Report and Accounts 2022
E X C H A N G E P L C
Introduction
1
2
4
6
Highlights of the Year 2022
Group at a Glance
Chairman’s Statement
Chief Executive’s Report
Strategic Report
10 Strategic Report
27 Directors’ Report
34 Audit, Risk and Compliance Committee Report
36 Board of Directors and Management Team
38 Nomination and Remuneration Committee Report
39 Directors’ Nomination and Remuneration Report
44 Remuneration at a Glance
47 Directors’ Remuneration Policy
Financial Statements
65
Independent auditor’s report to the members of
Aquis Exchange PLC
72
Statements of Comprehensive Income
73 Consolidated Statement of Financial Position
74 Company Statement of Financial Position
Statements of Changes in Equity
75
Statements of Cash Flows
76
Notes to the Financial Statements
78 Notes to the Financial Statements
Other Information
125 Notes
Highlights of the Year 2022
Highlights of the Year 2022
Strong year, with growth and
momentum across all divisions despite
challenging economic headwinds.
Successful launch of Aquis Matching
Pool (AMP) diversifies the Aquis
Markets offering into dark pools,
offsetting a decrease in lit volumes.
Increasing levels of interest in
Aquis Technologies' pioneering
exchange technology, with the
offering expanding to include a
24/7 Matching Engine.
Despite adverse market conditions,
Aquis Stock Exchange delivered an
impressive 22 new issues in 2022 –
making it the most successful growth
company exchange in the UK.
Finished the year with a well-received
inaugural Capital Markets Day,
outlining the resilience, diversification
and synergies of Aquis Exchange Plc
across its divisions.
1
Aquis Exchange PLC Report and accounts 2022
Net Revenue
£20.1m
2021: £16.2m
Profit Before Tax
£4.5m
2021: £3.6m
Basic Earnings per Share
17p
2021: 17p
Diluted Earnings Per Share
16p
2021: 16p
Introduction Group at a Glance
Group at a Glance
Aquis Exchange PLC is a creator
and facilitator of next-generation
financial markets through the
provision of accessible, simple and
efficient stock exchanges, trading
venues and technology.
Overview
Aquis Markets
Aquis Markets operates lit and dark order books, covering
16 European markets. For its lit books, Aquis uses a
subscription pricing model which works by charging users
according to the message traffic they generate, rather than
a percentage of the value of each stock that they trade and
does not allow aggressive non-client proprietary trading,
which has resulted in lower market impact and signalling risk
on Aquis than other trading venues in Europe.
Aquis Stock Exchange (AQSE)
Aquis Stock Exchange (AQSE) is a stock market providing
primary and secondary markets for equity and debt
products. It is authorised as a Recognised Investment
Exchange, which allows it to operate a regulated listings
venue. The AQSE Growth Market is divided into two
segments, 'Access' and 'Apex', with different levels of
admission criteria. The Access market focuses on earlier
stage growth companies, while Apex is the intended market
for larger, more established businesses.
Aquis Technologies
Aquis Technologies is the software and technology division
of Aquis. It focuses on building better markets via the
creation and licensing of cutting-edge, cost-effective
exchange infrastructure technology and services, including
matching engine and trade surveillance solutions.
Revenue by division
• Aquis Markets £12.4m
• Aquis Stock Exchange £2.4m
• Aquis Technologies £5.1m
Profit by division
• Aquis Markets £2.5m
• Aquis Stock Exchange £0.4m
• Aquis Technologies £1.6m
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Aquis Exchange PLC Report and accounts 2022
Introduction
Aquis Markets
Aquis Markets operates lit and dark order books, covering
16 European markets. For its lit books, Aquis uses a
subscription pricing model which works by charging users
according to the message traffic they generate, rather than
a percentage of the value of each stock that they trade and
does not allow aggressive non-client proprietary trading,
which has resulted in lower market impact and signalling risk
on Aquis than other trading venues in Europe.
Aquis Stock Exchange (AQSE)
Aquis Stock Exchange (AQSE) is a stock market providing
primary and secondary markets for equity and debt
products. It is authorised as a Recognised Investment
Exchange, which allows it to operate a regulated listings
venue. The AQSE Growth Market is divided into two
segments, 'Access' and 'Apex', with different levels of
admission criteria. The Access market focuses on earlier
stage growth companies, while Apex is the intended market
for larger, more established businesses.
Group at a Glance continued
Products and services
Revenue £m
Case study/Significant events
• MTFs (UK and France)
– AQXE: UK regulated
– AQEU: France regulated
• Data services
12.4
10.9
7.7
5.3
2019
2020
2021
2022
• AQSE Main Market (RIE)
• AQSE Growth Market (MTF)
– Apex
– Access
• AQSE Trading (MaTF)
Aquis Technologies
Aquis Technologies is the software and technology division
of Aquis. It focuses on building better markets via the
creation and licensing of cutting-edge, cost-effective
exchange infrastructure technology and services, including
matching engine and trade surveillance solutions.
• Aquis Matching Engine
• Aquis Market Surveillance
• Aquis Market Gateway
• Services
– Surveillance
– Operations
2.4
1.9
N/A
1.2*
2019
2020
2021
2022
*for 9 months from acquisition
5.1
3.4
2.2
1.6
2019
2020
2021
2022
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Aquis Exchange PLC Report and accounts 2022
• Successful launch of Aquis
Matching Pool (AMP)
• Growth in Market at Close (MaC),
now the largest alternative closing
mechanism
• 41 trading members
• 2,000+ shares and ETFs traded
• 22 IPOs
• £60m+ Money raised
• Online connectivity added with
Hargreaves Lansdown and IG; now
connected to 5 of the 6 largest
retail brokers
• 107 securities
• 4 Companies valued at £100m+
• +50 institutional investors now
involved in AQSE
• Delivered first exchange grade
24/7 platform
• Further progress in creating a cloud
native exchange
• Sustained growth in technology
pipeline, with Aquis offering
increasingly recognised as
competitive, credible, service-led,
innovative and attractively priced
HEADINGIntroduction
Chairman’s Statement
Chairman’s Statement
Glenn Collinson
Chair
Overview
I have now completed my first year as Chair of Aquis
Exchange PLC (AQXE) and it is with great pleasure that I am
able to report that the Group continues to make significant
progress underpinned by strong performances from each
of the Group's three business activities. These results were
particularly noteworthy given the macro-economic challenges
resulting primarily from the war in Ukraine, residual adverse
effects from COVID-19 and the requirement to handle the
impact of the UK’s exit from the EU.
During 2022 net revenue increased by 24% to £20.1m
and profit before tax by 27% to £4.5m. There was significant
increases in technology licensing revenue, whilst AQSE
generated a profit ahead of schedule. Pan-European
secondary market trading was strengthened through the
launch of AMP, our new dark pool activity. We continued
to develop our presence in Europe and enhance client
relationships within the EU 27 markets.
We have also continued to invest in our technology making
further significant progress through the development of
24/7 capability and exchange grade cloud platforms.
Board and Governance
We further strengthened the Aquis Exchange PLC Board
(“the Board”) during 2022 through the appointment of
Fields Wicker-Miurin as Senior Independent Director and
Chair of the Nominations & Remuneration Committee and
Ruth Wandhöfer as independent non-executive director
and member of the Audit & Risk Committee and the Aquis
Europe subsidiary Board. Richard Fisher joined the Board as
CFO at the AGM in April 2022.
Fields has a distinguished career with over 40 years’
experience as an executive in financial services, a social
entrepreneur 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.
Overall Group net revenue
increased by 24% from £16.2m
to £20.1m and profit before tax by
27% from £3.6m to £4.5m driven
by strong performances across all
divisions, in particular the technology
licensing activity.
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Aquis Exchange PLC Report and accounts 2022
Introduction Chairman’s Statement continued
She currently serves as a non-executive director, 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.
Ruth has considerable financial services experience.
Following a senior executive career at Citibank, she
has served on a number of Boards as an Independent
Non-Executive Director including the London Stock
Exchange from 2018 to 2020 and is currently serving on
the board of Gresham Technologies PLC and Permanent TSB
PLC in Ireland.
Prior to joining Aquis as Director of Finance in April 2021,
Richard was the Director of Finance at Redwood Bank
and prior to that held a number of senior roles within RBS.
Richard qualified as an accountant (ICAEW) with PwC.
Richard Bennett retired from the Board with effect from
31st December 2022 and Mark Spanbroek will retire on
27th April 2023. Richard served for nine years and Mark for
ten years. On behalf of the whole Company I would like to
thank them both for their service to Aquis.
Culture, Stakeholder Engagement and Section 172 Duties
The Board continued its engagement with key stakeholders,
particularly focusing on employees and shareholders. We
hosted a very successful Capital Markets Day in November
and Fields Wicker-Miurin and myself consulted with
shareholders in advance of the renewal of our Directors’
Remuneration Policy at the 2023 AGM.
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 positive.
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 continue to make progress on 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 p10.
We remain committed to further improving our gender
balance, making progress towards meeting the Hampton
Alexander guidelines on female representation on the
Board (3 out of 9 after the 2023 AGM), and further
improving the gender pay gap measure of female seniority
in the company to 24% on base salary and 29% on
base salary plus annual bonus. Our target remains to
be better than the average in UK financial services on
these measures.
Our focus for the year ahead
We are confident that we have the resources and
technology to support further profitable growth across all
our business activities and we will continue to invest for
future growth. We have strengthened the Board and it is
now scaled appropriately to meet the opportunities ahead.
However, we will continue to monitor closely the skills and
experience of the Board Directors to ensure that we are
able to continue to focus on ensuring the business delivers
on its strategy across all the aspects of the business.
Environment, Social and Corporate Responsibility
Glenn Collinson
Chair
The Board is focussed on the Company’s responsibility
to continue to grow and operate on a sustainable
basis whilst playing the role 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
wider contribution.
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Aquis Exchange PLC Report and accounts 2022
HEADINGIntroduction Chief Executive’s Report
Chief Executive’s Report
Alasdair Haynes
Chief Executive Officer
Overview
During 2022 Aquis celebrated its 10th anniversary. It has
already been an amazing journey from building a fledgling
pan-European secondary market equities trading platform
into a profitable Group covering primary and secondary
trading and technology licensing activities. I am confident
that the next decade will be equally, if not more, successful
than the first.
There were some major economic headwinds during the
year, yet the Group dealt comfortably with these adverse
conditions, despite the significant negative effects they
caused across the financial services industry.
The Group profited from significant growth in the
technologies division along with strong performances
in pan-European secondary market trading, the primary
market activities of AQSE and data revenue. This growth
demonstrates the resilience of the diversified business
model that Aquis has created. It also managed to maintain
market share of the pan-European equities secondary
market trading in excess of 5% whilst diversifying its product
offering through the launch of the Aquis Matching Pool
(AMP).
This overall performance resulted in the Group reporting
a 24% growth in net revenue to £20.1m (net of provisions)
and a profit before tax of £4.5m in 2022 compared to
a profit before tax of £3.6m in 2021. On an underlying
basis including FX movements reported through other
comprehensive income this equates to a 41% increase
in underlying profit from £3.3m to £4.7m. This increase
demonstrates the continued progress made during the
last 12 months and provides the Group with the profitable
platform to continue to invest and further strengthen the
synergies across its principal business activities.
Reflecting the increasing diversification across three
business units and four revenue streams, we have
successfully completed a rebrand post-period, in Q1 2023.
The Group now consists of Aquis Markets (formerly the
Aquis Exchange business), Aquis Technologies, and Aquis
Stock Exchange.
It is difficult to predict if market conditions will become more
stable in 2023, following a difficult 2022; however, I do
believe that our strong team and technology platform should
enable us to overcome these and any future challenges.
The Aquis Group delivered material
progress during 2022 demonstrating
the quality and resilience of all of its
core business activities.
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Aquis Exchange PLC Report and accounts 2022
Introduction Chief Executive’s Report continued
Aquis Markets
Aquis Market Data
Data revenues increased 29% in 2022 to reach £3.0m
as the Group continued to benefit from the implementation
of a harmonised data structure. Data is a key pillar of the
Aquis strategic plan, and we expect that it will continue to
make a significant contribution to the Group.
In addition to the contribution data brings to the Group
results, it may increase further in importance in the
long-term if consolidated tapes for the UK and Europe are
implemented. Introducing consolidated tapes for Equities
should improve the quality and pricing of market data and
lead to a fairer distribution of data fees across the various
European trading venues. Progress was made during
the year in the UK and in Europe where the European
Council has recently agreed a mandate to negotiate with
the European Parliament on reforms that include the
establishment of a consolidated tape.
Aquis Stock Exchange (AQSE)
AQSE had a very successful 2022, moving to profitability
ahead of schedule.
The exchange attracted a further 22 IPOs during the year:
the most of any growth company exchange in the UK. The
business also made good progress in integrating with the
main retail investor platforms thereby ensuring access to
its broad range of companies and continuing to attract
additional market makers, corporate advisers and brokers.
Underpinned by the Group’s proven, disruptive
technology and a track record of transparency and
innovation, we have already made material progress in
building AQSE into a competitive 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.
Over the period, the secondary market multilateral trading
facility (“MTF”) platforms operated by the Group in London
and Paris continued to grow despite challenging economic
and regulatory conditions. The number of trading members
grew from 38 to 41 and a number of members increased
their activity levels, leading Aquis Markets revenue to
increase by 15% to £12.4m.
The market share of all pan-European trading including
auctions and dark pools was maintained through the year
with the launch of AMP, the Aquis dark pool offering
offsetting a decrease in Lit volumes. We are confident that
with new innovative order types planned to be introduced
in 2023, our lower toxicity and high available liquidity will
ultimately underpin long-term market growth. Our Market
at Close (“MaC”) order type, made a material contribution
to trading volumes on the platform and we anticipate it will
grow further during 2023. 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 Markets offered clients the ability to trade in excess
of 2,000 stocks and ETFs across 16 European Markets as at
the end of December 2022. Overall, the available liquidity,
equal to approximately 23% of total pan-European equity
liquidity should underpin future market share growth.
Aquis Technologies
During 2022 Aquis made significant progress in its
technology division. This activity, where Aquis licenses
its leading exchange related technology to a variety of
international financial services clients across different
asset classes, has a strong pipeline and offers material
future growth opportunities. Net revenue from technology
licensing in 2022 grew 51% to £5.2m, reflecting the
increasing interest in our high-calibre, in-house technology.
In 2022, Aquis Technologies extended one contract and
secured two new contracts, bringing the total to seven.
Aquis Technologies continues to develop its technology
platforms to support growth across different asset classes
internationally, delivered the first exchange grade 24/7
platform and made further progress in the plan to create
a cloud native exchange.
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Aquis Exchange PLC Report and accounts 2022
HEADINGIntroduction Chief Executive’s Report continued
Further Investment in Research and Development (R&D)
The Group continued to invest in R&D throughout 2022
and will continue this investment during 2023 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 quality and flexibility
of our technology was demonstrated through the launch
of AMP, the creation of the first ever exchange grade 24/7
market and underpins our Group strategy. It is the principal
reason 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’ technology organisation
ensures expeditious product development and, together
with Aquis’ further investment, 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 2022 we continued to invest in personnel resources
across a number of departments with headcount across
the London and Paris offices increasing by 16% and we will
continue to further strengthen our team in particular in
support of the sales and technology activities.
Outlook
In November 2022 we held our first Capital Markets Day
(CMD) which enabled us to present some of the exciting
initiatives that we will pursue over the next few years and
how we believe we can remain at the forefront of exchange
technological invention.
Following the successful launch of AMP we will continue
to develop this activity and anticipate further product
development in this area during 2023.
There remains some macro-economic uncertainty;
however, I believe that our strong team and technology
platform should enable us to overcome this and any future
challenges. Our technology systems have dealt efficiently
with significantly higher messaging volumes caused by
increased volatility. 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 our readiness 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 2023 trading continues in line
with 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 2023.
We continue to invest in our business to ensure that we
maintain our ability to grow. This investment will support the
broadening of 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.
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 transforming primary
markets for small and mid-cap stocks.
Alasdair Haynes
Chief Executive Officer
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Aquis Exchange PLC Report and accounts 2022
HEADINGIntroduction
Strategic Report
9
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Strategic Report
Overview of the business
Aquis Exchange PLC (“Aquis” or “the Company”), is the
principal operating company and the holding company of
the Aquis exchange activities (“the Group”) which operates
three principal divisions: Aquis Markets, Aquis Technologies
and Aquis Stock Exchange.
• Aquis Markets, 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 which provides exchange and
regulatory technology to third parties.
• Aquis Stock Exchange Limited (“AQSE”) which 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”).
The Group has made significant progress in the
development of its activities since the IPO in June 2018
and is well positioned to be recognised as one of the
leading technology-led, international exchanges driving
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;
• Continue to increase the number of members of Aquis
Markets and associated trading volumes by providing a
robust and innovative platform that responds to their
needs;
•
License its proven technology platform to third
parties that require cutting-edge trading or market
surveillance technology; and
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Aquis Exchange PLC Report and accounts 2022
• Positively address the current market issues of large
spread and low 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 for the 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. For AMP (the Aquis dark pool market)
clients are charged a percentage of the value of each
transaction.
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.
During 2022 Aquis has consolidated its market position
commanding 5.2% market share (Q4 average) of all
EU secondary markets trading underpinned by a more
diversified product offering following the launch of AMP.
This business is well positioned to benefit from further
product development and any future regulatory changes.
Strategic Report
The institutional support for greater transparency in
European equities trading also supports 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 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.
As a growth company the Key Performance Indicators
(KPIs) for the Group are principally (i) the continued
growth in revenue (See the Table below showing Group
Revenue) and also (ii) the continued growth in Profit Before
Tax (PBT). In building out these KPIs significant focus is
made to the key drivers of revenue and profitability which
include for example the market share of pan European
secondary market trading (see Page 10). The delivery
against these principal KPIs are fundamental to the success
of the Group.
In support of these KPIs the Board has established for
the senior Executives clear financial and non-financial
objectives for the Group. For 2022 these were revenue,
profit before taxation, market share of pan-European
secondary market trading, quality of technology,
planning, sustainability and compliance with regulations
and corporate governance, allowing clear performance
measurement against the most important targets set
by the Board. Financial objectives represent 70% and
non-financial 30%. The financial KPIs are based on
target net revenue and profit before tax. The non-
financial KPIs address strategy, resources, information
and communication. Further details are given in the
Remuneration Report on page 59.
Financial Review
It has been a year of very strong revenue growth during 2022. 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
2022
£
Group
2021
£
YoY Growth
%
10,869,442
5,034,579
1,022,520
3,002,986
9,766,046
4,404,606
692,743
2,319,360
19,929,527
17,182,755
11
14
48
29
16
The Group generated a profit before taxation for the
year of £4.5m compared to £3.6m in the previous year.
The continued growth in profits during 2022 is primarily
attributable to increased exchange revenue through the
launch of AMP and 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 (Expected Credit
Loss on the trade receivables arising from contract assets).
11
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report
This year the application of IFRS 9 has resulted in a net
impairment provision release during the year of £133k
(2021: charge (£972k)).
Profit before tax increased 27% to £4.5m and EPS (fully
diluted) remained at to 16p per share. The profit before
taxation is after 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.
The Group generated an income tax credit of £157k which
was driven by an increase of £301k in deferred tax assets,
offset by an overseas corporation tax charge of £144k.
In May 2022 Aquis relocated its London office. The lease
liabilities arising are amortised over the life of the leases,
attracting a net finance expense charge amounting to £53k
for 2022, whereas the right of use assets are depreciated
on a straight-line basis over the life of the lease, attracting
a depreciation charge of £397k for 2022.
The Group’s cash and cash equivalents as at 31 December
2022 were £14.2m (2021: £14.0m) maintaining the
Group’s strong cash conversion rate which allowed the
continued investments as set out below. Over the year
the group deployed £1.95m of cash to purchase treasury
shares used to service the various employee share
schemes.
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 licencees to enter different asset classes. In
addition, the Group has made further investment in
personnel 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
2022 the Company ICARA requirement amounted to
£4.7m (2021 £3.9m). 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.
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
During 2022, the Group has invested significant time and
resource into AQSE 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.
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
12
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report • 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 between members of the company
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.
Stakeholder Management
The Group complies with the requirements prescribed by
Section 414CZA 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 fallout
from the war in Ukraine.
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.
Details on how Aquis and its Board engage with its
principal stakeholders, are given below.
Clients
Management proactively 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. The latest
round took place in January 2023. 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. Throughout the year Glenn Collinson has held 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. This the 4th consecutive year
that the Group has run the employee engagement
survey 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
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
13
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report 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.
Board Effectiveness and High Standards of Business
Conduct
The Board remains committed to high standards of
corporate and regulatory governance. During the year the
Board 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.
The Board has also made further progress in its succession
planning both for the Executive and the Board. Glenn
Collinson was appointed Chair with effect from 1st January
2022. The Board appointed two new NEDs, Fields
Wicker-Miurin and Ruth Wandhöfer in anticipation
of the scheduled retirement of Richard Bennett on
31st December 2022 and Mark Spanbroek on 29th April
2023. In addition the Board promoted Richard Fisher to
the Board in March 2022 as CFO. 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.
Management plan to recruit additional employees, in
particular in the technology area in the UK and France
during 2023.
COVID-19 and The Interests of Employees
The impact of COVID-19 decreased dramatically during
2022; however the Board continued to monitor the
day-to-day operations, the business continuity plans
and the employees’ well-being carefully throughout the
year. This included work from home issues and the office
environment.
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);
• Proactivity (discipline and initiative);
14
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report • Openness (transparency);
• To create an environment in which individual
• Excellence (through creativity and innovation);
• Collaboration (through positive, collegiate and free
thinking); and
• Respect.
Despite a further increase in employee numbers in 2022
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 also operates a flexible working
policy to ensure it takes account of individual employee
requirements.
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:
15
Aquis Exchange PLC Report and accounts 2022
differences and the contributions of all team members
are recognised and valued.
• To create a working environment that promotes
dignity and respect for every employee.
• To not tolerate any form of intimidation, bullying, or
harassment, and to discipline those that breach this
policy.
• 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 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
had established a target to increase the overall female NED
ratio and this was achieved during the year.
The employee targets are set out below. These are to:
1.
improve all diversity ratios
2.
increase the management team diversity ratios
3. decrease the female / male seniority gender pay gap
Strategic Report continuedStrategic Report 4.
5.
include more comprehensive employee statistical
analysis in the annual report
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:
•
in 2022 the gender (seniority) pay gap was 24% on
base salary and 29% on base salary plus annual bonus,
an improvement over the 2021 gap of 36% (base
salary) and 41% (base salary plus annual bonus)
• meet the Hampton Alexander Review target of at least
33% of board members being female
• have a gender pay (seniority) gap no worse than the
UK Financial Services industry average
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,
indirectly, through its consumption of supplies and
equipment including office hardware.
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Aquis Exchange PLC Report and accounts 2022
During the year the Group continued to promote the target
of reduced carbon emissions associated with employees
commuting to the office. In addition, the building electricity
provider for the current Aquis office obtains energy from
100% renewable electricity and carbon neutral gas and the
two data centres used by Aquis are both 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
not beneficial 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 which have allowed Aquis to comply with all
provisions of the Code during the accounting period and
up to the date of this report.
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
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.
Strategic Report continuedStrategic Report The wider community
Aquis has been involved in a number of charitable and
community enhancing initiatives in the year. In 2022,
Aquis partnered with Ravens Wood School in Bromley
to spearhead an ‘Investment Club’ scheme with A-Level
Economics and Business students. Aimed at increasing
financial literacy and accessibility, students received
tailored talks and presentations from members of Aquis
staff on aspects of the financial services industry, public
markets and career advice. Students then created their
own mock-up AQSE universe portfolios with an imaginary
starting value of £50,000 using an app developed by Aquis
fed with real price data. Aquis intends to continue with and
expand this programme in future. Aquis also participated
in the London Youth Rowing Race the Thames project and
employees have shown their desire to make a difference.
Knowledge Transfer Project
Aquis has made significant progress with the University
of Derby partnership: a two-thirds government funded
Knowledge Transfer Project (“KTP”) that involves industry-
led research and development on Artificial Intelligence for
trading platform surveillance alerts to develop 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 2023 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
• Complete a carbon footprint assessment for the Group
that has been commissioned and begun in January
2023.
• 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 2022
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
In March 2023 there were signs of stress
in the banking sector with the default of
Silicon Valley Bank and acquisition of Credit
Suisse by UBS. There is a risk the credit
worthiness of historically financially robust
institutions comprising the customer base
of AQXE might increase the credit risk of
the parent company. Equally, a second
order exposure is possible for other
customers who maintain deposits with
insolvent banks.
The Economic landscape was adversely
affected during 2022 by Ukraine
(particularly in respect of heightened cyber
risk) and to a lesser effect the residual
impacts of COVID-19 and Brexit. 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 war in Ukraine continues to cause
immeasurable suffering and harm but it is
not expected to have a material adverse
effect on the Group’s trading volumes.
Whilst COVID-19 had a material negative
effect on the economic landscape for
many countries; the impact on the UK and
European economies decreased materially
during 2022 and it is anticipated that it will
have less impact on total market volumes in
the future.
Pan-European trading is now executed
almost 100% by 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 and it is anticipated that this will
remain the case for the foreseeable future.
The Directors have reviewed where
possible our customer base to ensure
these entities are not directly exposed to
insolvent credit institutions. Additionally,
swift regulatory intervention by the Federal
Deposit Insurance Corporation secured
depositors with SVB and the acquisition of
UBS subsequent to a Swiss Central Bank
liquidity backstop both ensure limited
fallout from these events.
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Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Legal/Regulation
The Group operates highly regulated
entities, including three MTFs and an
RIE and is required to maintain sufficient
regulatory capital and comply with
relevant legal and regulatory requirements
necessary to operate the Group’s business.
All three Group entities must hold
regulatory licences and independent capital
minimum.
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.
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 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, and
•
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 cash reserves.
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 unanticipated 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 2022
Strategic Report continuedStrategic Report Risk
Competition
Risk Description
Mitigation
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.
Additionally, the emergence of new
asset classes might reduce the Group’s
competitiveness.
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.
New asset classes are emerging but have
yet to make a real impact on equities
trading, clearing custodian services and
settlement of equities; however, Aquis will
continue to closely monitor new market
developments.
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.
Intellectual property and
data protection
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).
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Aquis Exchange PLC Report and accounts 2022
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 the Aquis Technology
could mean that competitors get access
to Aquis’ Intellectual Property (IP) 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 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 2022
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.
Remote working practices across the
industry may slow new proposals or
development 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 2022 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.
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 2022
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, 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 with the results reviewed
by the ARCC and Board and all employees
undertake cyber-training.
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 NRC 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
and employee share option schemes, 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.
23
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Client concentration
The nature of equity financial markets
is that the majority of pan-European
secondary market trading 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 Group revenue is therefore dependent
on a concentrated number of customers
and significant change to a customer’s flow
could negatively impact revenues.
The Group continues to broaden 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 has offset some of the risk of
industry concentration through the quality
of the MTF exchange offering and the
strengthening of the product offering.
The Group 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 primary markets,
technology sales, data and market
gateways.
24
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Liquidity provision
concentration – Aquis
Exchange
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.
Internally, management maintain a close
relationship with its 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, the Group’s low
toxicity model and innovative offerings will
continue to counter this risk.
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 for its pan-European secondary
market trading activities 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.
25
Aquis Exchange PLC Report and accounts 2022
Strategic Report continuedStrategic Report Risk
Risk Description
Mitigation
Liquidity Provision
Concentration – AQSE
A relatively small population of market
makers support AQSE with similar risks
to those identified above with regard
to potential short-term impact if one or
more market makers were to change their
business model or approach.
The number of market makers active on
AQSE has and is anticipated to increase as
the number of companies and reputation of
the exchange continues to improve.
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 if
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 has approved FX
hedging policies in place and as at 31 December 2022 actively managed the balance sheet and risks without the use of
any financial derivatives. Previously all revenues were GBP denominated but at the end of 2022 the Group entered into
the first contract denominated in a foreign currency. To manage the FX risk going forward the Group entered into forward
FX trades and will continue to do so in the future where any further contracts are non-GBP denominated.
The Group has continued to increase its profits during 2022 demonstrating that it has been able to manage 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 January 2023 – December 2027. These include
considering the impact during 2022 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 2022 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 29 March 2023 and is signed on its behalf by:
Alasdair Haynes
CEO
Richard Fisher
CFO
26
Aquis Exchange PLC Report and accounts 2022
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 2022
with comparatives for the year ended 31 December 2021.
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.
The Group consists of 3 regulated entities: AQXE, 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.
The Board discharged its Section 172 (1) duties in a
number of ways, details of which are set out on p13 and
include significant time focusing on strategy for the Group,
as well as considering employees well-being during another
very challenging year in order to improve the Board’s
effectiveness and maintain high standards of conduct.
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
Glenn Collinson Chair
Re-appointed to the Board September 2021
Fields Wicker-Miurin Senior Independent Director
Appointed to the Board March 2022
Richard Fisher CFO
Appointed to the Board March 2022
Mark Spanbroek
Appointed to the Board March 2013
Richard Bennett
Appointed to the Board March 2014
Jonathan Clelland COO
Appointed to the Board October 2012
Mark Goodliffe
Appointed to the Board March 2018
David Vaillant
Appointed to the Board June 2020
Deirdre Somers
Appointed to the Board October 2020
Ruth Wandhöfer
Appointed to the Board March 2022
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.
27
Aquis Exchange PLC Report and accounts 2022
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
Strategic Report
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 (“NRC”).
The ARCC has been chaired by Mark Goodliffe since June
2018. Mark Spanbroek was a member of the committee
throughout 2022 and Ruth Wandhöfer joined the
committee in June 2022. Mark Goodliffe, Mark Spanbroek
and Ruth Wandhöfer have considerable accounting, risk
and compliance experience, and 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,
MLRO reports, risk assessments and ICARA / 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 NRC is chaired by the Senior Independent Director
Fields Wicker-Miurin who took over the position from
Richard Bennett in September 2022. Richard Bennett
remained on the committee until his retirement on
31st December 2022. The other member of the NRC
28
Aquis Exchange PLC Report and accounts 2022
throughout the year was Glenn Collinson. In December
2022 Deirdre Somers was appointed to the NRC. The
Executive Directors and other senior personnel may be
invited to attend meetings when appropriate to provide
advice.
The NRC 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 NRC meetings are made available to the Board
and a summary review of the NRC’s activities is presented
to the Board by the chair of the NRC 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 NRC.
The NRC 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 consists of
the Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer (also Chief Executive Officer of Aquis
Exchange Europe SAS, AQEU), Chief Revenue Officer,
Head of Regulation, Head of AQSE Regulation and Head of
Technology Sales.
Directors’ Report continuedStrategic Report Governance Summary
Directors’ Board and Committee attendance during 2022 is summarised below:
Director
Glenn Collinson
Alasdair Haynes
Richard Fisher
Jonathan Clelland
Fields Wicker-Miurin
Richard Bennett
Mark Spanbroek
Mark Goodliffe
David Vaillant
Deirdre Somers
Ruth Wandhöfer
Board
ARCC
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
3/3
NRC
7/7
5/5
7/7
1/1
Results
The Group made an EBITDA for the year of £5.8m (2021:
EBITDA of £4.6m).
After taking into account interest, depreciation and
amortisation the Group made a profit before tax of £4.5m
(2021: profit before tax of £3.6m).
Income tax credits of £0.2m were recognised (2021:
£1.1m) representing a further £0.3m increase in the
deferred tax asset to £1.6m (2021: increase of £1.1m to
£1.3m) offset by £0.1m of overseas tax charges for the
French subsidiary.
Group contract assets (net of ECL provisions) have
increased to £6.1m (2021: £3.5m) after signing a new
technology licence contract in the year.
The Group has invested £2.0m in Employee Benefit Trusts
(£1.1m). These are recognised as Treasury shares in the
Group consolidated results and as Investment in Trusts by
the Company.
There were no discontinued operations in the current or
previous year.
Dividend
The Directors do not recommend the payment of a
dividend.
Future developments
The Group has continued to make progress in both its MTF
exchange and data activities during 2022 with growth in
revenue, numbers of clients and client pipeline despite an
extremely challenging market environment. In April 2022
the Group added dark pool capability through the creation
of the Aquis Matching Pool (AMP) following the assumption
of the business activities of UBS MTF, the non-displayed
matching pool of UBS AG. This expansion allows the
Group to offer a more comprehensive suite of products to
its clients. The potential for new customers continues to
increase as the trading opportunities on the Aquis Markets
become more widely recognised, as does the opportunity
for increased trading volumes and several banks / brokers
who are focused on the market micro-structure and best
execution have continued to increase their activities on
Aquis Exchange and it is anticipated that others will follow
during 2023.
With a proven business model and further potential
improvements in the economic landscape, 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 technology resources in London
and Paris during 2023 and thereafter, to take advantage of
the scope for significant long-term sales and value creation
for shareholders.
29
Aquis Exchange PLC Report and accounts 2022
Directors’ Report continuedStrategic Report
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.
Significant progress was made with AQSE the primary
market activity of the Aquis Group during 2022 including
22 IPOs during the year and surpassing the breakeven
target ahead of schedule and the Group is confident that
this activity will be further enhanced during 2023 and
thereafter.
Audit information disclosure
So far as the Directors are aware, there is no relevant
audit information of which the auditors are unaware, and
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 2022
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 Directors can confirm that there were no 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
including the creation of a fully integrated 24/7 cloud-
based market
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 has one subsidiary company in France: Aquis
Exchange Europe SAS (AQEU). This subsidiary company
operates an MTF and is regulated by the Autorité de
Contrôle Prudentiel et de Résolution (ACPR) since March
2019. Aquis does not have any other subsidiaries, associate
companies or branches outside the UK.
Share Capital Structure
Aquis Exchange PLC is dual listed on Aquis Stock Exchange
and the AIM market of the London Stock Exchange. The
Company has 27,509,448 ordinary shares of 10p each in
issue (31st December 2021: 27,505,449). During the year
the Company acquired 481,301 of its own shares with a
nominal value of £48,130 for consideration of £1,952,325.
These shares were acquired for the Employee Benefit
Trusts operated by the company (further details in note 21
to financial statements).
The shareholders with a significant holding (more than
3.0%) in Aquis as at 31st December 2022 were as follows:
XTX Markets
Mr. G Roveda
Mr. R Ricci
Canaccord Genuity Wealth Management
Kendall Capital Markets
Mr. A Haynes
Schroder Investment Management
J O Hambro
Rathbone Investment Management
Madison Avenue Partners
Barclays Wealth
9.5%
9.3%
7.8%
5.4%
5.0%
4.8%
4.6%
4.5%
4.1%
3.2%
3.1%
At 31st December 2022 there were no securities carrying
special rights and no restrictions on voting rights. At 31st
December 2022, 1,890,955 shares representing 6.9% of
the total issued share capital was held by the Directors.
The Company operates an Employee Share Incentive Plan
(SIP), Company Share Option plan (CSOP), Restricted Share
30
Aquis Exchange PLC Report and accounts 2022
Directors’ Report continuedStrategic Report Plan (RSP) and an Executive Share Option Plan (PPO). The
voting rights of the shares held in the trust relating to the
SIP, CSOP, RSP and PPO 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 39, 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 2022 amounts to (39.7%)
compared to the AIM market of the London Stock
Exchange which reported a return for the same period of
(31.7%). Aquis shareholders’ return since 14th June 2018
amounts to 41.3% compared to the AIM market of the
London Stock Exchange which reported a return for the
same period of (24.8%).
Aquis(cid:3)Shareholder(cid:3)Return(cid:3)
June(cid:3)2018(cid:3)(cid:882) 31(cid:3)December(cid:3)2022
250.00
200.00
150.00
100.00
50.00
0.00
8
1
0
2
/
7
0
/
1
0
8
1
0
2
/
0
1
/
1
0
9
1
0
2
/
1
0
/
1
0
9
1
0
2
/
4
0
/
1
0
9
1
0
2
/
7
0
/
1
0
9
1
0
2
/
0
1
/
1
0
0
2
0
2
/
1
0
/
1
0
0
2
0
2
/
4
0
/
1
0
0
2
0
2
/
7
0
/
1
0
0
2
0
2
/
0
1
/
1
0
1
2
0
2
/
1
0
/
1
0
1
2
0
2
/
4
0
/
1
0
1
2
0
2
/
7
0
/
1
0
1
2
0
2
/
0
1
/
1
0
2
2
0
2
/
1
0
/
1
0
2
2
0
2
/
4
0
/
1
0
2
2
0
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/
7
0
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1
0
2
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0
2
/
0
1
/
1
0
3
2
0
2
/
1
0
/
1
0
Aquis(cid:3)share(cid:3)price(cid:3)(rebased)
AIM(cid:3)index(cid:3)(rebased)
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,
31
Aquis Exchange PLC Report and accounts 2022
Nomination and Remuneration Committee Report, and
Directors’ Report.
The Directors have implemented appropriate measures,
as stated in the Strategic Report to comply, so far as
practicable, with the Code, such that Group has complied
with the Code throughout the financial year ended 31
December 2022 and to the date of this report.
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 13, and information on the Share
Incentive Plan (SIP) can be found in the NRC 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 14 to 16.
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.
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 16.
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 18.
Directors’ Report continuedStrategic Report 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.
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.
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,
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) or Chief Operating Officer (COO). New exchange
32
Aquis Exchange PLC Report and accounts 2022
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
or COO. All expenditure and client invoices are authorised
by the CFO.
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.
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.
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
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).
Directors’ Report continuedStrategic Report 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:
•
•
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 29 March 2023 and is signed on its behalf by:
Alasdair Haynes
Richard Fisher
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 IFRS 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
33
Aquis Exchange PLC Report and accounts 2022
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
2022.
Composition and meetings
The ARCC members as at 31st December 2022 were
Mark Goodliffe, Mark Spanbroek and Ruth Wandhöfer
who joined in March 2022. 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 Chair, Chief Executive Officer, Chief Financial Officer,
Finance Manager, 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 AQSE
and 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
corporate governance section of the Group’s website at:
https://www.aquis.eu/investors/corporate-governance/.
2022 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 2022 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.
Following the external audit tender process in 2021
and the decision to appoint Mazars 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 Pauline Pélissier.
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 reviewed all the 2022
internal audit reports in detail and when circumstances
allowed, met Grant Thornton to assess the quality
and effectiveness of the internal audit process
and management responses to the internal audit
recommendations;
• Reviewed and monitored the principal internal and
business risks and associated mitigative management
actions on a quarterly basis. This process included
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;
• Assessed the annual ICARA;
• Considered operational risks, cybersecurity risks and
technology resilience. This included an annual review
34
Aquis Exchange PLC Report and accounts 2022
Strategic Report
of the effectiveness of risk management and internal
control systems;
• Review and monitor compliance, surveillance and
regulation developments on a quarterly basis; and,
• Monitor the Brexit transition process, which included
the operational setup of Aquis Exchange Europe SAS.
Priorities for the 2023 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 any UK / EU regulatory
divergence and the implications of it on the business;
and,
• Monitoring the implementation of a new accounting
ledger system.
35
Aquis Exchange PLC Report and accounts 2022
Audit, Risk and Compliance Committee Report continuedStrategic Report Board of Directors and Management Team
Audit, Risk and Compliance Committee Report
t
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Glenn Collinson
Independent Non-Executive
Chairman
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.
Alasdair Haynes
Chief Executive Officer
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. 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
Chief Operating Officer
Jonathan Clelland is the
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 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 Fisher
Chief Financial Officer
Richard is the Chief Financial
Officer ("CFO") of the Company.
He joined the Board in March 2022
and also attends the Company’s
ARCC and Nominations and
Remuneration Committees.
Prior to joining Aquis he was the
Director of Finance at Redwood
Bank and has also been the Chief
Accountant at RBS among other
senior roles at the firm.
Fields Wicker-Miurin
Senior Independent
Non-Executive Director
Fields Wicker-Miurin OBE, joined
the Board in March 2022 as an INED
and also sits on the Nominations
and Remuneration Committee.
Fields has a distinguished career
with over 40 years’ experience as
an executive in financial services
in both global companies and
government departments, including
the London Stock Exchange (1994-
7) and BNP Paribas (the eurozone’s
largest bank) and Scor (the world’s
4th largest reinsurance company).
She is also Deputy Chair of the
Royal College of Art & Design.
36
Aquis Exchange PLC Report and accounts 2022
Audit, Risk and Compliance Committee Report
Board of Directors and Management Team continued
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Deirdre Somers
Independent
Non-Executive Director
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.
Dr Ruth Wandhöfer
Independent
Non-Executive Director
Ruth joined the Board in March
2022 as an INED and also sits on
the Company’s Audit, Risk and
Compliance Committee and the
board of its Aquis Exchange Europe
subsidiary. Ruth has considerable
financial services experience.
Following a senior executive
career at Citi Bank she has served
on a number of Boards as an
INED including the London Stock
Exchange (2018-20) and currently
Gresham Technologies Plc and
Permanent TSB Plc in Ireland.
Philip Olm
Company Secretary
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
Independent
Non-Executive Director
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 Vaillant
Independent
Non-Executive Director
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.
37
Aquis Exchange PLC Report and accounts 2022
Nomination & Remuneration Committee Report
The Board has brought together the responsibilities of both
nominations and remuneration matters in one committee
to ensure Aquis is in a strong position to attract, motivate
and retain the best talent for the Group in a competitive
and dynamic environment. The Board recognizes that
Group performance depends on both individual and team
contributions. Its approach is to encourage and reward
sustainable financial performance, innovation and growth in
shareholder value over the longer term.
a diverse and talented workforce through appropriate
recruitment and selection processes and through active
monitoring of the actions resulting from the annual
Employee Survey. During 2022 Glenn Collinson acted
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 pages 14 to 16. In 2022
the Company has exceeded recommended industry
diversity benchmarks.
The Nomination and Remuneration Committee (NRC) has
delegated authority from the Board to prepare proposals
to the Board on key matters relating to nomination and
governance topics, and all director-level remuneration
topics. The Senior Independent Director is the Chair of the
Nominations and Remuneration Committee. All members
of the NRC are independent. The NRC is advised by an
independent external remuneration consultancy and has
the authority to commission external expertise whenever
required.
The Group uses specialist recruitment agencies for all
recruitment opportunities for the Board and employees. In
2022 the Group engaged a specialist recruitment agency
Sainty Hird and Partners (SHP), in connection with the
recruitment of the additional Non-Executive Directors for
the Company. SHP does not have any other connection
to the Group or any individual directors. Roles are also
advertised on the Aquis website and the NRC provides
oversight to ensure that the recruitment process is aligned
to Aquis’ policies on equality and diversity.
Within its Nomination remit, the NRC ensures that the
Board has the right composition of skills, expertise and
diversity in its directors and is the right size to conduct
its responsibilities effectively. The NRC reviews the
composition and remits of Board committees (Audit and
Risk, and the NRC). It makes proposals to the Board
for any desired changes in composition or remit, and
keeps under review succession planning. The NRC
also supports the boards of the subsidiary companies
(AQSE and AQEU) in their composition assessments
to ensure they are well-equipped to fulfil their roles.
Regarding executive nomination matters, the NRC has
sight over the development and performance of both
the Executive Directors (EDs) and the members of the
Executive Committee. It keeps under review further talent
development and succession planning.
More broadly, the NRC reviews the development of
talent throughout the company, keeps a watching brief
on employee engagement, learning and development, and
well-being, diversity and inclusion. The Committee regularly
invites the Head of Human Resources to present matters
regarding Aquis employees. Reflecting its interest in talent
development, the NRC is consulted on senior appointments
across the businesses and in particular appointments to the
Executive Committee.
The Board is committed to equality and diversity
throughout the Group and seeks to attract and retain
In fulfilling its Remuneration responsibilities, the NRC
makes proposals to the Board regarding the company’s
remuneration philosophy, principles and policy as they
apply to both Executive and Non-Executive Directors. In
particular, the NRC reviews and makes proposals to the
Board regarding the EDs in relation to 1) the structure of
their total remuneration packages; 2) the levels of their
fixed salaries and any related benefits (e.g., pensions and
health insurance); 3) their performance objectives for their
annual bonus; 4) the assessment of their performance
and their resulting annual bonus; and 5) their long-term
incentive plans, including any Aquis share or option awards
under the plans.
As part of its role to set performance objectives and then
to review performance outcomes, the Committee receives
input from the Audit and Risk Committee with regard
to financial outcomes, compliance with regulations and
ensuring that objectives and rewards do not create risk
outside of the Company’s risk appetite.
The committee also reviews the structure of remuneration
throughout the company to assure itself that the principles
applied are consistent with the philosophy and principles of
remuneration applied to the Executive Directors.
The NRC also reviews and makes proposals to the board
on the remuneration structure and levels of fees for non-
executive directors (NEDs).
38
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Directors’ Nomination and Remuneration Report
Annual Statement
Dear Shareholder,
I am pleased to present, on behalf of the Board of
Directors and for the first time as Chair of the NRC, the
Directors’ Remuneration Report for the year ended
31 December 2022. This report is set out in three sections
and includes:
I.
II.
III.
this Annual Statement which sets out a summary of
the work of the NRC and the key decisions taken in
2022 and for the year ahead;
an updated Directors’ Remuneration Policy (‘Policy’)
which sets out the framework within which our
executive directors will be paid from FY2023; and
the Annual Report on Remuneration which sets out
details of the payments and awards made to the
Directors for FY2022 and summarises how we intend
to operate our revised Policy in FY2023.
We will present a single remuneration-related resolution
covering the whole Directors’ Remuneration Report at the
2023 AGM. This resolution will be subject to an advisory
shareholder vote.
Business context – summary of the year
Aquis performed strongly in the year with net revenues
increasing by 24% in the year to £20.1m (2021: £16.2m)
and PBT increasing by 27% to £4.5m (2021: £3.6m). This
growth was across all divisions, in particular the technology
licensing activity.
Significant strategic milestones were achieved in the year
including the successful launch of the Aquis Matching Pool
(AMP) following the assumption of the assets of the UBS
MTF. This has allowed Aquis to offer a comprehensive
product set to its clients including dark pool activity for
the first time since incorporation. A further significant
milestone was the transformation of AQSE to profitability
by the mid-point of 2022, a full half year earlier than
planned on acquisition.
The Executive Directors delivered a successful first Capital
Markets Day and have continued to actively engage with
current and potential shareholders to allow greater access
to and understanding of the Aquis growth strategy.
Markets remained volatile through 2022 but the Group
has continued to grow strongly and delivered good market
share growth in the latter part of 2022 as the benefits of
39
Aquis Exchange PLC Report and accounts 2022
the AMP were fully embedded. In addition, despite the
impact on capital markets of economic conditions, Aquis’
relevant market share of IPOs grew, and the pipeline for
the future remains strong.
Board changes
The Aquis plc board saw several changes in 2022. The
Board was delighted to announce the appointment of
Richard Fisher as CFO (succeeding Jonathan Clelland as
CFO) and as an Executive Director following the 2022
AGM. Jonathan continues as COO and has taken on the
additional responsibility of CEO of Aquis Exchange Europe.
Prior to his appointment as CFO, Richard had been
Director of Finance. Richard’s package on joining the Board
was fully in line with our approved Policy. His salary on
joining the Board was £200,000 (significantly below Board-
level CFO market benchmarks) with the intention that this
would be reviewed for FY2023 taking into consideration
his performance and development in the role. Richard’s
pension allowance was set at 5% of salary (in line with the
workforce), with annual bonus potential of 80% of salary
and a restricted share award with a face value of 65% of
salary (in line with the other Executive Directors).
Regarding non-executive directors of the Board, Richard
Bennett relinquished his role as Chair of the NRC in
September 2022 and subsequently stepped down from the
Board in December 2022. I would like to thank Richard for
his excellent handover and for his support and wisdom.
In March 2022, Ruth Wandhöfer, an expert in financial
markets and risk, and I joined the board as independent
non-executive directors. I also took on the role from
Richard Bennett of Senior Independent Director.
Implementation of the Policy during 2022
The Committee applied the Policy consistently for the year
2022 when considering the remuneration outcomes for the
three Executive Directors, Alasdair Haynes, CEO, Jonathan
Clelland, COO and Richard Fisher, CFO. The structure of
remuneration for Executive Directors remained unchanged,
consistent with the prior year. As a reminder, we operated
a simple and transparent structure comprising salary,
modest benefits, workforce-aligned pension, a single
long-term incentive plan (comprising, in 2022, awards of
restricted shares) and, subject to stretching performance
conditions, an annual bonus. Incentive pay is subject to
withholding and recovery provisions, a post-vesting holding
period operates for our long-term incentives and significant
Strategic Report
Directors’ Nomination and Remuneration Report continued
share ownership guidelines apply. These features enhance
the alignment of interest between our executive directors
and shareholders and contribute to an appropriate level of
risk mitigation.
In addition, market value share options awarded under the
legacy Aquis EMI Option Plan vested during the year and
the gain on vesting has also been included in the single
figure of total remuneration.
Fixed salary
No salary increases were awarded to any of the Executive
Directors in 2022.
2022 Annual cash bonus
For 2022, in determining the amount of the discretionary
cash bonus to be awarded to each Executive Director,
the NRC evaluated the Executive Directors’ performance
against the financial, strategic and individual performance
objectives agreed at the beginning of 2022. For 2022
these objectives were based on Group revenue (46.7%),
Group profit before tax (23.3%) and strategic and individual
priorities (30%). The targets in relation to these objectives
were set after detailed scrutiny and approval of the 2022
budget, and following discussion within the Committee and
at the Board.
In summary, as discussed above, the Group delivered a
strong financial performance in 2022. As a result, both
the stretch revenue and the profit before tax targets
were exceeded. Performance against the non-financial,
strategic and individual objectives set for each of the three
Executive Directors was also strong. In total, this resulted
in bonuses of 60% of maximum (equivalent to 48% of
salary) for the Executive Directors. The Committee believes
this is an appropriate outcome and reflects the strong
performance of the Group during the financial year.
Further details of the measures, targets and bonus
outcomes are set out in the Annual Report on
Remuneration.
Long-term incentives vesting
Awards of restricted shares under the Aquis Exchange
Omnibus Share Plan were granted in June 2020 and are
due to vest in June 2023. The vesting of these awards
was subject to certain financial and strategic underpinning
conditions measured over 1 January 2020 to 31 December
2022. The NRC reviewed performance against the
underpins and determined that all of the thresholds had
been achieved and the awards will therefore vest in full.
The value of the award on vesting has been included in the
single figure of total remuneration for FY2022.
Further awards of restricted shares at a face value of 65%
of salary were granted to each of the Executive Directors
during 2022. The awards will vest after three years subject
to continued service and the achievement of underpin
conditions.
Discretion
ln addition to reviewing performance against the specific
targets set under the annual bonus and long-term incentive
arrangements, the NRC takes into account the context
of the underlying performance of the business and the
experience of our stakeholders. The NRC was satisfied
that the overall results reflected the strong performance
of the Group and of the Executive Directors and therefore
no discretion was used to adjust the formulaic outcomes
under the incentive arrangements.
Remuneration Policy review
Our current Policy was approved by shareholders with
over 98% of votes cast in favour of the remuneration-
related resolution at the 2020 AGM. The current Policy
has served us well over the initial period post IPO but the
NRC felt that it was prudent now to review it in light of
the development of the company over the period since
2020 to ensure it remains fit for purpose. In particular, the
Group has grown significantly since the current Policy was
adopted and the business is now at a different stage of its
maturity, we have reached sustainable profitability and we
are keen to incentivise further profitable growth.
• 2017 Revenue £2.0m, Loss before tax £3.0m
• 2018 Revenue £4.0m, Loss before tax £3.4m
• 2019 Revenue £6.9m, Loss before tax £0.8m
• 2020 Revenue £11.5, Profit before tax £0.5m
• 2021 Revenue £16.2m, Profit before tax £3.6m
• 2022 Revenue £20.1m, Profit before tax £4.5m
As part of this review, the NRC assessed and confirmed
the underlying philosophy shaping the Policy, sought
advice from external consultants on both structure and
levels of remuneration, and met with shareholders to get
their input. We were grateful for the feedback received
40
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Nomination and Remuneration Report continued
from shareholders and have sought to take on board the
views heard. As a result of this work the NRC is proposing
some changes to the Policy and how we will be seeking to
implement it which will be presented to the shareholders
for an advisory vote at the 2023 AGM.
The Group’s philosophy and underlying principles regarding
remuneration do not change:
1.
Keep it simple and uncluttered;
2. Be transparent to shareholders and the workforce;
3.
4.
5.
Have performance objectives that reflect the Group’s
financial performance, strategic objectives and build a
healthy culture;
Reward out-performance and do not pay for under-
performance;
Be competitive mainly through long-term share and
options plans to reward longer-term performance; and
6. Everyone is a shareholder.
These principles continue to inform the design and
implementation of the Directors’ Remuneration Policy.
Key changes to Policy structure
The NRC believes that the current overarching framework
continues to be effective. As a reminder, we operate a
simple and transparent structure comprising salary, benefits
and pension and, subject to stretching performance
conditions, an annual bonus along with a single long-term
incentive plan.
Within this structure, however, we are suggesting some
operational changes. The main change to the Policy is with
regard to the long-term incentive arrangements. Since
2020 we have made awards of restricted shares which
vest based on continued service and underpin conditions
only. This structure was considered appropriate for the first
years post IPO when forecasting medium- to long-term
financial targets was difficult but where promotion of long-
term alignment and stewardship of the share price was key
and this vehicle has served us well to date in this regard.
As the company has grown and diversified significantly
over the last three years and as we have now reached
sustainable profitability, the NRC proposes to introduce a
new, more leveraged award vehicle linked more directly
to incentivising superior share price growth. We therefore
propose the replacement of awards of restricted shares
with awards of premium priced options (‘PPOs’).
41
Aquis Exchange PLC Report and accounts 2022
The PPOs will vest after three years and the initial awards
will have an exercise price set at 25% above the 1 month
trading swap share price at the date of grant. This ensures
a simple, transparent structure with a clear incentive to
growing the share price. Participants only benefit from
the value created above the 25% hurdle rate. In line with
good practice, vested awards will be subject to a two-year
holding period and awards will be subject to recovery and
withholding provisions.
In terms of quantum, we are proposing to make awards
of PPOs at broadly the same levels, on a fair value basis,
as for restricted share awards made to date, (i.e. 75% of
salary in PPOs which is the equivalent to 75% of salary in
restricted shares to the CEO and 65% of salary in PPOs
which is the equivalent to 65% of salary in restricted shares
to the COO and the CFO). This involves a modest increase
to the fair value of the CEO’s award.
The approach to long-term incentivisation will cascade
down to the below Board executive committee level
to ensure alignment across the senior team (i.e. annual
awards of PPOs). Vested PPO awards will be net settled
on exercise monthly using shares previously bought by the
EBT in the market. All discretionary awards granted by the
Company will remain subject to the prevailing 10% in 10
years’ dilution limit which limits the use of new issue shares
to satisfy share awards.
Implementation of Policy in 2023
Executive Directors’ Base salary adjustments from 1 January
2023
The NRC assessed the levels of fixed salaries of the
Executive Directors and considered the following factors:
1.
2.
3.
As described in the Strategic Report, the Group has
continued its successful development and is now
sustainably profitable.
Our approach to setting and reviewing salaries to date
has been prudent and the CEO and the COO have not
had an increase in base salary for four of the past five
years.
Over those same five years, staff have had average
yearly increases in base salary, totalling c.38% over
the five-year period, and were awarded an average
c.7% increase in 2023. In addition, the Group made a
one-off ‘cost-of-living’ payment last year to all those
employees earning less than £100,000.
Strategic Report Directors’ Nomination and Remuneration Report continued
4.
5.
Market analysis has indicated that the fixed salary for
the CEO in particular is significantly below relevant
benchmarks.
Richard Fisher did not receive an increase when
appointed to the Group Board in March 2022 and his
salary is significantly below relevant benchmarks. At
the time of Richard’s appointment, the NRC’s intention
was to review his salary for FY2023 taking into
account his performance and development in the role
and, subject to these being satisfactory, to increase it
to a level more appropriate for a Board-level CFO.
Annual(cid:3)salary(cid:3)increases(cid:3)(cid:882) CEO(cid:3)v(cid:3)workforce
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2018
2019
2020
2021
2022
2023
Total(cid:3)2018(cid:3)(cid:882)(cid:3)23
Average(cid:3)Staff
Alasdair(cid:3)Haynes
(cid:3)
Taking into account the above facts, while the NRC
does not generally approve of increases of base salary
for Executive Directors that are higher than the annual
increase in salary for the average of the workforce, the
NRC has decided to award higher increases for 2023 for
all three Executive Directors. The base salaries of both the
CEO, Alasdair Haynes and the COO, Jonathan Clelland, will
increase by 12% to £280,000 and £263,200 respectively
and the base salary of the CFO, Richard Fisher will increase
by 25% to £250,000 p.a., which brings his base salary to a
competitive level for a Board-level CFO role.
Executive Directors’ 2023 Annual Cash Bonus Plan
In addition, we are proposing to increase the CEO’s annual
bonus potential from 80% of salary at maximum (40%
of salary on-target) to 120% of salary maximum (50% of
salary on-target). The increase in the CEO’s bonus potential
will be accompanied by a significant increase in the stretch
in the targets. The bonus potential for the COO and the
CFO will remain at 80% of salary at maximum (40% of
salary on-target). The financial targets for the CEO will be
set at more stretching levels than for the COO and CFO in
recognition of the increased quantum.
As for the previous year, the majority of the bonus will be
based on stretching, quantitative financial measures: 70%
of the bonus will be based on Group financial objectives
42
Aquis Exchange PLC Report and accounts 2022
(49% Group revenue and 21% Group profit before tax),
20% on Group strategic, non-financial objectives and
10% on individual objectives. Measurable environmental
and social objectives are included within the strategic and
individual objectives scorecard.
In addition, 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.
Further details of the structure of the 2022 Executive
Directors’ Annual Cash Bonus Plan are included in the
Annual Report on Remuneration, page 40.
The increase for the CEO in the fair value of the long-term
incentive and the annual bonus opportunity is intended to
reflect the significant growth in the scale and complexity
of the business since the approval of the current Policy. It
also helps to achieve the NRC’s goal of distinguishing more
between the leadership and performance expectations of
the CEO and the other two Executive Directors.
Long-term incentive awards in 2023
As outlined above, in 2023 we intend to make awards of
premium priced options to the Executive Directors. The
exercise price of the awards will be set at a 25% premium
to the 1 month trading swap share price on grant, will vest
after three years and be subject to a two-year post-vesting
holding period.
The grants will be made on the basis of a Fair Value award
of 75% of salary to the CEO and 65% of salary to the COO
and the CFO. Further details are provided in the Annual
Report on Remuneration.
Overall, following these changes, the balance of the
packages remains broadly the same for the COO and
the CFO but is now weighted slightly more in favour of
variable pay for the CEO:
Remuneration(cid:3)balance(cid:3)(cid:882) on(cid:882)target
31.0%
32.6%
31.0%
31.0%
31.0%
31.0%
19.0%
21.7%
19.0%
19.0%
19.0%
19.0%
50.0%
45.7%
50.0%
50.0%
50.0%
50.0%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current(cid:3)policy
Proposed(cid:3)policy
Current(cid:3)policy
Proposed(cid:3)policy
Current(cid:3)policy
Proposed(cid:3)policy
CEO
COO
CFO
Fixed
On(cid:882)target(cid:3)bonus
Fair(cid:3)value(cid:3)of(cid:3)LTI
(cid:3)
Strategic Report Directors’ Nomination and Remuneration Report continued
Shareholder Engagement
During 1Q2023, Glenn Collinson and I undertook a series
of meetings with major shareholders primarily to discuss
the proposed remuneration changes and to introduce
myself as the new Chair of the NRC. This also offered
the opportunity to cover a variety of other topics. It is the
NRC’s firm commitment to continue a wide engagement
with our shareholders on remuneration issues going
forwards.
Finally, I would like to thank our shareholders and I hope
we can continue to rely on your support at our Annual
General Meeting on 25 April 2023.
Fields Wicker-Miurin
Nomination and Remuneration Committee Chair
29 March 2023
43
Aquis Exchange PLC Report and accounts 2022
Strategic Report Remuneration at a Glance
Our pay principles
Clear, simple and transparent │ Meritocratic, performance related and linked to our KPIs
Aligned with the interests of shareholders and other stakeholders and with our culture
Reward outperformance and do not pay for underperformance
Competitive but not excessive │ Culture of share ownership across the company
Fixed pay
Salary
• CEO – £280,000 (increased by 12%, from 1 Jan 2023)
Implementation of our policy in 2023
Pension
Benefits
Maximum
Annual bonus
• COO – £263,200 (increased by 12%, from 1 Jan 2023)
• CFO – £250,000 (increased by 25%, from 1 Jan 2023)
• 5% of salary (in line with contribution levels for the
workforce)
• Medical and life insurance
• CEO – 120% of salary
• COO/CFO – 80% of salary
On-target
• CEO – 50% of salary
Performance measures
• Revenue (49%)
• COO/CFO – 40% of salary
• Profit before tax (21%)
• Key strategic objectives (30%)
Long-term incentive
Award vehicle
• Premium priced options (exercise price at least 25% higher
Operation
• Recovery and withholding provisions operate
than grant price)
Award level
• CEO – Fair Value of 75% of salary (equivalent to 75% of
salary restricted share award in fair value terms)
• COO/CFO – Fair Value of 65% of salary (equivalent to 65%
of salary restricted for the share award in fair value terms)
Performance measures
• Exercise price set to at least a 25% premium to the share
Operation
• Vests after three years
price at grant
• Two-year additional holding period applies to vested awards
• Recovery and withholding provisions apply
Share ownership
guidelines
In-employment guideline
• 200% of salary
Current shareholding
• CEO 2024% of salary
• COO 885% of salary
• CFO 0% of salary (newly appointed as CFO in 2022)
44
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Remuneration at a Glance continued
2022 remuneration outcomes versus policy maximum
Implementation of our policy in 2022
2022
(cid:3)
(cid:3)
s
£
n
o
i
t
a
r
e
n
u
m
e
R
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Actual
Max(cid:3)potential
Actual
Max(cid:3)potential
Actual
Max(cid:3)potential
A(cid:3)Haynes
R(cid:3)Fisher
J(cid:3)Clelland
Fixed(cid:3)£
Cash(cid:3)Bonus(cid:3)£
LTIP(cid:3)£
2022/23 annual bonus outcome
Aquis Executive Directors 2022 Cash Bonus % of salary
A Haynes
R Fisher
J Clelland
Revenue
%
Profit before tax
%
Non-Financial
%
Actual
Max Pot
Actual
Max Pot
Actual
Max Pot
20.42%
37.33%
20.42%
37.33%
20.42%
37.33%
14.13%
18.67%
14.13%
18.67%
14.13%
18.67%
13.20%
24.00%
14.00%
24.00%
10.20%
24.00%
Total
%
47.75%
80.00%
48.55%
80.00%
44.75%
80.00%
45
Aquis Exchange PLC Report and accounts 2022
Strategic Report Remuneration at a Glance continued
In designing and implementing our Directors’ Remuneration Policy the 2018 UK Corporate Governance Code has been
a key touchstone. The NRC has sought to take full account of its remuneration-related provisions, as we illustrate below
in describing how we have sought to comply with the six factors in provision 40 of the Code:
Governance considerations
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
Our remuneration framework supports financial delivery and the achievement of strategic
objectives, aligning the interests of our executive directors and shareholders. Our policy is
transparent and has been well communicated to our senior executive team. It has been, and
will continue to be, clearly articulated to our shareholders (both on an ongoing basis and
during consultation, if any changes are considered necessary in the future).
Our framework has been designed to be straightforward to communicate and operate.
Our incentives have been structured to align with the Board’s system of risk management and
risk appetite. Inappropriate risk-taking is discouraged and mitigated by, for example:
• A balance of fixed pay to performance-related incentive pay and through multiple
performance measures based on a blend of financial and non-financial targets
• Operating a post-vesting holding period for the LTIP
• Significant in-employment shareholding guidelines and a formal post-employment
shareholding policy
• Robust recovery and withholding provisions.
Our incentive plans have individual caps, with share plans also subject to market standard
dilution limits. The committee has full discretion to alter the payout level or vesting outcome
to ensure payments are aligned with our underlying performance.
Our approach is underpinned by the principle that failure should not be rewarded. There is
a clear link between individual awards, strategic delivery and our long-term performance.
This is demonstrated, for example, by the connection between executive directors’ pay
arrangements and their building and maintaining of meaningful levels of shareholding; through
linking our incentive measures and performance objectives; by our ability to use discretion
to ensure appropriate outcomes; and via the structure of our executive directors’ contracts.
The Committee will review formulaic incentive outcomes and may adjust them in the light
of overall Group performance and taking account of the shareholder and wider stakeholder
experience.
Our policy is aligned to our entrepreneurial and dynamic culture. The Committee strives
to embed a sustainable performance culture at management level that can cascade down
throughout our business. The Board sets the framework of performance objectives against
which we monitor the company’s performance and the Committee links the performance
metrics of our incentive arrangements to those indicators. We are also keen to foster a
culture of share ownership and operate employee share schemes across the workforce.
46
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy
Directors’ Remuneration Policy
The Directors’ Remuneration Policy was last adopted in
2020 following an extensive shareholder consultation
exercise undertaken in 2019. The NRC has reviewed the
Policy and is proposing some amendments intended to
ensure that it remains fit for purpose and reflective of the
significant progress the company has made during the
last three years. The NRC consulted shareholders during
the course of 2022 and in early 2023 and received broad
support for the proposed changes to the Policy.
The overarching objective of the company’s remuneration
arrangements remains to promote the long-term success
of the company. The company does not pay more than is
necessary for this purpose. In fulfilment of this objective,
the Policy is designed to motivate Executive Directors and
other members of Exco appropriately in the context of the
Group’s performance objectives and culture and to ensure
it is aligned with the interests of shareholders and other
key stakeholders. The Policy also takes full account of the
requirements and standards of the regulatory system, and
takes care to avoid encouraging behaviours which may lead
to conflicts of interest and potentially damage to the best
interests of its shareholders and its members/clients.
The key proposed changes to the Policy for 2023 and
onwards are as follows:
• Annual awards of premium priced options will replace
our current practice of making awards of time vesting
restricted shares and the award level will increase (in
fair value terms) for the CEO only.
• The annual bonus potential for the CEO only will
increase from 80% of salary at maximum (40% of
salary on-target) to 120% of salary at maximum (50%
of salary on-target).
The rationale for these changes is set out in detail in the
Annual Statement on pages 41 to 42.
In addition, the Group continues to take a prudent
approach to the positioning of salaries and cash bonus
potential relative to market comparisons. The NRC has
concluded that this remains the right approach as it
continues to invest in the business.
47
Aquis Exchange PLC Report and accounts 2022
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.
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.
NRC reviews the
salaries of Executive
Directors each year
taking due account of
all the factors described
in the ‘Operation’ and
‘Maximum’ columns of
this table.
There is no
maximum. The
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.
48
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Benefits
Recruit and
retain executives
of a high calibre.
Pension
To provide
retirement
benefits in line
with the overall
Group Policy.
Benefits may include:
• Private health cover (individual
and family), permanent health
cover and life assurance cover.
• Executive Directors are also
eligible to participate in any
all-employee HMRC tax
advantaged share schemes,
on the same basis as other
employees.
• 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 NRC.
Executive directors may be
offered the choice of:
• a company contribution into a
defined contribution pension
scheme; or
• a cash allowance in lieu of
pension.
N/A
There is no
maximum as
costs may vary in
accordance with
market conditions.
HMRC tax-
advantaged limits
will apply in
accordance with
share scheme rules.
N/A
The maximum
opportunity
is aligned to
the approach
available to the
wider workforce,
currently:
• up to 5% of
salary into
a defined
contribution
scheme; or
• up to 5% of
salary cash
allowance.
49
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
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.
An overall
maximum of 120%
of salary will apply
to the CEO and
80% to the CFO
and COO.
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.
Performance metrics are
selected annually based
on the Group’s financial
and 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 at least
70% of the bonus with a
minority (up to 30%) on
key strategic objectives.
90% of the objectives
are measurable.
For financial measures,
a sliding scale of targets
is set by the NRC, taking
into account factors
such as the business
outlook for the year.
Nothing is payable for
performance below
a minimum level of
performance.
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.
50
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Maximum grant
at a fair value
level of 125%
of salary in the
form of premium
priced options
over shares for
current Executive
Directors.
Premium priced share
options awards will
normally vest three
years after grant
subject to continued
employment.
The performance
condition that applies
is a premium of at least
25% premium to the
share price at the date
of the grant.
Long Term
Incentives
Incentivises
Executive
Directors and
senior executives
to achieve
successful
execution of
business strategy
over the longer
term.
Aligns the
interests of
the Executives,
senior staff and
shareholders.
Also helps to
provide long-
term retention.
Participation and individual award
levels will be determined annually
at the discretion of the Board
within the Policy.
Awards are normally granted
annually in the form of premium
priced options under the Aquis
Exchange Executive Share Option
Plan (ESOP).
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 Executive Directors are
required to retain their net of tax
vested awards for two years post
vesting.
Awards are subject to recovery
and withholding provisions – see
below for more details.
51
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Shareholding
guidelines
To align the
interests of
management and
shareholders and
promote a long-
term approach.
N/A
N/A
The Policy for all Executive
Directors on shareholding is that
in the medium term 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.
The Board also operates a formal
post-cessation shareholding 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 where applicable subject to
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 share 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 period 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.
52
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Element
Purpose
Operation
Maximum
Performance
Non-
Executive
Chair
and Non-
Executive
Directors’
fees
To attract and
retain a high-
quality Chair
and experienced
Non-Executive
Directors.
Neither the Non-
Executive Chair nor the
Non-Executive Directors
are eligible for any
performance related
remuneration.
There is no
maximum. Any
increase to fees,
however, 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.
The Non-Executive Chair receives
a single fee covering all his 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 and their committees.
The level of fees of the Non-
Executive Directors reflects
the time commitment and
responsibility of their respective
roles.
In exceptional circumstances,
additional fees may be payable
to reflect a substantial increase in
time commitment of the Non-
Executive Chair or Directors.
53
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Consideration of employment conditions elsewhere in
the Group
Whilst the NRC does not consult directly with employees
on the Directors’ Remuneration Policy, the NRC 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 incentive plan Discretions
The Group will operate the Annual Cash Bonus Plan and
Aquis Exchange Executive Share Option Plan according
to their respective rules and in accordance with the AQSE
Rules, AIM Rules and HMRC rules, where relevant. 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 and form of grant of award and/or payment
(including what performance conditions or underpins
may apply);
• The size of an award and/or a payment (including
application of holding periods);
• Discretion relating to the measurement of
performance in the event of a change of control or
other corporate events;
• Determination of a good leaver (in addition to any
specified categories) for incentive plan purposes based
on the rules of each incentive plan and the appropriate
treatment chosen including timing of when the award
may vest and whether time pro-rating will apply;
• Adjustments required in certain circumstances (e.g.
rights issues, corporate restructuring, on a change of
control and special dividends);
• 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; and
• Application of recovery and withholding provisions,
including treatment of awards pending disciplinary
proceedings (see further below).
54
Aquis Exchange PLC Report and accounts 2022
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.
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’ service contracts and letters of appointment
are available for inspection on request from the Company
Secretary.
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. An Executive Share Option 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 AQSE
Rules and / or 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.
Strategic Report Directors’ Remuneration Policy continued
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.
(a) material misstatement of financial results; or
(b)
miscalculation of bonus as a result of an error, or
inaccurate or misleading information or assumptions;
or
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.
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.
The circumstances which may give rise to the application
of Clawback are, for any period from Financial Year 2020
onwards:
(c) serious misconduct that warrants or could have
warranted summary dismissal; or
(d) the Group becomes insolvent or is put into
administration; or
(e) 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
(f) a serious failure of risk management within the Group.
Change of Control provisions for Executive Directors
in Aquis Exchange Executive Share Option Plan
In the event of a genuine change of control, unvested
share awards shall normally vest on the date of such event.
The Board will usually apply a pro rata reduction to vested
awards based on the portion of the vesting period that has
elapsed at the time of the change of control.
Good Leaver (including Retirement) provisions for
Executive Directors in Aquis Exchange Executive Share
Option Plan
If prior to vesting of any shares, an individual ceases to be
a director or employee of the Group by reason of death,
injury or disability, retirement, the participant’s employing
company or employing part of a business being sold out
of the Group, or for any other good leaver reason that
the Board determines, then his/her awards shall vest on
leaving, but the Board will apply a pro rata reduction to
vested awards based on the portion of the vesting period
that has elapsed.
Withholding (Malus) and Recovery (Clawback)
provisions for Executive Directors in Aquis Exchange
Executive Share Option 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. The Board may apply Malus or Clawback if
it forms the view that one or more of the circumstances
envisaged in (a) to (f) of the provisions established for the
55
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Annual Cash Bonus (listed above) applies; and it is, in the
Board’s opinion, appropriate.
Annual Report on Remuneration
The information in this section of the Directors’
Remuneration Report includes details, firstly, of how we
intend to operate the new Remuneration Policy in 2023
and, secondly, details of the pay outcomes in respect of the
2022 financial year.
Implementation of Remuneration Policy in 2023
Executive Directors’ base salaries from 1 January 2023
Alasdair Haynes’ base salary will increase by 12% to
£280,000 p.a., Richard Fisher’s base salary will increase by
25% to £250,000 and Jonathan Clelland’s base salary will
increase by 12% to £263,200 p.a. This is in the context of
increases provided to the general workforce of on average
around c 7% for 2023. The rationale for these increases is
set out in the Annual Statement on pages 39 to 42.
The salary increase progression over the period since
January 2020 is set out below:
Executive Director
1 Jan 2023
1 Jan 2022
1 Jan 2021
1 Jan 2020
A. Haynes
J. Clelland
R. Fisher1
£280,000 £250,000 £250,000 £250,000
£263,200 £235,000 £235,000 £235,000
£250,000 £200,000
–
–
1 Richard Fisher joined the Board in March 2022 and his
salary on appointment as CFO and Executive Director was
£200,000.
Executive Directors’ Benefits and Pension
The Executive Directors’ remuneration packages
include private health cover (individual and family),
permanent health cover and life assurance cover. Pension
contributions (whether through participation in the Group
Pension Plan or by way of a cash equivalent sum) are
set at 5% of salary (in line with the contribution level
made available to the wider workforce). Richard Fisher
has elected to participate in the Group Pension Plan and
Alasdair Haynes and Jonathan Clelland have elected not to
participate and receive cash equivalent supplements.
Executive Directors’ 2023 Annual Cash Bonus Plan
For Alasdair Haynes the maximum bonus opportunity for
2023 will be capped at 120% of base salary. For on-target
performance, bonus payout will be 50% of base salary. At
threshold performance, below which no bonus will be paid,
the bonus payout will be 0% of base salary.
56
Aquis Exchange PLC Report and accounts 2022
For Richard Fisher and Jonathan Clelland, the maximum
bonus opportunity for 2023 will be capped at 80% of base
salary. 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 2023, for the Executive Directors have been
amended in comparison to 2022, with a slightly increased
weighting toward revenue and will be Group revenue
(49.0%), Group Profit Before Tax (21.0%) and strategic,
non-financial objectives (30%). 90% of the performance
objectives are measurable.
The Group Financial performance objectives 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
is no formal underpin for the strategic, non-financial
objectives but the NRC and Board will retain discretion to
reduce (including to nil) cash bonuses based on strategic,
non-financial objectives if they determine that the overall
circumstances cannot justify it.
Executive Directors’ long-term incentives
In 2023 awards of premium priced options will be made
to the Executive Directors at a Fair Value level of 75% of
salary to the CEO and 65% to both the COO and CFO.
The options will vest after three years subject to continued
employment only and will have an exercise price set at (at
least) 25% above the 1 month trading swap share price
at the date of grant. Vested awards will be subject to a
two-year holding period and awards will be subject to
recovery and withholding provisions.
Single figure of total remuneration for Directors
The following tables present all elements of remuneration
earned by the Directors in 2022 (and 2021).
Long term incentive benefits in 2022 for the Executive
Directors represent the Fair Value of the restricted share
awards. The 2021 comparisons 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.
Strategic Report Directors’ Remuneration Policy continued
2022 Audited
Director
Executive Directors
Alasdair Haynes
Richard Fisher(1)
Jonathan Clelland
Non-Executive Directors
Glenn Collinson(2)
Richard Bennett
Mark Spanbroek
Mark Goodliffe
Deirdre Somers
David Vaillant
Fields Wicker-Miurin(3)
Ruth Wandhöfer(3)
Salary / Fees
Taxable
benefits(5)
Performance
Bonus Actual(4)
Long-Term
Incentives(6)
Fixed
Total
250,000
200,000
235,000
19,476
21,878
20,540
269,476
221,878
255,540
119,386
97,109
105,173
162,500
130,000
152,750
551,362
448,978
513,463
75,000
55,000
45,000
60,000
45,000
60,000
45,900
42,100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,000
55,000
45,000
60,000
45,000
60,000
45,900
42,100
(1) Richard Fisher was appointed to the Board in March 2022.
(2) Glenn Collinson was appointed Chairman on 1st January 2022.
(3) Fields Wicker-Miurin and Ruth Wandhöfer joined the Board in March 2022.
(4) The detailed calculation of the performance bonus is described in the section on 2022 annual cash bonus below.
(5) Taxable benefits comprise private health care and compensation (in lieu) of pension contribution.
(6) The long term incentive value includes the value of the restricted share awards made to Alasdair Haynes (£162,500), Richard Fisher
(£130,000) and Jonathan Clelland (£152,750). For the purposes of this table the fair value of the restricted share awards on date of
issue has been included.
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
Taxable
benefits(2)
Fixed
Performance
Bonus Actual
Long-Term
Incentives(3)
Total
250,000
235,000
17,301
18,412
267,301
253,412
143,777
133,300
264,035
264,035
675,112
650,747
55,000
40,000
35,000
45,000
33,300
45,000
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55,000
40,000
35,000
45,000
33,300
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) Taxable benefits comprise private health care and compensation (in lieu) of pension contribution.
(3) 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.
57
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Directors’ Remuneration Policy continued
Executive Directors’ 2022 annual cash bonus
In 2022, the Group Financial performance objectives for Alasdair Haynes, Richard Fisher and Jonathan Clelland were the
same. The strategic, non-financial, individual objectives for Alasdair Haynes, Richard Fisher and Jonathan Clelland reflected
their specific individual responsibilities for the Group. 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%
£17.89m
£19.88m
£21.86m
£20.06m
20.42%
18.66%
£3.28m
£4.10m
£4.92m
£4.53m
14.13%
Strategic, Non-financial Objectives
(KPIs)
24% See the table
below
12%
24%
13.20%
13.20%
Total
R Fisher
80%
Maximum Bonus
Opportunity (%
of salary)
Threshold
Target
Max
Act Res
47.75%
Bonus outcome
(% of salary)
Group Financial Objective (KPI)
1: Revenue (net of ECL)
Group Financial Objective (KPI)
2: Profit Before Tax
37.34%
£17.89m
£19.88m
£21.86m
£20.0m
20.42%
18.66%
£3.28m
£4.10m
£4.92m
£4.53m
14.13%
Strategic, Non-financial Objectives
(KPIs)
24% See the table
below
12%
24%
14.00%
14.00%
Total
80%
Maximum Bonus
Opportunity (%
J Clelland
of salary)
Threshold
Target
Max
Act Res
48.55%
Bonus outcome
(% of salary)
Group Financial Objective (KPI)
1: Revenue (net of ECL)
Group Financial Objective (KPI)
2: Profit Before Tax
37.34%
£17.89m
£19.88m
£21.86m
£20.06m
20.42%
18.66%
£3.28m
£4.10m
£4.92m
£4.53m
14.13%
Strategic, Non-financial Objectives
(KPIs)
24% See the table
below
Total
80%
12%
24%
10.20%
10.20%
44.75%
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
58
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Directors’ Remuneration Policy continued
A Haynes
Strategic, Non-financial Objectives
Strategic plan
Pan-European Secondary Market %
Leadership
Capital Markets Day
Brand
R Fisher
Strategic, Non-financial Objectives
Strategic plan
Capital Markets Day
Financial accounts preparation
Management accounts preparation
Finance management
Risk management
J Clelland
Strategic, Non-financial Objectives
Strategic plan
Pan-European Secondary Market %
Succession planning
Capital Markets Day
Manage Aquis Exchange Europe SAS as CEO and make
certain that there are no business or regulatory issues.
(either Not met target, Partially met target, Met target, or Exceeded target)
Performance outcome as a % of target
100%
0%
100%
200%
150%
(either Not met target, Partially met target, Met target, or Exceeded target)
Performance outcome
100%
200%
100%
100%
100%
100%
(either Not met target, Partially met target, Met target, or Exceeded target)
Performance outcome
100%
0%
100%
200%
75%
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.
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 performance
against objectives was derived from independent
sources and internal management reports. No significant
assumptions were made in measuring the performance
against objectives. The calculation methods for all the
financial and non- financial objectives were consistent with
prior years and there were no changes to the underlying
accounting policies.
Executive Directors’ vesting during 2022 of share-based
awards under long term incentive plans
Restricted shares were granted in June 2020 and the
performance underpins attached were measured over the
period 1 January 2020 to 31 December 2022. The NRC
assessed performance against each of the underpins and
determined that all of the thresholds had been comfortably
met and that the award could therefore vest in full. The
59
Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
award is due to vest in June 2023 and will be subject to a
two-year post-vesting holding period.
In addition, awards granted in April 2020 under the legacy
Aquis EMI option scheme vested during 2022 and are
exercisable at a price of £3.47 per share. These awards
were not subject to any performance conditions.
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
Executive Directors’ Awards in 2022 under the Aquis
Exchange Omnibus Share Plan
On 29th April 2022, Alasdair Haynes was granted 33,163,
and Jonathan Clelland 31,173 restricted share awards
under the Aquis Exchange Omnibus share Plan. These
awards are valued at face value from the share price of
£4.90 at 29th April 2022 and therefore represent 65%
base salary. On 30 June 2022 Richard Fisher was granted
18,367 restricted share awards valued at face value from
the share price of £4.90 at 29th April 2022. Following his
appointment as an Executive Director, on 30 June 2022
Richard Fisher was granted an additional 10,449 restricted
share awards at face value from the share price of £3.75,
bringing the total for the year to 65% base salary.
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 2021
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 NRC and Board will consider
overall performance while recognising that fast growing
financial and technology companies may require capital
expenditure and investment.
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Aquis Exchange PLC Report and accounts 2022
Strategic Report Directors’ Remuneration Policy continued
Outstanding Share Plan awards
Details of all outstanding awards under all Share Plans for the Executive Directors are set out below.
Share (or
EMI Option
Exercise)
Price at
grant
Unvested at
1 January
2022
Awarded
during
the year
Lapsed
during
the year
£3.47
53,333
Director
Type of award
Award date
Alasdair Haynes
Aquis EMI
Option Plan
2018
19th November
2019
Richard Fisher
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
15th June 2020
£3.55
45,775
30th April 2021
£6.85
23,723
29th April 2022
£4.90
–
33,163
30th April 2021
£6.85
6,204
29th April 2022
£4.90
30thJune 2022
£3.75
–
–
Jonathan Clelland
Aquis EMI
Option Plan
2018
19th November
2019
£3.47
53,333
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
Aquis Omnibus
Share Plan 2020
15th June 2020
£3.55
43,028
30th April 2021
£6.85
22,299
29th April 2022
£4.90
–
31,173
–
–
–
–
18,367
10,449
–
–
–
Options
vested
during
the
year
Unvested at
31 December
2022
26,666
26,667
Earliest date
shares from
most recent
award could
be acquired
Latest date
shares from
most recent
award could
be acquired
16th April
2022
15th April
2030
–
–
–
–
–
–
45,775
23,723
33,163
6,204
18,367
10,449
26,666
26,667
–
–
–
43,028
22,299
31,173
15th June
2023
30th April
2024
29th April
2025
30th April
2024
29th April
2025
30th June
2025
16th April
2021
15th June
2023
30th April
2024
29th April
2025
14th June
2030
29th April
2031
28th April
2032
29th April
2031
29th April
2032
29thJune
2032
15th April
2030
14th June
2030
29th April
2031
28th April
2032
–
–
–
–
–
–
–
–
–
–
–
(1) 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.
(2) 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.
(3) 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.
Directors’ shareholdings and share interests
The following table summarises the shareholdings and share interests of the Directors at 31 December 2022.
Director
Executive
Alasdair Haynes
Richard Fisher
Jonathan Clelland
Shares
Options vested but
not exercised
Options unvested
SIP
Total
1,491,551
–
547,401
174,152
–
53,333
26,667
–
26,667
9,015
3,522
9,027
1,541,385
3,522
636,428
The shareholdings and share interests above, do not take account of any allotted under the Aquis Exchange Omnibus
Share plan granted during 2020 - 2022 which will vest with effect from 2023 onwards.
61
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Directors’ Remuneration Policy continued
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 further payment obligations once the
contributions have been paid, nor any 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 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 Group income in respect of
defined contribution plans in 2022 are £159,366 (2021:
£183,940).
All Employee Share Plans
The Group operates an HMRC tax-advantaged Share
Investment Plan (SIP).
All employees are eligible to participate in the SIP scheme
and during 2022, 34 employees including the Executive
Directors subscribed to the scheme. As at, 31 December
2022, 186,155 shares in the Company were held in the
SIP.
Directors are not eligible for pensions and do not
participate in the Group’s cash bonus or share schemes.
By invitation of the NRC, meetings are attended by
the Company Secretary (who acts as Secretary to the
Committee), the Head of Human Resources and the
Executive Directors, who are consulted on matters
discussed by the Committee, unless those matters relate
to their own remuneration. Advice or information is also
sought from other employees where the NRC feels that
such additional contributions will assist the decision-making
process.
• The Committee is authorised to take such internal
and external advice as it considers appropriate in
connection with carrying out its duties, including
the appointment of its own external remuneration
advisers. During the year, the committee was assisted
in its work by FIT Remuneration Consultants LLP. FIT’s
fees for advice provided to the NRC during 2022 were
£56,427 covering general advice on remuneration
on matters including the benchmarking of Executive
Directors’ salaries and the establishment of a new
share option scheme to replace the Aquis Omnibus
Share Plan. FIT also provides advice on Non-Executive
Directors’ fees but other than this does not provide
any other services to the Group and the NRC is
satisfied that it provides independent and objective
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.
In 2022, the Committee:
Other information about the NRC
The membership of the NRC during 2022 was as follows:
•
• Richard Bennett, Chairman until September
• Fields Wicker-Miurin, member from March and
Chairman from September
• Glenn Collinson
• Deirdre Somers, from December
The NRC 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
62
Aquis Exchange PLC Report and accounts 2022
Identified and selected candidates for new
appointments to the Board and the boards of its
subsidiaries. The Board composition is described in the
Directors’ Report, page 27;
• Reviewed the skill sets, the independence and time
availability of the Non-Executive Directors across
the Group. The NRC believes that the current
compositions of the Boards and the Committees of
both the Group and its subsidiaries are appropriate to
meet the Group’s business, regulatory and governance
objectives;
• Recommended that all Non-Executive Directors be
nominated for re-election at the 2023 AGM, with the
Strategic Report 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. None
of the Executive Directors currently holds an appointment
of this nature.
2022 AGM Remuneration Resolution Voting Outcome
For
Against
Withheld
Directors’
Remuneration
Report
9,351,612
100.0%
–
0.0%
–
0.0%
On behalf of the Board and the Nomination &
Remuneration Committee.
Fields Wicker-Miurin
Chair, Nomination & Remuneration Committee
29 March 2023
Directors’ Remuneration Policy continued
exception of Mark Spanbroek who will be stepping
down from the Board after 10 years of outstanding
service to Aquis;
• Supported the introduction of a Board mentoring
programme whereby Non-Executive Directors mentor
Aquis employees. The take-up was excellent and board
directors report that they are also learning a lot from
their ‘mentees’;
• Reviewed the succession plans for the Board and
senior executives to ensure they considered changing
skill requirements as the Group develops;
• Monitored key diversity and inclusion metrics
throughout the Group;
• Evaluated the fixed salaries of the two Executive
Directors in 2021 and proposed no changes to their
salaries in 2022;
• Evaluated the performance of the two Executive
Directors in 2021 and proposed remuneration
outcomes for FY2021 in the forms of annual bonus
and LTIPs;
• Set the performance objectives of the three Executive
Directors in 2022;
• Confirmed the terms and recommended to the Board
the grant of Restricted Share Awards to the Executive
Directors and other Exco members in April 2022 under
the Aquis Exchange Omnibus Share Plan;
• Reviewed and updated the Group’s Remuneration
Policy to make sure it remains fit for purpose for this
next phase in the Group’s development. The current
Policy was last reviewed and updated in 2020.
In addition to the above, with the sponsorship of the NRC,
the Board conducted an evaluation of its performance,
including self-assessments by each Board member.
Throughout the year, the NRC has continued to work to
ensure policy and practices remain consistent with the
relevant provisions of the 2018 UK Corporate Governance
Code.
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.
63
Aquis Exchange PLC Report and accounts 2022
Strategic Report
Financial Statements
64
Aquis Exchange PLC Report and accounts 2022
Financial Statements
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 2022 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 2022 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 various global and domestic events
including, but not limited to, the Russia-Ukraine conflict, the widespread unrest in financial market as well as the inflation levels and
increasing interest rates;
• 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
from when the financial statements are authorised for issue through to 31 March 2024.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
In relation to Aquis Exchange Plc’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the director’s considered it
appropriate to adopt the going concern basis of accounting.
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Aquis Exchange PLC Report and accounts 2022
Financial Statements
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
Key Audit Matter
How our scope addressed this matter
Completeness, cut-off and accuracy of revenue recognition
consistently with IFRS 15 (note 2, 5 and 11) (2022: £5.0m,
2021: £4.4m)
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 judgement
required in determining the performance obligations and the
stand-alone price for each performance obligation.
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.
We evaluated the appropriateness of the revenue recognition policy
in accordance with IFRS 15 ‘Revenue from Contracts with Customers’.
We benchmarked the accounting policies with industry peers to ensure
they are in line with industry standards.
We confirmed our understanding of the processes and controls
relevant to the material revenue streams of the Group. We evaluated
the design and implementation of the controls over revenue. We
adopted a substantive approach to the audit of the licence fee revenue
and did not test the operating effectiveness of the controls identified.
As part of our substantive procedures:
– We obtained all contracts to identify the relevant performance
obligations, whether these obligations arose at a point in time
or over a period of time; and the relevant period to which they
would continue to apply.
– We verified the invoices raised and cash collected as applicable.
– We challenged management’s assessment of the stand-alone
selling prices and verified that the assumptions applied were
consistent for similar contracts.
The risk has remained stable over the period.
– We performed a review of all contracts modified or extended
during the period and challenged management’s conclusions
on whether these should be accounted as separate contracts,
modifications to the existing contracts or a combination of both,
based on the specific facts of each contract.
Disclosures
We considered the adequacy of the group’s disclosures to ensure that
they are appropriate and in line with the requirements of applicable
financial reporting standards.
Our observations
We are satisfied that revenue related to subscription licence fees on
technology contracts is reasonable and recorded in accordance with
IFRS 15 ‘Revenue from Contracts with Customers’.
66
Aquis Exchange PLC Report and accounts 2022
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 2, 5 and 12) (2022:
£1.4m, 2021: £1.5m)
The group applies the simplified approach to measure the
expected credit loss (ECL).
A significant level of judgement is required in determining
the ECL due to limited default history and lack of comparable
data to estimate the probability of default (PD).
Licensing customers primarily consist of start-ups with
limited external credit scores. Customers are spread across
a wide geographical area including UK, EU, Asia and Africa.
This limits the availability of comparable data and requires
significant management judgment to assess the estimate of
probability of default (PD) and the loss given default (LGD)
used in the ECL estimate.
We have identified a significant risk due to risk of fraud
and error with respect to the judgements applied in the
estimation of the LGD and PD parameters.
The risk has remained stable over the period.
We evaluated the appropriateness of the ECL policy and methodology
for compliance with IFRS 9 ‘Financial Instruments’
We confirmed our understanding of the processes, controls,
governance and oversight relevant to the ECL assessment. We
evaluated the design and implementation of the key controls identified.
We adopted a substantive approach and did not test the operating
effectiveness of the controls.
As part of our substantive procedures:
– We challenged management’s assessment of the PD and LGD for
all counterparties for the licence fee contracts, taking into account
information and events that took place after the period end to
assess whether they provided information about credit conditions
that existed at the reporting date.
– 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 assessed and challenged the amount of ECL held against
counterparties, including ECLs against trade receivables and
counterparties where the ECL has historical been immaterial.
– We evaluated the post period settlement of receivables and
amounts outstanding at period end to assess if they were
indicative of a deterioration of the credit profiles for the
counterparties during the period under review that had not been
identified and accounted for by management.
– We assessed if the group had material exposures (direct or
indirect) to banks in distress and validated that management had
appropriately considered and accounted for any such exposures.
We considered the adequacy of the group’s disclosure to ensure that
they are appropriate and in line with the requirements of applicable
financial reporting standards.
Our observations
We concluded that the approach taken by the group and company in
respect to ECL is overall consistent with the requirements of IFRS 9.
We consider management’s estimate of the ECL reasonable.
67
Aquis Exchange PLC Report and accounts 2022
Independent Auditor’s Report to the Members of Aquis Exchange PLC continuedFinancial Statements 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
£200,000
How we determined it
1% of Total Revenue (2021: 1% of total revenue)
Rationale for benchmark applied
The group is profit-oriented, but, is still in its investment and development phase.
Performance materiality
Reporting threshold
Parent company materiality
Overall materiality
How we determined it
Shareholders and investors are the primary users of the group’s financial statements.
They tend to focus mostly on profit and revenue evolution. Whilst we have considered
profit before tax as a potential benchmark, it remains volatile. Consequently, in our
view, revenue levels provide the best indicator of the level of economic activity during
the period and is considered the most appropriate benchmark
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 £100,000, which represents 50% (2021: 60%) of
overall materiality, reflecting the history of misstatements, our consideration of the
audit risks and our assessment of the control environment.
We agreed with the directors that we would report to them misstatements identified
during our audit above £6,000 (2021: £5,100) as well as misstatements below that
amount that, in our view, warranted reporting for qualitative reasons.
£100,000
1% of Total Revenue
Rationale for benchmark applied
The Company is profit-oriented, but is still in its investment and development phase.
Performance materiality
Reporting threshold
Shareholders and investors are the primary users of the group’s financial statements.
They tend to focus mostly on profit and revenue evolution. Whilst we have considered
profit before tax as a potential benchmark, it remains volatile. Consequently, in our
view, revenue levels provide the best indicator of the level of economic activity during
the period and is considered the most appropriate benchmark.
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 £50,000, which represents 50% (2021: 60%) of
overall materiality, reflecting the history of misstatements, our consideration of the
audit risks and our assessment of the control.
We agreed with the directors that we would report to them misstatements identified
during our audit above £3,000 (2021: £3,000) as well as misstatements below that
amount that, in our view, warranted reporting for qualitative reasons.
68
Aquis Exchange PLC Report and accounts 2022
Independent Auditor’s Report to the Members of Aquis Exchange PLC continuedFinancial Statements 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.
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.
69
Aquis Exchange PLC Report and accounts 2022
Independent Auditor’s Report to the Members of Aquis Exchange PLC continuedFinancial Statements Corporate governance statement
We have reviewed the directors’ statement in relation to going concern, longer term viability and that part of the Corporate Governance
Statement relating to the Group’s and the Parent Company’s voluntary compliance with the provisions of the UK Corporate Governance
Code.
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 33;
• 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 26;
• Directors' statement on fair, balanced and understandable, set out on page 33;
•
•
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 18;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems, set out
on page 32; and;
•
The section describing the work of the audit committee, set out on page 34.
Responsibilities of Directors
As explained more fully in the Statement of directors’ responsibilities set out on page 33, 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.
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;
70
Aquis Exchange PLC Report and accounts 2022
Independent Auditor’s Report to the Members of Aquis Exchange PLC continuedFinancial Statements • 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;
•
Remaining skeptical to potential management’s bias through judgements and assumptions in significant accounting estimates; 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.
Pauline Pélissier (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
29 March 2023
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Aquis Exchange PLC Report and accounts 2022
Independent Auditor’s Report to the Members of Aquis Exchange PLC continuedFinancial Statements
Consolidated and Company Statements of Comprehensive Income
For the year ended 31 December 2022
Profit and loss
Revenue
Impairment credit / (charge) on contract assets
Impairment (charge) on trade and other receivables
Operating expenses
Earnings before interest, taxation, depreciation
and amortisation
Depreciation and amortisation
Net finance expense
Finance income
Profit before taxation
Income tax credit
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss:
Foreign exchange differences on translation of
foreign operations
Other comprehensive income for the year
Group
2022
£
2021
Restated
£
Company
2022
£
2021
Restated
£
Notes
11
19,929,527
12
133,484
12
(12,784)
13 (14,239,918)
17,182,755
(972,161)
(28,499)
(11,560,000)
10,342,525
133,484
–
(5,616,089)
9,243,427
(972,161)
–
(4,038,025)
5,810,309
4,622,095
4,859,920
4,233,241
13
13, 25
13
(1,259,492)
(53,130)
28,722
(1,032,240)
(26,175)
444
(1,187,569)
(36,948)
2,416
(1,026,980)
(26,175)
444
15, 16
4,526,409
157,203
3,564,124
1,088,543
3,637,819
163,925
3,180,530
1,088,543
4,683,612
4,652,667
3,801,744
4,269,073
181,370
(231,412)
181,370
(231,412)
–
–
–
–
Total comprehensive income for the year
4,864,982
4,421,255
3,801,744
4,269,073
Earnings per share (pence)
Basic
Ordinary shares
Diluted
Ordinary shares
17
17
17
16
17
16
14
13
16
16
72
Aquis Exchange PLC Report and accounts 2022
Financial Statements
Consolidated Statement of Financial Position
As at 31 December 2022
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant, and equipment
Deferred tax asset
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Net current assets
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
Notes
2022
£
2021
Restated
£
2020
Restated
£
18
18
19
15
22
83,481
1,032,224
4,155,215
1,593,931
5,352,110
83,481
753,714
4,146,333
1,292,260
2,744,656
83,481
916,256
1,578,554
203,717
839,630
12,216,961
9,020,444
3,621,638
22
23
4,135,426
14,170,965
3,768,946
14,046,399
2,890,477
12,268,418
30,523,352
26,835,789
18,780,533
24
4,268,735
3,783,585
2,810,710
14,037,656
14,031,760
12,348,185
25
2,874,877
3,422,744
2,874,877
3,422,744
995,081
995,081
7,143,612
7,206,329
3,805,791
23,379,740
19,629,460
14,974,742
26
30
31
27
2,750,945
11,785,045
1,813,119
(3,350,325)
10,316,831
64,125
2,750,545
11,771,462
1,118,314
(1,526,835)
5,633,219
(117,245)
2,716,970
10,892,135
760,543
(489,625)
980,552
114,167
23,379,740
19,629,460
14,974,742
Alasdair Haynes
CEO
Richard Fisher
CFO
73
Aquis Exchange PLC Report and accounts 2022
Financial Statements
Company Statement of Financial Position
As at 31 December 2022
Assets
Non-current assets
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
Liabilities
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Lease liabilities
Total liabilities
Net total assets
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total equity
Alasdair Haynes
CEO
Richard Fisher
CFO
74
Aquis Exchange PLC Report and accounts 2022
Notes
18
19
20
21
15
22
2022
£
2021
Restated
£
1,032,224
3,628,081
6,884,202
3,350,325
1,456,184
5,329,674
753,714
3,563,758
6,884,203
1,856,964
1,292,260
2,731,174
21,680,690
17,082,073
22
23
10,571,256
5,595,827
4,372,553
7,094,964
37,847,773
28,549,590
24
8,992,201
3,407,826
7,174,882
8,059,691
25
2,449,312
2,915,920
2,449,312
2,915,920
11,441,513
6,323,746
26,406,260
22,225,844
26
30
31
2,750,945
11,785,045
1,813,119
10,057,151
2,750,545
11,771,462
1,448,430
6,255,407
26,406,260
22,225,844
Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Group
Balance at 1 January 2021 as
previously stated
Prior year adjustment
Balance at 1 January 2021 as
restated
Profit for the year (restated)
Foreign exchange differences on
translation of foreign operations
(restated)
Notes
Share
Capital
Share
Premium
Share Based
Payment
Reserve
Retained
Earnings
Treasury
Shares
Foreign
Currency
Translation
Reserve
Total
2,716,970 10,892,135
760,543
1,127,401
(489,625)
908 15,008,332
–
–
–
(146,849)
–
113,259
(33,590)
2,716,970 10,892,135
760,543
980,552
(489,625)
114,167 14,974,742
Issue of new shares
26,30
33,575
879,327
Movement in share based payment
reserve
Movement in Treasury Shares
31
27
–
–
–
–
–
–
–
4,652,667
–
–
4,652,667
–
–
–
357,771
–
–
–
–
(231,412)
(231,412)
–
–
–
–
912,902
357,771
–
–
–
(1,037,210)
–
(1,037,210)
Balance at 31 December 2021
2,750,545 11,771,462
1,118,314
5,633,219
(1,526,835)
(117,245) 19,629,460
Balance at 1 January 2022
2,750,545 11,771,462
1,118,314
5,633,219 (1,526,835)
(117,245) 19,629,460
Profit for the year
Foreign exchange differences on
translation of foreign operations
–
–
–
–
Issue of new shares
26,30
400
13,583
–
–
–
Movement in share based payment
reserve
Movement in Treasury Shares
31
27
–
–
–
694,805
4,683,612
–
–
–
–
–
–
–
–
4,683,612
181,370
181,370
–
–
13,983
694,805
–
–
–
(1,823,490)
–
(1,823,490)
Balance at 31 December 2022
2,750,945 11,785,045
1,813,119 10,316,831
(3,350,325)
64,125 23,379,740
Company Statement of Changes in Equity
For the year ended 31 December 2022
Company
Balance at 1 January 2021
Profit for the year (restated)
Issue of new shares
Movement in share based payment
reserve
Balance at 31 December 2021
as restated
Notes
Share
Capital
Share
Premium
Share Based
Payment Reserve
Retained
Earnings
Total
2,716,970
10,892,135
748,525
1,986,334
16,343,964
–
–
26,30
33,575
879,327
–
–
31
–
–
699,905
4,269,073
4,269,073
–
–
912,902
699,905
2,750,545
11,771,462
1,448,430
6,255,407
22,225,844
Balance at 1 January 2022
2,750,545
11,771,462
1,448,430
6,255,407
22,225,844
Profit for the year
Issue of new shares
Movement in share based payment
reserve
26,30
31
–
400
–
–
13,583
–
–
–
364,689
3,801,744
3,801,744
–
–
13,983
364,689
Balance at 31 December 2022
2,750,945
11,785,045
1,813,119
10,057,151
26,406,260
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Aquis Exchange PLC Report and accounts 2022
Financial Statements
Consolidated and Company Statements of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Cash generated/ (absorbed) by operations
Net finance expense on lease liabilities
Notes
28
Group
2022
£
2021
£
Company
2022
£
2021
£
3,961,654
53,130
3,157,518
(26,175)
2,164,898
36,948
2,748,347
(26,175)
Net cash outflow from operating activities
4,014,784
3,131,343
2,201,846
2,722,172
Investing activities
Recognition of intangible assets
Purchase of property, plant and equipment
Capital injection into AQSE
Interest received
Loan to Investment in Trust
18
19
20
13
(777,465)
(769,419)
–
34,653
–
(350,893)
(319,520)
–
444
–
(777,465)
(752,938)
–
2,416
(1,955,720)
(350,893)
(314,385)
(400,000)
444
(1,100,000)
Net cash used in investing activities
(1,512,231)
(669,969)
(3,483,707)
(2,164,834)
Financing activities
Issue of new shares
Principal portion of lease liability
Loan to employee benefit trusts
13,983
(300,994)
(1,955,720)
912,902
(573,194)
(1,100,000)
13,983
(231,259)
–
912,902
(554,842)
–
6,25
27
Net cash used in financing activities
(2,242,731)
(760,292)
(217,276)
(358,060)
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
259,822
1,701,082
(1,499,137)
915,398
23
14,046,399
12,268,418
7,094,964
6,179,566
(135,256)
76,899
–
–
23 14,170,965 14,046,399
5,595,827
7,094,964
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Aquis Exchange PLC Report and accounts 2022
Financial Statements
Notes to Financial Statements
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Aquis Exchange PLC Report and accounts 2022
Notes to the 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:
Data revenues earned are now apportioned between Aquis Exchange PLC where the underlying trade activity has arisen
in the UK and within Aquis Exchange SAS where that revenue has been derived within the EU27 countries. 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 63 Queen Victoria Street, London, EC4N 4UA. The Company Number is 07909192.
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 requirements.
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 2022 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 2023, with profits forecasted for future years.
The Russia-Ukraine 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.
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 from the date of approval of these financial statements to 31 March
2024.
Consolidation
In preparing these financial statements, the group has applied the consolidation principles in IFRS 10, Consolidated
Financial Statements. This requires the Group to consolidate subsidiary entities it controls. Control is determined based on
the ability to direct the activities of the entity that significantly affect its returns.
The Group assesses control on a continuing basis and includes entities it controls as of the end of the reporting period.
The financial statements of the consolidated entities are prepared using consistent accounting policies and are presented
as if they were a single economic entity. Intercompany transactions, balances, and unrealized gains and losses on
transactions between consolidated entities are eliminated in full.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements
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 Group 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,RSP or PPO, 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. 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 over time when the services are rendered.
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.
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, and is recognised over time. 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,
these are all recognised over time under IFRS 15 except further issue fees which are recognised at a point in time.
Application and admission fees are charged upfront to prospective companies admitted to AQSE markets. These are
recognised monthly over the average expected life of company admission periods (see further details about this estimate
in the following section).
Annual fees are paid upfront annually by companies with securities listed on AQSE and are recognised over the year.
Further issue fees are incurred by existing issuers who have already contributed an application and admission fee, and are
recognised at a point in time on the date the new security is available for trade on AQSE.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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 £6k decrease /£7k 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 5.
Business Combination
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at fair value. Acquisition-related costs are expensed as
incurred and recognised as non-underlying transaction costs in the income statement.
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 18 provides further detail on the
impairment assessment for goodwill as at 31 December 2022.
Goodwill is initially measured at cost being the amount by which the aggregate of the consideration transferred that
exceeds the net identifiable assets acquired and liabilities assumed. The Group assess for impairment of goodwill on an
annual basis with any impairment charge recognised in the statement of comprehensive income.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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.
Financial assets
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. Otherwise 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.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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 25.
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.
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 2022 the Group did not hold any Financial liabilities beyond Trade and other
payables 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.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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 (note 15) 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 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 group developed trading platforms.
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 were 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.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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.
Restricted share plan
The Restricted share plan is 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.
Company Share Option Plan
The company share option plan is a share based scheme awarded to staff and has a vesting period of three years 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.
Premium Priced Options Plan
The PPO scheme is option based and they 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.
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.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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 ‘Impairment of tangible and intangible assets’ 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.
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.
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.
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Notes to the Financial Statements continuedNotes to the Financial Statements 3 RESTATEMENT OF PRIOR YEAR COMPARATIVES
i)
AQEU has been consolidated as a EUR functional currency subsidiary. In 2022 it was noted that certain consolidation
adjustments since incorporation should be treated differently and this has led to a life to date adjustment of £195k
between Foreign Currency Translation Reserve (FCTR) and Retained Earnings, with the 2021 comparative for
expenses reduced by a corresponding amount from £11,902k to £11,560k and a resultant increase in Group PBT for
2021 of £342k to £3,564k. The restatement does not impact net cash flows generated by the group.
ii)
In 2020 Aquis Exchange Europe (AQEU) was established as a 100% owned subsidiary of Aquis Exchange PLC to allow
the trading of EU stocks post the Brexit transition period. In 2021 AQEU reflected Exchange Fees of £5,857k that
arose through the trading of the underlying EU27 stocks. In 2022 in agreement with the local French regulator it has
been decided to reflect that element of data revenue which is derived from EU stocks within the results for AQEU.
In 2022 this reflects £760k. Consequently, the 2021 Company comparatives have been adjusted by £211k to reflect
that element of data revenue that is now reported within AQEU. The restatement does not impact the Company’s net
operating cash flows in note 28.
Group
2021
£
Adjustment
£
Restated
£
i) Other Operating costs (Income Statement)
i) Foreign Exchange differences on translation of foreign operations
(11,901,901)
76,899
341,901
(308,311)
(11,560,000)
(231,412)
(Other Comprehensive Income)
i) Retained Earnings brought forward (Equity)
i) Translation reserve brought forward (Equity)
1,127,401
908
(146,849)
113,259
980,552
114,167
i) Basic EPS (pence)
i) Diluted EPS (pence)
Company
ii) Data Vendor Revenues
ii) Intercompany Payable
16
15
1
1
17
16
2021
£
Adjustment
£
Restated
£
1,573,925
552,754
(211,310)
211,310
1,362,615
764,064
4 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 2022. Three standards have been amended
and are effective as of 2022 as set out below. These have not impacted the current year financial statements.
Amendments to IFRS 3
Amendment to IAS 16
Amendment to IAS 37
Definition of a business
Property, plant and equipment
Provisions, contingent liabilities and contingent assets
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Notes to the Financial Statements continuedNotes to the Financial Statements
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
Amendments to IAS 1 and IAS 8
Amendment to IAS 12
Insurance Contracts
Definition of material
Income taxes
There have been no changes to any accounting policies in the year.
5 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 from the time of invoice as Aquis becomes unconditionally entitled
to payment but in practice recognition will often be deferred until the work is completed.
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.
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Notes to the Financial Statements continuedNotes to the Financial Statements • 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. 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 1-5. 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;
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Notes to the Financial Statements continuedNotes to the Financial Statements •
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.
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 (note 15) 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 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.
Share-based payments
The US binomial model and Black Scholes model are used to estimate the value of the EMI, CSOP, RSP and PPO options.
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
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Notes to the Financial Statements continuedNotes to the Financial Statements 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.
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.
AQXE has a total capital regulatory requirement of
£4.7m as at 31 December 2022, with available capital of
£22.4m, reflecting a surplus of £17.7m / 478%. The total
regulatory requirement is set as the total capital ratio plus
Pillar 2 add on.
Within the AQSE subsidiary the capital regulatory
minima is set by the FCA through the Financial Resource
Requirement (FRR) which is currently set at £2.4m.
Financial resources available (representing net assets)
were £2.8m at 31 December 2022, reflecting a £0.4m
headroom above regulatory minima.
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 has mitigated the level of risk significantly by
ensuring that, as set out within the risk description, each
entity in 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 continue to be met. The directors have
assessed the impact of a 10% fall in the Group’s available
capital and concluded the impact not to be material.
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, and has historically done so within AQSE
after the Company had been acquired to enable its capital
to be sufficient as the company was brought up to the
current profitable trading levels evidenced from 2022.
The Group continuously monitors its level of capital in
order to ensure it remains compliant with regulatory
capital requirements and performs monthly and quarterly
reporting on capital balances and associated headroom.
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.
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Notes to the Financial Statements continuedNotes to the Financial Statements 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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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’ credit risk management processes are applied to all
trade receivables and are calculated using a lifetime ECL
method, as detailed in Note 12. The Directors have stress
tested the current approach to managing this risk and
believe it to be appropriate. If 10% of trade receivables
outstanding from 31 December 2022 were to default, the
hypothetical impairment charge would be immaterial.
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
(2021: £14.0 million), with the majority of the debtor’s
book being short term in nature. The Group is also
funded entirely by equity, with no external debt funding
obligations to be met. The Directors have stress tested
the current approach to managing this risk and believe
it to be appropriate. If group net assets were to fall by
10% there would still be a significant surplus to meet the
Group’s liabilities as they fall due.
Notes to the Financial Statements continuedNotes to the Financial Statements Interest Rate Risk
Risk description
Risk management approach
The Group is not materially exposed to market risk
including interest rate (see below for FX risk)
There is no negative 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.
Bank deposits are primarily placed over night or as interest
rates have risen the Group has started to prudently place
some funds on deposit for up to 3 months. The Directors
have stress tested the current approach to managing this
risk and believe it to be appropriate. The only adverse
impact would be if interest rates were to fall and reduce
interest income on bank deposits. As at 31 December
2022 total interest income on deposits was immaterial.
FX Risk
Risk description
Risk management approach
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 of
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
and an immaterial amount of USD held by Aquis Exchange
PLC, with the remaining cash held in Sterling denominated
bank accounts.
Foreign exchange risk has previously arisen on foreign
currency denominated costs within Aquis Exchange PLC
or through the translation of GBP denominated balances
within Aquis Exchange SAS. At the end of 2022 Aquis
entered into a USD denominated technology contract and
hence opened a USD account which holds a low level of
USD at the year end (£0.2m). The contract will deliver
USD cash flows in the future from 2023 and so in January
2023 Aquis entered into an FX forward arrangement
to lock in the future GBP benefit of this contract. As
at the year end at 31 December 2022 there were no
FX derivatives in place. The Directors performed stress
testing on the cost base of the group in non-functional
currencies and concluded that an adverse movement of
10% versus GBP would not render a material impact.
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Notes to the Financial Statements continuedNotes to the Financial Statements 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 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 2022
Trade and other payables
Lease Liabilities
31 December 2021
Trade and other payables
Lease Liabilities
Company
31 December 2022
Trade and other payables
Lease Liabilities
31 December 2021 (Restated)
Trade and other payables
Lease Liabilities
1 Year
2-5 years
5+ years
Total
3,754,935
522,800
–
1,580,900
–
1,293,977
3,754,935
3.397,677
4,268,735
1,580,900
1,293,977
7,143,612
3,575,350
208,236
–
1,623,226
–
1,799,519
3,575,350
3,630,981
3,783,586
1,623,226
1,799,519
7,206,331
1 Year
2-5 years
5+ years
Total
8,992,201
437,400
–
1,239,300
–
1,210,012
8,992,201
2,886,712
9,429,601
1,239,300
1,210,012
11,441,513
3,256,845
150,981
–
1,376,301
–
1,539,620
3,256,845
3,066,902
3,407,826
1,376,301
1,539,620
6,323,747
Both the Group and the Company have no derivative financial liabilities as at 31 December 2022.
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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 benefitting 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.
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, net profit and EBITDA. When monitoring the performance of each
operating segment individually, management examines the discrete financial information available which will normally
include revenue and gross profit for each division. Assets and liabilities, income tax and IFRS 2 charges are not reported
internally to Chief Operating Decision Maker. In line with IFRS 8 the operating segments are reported separately as
follows:
2022
Revenue
Impairment credit on contract assets
Impairment charge on trade and other receivables
Costs
EBITDA
Depn, amortisation and net interest
Profit Before Tax
2021 (Restated)
Revenue
Impairment charge on contract assets
Impairment charge on trade and other receivables
Costs
EBITDA
Depn, amortisation and net interest
Profit Before Tax
AQXE & AQEU
AQSE
Aquis
Technologies
Total
12,450,578
–
–
(8,687,263)
3,763,315
(1,283,900)
2,479,415
2,444,370
–
(12,784)
(2,043,164)
388,422
–
388,422
5,034,579
133,484
–
19,929,527
133,484
(12,784)
(3,509,491) (14,239,918)
5,810,309
1,658,572
(1,283,900)
–
4,526,409
1,658,572
AQXE & AQEU
AQSE
Aquis
Technologies
Total
10,897,483
–
–
(8,475,927)
2,421,556
(1,057,971)
1,363,585
1,880,666
–
(28,012)
(2,074,604)
(221,950)
–
(221,950)
4,404,606
(972,648)
–
(1,009,469)
2,422,489
–
2,422,489
17,182,755
(972,648)
(28,012)
(11,560,000)
4,622,095
(1,057,971)
3,564,124
The tables above represent the segment-level information that is monitored by the Chief Operating Decision Makers,
which are the Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer. All non-current assets
are held centrally by Aquis Exchange PLC, other than the lease for the Paris office assigned to AQEU. The geographical
analysis of the non-current assets is as follows; UK: £1,815k, Singapore: £3,471k and South Africa: £1,815k, Total:
£7,461k. Gross revenue from one customer amounted to £3,383k (2020: £3,785k) 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 directors) employed by the Group during the year was:
Group
Management
IT
Compliance and Surveillance
Operations
Business Development
Finance / HR / Admin
Marketing
Company
Management
IT
Compliance and Surveillance
Operations
Business Development
Finance / HR / Admin
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 2022
2022
Number
2021
Number
4
20
11
7
17
5
2
66
2
19
10
9
8
4
2
54
2022
Number
2021
Number
2
18
5
7
10
5
2
49
2
18
4
8
5
3
2
42
2022
£
2021
£
6,598,427
967,032
159,366
819,872
170,102
6,129,802
815,822
183,940
571,834
165,617
8,714,799
7,867,015
2022
£
2021
£
4,698,746
680,908
116,150
819,872
169,596
4,605,033
560,051
145,884
576,609
165,357
6,485,272
6,052,934
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 55).
2022
£
2021
£
1,562,555
49,250
445,250
1,052,077
35,713
528,070
2,057,055
1,615,860
2022
£
2021
£
366,060
17,500
162,500
546,060
393,777
17,301
264,035
675,113
2022
£
2021
£
1,437,555
49,250
445,250
1,052,077
35,713
528,070
1,932,055
1,615,860
Group
Salaries, fees and bonuses
Taxable benefits
Share-based payments
Remuneration for qualifying services
Remuneration disclosed above include the following amounts paid to the highest paid director:
Salaries, fees and bonuses
Taxable benefits
Share-based payments
Remuneration for qualifying services
Company
Salaries, fees and bonuses
Taxable benefits
Share-based payments
Remuneration for qualifying services
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Notes to the Financial Statements continuedNotes to the Financial Statements
11 REVENUE
An analysis of the company’s revenue is as follows:
Revenue analysed by class of business
Exchange fees
Licence fees
Data vendor fees
Issuer fees
Revenues from customers by class of business is as follows:
Revenue analysed by class of business
AQXE & AQEU
Exchange fees
Data vendor fees
AQSE
Exchange fees
Data vendor fees
Issuer fees
Aquis Technologies
Licence fees
Group
Company
2022
2021
2022
£
£
£
2021
Restated
£
10,869,442
5,034,579
3,002,986
1,022,520
9,766,046
4,404,606
2,319,360
692,743
3,894,736
4,970,622
1,477,167
–
3,476,206
4,404,606
1,362,615
–
19,929,527
17,182,755
10,342,525
9,243,427
Group
Company
2022
2021
2022
£
£
£
2021
Restated
£
10,244,767
2,205,811
9,323,559
1,573,925
3,894,736
1,477,167
3,476,206
1,362,615
624,675
797,175
1,022,520
442,487
745,435
692,743
–
–
–
–
–
–
5,034,579
4,404,606
4,970,622
4,404,606
19,929,527
17,182,755
10,342,525
9,243,427
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
Revenues from customers attributable to each of the following countries
Group
Company
2022
2021
2022
£
£
£
2021
Restated
£
58,325
8,575
22,860
14,717
25,025
8,075
38,259
13,500
1,201,936
182,715
12,075
7,977
15,300
1,422,523
17,717
18,900
23,371
4,000
–
47,789
2,425
34,950
–
3,646,556
–
35,931
12,473
10,220
1,000
–
6,800
–
–
949,349
299,801
–
1,700
92,706
78,611
–
–
8,800
–
15,000
37,200
–
34,300
1,700
–
2,333
117,320
47,039
15,300
197,312
17,150
11,223,396
1,484,440
2,168,290
–
5,600
159,017
15,300
11,727,897
1,518,727
31,403
–
–
–
–
–
10,859
8,931
528,432
62,080
–
–
10,112
463,743
–
12,472
–
–
–
31,643
–
–
–
3,646,556
–
109,245
13,689
10,112
69,666
–
4,469,782
863,800
23,600
–
–
1,000
–
–
–
–
125,915
74,829
–
–
74,300
72,611
–
–
–
–
15,000
38,556
–
–
–
–
–
2,161,490
–
5,600
79,522
–
5,592,886
978,118
19,929,527
17,182,755
10,342,525
9,243,427
Country
Australia
British Virgin Islands
Canada
Cayman Islands
China
Cyprus
Denmark
Finland
France
Germany
Gibraltar
Guernsey
Hong Kong
Ireland
Isle of Man
Italy
Jersey
Kenya
Luxembourg
Netherlands
New Zealand
Norway
Peru
Singapore
Slovenia
South Africa
Spain
Sweden
Switzerland
United Arab Emirates
United Kingdom
United States
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
Subscription 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 subscription 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.
In the case of subscription, 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 constrained 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.
Licence fees and contract assets:
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 7 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. Contract liabilities arise when consideration has been provided to Aquis prior to completion of
relevant performance obligations as outlined below. There balances typically arise when customers pay in advance of
implementation. As of the balance sheet date there are no contract liabilities (2021: nil).
The revenue from licensing contracts with customers has been categorised reflecting the nature, amount, customer
categorisation (see also Note 5), 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. A
transaction price is determined by the contractual terms of an agreement. Transaction prices are allocated to each
performance obligation based on the standalone price of the product or service offered by the Group. The list of
performance obligations included within Aquis’ Technology Licence agreements is outlined below.
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. There is no
constrained variable consideration in any customer contracts.
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.
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements Contract balances are thus analysed:
Contract Assets (Group and Company)
As at 1 January
New contracts
Foreign exchange gains
Impairment of contract assets
Transfers to trade receivables
Maintenance fees
2022
£
2021
£
5,009,162
3,805,388
87,784
–
(1,756,639)
315,687
1,749,834
3,788,615
–
–
(994,482)
465,195
7,461,382
5,009,162
The scope of a Technology Licence contract was amended during the year which resulted in cumulative catch-up
adjustments of £191,000 (2021: -£147,000) being recognised in the year despite satisfaction of their performance
obligation in prior periods.
Upon invoicing of revenues the right to consideration becomes unconditional and thus contract asset balances have been
reduced for balances transferred to trade receivables. The unrecovered amount included in receivables is £462,563 (2021:
£177,527).
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.
100
Aquis Exchange PLC Report and accounts 2022
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
£
2
2022
£
3
£
4
–
191,000
315,687
236,842
3,382,792
–
–
231,596
–
506,687
3,619,634
231,596
£
1
–
–
–
–
£
1
–
–
–
–
£
2
–
3,788,615
59,943
3,848,558
2021
£
3
–
–
25,080
25,080
£
5
–
–
–
–
£
4
–
–
–
–
£
Total
236,842
3,805,388
315,687
4,357,917
£
Total
–
3,788,615
85,023
3,873,638
The amount of revenue to be recognised from unsatisfied performance obligations with Technology Licence customers is
as follows:
As at 31 December 2022
Maintenance and other support
Regulatory services
As at 31 December 2021
Maintenance and other support
Regulatory services
2023
£
2024
£
2025
2026-2029
£
£
Total
£
429,384
–
353,197
–
234,245
–
691,179
–
1,708,005
–
429,384
353,197
234,245
691,179
1,708,005
2022
£
2023
£
2024
2025-2027
£
£
Total
£
314,582
–
286,285
–
228,197
–
300,424
–
1,129,488
–
314,582
286,285
228,197
300,424
1,129,488
Customer risk category definitions: 2022: 1 – High, 2 – Moderately High, 3 – Moderate, 4 – Moderately Low and 5 – Low.
(2021: 1 – High, 2 – Moderately High, 3 – Moderately Low and 4 – Low)
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
12 IMPAIRMENT
The Group has two types of financial asset that are subject to potential impairment, which are contract assets relating to
technology licencing contracts within the Company and also trade receivables arising on services provided in the AQSE
subsidiary.
The Group have concluded that trade receivables and contract assets have different risk characteristics and therefore the
Expected Credit Loss (ECL) 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, whilst 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.
IFRS 9 provisioning is applied to technology licensing contract assets based on management estimates of the collectability
of contracts over their useful life, and which are re-assessed at each renewal and also at each year-end.
The Group applies the IFRS 9 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.
Closing Impairment Provision at 31 December
1,347,278
58,953
1,347,278
Reconciliation of opening to closing loss allowances 2022
Opening Impairment Provision at 1 January
ECL increase during the year
Impairment on new contract assets
Impairment reversed over time
Reconciliation of opening to closing loss allowances 2021
Opening Impairment Provision at 1 January
ECL increase during the year
Impairment on new contract assets
Impairment reversed over time
Group
Company
Contract
Assets
£
Trade
Receivables
£
Contract
Assets
£
Trade
Receivables
£
1,480,762
–
713,230
(846,714)
46,169
12,784
–
–
1,480,762
–
713,230
(846,714)
Group
Company
Contract
Assets
£
Trade
Receivables
£
Contract
Assets
£
Trade
Receivables
£
508,601
14,895
1,321,449
(364,183)
17,670
28,499
–
–
508,601
14,895
1,321,449
(364,183)
–
–
–
–
–
–
–
–
–
–
Closing Impairment Provision at 31 December
1,480,762
46,169
1,480,762
Technology Licencing Contracts
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 0-50% is applied to each client
based on the assigned risk category. The model has been further enhanced during the year to allow greater granularity
by creation of an additional category, allowing increased differentiation between contracts. The credit risk of Aquis’
102
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
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 50% 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 assigned PD 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 50%. 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.
The Loss Given Default (LGD) 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 company specific factors and also 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.
Although the full risk assessment is completed only at the start of the contract, Aquis regularly assesses whether macro-
economic factors could have a bearing on the success of the client and the recoverability of the outstanding debt. At
renewal a desk top assessment is made as to whether the previous categorisation remains appropriate.
The Contract Asset Impairment provision as at 31 December 2022 is £1,348k (2021: £1,481k) and has been calculated
with reference to estimations based on the PD and LGD as described above for each individual contract taking into
account the nature, amount, customer categorisation, contract duration and uncertainty of revenue and cash flows.
The contracts are short-to-medium term in length and, as at 31 December 2022, the average contract duration for the
portfolio of technology contracts is 3.1 years. (2021: 2.7 years).
In calculating the Impairment provision, the impact of a significant change in macroeconomic circumstances on the
expected PD over the life of the contracts has been assessed. Management does not believe that there is significant
impact on the assessed PDs for each of the existing contracts from these variables, with the success of the contractual
counterparts more driven through individual factors already incorporated within the ECL assessment. In this assessment
the macroeconomic variables used are based on 3-year average forecast rates for 2023-2025, 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
-4.8%
7.9%
5.3%
-0.43%
5.7%
2.2%
4.0%
3.5%
-0.5%
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 PD 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).
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 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:
At 31 December 2022
Impairment provision
Impact on PD
Probability weighting
Trade Receivables
Downside
£
Baseline
£
Upside
£
1,628,007
5%
25%
1,347,765
0%
50%
1,066,549
-5%
25%
In line with IFRS 9 guidance, the Group has applied a simplified “Expected Credit Loss” (ECL) model on trade receivables
where a risk of potential non-payment may arise. 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. Such trade receivables largely
arise within the AQSE subsidiary, with those arising in Aquis Exchange PLC predominantly with institutions where the
resultant credit risk is assessed as non-material, with no historical evidence of non-payment, hence no ECL provision is
recognised on trade receivables. The trade receivables are measured at amortised cost and the calculated ECL provision
is 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 where appropriate 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 180 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.
The key assumptions in calculating the ECL for 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 credit losses experienced 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.
Trade receivables have payment terms of 30 days from the date of billing. For debts older than 180 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 £12,784 (2021: £28,499) of trade receivables were written off relating to debts from companies that had ceased
membership with AQSE and the contractual rights to cash flows from the financial assets were deemed to have expired.
104
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements The total loss allowance is 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 trade receivables as at 31 December 2022 was £58,953
(31 December 2021: £46,169) which was comprised as follows:
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%
106,305
532
1%
33,200
332
3%
6,800
204
5%
2,200
110
10%
4,500
450
25%
–
–
50%
15,780
7,890
100%
78,845 247,630
88,363
78,845
–
–
–
–
–
532
332
204
110
450
–
–
–
(29,410)
(29,410)
7,890
49,435
58,953
Group – 2022
Days past Due
Expected loss rate
Trade receivables
Expected loss
Specific provisions
charged / (released)
Total Expected Credit
Losses
Group – 2021
Days past Due
0
days
1–29
days
30–59
days
60–89
days
90–124
days
125 – 149
days
150–179
days
Over 180
days
Total
Expected loss rate
Trade receivables
Expected loss
Specific provisions
charged / (released)
Total Expected Credit
Losses
0.5%
88,947
445
1%
17,650
177
w3%
14,405
432
5%
4,200
210
10%
14,200
1,420
25%
700
175
50%
–
–
100%
43,310 183,413
17,670
14,811
–
–
–
–
–
445
177
432
210
1,420
175
–
–
28,499
28,499
43,310
46,169
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
13 OPERATING EXPENSES
Earnings before interest, taxation, depreciation and amortisation is stated after charging:
Administrative 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
2022
£
2021
Restated
£
Company
2022
2021
£
£
241,250
222,000
190,000
167,000
10,000
819,872
116,415
7,894,927
5,157,454
7,500
571,834
(341,877)
7,295,181
3,805,362
10,000
819,872
(50,269)
5,665,400
(1,018,914)
7,500
576,609
–
5,476,324
(2,189,408)
14,239,918
11,560,000
5,616,089
4,038,025
Other administrative expenses comprise marketing fees, data centre and other service fees incurred in the ordinary course
of business.
Profit before taxation is stated after charging:
Depreciation, amortisation and finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Net finance expense on lease liabilities and rent deposit asset
(Note 25)
Interest on deposited funds
Total company expenses were as follows:
Total expenses
Expenses
Group
2022
£
2021
£
Company
2022
£
2021
£
760,537
498,955
518,805
513,435
688,615
498,955
513,545
513,435
1,259,492
1,032,240
1,187,569
1,026,980
53,130
26,175
36,948
26,175
(28,722)
(444)
(2,416)
(444)
1,283,900
1,057,971
1,222,101
1,052,711
Group
2022
£
2021
£
Company
2022
£
2021
£
15,523,818
12,617,971
6,838,190
5,090,736
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Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
14 SHARE-BASED PAYMENTS
Aquis Exchange PLC has five different share schemes which have been set up since incorporation of which one, being the
EMI scheme, is now closed to new entrants. A new scheme, being the Premium Priced Option scheme was introduced in
2022.
Aquis Exchange PLC has established two Trusts (see Note 21) to which it has provided funding to allow the purchase of
shares for future settlement of the share awards noted below.
The Fair Value of any awards made in the year is calculated and recognised through the P&L over the appropriate period
as set out in the detail on each scheme below. The total costs recognised through the P&L in the Group in 2022 was
£819,872 (2021: £571,834).
EMI Option Scheme
Restricted Share Plan (RSP) scheme
Company Share Ownership Plan (CSOP) scheme
Premium Priced Option (PPO) scheme
Share Incentive Plan (SIP) scheme
Group
2022
£
58,430
485,860
43,039
69,000
163,543
819,872
2021
£
160,052
314,222
19,045
–
78,515
571,834
Company
2022
£
58,430
485,860
43,039
69,000
163,543
819,872
2021
£
152,577
314,222
19,045
–
90,765
576,609
The aggregate level of share options and shares awarded which existed at the year end is 2,207,649 shares (2021:
1,401,259 shares).
EMI Option Scheme
Restricted Share Plan (RSP) scheme
Company Share Ownership Plan (CSOP) scheme
Premium Priced Option (PPO) scheme
Share Incentive Plan (SIP) scheme
Group
2022
£
904,849
346,624
163,090
606,931
186,155
2021
£
937,143
228,768
95,805
–
139,543
Company
2022
£
904,849
331,292
145,504
606,931
186,155
2021
£
937,143
228,768
95,805
–
139,543
2,207,649
1,401,259
2,174,731
1,401,259
EMI Share Options
There is one approved EMI scheme, which was initiated in June 2018 when the first 564,124 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.
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.
Of the total number of options granted, 3,999 (2021: 335,753) were exercised, none (2021: Nil) expired and 28,295
(2021: 24,526) were forfeited during 2022.
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 Nil
months (2021: 5.5 months).
107
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
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 was 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
1 year and 3.5 months (2021: 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 was 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
Restricted Share Plan
2022
2021
Number of
Shares
937,143
–
(28,295)
(3,999)
–
904,849
670,766
Average
Exercise
Price (£)
3.31
N/A
3.22
3.50
–
3.43
3.24
Number of
Shares
1,297,421
–
(24,526)
(335,753)
–
937,143
453,643
Average
Exercise
Price (£)
3.15
N/A
3.07
2.70
N/A
3.31
3.11
The Group implemented a Restricted Share Plan (RSP) senior executive option scheme in 2020. Total grants were made in
April 2022 of 107,527 at a grant price of £4.90 (April 2021: 88,320 options at a grant price of £6.85). A further grant was
made in September 2022 of 10,449 at a grant price of £3.83 (September 2021: Nil).
Options vest three years after grant, with an additional hold period of a further 2 years and expire after 10 years.
The Black-Scholes model with an average expiry duration of 3 years, volatility of 21% and risk-free interest rate of 1.669%
was used to calculate the fair value of the options granted in April 2022.
The Black-Scholes model with an average expiry duration of 3 years, volatility of 21% and risk-free interest rate of
1.891% was used to calculate the fair value of the options granted in September 2022. The weighted average remaining
contractual life of options outstanding at the end of the reporting period amounted to 8 years and 7 months (2021:
8 years and 0 months).
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
108
Aquis Exchange PLC Report and accounts 2022
2022
2021
Number of
Shares
228,768
117,856
–
–
–
346,624
–
Average
Exercise Price
(£)
4.88
4.86
N/A
N/A
–
4.81
–
Number of
Shares
140,448
88,320
–
–
–
228,768
–
Average
Exercise Price
(£)
3.64
6.85
N/A
N/A
N/A
4.88
–
Notes to the Financial Statements continuedNotes to the Financial Statements
Company Share Ownership Plan
The Group implemented a Company Share Ownership Plan (CSOP) employee option scheme in 2021. Grants in April 2022
were made amounting to 78,045 options at a grant price of £4.90 (April 2021: 100,000 options at a grant price of £6.85).
Options vest three years after grant and expire after 10 years.
The Black-Scholes model with an average expiry duration of 5 years, volatility of 21 and risk-free interest rate of 1.669%
was used to calculate the fair value of the options granted in April 2022. The weighted average remaining contractual
life of options outstanding at the end of the reporting period amounted to 9 years and 1 months (2021: 8 years and
8 months).
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
Premium Priced Option Plan
2022
2021
Number of
Shares
95,805
78,045
(10,760)
–
–
163,090
–
Average
Exercise Price
(£)
6.85
4.90
6.39
N/A
N/A
5.95
–
Number of
Shares
–
100,000
(4,195)
–
–
95,805
–
Average
Exercise Price
(£)
–
6.85
6.85
N/A
N/A
6.85
–
The Group implemented a Premium Priced Option (PPO) option scheme in 2022 primarily focussed on Senior Executives.
Grants in June 2022 were made amounting to 684,811 options at a grant price of £3.88 (2021: No PPO options were
granted).
Options vest 3 years after grant and expire after 7 years.
The Black-Scholes model with an average expiry duration of 5 years, volatility of 22.5% and risk-free interest rate of 1.5%
was used to calculate the fair value of the options granted in June 2022. The weighted average remaining contractual life
of options outstanding at the end of the reporting period amounted to 6 years and 6 months (2021: N/A).
Details of the PPO 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
Share Incentive Plan
2022
2021
Number of
Shares
–
684,811
(77,880)
–
–
606,931
–
Average
Exercise Price
(£)
Number of
Shares
Average
Exercise Price
(£)
–
4.79
4.79
–
–
4.79
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The employee Share Incentive Plan (SIP) 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. Employees are limited to a maximum annual
109
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
contribution of £1,800. 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. Free shares are also awarded to staff
on an annual basis where performance criteria are met, with the Company purchasing up to a further 2 shares for each
partnership share purchased.
The fair value of the matching and free 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.
Details of the SIP scheme are as follows:
• Shares held at the beginning of the period
• Partnership shares purchased in the period
• Matching shares purchased during the period
• Free shares purchased during the period
• Exercised during the period
• Forfeited during the period
• Shares held at the end of the period
2022
Number of
Shares
139,543
12,478
24,956
22,465
(9,241)
(4,046)
186,155
2021
Number of
Shares
104,656
8,611
17,222
16,327
(6,483)
(790)
139,543
15 DEFERRED TAX ASSET
A net deferred tax asset of £1,593,931 (2021: £1,292,260) at the Group and £1,456,184 (2021: £1,292,260 at the
Company) 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. This comprises a gross
Deferred Tax Asset of £1,716,748 (2021: £1,323,459) at the Group and £1,578,001 (2021: £1,323,459 at the Company)
offset by a Deferred Tax Liability of £122,817 (2021: £31,199) at the group and Company arising in the Company on the
timing difference on accounting depreciation versus tax written down value charge.
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.
110
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements The net deferred tax balance comprises temporary differences attributable to:
Group
Tax losses
Fixed asset timing differences
Total deferred tax asset
Company
Tax losses
Fixed asset timing differences
Total deferred tax asset
Movement in deferred tax balance:
Group
At 1 January
Origination and reversal of timing differences
Effects of changes in tax rates
At 31 December
Company
At 1 January
Origination and reversal of timing differences
Effects of changes in tax rates
At 31 December
2022
£
2021
£
1,716,748
1,323,459
(122,817)
(31,199)
1,593,931
1,292,260
2022
£
2021
£
1,579,001
1,323,459
(122,817)
(31,199)
1,456,184
1,292,260
2022
£
2021
£
1,292,260
203,717
229,267
72,404
1,024,212
64,331
1,593,931
1,292,260
2022
£
2021
£
1,292,260
203,717
124,581
39,343
1,024,212
64,331
1,456,184
1,292,260
The Group has combined losses of £46,116,352 (2021: £49,555,213) 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 generated in the
UK by Aquis Exchange PLC and Aquis Stock Exchange Limited. There are no losses carried forward in France within Aquis
Exchange Europe SAS.
The Company has estimated losses of £11,747,647 (2021: £14,801,969) available for carry forward against future trading
profits.
111
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements 16 INCOME TAX
The credit for the year can be reconciled to the loss per the income statement as follows:
Current tax
UK Corporation tax charge
Overseas tax charges on foreign operations
Total tax charge
Deferred tax
Group
2022
£
–
144,469
144,469
£
2021
Restated
£
–
–
–
£
Company
2022
£
–
–
–
£
2021
Restated
£
–
–
–
£
Origination and reversal of timing differences
(229,267)
(1,024,212)
(124,581)
(1,024,212)
Effect of changes in tax rates
Total deferred tax credit
(72,405)
(64,331)
(39,344)
(64,331)
(301,672)
(1,088,543)
(163,925)
(1,088,543)
The credit for the year can be reconciled to the loss per the income statement as follows:
Profit for the year before taxation
4,526,409
3,564,124
3,637,819
3,180,530
Group
2022
£
2021
Restated
£
Company
2022
£
2021
Restated
£
Expected tax charge based on a corporation tax rate of 19%
Expected tax charge based at effective overseas rates of 25%
Fixed asset differences
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Other differences
Remeasurement of deferred tax for changes in tax rates
860,018
177,647
677,184
691,186
604,301
–
–
–
(40,330)
(12,963)
(40,330)
(12,963)
109,502
100,424
109,104
98,891
–
(267,184)
(1)
–
16
(267,184)
–
(64,331)
(39,344)
(64,331)
(89,428)
(72,405)
Movement in deferred tax not recognised
(1,069,029)
(1,413,895)
(884,557)
(1,447,257)
Movement in deferred tax not recognised at overseas rates
(33,178)
(107,777)
–
–
Tax credit for the period
(157,203)
(1,088,543)
(163,925)
(1,088,543)
112
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
17 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
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
Group
2022
2021
Restated
Company
2022
2021
Restated
27,508,166
27,339,947
27,508,166
27,339,947
28,425,419
28,456,875
28,425,419
28,456,875
4,683,612
4,652,667
3,801,744
4,269,073
17
16
17
16
14
13
16
16
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).
The basic EPS when adjusted for outstanding EMI options of 937,143 (2021: 1,297,421) and adjusted for forfeited
options in the year of 28,295 (2021: 24,526) gives a weighted average of 28,425,419 (2021: 28,456,875).
18 INTANGIBLE ASSETS
Group and Company
Cost
As at 1 January 2021
Additions- internally generated/ acquired
As at 31 December 2021
Additions- internally generated/ acquired
Group
Developed
trading
platforms
2,698,021
313,463
3,011,484
605,599
Other
Intangibles
–
37,430
37,430
171,866
Total
Intangible
Assets
2,698,021
350,893
3,048,914
777,465
Group
Goodwill
83,481
–
83,481
–
As at 31 December 2022
3,617,083
209,296
3,826,379
83,481
Accumulated amortisation and impairment
As at 1 January 2021
Charge for the year
As at 31 December 2021
Charge for the year
As at 31 December 2022
Carrying amount
As at 31 December 2022
As at 31 December 2021
All intangible assets within the Group are held by the Company.
113
Aquis Exchange PLC Report and accounts 2022
1,781,765
505,515
2,287,280
484,915
–
7,920
7,920
14,040
1,781,765
513,435
2,295,200
498,955
2,772,195
21,960
2,794,155
–
–
–
–
–
844,888
187,336
1,032,224
724,204
29,510
753,714
83,481
83,481
Notes to the Financial Statements continuedNotes to the Financial Statements
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 2025. The two key estimates used in this model were an estimated terminal growth rate of 2%, and a pre-tax
discount factor of 12%.
The results of the testing indicated the projected value of Aquis Stock Exchange to exceed its carrying value. As a result
no impairment loss has been recognised in the current year.
19 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
As at 1 January 2021
Additions
Disposals
Foreign Currency Translation Differences
As at 31 December 2021
Additions
As at 31 December 2022
Accumulated depreciation and impairment
As at 1 January 2021
Charge for the year
Disposals
Foreign Currency Translation Differences
As at 31 December 2021
Charge for the year
As at 31 December 2022
Carrying amount
As at 31 December 2022
As at 31 December 2021
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Aquis Exchange PLC Report and accounts 2022
Fixtures, fittings
and equipment
Computer
equipment
Right of use
asset
Total
251,540
72,636
–
285
2,211,295
246,885
(68,926)
–
1,469,474
3,758,437
(963,837)
(25,315)
3.932.309
4,077,958
(1,032,763)
(25,030)
324,461
2,389,254
4,238,759
6,952,474
167,440
601,979
–
769,419
491,901
2,991,233
4,238,759
7,721,893
178,036
51,938
–
29
1,804,328
312,092
(41,362)
–
346,038
154,775
–
267
2,328,402
518,805
(41,362)
296
230,003
2,075,058
501,080
2,806,141
65,263
298,052
397,222
760,537
295,266
2,373,110
898,302
3,566,678
196,635
618,123
3,340,457
4,155,215
94,458
314,196
3,737,679
4,146,333
Notes to the Financial Statements continuedNotes to the Financial Statements
Company
Cost
As at 1 January 2021
Additions
Disposal
As at 31 December 2021
Additions
As at 31 December 2022
Accumulated depreciation and impairment
As at 1 January 2021
Charge for the year
Disposal
As at 31 December 2021
Charge for the year
As at 31 December 2022
Carrying amount
As at 31 December 2022
As at 31 December 2021
Fixtures, fittings
and equipment
Computer
Equipment
Right of Use
Asset
Total
251,825
67,500
–
319,325
157,805
2,211,294
246,885
(68,926)
2,389,253
595,133
1,444,159
3,175,765
(963,837)
3,656,087
–
3,907,278
3,490,150
(1,032,763)
6,364,665
752,938
477,130
2,984,386
3,656,087
7,117,603
178,064
51,965
–
230,029
62,746
1,804,328
312,092
(41,362)
2,075,058
296,005
346,332
149,488
–
495,820
329,864
2,328,724
513,545
(41,362)
2,800,907
688,615
292,775
2,371,063
825,684
3,489,522
184,355
613,323
2,830,403
3,628,081
89,296
314,195
3,160,267
3,563,758
115
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
20 INVESTMENT IN SUBSIDIARIES
Company
Investment in subsidiaries
2022
£
2021
£
6,884,202
6,884,202
Details of the Company’s subsidiaries at 31 December 2022 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
Country of
incorporation
Ownership
interest (%)
Voting power
held (%)
Nature of
business
UK
100
100
Aquis Exchange Europe SAS
France
100
100
Recognised
Investment
Exchange
European
Equities
Exchange
Carrying
amount
31-Dec-22
Carrying amount
31-Dec-21
3,677,118
3,677,118
3,207,084
3,207,084
6,884,202
6,884,202
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 63 Queen Victoria Street, EC4N 4UA,UK.
Both investments were assessed for impairment at year end and no indicators of impairment were noted, with both
Aquis Stock Exchange and Aquis Exchange Europe SAS profitable in 2022. Therefore, in line with IAS 36 guidance, no
impairment provision has been recognised in Aquis Exchange PLC’s financial statements.
There has been no change in the year of the carrying value of any subsidiary (2021: £400k increase in Aquis Stock
Exchange following a capital injection in the year) as set out in the table below;
Company
Carrying amount at 1 January
Capital injection in the year
Carrying amount at 31 December
2022
£
2021
£
6,884,202
–
6,484,202
400,000
6,884,202
6,884,202
21 INVESTMENT IN TRUSTS
The table below shows the total amount the Company has invested in the two Trusts in respect of the share based
payments arising under (i) the Employee Share Incentive Plan and (ii) the Restricted Share Plan, Company Share Ownership
Plan and Premium Price Options plan as at the reporting date. Investments into the Trusts are primarily comprised of cash
contributions made to acquire Company shares. Deductions from the Trusts represent vested shares withdrawn.
Company
Investment in Trusts
2022
£
2021
£
3,350,325
1,856,964
116
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
22 TRADE AND OTHER RECEIVABLES
Group
Current
2022
£
2021
£
Non-current
2022
£
2021
£
Total
2022
£
2021
£
Trade receivables
Technology licence contract assets
Other receivables
Prepayments
2,317,384
1,104,221
77,635
636,186
1,884,329
1,112,576
339,353
432,688
–
5,009,883
342,227
–
–
2,415,824
328,832
–
2,317,384
6,114,104
419,862
636,186
1,884,329
3,528,400
668,185
432,688
4,135,426
3,768,946
5,352,110
2,744,656
9,487,536
6,513,602
Company
Current
2022
£
Trade receivables
Technology licence contract assets
Other receivables
Intercompany receivables
Prepayments
2,053,560
1,104,221
330,957
6,485,690
596,828
2021
£
1,747,286
1,112,576
313,224
804,406
395,061
Non-current
2022
£
2021
£
Total
2022
£
–
5,009,883
319,791
–
–
–
2,415,824
315,350
–
–
2,053,560
6,114,104
650,748
6,485,690
596,828
2021
£
1,747,286
3,528,400
628,574
804,406
395,061
10,571,256
4,372,553
5,329,674
2,731,174
15,900,930
7,103,727
The following details the trade receivables 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
Expected credit loss provision on trade receivables
Gross contract assets
Expected credit loss provision on contract assets
Group
2022
£
2021
£
Company
2022
£
2021
£
2,376,337
(58,953)
7,461,382
(1,347,278)
1,930,011
(45,682)
5,009,162
(1,480,762)
2,053,560
–
7,461,382
(1,347,278)
1,747,286
–
5,009,162
(1,480,762)
Trade receivables net of provisions
8,431,488
5,412,729
8,167,664
5,275,686
117
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
23 CASH AND CASH EQUIVALENTS
Group
2022
£
2021
£
Company
2022
£
2021
£
Cash at bank
14,170,965
14,046,399
5,595,827
7,094,964
Cash and cash equivalents comprise over night and short term deposits of less than 3 month and are held with
authorised counterparties of a high credit standing. 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.
24 TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Deferred revenue
Social security and other taxation
Overseas corporation tax payable
Intercompany payables
Other payables
Short term lease liabilities
25 LEASES
Group
Company
2022
2021
2022
£
£
£
510,384
1,508,760
1,358,479
220,593
144,469
–
3,250
522,800
170,934
1,811,168
882,525
506,638
–
–
204,083
208,237
510,068
1,287,138
251,250
220,593
–
6,285,752
–
437,400
2021
Restated
£
162,989
1,564,785
270,900
494,107
–
764,064
–
150,981
4,268,735
3,783,585
8,992,201
3,407,826
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 2022 as follows:
Carrying amount at 1 January 2021
Additions
Disposals
Depreciation for the year
Carrying amount at 31 December 2021
Depreciation for the year
Carrying amount at 31 December 2022
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Aquis Exchange PLC Report and accounts 2022
Group
Property
£
Company
Property
£
1,097,827
3,758,437
(963,837)
(154,748)
3,737,679
(397,222)
1,097,827
3,175,765
(963,837)
(149,488)
3,160,267
(329,864)
3,340,457
2,830,403
Notes to the Financial Statements continuedNotes to the Financial Statements
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 2022 as follows:
Carrying amount at 1 January 2021
Additions
Finance income on rent deposit asset
Carrying amount at 31 December 2021
Recovery of rent deposit
Finance income on rent deposit asset
Carrying amount at 31 December 2022
Of which are:
Current
Non-current
Group
Rent Deposit
Asset
£
Company
Rent Deposit
Asset
£
228,765
374,442
8,835
612,042
(269,956)
14,561
228,765
361,932
7,444
598,141
(282,315)
14,121
356,647
329,947
10,667
345,980
10,156
319,791
356,647
329,947
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.
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 2022 as follows:
Carrying amount at 1 January 2021
Additions
Reduction in assumed lease liability
Finance expense on lease liability
Lease payments made
Carrying amount at 31 December 2021
Finance expense on lease liability
Lease payments made
Carrying amount at 31 December 2022
Of which are:
Current
Non-current
119
Aquis Exchange PLC Report and accounts 2022
Group
Lease Liability
£
Company
Lease Liability
£
1,189,694
3,563,025
(926,304)
35,010
(230,445)
1,127,268
3,062,762
(926,303)
33,619
(230,444)
3,630,980
3,066,902
67,691
(300,994)
51,069
(231,259)
3,397,677
2,886,712
522,800
2,874,877
437,400
2,449,312
3,397,677
2,886,712
Notes to the Financial Statements continuedNotes to the Financial Statements
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
Group
2022
£
67,691
(14,561)
53,130
2021
£
35,010
(8,835)
26,175
Company
2022
£
51,069
(14,121)
36,948
2021
£
33,619
(7,444)
26,175
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
Group
2022
£
(397,222)
(67,691)
14,561
(35,816)
2021
£
(149,488)
(35,010)
8,835
(37,568)
Company
2022
£
(329,863)
(51,069)
14,121
–
2021
£
(149,488)
(33,619)
7,444
–
Net impact of leases on profit for the year
(486,168)
(213,231)
(366,811)
(175,663)
The property leases (of which there are two) in which the Group is the lessee do not contain variable lease payment terms.
26 SHARE CAPITAL
Group
Ordinary share capital
Issued and fully paid
27,505,450 (2021: 27,169,700) Ordinary shares of 10p each
Issue of 3,998 (2021: 335,750) New shares of 10p each
27,509,448 (2021: 27,505,450) Ordinary Shares of 10p each
2022
£
2021
£
2,750,545
400
2,716,970
33,575
2,750,945
2,750,545
120
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
27 TREASURY SHARES
Group
At the beginning of the year
Purchase of additional shares
Shares vested or sold by trusts
Change in level of surplus cash held by trusts
At the end of the year
2022
£
2021
£
1,526,835
1,952,325
(132,230)
3,395
489,625
1,211,907
(177,975)
3,278
3,350,325
1,526,835
Treasury shares are held by the Employee Benefit Trusts. Further disclosures about the value of shares acquired by the
EBT can be read in note 21. The Investment in Trust has been consolidated within the Group’s results as the parent
company (Aquis Exchange PLC) can substantially direct the investment activities of the Trusts, thus the Trusts’ assets have
been consolidated as Treasury Shares.
In the year to 31 December 2022 481,301 shares with a nominal value of £48,130 were bought at a total cost of
£1,952,325 and held in Treasury (2021 - 184,887 shares with a nominal value of £18,489 were bought at a total cost of
£1,211,907 and held in Treasury).
As at 31 December 2022, 186,155 shares (2021: 139,651) were held in the Employee Share Incentive Plan Trust, and a
further 584,797 shares (2021: 150,000) held in the Trust relating to Restricted Share Plan, Company Share Ownership
Plan and Premium Priced Option Plan.
At 31 December 2022 £36,610, (2021: £33,215) of surplus cash was held within the Trust, which had yet to be used to
purchase Treasury shares, but remained under the control of the Trust.
Group
Treasury Shares held
Cash held in Employee Trusts
At the end of the year
28 CASH GENERATED BY OPERATIONS
Group
Profit after tax
Adjustments for:
Corporation tax
Foreign exchange (gains)/losses
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/(decrease) in trade and other payables
Cash generated by operations
121
Aquis Exchange PLC Report and accounts 2022
2022
£
2021
£
3,313,715
36,610
1,493,620
33,215
3,350,325
1,526,835
2022
£
2021
Restated
£
4,683,612
4,652,667
(157,203)
116,415
(28,722)
498,955
760,537
819,872
58,031
(1,088,543)
(341,877)
(444)
513,435
518,805
571,834
316,906
(1,593,925)
(1,195,918)
(2,749,906)
764,641
3,961,654
3,157,518
Notes to the Financial Statements continuedNotes to the Financial Statements
Company
Profit after tax
Adjustments for:
Deferred tax
Foreign exchange (gains)
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 by operations
29 RELATED PARTY TRANSACTIONS
2022
£
2021
Restated
£
3,801,744
4,269,073
(163,925)
(50,269)
(2,416)
498,955
688,615
819,872
57,447
(1,088,543)
–
(444)
513,435
513,545
576,609
320,664
(8,783,081)
5,297,956
(3,320,730)
964,738
2,164,898
2,748,347
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
Value of share options granted
Total
2022
£
2021
£
1,068,562
445,250
797,788
528,070
1,513,812
1,325,858
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 £5,528k
(2021: £4,965k) to Aquis Europe SAS and a net recharge of £450k (2021: £494k) to Aquis Stock Exchange Limited. The
net cash payments in the year and balances outstanding at the year end were;
2022
Company
Aquis Stock Exchange Ltd
Aquis Europe SAS
Total
2021
Company
Aquis Stock Exchange Ltd
Aquis Europe SAS
Total
122
Aquis Exchange PLC Report and accounts 2022
Receipts and
(payments)
£000s
Amounts owed
from related
parties
£000s
Amounts owed
to related
parties
£000s
600
(1,389)
(789)
533
5,953
6,486
–
(6,286)
(6,286)
Receipts and
(payments)
£000s
Amounts owed
from related
parties
£000s
Amounts owed
to related
parties
£000s
(82)
193
111
390
414
804
–
553
553
Notes to the Financial Statements continuedNotes to the Financial Statements
30 SHARE PREMIUM ACCOUNT
Group
At the beginning of the year
Issue of new shares
At the end of the year
31 OTHER RESERVES
2022
£
2021
£
11,771,462
13,583
10,892,135
879,327
11,785,045
11,771,462
Group
2022
£
2021
£
Company
2022
£
2021
£
Reserves relating to share-based payments
1,813,119
1,118,314
1,813,119
1,448,430
The reserves relating to share-based payments reflects the estimated fair value of the approved Employee Share Option
Scheme estimated using the US binomial and Black Scholes option valuation models.
32 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 2022.
33 EVENTS OCCURING AFTER THE REPORTING PERIOD
On 10 March 2023 Silicon Valley Bank (SVB) had its assets assumed by the Federal Deposit Insurance Corporation (FDIC)
as it became unable to fulfil consumer withdrawals and SVB (UK) was bought by HSBC. Whilst this led to widespread
unrest in financial markets, which was further compounded by the announcement that Credit Suisse had secured a SFr
50bn liquidity backstop from the Swiss central bank on 16 March 2023 and then subsequently been acquired by UBS on
19 March 2023, these events have not currently impacted the trading performance of the Group.
At this stage, the Directors do not believe this would have a material adverse effect on the Group and consider this to be a
non-adjusting post balance sheet event.
123
Aquis Exchange PLC Report and accounts 2022
Notes to the Financial Statements continuedNotes to the Financial Statements
Other Information
124
124
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Aquis Exchange PLC Report and accounts 2022
Notes
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Aquis Exchange PLC Report and accounts 2022
Other Information
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Aquis Exchange PLC Report and accounts 2022
Other Information
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