1
Aquila Services Group plc
Annual report and financial statements
for the year ended 31 March 2020
Company Registration No. 08988813 (England and Wales)
Contents
Page
Group Highlights
Corporate Structure
Aquila at a Glance
Chair’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 Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flow
Company Statement of Cash Flow
Notes to the Financial Statements
Notice of Annual General Meeting
Directors and Advisors
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2
3
4
6
17
19
22
29
30
35
36
37
38
39
40
42
43
66
70
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Group Highlights
Our Purpose
To: make a better, more sustainable, and socially responsible world.
Our Vision
•
•
To have a direct and positive impact on communities and people’s lives in the UK and beyond.
To offer staff the opportunity to work in an environment which has a strong social focus and an opportunity to make a
positive impact.
To provide investors with the opportunity to support an organisation that combines strong performance with work
which makes a positive difference.
•
Our Culture and Values
• We Collaborate – working together to succeed together.
• We Innovate – we challenge the norm.
• We Care – we go the extra mile.
What We Do
Our work helps our clients to develop a response to a changing world and make a positive difference to the communities in
which they operate. We work with clients across housing and regeneration, sport and education, charity and government
sectors. We work across the UK and internationally.
Financial highlights
The comparison between this reporting period, the mid-year results and the previous year’s results for the Group is as
follows:
Turnover
Gross profit
Underlying operating profit
Share option charge
Restructuring costs relating to Covid-19
Acquisition costs
Share of profits from associate
Statutory profit after tax
EPS
Cash balances
Year ended
6 months to
Year ended
31 March 2020
(audited)
30 Sept 2019
(unaudited)
31 March 2019
(audited)
£000s
7,963
1,752
468
(105)
(186)
(51)
51
126
0.35p
828
£000s
3,891
980
306
(52)
-
-
-
195
0.55p
1,127
£000s
7,655
1,867
724
(117)
-
-
-
466
1.32p
1,719
Dividend
Due to the current economic climate and the requirement for the Group to maintain and retain cash reserves within the
business the directors do not propose a final dividend for the year end. The total dividend for the year was 0.30p (paid as
an interim dividend in December) compared to a final dividend of 0.89p in 2019.
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3
Corporate Structure
Aquila at a Glance
The Group is pleased to report that since the end of the financial year, changes to the corporate structure of the
organisation and the directors of the subsidiary boards are shown below.
Aquila Services Group plc
“Aquila”
Derek Joseph (Executive Chair)
Claire Banks (Finance Director & Co Sec)
Fiona Underwood (Executive Director)
Richard Wollenberg (Non-Executive)
Altair Consultancy and Advisory
Services Ltd
“Altair”
Directors:
Fiona Underwood (CEO)
Claire Banks
Michael Appleby
Cathy Beazley
Matt Carroll
Jim Lashmar
Chris Wood
Aquila Treasury and Finance
Solutions Ltd
“ATFS”
Directors:
David Mairs (CEO)
Claire Banks
Chris Wood
Oaks Consultancy Ltd
“Oaks”
Directors:
Adam Walker (CEO)
Claire Banks
Rahul Bissoonauth
Luke Southall
Aquila Services Group plc (‘the
company’) is the holding company
for Altair Consultancy & Advisory
Services Ltd (‘Altair’), Aquila Treasury
& Financial Solutions Ltd (‘ATFS’) and
Oaks Consultancy Ltd (‘Oaks’) which
form the group (‘the Group’).
Oaks, an independent consultancy,
assists education and sporting
organisations and joined the Group
on 11 June 2019 and Finalysis
acquired on 31 January joined the
Group as part of ATFS.
The Group continues to implement
its business strategy of widening
the offer to encompass all the
professional consultancy services that
the Groups client base demands. The
Group now encompasses specialisms
in affordable housing, regeneration,
sport and education consultancy. This
includes the provision, financing and
management of affordable housing
and related activities, advising and
supporting organisations that benefit
local communities such as housing
associations, local authorities,
government agencies, multi-academy
trusts, other non-profit organisations
and those set up for community
benefit, as well as providing related
high- level business advice to the
commercial property sector. The
acquisition of Oaks and Finalysis was
a key step in fulfilling this strategy.
Group members
Altair Consultancy & Advisory
Services Ltd
•
Specialist management
consultancy company
• Works with organisations that
govern, manage, regulate or build
housing
•
• Operates within the UK, Republic
of Ireland and with an increasing
international presence
Provides development,
governance, financial, HR,
compliance, transformation and
strategic advice and executive
and non-executive recruitment
• Work is delivered through
advisory projects on a fixed fee
basis, retained contracts in our
finance and governance business
streams and interim placements
for members of the property team
at client sites
Aquila Treasury & Financial
Solutions Ltd
•
Specialist treasury management
consultancy authorised and
regulated by the Financial
Conduct Authority.
• Clients include local authorities,
charities, housing associations,
education bodies, private
sector housing providers and
government bodies.
• Operates across the UK and
•
Ireland.
Provides advice on treasury
policy and strategy, debt and
capital market finance, banking
and card merchant services,
value for money, and financial
market information services.
• Work is delivered through fixed
price contracts as retained
general treasury advisers
and information subscription
agreements
Specific advisory project
contracts are on a fixed fee
basis, won through competitive
procurement tenders, payable on
agreed project milestones
•
Oaks Consultancy Limited
Specialist sports, charity,
•
statutory and education
consultancy
• Clients include national and
international sports teams and
governing bodies, national
and international charities,
statutory organisations and local
authorities, multi academy trusts
and teaching school alliances,
housing associations and
corporate businesses
•
• Operates extensively within the
UK and Europe and increasingly
within India and Asia
Provides consultancy advice
and guidance in relation to
strategic and business planning,
organisational and cultural
change programmes, impact
measurement, together with
implementation support in
relation to income generation and
diversification
• Work is delivered through a
mix of fixed price contracts
and retained general advisory
services
Investments
3C Consultancy Limited – 25% equity
holding
The Company provides IT consultancy
services to the housing sector.
AssetCore – 6% equity holding
A digital financial debt management
platform for the affordable housing
sector.
These investments form part of the
Group’s continuing strategy to es-
tablish a presence as a key player in
a range of IT consultancy and digital
initiatives in the sector.
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Chair’s Statement
Dear Shareholder,
financial support services.
I am pleased to present the Annual
Report and the Financial Statements
for the year to 31st March 2020.
The report has been redesigned to
provide a more accessible overview of
the Group businesses, activities and
outcomes for the year so I am taking
this opportunity to give an insight to
our trading and decisions for the past
year and our thoughts and plans for
the future.
‘May you live in interesting times’ is an
old Chinese greeting although some
might say a curse. The implication
was not avoiding boredom but that
the road ahead would be dangerous
and you would need all your skill and
endeavour to successfully complete
your journey. How apt this greeting
would have been at the start of
the year. So much has happened.
I am pleased to report we are now
recognising the successes and
overcoming the difficulties so that we
look forward with confidence.
We have been diversifying our
business activities within Altair,
updating and expanding our
transformation offering, growing and
strengthening our technical teams to
support clients with their compliance
and cladding issues, particularly
through Altair governance and
leadership teams. The continuing
expansion of Altair International and
teams developing new products will
provide increasing revenues in future
years.
We are successfully continuing to
develop our high level and short-term
placement model mainly through the
Group’s property division and future
plans include rollout to other divisions
and specialist teams. As mentioned in
previous reports, the interim executive
business remains under pressure from
a variety of sources: clients utilising
internal resources or utilising their own
networks, the implementation of IR35
and competition from internet-based
platforms.
A key element of the Group’s business
objectives was to widen the range
of professional services we offer our
clients. This expansion would benefit
the business by diversifying our
income streams both by sectors and
geographically.
The acquisition of Oaks which
completed in June 2019 widened
our consultancy client base in the
education, sports and charity sectors
as well as providing opportunities
with existing clients who provide
community services. Oaks also has an
established and growing international
portfolio. Bringing Finalysis into
the Group as part of our treasury
subsidiary ATFS earlier this year adds
the education sector to our treasury
client base as well as a wider range of
Early in the financial year the Group
Board conducted a governance
review, streamlined some of our
decision making and enabling
opportunities for our up and coming
ambitious team members. Subsidiary
boards will now only have operational
members and all Group integration
and co-ordination will be routed
through these boards. This process
completed towards the end of
the year is working well in difficult
circumstances and is expected to be
cost beneficial for the future.
The success of our business strategy
was starting to be recognised at the
September 2019 interim stage with
increased turnover and higher profit,
both at the gross and operating
level and enhanced cash balances
all compared to the same point in
the previous year. With Oaks and
Finalysis beginning their integration
into the Group and some of the wider
political uncertainties such as Brexit
and the General Election now less
important, we looked forward to
sustainable growth and reporting
improved outcomes for the year.
By the middle of February 2020 there
were increasing concerns about the
spread of the COVID-19 virus and we
were thinking about the implications
this could have on our operations. Like
most other businesses, it was difficult
to assess the impact this might have
in the UK and on our clients. Within
two weeks we moved from a watching
brief to an action plan. The investment
we had made in IT meant that the
move to home working was swift and
seamless. Consultants normally based
at the offices of clients were able to
continue working from home. The
Board agreed that it must reshape the
business to focus on client delivery
and put on hold our expansion
programme. Resources would not be
available for our strategic plans such
as acquisitions and mergers. As a
consequence, the role of our Group
CEO Steve Douglas CBE became
redundant.
Much depended on the decisions of
our clients wanting to continue with
existing contracts or defer. For many
of our clients their priorities would
dramatically change as many needed
to put first their own vulnerable
residents and service users. This
was all done with a high level of co-
operation and understanding and
reflects the quality of the relationships
between our staff and clients.
By the end of March 2020, we had
issued or were part-way through
a redundancy process for a small
number of staff and also took
advantage of the government scheme
to furlough some staff to protect
their employment. All the above was
carried out with as much transparency
and staff involvement as possible.
Inevitably working through this action
plan reduced turnover in what is
usually one of the busiest periods of
the year. We reviewed the values of
our work in progress and contract
pipeline, particularly in terms of
delay and extra costs that lockdown
arrangements could generate. Our
actions had cost implications in
addition to redundancy costs, the
latter are identified separately in the
results.
Without the COVID-19 emergency
we are confident that reported profits
for the year would have been similar
or better than the previous year
reflecting the progress reported at the
interim stage. The gross profit for the
twelve months ended 31 March was
£1,752k compared to £1,867k for the
twelve months ended 31 March 2019.
Including redundancy costs of
£186k (2019 £Nil), the legal costs of
acquisitions £51k (2019 £nil) and the
costs attributed to the existing share
options £105k (2019 £117k) underlying
operating profit of the business was
£468k (Sept 2019 £306k, Mar 2019
£724k). The shortfall is an indicator
of the cost to the business from the
crisis. Statutory profit after tax for
the year was £126k (Sept 2019 £195k,
Mar 2019 £466k). For the first time
we are pleased to report there has
been a contribution from our share of
associates profit of £51k (2019: Nil).
Our most pressing concern was not
the continuation of existing contracts
but whether clients, hard pressed to
manage their existing workload and
with new responsibilities to support
their own vulnerable clients, could
allocate resources to procure future
strategic and technical support. We
did not know whether new property
developments, looking at new ways of
working, training and efficiency initia-
tives would be put on hold and for an
uncertain timescale. To plan for this
uncertainty, we formulated a range of
budgets and cash flows with resulting
action plans. I am pleased to report
that for the first two months of this year
trading has been satisfactory and with
some new opportunities coming for-
ward, although not at the level of pre
COVID-19, we are likely to be able to
sustain trading at a profitable level.
term requirements when the future
level of business activities is more
predictable.
There are so many people I personally
and on behalf of the Group Board
should mention that deserve our
thanks and appreciation. I need to
express my gratitude to my fellow
board members Claire, Fiona and
Richard. It would be invidious to pick
out other individuals because every
staff member, associate, people we
work with at clients, regulators and
government have given over and
above what should be expected and
with good humor and understanding.
We do not know if the crisis is over
yet though the current easing of
lockdown is promising and hope the
future is less ‘interesting’. Today we
are looking forward with confidence
to restarting our growth agenda and
again generating increasing returns
for shareholders. I look forward to
reporting on progress at the interim.
Derek Joseph - Chair
2 July 2020
From the early days of the crisis it
was obvious that one of the most
critical measures was to maximise the
Group cash balances. Consequently,
additional resources and monitoring
were inputted into both billing and
debt collection as well as reducing
non-essential operating costs as
much as possible. This included not
declaring a final dividend for the
year. I am pleased to say that as at
the time of writing our cash balances
are higher than at the year end, even
after deducting the benefit of the
deferral of VAT payments. We are also
examining options to increase cash
availability to have the capacity to
expand if competitors cannot deliver
or there are relevant opportunities
created by government actions to
boost economic activity.
I must make special mention of Steve
Douglas CBE, our CEO. We will miss
his knowledge and experience of the
affordable housing sector and his
commitment to the diversity agenda.
We wish him well for the future.
Following Steve’s departure and
discussions at Group Board it
was agreed that I should become
the Executive Chair for an interim
period. We will review our longer-
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Strategic Report
Strategy and objectives
Aquila Services Group (Aquila) has a bold purpose to ‘make a better, more sustainable, and socially responsible world’.
We achieve this by being a consultancy group which provides professional support services to socially focused sectors in
the UK and internationally.
Our purpose is core to what we want to be across the group:
• We want our subsidiaries to have a direct and positive impact on people’s lives in the UK and beyond.
• We want to offer staff the opportunity to work in an environment which has a strong social focus and an opportunity to
make a positive impact.
• And we want to provide investors with the opportunity to work with an organisation that combines strong performance
with work which makes a positive difference.
Our work helps our clients to develop a response to a changing world and make a positive difference to the communities
in which they operate. At present we work with clients across housing and regeneration, sport and education, charity and
government sectors. We work across the UK and increasingly internationally.
Our business as at 31 March 2020
The revised UK Corporate Governance Code (‘2018 Code’) was published in July 2018 and applies to accounting
periods beginning on or after January 1, 2019. The Companies (Miscellaneous Reporting) Regulations 2018 (‘2018 MRR’)
require directors to explain how they considered the interests of key stakeholders and the broader matters set out in
section 172(1) (A) to (F) of the Companies Act 2006 (‘S172’) when performing their duty to promote the success of the
Company under S172. This includes considering the interest of other stakeholders which will have an impact on the long-
term success of the company.
This S172 statement, which is reported for the first time, explains how the Group and in particular the board:
•
•
has engaged with key stakeholders; and
has reached key decisions and the likely impact of those decisions, including how it has taken account of the
company’s stakeholders in doing so during the financial year.
The S172 statement focuses on matters of strategic importance to the Group, and the level of information disclosed is
consistent with the size and the complexity of the business.
S172(1) (A) “The likely consequences of any decision in the long term”
The Group board reviews all relevant information and possible scenarios to consider the implications of any decision
made to ensure there is no adverse impact on the future business or stakeholders of the Group and that the strategic
aims and objectives of the Group can be achieved. This was demonstrated in the Group’s COVID-19 planning.
S172(1) (B) “The interest of the company’s employees”
S172(1) (C) “The need to foster the company’s business relationships with suppliers, customers and others;”
Why they matter to us
Investors
Employees
Customers
Providers of capital
and therefore growth
opportunities
A significant
proportion of
shareholders are also
employees
Key resource of talent
providing solutions
and innovative product
development to assist clients.
Our clients provide services
that help in making a better,
more sustainable, and socially
responsible world
Critical in achieving the
Group’s objectives
The aim of the Group is to assist
clients in achieving this.
To offer employees the
opportunity to work in an
environment that has a
positive social impact.
They are the Group’s main source
of revenue.
Aquila Services Group plc
What matters to them
Return on investment
Recognition and reward
Quality and value for money.
Altair Consultancy and
Advisory Services Ltd
‘Altair’
Aquila Treasury and
Finance Solutions and
‘ATFS’
Oaks Consultancy Ltd
‘Oaks’
Aquila delivers work to clients through key subsidiaries, each of which has a core market and service focus:
• Altair provides support for affordable housing and government bodies through the development, growth,
management, governance, and operation of organisations, and the improvement of services to housing customers.
• ATFS is registered with the Financial Conduct Authority and provides advice to the affordable housing sector on
treasury and funding solutions, particularly for new affordable housing.
• Oaks works with clients in the sport and education sectors focused on strategy, business planning and income
generation activities.
Longevity of the
business
Interesting work and strong
client relationships
Strong culture and values
Personal and career develop-
ment
Sound advice.
Strong relationships with the
Group’s employees.
Type of engagement
Stock Exchange
announcements and
press releases
Annual reports
Regular staff surveys
Direct engagement with clients.
Regular use of different media
forums to inform and listen
How the board engages
Board attendance at
the AGM
Attendance at staff
conferences
Regular communication via
publications, and e-bulletins.
Non-executive
director meetings
Regular webinar updates and
communications
Customer satisfaction survey.
How they influence
board-making decisions
Investors’ opinions are
taken into account
when considering
future policy.
The board listened to the
concerns and appointed
senior members of staff onto
subsidiary boards, all of which
are now operational boards.
Investment in new product
development.
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Strategic Report (continued)
S172(1) (D) “The impact of the company’s operation on the community and the environment”
The Group is committed to making a better, more sustainable and socially responsible world.
The board listened to the employees and the ‘Green Group’ has been created as an employee-led group, with rep-
resentation from across Aquila Group and its subsidiaries.
The Green Group has responsibility for driving Aquila’s approach to become a carbon neutral and climate conscious
organisation.
S172(1) (E) “The desirability of the company maintaining a reputation for high standards of business conduct”
The Group provides professional support services to socially focused sectors in the UK and internationally, and always
aims to deliver exceptional standards of service and conduct and remain market leaders in our sectors.
Our purpose, culture and values dictate the standards that are maintained by our employees.
S172(1) (F) “The need to act fairly between members of the company”
The Group board considers all relevant information taking into account the impact on all stakeholders before adopting
the best course of action to enable delivery of the Group’s strategy.
Business environment
Trends and factors
This year has been one of change
for the Group with the acquisition
of Oaks, our specialist sports and
education business, and Finalysis, a
banking and treasury consultancy.
There has been considerable external
change and uncertainty as the
UK went through another election,
finally exited from the EU in January
2020 and the impact of COVID-19
in February and March 2020. These
external events have affected the
business of the Group.
The General Election meant that
all government departments and
local authorities went into purdah,
Brexit caused significant delay
in commissioning new work as
businesses focussed on preparedness
and the actions of the UK Government
to halt the spread of COVID-19 meant
that work was again delayed, both in
commissioning and also delivery or
cancelled.
The Group acted very swiftly during
March and all our staff were home-
working within days of the initial
announcement pre-COVID-19
lockdown in mid-March. Our
investment in the previous year in IT
put us in a very strong position and
we could immediately communicate
virtually with our clients and internally
with our colleagues. The offices in
Birmingham and St Leonards on Sea
were closed, and our London office
remained open for essential services.
We quickly moved to restructure
the business and our Group Chief
Executive, Steve Douglas CBE,
left in April. We have made further
redundancies and have taken
advantage of the government’s
furlough scheme for a few of our
staff. The redundancies that were
committed in the year ended 31 March
2020 have been provided for in the
year and identified within note 6 in the
notes to the accounts.
The following case studies show
work across the Group
Altair International - Providing
support to Kyrgyzstan State
Mortgage Company to boost
supply of energy efficient homes
The objective of this consultancy
project is to assist the State Mortgage
Company (SMC) in developing
solutions for low-cost, low-density
housing design, construction
techniques and materials suitable for
local climate and cultural identity in
rural areas, and support stakeholders
in rural mid-sized cities to initiate
corresponding pilot construction
projects.
The outcome from the project led
by Altair International, working with
a number of other advisers (Sweco
and Affordable Housing Institute),
is to have pilot projects prepared
which integrate energy efficiency/
climate resilience principles with
affordable, risk-free lending for the
rural population. The core tasks of the
project are these:
• Conduct general housing market
analysis for Kyrgyz Republic in
seven cities.
• Assist the creation of Special
Purpose Vehicles for land
acquisition, infrastructure
Bus UK fundraising office for 2020,
acting as Interim Fundraising Director
and supplying significant fundraising
capacity to the team. We are leading
their fundraising approach to
institutions, corporates and major
donors in addition to managing and
restructuring their existing fundraising
team. In 2020 this approach is
expected to raise over £700,000 for
the charity’s work in India and will
result in the transition to a new, high
performing fundraising team in early
2021.
ATFS
Our client was a Top 100 charity,
providing housing for those with
learning disabilities. Here at ATFS
we reviewed the commercial terms
of a proposed agreement to act as
delivery agent for a social impact
fund. We assessed associated risks,
reviewed board presentations and
interviewed executive staff to verify
that internal risk assessment was
rigorous, and assessed the credential
and standing of the social impact
fund.
We gained an outcome of an
independent view of the risks of the
transaction and we highlighted any
issues for the Board that had not
already been identified.
More information on all case studies is
available on the Group’s website
www.aquilaservicesgroup.co.uk
Principal risks and uncertainties
The principal risks currently faced by
the Group are:
Financial instruments
The main financial risks arising from
the Group’s activities are credit risk,
foreign currency risk,
interest rate
risk and liquidity, details of which can
be found in note 24 to the Financial
Statements.
servicing, and real estate
development including business
plan elaboration (up to three
cities).
Support SMC in developing
simple and flexible low-cost/low-
density housing solutions suitable
for rural areas.
Identification of pilot projects for
new low- density construction in
rural, mid-sized cities of Krygyz
Republic.
•
•
The work will result in having an impact
on identifying how housing needs can
be addressed in a part of the world
where the demand for low-cost homes
is high.
Altair - Greater Manchester GC
Growth Hub
The Growth Hub appointed Altair
(after a competitive tendering
process) to undertake research to
better understand the scale and
scope of the market opportunities
likely to be realised in the next five
years for green technologies and
services by Greater Manchester
Housing Providers (GMHPs). From
October 2019 to February 2020,
Altair undertook qualitative and
quantitative research to understand
the barriers and opportunities for the
use of green technologies by GMHPs,
and to identify demand for specific
technologies likely to be used in future
for retrofitting of existing properties,
and for new development.
The recommendations focussed on:
what the low carbon supply chain
might do to support the social housing
sector, thereby developing commer-
cial opportunities for GMHPs, the
role that other key stakeholders might
play in expediating the use of green
technologies, and ensuring that the
sector maximises the opportunity of
delivering against national carbon
reduction targets.
Our findings have been summarised
in a report which is due for wider
publication.
Altair - Government of Jersey
- Housing Policy Development
Board (Lead sector experts and
researchers)
Altair was appointed to assist the
work and activities of The Housing
Policy Development Board in
Jersey by undertaking primary and
secondary research, identifying
and liaising with expert witnesses,
scoping policy, delivery and financing
recommendations and preparing
final reports. Our work began with an
as-is “baseline” analysis of the main
challenges, including key drivers for
policy on the supply and demand side
of housing provision, such as:
•
•
•
•
barriers to land and development
Jersey’s ageing population
tenure and affordability
Jersey’s housing market in the
wider economy
Once the board agreed the key
issues, we led workshop sessions
with sector experts in housing
finance, housing delivery, housing
for older people, and fiscal policy
to generate a long list of potential
policy interventions for the board to
consider. This long list was refined
and tested. Once acceptable
interventions were determined, we
worked the individual interventions
into comprehensive policy packages.
They are now being tested (including
assessing viability / financial impact)
and refined with the board at present.
Our final report includes
recommendations from the board for
inclusion in the spatial land strategy
(Island Plan), Government Strategy
and related housing policies.
Oaks - Magic Bus
Magic Bus works primarily in the
most disadvantaged areas of India,
Bangladesh and Nepal, and the
charity supports over 400,000 young
people across South Asia each year.
Magic Bus recently partnered with
Oaks to undertake a review of its
fundraising performance over the last
few years and explore all the possible
income generation opportunities
available in the UK market.
Upon successful completion of this
exercise, we presented our findings
to the Magic Bus UK board in July
2019, identifying several new areas
of development and proposing a new
fundraising team structure to build
sufficient capacity and expertise
within the organisation to enable
significant income growth. Following
this consultancy exercise, Oaks has
taken on the running of the Magic
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11
Strategic Report (continued)
Unfavourable economic conditions
and/or changes to government
policy
The predicted economic decline
and/or recession and changes in
government policy that may restrict
client income, reduce grant levels
or other measures could impact the
business as clients react and reduce
or stop commissioning work.
Local authorities, whose finances
have been severely affected by
COVID-19, may stop all consultancy
contracts and stop commissioning
new work.
The continuing Brexit negotiations
and the risk of exiting without a deal
could lead to a period of uncertainty.
The implementation of IR35 within the
interim market, although delayed, has
and will continue to affect this part of
the business.
than anticipated and
COVID-19
The return to normal business takes
longer
the
possibility of a second or third wave
means the normal procurement and
commissioning of projects is delayed
or cancelled.
Competition
Increased competition in the market
continues to pose a risk to all subsidiary
companies.
Staff skills, retention, recruitment
and succession
As the Group is a people-based
business a significant risk is the
recruitment and retention of talent.
The Group has implemented
succession plans within the year to
mitigate this risk.
Data governance
The increase of cyber-attacks and
the loss of data is a serious risk that
is monitored closely. The Group
complies with all relevant legislation
and has invested in updated systems,
security and training during the year.
Mitigations of risk
The Group seeks to mitigate all these
risks through ensuring that it monitors
changes in statutory, regulatory and
financial requirements and maintains
good relationships with
its clients,
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
its clients as the external environment
changes.
Despite the impact and
uncertainty of Covid-19, the outlook
for the Group remains positive.
Environment
As part of the Group’s overall purpose
of ‘Making a better, more sustainable,
socially responsible world’ the need
to tackle the wider climate emergency
has been a focus and as a result, a
group of employees from across the
Group has been set up to plan an
approach for the Group and how to
assist clients with their climate change
issues.
agenda and environmental
Through
the
Group’s impact on the environment is
currently being measured so that we
can develop an action plan to move
towards carbon neutral.
“Green Group”
the
Further information is on the website
www.aquilaservicesgroup.co.uk
Corporate and social responsibility
The Group recognises that we have a
responsibility to ensure the impact of
our business is positive. The Group’s
Corporate and Social Responsibility
policy can be seen on the website
www.aquilaservicesgroup.co.uk.
The Group has adopted polices to
ensure that in all work across the
Group and its subsidiaries the impact
of human rights, anti-corruption and
anti-bribery matters are considered.
The following case study shows the
Group’s CSR work through Oaks.
Noah’s Star
At the beginning of 2019, Oaks
approached the Birmingham charity
sector with an exciting opportunity. In
line with its values and socially minded
ethos, Oaks asked organisations to
apply to become its charity of choice.
Through this relationship Oaks would
provide pro bono support to help
the selected charity to generate
additional resources and grow its
charitable impact.
In the spring of 2019, Oaks were
delighted to announce Noah’s Star
as its charity of choice. Noah’s Star
provides a safe and fun place for
siblings of sick and premature babies
to play, as well as reassurance to
parents, enabling them to spend
time with their newborn. Noah’s Star
also runs a sibling support group
at Birmingham Women’s Hospital,
providing an area for children to play
whilst their parents spend time with
their poorly baby.
Throughout 2019 Oaks Consultancy
have volunteered at Stay and Play
sessions, provided £6,000 worth of
in-kind business support, secured a
£10,000 grant, and fundraised £1,800.
The Charity Quiz Night in March at
Birmingham Malmaison invited local
businesses to enter teams to play for
prizes, with all ticket sales donated
directly to the charity, and ran a
raffle. Nearly £800 was fundraised
in total on the night. It also increased
the charity’s profile in Birmingham’s
professional sector.
As a result of 2019 success Oaks have
extended its partnership for a further
year and very much look forward to
helping Noah’s star with the brilliant
and impactful work that it delivers.
In addition to the obvious benefit,
this partnership has also acted as a
powerful team development tool, with
all Oaks members of staff feeling that
they have played their part in support-
ing a fantastic cause.
Highlights of the partnership to date
have included:
• Oaks securing new grants for
Noah’s Star to grow their vital
work.
• Oaks supporting Noah’s Star
to register with the Charity
Commission for charitable status.
Team Oaks completing the 2019
Wolf Run, raising over £1,000.
•
• Oaks volunteering at the
Birmingham Women’s Hospital
and at Stay and Play groups at
Revolution Gymnastics Club.
• Oaks donating a large collection
of wine, chocolates and toiletries
made into Christmas gifts for
Noah’s Star’s volunteer.
Noah’s Star delivering workshops on
children’s mental health and safe-
guarding adults at the Oaks office for
local healthcare professionals and
care workers.
Business performance and
position
Altair
Altair saw a slowdown in
commissioning of its governance and
strategy work over the summer months
due to the political uncertainty of
Brexit. The impending introduction
of IR35 in April 2020 also had an
impact on the interim business,
with clients changing the way they
resourced executive vacancies,
choosing to source in-house rather
than through professional services
firms. Our property team continued
their growth trajectory, despite some
larger London housing organisations
scaling back on their programmes
and a slowdown in the sales market
very visible. We were very successful
in growing our market presence
supporting London local authorities’
and housing associations’ in-house
development teams and the delivery
of much needed homes. Our technical
team grew in response to the need for
expert advice on health and safety
compliance and the difficult task of
re-cladding buildings with aluminium
composite materials (ACM) and
other unsuitable materials. Policy and
legislative changes following Grenfell
continue to ensure improved safety of
buildings.
Our work with for-profit providers has
continued and we have grown our
reputation in this market, providing
advice to large funding institutions in
addition to smaller providers.
Altair has continued to invest in its
staff and their development and this
year we commenced a graduate
programme, recruiting four graduates
who joined us in September 2019 to
ensure we build resilience into the
company.
During the year we have also invested
in the growth of Altair International,
our consultancy focused on
supporting the delivery of affordable
housing interventions in developing
countries across the world. This
investment had begun to lead to a
significant growth in our profile and
pipeline of projects. We are now
delivering projects which have a
real impact on affordable housing in
countries across Sub-Saharan Africa
and Asia and we are working with a
range of stakeholders and clients
including national governments,
multilateral aid agencies, funders
and international investors. The
international environment has been
significantly affected by COVID-19,
with several projects being delayed or
put on hold, whilst some have moved
to virtual working. Travel restrictions
and a reprioritisation of focus from
international stakeholders imposed by
Covid-19, will affect our international
work in the short term. However, the
demand for support in tackling the
affordable housing crisis remains
strong and we are well positioned to
take advantage of this in the medium
to long term.
ATFS
This year saw significant change
for ATFS with the acquisition by the
Group in Q3 of Finalysis UK Limited,
a leading banking and treasury
consultancy practice specialising in
the education sector. This represents
not only expansion and diversification
of ATFS’s client base and scope of
services, but also brings services
complementary to the wider Group
client base.
Over the first three quarters of the
year the main focus for clients was the
potential financial risks associated
with Brexit and anticipated financial
market volatility. The capital market
continued to exhibit substantial
appetite for housing association
debt transactions. Consequently,
the majority of debt advisory work
during the year was focused on
restructuring/repositioning clients’
debt portfolios to provide high levels
of liquidity as a cushion against Brexit
impact and to take advantage of low
long-term interest rates. However,
a number of clients also postponed
commitments or suspended project
progress pending the election
outcome.
During the coming year we will
complete full integration of the
Finalysis brand into ATFS and
develop the service offer across the
Group’s education and housing client
portfolios.
Oaks
Oaks joined the Group in June 2019
and has added strength across
sectors where we had little or no
presence. The Group has already
reaped the benefits, with services that
Oaks offer into the education and
sports sector being commissioned in
the housing sector and we will build
on this in the coming year. During the
year under review, Oaks significantly
expanded its European presence
through its appointment as a UEFA
consultant. This work stimulated
strategic planning projects within
eight national football federations.
Over the same period, Oaks further
expanded its international credentials
through its work with Magic Bus,
one of India’s largest sport for
development charities. In education,
Oaks maintained a strong market
position however it saw a marginal
and temporary decrease in new
contract conversions in quarter 3 and
4, primarily caused by a new Ofsted
regime.
12
13
Strategic Report (continued)
Key performance indicators
The Group tracks its progress against its strategy by monitoring its key performance indicators (KPIs) regularly. These are
set out below:
Revenue
£7,963k
Gross profit
£1,752k
Gross profit margin
22%
The measure
Revenue growth is the increase/
decrease
in revenue year-on-
year.
The measure
Gross profit growth is the increase/
decrease in gross profit year-on-
year.
The measure
Gross profit margin growth is the
increase/decrease in margin year-
on-year.
The target
To deliver growth in revenue from
expansion both geographically
and by business stream.
The target
To deliver growth in profit across all
parts of the Group.
The target
To maintain strong gross profit
margins.
k
3
6
9
7
£
,
k
5
5
6
7
£
,
k
5
0
9
5
£
,
k
7
6
8
,
1
£
k
1
5
7
,
1
£
%
6
2
%
4
2
k
2
6
5
,
1
£
%
2
2
0
2
0
2
9
1
0
2
8
1
0
2
0
2
0
2
9
1
0
2
8
1
0
2
0
2
0
2
9
1
0
2
8
1
0
2
Underlying operating profit
£468k
The measure
The increase/decrease in
underlying profit year on year.
Statutory profit after tax
£126k
Earnings per share
0.35p
The measure
The increase/decrease in
reported profit year-on-year.
The measure
The increase/decrease in EPS
year on year.
The target
To deliver sustainable growth in
underlaying operating profit.
The target
To deliver sustainable long term
growth in profit after tax.
The target
To deliver long term growth in EPS
to enhance Shareholder value.
Underlying operating profit
excludes costs and charges
relating to restructuring,
acquisition and share options.
k
4
2
7
£
k
0
6
6
£
k
8
6
4
£
k
6
6
4
£
k
5
0
4
£
k
6
2
1
£
0
2
0
2
9
1
0
2
8
1
0
2
0
2
0
2
9
1
0
2
8
1
0
2
p
2
3
.
1
p
0
2
.
1
p
5
3
0
.
0
2
0
2
9
1
0
2
8
1
0
2
Underlying profit is shown as profit before share options charges, redundancy costs and costs of reorganisation. The
Group uses this as a performance measure of “operational profits” providing a clearer measure year on year without the
distortion of unusual items.
Underlying operating profit
Share option charge
Restructuring costs relating to COVID-19
Acquisition costs
Operating profit
31 March 2020
31 March 2019
31 March 2018
£000s
468
(105)
(186)
(51)
126
£000s
724
(117)
-
-
607
£000s
660
(135)
-
-
525
14
15
Strategic Report (continued)
Turnover is split accross the different services as shown below.
The measure:
To track how income across the Group is generated
2020
7%
10%
2019
7%
16%
83%
77%
Revenue from Consultancy
Revenue from Interim management
Revenue from Consultancy
Revenue from Interim management
Revenue from Treasury management
Revenue from Treasury management
Geographic spread of income
The measure:
To track where income across the Group is generated
The target:
To increase income from international markets
2020
3% 4%
2019
4%2%
93%
94%
UK
Republic of Ireland
Rest of World
UK
Republic of Ireland
Rest of World
Spread of income by sector
The measure:
To track income across the Group by sector
The target:
To increase market share in other sectors
2020
4% 4%
93%
2019
2% 0%
98%
Housing
Education
Sports
Housing
Education
Sports
Client numbers across the Group
427
The measure:
Increased client numbers year on year
The target:
To increase the number of clients that the
Group deliver services to
Client satisfaction
The measure:
To ensure all customers are satisfied with the services delivered across the Group
The target:
To exceed client expectation in delivery of services
7
2
4
9
3
3
8
7
1
5
2
2
7
0
1
7
7
0
2
0
2
9
1
0
2
8
1
0
2
Number of clients
Number of new
clients
2020
23.08%
76.92%
2019
45.45%
54.55%
Meets Client Expectations
Exceeds Client Expectations
Meets Client Expectations
Exceeds Client Expectations
16
17
Strategic Report (continued)
Directors’ Report
Employees
A split of our employees and directors by gender as at the end of the year is shown below:
Male
3
8
31
Female
2 2
36
Directors
Directors of the Company
Total senior managers other than directors of the Company
Total senior managers other than directors of the Company
Other employees of the Group
Other employees of the Group
files are stored on a SharePoint site.
The IT remains strong and support
is continuously monitored to ensure
continuation of services.
Based on the results of these
analyses, action taken during March
and April, continuous monitoring of
the sales invoices, cash generation
and cash balances, the directors
have a reasonable expectation that
the company will be able to continue
in operation and meet its liabilities as
they fall due in the next twelve months
and over the three-year period of
their assessment; thus they continue
to adopt the going concern basis of
accounting in preparing the annual
financial statements.
Dr Fiona Underwood
Executive Director
2 July 2020
The Group consults with its employees
regularly through direct updates and
conducts an annual review of staff;
results are reviewed and discussed
by the directors and an action plan
agreed and discussed with all staff.
The Group invests in training and
developing its employees through
both internal and external courses.
The Group follows the legislative
requirements set out in the Equality
Act 2010 which covers all aspects
of equality and diversity, replacing
previous legislation covering
equal pay, sex, race and disability
discrimination. The Group gives due
consideration to all applications and
provides training and the opportunity
for career development wherever
possible. The board is also mindful of
the Human Rights Act 1998.
Going concern basis
The board updates its three-year
business plan annually. This includes
a review of the company’s cash
flows and other key financial ratios
over the period. These metrics are
subject to sensitivity analysis which
involves flexing a number of the main
assumptions underlying the forecast,
both individually and in unison.
Where appropriate, this analysis is
carried out to evaluate the potential
impact of the company’s principal
risks. The three-year review also
makes certain assumptions about the
normal level of capital investment
likely to occur and considers whether
additional financing facilities will be
required.
When COVID-19 struck the main
focus was on the following:
1. The ability to complete existing
contracts due to travel restrictions
2. Clients not commissioning new
contracts
3. Some parts of the organisation not
having sufficient work because of the
short-term nature of contracts
4. Monitoring of sales invoices and
control of debtors
5. Working capital requirements
The Group implemented a revised
plan towards the middle of March,
which involved reviewing current
client contracts, committed income,
pipeline opportunities and costs.
The budgets were flexed and stress
tested to ensure their viability,
variable costs were reduced in line
with a reduction in income.
The majority of employees across the
Group were already used to working
from home with their own laptops. At
the beginning of the financial year the
Group switched to Office 365 which
makes remote working easier as all
The directors present their report and
consolidated financial statements for
the year ended 31 March 2020.
Directors
The following served as directors of the Company during the period or
thereafter:
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 18. 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 21.
The Board’s assessment of the
performance of the Group, its future
developments and the principal risks
and uncertainties affecting the group,
together with the mitigating factors,
are presented in the Strategic report
on pages 6 to 16.
Principal activities
The principal activities of the Group
are the provision of specialist housing,
sport, educational 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 2020 are set out from
page 35.
Dividend
Due to the current economic climate
and the requirement for the business
to retain and maintain cash reserves
the directors do not propose a final
dividend for the year end. The total
dividend for the year was 0.30p (paid
as an interim dividend in December)
compared to a final dividend of 0.89p
in 2019.
Derek Joseph
Executive Chair
Steven Douglas
Group Chief Executive
Resigned 7 April 2020
Fiona Underwood
Executive Director
Claire Banks
Group Finance Director and
Company Secretary
Appointed 24 July
2019
Susan Kane
Group Finance Director
Resigned 24 July 2019
Richard Wollenburg Non-Executive Director
Substantial shareholdings
As at 31 March 2020, the Company was aware of the following notifiable interests
in its voting rights:
Number of
Ordinary shares
Percentage of
voting rights
Nature of
holding
Richard Wollenburg*
3,808,406
10.04%
Susan Kane
3,279,440
Fiona Underwood
3,279,440
Chris Wood
3,279,440
Steven Douglas
3,144,305
Derek Joseph
3,005,538
Jeffrey Zitron
2,798,403
Matt Carroll
1,307,229
Hannah Breitschadel
1,307,229
Mark Walker
1,296,239
Adam Walker
1,248,176
8.64%
8.64%
8.64%
8.29%
7.92%
7.37%
3.44%
3.44%
3.42%
3.29%
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
*Includes shares held by immediate family members of Richard Wollenberg
The Company is not aware of any changes to the above holdings between 31
March 2020 and the date of this report.
18
19
Directors’ Report (continued)
Corporate Governance Statement
The Directors’ Report incorporates the
Corporate Governance Statement
set out on pages 19 to 21.
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 19
to 21.
Post balance sheet events
Post balance sheet events are
disclosed in note 25.
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.
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 2013. Therefore
the Group has not published a GHG
Emissions Statement.
Auditor
Crowe UK LLP appointed as auditors
on 12 March 2019 have expressed
their willingness to remain in office
as auditor and, in accordance with
section 489 of the Companies Act
2006, a resolution that Crowe UK LLP
be re-appointed will be proposed at
the Annual General Meeting.
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 they ought
to have taken as a director to make
themselves aware of any relevant
audit information and to establish that
the Group’s auditor is aware of that
information.
Dr Fiona Underwood – Executive
Director
By order of the Board
2 July 2020
Corporate Governance
Statement
A full schedule of matters reserved
for the Board’s decision along with
the Terms of Reference of the Board’s
principal committees can be found
on the Company’s website at www.
aquilaservicesgroup.co.uk
Audit Committee
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 Audit Committee met twice in
the year.
•
• Members are: Derek Joseph,
Richard Wollenberg and Fiona
Underwood.
The Corporate Governance
Statement forms part of the Directors’
Report and follows the FRC UK
Corporate Governance Code 2018
(“the code”). A copy of the code is
available from the FRC website at
www.frc.org.uk
The Group Board
is committed to
maintaining appropriate standards of
corporate governance. The statement
below, together with the report on
directors’ remuneration on pages 22
to 28, explains how the company has
observed principles set out in The
Code as relevant to the company
and contains the information required
by section 7 of the of the Financial
Conduct
Disclosure
Authority’s
Guidance and Transparency Rules.
A copy of the Company’s Corporate
Governance Code
is available
on
the Company’s website www.
aquilaservicesgroup.co.uk
sheet date the Group has reviewed
the structure and composition of the
boards. At the date of the report the
composition of the boards can be seen
on page 2.
to engage
The Group commits
with employees and create further
employee led groups.
The structure of
committees and
responsibilities are shown below.
the board and
respective
their
Board Governance framework
At the date of this report the Board
comprises (Chairman, two Executive
Directors and one Non-Executive
Director).
The Group Board has primary
responsibility for:
•
Providing leadership for the
Group
• Overseeing the overall strategic
In compliance with S172 of Companies
Act 2006, the Board recognises the
importance of engagement with its
stakeholders and the link this has to
the long-term success of the Group.
Through the discussions, presentations
and reviews held at the board meetings
throughout the year, the Board is able
to ensure that the Group maintains
an effective working relationship with
a wide range of stakeholders as well
its shareholders. Updates from
as
directors of the subsidiaries and senior
leaders across the Group provide the
Board with a greater understanding of
the operation of the Group.
•
•
•
•
development of the Group and
approving the strategy to achieve
the Group’s strategic aims
Setting the Group’s values and
standards
Ensuring effective governance
and risk management and that
the Group’s businesses act
ethically and that obligations to
Shareholders are understood
and met
Delegates the management of
the day-to-day operation of the
business to the subsidiary boards
The Group board met sixteen
times during the year
Following the Group’s commitment
to improving corporate governance
across the Group since the balance
Matters reserved to the Board
The Board has adopted a formal
schedule of matters specifically
reserved to it for decision-making.
20
21
Corporate Governance
Statement (continued)
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 three times during the year.
• Members are: Derek Joseph,
•
Richard Wollenberg.
The report of the Remuneration
Committee is set out on pages 22
to 28 of this report.
Attendance at Boards
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;
• Consider 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;
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.
• Members are: Derek Joseph, and
Richard Wollenberg
Subsidiary Boards
The key responsibilities of the
subsidiary boards are:
•
Responsible for the day-to- day
management of the relevant
Subsidiary
• Oversee the development and
implementation of the Group’s
strategy
Implementation of Group policies
•
• Monitor risks and ensure
mitigation strategies are in place
• Monitor financial and operational
performance of the relevant
subsidiary and other specific
matters delegated to them by the
Group Board
Green Group
The ‘Green Group’ has been created
as an employee
led group, with
representation from across Aquila. It
has responsibility for driving Aquila’s
approach to become a carbon neutral
and climate conscious organisation.
Director
Board
Audit Committee
Remuneration
Committee
Nominations
Committee
Total number of meetings
Derek Joseph
Richard Wollenberg
Steve Douglas
Fiona Underwood
Susan Kane*
Claire Banks**
16
14
11
15
16
5
12
*Resigned 24 July 2019 **Appointed 24 July 2019
2
2
2
-
2
-
-
3
3
3
-
-
-
-
3
3
3
-
-
-
-
Board directors
Due to the impact of Covid-19 and
the subsequent departure of Steve
Douglas, Group CEO, on 7 April 2020
Derek Joseph has taken on the role
of executive chair. The Board agreed
not to replace the Group CEO at
this time due to the current economic
climate but will review the position
including the overall composition of
the board in the second half of the
financial year.
As the Group’s independent
non-executive director, Richard
Wollenberg acts as a sounding board
for the chair and as an intermediary to
other directors and shareholders.
Derek Joseph continues to assist the
Group in developing the international
business and is remunerated for these
consultancy services. In the year to
31st March 2020, these totalled £24k.
(2019: £53k).
Derek Joseph is a director of
AssetCore. Both Derek and Richard
Wollenberg are shareholders of
AssetCore, of which the Group has an
6% shareholding.
Claire Banks is a board member of
3C, an associate company of the
Group.
meetings are discussed with board
members. All directors attend the
Annual General Meeting at which
they have the opportunity to meet with
shareholders.
Composition, succession and
evaluation
The work of board composition and
succession is undertaken by the
nominations committee.
The succession plan for the
replacement of the Group Finance
Director successfully took place
during the year ended 31 March 2020.
The Board intends to make non-
executive Group Board appointments
in the second half of the financial
year.
During the year ended 31 March 2020,
the Board did not undertake a board
evaluation.
Audit risk and internal control
The Audit Committee, which is chaired
by Richard Wollenberg, comprises
the executive chair, non-executive
director and executive director.
The Board is satisfied that Richard
Wollenberg has recent and relevant
financial experience to guide the
committee in its deliberations and that
Derek Joseph and Fiona Underwood
have the relevant sector experience.
The Board meets regularly with senior
staff throughout the year to discuss
areas of operational performance,
trading outlook and growth
opportunities. This replaces the
requirements within The Code which
requires a director appointed from
the workforce or a formal advisory
workforce advisory panel.
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
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.
As part of the decision to recommend
to the Board the re-appointment of
the external auditor, the committee
considers 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.
Internal financial controls have been
established 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 Board has considered the size of
the Group and the close involvement
of executive directors in the day-
to-day operations and deems the
internal audit function unnecessary.
The Board will continue to monitor this
situation.
The Group’s operations are
conducted in accordance with the
provisions of laws and regulations,
including compliance with the
provision of laws and regulations
central to the FCA.
22
23
Directors’ Remuneration Report
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.
Richard Wollenberg
Chair of the Remuneration
Committee
2 July 2020
Remuneration
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 Chair
• Annual Report on Remuneration
•
Policy Report.
The Remuneration Committee is
chaired by Richard Wollenberg (non-
executive) and comprises Richard
Wollenberg and Derek Joseph
(executive chair).
Statement of implementation
of remuneration policy in the
following year
The Remuneration Committee
proposes to amend the remuneration
policy that was approved by the
shareholders at the 2018 annual
general meeting. The changes to the
policy are detailed in the table on
page 27.
Statement from the Chair
I am pleased to present the Annual
Report on Remuneration for the year
ended 31 March 2020.
The Remuneration Committee has
used the remuneration policy to
specifically link 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 considered 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 and The Code.
The Remuneration Committee met
three times during the year to discuss
the executive directors’ remuneration,
including bonus and share option
awards. The directors reviewed the
remuneration policy and agreed that
further changes were required.
The remuneration policy is designed
to attract and retain executive
The information provided on pages 23 to 25 of the Directors’ Remuneration Report is subject to audit.
Annual report on remuneration
The directors followed the remuneration policy agreed at the AGM in 2018. The original version of the policy is set out in
the 2019 annual report and is available on the website (www.aquilaservicesgroup.co.uk).
Director changes
Claire Banks was appointed Group Finance Director on 24 July 2019 with Susan Kane stepping down from the board.
Executive directors’ remuneration payable as a single figure (2020)
Salary and
fees
2020
£
145,000
145,000
14,000
60,000
364,000
Benefits *
Annual bonuses
Pension
Total
2020
£
1,200
1,367
438
774
3,779
2020
£
-
-
-
13,500
13,500
2020
£
8,700
8,700
-
4,410
21,810
2020
£
154,900
155,067
14,438
78,684
403,089
Steven Douglas
Fiona Underwood
Susan Kane
Claire Banks
Total
*Benefits include private medical insurance
Executive directors’ remuneration payable as a single figure (2019)
Steven Douglas
Fiona Underwood
Susan Kane
Salary and
fees
£
140,000
140,000
42,000
322,000
Benefits *
Annual bonuses
LTIP**
Pension
Total
£
1,050
1,232
1,232
3,514
£
22,400
22,400
6,720
51,520
£
16,000
16,000
-
£
8,400
8,400
£
187,850
188,032
-
49,982
32,000
16,800
425,864
*Benefits include private medical insurance
** Base on 50,000 shares at a market price of 32p
Non-executive directors’ remuneration payable as a single figure (2020)
Salary and
fees
Benefits
Annual
bonuses
LTIP
Pension
Total
£
34,153
4,000
38,153
£
-
-
-
£
-
-
-
£
-
-
-
£
34,153
4,000
38,153
Derek Joseph**
Richard Wollenberg
Total
24
25
Directors’ Remuneration Report
(continued)
Non-executive directors’ remuneration payable as a single figure (2019)
Salary and
fees
Benefits
Annual
bonuses
LTIP
Pension
Total
Derek Joseph**
Richard Wollenberg
Jeffrey Zitron***
£
62,756
4,000
3,332
£
-
-
-
£
-
-
-
70,088
**Included within the fees for Derek Joseph are £24,153k (2019: £52,756) of consultancy fees.
-
-
£
-
-
-
-
£
£
62,756
4,000
3,332
70,088
*** Jeffrey Zitron resigned 30 January 2019
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.
Payments to past directors
In the year ended 31 March 2020, 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 2020.
Executive Incentive Scheme
The scheme, which is discretionary for executive group board directors, 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, this is made up pf a personal target of up to 20% and 10%
on Group profit targets, 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.
2019-20 award
Remuneration comittee assessed the performance of the group executive directors against the target and the committee’s
decision is shown below.
Target
Performance1
Actual
Performance
Maximum
Possible
award
2019/20
Unconsolidated
bonus award -
Executive Directors
(excluding Group
Finance Director)
2019/2020
Unconsolidated
personal
bonus award -
Group Finance
Director
Cash based
award
Share option
award
£796k
£796k
£469k
£469k
£43,500
£100,000
share
options
£Nil
£Nil
1 2018-19 Profit before tax and excluding share option charge plus 10%
£13,500
£Nil
The committee believes that the reward payable is a fair reflection of the performance over the year.
The bonus award for the Group Finance Director for the year ended 31 March 2020 was based on achieving a personal
target and is awarded at 15% of salary. The targets were non-financial due to the promotion to Group Finance Director
part-way through the year. The maximum award achievable was £27,000.
Statement of directors’ shareholding and share interest
The total number of directors’ interests in shares and 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:
Share Options
Number of
shares
With
performance
measures
Without
performance
measures1
Vested but
unexercised2
Exercised during
the year
Richard Wollenberg3
3,808,406
Steven Douglas
Susan Kane
Fiona Underwood
Derek Joseph
Claire Banks
3,144,305
3,279,440
3,279,440
3,005,538
48,315
-
50,000
-
50,000
-
-
-
100,000
100,000
100,000
-
-
515,000
615,050
615,050
615,050
309,000
-
-
-
-
-
-
-
The information provided on pages 26 to 28 of the Directors’ Remuneration Report is not subject to audit.
Remuneration of Chief Executive Officer for the year ended 31 March 2020
Shares
Total
Total
Total
Annual
receivable
Remuneration
bonuses
Steven Douglas
£
145,000
£
-
£
-
£
145,000
This compares to the total percentage increase from 2019 to 2020 for all staff within the Group of 2%.
Relative importance of spend on pay
Remuneration
Percentage
increase
£
Nil
A comparison of shareholder distributions and total employee expenditure of the Group is set out below for the years end-
ed 31 March 2019 and 31 March 2020.
All employee remuneration
Total dividend per share
Distributions to shareholders
2020
£’000
5,351
0.30p
106
2019
£’000
4,270
0.891p
314
Change
%
25%
(66%)
(66%)
1 Are part of a total of 1,713,772 Ordinary Shares at £0.05 per share which were issued as “Rollover Options” and are exercis-
able in tranches from 1 April 2016 with expiry dates between 31 March 2023 and 31 March 2025. For each director, 275,050 of
these share options are vested.
2 These unapproved Options may be exercised at any time up to 20 July 2020.
3 Includes shares held by immediate family members of Richard Wollenberg.
26
27
Future policy table
Directors’ Remuneration Report
(continued)
The following tables provides a summary of the key components of the remuneration package for executive directors:
Summary of approach
Performance criteria
Change from previous policy
Salary
To provide competitive fixed elements
of reward. Salaries are reviewed
annually or when an individual changes
position or responsibility.
Assessment of personal
and corporate
performance.
None
Gender pay gap report
The Group is not required by law to report on its gender pay figure but recognises the importance of openness and
transparency; future information will be available for review on the Group’s website.
Benefits
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 staff 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.
Consideration by the directors of matters relating to directors’ remuneration
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 2019 was approved by shareholders at the Annual
General Meeting held on 24 July 2019. The Directors’ Remuneration Policy was last approved by shareholders at the
Annual General Meeting held on 31 July 2018.
Directors’ remuneration report (2019 Annual General Meeting)
% of votes cast
For
Against
Abstention
Total votes cast
91%
0%
9%
100%
Directors’ remuneration policy (2017 Annual General Meeting)
% of votes cast
For
Against
Total votes cast
100%
0%
100%
Policy report
Implementation of remuneration policy in the following year
Due to the expansion of the Group and a change of Group board directors, the remuneration committee intend to
update the remuneration policy to be approved at the AGM on 29 July 2020 for implementation for the year ended 31
March 2021. The proposed changes are set out below.
To provide a range of cost-effective
benefits which are in-line with the
market.
Benefits include:
• Private Medical Insurance
• Permanent Health Insurance
• Life Insurance
Pension benefits are provided through
a Group personal pension plan at 6%
of salaries.
To incentivise and reward for achieve-
ment of in-year objectives linked to the
performance of the individual and the
Group up to 30% of their annual salary.
Pensions
Annual bonus
Share options
Awards of share options are
made subject to an annual profit
performance period. The maximum
award is 30% of annual salary.
None
None
None
None
Up to 10% based on
personal objectives
as agreed by the
remuneration committee.
An additional 20% based
on the performance of the
Group.
Share options are
awarded for Group
performance in excess of
5% year on year and are
at the discretion of the
remuneration committee.
10% of bonus is based on
personal performance with a
further 20% based on Group
profits. Bonus payments
are at the discretion of the
remuneration committee. The
minimum award will be nil and
the maximum award will be at
30% of salary.
The performance criteria
for the awarding of share
options will be based on
Group performance in excess
of 5% year on year and
are at the discretion of the
remuneration committee. The
maximum award is reduced
from £100k per executive
director to a maximum of 30%
of salary.
Approach to recruitment remuneration
The committee’s approach to recruitment 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.
28
29
Directors’ Remuneration Report
(continued)
Statement of Directors’
Responsibilities
Performance graph of total shareholder return
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. Aquila operates in a niche
sector with very few comparisons and as such the directors believe that the FTSE All Share Index provides the best measure
on which to assess the directors performance.
The directors (whose names and
functions are set out on page 17)
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
statements
financial
International
in accordance with
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;
including
information,
present
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
in the financial
and explained
statements;
prepare the financial statements
on the going concern basis unless
inappropriate to presume
it
is
•
Data source: London Stock Exchange
Policy on payment for loss of office
Payments for loss of office would be determined by the remuneration committee taking into account contractual
obligations. The contractual obligations relate only to payments in lieu of notice.
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 personal performance element of the annual bonus for executive directors has been
aligned with that of other subsidiaries across the Group. At the discretion of the remuneration committee share options
may be awarded to employees across the Group for exceptional performance.
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.
Richard Wollenberg
Chair of the Remuneration Committee
2 July 2020
•
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.
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.
Claire Banks
Group Finance Director
On behalf of the Board
2 July 2020
adequate
The directors are responsible for
accounting
keeping
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.
integrity of
The directors are responsible for the
maintenance and
the
corporate and financial information
included on the Company’s website.
in the United Kingdom
Legislation
governing
the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
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,
30
31
Independent Auditors’ Report to
the Members
‘Group’)
the
of Aquila
Opinion
financial
We have audited
Services
statements
Group plc (the “Company”) and
its subsidiaries (the
for
the year ended 31 March 2020
the Consolidated
which comprise
Statement of Comprehensive Income,
the Consolidated and Company
Statements of Financial Position,
the Consolidated and Company
in Equity,
Statement of Changes
the Consolidated and Company
Statement of Cash Flows and notes
to the financial statements, including
a summary of significant accounting
policies. The
reporting
framework that has been applied in
the preparation of the group financial
law and
is applicable
statements
International
Financial Reporting
Standards (IFRSs) as adopted by
the European Union and, as regards
the Company financial statements,
as applied in accordance with the
provisions of the Companies Act 2006.
financial
requirements of the Companies Act
2006; and, as regards the group
financial statements, Article 4 of the
IAS Regulation.
our
audit
Basis for opinion
in
conducted
We
accordance
International
with
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 Company in accordance
with the ethical requirements that are
relevant to our audit of the financial
statements
including
the FRC’s Ethical Standard, 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.
the UK,
in
In our opinion:
• the financial statements give a
true and fair view of the state of the
Group’s and of the Company’s affairs
as at 31 March 2020 and of the group’s
profit for the year then ended;
the Group financial statements
•
have been properly prepared
in
accordance with IFRS as adopted by
the European Union;
• the Company financial statements
have been properly prepared
in
accordance with IFRSs as adopted by
the European Union and as applied in
accordance with the provisions of the
Companies Act 2006; and
• the financial statements have been
in accordance with the
prepared
to going
Conclusions relating
concern
We have nothing to report in respect
of the following matters in relation to
which ISAs (UK) require us to report to
you when:
• 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 the 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.
Overview of our audit approach
materiality
In planning and performing our audit
we applied the concept of materiality.
An item is considered material if it
could reasonably be expected to
change the economic decisions of a
user of the financial statements. We
used the concept of materiality to both
focus our testing and to evaluate the
impact of misstatements identified.
Based on our professional judgement,
we determined overall materiality for
the financial statements as a whole to
be £50,000 (2019 £75,000), assessed
initially with reference to profit before
tax and having regard to underlying
operating profit. Last year materiality
was based on a percentage of
revenue.
materiality’)
We use a different level of materiality
(‘performance
to
determine the extent of our testing for
the audit of the financial statements.
Performance materiality is set based
on the audit materiality as adjusted for
the judgements made as to the entity
risk and our evaluation of the specific
risk of each audit area having regard
to the internal control environment.
considered
appropriate
Where
performance materiality may be
reduced to a lower level, such as,
for related party transactions and
directors’ remuneration.
We agreed with the Audit Committee
to report to it all identified errors
in excess of £2,000 (2019: £4,000).
Errors below that threshold would also
be reported to it if, in our opinion as
auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
We audit the Parent Company and
some of its wholly owned subsidiaries.
Our audit approach was developed
by obtaining an understanding of the
Group’s activities, the key functions
undertaken on behalf of the Board
by management and
the overall
control environment. Based on this
understanding we assessed
those
aspects of the Group and subsidiary
companies transactions and balances
which were most likely to give rise to
a material misstatement and were
most susceptible
irregularities
including fraud or error. Specifically,
we identified what we considered to
be key audit matters and planned our
audit approach accordingly.
to
Extent to which the audit
is
capable of detecting irregularities,
including fraud
We design our procedures so as to
obtain sufficient appropriate audit
evidence that the financial statements
are not materially misstated due
to non-compliance with
laws and
regulations or due to fraud or error. We
are not responsible for preventing non-
compliance and cannot be expected
to detect non-compliance with all laws
and regulations – this responsibility
lies with the board of directors.
identified
Based on our understanding of the
Group and industry, discussions with
management and the Audit Committee
we
reporting
standards and the Companies Act
2006 as having a direct effect on
the amounts and disclosures in the
financial statements.
financial
Other
laws and regulations where
non-compliance may have a material
effect on the Group’s operations are
the FCA registration for one of the
subsidiary companies and the FCA’s
listing rules for the parent company.
the Group’s
As part of our consideration of how
financial
and where
statements may
be materially
misstated due to fraud, we did not
rebut the presumption within auditing
standards that there is a significant risk
of material misstatement in revenue
through fraud.
Our audit procedures included:
•
enquiry of management about
the Group’s policies, procedures
and related controls regarding
compliance with laws and
regulations and if there are
any known instances of non-
compliance;
examining supporting documents
for all material balances,
transactions and disclosures;
review of the minutes of meetings
of the board of directors and the
Audit Committee;
enquiry of management
about litigations and claims
and inspection of relevant
correspondence;
evaluation of the selection
and application of accounting
policies related to subjective
measurements and complex
transactions, in particular in the
treatment of acquisitions and the
carrying value of goodwill which
are included in the Key Audit
Matters;
analytical procedures to identify
any unusual or unexpected
relationships;
testing the appropriateness
of journal entries recorded
in the general ledger and
other adjustments made in the
preparation of the financial
statements;
review of accounting estimates
for biases including impairment
reviews which is included in the
Key Audit Matters.
•
•
•
•
•
•
•
Owing to the inherent limitations of
an audit, there is an unavoidable risk
that some material misstatements of
the financial statements may not be
detected, even though the audit is
properly planned and performed in
accordance with the ISAs (UK).
The potential effects of
inherent
limitations are particularly significant
in the case of misstatement resulting
from fraud because fraud may involve
sophisticated and carefully organised
schemes designed
it,
including deliberate failure to record
transactions, collusion or intentional
misrepresentations being made to us.
to conceal
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. These
matters included those which had the
greatest effect on: the overall audit
strategy, the allocation of resources in
the audit; and directing the efforts of
the engagement team. These matters
were addressed in the context of our
audit of the financial statements as
a whole, and in forming our opinion
thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks
identified by our audit.
Our audit procedures in relation to
these matters were designed in the
context of our audit opinion as a whole.
They were not designed to enable us
to express an opinion on these matters
individually and we express no such
opinion.
32
33
Independent Auditors’ Report to
the Members (continued)
Key audit matter
Revenue recognition
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.
Accounting for acquisitions
The allocation between goodwill and other
intangible assets may not be appropriate.
Carrying value of goodwill
Goodwill on consolidation or arising on the
historical purchase of the trade and assets
of another entity may be impaired.
Carrying value of investments in
subsidiaries and associates
Investments in subsidiaries and associates
may be impaired.
Going concern
The impact of the Covid-19 pandemic poses
a significant risk to going concern. Due to
the evolving nature of the issue, this raises
uncertainties on the Group’s ability to
continue to operate as going concern.
How the scope of our audit addressed the key audit matter
We reviewed the compliance of accounting policy, along with the
disclosures made in the financial statements, and considered whether
these were in accordance with the requirements of IFRS 15.
Our work also included:
•
•
•
testing a sample of transactions in the year to ensure they were
recorded accurately;
testing to ensure that revenue was recognised in the appropriate
accounting period; and
reviewing the estimates and judgements in respect of contract
assets and contract liabilities to ensure they were reasonable and
applied consistently.
We challenged management’s assessment of the assets acquired in the
acquisitions in the year including whether or not any intangible assets
had been acquired separate to goodwill.
We reviewed management’s assessment of the basis for the recognition
and carrying value of goodwill with particular focus on current
performance, key assumptions used and the integrity of the underlying
valuation model.
Using management’s model, we applied sensitivities and alternative
assumptions and compared the results to those from management.
We obtained management’s view of whether there were any indications
of impairment. We assessed the Performance of the subsidiaries and
associates to determine whether we believed any impairment was
necessary.
We obtained and reviewed management’s paper setting out the going
concern assessment.
We obtained supporting cashflow forecasts and associated budgets so
we could corroborate management’s assessment.
In particular, we have reviewed and challenged management on the
following:
•
the key assertions and assumptions used;
• sensitively analysis;
• capital commitments and other financial obligations; and
• action plans for the group in response to Covid-19.
We have also reviewed and considered whether disclosures are
adequately made within the financial statements.
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 our 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
report and
directors’ report have been prepared
in accordance with applicable legal
requirements.
the strategic
Matters on which we are required
to report by exception
In the light of the knowledge and
the Group and
understanding of
the Company and
its environment
obtained in the course of the audit,
identified material
we have not
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 Company, or
returns adequate for our audit have
not been received from branches not
visited by us; or
• the Company financial statements
and
the directors’
remuneration report to be audited are
not in agreement with the accounting
the part of
Other information
The directors are responsible for
information. The other
the other
information comprises the information
included in the annual report, other
than the financial statements and
thereon. Our
our auditor’s report
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
required
misstatements, we are
to determine whether
is a
material misstatement in the financial
statements or a material misstatement
of the other
If, based
on the work we have performed, we
conclude that there
is a material
misstatement of this other information,
information.
there
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.
in
fully
Responsibilities of the directors for
the financial statements
As explained more
the
directors’ responsibilities statement
set out on page 29, 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.
responsible
the Group’s and
In preparing the financial statements,
for
the directors are
assessing
the
Company’s ability
to continue as
a going concern, disclosing, as
applicable, matters related to going
concern and using the going concern
the
basis of accounting unless
directors either
liquidate
the Group or the Company or to
cease operations, or have no realistic
alternative but to do so.
intend to
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
34
35
Independent Auditors’ Report to
the Members (continued)
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.
Steve Gale (Senior Statutory Auditor)
For and on behalf of
Crowe UK LLP
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
2 July 2020
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
the
material
aggregate, they could reasonably be
expected to influence the economic
decisions of users taken on the basis
of these financial statements.
individually or
in
if,
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.
Other matters which we are re-
quired to address
We were appointed by the Board on
21 March 2019 to audit the financial
statements for the period ending 31
March 2020. Our total uninterrupted
period of engagement is less than two
years, covering the years ending 31
March 2019 and 31 March 2020.
The non-audit services prohibited
by the FRC’s Ethical Standard were
not provided to the Group’s or the
Company and we remain independent
of the Group’s and the Company in
conducting our audit.
Our audit opinion is consistent with
the additional report to the audit
committee.
Use of our report
This report
is made solely to the
Company’s members, as a body, in
Consolidated Statement of
Comprehensive Income for the
year ended 31 March 2020
Notes
2020
£’000s
2019
£’000s
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income
Release of contingent consideration
Impairment of goodwill
Share of profits from associate
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
10
10
13
6
8
9
9
7,963
7,655
(6,211)
(5,788)
1,752
1,867
(1,626)
(1,260)
126
1
555
(555)
51
178
(52)
126
-
126
0.35p
0.32p
607
2
-
-
-
609
(143)
466
-
466
1.32p
1.15p
The income statement has been prepared on the basis that all operations are continuing operations.
36
37
Consolidated Statement of
Financial Position as at 31
March 2020
Group
2020
Notes
£’000s
Non-current assets
Goodwill
Property, plant and equipment
Investment in associates
Investments
Current assets
Trade and other receivables
Cash and bank balances
Current liabilities
Trade and other payables
Lease liabilities
Corporation tax
Net current assets
Non-current lease liabilities
Net assets
Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Retained (losses) / earnings
10
11
13
14
15
16
16
17
18
18
18
21
Equity attributable to the owners of the parent
The financial statements were approved by the board on 2 July 2020.
Claire Banks - Group Finance Director
Group
2019
£’000s
2,028
72
227
121
2,448
2,193
1,719
3,912
1,595
-
162
1,757
2,155
-
3,317
518
278
121
4,234
2,387
828
3,215
1,683
79
76
1,838
1,377
369
5,242
4,603
1,897
1,475
3,042
769
(1,941)
5,242
1,765
1,487
2,413
668
(1,730)
4,603
Company Statement of Financial
Position as at 31 March 2020
Company
Company
2019
£’000s
37
2,818
227
121
3,203
1,084
334
1,418
672
672
746
2020
Notes
£’000s
16
4,212
227
121
4,576
708
13
721
635
635
86
Non-current assets
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
Net current (liabilities)/assets
Net assets
Equity
Share capital
Share premium account
Share-based payment reserve
Retained (losses) / earnings
Equity attributable to the owners of the parent
11
12
13
14
15
16
18
18
21
4,662
3,949
1,897
2,104
769
(108)
4,662
1,765
1,487
668
29
3,949
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 £200k (2019: £165k).
The financial statements were approved by the board on 2 July 2020.
Claire Banks – Group Finance Director
Company Registration No. 08988813
38
39
Consolidated Statement of
Changes in Equity for the year
ended 31 March 2020
Company Statement of Changes
in Equity for the year ended 31
March 2020
Share
capital
£’000s
Share
premium
account
£’000s
Share based
Merger
reserve
£’000s
payment
Retained
reserve
£’000s
losses
£’000s
Total
equity
£’000s
1,763
1,487
2,413
558
(1,907)
4,314
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7)
-
117
-
7
2
-
466
466
-
(296)
1,765
1,487
2,413
668
(1,730)
1,765
132
1,487
(12)
2,413
629
668
(1,730)
(4)
105
4
126
(341)
1,897
1,475
3,042
769
(1,941)
117
(296)
4,603
4,603
760
-
126
105
(341)
5,242
Balance at 1
April 2018
Issue of shares
Transfer on
exercise of
options
Total
comprehensive
income
Share based
payment charge
Dividend
Balance at 31
March 2019
Balance at 1
April 2019
Issue of shares
Transfer on
exercise of
options
Total
comprehensive
income
Share based
payment charge
Dividend
Balance at 31
March 2020
Share
Share based
Share
capital
£’000s
premium
account
£’000s
payment
reserve
£’000s
Retained
earnings
£’000s
1,763
1,487
558
2
-
-
-
-
-
-
-
1,765
1,487
1,765
132
1,487
617
-
-
(7)
117
-
668
668
(4)
105
1,897
2,104
769
153
-
165
7
-
(296)
29
29
200
4
(341)
(108)
Total
equity
£’000s
3,961
2
165
-
117
(296)
3,949
3,949
749
200
-
105
(341)
4,662
Balance at 1 April
2018
Issue of shares
Total
comprehensive
income
Transfer on exercise
of options
Share based pay-
ment charge
Dividend
Balance at 31
March 2019
Balance at 1 April
2019
Issue of shares
Total comprehen-
sive income
Transfer on exercise
of options
Share based pay-
ment charge
Dividend
Balance at 31
March 2020
Consolidated Statement of Cash
Flow for the year ended 31
March 2020
Notes to the consolidated statement of cashflows
Net assets acquired on acquisitions
Oaks
Finalysis
Total
£’000
£’000
£’000
Tangible non-current assets
Trade and other receivables
Cash at bank
Trade and other payables
Goodwill
Satisfied by
Shares allotted
Cash
34
315
-
(348)
1,161
1,162
730
432
1,162
-
71
5
(27)
130
179
30
149
179
34
386
5
(375)
1,291
1,341
760
581
1,341
40
41
Consolidated Statement of Cash
Flow for the year ended 31
March 2020
Cash flows from operating activities
Profit for the year
Interest received
Income tax expense
Share based payment charge
Profit from associate
Release of contingent consideration
Impairment of goodwill
Depreciation
Operating cash flows before movement in working capital
Decrease/(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash generated by operations
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Purchase of subsidiary
Acquisition of investment in an associate
Net cash outflow from investing activities
Cash flows from financing activities
Lease liability payments
Proceeds of share issue
Dividends paid
Net cash outflow from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
2020
£’000s
126
(1)
52
105
(51)
(555)
555
134
365
122
(257)
230
(139)
121
1
(32)
(544)
-
(575)
(66)
-
(341)
(407)
(891)
1,719
2019
£’000s
466
(2)
143
117
-
-
-
52
776
(84)
566
1,258
(123)
1,135
2
(28)
-
(66)
(92)
-
2
(296)
(294)
749
970
Cash and cash equivalents at end of the year
Other than the inclusion of lease liabilities on adoption of IFRS 16 all changes in liabilities arising from financing arose from
cash flows.
1,719
828
42
43
Company Statement of Cash Flow
for the year ended 31 March 2020
Cash flows from operating activities
Profit for the year
Dividends received
Interest received
Income tax expense
Depreciation
Operating cash flows before movement in working capital
Decrease in trade and other receivables
(Increase)/ decrease in trade and other payables
Cash inflow /(outflow) generated by operations
Income taxes paid
Net cash inflow / (outflow) from operating activities
Cash flows from investing activities
Interest received
Dividends received
Purchase of property, plant and equipment
Acquisition of subsidiaries
Acquisition of investment in an associate
Acquisition of investment
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds of share issue
Dividends paid
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2020
£’000s
200
(461)
(1)
-
21
(241)
379
(37)
101
-
101
1
461
-
(544)
-
-
(82)
-
(341)
(341)
(322)
335
13
2019
£’000s
165
(381)
(1)
-
21
(196)
43
122
(31)
-
(31)
1
381
-
-
(65)
-
317
2
(296)
(294)
(8)
343
335
Notes to the Financial Statements
for the year ended 31 March 2020
1. General information
Aquila Services Group plc (‘the Company’) and its subsidiaries (together, ‘the Group’) provide specialist housing, sport,
education 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 except for certain assets which are carried at fair
value.
The financial statements are presented in Pounds Sterling which is the functional and presentational currency of all companies
within the Group.
The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas of
critical accounting estimates and judgements are set out in note 3.
Going concern
As a result of the COVID-19 pandemic management have produced forecasts that have been adapted to reflect plausible
scenarios on revenue and costs over the short term and into a transition period. These have further been stress tested to ensure
their viability.
All non-essential spend was suspended and all travel and subsistence spend suspended due to lockdown measure being in
place.
44
45
Notes to the Financial
Statements (continued) for the
year ended 31 March 2020
Revenue recognition
The group earns income from the following principal services:
•
•
•
Revenue from consultancy services
Revenue from interim management
Revenue from treasury management
For all these principal services, revenue represents amounts recoverable from clients for professional services provided during
the year. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties.
Revenue is recognised when control of a product or service is transferred to a customer.
2. Accounting policies (continued)
Going concern (continued)
The Group made six redundancies between March and June and placed seven members of staff on furlough, one of whom has
since returned to work.
Revenue from fixed fee assignments is recognised over a period of time by reference to the stage of completion of the actual
services provided at the reporting date, as a proportion of the total services to be provided because the customer receives and
uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour
hours.
All employees continue to work from home and are able to service both the needs of clients and the organisation.
The Group took advantage of the VAT payment deferral plan and have built into the cashflow forecast the payment in March
2021.
The directors considered the possibility of bank loans and have opted not to take out debt financing but have considered equity
financing and the placement of shares should cash be required.
The Group is in a strong cash position post balance sheet.
The Board continue to review the current position on a fortnightly basis. The subsidiary CEO’s and the Group Finance Director
monitor weekly to ensure forecasts are sustainable and cash reserves are maintained.
All the actions taken and the forecasts that have been produced and reviewed demonstrate that the Group is forecast to
generate profits and cash in the year ended 31 March 2021 and beyond and that the Group has sufficient cash reserves to
enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the financial
statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of subsidiary entities. A subsidiary is defined as an
entity over which the Company has control. Control is achieved when the Company has power over an entity, is exposed to, or
has rights to, variable returns from its involvement with the entity, and could use its power to affects its returns.
Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company
reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three
control elements listed above.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line
with the Group’s accounting policies.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by
the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in
exchange for control of the acquiree.
Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill.
Goodwill is not amortised but is reviewed for impairment at least annually. If the consideration is less than the fair value of the
identifiable assets and liabilities acquired, the difference is recognised in the statement of comprehensive income.
Time and materials assignments are recognised as services are provided at the fee rate agreed with the client. Unbilled revenue
on individual client assignments is classified as accrued income for client work within trade and other receivables. Where
individual on-account billings exceed recognised revenue on a client assignment, the excess is classified as contract liabilities
for client work within trade and other payables.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The
cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly
attributable to bringing the asset to the location and condition necessary for use. Depreciation is recognised to write-off the
cost of assets less their residual values over their estimated useful lives, using the straight-line method, on the following bases:
Short leasehold property
Equipment
Over unexpired term of lease
3-5 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.
Investment in subsidiaries
In the Company’s 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.
Investment 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.
46
47
Notes to the Financial Statements
(continued) for the year ended 31
March 2020
2. Accounting policies (continued)
Investment in associates (continued)
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an
associate. On acquisition of the investment in an associate, any excess of cost over the Group’s share of the net fair value of
the identifiable assets and liabilities of the investee is recognised as goodwill, which is included in the carrying amount of the
investment.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL)
and ‘amortised cost’. The classification depends on the financial asset’s contractual cash flow characteristics and the Group’s
business model for managing them and is determined at the time of initial recognition. Financial assets with cash flows that are
not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the
business model.
Amortised cost
Financial assets at amortised cost
These assets are held within a business model whose objective is to collect contractual cash flows which are solely payments
of principals and interest and therefore classified as subsequently measured at amortised cost. With the exception of trade
receivables which are initially measured at transaction price determined in accordance with IFRS 15, financial assets at
amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition, and
are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. The Group’s
financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents. Cash
comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand which have a right of offset
against cash balances. These instruments are readily convertible to a known amount of cash and are subject to an insignificant
risk of change in value.
Financial assets at fair value through profit or loss
Assets that do not meet the criteria for amortised cost are measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in
which it arises. The Group’s financial assets measured at FVTPL comprise unquoted equity investments.
Impairment of financial assets
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of credit losses. During this process the probability of the non-payment
of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default
to determine the expected credit loss for the trade receivables. Provisions are recorded net in a separate provision account
with the loss being recognised in the consolidated income statement. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for
receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss
model. The methodology used to determine the amount of provision is based on whether there has been a significant increase
in credit risk since the initial recognition of the asset.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘amortised cost’. The Group does not currently hold
any financial liabilities ‘at FVTPL’.
Pensions
The Group contributes to defined contribution schemes for the benefit of its directors and employees. Contributions payable
are charged to the statement of comprehensive income in the year they are payable.
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit
or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and
liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit, and, is accounted
for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities
in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is
settled. Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other
comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets
Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income. No
deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.
Impairment of assets
The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired. If any
such indication exists, the Group estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not
possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to
which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in
profit or loss.
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for
assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of
those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.
48
49
Notes to the Financial
Statements (continued) for the
year ended 31 March 2020
2. Accounting policies (continued)
Impairment of assets (continued)
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.
Leases
The Group has revised its accounting policy for leases where the Group is the lessee following the adoption of IFRS 16 on 1 April
2019.
The Group enters into lease agreements for the use of buildings. Lease terms are negotiated on an individual basis and contain
a range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests
in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Until March 2019 leases of property were classified as operating leases. From 1 April 2019, following the adoption of IFRS 16,
leases are recognised as a right-of-use asset (ROU) and a corresponding lease liability for future lease payments at the date at
which the leased asset is available for use by the Group. Depreciation of the right-of-use asset will be recognised in the income
statement on a straight-line basis, with interest recognised on the lease liability.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
•
•
•
•
•
fixed payments, less any lease incentives receivable;
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options would also be included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which
is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of use asset in a similar
economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and interest cost. The finance cost is charged to the income statement over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
•
•
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
•
•
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line
basis. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
The modified retrospective method has been applied the impact on adoption was a recognition of a right of use asset of £514k
with a matching lease liability. There are no adjustments to opening retained earnings as there were no lease liabilities in force
at the end of the prior year.
The Group does not have any short-term leases of equipment or vehicles.
Accounting policy applied prior to 1 April 2019
Under IAS 17 (prior to transition to IFRS 16), rental payments under operating leases were charged to the income statement on a
straight-line basis over the lease term.
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.
The fair value of the options is measured using the Black Scholes options valuation model. The inputs into that model are the
share price at the date of the grant, the exercise price, the expected life of the option, the risk-free rate based on the yield of a
10-year government bond and the expected share price volatility based on the Company’s share price since 20 August 2015.
Adoption of new and revised standards
The following pronouncements have been adopted in the year:
•
IFRS 16 Leases
Standards issued but not yet effective
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
3. Critical accounting estimates and judgements
In application of the Group’s accounting policies, which are described in note 2, the directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
50
51
Notes to the Financial Statements
(continued) for the year ended 31
March 2020
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.
Sensitivities have been applied to all assumptions. In the light of COVID-19 the cashflows have been further tested to ensure the
assumptions are viable.
Intangible assets
On acquisition the following items are reviewed to assess if there is any value in acquiring the intangibles separately.
•
•
•
•
•
•
Trademarks or trade names
Technology based intangibles, including any IT systems
Artistic-related intangibles
Intellectual property
Customer-related intangibles
Employment contracts
On acquisition of the two entities during the year there were no assets identifiable as being separable from the entity that could
be sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or
liability. There were also no assets arising from contractual or other legal rights.
Work in progress within 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).
Valuation of unquoted investments
The Group determines the fair value of these financial instruments using recent transactions or valuation models if information
about recent transactions is not available. The values derived from applying these models are significantly impacted by the
choice of the valuation model used and the underlying assumptions made, such as the amounts and timing of future cash flows,
discount rates, volatility and credit risk.
Share-based payments
The Company has granted share options to certain employees and directors of the Group. The share options granted become
exercisable at varying future dates. If certain conditions are met, following the vesting period, the employee will be eligible to
exercise their option at an exercise price determined on the date the share options are granted.
The share-based payment charge is recognised in the statement of comprehensive income and is calculated based on the
Company’s estimate of the number of share options that will eventually vest.
Assumptions regarding the fair value of the Company’s shares and assumptions regarding employee fluctuation are considered
when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled
share-based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of
comprehensive income to reflect the services rendered as consideration during the vesting period (note 21).
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.
The recoverable amount of the goodwill is determined from value in use calculations. The key assumptions for the value in use
calculations are those regarding the discount rates, growth rates and expected changes to income and direct costs during the
period.
Management reviewed all information available at 31 March 2020 taken into account all additional information relating to
market participant assumptions that is reasonably available and concluded that there is insufficient information available and
a wide range of possible fair value measurements and as such cost is considered to be an appropriate estimate of fair value.
4. Revenue and finance income
An analysis of the Group’s revenue is as follows:
Continuing operations - rendering of services
Specialist housing consultancy income
Treasury management consultancy income
Specialist sports and education consultancy
Finance income is comprised of:
Interest revenue on bank deposits
5. Operating segments
2020
£’000s
6,729
528
706
7,963
1
7,964
2019
£’000s
7,087
568
-
7,655
2
7,657
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.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money
and the risks specific to each acquisition of goodwill. Discount rates of 11% and a terminal value of 1.4% has been used.
The principal activities of the Group are as follows:
Growth rates of 0-15% have been applied, these are based on industry rates managements knowledge of the business and the
markets and the ability for the business to expand. The maximum period over which the cashflows are reviewed is 5 years.
Consultancy – a range of services to support the business needs of a diverse range of organisations (including housing
52
Notes to the Financial Statements
(continued) for the year ended 31
March 2020
5. Operating segments (continued)
associations, local authorities, multi academy trusts and sporting businesses) across the housing, education and sports sectors.
Most consultancy projects run over one to two months and on-going business development is required to ensure a full
pipeline of consultancy work for the employed team.
Interim Management – individuals are embedded within housing organisations (normally housing associations, local
authorities and ALMOs) in a substantive role, normally for a specified period. Interim management provides the Group
with a more extended forward sales pipeline as the average contract is for six months. This section of the business
provides low risk as the interim consultants are placed on rolling contractual basis and provides minimal financial
commitment as associates to the business, rather than employees, are used for these roles.
Treasury Management – a range of services providing treasury advice and fund-raising services to non-profit making
organisations working in the affordable housing and education sectors. Within this segment of the business several
client organisations enter fixed period retainers to ensure immediate call-off of the required services.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note
2. Segment profit represents the profit earned by each segment, without allocation of central administration costs,
including directors’ salaries, finance costs and income tax expense. This is the measure reported to the Group’s chief
executive for the purpose of resource allocation and assessment of segment performance.
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
Administrative expenses
Operating profit
2020
£’000s
6,640
795
528
7,963
5,315
574
322
6,211
1,325
221
206
1,752
(1,626)
126
2019
£’000s
5,867
1,220
568
7,655
4,381
1,010
397
5,788
1,486
210
171
1,867
(1,260)
607
Within consultancy revenues, approximately 7% (2019: 6%) has arisen from the segment’s largest customer; within
interim management 24% (2019: 12%); within treasury management 26% (2019: 34%).
53
Geographical information
Revenues from external customers, based on location of the customer, are shown below:
UK
Europe
Rest of World
6. Profit before taxation
Profit before taxation is arrived at after charging:
Auditors’ remuneration (see below)
Depreciation of property, plant and equipment
Depreciation of leasehold property
Staff costs (see note 7)
Significant reorganisation costs *
Acquisition related costs **
Operating lease costs – land and buildings
2020
£’000s
7,368
279
316
7,963
2020
£’000s
42
63
71
5,351
186
51
-
2019
£’000s
7,179
305
171
7,655
2019
£’000s
38
52
-
4,270
-
-
42
* Significant restructuring costs include staff related costs of £186k (2019: Nil) arising from the redundancy costs relat-
ing to COVID-19 are provided for
** Refer to note 10 for the breakdown of acquisition-related costs
Breakdown of auditors’ remuneration
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the
parent Company
Fees payable to the Company’s auditors for the audit of the
Company’s subsidiaries
Total
2020
£’000s
23
19
42
2019
£’000s
19
19
38
54
Notes to the Financial Statements
(continued) for the year ended 31
March 2020
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
Company staff costs
Wages and salaries
Directors’ remuneration
Salary (including taxable benefits)
Share-based payments
Pension contributions
2020
74
2020
£’000s
4,542
105
215
489
5,351
2020
£’000s
10
2020
£’000s
396
20
22
438
Three 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
£’000s
146
8
9
163
2019
52
2019
£’000s
3,605
117
161
387
4,270
2019
£’000s
10
2019
£’000s
390
43
17
450
£’000s
162
15
8
185
55
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
8. Taxation
Corporation tax:
Current year
2020
£’000s
664
29
22
715
2020
£’000s
52
The tax charge for the year can be reconciled to the profit in the income statement as follows:
Profit before taxation
Tax at the UK corporation tax rate of 19% (2019: 19%)
Post tax income from associate
Expenses not deductible
Tax expense for the year
9. Earnings per share
2020
£’000s
178
34
(9)
27
52
2019
£’000s
655
64
22
741
2019
£’000s
143
2019
£’000s
609
116
27
143
Basic earnings per share is calculated by dividing the profit after tax attributable to the equity holders of the Group by
the weighted average number of shares in issue during the year. Diluted earnings per share is calculated by adjusting
the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share
options. Details of which are set out in note 21.
Profit after tax attributable to owners of the parent
Weighted average number of shares
-
Basic
- Diluted
Basic earnings per share
2020
£’000s
75
36,285
41,665
0.35p
2019
£’000s
466
35,272
40,353
1.32p
56
57
Notes to the Financial Statements
(continued) for the year ended 31
March 2020
Diluted earnings per share
0.32p
1.15p
10. Goodwill
Group
Cost
At 1 April 2018 and 31 March 2019
Additions
At 31 March 2020
Accumulated impairment losses
At 1 April 2018 and 31 March 2019
Impairment losses for the year
At 31 March 2020
Net book value
At 1 April 2018 and 31 March 2019
At 31 March 2020
Goodwill
£’000s
2,028
1,844
3,872
-
(555)
-
2,028
3,317
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 11 June 2019, the Group acquired 100% of the share capital of Oaks Consultancy Ltd, a company incorporated in the
UK. The principal activity of Oaks is that of consultancy within the sports and education sector. Oaks’ business services
complement those of existing subsidiaries within the Group and provides strong opportunities for collaboration.
The transaction has been accounted for by the acquisition method of accounting. This comprises an initial consideration
of £1,714k being £441k in cash, £718k in ordinary shares and deferred contingent consideration of £555k. The deferred
consideration is contingent upon specific targets on the annual recurring revenue (ARR) growth of the business up to
March 2021. The directors have reviewed the business performance of Oaks including the future budgets and cashflows
up to March 2021 and have concluded that the ARR is unlikely to be achieved and have therefore release the contingent
liability. The directors have also impaired the investment by the amount equivalent to the contingent consideration.
Further impairment reviews have taken place and no further impairment is required on the remaining goodwill. The costs of
acquisition totalling £35k have been included within the profit and loss account of the Group. The total amount of goodwill
in the Statement of Financial Position is shown as £1,159k.
The net assets of Oaks totalling £1k were acquired for cash.
On 31 January 2020, the Group acquired 100% of the share capital of Finalysis (UK) Limited a consultancy business
providing treasury and banking services.
The transaction has been accounted for by the acquisition method of accounting at a fair value of consideration of £130k
being £100k in cash and £30k in ordinary shares. The costs of acquisition of £16k have been included within the profit and
loss account of the Group. The total goodwill calculated at £130k.
The net assets of Finalysis totalling £49k were acquired for cash. The trade and assets of Finalysis were hived into ATFS.
The Group tests goodwill annually for impairment, or more frequently if there are any indications that goodwill might be
impaired.
The recoverable amount of goodwill is determined from value in use calculations. The key assumptions for the value in use
calculations are those regarding growth rate of client base and project fees. Management’s approach to determining the
values to each key assumption is based on experience and project work already secured for future periods. Management
have projected cash flows over a period of 5 years, based on growth rates of between 0% and 15% per annum, this is
based on past performance and expected future activity, also taking into account a slower growth rate due to COVID-19.
A discount rate of 11% and a terminal value of 1.4% has been used. Sensitivities have then been applied to the model to
stress test the assumptions. As a result of the review an impairment on Oaks has occurred and £555k has been written off
in the financial year under review.
The following amounts have been recognised within the consolidated statement of comprehensive income for the reporting
period.
Revenue
Profit before tax
Oaks
£’000
706
(21)
Finalysis
£’000
89
37
If the acquisitions had taken place at the start of the financial year, the group revenue would have been £8,381k and the
profit before tax £279k
11. Property, plant and equipment
The Group has revised its accounting policy for leases where the Group is the lessee following the adoption of IFRS 16. The
Statement of Financial Position shows the following amounts relating to the right of use assets in property.
Group
Cost
At 1 April 2018
Additions
At 31 March 2019
Additions
At 31 March 2020
Accumulated depreciation
At 1 April 2018
Charge for the year
At 31 March 2019
Charge for the year
At 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
Property
Fixtures and
fittings
Computer equipment
£’000s
£’000s
£’000s
Total
£’000s
34
-
34
11
45
13
11
24
14
38
21
10
7
-
541
541
71
71
470
110
28
138
28
166
36
40
76
49
125
74
62
41
144
28
172
580
752
49
51
100
134
234
95
72
518
58
59
Notes to the financial statements
(continued) for the year ended 31
March 2020
11. Property, plant and equipment (continued)
Company
Cost
At 1 April 2018 and 31 March 2019
Additions
At 31 March 2020
Accumulated depreciation
At 1 April 2018
Charge for the year
At 31 March 2019
Charge for the year
At 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
Computer equipment
£’000s
64
-
64
5
22
27
21
48
59
37
16
12. Investment in subsidiaries
Company
Investments in subsidiaries
Cost
At 1 April 2018
Additions
At 31 March 2019
Additions
At 31 March 2020
Accumulated impairment losses
At 1 April 2018 and 31 March 2019
Impairment losses for the year
At 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
£’000s
2,701
117
2,818
1,949
4,767
-
555
555
2,701
2,818
4,212
The addition of £1,949k represents the acquisition of Oaks of £1,714k (including deferred consideration of £555k) the acquisition
of Finalysis of £130k and £105k representing capital contributions made to the Company’s subsidiaries in respect of the share
option expense recognised in those subsidiaries on share options issued by the Company.
Details of the Company’s subsidiaries at 31 March 2020 are as follows.
Place of incorporation
and operation
Principal activity
Proportion of ownership and
voting rights held
Altair Consultancy and Advisory
Services Limited
Aquila Treasury and Finance
Solutions Limited
England and Wales
England and Wales
Oaks Consultancy Limited
England and Wales
Specialist housing
consultancy
Treasury management
consultancy
Specialist sports and
education consultancy
100%
100%
100%
The accounting reference date of each of the subsidiaries is co-terminus with that of the Company. The registered office of
each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
13. Investment in associates
Details of the Group’s material associates at 31 March 2020 are as follows:
3C Consultants Limited
England and Wales
IT consultancy
25%
Place of incorporation
and operation
Principal activity
Proportion of ownership and
voting rights held
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.
Investment in associate
2020
£’000s
228
2019
£’000s
227
The Group’s share of the net assets in the associate company is £76k (2019: £26k). Profit for the year, of which £51k is attributable
to Aquila, has been recognised in the statement of comprehensive income and added to the carrying value. No share of profit
was recognised in the prior year. In the Company statement of financial position, the investment is carried at cost of £227k.
Although the Group’s share of net assets in the associate is below the carrying value, no impairment has been recorded be-
cause the associate was profitable in the year and expected to continue to be profitable going forward.
60
61
Notes to the financial statements
(continued) for the year ended 31
March 2020
13. Investment in associates (continued)
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 the owners of the Company
Revenue
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income
Dividends received from associate during the year
2020
£’000s
520
2
(217)
-
305
1,416
203
-
203
-
2019
£’000s
328
3
(222)
(6)
103
959
65
-
65
-
Reconciliation of the above summarised financial information to the carrying amount recognised in the consolidated financial
statements for the prior year:
Net assets of associates
Proportion of the Group’s ownership interest in the
associate
Goodwill
Carrying amount
14. Investments
Fair Value Hierarchy
Unquoted equity investments
Level 3
2020
£’000s
121
2018
£
37,651
9,413
217,207
226,620
2019
£’000s
121
The Group has a 6% equity shareholding in AssetCore Limited an unquoted company. AssetCore’s principal activity is a
cloud-based platform used to manage loan security within the affordable housing sector. As explained in Note 3, based
on the information available at the reporting date the directors consider cost to be an appropriate estimate of fair value.
Financial instruments measured at fair value subsequent to initial recognition are grouped into levels 1 to 3 based on the
degree to which the fair value is observable, i.e.:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
15. Trade and other receivables
Trade receivables
Group undertakings
Other receivables
Prepayments
Contract assets
31 March 2020
31 March 2019
Group
2020
£’000s
Group
2019
£’000s
2,063
1,872
-
23
79
222
2,387
-
9
88
224
2,193
Company
Company
2020
£’000s
-
685
14
9
-
708
2019
£’000s
-
1,082
0
2
-
1,084
Total
<30 days
30-60 days
66-90 days
>90 days
£’000s
£’000s
£’000s
£’000s
£’000s
2,063
1,872
1,500
1,744
209
50
147
23
207
54
No expected credit loss is recognised in the accounts. The Group do not expect any debts not to be paid, the directors
have reviewed the provision for expected credit loss and have not identified any which need to be provided for.
16. Trade and other payables
Trade payables
Other payables
Lease liabilities
Amounts owed to Group undertakings
Taxes and social security costs
Accruals
Contract liabilities
Group
2020
£’000s
154
101
79
-
613
634
181
1,762
Group
2019
£’000s
253
28
-
-
518
569
227
1,595
Company
Company
2020
£’000s
2019
£’000s
9
50
-
520
56
635
-
-
560
-
112
-
672
Of the contract liability brought forward at the start of the year £227k (2019: £226k) was recognised in revenue in the year.
17. Long term liabilities
As explained in note 2, the Group has revised its accounting policy for leases were the Group is the lessee following the
adoption of IFRS 16. The Statement of Financial Position shows the following amounts relating to lease liabilities.
62
Notes to the financial statements
(continued) for the year ended 31
March 2020
17. Long term liabilities (continued)
Additions new leases
Decrease in lease liabilities
Closing amounts as at 31 March 2020
Current
Non-current
18. Share capital
2020
£’000s
514
(66)
448
79
369
63
19. Reserves
The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their
nominal value and is non-distributable.
The merger relief reserve arose on the Company’s acquisition of Altair. There is no legal share premium on the shares issued as
consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition.
Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as
though the legal acquiree is the accounting acquirer.
Upon acquisition of Oaks and Finalysis in the year to 31 March 2020 the premium arising on the issue of shares has been credited
to the merger reserve as shown in note 18.
20. Dividends
Amounts recognised as distributions to equity holders
Final dividend for the year ended 31 March 2019 of 0.6p per share (2018:
0.55p)
Interim dividend for the year ended 31 March 2020 of 0.3p per share (2019:
0.29p)
Proposed final dividend for the year ended 31 March 2020 of Nil per share
(2019: 0.6p)
The group do not propose a final dividend for the year ended 31 March 2020.
2020
£’000s
227
114
341
-
2019
£’000s
194
102
296
211
Allotted, called up and fully paid
37,947,905 (2019: 35,307,776) Ordinary shares of 5p each
1,897
1,765
The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme. The total expense
recognised in the year to 31 March 2020 arising from share-based payment transactions is £105k (2019: £117k).
2020
£’000s
2019
£’000s
21. Share-based payment transactions
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 31 March 2018
Issued at 5p per share on 1 Feb 2019
At 31 March 2019
Issued at 28.7p per share on 14 Nov
2019
Cost of share on acquisition
Issued at 35p per share on 31 Jan 2020
Issued at 5p per share on 21 Feb 2020
Number of
Ordinary shares
Amount called up
and fully paid
‘000
35,265
42
35,307
2,544
-
86
10
£’000s
1,763
2
1,765
128
-
4
-
Share premium Merger reserve
£’000s
1,487
-
£’000s
2,413
-
1,487
2,413
-
(12)
-
-
603
-
26
-
At 31 March 2020
37,947
1,897
1,475
3,042
Unapproved scheme
Number ‘000
exercise price
Weighted average
Number of options outstanding at 1 April
2019
Granted during period
Forfeited during period
Exercised during period
Number of options outstanding as at 31
March 2020
Number of options exercisable as at 31
March 2020
2,587
171
-
-
2,758
2,587
£0.23
£0.35
-
-
£0.25
£0.23
The exercise price of the options outstanding at 31 March 2020 ranges between £0.05 and £0.35. The weighted average
remaining contractual life of the options outstanding at 31 March 2020 is 1 year (2019: 1 year).
On 31 January 2020, following the acquisition of Finalysis, the Company granted 171,428 of options at an exercise price of
35p. The options are exercisable between 31 January 2022 and 31 January 2027. The weighted average fair value of the
options at grant date was £0.067. The fair value of the options was measured using the Black Scholes options valuation
model. The inputs into that model in respect of the EMI share options were as displayed on the following page.
64
65
Notes to the financial statements
(continued) for the year ended 31
March 2020
21. Share-based payment transactions (continued)
Share price
Exercise price
Expected volatility
Expected option life
Risk-free rate
£0.35
£0.35
20.19%
5 years
0.61%
The risk-free rate is based on the yield of a 10-year government bond.
The expected share price volatility is based on the Company’s share price since 20 August 2015.
EMI scheme
Number
Weighted average
exercise price
Number of options outstanding at 1 April 2019
Granted during period
Forfeited during period
Exercised during period
Number of options outstanding as at 31 March 2020
2,851
-
(65)
(10)
2,776
£0.05
-
£0.05
£0.05
Number of options exercisable as at 31 March 2020
2,005
£0.05
The weighted average remaining contractual life of the options outstanding at 31 March 2020 is 5 years (2019: 6 years).
22. Related party disclosures
Balances and transactions between the Group and other related parties are disclosed below:
Dividends totalling £149k (2019: £137k) were paid in the year in respect of Ordinary Shares held by the Company’s directors.
During the year the Group charged £Nil (2019: £10,000) to DMJ Consultancy Services Limited for administrative services, a
company in which Derek Joseph serves as a director.
At 31 March 2020, the balance owed to Richard Wollenberg for services as a non-executive director was £8k (2019: £4k).
At 31 March 2020, the balance owed to Fiona Underwood for reimbursement of expenses was £182.
23. Control
In the opinion of the Directors there is no single ultimate controlling party.
24. Financial instruments
Financial risk management
The Group’s activities are exposed to a variety of market risk (including foreign currency risk and interest rate risk), credit risk
and liquidity risk.
Credit risk
Credit risk is the risk of financial loss to the Group resulting from counterparties failing to discharge their obligations to the
Group. The Group’s principal financial assets are trade and other receivables and cash and cash equivalents.
The Group considers its credit risk to be low. Of the total trade receivables at the 2020 year-end £136k (2019: £148k) is due from
one customer (which has since been received).
There are no other customers that represent more than 7% of the total balance of trade receivables. The maximum exposure to
credit risk is equal to the carrying value of these instruments.
Liquidity risk
Liquidity risk is the risk of the Group being unable to meet its liabilities as they fall due. The Group manages liquidity risk by
maintaining enough cash reserves and holding banking facilities, and by continuously monitoring forecast and actual cash
flows. In addition, the Group is a cash generative business with income being received regularly over the course of the year.
The Group held cash reserves of £828k (2019: £1,719k) at the year-end.
Foreign currency risk
Foreign exchange risk is the risk of loss due to adverse movements in the exchange rates affecting the Group’s profits and cash
flows. Only a very small number of clients are invoiced in Euros and USD and the foreign exchange exposure is not considered
a significant risk. The Group’s principal financial assets are cash and cash equivalents and trade and other receivables, which
are almost exclusively denominated in Pounds Sterling.
Interest rate risk
The Group does not undertake any hedging activity in this area. The main element in interest rate risk involves sterling deposits.
Capital risk management
Internal working capital requirements are low and are regularly monitored.
The Groups’ objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to
provide return for shareholders, benefits for other stakeholders and to maintain optimal capital structure and to reduce the cost
of capital.
In order to ensure an appropriate return for shareholder capital invested in the Group, management thoroughly evaluates all
material projects and potential acquisitions and has them approved by the Board of Directors where applicable.
The Group monitors capital on a short- and medium-term view.
25. Post Balance Sheet event
There are no post balance sheet events.
26. Capital commitments
There were no capital commitments at 31 March 2020.
27. Contingent liabilities
There were no contingent liabilities at 31 March 2020.
66
67
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 29 July 2020 at 3:00 pm, for the purpose of considering and, if thought
fit, passing the following resolutions, of which resolutions numbered 1 to 5 will be proposed as ordinary resolutions and
resolution 6 and 7 will be proposed as a special resolutions. Resolutions 5 to 7 are items of special business.
Please note that arrangements for the Annual General Meeting this year are different from those of previous years.
Restrictions on personal movement and social distancing measures implemented by the UK Government in response to
the Covid-19 pandemic means that special measures will be adopted for the Annual General Meeting (AGM) to protect
the health and safety of Shareholders and others in attendance at the AGM. It is currently envisaged that the AGM will be
run as a closed meeting with the minimum number of shareholders present (or via video conferencing in accordance with
the Company’s articles of association) to ensure that the meeting is quorate and conducted without a presentation or a
question and answer session. The Board requests that no Shareholders attend the meeting in person and any Shareholders
that do attend (other than to form a quorum) will be refused entry. Accordingly, Shareholders are encouraged to vote on
the resolutions by proxy and the votes on each resolution will be taken on a poll. You can vote by completing and returning
the proxy form which accompanies this document.
The Board will continue to keep Government guidance under review and may, if necessary, make further changes to the
arrangements for the AGM. Further announcements and information will be provided as required and Shareholders
should continue to monitor the Company’s website at https://aquilaservicesgroup.co.uk/ for any up-dates.
Ordinary business
1.
To receive the reports of the directors and auditor and the financial statements for the period ended 31 March
2020.
2.
3.
To approve the remuneration report for the period ended 31 March 2020.
To approve the revised remuneration policy for implementation from 1 April 2020.
4.
to determine the auditor’s remuneration.
That Crowe UK LLP be and is hereby reappointed as auditor of the Company and that the directors be authorised
Special business
5. 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:
5.1 £229,580 in connection with the valid exercise of the options (both approved and unapproved) granted by the
Company (as set out in the prospectus issued by the Company dated 20 July 2015), any unapproved options granted
to current or former officers of the Company and options granted to employees and officers of the Company and/or its
subsidiaries in accordance with the terms of the Company’s Employee Share Option Scheme (“Options”); and
5.2 in any other case, £632,465 (such amount to be reduced by the nominal amount of any equity securities allotted
pursuant to the authorities in paragraph 5.1 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.
6. That, subject to Resolution 5 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 5 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:
6.1 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;
6.2 in connection with the valid exercise of Options;
6.3 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
6.4 otherwise, up to a maximum nominal amount of £94,870.
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.
7. 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:
7.1 the maximum aggregate number of Ordinary Shares that may be purchased is 3,794,790;
7.2 the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is £0.05;
7.3 the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of:
7.3.1 105 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
7.3.2 the value of an Ordinary Share calculated on the basis of the higher of the price quoted for:
7.3.3 the last independent trade of; and
7.3.4 the highest current independent bid for any number of Ordinary Shares on the Official List.
7.4 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
By order of the board
Claire Banks
Company Secretary
2 July 2020
68
69
Notice of Annual General
Meeting Notes
1. A member entitled to attend and
vote at the above meeting is entitled
to appoint a proxy to exercise all or
any of their rights to attend, speak and
vote on his / her behalf at the meeting.
A proxy need not be a member of the
company.
2. You may appoint more than
one proxy provided each proxy is
appointed to exercise rights attached
to different shares. You may not
appoint more than one proxy to
exercise rights attached to any one
share. To appoint more than one
proxy you may photocopy the form
of proxy. Please indicate the proxy
holder’s name and the number of
shares in relation to which they are
authorised to act as your proxy (which,
in aggregate, should not exceed the
number of shares held by you). Please
also indicate if the proxy instruction
is one of multiple instructions being
given. All forms must be signed and
should be returned together in the
same envelope.
3. A form of proxy accompanies this
notice. Forms of proxy, to be valid,
must be delivered to the company’s
registrars, Neville Registrars Limited,
Neville House, Steelpark Road,
Halesowen B62 8HD in accordance
with the instructions printed thereon,
not less than 48 hours before the
time appointed for the holding of the
meeting.
4. If you are not a member of
the company but you have been
nominated under section 146 of the
Companies Act 2006 (the ‘Act’) by
a member of the company to enjoy
information rights, you do not have
the rights of members in relation to
the appointment of proxies set out in
notes 1, 2 and 3. The rights described
in those notes can only be exercised
by members of the company.
5. A vote withheld is not a vote in law,
which means that the vote will not be
counted in the calculation of votes for
or against the resolution. If you either
select the “Withheld” option or if no
voting indication is given, your proxy
will vote or abstain from voting at his
or her discretion. Your proxy will vote
(or abstain from voting) as he or she
thinks fit in relation to any other matter
which is put before the meeting.
6. Information regarding the meeting,
including the information required by
section 311A of the Act, is available
from www.aquilaservicesgroup.co.uk
7. As provided by Regulation 41 of the
Uncertificated Securities Regulations
2001, only those members registered
in the register of members of the
company 48 hours before the time
set for the meeting shall be entitled
to attend and vote at the meeting
in respect of the number of shares
registered in their name at that time.
Changes to entries on the relevant
register of securities after that time
shall be disregarded in determining
the rights of any person to attend or
vote at the meeting.
8. As at close of business on 1 July
2020 the company’s issued share
capital comprised 37,947,905 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 1 July 2020 is 37,947,905.
9. Under section 319A of the Act,
the company must answer any
question you ask relating to the
business being dealt with at the
meeting unless (a) answering the
question would interfere unduly with
the preparation for the meeting or
involve the disclosure of confidential
information; (b) the answer has
already been given on a website in
the form of an answer to a question;
or (c) it is undesirable in the interests
of the company or the good order
of the meeting that the question be
answered.
10. If you are a person who has been
nominated under section 146 of
the Act to enjoy information rights
(a ‘Nominated Person’), you may
have a right under an agreement
between you and the member of the
company who has nominated you to
have information rights (a ‘Relevant
Member’) to be appointed or to have
someone else appointed as a proxy
for the meeting. If you either do not
have such a right or if you have such a
right but do not wish to exercise it, you
may have a right under an agreement
between you and the Relevant
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.
Member to give instructions to the
Relevant Member as to the exercise
of voting rights. Your main point of
contact in terms of your investment
in the company remains the Relevant
Member (or, perhaps, your custodian
or broker) and you should continue to
contact them (and not the company)
regarding any changes or queries
relating to your personal details
and your interest in the company
(including any administrative
matters). The only exception to this
is where the company expressly
requests a response from you.
11. Members satisfying the thresholds
in section 338 of the Act may require
the company to give, to members
of the company entitled to receive
notice of the Annual General Meeting,
notice of a resolution which those
members intend to move (and which
may properly be moved) at the Annual
General Meeting. A resolution may
properly be moved at the Annual
General Meeting unless (i) it would,
if passed, be ineffective (whether
by reason of any inconsistency with
any enactment or the company’s
constitution or otherwise); (ii) it is
defamatory of any person; or (iii) it is
frivolous or vexatious. The business
which may be dealt with at the Annual
General Meeting includes a resolution
circulated pursuant to this right. A
request made pursuant to this right
may be in hard copy or electronic
form, must identify the resolution
of which notice is to be given, must
be authenticated by the person(s)
making it and must be received by
the company not later than 6 weeks
before the date of the Annual General
Meeting.
12. Members satisfying the thresholds
in section 338A of the Act may
request the company to include in
the business to be dealt with at the
Annual General Meeting any matter
(other than a proposed resolution)
which may properly be included in
the business at the Annual General
Meeting. A matter may properly
be included in the business at the
Annual General Meeting unless (i)
it is defamatory of any person or (ii)
it is frivolous or vexatious. A request
made pursuant to this right may be
in hard copy or electronic form, must
identify the matter to be included in
the business, must be accompanied
by a statement setting out the grounds
for the request, must be authenticated
by the person(s) making it and must
be received by the company not later
than 6 weeks before the date of the
Annual General Meeting.
13. Members satisfying the thresholds
in section 527 of the Act can require
the company to publish a statement
on its website setting out any
matter relating to (i) the audit of the
company’s accounts (including the
auditor’s report and the conduct of
the audit) that are to be laid before
the Annual General Meeting; or (ii)
any circumstances connected with
an auditor of the company ceasing
to hold office since the last Annual
General Meeting, which the members
propose to raise at the meeting. The
70
71
Directors and advisors
Directors
Derek Joseph
Dr Fiona Underwood
Executive Chair
Executive Director
Susan Kane (resigned 24 July 2019)
Group Finance Director
Claire Banks (appointed 24 July 2019)
Group Finance Director
Steven Douglas (resigned 7 April 2020)
Group Chief Executive
Richard Wollenberg
Non-Executive Director
Company secretary
Claire Banks (appointed 24 July 2019)
Registered office
Tempus Wharf
29a Bermondsey Wall West
London
SE16 4SA
Indepedant auditors
Corporate advisor
Bankers
Registrars
Crowe U.K. LLP
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
Beaumont Cornish Limited
10th Floor
30 Crown Place
London
EC2A 4EB
National Westminster Bank plc
50 High Street
Egham
Surrey
TW20 9EU
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Company number
08988813
Company website
www.aquilaservicesgroup.co.uk