TIDMAQSG
RNS Number : 9197R
Aquila Services Group PLC
03 July 2020
For immediate release 3 July 2020
Aquila Services Group plc
("Aquila", the "Company" or the "Group")
Annual report and financial statements
for the year ended 31 March 2020
Notice of AGM
Annual report
Aquila is pleased to announce its audited annual report and
financial statements for the year ended 31 March 2020, extracts
from which are set out below.
The Company's annual report and financial statements for the
year ended 31 March 2020 are being posted to
shareholders today and 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
http://www.morningstar.co.uk/uk/NSM .
Financial Highlights
The comparison between this reporting period, the mid-year
results and the previous year's results for the Group is as
follows:
Year ended 6 months to Year ended
31 March 2020 30 Sept 2019 31 March 2019
(audited) (unaudited) (audited)
GBP000s GBP000s GBP000s
Turnover 7,963 3,891 7,655
Gross profit 1,752 980 1,867
Underlying operating profit 468 306 724
Share option charge (105) (52) (117)
Restructuring costs relating (186) - -
to COVID-19
Acquisition costs (51) - -
Share of profits from associate 51 - -
Statutory profit after tax 126 195 466
EPS 0.35p 0.55p 1.32p
Cash balances 828 1,127 1,719
Dividend
Due to the current economic climate and the requirement for the
Group to maintain and retain cash reserves within the business, the
directors do not propose a final dividend for the year end. The
total dividend for the year was 0.30p (paid as an interim dividend
in December) compared to a final dividend of 0.89p in 2019.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014. 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
Tel: 020 7628 3396
Notice of Annual General Meeting ("AGM")
The Company's AGM will be held at Tempus Wharf 29A, Bermondsey
Wall West, London, SE16 4SA on 29 July 2020 at 3:00 pm
Please note that arrangements for the Annual General Meeting
this year are different from those of previous years. Restrictions
on personal movement and social distancing measures implemented by
the UK Government in response to the COVID-19 pandemic means that
special measures will be adopted for the Annual General Meeting
(AGM) to protect the health and safety of Shareholders and others
in attendance at the AGM. It is currently envisaged that the AGM
will be run as a closed meeting with the minimum number of
shareholders present (or via video conferencing in accordance with
the Company's articles of association) to ensure that the meeting
is quorate and conducted without a presentation or a question and
answer session. The Board requests that no Shareholders attend the
meeting in person and any Shareholders that do attend (other than
to form a quorum) will be refused entry. Accordingly, Shareholders
are encouraged to vote on the resolutions by proxy and the votes on
each resolution will be taken on a poll. You can vote by completing
and returning the proxy form which accompanies the Report and
Accounts.
The Board will continue to keep Government guidance under review
and may, if necessary, make further changes to the arrangements for
the AGM. Further announcements and information will be provided as
required and Shareholders should continue to monitor the Company's
website at https://aquilaservicesgroup.co.uk/ for any up-dates.
The financial information set out below does not constitute the
Company's statutory accounts for the period ending 31 March 2020.
The financial information for 2019 is derived from the statutory
accounts for that year. The auditors, Crowe U.K. LLP, have reported
on the 2020 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.
Chair's Statement
Dear Shareholder,
I am pleased to present the Annual Report and the Financial
Statements for the year to 31 March 2020.
The report has been redesigned to provide a more accessible
overview of the Group businesses, activities and outcomes for the
year so I am taking this opportunity to give an insight into our
trading and decisions for the past year, and our thoughts and plans
for the future.
'May you live in interesting times' is an old Chinese greeting
although some might say a curse. The implication was not avoiding
boredom but that the road ahead would be dangerous and you would
need all your skill and endeavour to successfully complete your
journey. How apt this greeting would have been at the start of the
year. So much has happened. I am pleased to report we are now
recognising the successes and overcoming the difficulties so that
we look forward with confidence.
A key element of the Group's business objectives was to widen
the range of professional services we offer our clients. This
expansion would benefit the business by diversifying our income
streams both by sectors and geographically.
The acquisition of Oaks which completed in June 2019 widened our
consultancy client base in the education, sports and charity
sectors as well as providing opportunities with existing clients
who provide community services. Oaks also has an established and
growing international portfolio. Bringing Finalysis into the Group
as part of our treasury subsidiary ATFS earlier this year adds the
education sector to our treasury client base as well as a wider
range of financial support services.
We have been diversifying our business activities within Altair,
updating and expanding our transformation offering, growing and
strengthening our technical teams to support clients with their
compliance and cladding issues, particularly through Altair
governance and leadership teams. The continuing expansion of Altair
International and teams developing new products will provide
increasing revenues in future years.
We are successfully continuing to develop our high level and
short-term placement model mainly through the Group's property
division and future plans include rollout to other divisions and
specialist teams. As mentioned in previous reports, the interim
executive business remains under pressure from a variety of
sources: clients utilising internal resources or their own
networks, the implementation of IR35 and competition from
internet-based platforms.
Early in the financial year the Group Board conducted a
governance review streamlined some of our decision making and
enabling opportunities for our up and coming ambitious team
members. Subsidiary boards will now only have operational members
and all Group integration and co-ordination will be routed through
these boards. This process completed towards the end of the year is
working well in difficult circumstances and is expected to be cost
beneficial for the future.
The success of our business strategy was starting to be
recognised at the September 2019 interim stage with increased
turnover and higher profit, both at the gross and operating level
and enhanced cash balances all compared to the same point in the
previous year. With Oaks an Finalysis beginning their integration
into the Group and some of the wider political uncertainties such
as Brexit and the General Election now less important, we looked
forward to sustainable growth and reporting improved outcomes for
the year.
By the middle of February 2020 there were increasing concerns
about the spread of the COVID-19 virus and we were thinking about
the implications this could have on our operations. Like most other
businesses, it was difficult to assess the impact this might have
in the UK and on our clients. Within two weeks we moved from a
watching brief to an action plan. The investment we had made in IT
meant that the move to home working was swift and seamless.
Consultants normally based at the offices of clients were able to
continue working from home. The Board agreed that it must reshape
the business to focus on client delivery and put on hold our
expansion programme. Resources would not be available for our
strategic plans such as acquisitions and mergers. As a consequence,
the role of our Group CEO Steve Douglas CBE became redundant.
Much depended on the decisions of our clients wanting to
continue with existing contracts or defer. For many of our clients
their priorities would dramatically change as many needed to put
first their own vulnerable residents and service users. This was
all done with a high level of co-operation and understanding and
reflects the quality of the relationships between our staff and
clients.
By the end of March 2020, we had issued or were part-way through
a redundancy process for a small number of staff and also took
advantage of the government scheme to furlough some staff to
protect their employment. All the above was carried out with as
much transparency and staff involvement as possible.
Inevitably working through this action plan reduced turnover in
what is usually one of the busiest periods of the year. We reviewed
the values of our work in progress and contract pipeline,
particularly in terms of delay and extra costs that lockdown
arrangements could generate. Our actions had cost implications in
addition to redundancy costs, the latter are identified separately
in the results.
Without the COVID-19 emergency we are confident that reported
profits for the year would have been similar or better than the
previous year reflecting the progress reported at the interim
stage. The gross profit for the twelve months ended 31 March 2020
was GBP1,752k compared to GBP1,867k for the twelve months ended 31
March 2019.
Including redundancy costs of GBP186k (2019 GBPNil), the legal
costs of acquisitions GBP51k (2019 GBPnil) and the costs attributed
to the existing share options GBP105k (2019 GBP117k) underlying
operating profit of the business was GBP468k (Sept 2019 GBP306k,
Mar 2019 GBP724k). The shortfall is an indicator of the cost to the
business from the crisis. Statutory profit after tax for the year
was GBP126k (Sept 2019 GBP195k, Mar 2019 GBP466k). For the first
time we are pleased to report there has been a contribution from
our share of associates profit of GBP51k (2019: Nil).
Our most pressing concern was not the continuation of existing
contracts but whether clients, hard pressed to manage their
existing workload and with new responsibilities to support their
own vulnerable clients, could allocate resources to procure future
strategic and technical support. We did not know whether new
property developments, looking at new ways of working, training and
efficiency initiatives would be put on hold and for an uncertain
timescale. To plan for this uncertainty, we formulated a range of
budgets and cash flows with resulting action plans. I am pleased to
report that for the first two months of this year trading has been
satisfactory and with some new opportunities coming forward,
although not at the level of pre COVID-19, we are likely to be able
to sustain trading at a profitable level.
From the early days of the crisis it was obvious that one of the
most critical measures was to maximise the Group cash balances.
Consequently additional resources and monitoring were inputted into
both billing and debt collection as well as reducing non-essential
operating costs as much as possible. This included not declaring a
final dividend for the year. I am pleased to say that as at the
time of writing our cash balances are higher than at the year end,
even after deducting the benefit of the deferral of VAT payments.
We are also examining options to increase cash availability to have
the capacity to expand if competitors cannot deliver or there are
relevant opportunities created by government actions to boost
economic activity.
I must make special mention of Steve Douglas CBE, our CEO. We
will miss his knowledge and experience of the affordable housing
sector and his commitment to the diversity agenda. We wish him well
for the future.
Following Steve's departure and discussions at Group Board it
was agreed that I should become the Executive Chair for an interim
period. We will review our longer-term requirements when the future
level of business activities is more predictable.
There are so many people I personally and on behalf of the Group
Board should mention that deserve our thanks and appreciation. I
need to express my gratitude to my fellow board members Claire,
Fiona and Richard. It would be invidious to pick out other
individuals because every staff member, associate, people we work
with at clients, regulators and government have given over and
above what should be expected and with good humor and
understanding.
We do not know if the crisis is over yet though the current
easing of lockdown is promising and hope the future is less
'interesting'. Today we are looking forward with confidence to
restarting our growth agenda and again generating increasing
returns for shareholders. I look forward to reporting on progress
at the interim.
Derek Joseph - Chair
2 July 2020
Consolidated statement of comprehensive income
For the year ended 31 March 2020
Notes 2020 2019
GBP'000s GBP'000s
Revenue 4 7,963 7,655
Cost of sales 5 (6,211) (5,788)
--------- ---------
Gross profit 1,752 1,867
Administrative expenses 5 (1,626) (1,260)
Operating profit 126 607
Finance income 4 1 2
Release of contingent consideration 10 555 -
Impairment of goodwill 10 (555) -
Share of profits from associate 13 51 -
Profit before taxation 6 178 609
Income tax expense 8 (52) (143)
--------- ---------
Profit for the year 126 466
Other comprehensive income - -
--------- ---------
Total comprehensive income for
the year 126 466
========= =========
Earnings per share attributable
to owners of the parent
Basic 9 0.35p 1.32p
Diluted 9 0.32p 1.15p
The income statement has been prepared on the basis that all
operations are continuing operations.
Consolidated statement of financial position
As at 31 March 2020
Group Group
2020 2019
Notes GBP'000s GBP'000s
Non-current assets
Goodwill 10 3,317 2,028
Property, plant and equipment 11 518 72
Investment in associates 13 278 227
Investments 14 121 121
---------
4,234 2,448
Current assets
Trade and other receivables 15 2,387 2,193
Cash and bank balances 828 1,719
---------
3,215 3,912
--------- ---------
Current liabilities
Trade and other payables 16 1,683 1,595
Lease liabilities 16 79 -
Corporation tax 76 162
---------
1,838 1,757
--------- ---------
Net current assets 1,377 2,155
--------- ---------
Non-current lease liabilities 17 369 -
Net assets 5,242 4,603
========= =========
Equity
Share capital 18 1,897 1,765
Share premium account 18 1,475 1,487
Merger reserve 18 3,042 2,413
Share-based payment reserve 21 769 668
Retained (losses)/earnings (1,941) (1,730)
--------- ---------
Equity attributable to the
owners of the parent 5,242 4,603
========= =========
The financial statements were approved by the board on 2 July
2020.
Claire Banks - Group Finance Director
Company statement of financial position
As at 31 March 2020
Company Company
2020 2019
Notes GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 11 16 37
Investment in subsidiaries 12 4,212 2,818
Investment in associates 13 227 227
Investments 14 121 121
---------
4,576 3,203
Current assets
Trade and other receivables 15 708 1,084
Cash and bank balances 13 334
---------
721 1,418
--------- ---------
Current liabilities
Trade and other payables 16 635 672
635 672
--------- ---------
Net current (liabilities)/assets 86 746
Net assets 4,662 3,949
========= =========
Equity
Share capital 18 1,897 1,765
Share premium account 18 2,104 1,487
Share-based payment reserve 21 769 668
Retained (losses)/earnings (108) 29
--------- ---------
Equity attributable to the
owners of the parent 4,662 3,949
========= =========
As permitted by S408 Companies Act 2006, the company has not
presented its own profit and loss account and related notes. The
company's profit for the year was GBP200k (2019: GBP165k).
The financial statements were approved by the board on 2 July
2020.
Claire Banks - Group Finance Director
Company Registration No. 08988813
Consolidated statement of changes in equity
For the year ended 31 March 2020
Share Share based
Share premium Merger payment Retained Total
capital account reserve reserve losses equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balance at 1
April 2018 1,763 1,487 2,413 558 (1,907) 4,314
Issue of shares 2 - - - - 2
Transfer on
exercise of
options - - - (7) 7 -
Total comprehensive
income - - - - 466 466
Share based
payment charge - - - 117 - 117
Dividend - - - (296) (296)
Balance at 31
March 2019 1,765 1,487 2,413 668 (1,730) 4,603
========= ========= ========= ============ ========= =========
Balance at 1
April 2019 1,765 1,487 2,413 668 (1,730) 4,603
Issue of shares 132 (12) 629 - - 749
Transfer on
exercise of
options - - - (4) 4 -
Total comprehensive
income - - - - 126 126
Share based
payment charge - - - 105 - 105
Dividend - - - - (341) (341)
--------- --------- --------- ------------ --------- ---------
Balance at 31
March 2020 1,897 1,475 3,042 769 (1,941) 5,242
========= ========= ========= ============ ========= =========
Company statement of changes in equity
For the year ended 31 March 2020
Share Share based
Share premium payment Retained Total
capital account reserve earnings equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balance at 1
April 2018 1,763 1,487 558 153 3,961
Issue of shares 2 - - - 2
Total comprehensive
income - - - 165 165
Transfer on exercise
of options - - (7) 7 -
Share based payment
charge - - 117 - 117
Dividend - - - (296) (296)
Balance at 31
March 2019 1,765 1,487 668 29 3,949
========= ========= ============ ========= =========
Balance at 1
April 2019 1,765 1,487 668 29 3,949
Issue of shares 132 617 - - 749
Total comprehensive
income - - - 200 200
Transfer on exercise
of options - - (4) 4 -
Share based payment
charge - - 105 - 105
Dividend - - - (341) (341)
--------- --------- ------------ --------- ---------
Balance at 31
March 2020 1,897 2,104 769 (108) 4,662
========= ========= ============ ========= =========
Consolidated statement of cash flow
For the year ended 31 March 2020
2020 2019
GBP'000s GBP'000s
Cash flows from operating activities
Profit for the year 126 466
Interest received (1) (2)
Income tax expense 52 143
Share based payment charge 105 117
Profit from associate (51) -
Release of contingent consideration (555) -
Impairment of goodwill 555 -
Depreciation 134 52
--------- ---------
Operating cash flows before movement in working
capital 365 776
Decrease/(Increase) in trade and other receivables 122 (84)
(Decrease)/Increase in trade and other payables (257) 566
--------- ---------
Cash generated by operations 230 1,258
Income taxes paid (139) (123)
--------- ---------
Net cash inflow from operating activities 91 1,135
--------- ---------
Cash flows from investing activities
Interest received 1 2
Purchase of property, plant and equipment (32) (28)
Purchase of subsidiary (544) -
Acquisition of investment in an associate - (66)
--------- ---------
Net cash outflow from investing activities (575) (92)
--------- ---------
Cash flows from financing activities
Lease liability payments (66) -
Proceeds of share issue - 2
Dividends paid (341) (296)
--------- ---------
Net cash outflow from financing activities (407) (294)
Net (decrease)/increase in cash and cash equivalents (891) 749
Cash and cash equivalents at beginning of
the year 1,719 970
--------- ---------
Cash and cash equivalents at end of the year 828 1,719
========= =========
Other than the inclusion of lease liabilities on adoption of
IFRS 16 all changes in liabilities arising from financing arose
from cash flows.
Notes to the consolidated statement of cashflows
Net assets acquired on acquisitions Oaks Finalysis Total
GBP'000 GBP'000 GBP'000
Tangible non-current assets 34 - 34
Trade and other receivables 315 71 386
Cash at bank - 5 5
Trade and other payables (348) (27) (375)
Goodwill 1,161 130 1,291
-------- ---------- --------
1,162 179 1,341
======== ========== ========
Satisfied by
Shares allotted 730 30 760
Cash 432 149 581
1,162 179 1,341
======== ========== ========
Company statement of cash flow
For the year ended 31 March 2020
2020 2019
GBP'000s GBP'000s
Cash flows from operating activities
Profit for the year 200 165
Dividends received (461) (381)
Interest received (1) (1)
Income tax expense - -
Depreciation 21 21
Operating cash flows before movement in working
capital (241) (196)
Decrease in trade and other receivables 379 43
(Increase)/Decrease in trade and other payables (37) 122
Cash (outflow)/generated by operations 101 (31)
Income taxes paid - -
--------- ---------
Net cash inflow/(outflow) from operating activities 101 (31)
--------- ---------
Cash flows from investing activities
Interest received 1 1
Dividends received 461 381
Purchase of property, plant and equipment - -
Acquisition of subsidiaries (544) -
Acquisition of investment in an associate - (65)
Acquisition of investment - -
Net cash (outflow)/inflow from investing activities (82) 317
--------- ---------
Cash flows from financing activities
Proceeds of share issue - 2
Dividends paid (341) (296)
Net cash outflow from financing activities (341) (294)
Net decrease in cash and cash equivalents (322) (8)
Cash and cash equivalents at beginning of
the year 335 343
Cash and cash equivalents at end of the year 13 335
========= =========
Noted to the financial statements For the year ended 31 March
2020
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 Reporting Standards as adopted by the European Union
(IFRSs), issued by the International Accounting Standards Board
(IASB), including interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC), and the
Companies Act 2006 applicable to companies reporting under
IFRS.
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
As a result of the COVID-19 pandemic management have produced
forecasts that have been adapted to reflect plausible scenarios on
revenue and costs over the short term and into a transition period.
These have further been stress tested to ensure their
viability.
All non-essential spend was suspended and all travel and
subsistence spend suspended due to lockdown measure being in
place.
The Group made six redundancies between March and June and
placed seven members of staff on furlough, one of whom has since
returned to work.
All employees continue to work from home and are able to service
both the needs of clients and the organisation.
The Group took advantage of the VAT payment deferral plan and
have built into the cashflow forecast the payment in March
2021.
The Company has not sought assistance through the CBILS scheme
at the current time, but it remains an option that the directors
will keep under review. The directors have considered the
possibility of bank loans and have opted not to take out debt
financing but have considered equity financing and the placement of
shares should cash be required.
The Group is in a strong cash position post balance sheet.
The Board continues to review the current position on a
fortnightly basis. The subsidiary CEOs and the Group Finance
Director monitor weekly to ensure forecasts are sustainable and
cash reserves are maintained.
All the actions taken and the forecasts that have been produced
and reviewed demonstrate that the Group is forecast to generate
profits and cash in the year ended 31 March 2021 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 interim management
-- 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 .
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 accrued income
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:
Short leasehold property Over unexpired term of lease
Equipment 3-5 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.
Investment in associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is
not control over those policies.
The results and assets and liabilities of associates are
incorporated in these financial statements using the equity method
of accounting. Under the equity method, an investment in an
associate is initially recognised in the consolidated statement of
financial position at cost and adjusted thereafter to recognise the
Group's share of profit or loss and other comprehensive income of
the associate.
An investment in an associate is accounted for using the equity
method from the date on which the investee becomes an associate. On
acquisition of the investment in an associate, any excess of cost
over the Group's share of the net fair value of the identifiable
assets and liabilities of the investee is recognised as goodwill,
which is included in the carrying amount of the investment.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet 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 and non-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 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
The Group has revised its accounting policy for leases where the
Group is the lessee following the adoption of IFRS 16 on 1 April
2019.
The Group enters into lease agreements for the use of buildings.
Lease terms are negotiated on an individual basis and contain a
range of different terms and conditions. The lease agreements do
not impose any covenants other than the security interests in the
leased assets that are held by the lessor. Leased assets may not be
used as security for borrowing purposes.
Until March 2019 leases of property were classified as operating
leases. From 1 April 2019, following the adoption of IFRS 16,
leases are recognised as a right-of-use asset (ROU) and a
corresponding lease liability for future lease payments at the date
at which the leased asset is available for use by the Group.
Depreciation of the right-of-use asset will be recognised in the
income statement on a straight-line basis, with interest recognised
on the lease liability.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments, less any lease incentives receivable;
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable by the Group under residual value guarantees;
-- the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options would also be included in the measurement of the
liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of use asset in a
similar economic environment with similar terms, security and
conditions.
Lease payments are allocated between principal and interest
cost. The finance cost is charged to the income statement over the
lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
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.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. An asset's carrying amount is written down immediately to
its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount.
The modified retrospective method has been applied the impact on
adoption was a recognition of a right of use asset of GBP514k with
a matching lease liability. There are no adjustments to opening
retained earnings as there were no lease liabilities in force at
the end of the prior year.
The Group does not have any short-term leases of equipment or
vehicles.
Accounting policy applied prior to 1 April 2019
Under IAS 17 (prior to transition to IFRS 16), rental payments
under operating leases were charged to the income statement on a
straight-line basis over the lease term.
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 balance sheet
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. The inputs into that model are the
share price at the date of the grant, the exercise price, the
expected life of the option, the risk-free rate based on the yield
of a 10-year government bond and the expected share price
volatility based on the Company's share price since 20 August
2015.
Adoption of new and revised standards
The following pronouncements have been adopted in the year:
-- IFRS 16 Leases.
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).
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,
following the vesting period, 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 and
assumptions regarding employee fluctuation 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 21).
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet 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 balance sheet 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 11% and a terminal value of 1.4% has been used.
Growth rates of 0-15% have been applied, these are based on
industry rates, managements' knowledge of the business and the
markets and the ability for the business to expand. The maximum
period over which the cashflows are reviewed is 5 years.
Sensitivities have been applied to all assumptions. In the light
of COVID-19 the cashflows have been further tested to ensure the
assumptions are viable.
Intangible assets
On acquisition the following items are reviewed to assess if
there is any value in acquiring the intangibles separately.
-- Trademarks or trade names
-- Technology based intangibles, including any IT systems
-- Artistic-related intangibles
-- Intellectual property
-- Customer-related intangibles
-- Employment contracts
On acquisition of the two entities during the year there were no
assets identifiable as being separable from the entity that could
be sold, transferred, licensed, rented or exchanged, either
individually or together with a related contract, identifiable
asset or liability. There were also no assets arising from
contractual or other legal rights.
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 reviewed all information available at 31 March 2020
taking into account all additional information relating to market
participant assumptions that is reasonably available and concluded
that there is insufficient information available and a wide range
of possible fair value measurements and as such cost is considered
to be an appropriate estimate of fair value.
4 Revenue and Finance income
An analysis of the Group's revenue is as
follows:
2020 2019
GBP'000s GBP'000s
Continuing operations - rendering of services
Specialist housing consultancy income 6,729 7,087
Treasury management consultancy income 528 568
Specialist sports and education consultancy 706 -
--------- ---------
7,963 7,655
========= =========
Finance income is comprised of:
Interest revenue on bank deposits 1 2
7,964 7,657
========= =========
5 Operating segments
The Group has three reportable segments being; consultancy,
interim management 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.
Interim Management - individuals are embedded within housing
organisations (normally housing associations, local authorities and
ALMOs) in a substantive role, normally for a specified period.
Interim management provides the Group with a more extended forward
sales pipeline as the average contract is for six months. This
section of the business provides low risk as the interim
consultants are placed on rolling contractual basis and provides
minimal financial commitment as associates to the business, rather
than employees, are used for these roles.
Treasury Management - a range of services providing treasury
advice and fund-raising services to non-profit making organisations
working in the affordable housing and education sectors. 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 chief executive for the purpose of resource
allocation and assessment of segment performance.
2020 2019
GBP'000s GBP'000s
Revenue from Consultancy 6,640 5,867
Revenue from Interim management 795 1,220
Revenue from Treasury management 528 568
7,963 7,655
Cost of sales from Consultancy 5,315 4,381
Cost of sales from Interim management 574 1,010
Cost of sales from Treasury management 322 397
--------- ---------
6,211 5,788
Gross profit from Consultancy 1,325 1,486
Gross profit from Interim management 221 210
Gross profit from Treasury management 206 171
--------- ---------
1,752 1,867
Administrative expenses (1,626) (1,260)
Operating profit 126 607
========= =========
Within consultancy revenues, approximately 7% (2019: 6%) has
arisen from the segment's largest customer; within interim
management 24% (2019: 12%); within treasury management 26% (2019:
34%).
Geographical information
Revenues from external customers, based on location of the
customer, are shown below:
2020 2019
GBP'000s GBP'000s
UK 7,368 7,179
Europe 279 305
Rest of World 316 171
--------- ---------
7,963 7,655
========= =========
6 Profit before taxation
2020 2019
GBP'000s GBP'000s
Profit before taxation is arrived at after
charging:
Auditors' remuneration (see below) 42 38
Depreciation of property, plant and equipment 63 52
Depreciation of leasehold property 71 -
Staff costs (see note 7) 5,351 4,270
Significant reorganisation costs * 186 -
Acquisition related costs ** 51 -
Operating lease costs - land and buildings - 42
========= =========
* Significant restructuring costs include staff related costs of
GBP186k (2019: Nil) arising from the redundancy costs relating to
COVID-19 are provided for
** Refer to note 10 for the breakdown of acquisition-related
costs
Breakdown of auditors' remuneration
2020 2019
GBP'000s GBP'000s
Auditors' remuneration
Fees payable to the Company's auditors
for the audit of the parent Company 23 19
Fees payable to the Company's auditors
for the audit of the Company's subsidiaries 19 19
--------- ---------
Total 42 38
========= =========
7 Staff costs
2020 2019
The average monthly number of employees
(including directors) employed by the
Group was: 74 52
2020 2019
GBP'000s GBP'000s
Aggregate remuneration (including directors)
Wages and salaries 4,542 3,605
Share-based payments 105 117
Pension contributions 215 161
Social security costs 489 387
--------- ---------
5,351 4,270
========= =========
2020 2019
GBP'000s GBP'000s
Company staff costs
Wages and salaries 10 10
========= =========
2020 2019
GBP'000s GBP'000s
Directors' remuneration
Salary (including taxable benefits) 396 390
Share-based payments 20 43
Pension contributions 22 17
----------- -----------
438 450
=========== ===========
Three 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:
Salary (including taxable benefits) 146 162
Share-based payments 8 15
Pension contributions 9 8
----------- -----------
163 185
=========== ===========
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.
2020 2019
GBP'000s GBP'000s
Short-term employee benefits 664 655
Share-based payments 29 64
Post-retirement benefits 22 22
------------ ------------
715 741
============ ============
8 Taxation
2020 2019
GBP'000s GBP'000s
Corporation tax:
Current year 52 143
========== =========
The tax charge for the year can be reconciled to the profit
in the income statement as follows:
2020 2019
GBP'000s GBP'000s
Profit before taxation 178 609
Tax at the UK corporation tax rate of
19% (2019: 19%) 34 116
Post tax income from associate (9)
Expenses not deductible 27 27
Tax expense for the year 52 143
========== =========
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 21.
2020 2019
GBP'000s GBP'000s
Profit after tax attributable to owners
of the parent 75 466
Weighted average number of shares
* Basic 36,285 35,272
* Diluted 41,665 40,353
Basic earnings per share 0.35p 1.32p
Diluted earnings per share 0.32p 1.15p
10 Goodwill
Group Goodwill
GBP'000s
Cost
At 1 April 2018 and 31 March 2019 2,028
Additions 1,844
At 31 March 2020 3,872
---------
Accumulated impairment losses
At 1 April 2018 and 31 March 2019 -
Impairment losses for the year (555)
---------
At 31 March 2020 -
---------
Net book value
At 1 April 2018 and 31 March 2019 2,028
=========
At 31 March 2020 3,317
=========
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units that are expected to
benefit from that business combination.
On 11 June 2019, the Group acquired 100% of the share capital of
Oaks Consultancy Ltd, a company incorporated in the UK. The
principal activity of Oaks is that of consultancy within the sports
and education sector. Oaks' business services complement those of
existing subsidiaries within the Group and provides strong
opportunities for collaboration.
The transaction has been accounted for by the acquisition method
of accounting. This comprises an initial consideration of GBP1,714k
being GBP441k in cash, GBP718k in ordinary shares and deferred
contingent consideration of GBP555k. The deferred consideration is
contingent upon specific targets on the annual recurring revenue
(ARR) growth of the business up to March 2021. The directors have
reviewed the business performance of Oaks including the future
budgets and cashflows up to March 2021 and have concluded that the
ARR is unlikely to be achieved and have therefore released the
contingent liability. The directors have also impaired the
investment by the amount equivalent to the contingent
consideration. Further impairment reviews have taken place and no
further impairment is required on the remaining goodwill. The costs
of acquisition totalling GBP35k have been included within the
profit and loss account of the Group. The total amount of goodwill
in the Statement of Financial Position is shown as GBP1,159k.
The net assets of Oaks totalling GBP1k were acquired for
cash.
On 31 January 2020, the Group acquired 100% of the share capital
of Finalysis (UK) Limited a consultancy business providing treasury
and banking services.
The transaction has been accounted for by the acquisition method
of accounting at a fair value of consideration of GBP130k being
GBP100k in cash and GBP30k in ordinary shares. The costs of
acquisition of GBP16k have been included within the profit and loss
account of the Group. The total goodwill is calculated at
GBP130k.
The net assets of Finalysis totalling GBP49k were acquired for
cash. The trade and assets of Finalysis were hived into ATFS.
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. Management have projected cash flows
over a period of 5 years, based on growth rates of between 0% and
15% per annum, this is based on past performance and expected
future activity, also taking into account a slower growth rate due
to COVID-19. A discount rate of 11% and a terminal value of 1.4%
has been used. Sensitivities have then been applied to the model to
stress test the assumptions. As a result of the review an
impairment on Oaks has occurred and GBP555k has been written off in
the financial year under review.
The following amounts have been recognised within the
consolidated statement of comprehensive income for the reporting
period:
Oaks Finalysis
GBP'000s GBP'000s
Revenue 706 89
Profit before tax (21) 37
If the acquisitions had taken place at the start of the
financial year, the group revenue would have been GBP8,381k and the
profit before tax GBP279k
11 Property, plant and equipment
The Group has revised its accounting policy for leases where the
Group is the lessee following the adoption of IFRS 16. The
Statement of Financial Position shows the following amounts
relating to the right of use assets in property.
Group Property Fixtures Computer Total
and fittings equipment
GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 1 April 2018 34 110 144
Additions - 28 28
--------- -------------- ----------- ---------
At 31 March 2019 - 34 138 172
Additions 541 11 28 580
--------- -------------- ----------- ---------
At 31 March 2020 541 45 166 752
--------- -------------- ----------- ---------
At 1 April 2018 13 36 49
Charge for the year 11 40 51
--------- -------------- ----------- ---------
At 31 March 2019 24 76 100
Charge for the year 71 14 49 134
--------- -------------- ----------- ---------
At 31 March 2020 71 38 125 234
--------- -------------- ----------- ---------
Net book value
At 1 April 2018 21 74 95
========= ============== =========== =========
At 31 March 2019 10 62 72
========= ============== =========== =========
At 31 March 2020 470 7 41 518
========= ============== =========== =========
Computer
Company equipment
GBP'000s
Cost
At 1 April 2018 64
Additions -
-----------
At 31 March 2019 64
Additions -
-----------
At 31 March 2020 64
-----------
Accumulated depreciation
At 1 April 2018 5
Charge for the year 22
-----------
At 31 March 2019 27
Charge for the year 21
-----------
At 31 March 2020 48
-----------
Net book value
At 1 April 2018 59
===========
At 31 March 2019 37
===========
At 31 March 2020 16
===========
12 Investment in subsidiaries
Company Investments
in subsidiaries
GBP'000s
Cost
At 1 April 2018 2,701
Additions 117
-----------------
At 31 March 2019 2,818
Additions 1,949
-----------------
At 31 March 2020 4,767
-----------------
Accumulated impairment losses
At 1 April 2018 and 31 March 2019 -
Impairment losses for the year 555
-----------------
At 31 March 2020 555
-----------------
Net book value
At 1 April 2018 2,701
=================
At 31 March 2019 2,818
=================
At 31 March 2020 4,212
=================
The addition of GBP1,949k represents the acquisition of Oaks
of GBP1,714k (including deferred consideration of GBP555k) the
acquisition of Finalysis of GBP130k and GBP105k representing
capital contributions made to the Company's subsidiaries in
respect of the share option expense recognised in those subsidiaries
on share options issued by the Company.
Details of the Company's subsidiaries at 31 March 2020 are as
follows:
Proportion of
ownership and
Place of incorporation voting rights
and operation Principal activity held
Altair Consultancy
and Advisory Services England and Specialist housing
Limited Wales consultancy 100%
Aquila Treasury and
Finance Solutions England and Treasury management
Limited Wales consultancy 100%
Specialist sports
England and and education
Oaks Consultancy Limited Wales consultancy 100%
The accounting reference date of each of the subsidiaries is
co-terminus with that of the Company. The registered office of each
subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16
4SA.
13 Investment in Associates
Details of the Group's material associates at 31 March 2020
are as follows:
Proportion of
ownership and
Place of incorporation voting rights
and operation Principal activity held
England and
3C Consultants Limited Wales IT consultancy 25%
The principal activity of the associate is seen as complementing
the Group's operations and contributing to achieving the Group's
overall strategy.
The above associate is accounted for using the equity method in
these consolidated financial statements as set out in the
accounting policies in note 2.
2020 2019
GBP'000s GBP'000s
Investment in associate 278 227
========= =========
The Group's share of the net assets in the associate company is
GBP76k (2019: GBP26k). Profit for the year, of which GBP51k is
attributable to Aquila has been recognised in the statement of
comprehensive income and added to the carrying value. No share of
profit was recognised in the prior year. In the Company statement
of financial position, the investment is carried at cost of
GBP227k.
Although the Group's share of net assets in the associate is
below the carrying value, no impairment has been recorded because
the associate was profitable in the year and expected to continue
to be profitable going forward.
Summarised financial information in respect of the Group's
associates are set out below:
3C Consultants Limited 2020 2019
GBP'000s GBP'000s
Current assets 520 328
Non-current assets 2 3
Current liabilities (217) (222)
Non-current liabilities - (6)
--------- ---------
Equity attributable to the owners of the
Company 305 103
========= =========
Revenue 1,416 959
Profit/(loss) for the year 203 65
========= =========
Other comprehensive income - -
Total comprehensive income 203 65
========= =========
Dividends received from associate during - -
the year
========= =========
Reconciliation of the above summarised financial information to
the carrying amount recognised in the consolidated financial
statements for the prior year:
2018
GBP
Net assets of associates 37,651
========
Proportion of the Group's ownership interest
in the associate 9,413
Goodwill 217,207
--------
Carrying amount 226,620
========
14 Investments
Fair Value Hierarchy 2020 2019
GBP'000s GBP'000s
Unquoted equity investments Level 3 121 121
The Group has a 6% 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).
15 Trade and other receivables
Group Group Company Company
2020 2019 2020 2019
GBP'000s GBP'000s GBP'000s GBP'000s
Trade receivables 2,063 1,872 - -
Group undertakings - - 685 1,082
Other receivables 23 9 14 0
Prepayments 79 88 9 2
Contract assets 222 224 - -
--------- --------- --------- ---------
2,387 2,193 708 1,084
========= ========= ========= =========
Total <30 days 30-60 days 66-90 days >90 days
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
31 March 2020 2,063 1,500 209 147 207
31 March 2019 1,872 1,744 50 24 54
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.
16 Trade and other payables
Group Group Company Company
2020 2019 2020 2019
GBP'000s GBP'000s GBP'000s GBP'000s
Trade payables 154 253 9
Other payables 101 28 50 -
Lease liabilities 79 - - -
Amounts owed to Group
undertakings - - 520 560
Taxes and social security
costs 613 518 -
Accruals 634 569 56 112
Contract liabilities 181 227 -
--------- --------- --------- ---------
1,762 1,595 635 672
========= ========= ========= =========
Of the contract liability brought forward at the start of the
year GBP227k (2019: GBP226k) was recognised in revenue in the
year.
17 Long term liabilities
As explained in note 2, the Group has revised its accounting
policy for leases where the Group is the lessee following the
adoption of IFRS 16. The Statement of Financial Position shows the
following amounts relating to lease liabilities.
2020
GBP'000s
Additions new leases 514
Decrease in lease liabilities (66)
Closing amounts as at 31 March 2020 448
---------
Current 79
Non-current 369
=========
18 Share capital
2020 2019
GBP'000s GBP'000s
Allotted, called up and fully paid
37,947,905 (2019: 35,307,776) Ordinary shares
of 5p each 1,897 1,765
========= =========
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:
Amount
Number called
of Ordinary up and Merger
shares fully paid Share premium reserve
'000 GBP'000s GBP'000s GBP'000s
At 31 March 2018 35,265 1,763 1,487 2,413
Issued at 5p per share on
1 Feb 2019 42 2 - -
At 31 March 2019 35,307 1,765 1,487 2,413
Issued at 28.7p per share
on 14 Nov 2019 2,544 128 - 603
Cost of share issue on acquisition - - (12) -
Issued at 35p per share on
31 Jan 2020 86 4 - 26
Issued at 5p per share on 10 - - -
21 Feb 2020
============= ============ ============== =========
At 31 March 2020 37,947 1,897 1,475 3,042
============= ============ ============== =========
19 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.
Upon acquisition of Oaks and Finalysis in the year to 31 March
2020 the premium arising on the issue of shares has been credited
to the merger reserve as shown in note 18.
20 Dividends
2020 2019
Amounts recognised as distributions to equity GBP'000s GBP'000s
holders
Final dividend for the year ended 31 March
2019 of 0.6p per share (2018: 0.55p) 227 194
Interim dividend for the year ended 31 March
2020 of 0.3p per share (2019: 0.29p) 114 102
341 296
========= =========
Proposed final dividend for the year ended
31 March 2020 of Nil per share (2019: 0.6p) - 211
========= =========
The group do not propose a final dividend for the year ended 31
March 2020.
21 Share-based payment transactions
The Company operates an Unapproved Scheme and an Enterprise
Management Incentives Scheme. The total expense recognised in the
year to 31 March 2020 arising from share-based payment transactions
is GBP105k (2019: GBP117k).
Weighted average
Unapproved scheme Number '000 exercise price
Number of options outstanding at 1 April
2019 2,587 GBP0.23
Granted during period 171 GBP0.35
Forfeited during period - -
Exercised during period - -
------------
Number of options outstanding as at
31 March 2020 2,758 GBP0.25
============
Number of options exercisable as at
31 March 2020 2,587 GBP0.23
============
The exercise price of the options outstanding at 31 March 2020
ranges between GBP0.05 and GBP0.35. The weighted average remaining
contractual life of the options outstanding at 31 March 2020 is 1
year (2019: 1 year).
On 31 January 2020, following the acquisition of Finalysis, the
Company granted 171,428 of options at an exercise price of 35p. The
options are exercisable between 31 January 2022 and
31 January 2027. The weighted average fair value of the options
at grant date was GBP0.067. 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 GBP0.35
Exercise price GBP0.35
Expected volatility 20.19%
Expected option life 5 years
Risk-free rate 0.61%
The risk-free rate is based on the yield of a 10-year government
bond.
The expected share price volatility is based on the Company's
share price since 20 August 2015.
Weighted average
EMI scheme Number exercise price
Number of options outstanding at 1 April
2019 2,851 GBP0.05
Granted during period - -
Forfeited during period (65) GBP0.05
Exercised during period (10) GBP0.05
-------
Number of options outstanding as at
31 March 2020 2,776
=======
Number of options exercisable as at
31 March 2020 2,005 GBP0.05
======
The weighted average remaining contractual life of the options
outstanding at 31 March 2020 is 5 years (2019: 6 years).
22 Related party disclosures
Balances and transactions between the Group and other related
parties are disclosed below:
Dividends totalling GBP149k (2019: GBP137k) were paid in the
year in respect of Ordinary Shares held by the Company's
directors.
During the year the Group charged GBPNil (2019: GBP10,000) to
DMJ Consultancy Services Limited for administrative services, a
company in which Derek Joseph serves as a director.
At 31 March 2020, the balance owed to Richard Wollenberg for
services as a non-executive director was GBP8k (2019: GBP4k).
At 31 March 2020, the balance owed to Fiona Underwood for
reimbursement of expenses was GBP182.
23 Control
In the opinion of the Directors there is no single ultimate
controlling party.
24 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 considers its credit risk to be low. Of the total
trade receivables at the 2020 year-end GBP136k (2019: GBP148k) is
due from one customer (which has since been received).
There are no other customers that represent more than 7% 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
reserves of GBP828k (2019: GBP1,719k) at the year-end.
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 Groups' 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
25 Post Balance Sheet event
There are no post balance sheet events
26 Capital commitments
There were no capital commitments at 31 March 2020.
27 Contingent liabilities
There were no contingent liabilities at 31 March 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKBBQCBKDPOK
(END) Dow Jones Newswires
July 03, 2020 02:00 ET (06:00 GMT)
Aquila Services (LSE:AQSG)
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Aquila Services (LSE:AQSG)
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