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Aquila Services Group PLC   -  AQSG   

Annual Report, AGM Notice & Proposed Board Changes

Released 07:00 27-Jun-2019

RNS Number : 5550D
Aquila Services Group PLC
27 June 2019
 

 

For immediate release                                                                                                  27 June 2019

 

Aquila Services Group plc

("Aquila" or the "Company")

 

Annual report and financial statements

for the year ended 31 March 2019, Notice of AGM and Proposed Board Changes

 

Annual report

Aquila is pleased to announce its audited annual report and financial statements for the year ended 31 March 2019, extracts from which are set out below.

The Company's annual report and financial statements for the year ended 31 March 2019 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.

The financial information set out below does not constitute the Company's statutory accounts for the period ending 31 March 2019.  The financial information for 2018 is derived from the statutory accounts for that year.  The auditors, Crowe U.K. LLP, have reported on the 2019 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.

Notice of Annual General Meeting ("AGM")

The Company's AGM will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 24 July 2019 at 3:00 pm. The full notice is set out below.

Proposed Board Changes

The Company also announces that Susan Kane, the Group's Finance Director has informed the Board that she has decided to step back from her Group commitments from the date of this year's AGM and retire fully from September 2019. Claire Banks, current Head of Finance and Corporate Resources, will step into the role of Group Finance Director and Company Secretary effective from the AGM. A further announcement will be made in due course.

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

Susan Kane, Group Finance Director

Tel: 020 7934 0175

 

Beaumont Cornish Limited, Financial Adviser

Roland Cornish

Tel: 020 7628 3396

 

 

 

 

 

Chair's Statement

Dear Shareholder,

I am pleased to present the Annual Report and Financial Statements for the year to 31 March 2019.

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

We are pleased to welcome Oaks Consultancy Limited ('Oaks'), an independent consultancy which assists education and sporting organisations and joined the group on 11 June 2019.

The group continues to implement its business strategy of widening our offer to encompass all the professional consultancy services that our client base demands.  The group now encompasses specialisms in affordable housing, regeneration, sport and education consultancy.  This includes the provision, financing and management of affordable housing and related activities, advising and supporting organisations that benefit local communities such as housing associations, local authorities, government agencies, multi-academy trusts, other non-profit organisations and those set up for community benefit, as well as providing related high level business advice to the commercial property sector.  The acquisition of Oaks is a key step in fulfilling this strategy.

Group Members

Altair Consultancy & Advisory Services Ltd

Altair is a specialist management consultancy providing professional services to local authorities, housing associations, charities, property companies, regulators and government departments.  The consultancy covers the whole of the United Kingdom and, during the year under review, has been consolidating its presence in the Republic of Ireland and has continued its investment in further resourcing its client base in the Midlands and the North of England.  Altair advises on all aspects of development and management of affordable housing for rent and sale and on the effective management of organisations operating in the sector.  With the changes in the regulatory regime allowing 'for profit' housing organisations to be registered with The Regulator for Social Housing, advising commercial development companies on how they can comply and work within the new regime is a significant area of expansion.

The acquisition of 'pod', a consultancy specialising in development and related financial modelling services in October 2017 was reported in my previous annual statement.  We have now been able to consolidate these activities within the Altair framework and this business stream is now poised for significant growth underpinned by a programme of recruitment which is already underway.

As reported previously, a separate business stream to bid for and undertake work in Africa was established in 2017 and is now being further resourced to expand our international work.  This reflects an increased interest by national governments in developing economies, pan-national institutions and aid agencies in the benefits of urban regeneration and creating institutions to support affordable housing in the continent.

The company has over 300 active clients and depending on the service requirement, supplies these on time-based charge-out rates, fixed price or retention agreements.

Aquila Treasury & Financial Solutions Ltd

ATFS is a specialist treasury management consultancy authorised and regulated by the Financial Conduct Authority.  ATFS advises local authorities, housing associations, higher education bodies and other clients on their capital funding requirements and supports them in securing and managing debt finance.  The business operates principally through contracts as retained general treasury advisers with a significant number of clients, and specific advisory projects on which fees are generated according to agreed milestones.

ATFS provides its consultancy services principally through retention agreements or fixed price contracts.  Where it is involved in advising on fundraising, fee arrangements are normally result based.  These latter contracts are often procured as a result of winning competitive tenders.  As smaller clients raise new funds infrequently, growth will be through expanding the client base.

Oaks Consultancy Limited

Oaks joined the group on 11 June 2019 and so its results are not included in the accompanying consolidated results.  The company was founded in 2008 and has an established track record in education and sports related consultancy and in recent years has grown its core client base to include organisations in the voluntary and public sector which are either existing group clients or have synergies with the work of those clients.

Oaks is based in Birmingham with the team of 18 delivering services across the UK.

The unaudited management accounts of Oaks at 31 March 2019 reported turnover for the 12 months of £909k and profit before taxation but not adjusted for directors' salaries of £254k.  The total consideration for the purchase, including the maximum payment for meeting targets over the next two financial years will not exceed £1.7m of which 35% is cash and 65% new ordinary shares.

Oaks sells its services either through retention agreements, fixed price contracts, or success related fees.  This latter arrangement is particularly relevant to assignments involving bidding for funds or arranging sponsorship.

Investments

In March 2018, Aquila acquired minority stakes in 3C Consultants Limited and AssetCore Limited, companies involved in the provision of IT consultancy to the affordable housing sector and a cloud-based platform to manage loan security respectively.  The total cost was approximately £348k.  In addition to the investment in 3C, Steve Douglas, our Group Chief Executive, joined the board as a non-executive director.  The company sells its consultancy services on a similar basis to Altair and is looking to replicate the same growth targets.

The investment in AssetCore represents around 8% of its enlarged equity and was part of a £500,000 cash injection to expand the platform currently used by eleven major housing associations.  I, and our non-executive director Richard Wollenberg also invested similar amounts and now each hold around 8% of the enlarged equity and I sit on the board as a non-executive director.

It is part of the group's continuing strategy to establish a presence as a key player in a range of IT consultancy and digital initiatives in the sector.

 

Financial results

The comparison between this reporting period, the mid-year results and the previous year's results for the Group are as follows:

 

Year ended 31 March 2019 (audited)

6 months to 30 September 2018 (unaudited)

Year ended 31 March 2018 (audited)

 

£000s

£000s

£000s

Turnover

7,656

3,592

5,905

Gross profit

1,867

773

1,562

Operating profit (before share option charge)

724

281

660

Share option charge

117

59

135

Operating profit (after share option charge)

607

222

524

 

The Group has a strong balance sheet with £1.72m (2018: £0.98m) in cash deposits as at 31 March 2019.  Where the Group is committed to pay cash for the acquisition of Oaks, there is sufficient cash and working capital to facilitate this.

Altair's consultancy and interim management business contributed £7.086m (2018: £5.32m) and ATFS's £0.58m (2018: £0.59m).

Operating profit took into account investment in new staff and resources for expanding our activities and meeting changing demand.  Profit after tax, attributable to shareholders, was £461k (2018: £405k) and earnings per share was 1.32p (2018: 1.20p).

Dividend

The directors propose a final dividend of 0.6p per share (2018: 0.55p), making a total dividend for the year of 0.89p per share (2018: 0.81p), an increase of 10% compared to 2018.  This will be payable on 2 August 2019 to shareholders on the register at 19 July 2019.

Outlook

The outlook for the group remains positive.  We are expanding our services and skill base to meet the demands of key organisations in the UK economy.  Whatever the outcome of the Brexit negotiations and the future political make-up, there will be continuing pressure to deliver more homes, support employment, particularly in the construction industry, and for the promotion of health and education, including sporting opportunities.

The international work of Altair offers the opportunity to expand our revenue base as well as diversify our markets.  Altair Africa and Altair International were set up in 2017 as our first ventures into this wider market.  We have built up a small team where I have taken an executive role in identifying clients, winning contracts and being involved in the delivery.  These contracts are nearly all won through competitive tender and based on fixed prices, usually denominated in dollars or euros.  Building on this initial success, we anticipate appointing an executive to lead this team and to recruit additional specialists, both as employees and associates.

Critical to the reputation and sector penetration of the business is that we embrace the digital agenda of our clients.  The investment in 3C and AssetCore is part of this strategy, balancing consultancy support with development of specialist platforms.  We will be continuing this approach for the foreseeable future to exploit the demand for digital services.

We operate in an industry where the providers of support services to our existing clients and potential clients come from a few major providers and a range of smaller fragmented businesses.  Where there are synergies and financial opportunities, we will look to make acquisitions.  At the same time, we will look to recruit the additional specialist skills we need and invest in our existing staff.  Any acquisitions will always include a significant element of shares in the company as part of the consideration and for existing staff, the provision of a valuable share option scheme.

There will always be a limit to how fast the business can grow; we will continue to balance the need for investment and the continuing growth of our reported profits and dividend yield.  For the year ended 31 March 2019, I believe that we achieved the right balance and we will continue these policies and strategies for the foreseeable future.  I look forward to reporting on continuing progress in our next report for the six months ending 30 September 2019.

I cannot finish this report without recording my thanks to my fellow directors, executive team and staff and associates of the group.  As a people business, the group is dependent on their commitment and expertise.

In particular I want to record my thanks to Susan Kane, our Group Finance Director, who was one of the prime movers in setting up Altair in February 2011 and who, after a sabbatical in 2018 and then returning to the group on a part-time basis, has decided to step back from her Group commitments from the date of this year's AGM and retire fully from September 2019.  I am delighted that Claire Banks, our current Head of Finance and Corporate Resources, will step into the role of Group Finance Director.  I must also mention our pleasure in the award of a CBE in the recent Honours List to our Group Chief Executive, Steve Douglas, for his services to housing.  It is richly deserved.

 

 

 

Derek Joseph - Chair

26 June 2019

 

 

 

Strategic Report

Strategy and Objectives - Leadership, Quality, Insight

The strategy and objectives of the Group are to:

§ Provide high quality consultancy advice and support to organisations operating within or aligned to the public sector that aim to make a difference in communities

§ Continue to seek out acquisitions and investments which will expand our range of services and scope of business to increase our ability to be a multi-disciplinary, multi-sector provider of professional support services for the clients of our subsidiary companies

§ Attract and retain employees by providing a great place and environment to work, and enable employee participation and reward through equity participation

§ Increase our client base across the UK and internationally

§ Encourage innovation through the development of new products.

Our business

As at 31 March 2019 the Group comprised the holding company, Aquila Services Group plc (''the Company''), and two trading subsidiaries, Altair Consultancy and Advisory Services Limited ("Altair") and Aquila Treasury and Finance Solutions Limited ("ATFS").

Altair Consultancy and Advisory Services Ltd

Altair provides support services to enable organisations to carry out their activities in a more efficient manner.  It helps manage complex and diverse organisations through periods of significant change, driving service improvement and delivering creative solutions.  Altair's traditional client base includes housing associations, developers and regeneration specialists, charities and local authorities.  Our client base also includes government departments, statutory bodies, financial institutions and other private commercial institutions.

Within the housing sector, Altair provides a broad range of advisory and consultancy services to its clients, covering areas such as general management, high-level executive recruitment, corporate governance, financial planning, management strategy, organisational improvement and training.  The full integration of "pod" has greatly expanded our development, regeneration and compliance offering.

We have strong relationships with the English Regulator (the Regulator of Social Housing), Greater London Authority, Welsh Government, Community Housing Cymru, the Scottish Housing Regulator, the Irish Housing Regulator, the Irish Council for Social Housing and the Government of Jersey.  Altair's services also cover the application of government strategies to increase the supply of affordable housing both for rent and home ownership, as well as local government initiatives encouraging the transfer of public sector housing to independent vehicles.

Altair has created a specialist bid team to enable our expansion into Africa.  This work has focused on assisting governmental and international institutions interested in the provision of affordable housing in countries such as Nigeria and Rwanda.

 

 

Aquila Treasury and Financial Solutions Ltd

ATFS specialises in providing debt and financial risk management advice to organisations principally involved in the affordable/social housing and education sectors.  Continued pressure to deliver more homes and fundamental changes in the financing markets mean there is strong and growing demand for specialist treasury advisory services, with increasing emphasis on funding from the capital markets and other sources of long-term capital.

Housing associations and local authorities are becoming involved in more complex legal, commercial and financial structures, particularly with housebuilders and private sector developers in joint ventures.  As clients face new risks, Altair's products and services complement ATFS' core advisory activity, providing opportunity for the growth of a comprehensive financial and commercial advisory service.

Going Forward

Oaks Consultancy Ltd

Oaks specialises in two main sectors: Education, working with multi-academy trusts/further and higher education institutions; and Sport, working with sport bodies, charities and clubs.  Oaks will enable the diversification of our offer using the synergies of our core strengths in governance consultancy, strategic advice and financial modelling support.

Review of the Business

Key Performance Indicators

The Group monitors its key performance indicators (KPIs) regularly.  These are set out below:

 

Revenue

£000s

Gross profit

£000s

Earnings

per share

2019

7,656

1,867

1.32p

2018

5,905

1,562

1.20p

 

 

Number of

clients

Number of

new clients

Client retention

rate (%)

2019

339

107

84

2018

225

77

66

 

The year under review has achieved the following financial results:

The Group saw a 30% increase in turnover on 2018.  This reflected the growth in Altair's housing consultancy, specifically through the acquisition of "pod", which was countered by a decline in revenue of interim management business through a tightening of IR35, some consolidation in the sector, and the continued impact of the government's policy of rent reduction for the sector.

Gross profit for the Group increased by £0.31m (20%).  Aquila continues to make substantial investment in its staff and IT infrastructure in anticipation of future growth; the Board anticipates that this continued investment will aid future profit growth.  The Group is in a very strong net asset position, with £1.72m in cash held at 31 March 2019.

Operating across the UK and Ireland, we have continued to grow our services into the North of England and Wales.  Our international work also continues to grow and demonstrates our ability to transfer our expertise internationally.  The Group is benefiting from our acquisitions and investment in recent years and we have seen an increase in opportunities arising from cross-selling the full range of our services with clients.

Brexit is causing continued uncertainty in the sector, with the most significant impact being on housing associations with large market-sale development programmes.  We are supporting a number in reprofiling their programmes and ensuring financial viability going forward.  Despite the challenges in the outright sale market, development activity in the affordable and social housing sector has remained strong this year.  The National Housing Federation reported that, in the twelve months to December 2018, housing associations had completed almost 44,000 new homes, an increase of 12% compared to the previous year.  The first quarter for 2019 followed the same trend with nearly 11,000 new homes registered in the affordable and social rented sector, an increase of 36% on the previous year.

This was the first full year of integration following the acquisition of "pod" in October 2018, which expanded our property development capability and capacity, enabling us to take advantage of this strong market.  In addition, the removal of the Local Housing Allowance cap is now resulting in a significant increase in development activity by local authorities, with many also setting up their own wholly-owned subsidiaries for development purposes.  Aquila is uniquely positioned to provide support on the initial set-up, governance, procurement and then ongoing development programme delivery for these organisations.  We are already working with clients such as Lambeth, Enfield, Basildon, Barking and Dagenham.

Compliance with health and safety requirements is a priority for housing providers; this has come into sharper focus following the Grenfell tragedy.  We have supported a wide range of organisations in compliance audits and providing governance advice.  We have increased our staff capacity to meet this client need.  Previously there has been a trend towards deregulation in the sector but, following the publication of the Social Housing Green Paper in 2018, we are likely to see a strengthening of consumer regulation in some form.  With governance being one of our core disciplines, we are well positioned to support organisations in ensuring that their overall approach to governance complies with the needs of the changing environment.

The affordable and social housing sector is continuing to become more diverse, with an increase in the number of 'new entrants' and 'for-profit' affordable housing providers.  This includes institutional investors and commercial developers who see benefits in setting up as a registered provider of social housing.  These new entrants are likely to change the shape of the sector over the next five years, with many having strong ambitions to grow quickly.  Our work with these new entrants, such as Blackstone/Sage, Alpha Real Capital and Resi, has focused on providing advice on areas such as registering with the Regulator for Social Housing, financial planning, funding, ensuring regulatory compliance and organisational design.  This part of the sector is likely to increase in size and is a key growth opportunity for Aquila.

Within the traditional social housing sector, there is a continued drive for organisations to operate more efficiently and create capacity to build more homes.  We have supported several mergers throughout the year and expect further activity next year.  Organisational change and transformation activities also remain high on the agenda of many in the sector.

As part of our approach to supporting clients in embracing technology and modernising approaches to work, our work with 3C continues to cover all aspects of ICT consultancy, from strategy to implementation.  We also continue to support the exploration of a fintech platform for financial institution compliant document handling through our investment in AssetCore.  Both strategic investments support the continuing diversification of our offer to clients, with a specific focus on technology and transformation activities.

Through the transformation programmes, there is ongoing appetite for our human resource and recruitment activities.  This particularly focuses on providing support during organisational change.  This year we have been involved in several high-profile recruitment activities for executive and non-executives for clients such as Gentoo, Riverside, and Shepherds Bush Housing Groups.

Our international work has seen projects in Rwanda and Nigeria.  Our work in this area involves providing support for the set-up, funding and management of affordable and social housing related activities.  There are significant opportunities for growing our international activities.  To support this we have developed, resourced and are implementing an international growth strategy.

We continue to position ourselves as thought leaders in the sector.  We published the results of our second report (the first was published in 2016) in the Future Gazing Future Shaping series which aims to assess levels and approaches to innovation and transformation in the sector.  

We were commissioned by seven housing associations in Wales to complete a feasibility study, funded by Welsh Government, into the most efficient way of delivering 250 off-site manufactured homes per annum in South Wales.  This links to our increased activity in the developing area of modern methods of construction.

We also continue to be a lead partner in the Leadership 2025 campaign, creating a more diverse leadership across the housing sector.  This work is supported by BME London, L&Q, Optivo and Network Homes.

The extension of IR35 to the private sector is leading to changes in demand for our executive interim management services.  Ongoing uncertainty caused by Brexit is also likely to remain a challenge for many in the sector. However, overall the opportunities for continued growth remain strong.

ATFS continues to be contractually retained general treasury advisers to a significant number of clients and additional fees are secured on specific bespoke projects.  During the year under review, we successfully advised several clients in connection with their first financing from the capital markets.  Although uncertainty concerning the impact of "Brexit" has caused some delay in clients committing to projects, further similar assignments have commenced with fees expected to accrue during the next twelve months.

Post balance sheet event

On 11 June 2019, the Group acquired the entire share capital of Oaks Consultancy Limited.  The total consideration for the purchase, including the maximum payment for meeting targets over the next two financial years, will not exceed £1.7m of which 35% is cash and 65% new ordinary shares, as set out in note 25 to the Financial Statements.

The Group will also continue to look at opportunities to expand its consultancy base through acquisition so as to offer an increased scope of services and products to our clients.

 

Principal Risks and Uncertainties

The principal risks currently faced by the Group are:

Financial Instruments

The main financial risks arising from the Group's activities are credit risk, foreign currency risk and interest rate risk, details of which can be found in note 24 to the Financial Statements.

Unfavourable economic conditions and/or changes to government policy

The Group's operating results and its financial condition may be negatively affected by a downturn in the general economic climate within the UK which consequently may have an adverse influence upon government policy and spending, and private sector investments.

A reduced level of economic activity will restrict the amount of outsourcing by companies, local authorities or other bodies and result in the restriction of funding available for the purchase of such services leading to a decline in the number of firms in the sector and their profitability.

The continuing Brexit negotiations and the immediate aftermath of the United Kingdom leaving the European Union could lead to a period of uncertainty; this may cause clients to review their spending with consultancy providers and lead to a reduction in projects.

The focus on the tax arrangements of IR35 within the interim market for public sector bodies has caused a softening of the interim market with government and local authorities.  Clients are carefully reviewing their spend and methods of resourcing, turning to new and alternative models.

Reduction in government investment and funding

The Group's future revenues and profitability will be dependent on the current UK Government's policy regarding expenditure on service and social housing improvements and to public expenditure levels in general.  The introduction of policies to restrict the income for housing providers is a risk that the Group is monitoring closely.

The Grenfell tragedy in 2017 has meant that organisations have invested in remedial works and, although the Government has indicated there is some money available for recladding of tower blocks, this has been provided from the Affordable Housing Programme which provides the grant to clients who are developing new houses.  This reallocation of investment is likely to affect development and regeneration programmes for our clients, although the funding is due to be reinstated in the 2022 Programme.

A change in the political environment relating to regeneration, specifically in the major cities, could dampen private developer appetite and this would have an impact on our clients.

The UK Government and local authorities may decide in future to change their programmes and priorities, including reducing present or future spending and investment where the Group would expect to compete for work.

Competition

The contracts and procurement arrangements under which companies operating in these sectors compete for new business can lead to a higher cost of procuring new contracts and the possibility of not meeting fully the terms of contracts resulting in reduced margins.

Staff skills, retention, recruitment and succession

The success of the Group is dependent on retaining, developing, motivating and communicating with senior management and personnel and, as the business grows, on recruiting appropriately skilled, competent people at all levels.  Any shortage in the availability of appropriately skilled personnel may have a negative impact on the Group.  The directors of the subsidiaries are expected to contribute to the Group's ability to obtain, generate and manage opportunities.

Data governance

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

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

The Group is well placed to provide the full range of services needed by housing providers as the external environment changes.  The outlook for the business continues to be positive.  A continued understanding of its position in the market and delivering value for money to clients will ensure that services and products remain competitive.  In addition, the Group will ensure that its people policies are refreshed and follow good practice so that it can continue to attract and retain excellent staff.

Employees

A split of our employees and directors by gender as at the end of the year is shown below:

 

Male

Female

Directors of the Company

3

2

Directors of subsidiary companies not included in above

3

-

Employees in other senior management positions

2

3

Total senior managers other than directors of the Company

5

3

Other employees of the Group

21

23

Total employees of the Group

29

28

 

The Group consults with its employees regularly through direct updates and conducts an annual review of staff; results are reviewed and discussed by the directors and an action plan agreed and discussed with all staff.  The Group invests in training and developing its employees through both internal and external courses.

The Group follows the legislative requirements set out in the Equality Act 2010 which covers all aspects of equality and diversity, replacing previous legislation covering equal pay, sex, race and disability discrimination.  The Group gives due consideration to all applications and provides training and the opportunity for career development wherever possible.  The Board is also mindful of the Human Rights Act 1998.

 

Environment

We understand and effectively manage the actual and potential environmental impact of our activities.  The Group's operations are conducted such that compliance is maintained with legal requirements relating to the environment.

Corporate and Social Responsibility

The Group recognises that we have a responsibility to ensure the impact of our business is positive, and that we are good corporate citizens.  We focus our corporate and social responsibility in four key areas: sustainability, staff, charitable giving, and supporting communities.

§ We are committed to treating with respect and dignity those we work with.

§ We are committed to honesty and transparency in our communication with staff, external stakeholders, and customers.

§ We recognise the importance of reflecting our clients and networks within the housing sector and seek to promote diversity and inclusion in all our activities.

§ The Group considers a strategic approach to diversity and inclusion is imperative to creating an environment that supports its talented and highly valued people.  Our approach is based on inclusivity, enabling those we work with, and those who work for us, to achieve their potential.

§ We ensure those we work with are provided with equitable opportunities, and do not discriminate because of age, gender, sexuality, disability, ethnicity, or any other protected characteristic listed in the Equality Act 2010.

§ We aim to work actively with our suppliers to ensure they meet our values and consider the sustainability implications of their decisions.

§ We are conscious of our responsibilities to minimise the environmental impact of our activities and to behave in a sustainable manner.

§ We know that, as corporate citizens, we have a responsibility to the broader community.  We work with our stakeholders to understand community priorities and reflect these in our activities.

§ We work with organisations whose customers include some of the most vulnerable in society.  We are committed to supporting our clients as they contribute to their communities and consider the impact of their plans on their stakeholders.

§ We recognise that our staff are the most valuable asset of our organisation.  Our employment policies across the Group seek to exceed mere compliance with relevant legislation, to create a working environment that embraces diversity and offers fairness and equality of opportunity throughout our workplace.

§ Aquila will support the development of all its staff, particularly those from diverse backgrounds.  We will challenge inappropriate and discriminatory behaviours and will continually assess our progress against organisations inside and outside of the sector.

§ We support and encourage our staff to engage in the governance of organisations within our spheres of influence, for example by holding non-executive directorships of charities or not-for-profit organisations.

 

During the year, we continued our commitment to supporting a vibrant and inclusive leadership within the housing sector.  Altair has been providing extensive support to the Leadership 2025 programme.  Altair, along with housing associations L&Q, Optivo, Network Homes and BME London, in partnership with Roffey Park Business School, have led this leadership programme aimed at senior leaders from BME backgrounds.  Now recruiting for the third-year cohort, and supported by the GLA, Leadership 2025's central aim is to support and empower BME senior professionals to become sector leaders of the future.  Leadership 2025 seeks to positively disrupt the housing sector by challenging current perceptions.

Altair has also committed to report on its performance against the findings of the Altair sector review on how it performs in delivering diversity.

Going Concern Basis

The Board updates its three-year business plan annually.  This includes a review of the company's cash flows and other key financial ratios over the period.  These metrics are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast, both individually and in unison.  Where appropriate, this analysis is carried out to evaluate the potential impact of the company's principal risks.  The three-year review also makes certain assumptions about the normal level of capital investment likely to occur and considers whether additional financing facilities will be required.

Based on the results of this analysis, the directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due in the next twelve months and over the three-year period of their assessment; thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

 

Steve Douglas CBE - Group Chief Executive

26 June 2019

 

Consolidated statement of comprehensive income

For the year ended 31 March 2019

 

 

 

Notes

 

 

2019

 

2018

 

 

 

 

 

£

 

£

Revenue

 

4

 

 

7,655,632

 

5,905,221

 

 

 

 

 

 

 

 

Cost of sales

 

5

 

 

(5,788,472)

 

(4,343,456)

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

1,867,160

 

1,561,765

 

 

 

 

 

 

 

 

Administrative expenses

 

5

 

 

(1,259,523)

 

(1,037,287)

Operating profit

 

 

 

 

607,637

 

524,478

 

 

 

 

 

 

 

 

Finance income

 

4

 

 

1,860

 

3,596

 

 

 

 

 

 

 

 

Profit before taxation

 

6

 

 

609,497

 

528,074

 

 

 

 

 

 

 

Income tax expense

 

8

 

 

(143,460)

 

(123,390)

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

466,037

 

404,684

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

-

 

-

Total comprehensive income for the year

 

 

 

466,037

 

404,684

 

 

 

 

 

 

 

 

Earnings per share attributable to owners of the parent

 

 

 

 

 

 

 

Basic

 

9

 

 

1.32p

 

1.20p

Diluted

 

9

 

 

1.15p

 

1.05p

 

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

 

 

Consolidated and Company statements of financial position

 

As at 31 March 2019

 

 

 

 

 

 

 

 

Group

 

Group

 

Company

 

Company

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

As restated

 

 

 

As restated

Notes

£

 

£

 

£

 

£

Non-current assets

 

 

 

 

 

 

 

 

Goodwill

10

2,027,688

 

2,027,688

 

-

 

-

Property, plant and equipment

11

72,270

 

95,747

 

37,548

 

58,967

Investment in subsidiaries

12

-

 

-

 

2,817,930

 

2,700,859

Investment in associates

13

226,620

 

226,620

 

226,620

 

226,620

Investments

14

121,104

 

121,104

 

121,104

 

121,104

 

 

2,447,682

 

2,471,159

 

3,203,202

 

3,107,550

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

15

2,193,927

 

2,109,678

 

1,084,914

 

1,127,499

Cash and bank balances

 

1,719,068

 

969,987

 

334,563

 

343,269

 

 

3,912,995

 

3,079,665

 

1,419,477

 

1,470,768

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

16

1,594,632

 

1,094,690

 

672,895

 

616,971

Corporation tax

 

162,691

 

141,775

 

-

 

-

 

 

1,757,323

 

1,236,465

 

672,895

 

616,971

 

 

 

 

 

 

 

 

 

Net current assets

 

2,155,672

 

1,843,200

 

746,582

 

853,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

4,603,354

 

4,314,359

 

3,949,784

 

3,961,347

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

17

1,765,389

 

1,763,273

 

1,765,389

 

1,763,273

Share premium account

18

1,487,512

 

1,487,512

 

1,487,512

 

1,487,512

Merger reserve

18

2,412,861

 

2,412,861

 

-

 

-

Share-based payment reserve

20

667,878

 

557,653

 

667,878

 

557,653

Retained (losses) / earnings

 

(1,730,286)

 

(1,906,940)

 

29,005

 

152,909

 

 

 

 

 

 

 

 

 

Equity attributable to the owners of the parent

 

4,603,354

 

4,314,359

 

3,949,784

 

3,961,347

 

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 £165,479 (2018: £299,704).

The financial statements were approved by the board on 26 June 2019.

 

 

Susan Kane - Group Finance Director

Company Registration No. 08988813

Consolidated statement of changes in equity

For the year ended 31 March 2019

 

 

 

 

 

 

 

Reverse

 

 

 

 

 

 

Share

acquisition

Merger

Share based

 

 

 

Share

premium

reserve

reserve

payment

Retained

Total

 

capital

account

As restated

As restated

reserve

losses

equity

 

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

Balance at 1 April 2017

1,632,550

533,235

(4,771,473)

7,184,334

422,391

(2,056,679)

2,944,358

Issue of shares

130,723

954,277

-

-

-

-

1,085,000

Total comprehensive income

-

-

-

-

-

404,684

404,684

Share based payment charge

-

-

-

-

135,262

-

135,262

Dividend

-

-

-

-

-

(254,945)

(254,945)

Restatement adjustment

-

-

4,771,473

(4,771,473)

 

 

 

Balance at 31 March 2018

1,763,273

1,487,512

-

2,412,861

557,653

(1,906,940)

4,314,359

 

 

 

 

 

 

 

 

Balance at 1 April 2018

1,763,273

1,487,512

-

2,412,861

557,653

(1,906,940)

4,314,359

Issue of shares

2,116

-

-

-

-

-

2,116

Transfer on exercise of options

-

-

-

-

(6,846)

6,846

-

Total comprehensive income

-

-

-

-

-

466,037

466,037

Share based payment charge

-

-

-

-

117,071

-

117,071

Dividend

-

-

-

-

 

(296,229)

(296,229)

Balance at 31 March 2019

1,765,389

1,487,512

-

2,412,861

667,878

(1,730,286)

4,603,354

 

 

 

 

Company statement of changes in equity

For the year ended 31 March 2019

 

 

 

 

 

 

 

 

 

Share

Merger

Share based

 

 

 

 

Share

premium

Reserve

payment

Retained

Total

 

 

capital

account

As restated

reserve

earnings

equity

 

 

£

£

£

£

£

£

 

 

 

 

 

 

 

 

Balance at 1 April 2017

 

1,632,550

533,235

7,184,334

422,391

108,150

9,880,660

Issue of shares

 

130,723

954,277

-

-

-

1,085,000

Total comprehensive income

 

-

-

-

-

299,704

299,704

Share based payment charge

 

-

-

-

135,262

-

135,262

Dividend

 

-

-

-

-

(254,945)

(254,945)

Restatement adjustment

 

-

-

(7,184,334)

-

-

(7,184,334)

Balance at 31 March 2018

 

1,763,273

1,487,512

-

557,653

152,909

3,961,347

 

 

 

 

 

 

 

 

Balance at 1 April 2018

 

1,763,273

1,487,512

-

557,653

152,909

3,961,347

Issue of shares

 

2,116

-

-

-

-

2,116

Total comprehensive income

 

-

-

-

-

165,479

165,479

Transfer on exercise of options

 

 

 

-

(6,846)

6,846

-

Share based payment charge

 

-

-

-

117,071

-

117,071

Dividend

 

-

-

-

-

(296,229)

(296,229)

Balance at 31 March 2019

 

1,765,389

1,487,512

-

667,878

29,005

3,949,784

                 

 

 

Consolidated statement of cash flow

For the year ended 31 March 2019

 

 

 

 

 

 

2019

 

2018

 

£

 

£

Cash flows from operating activities

 

 

 

Profit for the year

466,037

 

404,684

Interest received

(1,860)

 

(3,596)

Income tax expense

143,460

 

123,390

Share based payment charge

117,071

 

135,262

Depreciation

51,692

 

31,639

Operating cash flows before movement in working capital

776,400

 

691,379

 

 

 

 

Increase in trade and other receivables

(84,249)

 

(759,491)

Increase in trade and other payables

565,712

 

76,997

Cash generated by operations

1,257,863

 

8,885

 

 

 

 

Income taxes paid

(122,544)

 

(116,368)

Net cash inflow / (outflow) from operating activities

1,135,319

 

(107,483)

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

1,860

 

3,596

Purchase of property, plant and equipment

(28,215)

 

(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

(92,125)

 

(980,185)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds of share issue

2,116

 

-

Dividends paid

(296,229)

 

(254,945)

Net cash outflow from financing activities

(294,113)

 

(254,945)

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

749,081

 

(1,342,613)

 

 

 

 

Cash and cash equivalents at beginning of the year

969,987

 

2,312,600

 

 

 

 

Cash and cash equivalents at end of the year

1,719,068

 

969,987

 

 

Company statement of cash flow

For the year ended 31 March 2019

 

 

 

 

 

 

 

 

2019

 

2018

 

£

 

£

Cash flows from operating activities

 

 

 

Profit for the year

165,479

 

299,704

Dividends received

(380,731)

 

(410,820)

Interest received

(1,342)

 

(1,082)

Income tax expense

206

 

205

Depreciation

21,421

 

5,355

Operating cash flows before movement in working capital

(194,967)

 

(106,843)

 

 

 

 

Decrease / (increase) in trade and other receivables

42,585

 

(42,452)

Increase in trade and other payables

121,694

 

333,821

Cash (outflow) / generated by operations

 

184,526

 

 

 

 

Income taxes paid

(207)

 

-

Net cash (outflow) / inflow from operating activities

(30,895)

 

184,526

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

1,342

 

1,082

Dividends received

380,731

 

410,820

Purchase of property, plant and equipment

-

 

(64,322)

Acquisition of investment in an associate

(65,770)

 

(160,850)

Acquisition of investment

-

 

(121,104)

Net cash inflow from investing activities

316,303

 

65,626

 

 

 

Cash flows from financing activities

 

 

 

Proceeds of share issue

2,115

 

-

Dividends paid

(296,229)

 

(254,945)

Net cash outflow from financing activities

(294,114)

 

(254,945)

 

 

 

 

Net decrease in cash and cash equivalents

(8,706)

 

(4,793)

 

 

 

 

Cash and cash equivalents at beginning of the year

343,269

 

348,062

 

 

 

 

Cash and cash equivalents at end of the year

334,563

 

343,269

 

 

Notes to the financial statements

1        General information

Aquila Services Group plc (''the Company'') and its subsidiaries (together, ''the Group'') provide specialist housing 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.

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.

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 affects 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:

Computer equipment        33% per annum

Fixtures and fittings           33% per annum

 

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 separate annual financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

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

Investments 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 FVPL.  A gain or loss on a debt investment that is subsequently measured at FVPL 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 FVPL 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.

Operating leases

Rentals payable under operating leases, net of lease incentives, are charged to the statement of comprehensive income on a straight-line basis over the term of the lease.

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.

Restatement

The directors have reconsidered the Group's accounting policy choice in respect of acquisitions which fall within merger relief provisions.  The directors consider that the parent company financial statements better reflect the impact of the acquisition by not recording an amount equivalent to share premium as a merger relief reserve.  The consequences of change of accounting policy choices are that within the parent Company's balance sheet the merger relief reserve of £7.18m is eliminated and the cost of investment in subsidiaries is reduced by an equivalent amount.  The impact on the Group accounts is in effect a re-designation of reserves such that the reverse acquisition reserve eliminates, and the merger reserve is reported as a credit of £2.41m.

Adoption of new and revised standards

The following pronouncements have been adopted in the year and either had no impact on the financial statements or resulted in changes to presentation and disclosure only:

§ IFRS 2 (amendments) Classification and Measurement of Share-based Payment Transactions *

§ IFRS 9 Financial Instruments *

§ IFRS 15 (amendments) Revenue from Contracts with Customers *

§ IFRIC 22 Foreign Currency Transactions and Advance Consideration *

*Effective for annual periods beginning on or after 1 January 2018

Standards issued but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the Group, which have not been applied in these financial statements, were in issue but were not yet effective.  In some cases, these standards and guidance have not been endorsed by the European Union.

§ IFRS 16 Leases **

§ IFRIC 23 Uncertainty over Income Tax Treatments **

§ IAS 28 (amendments) Long-term Interests in Associates and Joint Ventures**

§ Annual improvements 2015-2017 cycle**

**Effective for annual periods beginning on or after 1 January 2019

The directors have assessed the impact of the standards in issue but not yet effective and have noted below their conclusions on the key new standards.

IFRS 16 (latest amendment issued in January 2016) introduces a new basis for the accounting of leases.  It is effective for all accounting periods beginning on or after 1 January 2019.

The directors have considered the potential impact of IFRS 16 Leases for the accounting period beginning on 1 January 2019 for all existing lease agreements.  At present, the existing lease agreements are either of too short a nature or too low a value to qualify for a transitional change.  The directors are aware that the new standard may impact future lease agreements and will account for any new agreements in line with IFRS 16 Leases.

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.

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 20).

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.

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 information available at 31 March 2019 and concluded that there is both insufficient more recent information available to measure fair value and there is a wide range of possible fair value measurements 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:

 

 

 

 

2019

 

2018

 

£

 

£

Continuing operations - rendering of services

 

 

 

Specialist housing consultancy income

7,086,961

 

5,320,054

Treasury management consultancy income

568,671

 

585,167

 

7,655,632

 

5,905,221

 

 

 

Finance income is comprised of:

 

 

 

Interest revenue on bank deposits

1,860

 

3,596

 

 

 

 

 

7,657,492

 

5,908,817

 

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 and local authorities) across the housing sector.  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.

 

2019

 

2018

 

£

 

£

 

 

 

 

Revenue from Consultancy

5,867,295

 

4,214,909

Revenue from Interim management

1,219,668

 

1,152,950

Revenue from Treasury management

568,669

 

537,362

 

7,655,632

 

5,905,221

 

 

 

 

Cost of sales from Consultancy

4,381,010

 

3,036,105

Cost of sales from Interim management

1,009,498

 

914,801

Cost of sales from Treasury management

397,964

 

392,550

 

5,788,472

 

 

 

 

 

Gross profit from Consultancy

1,486,285

 

1,178,804

Gross profit from Interim management

210,170

 

238,149

Gross profit from Treasury management

170,705

 

144,812

 

1,867,160

 

 

 

 

 

Administrative expenses

(1,259,523)

 

(1,037,287)

 

 

 

 

Operating profit

607,637

 

524,478

 

Within consultancy revenues, approximately 6% (2018: 3%) has arisen from the segment's largest customer; within interim management 12% (2018: 14%); within treasury management 34% (2018: 46%).

Geographical information

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

 

2019

 

2018

 

£

 

£

 

 

 

 

UK

7,179,360

 

5,530,360

Republic of Ireland

305,008

 

298,212

Rest of World

171,264

 

76,649

 

7,655,632

 

5,905,221

 

6        Profit before taxation

 

2019

 

2018

 

£

 

£

Profit before taxation is arrived at after charging:

 

 

 

Auditors' remuneration

37,750

 

37,975

Depreciation of property, plant and equipment

51,692

 

31,639

Staff costs (see note 7)

4,270,476

 

2,943,663

Operating lease costs - land and buildings

41,882

 

49,605

 

7        Staff costs

 

2019

 

2018

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

52

 

40

 

 

 

 

 

2019

 

2018

 

£

 

£

Aggregate remuneration (including directors)

 

 

 

Wages and salaries

3,604,701

 

2,436,180

Share-based payments

117,071

 

135,262

Pension contributions

161,003

 

96,160

Social security costs

387,701

 

276,061

 

4,270,476

 

2,943,663

 

 

2019

 

2018

 

£

 

£

Directors' remuneration

 

 

 

Salary (including taxable benefits)

389,752

 

333,957

Share-based payments

43,440

 

65,871

Pension contributions

16,800

 

12,600

 

449,992

 

412,428

 

 

 

 

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

 

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

 

 

 

 

Salary (including taxable benefits)

161,600

 

126,389

Share-based payments

14,735

 

21,957

Pension contributions

8,400

 

6,300

 

184,735

 

154,646

 

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.

 

2019

 

2018

 

£

 

£

 

 

 

 

Short-term employee benefits

655,495

 

571,880

Share-based payments

64,232

 

113,000

Post-retirement benefits

21,900

 

17,700

 

741,627

 

702,580

 

8        Taxation

 

2019

 

2018

 

£

 

£

Corporation tax:

 

 

 

Current year

143,460

 

123,390

 

 

 

 

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

 

2019

 

2018

 

£

 

£

 

 

 

 

Profit before taxation

609,497

 

528,074

 

 

 

 

Tax at the UK corporation tax rate of 19% (2018: 19%)

115,804

 

100,334

 

 

 

 

Expenses not deductible

27,656

 

23,056

Tax expense for the year

143,460

 

123,390

 

 

 

 

9        Earnings per share

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

 

2019

 

2018

 

£

 

£

Profit after tax attributable to owners of the parent

466,037

 

404,684

Weighted average number of shares

 

 

 

-      Basic

35,272,301

 

33,746,926

-      Diluted

40,353,113

 

38,429,011

 

 

 

 

Basic earnings per share

1.32p

 

1.20p

Diluted earnings per share

1.15p

 

1.05p

 

 

 

10      Goodwill

Group

 

 

Goodwill

 

 

 

£

Cost

 

 

 

At 1 April 2017

 

 

317,688

Additions

 

 

1,710,000

At 31 March 2018

 

 

2,027,688

Additions

 

 

-

At 31 March 2019

 

 

2,027,688

 

 

 

 

Accumulated impairment losses

 

 

 

At 1 April 2017 and 31 March 2018

 

 

-

Impairment losses for the year

 

 

-

At 31 March 2019

 

 

-

 

 

 

 

Net book value

 

 

 

At 1 April 2017

 

 

317,688

At 31 March 2018

 

 

2,027,688

At 31 March 2019

 

 

2,027,688

 

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 27 October 2017, the Group acquired the business of pod LLP and pod Partnership Limited for a fair value consideration of £1,710,000, satisfied by cash consideration of £625,000 and 2,614,458 shares issued at the market price of 41.5p per share.

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 a minimum average growth rate of 10% per annum, this is based on past performance and expected future activity.  Projected cash flows have been discounted at a rate of 5%, this is the rate at which the bank would likely loan cash to the Group.  No terminal value has been applied.  Sensitivities have been applied to the model and an impairment would occur if the growth rate was 0% and a discount rate of 10% was applied, it is considered that these are not reasonable possible changes and therefore no impairment has been made.

 

11      Property, plant and equipment

Group

Fixtures and fittings

Computer equipment

Total

 

£

£

£

Cost

 

 

 

At 1 April 2017

34,339

33,371

67,710

Additions

-

76,827

76,827

At 31 March 2018

34,339

110,198

144,537

Additions

-

28,215

28,215

At 31 March 2019

34,339

138,413

172,752

 

 

 

 

Accumulated depreciation

 

 

 

At 1 April 2017

953

16,198

17,151

Charge for the year

11,435

20,204

31,639

At 31 March 2018

12,388

36,402

48,790

Charge for the year

11,435

40,257

51,692

At 31 March 2019

23,823

76,659

100,482

 

 

 

 

Net book value

 

 

 

At 1 April 2017

33,386

17,173

50,559

At 31 March 2018

21,951

73,796

95,747

At 31 March 2019

10,516

61,754

72,270

 

 

 

Company

 

 

Computer equipment

 

 

 

£

Cost

 

 

 

At 1 April 2017

 

 

-

Additions

 

 

64,322

At 31 March 2018

 

 

64,322

Additions

 

 

-

At 31 March 2019

 

 

64,322

 

 

 

 

Accumulated depreciation

 

 

 

At 1 April 2017

 

 

-

Charge for the year

 

 

5,355

At 31 March 2018

 

 

5,355

Charge for the year

 

 

21,419

At 31 March 2019

 

 

26,774

 

 

 

 

Net book value

 

 

 

At 1 April 2017

 

 

-

At 31 March 2018

 

 

58,967

At 31 March 2019

 

 

37,548

 

 

12      Investment in subsidiaries

Company

 

 

Investments

 

 

 

in subsidiaries

As restated

 

 

 

 

£

 

Cost

 

 

 

 

At 1 April 2017

 

 

2,565,597

 

Additions

 

 

135,262

 

At 31 March 2018

 

 

2,700,859

 

Additions

 

 

117,071

 

At 31 March 2019

 

 

2,817,930

 

 

 

 

 

 

 

Accumulated impairment losses

 

 

 

 

At 1 April 2017 and 31 March 2018

 

 

-

 

Impairment losses for the year

 

 

-

 

At 31 March 2019

 

 

-

 

 

 

 

 

 

Net book value

 

 

 

 

At 1 April 2017

 

 

2,565,597

 

At 31 March 2018

 

 

2,700,859

 

At 31 March 2019

 

 

2,817,930

 

 

 

 

 

 

 

The addition of £117,071 represents 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 2019 are as follows:

 

 

 

 

 

 

 

Place of incorporation and operation

Principal activity

Proportion of ownership and voting rights held

 

 

 

 

 

 

Altair Consultancy and Advisory Services Limited

England and Wales

Specialist housing consultancy

100%

 

Aquila Treasury and Finance Solutions Limited

England and Wales

Treasury management consultancy

100%

 

               

 

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 2019 are as follows:

 

 

Place of incorporation and operation

Principal activity

Proportion of ownership and voting rights held

3C Consultants Limited

England and 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.

 

2019

 

2018

 

£

 

£

Cost of investment in associate

226,620

 

226,620

 

 

 

The Group's share of the net assets in the associate company is £25,670 (2018: £9,413).  Although the associate made a profit for the year of which £16,257 (2018: a loss of £13,710) is attributable to Aquila, this has not been recognised in the financial statements because the carrying value of the investment exceeds the proportion of the net assets of the associate attributable to the Group.

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

2019

 

2018

 

£

 

£

 

 

 

 

Current assets

328,450

 

400,410

Non-current assets

2,996

 

2,210

Current liabilities

(222,183)

 

(282,983)

Non-current liabilities

(6,583)

 

(81,986)

Equity attributable to the owners of the Company

102,680

 

37,651

 

 

 

 

 

 

 

 

Revenue

958,875

 

1,000,905

Profit/(loss) for the year

65,029

 

(54,838)

Other comprehensive income

-

 

-

Total comprehensive income

65,029

 

(54,838)

 

 

 

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

 

 

 

£

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

2019

2018

 

 

£

£

Unquoted equity investments

Level 3

121,104

121,104

 

The Group has an 8% equity shareholding in Assetcore Limited an unquoted company.  Assetscore'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, ie:

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

 

 

2019

 

2018

 

2019

 

2018

 

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

Trade receivables

1,872,528

 

1,815,073

 

-

 

-

 

Group undertakings

-

 

-

 

1,081,715

 

1,124,665

 

Other receivables

9,100

 

24,115

 

200

 

2,259

 

Prepayments and accrued income

312,299

 

270,490

 

2,999

 

575

 

 

2,193,927

 

2,109,678

 

1,084,914

 

1,127,499

 

 

 

 

 

 

 

 

 

 

 

Total

<30 days

 

30-60 days

 

66-90 days

 

>90 days

 

 

£

£

 

£

 

£

 

£

 

31 March 2019

1,872,528

1,744,465

 

50,369

 

23,201

 

54,493

 

31 March 2018

1,815,073

1,650,520

 

-

 

76,495

 

88,058

 

                               

 

No expected credit loss is recognised in the accounts as the amount is not material.

16      Trade and other payables

 

 

Group

 

Group

 

Company

 

Company

 

2019

 

2018

 

2019

 

2018

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

Trade payables

252,632

 

254,782

 

690

 

12,505

Other payables

27,821

 

88,063

 

-

 

65,770

Amounts owed to Group undertakings

-

 

-

 

560,205

 

500,000

Taxes and social security costs

518,504

 

200,487

 

-

 

-

Accruals

568,896

 

324,917

 

112,000

 

38,696

Contract liabilities

226,779

 

226,441

 

-

 

-

 

1,594,632

 

1,094,690

 

672,895

 

616,971

 

Of the contract liability brought forward at the start of the year £226,441 (2018: £123,608) was recognised in revenue in the year.

 

17      Share capital

 

2019

 

2018

 

£

 

£

Allotted, called up and fully paid

 

 

 

35,307,776 (2018: 35,265,461) Ordinary shares of 5p each

1,765,389

 

1,763,273

 

 

 

 

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

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

 

Number of Ordinary shares

Amount called up and fully paid

Share premium

As Restated

Merger reserve

 

 

£

£

£

At 31 March 2017

32,651,003

1,632,550

533,235

2,412,861

Issued at 41.5p per share on

   27 October 2017

2,614,458

130,723

954,277

-

At 31 March 2018

35,265,461

1,763,273

1,487,512

2,412,861

Issued at 5p per share on

   1 February 2019

42,315

2,116

-

-

At 31 March 2019

35,307,776

1,765,389

1,487,512

2,412,861

 

18      Reserves

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

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

As a consequence of a change in accounting policy choices in the Group accounts there has been a re-designation of reserves (see note 2).

 

19      Dividends

 

2019

 

2018

Amounts recognised as distributions to equity holders

 

£

 

£

Final dividend for the year ended 31 March 2018 of 0.55p per share (2017: 0.50p)

193,960

 

163,255

Interim dividend for the year ended 31 March 2019 of 0.29p per share (2018: 0.26p)

102,270

 

91,690

 

296,230

 

254,945

Proposed final dividend for the year ended 31 March 2019 of 0.6p per share (2018: 0.55p)

211,847

 

193,960

 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.  The proposed dividend is payable on 2 August 2019 to shareholders on the Register of Members at 19 July 2019.  The total recommended dividend to be paid is 0.6p per share.  The payment of this dividend will not have any tax consequences for the Group.

20      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 2019 arising from share-based payment transactions is £117,071 (2018: £135,262).

Unapproved scheme

Number

Weighted average

exercise price

 

 

 

Number of options outstanding at 1 April 2018

2,587,093

£0.23

Granted during period

-

-

Forfeited during period

-

-

Exercised during period

-

-

Number of options outstanding as at 31 March 2019

2,587,093

£0.23

 

 

 

Number of options exercisable as at 31 March 2019

2,587,093

£0.23

 

 

 

The exercise price of the options outstanding at 31 March 2019 ranges between £0.10 and £0.42.  The weighted average remaining contractual life of the options outstanding at 31 March 2019 is 1 year (2018: 2 years).

 

EMI scheme

Number

Weighted average exercise price

 

 

 

Number of options outstanding at 1 April 2018

2,077,983

£0.05

Granted during period

836,929

£0.05

Forfeited during period

(21,158)

£0.05

Exercised during period

(42,315)

£0.05

Number of options outstanding as at 31 March 2019

2,851,439

£0.05

 

Number of options exercisable as at 31 March 2019

1,544,511

£0.05

 

The weighted average remaining contractual life of the options outstanding at 31 March 2019 is 6 years (2018: 7 years).

On 1 September 2018, the Company granted 736,929 options to certain employees and directors of the Group at an exercise price of 5p.  The options are exercisable between 1 September 2021 and 31 August 2028.  The weighted average fair value of the options at grant date was £0.3720.  The fair value of the options was measured using the Black Scholes options valuation model.  The inputs into that model in respect of the EMI share options were as follows:

Share price

£0.415

Exercise price

£0.05

Expected volatility

17.80%

Expected option life

10 years

Risk-free rate

1.5%

 

On 29 January 2019, the Company granted 100,000 options to two directors of the Group at an exercise price of 5p.  The options are exercisable between 29 January 2022 and 28 January 2029.  The weighted average fair value of the options at grant date was £0.2753.  The fair value of the options was measured using the Black Scholes options valuation model.  The inputs into that model in respect of the EMI share options were as follows:

Share price

£0.32

Exercise price

£0.05

Expected volatility

18.84%

Expected option life

10 years

Risk-free rate

1.1%

 

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.

 

21      Operating lease arrangements

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

 

 

 

 

 

2019

 

2018

 

£

 

£

 

 

 

 

Within one year

21,524

 

49,650

In the second to fifth years inclusive

-

 

21,524

 

21,524

 

71,174

 

 

 

 

Operating lease payments represent rentals payable by the Group for certain of its office properties.

 

22      Related party disclosures

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

Dividends totalling £137,609 (2018: £171,722) were paid in the year in respect of Ordinary Shares held by the Company's directors.

During the year the Group charged £10,000 (2018: £12,327) to DMJ Consultancy Services Limited for administrative services, a company in which Derek Joseph serves as a director.  At 31 March 2019, the balance owed to the Group by DMJ Consulting Limited was £Nil (2018: £5,000).

At 31 March 2019, the balance owed to Richard Wollenberg for services as a non-executive director were £4,500 (2018: £4,000).

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 2019 year-end £148,103 (2018: £121,626) is due from one customer.  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 £1,719,068 (2018: £969,987) 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 which are placed on deposit.

Capital risk management

Internal working capital requirements are low and are regularly monitored.  Externally imposed capital requirements to which the Group is subject have been complied with in the year.

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. Internal working capital requirements are low and are regularly monitored.

Externally imposed capital requirements to which the Group is subject have been complied with in the year.

25      Post Balance Sheet event

On 11 June the Group acquired the entire share capital of Oaks Consultancy Limited, the total consideration for the purchase, including the maximum payment for meeting targets over the next two financial years will not exceed £1.7m of which 35% is cash and 65% new ordinary shares.

26      Capital commitments

There were no capital commitments at 31 March 2019.

27      Contingent liabilities

There were no contingent liabilities at 31 March 2019.

 

 

Notice is hereby given that the Annual General Meeting of Aquila Services Group plc will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 24 July 2019 at 3:00 pm, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 8 and 10 will be proposed as ordinary resolutions and resolution 9 will be proposed as a special resolution:

 

Ordinary business

 

1.       To receive the reports of the directors and auditor and the financial statements for the period ended 31 March 2019.

 

2.       To approve the remuneration report for the period ended 31 March 2019.

 

3.       That, following a recommendation by the directors, a final dividend payment of 0.6p per Ordinary Share shall be paid to those persons who were named on the register of shareholders on 19 July 2019.

 

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

 

5.       To re-elect as a director, Steven Douglas, who was re-elected at the AGM held on 21 July 2016.

 

6.       To re-elect as a director, Fiona Underwood, who was re-elected at the AGM held on 21 July 2016.

 

7.       That Claire Banks be and is hereby appointed as a director of the Company.

 

 

Special business

 

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

 

     8.1     £206,580 in connection with the valid exercise of the options (both approved and unapproved) granted by the Company (as set out in the prospectus issued by the Company dated 20 July 2015), any unapproved options granted to current or former officers of the Company and options granted to employees and officers of the Company and/or its subsidiaries in accordance with the terms of the Company's Employee Share Option Scheme ("Options"); and

 

     8.2     in any other case, £588,463 (such amount to be reduced by the nominal amount of any equity securities allotted pursuant to the authorities in paragraph 8.1 above in excess of the stated amount)

 

          provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require relevant securities to be allotted and the directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.

 

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

 

9.       That, subject to Resolution 8 above being duly passed, the directors of the Company be and are hereby empowered, pursuant to section 570 of the CA 2006, to allot equity securities (as defined in section 560 of the CA 2006) wholly for cash pursuant to the authority conferred upon them by Resolution 8 above (as varied, renewed or revoked from time to time by the Company at a general meeting) as if section 561(1) of the CA 2006 did not apply to any such allotment provided that such power shall be limited to the allotment of equity securities:

 

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

 

9.2     in connection with the valid exercise of Options;

 

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

 

9.4     otherwise, up to a maximum nominal amount of £88,269.

 

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

 

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

 

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

 

     10.1   the maximum aggregate number of Ordinary Shares that may be purchased is 3,530,777;

 

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

 

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

 

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

            (b)        the value of an Ordinary Share calculated on the basis of the higher of the price quoted for:

 

                        (i)        the last independent trade of; and

                        (ii)       the highest current independent bid for any number of Ordinary Shares on the Official List.

 

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

 

Registered office:                                                                           By order of the board

Tempus Wharf                                                                                  Dr Fiona May Underwood

29a Bermondsey Wall West                                                             Company Secretary

London

SE16 4SA                                                                                         26 June 2019

 

Notes

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.          As at close of business on 26 June 2019 the company's issued share capital comprised 35,307,766 ordinary shares of 5 pence each. Each ordinary share carries the right to one vote at a general meeting of the company and, therefore, the total number of voting rights in the company at close of business on 26 June 2019 is 35,307,766.

 

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

 

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

 

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

 

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

 

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

 

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


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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Annual Report, AGM Notice & Proposed Board Changes - RNS