Final Results and Notice of AGM

RNS Number : 5047M

Aeorema Communications Plc

14 October 2016

 

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

14 October 2016

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

Final Results

Notice of AGM

Aeorema Communications plc, the AIM-traded live events agency, announces its results for the year ended 30 June 2016.

Overview

·      Profits before tax from continuing operations of £340,165 (2015: £383,216)

·      Revenues of £4,583,050 (2015: £4,934,560)

·      Cash at bank and in hand of £1,427,723 (2015: £1,558,453)

·      Recommend final dividend payment of 2p (2015: 3p), which is in addition to the 3p special dividend paid in March 2016

Chairman's Statement

I am proud of Aeorema's ability to adapt to change positively and to continue to generate profits, sustain a strong cash position and deliver a dividend in what continues to be a highly challenging market.  This has been achieved by differentiating ourselves as a specialty live events company that attracts quality businesses through the development of innovative corporate communication solutions in the UK and internationally. Over the last year, we have worked with a number of blue-chip corporations and were pleased to welcome the Mail Online to our client list. 

Whilst the first half was slow, revenues improved as the year progressed resulting in Aeorema having another profitable year, albeit slightly down on the previous year. The results for the year show a profit before taxation from continuing operations of £340,165 (2015: £383,216) on revenue of £4,583,050 (2015: £4,934,560). We remain cash positive with cash at bank and in hand of £1,427,723 (2015: £1,558,453).

The Board is proposing a final dividend of 2 pence per share (2015: 3 pence per share) to be paid to shareholders on the register on 4 November 2016. The ex-dividend date will be on 3 November 2016. Subject to the proposed dividend being approved by the shareholders at the Company's Annual General Meeting, it will be paid on 25 November 2016. This dividend is in addition to the 3p special dividend paid in March 2016.

The trading environment in the event sector remains challenging, in part caused by the uncertainties of Brexit and its destabilising effects.  However, we anticipate that whilst global customers may at first rein in activities, in the longer term Brexit will create new opportunities as those very same organisations look to the UK, including companies like Aeorema, for cost-effective, unique, cutting edge solutions that this country is renowned for. I am not saying that it will be a smooth ride, indeed the next six months will be rocky, but we are confident that our long-term strategy and team which delivers creative live events, incorporating screen content and video, will ultimately see Aeorema prosper.

I would like to thank our team for their commitment and efforts during the year as well as our shareholders for their continued support. 

M Hale

Chairman

13 October 2016

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

Gary Fitzpatrick                                     Aeorema Communications plc                 Tel: [phone]

Marc Milmo/Catherine Leftley                  Cantor Fitzgerald Europe                        Tel: [phone]

Isabel de Salis/Elisabeth Cowell              St Brides Partners                                 Tel: [phone]

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2016

	Notes	2016	2015
		£	£
Continuing operations
Revenue	2	4,583,050	4,934,560
Cost of sales		(2,779,903)	(3,017,634)
Gross profit		1,803,147	1,916,926
Administrative expenses		(1,463,899)	(1,534,471)
Operating Profit	3	339,248	382,455
Finance income	4	917	761
Profit before taxation		340,165	383,216
Taxation	5	(66,663)	(67,979)
Profit and total comprehensive income for the year attributable to owners of the parent		273,502	315,237
Profit per ordinary share:
Total basic earnings per share	8	3.02195p	3.51904p
Total diluted earnings per share	8	2.92500p	3.37134p

There were no other comprehensive income items.

Statement of Financial Position

As at 30 June 2016

	Notes	Group		Company
		2016	2015	2016	2015
		£	£	£	£
Non-current assets
Intangible assets	9	365,154	365,154	-	-
Property, plant and equipment	10	60,259	65,135	-	-
Deferred taxation	6	6,075	6,404	-	-
Investments in subsidiaries	11	-	-	580,490	568,080
Total non-current assets		431,488	436,693	580,490	568,080
Current assets
Trade and other receivables	12	1,174,337	1,352,398	807,418	328,135
Cash and cash equivalents	13	1,427,723	1,558,453	469,923	657,873
Total current assets		2,602,060	2,910,851	1,277,341	986,008
Total assets		3,033,548	3,347,544	1,857,831	1,554,088
Current liabilities
Trade and other payables	14	(1,340,583)	(1,412,343)	(98,805)	(86,105)
Current tax payable	14	(66,043)	(51,161)	-	-
Total current liabilities		(1,406,626)	(1,463,504)	(98,805)	(86,105)
Net assets		1,626,922	1,884,040	1,759,026	1,467,983
Equity
Share capital	15	1,131,313	1,131,313	1,131,313	1,131,313
Share premium	16	7,063	7,063	7,063	7,063
Merger reserve	17	16,650	16,650	16,650	16,650
Capital redemption reserve		257,812	257,812	257,812	257,812
Retained earnings		214,084	471,202	346,188	55,145
Equity attributable to owners of the parent		1,626,922	1,884,040	1,759,026	1,467,983

Consolidated Statement of Changes in Equity

For the year ended 30 June 2016

Group	Share capital	Share premium	Merger reserve	Other reserve	Share-based payment reserve	Capital redemption reserve	Retained earnings	Total equity
	£	£	£	£	£	£	£	£
At 1 July 2014	1,079,688	-	16,650	19,500	110,972	257,812	482,609	1,967,231
Profit and total comprehensive income for the year, net of tax	-	-	-	-	-	-	315,237	315,237
Dividends paid	-	-	-	-	-	-	(452,500)	(452,500)
Shares issued in the period/to be issued	51,625	7,063	-	(19,500)	-	-	-	39,188
Share-based payments	-	-	-	-	14,884	-	-	14,884
Transfer	-	-	-	-	(125,856)	-	125,856	-
At 30 June 2015	1,131,313	7,063	16,650	-	-	257,812	471,202	1,884,040
At 1 July 2015	1,131,313	7,063	16,650	-	-	257,812	471,202	1,884,040
Profit and total comprehensive income for the year, net of tax	-	-	-	-	-	-	273,502	273,502
Dividends paid	-	-	-	-	-	-	(543,030)	(543,030)
Share-based payments	-	-	-	-	-	-	12,410	12,410
At 30 June 2016	1,131,313	7,063	16,650	-	-	257,812	214,084	1,626,922

Company Statement of Changes in Equity

For the year ended 30 June 2016

Company	Share capital	Share premium	Merger reserve	Other reserve	Share- based payment reserve	Capital redemption reserve	Retained earnings	Total equity
	£	£	£	£	£	£	£	£
At 1 July 2014	1,079,688	-	16,650	19,500	110,972	257,812	71,345	1,555,967
Comprehensive income for the year, net of tax	-	-	-	-	-	-	310,444	310,444
Dividends paid	-	-	-	-	-	-	(452,500)	(452,500)
Shares issued in the period/to be issued	51,625	7,063	-	(19,500)	-	-	-	39,188
Share-based payments	-	-	-	-	14,884	-	-	14,884
Transfer	-	-	-	-	(125,856)	-	125,856	-
At 30 June 2015	1,131,313	7,063	16,650	-	-	257,812	55,145	1,467,983
At 1 July 2015	1,131,313	7,063	16,650	-	-	257,812	55,145	1,467,983
Comprehensive income for the year, net of tax	-	-	-	-	-	-	821,663	821,663
Dividends paid	-	-	-	-	-	-	(543,030)	(543,030)
Share-based payments	-	-	-	-	-	-	12,410	12,410
At 30 June 2016	1,131,313	7,063	16,650	-	-	257,812	346,188	1,759,026

Statement of Cash Flows

For the year ended 30 June 2016

	Notes	Group		Company
		2016	2015	2016	2015
		£	£	£	£
Net cash flow from operating activities	24	450,608	383,894	(545,174)	(63,711)
Cash flows from investing activities
Finance income		917	761	254	268
Purchase of property, plant and equipment	10	(39,225)	(43,785)	-	-
Proceeds from sale of property, plant and equipment		-	10,000	-	-
Dividends received by the Company		-	-	900,000	400,000
Cash (used) / generated in investing activities		(38,308)	(33,024)	900,254	400,268
Cash flows from financing activities
Proceeds of share issue		-	39,188	-	39,188
Dividends paid to owners of the Company		(543,030)	(452,500)	(543,030)	(452,500)
Cash used in financing activities		(543,030)	(413,312)	(543,030)	(413,312)
Net (decrease) in cash and cash equivalents		(130,730)	(62,442)	(187,950)	(76,755)
Cash and cash equivalents at beginning of year		1,558,453	1,620,895	657,873	734,628
Cash and cash equivalents at end of year	13	1,427,723	1,558,453	469,923	657,873

Notes to the consolidated financial statements

For the year ended 30 June 2016

1 Accounting policies

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

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

Going concern

The Group's business activities, together with the factors likely to affect its future development and performance are set out in the review of business contained in the Chairman's Statement. The Group's financial statements show details of its financial position including, in note 25, 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 25, 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 2015. Their adoption has not had a material impact on the financial statements:

·      IAS 19 (Amended) 'Defined Benefit Plans: Employee Contributions', effective 1 February 2015.

·      Annual improvements to IFRSs 2011-2013 Cycle, effective 1 January 2015.

·      Annual improvements to IFRSs 2010-2012 Cycle - amendments to IFRS 8, IAS 16, IAS 24 and IAS 38, effective 1 February 2015.

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 2015 and have not been adopted early by the Group:

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

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

·      IFRS 16 'Leases', effective 1 January 2019

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

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

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

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

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

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

Management does not currently anticipate that the application of these standards, where applicable, will have an impact on the financial statements, except for the requirement of additional disclosures.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2016. Subsidiaries are all entities (including structured entities) over which the group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

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

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

Revenue

Revenue represents amounts (excluding value added tax) derived from the provision of services to third party customers in the course of the Group's ordinary activities. Revenue is measured at the fair value of consideration received taking into account any trade discounts and volume rebates. Revenue for all business segments is recognised when the Group has earned the right to receive consideration for its services.

Intangible assets - goodwill

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

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

Property, plant and equipment

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

Leasehold land and buildings	straight line over the life of the lease (three years)
Fixtures, fittings and equipment	straight line over four years

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

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

Impairment

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

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

Operating leases

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

Investments

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

Trade and other receivables

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

Trade and other payables

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

Cash and cash equivalents

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

Finance income

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

Taxation

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

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

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

Pension costs

The Group 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.

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)     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.

b)     An allowance for uncollectable trade receivables is estimated based on a combination of ageing analysis and any specific, known troubled customer accounts.

c)     An allowance for dilapidations is estimated based on a total value of works to restore the property to its original condition at the end of the lease.

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 2016 there is only a single reportable segment.

All revenue represents sales to external customers. Two customers (2015: three) are defined as major customers by revenue, contributing more than 10% of the Group revenue.

	2016	2015
	£	£
Customer one	1,006,510	-
Customer two	819,443	632,892
Customer three	453,552	581,546
Customer four	160,826	1,320,762
Major customers	2,440,331	2,535,200

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

Geographical market	2016	2015	2016	2015	2016	2015	2016	2015
	UK	UK	Europe	Europe	Rest of the World	Rest of the World	Total	Total
	£	£	£	£	£	£	£	£
Revenue	3,410,154	4,479,022	66,990	391,519	1,105,906	64,019	4,583,050	4,934,560

All non-current assets are based in the UK.

3 Operating profit

Operating profit is stated after charging or crediting:	2016	2015
	£	£
Cost of sales
Depreciation of property, plant and equipment	21,910	26,600
Administrative expenses
Depreciation of property, plant and equipment	22,191	4,108
Loss on disposal of property, plant and equipment	-	5,389
(Profit)/Loss on foreign exchange differences	(2,307)	639
Fees payable to the Company's auditor in respect of:
Audit of the Company's annual accounts	7,500	8,500
Audit of the Company's subsidiaries	20,000	14,000
Staff costs (see note 21)	1,029,928	1,063,817
Operating leases - land and buildings	91,000	80,813

4 Finance income

Finance income	2016	2015
	£	£
Bank interest received	917	761

5 Taxation

	2016	2015
	£	£
The tax charge comprises:
Current tax
Prior period adjustment	291	(923)
Current year	66,043	51,161
	66,334	50,238
Deferred tax (see note 6)
Current year	329	17,741
	329	17,741
Total tax charge in the statement of comprehensive income	66,663	67,979
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation from continuing operations	340,165	383,216
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 20% (2015: 20.75%)	68,033	79,517
Effects of:
Non-deductible expenses	358	1,204
Depreciation, impairment losses and disposals	8,820	7,490
Capital allowances	(7,743)	(7,938)
Share options exercised	-	(28,645)
Other adjustments	(3,425)	-
Marginal relief	-	(467)
Deferred tax movement due to temporary differences	329	17,741
Prior period adjustment	291	(923)
	(1,370)	(11,538)
Total tax charge	66,663	67,979

The Group has estimated losses of £375,762 (2015: £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.

6 Deferred taxation

	2016	2015
	£	£
Property, plant and equipment temporary differences	(5,681)	(8,296)
Temporary differences	11,756	14,700
	6,075	6,404
At 1 July	6,404	24,145
Transfer to Statement of Comprehensive Income	(329)	(17,741)
At 30 June	6,075	6,404

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

7 Profit attributable to members of the parent company

As permitted by section 408 of the Companies Act 2006, the parent Company's Statement of Comprehensive Income has not been included in these financial statements. The retained profit for the financial year of the holding company was £821,663 (2015: £310,444).

8 Earnings per ordinary share

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

Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

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

	2016	2015
	£	£
Basic earnings per share
Profit for the year attributable to owners of the Company	273,502	315,237
Basic weighted average number of shares	9,050,500	8,958,044
Dilutive potential ordinary shares: Employee share options	300,000	392,456
Diluted weighted average number of shares	9,350,500	9,350,500

9 Intangible fixed assets

Group	Goodwill
	£
Cost
At 1 July 2014	2,728,292
At 30 June 2015	2,728,292
At 30 June 2016	2,728,292
Impairment and amortisation
At 1 July 2014	2,363,138
At 30 June 2015	2,363,138
At 30 June 2016	2,363,138
Net book value
At 1 July 2014	365,154
At 30 June 2015	365,154
At 30 June 2016	365,154

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

Impairment - Aeorema Limited

Goodwill has been tested for impairment based on its future value in use. Future value has been calculated on a discounted cash flow basis using the 2016-17 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 between 1.5% and 2%. 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 £166,569 and a one percentage fall in future growth would reduce the recoverable amount by £329,746. However, in both cases there would still be no indication of impairment of goodwill.      

10 Property, plant and equipment

Group	Leasehold land	Fixtures, fittings	Total
	and buildings	and equipment
	£	£	£
Cost
At 1 July 2014	24,034	859,661	883,695
Additions	17,761	26,024	43,785
Disposals	(24,034)	(583,741)	(607,775)
At 30 June 2015	17,761	301,944	319,705
Additions	36,537	2,688	39,225
Disposals	-	(160,562)	(160,562)
At 30 June 2016	54,298	144,070	198,368
Depreciation
At 1 July 2014	21,305	794,941	816,246
Charge for the year	4,108	26,600	30,708
Eliminated on disposal	(24,034)	(568,350)	(592,384)
At 30 June 2015	1,379	253,191	254,570
Charge for the year	22,191	21,910	44,101
Eliminated on disposal	-	(160,562)	(160,562)
At 30 June 2016	23,570	114,539	138,109
Net book value
At 1 July 2014	2,729	64,720	67,449
At 30 June 2015	16,382	48,753	65,135
At 30 June 2016	30,728	29,531	60,259

11 Non-current assets - Investments

Company	Shares in subsidiary
	£
Cost
At 1 July 2014	3,247,409
Increase in respect of share based payments	14,884
At 30 June 2015	3,262,293
Increase in respect of share based payments	12,410
At 30 June 2016	3,274,703
Provision
At 1 July 2014	2,694,213
At 30 June 2015	2,694,213
At 30 June 2016	2,694,213
Net book value
At 1 July 2014	553,196
At 30 June 2015	568,080
At 30 June 2016	580,490

Holdings of more than 20%

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

Subsidiary undertakings	Country of	Shares held
	registration
	or incorporation	Class	%
Aeorema Limited	England and Wales	Ordinary	100
Twentyfirst Limited	England and Wales	Ordinary	100

12 Trade and other receivables

	Group		Company
	2016	2015	2016	2015
	£	£	£	£
Trade receivables	1,038,669	1,055,898	-	-
Related party receivables	-	-	802,543	323,447
Other receivables	19,585	19,230	-	-
Prepayments and accrued income	116,083	277,270	4,875	4,688
	1,174,337	1,352,398	807,418	328,135

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 £36,232 (2015: £284,944) were past due but not impaired. These relate to a number of customers for whom there is no significant change in credit quality and the amounts are still considered recoverable. The ageing of these trade receivables is as follows:

	Group
	2016	2015
	£	£
Less than 90 days overdue	27,190	284,944
More than 90 days overdue	9,042	-
	36,232	284,944

13 Cash and cash equivalents

	Group		Company
	2016	2015	2016	2015
	£	£	£	£
Bank balances	1,427,723	1,558,453	469,923	657,873
Cash and cash equivalents	1,427,723	1,558,453	469,923	657,873
Cash and cash equivalents in the statement of cash flows	1,427,723	1,558,453	469,923	657,873

14 Trade and other payables

	Group		Company
	2016	2015	2016	2015
	£	£	£	£
Trade payables	663,797	685,375	6,950	2,878
Related party payables	-	-	67,355	67,355
Taxes and social security costs	177,985	187,778	-	-
Other payables	14,614	33,543	-	-
Accruals and deferred income	550,230	556,808	24,500	15,872
	1,406,626	1,463,504	98,805	86,105

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

15 Share capital

	2016	2015
	£	£
Authorised
28,000,000 Ordinary shares of 12.5p each	3,500,000	3,500,000
Allotted, called up and fully paid	Number	Ordinary shares
		£
At 1 July 2014	8,637,500	1,079,688
Issue of shares	413,000	51,625
At 30 June 2015	9,050,500	1,131,313
At 30 June 2016	9,050,500	1,131,313

See note 22 for details of share options outstanding.16 Share Premium

	Share Premium
	£
At 1 July 2014	-
Issue of shares	7,063
At 30 June 2015	7,063
At 30 June 2016	7,063

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

17 Merger reserve

	Merger reserve
	£
At 1 July 2014	16,650
At 30 June 2015	16,650
At 30 June 2016	16,650

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

18 Other reserve

	Subscriptions received reserve
	£
At 1 July 2014	19,500
Allotment of shares	(19,500)
At 30 June 2015	-
At 30 June 2016	-

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. The reserve was fully transferred out by 30 June 2015. The reserve is not distributable.

19 Financial commitments

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

Group	Land and Buildings
	2016	2015
	£	£
Not later than one year	91,000	91,000
Later than one year and not later than five years	15,167	106,167
Total	106,167	197,167

20 Directors' emoluments

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

	Salary, bonus or fees	Salary, bonus or fees	Pensions	Pensions	Total	Total
	2016	2015	2016	2015	2016	2015
	£	£	£	£	£	£
P Litten	77,000	78,333	39,932	45,993	116,932	124,326
G Fitzpatrick	40,000	46,667	18,272	45,993	58,272	92,660
M Hale	10,000	-	-	-	10,000	-
S Garbutta	5,000	7,500	-	-	5,000	7,500
S Haffner	7,500	-	-	-	7,500	-
R Owen	10,000	7,500	-	-	10,000	7,500
S Quah	115,000	132,000	-	-	115,000	132,000
	264,500	272,000	58,204	91,986	322,704	363,986

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

Name	Grant date	Number awarded	Exercise price	Earliest exercise date	Expiry date
S Quah	25 April 2013	300,000	16.50p	25 April 2016	24 April 2023

Fees for S Garbutta and S Haffner are charged by Harris & Trotter LLP, a firm in which they are members. See note 23.

Some directors were awarded a bonus in the year. S Quah was awarded a bonus of £25,000 (2015: £30,000) and P Litten was awarded a bonus of £17,000 (2015: £20,000).

21 Employee information

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

Number of employees	2016	2015
	Number	Number
Administration and production	20	19

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

Employment costs	2016	2015
	£	£
Wages and salaries	871,534	874,703
Social security costs	86,409	81,972
Pension costs	59,575	92,258
Share-based payments	12,410	14,884
	1,029,928	1,063,817

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		Number of options 2016	Number of options 2015
		From	To
25 April 2013	16.5p	25 April 2016	24 April 2023	300,000	300,000
				300,000	300,000

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

	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
	2016	2016	2015	2015
		£		£
Outstanding at beginning of the year	300,000	0.17	609,000	0.15
Exercised during the year	-	-	(309,000)	0.13
Outstanding at end of the year	300,000	0.17	300,000	0.17
Exercisable at the end of the year	300,000	0.17	-	-

The exercise price of options outstanding at the year end was £0.165 (2015: £0.165) and their weighted average contractual life was 6.8 years (2015: 7.8 years).

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

Grant date	25 April 2013
Model used	Black-Scholes
Share price at grant date	16.5p
Exercise price	16.5p
Contractual life	10 years
Risk free rate	0.5%
Expected volatility	104%
Expected dividend rate	0%
Fair value option	14.889p

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

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

	2016	2015
	£	£
Share-based payment charge	12,410	14,884

23 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:

	2016	2015
	£	£
Amounts owed by subsidiaries
Total amount owed by subsidiaries	802,543	323,447
Amounts owed to subsidiaries
Total amount owed to subsidiaries	67,355	67,355

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

	2016	2015
	£	£
Short-term employee benefits	287,317	302,076
Post-employment benefits	58,204	91,986
Share based payment expense	12,410	14,884
	357,931	408,946

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

Harris and Trotter LLP - charged during the year	2016	2015
	£	£
Aeorema Communications plc	12,500	15,250
Aeorema Limited	15,060	29,390
	27,560	44,640

At the year end, the group had an outstanding trade payable balance to Harris and Trotter LLP of £6,600 (2015: £nil).

The company received dividends during the year of £900,000 (2015: £400,000) from its subsidiary Aeorema Limited. The company transferred a VAT receivable of £14,810 (2015: £6,759) 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 £7,317 (2015: £36,624).

During the year, Aeorema Limited made a net transfer of cash of £443,030 (2015: £400,025) to Aeorema Communications plc

24 Cash flows

	Group		Company
	2016	2015	2016	2015
	£	£	£	£
Cash flows from operating activities
Profit before taxation	340,165	383,216	821,663	310,444
Depreciation	44,101	30,708	-	-
Loss on disposal of property, plant and equipment	-	5,389	-	-
Share-based payment	12,410	14,884	-	-
Dividends received by the Company	-	-	(900,000)	(400,000)
Finance income	(917)	(761)	(254)	(268)
	395,759	433,436	(78,591)	(89,824)
Increase / (decrease) in trade and other payables	(71,760)	(132,788)	12,699	(3,624)
(Increase) / decrease in trade and other receivables	178,061	123,523	(479,282)	29,737
Decrease in inventories	-	2,674	-	-
Taxation paid	(51,452)	(42,951)	-	-
Cash generated / (used) from operating activities	450,608	383,894	(545,174)	(63,711)

25 Financial instruments

Financial instruments recognised in the consolidated statement of financial position

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

	Group		Company
	2016 £	2015 £	2016 £	2015 £
Loans and receivables
Trade and other receivables	1,070,627	1,280,861	802,543	323,447
Cash and cash equivalents	1,427,723	1,558,453	469,923	657,873
Investments in subsidiaries	-	-	580,490	568,080
Total	2,498,350	2,839,314	1,852,956	1,549,400
Other financial liabilities
Trade and other payables	678,411	718,919	74,305	70,233
Accruals	439,956	518,697	24,500	15,872
Total	1,118,367	1,237,616	98,805	86,105

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 2016 was £1,038,669 (2015: £1,055,898). Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. At the year end, the credit quality of trade receivables is considered to be satisfactory.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to meet its liabilities when they fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid resources to meets its obligations of £1,406,626 (2015: £1,463,504).

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 £1,427,723 (2015: £1,558,453). 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 £1,626,922 (2015: £1,884,040).

26 Pension costs defined contribution

The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the Group for the year were £59,575 (2015: £92,258). At the end of the reporting period £12,880 (2015: £30,000) of contributions were due in respect of the period. The amounts were paid subsequent to the end of the reporting period.

27 Dividends

On the 27 November 2015 a final dividend of 3 pence per share (total dividend £271,515) 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 be paid to shareholders on 25 November 2016. 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 4 November 2016. The total estimated dividend to be paid is £181,010. The payment of this dividend will not have any tax consequences for the Group.

28 Contingent Liability

Company

The company is a member of a group VAT registration with all other companies in the Aeorema Communications group and, under the terms of the registration, is jointly and severally liable for the VAT payable by all members of the group.  At 30 June 2016 the company had no potential liability under the terms of the registration.

29 Control

There is no overall controlling party.

Notice of annual general meeting

The Annual General Meeting of Aeorema Communications plc will be held at Moray House, 23-31 Great Titchfield Street, London W1W 7PA on 14^th November 2016 at 10.00 a.m. A formal notice of AGM along with the Annual Report and Accounts for the year ended 30 June 2016 will be sent to shareholders and will be available on the Company's website www.aeorema.com in due course.    

 

END

 

 

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