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Aquila Services Group PLC  -  AQSG   

Interim results to 30 September 2018

Released 07:00 26-Nov-2018

RNS Number : 3598I
Aquila Services Group PLC
26 November 2018
 

For immediate release

26 November 2018

 

Aquila Services Group plc

Unaudited Interim Results for the six months ended 30 September 2018

 

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

The Group's expertise is in the provision, financing and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations as well as high level business advice to the property sector.

Results Highlights

 

6 months to 30 September 2018 (unaudited)

6 months to 30 September 2017 (unaudited)

Year ended 31 March 2018 (audited)

 

£000s

£000s

£000s

Revenue

3,592

2,524

5,905

Gross Profit

773

676

1,562

Operating Profit

222

193

524

EPS

0.47p

0.42p

1.20p

Declared Dividend per Share

0.29p

0.26p

0.81p

Cash Balances

1,029

2,238

970

 

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014.

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

 

Aquila Services Group plc

Steve Douglas

Co-Chief executive

Tel: 020 7934 0175

 

Beaumont Cornish Limited, Financial Adviser

Roland Cornish

Tel: 020 7628 3396

 

 

 

Chairman's Statement and Interim Management Report

Dear Shareholder,

I am pleased to present the half-year report and the interim results for the 6 months to 30 September 2018.

Aquila Services Group plc ("the Company") is the holding company for Altair Consultancy & Advisory Services Ltd ("Altair") and Aquila Treasury and Finance Solutions Ltd ("ATFS") which form the group ("the Group").

The Group is an independent consultancy specialising in the provision, financing and management of affordable housing by housing associations, local authorities, government agencies and other housing related organisations, as well as high level business advice to the commercial property sector.

The half-year results for the Group demonstrate the sustainability of our business model and the benefits of investment in longer term planned growth, both organic and targeted acquisitions, 3C and AssetCore.

The six months has seen a continuation of the strategy described in the annual report for the previous financial year.  The streamlining of the executive team to concentrate on our particular specialisms, the integration of the pod property consultancy business following its acquisition, the development of our overseas business following the launch of the Altair Africa brand, and building our presence in the IT market by acquiring stakes in established sector businesses.

We are now seeing the results of this strategy starting to work through to both our turnover and operating profit.   We enter the second half of the year with expectations of continuing progress.  This confidence is reflected in the continuation of our progressive dividend policy for the half-year.

Trading Results

The Group saw an increase in turnover for the 6 months to 30 September 2018 compared to the 6 months ended 30 September 2017.  Gross profit was £773k (September 2017: £676k, March 2018: £1,562k) with operating profit before share option charges of £281k (September 2017: £263k, March 2018: £660k).

 

6 months to

30 September 2018

(£000's)

6 months to

30 September 2017

(£000's)

Year ended 31 March 2018

(£000's)

Turnover

3,592

2,524

5,905

Gross Profit

773

676

1,562

Operating profit (before share options charge)

281

263

659

Share option charge

59

70

135

Operating profit (after share option charge)

222

193

524

EPS

0.47p

0.42p

1.20p

 

 

 

The Group has a strong net asset position, with over £1,029k in cash held at the 30 September 2018.

Dividend

The Directors propose to declare an interim dividend of 0.29p (2016: 0.26p) per share, an increase of 11.54% which will be paid on 21 December 2018 to shareholders on the register at 7 December 2018.

Business Review

The underlying business remains robust and there has been continuing growth of the client base in both Altair's consultancy business and the treasury advice business of ATFS.  This is reflected in the increased turnover.  Operating profit after the share option charge increased by 15% in the six months compared to the previous period.  The increase in operating profits is after our continuing investment in the business.  We expect the benefits to continue as the need to divert resources to implement the new strategies reduces and the infra-structure we have put in place matures.  Growth continues to be constrained by the recruitment and retention of staff with the relevant, on the ground, experience and reputation in the sector and such recruitment has associated costs.  We are starting to see some improvement in this trend which should assist longer term improved performance.  We continue to encourage commitment to wider share ownership amongst all our staff through the share option programme.

The prospects for the consultancy service and the sector are encouraging.  At the Conservative party conference, it was announced that there would be in excess of £2bn for affordable housing to be bid for from 2021/22.  This commitment to a longer-term programme gives housing organisations greater certainty to plan and invest in new housing projects.  This support has also been confirmed in the 2018 Budget which identified longer-term strategic partnerships with a range of housing providers and is an initiative that has cross-party support.  At the same time, it was announced that local authorities would be granted freedom to borrow to enable them to build more new homes.  We need to see the detail and, in particular, how new borrowing will be serviced, but many local authorities are enthusiastic to take up this opportunity with affordable housing demand vastly outstripping supply in many areas.  Our Property, Treasury and Finance teams are advising a number of local authorities on how to use this newly given freedom.

The importance of the housing sector, as a political priority, was emphasised by the Chancellor of the Exchequer in the Autumn Statement with removal of stamp duty on shared ownership purchases below £500,000 and some extensions of the Help to Buy equity loan scheme.

Increasingly the sector is attracting private investors who see the stable revenues from long term investment in affordable housing as part of their offering to clients seeking a home for wider funds.  Our clients now include Blackstone and its registered provider Sage, Grainger plc and Civitas plc, amongst others.  Most of these organisations have commissioned Altair to provide advice on the governance and technical requirements of being a regulated provider of social housing.  These investments are an opportunity suitable for those looking for longer term returns.  We expect other private investment houses to see this as an attractive option.

Our work across the United Kingdom and beyond continues to grow.  Altair Africa is still building its brand but has now wider recognition amongst potential clients and funders.  It continues to win contracts, in particular, with its work on the affordable housing programme in Nigeria.  In partnership with Sweco, a significant contract has recently been signed to develop a 'Green City' in Rwanda funded by an agency of the German government.  A further contract in negotiation is a review of the mortgage market in Ghana.  Like other Altair Africa assignments, these are longer term contracts so profit recognition is anticipated to be realised in future financial years.

The pod property consultancy business has now been successfully integrated into the Altair team and their services as 'property advisors' is in continuing demand from housing associations, local authorities, public and private sector bodies.  Notable clients now include some of the largest housing associations in London, including Peabody and Optivo as well as major public bodies such as the NHS and Transport for London.  The benefits of increasing demand alongside integration with Group services should see improving fee income.  This will take time to realise as many of these are also longer-term contracts.  Recently, significant resources have been diverted into bids particularly when working through local authority procurement processes.  Again, we expect to see a future benefit from this activity.

Against this generally positive news there are some areas where there are concerns.  Like other sectors, the uncertainties relating to Brexit and world economic growth causes concern amongst our commercial clients and, also, the housing associations who generate cross-subsidy for affordable housing through sale of homes built for market sale.  This is reinforced by whether the Help to Buy scheme from which much of the cross-subsidy is generated will continue to generate current revenues.  Also, some local authorities and housing associations who are concerned about funding the works required to their existing housing stock following the tragic events at Grenfell are being cautious about committing to other future expenditure.  Despite these factors, the overall view is that the future is positive both for the sector and our business.

Risks and Uncertainties

The Directors do not consider that the Group's principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 March 2018, which contains a detailed explanation of the risks relevant to the Group on Page 9 and is available at https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/AQSG/13696541.html

Outlook

The first six months of this financial year has seen the beginning of the benefits of our investment strategy working through to our financial results.  The sector is seen as increasingly important as both a social need and an economic driver with increasing political visibility and cross-party consensus.  Our business will only be successful if our clients perceive that we continue to be both relevant to their needs and offer a range of services that they can utilise for their benefit.  The level of repeat business that we secure from existing clients, as well as new opportunities, gives us confidence that our strategy is right.

 

We will continue to develop our 'one-stop professional services' approach for the sector and balance the needs of providing a return to shareholders in the short to medium term with the resources required to ensure the long term sustainability of the business.  Both need to be achieved to be attractive to clients, executive, staff and investors as well as potential acquisitions.

I have now been Chair for a little over 15 months.  It is pleasing to be at the helm of a business that provides a worthwhile social service, an exciting place to work and a benefit to our investors.  It would be remiss of me not to end this statement without thanking all our staff and my fellow directors.

I look forward to reporting to you further after the year end.

 

Derek Joseph - Chair

23 November 2018

 

 

 

Directors' Report

Substantial Shareholdings

As at 30 September 2018, the Company was aware of the following notifiable interests in its voting rights:

 

Number of

Ordinary shares

Percentage of

Voting rights

Nature of

holding

Richard Wollenberg*

3,808,406

10.8%

Direct

Chris Wood

3,279,440

9.3%

Direct

Susan Kane

3,279,440

9.3%

Direct

Fiona Underwood**

3,279,440

9.3%

Direct

Steven Douglas

3,144,305

8.9%

Direct

Derek Joseph

3,005,538

8.5%

Direct

Jeffrey Zitron

2,798,403

7.9%

Direct

Matt Carroll

1,307,229

3.7%

Direct

Hannah Breitschadel

1,307,229

3.7%

Direct

 

*Includes shares held by immediate family members of Richard Wollenberg

**Fiona Underwood's shares are held in a nominee account at Old Mutual plc.

 

Related Party Transactions

During the 6 months to 30 September 2018, the non-executive directors were paid fees of £5,054 (6 months to September 2017: £6,375).

During the 6 months to 30 September 2018, the Group charged £5,214 (6 months to September 2017: £9,686) to DMJ Consultancy Services Limited for office costs and secretarial services, a company in which Derek Joseph is a director and shareholder.

Remuneration of Directors and key management personnel

The remuneration of the directors, who are the key management personnel of the Group, is set out below.

 

6 months to 30 September 2018 (unaudited)

6 months to 30 September 2017 (unaudited)

Year ended 31 March 2018

(audited)

 

 

 

 

Short-term employee benefits

283,592

316,512

571,880

Share-based payments

31,351

56,500

113,000

Post-retirement benefits

10,378

8,850

17,700

 

 

 

 

 

325,321

381,862

702,580

 

Corporate Governance

The UK Corporate Governance Code (September 2014) (the code), as appended to the listing rules, sets out Principles of Good Corporate Governance and Code provisions which are applicable to listed companies incorporated in the United Kingdom.  As a standard listed company, the Company is not subject to the UK Corporate Governance Code but the Board recognises the value of applying the principles of the code where appropriate and proportionate and endeavours to do so where practicable.

Responsibility Statement

The Directors, whose names and functions are set out at the end of this report, are responsible for preparing the Unaudited Interim Condensed Consolidated Financial Statements in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority ('DTR') and with International Accounting Standard 34 on Interim Financial reporting (IAS34).  The Directors confirm that, to the best of their knowledge, this unaudited interim condensed consolidated report has been prepared in accordance with IAS34 as adopted by the European Union.  The interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:

§ an indication of key events occurred during the period and their impact on the unaudited interim condensed consolidated financial statements and a description of the principal risks and uncertainties for the second half of the financial year, and

§ related party transactions that have taken place during the period and that have materially affected the financial position or the performance of the business during that period.

Susan Kane - Group Finance Director

23 November 2018

 

 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2018

 

 

Six months to 30 September 2018

Six months to 30 September 2017

Year ended

31 March

2018

 

(unaudited)

(unaudited)

(audited)

 

£

£

£

 

 

 

 

Revenue

3,592,129

2,524,200

5,905,221

Cost of sales

(2,818,980)

(1,848,222)

(4,343,456)

 

 

 

 

Gross profit

773,149

675,978

1,561,765

 

 

 

 

Administrative expenses

(551,460)

(482,896)

(1,037,287)

 

 

 

 

Operating profit

221,689

193,082

524,475

 

 

 

 

Finance income

22

887

3,596

 

 

 

 

Profit before taxation

221,711

193,969

528,074

 

 

 

 

Income tax expense

(55,640)

(58,191)

(123,390)

 

 

 

 

Profit and total comprehensive income for the period

166,071

135,778

404,684

 

 

 

 

 

 

 

 

Earnings per share attributable to owners of the parent

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

-     Basic

35,265,461

32,651,003

33,746,926

-     Diluted

39,989,368

37,357,238

38,429,011

 

 

 

 

Basic earnings per share

0.47p

0.42p

1.20p

Diluted earnings per share

0.42p

0.36p

1.05p

 

Condensed Consolidated Statement of Financial Position

As at 30 September 2018

 

 

30 September 2018

30 September 2017

31 March

2018

 

(unaudited)

(unaudited)

(audited)

 

£

£

£

Non-current assets

 

 

 

Goodwill

2,027,688

317,688

2,027,688

Property, plant and equipment

90,458

71,241

95,747

Investment in associates

226,620

-

226,620

Investments

121,104

-

121,104

 

 

 

 

 

2,465,870

388,929

2,471,159

 

 

 

 

Current assets

 

 

 

Trade and other receivables

2,192,146

1,210,162

2,109,678

Cash and bank balances

1,028,951

2,237,725

969,987

 

 

 

 

 

3,221,097

3,447,887

3,079,665

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

1,143,599

657,474

1,094,690

Corporation tax

197,415

192,944

141,775

 

 

 

 

 

1,341,014

850,418

1,236,465

 

 

 

 

Net current assets

1,880,083

2,597,469

1,843,200

 

 

 

 

Net assets

4,345,953

2,986,398

4,314,359

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Share capital

1,763,273

1,632,550

1,763,273

Share premium account

1,487,512

533,235

1,487,512

Reverse acquisition reserve

(4,771,473)

(4,771,473)

(4,771,473)

Merger reserve

7,184,334

7,184,334

7,184,334

Share-based payment reserve

617,136

491,908

557,653

Retained losses

(1,934,829)

(2,084,156)

(1,906,940)

 

 

 

 

Equity attributable to the owners of the parent

 

4,345,953

2,986,398

4,314,359

 

 

 

 

 

Condensed Consolidated Statement of Changes in Equity

 

Share capital

Share premium account

Reverse acquisition reserve

Merger relief reserve

Share based payments reserve

Retained losses

Total equity

 

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

As at 1 April 2017

1,632,550

533,235

(4,771,473)

7,184,334

422,391

(2,056,679)

2,944,358

 

 

 

 

 

 

 

 

Total comprehensive income

-

-

-

-

-

135,778

135,778

Share based payment

-

-

-

-

69,517

-

69,517

Dividend

-

-

-

-

-

(163,255)

(163,255)

 

 

 

 

 

 

 

 

As at 30 September 2017

1,632,550

533,235

(4,771,473)

7,184,334

491,908

(2,084,156)

2,986,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issue of shares

130,723

954,277

-

-

-

-

1,085,000

Total comprehensive income

-

-

-

-

-

268,906

268,906

Share based payment

-

-

-

-

65,745

-

65,745

Dividend

-

-

-

-

-

(91,690)

(91,690)

 

 

 

 

 

 

 

 

As at 31 March 2018

1,763,273

1,487,512

(4,771,473)

7,184,334

557,653

(1,906,940)

4,314,359

 

 

 

 

 

 

 

 

Total comprehensive income

-

-

-

-

-

166,071

166,071

Share based payment

-

-

-

-

59,483

-

59,483

Dividend

-

-

-

-

-

(193,960)

(193,960)

 

 

 

 

 

 

 

 

As at 30 September 2018

1,763,273

1,487,512

(4,771,473)

7,184,334

617,136

(1,934,829)

4,345,953

 

 

 

 

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2018

 

 

Six months to 30 September

Six months to 30 September

Year ended

31 March

 

2018

2017

2018

 

(unaudited)

(unaudited)

(audited)

 

£

£

£

Cash flow from operating activities

 

 

 

Profit for the period

166,071

135,778

404,684

Interest received

(22)

(887)

(3,596)

Income tax expense

55,640

58,191

123,390

Share based payment charge

59,483

69,517

135,262

Depreciation

25,149

12,685

31,639

 

 

 

 

Operating cash flows before movement in working capital

306,321

275,284

691,379

 

 

 

 

(Increase)/decrease in trade and other receivables

(82,468)

140,025

(759,491)

Increase/(decrease) in trade and other payables

114,679

(294,449)

76,997

 

 

 

 

Cash generated by operations

338,532

120,860

8,885

 

 

 

 

Income taxes paid

-

-

(116,368)

 

 

 

 

Net cash inflow/(outflow) from operating activities

338,532

120,860

(107,483)

 

 

 

 

Cash flow from investing activities

 

 

 

Interest received

22

887

3,596

Purchase of property, plant and equipment

(19,860)

(33,367)

(76,827)

Acquisition of Goodwill

-

-

(625,000)

Acquisition of investment in an associate

(65,770)

-

(160,850)

Acquisition of investment

-

-

(121,104)

 

 

 

 

Net cash outflow from investing activities

(85,608)

(32,480)

(980,185)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid

(193,960)

(163,255)

(254,945)

 

 

 

 

Net cash outflow from financing activities

(193,960)

(163,255)

(254,945)

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

58,964

(74,875)

(1,342,613)

 

 

 

 

Cash and cash equivalents at beginning of the period

969,987

2,312,600

2,312,600

 

 

 

 

Cash and cash equivalents at end of the period

1,028,951

2,237,725

969,987

 

 

Notes to the Condensed set of Financial Statements

for the six months ended 30 September 2018

1.   General information

The Company and its subsidiaries (together ''the Group'') are a major provider of consultancy services to organisations that develop, fund or manage affordable housing.

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 08988813 in England and Wales.  The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

2.   Basis of preparation

The unaudited condensed consolidated interim financial statements of the Group have been prepared on the basis of the accounting policies, presentation, methods of computation and estimation techniques used in the preparation of the audited accounts for the period ended 31 March 2018 and expected to be adopted in the financial information by the Company in preparing its annual report for the year ending 31 March 2019.

This interim consolidated financial information for the six months ended 30 September 2018 has been prepared in accordance with IAS 34, 'Interim financial reporting'.  This interim consolidated financial information is not the Group's statutory financial statements and should be read in conjunction with the annual financial statements for the year ended 31 March 2018, which have been prepared in accordance with International Financial Reporting Standard (IFRS) and have been delivered to the Registrar of Companies.  The auditors have reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis of matter without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The interim consolidated financial information for the six months ended 30 September 2018 is unaudited.  In the opinion of the Directors, the interim consolidated financial information presents fairly the financial position, and results from operations and cash flows for the period.

The Directors have made an assessment of the Group's ability to continue as a going concern and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  The Group, therefore, continues to adopt the going concern basis in preparing its consolidated financial statements.

The financial statements are presented in sterling, which is the Group's functional currency as the UK is the primary environment in which it operates.

3.   Segmental analysis

The Directors are of the opinion that the business of the Group is in a single activity.  Nearly all business is conducted in sterling and within the UK.  Some fees are received in Euros and US Dollars but in the Director's opinion these amounts are not significant and any changes in exchange rates would not have a material impact on the Group.

4.   Share capital

The Company has one class of share in issue being ordinary shares with a par value of 5p.

Allotted, issued and called up ordinary shares of £0.05 each:

 

 

Number

Amount called up and fully paid

£

 

 

 

 

As at 1 April 2017

 

32,651,003

1,632,550

Issued during the period

 

-

-

 

 

 

 

As at 30 September 2017

 

32,651,003

1,632,550

Issued during the period

 

2,614,458

130,723

 

 

 

 

As at 31 March 2018

 

35,265,461

1,763,273

Issued during the period

 

-

-

 

 

 

 

As at 30 September 2018

 

35,265,461

1,763,273

 

As at 1 April 2018, 4,665,077 options were held by Directors and employees of the Group.

On 31 August 2018, 21,158 options were returned by an employee who left the business.

On 1 September 2018, 736,929 options were granted to Directors and employees of the Group.

As at 30 September 2018 a total of 5,380,848 options were held by Directors and employees of the Group.

Option exercise price are in a range of 5p to 29.5p.

5.   Going concern

The Group has sufficient financial resources to enable it to continue its operational activities for the foreseeable future.  Accordingly, the Directors consider it appropriate to adopt the going concern basis in preparing these interim accounts.

6.   Dividend

An interim dividend of 0.29p will be paid on 21st December 2018 to shareholders on the register at 7th December 2018 at a cost of £102,270.

Financial Calendar

Year

Date

Comments

2018

26 November

Interim results 2018 announced

 

6 December

7 December

Ex-dividend date

Record date

 

21 December

Payment date for interim

2019

31 March

End of accounting year

 

By 31 July

2018 Annual Financial Report to be published and announced

 

July / August

Annual General Meeting

 

September

Final dividend to be paid

 


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.
 
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Interim results to 30 September 2018 - RNS