Company Registration No. 08988813 (England and Wales)
Aquila Services Group plc
Annual report and financial statements
for the year ended 31 March 2018
Aquila Services Group plc
Contents
Directors and Advisers
Chairman’s Statement
Strategic Report
Directors’ Report
Corporate Governance Statement
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report to the Members
Consolidated Statement of Comprehensive Income
Consolidated and Company Statements of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Notice of Annual General Meeting
Page
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69
Aquila Services Group plc
Directors and Advisers
Directors
Derek Joseph
Dr Fiona Underwood
Steven Douglas
Susan Kane
Richard Wollenberg
Jeffrey Zitron
Chairman
Co-Chief Executive
Co-Chief Executive
Group Finance Director
Non-Executive Director
Non-Executive Director
Company Secretary
Dr Fiona Underwood
Registered office
Independent Auditors
Corporate Advisor
Bankers
Registrars
Tempus Wharf
29A Bermondsey Wall West
London
SE16 4SA
Saffery Champness LLP
71 Queen Victoria Street
London
EC4V 4BE
Beaumont Cornish Limited
2nd Floor Bowman House
29 Wilson Street
London
EC2M 2SJ
National Westminster Bank plc
50 High Street
Egham
Surrey
TW20 9EU
Neville Registrars
Neville House
18 Laurel Lane
Halesowen
B63 3DA
Company Number
08988813
Company website
www.aquilaservicesgroup.co.uk.
1
Aquila Services Group plc
Chairman’s Statement
Dear Shareholder,
I am pleased to present the annual report and the Financial Statements for the year to 31 March
2018.
Aquila Services Group plc (‘‘the Company’’), is the holding company for Altair Consultancy &
Advisory Services Limited (‘‘Altair’’) and Aquila Treasury and Finance Solutions Limited (“ATFS”)
(formerly known as Murja Limited), which form the Group (‘‘the Group’’).
The Group is an independent consultancy specialising in the provision, financing and management
of affordable housing by housing associations, local authorities, government agencies and other
non-profit organisations, as well as high level business advice to the commercial property sector.
Group Members
Altair Consultancy and Advisory Services Limited
Altair is a specialist management consultancy providing professional services to local authorities,
housing associations, charities, property companies, regulators and government departments. The
consultancy covers the whole of the United Kingdom and, during the year under review, has
consolidated its presence in the Republic of Ireland and further resourced its client base in the
Midlands and North of England. Altair advises on all aspects of the development and management
of affordable housing for rent and sale, and on the effective management of organisations operating
in this sector. During the year, Altair completed five major consulting assignments in Africa with two
further ongoing. This expansion has led to the establishment of a specialist team to bid for further
work.
In October 2017, the company acquired the development consultancy and financial modelling
services business of pod LLP and pod Partnership for a consideration of £1.7m for cash and the
issue of new equity. This increased in-house capability by a team of 13 experienced consultants
and is expected to boost turnover in a full year by a sum in excess of £1m.
Aquila Treasury and Finance Solutions Limited
ATFS is a specialist treasury management consultancy authorised and regulated by the Financial
Conduct Authority. ATFS advises local authorities, housing associations, higher education bodies
and other clients on their capital funding requirements and supports them in securing and managing
debt finance. The business operates through contracts as retained general treasury advisers with a
significant number of clients, and specific advisory projects on which fees are generated according
to agreed milestones.
Investments
In March 2018, Aquila acquired two minority stakes in 3C Consultants Limited and AssetCore
Limited respectively, companies involved in the provision of IT consultancy and a cloud-based
platform to manage loan security. The total cost was approximately £348k. In addition to the
investment in 3C, Steve Douglas, our Co CEO, joined the board as a non-executive director.
2
Aquila Services Group plc
Chairman’s Statement
The investment in AssetCore represents around 8% of its enlarged equity and was part of a
£500,000 cash injection to expand the platform already used by ten major housing associations. I,
and non-executive director Richard Wollenberg, have also invested similar amounts and now each
hold 8% of the enlarged equity. I have also been appointed Chair of the company following the
completion of the equity issue. It is part of the Aquila Group’s continuing strategy to establish a
presence as the key player in direction of IT services to the sector.
Business Review
At the half year, I reported on the investment by the Group in resources to ensure the recruitment
and retention of staff, the acquisition of pod, the launch of Altair Africa and our adjustment to the
management structure that better reflected the workstreams following changes in government policy
and client demand. This investment in resources was reflected in a reduction in operating profit for
the six months ended 30 September 2017. We have confidence that this investment will support
future expansion. The results for the 12 months show both turnover and operating profit matching
the previous year reflecting the improved performance in the second half.
The financial health of the affordable housing sector and its willingness to invest in both growth and
business opportunities is dependent on government housing and economic policy. The sector
principally finances itself through borrowings, particularly on the capital markets where public policy
is a key component of the credit risk. The availability of skilled construction personnel and land
availability are critical to growth, as is a stable and active residential property market where sales of
completed housing provide cross-subsidy for affordable provision. Demand for the Group’s services
is partly dependent on the confidence of our clients in making new investments. To date, the UK
economy has stood up well against the projections of the impact of Brexit, but there still remains a
residue of political and economic uncertainty in Europe.
The need for more affordable housing has moved up the political agenda and most opinion polls
indicate that this is now a much more important concern to the wider population. The tragedy at
Grenfell has highlighted some of the worst deficiencies but it is yet to be seen whether either will
generate increased investment in more and better affordable housing, as well as remedying some of
the poor investment decisions of the past.
During the year the Group has seen some increases in demand for its services, particularly in the
areas of governance and financial oversight, as well as reviewing the quality and impact of our
clients ongoing operational services. The expanded property team have been kept busy as clients
investigate more complex development opportunities and ATFS assists medium sized players who
are keen to utilise their available assets to support growth.
The Group investment in 3C and AssetCore is a stepping stone into one of the fastest growing areas
of the sector where larger organisations are having to deal with increasing volumes of transactions,
increasing regulations concerning the holding and management of data and the expectation of a
more immediate and efficient response to our clients’ tenant base.
The resources invested in the creation of Altair Africa are now generating both turnover and profits.
This allows us to start to diversify our income stream while still concentrating on our core skills. At
this stage, we are only a small player in a very large market and it will be important to consolidate
our presence. Many of the contracts on offer require us to partner with existing players, particularly
those with local presence and physical property skills.
3
Aquila Services Group plc
Chairman’s Statement
Financial results
For the year to 31 March 2018, Group turnover was £5.905m (2017: £5.928m). Altair’s consultancy
and interim management business contributed £5.320m (2017: £5.456m) and ATFS’s £0.585m
(2017: £0.472m).
Gross profit was £1.562m (2017: £1.475m) with operating profit, before share option charges, of
£660k (2017: £658k). Operating profit took into account investment in new staff and resources for
Altair and ATFS to meet growing and changing demand, particularly, in the North of England,
Midlands and Scotland. Profit after tax, attributable to shareholders, was £405k (2017: £404k) and
earnings per share was 1.20p (2017: 1.24p).
The comparison between this reporting period, the mid-year results and the previous year’s results
for the Group are as follows:
Turnover
Gross profit
Operating profit (before share option charge)
Share option charge
Operating profit (after share option charge)
Year ended 31
March 2018
(audited)
£000s
5,905
1,562
660
135
524
6 months to 30
September 2017
(unaudited)
£000s
2,524
676
263
70
193
Year ended 31
March 2017
(audited)
£000s
5,928
1,475
658
148
510
The Group has a strong balance sheet with £970k in cash deposits as at 31 March 2018.
Dividend
The directors propose a final dividend of 0.55p per share (2017: 0.50p), making a total dividend for
the year of 0.81p per share (2017: 0.74p), an increase of 9.5% compared to 2017. This will be
payable on 3 August 2018 to shareholders on the register at 20 July 2018.
Outlook
The outlook for the Group remains positive. The affordable housing sector is a key market for the
Group. The continued political pressure to deliver more homes and the impact of the Grenfell
tragedy, coupled with economic stability prior to the conclusion of the Brexit negotiations has meant
that housing organisations require more of the services provided by Aquila. However, any major
setback could harm confidence.
Our decision to invest in skills and resources has started to show a beneficial impact. The
investment in the technology companies and the setting up of Altair Africa will widen both the range
of services and client opportunities whilst making the Group more resilient.
The Group will continue to work with housing providers of all types, including housing associations,
local authorities, house builders and private sector providers. We will support their growth, helping
them change to improve and supporting their resilience to the current and future operating
environment. This coupled with our constant engagement with the policy landscape ensures that we
are able to provide credible, innovative and practical solutions to our client needs.
4
Aquila Services Group plc
Chairman’s Statement
The increasing profile of public and political debate around the funding of care and support services
will also provide opportunities as well as threats for a number of our clients; we will be developing
our services to provide support in this area.
We continue to investigate acquisitions and other opportunities to increase the scope and depth of
the business.
May I take the opportunity to record my thanks to my fellow directors, executive team and staff of
the Group. As a people-business, the Group is dependent on their enormous commitment and
expertise. I look forward to reporting further progress as part of the half year results.
Derek Joseph - Chairman
27 June 2018
5
Aquila Services Group plc
Strategic Report
Our business
The Group comprises the holding company Aquila Services Group plc (‘‘the Company’’) and two
trading subsidiaries, Altair Consultancy and Advisory Services Limited (“Altair”) and Aquila Treasury
and Finance Solutions Limited (“ATFS”) (formerly known as Murja Limited).
Altair
Altair provides support services to enable organisations to carry out their activities in a more efficient
manner. It helps manage complex and diverse organisations through periods of significant change,
driving service improvement and delivering creative solutions. Altair’s traditional client base includes
housing associations, developers and regeneration specialists, charities and local authorities. Our
client base also includes government departments, statutory bodies, financial institutions and other
private commercial institutions.
Within the housing sector, Altair provides a broad range of advisory and consultancy services to its
clients covering areas such as general management, high level executive recruitment, corporate
governance, financial planning, management strategy, organisational improvement and training.
The acquisition of pod has created further opportunities to expand our development and
regeneration offering.
We have strong relationships with the English Regulator (the Regulator of Social Housing), Greater
London Authority, Welsh Government, the Scottish Regulator, the Irish Housing Regulator and the
Irish Council for Social Housing. Altair’s services also cover the application of government
strategies to increase the supply of affordable housing both for rent and home ownership as well as
local government initiatives encouraging the transfer of public sector housing to independent
vehicles.
Altair has created a specialist bid team to enable our expansion into Africa. The work has focused
on assisting governmental and international institutions interested in the provision of affordable
housing in countries such as Nigeria and Rwanda.
ATFS
ATFS specialises in providing advice to organisations principally involved in the affordable / social
housing and education sectors in respect of debt and financial risk management. Continued
pressure to deliver more homes and fundamental changes in the financing markets mean there is
strong and growing demand for specialist treasury advisory services, with increasing emphasis on
funding from the capital markets and other sources of long-term capital.
Housing associations and local authorities are becoming involved in more complex legal,
commercial and financial structures particularly with housebuilders and private sector developers in
joint ventures. As clients face new risks, Altair’s products and services complement ATFS’ core
advisory activity providing opportunity for growth of a comprehensive financial and commercial
advisory service.
6
Aquila Services Group plc
Strategic Report
Strategy and Objectives – Leadership, Quality, Insight
The strategy and objectives of the Group are:
▪ Provide high quality consultancy advice and support to organisations operating within or
aligned to the public sector, specifically those that govern, manage, regulate or build houses.
▪ Continue to seek out acquisitions and investments which will expand our range of services
and scope of business to increase our ability to be a one-stop shop of professional support
services for the clients of our subsidiary companies.
▪ Attract and retain employees by providing a great place and environment to work and enable
employee participation and reward through equity participation.
▪ To increase our client base nationwide.
▪ Encourage innovation through the development of new products.
▪ To continue exploring the opportunities that are occurring as a result of the Group’s expertise
in overseas markets
Review of the Business
The year under review has achieved the following financial results.
The Group saw a 0.39% decrease in turnover on 2018. This reflected some growth in Altair’s
housing consultancy, specifically through the acquisition of pod, which was countered by a decline in
revenue of interim management business through a tightening of IR35, some consolidation in the
sector and the continued impact of the government’s policy of rent reduction for the sector.
Gross profit for the Group rose by over £87k (5.9%). Altair has made a substantial investment in its
acquisition of pod, its IT infrastructure and staff over the year in anticipation of future growth; the
Board anticipates that this investment will aid future profit growth. The Group is in a very strong net
asset position, with £970k in cash held at 31 March 2018.
The underlying business remains strong and there has been continued growth of the client base in
the consultancy business in the Midlands, the North of England and Ireland.
The Group is benefiting from our acquisitions and investments and this year we have seen an
increase in opportunities arising from being able to offer consulting and treasury advice to our clients
both in the United Kingdom and Ireland. Our work in Africa demonstrates our ability to transfer our
expertise internationally and we continue to seek international opportunities using the bid team we
have created for this purpose. In the first year, this area of the business has been profitable.
We have assisted clients with their response to the tragic events following Grenfell and continue to
work closely with them as policies evolve. We await the issue of the Housing Green Paper later this
year and are reviewing the outcomes within the Dame Judith Hackett Report as to how this will
affect our clients. The government’s focus on the delivery of 300,000 new homes per year is
challenging and the acquisition of pod has helped position Altair to respond proactively to clients as
they seek to increase their development capability and capacity. The demand for the increase in
new homes has meant some consolidation in the sector and we have advised clients through
mergers and acquisitions.
7
Aquila Services Group plc
Strategic Report
We continue to seek out research opportunities to help inform the decision makers throughout the
sector and government and, for the year under review, we have worked with the Joseph Rowntree
Foundation developing and publishing a suite of reports that examined the links between housing
and poverty and an individual’s life experiences; the Altair/ J RF Housing and Poverty Prevention
Project. We published a major report, Building Bridges, which examined how local authorities and
housing associations could better work together through partnerships.
Altair is one of the major partners in the Leadership 2025 campaign, Creating a more diverse
leadership across the housing sector. This work is supported by BME London, L&Q, and Optivo.
Altair has continued to expand its consultancy capacity through its acquisition of pod and through
recruitment of new consultants focusing on increasing its national coverage and developing new
products and services to reflect the changing operational and political environment of our clients. As
organisations embrace new ways of working and communicating with their customers, our continued
partnership with 3C, a specialist IT consultancy company, has strengthened our offer to our
customers, specifically the Organisational Excellence product. Altair has also provided Human
Resource and Personnel services to clients through retained contracts during the year. The interim
business has experienced a weaker market, IR35 has had an impact on how housing organisations
and local authorities cover their short-term vacancies. This has led to a reduced income from this
stream of work. The core recruitment business remains strong and the client base continues to
grow in number and range.
ATFS similarly expanded its treasury advisory offering with increasing focus on advisory
assignments for the capital markets, and private placements in particular. ATFS also strengthened
its presence in Ireland winning renewal of a three-year contract providing services to the Housing
Finance Agency plc in Dublin as the Irish social housing market grows with increasing focus on
funding construction of new housing.
The company continues to have a strong presence in Scotland, reinforced with the appointment of a
full-time Director based near Edinburgh. The Scottish government has a significant programme for
delivery of new homes, creating increasing demand for advisory services on new debt funding and
capital markets access.
The comparison between this reporting year, the mid-year results and the last reporting year are set
out below:
Turnover
Gross profit
Operating Profit
Year ended 31
March 2018
(audited)
£000s
5,905
1,562
524
6 months to 30
September 2017
(unaudited)
£000s
2,524
676
193
Year ended 31
March 2017
(audited)
£000s
5,928
1,475
510
Operating profit is after charging share option expense as follows:
Share option charge
135
70
148
The Group has not identified any post balance sheet events, as set out in note 27 to the Financial
Statements.
The Group will also continue to look at opportunities to expand its consultancy base through
acquisition to offer an increased scope of services and products to our clients.
8
Aquila Services Group plc
Strategic Report
Key Performance Indicators
The Group monitors its key performance indicators (KPI’s) regularly and these are set out below:
2018
2017
2018
2017
Revenue
5,905,221
5,928,201
Number of
clients
225
212
Gross profit
1,561,765
1,474,735
Earnings
per share
1.20p
1.24p
Number of
New clients
77
Client retention rate
(%)
66
72
64
Principal Risks and Uncertainties
The principal risks currently faced by the Group are:
Financial Instruments
The main financial risks arising from the Group activities are credit risk, foreign currency risk and
interest rate risk details of which can be found in Note 26 to the Financial Statements.
Unfavourable economic conditions and / or changes to government policy
The Group’s operating results and its financial condition may be negatively affected by a downturn in
the general economic climate within the UK which consequently may have adverse effect upon
government policy and spending, and private sector investments.
A reduced level of economic activity will restrict the amount of outsourcing by companies, local
authorities or other bodies and result in the restriction of funding available for the purchase of such
services leading to a decline in the number of firms in the sector and their profitability.
The continuing Brexit negotiations and the immediate aftermath of the United Kingdom leaving the
European Union could lead to a period of uncertainty and this may cause clients to review their
spending with consultancy providers and lead to a reduction in projects.
The focus on IR35 within the interim market for public sector bodies has caused a softening of the
interim market within government and local authorities. Clients are carefully reviewing their spend
and methods of resourcing, turning to new and alternative models.
Reduction in government investment and funding
The Group’s future revenues and profitability will be dependent on the current UK Government’s
policy with regard to expenditure on service and social housing improvements and to public
expenditure levels in general. The introduction of policies to restrict the income for housing
providers is a risk that the Group is monitoring closely.
9
Aquila Services Group plc
Strategic Report
The Grenfell tragedy has meant that organisations have invested in remedial works, and, although
the Government has indicated there is some money available for recladding of tower blocks, this has
been provided from the Affordable Housing Programme, which provides the grant to clients who are
developing new houses. This additional investment is likely to have an impact on development and
regeneration programmes for our clients, although the funding will be reinstated in the 2022
Programme.
A change in the political environment relating to regeneration, specifically in the major cities, could
dampen private developer appetite and this would have an impact on our clients.
The UK Government and local authorities may decide in future to change their programmes and
priorities including reducing present or future spending and investment where the Group would
expect to compete for work.
Competition
The contracts and procurement arrangements under which companies operating in these sectors
compete for new business can lead to a higher cost of procuring new contracts and the possibility of
not meeting fully the terms of contracts leading to reduced margins.
Staff skills, retention, recruitment and succession
The success of the Group is dependent on retaining, developing, motivating and communicating
with senior management and personnel and, as the business grows, on recruiting appropriately
skilled, competent people at all levels. Any shortages in the availability of appropriately skilled
personnel may have a negative effect on the Group. The Directors of the subsidiaries are expected
to contribute to its ability to obtain, generate and manage opportunities.
If the Group cannot successfully attract, retain and motivate such personnel, it may not be able to
maintain standards of service or continue to grow its businesses as anticipated. The loss of such
personnel, or the inability to attract, retain, motivate and communicate with additional skilled
employees required for their activities within an affordable cost base, could have an adverse effect
on the Group’s business and prospects.
Data Governance
The increase of cyber-attacks and the loss of data is a key risk that is monitored closely. The Group
complies with all relevant legislation and has invested in updated systems, security and training
during the year.
The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory,
regulatory and financial changes and maintains good relationships with its principal contacts within
government, regulators and other key influencers within the sector.
The Group is well placed to provide the full range of services needed by housing providers as the
external environment changes and the outlook for the business continues to be positive. A
continued understanding of its position in the market and delivering value for money to clients will
ensure that services and products remain competitive. In addition, the Group will ensure that its
people policies are refreshed and follow good practice so that it can continue to attract and retain
excellent staff.
10
Aquila Services Group plc
Strategic Report
Employees
A split of our employees and directors by gender as at the end of the year is shown below:
Directors of the Company
Directors of subsidiary companies not included in above
Employees in other senior management positions
Total senior managers other than directors of the Company
Other employees of the Group
Total employees of the Group
Male
Female
4
3
2
5
14
23
2
-
3
3
17
22
The Group consults with its employees on a regular basis through direct updates and conducts an
annual review of staff; results are reviewed and discussed by the Directors and an action plan
agreed and discussed with all staff. The Group invests in training and developing its employees
through both internal and external courses.
The Group follows the legislative requirements set out in the Equality Act 2010 which covers all
aspects of equality and diversity, replacing previous legislation covering equal pay, sex, race and
disability discrimination. The Group gives due consideration to all applications and provides training
and the opportunity for career development wherever possible. The Board is also mindful of the
Human Rights Act 1998.
Environment
We understand and effectively manage the actual and potential impact of our activities. The
Group’s operations are conducted such that compliance is maintained with legal requirements
relating to the environment.
Corporate and Social Responsibility
The Group recognises that we have a responsibility to ensure the impact of our business is positive,
and that we are good corporate citizens. We focus our corporate and social responsibility in four
key areas; sustainability, staff, charitable giving, and supporting communities.
▪ We are committed to treating with respect and dignity those we work with.
▪ We are committed to honesty and transparency in our communication with staff, external
stakeholders, and customers.
▪ We recognise the importance of reflecting our clients and networks within the housing sector
and seek to promote diversity and inclusion in all our activities.
▪ The Group considers a strategic approach to diversity and inclusion is imperative to creating
an environment that supports its talented and highly valued people. Our approach is based
on inclusivity, enabling those we work with, and those who work for us to achieve their
potential.
▪ We ensure those we work with are provided with equitable fair opportunities, and do not
discriminate on the basis of age, gender, sexuality, disability, ethnicity, or any other protected
characteristic listed in the Equality Act 2010.
11
Aquila Services Group plc
Strategic Report
▪ We aim to work actively with our suppliers to ensure they meet our values and have
sustainability issues at the heart of every decision.
▪ We are conscious of our responsibilities to minimise the environmental impact of our
activities and to behave in a sustainable manner.
▪ We know that, as corporate citizens, we have a responsibility to the broader community. We
work with our stakeholders to understand community priorities and reflect these in our
activities.
▪ We work with organisations whose customers include some of the most vulnerable in
society. We are committed to supporting our clients to contribute to their communities and
consider the impact of their plans on their stakeholders.
▪ We recognise that our staff are the most valuable asset to our organisation. Our
employment policies across the Company seek to exceed mere compliance with relevant
legislation, to create a working environment that embraces diversity and offers fairness and
equality of opportunity throughout our workplace.
▪ Aquila will support the development of all its staff, particularly those from diverse
backgrounds. We will challenge inappropriate and discriminatory behaviours and will
continually assess our progress against organisations inside and outside of sector.
▪ We support and encourage our staff to engage in the governance of organisations within our
spheres of influence, for example by holding non-executive directorships of charities or not
for profit organisations.
During the year, we continued our commitment to supporting a vibrant and inclusive leadership
within the housing sector. Altair has been providing extensive support to the Leadership 2025
programme. Altair, L&Q, Optivo and BME London, in partnership with Roffey Park Business School,
joined forces to develop this leadership programme aimed at senior leaders from BME backgrounds.
At its heart, Leadership 2025 aims to support and empower BME senior professionals to become
sector leaders of the future. Leadership 2025 seeks to positively disrupt the housing sector by
challenging current perceptions.
Altair were commissioned to carry out a research project identifying where the sector stands in terms
of diversity representation, developing a business case for diverse leadership, scoping what the
sector can learn from its past and present leaders and from other sectors and highlighting what
changes the sector should make now. To enable the step-change necessary to break down these
existing barriers, the review set out a number of ambitious but practical recommendations, which
have been distilled as a five-point plan. Aquila has committed to implementing the plan and report
to the Board on progress.
Leadership 2025 and the research report was launched in November 2017 at City Hall, with the
support of the Mayor of London.
12
Aquila Services Group plc
Strategic Report
Going Concern Basis
The Board updates its three-year business plan annually which includes a review of the company’s
cash flows and other key financial ratios over the period. These metrics are subject to sensitivity
analysis which involves flexing a number of the main assumptions underlying the forecast both
individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential
impact of the company’s principal risks actually occurring. The three-year review also makes certain
assumptions about the normal level of capital investment likely to occur and considers whether
additional financing facilities will be required.
Based on the results of this analysis, the directors have a reasonable expectation that the company
will be able to continue in operation and meet its liabilities as they fall due over the three-year period
of their assessment, and thus they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
Dr Fiona Underwood – Co-Chief Executive
27 June 2018
13
Aquila Services Group plc
Directors Report
The Directors present their report and consolidated financial statements for the year ended 31
March 2018.
Aquila Services Group plc is incorporated as a public limited company and is registered in England
and Wales with the registered number 08988813. Details of the Company’s issued share capital,
together with the details of the movements during the year are shown in note 17. The Company has
one class Ordinary share which carries no right to fixed income. Each share carries the right to one
vote at general meetings of the Company. Details of employee share schemes are set out in note
20.
Principal activities
The principal activities of the Group are the provision of specialist housing and treasury
management consultancy services. The principal activity of the Company is that of a holding
company which manages the Group’s strategic direction.
Results
The results for the Group for the year ended 31 March 2018 are set out from page 40.
Dividends
The directors recommend a final dividend of 0.55p per Ordinary share to be paid on 3 August 2018
to shareholders on the register at 20 July 2018 which, together with the interim dividend of 0.26p
paid on 22 December 2017, makes a total of 0.81p for the year.
Directors
The following served as directors of the Company during the period or thereafter:
Derek Joseph
Chairman
Steven Douglas
Co-Chief Executive
Fiona Underwood
Co-Chief Executive and Company Secretary
Susan Kane
Group Finance Director
Richard Wollenberg
Jeffrey Zitron1
Non-Executive director
Non-Executive Director
1 Jeffrey Zitron was chairman up until 17 July 2017
14
Aquila Services Group plc
Directors Report
Substantial Shareholdings
As at 31 March 2018, the Company was aware of the following notifiable interests in its voting rights:
Richard Wollenberg*
Chris Wood
Susan Kane
Fiona Underwood**
Steven Douglas
Derek Joseph
Jeffrey Zitron
Matt Carroll
Hannah Breitschadel
Number of
Percentage of
Nature of
Ordinary shares
Voting rights
holding
3,808,406
3,279,440
3,279,440
3,279,440
3,144,305
3,005,538
2,798,403
1,307,229
1,307,229
10.8%
9.3%
9.3%
9.3%
8.9%
8.5%
7.9%
3.7%
3.7%
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
*Includes shares held by immediate family members of Richard Wollenberg
**Fiona Underwood’s shares are held in a nominee account at Old Mutual plc
The Company is not aware of any changes to the above holdings between 31 March 2018 and the
date of this report.
Corporate Governance Statement
The Directors report incorporates the Corporate Governance Statement set out on pages 18 to 20.
Powers of Directors
Subject to the Company’s Articles of Association, UK legislation and any directions given by special
resolution, the business of the Company is managed by the Board of directors. Details of the
matters reserved for the Board can be found in the Corporate Governance Statement on pages 18
to 20.
Post balance sheet events
Post balance sheet events are disclosed in note 27.
Political Donations
The Group / Company made no political donations during the period.
Data Protection
The Group / Company is compliant with the Data Protection Act 1998 and the General Data
Protection Regulation (Regulation (EU)2016/679). The updated policies are available on
http://aquilaservicesgroup.co.uk.
15
Aquila Services Group plc
Directors Report
Greenhouse Gas Emissions
The Group / Company has, as yet, minimal greenhouse gas emissions to report from the operations
of the Company and its subsidiaries and does not have responsibility for any other emission
producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports)
Regulations 2014.
Auditor
Saffery Champness LLP have expressed their willingness to remain in office as Auditor and, in
accordance with section 489 of the Companies Act 2006, a resolution that Saffery Champness LLP
be re-appointed will be proposed at the Annual General Meeting.
Requirements of the Listing Rules
The following table provides references to where the relevant information required by listing rule
9.8.4R is disclosed:
Listing Rule requirement
Details of long term incentive schemes as required by Listing
Rule 9.4.3R
see Directors’
Remuneration Report
Details of any arrangement under which a director of the
Company has waived emoluments from the Company
No such waivers
Details of any allotment for cash of equity securities made
during the period otherwise than to the holders of such equity
shares in proportion to their holdings of such equity shares
and which has not been specifically authorised by the
Company’s shareholders
Details of any contract of significance subsisting during the
period to which the Company, or one of its subsidiary
undertakings, is a party and in which a director of the
Company is or was materially interested.
Details of any contract of significance subsisting during the
period between
its subsidiary
the Company, one of
undertakings, and a controlling shareholder.
Details of contracts for the provision of services to the
Company or any of its subsidiary undertakings by the
controlling shareholder.
Details of any arrangement under which a shareholder has
to waive any dividends, where a
waived or agreed
shareholder has agreed to waive future dividends, details of
such waiver together with those relating to dividends which
are payable during the period under review.
No such allotments
No such contracts
No such contracts
No such contracts
No such waivers
16
Aquila Services Group plc
Directors Report
Auditor Information
The Directors who held office at the date of approval of the Report of the Directors confirm that, so
far as they are each aware, there is no relevant audit information of which the Group’s Auditor is
unaware; and each Director has taken all the steps that he ought to have taken as a Director to
make himself aware of any relevant audit information and to establish that the Group’s Auditor is
aware of that information.
Dr Fiona Underwood – Co-Chief Executive
By order of the Board
27 June 2018
17
Aquila Services Group plc
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
The Board is committed to maintaining appropriate standards of corporate governance. The
statement below, together with the report on directors’ remuneration on pages 21 to 31, explains
how the company has observed principles set out in The UK Corporate Governance Code (“the
Code”) as relevant to the company and contains the information required by section 7 of the UK
Listing Authority’s Disclosure Rules and Transparency Rules.
The Company is not required to comply with the Code. Given the current size and resources of the
Group, the Company has decided not to apply the Code provisions in full. A copy of the Company’s
corporate
the Company’s website www.
available
aquilaservicesgroup.co.uk.
governance
practices
on
is
Board of Directors
The Board currently consists of three non-executive directors and three executive directors. The
Board determines that Richard Wollenberg and Jeffrey Zitron are independent non-executive
directors; its assessment is based on the fact that Richard Wollenberg and Jeffrey Zitron do not
receive any additional benefits from the Group.
Derek Joseph became Chair during the year taking over from Jeff Zitron, who remains an
independent non-executive director. After taking up the role, an opportunity arose for the Group to
open-up further markets for its services in Africa. As Derek has experience in this market, he has
initially taken on responsibility for helping the Group develop this new business. Additional staff
members have been recruited to further develop this business and to take on the leadership
responsibility. Whilst carrying out these tasks, it has been agreed to remunerate the Chair through a
proportion of the fees he earns for the Group and in the year to 31st March 2018 these totalled
£4,620.
The Board meets regularly with senior staff throughout the year to discuss areas of operational
performance, trading outlook and growth opportunities. The Board met 10 times during the year.
Internal financial control
Financial controls have been established so as to provide safeguards against unauthorised use or
disposition of the assets, to maintain proper accounting records and to provide reliable financial
information for internal use. Key financial controls include:
▪
the maintenance of proper records;
▪ a schedule of matters reserved for the approval of the Board; and
▪ evaluation, approval procedures and risk assessment for acquisitions.
The directors consider the size of the Group and the close involvement of executive directors in the
day-to-day operations makes the maintenance of an internal audit function unnecessary. The
directors will continue to monitor this situation.
18
Aquila Services Group plc
Corporate Governance Statement
Committees
The Group has three committees; Audit, Remuneration and Nominations with membership of:
Audit
Remuneration
Nominations
Committee
*
-
Committee
*
-
-
Committee
*
-
Derek Joseph
Richard Wollenberg
Jeffrey Zitron
Steven Douglas
Fiona Underwood
*Committee Chairman
Audit Committee
The audit committee, which is chaired by Richard Wollenberg, comprises all three of the
independent non-executive directors, and the Company Secretary. The Board is satisfied that
Richard Wollenberg has recent and relevant financial experience to guide the committee in its
deliberations.
The primary responsibilities of the Audit Committee are:
▪
▪
▪
to monitor the financial reporting for the annual and half-yearly reports, challenging where
necessary to ensure appropriate accounting standards have been met;
review the internal controls and risk management systems;
review the compliance, whistleblowing and fraud polices for the organisation;
▪ make recommendations to the Board and shareholders in relation to the appointment,
reappointment and removal of the external auditors; and
▪ meet regularly with the external auditor, review and approve the annual audit plan and review
the findings of the audit with the external auditor.
The committee will meet with the external auditor to consider the results, internal procedures and
controls, and matters raised by the auditor. The audit committee considers auditor independence
and objectivity and the effectiveness of the audit process. It also considers the nature and extent of
the non-audit services supplied by the auditor reviewing the ratio of audit to non-audit fees. It is a
specific responsibility of the audit committee to ensure that an appropriate relationship is maintained
between the company and its external auditor. The company has a policy of controlling the
provision of non-audit services by the external auditor in order that their objectivity and
independence are safeguarded. This control is exercised by ensuring non-audit projects where fees
are expected to exceed £5,000 are subject to the prior approval of the audit committee. At least one
of the members has relevant recent financial experience.
As part of the decision to recommend to the Board the re-appointment of the external auditor, the
committee takes into account the tenure of the auditor in addition to the results of its review of the
effectiveness of the external auditor and considers whether there should be a full tender process.
There are no contractual obligations restricting the committee’s choice of external auditor.
19
Aquila Services Group plc
Corporate Governance Statement
Nominations Committee
The primary responsibilities of the Nominations Committee are:
▪
regularly review the structure, size and composition (including the skills, knowledge,
experience and diversity) of the board;
▪ give full consideration to succession planning for directors and other senior executives;
▪ keep under review the leadership needs of the organisation, both executive and non-
executive;
▪
identifying and nominating, for the approval of the board, candidates to fill the board
vacancies as and when they arise;
▪ make recommendations to the Board and shareholders in relation to the appointment,
reappointment and removal of the external auditors; and
▪ evaluate the balance of skills, knowledge, experience and diversity on the board before any
appointment is made by the board, and, in the light of this, prepare a description of the role
and capabilities required for a particular appointment.
The Nominations Committee, in conjunction with Board meetings, met several times during the
financial year.
Remuneration Committee
The primary responsibilities of the Remuneration Committee are:
▪ setting the remuneration policy for executive and non-executive directors, including pension
and compensation payments. No-one can be involved in their own remuneration process;
▪
▪
recommending and monitoring the level and structure of senior management remuneration;
reviewing the ongoing relevance of remuneration policy;
▪ approving and determining targets for any performance-based pay schemes;
▪ ensuring contractual terms of termination are fair; and
▪ overseeing any major change in employee benefits.
The Remuneration Committee met four times during the year.
The report of the Remuneration Committee is set out on pages 21 to 31 of this report.
Relations with shareholders
Presentations are given to institutional investors when requested, normally following the publication
of the half year and full year results, when interim and annual reports are sent to all shareholders.
The results of such meetings are discussed with board members. All directors attend the Annual
General Meeting at which they have the opportunity to meet with shareholders.
20
Aquila Services Group plc
Directors’ Remuneration Report
The information provided on this page of the Directors’ Remuneration Report is not subject to Audit.
The report is split into three main areas:
▪ Statement from the Chairman
▪ Annual Report on Remuneration
▪ Policy Report
Remuneration Committee membership
Derek Joseph
Richard Wollenberg
Jeffrey Zitron
Chairman
Non-Executive Director
Non-Executive Director
Statement from the Chairman
I am pleased to present the Annual Report on Remuneration for the year ended 31 March 2018.
The Remuneration Committee has used the remuneration policy to specifically link to the
performance of the Group as a framework to set remuneration levels. Executive directors do not
participate in decisions regarding their own remuneration. The committee has access to
independent advice but during the year under review they have not sought such advice.
In setting the company’s remuneration policy for directors, the Remuneration Committee has given
full consideration to the best practice provisions annexed to The Financial Conduct Authority Listing
Rules and the report has been prepared in accordance with Chapter 6 of the Companies Act 2006
and the Directors’ Remuneration Report Regulations 2013.
The Remuneration Committee met four times during the year to discuss the remuneration policy and
aspects of the remuneration for the directors and Chair of the Group. The remuneration policy was
updated to reflect a more flexible approach to the bonus arrangements for the Co-Chief Executives
as they have taken on increased responsibilities with the growth of the Group. The Remuneration
Committee also agreed to increase the salaries of the Co-Chief Executives in-line with the market.
The Committee agreed a revision to the remuneration of the Group Finance Director to take account
of her reduced hours. The Chair’s remuneration has increased to reflect the increased time
commitment required with the growth of the Group.
The remuneration policy is designed to attract and retain executive directors and to motivate them in
delivering the objectives of the Company. The underlying principle is that employee and director
share ownership is encouraged, and the remuneration policy provides opportunity to reward
employees who have met their financial targets and contributed to the wider success of the
business. This is achieved through the award of share options. This links their personal interest to
the success of the company.
Derek Joseph - Chairman of the Remuneration Committee
27 June 2018
21
Aquila Services Group plc
Directors’ Remuneration Report
The information provided on pages 22 to 24 of the Directors’ Remuneration Report is subject to
audit.
Annual Report on Remuneration
The remuneration of the executive directors is made up as follows:
Directors’ remuneration as a single figure (2018)
Steven Douglas
Fiona Underwood
Susan Kane
Salary All taxable
Annual
and fees
benefits
bonuses
LTIP Pension
Total
£
110,000
110,000
59,950
279,950
£
1,169
1,389
1,389
3,947
£
15,000
15,000
-
30,000
£
-
-
-
-
£
£
6,300
132,469
6,300
132,689
-
61,339
12,600
326,497
Directors’ remuneration as a single figure (2017)
Derek Joseph*
Steven Douglas
Fiona Underwood
Richard Murphy
Susan Kane
Salary All taxable
Annual
and fees
benefits
bonuses
LTIP Pension
Total
£
2,500
105,000
105,000
36,758
78,750
328,008
£
-
1,288
1,513
-
1,571
4,372
£
-
-
-
-
-
-
£
-
-
-
-
-
-
£
-
£
2,500
6,000
112,288
6,000
112,513
-
-
36,758
80,321
12,000
344,380
The remuneration of the non-executive directors is made up as follows:
Non-executive directors’ remuneration as a single figure (2018)
Derek Joseph*
Richard Wollenberg
Jeffrey Zitron
Salary All taxable
Annual
and fees
benefits
bonuses
LTIP Pension
Total
£
10,953
4,000
5,107
20,060
£
-
-
-
-
£
-
-
-
-
£
-
-
-
-
£
-
-
-
-
£
10,953
4,000
5,107
20,060
*Included within the fees for Derek Joseph are £4,620 of consultancy fees.
22
Aquila Services Group plc
Directors’ Remuneration Report
Non-executive Directors’ remuneration as a single figure (2017)
Derek Joseph*
Richard Wollenberg
Jeffrey Zitron
Salary All taxable
Annual
and fees
benefits
bonuses
LTIP Pension
£
3,000
4,482
7,500
14,982
£
-
-
-
-
£
-
-
-
-
£
-
-
-
-
£
-
-
-
-
Total
£
3,000
4,482
7,500
14,982
*Derek Joseph held the role of Group Finance Director from 19 August 2015 to 27 June 2016 then a non-executive role
from 28 June 2016.
The taxable benefits above represent private medical insurance.
Executive Incentive Scheme
All the executive directors of the Group’s subsidiaries benefit from the executive incentive scheme
(“the scheme”). Where a subsidiary is acquired during the reporting period, the Remuneration
Committee (RemCo) confirms the eligibility or not of that subsidiary’s executive directors for
participation in the scheme for the remaining part of the year. For the year under review, the
executive directors of both Altair and ATFS were eligible for the executive incentive scheme.
The scheme, which is discretionary, is dependent on the performance target for the year, as set out
in the remuneration policy. The scheme comprises two elements:
1. An unconsolidated bonus award of up to 30% of basic salary, and
2. A share option award of up to £100,000 (based on the mid-market share price on the date the
accounts are signed) which forms part of the long-term incentive plan (LTIP) of the scheme.
The target for those eligible executive directors, in-line with the 2016 revised policy, was to achieve
the Group’s 2017/2018 outturn (reported profit before tax and exceptional items) plus 10%, adjusted
for any one-off costs and expenses.
2017/18 Award
RemCo assessed the performance of the Group executive directors against the target and the
Committee’s decision is shown below.
Performance
Target
Aquila 2017
profit increased
by 10%2
£723,463
Actual
Performance
Aquila 2017
profit increased
by 0.31%
£659,739
Maximum
Possible
award
2017/18
Unconsolidated
bonus award –
Co-Chief
Executives
2017/18
Unconsolidated
bonus award –
Group Finance
Director
£30,000
£15,000
£0
£723,463
£659,739
£100,000
share
options
Nil share options
Nil share options
Cash based
award
Share option
award
2 Profit before tax and excluding and share option charge
23
Aquila Services Group plc
Directors’ Remuneration Report
The Committee believes that the reward payable is a fair reflection of the performance over the year.
Statement of directors’ shareholding and share interest
The total number of directors’ interests in shares as at 31 March 2018 is set out below:
Richard Wollenberg3
Susan Kane
Fiona Underwood
Steven Douglas
Derek Joseph
Jeffrey Zitron
Number of shares
3,808,406
3,279,440
3,279,440
3,144,305
3,005,538
2,798,403
No share options have been granted to the directors during the year. The total number of share
options in relation to each director with and without performance measures, those vested but
unexercised, and those exercised, is set out below:
With
performance
measures
Without
performance
measures4
Vested but
unexercised5
Exercised
during the
year
Richard Wollenberg
Steven Douglas
Susan Kane
Fiona Underwood
Derek Joseph
Jeffrey Zitron
Payments to past directors
-
-
-
-
-
-
-
248,104
248,104
248,104
-
-
515,000
466,946
466,946
466,946
309,000
300,000
-
-
-
-
-
-
In the year ended 31 March 2018, there were no payments to past directors.
Payments for loss of office
No payments were made to directors for loss of office in the year ended 31 March 2018.
3 Includes shares held by immediate family members of Richard Wollenberg
4 Are part of a total of 1,713,772 Ordinary Shares at £0.05 per share which were issued as “Rollover Options” and are
exercisable in tranches from 1 April 2016 with expiry dates between 31 March 2023 and 31 March 2025. For each
director, 126,946 of these share options are vested.
5 The Unapproved Options may be exercised at any time up to 20 July 2020
24
Aquila Services Group plc
Directors’ Remuneration Report
The information provided on pages 25 to 31 of the Directors’ Remuneration Report is not subject to
audit.
Performance graph
The following graph shows the company’s performance since flotation, measured by total
shareholder return, compared with the performance of the FTSE All Share Index also measured by
total shareholder return:
Data source: London Stock Exchange
Remuneration of Co-Chief Executive Officers
Steven Douglas
Fiona Underwood
Total
Remuneration
£
117,469
117,689
Annual
bonuses
£
15,000
15,000
Shares
receivable
£
-
-
Total
£
132,469
132,689
Percentage change in remuneration of directors undertaking role of chief executive
The total percentage increase from 2017 to 2018 is set out below. No bonuses were paid to the co-
chief executives in the year to 31 March 2017.
Steven Douglas
Fiona Underwood
Total
Remuneration
Percentage increase
4%
4%
The total percentage increase from 2017 to 2018 for all staff was 4.5%.
25
Aquila Services Group plc
Directors’ Remuneration Report
Relative importance of spend on pay
Comparison of shareholder distributions and total employee expenditure of the Group is set out
below for the years ended 31 March 2017 and 31 March 2018.
All employee remuneration
Total dividend per share
Distributions to shareholders
Gender pay gap report
2018
£
2017
£
2,943,663
2,816,112
0.81p
0.74p
285,650
241,617
Change
%
4.53%
9.46%
18.22%
The Group is not required by law to report on its gender pay figure but recognises the importance of
openness and transparency. The Group’s mean and median pay gap figures are as follows:
▪ Women’s hourly mean rate is 7.8% lower than men’s.
▪ Women’s hourly median rate is 3.0% lower than men’s
This is compared to national average figures of a 14.3% mean gap and a 9.7% median.
The Group is committed to exploring the reasons for the pay gap and will review its HR and reward
strategy, pay structures and associated policies to address any issues and proactively engage in
practical solutions to address the gap.
The Group is also committed to creating an ethnically diverse organisation. From this year, the
Group will start to monitor its ethnicity pay gap figures, related recruitment activities and talent
development opportunities to ensure that it is creating prospects for diverse talent pools.
Employees
The Group is committed to creating an environment where its staff feel engaged and motivated in
their roles. It is by default a learning organisation where people can gain new knowledge skills and
experience through the work that they deliver. It also offers staff learning and development
opportunities and the chance to communicate their views through the annual survey. The results of
which are actively considered by the directors and leadership team.
The Group ensures that it complies with its legislative requirements in relation to employment law.
Statement of implementation of remuneration policy in the following year
The Remuneration Committee proposes to implement the policy approved by the shareholders at
the 2018 annual general meeting.
26
Aquila Services Group plc
Directors’ Remuneration Report
Consideration by the directors of matters relating to directors’ remuneration
Members of the committee during the year are as follows:
Derek Joseph
Richard Wollenberg
Jeffrey Zitron
Chairman
Non-Executive Director
Non-Executive Director
No advice or services were given that materially assisted the committee in their consideration of the
remuneration policy.
Shareholder voting at the last general meeting
The Group is committed to on-going shareholder dialogue and takes an active interest in voting
outcomes. Where there are substantial votes against resolutions in relation to directors’
remuneration, the reasons for any such vote will be sought, and any actions in response will be
detailed here. The Directors’ Remuneration Report for the year ended 31 March 2017 was
approved by shareholders at the Annual General Meeting held on 27 July 2017. The Directors’
Remuneration Policy was last approved by shareholders at the Annual General Meeting held on 26
July 2016.
Directors’ Remuneration Report (2017 Annual General Meeting)
% of votes cast
For
Against
Total votes cast
100%
0%
100%
Directors’ Remuneration Policy (2016 Annual General Meeting)
% of votes cast
For
Against
Total votes cast
Policy Report
Policy update introduction
100%
0%
100%
The remuneration policy has been updated to reflect changes due to continued growth of the Group.
All of the provisions within the previous policy continue to apply, the amendments to the previous policy
are not considered material to the Group. The changes are within pensions and annual bonuses
(performance criteria) as set out in the table below.
27
Aquila Services Group plc
Directors’ Remuneration Report
Future policy table
The following tables provides a summary of the key components of the remuneration package for executive directors:
Purpose
Operation
Performance Criteria
Salary
and fees
All
taxable
benefits
Pensions
To provide competitive
fixed elements of
reward which can
attract and retain high
calibre individuals with
the appropriate skills
and knowledge to
deliver the Group’s
strategy.
To provide a range of
cost-effective benefits
which are in-line with
the market.
To provide cost-
effective long-term
retirement
arrangements
Salaries are reviewed annually or when an individual changes
position or responsibility.
Assessment of personal and
corporate performance.
The committee will also consider the skills, experience and on-going
performance of individuals when deciding on any changes to their
basic salary.
The main benefits include private medical insurance and death in
service benefit of four times salary.
None
The committee may wish to introduce other benefit provisions from
time-to-time.
Contributions of 6% of salary is available to all staff. There is no
differential for executive directors.
None
A salary sacrifice scheme is available for staff should they wish to
increase their personal contributions.
Executive directors are able to opt-out of the company pension
scheme seeking to plan for their retirement.
28
Aquila Services Group plc
Directors’ Remuneration Report
Annual
bonuses
To incentivise and
reward for
achievement of in-
year objectives
linked to the
performance of the
Group and the
individual
subsidiaries.
Executive directors are eligible for an annual bonus of up to 30% of their
annual salary (unconsolidated award) upon achievement of
company/subsidiary targets.
Half of the executive directors’ annual bonus may be paid into a Long-
Term Incentive Plan (LTIP) at the discretion of the Remuneration
Committee, which will earn a rate of interest equivalent to a bank deposit
and can be drawn, on a rolling basis, after a minimum of three years.
Early release or penalties will be relevant to leavers depending on the
circumstances.
Share
options
To incentivise and
reward for the
achievement of
long-term
performance,
aligned to the
generation of
shareholder value.
An annual grant of share options, which vest after three years subject to
continued service and the achievement of targets.
Upon the achievement of the target executive directors will be entitled to a
share option award which is the equivalent of one third the reported profit
(before tax and exceptional items) of the individual subsidiary companies.
The number of share options available for distribution is determined from
the mid-market price on the day the results are published.
The committee can, on the recommendation of the executive directors,
award share options to individual members of staff to reward exceptional
performance. Any share options awarded to staff must be included within
the one-third reported profit distribution for each subsidiary.
1. Up to 15% can be awarded for a
year-on-year increase in
reported profit before tax and
exceptional items adjusted for
any Group costs and expenses
year-on-year growth.
2. Up to 30% can be awarded for
an achievement of 10% increase
in reported profit before tax and
exceptional items year-on-year
adjusted for any Group costs
and expenses.
3. To take account of further
growth within the Group
individual subsidiary reported
profit for the year of acquisition
is used as the baseline for those
executive directors.
1. Share option awards are
measured against an increase in
reported profit before tax and
exceptional items year-on-year
adjusted for any Group costs and
expenses.
2. To take account of further growth
within the Group individual
subsidiary reported profit for the
year of acquisition is used as the
baseline for those staff within
each subsidiary.
29
Aquila Services Group plc
Directors’ Remuneration Report
Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to offer a market competitive
remuneration package sufficient to attract high calibre candidates who are appropriate to the role but
without paying any more than is necessary.
Any new executive director’s remuneration would include the same elements and be in line with the
policy set out in this Report.
Service contracts of executive directors
All executive directors have a service contract. The contract can be terminated by either party upon
giving six months’ notice in writing. The contracts are available for inspection at the company’s
offices.
Illustration of application of remuneration policy
The chart below illustrates the remuneration that would be paid to each of the Executive Directors
under three different performance scenarios: (i) Minimum; (ii) On-target; and (iii) Maximum.
The elements of remuneration have been categorised into two components: (i) Fixed; and (ii) Annual
variable (annual bonus awards); which are set out in the future policy table above.
The remuneration is based on the following assumptions.
That the base salary of the co-chief executives remains at £125,000 pa. That the pension
contribution is 6% of salary and that bonuses are based on 15% and 30% of salary as indicated in
the remuneration policy.
30
Aquila Services Group plc
Directors’ Remuneration Report
The remuneration for the Group Finance Director is based on the following assumptions.
That the base salary of the Group Finance Director remains at 2 days per week. That pension
contributions are nil and that bonuses are based on 15% and 30% of salary as indicated in the
remuneration policy.
Policy on payment for loss of office
Payments for loss of office would be determined by the remuneration committee taking into account
contractual obligations.
Statement of consideration of employment conditions elsewhere in the Group
The Committee has not consulted with its employees on executive pay but is aware of the pay and
employment benefits across the wider Group. The wider benefits package available to staff is
reflected within the remuneration package for executive directors, the exceptions being the level of
bonus awarded and long-term share options.
Statement of consideration of shareholder views
The Committee will consider shareholder feedback received at the AGM and during meetings with
shareholders and investors throughout the year and will use these views to formulate any changes
to the remuneration policy.
Derek Joseph – Chairman
27 June 2018
31
Aquila Services Group plc
Statement of Directors’ Responsibilities in respect of the Annual Report and the
Financial Statements
The Directors (whose names and functions are set out on page 14) are responsible for preparing this
report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under
that law the directors have prepared the Company and Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union and
applicable law. Under company law, the 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 Company and the
Group and the profit or loss of the Company and the Group for that period.
In preparing the Company and Group financial statements, the Directors are required to:
▪ select suitable accounting policies and then apply them consistently;
▪ make judgements and estimates that are reasonable and prudent;
▪ present information, including accounting policies, in a manner that provides relevant,
reliable, comparable and understandable information;
▪ state whether IFRSs as adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial statements;
▪ prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company and Group will continue in business; and
▪ provide additional disclosures when compliance with the specific requirements in IFRSs is
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial performance.
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Company and Group’s transactions and disclose with reasonable accuracy at any
time the financial position of the Company and Group and enable them to ensure that the financial
statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
32
Aquila Services Group plc
Statement of Directors’ Responsibilities in respect of the Annual Report and the
Financial Statements
We confirm that to the best of our knowledge:
▪
▪
the Company and Group financial statements, prepared in accordance with IFRS as adopted
by the European Union, give a true and fair view of the assets, liabilities, financial position
and profit of the Company and Group; and
these strategic and directors’ reports include a fair review of the development and
performance of the business and the position of the Company and Group together with a
description of the principal risks and uncertainties that it faces.
Dr Fiona Underwood – Co Chief Executive
On behalf of the Board
27 June 2018
33
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
Opinion
We have audited the financial statements of Aquila Services Group plc (the ‘parent company’) and
its subsidiaries (the ‘group’) for the year ended 31 March 2018 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Company Statements of Financial
Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in
Equity, the Consolidated Statement of Cash Flows, the 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
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
▪ give a true and fair view of the state of affairs of the group and of the parent company as at
31 March 2018 and of the group’s profit for the year then ended;
▪ have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
▪ have been prepared in accordance with the requirements of the Companies Act 2006; and as
regards the group financial statements, Article 4 of the IAS Regulation.
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.
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 public interest 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK)
require us to report to you where:
▪
▪
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material
uncertainties that may cast significant doubt about the group’s or parent company’s ability to
continue to adopt the going concern basis of accounting for a period of at least twelve
months from the date when the financial statements are authorised for issue.
34
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
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) that 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 statement as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
▪ Revenue recognition and completeness
The revenue recognised in the financial statements may be understated and not recognised
in accordance with the relevant accounting standard and the group’s accounting policy. As
part of the audit, a sample of contracts were tested to confirm that the revenue has been
recognised in the correct period and in line with the terms of the engagement. From the work
performed, we did not identify any material misstatements in respect of the completeness
and timing of revenue recognised. We found the revenue recognition policy to be in line with
accounting standards.
▪ Business combinations
The group’s acquisition during the year of the business and assets of another entity may not
meet the criteria of a business combination or be measured and accounted for correctly on
initial recognition. Based on the substantive testing that was performed, including a detailed
review of the sales and purchase contract and legal invoices, we did not identify any material
misstatements in respect of the accounting of the acquisition under IFRS 3 ‘Business
combinations’.
▪
Impairment of goodwill
Goodwill in respect of the above business combination and the acquisition of a subsidiary
company in a prior year may be impaired. We reviewed and assessed the value in use
calculations prepared by the board as part of their impairment review, focussing on the key
assumptions and inputs. We did not identify any material misstatement in respect of
goodwill.
▪
Investments
The investments acquired during the year may not be measured or accounted for correctly
on initial recognition and may not be held at the correct carrying amount at the balance sheet
date. From the work performed, we did not identify any material misstatement in respect of
the investments acquired both from an accounting perspective and the carrying amount at
the balance sheet date.
Our application of materiality
The concept of materiality is fundamental to the preparation of the financial statements and the audit
process. Our overall objective as auditor is to obtain reasonable assurance that the financial
statements as a whole are free from material misstatement, whether due to fraud or error. We
consider a misstatement to be material where it could reasonably be expected to influence the
economic decisions of the users of the financial statements.
We have determined a materiality of £59,000 for the financial statements as a whole. This is based
on 1% of revenue.
35
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
Performance materiality is the application of materiality at the individual account or balance level.
We set it at an amount to reduce to an approximately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality. On the basis of our risk
assessment of the group’s overall control environment, our judgement was that performance
materiality was 75% of our materiality, namely £44,250.
Our reporting threshold, being the amount below which identified misstatements are considered as
being clearly trivial, was set at £2,950 which is 5% of our materiality.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality
and qualitative considerations in forming our opinion. We communicate all misstatements to the
Audit Committee.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we obtained sufficient evidence to support our
opinion on the financial statements as a whole.
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we looked at where the Directors made
subjective judgements, for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. We also
addressed the risk of management override of internal controls, including evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
In response to the key audit matters above:
▪
for a sample of clients of the group, we traced the engagement terms and time billed through
to the revenue recorded
▪ we agreed the acquisition of the business and assets to the purchase agreement
▪ we agreed the acquisition of investments to investor agreements
▪ we assessed the accounting for the business combination and acquired investments against
the requirements of accounting standards
▪ we assessed and tested the methodology and assumptions used in the value in use
calculations prepared by the directors as part of their goodwill impairment review
Explanation of the extent to which our audit can detect fraud
The objectives of our audit, in respect of fraud, are: to identify and assess the risks of material
misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence
regarding the assessed risks of material misstatement due to fraud, through designing and
implementing appropriate responses; and to respond appropriately to fraud or suspected fraud
identified during the audit. However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the entity and management.
We assessed the susceptibility of the group’s financial statements to material misstatement by
considering the programs and controls that the group has established to address risks identified by
the entity and how senior management monitor those programs and controls, and by evaluating
conditions in the context of incentive/pressure to commit fraud, considering the opportunity to
commit fraud.
36
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
Based on our understanding obtained through the procedures outlined above, we designed our audit
procedures to identify non-compliance with the aforementioned laws and regulations. Our
procedures included journal entry testing, inquiries of management, and focused testing, as referred
to in the Key audit matters section above.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s report
thereon. 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.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. 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 the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with 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.
37
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
Matters on which we are required to report by exception
In the 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 and the part of the Directors’ Remuneration Report
to be audited 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.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement, 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
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 these financial statements.
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.
38
Aquila Services Group plc
Independent Auditor’s Report to the Members of Aquila Services Group plc
Other matters which we are required to address
We were appointed by the board on 17 February 2015 to audit the financial statements for the
period ending 31 March 2015. Our total uninterrupted period of engagement is 4 years, covering the
period ending 31 March 2015 to 31 March 2018.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or
the parent company and we remain independent of the group and the parent company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Jamie Cassell
(Senior Statutory Auditor)
For and on behalf of
Saffery Champness LLP
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
27 June 2018
39
Aquila Services Group plc
Consolidated statement of comprehensive income
For the year ended 31 March 2018
Notes
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income
Profit before taxation
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Earnings per share attributable to
owners of the parent
Basic
Diluted
4
5
5
4
6
8
9
9
2018
£
2017
£
5,905,221
5,928,201
(4,343,456)
(4,453,466)
1,561,765
1,474,735
(1,037,287)
(964,692)
524,478
510,043
3,596
5,512
528,074
515,555
(123,390)
(111,345)
404,684
404,210
-
-
404,684
404,210
1.20p
1.05p
1.24p
1.08p
The income statement has been prepared on the basis that all operations are continuing operations.
40
Aquila Services Group plc
Consolidated and Company statements of financial position
As at 31 March 2018
Non-current assets
Goodwill
Property, plant and equipment
Investment in subsidiaries
Investment in associates
Investments
Current assets
Trade and other receivables
Cash and bank balances
Current liabilities
Trade and other payables
Corporation tax
Notes
10
11
12
13
14
15
16
Group
2018
£
2,027,688
95,747
-
226,620
121,104
2,471,159
2,109,678
969,987
3,079,665
1,094,690
141,775
1,236,465
Group
2017
£
317,688
50,559
-
-
-
368,247
1,350,187
2,312,600
3,662,787
951,923
134,753
1,086,676
Company
2018
£
Company
2017
£
-
58,967
9,885,193
226,620
121,104
10,291,884
-
-
9,749,931
-
-
9,749,931
1,127,499
343,269
1,470,768
616,971
-
616,971
47
348,062
348,109
217,380
-
217,380
Net current assets
1,843,200
2,576,111
853,797
130,729
Net assets
4,314,359
2,944,358
11,145,681
9,880,660
Equity
Share capital
17
Share premium account
18
Reverse acquisition reserve
18
Merger reserve
18
Share-based payment reserve 20
Retained (losses) / earnings
Equity attributable to the
owners of the parent
1,763,273
1,487,512
(4,771,473)
7,184,334
557,653
1,632,550
533,235
(4,771,473)
7,184,334
422,391
1,763,273
1,487,512
-
7,184,334
557,653
1,632,550
533,235
-
7,184,334
422,391
(1,906,940)
(2,056,679)
152,909
108,150
4,314,359
2,944,358
11,145,681
9,880,660
As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss
account and related notes. The company’s profit for the year was £299,704 (2017: £225,364).
The financial statements were approved by the board on 27 June 2018.
Susan Kane – Group Finance Director
Company Registration No. 08988813
41
Aquila Services Group plc
Consolidated statement of changes in equity
For the year ended 31 March 2018
Balance at 1 April 2016
Issue of shares
Total comprehensive income
Transfer on exercise of options
Share based payment charge
Dividend
Share
capital
£
1,630,434
2,116
-
-
-
-
Share
premium
account
£
533,235
-
-
-
-
-
Reverse
acquisition
reserve
£
(4,771,473)
-
-
-
-
-
Merger
reserve
£
Share based
payment
reserve
£
7,184,334
-
-
-
-
-
281,586
-
-
(6,846)
147,651
-
Retained
losses
£
(2,245,895)
-
404,210
6,846
-
(221,840)
Total
equity
£
2,612,221
2,116
404,210
-
147,651
(221,840)
Balance at 31 March 2017
1,632,550
533,235
(4,771,473)
7,184,334
422,391
(2,056,679)
2,944,358
Balance at 1 April 2017
Issue of shares
Total comprehensive income
Share based payment charge
Dividend
1,632,550
130,723
-
-
-
533,235
954,277
-
-
-
(4,771,473)
-
-
-
-
7,184,334
-
-
-
-
422,391
-
-
135,262
-
(2,056,679)
-
404,684
-
(254,945)
2,944,358
1,085,000
404,684
135,262
(254,945)
Balance at 31 March 2018
1,763,273
1,487,512
(4,771,473)
7,184,334
557,653
(1,906,940)
4,314,359
42
Aquila Services Group plc
Company statement of changes in equity
For the year ended 31 March 2018
Balance at 1 April 2016
Issue of shares
Total comprehensive income
Transfer on exercise of options
Share based payment charge
Dividend
Share
capital
£
1,630,434
2,116
-
-
-
-
Share
premium
account
£
533,235
-
-
-
-
-
Merger
reserve
£
7,184,334
-
-
-
-
-
Share based
payment
reserve
£
281,586
-
-
(6,846)
147,651
-
Retained
earnings
£
97,780
-
225,364
6,846
-
(221,840)
Total
equity
£
9,727,369
2,116
225,364
-
147,651
(221,840)
Balance at 31 March 2017
1,632,550
533,235
7,184,334
422,391
108,150
9,880,660
Balance at 1 April 2017
Issue of shares
Total comprehensive income
Share based payment charge
Dividend
1,632,550
130,723
-
-
-
533,235
954,277
-
-
-
7,184,334
-
-
-
-
422,391
-
-
135,262
-
108,150
-
299,704
-
(254,945)
9,880,660
1,085,000
299,704
135,262
(254,945)
Balance at 31 March 2018
1,763,273
1,487,512
7,184,334
557,653
152,909
11,145,681
43
Aquila Services Group plc
Consolidated statement of cash flow
For the year ended 31 March 2018
Cash flows from operating activities
Profit for the year
Interest received
Income tax expense
Share based payment charge
Depreciation
Operating cash flows before movement in working capital
2018
£
404,684
(3,596)
123,390
135,262
31,639
691,379
2017
£
404,210
(5,512)
111,345
147,651
11,694
669,388
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
Cash generated by operations
(759,491)
76,997
(191,351)
(324,578)
8,885
153,459
Income taxes paid
Net cash (outflow) / inflow from operating activities
(116,368)
(107,483)
(131,690)
21,769
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Acquisition of goodwill
Acquisition of investment in an associate
Acquisition of investment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds of share issue
Dividends paid
Net cash outflow from financing activities
3,596
(76,827)
(625,000)
(160,850)
(121,104)
(980,185)
-
(254,945)
(254,945)
5,512
(47,599)
-
-
-
(42,087)
2,116
(221,840)
(219,724)
Net decrease in cash and cash equivalents
(1,342,613)
(240,042)
Cash and cash equivalents at beginning of the year
2,312,600
2,552,642
Cash and cash equivalents at end of the year
969,987
2,312,600
44
Aquila Services Group plc
Company statement of cash flow
For the year ended 31 March 2018
Cash flows from operating activities
Profit for the year
Dividends received
Interest received
Depreciation
2018
£
299,704
(410,820)
(1,082)
5,355
2017
£
225,364
(325,650)
(1,024)
-
Operating cash flows before movement in working capital
(106,843)
(101,310)
(Increase) / decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Net cash inflow / (outflow) from operating activities
Cash flows from investing activities
Interest received
Dividends received
Purchase of property, plant and equipment
Acquisition of investment in an associate
Acquisition of investment
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds of share issue
Dividends paid
Net cash outflow from financing activities
(42,452)
333,821
184,526
1,082
410,820
(64,322)
(160,850)
(121,104)
65,626
-
(254,945)
(254,945)
1,723
(1,150)
(100,737)
1,024
325,650
-
-
-
326,674
2,116
(221,840)
(219,724)
Net (decrease) / increase in cash and cash equivalents
(4,793)
6,213
Cash and cash equivalents at beginning of the year
348,062
341,849
Cash and cash equivalents at end of the year
343,269
348,062
45
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
1
General information
Aquila Services Group plc (‘‘the Company’’) and its subsidiaries (together, ‘‘the Group’’)
provide specialist housing and treasury management consultancy services. The principal
activity of the Company is that of a holding company for the Group as well as providing all the
strategic and governance functions of the Group.
The Company is a public limited company which is listed on the London Stock Exchange,
domiciled in the United Kingdom and incorporated and registered in England and Wales. The
Company’s registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16
4SA.
2
Accounting policies
The principal accounting policies applied in preparation of these consolidated financial
statements are set out below. These policies have been consistently applied unless otherwise
stated.
Basis of preparation
The financial statements have been prepared in accordance with International Reporting
Standards as adopted by the European Union (IFRSs), issued by the International Accounting
Standards Board (IASB), including interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC), and the Companies Act 2006 applicable to
companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis.
The financial statements are presented in Pounds Sterling which is the Group’s functional and
presentational currency.
The preparation of the financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas of critical accounting
estimates and judgements are set out in note 3.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of subsidiary
entities. A subsidiary is defined as an entity over which the Company has control. Control is
achieved when the Company has power over an entity, is exposed to, or has rights to, variable
returns from its involvement with the entity, and has the ability to use its power to affects its
returns.
Consolidation of a subsidiary begins when the Company obtains control and ceases when
control is lost. The Company reassesses whether or not it controls an entity if facts and
circumstances indicate that there are changes to one or more of the three control elements
listed above.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated on consolidation.
46
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Basis of consolidation (continued)
Where necessary, adjustments are made to the financial statements of subsidiaries to bring
accounting policies used into line with the Group’s accounting policies.
Business combinations
Other than the reverse acquisition noted above, acquisitions of subsidiaries are accounted for
using the acquisition method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the Group to the former owners of the
acquiree and the equity interest issued by the Group in exchange for control of the acquiree.
Any excess of the consideration over the fair value of the identifiable assets and liabilities
acquired is recognised as goodwill. Goodwill is not amortised but is reviewed for impairment
at least annually. If the consideration is less than the fair value of the identifiable assets and
liabilities acquired, the difference is recognised in the Statement of comprehensive income.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the rendering
of services in the ordinary course of the Group’s activity. Revenue is shown net of value
added tax, returns, rebates and discounts. The Group recognises revenue when the amount
of the revenue can be reliably measured and when it is probable that economic benefits will
flow to the entity.
Un-invoiced fees at the balance sheet date are valued at the fair value of the consideration
receivable when it is probable that economic benefits will flow to the Group. Where income is
invoiced in advanced of work being completed, revenue is treated in the first instance as
deferred income and recognised when the services are performed by the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss. The cost of an item of property, plant and equipment initially
recognised includes its purchase price and any cost that is directly attributable to bringing the
asset to the location and condition necessary for use. Depreciation is recognised so as to
write-off the cost of assets less their residual values over their estimated useful lives, using the
straight-line method, on the following bases:
Computer equipment
33% per annum
Fixtures and fittings
33% per annum
The estimated useful lives, residual values and depreciation method are reviewed at the end
of each reporting period, with the effect of any changes in estimate accounted for on a
prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. The gain or loss
arising on the disposal of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the Statement of comprehensive
income.
47
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Investment in subsidiaries
In the company’s separate annual financial statements, investments in subsidiaries are carried
at cost less any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of
exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by
the company, plus any costs directly attributable to the purchase of the subsidiary.
Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a
subsidiary nor an interest in a joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is not control over those
policies.
The results and assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting. Under the equity method, an investment in
an associate is initially recognised in the consolidated statement of financial position at cost
and adjusted thereafter to recognise the Group’s share of profit or loss and other
comprehensive income of the associate.
An investment in an associate is accounted for using the equity method from the date on
which the investee becomes an associate. On acquisition of the investment in an associate,
any excess of cost over the Group’s share of the net fair value of the identifiable assets and
liabilities of the investee is recognised as goodwill, which is included in the carrying amount of
the investment.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the
Group becomes a party to the contractual provisions of the instrument.
Financial assets can be divided into the following categories: loans and receivables, financial
assets at fair value through profit or loss, available-for-sale financial assets and held-to-
maturity investments. Financial assets are assigned to the different categories by
management on initial recognition, depending on the purpose for which the instruments were
acquired. The designation of financial assets is re-evaluated at every reporting date at which
a choice of classification or accounting treatment is available.
De-recognition of financial instruments occurs when the rights to receive cash flows from
investments expire or are transferred and substantially all of the risks and rewards of
ownership have been transferred. An assessment for impairment is undertaken at least at
each balance sheet date whether or not there is objective evidence that a financial asset or a
group of financial assets is impaired.
48
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Trade receivables
Trade receivables are measured at initial recognition at fair value plus, if appropriate, directly
attributable transaction costs and are subsequently measured at amortised cost using the
effective interest method. Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement when there is objective evidence that the asset is
impaired. The allowance recognised is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at an
effective interest rate computed at initial recognition.
Loans receivable
Loans receivable are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the Group or Company provides money
directly to a debtor with no intention of trading the receivables. Loans receivable are
measured at initial recognition at fair value plus, if appropriate, directly attributable transaction
costs and are subsequently measured at amortised cost using the effective interest method,
less provision for impairment. Any change in their value is recognised in the income
statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits that are readily
convertible to a known amount of cash and are subject to an insignificant risk of change in
value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial
liability and an equity instrument. A financial liability is a contractual obligation to either deliver
cash or another financial asset to another entity or to exchange a financial asset or financial
liability with another entity, including obligations which may be settled by the Group using its
equity instruments. An equity instrument is any contract that evidences a residual interest in
the assets of the Group after deducting all of its liabilities. The accounting policies adopted for
specific financial liabilities and equity instruments are set out below.
Financial liabilities
At initial recognition, financial liabilities are measured at their fair value plus, if appropriate, any
transaction costs that are directly attributable to the issue of the financial liability. After initial
recognition, all financial liabilities are measured at amortised cost using the effective interest
method.
Pensions
The Group contributes to defined contribution schemes for the benefit of its directors and
employees. Contributions payable are charged to the statement of comprehensive income in
the year they are payable.
49
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net
profit as reported in the profit or loss, because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the
carrying amount of assets and liabilities in the financial information and the corresponding tax
bases used in the computation of taxable profit, and, is accounted for using the balance sheet
liability method. Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled. Deferred tax is charged or credited in the profit or
loss, except when it relates to items credited or charged in other comprehensive income
directly to equity, in which case the deferred tax is also dealt with in other comprehensive
income.
Deferred tax assets
Management regularly assesses the likelihood that deferred tax assets will be recovered from
future taxable income. No deferred tax asset is recognised when management believe that it
is more likely than not that a deferred asset will not be realised.
Impairment of assets
The Group assesses at each statement of financial position date if there is any indication that
an asset may be impaired. If any such indication exists, the Group estimates the recoverable
amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated
for the individual asset. If it is not possible to estimate the recoverable amount of the individual
asset, the recoverable amount of the cash-generating unit to which the asset belongs is
determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less
costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of
the asset is reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation
is recognised immediately in profit or loss.
50
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Impairment of assets (continued)
An entity assesses at each reporting date whether there is any indication that an impairment
loss recognised in prior periods for assets other than goodwill may no longer exist or may have
decreased. If any such indication exists, the recoverable amounts of those assets are
estimated.
The increased carrying amount of an asset other than goodwill attributable to a reversal of an
impairment loss does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation or
amortisation other than goodwill is recognised immediately in profit or loss.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of the amount can be made. If the effect is material,
provisions are determined by discounting the expected future cash flows at an appropriate pre-
tax discount rate.
Operating leases
Rentals payable under operating leases, net of lease incentives, are charged to the statement
of comprehensive income on a straight-line basis over the term of the lease.
Share capital / equity instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company are
recorded at the proceeds received, net of direct issue costs. The Company has one class
Ordinary share which carries no right to fixed income. Each share carries the right to one vote
at general meetings of the Company.
Share based payments
Equity-settled share-based payments to employees and directors are measured at the fair
value of the equity instruments at grant date. The fair value excludes the effect of non-market-
based vesting conditions.
The fair value determined at the grant date of the equity-settled share based-payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest. At each balance sheet date, the Group revises the
estimate of the number of equity instruments expected to vest as a result of the effect of non-
market-based vesting conditions. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate, with
a corresponding adjustment to equity reserves.
51
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Adoption of new and revised standards
The following pronouncements have been adopted in the year and either had no impact on the
financial statements or resulted in changes to presentation and disclosure only:
▪
▪
IAS 7 (amendments) Statement of cashflows disclosure *
IAS 12 (amendments) Income taxes on Recognition of deferred tax losses for unrealised
losses *
▪ Annual Improvements 2014-2016 Cycles *
*Effective for annual periods beginning on or after 1 January 2017.
Standards issued but not yet effective
At the date of authorisation of these financial statements, the following Standards and
Interpretations relevant to the Group, which have not been applied in these financial
statements, were in issue but were not yet effective. In some cases, these standards and
guidance have not been endorsed by the European Union.
▪
▪
▪
▪
▪
▪
▪
IFRS 2 (amendments) Classification and Measurement of Share-based Payment
Transactions **
IFRS 9 Financial Instruments **
IFRS 15 (amendments) Revenue from Contracts with Customers **
IFRIC 22 Foreign Currency Transactions and Advance Consideration **
IFRS 16 Leases ***
IFRIC 23 Uncertainty over Income Tax Treatments ***
IAS 28 (amendments) Long-term Interests in Associates and Joint Ventures***
▪ Annual improvements 2015-2017 cycle***
**Effective for annual periods beginning on or after 1 January 2018
***Effective for annual periods beginning on or after 1 January 2019
The directors have assessed the impact of the standards in issue but not yet effective and
have noted below their conclusions on the key new standards.
52
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
2
Accounting policies (continued)
Standards issued but not yet effective (continued)
IFRS 9 Financial Instruments
IFRS 9 issued in July 2014 introduces new requirements for the classification and
measurement of financial instruments. It is effective for all accounting periods beginning on or
after 1 January 2018.
The directors have considered the impact of IFRS 9 Financial Instruments for the next
accounting period, and believe the key changes to the Company's accounting policies to be as
follows:
▪ The directors will assess the recoverability of receivables and loans with a view to
recognising any impairment losses as necessary in line with the expected credit loss
basis.
▪ The directors are aware of the additional disclosure requirements of IFRS 9 Financial
Instruments and will ensure their inclusion in the financial statements for the year ended
31 March 2019.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 (latest amendment issued in April 2016) introduces a new standard for the recognition
of revenue from contracts with customers. It is effective for all accounting periods beginning
on or after 1 January 2018.
The directors have considered the potential impact of IFRS 15 Revenue from Contracts with
Customers for the next accounting period and believe there to be no impact on the revenue
recognition policies of the Company.
IFRS 16 Leases
IFRS 16 (latest amendment issued in January 2016) introduces a new basis for the accounting
of leases. It is effective for all accounting periods beginning on or after 1 January 2019.
The directors have considered the potential impact of IFRS 16 Leases for the accounting
period beginning on 1 January 2019 for all existing lease agreements. At present, the existing
lease agreements are either of too short a nature or too low a value to qualify for a transitional
change. The directors are aware that the new standard may impact future lease agreements
and will account for any new agreements in line with IFRS 16 Leases.
3
Critical accounting estimates and judgements
In application of the Group’s accounting policies, which are described in note 2, the directors
are required to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are
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.
53
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
3
Critical accounting estimates and judgements (continued)
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimations, that the
directors have made in the process of applying the Group’s accounting policies and that have
a significant effect on the amounts recognised in the financial statements.
Revenue recognition
Work in progress is calculated on a project by project basis using the fair value of chargeable
time that is un-invoiced at the period end. Historic analysis shows that recovery rates of work
in progress are very high; the Group does not expect any work in progress to be irrecoverable.
Work in progress is reviewed on a monthly basis to ensure it is recognised appropriately, it is
probable that economic benefits will flow to the Group and that the fair value can be reliably
measured (note 4).
Share based payments
The Company has granted share options to certain employees and directors of the Group.
The share options granted become exercisable at varying future dates. If certain conditions
are met, following the vesting period, the employee will be eligible to exercise their option at an
exercise price determined on the date the share options are granted.
The share-based payment charge is recognised in the statement of comprehensive income
and is calculated based on the Company’s estimate of the number of share options that will
eventually vest.
Assumptions regarding the fair value of the Company’s shares and assumptions regarding
employee fluctuation are taken into account when measuring the value of share-based
payments for employees, which are required to be accounted for as equity-settled share-
based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro
rata in the statement of comprehensive income to reflect the services rendered as
consideration during the vesting period (note 20).
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at
the balance sheet date, that may have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are discussed below.
Impairment of goodwill
The carrying amounts of the Group’s assets value are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated and an impairment loss is recognised where the
recoverable amount is less than the carrying value of the asset. Any impairment losses are
recognised in the income statement.
54
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
4
Revenue
An analysis of the Group’s revenue is as follows:
Continuing operations - rendering of services
Specialist housing consultancy income
Treasury management consultancy income
2018
£
5,320,054
585,167
5,905,221
2017
£
5,456,328
471,873
5,928,201
Interest revenue on bank deposits
3,596
5,512
5,908,817
5,933,713
5
Operating segments
The Group has three reportable segments, being consultancy, interim management and
treasury management services, the results of which are included within the financial
information. In accordance with IFRS8 ‘Operating Segments’, information on segment assets
is not shown, as this is not provided to the chief operating decision-maker.
The principal activities of the Group are as follows:
Consultancy – a range of services to support the business needs of a diverse range of
organisations (including housing associations and local authority) across the housing sector.
The majority of consultancy projects run over one to two months requiring on-going business
development to ensure a full pipeline of consultancy work for the employed team.
Interim Management – individuals are embedded within housing organisations (normally
registered providers, local authorities and ALMOs) in a substantive role, normally for a
specified period of time. Interim management provides the Group with a more extended
forward sales pipeline as the average contract is for six months. This section of the business
provides low risk as the interim consultants are placed on rolling contractual basis and
provides minimal financial commitment as associates to the business, rather than employees,
are used for these roles.
Treasury Management – a range of services providing treasury advice and fund-raising
services to non-profit making organisations working in the affordable housing and education
sectors. Within this segment of the business a number of client organisations enter into fixed
period retainers to ensure immediate call-off of the required services.
The accounting policies of the reportable segments are the same as the Group’s accounting
policies described in note 2. Segment profit represents the profit earned by each segment,
without allocation of central administration costs, including Directors’ salaries, finance costs
and income tax expense. This is the measure reported to the Group’s Co-Chief Executives for
the purpose of resource allocation and assessment of segment performance.
55
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
5
Operating segments (continued)
Revenue from Consultancy
Revenue from Interim management
Revenue from Treasury management
Cost of sales from Consultancy
Cost of sales from Interim management
Cost of sales from Treasury management
Gross profit from Consultancy
Gross profit from Interim management
Gross profit from Treasury management
2018
£
4,214,909
1,152,950
537,362
5,905,221
3,036,105
914,801
392,550
4,343,456
1,178,804
238,149
144,812
1,561,765
2017
£
3,712,790
1,743,538
471,873
5,928,201
2,627,985
1,483,353
342,128
4,453,466
1,084,805
260,185
129,745
1,474,735
Administrative expenses
(1,037,287)
(964,692)
Operating profit
524,478
510,043
Within consultancy revenues, approximately 3% (2017: 11%) has arisen from the segments
largest customer; within interim management 14% (2017: 9%); within treasury management
46% (2017: 18%).
Geographical information
Revenues from external customers, based on location of the customer, are shown below:
UK
Republic of Ireland
Africa
2018
£
5,530,360
298,212
76,649
5,905,221
2017
£
5,724,527
157,628
46,046
5,928,201
56
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
6
Profit before taxation
Profit before taxation is arrived at after charging:
Auditors’ remuneration
Depreciation of property, plant and equipment
Staff costs (see note 7)
Operating lease costs – land and buildings
7
Staff costs
The average monthly number of employees (including
directors) employed by the Group was:
Aggregate remuneration (including directors)
Wages and salaries
Share-based payments
Pension contributions
Social security costs
Directors’ remuneration
Salary (including taxable benefits)
Share-based payments
Pension contributions
2018
£
37,975
31,639
2,943,663
49,605
2018
40
2018
£
2,436,180
135,262
96,160
276,061
2,943,663
2018
£
333,957
65,871
12,600
412,428
2017
£
37,200
11,694
2,816,112
49,605
2017
37
2017
£
2,322,383
147,651
88,565
257,513
2,816,112
2017
£
347,362
65,500
12,000
424,862
Two directors are members of the company’s defined contribution pension scheme.
The amounts set out above include remuneration to the highest paid director as follows:
Salary (including taxable benefits)
Share-based payments
Pension contributions
126,389
21,957
6,300
154,646
106,513
22,866
6,000
135,379
57
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
8
Taxation
Corporation tax:
Current year
Adjustment in respect of prior years
Deferred tax charge
2018
£
123,390
-
123,390
-
123,390
2017
£
117,738
(18,064)
99,674
11,671
111,345
The tax charge for the year can be reconciled to the profit in the income statement as follows:
2017
£
2018
£
Profit before taxation
528,074
515,555
Tax at the UK corporation tax rate of 19% (2017: 20%)
100,334
103,111
Expenses not deductible
Adjustment in respect of prior years
23,056
-
23,056
26,298
(18,064)
8,234
Tax expense for the year
123,390
111,345
9
Earnings per share
Basic earnings per share is calculated by dividing the profit after tax attributable to the equity
holders of the Group by the weighted average number of shares in issue during the year.
Diluted earnings per share is calculated by adjusting the weighted average number of shares
outstanding to assume conversion of all potential dilutive shares, namely share options.
Profit after tax attributable to owners of the parent
Weighted average number of shares
- Basic
- Diluted
Basic earnings per share
Diluted earnings per share
2018
£
404,684
2017
£
404,210
33,746,926
38,429,011
32,633,381
37,301,635
1.20p
1.05p
1.24p
1.08p
58
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
10 Goodwill
Group
Cost
At 1 April 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated impairment losses
At 1 April 2016 and 31 March 2017
Impairment losses for the year
At 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Goodwill
£
317,688
-
317,688
1,710,000
2,027,688
-
-
-
317,688
317,688
2,027,688
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating
units that are expected to benefit from that business combination.
On 27th October 2017, the Group acquired the business of pod LLP and pod Partnership
Limited for a fair value consideration of £1,710,000, satisfied by cash consideration of
£625,000 and 2,614,458 shares issued at the market price of 41.5p per share. Acquisition
related costs of £26,307 have been recognised as an expense in Administrative expenses in
the Statement of comprehensive income.
The Group tests goodwill annually for impairment, or more frequently if there are any
indications that goodwill might be impaired.
The recoverable amount of goodwill is determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding growth rate of client base
and project fees. Management’s approach to determining the values to each key assumption
is based on past experience and project work already secured for future periods.
Management have projected cash flows over a period of 5 years, based on a minimum
average growth rate of 10% per annum. Projected cash flows have been discounted at a rate
of 5%.
59
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
11 Property, plant and equipment
Group
Cost
At 1 April 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated depreciation
At 1 April 2016
Charge for the year
At 31 March 2017
Charge for the year
At 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Company
Cost
At 1 April 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated depreciation
At 1 April 2016
Charge for the year
At 31 March 2017
Charge for the year
At 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Fixtures
and fittings
£
Computer
equipment
£
-
34,339
34,339
-
34,339
-
953
953
11,435
12,388
-
33,386
21,951
20,111
13,260
33,371
76,827
110,198
5,457
10,741
16,198
20,204
36,402
14,654
17,173
73,796
Total
£
20,111
47,599
67,710
76,827
144,537
5,457
11,694
17,151
31,639
48,790
14,654
50,559
95,747
Computer
equipment
£
-
-
-
64,322
64,322
-
-
-
5,355
5,355
-
-
58,967
60
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
12
Investment in subsidiaries
Company
Cost
At 1 April 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated impairment losses
At 1 April 2016 and 31 March 2017
Impairment losses for the year
At 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Investments
in subsidiaries
£
9,602,280
147,651
9,749,931
135,262
9,885,193
-
-
-
9,602,280
9,749,931
9,885,193
The addition of £135,262 represents capital contributions made
the Company’s
subsidiaries in respect of the share option expense recognised in those subsidiaries on share
options issued by the Company.
to
Details of the Company’s subsidiaries at 31 March 2018 are as follows:
Place of
incorporation and
operation
Altair Consultancy and
Advisory Services Limited
Aquila Treasury and
Finance Solutions Limited
England and Wales
England and Wales
Proportion of
ownership and
voting rights held
100%
100%
Principal activity
Specialist housing
consultancy
Treasury
management
consultancy
The accounting reference date of each of the subsidiaries is co-terminus with that of the
Company. The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall
West, London, SE16 4SA.
61
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
13
Investment in Associates
Details of the Group’s material associates at 31 March 2018 are as follows:
Place of
incorporation and
operation
Principal activity
Proportion of
ownership and
voting rights held
3C Consultants Limited
England and Wales
IT consultancy
25%
The principal activity of the associate is seen as complementing the Group’s operations and
contributing to achieving the Group’s overall strategy.
The above associate is accounted for using the equity method in these consolidated financial
statements as set out in the accounting policies in note 2.
Summarised financial information in respect of the Group’s associates are set out below:
3C Consultants Limited
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity attributable to owners of the Company
Revenue
Profit or loss from continuing operations
Post-tax profit or loss from discontinued operations
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income
Dividends received from associate during the year
Year ended
31 March 2018
£
400,410
2,210
(282,983)
(81,986)
37,651
1,000,905
(54,838)
-
(54,838)
-
(54,838)
-
Reconciliation of the above summarised financial information to the carrying amount
recognised in the consolidated financial statements:
Net assets of associates
Proportion of the Group’s ownership interest in the associate
Goodwill
Carrying amount
2018
£
37,651
9,413
217,207
226,620
62
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
14
Investments
Cost
At 1 April 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated impairment losses
At 1 April 2016 and 31 March 2017
Impairment losses for the year
At 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Equity
investment
£
-
-
-
121,104
121,104
-
-
-
-
-
121,104
Investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured is held at cost less impairment.
15 Trade and other receivables
Group
2018
£
Group
2017
£
Company
2018
£
Company
2017
£
Trade receivables
Group undertakings
Other receivables
Prepayments and accrued
income
1,815,073
-
24,115
1,153,940
-
11,055
-
1,124,665
2,259
270,490
2,109,678
185,192
1,350,187
575
1,127,499
-
-
47
-
47
The directors consider that the carrying amount of trade receivables approximates to their fair
value. Trade and other receivables are not considered impaired.
The aged profile of trade receivables not impaired is as follows:
Total
£
1,815,073
1,153,940
<30 days
£
1,650,520
30-60 days
£
-
66-90 days
£
76,495
774,753
299,432
30,933
31 March 2018
31 March 2017
>90 days
£
88,058
48,822
63
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
16 Trade and other payables
Trade payables
Other payables
Amounts owed to Group
undertakings
Taxes and social security costs
Accruals and deferred income
Group
2018
£
254,782
88,063
-
200,487
551,358
1,094,690
Group
2017
£
Company
2018
£
Company
2017
£
274,420
27,668
-
341,020
308,815
951,923
12,505
65,770
500,000
-
38,696
616,971
140
-
183,865
-
33,375
217,380
The directors consider that the carrying amount of trade payables approximates to their fair
value.
Included in other payables is £65,770 in respect of contingent consideration on the
acquisition of investment in associate. There is minimal uncertainty with regard to the
amount and timing of the outflow.
17 Share capital
2018
£
2017
£
Allotted, called up and fully paid
35,265,461 (2017: 32,651,003) Ordinary shares of 5p each
1,763,273
1,632,550
The Company has one class Ordinary share which carries no right to fixed income. Each
share carries the right to one vote at general meetings of the Company.
A reconciliation of share capital, share premium account and merger reserve is set out below:
At 1 April 2016
Issued at 5p per share on
31 August 2016
At 31 March 2017
Issued at 41.5p per share on
27 October 2017
At 31 March 2018
Number of
Ordinary
shares
Amount
called up and
fully paid
£
Share
premium
£
Merger
reserve
£
32,608,688
1,630,434
533,235 7,184,334
42,315
32,651,003
2,614,458
35,265,461
2,116
1,632,550
-
-
533,235 7,184,334
130,723
-
954,277
1,763,273 1,487,512 7,184,334
64
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
18 Reserves
The share premium account represents the amount received on the issue of Ordinary shares
by the Company in excess of their nominal value and is non-distributable.
The merger relief reserve arose on the Company’s acquisition of Altair. There is no legal
share premium on the shares issued as consideration as section 612 of the Companies Act
2006, which deals with merger relief, applies in respect of the acquisition.
The reverse acquisition reserve arises due to the elimination of the Company’s investment in
Altair. Since the shareholders of Altair became the majority shareholders of the enlarged
group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer.
19 Dividends
Amounts recognised as distributions to equity holders
Final dividend for the year ended 31 March 2017 of 0.50p per
share (2016: 0.44p)
Interim dividend for the year ended 31 March 2018 of 0.26p
per share (2017: 0.24p)
Proposed final dividend for the year ended 31 March 2018 of
0.55p per share (2017: 0.50p)
2018
£
2017
£
163,255
143,478
91,690
254,945
78,362
221,840
193,960
163,255
The proposed final dividend is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements. The proposed
dividend is payable on 3 August 2018 to shareholders on the Register of Members at 20 July
2018. The total recommended dividend to be paid is 0.55p per share. The payment of this
dividend will not have any tax consequences for the Group.
20 Share-based payment transactions
The Company operates an Unapproved Scheme and an Enterprise Management Incentives
Scheme. The total expense recognised in the year to 31 March 2018 arising from share-
based payment transactions is £135,262 (2017: £147,651).
Unapproved scheme
Number
Weighted average
exercise price
Number of options outstanding at 1 April 2017
Granted during period
Forfeited during period
Exercised during period
Number of options outstanding as at 31 March 2018
2,587,093
-
-
-
2,587,093
Number of options exercisable as at 31 March 2018
2,587,093
£0.23
-
-
-
£0.23
£0.23
The exercise price of the options outstanding at 31 March 2018 ranges between £0.10 and
£0.42. The weighted average remaining contractual life of the options outstanding at 31
March 2018 is 2 years (2017: 3 years).
65
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
20 Share-based payment transactions (continued)
EMI scheme
Number
Weighted average
exercise price
Number of options outstanding at 1 April 2017
Granted during period
Forfeited during period
Exercised during period
Number of options outstanding as at 31 March 2018
2,119,141
-
(41,158)
-
2,077,983
Number of options exercisable as at 31 March 2018
1,607,983
£0.05
-
£0.05
-
£0.05
£0.05
The weighted average remaining contractual life of the options outstanding at 31 March 2018
is 7 years (2016: 8 years).
21 Operating lease arrangements
At the balance sheet date, the Group had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
2018
£
49,650
21,524
71,174
2017
£
49,650
71,106
120,756
Operating lease payments represent rentals payable by the Group for certain of its office
properties.
22 Remuneration of key management personnel
The remuneration of the key management personnel of the Group, including all directors, is
set out below in aggregate for each of the categories specified in IAS 24 Related Party
Disclosures.
Short-term employee benefits
Share-based payments
Post-retirement benefits
2018
£
571,880
113,000
17,700
702,580
2017
£
694,790
112,956
12,000
819,746
66
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
23 Related party disclosures
Balances and transactions between the Group and other related parties are disclosed below:
Dividends totalling £171,722 (2017: £153,646) were paid in the year in respect of Ordinary
shares held by the Company’s directors.
During the year the Group charged £12,327 (2017: £24,060) to DMJ Consultancy Services
Limited for administrative services, a company in which Derek Joseph serves as a director. At
31 March 2018, the balance owed to the Group by DMJ Consulting Limited was £5,000 (2017:
£14,436).
During the year the Group was charged £nil (2017: £257) by Jeffrey Zitron for consultancy
services.
At 31 March 2018, the balance owed to Richard Wollenberg for services as a non-executive
director were £4,000 (2017: £1,906)
24 Retirement benefit schemes
Defined contribution schemes
2018
£
2017
£
Contributions payable by the Group for the year
96,160
88,565
25 Control
In the opinion of the Directors there is no single ultimate controlling party.
26 Financial instruments
Financial risk management
The Group’s activities are exposed to a variety of market risk (including foreign currency risk
and interest rate risk), credit risk and liquidity risk.
Credit risk
Credit risk is the risk of financial loss to the Group resulting from counterparties failing to
discharge their obligations to the Group. The Group’s principal financial assets are trade and
other receivables and cash and cash equivalents.
The Group considers its credit risk to be low. Of the total trade receivables at the 2018 year
end, £121,626 (2017: £107,604) is due from one customer. There are no other customers that
represent more than 7% of the total balance of trade receivables. The maximum exposure to
credit risk is equal to the carrying value of these instruments.
Liquidity risk
Liquidity risk is the risk of the Group being unable to meet its liabilities as they fall due. The
Group manages liquidity risk by maintaining sufficient cash reserves and holding banking
facilities, and by continuously monitoring forecast and actual cash flows. In addition, the
Group is a cash generative business with income being received regularly over the course of
the year. The Group held cash reserves of £969,987 (2017: £2,312,600) at the year-end.
67
Aquila Services Group plc
Notes to the financial statements (continued)
For the year ended 31 March 2018
26 Financial instruments (continued)
Foreign currency risk
Foreign exchange risk is the risk of loss due to adverse movements in the exchange rates
affecting the Group’s profits and cash flows. Only a very small number of clients are invoiced
in Euros and USD and the foreign exchange exposure is not considered a significant risk. The
Group’s principal financial assets are cash and cash equivalents and trade and other
receivables, which are almost exclusively denominated in Pounds Sterling.
Interest rate risk
The Group does not undertake any hedging activity in this area. The main element in interest
rate risk involves sterling deposits which are placed on deposit.
Capital risk management
Internal working capital requirements are low and are regularly monitored. Externally imposed
capital requirements to which the Group is subject have been complied with in the year.
27 Post Balance Sheet event
There are no post balance sheet events.
28 Capital commitments
There were no capital commitments at 31 March 2018.
29 Contingent liabilities
There were no contingent liabilities at 31 March 2018.
68
Aquila Services Group plc
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Aquila Services Group plc will be held at
Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 31 July 2018 at 4:30 pm, for the
purpose of considering and, if thought fit, passing the following resolutions, of which resolutions
numbered 1 to 9 and 11 will be proposed as ordinary resolutions and resolution 10 will be proposed as
a special resolution:
Ordinary business
1.
2.
3.
4.
5.
6.
7.
To receive the reports of the directors and auditor and the financial statements for the period
ended 31 March 2018.
To approve the remuneration report for the period ended 31 March 2018.
To approve the revised remuneration policy as implemented from 1 October 2017.
That, following a recommendation by the directors, a final dividend payment of 0.55p per
Ordinary Share shall be paid to those persons who were named on the register of
shareholders on 20 July 2018.
That Saffery Champness LLP be and is hereby reappointed as auditor of the Company and
that the directors be authorised to determine the auditor's remuneration.
To re-elect as a director, Derek Joseph, who was appointed at the AGM held on 19 August
2015.
To re-elect as a director, Richard Wollenberg, who was appointed at the AGM held on 19
August 2015.
8.
To re-elect as a director, Jeff Zitron, who was appointed at the AGM held on 19 August 2015.
Special business
9.
That, in accordance with section 551 of the Companies Act 2006 ("CA 2006"), the directors be
generally and unconditionally authorised to issue and allot equity securities (as defined by
section 560 of the CA 2006) up to an aggregate nominal amount of:
9.1 £209,755 in connection with the valid exercise of the options (both approved and
unapproved) granted by the Company (as set out in the prospectus issued by the Company
dated 20th July 2015), any unapproved options granted to current or former officers of the
Company and options granted to employees and officers of the Company and/or its
subsidiaries in accordance with the terms of the Company's Employee Share Option
Scheme ("Options"); and
9.2
in any other case, £587,758 (such amount to be reduced by the nominal amount of any
equity securities allotted pursuant to the authorities in paragraph 9.1 above in excess of the
stated amount)
provided that this authority shall, unless renewed, varied or revoked by the Company, expire
on the date of the next annual general meeting of the Company save that the Company may,
before such expiry, make offers or agreements which would or might require relevant
securities to be allotted and the directors may allot relevant securities in pursuance of such
offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the
directors to allot relevant securities but without prejudice to any allotment of shares or grant of
rights already made, offered or agreed to be made pursuant to such authorities.
69
Aquila Services Group plc
Notice of Annual General Meeting
10. That, subject to Resolution 9 above being duly passed, the directors of the Company be and
are hereby empowered, pursuant to section 570 of the CA 2006, to allot equity securities (as
defined in section 560 of the CA 2006) wholly for cash pursuant to the authority conferred
upon them by Resolution 9 above (as varied, renewed or revoked from time to time by the
Company at a general meeting) as if section 561(1) of the CA 2006 did not apply to any such
allotment provided that such power shall be limited to the allotment of equity securities:
10.1 in connection with a rights issue or any other pre-emptive offer in favour of holders of equity
securities where the equity securities offered to each such holder is proportionate (as
nearly as may be) to the respective amounts of equity securities held by each such holder
subject only to such exclusion or other arrangements as the Directors may consider
appropriate to deal with fractional entitlements or legal or practical difficulties under the
laws of or the requirements of any recognised regulatory body in any territory or otherwise;
10.2 in connection with the valid exercise of Options;
10.3 in connection with the valid exercise of any share options granted to employees of the
Group in accordance with the terms of the Employee Share Option Scheme; and
10.4 otherwise, up to a maximum nominal amount of £88,163.
The power granted by this resolution will expire on the conclusion of the Company's next
annual general meeting (unless renewed, varied or revoked by the Company prior to or on
such date) save that the Company may, before such expiry make offers or agreements which
would or might require equity securities to be allotted after such expiry and the directors may
allot equity securities in pursuance of any such offer or agreement notwithstanding that the
power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted to the
directors to allot equity securities as if section 561(1) of the CA 2006 did not apply but without
prejudice to any allotment of equity securities already made or agreed to be made pursuant to
such authorities.
11. That the Company be and is hereby authorised generally and unconditionally to make market
purchases (within the meaning of section 693(4) of the CA 2006) of its ordinary shares
(“Ordinary Shares”) provided that:
11.1 the maximum aggregate number of Ordinary Shares that may be purchased is 3,526,546;
11.2 the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is
£0.05;
11.3 the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the
higher of:
(a)
(b)
105 per cent of the average closing middle market quotations for the Ordinary Shares
as quoted on the Official List of the London Stock Exchange for the five business
days prior to the day the purchase is made; and
the value of an Ordinary Share calculated on the basis of the higher of the price
quoted for:
(i)
(ii)
the last independent trade of; and
the highest current independent bid for any number of Ordinary Shares on the
Official List.
70
Aquila Services Group plc
Notice of Annual General Meeting
11.4 The authority conferred by this resolution shall expire on the conclusion of the Company's
next annual general meeting save that the Company may, before the expiry of the authority
granted by this resolution, enter into a contract to purchase Ordinary Shares which will or
may be executed wholly or partly after the expiry of such authority.
Registered office:
Tempus Wharf
29a Bermondsey Wall West
London
SE16 4SA
Notes
By order of the board
Dr Fiona May Underwood
Company Secretary
27 June 2018
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to exercise all or any of their rights to
attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the company.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may
not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy you may
photocopy the form of proxy. Please indicate the proxy holder’s name and the number of shares in relation to which they are
authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if
the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the
same envelope.
A form of proxy accompanies this notice. Forms of proxy, to be valid, must be delivered to the company’s registrars, Neville
Registrars Limited, Neville House, 18 Laurel Lane, Halesowen B63 3DA in accordance with the instructions printed thereon, not
less than 48 hours before the time appointed for the holding of the meeting.
If you are not a member of the company but you have been nominated under section 146 of the Companies Act 2006 (the ‘Act’)
by a member of the company to enjoy information rights, you do not have the rights of members in relation to the appointment of
proxies set out in notes 1, 2 and 3. The rights described in those notes can only be exercised by members of the company.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If you either select the “Withheld” option or if no voting indication is given, your proxy will vote or abstain from voting at
his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put
before the meeting.
Information regarding the meeting, including the information required by section 311A of the Act, is available from
www.aquilaservicesgroup.co.uk
As provided by Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered in the register of
members of the company 48 hours before the time set for the meeting shall be entitled to attend and vote at the meeting in
respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of securities
after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
As at close of business on 27 June 2018 the company’s issued share capital comprised 35,265,461 ordinary shares of 5 pence
each. Each ordinary share carries the right to one vote at a general meeting of the company and, therefore, the total number of
voting rights in the company at close of business on 27 June 2018 is 35,265,461.
Under section 319A of the Act, the company must answer any question you ask relating to the business being dealt with at the
meeting unless (a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is
undesirable in the interests of the company or the good order of the meeting that the question be answered.
If you are a person who has been nominated under section 146 of the Act to enjoy information rights (a ‘Nominated Person’), you
may have a right under an agreement between you and the member of the company who has nominated you to have information
rights (a ‘Relevant Member’) to be appointed or to have someone else appointed as a proxy for the meeting. If you either do not
have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you
and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights. Your main point of
contact in terms of your investment in the company remains the Relevant Member (or, perhaps, your custodian or broker) and
you should continue to contact them (and not the company) regarding any changes or queries relating to your personal details
and your interest in the company (including any administrative matters). The only exception to this is where the company
expressly requests a response from you.
11. Members satisfying the thresholds in section 338 of the Act may require the company to give, to members of the company entitled
to receive notice of the Annual General Meeting, notice of a resolution which those members intend to move (and which may
properly be moved) at the Annual General Meeting. A resolution may properly be moved at the Annual General Meeting unless
(i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the company’s constitution or
otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which may be dealt with at the
Annual General Meeting includes a resolution circulated pursuant to this right. A request made pursuant to this right may be in
hard copy or electronic form, must identify the resolution of which notice is to be given, must be authenticated by the person(s)
making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting.
71
Aquila Services Group plc
Notice of Annual General Meeting
12. Members satisfying the thresholds in section 338A of the Act may request the company to include in the business to be dealt with
at the Annual General Meeting any matter (other than a proposed resolution) which may properly be included in the business at
the Annual General Meeting. A matter may properly be included in the business at the Annual General Meeting unless (i) it is
defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or
electronic form, must identify the matter to be included in the business, must be accompanied by a statement setting out the
grounds for the request, must be authenticated by the person(s) making it and must be received by the company not later than 6
weeks before the date of the Annual General Meeting.
13. Members satisfying the thresholds in section 527 of the Act can require the company to publish a statement on its website setting
out any matter relating to (i) the audit of the company’s accounts (including the auditor’s report and the conduct of the audit) that
are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an auditor of the company ceasing to
hold office since the last Annual General Meeting, which the members propose to raise at the meeting. The company cannot
require the members requesting the publication to pay its expenses. Any statement placed on the website must also be sent to
the company’s auditor no later than the time it makes its statement available on the website. The business which may be dealt
with at the Annual General Meeting includes any statement that the company has been required to publish on its website
pursuant to this right.
14.
Copies of the directors’ service contracts will be available for inspection at the registered office of the company during usual
business hours from the date of this notice until the date of the Annual General Meeting, and also during and at least fifteen
minutes before the beginning of the Annual General Meeting.
72