Aeorema Communications (LSE:AEO) — Investor Presentation

0:00 Good afternoon, and welcome to the AEOREMA COMMUNICATIONS PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it received in the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Steve Kuer, CEO. Good afternoon, sir.

0:30 Good afternoon, and good to be back. So I do have a presentation. I have presented this before, so apologies if it's you've seen it before, but there's some updates in there. I'm gonna give you a little bit of a flavor about our our finances and our performance, tell you what we do, and you show you some of our work, which should give you a better picture of actually what we do as a business. Here's a little disclaimer. I shall put that up. I shall move on. So AEOREMA COMMUNICATIONS PLC, a global award winning strategic communications group. I'll explain what we do. But first of all, we have offices based in London, New York, and Amsterdam. We're about 70 strong now, full time employees, and approximately sixty years operating business within the business the agencies within the group.

1:16 So if you could run the next video, Ali, what do we actually do? Because the brand experience, strategic comms, there's a lot of words that use to describe our business. We work with brands who wanna connect with an audience, and the medium that primarily we use is that live experience. Some people call it conferences, exhibitions, brand experience, activations. But what we do is work with brands to connect those audiences. We work initially at the base strategic level to work out the the why and how. We create the actual experience, and then we deliver that. We measure that. We go into the next one. Now I'm gonna take you through those sort of experiences later on. Next slide, please. Here's me. I'm glad to be the founder and CEO of Chip twenty first. Started over thirty years ago.

2:05 Started my first agency, and I have been running a leading agencies ever since. And I have worked with some of the biggest brands and delivered lots and lots of activations. So, hopefully, some of that rubs off from my team. This is my favorite slide. From an AIM point of view, this is quite an exception in the AIM market. We are very profitable. We are growing strongly. We generate cash and system a nice cash reserve. We pay dividends. We have a strong experienced management team. We lead in our industry. We win loads of awards, and we have a huge CSR commitment to be net zero by 2030. I understand this is the exception in AEO. So we're a bit of a secret, and this is part of why I'm talking to you guys and and give you some more color about my business.

2:51 Financial summary. So we had our best year ever. Our final results came out, I think, last week. Just nice over 20,000,000 in revenue, 7 figure profit for the first time, sitting on 1,900,000 cash. We're going to increase our dividend to three p. It's a 50 increase, and our reputation continues to grow. And our outlook is strong. We continue that momentum going forward into 2024. Here's a nice chart to show how we actually generate cash in our final numbers, and here's our growth plan. You can see pretty exceptional growth from post COVID and last year to this year. Delighted to say that since myself and the management team took over, our share prices continues to go up. We still believe it's undervalued, hence why I'm talking to you, But there's a nice growth curve for our share price as well.

3:46 So where do we play? What's the market and kind of where do we do these brand activations connecting with audiences and creating that experience? Well, a bit of research. This is actually last year. We think the market we're in for The UK alone is about 42,000,000,000, so we're just scratching that surface. Excitingly, America is bigger, obviously, about a 103,000,000, and globally, about 800,000,000,000. And these numbers are actually predicted to increase by threefold in the next five years under that experience economy. Again, it gives some sort of color to what that means. What is our kind of overall strategy? Obviously, we continue to grow, and we want to kind of strengthen our position as a leading, brand experience agency, leading with strategy at the heart of what we do, with offices in multiple markets as we are.

4:36 Culture strategy, key. You know, we are a people business. We want to maintain and nurture our talent. We also want to attract the best talent, and we also want to let the competition know we have the best talent. And that growth piece again around keeping our clients, that global footprint expansion, strategic consultative relationships is what we're building our foundations on, and it's proven to be very successful. Let's talk about our agencies. So in the world that we operate, in the agency world, we run two brands. Eventful is our smaller agency. Very boutique specializes what I say more traditional events. That's venue search, incentive travel, high level meetings, quite a boutique agency support cheerful twenty first. Cheerful twenty first is the mothership.

5:23 It's the main agency, offices in London, my Central London office in the Capitol Street, offices in New York, and the Rockefeller Center, and our satellite office in Amsterdam. Let me talk a little bit more about cheerful twenty first. On the right hand side, we have a dream client list. It'd be unusual to say that we work with brands that are not heard of. We work with the biggest brands in the world globally. I think the key thing here is always some big brands there, but we are what is known as a tier one procured agency. So there's an exhaustive process to get on the books of these agencies these these brands. And therefore, as an approved agency, we get opportunities for business. It's either repeat business or or to tender for work. Strategy led with unmatched creativity.

6:11 That really is at heart what we do. And I give you I'm gonna show you some of the work because I think that speaks pretty loud. Some key highlights, though, I think, you know, I think we mentioned in our final report, 100% client retention, which is that's an. Increase in revenue, 47%. America continues to grow and is a big part of our growth plan. Supporting that, delighted to say, and it again. Later on, Andre has joined us as a president in America to really kinda drive that growth going forward. Our work. Snapshot. And this shows you several projects that kind of explain the differences in projects, but the type of work we're doing and the quality and the level of excellence that we deliver. First client is a project we did this year for YouTube.

7:01 YouTube, again, wanted to collect their brands with buyers in the agency world to promote their products and services. The brief to us was to create something unusual, highly experiential, to drive that awareness, to drive that kind of attention, to drive that attraction. We had 400 attendees, and we created the entire process, finding the venue, delivering the project, running the event, measuring it, crystallizing it, going to the next event. Please run the next video, please. So that just shows you what is kind of our sweet spot. We've got a brilliant brand that we collaborate with. We're working at the highest high level, working on strategy and content, the ideation and the creation of the space and the experience, delivering it, managing it, logistics, hospitality, and going on to the next event. So that was a b to b event as we call in our work.

8:19 Next event. Slightly different. Wall Street Journal. Two things of Wall Street Journal. Wall Street Journal is a client we started with for one project, probably about five years ago. We have now expanded to be their global partner, and we're operating in The US and, EMEA, producing multiple events. This is fully classified more as a conference or an a an a a business event. It's a CEO summit. We produced this back last year, and post last year, we've done a three or four events with the for the same audience. Really high level, again, designing, creating the whole experience, ideation around the content, and then you will see the most high profile guests and delivery to be exceptional.

9:05 Can you run the next video, please?

9:12 The Wall Street Journal is one of the most prestigious newspapers in the world. As their trusted agency partner, cheerful twenty first works alongside them to deliver compelling brand experiences across their events and communications both in The US and in Europe. In May 2022, we partnered for the fourth time to produce The Wall Street Journal CEO Council Summit, an exclusive event series that brings together the world's most influential people to discuss the issues that matter. Hosted live from the Rosewood Hotel in London, the May Summit was the culmination of over a year of audience insight, creative development, and an extraordinary partnership built on trust, creativity, and seamless execution.

10:00 The Wall Street Journal uses these events to reinforce positioning as a connected highly credible and sophisticated news outlet. They understand that today's CEOs need an efficient and trusted forum to help them consider the most pressing issues of the day. Our hybrid format gave the CEO audience a choice in how they participated. Guests could join in person from the Rosewood or direct from their desks anywhere in the world. Alongside off the record breakout sessions to exchange learnings with trusted peers, our guests heard exclusive conversations between Wall Street Journal editors and renowned global guests. With immersive design and branding developed in our studio, the sophisticated members only atmosphere provoked thoughts and promoted conversation.

10:49 A table of curiosities tapped into haptic memory. Each item was linked to a plenary topic, sparking the interest of our guests and making the content unforgettable. The set design was critical to audience engagement. Both grand and intimate, the curved staging invited them into the discussion. Moving Image was central to the experience. Created by our in house team, we blended news and other footage in clever ways to provide powerful context for interviews. Our filmmakers worked closely with The Wall Street Journal news team, sometimes up to the wire to keep up with the pace of the changing agenda, while our broadcast team made sure the audience at home had the best seats in the house.

11:34 Our partnership with the Wall Street Journal is based on a shared vision, inspiring the world's world's most influential decision makers to tackle the planet's most pressing issues in a time of extraordinary change.

12:11 Thank you. And for our team, we're actually in COP twenty eight in Dubai, Wall Street Journal, again, engage with the potential audiences. So moving on to the next one. Well, actually, pausing a little bit about Cannes Lions. People who know us and probably know our industry probably know what Cannes Lions is about. But for those who don't know, Cannes Lions is a big advertising festival that happens in Cannes. It's the great and the good of the advertising and marketing world come together. All big brands come together. All big advertisers come together. It's the Oscars of the advertising world to win a lion. It's like the highest accolade. And we work with brands and to activate. And then in our language, that's pushing on an experience and exhibition or creating some sort of presence on the beach in Cannes.

12:57 Cannes Lions is a big success for us. We started with one activation, if you like, twelve years ago. We're I think we completed eight this year, and we're on target to do exceed that next year. So typical example of where we kinda lead and where we won business because of our success for us in Cannes. Stagwell. Stagwell wanted to kind of really amplify their voice and cement the position as one of the leading advertising groups in Cannes. They came to us, a multi way pitch, to pitch and create something that hasn't been done before, to really create some intrigue and attraction and actually disrupt, if you like, the Cannes landscape, and we did that. And we came up with SportBeach. Stagwell is a brilliant partner. This activation took everyone by surprise, and we won Cannes.

13:49 And I think it was the most searched online activation in Cannes after the Foo Fighters. So 5,000 attendees came to come experience this. I will run the video. Please go ahead.

14:49 So in essence, we built a sports stadium on the beach. It was just sand and dirt, and we created a pickleball court stadium, bleachers, activations, evening activations in the for dinner, breakfast meetings, sports happenings. Really, really dominated Cannes. Hugely successful. Client delighted beyond the expectations, and we're back again next year. And then final one from Cannes, just to round off that kind of experience piece. So the sport beach I just showed you, we kinda dominated on the beach. In the harbor, we did this activation for we'll shoot journal again, showing that account model we expand for our relationships is the activation built in the port for it's called Journal House. And then Journal House is seen as probably the highest end and the biggest quality of activation. Wall Street Journal being, you know, the premium brand, and we created a triple decker experience, which I'll run the video.

15:54 General House is a a premium event. It's where c level execs come and mingle. When they enter into the building itself, they know they've entered into Journal House. The core intention is to bring their CMO network together. It's a place for them actually to meet decision makers, their peers, policy makers, and sometimes it's a chance for them to actually switch off and actually relax away from the madness of what is Cannes Alliance. This year, Journal House hosted over 15 premium events throughout the week and was a space for guests to connect, host meetings, or relax. Each morning kicked off of the Wall Street Journal newsroom led interviews featuring leaders in the marketing and advertising world, including actor Ryan Reynolds, Peloton CMO, Dara Tresner, and Google CMO, Lorraine Tughill. Journal House is actually built on top of a viewing deck at the end of a pier in Cannes Port. That brings a lot of restrictions, a lot of access issues, weight loading issues, so lots of challenges to actually build there.

16:48 Everything about Jailhouse is in the detail, and I mean every single element is looked at under a magnifying glass. Even from the way the flags are hung, you know, the research that's done and the fact that we know that 75% of the time, at that time of year, the wind's going to blow in that direction, so therefore, that's the way you put the flag. Through sun studies, we know exactly where sun's coming into each part of the building. So do we need a blind there? Does it present any protection? So it is all down to that exact minute detail. As with any outdoor event, there are challenges with the weather, the rain, and how to deal with all these, you know, these problems. But the way we actually designed it and the versatility of the space, it meant we could overcome all these challenges.

17:35 What makes Journal House so special is the fact that you can see it from everywhere you can. It is literally the beacon at the end of a pier. So really, it's it's just a massive branding opportunity, and it is a statement piece. Doing this, we actually built up an amazing relationship with Wall Street Journal. There was trust and true partnership. We actually could make decisions quicker and end up with a pretty amazing product. Wonderful. And we continue that lovely relationship for next year as well. So let's talk a little bit about growth and the word tempo events and what that means in our industry. So tempo events, Caroline is a tempo event. It's a big event where lots of brands come together.

18:22 But there are lots of other tempo events. So CES, the consumer electronics show in Vegas, for example, South by Southwest, Art Basel in Miami, the Mexico in Cologne, Mobile World Congress in Barcelona. We are now targeting these act these are tempo events to kinda repeat our success, and we're already making inroads. We're really doing some activations at CES. We've got a team down at Heart Basil doing an activation for one of our brands already, and that continues to be our growth going forward. So Caroline's killing it. We're gonna go and focus on other temple activations. But this is only one of our revenue streams in the business. It's not the main revenue stream, but it's a significant growth part for our business. So watch this space. Here's just an example of where the geographic locations are, and you can see quite a lot are actually in North America. Hence, why we invest in America.

19:14 One of the main reasons that we've gone to the exciting place to actually hire a president to kind of run the operation. Andre Schrader has joined us. It's been about five months. I think mentioned in our last results. America continues to grow. We foresee America being a big growth opportunity for us. If you remember the earlier slide I showed where the market's twice as big, if not bigger than The UK, and we will continue to invest in that, and that is proved to be very, very successful. A little bit about Eventful, our little boutique agency. That was our first acquisition just as COVID started, but we managed to, ride out that COVID storm and come out at thriving and strong. Eventful specializes in, what I say, the more traditional event space, which is very high level, high touch c suite acts, dinner engagements or meetings and conferences.

20:10 They also do specialize in venue search and incentive travel, and as such, actually complement cheerful twenty first. And, actually, we met through a mutual client, which we still share now. Happy to say that the revenue has grown a 140% in the last last year, back to pre COVID levels, and continue to grow and continue to be thriving within our group. Again, good things to see there. It's very easy to say that we're industry leaders. It's very easy to say that, you know, we know what we're talking about, but in reality, we have a quite an extensive sales and marketing and thought leadership program. Brand playbook is the label we put in our research piece. We started that four years ago. We try and do this at least once, maybe twice a year where we kind of have a subject.

20:59 We do some research. I think last time we reached out to about 500 of our clients, ask them questions about other market trends and what's going forward. The key thing is it gives us amazing insights, and this is one of our last piece of research. We're delighted to see 69% see the value of live events come together again. 78% of participants prioritize experiences over material things. We're in a growth sector, and what came out of this in the marketing mix is that the live piece is very much at the marking top table, whereas pre COVID, it wasn't. And now we're seeing growth in that space, and we're enjoying that ride as we go along with that trend. Our last piece was about talking about our generation, age differentiation. So it looks at audience demographics. A marketing tool. We launched this twice. We launched it in London to our key clients, and we launched it in America. And it continues to be a good rich stream of insights and conversation opens.

21:54 Just proves that we do know what we're talking about. We've done the research going back to that strategic thinking within the business that is key, that fundamentally drives everything we do. We win three full awards. Happy to say, in the last twenty four months, won numerous awards, Grand Prix award, agency of the year, global agency the year, creative team of the year for fives in a row. That is a testament to team, clients, and our reputation in the industry. Going back to that culture piece, we continue to be the agency that's watched and create ripples in the industry. And also delighted to say that we expanded even further into the bigger world of advertising and marketing. The Drum Awards, for those who know the industry, is a highly reputable recognized award.

22:43 We entered five nominations. The awards happened last night. And watch this space because we did pretty well at the awards. There'll be an RNS announcement. Delighted to say that. But that's just showing how we're maturing and growing up in a much bigger space in the advertising and marketing world, which is where we sit now happily. Operationally carbon neutral since 2019, very proud of that. There's a lot of greenwashing. There's a lot of heightened stuff said about, you know, sustainability. We believe it's a commercial driver. We believe it's important, and some of our brands ask for CSR credits and our DNI credits before our real good. They know you do great work. We know that. Order your CSR credits, and it's very important to us.

23:34 It's also not just, an internal initiative. We are now pushing measurement and carbon offsets with our clients. We offer this service on every project and goes to kind of our carbon goals. Action always speaks louder words, and it's something we're very proud of. Just to wrap up, we're very profitable. We are growing. We generate lots of cash. We're paying dividends. We're a brilliant management team. We're leading the market. We continue to win awards, and we have a net zero commitment by 2030. I don't think there's many businesses, let alone businesses on AIM that actually can say that. And that is the end of my presentation. So I'll take some questions.

24:20 Perfect, Steve. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while Steve takes a few moments for you, those questions have been submitted today. I'd like to remind you that recording of this presentation along with a copy of the slides and published q and a can be accessed via your investor dashboard. As you can see, we received a number of questions throughout today's presentation. And, Steve, could I just ask you to read out the questions and give responses to what is appropriate to do so? Then I'll pick up from you at the end. Sorry. I'm just I'm just reading these questions. I'm flying solo. There's a question. Admin expenses rose 50% year on year. How much of that reinvestment in the business, and how much of one off cost? Good question.

25:09 Now we have tripled in size in the last twenty four months. That does put pressure on the old systems. So we've invested in new back office and admin and operation systems. We've expanded our finance team, significant investment in our HR function, and our sales and marketing efforts. So there are some one off costs. There's also a certain mass and size if you wanna be a £20,000,000 plus business. And I think we're certainly not gonna be doing that again because we're a certain size that we can certainly increase our revenue without dramatically adding more cost to the business, if that gives you some sort of color to that. Can you give a bit more color on why you expect revenue for the year to be weighted to the second half? Good question again. What we are seeing, and I was is probably a return back to seasonality more than anything.

26:01 Pre COVID. I hate this. Pre COVID. There were seasons in the year that historically, we've always had a busier second half than the first half. Post COVID, that was kind of thrown out the window where everyone was catching up with the delivery dates and events. We're now seeing that stuff go down again back into a busier second half. They need to say can lines actually in June. We're seeing some of that trend come back. Let me see what questions do. Do you plan do you plan to leave this is for Marcus A. Do you plan to leverage the success in Your US for further global expansion? Are your clients leading you into new markets? Yeah. I mean, just finished a big event in Tokyo three weeks ago.

26:48 I mean, the industry is naturally global anyway. You know, we work with certain brands based on either North America or Europe, and they activate throughout the world. We can do that. America is our big focus, and we'll look at other opportunities, but America's gonna be our definitely our focus for the next twelve, twenty four months because it's just such huge potential, and we continue to grow in in The UK and Europe, EMEA. Strategic report. Page eight has a profit with that oh, that's a great that's a lay long mouthful. Is it fair? I can't. So what benefits are you seeing from your technology investments? Do they enable to scale operations more efficiently without the additional overheads? Yes. As I said, we've gone to completely revamp our back office and job management and purchasing procuring system.

27:40 More primary well, two reasons, obviously, to be more efficient, look at data, look at actually how we are charging more efficiently. And we're seeing and we've built a model that we can significantly scale our revenue without having to reinvest in the technology. The virtual hybrid piece to our event world, you know, that was really strong in COVID, which we were very good at. The virtual hybrid piece has certainly shrunk, but the real life piece has come back even stronger. No other questions.

28:16 Any other questions?

28:20 No. Steve, thank you very much for that. I think you've addressed all those questions from investors. And, of course, the company will review all the questions submitted today, and we'll post publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to the company, Steve, could I just ask you for a few closing comments? Yeah. So, look, delighted to kind of keep broadcasting about our success. As our chairman statement indicated, we are forecasting our momentum to be continuing going forward. We think it's gonna be another great year for us. We continue to be excited and delighted with our success in America. We are nothing without our team, continue to nurture and find the best talent.

29:09 We like paying dividends back to our shareholders. We have a very good shareholder base, but we need to get more liquidity in the market. We think we're very undervalued. If you took the cash out of the business, lose any metric, we're undervalued. So going back to this slide, we're undervalued. We're still paying dividends, and we're very profitable. Oh, I'm available anytime for any other conversations, and thank you for the time today, and it's been a delight. And we continue to continue on our wonderful journey of creating success for all our partners, clients, shareholders, and staff. Perfect, Steve. Thank you once again for updating investors today. Could I please ask investors not to close this session as you're now automatically be redirected to provide your feedback in order that the management team can better understand your views and expectations? This then takes a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of AEOREMA COMMUNICATIONS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.