Annual Financial Report and Notice of AGM

Aquila Services Group PLC
03 July 2023
 

 

For immediate release                                                                                          3 July 2023

Aquila Services Group plc

("Aquila", the "Company" or the "Group")

Annual report and financial statements

for the year ended 31 March 2023

and

Notice of AGM

 

Annual report

Aquila is pleased to announce its audited annual report and financial statements for the year ended 31 March 2023, extracts from which are set out below.

The Company's annual report and financial statements for the year ended 31 March 2023 will shortly be made available from the Company's website at: http://www.aquilaservicesgroup.co.uk/.

In addition, the document will be uploaded to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Financial Highlights

For the year ended 31 March 2023

Revenue

£12,249k

(2022: £10,119k)

 

Gross profit

£2,605k

(2022: £2,206k)

 

Gross profit margin

21%

(2022: 22%)

Underlying operating profit*

£806k

(2022: £726K)

 

Statutory profit after tax

£518k

(2022: £579k)

Statutory earnings per share

1.29p

(2022: 1.45p)

Cash generated by operations.

£719k

(2022: £512k)

Cash balances

£2,405k

(2022: £2,193k)

Total dividend payable

0.75p per share

(2022: 0.6p)

 

* Underlying operating profit is calculated by adjusting the reported pre-tax profit for share-based payment charges and impairments of goodwill.

 

Dividend

The Directors propose a final dividend of 0.5p per share (2022: 0.4p). This will be paid on 2 August 2023 to shareholders on the register at 14 July 2023.

 

Notice of Annual General Meeting ("AGM")

The Company's AGM will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 26 July 2023 at 12:00 midday.

 

 

The financial information set out below does not constitute the Company's statutory accounts for the period ending 31 March 2023.  The financial information for 2022 is derived from the statutory accounts for that year.  The auditors, Crowe U.K. LLP, have reported on the 2023 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

For further information please visit www.aquilaservicesgroup.co.uk or contact:

Aquila Services Group plc

Claire Banks, Group Finance Director

Tel: 020 7934 0175

 

Beaumont Cornish Limited, Financial Adviser

Roland Cornish / Asia Szusciak

Tel: 020 7628 3396

 

Extracts from the Company's annual report and financial statements for the year ended 31 March 2023

Chairs statement

 

Dear Shareholder,

 

I am pleased to present the Annual Report and Financial Statements for the year to 31 March 2023. The report is designed to provide both an overview of the Group's business and achievements as well as a summary of the results for the year. I trust that shareholders will find the information both helpful and informative as well as giving them the confidence that the company works on behalf of the public good, is progressive and is confident about future growth. If you would like further information or wish to discuss the work of the Group, please do not hesitate to contact one of the directors, details are given on page 2.

 

Aquila Services Group plc ('the Company') is the holding company for Altair Consultancy and Advisory Services Ltd ('Altair'), Aquila Treasury & Financial Solutions Ltd ('ATFS') and Oaks Consultancy ('Oaks') which form the Group ('the Group').

 

The Group is an independent consultancy which provides advice and support to organisations both in the private and public sector that develop and manage affordable housing, provide education and sports opportunities as well as to organisations active in the charity and community sectors. Most clients operate within the United Kingdom but increasingly our services are in demand to support the provision of affordable housing and community services, particularly in Africa and Asia, where our initiatives are funded by International Agencies.

 

My statement at the interim stage reflected that the easing of restrictions from the pandemic and economic life returning to normal was an opportunity for the Group to expand its business. This growth has continued with turnover for the year 21% higher than for the previous equivalent 12 months.

 

The main driver of growth had been through the affordable housing client base. This has continued together with an upward trajectory in the sports, communities and charity sectors. Education has lagged behind, waiting for procedures to be created to complement government announcements on capital allocations.

 

Wage inflation and skills shortages are still a significant upward pressure on our cost base so that profit growth lags behind the increase in turnover. Despite this, the Group has achieved record operating and gross annual profits.

 

Group results for the financial year ended 31 March 2023 are a turnover of £12,249 (2022: £10,119), an increase of 21%; underlying operational profit of £806k (2022: £726k), up by 8%; and profit after tax of £518k (2022: £579k), decreased by 12%.

 

In line with the Financial Reporting Standards the Group accepted an impairment charge of £120k on the carrying value of the investment in ATFS which had previously a significant proportion of its business from the education sector.

 

The Directors recommend a final dividend of 0.5p (2022: 0.4p) which would total dividends for the year of 0.75p (2022: 0.6p), an increase of 25%.

 

The new financial year has started with some encouraging signs, particularly in the affordable housing sector both in the UK and with international clients. There is every expectation that growth will continue in the sports, community and charity sectors. We are still awaiting the necessary clarification on the authorities needed for capital spending by educational bodies. The evidence for this continuing growth is the number of enquiries being received and the increasing value of new business being won. This will again put pressure on our staff resources and the requirement for increased investment in skills and training. The pressures on the cost base that is reflected in the published accounts is likely to continue and, with labour market changes, is likely to be a permanent feature.

 

During the year we have streamlined our executive structure to ensure that our investment in skills and training is protected by more defined career paths for staff. It has also been a further opportunity to ensure that we have a succession strategy for all the key posts.

 

The services the business offers relate to the essential needs of people of all ages living in a developed economy. The pandemic demonstrated that this is not in itself a protection against the threats of an increasingly unstable and fragile geopolitical and economic environment. At any time, we need to have the optimum organisation of our staff and the IT that services them. We need the goodwill of our clients as well as the financial resources to cover fiscal shocks. We believe these are all now substantially in place and we continue to review and update to ensure the resilience of the business.

 

We all have an ongoing responsibility to the society and world in which we live. We take this seriously and we have now combined our EDI and Green Groups into a new employee body focussing on ESG. They review and have input into our policies to ensure that both our recruitment and our opportunities are open to all, that we minimise our carbon footprint and treat everyone with the dignity they have a right to expect, and we are sensitive to individual needs. We want all those who work within the business to feel welcome, valued and treated with respect.

 

Recent years and especially since the pandemic have seen reducing levels of interest in smaller quoted companies listed on the main market of the London Stock Exchange (LSE). At the same time the cost of maintaining a listing is significant and regulatory changes are increasing costs as a proportion of the Group's total revenues. In the Board's view the increasing profitability of the Group, the increases in dividends payable and financial strength has not been reflected in either the share price or market liquidity.

 

The FCA has recently announced some changes they are proposing to make, which when implemented may have an impact on the costs of maintaining a listing. As and when these changes are known, the Board will assess the implications for the Company.

 

There is a long list of people who work for us and those with whom we work that I would want to thank for their commitment, hard work and good humour throughout the year. The business provides services that enhance people's quality of life. This should not mean that working for the business is not also enjoyable as well as fulfilling. I know that all the members of the board including myself have enjoyed making our contribution during the 12 months and we look forward to this continuing and reporting further progress to shareholders at the interim stage of the new financial year. Finally, I must pay tribute to our Chief Executive Officer, Fiona Underwood. Without her leadership, management and communication skills, as well as dedication and hard work, little of the successes of the year would have been possible.

 

Derek Joseph - Chair

30 June 2023

Extract from the Strategic Report

Strategy and objectives

Aquila Services Group (Aquila) has a bold purpose to 'make a better, more sustainable and socially responsible world'.  We achieve this by being a consultancy group which provides professional support services to socially focused sectors in the UK and internationally.

Our purpose is core to what we want to be across the group:

§ We want our subsidiaries to have a direct beneficial impact on communities and lives in the UK and beyond.

§ We want to offer staff the opportunity to inspire positive change in an environment with a strong social focus.

§ And we want to provide investors the opportunity of supporting an organisation that combines strong performance with a positive social outcome.

 

Our work helps our clients to develop a response to a changing world and make a positive difference to the communities in which they operate.  At present we work with clients across housing and regeneration, sport and education, charity and government sectors.  We work across the UK and increasingly internationally.

Our business as at 31 March 2023

 

Aquila delivers work to clients through key subsidiaries, each of which has a core market and service focus:

§ Altair provides support for affordable housing and government bodies through the development, growth, management, governance, and operation of organisations, and the improvement of services to affordable and social housing customers.

 

§ ATFS is registered with the Financial Conduct Authority and provides advice to the affordable housing and education sectors on treasury and funding solutions.

 

§ Oaks works with clients in the sport, charity and education sectors focused on strategy, business planning and income generation activities.

The Group had two employee led groups with representation across the Aquila Group.  The aim was to focus activities on the environment and sustainability, equality, diversity and inclusion and promoting these initiatives amongst colleagues, making Aquila an attractive employer to work for.

In October 2022 the Group agreed to combine the work of the Green and EDI groups and create a smaller team focussed on the Environment, Social and Governance (ESG) agenda. The ESG group meets monthly and its purpose is to drive the ESG agenda across the Group and its subsidiaries.

Further information about, and activities within the groups, is available on the website.

Principal risks and uncertainties

The principal risks currently faced by the Group are:

Financial risk

The main financial risks arising from the Group's activities are credit risk, foreign currency risk, interest rate risk and liquidity, details of which can be found in note 23 to the Financial Statements.

Unfavourable economic conditions and/or changes to government policy

The current macro-economic uncertainty, rising interest rates and high inflation may see a reduction in business as clients spending on consultancy is curtailed. Local authorities continue to see significant pressure on budgets and may stop consultancy contracts and/or limit their commissioning of work.

The Group mitigates these risks by ensuring that each subsidiary has diversity across its client base, not relying on any one client or group of clients.

Changes to government policy may adversely affect the Group. The Group ensures that it is aware of the impact of these changes and adapts its products and services to proactively respond to this risk.

Competition

Increased competition in the market continues to pose a risk to all companies within the Group.

Staff skills, retention, recruitment and succession

As the Group is a people-based business, a significant risk is the recruitment and retention of talent.   The Group continues to monitor retention and all staff leaving the business have exit interviews which provides important input into our People policies to improve our working practices and environment.

Data governance

The increase of cyber-attacks and the loss of data is a serious risk that is monitored closely.  The Group complies with all relevant legislation and has invested in updated systems, security and training. The Group obtained the certification of Cyber Essentials Plus status during the year.

Mitigations of risk

The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial requirements and maintains good relationships with its clients, principal contacts within government, regulators and other key influencers within the sector.

The Group is well placed to provide the full range of services needed by its clients as the external environment changes. Our international work will continue to be impacted due to international travel restrictions.  It is hoped these will further ease during the year.

Environment

The Group undertakes regular risk assessments, scenario analysis, and stress testing to identify, measure, and manage climate risks across all operations, supply chains, and investment portfolio.   Risks are managed on a case-by-case basis and are considered during the business planning process.

Aquila has again achieved Carbon Neutral Plus status within the year.

Further information is on the website.

Corporate and social responsibility

The Group recognises that we have a responsibility to ensure the impact of our business is positive. The Group's Corporate Social Responsibility policy can be seen on the website.

The Group has adopted policies to ensure that in all work across the Group and its subsidiaries the impact of human rights, anti-corruption and anti-bribery matters are considered.

The Group continues to support programmes, on a pro-bono basis that are aimed at improving the opportunities for individuals from a minority ethnic background and to increase the diversity of housing sector leaders. In March this year we joined the Future of London Emerging Talent Programme, providing a placement opportunity for individuals from a minority ethnic background. Our involvement will span three financial years.

Our subsidiary Oaks supports WAITS as its charity partner. Through this relationship the Oaks team provide pro bono support with strategy and business planning together with income generation.

As part of the work of the ESG Group there is a project to increase our CSR work and provide opportunities for more colleagues to be involved.

 

Statement of Directors Responsibilities in respect of the Annual Report and the Financial Statements

The directors (whose names and functions are set out on page 26) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have prepared the Company and Group financial statements in accordance with UK Adopted International accounting standards in conformity with the requirements of the Companies Act 2006.  Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and the profit or loss of the Company and the Group for that period.

In preparing the Company and Group financial statements, the directors are required to:

§ select suitable accounting policies and then apply them consistently;

§ make judgements and estimates that are reasonable relevant and reliable;

§ present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

§ State whether they have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006;

§ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business; and

§ Use the going concern basis of accounting unless they either intend to liquidate the Group or the Company or cease operations or have no realistic alternative but to do so.

The Directors are responsible for maintaining adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

The directors are responsible for such internal controls as they determine are necessary to enable the preparation of financial statements that are free from material misstatement. Whether due to fraud or error. and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations. the Directors are also responsible for preparing a Strategic Report. Directors' Report and Corporate Governance Report that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the Annual Report and Financial Statements

We confirm that to the best of our knowledge:

§ the Company and Group financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

§ the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole. together with a description of the principal risks and uncertainties that they face.

 

We consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Claire Banks - Group Finance Director

On behalf of the Board

30 June 2023

Consolidated statement of comprehensive income

For the year ended 31 March 2023

 



Notes

 

 

2023

 

2022

 


 

 

 

£'000

 

£'000

 


 

 

 

 

 


Revenue


4

 

 

12,249


10,119




 

 




Cost of sales


5

 

 

(9,644)


(7,913)




 

 




Gross profit


 


 

2,605


2,206



 


 




Administrative expenses


5


 

(1,828)


(1,488)

 


 

 

 




Operating profit


 

 

 

777


718

 


 

 

 




Finance income


4



17


-









Impairment of Goodwill


10



(120)


-

 


 

 

 




Profit before taxation


6

 

 

674


718


 

 

 




Income tax expense


8

 

 

(156)


(139)




 

 




Profit for the year



 

 

518


579




 

 




Other comprehensive income


 

 

 

-


-

Total comprehensive income for the year

 

 

 

518


579



 

 

 




Earnings per share attributable to owners of the parent


 

 

 




Basic


9

 

 

1.29p


1.45p

Diluted


9

 

 

1.26p


1.41p

 

The income statement has been prepared on the basis that all operations are continuing operations.

Consolidated statement of financial position

As at 31 March 2023


 



 



Group


Group

 



2023


2022

 



 



 

Notes

£'000


£'000


Non-current assets






Goodwill

10

3,197

 

3,317

 

Property, plant and equipment

11

234

 

313

 

Investments

13

71


71

 



3,502

 

3,701

 

Current assets


 




Trade and other receivables

14

3,130


2,593


Cash and bank balances



2,193





4,786


Current liabilities


 




Trade and other payables

15

2,260


1,917


Lease liabilities

16

69


88


Corporation tax


170


144





2,149


 


 




Net current assets










Non-current lease liabilities

16

126


196


 


 




 


 




Net assets


6,412


6,142


 






Equity






Share capital

17

1,998


1,998


Share premium account

17

1,712


1,712


Merger reserve

17

3,042


3,042


Share-based payment reserve

20

364


415


Retained losses


(704)


(1,025)


 






Equity attributable to the owners of the parent


6,412


6,142


 

The financial statements were approved by the board and authorised for issue on 30 June 2023.

Claire Banks - Group Finance Director

Company statement of financial position

As at 31 March 2023

 

 


Company


Company

 



2023


2022

 



 



 

Notes

£'000


£'000


Non-current assets






Property, plant and equipment

11

12

 

3

 

Investment in subsidiaries

12

4,072


4,180

 

Investments

13

71


71

 



4,155

 

4,254

 

Current assets


 


 


Trade and other receivables

14

236


991


Cash and bank balances


1,052


89




1,288


1,080


Current liabilities


 


 


Trade and other payables

15

694


440




694


440


 


 


 


Net current assets


594


640


 


 


 


Net assets


4,749


4,894


 






Equity






Share capital

17

1,998


1,998


Share premium account

17

2,341


2,341


Share-based payment reserve

20

364


415


Retained earnings


46


140


 






Equity attributable to the owners of the parent


4,749


4,894


 

As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss account.  The company's profit for the year was £103k (2022: loss £441k).

The financial statements were approved by the board and authorised for issue on 30 June 2023.

Claire Banks - Group Finance Director

Company Registration No. 08988813

Consolidated statement of changes in equity

For the year ended 31 March 2023


 

Share

 

Share based

 

 


Share

premium

Merger

payment

Retained

Total


capital

account

reserve

reserve

losses

equity


£'000

£'000

£'000

£'000

£'000

£'000

 







Balance at 1 April 2021

1,998

1,712

3,042

580

(1,537)

5,795

Total comprehensive income

-

-

-

-

579

579

Transfer on reserves

-

-

-

(173)

173

-

Share based payment charge

-

-

-

8

-

8

Dividend

-

-

-

-

(240)

(240)

Balance at 31 March 2022

1,998

1,712

3,042

415

(1,025)

6,142








Balance at 1 April 2022

1,998

1,712

3,042

415

(1,025)

6,142

Total comprehensive income

-

-

-

-

518

518

Transfer on reserves

-

-

-

(63)

63

-

Share based payment charge

-

-

-

12

-

12

Dividend

-

-

-

-

(260)

(260)

Balance at 31 March 2023

1,998

1,712

3,042

364

(704)

6,412

 

 

 

Company statement of changes in equity

For the year ended 31 March 2023


 

Share

Share based

 

 


Share

premium

payment

Retained

Total


capital

account

reserve

earnings

equity


£'000

£'000

£'000

£'000

£'000

 






Balance at 1 April 2021

1,998

2,341

580

648

5,567

Total comprehensive income

-

-

-

(441)

(441)

Transfer on reserves

-

-

(173)

173

-

Share based payment charge

-

-

8

-

8

Dividend

-

-

-

(240)

(240)

Balance at 31 March 2022

1,998

2,341

415

140

4,894







Balance at 1 April 2022

1,998

2,341

415

140

4,894

Total comprehensive income

-

-

-

103

103

Transfer on reserves

-

-

(63)

63

-

Share based payment charge

-

-

12

-

12

Dividend

-

-

-

(260)

(260)

Balance at 31 March 2023

1,998

2,341

364

46

4,749


Consolidated statement of cash flow

For the year ended 31 March 2023


2023


2022


£'000


£'000

Cash flows from operating activities

 



Profit for the year

518


579

Interest received

(17)


-

Income tax expense

156


139

Share based payment charge

12


8

Impairment of goodwill

120


-

Depreciation

124


118

Operating cash flows before movement in working capital

913


844


 



(Increase)/Decrease in trade and other receivables

(537)


(320)

(Decrease)/Increase in trade and other payables

343


(12)

Cash generated by operations

719


512





Income taxes paid

(130)


(84)

Net cash inflow from operating activities

589


428

 




Cash flows from investing activities

 



Interest received

17


-

Purchase of property, plant and equipment

(45)


(37)

Net cash (outflow)/inflow from investing activities

(28)


(37)

 




Cash flows from financing activities

 



Lease liability payments

(89)


(85)

Dividends paid

(260)


(240)

Net cash (outflow)/inflow from financing activities

(349)


(325)

 




Net increase in cash and cash equivalents

212


66





Cash and cash equivalents at beginning of the year

2,193


2,127





Cash and cash equivalents at end of the year

2,405


2,193

 

 

Company statement of cash flow

For the year ended 31 March 2023

 


2023


2022


£'000


£'000

Cash flows from operating activities

 



Profit/(Loss) for the year

103


(441)

Interest received

(17)


-

Dividends received

(977)


(200)

Impairment of investment

120


-

Depreciation

6


-

Operating cash flows before movement in working capital

(765)


(641)





Decrease/(Increase) in trade and other receivables

755


313

Increase/(Decrease) in trade and other payables

254


39

Cash (outflow) generated by operations

244


(289)





Net cash (outflow) from operating activities

244


(289)





Cash flows from investing activities




Interest on deposits

17


-

Purchase of plant and equipment

(15)


3

Dividends received

977


200

Net cash (outflow)/inflow from investing activities

979


203

 




Cash flows from financing activities




Dividends paid

(260)


(240)

Net cash (outflow) from financing activities

(260)


(240)

 




Net increase/(decrease) in cash and cash equivalents

963


(326)

 




Cash and cash equivalents at beginning of the year

89


415

Cash and cash equivalents at end of the year

1,052


89

 

Notes to the financial statements

For the year ended 31 March 2023

 

1        General information

Aquila Services Group plc ('the Company') and its subsidiaries (together, 'the Group') provide specialist housing, sport, education and treasury management consultancy services.  The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.

The Company is a public limited company which is listed on the London Stock Exchange, domiciled in the United Kingdom and incorporated and registered in England and Wales.  The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

2        Accounting policies

The principal accounting policies applied in preparation of these consolidated financial statements are set out below.  These policies have been consistently applied unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Accounting standards in conformity with the requirements of the Companies Act 2006.

The financial statements have been prepared on the historical cost basis except for certain assets which are carried at fair value.

The financial statements are presented in Pounds Sterling which is the functional and presentational currency of all companies within the group.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies.  The areas of critical accounting estimates and judgements are set out in note 3.

Going concern

The budgets and cashflow forecasts that have been produced and reviewed demonstrate that the Group is forecast to generate profits and cash in the year ended 31 March 2023 and beyond and that the Group has sufficient cash reserves to enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the financial statements.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of subsidiary entities.  A subsidiary is defined as an entity over which the Company has control.  Control is achieved when the Company has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity, and could use its power to affect its returns.

Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost.  The Company reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three control elements listed above.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with the Group's accounting policies.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method.  The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.

Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill.  Goodwill is not amortised but is reviewed for impairment at least annually.  If the consideration is less than the fair value of the identifiable assets and liabilities acquired, the difference is recognised in the statement of comprehensive income.

Revenue recognition

The group earns income from the following principal services:

§ Revenue from consultancy services

§ Revenue from treasury management.

For all these principal services, revenue represents amounts recoverable from clients for professional services provided during the year.  Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.

Revenue is recognised when control of a product or service is transferred to a customer A receivable is recognised when the services are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Revenue from fixed fee assignments is recognised over a period of time by reference to the stage of completion of the actual services provided at the reporting date, as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously.  This is determined based on the actual labour hours spent relative to the total expected labour hours.

Time and materials assignments are recognised as services are provided at the fee rate agreed with the client.  Unbilled revenue on individual client assignments is classified as contract assets for client work within trade and other receivables.  Where individual on-account billings exceed recognised revenue on a client assignment, the excess is classified as contract liabilities for client work within trade and other payables.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.  The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for use.  Depreciation is recognised to write-off the cost of assets less their residual values over their estimated useful lives, using the straight-line method, on the following bases:

 

Right of use assets

Over unexpired term of lease

Leasehold improvements

Over unexpired term of lease

Fixtures, fittings and equipment

3-4 years

 

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.  The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.

Investment in subsidiaries

In the Company's financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company, plus any costs directly attributable to the purchase of the subsidiary.

Investments

Investments are held at fair value.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'amortised cost'.  The classification depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them and is determined at the time of initial recognition.  Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.

Amortised cost

Financial assets at amortised cost

These assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost.  With the exception of trade receivables which are initially measured at transaction price determined in accordance with IFRS 15, financial assets at amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.  The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents.  Cash comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand which have a right of offset against cash balances.  These instruments are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial assets at fair value through profit or loss

Assets that do not meet the criteria for amortised cost are measured at FVTPL.  A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.  The Group's financial assets measured at FVTPL comprise unquoted equity investments.

Impairment of financial assets

Impairment provisions for current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of credit losses.  During this process the probability of the non-payment of the trade receivable is assessed.  This probability is then multiplied by the amount of the expected loss arising from default to determine the expected credit loss for the trade receivables.  Provisions are recorded net in a separate provision account with the loss being recognised in the consolidated income statement.  On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.  Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model.  The methodology used to determine the amount of provision is based on whether there has been a significant increase in credit risk since the initial recognition of the asset.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'.  The Group does not currently hold any financial liabilities 'at FVTPL'.

Pensions

The Group contributes to defined contribution schemes for the benefit of its directors and employees.  Contributions payable are charged to the statement of comprehensive income in the year they are payable.

Current and deferred income tax

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the profit or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.  Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled.  Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets

Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income.  No deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.

Impairment of non-financial assets

The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired.  If any such indication exists, the Group estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset.  If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.  That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.  If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate pre-tax discount rate.

Leases

Leases are accounted for on a 'right-of-use model' reflecting that, at the commencement date, the Company as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use asset. The right-of-use assets are recognised within property, plant and equipment on the face of the financial position and are presented separately in note 11.

The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. Subsequently the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is re-measured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.

Right-of-use assets are measured at cost comprising the following:

·    the amount of the initial measurement of lease liability;

·    any lease payments made at or before the commencement date less any lease incentives received;

·    any initial direct costs; and

·    restoration costs.

 

Subsequently the right-of-use asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight line-basis over the lease term.

The Group does not have any short-term leases of equipment or vehicles.

Share capital/equity instruments

Ordinary shares are classified as equity.  Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.  The Company has one class Ordinary share which carries no right to fixed income.  Each share carries the right to one vote at general meetings of the Company.

Share-based payments

Equity-settled share-based payments to employees and directors are measured at the fair value of the equity instruments at grant date.  The fair value excludes the effect of non-market-based vesting conditions.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest.  At each reporting date, the Group revises the estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions.  The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

The fair value of the options is measured using the Black Scholes options valuation model.

Adoption of new and revised standards

No new standards were adopted in the year.

 

Standards issued but not yet effective

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3        Critical accounting estimates and judgements

 

In application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.  The estimates and associated assumptions are based on historical experience and other factors that are relevant.  Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have a significant effect on the amounts recognised in the financial statements.

Work in progress within revenue recognition

Work in progress is calculated on a project by project basis using the fair value of chargeable time that is un-invoiced at the period end.  Historic analysis shows that recovery rates of work in progress are very high; the Group does not expect any work in progress to be irrecoverable.  Work in progress is reviewed on a monthly basis to ensure it is recognised appropriately, it is probable that economic benefits will flow to the Group and that the fair value can be reliably measured (note 4).  Work in progress is accounted for under contract assets.

Share based payments

The Company has granted share options to certain employees and directors of the Group.  The share options granted become exercisable at varying future dates.  If certain conditions are met the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.

The share-based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.

Assumptions regarding the fair value of the Company's shares are considered when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled share-based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of comprehensive income to reflect the services rendered as consideration during the vesting period (note 20).

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of goodwill

The carrying amounts of the Group's assets value are reviewed at each reporting date to determine whether there is any indication of impairment.  If any such indication exists, the asset's recoverable amount is estimated, and an impairment loss is recognised where the recoverable amount is less than the carrying value of the asset.  Any impairment losses are recognised in the income statement.

The recoverable amount of the goodwill is determined from value in use calculations.  The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to income and direct costs during the period.

 

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to each acquisition of goodwill.  Discount rates of 16.12% and a terminal value of 1% has been used.

 

Growth rates of between 0-15% have been applied to each cash generating unit as set out in note 10 these are based on industry rates, management's knowledge of the different businesses and the markets and the ability for the businesses to expand.  The maximum period over which the cashflows are reviewed is 5 years.

 

Sensitivities have been applied to all assumptions.

 

Valuation of unquoted investments

The Group determines the fair value of these financial instruments using recent transactions or valuation models if information about recent transactions is not available.  The values derived from applying these models are significantly impacted by the choice of the valuation model used and the underlying assumptions made, such as the amounts and timing of future cash flows, discount rates, volatility and credit risk.

Management has determined that a valuation based on five times annual turnover is an appropriate measure of fair value based on prior knowledge of the industry.

4        Revenue and Finance income

An analysis of the Group's revenue is as follows:




 

2023


2022

 

£'000

 

£'000

Continuing operations - rendering of services




Specialist housing consultancy income

10,558


8,502

Treasury management income

431


600

Specialist sports and education consultancy income

1,260


1,017


12,249


10,119

 

Interest received on bank deposits

17


-


12,266


10,119

 

5        Operating segments

The Group has two reportable segments; consultancy and treasury management services, the results of which are included within the financial information.  In accordance with IFRS8 'Operating Segments', information on segment assets is not shown, as this is not provided to the chief operating decision-maker.

The principal activities of the Group are as follows:

Consultancy - a range of services to support the business needs of a diverse range of organisations (including housing associations, local authorities, multi academy trusts and sporting businesses) across the housing, education and sports sectors.  Most consultancy projects run over one to two months and on-going business development is required to ensure a full pipeline of consultancy work for the employed team.

Treasury Management - within this segment of the business several client organisations enter fixed period retainers to ensure immediate call-off of the required services.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2.  Segment profit represents the profit earned by each segment, without allocation of central administration costs, including directors' salaries, finance costs and income tax expense.  This is the measure reported to the Group's executive directors for the purpose of resource allocation and assessment of segment performance.

 

2023


2022

 

£'000

 

£'000

Revenue from Consultancy

11,818


9,519

Revenue from Treasury management

431


600


12,249


10,119





Cost of sales from Consultancy

9,269


7,367

Cost of sales from Treasury management

375


546


9,644


7,913





Gross profit from Consultancy

2,550


2,152

Gross profit from Treasury management

55


54


2,605


2,206





Administrative expenses

(1,828)


(1,488)





Operating profit

777


718

 

Within consultancy revenues, approximately 18% (2022: 9%) has arisen from the segment's largest customer L&Q; within treasury management 11% (2022: 15%).

Geographical information

Revenues from external customers, based on location of the customer, are shown below:

 

2023


2022

 

£'000

 

£'000

UK

11,727


9,528

Europe

508


380

Rest of World

14


211


12,249


10,119

 

 




6        Profit before taxation

 

2023


2022

 

£'000

 

£'000

Profit before taxation is arrived at after charging:




Auditors' remuneration (see below)

66


56

Depreciation of property, plant and equipment (see note 11)

31


25

Depreciation of leasehold property (see note 11)

93


93

Impairment of goodwill

120


-

Staff costs (see note 7)

7,180


5,879





 

Breakdown of auditors' remuneration

 

 

2023


2022

 

£'000

 

£'000

Auditors' remuneration




Fees payable to the Company's auditors for:    




The audit of the parent Company

40


33

The audit of the Company's subsidiaries

21


18

The review of the interim report

3


3

The provision of a CASS assurance report to the FCA

2


2


66


56

 

7        Staff costs

 

2023


2022

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

102


86

 




 

2023


2022

 

£'000


£'000

Aggregate remuneration (including directors)




Wages and salaries

6,153


5,171

Share-based payments

12


8

Pension contributions

314


262

Social security costs

701


438



5,879

 

 

2023


2022

 

£'000


£'000

Directors' remuneration




Salary (including taxable benefits)

345


330

Share-based payments

1


5

Pension contributions

17


17


363


352





Two directors are members of the company's defined contribution pension scheme.


The amounts set out above include remuneration to the highest paid director as follows:

 






2023

 

2022


£'000

 

£'000

Salary (including taxable benefits)

195


177

Share-based payments

-


4

Pension contributions

10


10


205


191

 

Remuneration of key management personnel

The remuneration of the key management personnel of the Group, including all directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.


2023


2022


£'000


£'000

Wages and salaries

1,036


1,186

Share-based payments

5


(7)

Post-retirement benefits

48


49


1,089


1,228

 

8        Taxation

 

2023


2022

 

 



 

£'000


£'000

Corporation tax:




Current year


139

 

 

 




The tax charge for the year can be reconciled to the profit in the income statement as follows:


2023


2022


£'000


£'000

Profit before taxation

674


718





Tax at the UK corporation tax rate of 19% (2022: 19%)

128


136

Expenses not deductible

28


3

Tax expense for the year

156


139

 

The Finance Bill 2021 substantively enacted on 24 May 2021 included legislation increasing the UK corporation tax rate from 19% to 25% with effect from 1 April 2023.

 

 

9        Earnings per share

Basic earnings per share is calculated by dividing the profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year.  Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options.  Details of which are set out in note 20.

 

2023


2022

 

£'000


£'000

Profit after tax attributable to owners of the parent

518


579





Weighted average number of shares

'000

 

'000

-      Basic

39,962


39,962

-      Diluted

41,016


41,153





Basic earnings per share

1.29p

 

1.45p

Diluted earnings per share

1.26p

 

1.41p

 

10      Goodwill

Group



Goodwill

 



£'000

Cost




At 1 April 2021



3,872

Additions

 

 

-

At 31 March 2022



3,872

Additions



-

At 31 March 2023

 

 

3,872

Accumulated impairment losses




At 1 April 2021



(555)

Impairment loss for the year



-

At 31 March 2022



(555)

Impairment losses for the year



(120)

At 31 March 2023

 

 

(675)





Net book value




At 1 April 2021



3,317

At 1 April 2022



3,317

At 31 March 2023

 

 

3,197

 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination.  Each Subsidiary is considered to be the cash generating unit for the purpose of impairment review.

The Group tests goodwill annually for impairment, or more frequently if there are any indications that goodwill might be impaired.

The recoverable amount of goodwill is determined from value in use calculations.  The key assumptions for the value in use calculations are those regarding growth rate of client base and project fees.  Management's approach to determining the values to each key assumption is based on experience and project work already secured for future periods and the expected utilisation of consultants.  Management have projected cash flows over a period of five years, based on growth rates of between 0% and 16% per annum; this is based on past performance and expected future activity.  A discount rate of 16.1% and a terminal value of 1.0% has been used.

The Growth rates for each cash generating unit is as follows. For Property 0-7% (2022: 0-7%), for Treasury 0-16% (2022: 5-6%), for Oaks 6% (2022: 9-13%)

Sensitivity analysis has been performed on the value in use calculations, holding all other variables constant to:

·    Apply a 5-10% reduction to the forecasted turnover.

·    Apply a 5-10% decrease in gross profit margins.

·    Apply an increase in the discount rate.

 

A decline in turnover of 10% would trigger an impairment in Treasury, 10% in Property and 8% in Oaks.  A decline in gross profit to 21% would trigger an impairment in Treasury, 16% in Property and 19% in Oaks.  A discount rate of 26% would trigger an impairment in Treasury, 40% in Property and 35% in Oaks. 

 

The sensitivities applied in Property and Oaks do not provide reasonable possible changes and therefore no impairment has been made.  However, an impairment has been made of £120k within Treasury due to the decline in the Education market.

 

11      Property, plant and equipment (Group)

 

Group

Right of use assets-Leasehold property

Leasehold improvement

Fixtures and fittings

Computer equipment

Total

 

£'000

£'000

£'000

£'000

£'000

Cost






At 1 April 2021

514

27

45

173

759

Additions

-

-

-

37

37

At 31 March 2022

514

27

45

210

796

Additions

-

-

1

44

45

At 31 March 2023

514

27

46

254

841







At 1 April 2021

153

11

41

160

365

Charge for the year

88

5

3

22

118

At 31 March 2022

241

16

44

182

483

Charge for the year

88

5

2

29

124

At 31 March 2023

329

21

46

211

607







Net book value






At 1 April 2021

361

16

4

13

394

At 31 March 2022

273

11

1

28

313

At 31 March 2023

185

6

0

43

234

 

Company

 

 

Computer equipment

 

 

 

£'000

Cost




At 1 April 2021



 64

Additions



3

At 31 March 2022



67

Additions



15

At 31 March 2023

 

 

82





Accumulated depreciation




At 1 April 2021



64

Charge for the year



-

At 31 March 2022



64

Charge for the year



6

At 31 March 2023

 

 

70





Net book value




At 1 April 2021



 -

At 31 March 2022



3

At 31 March 2023

 

 

 

12

12      Investment in subsidiaries

Company



Investments in subsidiaries

 



£'000

Cost




At 1 April 2021



4,725

Additions



10

At 31 March 2022



4,735

Additions



12

At 31 March 2023



4,747





Accumulated impairment losses




At 1 April 2021



555

Impairment losses for the year



-

At 31 March 2022



555

Impairment losses for the year



120

At 31 March 2023



675





Net book value




At 1 April 2021



4,170

At 31 March 2022



4,180

At 31 March 2023



4,072

 



 

 

Details of the Company's subsidiaries at 31 March 2023 are as follows:

 

 

 

 

 

Place of incorporation and operation

Principal activity

Proportion of ownership and voting rights held

 




Altair Consultancy and Advisory Services Limited

England and Wales

Specialist housing consultancy

100%

Aquila Treasury and Finance Solutions Limited

England and Wales

 

Treasury management consultancy

100%

Oaks Consultancy Limited

England and Wales

 

Specialist sports and education consultancy

100%

 

The accounting reference date of each of the subsidiaries above is co-terminus with that of the Company.  The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

The following companies are all dormant, the registered office of each is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

 

Place of incorporation and operation

Proportion of ownership and voting rights held

 

Accounting reference date

 

Altair International Consultancy Limited

England and Wales

100% held by Aquila Services Group plc

31 August

 

Murja Limited

England and Wales

100% held by ATFS Limited

30 May

 

Finalysis UK Limited

England and Wales

100% held by Aquila Services Group plc

31 March

 





 

13      Investments

 

Fair Value Hierarchy

2023


2022



£'000


£'000

Unquoted equity investments

Level 3

71


71

 

The Group has a 5.3% equity shareholding in AssetCore Limited an unquoted company.  AssetCore's principal activity is a cloud-based platform used to manage loan security within the affordable housing sector.  As explained in Note 3, based on the information available at the reporting date the directors consider cost to be an appropriate estimate of fair value. 

Financial instruments measured at fair value subsequent to initial recognition are grouped into levels 1 to 3 based on the degree to which the fair value is observable, i.e.:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

14      Trade and other receivables


Group

 

Group


Company


Company


2023

 

2022


2023


2022


£'000

 

£'000


£'000


£'000









Trade receivables

2,715


2,240


-


-

Group undertakings

-


-


195


964

Other receivables

51


35


26


10

Prepayments

102


117


15


17

Contract assets

262


201


-


-


3,130


2,593


236


991

 

 

 

 

 

 

 

Total

<30 days

30-60 days

66-90 days

>90 days

 

£'000

£'000

£'000

£'000

£'000

31 March 2023

2,715

2,556

94

20

45

31 March 2022

2,240

2,182

14

23

21

 

No expected credit loss is recognised in the accounts. The Group does not expect any debts not to be paid. The directors have reviewed the provision for expected credit loss and have not identified any which need to be provided for.

15      Trade and other payables

 


Group

 

Group


Company


Company


2023

 

2022


2023


2022


£'000

 

£'000


£'000


£'000









Trade payables

532


510


33


11

Other payables

163


77


-


-

Amounts owed to Group undertakings

-


-


433


283

Taxes and social security costs

974


715


-


-

Accruals

357


246


228


146

Contract liabilities

473


369


-


-


2,499


1,917


694


440

 

Of the contract liability brought forward at the start of the year £369k (2022: £297k) was recognised in revenue in the year.

16      Lease liabilities

 

The Statement of Financial Position shows the following amounts relating to lease liabilities.

 



2023



£'000

At 31 March 2022


284

Lease payments


(97)

Interest expense


8

Closing amounts as at 31 March 2023


195

Current


69

Non-current


126

 

 

17      Share capital

 


2023


2022


£'000

 

£'000

Allotted, called up and fully paid

 

 


 39,961,955 (2022: 39,961,955) Ordinary shares of 5p each

1,998


1,998


 



The Company has one class Ordinary share which carries no right to fixed income.  Each share carries the right to one vote at general meetings of the Company.

A reconciliation of share capital, share premium account and merger reserve is set out below:


Number of Ordinary shares

Amount called up and fully paid

Share premium

Merger reserve

 

'000

£'000

£'000

£'000

At 31 March 2021

39,962

1,998

1,712

3,042

At 31 March 2022

39,962

1,998

1,712

3,042

At 31 March 2023

39,962

1,998

1,712

3,042

 



 

18      Reserves

The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their nominal value and is non-distributable.

The merger relief reserve arose on the Company's acquisition of Altair.  There is no legal share premium on the shares issued as consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition.  Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer.

19      Dividends

 

2023


2022

Amounts recognised as distributions to equity holders

 

£'000


£'000

Final dividend for the year ended 31 March 2022 of 0.4p per share (2021: 0.4p)

160


160

Interim dividend for the year ended 31 March 2023 of 0.25p per share (2022: 0.2p)

100


80


260


240

Proposed final dividend for the year ended 31 March 2023 of 0.5p per share (2022: 0.4p)

200


160

 

20      Share-based payment transactions

The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme.  The total charge in the year to 31 March 2023 arising from share-based payment transactions is £12k (2022: £8k).

 

Unapproved scheme

Number '000

Weighted average

exercise price

 



Number of options outstanding at 1 April 2022

171

£0.35

Lapsed during period

-


Exercised during period

-


Number of options outstanding as at 31 March 2023

171


Number of options exercisable as at 31 March 2023

171


 



 

The exercise price of the options outstanding at 31 March 2023 is 35p.  The weighted average remaining contractual life of the options outstanding at 31 March 2023 is 2 years (2022: 3 years).

EMI scheme

Number

'000

Weighted average exercise price




Number of options outstanding at 1 April 2022

1,474

£0.05

Granted during the period

931

£0.26

Lapsed during the period

(169)

£0.05

Cancelled during period

(40)

£0.26

 

Number of options outstanding as at 31 March 2023

2,196


 

Number of options exercisable as at 31 March 2023

1,305


 

The weighted average remaining contractual life of the options outstanding at 31 March 2023 is 5 years (2022: 3 years).

On 1 April 2022, the Company granted 930,770 options to certain employees and directors of the Group at an exercise price of 26p. The options are exercisable between 1 April 2025 and 31 March 2032. The weighted average fair value of the options at grant date was £0.0416. The fair value of the options was measured using the Black Scholes options valuation model. The inputs into that model in respect of the EMI share options were as follows:

Share price £0.26

Exercise price £0.26

Expected volatility 20.81%

Expected option life 10 years

Risk-free rate 1.3%

 

21      Related party disclosures

Balances and transactions between the Group and other related parties are disclosed below:

Dividends totalling £76k (2022: £70k) were paid in the year in respect of Ordinary Shares held by the Company's directors.

At 31 March 2023, the balance owed to Richard Wollenberg for services as a non-executive director was £8k (2022: £4k).

Amounts paid to Derek Joseph for consultancy services £17k (2022: £23k).

22      Control

In the opinion of the Directors there is no single ultimate controlling party.

23      Financial instruments

Financial risk management

The Group's activities are exposed to a variety of market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

Credit risk

Credit risk is the risk of financial loss to the Group resulting from counterparties failing to discharge their obligations to the Group.  The Group's principal financial assets are trade and other receivables and cash and cash equivalents.  The Group only deposits cash with banks that have an A rating. The Group holds cash in current and treasury reserve accounts.  The sums held in treasury reserve are on less than six-month terms, the Group has access to this cash should it be required at short notice.

The Group considers its credit risk to be low.  Of the total trade receivables at the 2023 year-end £729k (2022: £258k) is due from one customer.

There are no other customers that represent more than 10% of the total balance of trade receivables.  The maximum exposure to credit risk is equal to the carrying value of these instruments.

Liquidity risk

Liquidity risk is the risk of the Group being unable to meet its liabilities as they fall due.  The Group manages liquidity risk by maintaining enough cash reserves and holding banking facilities, and by continuously monitoring forecast and actual cash flows.  In addition, the Group is a cash generative business with income being received regularly over the course of the year.  The Group held cash balances of £2,405K (2022: £2,193k) at the year-end.

Trade payables are all less than 30days.

Foreign currency risk

Foreign exchange risk is the risk of loss due to adverse movements in the exchange rates affecting the Group's profits and cash flows.  Only a very small number of clients are invoiced in Euros and USD and the foreign exchange exposure is not considered a significant risk.  The Group's principal financial assets are cash and cash equivalents and trade and other receivables, which are almost exclusively denominated in Pounds Sterling.

Interest rate risk

The Group does not undertake any hedging activity in this area.  The main element in interest rate risk involves sterling deposits.

Capital risk management

Internal working capital requirements are low and are regularly monitored.

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide return for shareholders, benefits for other stakeholders and to maintain optimal capital structure and to reduce the cost of capital.

In order to ensure an appropriate return for shareholder capital invested in the Group, management thoroughly evaluates all material projects and potential acquisitions and has them approved by the Board of Directors where applicable.

The Group monitors capital on a short- and medium-term view.

24      Post Balance Sheet events

There are no post balance sheet events.

 

 

 

Notice of Annual General Meeting

 

Notice is hereby given that the Annual General Meeting (AGM) of Aquila Services Group plc will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 26 July 2023 at 12:00 midday, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 6 will be proposed as ordinary resolutions and resolutions 7 and 8 will be proposed as  special resolutions. Resolutions 6 to 8 are items of special business.

 

Ordinary business

 

1.   To receive the reports of the directors and auditor and the financial statements for the period ended 31 March 2023.

 

2.   To approve the remuneration report for the period ended 31 March 2023.

 

3.   To approve the revised remuneration policy applicable for the period commencing 01 April 2023 as set out in the annual report and financial statements.

 

4.   That, following a recommendation by the directors, a final dividend payment of 0.5p per Ordinary Share shall be paid to those persons who were named on the register of shareholders on 14 July 2023.

 

5.   That Crowe UK LLP be and is hereby reappointed as auditor of the Company and that the directors be authorised to determine the auditor's remuneration.

 

Special business

 

6.   That, in accordance with section 551 of the Companies Act 2006 ("CA 2006"), the directors be generally and unconditionally authorised to issue and allot equity securities (as defined by section 560 of the CA 2006) up to an aggregate nominal amount of:

 

6.1       £73,825 in connection with the valid exercise of the options (both approved and unapproved) granted by the Company (as set out in the prospectus issued by the Company dated 20 July 2015), any unapproved options granted to current or former officers of the Company and options granted to employees and officers of the Company and/or its subsidiaries in accordance with the terms of the Company's Employee Share Option Scheme ("Options"); and

 

6.2       in any other case, £666,033 (such amount to be reduced by the nominal amount of any equity securities allotted pursuant to the authorities in paragraph 6.1 above in excess of the stated amount) provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require relevant securities to be allotted and the directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.

 

This resolution revokes and replaces all unexercised authorities previously granted to the directors to allot relevant securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.

 

7.   That, subject to resolution 6 above being duly passed, the directors of the Company be and are hereby empowered, pursuant to section 570 of the CA 2006, to allot equity securities (as defined in section 560 of the CA 2006) wholly for cash pursuant to the authority conferred upon them by resolution 6 above (as varied, renewed or revoked from time to time by the Company at a general meeting) as if section 561(1) of the CA 2006 did not apply to any such allotment provided that such power shall be limited to the allotment of equity securities:

7.1       in connection with a rights issue or any other pre-emptive offer in favour of holders of equity securities where the equity securities offered to each such holder is proportionate (as nearly as may be) to the respective amounts of equity securities held by each such holder subject only to such exclusion or other arrangements as the directors may consider appropriate to deal with fractional entitlements or legal or practical difficulties under the laws of or the requirements of any recognised regulatory body in any territory or otherwise;

 

7.2       in connection with the valid exercise of Options;

 

7.3       in connection with the valid exercise of any share options granted to employees of the Group in accordance with the terms of the Employee Share Option Scheme; and

 

7.4       otherwise, up to a maximum nominal amount of £99,905.

 

The power granted by this resolution will expire on the conclusion of the Company's next annual general meeting (unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.

 

This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if section 561(1) of the CA 2006 did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities.

 

8.   That the Company be and is hereby authorised generally and unconditionally to make market purchases (within the meaning of section 693(4) of the CA 2006) of its ordinary shares ("Ordinary Shares") provided that:

 

8.1       the maximum aggregate number of Ordinary Shares that may be purchased is 3,996,196;

 

8.2       the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is £0.05;

 

8.3       the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of:

 

8.3.1    105 per cent of the average closing middle market quotations for the Ordinary Shares as quoted on the Official List of the London Stock Exchange for the five business days prior to the day the purchase is made; and

8.3.2    the value of an Ordinary Share calculated on the basis of the higher of the price quoted for:

8.3.3    the last independent trade of; and

8.3.4    the highest current independent bid for any number of Ordinary Shares on the Official List.

 

8.4       The authority conferred by this resolution shall expire on the conclusion of the Company's next annual general meeting save that the Company may, before the expiry of the authority granted by this resolution, enter into a contract to purchase Ordinary Shares which will or may be executed wholly or partly after the expiry of such authority.

 

Registered office:                                                                             By order of the board

Tempus Wharf                                                                                    Claire Banks

29a Bermondsey Wall West                                                               Company Secretary

London

SE16 4SA                                                                                           30 June 2023

 

Notes

 

1.          A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on his/her behalf at the meeting.  A proxy need not be a member of the company.

 

2.          You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share.  To appoint more than one proxy you may photocopy the form of proxy.  Please indicate the proxy holder's name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given.  All forms must be signed and should be returned together in the same envelope.

 

3.          A form of proxy accompanies this notice. Forms of proxy, to be valid, must be delivered to the company's registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD in accordance with the instructions printed thereon, not less than 48 hours before the time set for the holding of the meeting.

 

4.          If you are not a member of the company but you have been nominated under section 146 of the Companies Act 2006 (the 'Act') by a member of the company to enjoy information rights, you do not have the rights of members in relation to the appointment of proxies set out in notes 1, 2 and 3.  The rights described in those notes can only be exercised by members of the company.

 

5.          A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If you either select the "Withheld" option or if no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

 

6.          Information regarding the meeting, including the information required by section 311A of the Act, is available from www.aquilaservicesgroup.co.uk

 

7.          As provided by Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered in the register of members of the company 48 hours before the time set for the meeting shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time.  Changes to entries on the relevant register of securities after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.

 

8.          As at close of business on 29 June 2023 the company's issued share capital comprised 39,961,955 ordinary shares of 5 pence each. Each ordinary share carries the right to one vote at a general meeting of the company and, therefore, the total number of voting rights in the company at close of business on 29 June 2023 is 39,961,955.

 

9.          Under section 319A of the Act, the company must answer any question you ask relating to the business being dealt with at the meeting unless (a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the company or the good order of the meeting that the question be answered.

 

10.        If you are a person who has been nominated under section 146 of the Act to enjoy information rights (a 'Nominated Person'), you may have a right under an agreement between you and the member of the company who has nominated you to have information rights (a 'Relevant Member') to be appointed or to have someone else appointed as a proxy for the meeting.  If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights.  Your main point of contact in terms of your investment in the company remains the Relevant Member (or, perhaps, your custodian or broker) and you should continue to contact them (and not the company) regarding any changes or queries relating to your personal details and your interest in the company (including any administrative matters).  The only exception to this is where the company expressly requests a response from you.

 

11.        Members satisfying the thresholds in section 338 of the Act may require the company to give, to members of the company entitled to receive notice of the Annual General Meeting, notice of a resolution which those members intend to move (and which may properly be moved) at the Annual General Meeting.  A resolution may properly be moved at the Annual General Meeting unless (i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the company's constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious.  A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting.

 

12.        Members satisfying the thresholds in section 338A of the Act may request the company to include in the business to be dealt with at the Annual General Meeting any matter (other than a proposed resolution) which may properly be included in the business at the Annual General Meeting.  A matter may properly be included in the business at the Annual General Meeting unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious.  A request made pursuant to this right may be in hard copy or electronic form, must identify the matter to be included in the business, must be accompanied by a statement setting out the grounds for the request, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting.

 

13.        Members satisfying the thresholds in section 527 of the Act can require the company to publish a statement on its website setting out any matter relating to (i) the audit of the company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an auditor of the company ceasing to hold office since the last Annual General Meeting, which the members propose to raise at the meeting.  The company cannot require the members requesting the publication to pay their expenses.  Any statement placed on the website must also be sent to the company's auditor no later than the time it makes its statement available on the website.  The business which may be dealt with at the Annual General Meeting includes any statement that the company has been required to publish on its website pursuant to this right.

 

14.        Copies of the directors' service contracts will be available for inspection at the registered office of the company during usual business hours from the date of this notice until the date of the Annual General Meeting, and also during and at least fifteen minutes before the beginning of the Annual General Meeting.

 

 

 

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