Aeorema Communications drops as revenue increase offset by costs

Aeorema Communications' shares slid on Monday after increases in administrative expenses and cost of sales over the front half of the latest financial year largely offset higher revenues.

For the six month period ended 31 December, the live events agency reported revenue of £2.0m, an increase of 7% compared to the same period the year before, though cost of sales increased by 16% to £1.3m and administrative expenses jumped by 25% to £0.9m.

Accordingly, Aeorema's interim loss before tax fell by just 6% to £0.1m, benefiting from the absence of exceptional items that had cost the company £0.2m in the same period of the previous year.

Michael Hale, chairman of Aeorema, said: "The first half loss was anticipated due to recruitment costs and increased salaries. This investment is already producing results and creates a structure for growth. A key focus has been on account management and growing revenues from existing clients. The new team were instrumental in winning a significant new Cannes Lions project for June this year and they have also helped win other new projects for this year and next."

The Cannes Lions International Festival of Creativity is an event for those working in creative, communications, advertising and related fields, and Aeorema has spent several years staging innovative events at the festival which have typically provided a substantial part of its annual revenues.

Cash and cash equivalents remained steady at £1.0m at period end, while the AIM traded company said it intends to pay a full year dividend, subject to the final audited results for the full year.

"The company has explored, and continues to explore, value accretive acquisitions whose business or businesses are complementary to the existing offering and will help Aeorema build its position in the events and experiential category. To this end, we continue to seek to drive growth and innovation both in-house and via value accretive growth opportunities," said Hale.

Hale added that it is customary for Aeorema's revenues to be second half-weighted and anticipated and committed second half revenues are strong, with trading remaining in line with its expectations for the full-year to the end of June.

Aeorema Communications' shares were down 10.16% at 27.40p at 1202 GMT.