Half-year Results
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Aeorema Communications plc (AIM: AEO), a leading strategic communications group, today announces its unaudited interim results for the six months ended 31 December 2023 ("H1 2024").
OVERVIEW
| • | Revenue of £6,5 53,779 (H1 2023: £7,121,103) |
| • | Loss before taxation of £243,5 34 (H1 2023 Profit: £326,021) |
| • | Cash at date of this release of £3,717,848 |
| • | Expecting to reaffirm commitment to shareholders by maintaining the dividend policy |
| • | Winner of multiple industry awards |
| • | Cheerful Twentyfirst named Agency Team of the Year for the first time in the Experience category at industry-leading The Drum Awards Festival and nominated in four other award categories |
| • | Post period end, Cheerful Twentyfirst named Creative Team of the Year at the 2024 CN Agency Awards for sixth year running |
CHAIRMAN'S STATEMENT
As we navigate the dynamic landscape of our 2024 financial year, I present our interim results for the six months ended 31 December 2023 and provide insight into our strategic direction moving forward.
We are confident of delivering a full year profit of not less than £400,000, despite the loss in the first half of this financial year. We also expect to have a near record profit of £650,000 in the second half of this financial year. This is based on projecting revenue for the full year of no less than £19 million, and with three months still remaining in the Company's financial year ending 30 June 2024 ("FY2024"), we are confident in achieving this revenue.
Having made significant investment in the structure and foundations of our business in FY 2023, during H1 2024 we have focussed on investing in our team, both in the US and UK, which has impacted our profit margin. We are therefore amending our business model to have a better balance in costs between the first half and second halves of our financial year and we are also aggressively chasing business for the first half to improve the balance between first and second half revenue.
Like many agencies in its sector, Aeorema's clients are facing a challenging economic landscape which is resulting in delays in the decision-making process on committing spending and, consequently, in some cases, the temporary postponement of events. More particularly for Aeorema, several brands have delayed projects and pushed them into the first half of the 2024 calendar year (the second half of the Company's financial year) or into Aeorema's 2024/25 financial year, which is the case for approximately £2 million of contracted revenue.
Despite the disappointing impact of these timing shifts on both our half year and anticipated full year figures, we remain optimistic about the future. We have a robust pipeline of client projects and a resilient blue-chip client base. Importantly, Aeorema has maintained the loyalty of its client base, having not experienced any client losses during this period, which reflects the trust they place in our capabilities to deliver exceptional, world-class, experience events. This, and discussions with clients about future plans, gives us significant comfort in maintaining a positive outlook for the remainder of our 2023/24 financial year and for our 2024/25 financial year as we continue to grow organically and capitalise on an uptick in revenue driven by the realisation of postponed projects.
With a focus on adaptability and forward planning, Aeorema is well positioned for the future and is confident in its ability to deliver sustainable growth and value creation over the long term. We also expect to reaffirm our commitment to shareholders by maintaining our dividend policy.
While this half year's financial performance reflects the impact of project timing, we are encouraged by the underlying strength of our business and our pipeline. Our focus remains steadfast on delivering creative brilliance for our clients on a global scale, and sustained growth and value to our shareholders.
M Hale
Chairman
| Andrew Harvey | Aeorema Communications plc | +44 (0)20 7291 0444 | ||||||
|---|---|---|---|---|---|---|---|---|
| John Depasquale / Liz Kirchner / Lauren Wright (Corporate Finance) Kelly Gardiner / Joscelin Pinnington (Sales and Corporate Broking) | Allenby Capital Limited (Nominated Adviser and Broker) | +44 (0)20 3328 5656 | ||||||
| Paul Dulieu / Isabel de Salis | St Brides Partners Ltd (Financial PR) | aeorema@stbridespartners.co.uk | ||||||
| AEOREMA COMMUNICATIONS PLC | ||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENT | ||||||||
| For the period ended 31 December 2023 | ||||||||
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | Audited Year to 30 June 2023 | ||||||
| Notes | £ | £ | £ | |||||
| Continuing Operations | ||||||||
| Revenue | 6,553,779 | 7,121,103 | 20,230,231 | |||||
| Cost of sales | (5,051,024) | (5,595,529) | (15,896,463) | |||||
| Gross profit | 1,502,755 | 1,525,574 | 4,333,768 | |||||
| Administrative expenses | (1,724,982) | (1,175,668) | (3,240,848) | |||||
| Operating (loss) / profit | (222,227) | 349,906 | 1,092,920 | |||||
| Finance income | 20 | 80 | 215 | |||||
| Finance costs | (21,327) | (23,965) | (47,175) | |||||
| (Loss) / profit before taxation | (243,534) | 326,021 | 1,045,960 | |||||
| Taxation | 4 | 125,253 | (30,553) | (288,780) | ||||
| (Loss) / profit for the period from continuing operations | (118,281) | 295,468 | 757,180 | |||||
| Other comprehensive income | ||||||||
| Items that may be reclassified to profit or loss | ||||||||
| Exchange differences on translation of foreign entities | 56,973 | (29,245) | (119,547) | |||||
| Other comprehensive income for the period | 56,973 | (29,245) | (119,547) | |||||
| Total comprehensive income for the period | (61,308) | 266,223 | 637,633 | |||||
| Basic and diluted earnings per share from continuing operations | ||||||||
| Basic (pence) | 5 | (1.24010) | 3.18118 | 8.04398 | ||||
| Diluted (pence) | 5 | (1.05251) | 2.71870 | 6.83499 | ||||
| AEOREMA COMMUNICATIONS PLC | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||
| For the period ended 31 December 2023 | ||||||||
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | Audited Year to 30 June 2023 | ||||||
| £ | £ | £ | ||||||
| Non-current assets | ||||||||
| Intangible assets | 565,181 | 567,682 | 566,431 | |||||
| Property, plant and equipment | 379,137 | 389,668 | 428,509 | |||||
| Right-to-use assets | 633,584 | 760,388 | 696,986 | |||||
| Deferred taxation | 140,110 | - | 14,844 | |||||
| 1,718,012 | 1,717,738 | 1,706,770 | ||||||
| Current assets | ||||||||
| Trade and other receivables | 4,213,279 | 2,834,446 | 3,502,522 | |||||
| Cash and cash equivalents | 1,342,729 | 3,676,194 | 2,444,100 | |||||
| Current tax receivable | - | 101,426 | - | |||||
| 5,556,008 | 6,612,066 | 5,946,622 | ||||||
| Total assets | 7,274,020 | 8,329,804 | 7,653,392 | |||||
| Current liabilities | ||||||||
| Trade and other payables | 3,584,467 | 4,713,051 | 3,882,938 | |||||
| Lease liabilities | 109,808 | 141,278 | 109,058 | |||||
| Bank loans | 69,445 | 69,445 | 83,333 | |||||
| Current tax payable | 72,510 | - | 74,736 | |||||
| Provisions | 35,000 | 35,000 | 35,000 | |||||
| 3,871,230 | 4,958,774 | 4,185,065 | ||||||
| Non-current liabilities | ||||||||
| Lease liabilities | 594,247 | 668,006 | 612,693 | |||||
| Bank loans | - | 83,334 | 27,778 | |||||
| Provisions | 18,000 | 9,000 | 13,500 | |||||
| Deferred taxation | - | 4,629 | - | |||||
| 612,247 | 764,969 | 653,971 | ||||||
| Total liabilities | 4,483,477 | 5,723,743 | 4,839,036 | |||||
| Net assets | 2,790,543 | 2,606,061 | 2,814,356 | |||||
| Equity attributable to equity holder: | ||||||||
| Share capital | 1,192,250 | 1,192,250 | 1,192,250 | |||||
| Share premium | 21,876 | 21,876 | 21,876 | |||||
| Merger reserve | 16,650 | 16,650 | 16,650 | |||||
| Other reserve | 270,870 | 205,730 | 233,375 | |||||
| Capital redemption reserve | 257,812 | 257,812 | 257,812 | |||||
| Foreign translation reserve | (31,271) | 2,058 | (88,244) | |||||
| Retained earnings | 1,062,356 | 909,685 | 1,180,637 | |||||
| Total equity | 2,790,543 | 2,606,061 | 2,814,356 | |||||
| AEOREMA COMMUNICATIONS PLC | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||
| For the period ended 31 December 2023 | ||||||||
| Share capital | Share premium | Merger reserve | Other reserve | Capital redemption reserve | Foreign translation reserve | Retained earnings | Total equity | |
| £ | £ | £ | £ | £ | £ | £ | £ | |
| At 1 July 2022 | 1,154,750 | 9,876 | 16,650 | 168,956 | 257,812 | 31,303 | 614,217 | 2,253,564 |
| Comprehensive income for the period | - | - | - | - | - | - | 295,468 | 295,468 |
| Foreign currency translation | - | - | - | - | - | (29,245) | - | (29,245) |
| Share-based payments | - | - | - | 36,774 | - | - | - | 36,774 |
| Share issue | 37,500 | 12,000 | - | - | - | - | - | 49,500 |
| At 31 December 2022 | 1,192,250 | 21,876 | 16,650 | 205,730 | 257,812 | 2,058 | 909,685 | 2,606,061 |
| At 1 January 2023 | 1,192,250 | 21,876 | 16,650 | 205,730 | 257,812 | 2,058 | 909,685 | 2,606,061 |
| Comprehensive income for the period | - | - | - | - | - | - | 461,712 | 461,712 |
| Dividend paid | - | - | - | - | - | - | (190,760) | (190,760) |
| Foreign currency translation | - | - | - | - | - | (90,302) | - | (90,302) |
| Share-based payments | - | - | - | 27,645 | - | - | - | 27,645 |
| At 30 June 2023 | 1,192,250 | 21,876 | 16,650 | 233,375 | 257,812 | (88,244) | 1,180,637 | 2,814,356 |
| At 1 July 2023 | 1,192,250 | 21,876 | 16,650 | 233,375 | 257,812 | (88,244) | 1,180,637 | 2,814,356 |
| Comprehensive income for the period | - | - | - | - | - | - | (118,281) | (118,281) |
| Foreign currency translation | - | - | - | - | - | 56,973 | - | 56,973 |
| Share-based payments | - | - | - | 37,495 | - | - | - | 37,495 |
| Share issue | - | - | - | - | - | - | - | - |
| At 31 December 2023 | 1,192,250 | 21,876 | 16,650 | 270,870 | 257,812 | (31,271) | 1,062,356 | 2,790,543 |
| AEOREMA COMMUNICATIONS PLC | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
| For the period ended 31 December 2023 | ||||||||
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | Audited Year to 30 June 2023 | ||||||
| £ | £ | £ | ||||||
| Cash flow from operating activities | ||||||||
| (Loss) / profit before taxation | (243,534) | 326,021 | 1,045,960 | |||||
| Adjustments for: | ||||||||
| Depreciation of property, plant and equipment | 67,827 | 48,873 | 109,764 | |||||
| Depreciation of right-of-use assets | 63,402 | 63,384 | 126,786 | |||||
| Amortisation of intangible fixed assets | 1,250 | 1,250 | 2,500 | |||||
| Loss on disposal of fixed assets | - | - | 9,141 | |||||
| Share-based payment | 37,495 | 36,774 | 64,419 | |||||
| Interest on lease liabilities | 17,804 | 20,244 | 39,212 | |||||
| Finance income | (20) | (80) | (215) | |||||
| Dilapidations | 4,500 | 4,500 | 9,000 | |||||
| Exchange rate differences on translation | 60,590 | (28,902) | (119,455) | |||||
| Operating cash flow before movement in working capital | 9,314 | 472,064 | 1,287,112 | |||||
| Increase/(decrease) in trade and other payables | (298,470) | 1,752,830 | 922,716 | |||||
| (Increase)/decrease in trade and other receivables | (710,757) | 295,592 | (372,487) | |||||
| Cash (used in) / generated from operating activities | (999,913) | 2,520,486 | 1,837,341 | |||||
| Taxation paid | (2,241) | (279,218) | (380,753) | |||||
| Cash flow from investing activities | ||||||||
| Finance income | 20 | 80 | 215 | |||||
| Purchase of property, plant and equipment | (22,071) | (216,406) | (325,027) | |||||
| Repayment of leasing liabilities | (35,500) | (71,000) | (177,500) | |||||
| Net cash used in investing activities | (57,551) | (287,326) | (502,312) | |||||
| Cash flow from financing activities | ||||||||
| Share issue | - | 49,500 | 49,500 | |||||
| Dividends paid to owners of the company | - | - | (190,760) | |||||
| Repayment of bank loans | (41,666) | (41,665) | (83,333) | |||||
| Net cash used in financing activities | (41,666) | 7,835 | (224,593) | |||||
| Net increase / (decrease) in cash and cash equivalents | (1,101,371) | 1,961,777 | 729,683 | |||||
| Cash and cash equivalents at beginning of period | 2,444,100 | 1,714,417 | 1,714,417 | |||||
| Cash and cash equivalents at end of period | 1,342,729 | 3,676,194 | 2,444,100 | |||||
AEOREMA COMMUNICATIONS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 31 December 2023
General information
These condensed consolidated interim financial statements for the period ending 31 December 2023 (including comparatives for the periods ended 31 December 2022 and 30 June 2023) were approved by the board of directors on 22 March 2024.
The financial information set out in this interim report does not constitute statutory accounts for the purposes of section 434 of the Companies Act (2006). The Group's statutory financial statements for the year ended 30 June 2023, prepared under International Financial Reporting Standards (IFRS), have been filed with the Registrar of Companies. The auditor's report for those financial statements was unqualified and did not contain a statement under section 498 (2) or section 498 (3) of the Companies Act (2006).
Copies of the annual statutory financial statements and the interim report can be found on our website at www.aeorema.com or can be requested from the Company Secretary at the Company's registered office: 101 New Cavendish Street, 1st Floor South, London, W1W 6XH.
Basis of preparation
These condensed consolidated interim financial statements for the period ended 31 December 2023 have been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the United Kingdom. The interim condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2023, which have been prepared in accordance with IFRS as adopted by the United Kingdom.
Revenue and segmental results
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, has determined that for the period ended 31 December 2023 there is only one reportable operating segment.
- Income tax charge
- Earnings per share
The following reflects the income and share data used and dilutive earnings per share computations:
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | Audited Year to 30 June 2023 | |
|---|---|---|---|
| (Loss) / profit for the year attributable to owners of the Company | (£118,281) | £295,468 | £757,180 |
| Number of shares | |||
| Basic weighted average number of shares | 9,538,000 | 9,288,000 | 9,413,000 |
| Effect of dilutive share options | 1,700,000 | 1,580,000 | 1,665,000 |
| Diluted weighted average number of shares | 11,238,000 | 10,868,000 | 11,078,000 |
Dividends
During the interim period a dividend of 3 pence per share (2022: 2 pence per share) was declared to holders of the Company's ordinary shares in respect of the full year ended 30 June 2023.
AEOREMA COMMUNICATIONS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the period ended 31 December 2023
Related party transactions
| Unaudited 6 months to 31 December 2023 | Unaudited 6 months to 31 December 2022 | |
|---|---|---|
| £ | £ | |
| Subsidiaries | ||
| Amounts owed by/(to) subsidiaries | 503,557 | 370,342 |
| Amounts owed by/(to) subsidiaries | 503,557 | 370,342 |
Harris & Trotter LLP is a firm in which S Haffner is a member. The following was charged to the Group in respect of professional services.
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | |
|---|---|---|
| Harris & Trotter LLP | £ | £ |
| Aeorema Communications plc | 12,950 | 9,450 |
| Aeorema Limited | 7,750 | 9,500 |
| 20,700 | 18,950 |
Fees charged to Aeorema Communications plc include £10,000 (2022: £7,500) for the services of S Haffner as a non-executive director of that company.
The compensation of key management (including directors) of the Group is as follows:
| Unaudited 6 Months to 31 December 2023 | Unaudited 6 Months to 31 December 2022 | |
|---|---|---|
| £ | £ | |
| Short-term employee benefits | 361,004 | 266,375 |
| Post-employment benefits | 10,101 | 7,496 |
| 371,105 | 273,871 |
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