Aeorema Communications is being hit be the postponement of events.
Management of the video and events services provider is cutting costs and reducing the workforce by one-quarter. Despite this, the loss could reach £250,000 in the year to June 2020, compared to previous expectations of a pre-tax profit of £388,000. It is unlikely a dividend will be paid.
Aeorema made a loss in the first half, but previously it makes profit in the second half which more than covers the first half loss. That won’t happen this time.
The good news is that Aeorema had net cash of £1.39m at the end of 2019 and this has increased to £1.7m. At 23.5p a share, Aeorema is valued at £2.1m.
The acquisition of Eventful for up to £480,000 in cash and shares (£100,000 dependent on undemanding performance targets) will take Aeorema into venue sourcing and incentive travel. Aeorema is confident about the strength of the Eventful business because it has strong cash flow and cancellation fees. There will be cross-selling of group services.
The deal should be immediately earnings enhancing. In the year to March 2019, Eventful’s revenues were £343,000 and pre-tax profit was £96,000. A profit of £60,000 a year appears achievable on a regular basis. At the end of January 2020, Eventful had £227,000 in the bank.
Jonathan Hicking has increased his stake from 13.1% to 14.3%.
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