Group increased its pitch to win ratio from 60% to 84%, a 40% increase year on year.
Cashflows
Net cash outflow from operating activities was £389,918 compared with a net cash inflow of
£672,516 for the year ended 30 June 2017. Total cashflow, representing operating cashflow
after taxation, interest, capital expenditure and financing activities, decreased by £460,898
compared with an increase of £469,489 last year. The cash position, net of bank overdrafts,
at the end of the year was £1,436,314 compared with £1,897,212 at the end of the prior year.
The decrease in cash and cash equivalents at the year-end was largely as a consequence
of the exceptional items incurred during the year, a fall in the gross profit margin compared
with the previous year and a significant reduction in trade payables due at the year-end
compared with 2017.
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 custom-
ers' 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 21 to the financial statements.
Equal Opportunities
We are committed to ensuring equal opportunities for our staff. We have introduced training
which covers equal opportunities legislation and best practice. Our policy in respect of
employment of disabled persons is the same as that relating to all other employees in
matters of training, career development and promotion. Should employees become disa-
bled during the course of their employment, we will make every effort to make reasonable
adjustments to their working environment to enable their continued employment.
AEOREMA COMMUNICATIONS PLC 10
Strategic Report Continued
Safety, Health and Environment
The commitment and participation of all employees is vital to efficient and effective occupa-
tional 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 achieve-
ment of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are linked to customer dependency.
Though the Group has a very diverse customer base in certain market sectors, key custom-
ers can represent a significant amount of revenue (see note 2). Key customer relationships
are closely monitored but the loss of a key client could have adverse effect on the Group’s
performance. Further details of risks, uncertainties and financial instruments are contained
in note 24.
Key risks of nonfinancial nature
The Group is operating in a highly competitive global market that is undergoing continual
change. The Group’s ability to respond to many competitive factors including, but not
limited to technological innovations, product quality, customer service and employment of
qualified personnel will be key in the achievement of its objectives, but its ultimate success
will depend on the purchase spends of its customers and the buoyancy of the market.
On behalf of the Board
S Haffner
Director
6 November 2018
11
Directors' Report
The directors present their annual report and financial statements for the year ended 30
June 2018. The financial statements are for Aeorema Communications plc (“the Company”)
and its subsidiaries (together, “the Group”).
Directors
The following directors have held office since 1 July 2017:
M Hale
S Quah
R Owen
S Haffner
Other changes in directors holding office are as follows:
A Harvey (appointed 23 October 2017)
G Fitzpatrick (resigned 20 September 2017)
P Litten (resigned 20 September 2017)
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 0.75 pence per share to be paid on 11 January 2019
to shareholders on the register on 14 December 2018. The ex-dividend date for the final
dividend will be 13 December 2018.
Financial instruments
Details of financial instruments are given in note 24 to the accounts.
Shareholdings
At 31 October 2018, the directors were aware that the following were the beneficial owners
of 3% or more of the Company's issued share capital:
Directors
M Hale
S Quah
Number of shares
Percentages held
1,725,000
481,010
19.1
5.3
AEOREMA COMMUNICATIONS PLC
12
Directors' Report Continued
Shareholdings continued
Other shareholders with
more than 3%
J Hicking
Spreadex Ltd
S Perring
B Geary
Barnard Nominees Ltd
B Smith
Number of shares
Percentages held
1,000,000
592,332
474,666
434,667
434,666
300,000
11.0
6.5
5.2
4.8
4.8
3.3
Corporate governance
Although not required to do so, the Company has previously, within the practical confines of
being a small company, sought to have regard to the principles of good governance and the
UK Corporate Governance Code (“The Code") appended to the Listing Rules of the Financial
Conduct Authority. From 28 September 2018 the company has agreed to adopt the Quoted
Companies Alliance (QCA) Corporate Governance Code. Compliance will be reviewed and
considered annually by the Board.
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 two 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
The Board have been actively investing in new talent. During the year the Group hired a
new Experiential Director with the aim of increasing its revenue from experiential events.
The Group hired a new Creative Director with the aim of strengthening the Group’s creative
resources, as well as updating the Group’s brand. The investment in talent is already proving
successful with a series of new business gains, including experiential events, since the year
end for both existing and new clients. The Group will continue to invest in new talent where
this is considered to provide additional value.
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.
13
Directors' Report Continued
Audit Committee
There is an Audit Committee consisting of the Chairman, and two non-executive directors.
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 the Chairman and two non-executive direc-
tors, 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. Richard Owen chairs the
Remuneration Committee.
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. See note 1 for further information.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the Com-
pany'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.
A resolution to reappoint RSM UK Audit LLP as auditor for the ensuing year will be proposed
at the forthcoming annual general meeting.
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.
AEOREMA COMMUNICATIONS PLC 14
Directors' Report Continued
Directors' responsibilities continued
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 finan-
cial 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 Haffner
Director
6 November 2018
15
Independent Auditors' Report
to the Members of Aeorema Communications plc
Opinion
We have audited the financial statements of Aeorema Communications plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 30 June 2018 which comprise
the consolidated Statement of Comprehensive Income, the group and company Statements
of Financial Position, the consolidated and company Statements of Changes in Equity, the
group and company Statement of Cash Flows and notes to the financial statements, includ-
ing a summary of significant accounting policies. 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.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the
parent company’s affairs as at 30 June 2018 and of its 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 company 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 provisions of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard, as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs
(UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material
uncertainties that may cast significant doubt about the group’s or the parent company’s
ability to continue to adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
AEOREMA COMMUNICATIONS PLC 16
Independent Auditors' Report Continued
to the Members of Aeorema Communications plc
Key audit matters
Key audit matters are those that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period and include the most signifi-
cant assessed risks of material misstatements (whether or not due to fraud) we identified,
including those which had the greatest effect on the overall audit strategy, the allocation
of resources in the audit and directing the efforts of the engagement team. We have deter-
mined that there are no key audit matter to report.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to
determine the nature, timing and extent of our audit procedures and to evaluate the effects
of misstatements, both individually and on the financial statements as a whole. During
planning we determined a magnitude of uncorrected misstatements that we judge would be
material for the financial statements as a whole (FSM). During planning FSM was calculated
as £30,000, which was not changed during the course of our audit. We agreed with the Audit
Committee that we would report to them all unadjusted differences in excess of £1,500, as
well as differences below those thresholds that, in our view, warranted reporting on qualita-
tive grounds.
An overview of the scope of our audit
Our audit scope included all components and was performed to component materiality. Our
audit work therefore covered 100% of group revenue, group profit and total group assets
and liabilities. It was performed to the materiality levels set out above.
Other information
The directors are responsible for the other information. The other information comprises
the information included in the annual report, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.
17
Independent Auditors' Report Continued
to the Members of Aeorema Communications plc
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
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; and
the Strategic Report and the Directors’ Report has been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstate-
ments in the Strategic Report or the Directors’ Report.
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 13 and
14, the directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations,
or have no realistic alternative but to do so.
AEOREMA COMMUNICATIONS PLC 18
Independent Auditors' Report Continued
to the Members of Aeorema Communications plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reason-
ably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is
located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsre-
sponsibilites. This description forms part of our auditor’s report.
Use of our report
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 auditors’ 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.
Colin Roberts FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
6 November 2018
19
2017
£
4,156,592
(2,495,487)
1,661,105
(1,412,737)
248,368
-
248,368
519
248,887
(37,284)
Consolidated Statement of
Comprehensive Income
For the year ended 30 June 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating Profit pre-exceptional items
Exceptional items
Operating Profit post exceptional items
Finance income
Profit before taxation
Taxation
Profit and total comprehensive income
for the year attributable to owners of
the parent
Profit per ordinary share:
Total basic earnings per share
Total diluted earnings per share
Notes
2
3
4
5
6
9
9
2018
£
4,820,167
(3,033,514)
1,786,653
(1,497,003)
289,650
(231,357)
58,293
392
58,685
(8,280)
50,405
211,603
0.55693p
0.53906p
2.33803p
2.26301p
There were no other comprehensive income items.
The notes on pages 24 to 47 are an integral part of these financial statements.
AEOREMA COMMUNICATIONS PLC 20
Statement of Financial Position
As at 30 June 2018
Notes
Group
Company
2018
£
2017
£
2018
£
2017
£
Non-current assets
Intangible assets
Property, plant and equipment
Deferred taxation
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Bank loans and overdrafts
Trade and other payables
Current tax payable
Total current liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Capital redemption reserve
Retained earnings
10
11
7
12
13
14
16
15
365,154
365,154
37,044
2,254
-
31,341
2,861
-
-
-
-
-
-
-
580,490
580,490
404,452
399,356
580,490
580,490
1,106,292
1,007,592
995,874
1,437,904
1,897,212
-
748,661
459,180
2,544,196
2,904,804
995,874
1,207,841
2,948,648
3,304,160
1,576,364
1,788,331
(1,590)
-
(1,590)
-
(1,274,979)
(1,615,603)
(102,647)
(94,173)
(9,412)
(31,042)
-
-
(1,285,981)
(1,646,645)
(104,237)
(94,173)
1,662,667
1,657,515
1,472,127
1,694,158
17
1,131,313
1,131,313
1,131,313
1,131,313
7,063
16,650
257,812
249,829
7,063
16,650
257,812
244,677
7,063
16,650
257,812
59,289
7,063
16,650
257,812
281,320
Equity attributable to owners of the parent
1,662,667
1,657,515
1,472,127
1,694,158
The notes on pages 24 to 47 are an integral part of these financial statements.
The loss for the financial year of the holding company was £176,778 (profit in 2017: £116,142).
The financial statements were approved and authorised by the board of directors on 6 November 2018 and were signed
on its behalf by: A. Harvey, Director
Company Registration No. 04314540
S Haffner, Director
21
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2018
Group
Share
capital
£
Share
premium
£
Merger
reserve
£
Capital
redemption
reserve
£
Retained
earnings
£
Total equity
£
At 1 July 2016
1,131,313
7,063
16,650
257,812
214,084
1,626,922
Comprehensive income for the
year, net of tax
Dividends paid
At 30 June 2017
Comprehensive income for the
year, net of tax
Dividends paid
At 30 June 2018
-
-
-
-
-
-
-
-
211,603
211,603
(181,010)
(181,010)
1,131,313
7,063
16,650
257,812
244,677
1,657,515
-
-
-
-
-
-
-
-
50,405
50,405
(45,253)
(45,253)
1,131,313
7,063
16,650
257,812
249,829
1,662,667
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 distrib-
utable.
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 on pages 24 to 47 are an integral part of these financial statements.
AEOREMA COMMUNICATIONS PLC 22
Company Statement of
Changes in Equity
For the year ended 30 June 2018
Company
Share
capital
£
Share
premium
£
Merger
reserve
£
Capital
redemption
reserve
£
Retained
earnings
£
Total equity
£
At 1 July 2016
1,131,313
7,063
16,650
257,812
346,188
1,759,026
Comprehensive income for the
year, net of tax
Dividends paid
At 30 June 2017
Comprehensive income for the
year, net of tax
Dividends paid
At 30 June 2018
-
-
-
-
-
-
-
-
116,142
116,142
(181,010)
(181,010)
1,131,313
7,063
16,650
257,812
281,320
1,694,158
-
-
-
-
-
-
-
-
(176,778)
(176,778)
(45,253)
(45,253)
1,131,313
7,063
16,650
257,812
59,289
1,472,127
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 distrib-
utable.
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 on pages 24 to 47 are an integral part of these financial statements.
23
Statement of Cash Flows
For the year ended 30 June 2018
Notes
Group
Company
2018
£
2017
£
2018
£
2017
£
Net cash flow from operating activities
23
(389,918)
672,516
(415,534)
(29,846)
Cash flows from investing activities
Finance income
Purchase of property, plant and equipment
Dividends received by the Company
Cash (used) / generated in investing
activities
Cash flows from financing activities
5
11
392
519
(26,119)
(22,536)
-
-
17
-
-
113
-
200,000
(25,727)
(22,017)
17
200,113
Dividends paid to owners of the Company
(45,253)
(181,010)
(45,253)
(181,010)
Cash used in financing activities
(45,253)
(181,010)
(45,253)
(181,010)
Net increase/(decrease) in cash and cash
equivalents
(460,898)
469,489
(460,770)
(10,743)
Cash and cash equivalents at beginning of year
1,897,212
1,427,723
459,180
469,923
Cash and cash equivalents at end of year
1,436,314
1,897,212
(1,590)
459,180
Cash and cash equivalents
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equiva-
lents are in respect of the Statement of Financial Position amounts:
Cash and cash equivalents
Bank overdraft
Notes
Group
Company
2018
£
2017
£
2018
£
2017
£
14
16
1,437,904
1,897,212
-
459,180
(1,590)
-
(1,590)
-
1,436,314
1,897,212
(1,590)
459,180
The notes on pages 24 to 47 are an integral part of these financial statements.
AEOREMA COMMUNICATIONS PLC 24
Notes to the Consolidated
Financial Statements
For the year ended 30 June 2018
1
Accounting policies
Aeorema Communications plc is a public limited company incorporated in the United King-
dom. 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 Group’s business activities, together with the factors likely to affect its future develop-
ment and performance are set out in the review of business contained in the Chairman’s
Statement. The Group’s financial statements show details of its financial position including,
in note 24, details of its financial instruments and exposure to risk.
After reviewing the Group’s budget for the next financial year, other medium term plans
and considering the risks outlined in note 24, the Directors, at the time of approving the
financial statements, have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future and have therefore used the
going concern basis in preparing the financial statements.
Basis of Preparation
The Group’s financial statements have been prepared under the historical cost convention
and in accordance with International Financial Reporting Standards (IFRS) as adopted by the
European Union, and with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The following new standards, amendments to standards and interpretations have been
applied for the first time from 1 July 2017. Their adoption has not had a material impact on
the financial statements:
•
IAS 7 (Amended) ‘Statement of Cash Flows’, effective 1 January 2017
Adopted IFRS 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 2017 and have not been
adopted early by the Group:
•
•
•
IFRS 9 ‘Financial Instruments’, effective 1 January 2018
IFRS 15 ‘Revenue for Contracts with Customers’, effective 1 January 2018
IFRS 16 ‘Leases’, effective 1 January 2019
Management have assessed the impact they may have on future reporting periods, and do
not consider that the above standards will have a material impact on the Group’s financial
statements.
25
Notes to the Consolidated
Financial Statements Continued
For the year ended 30 June 2018
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary
undertakings drawn up to 30 June 2018. 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. 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.
Revenue is recognised by reference to the stage of completion of a transaction. The method
used to determine the stage of completion is the cost-to-cost method. Under the cost-to-
cost method the stage of completion is determined as a percentage of the costs incurred to
date compared with estimated total costs of the transaction.
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.
AEOREMA COMMUNICATIONS PLC 26
Notes to the Consolidated
Financial Statements Continued
For the year ended 30 June 2018
Property, plant and equipment
Property, plant and equipment is stated in the financial statements at cost less accumulated
depreciation and any impairment value. Depreciation is provided to write off the cost less
estimated residual value of property, plant and equipment over its expected useful life
(which is reviewed at least at each financial year end), as follows:
Leasehold land and buildings
Straight line over the life of the lease
(three years)
Fixtures, fittings and equipment
Straight line over four years
Any gain or loss arising on the derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the
Statement of Comprehensive Income in the year that the asset is derecognised.
Fully depreciated assets still in use are retained in the financial statements.
Impairment
The carrying amounts of the Group’s assets are reviewed at each period end to determine
whether there is any indication of impairment. If any such indication exists, the assets’
recoverable amount is estimated. For goodwill and intangible assets that have an indefinite
useful life and intangible assets that are not yet available for use, the recoverable amount
is estimated at each annual period end date and whenever there is an indication of impair-
ment.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-gen-
erating unit exceeds its recoverable amount. Impairment losses are recognised in the State-
ment of Comprehensive Income in those expense categories consistent with the function of
the impaired asset.
Operating leases
Rentals under operating leases are charged to the Statement of Comprehensive Income on
a straight line basis over the period of the lease.
The group leases office facilities under operating leases. The lease typically runs for a period
of 5 years, with a break cause in year 3. The group is restricted from entering into any sub-
lease arrangements.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
27
Notes to the Consolidated
Financial Statements Continued
For the year ended 30 June 2018
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 amor-
tised 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.
AEOREMA COMMUNICATIONS PLC 28
Notes to the Consolidated
Financial Statements Continued
For the year ended 30 June 2018
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 instru-
ments. Financial assets and liabilities are recognised on the Statement of Financial Position
when the Group becomes a party to the contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments are recorded at the proceeds received,
net of direct issue costs. The Group’s equity instruments comprise ‘share capital’ in the
Statement of Financial Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling
at the rates of exchange ruling at the end of the reporting period. Transactions in foreign
currencies are recorded at the rate ruling at the date of the transaction. All differences are
taken to the Statement of Comprehensive Income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled share based
payments are measured at fair value (excluding the effect of non-market based vesting
conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on factors such as
the exercise price, expected volatility, option price and risk free interest rate. The fair value
is then amortised through the Statement of Comprehensive Income on a straight-line basis
over the vesting period. Expected volatility is determined based on the historical share price
volatility for the Company. Further information is given in note 21 to the financial state-
ments.
29
Notes to the Consolidated
Financial Statements Continued
For the year ended 30 June 2018
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 esti-
mates are based on management’s best knowledge of the relevant facts and circumstances.
The company performs an impairment review of goodwill based on a value in use calcula-
tion. The calculation is based on a discounted cash flow model and an appropriate discount
rate. The review includes an estimation of the annual growth rates and appropriate discount
rates (see note 10 for key assumptions). Changes in the estimates which underpin the
group’s forecasts could have an impact on the value in use.
AEOREMA COMMUNICATIONS PLC 30
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
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 year ending 30 June 2018 there is only a single reportable segment.
All revenue represents sales to external customers. Four customers (2017: two) are defined
as major customers by revenue, contributing more than 10% of the Group revenue.
Customer one
Customer two
Customer three
Customer four
Major customers
2018
£
1,114,846
886,981
617,576
493,766
2017
£
722,825
715,074
-
392,894
3,113,169
1,830,793
The geographical analysis of revenue from continuing operations by geographical location
of customer is as follows:
Geographical
market
2018
2017
2018
2017
2018
2017
2018
2017
UK
£
UK
£
Europe
£
Europe
£
Rest of
the World
£
Rest of
the World
£
Total
£
Total
£
Revenue
4,774,107
4,089,412
31,531
29,589
14,529
37,591
4,820,167
4,156,592
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
3 Operating Profit
Operating profit is stated after charging or crediting:
31
2018
£
2017
£
Cost of sales
Depreciation of property, plant and equipment
15,327
21,577
Administrative expenses
Depreciation of property, plant and equipment
(Profit)/Loss on foreign exchange differences
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 20)
Operating leases – land and buildings
5,089
6,902
7,500
21,000
1,016,153
91,000
29,877
(426)
7,500
20,000
918,336
91,000
4
Exceptional items
Items that are material either because of their size or their nature, or that are non-recurring,
are considered as exceptional. During the year, the Group incurred expenditure totalling
£231,357 (2017: £nil) in relation to the departure of its two founders, Peter Litten and Gary
Fitzpatrick, from the board of directors. This expenditure included final salary payments of
£120,000, pension payments of £40,361 and associated costs including legal and profes-
sional fees of £70,996.
5
Finance income
Finance income
Bank interest received
2018
£
392
2017
£
519
AEOREMA COMMUNICATIONS PLC 32
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
6
Taxation
The tax charge comprises:
Current tax
Prior period adjustment
Current year
Deferred tax (see note 7)
Current year
2018
£
2017
£
(1,739)
9,412
7,673
607
607
3,028
31,042
34,070
3,214
3,214
Total tax charge in the statement of comprehensive income
8,280
37,284
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations
58,685
248,887
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 19% (2017: 19.75%)
11,150
49,155
Effects of:
Non-deductible expenses
Research and development claim
Prior period adjustment
Total tax charge
(1,131)
-
(1,739)
(2,870)
8,280
8,086
(22,985)
3,028
(11,781)
37,284
The Group has estimated losses of £375,762 (2017: £375,762) available to carry forward
against future trading profits. These losses are in Aeorema Communications plc which is
not currently making taxable profits as all trading is undertaken by its subsidiary Aeorema
Limited, therefore no deferred tax asset has been recognised.
The Finance Act 2016 included legislation to reduce the main rate of corporation tax from
20% to 19% from 1 April 2017 and to 17% from 1 April 2020. These rate reductions were sub-
stantively enacted by the balance sheet date and therefore included in these consolidated
financial statements. Temporary differences have been remeasured using the enacted tax
rates that are expected to apply when the liability is settled or the asset is realised.
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
7
Deferred taxation
Property, plant and equipment temporary differences
Temporary differences
At 1 July
Transfer to Statement of Comprehensive Income
At 30 June
33
2017
£
(2,269)
5,130
2,861
6,075
(3,214)
2,861
2018
£
(4,016)
6,270
2,254
2,861
(607)
2,254
The deferred tax asset is expected to be utilised given the continued profitability and future
trading prospects.
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.
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:
Basic earnings per share
Profit for the year attributable to owners of the Company
Basic weighted average number of shares
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares
2018
£
2017
£
50,405
211,603
9,050,500
9,050,500
300,000
300,000
9,350,500
9,350,500
AEOREMA COMMUNICATIONS PLC 34
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
10
Intangible fixed assets
Group
Cost
At 1 July 2016
At 30 June 2017
At 30 June 2018
Impairment and amortisation
At 1 July 2016
At 30 June 2017
At 30 June 2018
Net book value
At 1 July 2016
At 30 June 2017
At 30 June 2018
Goodwill
£
2,728,292
2,728,292
2,728,292
2,363,138
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.
Impairment – Aeorema Limited
Goodwill has been tested for impairment based on its future value in use. The future value
has been calculated on a discounted cash flow basis using the 2018-19 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 has been assumed that future growth will be between
1.5% and 2%. Using these assumptions, which are based upon past experience, there was
no impairment in the year.
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
11
Property, plant and equipment
35
Total
£
198,368
22,536
(67,316)
153,588
26,119
(2,141)
Leasehold land
and buildings
£
Fixtures, fittings
and equipment
£
54,298
4,238
-
58,536
-
-
144,070
18,298
(67,316)
95,052
26,119
(2,141)
58,536
119,030
177,566
23,570
29,877
-
53,447
5,089
-
58,536
30,728
5,089
-
114,539
21,577
(67,316)
68,800
15,327
(2,141)
81,986
29,531
26,252
37,044
138,109
51,454
(67,316)
122,247
20,416
(2,141)
140,522
60,259
31,341
37,044
Group
Cost
At 30 June 2016
Additions
Disposals
At 30 June 2017
Additions
Disposals
At 30 June 2018
Depreciation
At 30 June 2016
Charge for the year
Eliminated on disposal
At 30 June 2017
Charge for the year
Eliminated on disposal
At 30 June 2018
Net book value
At 1 July 2016
At 30 June 2017
At 30 June 2018
AEOREMA COMMUNICATIONS PLC
36
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
12 Non-current assets - Investments
Company
Cost
At 1 July 2016
At 30 June 2017
At 30 June 2018
Provision
At 1 July 2016
At 30 June 2017
At 30 June 2018
Net book value
At 1 July 2016
At 30 June 2017
At 30 June 2018
Shares in subsidiary
£
3,274,703
3,274,703
3,274,703
2,694,213
2,694,213
2,694,213
580,490
580,490
580,490
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings
Aeorema Limited
Twentyfirst Limited (Dormant)
Country of
registration
or incorporation
Shares held
Class
England and Wales
Ordinary
England and Wales
Ordinary
%
100
100
The registered address of Aeorema Limited and Twentyfirst Limited is 64 New Cavendish
Street, London, W1G 8TB.
37
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
13 Trade and other receivables
Trade receivables
Related party receivables
Other receivables
Prepayments and accrued income
Group
2018
£
2017
£
693,725
810,908
Company
2018
£
-
2017
£
-
-
25,870
386,697
-
981,850
743,037
19,167
177,517
4,718
9,306
-
5,624
1,106,292
1,007,592
995,874
748,661
All trade and other receivables are expected to be recovered within 12 months of the end
of the reporting period. The fair value of trade and other receivables is the same as the
carrying values shown above.
At the year end, trade receivables of £34,324 (2017: £61,560) 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 receiva-
bles is as follows:
Less than 90 days overdue
More than 90 days overdue
Group
2018
£
2017
£
-
61,560
34,324
-
34,324
61,560
14 Cash at bank and in hand
Bank balances
Group
2018
£
2017
£
1,437,904
1,897,212
1,437,904
1,897,212
Company
2018
£
-
-
2017
£
459,180
459,180
AEOREMA COMMUNICATIONS PLC
38
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
15
Trade and other payables
Trade payables
Related party payables
Taxes and social security costs
Other payables
Group
2018
£
2017
£
736,442
1,012,687
-
-
220,825
253,373
1,541
7,529
Company
2018
£
13,257
67,355
-
-
Accruals and deferred income
316,171
342,014
22,035
1,274,979
1,615,603
102,647
2017
£
7,380
67,355
-
-
19,438
94,173
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.
16 Loans
An analysis of the maturity of loans is given below:
Amounts falling due within one year or on demand:
Bank overdrafts
Group
Company
2018
£
1,590
1,590
2017
£
-
-
2018
£
1,590
1,590
2017
£
-
-
39
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
17
Share capital
Authorised
28,000,000 Ordinary shares of 12.5p each
3,500,000
3,500,000
2018
£
2017
£
At 1 July 2016
At 30 June 2017
At 30 June 2018
Number
Ordinary
shares
£
9,050,500
1,131,313
9,050,500
1,131,313
9,050,500
1,131,313
Holders of these shares are entitled to dividends as declared from time to time and are
entitled to one vote per share at general meetings of the company.
See note 21 for details of share options outstanding.
AEOREMA COMMUNICATIONS PLC 40
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
18
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
Total
Land and Buildings
2018
£
91,000
15,167
2017
£
91,000
106,167
106,167
197,167
41
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
19 Directors' emoluments
The remuneration of Directors of the Company is set out below.
Salary,
bonus or
fees
2018
£
Salary,
bonus or
fees
2017
£
Pensions
2018
£
Pensions
2017
£
Compen-
sation
for loss of
office
2018
£
Compen-
sation
for loss of
office
2017
£
P Litten
12,167
60,000
33,590
33,554
G Fitzpatrick
8,111
40,000
17,019
7,562
70,000
50,000
M Hale
S Haffner
R Owen
S Quah
A Harvey
25,000
10,000
15,000
15,000
25,000
10,000
100,000
90,000
80,625
-
-
-
-
493
665
-
-
-
155
-
-
-
-
-
-
265,903
225,000
51,767
41,271
120,000
-
-
-
-
-
-
-
-
Total
2018
£
115,757
75,130
25,000
15,000
25,000
100,493
81,290
Total
2017
£
93,554
47,562
10,000
15,000
10,000
90,155
-
437,670
266,271
The share options held by directors who served during the year are summarised below:
Name
Grant date
S Quah
25 April 2013
Number
awarded
300,000
Exercise
price
16.50p
Earliest exercise
date
Expiry date
25 April 2016
24 April 2023
On 23 August 2018 Steve Quah and Andrew Harvey were granted 300,000 share options each
at an exercise price of 29p. The options vest on 17 November 2020, and can be exercised in
the period from 17 November 2020 until the tenth anniversary of the date of grant, 23 August
2028. As the grant of the share options occurred after the year end no share-based payment
charge was recognised in the financial statements for the year ended 30 June 2018.
Fees for S Haffner are charged by Harris & Trotter LLP, a firm in which he is a member (see
note 22).
AEOREMA COMMUNICATIONS PLC 42
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
20 Employee information
The average monthly number of employees (including directors) employed by the Group
during the year was:
Number of employees
Group
Company
2018
Number
2017
Number
2018
Number
2017
Number
Administration and production
18
20
7
6
The aggregate payroll costs of these employees charged in the Statement of Comprehensive
Income was as follows:
Employment costs
Group
Company
Wages and salaries
Social security costs
Pension costs
2018
£
857,969
101,250
56,934
2017
£
2018
£
2017
£
788,365
65,000
35,000
85,708
44,263
-
-
-
-
1,016,153
918,336
65,000
35,000
21 Share-based payments
The Group operates an EMI share option scheme for key employees. Options are granted
to key employees at an exercise price equal to the market price of the Company’s shares at
the date of grant. Options are exercisable from the third anniversary of the date of grant and
lapse if they remain unexercised at the tenth anniversary or upon cessation of employment.
The following option arrangements exist over the Company’s shares:
Date of grant
Exercise price
Exercise period
25 April 2013
16.5p
25 April 2016
24 April 2023
From
To
Number of
options 2018
Number of
options 2017
300,000
300,000
300,000
300,000
43
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
21 Share-based payments continued
Details of the number of share options and the weighted average exercise price outstanding
during the year are as follows:
Number of
options
2018
300,000
300,000
300,000
Weighted
average
exercise price
2018
£
0.17
0.17
0.17
Number of
options
2017
300,000
300,000
300,000
Weighted
average
exercise price
2017
£
0.17
0.17
0.17
Outstanding at beginning of the year
Outstanding at end of the year
Exercisable at the end of the year
The exercise price of options outstanding at the year-end was £0.165 (2017: £0.165) and their
weighted average contractual life was 4.8 years (2017: 5.8 years).
Equity-settled share-based payments are measured at fair value at the date of grant. The fair
value as determined at the grant date of equity-settled share-based payments is expensed
on a straight line basis over the vesting period, based on the Group's estimate of shares that
will eventually vest. The estimated fair value of the options is measured using an option
pricing model. The inputs into the model are as follows:
Grant date
Model used
Share price at grant date
Exercise price
Contractual life
Risk free rate
Expected volatility
Expected dividend rate
Fair value option
25 April 2013
Black-Scholes
16.5p
16.5p
10 years
0.5%
104%
0%
14.889p
The expected volatility is determined by calculating the historical volatility of the company’s
share price over the last three years. The risk free rate is the official Bank of England base
rate.
The Group recognised the following charges in the Statement of Comprehensive Income in
respect of its share-based payment plans:
Share-based payment charge
2018
£
-
2017
£
-
AEOREMA COMMUNICATIONS PLC 44
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
22 Related party transactions
The Group has a related party relationship with its subsidiaries and its key management
personnel (including directors). Details of transactions between the Company and its
subsidiaries are as follows:
Amounts owed by subsidiaries
Total amount owed by subsidiaries
Amounts owed to subsidiaries
Total amount owed to subsidiaries
2018
£
2017
£
981,850
743,037
67,355
67,355
The company received dividends during the year of £nil (2017: £200,000) from its subsidiary,
Aeorema Limited. The company transferred a VAT receivable of £15,155 (2017: £10,200) 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 £58,050 (2017: £38,700).
Aeorema Limited paid expenses totalling £132,203 (2017: 49,996) on behalf of Aeorema
Communications plc during the year.
During the year, Aeorema Communications plc made a net transfer of cash of £413,911 to
Aeorema Limited (2017: £181,010 from Aeorema Limited to Aeorema Communications plc).
The compensation of key management (including directors) of the Group is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
2018
£
2017
£
309,786
251,204
51,767
120,000
41,271
-
481,553
292,475
45
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
22 Related party transactions continued
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
Aeorema Communications plc
Aeorema Limited
2018
£
15,000
25,995
2017
£
15,000
7,850
40,995
22,850
At the year end, the group had an outstanding trade payable balance to Harris and Trotter
LLP of £6,174 (2017: £5,640).
23 Cash flows
Cash flows from operating activities
Profit before taxation
Depreciation
Dividends received by the Company
Finance income
Group
2018
£
Company
2017
£
2018
£
2017
£
58,685
20,416
-
(392)
248,887
(176,778)
116,141
51,454
-
(519)
-
-
-
(200,000)
(17)
(113)
78,709
299,822
(176,795)
(83,972)
Increase / (decrease) in trade and other payables
(340,624)
275,021
8,474
(Increase) / decrease in trade and other receivables
Taxation paid
(98,700)
(29,303)
166,745
(247,213)
(69,072)
-
(4,631)
58,757
-
Cash generated / (used) from operating activities
(389,918)
672,516
(415,534)
(29,846)
AEOREMA COMMUNICATIONS PLC
46
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
24 Financial instruments
Financial instruments recognised in the consolidated
statement of financial position
All financial instruments are recognised initially at their fair value and subsequently meas-
ured at amortised cost.
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Investments in subsidiaries
Total
Other financial liabilities
Trade and other payables
Accruals
Total
Group
2018
£
Company
2017
£
2018
£
2017
£
987,811
847,525
981,850
1,437,904
1,897,212
-
-
-
580,490
743,037
459,180
580,490
2,425,715
2,744,737
1,562,340
1,782,707
779,851
1,020,216
275,893
236,068
82,202
22,035
74,735
19,440
1,055,744
1,256,284
104,237
94,175
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 objec-
tives, 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 2018 was £693,725 (2017: £810,908). Trade receivables are
managed by policies concerning the credit offered to customers and the regular monitoring
of amounts outstanding for both time and credit limits. At the year end, the credit quality of
trade receivables is considered to be satisfactory.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that
the Group will encounter difficulty in meeting its financial obligations as they fall due. The
Group’s policy is to meet its liabilities when they fall due. The Group monitors cash flow on a
regular basis. At the year end, the Group has sufficient liquid resources to meets its obliga-
tions of £1,244,113 (2017: £1,540,698).
47
Notes to the Consolidated
Financial StatementsContinued
For the year ended 30 June 2018
24 Financial instruments continued
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 £1,436,314 (2017:
£1,897,212). 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 con-
tinue 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 £1,662,667 (2017: £1,657,515).
25 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Con-
tributions payable by the Group for the year were £56,934 (2017: £44,263). At the end of the
reporting period £nil (2017: £nil) of contributions were due in respect of the period.
26 Dividends
On the 9 January 2018 a final dividend of 0.5 pence per share (total dividend £45,253) was
paid to holders of fully paid ordinary shares.
In respect of the current year, the directors propose that a final dividend of 0.75 pence per
share be paid to shareholders on 11 January 2019. 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 share-
holders on the Register of Members on 14 December 2018. The total estimated dividend to
be paid is £67,879. The payment of this dividend will not have any tax consequences for the
Group.
27 Contingent Liability
Company
The company is a member of a group VAT registration with all other companies in the Aeo-
rema 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 2018 the company had no
potential liability under the terms of the registration.
28 Control
There is no overall controlling party.
AEOREMA COMMUNICATIONS PLC 48
Director Profiles
Mike Hale
Non-Executive Chairman
Mike Hale has spent most of his career in the marketing and advertising
sectors. His roles have included Chairman and CEO of Young and Rubicam
Australia, Chairman and CEO of FCB Australia and Board Director of Saatchi
and Saatchi UK. He also established his own eponymous agency which he
built into one of Australia’s leading independent agencies and which he sold
before relocating to London.
He has also been involved with business and strategic planning for major
Australian and international companies including British Airways, Unilever,
Epson, Toshiba, NRMA and BMW.
His extensive marketing and advertising experience with blue-chip compa-
nies, both in the UK and Australia, will be highly beneficial to the Company’s
plans for growth and expansion.
Stephen Haffner
Non-Executive Director
Steve Haffner has almost 30 years’ accounting experience having qualified
as a chartered accountant in 1989. He has spent over 25 years at Harris and
Trotter LLP, during which time he became Head of the Audit Department.
He was appointed as Partner to the firm in 1994. Steve joined Aeorema as
Company Secretary in 2014 and as a Director in 2015. He is a Fellow of The
Institute of Chartered Accountants in England and Wales.
Richard Owen
Non-Executive Director
Richard is Executive Chairman of AIM listed Ultimate Sports Group (USG) Plc
and an Executive Director of its subsidiary Pantheon Leisure Plc. Richard has
extensive involvement and experience in corporate and strategic planning,
acquisitions and finance. Richard holds various other private company
directorships.
49
Steve Quah
Joint Managing Director
Steve Quah is a founder and Joint Managing Director at Cheerful Twentyfirst
and oversees the management of all events. With extensive expertise in both
theatrical and digital brand experiences, Steve is the driving force behind
the company’s strong creative service ethos. Steve brings over thirty years
of unique insight, innovation and experience to the company and continues
to focus the team on delivering game changing events for all clients. With a
passion for creating award winning live experiences, Steve has produced over
300 corporate productions and numerous live events for some of the world’s
largest brands including Vodafone, Google, Oath, Clifford Chance, LG, Disney,
AOL, News UK and Microsoft to name but a few.
Andrew Harvey
Joint Managing Director
Andrew Harvey is Joint Managing Director and has twenty years’ experience
producing events, branded content and interactive projects. Andrew joined
Cheerful Twentyfirst in 1999 and helped significantly grow the branded
content division winning numerous awards. Andrew has worked at many
levels within the company including Account Manager, Head of Moving Image,
Senior Event Producer and his most recent role - Director of Operations.
Andrew has delivered award winning projects for global brands including
HSBC, Nokia, McKinsey & Company, GE Alstom, Oliver Wyman, PubMatic and
Babcock. Andrew currently oversees all aspects of the agency’s operations.
AEOREMA COMMUNICATIONS PLC 50
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
Gilmoora House, 57/61 Mortimer Street, London W1W 8HS
on 6 December 2018 at 11 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 2018.
2. To re-appoint Richard Lawrence 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 RSM UK Audit LLP as auditors of the
Company and to authorise the Directors to fix their
remuneration.
4. 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 2018 of 0.75 pence per ordinary
share.
As Special Business to consider and, if thought fit, pass
the following resolutions of which Resolution 5 will be
proposed as an Ordinary Resolution and Resolutions 6
and 7 will be proposed as Special Resolutions:
5. That the directors of the Company be generally and un-
conditionally authorised pursuant to and in accordance
with section 551 of the Act (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 grant-
ed 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.
6. That, subject to the passing of Resolution 5 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 5 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.
51
7. That the Company be and is hereby generally and
unconditionally authorised in accordance with Section
701 of the Act to make market purchases (within the
meaning of Section 693(4) 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 ("Ordi-
nary Shares") provided that:
Notes:
(1) A member entitled to attend and vote at the above-men-
tioned 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.
(i) the maximum number of Ordinary Shares hereby
authorised to be purchased is 905,000 Ordinary Shares;
(ii) the minimum price (exclusive of expenses) which
may be paid for an Ordinary Share is 1 pence;
(iii) the maximum price (exclusive of expenses) 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 London Stock Exchange 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 2019 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.
(2) A Form of Proxy is enclosed for your use, if desired. The
instrument appointing a proxy must reach the Company’s
registrars, Link Asset Services, PXS, The Registry, 34 Beck-
enham Road, Beckenham, Kent, BR3 4TU not less than 48
hours before the time of holding of the Meeting.
(3) Pursuant to Regulation 41 of The Uncertificated Securi-
ties 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 reg-
istered 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.
By order of the Board
Stephen Haffner
Company Secretary
Registered Office:
64 New Cavendish Street, London W1G 8TB
Dated: 6 November 2018
AEOREMA COMMUNICATIONS PLC 52
Company Information
Directors
Secretary
(Non-Executive Chairman)
(Non-Executive)
(Non-Executive)
(Joint-Managing Director)
(Joint Managing Director)
M Hale
S Haffner
R Owen
S Quah
A Harvey
S Haffner
Company number
04314540
Registered office
Financial advisers
Stockbrokers
Nominated adviser
Auditors
Solicitors
Bankers
64 New Cavendish Street
London, W1G 8TB
Harris & Trotter LLP
64 New Cavendish Street
London, W1G 8TB
Allenby Capital Limited
5 St. Helens Place
London, EC3A 6AB
Allenby Capital Limited
5 St. Helens Place
London, EC3A 6AB
RSM UK Audit LLP
25 Farringdon Street
London, EC4A 4AB
Howard Kennedy LLP
No. 1 London Bridge
London, SE1 9BG
Barclays Bank plc
P O Box 32106
London, NW1 2ZH
Registrar and transfer office
Link Asset Services
The Registry
34 Beckenham Road
Beckenham, Kent, BR3 4TU