Report and accounts 2021
E X C H A N G E P L C
Introduction
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Aquis Exchange PLC at a glance
Our vision
2021: A year of continued growth and profitability
Aquis Technologies
Aquis Exchange
Aquis Stock Exchange (AQSE)
Board of Directors
Chairman's statement
Chief Executive’s report
Strategic report
Strategic Report
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30 Directors’ Report
38 Audit, Risk and Compliance Committee Report
40 Nomination and Remuneration Committee Report
Financial statements
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70
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Independent Auditors’ Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the financial statements
74 Notes to the Financial Statements
Aquis Exchange PLC at a glance
Aquis Exchange PLC is an international technology-led exchange services
group. It operates three complementary but distinct business lines:
pan-European cash equities trading businesses (Aquis Exchange), growth
and regulated primary markets (Aquis Stock Exchange/AQSE) and
develops/licenses exchange software to third parties (Aquis Technologies).
Aquis Exchange PLC
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The Group
Aquis Exchange PLC
3 divisions
Aquis Exchange
Operator of MTFs
and related services
Aquis Stock Exchange
(AQSE)
Primary listing &
trading businesses
Aquis Technologies
Developer of exchange
technology and services
Multiple products & services
– MTFs (UK and France)
– AQSE Main Market (RIE)
– Aquis matching engine
– Data services
– AQSE Growth Market (MTF)
– Aquis market surveillance
– AQSE Trading (MTF)
– Aquis market gateway
– Services
– Surveillance
– Operations
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Aquis Exchange PLC Report and accounts 2021
Our vision
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To improve the efficiency
of the investment industry
through transparency
and innovation.
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Aquis Exchange PLC Report and accounts 2021
2021: A year of continued growth and profitability
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The year 2021 saw a number of ‘firsts’ within Aquis Exchange: it was the
first year of running our EU MTF from Paris, after a seamless transition post
Brexit; it was the first year that we operated a transformed AQSE, which saw
a record 24 IPOs in the course of the year and it was the first year where we
implemented a harmonised data structure. These developments all contributed
to a year of continued growth and profitability.
However, it was also a year when Covid-19 refused to go away, resulting
in an adverse effect on some cost activities and initiatives. But despite the
pandemic still being with us, 2022 has got off to a strong start and we believe
all stakeholders can look forward to a positive year ahead for the Company.
Profit (pbt)
Up in excess of 500%
at £3.2m
Brexit
Transition completed
AQSE
Fully integrated
Net Revenue
Up 42% at £16.2m –
growth across all 3 divisions
Paris
Office growing
Data contribution
Up – now a strong 4th
revenue stream
Management strengthened
New Director of Finance
and CRO
Dual listing
Aquis is now quoted on
the AQSE Growth Market’s
Apex segment
Aquis Matching Pool
Launch of AMP — a
non-displayed matching
pool to complement existing
trading activities
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Aquis Exchange PLC Report and accounts 2021
Aquis Technologies
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The Aquis Technologies division
performed well in 2021, with a
number of renewals of existing
contracts and several new clients
coming on board. This was all
achieved against a backdrop of
reduced in-person marketing and
sales activity across the globe.
It is very encouraging that the pipeline for 2022 and
beyond is looking strong with many interesting projects
being considered in a wide variety of asset classes and
geographies. The common theme we are seeing is that
prospects are increasingly looking for cloud-based solutions
when launching new platforms – an area where Aquis has
particular expertise.
Aquis Technologies has been leading the race to a true
‘cloud native’ exchange offering in recent years having done
award-winning, ground-breaking research in the field with
Singapore Exchange and Amazon Web Services. As Aquis
has continued to refine its approach to becoming truly
cloud native, this has attracted interest within the industry
and also served to ultimately win new business for its
technology licensing division.
Aquis has continued to refine its approach to becoming truly cloud native.
Net Revenue £m
Case Study
£3.4
£2.2
£1.6
2019 2020 2021
Investre, the company
establishing the world’s first
exchange for tokenised values-
driven investment funds, is a
significant win for the business
and will be taking the full suite
of Aquis Technologies’ offering
including cloud hosting, outsourced
services – such as regulatory
reporting – and of course its
next generation Aquis Matching
Engine (AME) and Aquis Market
Surveillance (AMS) platforms.
A key differentiator for Aquis
Technologies in this competitive
landscape is its ability to offer
regulatory grade, outsourced
services and the contract with
Investre has been designed with
the EU’s draft Digital Operational
Resilience Act (DORA) in mind.
Aquis responded to the European
Securities and Markets Authority’s
call for evidence on DORA last
summer from the dual perspectives
of being an operator of markets
as well as a technology provider
to other financial markets.
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Aquis Exchange PLC Report and accounts 2021
Aquis Exchange
The last year saw a strengthening of
the AQX Exchange client base with
new Members joining and a number
of existing Members moving to higher
subscription tiers.
Another key development in 2021, was the significant up
tick in the use of newer products, such as the end of day
trading mechanism MaC and auction order type AOD2. As
part of Aquis’ ethos of providing best-in-class client service,
Aquis Exchange has developed a new set of analytics to
help clients measure and improve their trading performance.
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Building the
client base
Providing new
services
Extending the
product offering
A tale of two cities
Following the full implementation of Brexit in January
2021, the core Aquis Exchange business saw a dramatic
move of much of its European trading activities from
London to Paris.
This shift, while very significant, was also completely
seamless thanks to the Company having established
a fully-regulated entity in France well ahead of time.
Revenues from both MTF businesses grew in the year.
London
Paris
Revenue £m
Aquis Exchange value traded per month
£9.8
£7.7
£5.3
2019 2020 2021
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(cid:22) 70
(cid:22) 60
(cid:22) 50
(cid:22) 40
(cid:22) 30
(cid:22) 20
(cid:22) 10
(cid:22) -
7%
6%
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3%
2%
1%
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Aquis Exchange value traded (EUR)
Market share (incl. auc‚ons)
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Aquis Exchange PLC Report and accounts 2021
Aquis Stock Exchange (AQSE)
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This was the first full year in which
the Aquis Stock Exchange business
operated under its new structure,
unveiled at the end of 2020.
The changes included the segmentation of the Growth
Market into the Access segment for very early-stage
companies and the Apex segment for more mature
businesses. Additionally, a market maker incentive scheme
was introduced, which resulted in a reduction of spreads.
The year also saw a significant broadening of the range
of corporate advisers, brokers and institutions publicly
supporting AQSE.
As a result, 2021 was a record year for the division with
24 IPOs launched and over £100 million raised. While
this shows that significant progress has been made, the
full potential of AQSE has yet to be realised, especially in
regards to developing the retail investor offering.
The transformation process
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Increase institutional &
retail investment
– Segmentation into Apex & Access
– Retail access to IPOs
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Raise standards
– Modernise technology
– Enhance regulation
– Improve visibility & branding
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Boost liquidity in trading
– More market makers
– Narrower spreads
IPOs
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Money raised
Case Study
£100m+
SAMARKAND
GROUP plc.
Trading volumes
Spreads
up 400%+
down
by 15%
Number of securities
Companies valued at £100+m
100+
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Aquis Exchange PLC Report and accounts 2021
Samarkand Group plc is a cross-
border, e-commerce technology
and retail group, which is focused
on connecting international brands
with China. When it floated on
Aquis Stock Exchange on 22 March
2021, it was the first to adopt the
Growth Prospectus and, therefore,
entered directly into the Apex
segment of the market. The IPO was
significantly over-subscribed and
funds raised amounted to £17m.
Alongside institutions, over 100
individual investors participated in
the flotation. Samarkand was
very warmly received by the market
at its debut and its market cap rose
from £59m to over £80m by the
end of the year.
Board of directors
Glenn Collinson
Independent Non-Executive Chairman
Alasdair Haynes
Chief Executive Officer
Jonathan Clelland
Chief Financial Officer, Chief Operating Officer
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Glenn first joined the Company's Board in March 2019 before transferring to the Board of Aquis
Stock Exchange Limited ("AQSE") in March 2020. Glenn re-joined the Group's Board on 17
September 2021 as an independent non-executive director (INED).
Glenn started his career at Racal and worked for Motorola, Texas Instruments and Cambridge
Consultants Ltd. before co-founding Cambridge Silicon Radio in 1998. There he served as
an executive director and helped grow the company from a concept to a $3 billion market
capitalisation entity in 2006 (as CSR PLC) and one of the biggest players in the Bluetooth market.
Since leaving CSR he has held a number of non-executive directorships in UK and French
companies - both public and private - that specialise in technology. He is a member of the
Institute of Engineering and Technology and holds an MSc in Electronics from Durham University
as well as an MBA from Cranfield University. He was a member of the CSR team that was
awarded the Royal Academy of Engineering's MacRobert Award for Innovation in 2005.
Alasdair Haynes is the Chief Executive Officer (‘‘CEO’’) of the Company. He founded the
Company in 2012 after identifying the opportunity for providing a high-quality equities
exchange differentiated from all other exchanges through the introduction of a subscription
pricing model and subsequently the introduction of a ban on aggressive trading by proprietary
trading firms. Prior to founding the Company, Alasdair was CEO of Chi-X Europe. Alasdair, as
CEO of the Company, is responsible for the overall strategic development of the Company and
has been instrumental in the expansion and strong organic growth of the Company.
Jonathan Clelland is the Chief Financial Officer and Chief Operating Officer (‘‘COO’’) of the
Company and CEO of Aquis Exchange Europe SAS. Jonathan joined the Company in 2012
when the Company was started and is responsible for all financial and administrative aspects
of the Company. Prior to joining the Company, Jonathan was the COO of Shearman & Sterling
(London) LLP and COO of HSBC Bank plc Corporate Finance and Advisory Division.
Richard Bennett
Senior Independent Non-Executive Director
Richard is a Non-Executive Director of the Company and Chairman of the Nominations and
Remuneration Committee. He joined the Board in March 2014. Richard is the ex-Group
Managing Director & Group General Counsel of HSBC Holdings plc.
Mark Goodliffe
Independent Non-Executive Director
Mark is a Non-Executive Director of the Company and Chairman of the ARCC. He joined the
Board in March 2018. Mark is an independent Non-Executive Director and Chairman of the Audit
Committee of CME Trade Repository Limited.
Mark Spanbroek, Non-executive Director Mark Spanbroek is a non-executive director of
Aquis Exchange. He joined the Board in 2013. He is also the chairman of the Futures Industry
Association’s European Principal Traders Association and the chairman of the supervisory board
of TransTrend BV. Prior to this, he spent nine years as a director of GETCO Europe Limited, the
global independent market making firm. He began his career with Amro Bank and spent 15 years
with Dutch market maker Van der Moolen before joining GETCO in 2002.
David is a Non-Executive Director of Aquis Exchange PLC and Chairman of Aquis Exchange
Europe SAS (since September 2019). He joined the board in June 2020. David is the Global Head
of Finance, Strategy and Participation at BNP Paribas Asset Management. He started his career
as a lawyer with Skadden, before joining the French Central Bank. He then held several positions
at BNP Paribas CIB / Corporate Finance, notably Head of Banking for Europe, Middle East and
Africa. David is also a member of the Allfunds Group PLC Board and Vice Chairman of BEAGF.
Deirdre joined the Board in October 2020 and is a stock market expert having served as the CEO
of the Irish Stock Exchange from 2007 to 2018 and the President of FESE between 2015 and
2018. She is currently a NED and audit committee member of BlackRock iShares and Episode plc;
NED and audit committee chair of Kenmare Resources plc and Chair of Cancer Trials Ireland. She
is a Member/Fellow of the Institute of Chartered Accountants in Ireland since 1991.
Mark Spanbroek
Independent Non-Executive Director
David Vaillant
Independent Non-Executive Director
Deirdre Somers
Independent Non-Executive Director
Philip Olm
Company Secretary
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Aquis Exchange PLC Report and accounts 2021
Chairman’s statement
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Glenn Collinson
Chair
Overall Group net revenue increased
by 42% from £11.4m to £16.2m and
net profit before tax by in excess of
500% from £0.5m to £3.2m driven
primarily by the pan-European
secondary market trading activities
and material increases in data
revenues.
Overview
This is my first official communication since being
appointed Chair of Aquis Exchange PLC (AQX) with effect
from 1st January 2022 and it is with great pleasure that
I am able to report that the Group delivered significant
increases in revenue and net profit before tax reflecting
strong performances from each of the Group's 3 business
activities. These results were particularly noteworthy given
the continued COVID-19 challenges and the requirement
to handle the impact of the UK’s exit from the EU.
During 2021 we were able to recommence trading in
Swiss shares, increase our overall pan-European secondary
trading market share and manage the transition of a
significant part of the secondary exchange trading business
from the UK to France. Our aim is to further develop our
presence in Europe and enhance client relationships within
the EU 27 markets and this includes transferring Jonathan
Clelland, Group CFO & COO to Paris where he has taken
on the additional responsibility of CEO of Aquis Exchange
Europe (AQEU).
We also significantly increased data revenue following the
harmonisation of our offering and made material progress in
our Technologies division whilst innovative changes to Aquis
Stock Exchange (AQSE) increased liquidity and narrowed
spreads which helped drive growth in new issues.
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Aquis Exchange PLC Report and accounts 2021
In addition, we continued to invest in all areas of our
activities including the recruitment of David Stevens who
has joined as Chief Revenue Officer (CRO) and Richard
Fisher as Director of Finance (DoF), who subject to
satisfactory completion of the regulatory due diligence and
other processes currently under way, which are required
under AIM Rules, and approval at the AGM in April 2022,
will step up to take over the CFO responsibilities currently
held by Jonathan Clelland.
We retained our flexible partial remote working
environment demonstrating how important robust business
continuity plans and effective working practices supported
by a positive culture throughout the organisation is during a
rapidly changing and challenging period.
We have also continued with the AQSE integration, the
strengthening of the Paris office and continued to invest in
our technology division making further significant progress
with the target of creating exchange grade cloud platforms.
Board and Governance
The Aquis Exchange PLC Board (“the Board”) continued to
evolve in line with the Group’s expansion and subsequent
corporate governance requirements during the year. Niki
Beattie retired as Chair on 31st December 2021 having
served in that role for 9 years and I was appointed Chair in
her place. I would like to formally thank and recognise Niki
for all her hard work in helping Aquis to successfully reach
this stage of its growth and evolution. Succession plans
have also been established to cover other non-executive
board members as they come towards the end of their
nine-year tenure.
The Group consists of 3 regulated entities: AQX, AQEU
and AQSE, which holds a UK Recognised Investment
Exchange Licence (RIE), that allows it to offer primary
listings as well as secondary markets trading. All three
entities require appropriate independent Board governance.
Aquis complies with the FCA’s Senior Management and
Certification Regime (SM&CR), which ensures that the
identified individuals; namely the Chair, CEO, CFO and
Head of Regulation have clearly prescribed assigned
governance responsibilities.
We are pleased to announce that Fields Wicker-Miurin
and Ruth Wandhofer will join the Board of Aquis as
independent non-executive directors, subject to satisfactory
completion of the regulatory due diligence and other
processes currently under way, which are required by the
AIM Rules, and approval at the next AGM. Fields has a
distinguished career with over 40 years’ experience as
an executive in financial services, a social entrepreneur
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Chairman's statement continued
focused on leadership, and a non-executive director and
committee chair of the boards of both global companies
and government departments. From 1994-7 she led the
transformation of the London Stock Exchange (LSE) and the
London equity markets while CFO and Strategy Director
and from 2006-7 she was the only non-US member of
the NASDAQ Technical Advisory Council. Fields was one
of only 6 experts (and the only British one) advising the
EU Parliament on financial services harmonisation in the
lead-up to the Prospectus Directive. She currently serves
as a non-executive director and member and chair of
key committees of the main boards of BNP Paribas (the
eurozone’s largest bank) and Scor (the world’s 4th largest
reinsurance company) and is Deputy Chair of the Royal
College of Art & Design. It is our intention, as part of our
succession planning process, that Fields will take over the
Senior Independent Director role from Richard Bennett.
Ruth has considerable financial services experience.
Following a senior Executive career at Citi Bank she has
served on a number of Boards as an Independent Non-
Executive Director including the London Stock Exchange
from 2018 to 2020 and currently Gresham Technologies
PLC and Permanent TSB PLC in Ireland. At Aquis, Ruth will
also sit on the ARCC and Aquis Europe subsidiary Board.
Danny Lopez joined the Board of AQSE as an independent
Director during the year. Danny is the CEO of Glasswall
Solutions, an award-winning cybersecurity firm that delivers
unique protection against sophisticated cyber threats in files
and documents through its ground-breaking technology.
Danny is also an independent non-executive director of
Innovate Finance, an independent industry body that
champions the global FinTech community in the UK.
Culture, Stakeholder Engagement and Section 172 Duties
The Board continued its engagement with key stakeholders,
particularly focusing on employees and shareholders.
During the year I assumed responsibility as the appointed
representative of the Board to liaise with employees. We
also undertook our third annual employee engagement
survey and once again overall feedback was very positive.
In addition, the Chair and various members of the Board
continued with a program to meet with key shareholders
when possible either in person or remotely.
The Board discharged its Section 172 (1) duties in a
number of ways, details of which are set out on p15 and
include significant time focusing on strategy for the Group,
considering employees well-being during another very
challenging year and undertaking training in particular in
the area of risk assessment in order to improve the Board’s
effectiveness and maintain high standards of conduct.
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Aquis Exchange PLC Report and accounts 2021
Environment, Social and Corporate Responsibility
The Board is focussed on the Company’s responsibility
to both individually grow and operate on a sustainable
basis and more importantly the wider role that we play as
an exchange operator, in bringing issuers and investors
together to create a sustainable ecosystem where
capital flows and investment can occur. This offers us an
opportunity to make a difference not only through our
own actions but also by creating an environment for other
companies and investors to make a difference.
From the outset Aquis has been committed to improving
the efficiency of markets through transparency and
innovation. In addition, we aim to stimulate growth in the
economy by listening to the needs of issuers and creating
a supportive, fair and low-cost environment for capital
raisers to list instruments, particularly for innovative
young companies. We are committed to educating and
collaborating with these issuers about the expectations and
benefits of creating and adhering to ESG policies.
We have already made progress with our ESG plans through
integrating diversity objectives into our business plans and
reducing our environmental impact, details of which are set
out in the Strategic Report on p13.
Our focus for the year ahead
All of the Aquis business lines are set for further profitable
growth and we continue to invest for future growth.
We recently announced the initiative to assume the
business activities of UBS MTF, the non-displayed matching
pool, which we anticipate will be finalised in April 2022.
This initiative represents a significant extension of the
equities trading services Aquis offers its clients and will
complement its existing suite of lit liquidity pools and
range of order types. The pan-European secondary market
trading activities remains the core of the Aquis Group and
this initiative offers us the opportunity to expand our client
offering. This decision recognises that in recent years there
has been a change in the market’s attitude towards, and
increase in, the use of non-displayed liquidity pools.
Our Board will undergo further planned changes as the
longer serving Non-Executive Directors retire from the
Board, but with our on-going commitment to succession
planning, we are confident of being able to maintain stability
and continue to focus on ensuring the business delivers on
its strategy across all the aspects of the business.
Glenn Collinson
Chair
Chief Executive’s report
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Alasdair Haynes
Chief Executive Officer
The Aquis Group delivered material
progress across all its business
activities during 2021 building on
the maiden profit of 2020 against a
backdrop of continued challenging
economic uncertainty.
The Group dealt comfortably with the requirement to
continue to run the exchange platforms remotely during
the periods of lockdown. It also managed to grow market
share of the pan-European equities market, achieving 5.2%
market share of all trading including auctions during 4Q21,
compared to 4.7% during 4Q20.
Very strong growth from higher trading levels within
Aquis Exchange was supplemented by growth in the
technology and data divisions, together with the successful
integration of AQSE following the acquisition in 2020.
Our growth continues to be driven by the compelling
nature of our subscription model and the strength of
our industry-leading exchange software platform. We
offer a faster and more reliable trading venue to all
market participants compared to other international
trading venues; the benefits of which are clearly now
flowing through into improved financial results.
This resulted in the Group reporting a 42% growth in
revenue to £16.2m (net of provisions) and a pre-tax profit
of £3.2m in 2021, compared to a profit of £0.5m in 2020.
This increase demonstrates the significant progress made
during the last 12 months and provides the Group with
the profitable platform to continue to invest and grow its
principal business activities.
The Ukrainian conflict has resulted in extremely volatile
market conditions and there is no certainty as to when
this conflict will be resolved; however, at this stage, I do
not believe this will have a material adverse effect on the
Group. In addition, there remains some macro-economic
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Aquis Exchange PLC Report and accounts 2021
uncertainty given the continued presence of COVID-19 and
the lack of certainty of the full impact of Brexit; however,
I believe that our strong team and technology platform
should enable us to overcome these and future challenges.
Aquis Exchange
Over the period, the secondary market multilateral
trading facility (“MTF”) platforms operated by the Group
in London and Paris delivered growth despite challenging
economic and regulatory conditions. In March 2019,
the Company had established a French subsidiary with
full regulatory approval to operate an MTF covering the
European Union, AQEU. The transition from London
to Paris took place seamlessly in January 2021 with an
uninterrupted service to all our clients.
The number of trading members grew from 33 to 39 and a
number of members increased their activity levels, leading
exchange revenue to increase by 26% to £9.8m.
Aquis Exchange’s market share of all pan-European trading
including auctions and dark pools strengthened to 6.0%
2Q21 before partially reversing to 5.2% 4Q21. This is
compared to a market share of 4.7% 4Q20 and 1.8% at the
time of the IPO in June 2018. The second half decrease
reflected the more volatile trading conditions during 2H21
which resulted in an industry wide move from lit to dark
pools of liquidity. However, overall volumes executed on
the Aquis platforms during 2H21 were approximately the
same as 1H21 and we are confident our lower toxicity and
24% liquidity will ultimately underpin long-term market
growth. Our proposed acquisition of the UBS MTF activities
will also add immediate market share, providing us with
access to dark pool trading. Our Market at Close (“MaC”)
order type, launched in August 2019, made a material
contribution to trading volumes on the platform and we
anticipate it will grow further during 2022. As the MaC
allows members to enter orders for matching on the Aquis
platform at the closing price of the primary market, we now
operate across a larger cross-section of all available trading.
Aquis Exchange offered clients the ability to trade in
excess of 1,700 stocks and ETFs across 15 European
Markets as at the end of December 2021. From the 4th
February 2021 we were able to restart offering trading in
the Swiss market following the UK / Swiss agreement at the
beginning of 2021. Overall, the available liquidity, equal to
approximately 24% of total pan-European equity liquidity
should underpin future market share growth.
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Chief Executive’s report continued
Brexit and COVID-19 continued to present challenges
during the period, and it is very encouraging that we
have delivered such strong growth despite these issues
and further demonstrates the highly competitive nature
of our exchange business. This performance during a
very challenging period is reflective of the significant
efforts by all the Aquis employees during long periods
of remote working.
Aquis Technologies
In addition to the exchange business, Aquis licenses
its leading exchange related technology to a variety of
international financial services clients across different asset
classes. Revenue from technology licensing in 2021 grew
to £3.4m (net of provisions), reflecting the increasing
interest in our high-calibre, in-house technology; however,
revenue recognition remains lumpy and the timing of this
accounting recognition difficult to predict.
Aquis Technologies continues to develop its technology
platforms to support growth across different asset classes
internationally and during the year made further progress
in the plan to create a cloud native exchange.
Aquis Market Data
Data revenues increased 159% in 2021 to reach £2.3m
as the Group implemented a harmonised data structure.
Data is seen as a key pillar of the Aquis strategic plan,
and we expect that it will continue to make a material
contribution to the Group.
As demonstrated by the increased revenue, data is
becoming a key contributor to the Group results; however,
it may increase further in importance in the long-term if a
consolidated tape for Europe is implemented. Introducing
a consolidated tape for Equities in Europe should improve
the quality and pricing of market data and lead to a fairer
distribution of data fees across the various European trading
venues. The Group is continually monitoring European
Commission plans and market demand to introduce such a
tape and is well placed to understand and grow the Group
data activity as this market in Europe develops.
Aquis Stock Exchange (AQSE)
Following the acquisition of AQSE in March 2020 we
successfully completed the technology migration, concluded
a consultation period with industry participants in order to
11
Aquis Exchange PLC Report and accounts 2021
assess opportunities to enhance the market functionality
and launched an innovative market making scheme, which
has significantly enhanced liquidity and narrowed spreads
of stocks. These innovations have supported the growth
of AQSE including additional market makers, corporate
advisers, brokers and 24 new issuers during the year an
increase of approximately 30% compared to the number
of companies at 31 December 2020. We have a strong
pipeline of new companies and dual listed Aquis Exchange
PLC with effect from 29 March 2022.
The acquisition of AQSE has provided us with the ability to
operate a Recognised Investment Exchange (RIE) giving our
business the same status as the large national exchanges
in Europe and providing further resilience in the face of
possible regulatory headwinds.
Underpinned by the Group’s proven technology and a track
record of transparency and innovation, we have already
made material progress in building AQSE into a competitive
and disruptive primary marketplace, particularly as MiFID II
and the FCA Wholesale Markets Review continues to put
the traditional business model of national exchanges under
pressure. I believe that we have a unique opportunity to
build a pan-European, technology-driven, listing exchange
for growth companies, overcoming several issues faced by
small and mid-cap market participants today.
Further Investment in Research and Development (R&D)
The Group continued to invest in R&D throughout 2021
and will do so in 2022 in order to maintain and enhance the
quality of its technology and its ability to be able to deliver
new products and platform enhancements to its clients.
Our proven trading platform has been developed in-house
and is based on proprietary technology, which does not
rely on third party software suppliers. The effectiveness
and reliability of our technology was demonstrated through
our initial response to COVID-19 and the requirement to
maintain a flexible semi-remote working environment and
the transition of trading activities following Brexit both
of which were achieved seamlessly. The quality of our
technology underpins our Group strategy and is also one
of the principal reasons for the growth in our technology
licensing business.
I believe this structure and continued investment in
R&D gives us a significant competitive advantage on
functionality, price and ability to deliver. Aquis’ nimble
technology organisation ensures expeditious product
development and, together with Aquis’ further investment,
n
o
ti
c
u
d
o
r
t
n
I
Chief Executive’s report continued
will allow the Group to react quickly to dynamic market
conditions. We intend to continue to work on further
developments which will
foster future growth.
Resources
During 2021 we continued to invest in personnel
resources across a number of departments including the
key hires of a Chief Revenue Officer (CRO) and Director
of Finance (DoF) both of whom have joined the
Executive Committee.
To deliver against our current planned or future
initiatives we will where needed continue to further
strengthen our team in particular in support of the sales
and technology activities.
Outlook
Post year-end we announced the initiative to take over
the UBS MTF dark pool activities which we anticipate will
be finalised in April 2022. This is a very exciting initiative
offering us the opportunity to expand our overall pan-
European equities market offering and feedback from the
clients has been very positive.
There remains some macro-economic uncertainty given
the continued presence of COVID-19 and the lack of
certainty of the full impact of Brexit; however, I believe
that our strong team and technology platform should
enable us to overcome these and future challenges. Our
technology systems have dealt efficiently with significantly
higher messaging volumes caused by increased volatility,
and we continue to have an effective remote operating
capability in place. Although it is difficult to forecast with
any degree of certainty the effect of these events on the
broader Group for the time being, I remain confident in our
unique proposition and ready to achieve the next level of
operational, financial and strategic success.
There has been an encouraging start to the current financial
year and so far in 2022 trading continues in line with
current market expectations.
We are already delivering on our vision of a transformation
of primary markets for small and mid-cap stocks through
Aquis Stock Exchange where we have a pipeline of 50-60
companies looking to IPO and expect the growth of the
Exchange to continue at pace throughout FY22.
We continue to invest in our business to ensure that we
maintain our ability to grow. This investment should support
the aim of broadening and improving our market position
through innovation and excellence. We will continue
to promote the Aquis values of transparency, fairness
and simplicity, enabling our end customers to get better
performance and results.
Our principal aim in the future remains to deliver robust
and sustainable returns for the benefit of shareholders and
all our other stakeholders in the medium and long term
and our highly capable and experienced management team
remains focused on serving our clients as we grasp the
opportunities ahead and, in particular, on delivering our
shared goals, and our vision for transformation of primary
markets for small and mid-cap stocks.
Alasdair Haynes
Chief Executive Officer
12
Aquis Exchange PLC Report and accounts 2021
Strategic Report
Overview of the business
Aquis Exchange PLC (“Aquis” or “the Company”), is the
principal operating company and the holding company
of an exchange services group (“the Group”) which
operates three principal divisions: Aquis Exchange, Aquis
Technologies and Aquis Stock Exchange.
• Aquis Exchange, a pan-European Multi-Lateral Trading
Facility (MTF) operator that provides secondary market
trading in pan-European stocks that are listed on other
exchanges.
• Aquis Technologies provides exchange and regulatory
technology to third parties.
• Aquis Stock Exchange Limited (“AQSE”) is a Recognised
Investment Exchange (“RIE”). It runs a primary market
for small and medium size issuers and secondary
market trading in those stocks.
The Company also has a French subsidiary, Aquis Exchange
Europe SAS, (“AQEU”), an MTF established to enable
European clients to continue to trade EU stocks, which
provides secondary market trading in EU 27 stocks listed
on other exchanges.
The Company and AQSE are regulated by the UK Financial
Conduct Authority (“FCA”), while AQEU is regulated by the
Autorité de Contrôle Prudentiel et de Resolution (“ACPR”)
and the Autorité des Marchés Financiers (“AMF”).
Following the UK exit from the EU 99% of all EU
continuous trading moved from the exchange business in
London (AQXE) to AQEU on 4th January 2021. This move
was handled seamlessly.
The Group has made significant progress in the
development of its activities since the IPO in June 2018
and is well positioned to realise its primary objective
which is to become the leading technology driven
exchange services group and also to help drive improved
transparency and fairness in the securities trading market
through the introduction and enhancement of competition
and innovation. With these guiding principles the Group’s
main focus is to:
• Capitalise on regulatory and technical shifts in market
infrastructure by providing an exchange which offers
deeper liquidity and transparency, higher quality
execution for intermediaries and investors;
a robust and innovative platform that responds to their
needs;
•
License its proven technology platform to third parties
that require trading or market surveillance technology;
and
• Positively address the current market issues of spread
and liquidity in small and mid-cap trading through
AQSE’s RIE status
The trading platform for all Group entities is run on the
same trading technology and all entities apply a unique
subscription-based pricing model based on electronic
messaging traffic and a lit market. This means that the
dealing price prior to the trade is transparent to the whole
market. This is in contrast to pricing on dark and grey
markets, where price discovery is only available to the
market post-trade.
AQXE and AQEU MTFs apply a non-aggressive trading
model, which means that certain types of trading behaviour
are not allowed, and it encourages more passive trades
to rest in its order book. This creates greater depth of
liquidity and less potential for information leakage or
“toxicity” in the market. Independent studies have verified
that Aquis’ non-aggressive trading model has materially
lower toxicity than its competitors, which reduces adverse
price movements thereby lowering the implicit costs of
trading for the end investor. This is a significant positive
differentiating factor.
AQSE is focused on creating a primary market for growth
company issuers and a secondary market for the trading of
their stocks.
Clients and Competitive Landscape
The client base of all three entities consists, principally,
of investment banks and brokers acting on behalf of
institutions such as pension funds, asset managers and
retail brokers to execute their orders and, in the case of
AQSE, it includes the issuers who wish to raise capital on
the platform.
The principal competitors to Aquis business are the
incumbent national exchanges and other pan-European
trading venues. In secondary markets they charge
customers on a per transaction model to allow fully
aggressive trading.
• Continue to increase the number of members of Aquis
Exchange and associated trading volumes by providing
Since Aquis commenced trading it has increased its market
share of EU secondary markets trading, which has grown
13
Aquis Exchange PLC Report and accounts 2021
Strategic Report
to reach an average of 5.2% of the overall pan-European
market of all trading including auctions and dark pools
during 4Q21, an increase of 11% compared to the 4Q20
average of 4.7%. This business is well positioned to benefit
from regulatory changes, which support transparent, low
toxicity growth on “lit” markets as well as fairness and
non-discriminatory behaviours. The regulatory trends and
institutional support for greater transparency in European
equities trading also support future business growth.
Aquis’ matching engine and surveillance technology has
been operating successfully for a number of years. It
has been developed for multi-asset class trading and is
attracting customers wishing to license the technology
as the trading engine for a broad range of instruments.
The Company’s principal technology customers are new
equity trading venues where the market is opening up
to competition as well as exchanges specialising in digital
assets, MTF operators across asset classes and market
participants requiring real time market surveillance. Aquis
delivered a proof of concept for cloud-based exchange
technology in partnership with AWS and the Singapore
Stock Exchange in 2020 and continues to see significant
interest in this space. Competitors of the licensing business
are other matching engine providers and surveillance
software providers.
We are a strong supporter of the regulatory principles such
as best execution and greater transparency for markets
that have been introduced and we are committed to
complying with market regulation. We believe that we are
well placed to manage any regulatory divergence between
the UK and EU given our robust and agile business model,
our lean cost structure and our technology leadership.
The Board has established for the senior Executives clear
financial and non-financial KPIs for the Group. For 2021
these were revenue, earnings before interest, taxation,
depreciation and amortisation (EBITDA), quality of
technology, planning, sustainability and compliance with
regulations and corporate governance. The Group has
established financial and non-financial KPIs to allow clear
performance measurement against the most important
targets set by the Board. Financial KPIs represent 70%
and non-financial 30%. The financial KPIs are based
on target revenue and net profit before tax. The non-
financial KPIs address strategy, resources, information
and communication. Further details are given in the
Remuneration Report.
Financial Review
It has been a year of very strong revenue growth during 2021. The breakdown of the principal revenue activities is as
follows:
Revenue analysed by class of business
Subscription fees
Licence fees
Issuer fees
Data vendor fees
Group
2021
£
2020
£
YoY Growth
%
9,766,046
4,404,606
692,743
2,319,360
7,738,284
2,319,700
524,402
894,867
17,182,755
11,477,253
26.2
89.9
32.1
159.2
49.7
The Group generated an EBITDA for the year of £4.3m
compared to £1.5m in the previous year. The continued
growth in profits during 2021 is primarily attributable to
increased exchange revenue as members’ subscriptions
have risen as a result of increased trading levels, as well
as increased revenue from data, technology licensing and
issuer fees.
The trade receivables resulting from revenue from licensing
technology contracts attract an IFRS 9 (impairment
provision on the trade receivables arising from contract
assets). This year the application of IFRS 9 has resulted
in an impairment provision during the year of £972k
(2020: £109k).
The profit before taxation for the 2021 financial year of
£3.2m compares very favourably with the profit before
taxation in 2020 of £0.5m. Profit after tax increased more
than 300% to £4.3m and EPS (fully diluted) more than
400% to 15p per share. The profit before taxation is after
14
Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report
applying amortisation charges to internally generated
intangible assets, as well as depreciation and finance
charges, which reflect the accounting treatment of leases
under IFRS 16. In December 2021 Aquis signed a lease
agreement for a new office and will move into this in Q2
2022, with the existing property lease maturing in May
2022. The lease liabilities arising are amortised over the
life of the leases, attracting a finance expense charge
amounting to £26k for 2021, whereas the right of use
assets are depreciated on a straight-line basis over the life
of the lease, attracting a depreciation charge of £149k for
2021. These costs are in line with the 2020 results.
The Group’s cash and cash equivalents as at 31 December
2021 were £14.0m (2020: £12.3m) maintaining the
Group’s strong cash conversion rate.
Group investments, productivity and capital
management
The Group has continued to invest in its technology
offering, including the creation and enhancement of new
order types, enhancements to the surveillance system and
auction systems and further technical development to
enable the move into different asset classes. In addition,
the Group has made further investment in personnel
resources as it continues to develop capability and brand
awareness.
The Group is required to maintain sufficient capital to
meet the regulatory obligations for all entities. These
are calculated and updated annually. At 31 December
2021 the Company ICARA requirement amounted to
£3.9m (2020: £3.2m). The individual entities of the Group
meet the respective FCA and ACPR capital adequacy
requirements with plenty of headroom for further
investment in business operations.
The Board considers that its investments have contributed
to the Group’s ability to gain new clients, broaden
its customer base and increase revenue. The Group
recognises the importance of continuing to enhance
productivity, and the commitment to future investment,
both technically and in terms of resource training and
development. The Group has established both short- and
long-term incentive plans based on performance for all
employees, which are set out in more detail in the Report
of the Nomination & Remuneration Committee and aligns
the employees’ interests with the long-term strategic
objectives of the Group.
15
Aquis Exchange PLC Report and accounts 2021
In deciding its investment plans, Group management
receive a detailed analysis of the exchange and client
technical opportunities and related time requirements
on a quarterly basis, and then determine the personnel
and other resources that it wishes to allocate to these
opportunities. This information also includes an estimate of
the deployment cost.
Future development of the business
In order to support its long-term vision and in order
to strategically position for continued growth, Aquis
has invested significantly in its business differentiators,
R&D in the technology platform, brand and personnel
resources. The Group is cognisant of the importance of
such investments to maintain innovation and strong quality
delivery.
AQSE Acquisition
Following the acquisition of AQSE in March 2020, the
Group has invested significant expense and resource into
re-building the market presence and brand and has started
to realise some of the anticipated synergies across the
Group’s exchange memberships, data offering and use of
technology.
Stakeholder Management
The Group complies with the requirements prescribed by
S172 of the Companies Act to disclose how the Company
promotes its success for the benefit of all stakeholders.
The Board is acutely aware that the Group’s long-term
success and sustainable value creation is critically reliant
on maintaining good relations with all stakeholders and
ensuring that decisions are made after taking account of
the principal stakeholders’ interests. Specific stakeholder
considerations undertaken by the Board this year included,
but were not limited to, the Group’s handling of the
continued challenges posed by the COVID-19 pandemic
and the Group’s handling of Brexit.
In arriving at these decisions, the Board has assessed the
likely consequences of any decision in the long term, the
interests of the Group’s employees, the need to foster the
Group’s business relationships with suppliers, customers
and others, the impact of the Group’s operations on
the broader community, the desirability of the Group
maintaining a reputation for high standards of business
conduct, and the need to act fairly between shareholders
of the Company.
Strategic Report continuedStrategic Report Details on how Aquis and its Board engage with its
principal stakeholders, are given below.
Clients
Management pro-actively gathers regular feedback from
clients, both positive and negative, in order to understand
their ever-evolving needs, identify any improvements that
would result in better client outcomes or satisfaction and
to foster good client relations. This is regularly fed to the
Board at meetings or on an ad hoc basis, if required.
Shareholders
Executive Management meet with the key shareholders at
appropriate times during the year and provide feedback to
the Board.
Additionally, the Chair and other Non-Executive Directors
continued, where possible, to engage with a subset of key
shareholders through one-on-one meetings during the last
quarter of 2021 to introduce the new Chair and to ensure
that their views and opinions are clearly understood.
Shareholders have been extremely appreciative of these
meetings and feedback is provided to the Board in both
written and verbal updates.
Employees
The Group promotes a positive and inclusive culture.
Team meetings and Group briefings are held on a regular
basis to ensure all personnel are informed of the Group’s
performance and key strategic objectives and goals. In
addition, during the year Glenn Collinson took over the
responsibility as the Board’s nominated representative
for employee engagement and facilitated meetings with
employees so as to ensure that their voices are heard
through an independent ear from the Board.
This was complemented by the annual employee
engagement survey, which allowed employees to provide
feedback in confidence. The Group first implemented
the employee engagement survey in 2019 and results
have been consistently positive. The Executive develops
an action plan to address the key areas highlighted with
particular emphasis on our core values and on investing
further in employee training and career development.
Suppliers
The Group has identified key suppliers that include
suppliers of office hardware and consumables, as well as
suppliers such as liquidity providers and advisers such as
16
Aquis Exchange PLC Report and accounts 2021
auditors, brokers, recruitment agents, legal advisers and
PR consultants. The Group seeks the independent and
experienced view of its key advisers on various matters
as and when required. Sometimes this is directly with the
Board, or the Board will ensure that the Executive reports
on advice provided to the Group when needed.
Regulators
The Group takes an open and co-operative approach
with its regulators and positively embraces the FCA’s 11
principles of business. The Group submits regular returns
to the FCA, the ACPR and the AMF, and employees whose
roles encompass compliance activities are encouraged
to attend regular external presentations and workshops
arranged by the regulators on topical issues, and also
receive regular professional update training. All new and
existing employees and advisers are made aware of the
FCA, ACPR and AMF’s principles of business, and undergo
training required by finance professionals working at an
equities exchange group. The Group arranges regular
compliance assessments to provide assurance that the
Group is meeting the requirements of the regulator.
During the year the Board undertook training, which
covered reminders of Directors’ duties in the UK and
Europe with regards to the regulation and oversight of
financial market infrastructures.
Compliance with Section 172 (1) of the Companies Act
2006
Section 172 of the Companies Act 2006 requires a
Director of a company to act in the way he or she
considers, in good faith, would most likely promote the
success of the company for the benefit of its members as
a whole. As such, Section 172 requires a Director to have
regard, amongst other matters, to the:
•
•
Likely consequences of any decisions in the long-term
Interests of the Company’s employees
• Need to foster the Company’s business relationships
with suppliers, customers and others
•
Impact of the Company’s operations on the community
and environment
• Desirability of the company maintaining a reputation
for high standards of business conduct
• Need to act fairly as between members of the
company
Strategic Report continuedStrategic Report We set out below some examples of how the Directors
have had regard to the matters set out in Section 172(1)
when discharging their Section 172 duty and the effect of
that on certain of the decisions taken by them.
Board Effectiveness and High Standards of Business
Conduct
The Board remains committed to high standards of
corporate and regulatory governance. During the year we
undertook training, which covered reminders of directors’
duties under UK law, under the UK Corporate Governance
Code and also under UK and European regulation with
regards to the oversight of financial market infrastructures.
Additionally, it explored how to improve the Group’s cyber
security risk management frameworks and became more
informed about the policy-making environment for financial
markets in Europe.
Consequences of Long-Term Decisions
Considerable time was spent focusing on the Group’s
strategy and challenging management to think about the
longer-term impact of decisions, how those decisions were
in line with the Group’s values, the long-term sustainability
of the Company and its subsidiaries and the desire to
maintain its reputation. All Board members took part in
focused risk management training in the year.
The Board has also undertaken succession planning both
for the Executive and the Board. Niki Beattie reached
her nine-year tenure as a director on 31st December
2021 when she ceased to be independent and stepped
down as the Chair and as a Non-Executive Director. She
was succeeded by Glenn Collinson. Two other NEDs are
also coming towards the end of their nine-year tenure
during the next 12-18 months when they will cease to be
independent. The Board operates a skills matrix to map the
requirements of the organisation against the current skills
and composition of the Group Board and the skills and
composition gaps that will be created as the Group evolves
and directors move off the Board. This matrix is updated
at least annually and was used effectively in the search for
the latest additions to the Boards of both Aquis and AQSE.
During 2021, the Group recruited a new Chief Revenue
Officer (CRO) and a new Director of Finance (DoF).
Management plan to recruit additional employees, in
particular in the technology area in the UK and France
during 2022.
COVID-19 and The Interests of Employees
COVID-19 continued to present significant challenges
for every firm including Aquis during 2021. The Board
monitored the day-to-day operations, the business
continuity plans and the employees’ well-being carefully
throughout the year. This continued as the various
lockdowns unfolded and included considering work from
home issues as well as the office environment for the
periods between lockdowns.
The Board has also ensured engagement with employees
through the engagement survey and the nomination of
a Board representative to meet with employees when
possible.
Our ESG journey
Our Purpose
In its role as a disruptor, Aquis’ aim has always been to
improve financial markets by maintaining the utmost
transparency and least market toxicity for the benefit of
the end investor. In this way it reduces both the explicit
and implicit costs of trading that are borne by investors.
In addition, the Group is also focused on stimulating growth
in the economy by listening to the needs of issuers and
creating a supportive, fair and low-cost environment for
capital raisers to list instruments, particularly for innovative
growth companies while ensuring an appropriate balance
of investor protection. Aquis also recognises the pivotal
role it has to play in educating those issuers about ESG and
how they can set and achieve goals and facilitating their
disclosures to investors.
Our Culture, Diversity and Employee Well-being
The Group is committed to ethical business conduct and
expects the highest standards of integrity to be followed by
the Directors and all employees. The Aquis Group culture
is underpinned by the following core values:
• Trust (integrity, competence and deliver what and
when we say we will);
• Pro-activity (discipline and initiative);
• Openness (transparency);
• Excellence (through creativity and innovation);
• Collaboration (through positive, collegiate and free
thinking); and
• Respect.
17
Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Despite a further increase in employee numbers in 2021
the Group has a relatively small resource base, and
therefore has concentrated on recruiting personnel with
a high degree of specialist skills. The Group provides on-
going training and support with the aim of ensuring that
personnel retain and enhance their technical skills and that
employees feel that there is opportunity to develop within
the Group.
The Group has a Diversity and Inclusion Policy that
emphasises Aquis’ desire to create a supportive and
inclusive culture amongst the whole workforce. We
believe it is in the best interests of the Company and
the wider community to promote diversity and eliminate
discrimination in the workplace. Our aim is to ensure
that all employees and job applicants are given equal
opportunity and that our organisation is representative of
all sections of society. Each employee will be respected
and valued and able to give their best as a result.
The policy reinforces our commitment to providing equality
and fairness to all in our employment and not providing
less favourable facilities or treatment on the grounds of
age, disability, gender reassignment, marriage and civil
partnership, pregnancy and maternity, race, ethnic origin,
colour, nationality, national origin, religion or belief, or sex
and sexual orientation.
We are opposed to all forms of unlawful and unfair
discrimination. All employees, management, agency, casual
workers, and independent contractors no matter whether
they are part-time, full-time, or temporary, will be treated
fairly and with respect. When Aquis selects candidates
for employment, promotion, training, or any other benefit,
it will be on the basis of their aptitude and ability. All
employees will be given help and encouragement to
develop their full potential and utilise their unique talents.
Therefore, the skills and resources of our organisation will
be fully utilised, and we will maximise the efficiency of our
whole workforce. Aquis’ commitments are:
• To make training, development, and progression
opportunities available to all staff.
• To promote equality in the workplace, which Aquis
believes is good management practice and makes
sound business sense.
• To encourage anyone who feels they have been
subject to discrimination to raise their concerns so we
can apply corrective measures.
• To encourage employees to treat everyone with
dignity and respect.
• To regularly review all our employment practices and
procedures so that fairness is maintained at all times.
Aquis has implemented an equality, diversity and inclusion
policy which has been communicated to all employees
emphasising that they are obligated to comply with all
its requirements and promote fairness in the workplace.
The policy is also be drawn to the attention of agents,
stakeholders, customers and job applicants. It is therefore
very pleasing to report that gender and non-gender
diversity strengthened further during the course of the
year. It was also pleasing to see that through focused
effort with external recruiters a more diverse selection of
candidates made it through to the shortlists, at all levels of
seniority and we believe our diversity and inclusion policies
will have a positive impact on the successful execution of
the Group strategy.
This year the Group has established aspirational 3-year
diversity targets for the Board and for the employees.
These targets have been established to underpin the
importance the Board places on this issue and to provide
clear guidance and focus on these aspirations. The Board
has established a target to increase the overall female NED
ratio. During 2021 the Board assessed the profiles and
skill sets of the current Board Directors, including potential
retirees during the next 3 years in order to help the
Company meet its 3-year aspirational diversity targets.
• To create an environment in which individual
differences and the contributions of all team members
are recognised and valued.
The employee targets are set out below:
1.
improve all diversity ratios
• To create a working environment that promotes
2.
increase the management team diversity ratios
dignity and respect for every employee.
• To not tolerate any form of intimidation, bullying, or
harassment, and to discipline those that breach this
policy.
3. decrease the female / male seniority gender pay gap
4.
include more comprehensive employee statistical
analysis in the annual report
18
Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report 5.
create a targeted diversity inclusive supplementary
development program for employees who we believe
have the potential to be promoted to Exco in the next
5 years
6.
implement a more comprehensive mentoring system
In addition, the Group has established targets over the next
three years (i.e. to 2025) where the aspirations are to:
•
reduce the average seniority pay-gap by 12% from
37% to 25%.
• meet the Hampton Alexander Review target of at least
30% of board members being female
• have a gender pay (seniority) gap no worse than the
UK Financial Services industry average
The flexible working policies which we implemented in
2020 have proved very successful. During the last quarter
of 2021 we saw an increased desire for a partial return
to work from a large % of our employees which we have
supported whilst adhering to government recommended
health guidelines.
The Group runs an annual anonymous employee survey
and arranges regular meetings with the Board nominated
employee representative. In addition, employees have
regular one-to-one sessions with their immediate line
manager and annual reviews where development plans are
discussed to ensure individuals’ objectives are aligned to
the business strategy and to improve levels of employee
engagement.
The Group has a commitment towards preventing slavery
and human trafficking throughout our supply agreements:
the Group complies with the Modern Slavery Act 2015
(MSA) and adopts a zero-tolerance approach towards
slavery and human trafficking and expects all those in our
supply chain (and contractors) to comply with the MSA.
Consumption and The Environment
The Directors endeavour to promote the consumption
of resources in a manner that fosters the long-term
sustainability of the business and the environment in
which it operates and are conscious of the requirement to
monitor these activities.
Although the Group has a small number of personnel and
associated office space, it recognises that it contributes
directly to carbon emissions through its consumption
of energy, waste and water, through staff travel and,
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Aquis Exchange PLC Report and accounts 2021
indirectly, through its consumption of supplies and
equipment including office hardware.
During the year on average employees continued to
work remotely for material periods due to the COVID-19
pandemic which contributed to reduced carbon emissions
associated with employees commuting to the office and
the Group remains committed to continuing to operate a
flexible remote working structure which will continue to
have an incidental beneficial effect on carbon emissions.
In addition, the building electricity provider for the
current Aquis office obtains energy from 100% renewable
electricity and carbon neutral gas. Good progress has been
made in the year with regard to the 2 data centres used
by Aquis, and we are pleased to note that both are now
powered by 100% renewable energy.
We have also continued progress on the target to deliver
a cloud native exchange. While most major financial
exchanges operate using physical data centres, the
infrastructure required to run a trading environment is
massive, costly and unfriendly to the environment because
of the fact that servers must always be “on” and significant
duplicative processing occurs. If trading firms could
leverage all the benefits of running a cloud-based solution,
the cost optimisation, scalability and resiliency would
make a positive contribution to reducing the impact on the
environment.
Governance
When Aquis listed in 2018, it voluntarily chose to follow
the highest standards of corporate governance when it
committed to adhering to the UK Corporate Governance
Code and the Directors have implemented appropriate
measures to comply, so far as practicable, with the Code.
Aquis and AQSE are directly authorised and regulated
by the FCA and AQEU is regulated by the ACPR and the
AMF. The Group fully complies with the relevant rules and
guidelines in all respects and monitors that compliance
throughout the year.
The Group’s objective is to establish an open and
cooperative relationship with all regulators, and it positively
embraces the FCA’s 11 principles of business. The Group
submits regular returns to the FCA, and employees whose
roles encompass compliance activities are encouraged
to attend regular external presentations and workshops
arranged by the FCA on topical issues, and also receive
regular professional update training. All new and existing
Strategic Report continuedStrategic Report employees and advisers are made aware of the FCA’s
principles of business, and undergo training required by
finance professionals working at an equities exchange
group. The Group arranges regular compliance assessments
to provide assurance that the Group is meeting the
requirements of the regulator.
The wider community
Aquis has been involved in a number of charitable and
community enhancing initiatives e.g. supporting the NHS
and Help for Heroes throughout the year and employees
have shown their desire to make a difference.
Knowledge Transfer Project
Aquis is proud to have started the partnership process with
the University of Derby as part of a two-thirds government
funded Knowledge Transfer Project (“KTP”) that will
involve industry-led research and development on Artificial
Intelligence for trading platform surveillance alerts that will
promote an efficient and accurate market abuse monitoring
system.
Current surveillance systems are deterministic, handcrafted,
generate a high percentage of false positive alerts and run a
high risk of human fatigue and/or boredom. Consequently,
market abuse events may often be missed when analysing
a large number of false positives. As part of our mission to
improve transparency in financial markets, this partnership
will publish research papers on machine learning techniques
that will mitigate human error in detecting fraudulent
trading practices that harm the integrity of, and trust in,
financial systems that are critical for the modern economy.
As part of our mandate to strive for innovation, we are
excited for what the future holds for machine learning
and artificial intelligence in the trading industry and are
encouraged by the widespread support for this project.
Next Steps in Our ESG Journey
During the strategic planning process, we assessed a
number of potential ESG initiatives Our short-term goal is
to complete the assessment of the sustainability risk factors
of the Group’s day-to-day activities and translate them into
a meaningful Group-wide ESG strategy that can be woven
into our main strategic goals.
In addition, during 2022 we aim to:
• Develop a formal ESG policy
• Set formal short, medium and longer term non-financial
goals on material ESG topics that are directly relevant
to our business
•
Introduce a first round of formal initiatives to reduce
ESG impact and manage ESG risk
• Undertake an initial assessment of potential broader
ESG initiatives that may have a positive impact on the
wider community through the Group’s role as a primary
exchange
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Principal risks and uncertainties
The identification and management of risk is an integral part of the execution of Aquis’ strategic vision and operations. The
below provides an overview of the principal risks facing the Group:
STRATEGIC RISKS
Risk
Risk Description
Mitigation
Economic landscape
The effects of Ukraine, COVID-19 and
Brexit on the global, European and UK
economic conditions and the speed of
recovery may negatively affect the Group’s
trading volumes resulting in lower revenues
or increased costs.
Aquis derives revenues from both fee and
contractual annuity-based streams, which
is less impacted by cyclical market driven
trends.
The recent horrific events in Ukraine have
caused immeasurable suffering and harm
but are not expected to have a material
adverse effect on the economic landscape
nor on the Group’s trading volumes.
Whilst COVID-19 had a material negative
effect on the economic landscape for many
countries; the UK and European economies
have made substantial recoveries during
the last 18 months and overall total market
volumes have remained strong
Since Brexit pan-European trading has
shifted almost 100% to the Group’s MTF
subsidiary in France, AQEU, that has full
regulatory approval from the ACPR to allow
the Group to continue to operate as an
MTF.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Legal/Regulation
The Group operates highly regulated
entities, including two MTFs and an RIE
and is required to maintain sufficient
regulatory capital and comply with all legal
and regulatory requirements necessary to
operate the Group’s business. All three
group entities hold regulatory licences and
must hold their own capital.
There is the risk that current regulation
or future changes could have an adverse
effect on the Group. Possible impacts may
be (but are not limited to):
• Sustained downturn in revenues could
put the regulatory capital at risk;
• One of the group entities could be
subject to a fine or a lawsuit which may
draw on the entities’ finances
• Change in regulation may increase
costs for the Group or require
unanticipated investments
•
Inability to meet regulatory
requirements could result in a licence
being withdrawn and prevent the
Group entity from operating its core
business
In addition, changes in tax law may result
in an increase in the overall tax burden of
the Group which could have a materially
adverse effect on the Group’s business.
Senior management consistently monitor
regulatory developments including the
MifiD review and Wholesale Markets
Review, which are discussed and actioned
at Audit Risk and Compliance Committee
(ARCC) meetings and engage regularly
and directly with regulators including
where appropriate formal responses to
consultation documents.
The Board reviews a quarterly dashboard
that incorporates the Group’s behaviour
and statistics in relation to regulatory
obligations. The Board also places
considerable importance on having
competent staff and advisors to help
manage legal and regulatory risk.
The Board considers regulators as key
stakeholders and endeavours to maintain
positive working relationships with the
regulators for each group entity.
Each member of the Group currently has
sufficient excess regulatory capital to deal
with any potential changes in regulation.
Changes in regulation are usually
accompanied by a period of consultation
that allows market participants to provide
feedback before changes are made and a
further period to prepare for change once
changes in regulation are determined.
The Group consistently reviews the risks
associated with possible changes in tax
legislation.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Competition
Intellectual property and
data protection
Risk Description
Mitigation
Aquis’ competitive differentiation is
underpinned by its subscription-based
model and lack of aggressive trading. This is
hard for incumbent exchanges to replicate
without significantly impacting their own
revenue models which have always been
based on a per transaction basis and on
charging significant data fees to participants
who trade aggressively.
Whilst the effects of competitor behaviour
can never be fully mitigated, the Company
has consistently increased its secondary
market trading market share since it was
formed. Senior management initiatives
to reduce this risk include: consistent
monitoring of competitor activity and,
maintaining close customer relationships so
as to understand their evolving needs, and
the acquisition of a primary listing business
thereby gaining RIE status.
Following the change in the tick size regime
for SIs in June 2021 their competitive
advantage was removed, and their market
share gains have decreased.
As a disruptive firm, Aquis remains vigilant
about changing technologies and how it
might embrace them to further its business
model.
The Group has taken steps that are
consistent with industry practice to reduce
these risks by establishing controls to
protect the confidentiality and integrity
of customer information, and these
controls are consistently reviewed for their
effectiveness at quarterly ARCC meetings.
The Group operates in a highly competitive
global industry.
The principal competitors to the trading
business are the national exchanges,
other pan-European MTFs / Recognised
Investment Exchanges (RIEs) which
currently charge customers on a per
transaction model and accept both passive
and aggressive market makers. These
exchanges have significant market share
and could move to copy Aquis’ subscription
fee model and/or differentiate between
passive and aggressive trading.
Other competitors to the exchange
business are ad hoc OTC trading and
Systematic Internalisers (“SIs”) which
operate off-exchange models and make
money through spreads.
New technologies such as distributed
ledger technology are emerging but have
yet to gain ground in trading, clearing
custodian services and settlement of
equities.
The Group is reliant on copyright, trade
secret protection, database rights and
confidentiality and licence agreements with
its employees, clients and others to protect
its intellectual property rights.
The Group is subject to a number of laws
relating to privacy and data protection,
including the UK’s Data Protection Act
1988 and the Privacy and Electronic
Communications (EC Directive) Regulations
2003 and the EU General Data Protection
Regulation (GDPR).
23
Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report OPERATIONAL RISKS
Risk
Technology
Risk Description
Mitigation
The operation of the Group is critically
reliant on the smooth and efficient
functioning of technology.
Technological failures would negatively
affect clients and the Group’s ability to
deliver on performance obligations. It could
also result in regulatory scrutiny or fines or
requirements for further investment.
Failure to protect Intellectual Property
could mean that competitors gain access
to Aquis’ technology or make Aquis
susceptible to external infiltration.
These risks could adversely affect the firm’s
financial and competitive situation.
A defining feature of the Aquis business
model is its high calibre, in-house
technology. The technology was built
and is maintained by highly skilled
employees. Aquis actively seeks to retain
the employees through flexible attractive
working practices and remuneration
policies and to continually enhance the
technology to meet client requirements.
The Group’s key infrastructure,
development and operational activities are
prioritised accordingly, and resources are
closely and consistently monitored and
reviewed with the aim to ensure smooth
functioning of technology at all times.
Aquis technology is securely maintained
to protect it from unauthorised access
with full back up and version control if
remediation is required.
Aquis has system control features that
are regularly tested to protect data and
Intellectual Property (IP).
The Group maintains a Disaster Recovery
plan that encompasses input from all
departments and is continuously monitored
and reviewed by appropriately experienced
individuals.
The comprehensive back up and
contingency plans in place are tested
regularly.
The Board reviews a quarterly dashboard
that incorporates technology performance
statistics and operational resilience.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
COVID-19
Risk Description
Mitigation
There remains a risk that the COVID-19
pandemic could still negatively impact
personnel being able to operate the
exchanges.
There are also risks to clients, liquidity
providers, suppliers, markets and the
economy in general.
It is possible that governments or regulators
could impose extraordinary measures such
as closures of the market for a prolonged
period.
Remote working practices across the
industry may slow overall technology
programs at client and supplier
organisations which may have a longer-
term impact on Aquis. This could manifest
in new members not joining any of the
Aquis entities in the anticipated timelines
or slower adoption of new products
developed by Aquis.
The Group continued to successfully
operate a partial remote working plan
throughout 2021 and this remains in place,
with all staff demonstrating adaptive and
flexible behaviours The processes that the
Group has adopted are in accordance with
UK and French government guidelines. This
plan mitigated against and will continue
to mitigate against potential resource
shortages.
The Group has demonstrated and is
confident that it can operate the exchanges
remotely for a prolonged period.
The Group’s clients and liquidity providers
have also demonstrated that they
can remotely manage their activities
successfully. Key suppliers have also
successfully adopted disaster recovery
procedures.
Equity markets were at times during 2021
very volatile, experiencing significantly
higher than normal volumes. During these
periods the Company did not experience
any significant issues or delays and the
system has proven that it has more than
sufficient capacity to operate the market.
Aquis is not overly reliant on new members
to achieve its growth plans. The main
source of anticipated growth in trading is
from the increase in volumes of current
customers.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Cyber security
The Group’s networks and those of its
third-party service providers may be
vulnerable to security risks, cyber-attack or
other leakage of sensitive data.
Potential outcomes of such an attack might
include outages of the market, possible
attacks which seek to hold Aquis to ransom,
unintended movements of the company
finances or generally create reputational
and financial risk.
The Board reviews a quarterly dashboard
that incorporates cyber technology
monitoring.
Regular penetration tests are undertaken
by a third party and a new employee cyber-
training program was developed to address
this issue.
Internal exercises to alert employees to
the possibility of phishing emails are held
regularly.
The MTF has “kill” switches in place which
are intended to restrict clients if rogue
behaviour is evidenced.
The Group takes precautions to protect
data in accordance with applicable laws.
Extensive risk management protocols are
adopted in the IT control framework so as
to prevent, detect and respond proactively
to cyber security attacks.
The comprehensive back up and
contingency plans in place are tested
regularly.
Key management
personnel and employees
The Group has a relatively low headcount
and hence is exposed to key person risk.
The Group has established emergency
staffing plans for Senior Executives.
The Group’s future development and
prospects depend on its capacity to attract
and retain key personnel.
The N&RC reviews immediate and
medium-term succession plans and the
ARCC assesses key person risk.
Aquis employs a number of strategies to
ensure the Group is able to attract and
retain a high calibre of talent. The Group
employs a rigorous recruitment process and
offers competitive salaries and benefits,
whilst promoting a culture of diversity,
high performance and inclusion from the
top. The Group continues to demonstrate
its ability to recruit high-quality individuals
and is clearly viewed as a dynamic and
attractive employer.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Client concentration
The nature of equity financial markets
is that the majority of volumes are
undertaken by a small pool of market
participants. This risk has been increased
as some of the smaller market participants
have decided to route via larger banks that
maintain direct exchange memberships.
The Company initially concentrated on
connecting to large investment banks,
brokers and is now broadening its client
base to reduce client concentration but
recognises that volumes from smaller
participants are not likely in aggregate to be
as large.
The Group revenue is therefore dependent
on a concentrated number of customers
and significant change to one customer’s
flow could negatively impact revenues.
The Company can offset some of the risk
of industry concentration through the
quality of the MTF exchange offering.
The Company seeks to maintain positive
relationships with all current and future
members of its MTF exchange and to be
vigilant for change at any client.
The Group has diversified its business
activities to include technology sales, data
and market gateways and entering the
primary exchange business following the
acquisition of AQSE.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Liquidity provision
concentration – Aquis
In most trading venues globally, there is
considerable symbiosis between the venue
and the liquidity providers on which the
venues rely to make continuous prices and
enhance liquidity.
This risk is mitigated internally through a
number of actions including those set out
below, and externally through the likely
evolution of the structure of the European
equity market.
In Europe, where there is significant
competition between a limited number
of trading venues, the ability to attract
significant liquidity to the venue is critical.
The barriers to entry are even higher for
new trading venues, which must build
liquidity from scratch and differentiate
themselves to attract and retain it.
Market makers themselves have differing
business models and trading strategies; as
a result, they may be attracted to different
types of venues depending on the value
proposition.
Aquis has a highly differentiated business
model compared to the incumbent
platforms, both dramatically reducing the
cost of trading and also not permitting
aggressive trading by market makers. This
has been a driver of Aquis’ success to date.
The number of market makers that have
trading models currently aligned with
Aquis’ business philosophy is even more
concentrated than on the main markets.
Therefore, Aquis has always relied heavily
on a small number of key market makers
to support liquidity and a wider group to
supplement it. These market makers have
not always been the same organisations
and have changed over time.
Nonetheless, it is a risk that if a key market
maker decides to change its business model
or philosophy it would cause a short-term
disruption in the total liquidity provided and
could impact Aquis’ ability to differentiate
itself through the prevention on non-
aggressive trading flow.
Internally, management are working to
maintain a close relationship with all market
makers to ensure that there continues to
be positive synergies for all parties. Aquis
is also actively seeking to continue to
grow membership and diversify its liquidity
providers.
As Aquis’ market share increases further,
more natural liquidity should be attracted
thus diluting the concentration risk away
from a small number of liquidity providers
to a broader set of investor flows.
Externally, the market share growth that
Aquis has achieved to date is a strong
indication of the benefits to its members
and liquidity providers and makes it likely
that natural liquidity will continue to grow,
making the Aquis marketplace deeper and
more attractive for all counterparties.
Additional liquidity providers are likely
to follow over time as they should be
incentivised to adapt or create new models
that capitalise on Aquis’ value proposition
and interaction with a wider set of trading
flows.
The number of liquidity providers in
European equity markets is still relatively
small today, reflecting the continued need
to invest in technology and regulatory
oversight. However, as the effects of MiFID
II, particularly with its mandate for best
execution, continue to reduce competition
in liquidity provision, the Group’s low
toxicity model and innovative offerings will
continue to counter this risk
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Liquidity Provision
Concentration – AQSE
A relatively small, but growing, population
of market makers support AQSE with
similar risks to those identified above with
regard to potential short-term impact if
one were to change its business model or
approach.
The AQSE Market Maker warrant scheme
should ensure this risk is effectively
countered on that Exchange.
Supplier risk
The Group is exposed to the failure of a
key supplier. Examples include loss of data
supplied to Aquis which is an important
input into the trading platform.
Aquis has back up plans in place for key
suppliers and has agreed procedures and
thresholds in place for managing this when
necessary.
This may impact the ability to undertake
market surveillance.
FINANCIAL RISKS
The Group’s current assets comprise cash and liquid resources including trade receivables arising directly from its
operations. The main financial risks are capital, credit, liquidity and foreign currency risks. The Group actively manages the
balance sheet and risks without the use of any financial derivatives.
The Group has materially increased its profits during 2021 demonstrating that it has been able to manage the strategic
and operational risks; however future results could be negatively impacted if any of the risks outlined above were to occur.
Financial risk management disclosures have been made in Note 6 of the Group Financial Statements accompanying this
report.
Viability statement
The Directors have undertaken a detailed review of the Group’s prospects, taking account of the Group’s current position
and principal underlying business risks and its prospects for the period 2022 – 2026. These include considering the
impact during 2021 and potential future impact due to Ukraine, COVID-19 and Brexit. The Directors consider this to be
an appropriate period considering the target business and revenue growth, and the objective to maintain and enhance
profitability during this period.
The Group maintains a strong equity capital position which has been strengthened during 2021 as profitability has been
enhanced. This result complemented by the Group achieving and in certain areas exceeding its goals and taking account
of its ability to execute successfully its principal strategic objectives and operating goals during continued challenging
circumstances, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment.
This assessment has concentrated in particular on the key differentiating factors that the Group has established, the
quality and resiliency of the Group’s technology, the brand and market position, and the reputation and quality of the
experience of its key personnel resources.
This Strategic Report was approved by the Board of Directors on 28 March 2022 and is signed on its behalf by:
Alasdair Haynes
CEO
Jonathan Clelland
CFO
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Aquis Exchange PLC Report and accounts 2021
Strategic Report continuedStrategic Report Directors’ Report
The Directors of Aquis Exchange PLC are delighted
to present their report to shareholders and other
stakeholders, together with the audited consolidated
financial statements for the year ended 31 December 2021
with comparatives for the year ended 31 December 2020.
Board of Directors
The Directors of the Company who were in office during the year and up to the date of signing the financial statements
were:
Executive Directors
Non-executive Directors
Alasdair Haynes CEO
Appointed to the Board March 2012
Jonathan Clelland CFO
Appointed to the Board October 2012
Niki Beattie Chair
Appointed to the Board January 2013
Retired from the Board December 2021
Glenn Collinson
Re-appointed to the Board September 2021
Nominated Chair of the Board from January 2022
Mark Spanbroek
Appointed to the Board March 2013
Richard Bennett Senior Independent Director
Appointed to the Board March 2014
Mark Goodliffe
Appointed to the Board March 2018
David Vaillant
Appointed to the Board June 2020
Deidre Somers
Appointed to the Board October 2020
Directors’ Appointment, Removal and Duties
The Board of Directors has the authority to appoint and
remove a Director. Directors’ appointments are subject to
shareholder approval annually.
The Company has recruited Directors that it considers
have the knowledge, skills and diversity of experience
expected of a director in that role including specialist
financial, accounting and legal knowledge.
Directors have continued to act, throughout the year, in
the way which they consider, in good faith, would be most
likely to promote the success of the Company for the
benefit of all its stakeholders.
The Directors recognise that they must avoid any situation
where they have or can have an interest that directly or
indirectly conflicts with or may conflict with the Group’s
interests. Directors are required to confirm at every Board
meeting, if applicable, the nature and extent of any interest
they may have in any transaction or arrangement to which
the Group is or may be a party.
In addition, the Directors have exercised independent
judgement throughout the year and can confirm that
they have not accepted any benefit (for example gifts or
inducements) from third parties arising from their position
as a director which were intended to induce the director to
act in a certain way.
Board Committees
The Board has established two committees: The Audit, Risk
and Compliance Committee (“ARCC”) and the Nominations
and Remuneration Committee (“N&RC”).
The ARCC has been chaired by Mark Goodliffe since June
2018. Mark Spanbroek is the other committee member.
Mark Goodliffe and Mark Spanbroek have considerable
accounting, risk and compliance experience, and both
have previous Audit Committee experience which includes
financial reporting and internal control reviews.
The ARCC is responsible for reviewing a wide range
of matters, including reviewing the annual financial
statements, oversight of the relationship with the external
auditor, internal audit reports, compliance submissions,
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Aquis Exchange PLC Report and accounts 2021
Strategic Report
MLRO reports, risk assessments and ICAAP assessments.
A summary review of the ARCC’s activities is presented to
the Board by the chair of the ARCC on a quarterly basis
and minutes are made available to the Board.
The management team is responsible for ensuring the
“right tone at the top” and that the ethical and compliance
commitments of management and employees are
understood and adhered to throughout the Group. The
ARCC supports and provides guidance on this area. This is
achieved through adherence to the Group’s core values,
annual compliance training and whistleblowing policy.
The ARCC meets at least 4 times per year. The ARCC
advises the Board on the appointment of external auditors
and on their remuneration for the audit work, and
discusses the nature, scope and results of the audit with
the external auditors.
The ARCC has established a comprehensive assessment of
the internal and external risks which could adversely affect
the Group and actively assesses the potential impact and
mitigating factors, if applicable. These risks are reviewed
quarterly by the ARCC.
The N&RC is chaired by the Senior Independent Director
Richard Bennett. The other members of the N&RC during
the year were Niki Beattie and Glenn Collinson. Niki
retired from the N&RC with effect from 31.12.21. In
October 2021 Glenn was re-appointed to the Board of
the Company and stepped down from the Board of AQSE.
Glenn was a member of the N&RC throughout 2021. The
Executive Directors and other senior personnel may be
invited to attend meetings when appropriate to provide
advice.
The N&RC is responsible, inter alia, for assessing the skills
of the Directors, succession planning for all Group Boards,
its Committees and Executive Committee, identifying and
selecting candidates as required as well as assessing and
reviewing the remuneration packages of the Directors
and other members of the Executive Committee. It also
approves the high-level remuneration packages for all other
employees. It makes proposals for the granting of share
options and other equity incentives pursuant to any share
option scheme or equity incentive scheme in operation
from time to time. All Committee decisions on these
matters are recommended to the Board for approval.
Minutes of N&RC meetings are made available to the
Board and a summary review of the N&RC’s activities is
presented to the Board by the chair of the N&RC on a
quarterly basis.
The remuneration and terms and conditions of
appointment of the Non-Executive Directors of the
Company are set by the Board after recommendation by
the N&RC.
The N&RC supports the ongoing development of the
Group Boards and the Executive team to ensure that the
Group retains and recruits the best talent for its needs and
supports the Board of the Company in its work to secure
the long-term health of the Group and its strategy for
success in a fast-changing world.
The remuneration of the Executive Directors is designed
to attract, motivate and retain Directors of the calibre
necessary to execute effectively the strategic objectives
of the Group and to enhance shareholder return. The
remuneration packages are designed to reflect the success
of the Group’s performance while maintaining a balance
between short- and long-term performance and reward.
In addition to the two Board committees, Aquis has created
an Executive Committee (Exco) to help facilitate day-
to-day administration management. Exco was expanded
during 2021 and consists of the Chief Executive Officer,
Chief Financial Officer (also Chief Executive Officer of
Aquis Exchange Europe SAS, AQEU), Head of Regulation,
Chief Technical Officer, Head of AQSE Regulation, Head
of Technology Sales, Head of Marketing, Chief Revenue
Officer and the Director of Finance.
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Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report Governance Summary
Directors’ Board and Committee attendance during 2021 is summarised below:
Director
Niki Beattie
Alasdair Haynes
Jonathan Clelland
Richard Bennett
Mark Spanbroek
Mark Goodliffe
David Vaillant
Deidre Somers
Glenn Collinson
Board
ARCC
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
1/1
4/4
4/4
N&RC
5/5
5/5
5/5
Results
The Group made an EBITDA for the year of £4.3m (2020:
EBITDA of £1.5m).
After taking into account interest, depreciation and
amortisation the Group made a profit before tax of £3.2m
(2020: profit before tax of £0.5m).
There were no discontinued operations in the current or
previous year.
With a proven business model and further potential
improvements in the economic landscape (subject to the
events in Ukraine) post COVID-19 and Brexit, the Board
considers that it is important to continue to invest to
support the long-term success of the business. The Group
intends to further invest in sales resources and technology
in London and Paris during 2022 and thereafter, to take
advantage of the scope for significant long-term sales and
value creation for shareholders.
Dividend
The Directors do not recommend the payment of a
dividend.
Future developments
The Group has made significant progress in both its
MTF exchange and data activities during 2021 with
growth in revenue, numbers of clients, client pipeline and
market share despite an extremely challenging market
environment. Third party analysis by BigXYT and BMLL
shows that Aquis Exchange is consistently offering deeper
liquidity at the best price than many other competing
platforms. The potential for new customers continues
to increase as the trading opportunities on the Aquis
Exchange become more widely recognised, as does the
opportunity for increased trading volumes. Several banks
/ brokers who are focused on how really to achieve best
execution have already increased their activities on Aquis
Exchange and it is anticipated that others will follow during
2022.
Licensing activities continue to grow across a range of asset
classes as the Group’s brand and reputation strengthens,
and regulatory changes generate new requirements for
investment banks, brokers and trading companies. In
addition, the continued growth in the Group’s exchange
activities helps promote the quality of the technology and
assists in generating technology licensing opportunities
internationally and across different asset classes through
Aquis Technologies.
Following the successful completion of the acquisition
of AQSE in 2020 significant progress was made in the
integration and rebuilding of this market. This acquisition
has helped to support the long-term vision of Aquis which
is to be “The leading technology-driven exchange services
group”, adding primary markets capability to the growing
secondary markets and technology licensing activities
capability with an established issuer base
Audit information disclosure
So far as the Directors are aware, there is no relevant
audit information of which the auditors are unaware, and
32
Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report the Directors have taken all reasonable steps to ascertain
any relevant audit information and ensure the auditors are
aware of such information.
Pension obligations
The Directors can confirm that as at 31st December 2021
there were no qualifying third-party indemnity provisions
or qualifying pension scheme indemnity provisions, for the
benefit of Directors of the Group or directors of associated
companies and that such provisions were not in force
during the financial year.
Political contributions
The Directors can confirm that no political contributions,
financial or otherwise, were made during the year.
Post balance sheet events
The Ukrainian conflict has resulted in extremely volatile
market conditions and there is no certainty as to when
this conflict will be resolved; however, at this stage, the
Directors do not believe this could have a material adverse
effect on the Group and consider this to be a non-adjusting
post balance sheet event at 31.12.21.
The COVID-19 pandemic has continued to cause
considerable health and economic uncertainty and
significant market volatility and volumes. Notwithstanding
the significant adverse effect this has had and may
continue to have on the economy and whilst it is possible
that this pandemic may result in further adverse effects on
the Group at this stage the Directors do not believe that
they will be material.
In March 2022 Aquis announced the intention, subject to
contract, to assume the business activities of UBS MTF, the
non-displayed matching pool of UBS AG.
With effect from 29th March 2022 the Group dual-listed
on Aquis Stock Exchange Limited whilst remaining listed on
the AIM market of the London Stock Exchange.
The Directors can confirm that there were no other
significant post-balance sheet events.
Research and development
The Group is committed to continue to invest in research
and development to enhance the quality, efficiency,
effectiveness and breadth of its technology. The Group
has made significant progress through the course of the
year through enhancing the core matching engine and
development of innovative new order types. In addition,
the Group, through Aquis Technologies, has delivered
and/or been mandated to deliver, technology solutions
to clients across a number of different asset classes. This
progress reflects the quality and market reputation of the
Group’s technology which is underpinned by the significant
investment in research and development.
Subsidiary companies / Associates / Branches outside
the UK
The Company established a subsidiary company in France:
Aquis Exchange Europe SAS (AQEU) and this subsidiary
company received regulatory approval to operate as
an MTF from the Autorité de Contrôle Prudentiel et de
Résolution (ACPR) in March 2019. This subsidiary company
has and will drive the European growth aspirations of the
Group and has positioned the Group well to accommodate
the post Brexit outcome. Aquis does not have any other
subsidiaries, associate companies or branches outside the
UK.
Share Capital Structure
Aquis Exchange PLC is dual listed on the AIM market of
the London Stock Exchange and since 29th March 2022
on Aquis Stock Exchange. The Company has 27,505,449
ordinary shares of 10p each in issue (31st December 2020:
27,169,696). The shareholders with a significant holding
(more than 3.0%) in Aquis as at 31st December 2021 were
as follows:
XTX Markets
Mr G Roveda
Mr R Ricci
Canaccord Genuity Wealth Management
Kendall Capital Markets
Mr A Haynes
Schroder Investment Management
Rathbone Investment Management
J O Hambro
Madison Avenue Partners
AXA Framlington Investment Managers
9.5%
9.3%
7.8%
5.4%
5.0%
4.8%
4.6%
4.3%
4.0%
3.2%
3.2%
At 31st December 2021 there were no securities
carrying special rights and no restrictions on voting rights.
At 31st December 2021, 1,878,952 shares representing
6.8% of the total issued share capital was held by the
Directors.
33
Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report The Company operates both an Employee Share Incentive
Plan (SIP) ), company share option plan (CSOP) and a
Restricted Share Plan (RSP). The voting rights of the shares
held in the trust relating to the SIP, CSOP and RSP are
managed and controlled by the trustee.
Other than the Executive Directors’ participation in
long term incentive plans, full details of which including
change of control provisions are included in the Directors’
Remuneration Report on page 42, there are no significant
agreements that would alter or terminate on a change of
control of the Company and no agreements with Directors
or employees for compensation for the loss of office or
employment that occurs because of a successful takeover
of the Company.
Shareholder return
Aquis shareholders’ return for 2021 amounts to 34.0% compared to the AIM market of the London Stock Exchange which
reported a return for the same period of 5.2%.
Source: London Stock Exchange
Professional development programs
The Company supports the continued development of the
Directors. This is achieved primarily through attendance
at external conferences and seminars and in-house
presentations. It also runs technical and management
development training programs for employees.
Corporate Governance
The Board continued to apply the UK Corporate
Governance Code (the ‘‘Code’’) recommendations on
stakeholder engagement during the year. It focused on
active interaction with stakeholders, information on which
is set out in further detail in the Strategic Report.
34
Aquis Exchange PLC Report and accounts 2021
The Directors have implemented appropriate measures,
as stated in the Strategic Report to comply, so far as
practicable, with the Code.
The Group’s Corporate Governance Statement outlining all
of its governance policies and including its commitment to
the UK Corporate Governance Code is available from the
Company Secretary or in the corporate governance section
of the Group’s website at: https://www.aquis.eu/investors/
corporate-governance/.
Employees
Details on the Company’s approach to employee
engagement and human rights and diversity is given in the
Strategic report on page 18, and information on the Share
Incentive Plan (SIP) can be found in the N&RC report.
Directors’ Report continuedStrategic Report Diversity policy
The Group has adopted a Diversity and Inclusion policy
which is set out in more detail in the Strategic report on
pages 17, 18 and 19.
Environment
The Directors recognise the broader Group’s responsibility
to consume resources in a manner that ensures the long-
term sustainability of the business and the environments in
which it operates in.
Although the Group has a relatively small resource base
and associated office space, the Group recognises that it
creates carbon emissions from energy, waste and water
in its offices as well the data centres, staff travel and
indirectly through the supply of our office hardware.
Details of the initiatives that the Group has adopted in
its efforts to reduce the impact of this carbon footprint is
included in the Strategic Report on page 19.
Principal risks and uncertainties and risk management
policies and objectives
The principal risks and uncertainties of the Group, together
with mitigating actions taken, are detailed in the Strategic
Report from page 21.
In addition, the financial risk management disclosures have
been included in Note 6 in the Group Financial Statements
accompanying this report.
Financial reporting process – internal control and risk
management systems
The Group has established review processes, internal
controls and risk management systems in relation to the
financial reporting process, which are formally set out
within the Groups Internal Control Framework and Risk
Management Framework.
management maintain a risk register which addresses
all the identified business risks which is reviewed and
assessed by the ARCC on a quarterly basis. The majority
of the technology licensing clients are less established
businesses and are therefore monitored on an individual
basis. For AQSE there are a larger number of clients, but of
much smaller scale and credit risk is closely monitored on
both a collective and individual basis
The financial statements are subject to external audit
before being reviewed and approved by the Board prior to
shareholder approval.
Aquis prepares monthly management accounts and a
quarterly dashboard which is presented to the Board. The
management accounts consist of actual monthly profits
or losses compared with Budget, Balance Sheet, variance
commentary and forecast regulatory capital surplus and
cash flow for the rest of the calendar year. The quarterly
dashboard includes an analysis of operational statistics
and analyses, compliance and regulatory developments,
marketing-initiatives and financial performance reviews and
projections.
All new exchange members, software licences and data
subscribers are authorised by the Chief Financial Officer
(CFO). New exchange members or clients of Aquis
Technologies are subject to Know Your Clients (KYC)
and Anti-Money Laundering (AML) checks by the Aquis
compliance department. All software licences are reviewed
and approved by the CFO. All expenditure and client
invoices are authorised by the CFO or the Director of
Finance (DoF).
Aquis utilises an external provider for the internal audit
function. The ARCC approves the departments and
functions that are audited. All key operational departments
and / or functions are audited within a 3-year period.
Aquis has recruited a Board with the relevant financial
and other complementary skills to exercise oversight
over the reporting, assessment and use of the Group’s
financial information and to provide robust challenge to
management. The principal committee which oversees this
area is the ARCC.
Any issues raised by the external audit team will be
communicated to, considered by and logged by the ARCC.
The external and internal audit team are granted access to
ARCC and Board papers and any issues identified by the
external audit team will be communicated to the internal
auditors by the CFO.
The exchange transaction and credit risk levels of Aquis
are considered low given that the majority of the clients
are large financially secure financial institutions who
are invoiced monthly; however, in order to ensure that
Aquis reviews and manages the business risks effectively,
Aquis has established a Disaster Recovery crisis team and
clear Disaster Recovery plans which are tested regularly.
The plans focus on the exchange functionality and Aquis’
ability to ensure trading activities can continue under
any circumstances and providing support as required for
35
Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report technology clients. Initiation of the Disaster Recovery plan
is authorised by either the CEO or the CFO. The Disaster
Recovery plans include the ability to manage activities from
home and/or the requirement to take on new premises
(temporarily or, if necessary, permanently) and include
the ability to access all systems including Aquis’ financial
systems.
Access to IT networks, equipment, storage media and
program documentation is restricted to authorised
individuals. All Aquis information is stored in secure
dedicated data centres. Access to the data centres is
restricted. All information is password controlled and
the IT infrastructure department monitor system usage.
Access to IT systems, programs, master data, transaction
data and parameters and to processing in web-based or
web-enabled financial systems is restricted and password
controlled.
Aquis has clearly defined whistleblowing policies which are
set out in the Staff Handbook which is distributed to all
employees when they join the Group. The whistleblowing
policies are also included in the compliance training
program which all employees undertake annually. These
policies include escalation of problems and concerns to
senior management and the monitoring of how these are
addressed. The policies provide clear guidance on reporting
concerns including if required to the Chair. Alternatively,
employees can report concerns directly to the Financial
Conduct Authority (FCA).
Statement of Directors’ Responsibilities in respect of
the financial statements
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group and Company financial
statements in accordance with UK-adopted accounting
standards and the Companies Act 2006.
Under company law, directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group
and Company for that period. In preparing the financial
statements, the Directors are required to:
•
•
select suitable accounting policies and then apply them
consistently;
state whether applicable IFRSs as issued by the
International Accounting Standards Board (IASB) have
been followed, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and company will continue in business.
The Directors are also responsible for safeguarding the
assets of the group and company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the group and company and enable them to ensure that
the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the annual report and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s and Company’s position
and performance, business model and strategy.
In the case of each Director in office at the date the
Directors’ report is approved:
36
Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report •
•
so far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors
are unaware; and
they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Group’s and Company’s auditors are aware of that information.
The Directors’ Report was approved by the Board of Directors on 28 March 2022 and is signed on its behalf by:
Alasdair Haynes
CEO
Jonathan Clelland
CFO
37
Aquis Exchange PLC Report and accounts 2021
Directors’ Report continuedStrategic Report Audit, Risk and Compliance Committee Report
This report is intended to give an overview of the role and
activities of the Audit, Risk and Compliance Committee
(“ARCC”) in assisting the Board to fulfil its oversight
responsibilities relating to systems of internal control and
risk management, the independence and effectiveness of
the external auditor and the integrity of the Group’s financial
statements. It details the activities, discussions and decisions
that enabled the ARCC to fulfil its responsibilities effectively
during the financial year ended 31st December 2021.
Composition and meetings
The ARCC members as at 31st December 2021 were
Mark Goodliffe and Mark Spanbroek. The ARCC has been
chaired by Mark Goodliffe, a qualified chartered accountant
(ICAEW) and independent non-executive director, since
June 2018. The Group considers that the ARCC members’
qualifications and experience enable it to comply with the
audit committee composition requirements.
The Chief Executive Officer, Chief Financial Officer,
Director of Finance, Group Head of Regulatory Affairs,
Group Head of Surveillance and Group Financial
Accountant are standing invitees to all ARCC meetings.
The role and responsibilities of the ARCC
The ARCC was created in 2013 and the Terms of
Reference (“ToR”) of the ARCC comply with the AIM
market admission requirements. The Board undertakes an
annual evaluation of the ToR which includes an assessment
of the ARCC performance.
The principal role and responsibilities of the ARCC are:
• Financial reporting: review of the financial statements
and oversight of the relationship with the external
auditors and the external audit process;
•
Internal audit: monitoring and reviewing the
effectiveness of the Group’s internal auditors and
internal controls, including planning over a 3-year
period the internal audit schedule and annual audit
reviews;
• Risk assessment: quarterly risk assessment assessing
all internal and external business risks and mitigation
thereof; and
• Compliance: quarterly compliance review.
Further details on the functions and responsibilities of
the ARCC can be found in the Corporate Governance
Statement available from the Company Secretary or in the
38
Aquis Exchange PLC Report and accounts 2021
corporate governance section of the Group’s website at:
https://www.aquis.eu/investors/corporate-governance/.
2021 Activities
The ARCC maintains a formal agenda which ensures that
all matters for which the Committee is responsible are
considered at each meeting. The agenda for each meeting
during 2021 was determined by the key events of the
annual financial reporting cycle, the risks identified by the
Committee and the standing items under the ToR.
During 2021 the Committee decided to undertake an
external audit tender process. Three firms, including
the incumbent auditor, PricewaterhouseCoopers LLP
(appointed August 2018) were invited to submit proposals.
The ARCC reviewed and assessed the tender proposals
(which included interviewing the 3 firms) following
which it was decided to appoint Mazars LLP in place of
PricewaterhouseCoopers LLP. The ARCC has concentrated
on building an effective working relationship with the
external auditor, including monitoring their independence
and effectiveness and has reviewed the scope of the
external audit and agreed the key areas of focus. Mazars
will not provide non-audit services to the Group except
for the Client Money and Custody Asset Assurance Report
(CASS) audit. The Mazars audit partner for the current
audit is Greg Simpson.
In addition to maintaining the relationship with the external
auditor, the ARCC discharged its responsibilities by /
through the following:
• The Group appointed Grant Thornton as its internal
auditor in 2013. The ARCC reviews the internal
audit reports in detail and when circumstances
allow, meets Grant Thornton annually to assess the
quality and effectiveness of the internal audit process
and management responses to the internal audit
recommendations;
• Reviews and monitors principal internal and business
risks and associated mitigative management actions on
a quarterly basis. This process includes analysing and
assessing emerging risks as well as monitoring existing
previously identified risks;
• Completed a comprehensive assessment and review
of all accounting policies with particular emphasis on
areas of judgement and estimates to ensure that they
remain appropriate as the Group continues to grow;
Strategic Report
• Assesses the ICAAP / ICARA annually;
• Considers operational risks, cybersecurity risks and
technology resilience. This includes an annual review
of the effectiveness of risk management and internal
control systems;
• Reviews and monitors compliance, surveillance and
regulation developments on a quarterly basis; and
• Monitored the Brexit transition process, which
included the operational setup of Aquis Exchange
Europe SAS.
Priorities for the 2022 financial year will include:
• Continued monitoring of key processes such as
business continuity planning and risk assessment,
disaster recovery and cybersecurity monitoring
programmes;
• Monitoring the quality and effectiveness of the
support services provided to AQEU and AQSE across
all departments;
• Monitoring the progress of any management actions
recommended by Mazars within their letter to Those
Charged with Governance;
• Continuing to assess the impact of developments in
accounting standards and the related implementation;
• Continuing to monitor compliance, surveillance and
regulatory developments;
• Continuing to monitor progress on the key projects of
the Group;
• Continuing to monitor the effect of the COVID-19
pandemic on the Group and its customers, and make
appropriate plans; and
• Continuing to monitor Brexit developments and the
implications of it on the business.
39
Aquis Exchange PLC Report and accounts 2021
Audit, Risk and Compliance Committee Report continuedStrategic Report Nomination & Remuneration Committee Report
The Board recognises that Aquis operates within a
competitive environment and that Group performance
depends on the individual contributions to investors of the
Directors and employees. It believes in rewarding financial
performance and long-term vision and innovation that will
help grow the Group.
During the year the Board amended the Terms of
Reference of the N&RC to delegate to it the establishment
of a framework under which Board appointments should
be made by any subsidiary and to develop Group wide
remuneration policies on remuneration for the Senior
Management of the Company and its subsidiaries
but without compromising the independence of the
subsidiaries, Aquis Exchange Europe (AQEU) and Aquis
Stock Exchange Limited (AQSE) who continue to be
managed by their own independent board of Directors
The N&RC believes that the current composition of
the Board and its Committees and of the Boards and
Committees of its subsidiaries is appropriate to meet the
Group’s business, regulatory and governance objectives;
however, it will continue to keep the composition of the
Boards and Committees under regular review in order to
assess the range of skills and capabilities of the Boards and
the Committees for their relevance to the execution of the
Group’s strategy and regulatory responsibilities.
The N&RC supports the ongoing development of the
Boards and the Executive team to ensure that the Group
retains and recruits the best talent for its needs and
supports the Boards in their work to secure the long-term
health of the Group and its strategy for success in a fast-
changing world. During the year the N&RC considered
the likely business needs of the Group and its existing
executive management capability and took action where
appropriate. The N&RC, led by the Senior Independent
Director, worked with Ridgeway Partners in identifying a
successor as Chair to Niki Beattie who retired at the end of
2021. In addition, the N&RC co-ordinated the recruitment
of 2 new additional independent non-executive directors,
Fields Wicker-Miurin and Ruth Wandhofer, whose details
are set out in the Chairs report.
Following recommendation from the N&RC the Board
adopted a revised Independence Policy and assessed the
independence, effectiveness and commitment of each of
the Non-Executive Directors. The N&RC also reviewed the
skill sets of the Non-Executive Directors across the Group
and it remains satisfied with the contributions and time
40
Aquis Exchange PLC Report and accounts 2021
commitment of all the Non-Executive Directors during the
year.
At the Annual General Meeting all the Directors and new
proposed Directors will stand for re-election with the
support of the Board.
During 2021 the Board implemented a detailed work
programme to address the 2020 external Board evaluation
process recommendations. In late 2021 an internal Board
evaluation was conducted which required each Director
to complete an online questionnaire which focused on
matters such as the Board’s performance and collective
judgement, the performance of each of its Committees,
the Board’s focus on strategy, innovation and risk and the
relationship between the Non-Executive and Executive
Directors. The questionnaire included open questions that
encouraged Directors to provide comments or enabled
them to raise any concerns and also sought responses
from members of the Executive Committee (Exco). The
output of the review has been provided to the Board for
discussion and the Board believe that this evaluation will
help with its evolution and succession planning. Because of
the change of Chair no evaluation was made of the Chair’s
performance for 2021.
The Board is committed to equality and diversity
throughout the Group and seeks to ensure a diverse and
talented workforce is attracted and retained through
appropriate recruitment and selection processes and
through active monitoring of the actions resulting from the
annual Employee Survey. During 2021 Glenn Collinson
took over from Niki Beattie as the Board employee
representative The Group has a Diversity and Inclusion
policy which is set out in more detail in the Strategic
Report on page 18 and 19. In 2021 the Board has
prepared further diversity and inclusion targets for the
Board and employees generally taking account of industry
benchmarks and continues to make progress towards
improving the diversity ratios.
The Company proposes to retain the remuneration
structure adopted in 2020 as set out in the Directors
Remuneration Policy Report which explains that the Board
has not made any changes to the Policy or structure or the
manner in which discretionary awards are calculated and
made to Executive Directors so that in summary:
Strategic Report
Nomination & Remuneration Committee Report continued
•
•
•
•
the arrangements remain transparent to shareholders
and the workforce;
the structure continues to be simple and the
methodology is easy to understand;
the discretionary annual cash bonus and the share
awards to Executive Directors continue to have
underpin provisions as well as Clawback and Malus
provisions as described in more detail so as to mitigate
behavioural risks that could arise from target-based
incentive plans; and
the Directors Remuneration Report also explains the
range of possible values of awards to the Executive
Directors and how the discretions were applied in
2021 and how the Directors Remuneration Policy will
be applied in 2022.
The Group uses specialist recruitment agencies for all
recruitment opportunities for the Board and employees. In
2021 the Group engaged specialist recruitment agencies
Ridgeway Partners and Sainty Hird and Partners (SHP),
in connection with the recruitment of the additional
Non-Executive Directors for both Aquis and Aquis Stock
Exchange. Neither Ridgeway Partners nor SHP have any
other connection to the Group or any individual directors.
Roles are also advertised on the Aquis’ website and the
N&RC provides oversight to ensure that the recruitment
process is aligned to Aquis’ policies on equality and
diversity.
41
Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Report
Annual Statement
Dear Shareholder,
I am pleased to present, on behalf of the Board, the
Directors’ Remuneration Report for the year ended
31 December 2021 This report includes (i) this Annual
Statement which summarises the main decisions taken
by the Nomination & Remuneration Committee (N&RC)
during 2021 including the incentive outcomes for 2021,
(ii) the Directors’ Remuneration Policy Report which was
introduced in 2019 and sets out the structure of Directors’
pay packages, and (iii) the Annual Report on Remuneration
which sets out in more detail the payments and awards
made to the Directors during 2021 and how the Policy will
be operated for 2022.
At the 2022 Annual General Meeting there will be
a single remuneration-related resolution presented,
being the normal annual advisory vote on the Directors’
Remuneration Report.
Work of the N&RC during the year
The main activities during the year (full details of which are
set out in the relevant sections of this report) included:
• Assessing the skills of the Non-Executive Directors,
reviewing the succession plan for the Chair, the Board
and senior executives and identifying and selecting
candidates for new appointments to the Board and the
Boards of its subsidiaries. The Board composition is
described in the Directors’ Report;
• Determining changes to Executive Directors’ and
senior executives’ base salaries from January 2022 in
the context of salary changes across the Group
• Annual cash bonus:
o
Assessing performance versus Group Financial
Key Performance Indicators (KPIs) and strategic
non-financial objectives for and agreeing the
payouts to the Executive Directors and other Exco
members under the 2021 Executive Cash Bonus
Plan;
o
Reviewing and agreeing the KPIs and objectives
for the 2022 Executive Cash Bonus Plan for the
Executive Directors and other Exco members;
•
Long term incentives:
o Confirming the terms and recommending to the
Board the grant of Restricted Share Awards to the
42
Aquis Exchange PLC Report and accounts 2021
Executive Directors and other Exco members in
April 2021 under the Aquis Exchange Omnibus
Share Plan;
o
Reviewing and recommending the Restricted
Share Awards to be granted to Executive
Directors and other Exco members in April 2022
under the Aquis Exchange Omnibus Share Plan;
• Reviewing the fees of the Chair and other Non-
Executive Directors across the Group
Throughout the year, the N&RC has continued to work
to ensure policy and practices remain consistent with the
relevant provisions of the 2018 UK Corporate Governance
Code.
Discretion
The Group is satisfied that the Directors’ Remuneration
Policy operated as intended during 2021 versus the
performance of the Group and no discretion has been
applied in respect of remuneration outcomes.
Executive Directors’ Remuneration in 2021 and
comparison with Group Performance
Summary of 2021 performance
The Group performed strongly during 2021, making
significant financial and strategic progress despite the
continuation of very challenging economic conditions
arising from the Coronavirus pandemic. Once again during
2021 the Group did not have to take advantage of any
government assistance and did not reduce the number of
employees as a result of COVID-19 (consistent with 2020).
There has been very good revenue growth and the Group
materially increased profits during the year compared to
the previous year. Aquis Stock Exchange made further
progress and is on track to reach breakeven in 2022. At the
beginning of the year, upon expiry of the Brexit transition
period on 31st December, more than 99% of continuous
trading volume of EU27 equities switched from Aquis
Exchange’s platform in the UK to Aquis Exchange Europe
SAS, its regulated subsidiary in France. This was achieved
without any loss of service or other incident.
Executive Directors’ 2021 Annual Cash Bonus
The Executive Directors’ discretionary annual cash bonus
for 2021 was determined by the achievement against a set
of performance targets. The N&RC ensures performance
targets, agreed at the start of the performance period,
Strategic Report
Directors’ Remuneration Report continued
are sufficiently challenging. In 2021, for both Executive
Directors, 70% of the achievable bonus was determined
against Group Financial Key Performance Indicators (KPIs)
and 30% was determined against strategic, non-financial
objectives.
Against the Group Financial KPIs, the performance was
very strong with the revenue target exceeded and the
profit target significantly exceeded. When combined with
performance against the strategic, non-financial objectives,
the Board determined that cash bonuses of 57.5% of salary
should be payable to Alasdair Haynes, resulting in a cash
bonus of £143,777 (2020: £135,896) and 56.7% of salary
should be payable to Jonathan Clelland, resulting in a cash
bonus of £133,300 (2020: £127,742). These bonuses
are paid in the April 2022 payroll. Further details of the
measures, targets and bonus outcomes are set out in the
Annual Report on Remuneration.
Executive Directors’ vesting during 2021 of share-based
awards under previous long term incentive plans
Only previous awards that are subject to time-based
vesting, with no performance conditions attached, vested
during the year. Full details on the vesting status of all
share plan awards for the Executive Directors are set out in
the Annual Report on Remuneration. Long term incentive
benefits for the Executive Directors reflect the notional
benefit based on the share price at the date of vesting of
awards granted under the Aquis EMI Option Plan 2018
compared with the award price. The 2021 benefit reflects
the Aquis share price increase during 2021.
Implementation of Policy in 2022
Executive Directors’ base salaries from 1 January 2022
The Board have decided to maintain the Executive
Directors salaries for 2022 at the same level as in 2020
and 2021. Therefore, Alasdair Haynes’ base salary
will remain unchanged at £250,000 p.a. and Jonathan
Clelland’s base salary will remain at £235,000 p.a. This is in
the context of increases provided to the general workforce
of on average around 5%.
Executive Directors’ 2022 Annual Cash Bonus Plan
The N&RC conducted a full review of the Executive Annual
Cash Bonus Plan last year and for 2022 the Plan will
remain the same as in 2021:
• The maximum bonus opportunity will continue to be
80% of salary and half of the maximum will be payable
for on-target performance;
• 70% of the bonus will be based on stretching Group
Financial KPIs and 30% on strategic, non-financial
objectives. In 2022 66.7% of the Group Financial
KPIs (consistent with 2021) will be measured against
revenue and 33.3% (consistent with 2021) will be
measured against Profit Before Tax (as opposed to
EBITDA);
• As an underpin, a minimum level of profit must be
achieved before any payment can be made against
the financial element of the Annual Cash Bonus Plan.
There is no formal underpin for the strategic, non-
financial objectives but the N&RC and Board will retain
discretion to reduce (including to nil) annual cash
bonuses based on non-performance against strategic,
non-financial objectives if it determines, in exceptional
circumstances, acting reasonably in the best interests
of the Company, that the overall circumstances cannot
justify it.
• There are Recovery (Clawback) provision in exceptional
circumstances
Further details of the structure of the 2022 Executive
Directors’ Annual Cash Bonus Plan are included in the
Annual Report on Remuneration.
Executive Directors’ Awards in 2022 under the Aquis
Exchange Omnibus Share Plan
As set out in last year’s report, the first award under the
Aquis Exchange Omnibus Share Plan was made in 2020
in the form of restricted shares. The N&RC considered
carefully whether to retain the restricted share structure
or grant performance shares in 2022 and it was decided
again to grant restricted share awards. It also decided that
the awards should be at the same level as last year as per
the Directors’ Remuneration Policy hence this award will
be for restricted shares with a value of 65% of base salary
for both for Alasdair Haynes and Jonathan Clelland. These
awards will be granted shortly after the Annual General
Meeting on the last trading day in April, consistent with the
Group’s share dealing policy. Further details are provided in
the Annual Report on Remuneration.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Report continued
Shareholder Engagement
During 4Q2021, members of the N&RC undertook a series
of meetings with major shareholders primarily to introduce
the new Chair during which a wide-range of topics were
covered. It is the N&RC’s firm commitment to continue a
wide engagement with the shareholders on remuneration
issues going forwards.
Finally, I would like to thank our shareholders and I hope
we can continue to rely on their support at our Annual
General Meeting on 26 April 2022.
Richard Bennett
Nomination and Remuneration Committee Chairman
28 March 22
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy
The Directors’ Remuneration Policy was adopted in 2020
following an extensive shareholder consultation exercise
undertaken in 2019. Its purpose is to motivate Executive
Directors and other members of Exco appropriately in
the context of the Group’s objectives and culture and
to ensure it is aligned with shareholder interests. The
policy encourages compliance with the requirements and
standards of the regulatory system, whilst taking care to
avoid encouraging behaviours which may lead to conflicts
of interest and potentially damage the best interests of its
shareholders and its members/clients. It is not the intention
to bring employees into conflict with the regulatory regime
through inappropriate remuneration policies.
For Executive Directors and other members of Exco Aquis
operates a remuneration structure comprising salary,
benefits, annual cash bonus and a long-term incentive
comprised of annual grants of either restricted shares
or performance shares under the Aquis Exchange Share
Omnibus Plan adopted in 2020. All long-term incentive
awards under this Policy will vest after three years based
on continued service and the achievement of underpin
tests and thereafter are subject to a 2-year holding
period with associated withholding (malus) and recovery
(clawback) provisions.
The key advantages of restricted shares are:
•
•
•
•
It reduces uncertainties created from trying to forecast
a realistic 3-year financial target at this stage of the
Group’s development;
It helps to create a simple pay structure;
It provides a structure which promotes genuine long-
term alignment and stewardship of the share price;
and
It reduces the potential quantum relative to a more
highly leveraged ‘traditional’ performance share
plan (as fewer restricted shares will be granted in
comparison to a comparable award of performance
shares).
In addition, the Group continues to take a prudent
approach to the positioning of salaries and cash bonus
potential relative to market comparisons. The Group
has concluded that this remains the right approach as it
continues to invest in the business.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report
Directors’ Remuneration Policy continued
The table below provides a summary of the proposed Remuneration Policy for Executive Directors:
Element
Purpose
Operation
Maximum
Performance
Base salary
Recruit and retain
executives of a high
calibre.
Reflects an
individual’s
experience, role and
performance.
Prevents unnecessary
risk taking.
N&RC reviews the
salaries of Executive
Directors each year
taking due account
of all the factors
described.
There is no maximum.
Board is guided by
average increases across
the workforce. However,
higher % increases may
be awarded on occasion,
for example (but not
limited to):
• Where an individual
•
is promoted or has
been recruited on a
below market rate;
or
In relation to a
change in size,
scale or scope of
an individual’s role
or responsibilities
or in the size or
complexity of the
business or where
salaries have fallen
significantly below
mid-market levels.
Salaries are paid monthly.
They are reviewed
annually and normally
fixed for 12 months
commencing 1 January.
In deciding appropriate
levels, the Board
considers:
•
•
the role, experience,
responsibility &
performance of the
individual, increases
applied to the
broader workforce
and
relevant market
information for
similar roles in
broadly similar UK
listed companies
and companies of a
similar size.
The Board considers
the impact of any salary
increase on the total
remuneration package
prior to awarding any
increases.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Benefits
Recruit and retain
executives of a high
calibre.
N/A
Benefits include:
• Private health cover
(individual and
family), permanent
health cover and life
assurance cover.
• Executive Directors
There is no maximum
as costs may vary in
accordance with market
conditions.
HMRC tax-approved
limits will apply to all
share schemes.
are also eligible to
participate in any
all-employee HMRC
approved share
schemes, on the
same basis as other
employees.
• Any reasonable
business-related
expenses can be
reimbursed.
• Relocation or related
expenses may be
offered including
tax equalisation to
ensure the executive
is no better or worse
off.
• Executive Directors
may be offered
other benefits
if considered
appropriate and
reasonable by the
N&RC.
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Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
The current Executive
Directors have elected
not to participate in the
Group Pension Plan.
New Executive Directors
in the future, who
participate in the Group
Pension Plan, will receive
employer contributions
which are in line with
those given to the
majority of the Group’s
workforce.
An overall maximum of
80% of salary will apply.
Pension
To provide retirement
benefits in line with
the overall Group
Policy.
Executive Directors
as well as other staff
are eligible to receive
employer contributions
of 5% of base salary to
the Group’s Pension
Plan (which is a defined
contribution plan)
Annual cash
bonus
To incentivise the
achievement of
annual financial and/
or strategic business
targets, appropriately
stretching, in line
with shareholder
interests.
Participation in the bonus
plan is at the discretion
of the Board.
Bonus payment is
determined after the
year end, based on
performance against
targets set at the start of
each year.
For Executive Directors,
bonus payments are
paid in the April after
year end and after the
announcement of the
financial results for the
year.
Bonus payments are
subject to recovery and
withholding provisions
in the event of financial
misstatement, error or
gross misconduct -see
below for more details.
N/A
Performance metrics
are selected annually
based on the Group’s
strategic objectives.
The bonus will
be based on the
achievement of an
appropriate mix of
challenging financial,
strategic or personal
targets, tailored each
year to reflect business
priorities.
Outcomes will
be based on the
achievement of
financial measures
(e.g. revenue, profit),
representing a majority
of the bonus with a
minority (up to 30%)
on key strategic
objectives.
For financial measures,
a sliding scale of
targets is set by the
N&RC, taking into
account factors such
as the business outlook
for the year.
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Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Nothing is payable for
performance below
a minimum level of
performance.
Where non-financial
targets operate, it
may not always be
practicable to set
targets on a graduated
scale. Where these
operate, not more than
25% will be payable for
achieving the threshold
target.
The metrics, and
proportion of bonus
that can be earned
against each metric,
will be disclosed in
the Annual Report on
Remuneration each
year for the outcome
year.
The calculation of the
annual bonuses from
the actual performance
achieved against
each bonus target
will be described
retrospectively
each year in the
Annual Report on
Remuneration.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Long Term
Incentives
Incentivises Executive
Directors and senior
executives to achieve
successful execution
of business strategy
over the longer term.
Participation and
individual award levels
will be determined
annually at the discretion
of the Board within the
Policy.
Aligns the interests
of the Executives,
senior staff and
shareholders.
Also helps to provide
long-term retention.
Awards are normally
granted annually in
the form of nil cost
options under the Aquis
Exchange Omnibus Plan.
Award levels will be
subject to the individual
limit and will take into
account matters such as
market practice, overall
remuneration, and the
performance of both the
Group and the Executive
being granted the award.
Awards normally
vest after three years
subject to continued
employment.
A holding period will
apply under which all
participants are required
to retain their net of tax
vested awards for two
years post vesting.
A dividend equivalent
provision allows the
Group to pay dividend
equivalents, at the
Board’s discretion,
on vested awards (in
cash or shares) up to
the point of exercise
or sale (but no later
than the expiry of the
holding period). This may
assume the reinvestment
of dividends on a
cumulative basis.
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Aquis Exchange PLC Report and accounts 2021
Maximum grant level
of 65% of salary in the
form of restricted shares
for current Executive
Directors (and an
overall policy limit of
100% of salary to be
used in cases such as
recruitment). Under the
Aquis Exchange Omnibus
Share Plan, it would
be possible to grant
Performance Shares with
a maximum grant of up
to 130% of salary for
2022 onwards although
the current intention is
to make Restricted Share
awards only. The N&RC
will consult first with
shareholders if it wishes
to issue Performance
Shares in the future.
Restricted Share
awards will be share
based and will vest
three years after grant
subject to continued
employment.
No performance
conditions will apply
although appropriate
underpins will operate.
The underpins will be
set prior to grant and it
is envisaged that they
will always include
thresholds relating
to an assessment of
financial progress,
maintenance of
regulatory capital and
compliance. Details
of the underpins will
be disclosed in the
Annual Report on
Remuneration in the
year of each award.
In future years, if
the Board decides to
grant Performance
Shares to Executive
Directors, the terms
of such awards
(including the selection
of appropriate
performance measures,
targets, vesting &
holding periods,
dividend provision
and recovery &
withholding provisions)
will be subject to
prior shareholder
consultation.
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
N/A
N/A
Shareholding
guidelines
To align the interests
of management and
shareholders and
promote a long- term
approach.
Awards are subject to
recovery and withholding
provisions in the event of
financial misstatement,
error or gross
misconduct - see below
for more details.
The Policy for all
Executive Directors
on shareholding will
be amended such that
each will be expected to
build up and hold their
own shareholding in the
Company to a value of at
least 200% of their base
salary in line with market
practice in this area.
Furthermore, all vested
restricted share awards
should be retained on a
net of tax basis until the
guideline has been met.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
The Board has also
formalised its post-
cessation policy in the
light of the provisions
of the UK Corporate
Governance Code. It
is the Group’s policy
that good leavers’ share
awards should vest
on the normal vesting
date and be subject to
testing in relation to the
underpins and a pro rata
reduction. Thereafter,
such vested share
awards for good leavers
will still also be subject
to the 2-year holding
period and the same
associated withholding
and recovery conditions
as for those not leaving.
Vested shares awards for
good leavers that are still
within the 2-year holding
period, will continue
to be held to the end
of that holding period.
The Group believes
that these post leaving
conditions provide
sufficient shareholder
protection whilst not
risking unfairly penalising
good leavers by forcing
a further holding periods
for shares released
from vested awards first
granted more than 5
years ago or for shares
acquired independently
from the Group’s share
plans with good leavers’
own resources.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Neither the Non-
Executive Chair nor
the Non-Executive
Directors are eligible
for any performance
related remuneration.
There is no maximum.
However, any increase to
fees will be considered
in light of the expected
time commitment in
performing the roles,
increases received by
the wider workforce
and market rates in
comparable companies.
To attract and retain
a high-quality Chair
and experienced
Non-Executive
Directors.
Non-
Executive
Chair
and Non-
Executive
Directors’
fees
The Non-Executive Chair
receives a single fee
covering all their duties.
The Non-Executive
Directors receive a basic
fee and additional fees
payable for being the
Senior Independent
Director, chairing or
being a member of the
Audit, Risk & Compliance,
or the Nomination
& Remuneration
Committees or the
Group’s Regulated
Subsidiary Boards.
The Chair and Non-
Executive Directors
shall be entitled to have
reimbursed all expenses
that they reasonably
incur in the performance
of their duties.
The level of fees of
the Non-Executive
Directors reflects the
time commitment and
responsibility of their
respective roles. Their
fees were amended
with effect from 1.1.22
following a review during
2021 which took account
of fees paid by similar
UK listed companies and
companies of a similar
size.
In exceptional
circumstances, additional
fees may be payable
to reflect a substantial
increase in time
commitment of the
Non-Executive Chair or
Directors.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Consideration of employment conditions elsewhere in
the Group
Whilst the N&RC does not consult directly with employees
on the Directors’ Remuneration Policy, the N&RC does
receive periodic updates regarding salary increases and
remuneration arrangements across the Group. This is borne
in mind when determining the Remuneration Policy and
payments for the Executive Directors.
Bonus and Restricted Share Plan Discretions
The Group will operate the Annual Cash Bonus Plan and
Aquis Exchange Omnibus Share Plan according to their
respective rules and in accordance with the AIM Rules
and HMRC rules, where relevant. A copy of the Aquis
Exchange Omnibus Share Plan rules is available on request
from the Company Secretary. The Board, consistent with
market practice, retains discretion over a number of areas
relating to the operation and administration of these plans.
These include (but are not limited to) the following (albeit
the level of award is restricted as set out in the policy table
above):
• Who participates in the plans;
• The timing of grant of award and/or payment;
• The size of an award and/or a payment;
• Discretion relating to the measurement of
performance in the event of a change of control or
reconstruction;
• Determination of a good leaver (in addition to any
specified categories) for incentive plan purposes
based on the rules of each Plan and the appropriate
treatment chosen;
• Adjustments required in certain circumstances (e.g.
rights issues, corporate restructuring, on a change of
control and special dividends); and
• The ability to adjust existing performance conditions
and underpins for exceptional events, including any
M&A activity so that they can still fulfil their original
purpose whilst being no less stretching.
Recruitment and Promotion Policy
The remuneration package for a new Executive Director
will be established in accordance with the Directors’
Remuneration Policy subject to such modifications as are
set out below.
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Aquis Exchange PLC Report and accounts 2021
Salary levels for Executive Directors will be set in
accordance with the Remuneration Policy, taking into
account the experience and calibre of the individual and
their existing remuneration package. Benefits will generally
be provided in line with the Policy, with relocation or other
related expenses provided for if necessary. A pension
contribution or cash in lieu in line with the pension
contributions provided to the majority of the workforce
may be offered.
The outcome of variable pay elements of Executive
Directors will be in accordance with the Policy detailed
above. The maximum variable pay opportunity will be
as set out in the Remuneration Policy table, different
performance measures may be set initially for the annual
cash bonus in the year of joining, taking into account
the responsibilities of the individual, and the point in the
financial year that he or she joined the Board. The bonus
will be pro-rated to reflect the proportion of the financial
year served. A Restricted Share award can be made shortly
following an appointment (assuming the Group is not in a
close period).
In the case of external recruitment, if it is necessary to
buy out incentive pay or benefit arrangements (which
would be forfeited on leaving the previous employer), this
may be provided, taking into account the form (cash or
shares), timing and expected value (taking into account the
likelihood of meeting any existing performance criteria)
of the remuneration being forfeited. Replacement share
awards, if used, may be granted using the Group’s existing
share plans to the extent possible, although awards may
also be granted outside of these schemes if necessary
and as permitted under the AIM Rules. The intent of any
such award would be to ensure that, as far as possible, the
expected value and structure of the award will be no more
generous than the amount forfeited.
In the case of an internal recruitment, any outstanding
variable pay awarded in relation to the previous role will
be allowed to pay out according to its terms of grant or
adjusted as considered desirable to reflect the new role.
Service Contracts and Payments for Loss of Office
The Group’s policy is to have service contracts for
Executive Directors that continue indefinitely unless
determined by their notice period. Under the Executive
Directors’ service contracts and, in line with the policy
for new appointments, no more than 6 months’ notice of
termination of employment is required by either party.
Strategic Report Directors’ Remuneration Policy continued
For Executive Directors, the Group may, in its absolute
discretion, at any time after notice is served by either party,
terminate a Directors’ contract with immediate effect
by paying an amount equal to base salary for the then
unexpired period of notice plus the fair value of contractual
benefits subject to the deduction of tax.
An Executive Director’s service contract may be
terminated without notice for certain events such as gross
misconduct or a serious breach of contract. No payment
or compensation beyond salary (and the value of holiday
entitlement) accrued up to the date of termination will be
made if such an event occurs. Any statutory payments
required by law will be made.
All Non-Executive Directors letters of appointment
with the Group are for an annual renewable period.
Appointments may be terminated with three months’
notice. The appointment letters for the Chair and Non-
Executive Directors provide that no compensation is
payable on termination, other than accrued fees and
expenses
Recovery (Clawback) provisions for Executive
Directors in the Annual Cash Bonus Plan
For Executive Directors only, the Board may, in the
exceptional circumstances defined below, decide to
Clawback annual cash bonus payments.
The Board may decide at any time prior to the second
anniversary of the date on which annual cash bonuses
are paid, that the individual to whom the annual cash
bonus was paid shall be subject to Clawback: (i) after
due consideration, the Board forms the view that one or
more of the circumstances envisaged in (a) to (f) below
applies; and (ii) such Clawback is, in the Board’s opinion,
appropriate.
The circumstances which may give rise to the application
of this provision are, for any period from Financial Year
2019 onwards:
(a)
The Board forms the view that the Group materially
misstated its financial results for whatever reason
and that such misstatement resulted either directly or
indirectly in the value of the annual cash bonus paid
being greater than would have been the case had that
misstatement not been made; or
(b)
The Board forms the view that any calculation
in connection with the annual cash bonus or any
55
Aquis Exchange PLC Report and accounts 2021
assessment of any underpins and/or any other
condition imposed on the cash bonus was based on
an error, or on inaccurate or misleading information
or assumptions and that such error, information or
assumptions resulted either directly or indirectly in
the value of cash bonus paid being greater than would
have been the case had that error not been made; or
(c)
It is determined by the Board that the relevant
individual committed serious misconduct that warrants
or could have warranted his summary dismissal as a
result of his misconduct; or
(d) The Group becomes insolvent or is put into
administration (under the Insolvency Act 1986)
and the Board determines that such insolvency or
administration arose from events occurring (in whole
or substantial part) during any period in which the
relevant individual was an Executive Director; or
(e) There are circumstances which in the Board’s opinion
have (or would have if made public) a sufficiently
significant impact on the reputation of the Group or of
any of its subsidiaries to justify the application of this
provision; or
(f) The Board forms the view that there has been a
serious failure of risk management within the Group or
any of its subsidiaries to justify the application of this
provision.
Change of Control provisions for Executive Directors
in Aquis Exchange Omnibus Plan
In the event of a change of control, unvested share awards
shall vest on the date of such event. The Board shall
determine the number of vested shares by (i) applying an
assessment of any underpins imposed on the vesting of
the award, and (ii) by applying a pro rata reduction based
on the period of time after the grant date and ending on
the early vesting date relative to the period of three years
(counting part of any month as a whole month), unless
the Board, acting fairly and reasonably, decides that the
reduction in the number of vested shares is inappropriate
in any particular case in comparison with the original award
when it may increase the number of vested shares to such
higher number as it decides is appropriate.
Strategic Report Directors’ Remuneration Policy continued
Good Leaver (including Retirement) provisions for
Executive Directors in Aquis Exchange Omnibus Plan
If prior to vesting of any shares an individual ceases to be a
director or employee of the Group by reason of (a) death,
(b) injury or disability evidenced to the satisfaction of the
Board; (c) retirement with the agreement of the Board; (d)
redundancy (within the meaning of the Employment Rights
Act 1996 or applicable local law equivalent); or for any
other reason, if the Board so decides then his/her awards
shall vest on the normal vesting date, unless the Board
decides in exceptional circumstances that his/her award
shall vest on leaving.
The Board shall determine the number of shares that
will vest by (i) applying any underpin test at the time of
vesting, whether early or at the normal vesting date; and
(ii) applying a pro rata reduction to the number of shares
based on the period of time from the date of grant to
the date of cessation relative to the period of 3 years
(counting part of any month as a whole month) unless
the Board, acting fairly and reasonably, decides that the
reduction in the number of vested shares is inappropriate
in any particular case when it may increase the number of
shares that will vest to such higher number as it decides is
appropriate.
Withholding (Malus) and Recovery (Clawback)
provisions for Executive Directors in Aquis Exchange
Omnibus Plan
The Board may decide: (i) at any time prior to the date on
which an award vests that an unvested award is subject
to Malus; and/or (ii) at any time prior to the second
anniversary of the date on which an award vests, that the
individual to whom the award was granted shall be subject
to Clawback, or both: (i) after due consideration, the Board
forms the view that one or more of the circumstances
envisaged in (a) to (f) of the provisions established for the
Annual Cash Bonus applies; and (ii) such Malus and/ or
Clawback is, in the Board’s opinion, appropriate. The Board
shall not be obliged to prefer the application of Malus over
Clawback or vice versa.
Annual Report on Remuneration
The information below includes details, firstly, how we
intend to operate the Remuneration Policy in 2022 and,
secondly, details of the pay outcomes in respect of the
2021 financial year.
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Aquis Exchange PLC Report and accounts 2021
Implementation of Remuneration Policy in 2022
Executive Directors’ base salaries from 1 January 2022
The Executive Directors’ base salaries are determined by
assessment of the Group and individual performance in
2021 and also benchmarking against Executive Directors’
salaries in other UK listed companies in the Group’s market
sector of a similar size and performance. The outcome of
this review was to maintain Alasdair Haynes and Jonathan
Clelland’s base salaries. Alasdair Haynes’ base salary will
remain at £250,000 p.a. and Jonathan Clelland’s base
salary will remain at £235,000 p.a. This is in the context of
increases provided to the general workforce of on average
around 5%.
Executive Directors’ Benefits
The Executive Directors’ remuneration packages include
private health cover (individual and family), permanent
health cover and life assurance cover. The current
Executive Directors have elected not to participate in the
Group Pension Plan. In addition to public holidays the
Executive Directors are entitled to 25 working days of paid
holiday in each complete calendar year.
Executive Directors’ 2022 Annual Cash Bonus Plan
For both Executive Directors, the maximum bonus
opportunity for 2022 will be capped at 80% of base salary,
which is the same as in 2020 and 2021. For on-target
performance, bonus payout will be 40% of base salary. At
threshold performance, below which no bonus will be paid,
the bonus payout will be 5% of base salary.
The objectives and their weightings for the year ending
31 December 2022, for both Executive Directors are:
Group Financial KPI 1: Profit Before Tax
Group Financial KPI 2: Revenue
Strategic, non-financial objectives
Maximum bonus opportunity
Bonus Weighting
(% of salary)
37.33%
18.67%
24.00%
80.00%
The Group Financial KPI’s therefore constitute 70% of the
available bonus, and the strategic non-financial objectives
30%.
As an underpin, a minimum level of Profit Before Tax must
be achieved before any payment can be made against the
financial element of the Annual Cash Bonus plan. There
Strategic Report Directors’ Remuneration Policy continued
is no formal underpin for the strategic, non-financial
objectives but the N&RC and Board will retain discretion
to reduce (including to nil) cash bonuses based on non-
performance against strategic, non-financial objectives if it
determines, in exceptional circumstances, acting reasonably
in the best interests of the Company, that the overall
circumstances cannot justify it.
Executive Directors’ Awards in 2022 under the Aquis
Exchange Omnibus Share Plan
The Aquis Exchange Omnibus Share Plan forms the main
equity-based element of Executive Directors’ and other
senior executive’s remuneration.
Consistent with the approach taken last year and the
limit set out in the Directors’ Remuneration Policy, the
Restricted Share awards proposed for 2022 are 65% of
base salary for both for Alasdair Haynes and Jonathan
Clelland.
These awards will vest on the 3rd anniversary after the
grant date subject to underpin conditions being met. They
are then subject to a further two-year holding period
during which Recovery (Malus) and Withholding (Clawback)
conditions apply.
The Restricted Share Awards will be subject to underpins
that must be met before vesting can occur. The
underpins are based on a minimum level of underlying
performance of the Group over the three-year period
and delivery against the Group’s strategy and plans. As
such the underpins will require that the profitability of
the Group must not decrease below £1.5m and may
include sustainable profit delivery and financial progress
taking into account expansion and investment plans, the
avoidance of a material failure in governance or an illegal
act resulting in significant regulatory or reputational
damage and/or material financial loss to the Group or
any of its subsidiaries, and social factors such as culture
and employee engagement. When considering these
factors, the N&RC will consider overall performance while
recognising that fast growing financial and technology
companies may require capital expenditure and investment.
Chair and Non-Executive Director fees
The remuneration for the Chair and Non-Executive
Directors, which consists solely of fees, is summarised
in the table below in the section on Single figure of total
remuneration for Directors.
During 2021 the Board mandated FIT remuneration
consultants to review the fees of the Chair and other Non-
Executive Directors. The report highlighted a number of
differences with fees paid by similar UK listed companies
and companies of a similar size and increases of (on
average approximately 40%) were approved for all Non-
Executive Directors with affect from 01/01/22.
Single figure of total remuneration for Directors
The following tables present all element of remuneration
received by the Directors in 2021 (and 2020).
Long term incentive benefits for the Executive Directors
reflect the notional benefit based on the share price at the
date of vesting of awards granted under the Aquis EMI
Option Plan 2018 compared with the award price. The
2021 benefit reflects the Aquis share price increase during
2021.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
2021 Audited
Director
Executive Directors
Alasdair Haynes
Jonathan Clelland
Non-Executive Directors
Niki Beattie
Richard Bennett
Mark Spanbroek
Mark Goodliffe
Glenn Collinson(1)
David Vaillant
Deirdre Somers
Salary
/Fees
Performance
Bonus Actual(2)
Taxable
benefits(3)
Long-Term
Incentives(4)
Total
250,000
235,000
143,777
133,300
17,301
18,412
264,035
264,035
675,112
650,747
55,000
40,000
35,000
45,000
40,000
45,000
30,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
55,000
40,000
35,000
45,000
40,000
45,000
30,000
(1)
Glenn Collinson re-joined the Board in September 2021, previously he was a Non-Executive Director of Aquis Stock Exchange
Limited
(2)
The detailed calculation of the performance bonus is described in the section on 2021 annual cash bonus below
(3) Taxable benefits comprise private health care and compensation in lieu of pension contribution
(4)
Executive Directors were granted share options under the Aquis EMI Option Plan 2018 at the time of IPO on 14 June 2018 and on
30 April 2020. The values shown are the gains made at the date of vesting of 16 April and 14 June 2021. No further awards are to
be made under this plan.
2020 (Audited)
Director
Executive Directors
Alasdair Haynes
Jonathan Clelland
Non-Executive Directors
Niki Beattie
Richard Bennett
Mark Spanbroek
Mark Goodliffe
Glenn Collinson(1)
David Vaillant(2)
Deirdre Somers(3)
Salary/Fees
Performance bonus
actual(4)
Taxable benefits(5)
Long Term
Incentives(6)
Total
£250,000
£235,000
£135,896
£127,742
£18,164
£19,339
£34,634
£34,634
£438,694
£416,715
£55,000
£40,000
£35,000
£44,029
£40,000
£31,250
£5,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
£55,000
£40,000
£35,000
£44,029
£40,000
£31,250
£5,000
(1)
Glenn Collinson resigned from the Board in March 2020 and was appointed a Non-Executive Director of Aquis Stock Exchange
Limited
(2)
David Vaillant joined the Aquis Exchange Europe SAS Board in September 2019 and the Aquis Exchange PLC Board in April 2020
(3)
Deirdre Somers joined the Board in October 2020
(4)
The detailed calculation of the performance bonus is described in the section on 2020 annual cash bonus below
(5)
Taxable benefits comprise private health care and compensation in lieu of pension contribution
(6)
Executive Directors were granted share options under the Aquis EMI Option Plan 2018 at the time of IPO on 14 June 2018. The
values shown are the gains made at the date of vesting 14 June 2020. Further awards were made under this plan on 16 April 2020.
58
Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Executive Directors’ 2021 annual cash bonus
In 2021, the Group Financial KPIs for both Alasdair Haynes and Jonathan Clelland were the same. The strategic, non-
financial, individual objectives for both Alasdair Haynes and Jonathan Clelland were the same for the period 1.1.21-
30.9.21. Following his transfer to Aquis Exchange Europe with effect from 1.10.21 Jonathan Clelland’s strategic non-
financial objectives were amended. Performance against them was as follows:
A Haynes
Group Financial Objective (KPI) 1:
Revenue (net of ECL)
Group Financial Objective (KPI) 2:
Profit Before Tax
Maximum Bonus
Opportunity (%
of salary)
Threshold
Target
Max
Act Res
Bonus outcome
(% of salary)
37.34%
£14.13m
£15.70m
£17.27m
£16.2m
24.6%
18.66%
£1.60m
£2.00m
£2.40m
£3.2m
18.66%
Strategic, Non-financial Objectives
(KPIs)
24% See the table
below
12%
24%
14.25%
14.25%
Total
J Clelland
80%
Maximum Bonus
Opportunity (%
of salary)
Threshold
Target
Max
Act Res
57.51%
Bonus outcome
(% of salary)
Group Financial Objective (KPI) 1:
Revenue (net of ECL)
Group Financial Objective (KPI) 2:
Profit Before Tax
37.34%
£14.13m
£15.70m
£17.27m
£16.2m
24.6%
18.66%
£1.60m
£2.00m
£2.40m
£3.2m
18.66%
Strategic, Non-financial Objectives
(KPIs)
24% See the table
below
Total
80%
12%
24%
13.46%
13.46%
56.72%
The Strategic, Non-financial Objectives (30% of the bonus) are set out below together with the performance outcome.
The Executive Directors performance outcome assessment is based on:
• Not met target: Failed to meet the target
• Partially met target: has made material progress towards the target but did not fully meet it
• Met target: has achieved the stated target
• Exceeded target: has delivered a solution which was an improvement on the performance target
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
A Haynes
Strategic, Non-financial Objectives
Performance outcome
(either Not met target, Partially met target, Met target, or Exceeded target)
Completion of a comprehensive strategic plan
Further strengthen executive resources
Board processes, procedures and papers improved
Board partnership model maintained
100%
200%
100%
75%
J Clelland
Strategic, Non-financial Objectives
Performance outcome
(either Not met target, Partially met target, Met target, or Exceeded target)
Completion of a comprehensive strategic plan
Further strengthen executive resources
Board processes, procedures and papers improved
Board partnership model maintained
Manage Aquis Exchange Europe SAS as CEO and make
certain that there are no business or regulatory issues.
To ensure that the Group continues to grow all business
activities a comprehensive medium-term strategic plan
was prepared. This plan is key to ensure that the Group
identifies, prioritises and executes the strategic initiatives
to ensure the Group’s future success.
The objective of further strengthening executive resources
is to ensure that the Group has a core set of experienced
qualified professionals in order to manage the business and
successfully execute the Group’s strategy and business
plans.
The purpose of improving Board processes, procedures
and papers is to ensure that the Board can function
efficiently and effectively and assess and manage the
governance risks.
In order to ensure that the Board partnership model is
maintained and strengthened the Board remains focussed
on constructive analysis, assessment, debate and collective
decisions.
Aquis Exchange Europe is a key component of the Group’s
plans for continued growth across Europe.
The data used to measure and verify the KPIs and
objectives was derived from independent sources and
internal management reports. No significant assumptions
were made in measuring either the KPI or the objectives
and the calculation method for all the financial and non-
financial KPIs was consistent with prior years and there
were no changes to the underlying accounting policies.
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Aquis Exchange PLC Report and accounts 2021
100%
200%
100%
75%
75%
Executive Directors’ Awards in 2021 under the Aquis
Exchange Omnibus Share Plan
On 30th April 2021, Alasdair Haynes was granted 23,723
and Jonathan Clelland 22,299 restricted share awards
under the Aquis Exchange Omnibus Share Plan. These
awards are valued at face value from the share price of
£6.85 at 30th April 2021 and therefore represent 65%
base salary as disclosed in the Remuneration Policy in the
2020 Directors Remuneration Report. Further details on
the valuation, vesting schedule and conditions of this award
are described below in the table below on Outstanding
Share Plan awards.
These Restricted Share Awards are subject to underpins,
which are objectives that must be met before vesting can
occur. The underpins are based on a minimum level of
underlying performance of the Group over the three-year
period and delivery against the Group’s strategy and plans.
As such the underpins will require that the profitability of
the Group must not decrease below the level in the 2020
financial year and may include growth in market share in
the Aquis Exchange business, sustainable profit delivery
and financial progress taking into account expansion
and investment plans, the avoidance of a material failure
in governance or an illegal act resulting in significant
regulatory or reputational damage and/or material financial
loss to the Group or any of its subsidiaries, and social
factors such as culture and employee engagement. When
considering these factors, the N&RC and Board will
consider overall performance while recognising that fast
Strategic Report Directors’ Remuneration Policy continued
growing financial and technology companies may require
capital expenditure and investment.
Executive Directors’ vesting during 2021 of share-based
awards under previous long term incentive plans
Only previous awards that are subject to time-based
vesting, with no performance conditions attached, vested
during the year. These awards were granted in June 2018
and in April 2020 under the Aquis EMI option scheme,
vesting over a 3-year period with an exercise price of
£2.69 per share and £3.47 respectively. Full details on the
vesting status of all share plan awards for the Executive
Directors are set out in the Outstanding Share Plan awards
table below.
Outstanding Share Plan awards
Details of all outstanding awards under all Share Plans for
the Executive Directors are set out below.
Director
Alasdair
Haynes
Type of
award
Share (or EMI
Option Exercise)
Price at grant
Unvested at
1 January
2021
Awarded
during
the year
Lapsed
during
the year
Award date
Aquis EMI
Option Plan 2018
14th June 2018
£2.69
40,273
Aquis EMI
Option Plan 2018
19th November
2019
£3.47
80,000
0
0
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
15th June 2020
£3.55
45,755
30th April 2021
£6.85
0
23,723
Jonathan
Clelland
Aquis EMI
Option Plan 2018
14th June 2018
£2.69
40,273
Aquis EMI
Option Plan 2018
19th November
2019
£3.47
80,000
0
0
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
15th June 2020
£3.55
43,028
30th April 2021
£6.85
0
22,299
Options
vested
during the
year
Unvested at
31 December
2021
Earliest date
shares from
most recent
award could
be acquired
Latest date
shares from
most recent
award could
be acquired
40,273
0 14th June 2019 13th June 2028
26,667
53,333 16th April 2021 15th April 2030
0
0
45,766 15th June 2023 14th June 2030
23,723 30th April 2024 29th April 2031
40,273
0 14th June 2019 13th June 2028
26,667
53,333 16th April 2021 15th April 2030
0
0
43,028 15th June 2023 14th June 2030
22,299 30th April 2024 29th April 2031
0
0
0
0
0
0
0
0
(1)
(2)
(3)
Awards under the Aquis EMI Share Option plan 2018 are at-market share options. They are subject to time-based vesting in three
equal tranches on the 1st, 2nd and 3rd anniversary of the award.
Aquis Exchange PLC was under close period at the original award date of 19th November 2019, therefore this award was deferred
to 16th April 2020.
Awards under the Aquis Omnibus Share Plan are options to acquire shares in Aquis Exchange PLC at an exercise price of 10p/share,
vest 3 years after the date of the award subject to the Group exceeding underpin conditions and are held for a further 2 years post
vest subject to certain withholding (malus) and recovery (clawback) conditions described in the Aquis Exchange Remuneration Policy.
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Directors’ Remuneration Policy continued
Directors’ shareholdings and share interests
The following table summarises the shareholdings and
share interests of the Directors at 31 December 2021.
Director
Executive
Alasdair Haynes
Jonathan Clelland
Shares
Options vested
but not exercised
Options unvested
SIP
Total
1,491,551
547,401
147,486
26,667
53,333
53,333
6,879
6,879
1,699,249
634,280
The shareholdings and share interests above, do not take
account of any recovered under the Aquis Exchange
Omnibus Share plan granted during 2020 and 2021 which
will vest with effect from 2023 onwards.
Retirement Benefit Schemes
Pension obligations
The Group has defined contribution plans. A defined
contribution plan is a pension plan under which the Group
pays fixed contributions into a separate entity. The Group
has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service
in the current and prior periods.
The Group has no further payment obligations once
the contributions have been paid. The contributions are
recognised as an employee benefit expense as and when
they become due. Prepaid contributions are recognised as
an asset to the extent that a cash refund or a reduction in
the future payments is available.
The Group operates a defined contribution pension
scheme for all qualifying employees. The assets of the
scheme are held separately from those of the Group in an
independently administered fund.
The total costs charged to income in respect of defined
contribution plans in 2021 are £145,884 (2020: £112,907).
Both Alasdair Haynes and Jonathan Clelland have elected
not to participate in the Group pension plan.
All Employee Share Plans
The Group operates an HMRC approved Share Investment
Plan (SIP).
Share Investment Plan (SIP)
All employees are eligible to participate in the SIP scheme
and during 2021, 31 employees including the Executive
Directors subscribed to the scheme. As at, 31 December
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Aquis Exchange PLC Report and accounts 2021
2021, 139,543 shares in the Company were held in the
SIP.
Directors’ service contracts terms
The Group contract term policy is to establish Executive
Directors’ notice period of 6 months in line with
market norms. The Non-Executive Directors’ letters of
appointments are subject to annual approval at the AGM.
All Directors’ letters of appointment are available for
inspection on request from the Company Secretary.
Other information about the N&RC
The N&RC members have no personal financial interest
in matters to be decided, no potential conflicts of
interests arising from cross directorships and no day
to day involvement in running the business. The Non-
Executive Directors are not eligible for pensions and do not
participate in the Group’s cash bonus or share schemes.
The N&RC received help during the year from:
• Company Secretary, Philip Olm, who acted as
Secretary at the meetings
• CFO&COO, Jonathan Clelland, who attends meetings
as an Observer
• CEO, Alasdair Haynes who attends meetings as an
Observer.
• No individual takes part in discussions relating to their
own remuneration and benefits
• The N&RC’s appointed external adviser FIT
Remuneration Consultants LLP. FIT’s fees for advice
provided to the N&RC during 2021 were £22,518
covering the benchmarking of Executive Directors
salaries, fees for Non -Executive Directors and the
establishment of a new share option scheme to replace
the expired EMI Share Option Scheme. FIT does not
provide any other services to the Group and the N&RC
is satisfied that it provides independent and objective
Strategic Report Directors’ Remuneration Policy continued
remuneration advice. FIT is a signatory to the Code
of Conduct for Remuneration Consultants in the UK,
details of which can be found on the Remuneration
Consultants Group’s website at
www.remunerationconsultantsgroup.com.
2021 AGM Remuneration Resolution Voting Outcome
For
Against Withheld
Directors’
Remuneration Report
14,587,925
100.0%
0
0.0%
0
0.0%
External Non-Executive Directors Appointments
Executive Directors are permitted, where appropriate and
with Board approval, to take Non-Executive Directorships
with other organisations in order to broaden their
knowledge and experience in other markets and countries.
Fees received by the Executive Directors in their capacity
as directors of these companies are retained, reflecting
the personal responsibility they undertake in these roles.
Neither of the Executive Directors currently holds an
appointment of this nature.
On behalf of the Board and the Nomination &
Remuneration Committee.
Richard Bennett
Chairman, Nomination & Remuneration Committee
28 March 2022
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Aquis Exchange PLC Report and accounts 2021
Strategic Report Independent auditor’s report to the members of Aquis Exchange PLC
Opinion
We have audited the financial statements of Aquis Exchange PLC (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2021 which comprise the Consolidated and company statement of comprehensive income, the Consolidated
and company statement of financial position, Consolidated statement of changes in equity, Company statement of changes in equity,
Consolidated and company statement of cash flows, and notes to the financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting
standards.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2021 and of the group’s
and the parent company’s profit for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our
report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard, as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
Our audit procedures to evaluate the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going
concern basis of accounting included but were not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast significant doubt
on the group’s and the parent company’s ability to continue as a going concern;
• Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment;
•
•
Evaluating the directors’ method to assess the group’s and the parent company’s ability to continue as a going concern
Reviewing the directors’ going concern assessment, which incorporated severe but plausible scenarios;
• Challenging the key assumptions used and judgements applied by the directors in forming their conclusions on going concern; and
• Making inquiries of management, reading correspondence with regulators and minutes of board meetings;
• Assessing and challenging key assumptions and mitigating actions put in place in response to external factors including the continued
impact of COVID-19;
• Considering whether there were events subsequent to the balance sheet date which could have a bearing on the directors’
assessment of going concern conclusion
•
Reviewing the appropriateness of the directors’ disclosures in the financial statements
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Aquis Exchange PLC Report and accounts 2021
Financial Statements
Key Audit Matter
How our scope addressed this matter
Completeness, cut-off and accuracy of revenue
recognition consistent with IFRS 15 (note 2 and note 11)
(group and parent)
Revenue from contracts with customers is recognised once
the relevant contractual terms relating to each performance
obligation have been achieved, and when other recognition
criteria have been met. This can be either over time or point
in time which impacts the timing of the recognition of the
revenue.
We have determined this to be a key audit matter in relation
to licensing fees due to the level of management’s judgement
required in the revenue recognition under IFRS 15.
Total revenue from technology licensing fees is £4.4m
(2020: £2.3m). The revenue is recognised with reference
to three separate performance obligations. There is a risk
associated with the identification of these performance
obligations, the level of comparability between individual
contracts and the disaggregation of associated revenue to
each performance obligation.
Valuation of Share-Based Payments (SBP) (note 10)
(group and company)
The group has long term incentive plans and share schemes.
There is a risk that the share based payment schemes are
not correctly recognised in accordance with IFRS 2 and
that the vesting conditions are not accurately reflected. The
valuation of share based payments is complex and is subject
to significant management estimates and judgement. There is
an inherent risk of management bias in fair value calculations.
This risk is increased due to the complexity of SBP valuation.
65
Aquis Exchange PLC Report and accounts 2021
Our audit procedures included, but were not limited to:
We performed end-to-end process walkthroughs regarding
management’s process for identifying and recognising revenue.
We challenged management’s accounting policies in respect of
the recognition of each material stream of revenue against the
requirements of IFRS 15.
Our substantive audit procedures included:
– testing over journals, taking a risk-based characteristics approach,
with a focus on manual adjustment journals.
analytical review of the revenue evolution over the period and
post-year end in order to identify any significant transactions
outside the normal course of the business or trends outside the
expectations of the audit team;
– For a sample of contracts:
• we tested the accuracy of the key contractual terms recorded;
• we reperformed the calculation of revenue recorded within
•
the period (and deferred) based on contractual terms to ensure
that revenue has been recognised accurately, and in the
correct period;
for issuer fees, we critically assessed the estimation of length
of time that securities will remain listed on AQSE, taking into
account historical data and management’s judgements
We assessed the appropriateness and completeness of the disclosures
associated with revenue recognition under IFRS 15
Our observations
Based on the audit procedures performed, we determined that the
approach taken by the group in respect of the revenue recognition
is consistent with IFRS 15 requirements and that management’s
judgement applied is reasonable. We gained sufficient appropriate
audit evidence regarding the completeness and accuracy of the
revenue recognised by the group.
Our audit procedures included, but were not limited to:
We understood the end-to-end process for all schemes in place to
identify controls throughout the process.
We challenged the design and operating effectiveness of key controls.
We engaged with our technical accounting team to assess the
appropriateness of the accounting treatment applied to one of the key
SBP plans.
We agreed the key terms of equity settled share based payments
in respect of the award of performance shares and options to the
underlying board approved award documents.
We assessed the fair value calculations of options granted by checking the
accuracy of inputs to management’s option pricing model.
We engaged our internal valuation experts to perform an independent
valuation of the options granted over the period.
We tested the accuracy of the share-based payments amortisation
over the vesting periods.
We agreed the shares acquired in the current year through third party
confirmation when applicable.
We assessed the appropriateness and completeness of the disclosure
of share-based payments in the financial statements.
Our observations
Based on the work performed, we concluded that share based
payments have been appropriately accounted for and evaluated in
accordance with IFRS 2.
Independent auditor’s report to the members of Aquis Exchange PLC continuedFinancial Statements Key Audit Matter
How our scope addressed this matter
Valuation of expected credit losses (ECL) for contract
assets and trade receivables (note 12) (group and
company) (2021: £1.5m, 2020: £0.5m)
The group applies the simplified approach to measure ECL.
The estimation of the expected credit loss (ECL) is a key audit
matter given the size of the provision, changes expected
over the course of 2019 – 2022 due to the COVID-19
pandemic, and significant level of judgement in determining
the ECL arising from the limited default history to predict
the probability of default (PD). In addition the licensing
customers primarily consist of start-ups with limited external
credit scores which limits the availability of comparable data
to assess management’s estimates of probability of default
(PD) and the loss given default (LGD).
Our audit procedures included, but were not limited to:
We performed end-to-end process walkthroughs to identify the key
systems, applications and controls used in the ECL processes.
We challenged the design and tested the implementation of
controls including counterparties grouping, model data inputs and
governance. We tested the effectiveness of the control associated with
counterparties grouping.
We assessed the compliance of the ECL methodology with the IFRS 9.
We performed sensitivity analysis by flexing the PDs and LGDs to
assess as to whether there are any material movements noted on the
resultant ECL calculated.
We engaged our credit modelling specialist to assess the
reasonableness as per IFRS 9 of the PD and LGD estimates that
directors have decided.
We engaged our in-house Chief Economist to assess the
reasonableness of the macro-economic indicators and scenario
weighting used.
We performed substantive procedures over the validity of over
key inputs (including the history, status, and maturity of underlying
counterparties).
We assessed the data sources whether internal (i.e. historical client
relationship experience) or external, with a focus on assessing the
appropriateness, timeliness, relevance and adjustments applied.
We reviewed the disclosures associated with the ECL provision to
ensure that they are appropriate and in line with the requirements of
applicable financial reporting standards.
Our observations
Based on the audit procedures performed, we found the approach
taken by the group and company in respect to ECL is consistent with
the requirements of IFRS 9 and we consider management’s estimate of
the ECL appropriate as of 31 December 2021
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements
as a whole as follows:
Group materiality
Overall materiality
How we determined it
Rationale for benchmark applied
£172,000
1% of Total Revenue
Total revenue is the primary measure to assess the performance
of the group. The group is profit oriented, but as the group
has recently been loss making and is growing, and Aquis Stock
Exchange Limited is still loss making, profit before tax is not an
appropriate reflection of the operations.
66
Aquis Exchange PLC Report and accounts 2021
Independent auditor’s report to the members of Aquis Exchange PLC continuedFinancial Statements Overall materiality
Performance materiality
Reporting threshold
Parent company materiality
Overall materiality
How we determined it
Rationale for benchmark applied
Performance materiality
Reporting threshold
£172,000
Performance materiality is set to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £103,000, which represents
60% of overall materiality, recognising that this is a first year audit
for Mazars.
We agreed with the directors that we would report to them
misstatements identified during our audit above £5,100 as well
as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
£94,500
1% of Total Revenue
Total revenue is the primary measure to assess the performance
of the company. The company is profit oriented, but as the
company has recently been loss making and is growing, profit
before tax is not an appropriate reflection of the operations.
Performance materiality is set to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £57,000, which represents
60% of overall materiality, since this is a first year audit for
Mazars.
We agreed with the directors that we would report to them
misstatements identified during our audit above £3,000 as well
as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to fraud or error,
and then designed and performed audit procedures responsive to those risks. In particular, we looked at where the directors made
subjective judgements, such as assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements
as a whole. We used the outputs of our risk assessment, our understanding of the group and the parent company, their environment,
controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient coverage across all financial
statement line items.
Our group audit scope included an audit of the group and the parent company financial statements. Based on our risk assessment, all
components of the group, including the parent company, were subject to full scope audit performed by the group audit team and/or
component teams. For our audit of the group financial statements, we have scoped in Aquis Exchange PLC, Aquis Exchange Europe SAS
and Aquis Stock Exchange Limited, referred together as “components” financial statement line items to the extent they are material to the
Group. We engaged component auditors to perform audit procedures for Aquis Exchange Europe SAS who are also the local statutory
auditors of the entity. We determined the level of involvement we needed in their audit work to be able to conclude whether sufficient
and appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole. This included
regular communications with the component auditors throughout the audit, the issuance of instructions, and a review of the results of
their work.
At the parent company level, the group audit team also tested the consolidation process and carried out analytical procedures to confirm
our conclusion that there were no significant risks of material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
67
Aquis Exchange PLC Report and accounts 2021
Independent auditor’s report to the members of Aquis Exchange PLC continuedFinancial Statements Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
•
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to Aquis Exchange PLC’s compliance with the provisions of the UK Corporate Governance
Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified, set out on page 36;
• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why they period is
appropriate, set out on page 29;
• Directors’ statement on fair, balanced and understandable, set out on page 36;
•
•
Board’s confirmation that it has carried out a robust assessment of the e-merging and principal risks, set out on page 21;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems, set out
on page 35; and;
The section describing the work of the audit committee, set out on page 38.
•
Responsibilities of Directors
As explained more fully in the Statement of directors’ responsibilities set out on page 36, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
68
Aquis Exchange PLC Report and accounts 2021
Independent auditor’s report to the members of Aquis Exchange PLC continuedFinancial Statements Based on our understanding of the group and the parent company and their industry, we considered that non-compliance with the
following laws and regulations might have a material effect on the financial statements: financial crime regulations and regulatory and
supervisory requirements from the regulatory authorities where the group and company conduct their business, primarily the Financial
Conduct Authority (FCA) and HM Revenue & Customs (HMRC).
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material
misstatement in respect to non-compliance, our procedures included, but were not limited to:
•
Inquiring of management and, where appropriate, those charged with governance, as to whether the group and the parent company
is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and
regulations;
Inspecting correspondence, if any, with relevant licensing or regulatory authorities, including the FCA and HMRC;
Reviewing minutes of directors’ meetings in the year;
•
•
• Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance
throughout our audit;
• Considering the risk of acts by the group and the parent company which were contrary to applicable laws and regulations, including
•
fraud; and
The group and company operates in the exchange industry which is a regulated environment. As such, the Senior Statutory Auditor
reviewed the experience and expertise of the engagement team to ensure that the team had the appropriate competence and
capabilities, which included the use of experts where appropriate.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax
legislation, the Companies Act 2006 and UK adopted International Accounting Standards (IAS).
In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial
statements, including the risk of management override of controls, and determined that the principal risks related to posting manual
journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting
estimates, in particular in relation to, revenue recognition (which we pinpointed to the cut-off of revenue for performance obligations
realised over a period of time), judgements in the calculation and recognition of expected credit losses, recognition of shared based
management compensation and consideration of significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud;
•
Reviewing the accounting estimates in relation to expected credit losses (as described in our key audit matter) and valuation of share
based management compensation for evidence of management bias and performing procedures to respond to the fraud risk in
revenue recognition; and
• Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of
irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these
may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters” section of this report.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body for our audit work, for this report, or for the opinions we have formed.
Greg Simpson (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House,
St Katharine’s Dock,
London
Date: 28 March 2022
69
Aquis Exchange PLC Report and accounts 2021
Independent auditor’s report to the members of Aquis Exchange PLC continuedFinancial Statements
Consolidated and Company Statement of Comprehensive Income
For the year ended 31 December 2021
Profit and loss
Revenue
Impairment charge
Operating expenses
Earnings before interest, taxation, depreciation
and amortisation
Interest income
Depreciation and amortisation
Finance expense
Finance income
Profit before taxation
Income tax credit
Deferred tax
Profit for the year
Group
2021
£
2020
£
Company
2021
£
2020
£
Notes
17,182,755
11
(972,161)
12
13 (11,930,400)
11,477,253
(100,174)
(9,855,927)
9,454,737
(972,161)
(4,038,026)
9,860,328
(97,760)
(7,443,194)
4,280,194
1,521,152
4,444,550
2,319,374
15
13
13
13
18
17
444
(1,032,240)
(35,010)
8,835
3,222,223
—
1,088,543
14,632
(1,030,290)
(41,835)
6,736
470,395
307,616
203,717
444
(1,026,980)
(35,010)
8,835
3,391,839
—
1,088,543
14,632
(1,030,290)
(41,835)
6,736
1,268,616
307,616
203,717
4,310,766
981,728
4,480,382
1,779,951
Other comprehensive income
Foreign exchange differences on translation of
foreign operations
32
76,899
(531)
Other comprehensive income/(loss) for the year
76,899
(531)
—
—
—
—
Total comprehensive income for the year
4,387,665
981,197
4,480,382
1,779,951
Earnings per share (pence)
Basic
Ordinary shares
Diluted
Ordinary shares
19
19
16
15
4
3
16
16
7
6
70
Aquis Exchange PLC Report and accounts 2021
Financial Statements Consolidated and Company Statement of Financial Position
As at 31 December 2021
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Investment in subsidiaries
Investment in trust
Deferred tax asset
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Notes
16,20
16
21
22
23
17
24
Group
2021
£
2020
£
Company
2021
£
2020
£
83,481
753,714
4,146,333
—
—
1,292,260
2,744,656
83,481
916,256
1,578,554
—
—
203,717
839,630
—
753,714
3,563,758
6,884,202
1,856,964
1,292,260
2,731,174
—
916,256
1,578,554
6,484,202
486,127
203,717
839,630
9,020,444
3,621,638
17,082,072
10,508,486
24
25
3,768,947
14,046,399
2,924,067
12,268,418
4,372,554
7,094,964
2,943,368
6,179,566
26,835,790
18,814,123
28,549,589
19,631,420
Liabilities
Current liabilities
Trade and other payables and short term lease
liabilities
6, 26
3,783,587
2,810,710
3,196,516
2,292,106
Net current assets
14,031,759
12,381,775
8,271,002
6,830,828
Non-current liabilities
Lease liabilities
Total liabilities
Net total assets
Equity
Called up share capital
Share premium account
Other reserves
Treasury shares
Retained earnings
Foreign currency translation reserve
Total equity
27
3,422,744
995,081
2,915,920
995,081
3,422,744
995,081
2,915,920
995,081
7,206,331
3,805,791
6,112,436
3,287,187
19,629,460
15,008,332
22,437,153
16,344,234
28
29
30
31
32
2,750,545
11,771,462
1,118,314
(1,526,835)
5,438,167
77,807
2,716,970
10,892,135
760,543
(489,625)
1,127,401
908
2,750,545
11,771,462
1,448,430
—
6,466,716
—
2,716,970
10,892,135
748,525
—
1,986,604
—
19,629,460
15,008,332
22,437,153
16,344,234
Alasdair Haynes
CEO
Jonathan Clelland
CFO
71
Aquis Exchange PLC Report and accounts 2021
Financial Statements Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Group
Balance at 1 January 2020
Profit for the year
Foreign exchange differences on
translation of foreign operations
32
Issue of new shares
28,29
2,014
52,154
Notes
Share
Capital
Share
premium
Other
reserves
Retained
earnings
Treasury
Shares
Foreign
Currency
Translation
Reserve
Total
2,714,956 10,839,981
377,766
145,673
(327,809)
1,439 13,752,006
981,728
382,777
981,728
(531)
(531)
54,168
382,777
Movement in share-based
payment reserve
Movement in Treasury Shares
Balance at 31 December 2020
Balance at 1 January 2021
Profit for the year
Foreign exchange differences on
translation of foreign operations
30
31
32
2,716,970 10,892,135
760,543
1,127,401
(489,625)
908 15,008,332
2,716,970 10,892,135
760,543
1,127,401
(489,625)
908 15,008,332
(161,816)
(161,816)
—
—
—
—
— 4,310,766
—
—
357,771
—
—
—
— 4,310,766
76,899
76,899
—
—
912,902
357,771
—
—
—
—
— (1,037,210)
(1,037,210)
Issue of new shares
28,29
33,575
879,327
Movement in share-based
payment reserve
Movement in Treasury Shares
30
31
—
—
—
—
Balance at 31 December 2021
2,750,545 11,771,462
1,118,314
5,438,167 (1,526,835)
77,807 19,629,460
Company Statement of Changes in Equity
For the year ended 31 December 2021
Company
Balance at 1 January 2020
Profit for the year
Issue of new shares
Movement in share-based
payment reserve
Balance at 31 December 2020
Balance at 1 January 2021
Profit for the year
Issue of new shares
Movement in share-based
payment reserve
Notes
28,29
30
28,29
30
Share
Capital
Share
premium
Other
reserves
Retained
earnings
2,714,956
10,839,981
368,367
—
2,014
—
—
52,154
—
—
—
380,158
206,383
1,779,951
—
—
2,716,970
10,892,135
748,525
1,986,334
2,716,970
10,892,135
748,525
1,986,334
—
—
33,575
879,327
—
—
—
—
699,905
4,480,382
—
—
Total
14,129,687
1,779,951
54,168
380,158
16,343,964
16,343,964
4,480,382
912,902
699,904
Balance at 31 December 2021
2,750,545
11,771,462
1,448,430
6,466,716
22,437,153
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Aquis Exchange PLC Report and accounts 2021
Financial Statements
Consolidated and Company Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Cash generated by operations
Tax refunded
Finance expense on lease liabilities
Net cash outflow from operating activities
Investing activities
Recognition of software development costs
Purchase of property, plant and equipment
Investment in subsidiaries
Capital injection into AQSE and Aquis Europe
Interest received
Group
2021
£
2020
£
Company
2021
£
2020
£
3,157,517
—
(26,175)
2,129,563
307,616
(35,099)
2,748,346
—
(26,175)
2,228,339
307,616
(35,099)
3,131,342
2,402,080
2,722,171
2,500,856
(350,893)
(319,519)
—
—
444
(642,695)
(115,351)
(259,400)
—
14,632
(350,893)
(314,384)
—
(400,000)
444
(642,695)
(115,351)
—
(4,046,436)
14,632
Notes
33
18
27
20
21
22
13
Net cash used in investing activities
(669,968)
(1,002,815)
(1,064,833)
(4,789,851)
28,29
31
2,23
912,902
(1,100,000)
(573,194)
54,168
912,902
— (1,100,000)
(554,842)
(195,346)
54,168
—
(195,346)
(760,292)
(141,178)
(741,940)
(141,178)
1,701,082
1,258,088
915,398
(2,430,173)
25
12,268,418
11,010,861
6,179,566
8,609,739
32
76,899
(531)
—
—
25
14,046,399
12,268,418
7,094,964
6,179,566
Financing activities
Issue of new shares
Purchase of treasury shares
Principal portion of lease liability
Net cash generated from/(used in) financing
activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of the
year
Effect of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at the end of the
year
73
Aquis Exchange PLC Report and accounts 2021
Financial Statements Notes to the Financial Statements
1 SIGNIFICANT CHANGES IN THE REPORTING PERIOD
The following events and transactions had an impact on the financial position and performance of the Group and/or
Company during the period:
Following the end of the Brexit transition arrangements, from 1 January 2022 Aquis Europe SAS, a 100% owned
subsidiary of the Group earns that element of exchange revenue relating to EU27 stocks, with Aquis Exchange PLC (the
Company) now recording only that element of exchange revenue relating to UK and Swiss stocks. There is no impact at a
Group level.
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
Company information
Aquis Exchange PLC is a public limited company which is incorporated and domiciled in the United Kingdom. Its registered
office is located at Palladium House, 1-4 Argyll Street, London, W1F 7LD.
Accounting convention
The Group’s consolidated and the Company’s financial statements are prepared in accordance with UK-adopted
international accounting standards and the Companies Act 2006.
The “requirements of the Companies Act 2006” here means accounts being prepared in accordance with “international
accounting standards” as defined in section 474(1) of that Act.
The financial statements have been prepared on the historical cost basis.
The Group does not hold any financial instruments at fair value through profit or loss.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
Going concern
At the time of approving the financial statements, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future and thus continue to adopt the going
concern basis of accounting in preparing the financial statements.
The Group has made an increased profit in 2021 against prior year and has substantial cash reserves and a strong balance
sheet, due to high levels of investment within the Group. There has been a growth in revenue between the current year
and comparative years. Additional revenue growth is projected for 2022, with profits forecasted for future years.
Coronavirus has continued to impact the global economy in 2021 and caused a significant amount of uncertainty. Whilst
this has not hindered the business in a discernible way to date, which is evidenced by the revenue growth and profit
generated during the year, there remains a risk that there may be a longer-term impact on revenues and/or costs and
therefore the Directors continue to closely monitoring how the situation develops and are ready to address any negative
impact on the business if necessary.
The end of 2020 marked the end of the transition period following the UK’s departure from the EU, and a trade
agreement was reached at the end of the year, which did not address financial services. While the agreement ended
years of uncertainty regarding a no-deal Brexit, there are significant costs for the UK’s financial services industry, and it
is anticipated there will be a long-lasting effect on the UK economy. With its European subsidiary and a well-planned and
executed transition of EU securities trading, the Group has been well-positioned to respond quickly to the changes in
legislation. However, it remains difficult to predict the overall impact of Brexit on the future trading landscape for both the
financial services industry and the wider UK economy.
The Ukrainian conflict has resulted in extremely volatile market and there is no certainty as to when this conflict will be
resolved, however at this stage, the Directors do not believe that this could have a material adverse effect on the group.
74
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements
Taking the above into account in light of the Group’s current position and principal risks as discussed in the Strategic
Report section of this annual report, the Directors have assessed the prospects of the Group for the foreseeable future
and there is no material uncertainty as to the Group’s ability to continue to adopt the going concern basis of accounting
in preparing the financial statements over a period of at least 12 months from the date of approval of these financial
statements.
Consolidation
Group
The consolidated financial statements comprise the financial statements of the Company and its subsidiary companies with
all inter-company balances and transactions eliminated.
Investments in subsidiary companies’ shares, loans and other contributions are recognised at cost. These are reviewed
for impairment when events indicate that the carrying amount may not be recoverable and are accounted for in the
Company’s financial statements at cost less accumulated impairment losses.
The results of Aquis Stock Exchange Limited and Aquis Exchange Europe SAS have been consolidated in the Group
financial statements for the year ended 31 December 2021.
The Group consolidated financial statements also include treasury shares and cash held by two separate trusts (“the
Trusts”) that administers the Company’s employee share incentive plan and also hold shares purchased by the Company
in preparation for future settlement of employee share awards made to date. The Trusts have been consolidated based on
the IFRS 10 criteria for control over the Trust being met:
• The Trusts were established to (i) facilitate the acquisition and holding of shares under the Aquis Exchange PLC Share
Incentive Plan and (ii) facilitate the acquisition and holding of shares under the Aquis Exchange PLC Restricted Share
Plan.
• The activities of the Trusts are limited by the agreements in place; and
• The Trusts do not have any assets outside of the partnership share money received and the shares purchased. The
use of any shares or cash that remain in the Trust funds once the trustee no longer holds any shares relating to the
SIP or RSP, is directed by the company. The Trust itself has no rights to any dividends.
Accounting Policies
Revenue
Revenue comprises amounts derived from the provision of services which fall within the Company’s ordinary activities,
net of value added tax. It represents amounts receivable for subscription fees, the licensing of software, the provision of
data to third-party vendors, and fees relating to listings on the Aquis Stock Exchange (AQSE), all of which are net of value
added tax. Revenue is recognised once the performance obligations for each activity have been satisfied.
All the revenue streams are generated by contracts with customers and revenue is therefore recognised in accordance
with IFRS 15.
Revenue from exchange subscription-based services is recognised in the accounting year in which the services are
rendered, by reference to the ongoing contractual obligation to provide the services.
Revenue from licensing contracts is assessed for each contract and split into three performance obligations:
• Project fees and maintenance fees which are recognised over time as the obligations are met; and
•
Licensing for which fees are considered a “right to use” licence under IFRS 15 and are therefore recognised at a point
in time when control of the licence passes to the customer.
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Notes to the Financial Statements continuedNotes to the Financial Statements Revenue from the provision of data to third-party vendors is comprised of the annual fees paid by the redistributors,
member firms and multi-media firms for access to real time and/or end of day data. An additional monthly fee is received
based on the number of users the vendors provide the data to each month, variable based on usage for the prior month, is
charged in arrears and is recognised in the month it is incurred.
Revenue from AQSE issuer fees is comprised of initial application and admission fees, annual fees, and further issue
fees. Both application and admission fees are recognised monthly over the expected life of a company’s admission. An
estimation is required to determine the length of time the securities will remain listed on the exchange, the details of which
are set out below. Annual issuer fees relate to fees paid by issuers to maintain a listing on the exchange and are discussed
below, while further issue fees relate to fees in respect of further issues by listed companies are recognised at the point in
time they occur.
Annual issuer and data fees are paid by the customers in advance and are initially recognised as deferred revenue, then
released over time as the performance obligation is fulfilled.
Estimated listing period for Aquis Stock Exchange securities
In recognising application and admission fees, the Company determines the expected length of time each new security will
be listed on AQSE. The estimate is based on historical analysis of listing durations in respect of the companies listed on
AQSE. The length of time a security remains listed incorporates significant uncertainty as it is based on factors outside the
control of the Company and which are inherently difficult to predict.
Based on the available information and incorporating management’s predictions, it is currently estimated that an average
security will remain listed for a period of 9 years. Application and admission fees are recognised monthly over this period.
It is estimated that a one year increase/ decrease in the deferral period would cause a £4,657 decrease /£5,821 increase
in annual revenue released respectively. The estimated listing periods will be reassessed at each reporting date to ensure
they reflect the best estimates of the Group.
Intangible assets other than goodwill
Internally developed intangible assets arising from the capitalisation of Research and Development expenditures are
recognised in the financial statements when all of the following criteria are met:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale is established;
• There is an intention to complete the intangible asset and use or sell it;
• The Group has the ability to use or sell the intangible asset;
• The existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset can be demonstrated;
• Adequate technical, financial and other resources are available to complete the development and to use or sell the
intangible asset; and
• The Group has the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
Where the above criteria are not met, costs incurred in research and development are recognised in the Statement of
Comprehensive Income as incurred.
Amortisation is recognised in order to write off the cost or valuation of the assets, less their residual values over their
useful lives. The development of trading platforms has been amortised over 3 years on a straight-line basis reflecting
management’s estimate of the useful life of the technology, the rationale of which is discussed in Note 4.
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Notes to the Financial Statements continuedNotes to the Financial Statements Business Combination
Aquis Exchange PLC (the acquirer) purchased 100% of the shares of NEX Exchange Limited (which subsequently changed
its name to Aquis Stock Exchange Limited (AQSE)) on 11 March 2020 (the acquisition date). Business combinations are
recorded using the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess
of the consideration transferred over the fair value of the net identifiable assets is recorded as goodwill.
Goodwill
In March 2020 the acquisition of AQSE gave rise to goodwill in the consolidated financial statements. Goodwill is initially
measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets
acquired and liabilities assumed. Goodwill is assessed for impairment annually. Note 20 provides further detail on the
impairment assessment for goodwill as at 31 December 2021.
Property, plant and equipment (excluding right-of-use assets)
All property, plant and equipment are stated at historical cost less depreciation or impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure is included in the asset’s carrying amount or is recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repair and maintenance costs are charged to the income statement during the financial
period in which they are incurred.
Depreciation is recognised so as to write off the cost or valuation of assets, less their residual values, over their useful lives
on the following basis:
• Fixtures, fittings and equipment: 5 years straight line.
• Computer equipment: 3 years straight line.
Impairment of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Cash and cash equivalents
Cash and cash equivalents include cash at bank.
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Notes to the Financial Statements continuedNotes to the Financial Statements Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Financial
assets are initially measured at fair value plus transaction costs and are subsequently measured in their entirety at either
amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Trade and other receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of business. Other
receivables are defined as amounts due that are outside the ordinary course of business. If collection is expected in one
year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are
presented as non-current assets.
Contract assets
Contract assets are recognised for licensing fees recognised at inception of a licensing contract but not yet billed under
IFRS 15. Contract assets are initially measured at fair value and subsequently measured at amortised cost and are stated
net of any expected credit loss provision (ECL) recognised in accordance with IFRS 9, as detailed in Note 12. Contract
assets are presented on the Statement of Financial Position as trade receivables. The right to consideration becomes
unconditional once the customer has been billed.
Rent deposit asset
Under IFRS 16, a rent deposit is accounted for as a financial asset if:
• The collateral provided to the lessor is not a payment relating to the right to use the underlying assets and hence is
not a lease payment as defined;
• The difference between the nominal amount and fair value of the rent deposit at the commencement date represents
an additional lease payment which is prepaid and is included in initial carrying amount of the Right of Use (ROU) asset;
and
• The prepaid ROU portion is subsequently measured in terms of IFRS 16 i.e. is depreciated over the term of the lease.
Further disclosures are provided in Note 27.
Impairment of financial assets
The Group has considered the impact of the application of an expected credit loss model when calculating impairment
losses on current and non-current contract assets and other financial assets at amortised cost (presented within trade and
other receivables). In applying IFRS 9 the Group must consider the probability of a default occurring over the contractual
life of its trade receivables and contract asset balances on initial recognition of those assets. Note 12 details the Group’s
credit risk assessment procedures.
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Notes to the Financial Statements continuedNotes to the Financial Statements Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method. The effective
interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including
all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the
amortised cost of a financial liability.
In 2021 the Group did not hold any Financial liabilities beyond Trade and other payables, Accrued Expenses and the lease
liabilities recognised under IFRS 16 as described in the “Leases” sub-section below.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other
payables are not interest bearing and are initially recognised at fair value.
Equity instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or
options are charged against the share premium account.
Earnings per share
The earnings per share (EPS) calculations are based on basic earnings per ordinary share as well as diluted earnings per
ordinary share. The basic EPS is calculated by dividing the profit after tax of the Group by the weighted average number
of ordinary shares that were in issue during the year. The diluted EPS takes into account the dilution effects which would
arise on conversion of all outstanding share options and share awards under the Employee Share Incentive Plan.
Taxation
The tax expense/(credit) represents the sum of the tax currently payable/(repayable) and deferred tax.
An R&D tax credit is claimed annually from HMRC based on the employee costs involved in developing Aquis’ systems and
technology. It is recognised as a credit to the profit and loss in the year it is received.
Current tax
The current income tax charge/ (credit) is calculated on the basis of the tax laws enacted or substantively enacted
at the balance sheet date in the country where the company operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future measurable taxable profit will
be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the
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Notes to the Financial Statements continuedNotes to the Financial Statements same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle
the balances on a net basis.
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to
be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised as an expense when the Group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits, as set out within IAS 19.
Retirement benefits
Pension obligations
The Group has no further payment obligations once the contributions have been paid. The contributions are recognised
as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in the future payments is available.
Share-based payments
EMI Options
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the
equity instruments granted using the US Options Binomial model. The fair value determined at the grant date is expensed
on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding
adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently
modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms
and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original
fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based
payment. The share-based payment expense is adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of
vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Employee Share incentive plan
Shares purchased under the share incentive plan are recognised as share-based payments under IFRS 2. Partnership
shares are purchased by employees and matching shares are those purchased by Aquis at a ratio of 2:1. The shares are
held in a trust (“the Trust”), with matching shares required to be held for three years before being transferred to the
employee. The fair value of both the partnership and matching shares are recognised in the share-based payment reserve.
Partnership shares vest immediately while matching shares will vest over the three-year holding period. The market value
of shares when they are purchased is assumed to approximate the fair value of the shares.
The cash transferred to the Trust is recognised as an investment in the Company’s accounts. In line with IFRS 10 guidance,
the Trust is consolidated in the Group accounts with the fair value of the shares held in the trust recognised as a debit
entry within equity. This accounting treatment was initially adopted in 2020.
Restricted shares
Restricted shares are share based and will vest three years after the grant date subject to continued employment. Similar
to share-based payments they are measured at fair value determined at the grant date using the Black Scholes model. The
fair value is expensed on a straight-line basis over the vesting period, with the corresponding adjustment being made to
reserves.
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Notes to the Financial Statements continuedNotes to the Financial Statements Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right
of use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets
and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease
payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is
more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. Lease payments included in the measurement of the lease liability
comprise:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the
lease.
The lease liability is presented as a separate line in the consolidated statement of financial position and is subsequently
measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and
makes a corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an
unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case
a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments
using a revised discount rate at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are included in property,
plant and equipment in the consolidated statement of financial position and are depreciated over the term of the
lease. The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss as described in the ‘Property, Plant and Equipment’ policy. Variable rents that do not depend on an index
or rate are not included in the measurement the lease liability and the right-of-use asset.
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Notes to the Financial Statements continuedNotes to the Financial Statements Foreign exchange
Functional and presentation currency
Items included in the financial statements of the Group are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The financial statements are presented in UK Pound
Sterling (£), which is the Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised
in profit or loss.
All foreign exchange gains and losses recognised in the income statement are presented net within ‘operating expenses’.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average
exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive
income and accumulated in a foreign exchange translation reserve (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation or a partial disposal of an interest in a joint
arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all
of the exchange differences accumulated in a foreign exchange translation reserve in respect of that operation attributable
to the owners of the Group are reclassified to profit or loss.
3 ADOPTION OF NEW AND REVISED STANDARDS AND CHANGES IN ACCOUNTING POLICIES
New IFRS Standards that are effective for the current year
There were no new standards effective during the year ended 31 December 2021.
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet
been applied in these financial statements, were in issue. The Directors do not expect that the adoption of the Standards
listed below will have any impact on the financial statements of the Group in future periods:
IFRS 17
Insurance Contracts
Amendments to IFRS 9, IAS 39 and IFRS 17
Interest rate benchmark reform
Amendments to IFRS 3
Amendments to IAS 1 and IAS 8
Amendment to IAS 12
Amendment to IAS 16
Amendment to IAS 37
Amendment to IAS 41
IFRS 1
Definition of a business
Definition of material
Income taxes
Property, plant and equipment
Provisions, contingent liabilities and contingent assets
Agriculture
First time adoption of IFRS
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Notes to the Financial Statements continuedNotes to the Financial Statements 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In applying the Group’s accounting policies, which are described in Note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other
sources. Management has shown these matters as judgements where they relate to a significant policy and the judgement
has a material impact on the reported balance. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be 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
The following are the critical judgements, apart from those involving estimations (which are presented separately below),
that the Directors have made in the process of applying the Group’s accounting policies and that have the most significant
effect on the amounts recognised in financial statements.
Judgements in relation to performance obligations
In making their judgement, the Directors considered the detailed criteria for the recognition of revenue set out in IFRS 15,
and in particular, whether revenue is recognised at a point in time or over time. Following an assessment of the technology
licensing contract portfolio, and the obligations that Aquis has under each contract, the Directors are satisfied that
obligations contained therein be split into the following performance obligations, and that the revenue from each licensing
contract should be assessed individually. The identified performance obligations and the timing of revenue recognition on
delivering the licence contracts as follows:
•
•
Implementation/ project fees: these are upfront, non-refundable fees that a customer pays in order to obtain the user
agreement. Even if the user acceptance certificate is never issued, the implementation fee cannot be reclaimed and so
the revenue is guaranteed and can be recognised at the time of invoice as Aquis becomes unconditionally entitled to
payment.
Licensing fees: The customer is liable to pay the monthly licensing fee from the date of signing the user acceptance
agreement (contract inception date). At this point in time Aquis has fulfilled its promise to deliver the licence (i.e.
the system has been deployed in the client’s production environment) and this performance obligation is fulfilled.
Management uses judgement when assessing the recoverability of the licencing fees, and recognises them only when
their collection is assumed to be highly probable. This assessment takes into consideration the current status of the
client’s business, including whether the exchange system is active with products/ securities added and members
trading on it. The licensing fees are recognised at a point in time, which occurs after the contract is signed and once
Aquis is satisfied that receiving the licencing fees is highly probable.
• Maintenance fees: fees to maintain the system are recognised over the course of the licensing contract as Aquis fulfils
its performance obligation to maintain the system. Management have estimated a fixed annual amount per contract,
which reflects the time spent supporting the client’s platform and upgrading the software in accordance with the
contractual terms.
Changes in identification of performance obligations could impact the timing of revenue recognition for licensing contract
assets and is thus a critical accounting judgement.
Capitalisation of internally generated intangible assets resulting from Research and Development
Internally generated Intangible assets are capitalised when, in management’s judgement, the criteria for capitalisation
under IAS 38 (listed in Note 2) have been met. The direct costs incurred in the research and development of Aquis’
exchange platform and associated technology and systems are capitalised.
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Notes to the Financial Statements continuedNotes to the Financial Statements Management reviews the time spent by the development team in developing and maintaining the systems used internally
by Aquis when determining the amount to be capitalised within each period.
Critical accounting estimates
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that
may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Estimating the useful life of intangible assets
The expected useful life of an intangible asset is estimated to be 3 years. In making this judgement management have
taken into account product upgrade cycles, the pace of change of regulation as well as benchmarking against other
companies with internal systems and technology research and development.
Expected credit loss of contract assets
An impairment for the expected credit loss of contract assets that arise as a result of applying IFRS 15 to licensing revenue
is required under IFRS 9. This impairment is an accounting estimate which is calculated based on the Directors’ best
estimates of the probability of default and loss given default. The quantification of the assumptions and stresses for the
year are disclosed in Note 12 of the financial statements.
In arriving at these estimates, the Directors have assessed the range of possible outcomes using reasonable and
supportable forward-looking information, which is based on assumptions for the future movement of different economic
drivers and how these drivers will affect each other.
Aquis’ assessment of the credit risk associated with a licensing customer is conducted at inception of the contract (but
before the user agreement is signed) and includes factors that are specific to the customer, general economic conditions
and an assessment of both the current as well as the forecast direction of these conditions.
The credit risk assessment is conducted by means of a take-on assessment which comprises of a series of relevant criteria
for a licensing contract that are scored according to the specific circumstances of the customer, with scores for each
parameter typically ranging from 1-4. The assessment evaluates the following:
•
Level of funding;
• Regulatory approvals;
• Market, industry and business model;
• Macro-economic forecasts;
• Corporate governance/ Group management;
• Whether the client is revenue generating;
•
Level of client profitability;
• Contract length and the associated range of economic scenarios therein;
• Payment history; and
• External credit ratings.
The above assessment will determine the customer category upon inception of the contract, and the inputs to the
expected credit loss model is determined thereon.
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Notes to the Financial Statements continuedNotes to the Financial Statements The credit risk assessment and associated inputs to the expected credit loss model (probability of default and loss given
default) are critical assessments that could impact both the provision for expected credit losses as well as the movement in
the provision reflected in the income statement.
Deferred tax asset
Deferred tax assets are recognised to the extent that their utilisation is probable. The utilisation of deferred tax assets will
depend on whether it is possible to generate sufficient taxable income in the respective tax type and jurisdiction. A total
net deferred tax asset of £1,292k is recognised in the current period, since profitability is expected to continue for at least
the next 3 years. The deferred tax asset is calculated based on expected profitability over this period as Aquis is a high
growth company and there is considerable uncertainty in estimating financial performance beyond this length of time.
Various factors are used to assess the probability of the future utilisation of deferred tax assets, including, operational
plans and loss-carry forward periods. To reflect the uncertainty in the accuracy of business forecasts, the model uses
modest growth rates and applies a probability weighting to each type of revenue. The impact of flexing the discount rates
used by +2%/-2% for exchange and data revenue and by +5%/-5% for new licencing contracts would be +£272,100/-
£272,100, so that the deferred tax asset would be £1,604,493 in an upside scenario with lower probability discount rates
or £1,060,274 in a downside scenario with higher probability discount rates.
Share-based payments
The US binomial model and Black Scholes model are used to estimate the value of the EMI options and the restricted
shares. The resulting values are recognised straight-line over the vesting period as an expense, with the corresponding
amounts recognised as equity in the balance sheet. The model requires the following inputs: grant date, exercise price,
expiry, expected life of options, expected volatility, and the risk-free interest rate. The expected life and expected volatility
require the use of estimates. Volatility is estimated based on the historical average for the available data up to the grant
date, while the expected life of the options is based on management’s judgement of when the options will be exercised,
which is assumed to be an average of 5 years. No EMI options were granted during the year but management notes that
a 5% decrease/increase in expected volatility leads to a +£41,732/-£42,347 variance in the 2021 expense. Similarly, for
a 1 year increase/decrease in the expected life of the options, this would lead to a +£16,592/-£18,603 variance. Note 14
provides further disclosure on the amounts recognised in these financial statements.
5 CORPORATE INFORMATION
Aquis Exchange PLC (the ‘Group’) is licensed to operate a multilateral trading facility (MTF) enabling members to trade
across fifteen European markets and to provide exchange software under licence.
6 FINANCIAL RISK MANAGEMENT
The Group seeks to protect its financial performance and the value of its business from exposure to adverse changes in
capital commitments, as well as credit, liquidity and foreign exchange risks.
The Group’s financial risk management approach is not speculative. The Group’s Audit, Risk and Compliance Committee
provides assurance that the governance and operational controls are effective to manage risks within the Board-approved
risk appetite, supporting a robust Group risk management framework.
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Notes to the Financial Statements continuedNotes to the Financial Statements The Group’s objectives when managing these risks are detailed below.
Capital risk management and capital commitments
Risk Description
Risk management approach
There is a risk that Group entities may not maintain
sufficient capital to meet their obligations. The Group
comprises regulated entities. It considers that:
•
Increases in the capital requirements of its regulated
companies, or
• A scarcity of equity (driven by its own performance
or financial market conditions) either separately or
in combination are the principal risks to managing its
capital.
The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going
concern so that it can provide returns for shareholders
and benefits for other stakeholders.
The Group maintains a level of capital that is well in
excess of regulatory requirements. Maintaining a strong
capital structure is a key priority for the Group. If there
was an erosion of capital for any reason the Group may
issue new shares or sell assets to ensure capital adequacy
requirements are met (referenced in table below).
The Group continuously monitors its level of capital in
order to ensure it remains compliant with regulatory
capital requirements. Aquis reviews capital resources and
requirements on a monthly basis. Proposed investment
requirements, capital expenditure and potentially
increasing capital resources through equity or debt
issuance are assessed annually as part of the budgeting
process, as well as on an ad-hoc basis as required.
The Group supports both Aquis Europe and AQSE in
maintaining capital adequacy, and holds sufficient capital
to be able to inject capital into the businesses as and
when required.
The Return on Assets (ROA) is the amount of net profit/(loss) returned as a percentage of total assets.
2021
£
2020
£
4,310,766
981,728
26,875,790 18,814,123
5%
16%
ROA
Group
Profit for the year
Total assets as at 31 December
Return on assets (%)
86
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements There was no capital expenditure contracted for at the end of the reporting year that had not been provided for.
Risk management approach
The Directors make a judgement on the credit quality of
the Group’s customers based upon the customers’ financial
position, the recurring nature of billing and collection
arrangements and, historically, a low incidence of default.
Aquis’ assessment of the credit risk associated with a
licensing customer is conducted at inception of the contract
(but before the user agreement is signed) and includes
factors that are specific to the customer, general economic
conditions and an assessment of both the current as well
as the forecast direction of these conditions. Based on
this assessment, the prospective customer is assigned to a
customer category with an appropriate risk rating.
Aquis has also considered the impact of the Coronavirus
pandemic on credit risk by incorporating an assessment of
how COVID-19 has affected the risk profile of each client,
modifying risk ratings where necessary.
Aquis’ credit risk management processes are applied to all
trade receivables and are calculated using a lifetime ECL
method, as detailed in Note 12.
Risk management approach
The Group maintains sufficient liquid resources to meet
its financial obligations as and when they become due in
the ordinary course of business. Management monitors
forecasts of the Group’s cash flow quarterly through
an assessment of cash resources that are in excess of
regulatory capital requirements. The Group is solvent
with net current assets in excess of £14.0 million (2020:
£12.4 million), with the majority of the debtor’s book
(excluding contract assets as set out in Note 24) being short
term in nature. The Group is also funded entirely by equity,
with no external debt funding obligations to be met.
Credit risk
Risk Description
The Group’s credit risk relates to its customers being
unable to meet their obligations to the Group either in
part or in full.
Liquidity Risk
Risk Description
The Group’s operations are exposed to liquidity risk to the
extent that they are unable to meet their daily payment
obligations.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The Group is not materially exposed to market risk including interest rate or foreign exchange risk.
The following tables detail the Group and Company’s remaining contractual maturity for its non-derivative financial
liabilities with agreed repayment periods. The tables have been drawn up based on the discounted cash flows of financial
liabilities based on the earliest date on which the Group or Company can be required to pay. There is no exposure to
interest rate changes since the Group and Company have no external debt obligations, and the interest rate on the lease
liability is the rate implicit in the lease and as such is not subject to change over the term of the lease.
Group
31 December 2021
Trade and other payables
Lease Liabilities
31 December 2020
Trade and other payables
Lease Liabilities
Company
31 December 2021
Trade and other payables
Lease Liabilities
31 December 2020
Trade and other payables
Lease Liabilities
1 Year
2-5 years
5+ years
Total
3,575,350
208,236
—
1,623,226
— 3,575,350
3,630,981
1,799,519
3,783,586
1,623,226
1,799,519
7,206,331
2,616,097
194,613
—
714,704
— 2,616,097
1,189,694
280,377
2,810,710
714,704
280,377
3,805,791
1 Year
2-5 years
5+ years
Total
3,045,535
150,981
—
1,376,301
— 3,045,535
3,066,902
1,539,620
3,196,516
1,376,301
1,539,620
6,112,437
2,097,493
194,613
—
714,704
—
280,377
2,097,493
1,189,694
2,292,106
714,704
280,377
3,287,187
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The tables below have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group or Company can be required to pay.
Group
31 December 2021
Trade and other payables
Lease Liabilities
31 December 2020
Trade and other payables
Lease Liabilities
Company
31 December 2021
Trade and other payables
Lease Liabilities
31 December 2020
Trade and other payables
Lease Liabilities
1 Year
2-5 years
5+ years
Total
3,575,350
326,024
—
1,927,289
—
1,945,800
3,575,350
4,199,113
3,901,374
1,927,289
1,945,800
7,774,463
2,616,097
230,445
—
921,780
—
345,668
2,616,097
1,497,893
2,846,542
921,780
345,668
4,113,990
1 Year
2-5 years
5+ years
Total
3,045,535
254,264
—
1,640,250
—
1,676,700
3,045,535
3,571,212
3,299,799
1,640,250
1,676,700
6,616,747
2,616,097
230,445
—
921,780
—
345,668
2,616,097
1,497,893
2,846,542
921,780
345,668
4,113,990
Both the Group and the Company have no derivative financial liabilities.
Risk Description
Risk management approach
In order to mitigate the impact of unfavourable currency
exchange rate movements on consolidated earnings and
net assets, Aquis Exchange Europe SAS maintains the
majority of its net assets (primarily comprising of regulatory
cash) in a Sterling denominated bank account so as to
minimise fluctuations in the GBP/EUR exchange rate on a
consolidated basis.
The Group operates in the UK and Europe, with Sterling
as its principal currency of operation. The Group
companies invoice revenues and incur the majority
expenses in GBP. A relatively small percentage of the
overall Group’s expenses are incurred in Euros in relation
to the French subsidiary. As a result, foreign exchange risk
arises mainly from the translation of the Group’s foreign
currency earnings, assets and liabilities into its reporting
currency, Sterling.
An immaterial amount of cash held by Aquis Exchange
Europe SAS is held in a euro denominated bank account,
with the remaining cash held in a Sterling denominated
bank account, hedging the Group against foreign
exchange fluctuations in cash and cash equivalents. Since
the net asset value of the Aquis Exchange Europe SAS
is predominately comprised of cash, there is negligible
exposure to the Group of foreign exchange rate
fluctuations.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements
7 OPERATING SEGMENTS
The Aquis Group can be split into 3 operating segments, each offering multiple products and services and benefiting from
Group synergies. The specific focus of these activities are:
1)
2)
3)
Aquis Exchange – operator of MTF and related services. The Group operates two MTFs: Aquis Exchange (AQXE),
which is UK regulated and Aquis Exchange Europe (AQEU), which is French regulated. Another revenue stream for
this division is the provision of data services to third party vendors;
Aquis Stock Exchange (AQSE) – primary listings and trading business. Within this division is AQSE Main Market, AQSE
Growth Market, AQSE Trading and the provision of data services;
Aquis Technologies – developer of exchange technology and services. The product offering includes Aquis Matching
Engine, Aquis Market Surveillance, Aquis Market Gateway and related services including market surveillance and
operations.
The Group has no discontinued operations.
Aquis Exchange PLC is the parent company and comprises AQXE and Aquis Technologies. It owns 100% of its two
subsidiaries, AQEU and AQSE. Management monitors the Group’s overall performance regularly using a set of established
Key Performance Indicators including revenue, EBITDA and profit before taxation. When monitoring the performance of
each operating segment individually, management examines the discrete financial information available which will normally
include revenue and EBITDA for each division. In line with IFRS 8 the operating segments are reported separately as
follows:
2021
Revenue
Impairment Charge
Costs
Operating Profit/ (Loss)
Depn, amortisation and net interest
Profit/ (Loss) before taxation
2020
Revenue
Impairment Charge
Costs
Gross Profit/ (Loss)
Depn, amortisation and net interest
Profit before taxation
AQXE & AQEU
AQSE
10,897,483
—
(8,817,828)
2,079,655
(1,057,971)
1,021,684
1,880,666
—
(2,103,103)
(222,437)
—
(222,437)
AQXE & AQEU
AQSE
7,936,036
(97,760)
(6,687,237)
1,151,039
(1,050,757)
100,282
1,221,517
(2,414)
(1,754,950)
(535,847)
—
(535,847)
Aquis
Technologies
Total
4,404,606
(972,161)
(1,009,469)
2,422,976
17,182,755
(972,161)
(11,930,400)
4,280,194
— (1,057,971)
3,222,223
2,422,976
Aquis
Technologies
Total
2,319,700
—
(1,413,740)
905,960
11,477,253
(100,174)
(9,855,927)
1,521,152
— (1,050,757)
470,395
905,960
The tables above represent the segment-level information that is monitored by the Chief Operating Decision Makers,
which are the Chief Executive Officer and the Chief Financial Officer. All non-current assets are held centrally by Aquis
Exchange PLC, apart from the lease liability for the Paris office. The geographical analysis of the non-current assets is
as follows; UK: £6,565k, France: £583k and South Africa: £1,912k, Total: £9,060k. Gross revenue from 2 customers
amounted to £3,785k (2020: £117k) arising from licence and maintenance fees. There are no other customers with
revenue greater than 10% of total revenue for the Group.
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Notes to the Financial Statements continuedNotes to the Financial Statements 8 EMPLOYEES
The monthly average number of persons (including Executive Directors) employed by the Group during the year was:
Group
Management
IT
Compliance and Surveillance
Operations
Business Development
Finance
Marketing
2021
Number
2020
Number
2
19
10
9
8
4
2
54
2
20
8
6
6
3
1
46
The monthly average number of persons (including Executive Directors) employed by the Company during the year was:
Company
Management
IT
Compliance and Surveillance
Operations
Business Development
Finance
Marketing
Their aggregate remuneration was comprised of:
Group
Salaries and wages
Social security costs
Other pension costs
Share based payments
Employee benefits
Company
Salaries and wages
Social security costs
Other pension costs
Share based payments
Employee benefits
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Aquis Exchange PLC Report and accounts 2021
2021
Number
2020
Number
2
18
4
8
5
3
2
42
2
19
4
5
4
2
1
37
2021
£
2020
£
6,129,802
815,822
183,941
571,834
165,617
4,573,007
718,885
138,891
392,897
148,992
7,867,016
5,972,673
2021
£
2020
£
4,605,033
560,051
145,884
576,609
165,357
3,535,759
519,061
112,907
363,164
148,633
6,052,934
4,679,524
Notes to the Financial Statements continuedNotes to the Financial Statements 9 RETIREMENT BENEFIT SCHEME
Defined contribution schemes
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are
held separately from those of the Company in an independently administered fund.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service in the current and prior periods.
10
DIRECTORS REMUNERATION
Detail on Directors remuneration are included within the Directors Report (see page 30).
11 REVENUE
An analysis of the Group’s and Company’s revenue is as follows:
Revenue analysed by class of business
Exchange fees
Licence fees
Data vendor fees
Issuer fees
Group
2021
£
2020
£
Company
2021
£
2020
£
9,766,046
4,404,606
2,319,360
692,743
7,738,284
2,319,700
894,867
524,402
3,476,206
4,404,606
1,573,925
—
7,111,000
2,319,700
429,628
—
17,182,755
11,477,253
9,454,737
9,860,328
Revenues from customers by operating segment and class of business is as follows:
Revenue analysed by operating segment and class of business
AQXE & AQEU
Exchange fees
Data vendor fees
AQSE
Exchange fees
Data vendor fees
Issuer fees
Aquis Technologies
Licence fees
Group
2021
£
2020
£
Company
2021
£
2020
£
9,323,559
1,573,925
7,506,408
429,628
3,476,206
1,573,925
7,111,000
429,628
442,487
745,435
692,743
231,876
465,239
524,403
—
—
—
—
—
—
4,404,606
2,319,700
4,404,606
2,319,700
17,182,755
11,477,253
9,454,737
9,860,328
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Revenues from customers attributable to the United Kingdom, Europe and the rest of the world is as follows:
Revenue analysed by region
United Kingdom
Europe
Rest of the world (Africa/Americas/Asia)
2021
£
Group
2020
£
2021
£
Company
2020
£
12,048,156
1,598,511
3,536,088
8,780,442
1,989,508
707,303
5,764,371
621,987
3,068,380
7,629,888
1,733,587
498,853
17,182,755
11,477,253
9,454,738
9,860,328
Exchange fees and data vendor fees:
Subscription fees and some data vendor fees are accounted for under IFRS 15 and are all recognised at point in time as
they reflect variable revenue determined on a monthly basis.
In addition to the variable monthly fee some AQSE data vendors pay an annual fee for access to real time and/or end of
day data, which is recognised over time as the performance obligation of providing data is fulfilled.
The Group begins to recognise monthly exchange fees, data vendor fees, and connectivity fees when the customer
conformance test is satisfactorily concluded, and an acceptance certificate is issued. This is then verified by the customer
starting to utilise the platform, which is the point in time that the Group determines that the customer has obtained
control of the goods and services.
The Group determines the transaction price based primarily on the relative standalone prices. In the case of exchange,
connectivity and data fees, invoices are raised monthly in arrears and there is no obligation for a refund, return or any
other similar obligation. There is no variable consideration in any customer contracts, and the transaction price is allocated
in full at a single point in time when the customer obtains control of the goods.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Licence fees:
Aquis Exchange PLC provides technology services under licence to clients. The services comprise the provision of an
exchange platform and / or a surveillance system and may also include support services comprising basic infrastructure
support or additional services. The duration of the licences varies between 1 and 6 years and will consist of an
implementation fee, and, post implementation, a monthly licence fee for the duration of the contract. The monthly fees
also cover system maintenance and system upgrades that typically occur every 12 – 18 months. The licensing contracts
are accounted for under IFRS 15 and any corresponding contract assets are subject to IFRS 9 provisioning, as disclosed
further in Note 12.
The revenue from licensing contracts with customers has been categorised reflecting the nature, amount, customer
categorisation (see also Note 12), contract duration and uncertainty of revenue and cash flows. Revenue from licensing
contracts is assessed for each contract and is recognised as and when each performance obligation is satisfied.
The Company determines the transaction price of the licensing contract based primarily on the competitive landscape. For
licensing contracts, the Company has assessed the expected credit loss of each client individually. The transaction price is
allocated according to the Group’s obligations to the client over the course of licence period on the basis of the relative
standalone selling price.
Performance obligation (PO)
Recognition of revenue upon completion
PO1: Implementation fees
PO2: Licencing fees
PO3: Maintenance fees
Implementation/ project fees are upfront, non-refundable
fees that a customer pays in order to obtain the user
agreement. Even if the user acceptance certificate is never
issued, the implementation fee cannot be reclaimed and
so the revenue is guaranteed and can be recognised at the
time of invoice as Aquis becomes unconditionally entitled
to payment.
At a point in time upon signing the user acceptance
agreement, as the Company has fulfilled its promise to
deliver the licence (i.e. the system has been deployed in the
client’s production environment).
A corresponding contract asset (trade receivable) is
recognised to reflect the customer’s obligation to pay
the monthly licensing fee over the remaining term of the
contract.
Over the course of the licensing contract, as the
performance obligation to maintain the system is settled
and the customer benefits from using the system.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The aggregate amount of the transaction price per customer category that has been allocated to the performance
obligations for the year is as follows:
Group
Category
PO1
PO2
PO3
Group
Category
PO1
PO2
PO3
£
1
£
2
—
—
— 3,788,615
59,943
—
— 3,848,558
£
1
£
2
2021
£
3
—
25,080
25,080
2020
£
3
£
4
£
Total
—
—
— 3,788,615
85,023
—
— 3,873,638
£
4
£
Total
50,000
1,201,755
27,006
—
—
111,883
—
451,440
11,577
—
—
5,160
50,000
1,653,195
155,626
1,278,761
111,883
463,017
5,160
1,858,821
Customer risk category definitions: 1 - High, 2 - Moderately High, 3 - Moderately Low and 4 - Low
The licensing fees line item also includes connectivity fees for licensing contract customers that are recognised at a point
in time as they reflect variable revenue determined on a monthly basis, and are underpinned by a separate agreement.
These fees total £530k, (2020: £461k).
The resultant contract assets at year end are disclosed as per Note 24. In aggregate the total revenue that reflects future
performance obligations and has yet to be recognised is £1,190k.
Issuer fees:
Issuer fees are accounted for under IFRS 15 and are recognised over time. They can be separated into the following
categories:
Application and admission fees: These are charged upfront to prospective companies wishing to be admitted to AQSE.
They are recognised monthly over the expected life of a company’s admission. Deferred Revenue is shown as per
Note 26.
Annual fees: These are fees paid annually by companies listed on AQSE. They are charged in advance and are recognised
over the year.
Further issue fees: These are charged to companies already listed on AQSE wishing to issue further securities. In this case
revenue is recognised at the point in time of the further issue.
12 IMPAIRMENT
IFRS 9 provisioning is applied to technology licensing contract assets and to other trade receivables based on management
estimates of the collectability of contracts over their useful life, and which are re-assessed at each renewal. The Group
applies a simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade
receivables and contract assets and therefore the ECL for each contract is assessed on a lifetime basis rather than at each
reporting date. As the simplified approach is adopted it is not necessary to consider the impact of a significant increase in
credit risk.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The Group has two types of financial assets that are subject to the expected credit loss model:
• Contract assets relating to technology licensing contracts (Company and Group)
• Trade receivables relating to services provided by AQSE (Group)
The Group have concluded that the trade receivables and contract assets have different risk characteristics and therefore
the expected credit loss rates for each type of asset are measured separately. Since they comprise a portfolio of only a
small number of clients, contract assets have been assessed on a client-by-client basis while trade receivables have been
grouped based on shared credit risk characteristics and the days past due. Further details on both methodologies can be
found below.
Balance of impairment provisions at 1 Jan 2021
Trade receivable ECL Provision at 11 March 2020
ECL write off
Expected credit loss /(reversal)
Group
2021
£
526,271
—
—
972,161
2020
£
410,841
15,256
(9,236)
109,410
Company
2021
£
508,601
—
—
972,161
Balance of impairment provision
1,498,432
526,271
1,480,762
Contract Asset ECL provision
Trade receivable ECL provision
Other provisions
Balance of impairment provision
Group
2021
£
2020
£
Company
2021
£
1,480,762
17,183
487
508,601
17.670
—
1,480,762
—
—
1,498,432
526,271
1,480,762
2020
£
410,841
—
(9,236)
106,998
508,601
2020
£
508,601
—
—
508,601
During contract negotiation Aquis assesses the potential credit risk of a prospective client prior to committing to the
contract. Aquis’ assessment of the credit risk associated with a licensing customer is conducted at inception of the
contract (but before the user agreement is signed) and includes factors that are specific to the customer, general economic
conditions and an assessment of both the current as well as the forecast direction of these conditions. Based on this
assessment, the prospective customer is assigned to a customer category with an appropriate risk rating.
A probability of default (PD) occurring during the lifetime of the contract ranging from 0-49% is applied to each client
based on the assigned risk category. The model includes lifetime PD applied to each year of the contract, based on the
assumption that the PD will reduce over time.
The credit risk of Aquis’ technology clients ranges from those that are in infant start up stages (i.e. riskier) to those that are
highly liquid and solvent conglomerates (little to no risk). As such, the Directors view the range of PD’s for the portfolio
to be between 49% for those with the highest level of risk to 0% for those that are so near to a zero level of risk that the
PD is zero in substance. The Directors are comfortable that the PD assigned is sufficiently accurate to reflect the elevated
risk associated with each start up when considering the idiosyncratic circumstances and risk factors of each client. The
Directors would not enter into any contract where the PD is deemed to be any higher than 49%.
The loss given default is also quantified on a customer-by-customer basis and is done through an assessment of the
recovery rate the Directors anticipate will be applied to the customer in the event of liquidation. Currently the low number
of technology clients allows Aquis to assess each contract individually on the appropriate credit risk category, and this
is determined based on several factors including any future macro-economic changes, the sensitivity to these potential
changes and the impact that these may have on the recoverability of the outstanding debt.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The portfolio of technology contracts held by Aquis have PDs that have an observable relationship with time, i.e. the PD
will decrease each year as the contract progresses. The credit risk of the contracts is directly linked to the success of the
business and its ability to raise capital, which increases each year the company successfully continues in operation.
Although the full risk assessment is completed only at the start of the contract and at each renewal date, Aquis regularly
assesses whether macro-economic factors could have a bearing on the success of the client and the recoverability of the
outstanding debt.
The £1,480,762 expected credit loss provision for the year (2020: £508,601) has been calculated with reference to
estimations based on the probability of default and a loss given default as described above, and has been analysed
for each individual contract taking into account the nature, amount, customer categorisation, contract duration and
uncertainty of revenue and cash flows.
As at 31 December 2021, the average contract duration for the portfolio of technology contracts is 2.7 years. The
contracts are short-to-medium term in length and the ECL model incorporates the impact of a significant change in
macroeconomic circumstances on the expected PD over the life of the contracts. The macroeconomic variables are
based on 3-year average forecast rates for 2022-2024, which is an appropriate timescale based on the average contract
duration. The baseline rates are defined using the rates forecast by the Monetary Policy Committee (“MPC”). The
macroeconomic indicators used in the analysis are as follows:
Macroeconomic Indicators 3 year average forecast
Downside %
Baseline %
Upside %
UK GDP
UK unemployment
UK CPI Inflation
-3%
7%
1.2%
1.6%
4.2%
2.5%
5%
2%
5.0%
In order to quantify the impact of movement in credit losses that occur as a result of macro-economic developments,
the Directors have flexed the probability of default associated with each client category in three scenarios: a baseline
scenario (maintaining the status quo, keeping each assessment criteria reflecting current client circumstances and forecast
macroeconomic indicators), a downside scenario (prolonged recession), and an upside scenario (fast economic recovery).
The model incorporates all three possible outcomes by attaching a probability weighting to each scenario. The range of
outcomes is detailed in the table below:
Group and Company
At 31 December 2021
Impairment provision
Impact on PD
Probability weighting
Downside
£
Baseline
£
Upside
£
1,682,547
5%
25%
1,480,762
0%
50%
1,281,452
-5%
25%
Expected credit loss of Aquis Stock Exchange trade receivables
In line with IFRS 9 guidance, the Group has applied a simplified “Expected Credit Loss” (ECL) model on AQSE trade
receivables. In doing so the Group has considered the probability of a default occurring over the contractual life of the
financial asset on initial recognition of the asset. Loss allowances for financial assets measured at amortised cost are
deducted from the gross carrying amount of the assets. When a trade receivable is determined to be uncollectible, it is
written off against the provision account for trade receivables.
The simplified provision matrix is based on historic default rates over the expected life of the trade receivables and is
adjusted for forward-looking estimates. The trade receivables balance is split into 8 separate categories depending on the
age of each debt, ranging from 0 days past due to over 90 days past due. An appropriate estimation of the probability of
default is applied to each category of debt, based on both historical default rates and expectations for the future.
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Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The key assumptions in calculating the ECL for AQSE trade receivables are that the probability of default increases with
the age of the debt and that the debts are homogenous, i.e. the credit risk assessment is based on age rather than by
individual client. The expected loss rates are based on historical analysis of credit losses experienced since the acquisition
and adjusted to reflect current and forward-looking information. AQSE trade receivables have been assessed to have a
higher risk of impairment than the rest of the Group’s trade receivables due to a number of older debts being identified
and written off on acquisition.
Trade receivables have payment terms of 30 days from the date of billing. For debts older than 90 days, debts are
assessed on a case-by-case basis and are written off if there is no reasonable expectation of recovery. During the year a
total of £29,240 of trade receivables were written off relating to debts from companies that had ceased membership with
AQSE. The contractual rights to cash flows from the financial assets were deemed to have expired.
The total loss allowance calculated by applying the expected loss rate to the trade receivables balance in each age
bucket. The total portion of the ECL balance relating to AQSE trade receivables as at 31 December 2021 was £17,183
(2020: £17,670) which was comprised as follows:
Days past Due
Expected loss rate
Trade receivables
ECL Provision
0
days
1–29
days
30–59
days
60–89
days
90–124
days
125 – 149
days
150–179
days
Over 180
days
Total
0.5%
83,947
420
1%
19,650
197
3%
11,405
342
5%
5,200
260
10%
3,200
320
25%
—
—
50%
1,200
600
100%
N/A
15,044 139,646
17,183
15,044
13 OPERATING EXPENSES
EBITDA is stated after charging:
Operating Expenses
Fees payable to the Company's auditor for the audit of the
company's financial statements
Fees payable to the Company's auditor for the Client Asset audit
Share-based payments
Exchange loss/(gains)
Employee costs
Operating costs (Net of intercompany recharge)
Group
2021
£
2020
£
Company
2021
£
2020
£
222,000
225,559
167,000
126,431
7,500
571,834
—
7,295,182
3,833,884
6,300
392,897
5,958
5,579,775
3,645,438
7,500
576,609
—
5,476,325
(2,189,408)
6,300
363,164
6,144
4,316,360
2,624,795
11,930,400
9,855,927
4,038,026
7,443,194
Other operating expenses comprise marketing fees, data centre and other service fees incurred in the ordinary course of
business.
98
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Profit before taxation is stated after charging:
Depreciation, amortisation and finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Group
2021
£
2020
£
Company
2021
£
2020
£
518,806
513,434
550,620
479,670
513,546
513,434
550,620
479,670
1,032,240
1,030,290
1,026,980
1,030,290
Net finance expense (Note 27)
26,175
35,099
26,175
35,099
1,058,415
1,065,389
1,053,155
1,065,389
Total expenses were as follows:
Group
2021
£
2020
£
Company
2021
£
2020
£
Total expenses
12,988,815
10,921,316
5,091,181
8,508,583
14 SHARE-BASED PAYMENTS
EMI options granted
Restricted share awards
Company Share Ownership Plan awards
Shares purchased under employee Share Incentive Plan
Group
2021
£
160,052
314,222
19,045
78,515
2020
£
227,084
55,317
—
110,496
Company
2021
£
152,577
314,222
19,045
90,765
2020
£
205,601
55,317
—
102,243
571,834
392,897
576,609
363,164
Employee Share Incentive Plan
The share incentive plan is administered by Equiniti (“the Trust”). The Trust purchases shares in Aquis on the open market
on behalf of employees that have elected to take part. The scheme allows employees to become shareholders in the
Company in a tax efficient manner, with the Company purchasing two matching shares for every partnership purchased by
the employee.
The terms of the matching shares include that they must be held by the Trust for three years before they can be
transferred or sold, and the employee must remain employed with the Company throughout this period. The fair value of
the matching shares purchased by the company are expensed over the three year vesting period. Management assumes
that the cost of the shares is a close approximation of the fair value of the shares as the market price tends to be reflective
of the discounted value of research analysts’ medium-term projections.
99
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Employee Share incentive plan
Number of shares issued under the plan to participating employees
EMI Share Options
2021
2020
139,543
104,656
There is one approved EMI scheme, which was initiated in June 2018 when the first options were granted. In April 2020
the second allotment approved in and deferred from November 2019 because Aquis was in a close period was made
with a total of 740,250 options being granted. Options vest in 3 equal tranches, one, two and three years after grant. The
options expire after 10 years.
Of the total number of options granted, 335,753 were exercised, none expired and 24,526 were forfeited during the year.
In accordance with IFRS 2, the Group has estimated the fair value of options using a US binomial option valuation model
and spread the estimated value against the profit and loss account over the life of the vesting period.
The exercise price for the options granted on 14 June 2018 is £2.69 per share to be settled in cash at the date of exercise.
The weighted average remaining contractual life of options outstanding at the end of the reporting period amounted to
5.5 months.
The US binomial model with an average expiry duration of 5 years, volatility of 24 and risk-free interest rate of 1.1067%
was used to calculate the fair value of the options granted on 14 June 2018. All options are exercisable at a price of £2.69
and the weighted average expected life of the options is estimated to be 5 years.
The exercise price for the options granted on 16 April 2020 is £3.47 per share to be settled in cash at the date of exercise.
The weighted average remaining contractual life of options outstanding at the end of the reporting period amounted to
2 years 3.5 months.
The US binomial model using an average expiry duration of 5 years, volatility of 20 and risk-free interest rate of 0.16% was
used to calculate the fair value of the options granted on 16 April 2020. All options are exercisable at a price of £3.47 and
the weighted average remaining expected life of the options is estimated to be 5 years.
Details of the EMI scheme are as follows:
• Outstanding at the beginning of the period
• Granted during the period
• Forfeited during the period
• Exercised during the period
• Expired during the period
• Outstanding at the end of the period
• Exercisable at the end of the period
2021
2020
Number
of Shares
Average
Exercise Price (£)
Number
of Shares
Average
Exercise Price (£)
1,297,421
—
(24,526)
(335,753)
—
937,143
453,643
3.15
—
3.07
2.70
—
3.31
3.11
560,407
776,250
(19,099)
(20,137)
—
1,297,421
186,802
2.69
3.47
3.34
2.69
—
3.15
2.69
100
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements CSOP
The Group has implemented a CSOP employee option scheme in 2021. Initial grants amounting to 100,000 options at a
grant price of £6.85 were made in April 2021. Options vest three years after grant and expire after 10 years.
Details of the CSOP scheme are as follows:
• Outstanding at the beginning of the period
• Granted during the period
• Forfeited during the period
• Exercised during the period
• Expired during the period
• Outstanding at the end of the period
• Exercisable at the end of the period
RSP
Number of
Shares
Average
Exercise Price (£)
0
100,000
(4,195)
0
0
95,805
0
—
6.85
6.85
—
—
6.85
—
The Group implemented a RSP senior executive option scheme in 2020. Total grants made in April 2021 amounted to
88,320 options at a grant price of £6.85. Options vest three years after grant, with an additional hold period of a further 2
years and expire after 10 years.
Details of the RSP scheme are as follows:
AR report disclosure
2021
2020
Details of the RSP scheme are as follows:
• Outstanding at the beginning of the period
• Granted during the period
• Forfeited during the period
• Exercised during the period
• Expired during the period
• Outstanding at the end of the period
• Exercisable at the end of the period
Number
of Shares
Average
Exercise Price (£)
Number
of Shares
Average
Exercise Price (£)
140,448
88,320
—
—
—
228,768
—
3.64
6.85
—
—
—
4.88
—
—
140,448
—
—
—
140,448
—
—
3.64
—
—
—
3.64
—
101
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 15 INTEREST INCOME
Interest Income
Bank Deposits
16 BUSINESS COMBINATION
Group
Company
2021
£
444
2020
£
14,632
2021
£
444
2020
£
14,632
Business acquisition
On 11 March 2020 Aquis Exchange PLC acquired 100% of the issued share capital of NEX Exchange Limited, a UK based
Recognised Investment Exchange. It has since been rebranded as Aquis Stock Exchange (AQSE). The acquisition has
broadened the Group’s service offering, including the ability to offer companies wishing to go public a primary listing on
its growth market. It complemented the existing exchange services of the Group and has enabled the Group to expand its
strategic offering.
Details of the purchase consideration is as follows:
Purchase consideration:
Cash paid
The assets and liabilities recognised as a result of the acquisition are as follows:
Current assets:
Cash
Trade and other receivables
Current liabilities:
Trade and other payables
Add: Goodwill
Net assets arising on acquisition
£
2,877,118
2,617,718
653,390
(477,471)
83,481
2,877,118
The assets acquired and liabilities assumed have been recognised at their fair values measured at the acquisition date.
There were no intangible assets identified at the acquisition date.
There were no acquisitions in the year ending 31 December 2021.
102
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 17 DEFERRED TAX ASSET
A deferred tax asset of £1,292,260 relating to unused tax losses has been recognised in the current period. The losses
are considered able to offset against the Company’s taxable profits expected to arise in the next three accounting periods.
The assessment of future taxable profits involves a significant degree of estimation, which management have based on the
latest budget for the Company approved by the Board which reflects the improvement trading performance largely due
to the continued expansion of the business as discussed in the Strategic Report. The preparation of the budget involves
a rigorous review process by the Board, whereby each revenue stream and cost is scrutinised and challenged in detail so
that the final version is considered to be an accurate and plausible representation of what is likely to be achieved in the
period.
In calculating the deferred tax asset, management have applied a conservative approach by using probability adjusted
revenues, applying lower probabilities to budgeted revenue from more uncertain sources such as large technology
licencing contracts, with the effect of reducing estimated profits over the 3-year period from the original forecasts. The
analysis predicts profitability is still achievable even when revenues are reduced to reflect this adjustment.
The deferred tax balance comprises temporary differences attributable to:
Group and Company
Deferred tax
Tax losses
Total deferred tax asset
Movement in deferred tax balance:
Group and Company
Movements
At 1 January
Origination and reversal of timing difference
Rate change
At 31 December
2021
£
2020
£
1,292,260
1,292,260
203,717
203,717
2021
£
203,717
1,024,211
64,332
1,292,260
2020
£
—
203,717
—
203,717
The Group has combined losses of £48,125,182 (2020: £51,941,924) available for carry forward and to be used against
future trading profits of the same trade in which they were generated. This is comprised of trading losses totalling
£47,944,397 generated in the UK by Aquis Exchange PLC and Aquis Stock Exchange Limited and losses totalling
£130,785 generated in France by Aquis Exchange Europe SAS.
The Company has estimated losses of £13,099,278 (2020: £17,043,108) available for carry forward against future trading
profits.
103
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 18 INCOME TAX
Current tax
R&D tax credit
Group
2021
£
2020
£
Company
2021
£
2020
£
—
(307,616)
—
(307,616)
The credit for 2020 can be reconciled to the loss per the income statement as follows:
Group
2021
£
2020
£
Company
2021
£
2020
£
Profit for the year before taxation
3,222,223
470,395
3,391,839
1,268,618
Expected tax charge based on a corporation tax rate of 19.00%
Effect of expenses not deductible in determining taxable profit
Unutilised tax losses carried forward
Losses utilised against taxable profits
Deferred tax not recognised
Permanent capital allowances in excess of depreciation
Depreciation on assets not qualifying for tax allowances
Additional R&D allowance for qualifying expenditure
Non-trade loan relationship credits
Research and development tax credit
612,222
10,407
41,917
(735,805)
71,259
—
—
—
—
—
89,375
55,246
70,204
—
—
34,109
846
(247,000)
(2,780)
(307,616)
644,449
10,294
—
(732,782)
78,038
—
—
—
—
—
241,037
51,165
—
(77,377)
—
34,109
846
(247,000)
(2,780)
(307,616)
Taxation credit for the year
—
(307,616)
—
(307,616)
19 EARNINGS PER SHARE
Number of Shares
Weighted average number of ordinary shares for basic earnings
per share
Weighted average number of ordinary shares for diluted
earnings per share
Group
Company
2021
2020
2021
2020
27,339,947
27,164,230
27,339,947
27,164,230
28,456,875
28,281,234
28,456,875
28,281,234
Earnings
Profit for the year from continued operations
Basic and diluted earnings per share (pence)
Basic earnings per ordinary share
Diluted earnings per ordinary share
4,310,766
981,728
4,480,382
1,779,951
16
15
4
3
16
16
7
6
Basic earnings per share is in respect of all activities of the Group and diluted earnings per share takes into account the
dilution effects which would arise on conversion or vesting of all outstanding share options and share awards under the
Employee Share Incentive Plan (SIP).
104
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 20 INTANGIBLE ASSETS
Cost
As at 01/01/2020
Additions- internally generated
As at 31/12/2020
Additions- internally generated/ acquired
As at 31/12/2021
Accumulated amortisation and impairment
As at 01/01/2020
Charge for the year
As at 31/12/2020
Charge for the year
As at 31/12/2021
Carrying amount
As at 31/12/2021
As at 31/12/2020
Group
Developed
trading
platforms
2,055,326
642,695
2,698,021
313,463
3,011,484
1,302,096
479,670
1,781,766
505,514
2,287,280
Other
Intangibles
Group
Goodwill
Total
Intangible
Assets
Excl Goodwill
—
—
—
37,430
37,430
—
—
—
7,920
7,920
— 2,055,326
642,695
2,698,021
350,893
83,481
83,481
—
83,481
3,048,915
— 1,302,096
—
479,670
— 1,781,766
513,434
—
— 2,295,200
724,204
29,510
83,481
753,714
916,256
—
83,481
916,256
All intangible assets within the Group are held by the Company.
Goodwill
On 11 March 2020 the Group acquired NEX Exchange Limited which resulted in recognition of goodwill of £83,481. The
cash generating unit associated with the goodwill is determined to be the assets associated with the investment in AQSE.
The goodwill arising on consolidation represents the growth potential of the primary listings exchange and the synergies
with the rest of the business. AQSE has no intangible assets.
Impairment tests for goodwill
Goodwill has been allocated for impairment testing purposes to a cash generating unit, being the net assets related to
Aquis Stock Exchange.
The recoverable amounts of the cash generating unit has been determined based on a value-in-use calculation using
discounted cash flow forecasts based on business plans prepared by management for a three-year period ending
31 December 2024, using an estimated terminal growth rate of 2%, and a pre-tax discount factor of 7.75%.
No impairment loss has been recognised during the year, as management believes the value in use of Aquis Stock
Exchange is significantly higher than the carrying value and is unlikely to be materially impaired.
105
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 21
PROPERTY, PLANT AND EQUIPMENT
Group
Cost
As at 31/12/2019
Additions
As at 31/12/2020
Additions
Disposals
As at 31/12/2021
Accumulated depreciation and impairment
As at 31/12/2019
Charge for the year
As at 31/12/2020
Charge for the year
Disposals
As at 31/12/2021
Carrying amount
As at 31/12/2021
As at 31/12/2020
Fixtures, fittings
and equipment
Computer
Equipment
Total Right of
Use Asset
Total
249,497
2,328
2,098,270
113,024
1,444,159
—
3,791,927
115,351
251,825
2,211,295
1,444,159
3,907,278
72,636
—
246,885
(68,926)
3,758,437
(963,837)
4,077,958
(1,032,764)
324,461
2,389,254
4,238,759
6,952,474
127,572
50,492
1,477,366
326,962
173,166
173,166
1,778,104
550,620
178,064
1,804,328
346,332
2,328,724
51,938
—
312,092
(41,362)
154,748
—
518,779
(41,362)
230,002
2,075,058
501,080
2,806,141
94,458
73,761
314,196
3,737,679
4,146,333
406,966
1,097,827
1,578,553
106
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Company
Cost
As at 31/12/2019
Additions
As at 31/12/2020
Additions
Disposal
As at 31/12/2021
Accumulated depreciation and impairment
As at 31/12/2019
Charge for the year
As at 31/12/2020
Charge for the year
Disposal
As at 31/12/2021
Carrying amount
As at 31/12/2021
As at 31/12/2020
22 INVESTMENT IN SUBSIDIARIES
Company
Investment in subsidiaries
Fixtures, fittings
and equipment
Computer
Equipment
Total Right of
Use Asset
Total
249,497
2,328
251,825
67,500
—
2,098,270
113,024
2,211,294
246,885
(68,926)
1,444,159
—
1,444,159
3,175,765
(963,837)
3,791,927
115,351
3,907,278
3,490,150
(1,032,764)
319,325
2,389,253
3,656,087
6,364,664
127,572
50,492
178,064
51,965
—
1,477,366
326,962
1,804,328
312,092
(41,362)
173,166
173,166
346,332
149,488
—
1,778,104
550,620
2,328,724
513,545
(41,362)
230,029
2,075,058
495,820
2,800,907
89,296
73,761
314,195
3,160,267
3,563,758
406,966
1,097,827
1,578,554
2021
£
2020
£
6,884,202
6,484,202
Details of the Company’s subsidiaries at 31 December 2021 are set out in the following table. The investments are
measured using the equity method in Aquis Exchange PLC’s standalone accounts.
Name of undertaking
Aquis Stock Exchange
UK
100
100
Country of
incorporation
Ownership
interest (%)
Voting power
held (%)
Name of
business
Carrying
amount 2021
Carrying amount
2020
Aquis Exchange Europe SAS
France
100
100
3,677,118
3,277,118
3,207,084
3,207,084
Recognised
Investment
Exchange
European
Equities
Exchange
The registered office of Aquis Exchange Europe SAS is 231 rue Saint Honoré, 75001 Paris, France. The registered office
of Aquis Stock Exchange Limited is 77 Cornhill, London EC3V 3QQ, UK.
During the year Aquis Exchange PLC made capital contributions to Aquis Stock Exchange of £400,000.
107
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Both investments were assessed for impairment at year end. Although Aquis Stock Exchange was loss-making in 2021,
this performance was in line with expectations and is expected to reach profitability in 2022. Therefore, in line with IAS 36
guidance, no impairment provision has been recognised in Aquis Exchange PLC’s financial statements. The following table
summarises the movement in the carrying amounts of the subsidiaries during the year:
Carrying amount 2020
Capital injection
Carrying amount 2021
Aquis Stock
Exchange
Aquis Exchange
Europe SAS
3,277,118
400,000
3,677,118
3,207,084
—
3,207,084
23 INVESTMENT IN TRUSTS
The following table shows the total amount the Company has invested in the two Trusts in respect of the Share Incentive
Plan and also the Restricted Share Plan as at the reporting date:
Company
Investment in Trusts
2021
£
2020
£
1,856,964
486,127
24 TRADE RECEIVABLES, CONTRACT ASSETS AND OTHER RECEIVABLES
Group
Current
2021
£
2020
£
Non-current
2021
£
2020
£
Total
2021
£
2020
£
Trade receivables
Technology licence contract assets
Other receivables
Prepayments
1,884,329
1,112,576
339,353
432,689
1,500,524
1,132,029
11,911
279,603
—
2,415,824
328,832
—
— 1,884,329
3,528,400
668,185
432,689
617,805
221,825
—
1,500,524
1,749,834
233,736
279,603
3,768,947
2,924,067
2,744,656
839,630
6,513,603
3,763,697
Company
Current
2021
£
2020
£
Non-current
2021
£
Trade receivables
Technology licence contract assets
Other receivables
Intercompany receivables
Prepayments
1,747,286
1,112,576
313,225
804,406
395,061
1,384,467
1,132,029
6,941
177,266
242,665
—
2,415,824
315,350
—
—
2020
£
—
617,805
221,825
—
—
Total
2021
£
1,747,286
3,528,400
628,575
804,406
395,061
2020
£
1,384,467
1,749,834
228,766
177,266
242,665
4,372,554
2,943,368
2,731,174
839,630
7,103,728
3,782,998
108
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements The following details the trade receivables and contract assets that are stated net of any credit impairment provision, as
set out previously in Note 12 in accordance with IFRS 9.
Trade receivables
Gross trade receivables
Gross contract assets
Expected credit loss provision
Group
2021
£
2020
£
Company
2021
£
2020
£
1,930,498
5,009,162
(1,526,931)
1,540,230
2,236,397
(526,271)
1,747,286
5,009,162
(1,480,762)
1,406,505
2,236,397
(508,601)
Trade receivables net of provisions
5,412,729
3,250,357
5,275,686
3,134,300
25 CASH AND CASH EQUIVALENTS
Group
2021
£
2020
£
Company
2021
£
2020
£
Cash at bank
14,046,399 12,268,418
7,094,964
6,179,566
Cash and cash equivalents are held with authorised counterparties of a high credit standing, in secured investments.
Management does not expect any losses from non-performance by the counterparties holding cash and cash equivalents,
and there are no material differences between their book and fair values.
Cash held by Aquis Exchange Europe SAS is predominantly held in a Sterling denominated bank account, hedging the
Group against foreign exchange fluctuations in cash and cash equivalents of the subsidiary
26 TRADE AND OTHER PAYABLES AND SHORT TERM LEASE LIABILITIES
Current
Trade payables
Accruals
Deferred Revenue
Social security and other taxation
Intercompany payables
Other payables
Short term lease liabilities
Group
2021
£
170,934
1,811,168
882,525
506,638
—
204,085
208,237
2020
£
263,398
1,524,793
431,792
426,745
—
163,982
—
Company
2021
£
2020
£
162,989
1,564,785
270,900
494,107
552,754
—
150,981
251,136
1,301,073
43,127
242,588
454,182
—
—
3,783,587
2,810,710
3,196,516
2,292,106
109
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 27 LEASES
Right of Use Assets
The right-of use asset was measured at the amount equal to the lease liability, plus prepaid lease payments (being the
unamortised portion of the rent deposit asset). The right of use asset is depreciated over the term of the lease and was
accounted for during the year ended 31 December 2021 as follows:
Carrying amount at 1 January 2020
Depreciation for the year
Carrying amount at 31 December 2020
Additions
Disposals
Depreciation for the year
Carrying amount at 31 December 2021
Property
£
1,270,993
(173,166)
1,097,827
3,758,437
(963,837)
(154,748)
3,737,679
Rent deposit asset
The rent deposit asset (excluding the prepaid right of use portion which has been included in the calculation of the right
of use asset above) is a financial asset measured at amortised cost and was accounted for during the year ended 31
December 2021 as follows:
Carrying amount at 1 January 2020
Finance income on rent deposit asset for the year
Carrying amount at 31 December 2020
Additions
Finance income on rent deposit asset for the year
Carrying amount at 31 December 2021
Of which are:
Current
Non-current
Rent deposit
asset
£
222,029
6,736
228,765
374,442
8,835
612,042
283,212
328,830
612,042
The non-current and current portions of the rent deposit asset are both included in ‘Other Receivables’ (Trade and Other
Receivables) on the Statement of Financial Position.
110
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Lease liability
The lease liability is calculated as the net present value of the fixed payments (including in-substance fixed payments),
less any lease incentives receivable (e.g. any rent-free periods). The lease payments are discounted using the interest
rate implicit in the lease. The lease liability is measured at amortised cost and was accounted for during the year ended
31 December 2021 as follows:
Carrying amount at 1 January 2020
Finance expense on lease liability for the year
Lease payments made during the year
Carrying amount at 31 December 2020
Additions
Reduction in assumed lease liability
Finance expense on lease liability for the year
Lease payments made during the year
Carrying amount at 31 December 2021
Of which are:
Current
Non-current
Lease liability
£
1,378,304
41,835
(230,445)
1,189,694
3,563,025
(926,303)
35,010
(230,445)
3,630,981
208,237
3,422,744
3,630,981
The non-current and current portions of the lease liability are included in ‘Lease liability’ and ‘Other Payables’ (Trade and
Other Payables) on the Statement of Financial Position respectively.
Net finance expense on leases
Finance expense on lease liability
Finance income on rent deposit asset
Net finance expense relating to leases
31-Dec-21
£
31-Dec-20
£
35,010
(8,835)
26,175
41,835
(6,736)
35,099
The finance income and finance expense arising from the Groups leasing activities as a lessee have been shown net where
applicable as is permitted by IAS 32 where criteria for offsetting have been met.
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Finance expense on lease liability
Finance income on rent deposit asset
Short term lease expense
Net impact of leases on profit or loss
31-Dec-21
£
31-Dec-20
£
(149,488)
(35,010)
8,835
(37,568)
(173,166)
(41,835)
6,736
(25,726)
(213,231)
(233,991)
The property leases (of which there are three) in which the Group is the lessee do not contain variable lease payment
terms.
111
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 28 SHARE CAPITAL
Group and Company
Ordinary share capital
Issued and fully paid
27,169,700 Ordinary shares of 10p each
Issue of 335,750 new shares
29 SHARE PREMIUM ACCOUNT
Group and Company
At the beginning of the year
Issue of new shares
At the end of the year
30 OTHER RESERVES
2021
£
2020
£
2,716,970
33,575
2,714,956
2,014
2,750,545
2,716,970
2021
£
2020
£
10,892,135
879,327
10,839,981
52,153
11,771,462
10,892,135
Reserves relating to share-based payments
1,118,314
760,543
1,448,430
748,525
The reserves relating to share-based payments reflects the cost recognised to date for the fair value of the approved
Employee Share Plans estimated using the US binomial and Black Scholes option valuation models.
Group
2021
£
2020
£
Company
2021
£
2020
£
112
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements 31 TREASURY SHARES
Group
At the beginning of the year
Purchase of additional shares
Shares vested or sold by trusts
Cash held by trusts
At the end of the year/period
2021
£
2020
£
489,625
1,211,907
(177,975)
3,278
318,410
199,459
(40,262)
12,018
1,526,835
489,625
As at 31 December 2021 139,543 shares were held in the SIP Trust, and a further 150,000 shares held in the RSP/EMI
Trust.
32 FOREIGN CURRENCY TRANSLATION RESERVE
In 2019 the Group established a Multilateral Trading Facility (MTF) in France through its subsidiary, Aquis Exchange
Europe SAS. The translation of the European subsidiary’ assets into Sterling, the functional currency of the Group, results
in foreign exchange differences that have been recognised in Other Comprehensive Income and accumulated in a separate
component of equity as illustrated below.
Group
At the beginning of the year
Foreign exchange differences on translation of foreign operations recognised in OCI
At the end of the year
33 CASH GENERATED BY OPERATIONS
Group
Profit for the year after tax
Adjustments for:
Taxation credited
Deferred tax
Interest income
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Equity settled share based payment expense
Other gains/losses
Movement in working capital:
Increase in trade and other receivables
Increase in trade and other payables
Cash generated/ (absorbed) by operations
113
Aquis Exchange PLC Report and accounts 2021
2021
£
908
76,899
77,807
2020
£
1,439
(531)
908
2021
£
2020
£
4,310,766
981,728
—
(1,088,543)
(444)
505,514
518,779
571,834
324,876
(307,616)
(203,717)
(14,632)
479,670
550,620
392,897
39,814
(2,749,906)
764,641
(1,100,337)
1,311,136
3,157,517
2,129,563
Notes to the Financial Statements continuedNotes to the Financial Statements Company
Profit for the year after tax
Adjustments for:
Tax credit
Deferred tax
Interest income
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Equity settled share based payment expense
Other gains/losses
Movement in working capital:
Increase in trade and other receivables
Increase in trade and other payables
Cash generated/ (absorbed) by operations
34 RELATED PARTY TRANSACTIONS
2021
£
2020
£
4,480,382
1,779,951
—
(1,088,543)
(444)
513,434
513,545
576,609
320,664
(307,616)
(203,717)
(14,632)
479,670
550,620
363,164
(114,892)
(3,320,730)
753,428
(1,128,488)
824,278
2,748,346
2,228,339
Remuneration of key management personnel
The remuneration of the directors, who are key management personnel, is set out below in aggregate for each of the
categories specified in IAS 24 Related Party Disclosures.
Group
Salaries and other short term benefits
Share-based payments
Total
2021
£
2020
£
797,788
528,070
761,709
69,268
1,325,858
830,977
During the year the Group has entered into, in the ordinary course of business, with other related parties. All transactions
between Aquis Exchange Plc and its subsidiaries are eliminated on consolidation. There are no related party balances
outstanding at group level. Costs incurred by the Company on behalf of its subsidiary companies are recharged to these
Companies though a Management fee and service charge, which for 2021 represented a net recharge of £4,965k to
Aquis Europe SAS and a net recharge of £494k to Aquis Stock Exchange Limited. The net cash payments in the year and
balances outstanding at the year end were:
Group and Company
Aquis Stock Exchange Ltd
Aquis Europe SAS
Total
2021
£000s
Receipts and
Payments
2021
£000s
Amounts owed
from related parties
2021
£000s
Amounts owed to
related parties
(82)
193
111
390
414
804
–
553
553
114
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Group and Company
Aquis Stock Exchange Ltd
Aquis Europe SAS
Total
2020
£000s
Receipts and
Payments
2020
£000s
Amounts owed
from related parties
2020
£000s
Amounts owed to
related parties
485
–
485
177
–
177
–
54
54
35 CONTROLLING PARTY
In the opinion of the Directors, there is no single overall controlling party.
No individual shareholder had a shareholding of 10% or above as at 31 December 2021.
36 EVENTS OCCURING AFTER THE REPORTING PERIOD
The Ukrainian conflict has resulted in extremely volatile market conditions and there is no certainty as to when this conflict
will be resolved; however, at this stage, the Directors do not believe this could have a material adverse effect on the
Group and consider this to be a non-adjusting post balance sheet event at 31.12.21.
The COVID-19 pandemic has continued to cause considerable health and economic uncertainty and significant market
volatility and volumes. Notwithstanding the significant adverse effect this has had and may continue to have on the
economy and whilst it is possible that this pandemic may result in further adverse effects on the Group at this stage the
Directors do not believe that they will be material.
In March 2022 Aquis announced the intention, subject to contract, to assume the business activities of UBS MTF, the
non-displayed matching pool of UBS AG.
Aquis announced during March 2022 of the intention to dual-list on Aquis Stock Exchange Limited whilst remaining listed
on the AIM market of the London Stock Exchange.
115
Aquis Exchange PLC Report and accounts 2021
Notes to the Financial Statements continuedNotes to the Financial Statements Notes
This document is printed on FSC® certified paper and to the EMAS standard and its Environmental
Management System is certified to ISO 14001.
This publication has been manufactured using 100% offshore wind electricity sourced from UK wind.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislation and meets the
chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press
chemicals are recycled for further use and, on average 99% of any waste associated with this production
will be recycled and the remaining 1% used to generate energy.
This document is printed on Arena Smooth Extra White and GalerieArt Satin paper made of material
from well-managed, FSC®-certified forests and other controlled sources.
E X C H A N G E P L C
WWW.AQUIS.EU
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