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Pendal Group LimitedAnnual report and financial statements for the year ended 31 March 2022 Company Registration No. 08988813 (England and Wales) Contents 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 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 4 6 8 10 12 36 40 45 54 55 61 62 63 64 65 66 67 68 95 Directors and advisers 100 4 5 Group highlights Our purpose To make a better, more sustainable, and socially responsible world. Our vision To have a direct beneficial impact on communities and lives in the UK and beyond. To offer staff the opportunity to inspire positive change in an environment with a strong social focus. To provide investors the opportunity of supporting an organisation that combines strong performance with a positive social outcome. 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 throughout the UK and internationally with clients across housing and regeneration, sport and education, charity and government sectors. Financial highlights The results for the year ended 31 March 2022. Revenue £10,119k (2021: £7,642k) Gross profit £2,206k (2021: £1,640k) Gross profit margin 22% (2021: 21%) Underlying operating profit* £726k (2021: £614k) Statutory profit after tax £579k (2021: £187k) Statutory earnings per share 1.45p (2021: 0.48p) Cash generated by operations £512k (2021: £930k) Cash balances £2,193k (2021: £2,127k) Total dividend payable 0.6p per share (2021: 0.55p) *Underlying operating profit is calculated by adjusting the reported pre-tax profit for share- based payment charges and in 2021 restructuring costs related to COVID-19, acquisition costs, and impairments of investments. Dividend The Directors propose a final dividend of 0.4p per share (2021: 0.4p). This will be paid on 1 August 2022 to shareholders on the register at 15 July 2022. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 6 Corporate Structure Corporate Structure 7 Corporate structure The corporate structure of the organisation and the Directors of the subsidiary boards are shown below. Within the year of reporting the Group set up two employee led groups with representation across the Aquila Group to focus activities on the environment and sustainability and equality, diversity and inclusion. The composition of these groups is set out below. Green Group EDI Group Michael Appleby Ellen Spooner Claire Banks Jagjeet Tiwana Milly Clarke Ellie Dickens Will Morley Cydney Loughrey Annabel Grey Jennifer Rolison Jess Shepherdson Becky Hazell Kate Perham- Marchant Peter Latham Alex Neate Caroline Toogood Natasha Raj Jennifer Rolison Beth Sadler Mihir Shah Luke Southall Casey-Scarlett Haylock Patrick Goldie Rebecca How Alex Chilcott Aquila Aquila Services Group plc Derek Joseph (Executive Chair) Claire Banks (Finance Director & Co Sec) Fiona Underwood (Executive Director) Richard Wollenberg (Non-Executive) Altair Altair Consultancy and Advisory Services Ltd Directors: Fiona Underwood (CEO) Cathy Beazley Michael Appleby Claire Banks Matt Carroll Jim Lashmar ATFS Aquila Treasury and Finance Solutions Ltd Directors: Claire Banks Fiona Underwood Oaks Oaks Consultancy Ltd Directors: Adam Walker (CEO) Luke Southall Claire Banks Fiona Underwood Rahul Bissoonauth Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 8 Aquila at a Glance Aquila at a Glance 9 Aquila at a glance Aquila Services Group plc (‘the Company’) is the holding company for Altair Consultancy and Advisory Services Ltd (‘Altair’), Aquila Treasury and Financial Solutions Ltd (‘ATFS’) and Oaks Consultancy Ltd (‘Oaks’) which form the group (‘the Group’). The Group continues to implement its business strategy to encompass all the professional consultancy services that the Group’s client base demands. The Group now provides advice and support across the affordable housing, regeneration, sport and education sectors. Its purpose is to assist 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. Group members Altair Consultancy and Advisory Services Ltd Altair is a specialist management consultancy company that works with organisations that govern, manage, regulate or build housing. Operating within the UK and Europe, its international client base is increasing with expansion in Africa and Asia. Further information is provided within our strategic report on page 12. The services that Altair offers cover housing development and regeneration, property asset management, health and safety compliance and building safety advice, strategic financial advice, governance and risk management, executive and non-executive recruitment. Our ITC and digital, transformation and people services are areas of investment and growth. Clients contract with Altair on a fixed-fee basis, through retained contracts in our finance, governance and transformation business streams, and placements for members of the property team at client sites. Aquila Treasury and Financial Solutions Ltd ATFS is a specialist treasury management consultancy authorised and regulated by the Financial Conduct Authority that operates across the UK and Europe. It 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 to local authorities, charities, housing associations, education bodies, private sector housing providers and government bodies. 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. Investments AssetCore – 5.3% equity holding AssetCore is a digital financial debt management platform for the affordable housing sector. Oaks Consultancy Limited Oaks is a specialist sports, charity, statutory and education consultancy operating within the UK and Europe with an increasing international presence. Oaks’ 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. Oaks provides consultancy advice and guidance on strategy and business planning, organisational and cultural change programmes, impact measurement, together with implementation support in relation to income generation and diversification. Contracts are delivered through a mix of fixed-fee projects and retained contracts for general advisory services. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 10 Chair’s Statement Chair’s Statement 11 Chair’s statement Dear Shareholder, I am pleased to present the Annual Report and the Financial Statements for the year to 31 March 2022. The report is designed to provide both an overview of the Group’s business and achievements as well as a summary of the results for the year. I hope shareholders will find it both helpful and informative. If you would like further information or wish to discuss the work of the Group, please do not hesitate to contact one of the Directors; details are given on Page 6. 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 (‘Oaks’) which form the Group (‘the Group’). The Group is an independent consultancy which provides advice and support to organisations that develop and manage affordable housing, provide education and sports opportunities as well as organisations active in the charity and community sectors. Most clients are mainly public sector organisations and NGOs in both the UK and, increasingly, for support of affordable housing and communities internationally, particularly in Africa and Asia. My statement at the interim stage for the 6 months ended 30 September 2021 emphasised how financially resilient the Group had been during a period of restricted activity due to the pandemic. Much of this was generated by our affordable housing client base with continuing demand for both the management of existing stock and new development. During the second half of the financial year, the Group’s housing related services have seen continuing increasing demand and account for the majority of the increased turnover. The sports and communities work has seen some increase but slower than expected, with education only now starting to recover. Demand in these sectors for the Group’s services will improve as the services providers become fully operational and start to review their strategic options. Against this backdrop Group results for the financial year ended 31 March 2022 are encouraging with turnover £10,119k (2021: £7,642k) increasing by 33%, underlying operating profit at £726k (2021: £614k) was up by 18% and profit after tax £579k (2021: £187k) increased by over 300%. The Directors have declared a final dividend of 0.4p (2021: 0.4p) which totals dividends for the year of 0.6p (2021: 0.55p) an increase of 9%. There are a number of encouraging signs as we start the new financial year. In particular the Group is starting to acquire new clients after a period when few new tenders were circulating. In the interim report, we mentioned that during the pandemic most revenue was coming from renewal of services for existing clients with few providers having the resources to test the market or develop new projects. In recent months the Group has submitted a significant number of new bids and won a high proportion of these, and other, new contracts. A particular feature which is certainly appreciated by all our staff and executive is the dedication of everybody involved during the pandemic being recognised by our clients. Many positive comments have been received on both the continuity, reliability and quality of work and how this has enhanced our reputation. What of the future? The major restructuring we undertook in 2020 and 2021, as described in previous reports, is now fully in place. To respond to the increasing demands of the business we continue to grow organically through both expanding our range of products and services and recruiting and training new staff. We also continue to invest in our current colleagues through internal and external training. The Group continues to look at potential acquisitions. With higher rates of price inflation, the possibility of a recession and higher borrowing costs, potential acquisitions are becoming more realistic in their expectations. We continue to believe that this is a possible avenue of growth, especially into new markets. – Derek Joseph – Chair 24 June 2022 Demand for housing services continues to be high and expectations are that affordable housing will benefit from any government investment packages that are prompted by higher mortgage rates or a need to stimulate the economy. The international work is only now seeing potential expansion as travel restrictions are lifted. Much of the funding for this work comes from governments through their aid and development budgets. This will be restricted whilst, rightly, the needs of Ukraine are prioritised. For education, sports and communities the products and structures that worked well in the housing market are being reviewed to see whether they can be adapted for these sectors and our offering consolidated into larger multi-skilled groups. We continue to exist in an increasingly unstable and fragile geopolitical and economic environment. The range of sectors that we support and our continuing maintenance of significant reserves and cash flows enable us to grow successfully. This can also provide opportunities for the Group to enhance the services we offer. I look forward to reporting further to shareholders at the next interim stage. We have so much to thank our loyal, hardworking and skilled staff and executive that it is difficult to single out anyone amongst them, however the leadership of Fiona Underwood, our Group Managing Director has been important to our success and she deserves a special mention in despatches. Lastly, I need to pay tribute to Steve Douglas, our former Group Chief Executive who sadly passed away this year at the age of 57. He was a founding partner, a great ambassador of both the Group and the affordable housing sector. His work of bringing forward opportunities and justice for members of minority communities is to be remembered. He will be greatly missed by his friends and colleagues in the sector. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 12 Strategic Report Strategic Report 13 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 beneficial impact on communities and lives in the UK and beyond. • We want to offer staff the opportunity to inspire positive change in an environment with a strong social focus. • And we want to provide investors the opportunity of supporting an organisation that combines strong performance with a positive social outcome. 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 2022 Aquila Aquila Services Group plc EDI and Green Group Altair Altair Consultancy and Advisory Services Ltd ATFS Aquila Treasury and Finance Solutions Ltd Oaks Oaks Consultancy Ltd Corporate Governance The Board adopted the QCA code of Corporate Governance on 1 April 2021. The Board recognises that the long-term success of the business is dependent on the way we interact with a range of key stakeholders as demonstrated by our compliance with the QCA code, which under principles 3 and 9 require companies to take account of wider stakeholder and social responsibilities, including the implications for long-term success and to maintain governance structures and processes that support good decision making. Section 172(1) (A) to (F) of the Companies Act 2006 require directors to explain how they considered the interests of key stakeholders and the broader matters set out in 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 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. 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 and education sectors on treasury and funding solutions. • Oaks works with clients in the sport and education sectors focused on strategy, business planning and income generation activities The Group has two employee led groups with representation across the Aquila Group. The aim is to focus activities on the environment and sustainability, equality, diversity and inclusion and promoting these initiatives amongst colleagues, making Aquila an attractive employer to work for. Green Group The objective of the Green Group is to reduce the Group’s environmental impact, to maintain Carbon Neutral Plus status and develop further initiatives to mitigate the Group’s impact on the environment. EDI Group The purpose of the Equality Diversity and Inclusion (EDI) Group is to drive the EDI agenda across subsidiaries including developing frameworks and raising awareness for the implementation of a range of initiatives to foster a culture of equality, diversity and inclusion at Aquila. Further information about, and activities within the groups, is available on the website. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 14 Strategic Report Strategic Report 15 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, values and quality assurance framework 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. The board listened to the employees and the EDI Group was created as an employee-led group, with representation from across Aquila Group and its subsidiaries. The EDI Group has responsibility for driving Aquila’s approach on equality, diversity and inclusion ensuring all employees are treated fairly. We also ensure that our recruitment and succession planning aims to increase the diversity of the Group. 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. Our longer-term planning coming out of the pandemic reflects our approach. S172(1) (B) “The interest of the company’s employees” The table to the right sets out how the Company considers the interests of the employees. S172(1) (C) “The need to foster the company’s business relationships with suppliers, customers and others;” The table to the right sets out how the Company considers the interests of investors and customers. 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 was created as an employee-led group, with representation from across Aquila Group and its subsidiaries. The Green Group has responsibility for driving Aquila’s approach to being a climate conscious organisation. During the year the Group retained its Carbon Neutral Plus status. Investors Employees Customers Why they matter to us 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. Critical in achieving the Group’s objectives. To offer employees the opportunity to work in an environment that has a positive social impact. What matters to them Return on investment. Recognition and reward. Our clients provide services that help in making a better, more sustainable, and socially responsible world. The aim of the Group is to assist clients in achieving this. They are the Group’s main source of revenue. Quality and value for money. Longevity of the business. Interesting work and strong client relationships. Sound advice. Strong culture and values. Strong relationships with the Group’s employees. Type of engagement Stock Exchange announcements and press releases. Annual reports. Personal and career development. Regular staff surveys. Regular use of different media forums to inform and listen. Direct engagement with clients. Meetings with investors. Access to innovation fund for product development. How the board engages Board attendance at the AGM. Attendance at staff conferences. Non-executive director meetings. Regular webinar updates and communications. How they influence board-making decisions Investors’ opinions are taken into account when considering future policy. Following a request from employees via staff surveys, the board actively encouraged the setting up of the two employee led groups. They report their activity to the Group’s board and employees bi-annually, and regularly throughout the year with Group wide initiatives. Innovation fund outcomes are reviewed by the board which may lead to further investment and/or product launch. Regular communication via publications, and e-bulletins. Customer satisfaction survey. Investment in new product development. Customer insight may lead to research and product development opportunities. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 16 Strategic Report Strategic Report 17 Business environment Trends and factors This financial year has seen the gradual opening up of the UK and businesses trying to return to a new normal for work. Working practices have changed and the Group has realigned its products to be able to deliver in a hybrid model. In-line with Government guidelines, the offices returned to full capacity over the year, colleagues welcoming the opportunity to meet and work collaboratively once more in-person rather than through the medium of Teams. The sectors within which the Group consults differed in their approach to opening up; the housing and charity sectors embracing the hybrid working model, the sports sector returning to ‘in-person’ delivery and, as mentioned previously in the Chairman’s statement the education sector was slow to commission work due to the continuing impact of COVID-19 on both staff and students. This position remains. Our work with international clients has continued virtually, although we are beginning to see requests from clients to meet in-country. The aid-funded housing commissions are increasing in numbers, although the impact of COVID-19, and now the conflict in Ukraine will rightly continue to dominate the agenda. Macro-economic uncertainty remains high as the UK enters a period of increasing interest rates and high inflation. This will impact all sectors within which the Group operates in different ways but the development of products during COVID-19 has positioned it well to take advantage of opportunities as they arise, specifically income generation and organisational transformation. Changes in Government policy has continued to affect clients within the housing sector and during the year they have prepared for the changes in legislation in both building safety and the implementation of the Charter for Social Housing, where secondary legislation is expected this coming year. Altair have recruited and strengthened teams to respond to these changes. The following case studies show work across the Group Supporting the development of housing investment strategies in Africa An international investor commissioned Altair to complete an initial market study to help develop a stronger understanding of housing in Sub-Saharan- Africa which will then help inform the development of the future investment strategy. The investor was seeking to make inroads into the investment in affordable housing in Africa. The specific outputs that the project was designed to provide were: • A review of the affordable housing markets in; an initial eight, through to seven and then four countries • A review and recommendations on appropriate market interventions • A review and recommendations on appropriate transactions (strategic partners / sites / projects) in selected countries – Michael Appleby – Board Director Altair Our work was completed across three main stages of activity: Stage 1 An initial high-level review of the housing markets (supply and demand sides) within a sample of 8 countries (Rwanda, Kenya, Nigeria, Ethiopia, Cote D’Ivoire, Senegal, Tanzania and Uganda). This resulted in a prioritisation of the countries to determine which would be focussed on in a more detailed review in Stage 2. Stage 2 A more detailed review of each country (six were completed) focused on fully understanding the wider housing eco-system including government policy, trends, actors, development pipelines etc. As part of this stage, we also identified and assessed a wide range of potential intervention types in which the investor could consider investing in. This included an assessment of strengths and weaknesses and consideration of how each option was aligned to the investors’ broader strategy. Stage 3 Built on the detail of work completed in Stage 1 and 2, including completing additional stakeholder engagement activities (to enhance and test the understanding of opportunities – this includes actors across the value chain including developers, government institutions, funders etc.), to directly review pipeline projects and potential strategic partners. Our work resulted in three reports, one for each stage. Our final report provided detailed market assessments of each of the final countries reviewed. This included the scoping of potential investment opportunities and partners to work with (based on stakeholder engagement interviews, a review of opportunities and high-level feasibility analysis of potential partners). We also identified several specific investment opportunities for further progression. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 18 Strategic Report Strategic Report 19 Swan Housing DynamicAIM Altair have a team of 5 working with Swan on their building safety remediation programme. Appointments include Project Management for remediation of 22 buildings, communications support and government funding application support. The Project Management support involves pursuit of funding routes for remediation including via legal claims with parties involved in the original construction (developers, consultants etc.), building insurers (NHBC etc.) and through the Governments Building Safety Funding provision. Alongside our Project Management work the team have been working with software provided Cadline to develop a tool for the digital management of key building information and to enable safety case submission, both of which are key requirements of the new Building Safety Act and are needed in order to register buildings with the new regulator for building occupation so a major priority for our client base. We have had interest to date from multiple clients and we are anticipating a demand for this new product in the coming year. One of the projects is for the removal and replacement of external cladding and the installation of a new roofing system to a 29 storey tower block with a total cost of approx. £18m, which has been mostly funded through a successful NHBC claim of £15.8m and a successful grant funding application of £1.6m. Altair have managed the project through the initial investigation and scoping phase, through the legal claim and funding application phase, tender and now the remediation delivery phase. – Matt Carroll – Board Director Altair – Cathy Beazley – Board Director Altair Smart governance solutions for Beyond Housing Following the new publication of the NHF Code of Governance in 2020 and the Social Housing White Paper, organisations and their boards need to continue to build resilience and support their organisations to thrive. As part of our external governance review in 2021 and to support Beyond Housing to respond to these challenges, we utilised our smart governance solutions, Digi-ScoreBoard and Altair Aptitude to increase effectiveness and ensure continued compliance. The outputs have since allowed Beyond’s Board and Governance Team to continually manage the complexities they face within the governance environment. “Altair understands the ongoing uncertainty that Boards and Executive Teams face when responding to the strategic implications of the political, social, regulatory and economic landscape. Digi-ScoreBoard provided us with a clear review of our Board effectiveness and compliance against the NHF Code of Governance and highlighted areas of strength and further development. By combining the robust digital platform with Altair consultants’ in-depth knowledge of governance in housing, we now have an effective and efficient method to review, improve and measure our governance effectiveness. In addition, the utilisation of Altair Aptitude has enabled us to intelligently plan and identify future skill, competency and diversity gaps, all key elements when considering future succession planning. Overall, as a Governance Team we now have the right tools in place to continually plan and apply best practice”. Lyn Peacock, Director of Governance & Business Assurance, Beyond Housing. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 20 Strategic Report Strategic Report 21 Family Homes Funds Ltd (FHFL) – business planning and support to set up new housing fund Altair supported the FHFL to undertake a comprehensive assessment of the Nigeria housing finance and demand and supply market to develop a new business model, corporate strategy, financial and business plan, capital market plan, governance structures and funding strategy for the delivery of affordable housing through the Nigerian Government in the form of the FHFL. The aim of the organisation is to provide 100,000 new homes each year. Altair has been the principal advisor on the product development, business plan and funding. As part of this, we engaged with the Central Bank, retail banks, the Mortgage Refinance Corporation, the Nigerian Stock Exchange, and Capital Markets Authority on how best funding can be raised through the securitisation of future rental income including how this might be encouraged through tax breaks. – Olu Olanrewaju – Director Altair As part of this, we have been reviewing the global rental and home ownership markets in Nigeria and making recommendations about how amendments to tax arrangements, listing details and similar might encourage direct investment in residential housing. This includes a review of the benefits or otherwise of the REITs model. We conducted in-depth research into the Nigerian Housing sector, looking at the supply and demand factors in the affordable housing space. We identified gaps in the market for a co lending home assistance finance product. Altair also supported the FHFL in the development of its business plan, financial modelling and in the practical implementation of the Help to Buy product. This includes provision of suitable funding and funding models and the preparation of an overarching legal agreement with commercial banks. Of the 500,000 affordable homes planned over the next five years. FHFL has built 13,000 so far, and has 20,000 under construction this year. – Adam Walker – Board director Oaks The Association For International Sport For All (TAFISA) TAFISA is a membership network of over 360 sport federations, associations, agencies, and NGOs across more than 170 countries around the world. The team works closely with other global agencies including the UN, WHO, UNESCO and the IOC to promote access to and recognise the importance of Sport for All. In late 2021, the TAFISA leadership team commissioned Oaks to undertake a review of the organisation’s strategic plan and ambitions and lead a full exploration of the potential fundraising and income generation opportunities to deliver on these ambitions over the next five years. The Oaks team combined a series of facilitated workshops with desk-based research and extensive stakeholder consultation to review TAFISA’s historic business and financial performance, explore new opportunities, and benchmarking against similar or aspirational organisations in the sector. Opportunities that were identified included a renewed focus on international grant-makers and institutions, corporate partnerships, and campaign-focused public fundraising. In 2022, Oaks were commissioned by TAFISA as their exclusive fundraising and income generation partner to activate these opportunities and ultimately generate diverse and sustainable revenues for the organisation. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc More information on all case studies is available on the Group’s website. 22 Strategic Report Strategic Report 23 Principal risks and uncertainties Mitigations of risk Corporate and social responsibility 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. Our international work will continue to be impacted due to international travel restrictions. It is hoped these will further ease during the year. 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 Aquila has again achieved Carbon Neutral Plus status within the year. Further information is on the website. The Group recognises that we have a responsibility to ensure the impact of our business is positive. The Group’s Corporate Social Responsibility policy can be seen on the website. The Group has adopted policies 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 Group continues to support programmes, on a pro-bono basis that are aimed at improving the opportunities for individuals from a minority ethnic background and to increase the diversity of housing sector leaders. Following a three-year charity partnership with Noah’s Star, the Oaks staff selected WAITS as its new charity partner. Through this relationship the Oaks team provide pro bono support with strategy and business planning together with income generation. Oaks is extremely proud to support such a worthy local charity and are excited by the prospect of supporting them with the delivery of their ongoing and vital impact. WAITS is a registered charity that supports women in around Birmingham to escape domestic abuse situations and re-integrate into the community. They have four core services: Domestic Abuse Service, Community Integration, Refuge Accommodation and the VI Project, which together aim to provide women with the practical and emotional support to overcome the impact of domestic abuse. Within these focus areas, WAITS provides women with the one-to- one support and advice to escape from and overcome domestic abuse situations, a safe refuge in one of their four refuge houses in the Birmingham area, counselling, and physical activity opportunities to improve their mental and physical wellbeing and supports women at risk of offending/re-offending to enter the community and find employment. The Group is currently reviewing its activities to provide more opportunities for colleagues to get involved in community and volunteering projects. This will be launched in the coming year. The principal risks currently faced by the Group are: Financial risk 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. Unfavourable economic conditions and/or changes to government policy The current macro-economic uncertainty resulting from COVID-19 and the conflict in Ukraine may see a reduction in business as clients spending on consultancy is curtailed. Local authorities continue to see significant pressure on budgets and may stop consultancy contracts and/or limit their commissioning of work. The Group mitigates these risks by ensuring that each subsidiary has diversity across its client base, not relying on any one client or group of clients. Changes to government policy may adversely affect the Group. The Group ensures that it is aware of the impact of these changes and adapts its products and services to proactively respond to this risk. Competition Increased competition in the market continues to pose a risk to all companies within the Group. 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 a new pay- structure and 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. The Group obtained the certification of Cyber Essentials and is in the process of applying for Plus status. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 24 Strategic Report Strategic Report 25 Business performance and position Altair Altair has performed well this year, the consolidation and development of products and services during COVID-19 has meant that it has been able to respond swiftly to the demands of clients. The gradual opening up post-COVID-19 has meant that colleagues are beginning to travel to client sites for meetings as well as working virtually enabling continued efficiency for both clients and Altair. In preparation for a return to growth the Altair board set a challenging budget and recruited in order to successfully deliver. For example, the newly recruited Technology team strengthened our transformation offering which has resulted in the successful delivery of a significant number of projects throughout the year which provide longer-term committed income for the Group. Our property team continued to deliver work across local authorities, housing associations and private developers. The building safety team ensured clients were kept updated with the changing government policy and, in response to these changes we have worked with a partner, Cadline, to develop a digital building safety product, DynamicAim, which was launched in March 2022. Partnerships continue to be important and we continue to work with 4C (procurement) and Digiboard (governance). In February we launched our partnership with Green Park, a recruitment consultancy that is known for its experience in diversity and inclusion and enhances our offer to clients. This complements the support we provide to Leadership 2025 and the Future Leaders Programme aimed at increasing diversity within the sector. The governance and finance teams continue to deliver a broad spectrum of services to clients and our new digital governance products, Digi-Scoreboard and Altair Aptitude, being successfully adopted by clients. Altair Aptitude was developed in-house by a colleague funded via Altair’s Innovation Fund, assists boards with succession and has been welcomed by clients. Further development of digital products is planned during the year. We continue to provide advice to new entrants, those wishing to or having registered with the Regulator for Social Housing and we have increased the number of retained clients this year. The international work continued to be undertaken remotely on commissions in Malaysia, Cameroon, Kenya and the ongoing work with SWECO on the Green City Project in Rwanda. We have recently recruited a director to help build the business in Asia and we anticipate new work in this region in the coming year. Internally we realigned our remuneration package to assist in recruitment and retention and have offered management development training to aspiring and current managers. These initiatives have been welcomed by colleagues. We have also extended our graduate programme and after missing a year due to COVID-19 we successfully recruited six graduates to join us in September. The changing operating environment continues to be challenging but the action taken during COVID-19 ensured that the team could respond positively and has provided growth for the Group. ATFS The environment for ATFS continues to be challenging. The education sector, specifically colleges and universities, has been slow to return to the market for funding for capital investment and this has been reflected in the outturn. In anticipation of the retirement of the director who led on the card-services business, a succession plan was implemented and this resulted in the successful recruitment of an experienced industry expert. Following a slow-start at the beginning of the year the business has returned to pre-COVID-19 levels. Further expansion of this service is planned across different sectors and with a diversification of products. Our work within the housing sector continued with smaller and mid-sized associations in England and Scotland and we continued to support the HFA in Ireland. We have also won new commissions with For Profit providers and those entering the sector, working with Altair. OAKS With the exception of Q3, Oaks delivered a consistent and positive business performance, with continued growth in both the domestic and international sports federation sector. Building on the ongoing success and reputation of its UEFA, Lawn Tennis Association and European Clubs Association work it secured prestigious commissions with World Rugby, Premier League Rugby, and Volleyball England. Within the sport for development sector, Oaks delivered similarly impressive results securing global strategic projects with Laureus Sport for Good, and TIFISA. Within education, Oaks experienced a more challenging year. This was particularly acute within Q3 due to a further COVID-19-19 lockdown which prevented schools from initiating new projects. Consequently, commissions were either stopped or postponed. Pleasingly this challenge was relatively short lived as momentum began to return in Q4. In response to this challenge, Oaks pivoted effectively into the charities sector, examples of which can be illustrated through its strategic work with the National Brain Appeal and the Carers Trust. Whilst the pandemic delivered many challenges, it also created opportunity. Throughout the year Oaks used thought leadership webinars and blogs to significantly raise its profile. A position clearly demonstrated through its global sport for development series which attracted 750 unique users from 43 countries. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 26 Strategic Report Strategic Report 27 Key performance indicators The Group tracks progress against its strategy by monitoring its key performance indicators (KPIs) regularly. These are set out below: Revenue £10,119k The measure Revenue growth is the increase/decrease in revenue year-on-year. The target To deliver growth in revenue from expansion both geographically and by business stream. Gross profit £2,206k The measure Gross profit growth is the increase/ decrease in gross profit year-on-year. The target To deliver growth in gross profit across all parts of the Group. Gross profit margin 22% The measure Gross profit margin growth is the increase/ decrease in margin year-on-year. The target To maintain strong gross profit margins. 2022 2021 2020 2022 2021 2020 k 9 1 1 , 0 1 £ k 6 0 2 , 2 £ % 2 2 k 3 6 9 , 7 £ k 1 5 7 , 1 £ % 2 2 k 2 4 6 , 7 £ k 0 4 6 , 1 £ % 1 2 Underlying operating profit £726k The measure The increase/decrease in underlying profit year on year. The target To deliver sustainable growth in underlaying operating profit. Underlying operating profit excludes costs and charges relating to restructuring, acquisition and share options. Statutory profit after tax £579k The measure The increase/decrease in reported profit year on year. The target To deliver sustainable long term growth in profit after tax. Earnings Per Share 1.45p The measure The increase/decrease in EPS year on year. The target To deliver long term growth in EPS to enhance Shareholder value. k 6 2 7 £ k 9 7 5 £ p 5 4 . 1 £ k 4 1 6 £ k 7 8 1 £ p 8 4 0 . k 8 6 4 £ k 6 2 1 £ p 5 3 0 . Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 28 Strategic Report Strategic Report 29 • • Revenue from consultancy Revenue from Treasury management Underlying profit is shown as profit before share options charges, impairment of investments, acquisition costs, 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 Impairment of investments Acquisition costs Operating profit 31 March 2022 £000 31 March 2021 £000 31 March 2020 £000 726 (8) - - - 718 614 (88) (175) (50) - 301 468 (105) (186) - (51) 126 Business performance and position Turnover is split across the different services as shown below. The measure: To track how income across the Group is generated. 2022 6% 94% 2021 9% 91% Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 30 Strategic Report Strategic Report 31 UK • • • Europe Rest of the world Geographic spread of income The measure: To track where income across the Group is generated. The target: To increase income from international markets. 2022 4% 2% 3.7% 3.9% 94% 2021 92.3% • • • Housing Education Sports Spread of income by sector The measure: To track income across the Group by sector. The target: To increase market share in other sectors. 7% 6% 2022 87% 94% 2021 10% 6% 84% Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 32 Strategic Report Strategic Report 33 Client numbers across the Group 509 The measure Increased client numbers year on year. The target To increase the number of clients that the group deliver services to. Results The Group delivered services to 173 new clients in the year. 2022 2021 2020 173 177 178 Client satisfaction The measure: To ensure all customers are satisfied with the services delivered across the Group. The Group included an additional measure during the year under review where clients are able to identify exceptional service. The target: To exceed client expectation in delivery of services. • • Number of clients Number of new clients 509 479 427 Employees A split of our employees and directors by gender and ethnicity as at the end of the year is shown below: Male (44 total) Female (48 total) 2 12 30 2 5 41 • Directors • Total senior managers other than directors of the Company • Other employees of the Group 53% of the Groups employee are female, this is an increase in the year of 6%. • • • Exceeds client expectations Meets client service Exceptional client service 2022 2021 27.27% 36.36% 42.86% 36.36% 14.29% 36.36% 42.86% Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 34 Strategic Report Strategic Report 35 Ethnicity 2022 White • • Ethnic Minority 56 4 0 Directors 19 4 9 Subsidiary Directors and Senior Managers other than Directors of the company. Other employees of the Group This represents an increase in ethnic minority employees from 13% in 2021 to 14% in 2022. The Group consults with its employees regularly through direct updates and during the year has conducted multiple surveys and an annual review of staff; all 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. Further work continues to be done through the employee led EDI group holding the Board accountable for its policies on equality and diversity. Approved by the Board and signed on its behalf. – Dr Fiona Underwood – Group Managing Director 24 June 2022 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. The Group has no borrowings. The Directors are confident that the Company remains strong and viable with adequate financial resources together with long standing relationships with its clients and a diverse portfolio of contracts. The main costs to the business are staffing costs which are monitored regularly to ensure profitability. Based on the results of these analyses, 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 36 Directors’ Report Directors’ Report 37 Directors’ report The Directors present their report and consolidated financial statements for the year ended 31 March 2022. Aquila Services Group plc is incorporated as a public limited company and is registered in England and Wales with the registered number 08988813. Details of the Company’s issued share capital, together with the details of the movements during the year are shown in note 17. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company. Details of employee share schemes are set out in note 20. 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 12 to 35. Principal activities Directors 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. The following served as directors of the Company during the period or thereafter: Results The results for the Group for the year ended 31 March 2022 are set out from page 55. – Derek Joseph – Executive Chair – Dr Fiona Underwood – Group Managing Director Dividend The directors propose a final dividend of 0.4p per share for the year end (2021: 0.4p). The total dividend for the year was 0.6p per share (0.2p was paid as an interim dividend in December 2021) this compares to a total dividend of 0.55p per share in 2021. Aquila – Claire Banks – Group Finance Director and Company Secretary – Richard Wollenberg – Non-Executive Director Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 38 Directors’ Report Directors’ Report 39 Substantial shareholdings As at 31 March 2022, the Company was aware of the following notifiable interests in its voting rights: Richard Wollenberg* Derek Joseph Fiona Underwood** Susan Kane Chris Wood Steven Douglas Jeffrey Zitron Matt Carroll Hannah Breitschadel Mark Walker Adam Walker Number of Ordinary shares Percentage of voting rights Nature of holding 4,563,406 3,545,408 3,479,440 3,279,440 3,182,440 2,913,435 2,798,403 1,277,229 1,307,229 1,296,239 1,248,176 11.42% 8.87% 8.71% 8.21% 7.96% 7.29% 7.00% 3.20% 3.27% 3.24% 3.12% Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct *Includes shares held by immediate family members of Richard Wollenberg **Includes shares held by persons closely associated with Fiona Underwood The Company is not aware of any changes to the above holdings between 31 March 2022 and the date of this report. Corporate Governance Statement The Directors’ Report incorporates the Corporate Governance Statement set out on pages 40 to 44. 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 40 to 44. Post balance sheet events There are no post balance sheet events. 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). Greenhouse gas emissions The Group/Company has 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’ Report) Regulations 2013. The Group achieved Carbon Neutral Plus status for the year ended March 2020, the results of which are published on the Company website. Auditor Crowe U.K. 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 U.K. 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc – Dr Fiona Underwood – Group Managing Director By order of the Board 24 June 2022 40 Corporate Governance Statement Corporate Governance Statement 41 Corporate governance statement The Directors acknowledge the importance of good corporate governance and has formally adopted the 10 principles of the Quoted Companies Alliance Code (QCA). The statement below, together with the report on directors’ remuneration on pages 45 to 53, explains how the Company has observed principles set out in the QCA code as relevant to the company and contains the information required by section 7 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules. 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 as its shareholders. Updates from directors of the subsidiaries and senior leaders across the Group provide the Board with a greater understanding of the operation of the Group. At the date of the report the composition of the boards can be seen on page 6. The Group commits to engage with employees and will continue to create further employee led groups as required. The structure of the board and committees and their respective responsibilities are detailed as follows: Board governance framework At the date of this report the Board comprises of the Chairman, two Executive Directors and one Non- Executive Director. The QCA code states that normally boards will include at least two NED’s who are identified as independent. The Group Board has one independent NED who acts as a sounding board to the Chair and the two Executive Directors. Due to the recent pandemic the board succession plan was paused and the Group board continue to review the position. The Group Board has primary responsibility for: • Providing leadership for the Group • Overseeing the overall strategic 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 • Delegating the management of the day-to-day operation of the business to the subsidiary boards • The Group board met eight times during the year Matters reserved to the Board Remuneration Committee The Board has adopted a formal schedule of matters specifically reserved to it for decision-making. The primary responsibilities of the Remuneration Committee are: 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. Audit Committee • • • 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; The primary responsibilities of the Audit Committee are to: • 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 twice during the year. Its members are: Derek Joseph and Richard Wollenberg. The report of the Remuneration Committee is set out on pages 45 to 53 of this report. • 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 policies 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 four times in the year. Its members are: Derek Joseph, Richard Wollenberg and Fiona Underwood. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 42 Corporate Governance Statement Corporate Governance Statement 43 Nominations Committee Subsidiary Boards Attendance at Boards The primary responsibilities of the Nominations Committee are to: The key responsibilities of the subsidiary boards are to: • Regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the board; • Be responsible for the day-to- day management of the relevant subsidiary • Oversee the development and implementation • Consider succession planning for directors and of the Group’s strategy other senior executives; • • • Keep under review the leadership needs of the organisation, both executive and non-executive; Identify and nominate, for the approval of the board, candidates to fill the board vacancies as and when they arise; and Evaluate the balance of skills, knowledge, experience and diversity on the board before any appointment is made by the board, and, in the light of this, prepare a description of the role and capabilities required for a particular appointment. The Nominations Committee, in conjunction with Board meetings, met two times during the financial year. Its members are Derek Joseph and Richard Wollenberg • 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. Employee led groups Green Group Responsible for driving Aquila’s sustainability agenda. EDI Group Responsible for driving Aquila’s Equality, diversity and inclusion agenda. Director Total number of meetings Derek Joseph Richard Wollenberg Fiona Underwood Claire Banks Board Audit Committee Remuneration Committee Nomination Committee 8 8 8 8 8 4 4 4 4 - 2 2 2 - - 2 2 2 - - Board Directors The Board is responsible for the Company’s systems of Corporate Governance and comprises: Derek Joseph – Non-Executive Chair. Derek possesses a wealth of housing sector experience. During his executive and non-executive career, Derek has advised and project managed for European governments and cities, UK government departments, local authorities, housing associations, commercial property companies, investors and financial institutions, in addition to structuring joint ventures for numerous organisations. Richard Wollenberg – Non-executive Director. Richard has, over the past 25 years, been actively involved in numerous corporate acquisitions, mergers and capital reorganisations of public and private companies, very many of which were in the services sector. He was an investment consultant and has considerable experience and an excellent track record of admitting investment vehicles to the market. Fiona Underwood – Executive Director and Group Managing Director. Fiona has experience in building and running consultancy businesses, having previously led a large consulting business within a listed company. She is experienced in mergers and acquisitions and corporate governance, both in the private and the not-for-profit sector. Claire Banks – Group Finance Director and Company Secretary. Claire is a Fellow Chartered Accountant and has significant accounting, finance and corporate experience within the consulting sector. For the year ended 31 March 2021 Derek Joseph took the role of executive chair, during 2021-2022 he resumed the role of non-executive as he was previously, following the appointment of Fiona Underwood as Group Managing Director. Mr Wollenberg acts as a sounding board for the chair and as an intermediary to other directors and shareholders. Whilst Mr Wollenberg is a major shareholder and therefore not considered independent, he continues to offer constructive challenge, strategic guidance and holds management to account. 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 2022, these totalled £23k. (2021: £51k). Derek Joseph is a director of AssetCore. Both Derek Joseph and Richard Wollenberg are shareholders of AssetCore, in which the Group has a 5.3% shareholding. 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 44 Corporate Governance Statement Directors’ Remuneration Report 45 Composition, succession and evaluation The work of board composition and succession is undertaken by the nominations committee. During the year ended 31 March 2022, the Board did not undertake a board evaluation. Relations with shareholders The Group reports formally to shareholders when its annual and half-yearly financial statements are published. Presentations are given to investors when requested, normally following the publication of the full year results, when interim and annual reports are sent to all shareholders. The results of such meetings are discussed with board members. All directors are present at the Annual General Meeting. Audit risk and internal control The Audit Committee, which is chaired by Richard Wollenberg, comprises the Non-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 committee 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 all fees 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: • • • keeping adequate accounting 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. Directors’ remuneration report The information provided on this page of the Directors’ remuneration report is not subject to audit. The information provided on this page of the Directors’ Remuneration Report is not subject to audit. 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 (Chair). Statement of implementation of remuneration policy in the following year The remuneration policy that was approved by the shareholders at the 2020 annual general meeting and was implemented during the year 2020-2021. The policy is available for review on the Company’s website. Statement from the Chair I am pleased to present the Annual Report on Remuneration for the year ended 31 March 2022. 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’s 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 twice during the year to discuss the executive directors’ remuneration, including bonus and share option awards. The remuneration policy is designed to attract and retain executive directors and to motivate them in delivering the objectives of the Company. The underlying principle is that employee and director share ownership is encouraged, and the remuneration policy provides opportunity to reward employees who have met their financial targets and contributed to the wider success of the business. The award of share options may also be a consideration. This links their personal interest to the success of the company. – Richard Wollenberg - Chair of the Remuneration Committee 24 June 2022 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 46 Directors’ Remuneration Report Directors’ Remuneration Report 47 The information provided on pages 46 to 50 of the Directors’ Remuneration Report relating to Executive and Non-Executive remuneration, incentive schemes and share options is subject to audit. Non-executive directors’ remuneration payable as a single figure (2022) Richard Wollenberg Derek Joseph** Salary and fees Benefits* Annual bonuses LTIP Pension Total £ 4,000 33,061 37,061 £ - - - £ - - - £ - - - £ - - - £ 4,000 33,061 37,061 Non-executive directors’ remuneration payable as a single figure (2021) Salary and fees Benefits* Annual bonuses LTIP Pension Total Richard Wollenberg £ 4,000 £ - £ - £ - £ - £ 4,000 Annual report on remuneration Director changes The directors followed the remuneration policy agreed at the AGM in 2020. The original version of the policy is set out in the 2020 annual report and is available on the Company’s website. There were no changes during the year under review. Executive directors’ remuneration payable as a single figure (2022) Fiona Underwood Claire Banks Salary and fees Benefits* Annual bonuses LTIP Pension Total £ 170,000 110,000 £ 1,596 1,243 £ 5,000 5,000 280,000 2,838 10,000 £ - - - £ £ 10,200 186,795 6,600 122,843 16,800 309,638 Executive directors’ remuneration payable as a single figure (2021) Salary and fees Benefits* Annual bonuses LTIP Pension Total Fiona Underwood 145,000 1,645 22,500 £ £ £ Claire Banks Derek Joseph** 100,000 1,213 10,000 61,481 - - 306,481 2,858 32,500 £ - - - - £ £ 8,700 177,845 6,000 117,213 - 61,481 14,700 356,539 *Benefits include private medical insurance **Included within the fees for Derek Joseph are £23k (2021: £51k) of consultancy fees. For the year ended 31 March 2021 Derek Joseph took the role of executive chair, during 2022 he resumed the role of non-executive as he was previously. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 48 Directors’ Remuneration Report Directors’ Remuneration Report 49 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. 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 of a personal target of up to 20% and 10% on Group profit targets, and 2. A share option award of up to 30% of salary (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. Cash based award Share option award £675k £726k £51k £5k £5k £675k £726k £51k £Nil £Nil Payments to past directors In the year ended 31 March 2022, 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 2022. 2021-22 award Remuneration committee 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 2021/22 Unconsolidated bonus award- Executive Director 2021-22 Unconsolidated bonus award – Group Finance Director The committee believes that the reward payable is a fair reflection of the performance over the year. Statement of directors’ shareholding and share interest The total number of directors’ interests in shares 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: Interest in share options Number of ordinary shares With performance measures Without performance measures Vested but unexercised Exercised during the year Richard Wollenberg2 4,563,406 Derek Joseph Fiona Underwood3 Claire Banks 3,545,408 3,479,440 48,315 - - - - - - 50,000 100,000 275,050 - - 77,315 - - - - The information provided on pages 49 to 53 of the Directors’ Remuneration Report is not subject to audit. Relative importance of spend on pay A comparison of shareholder distributions and total employee expenditure of the Group is set out below for the years ended 31 March 2021 and 31 March 2022. All employees remuneration Total dividend per share Distributions to shareholders 2022 £’000 5,879 0.60p 219 2021 £’000 5,067 0.55p 219 Change 16% 0% 0% 1 2020-21 Underlying operating profit plus 10% Annual report and financial statements for the year ended 31 March 2022 2 Includes shares held by immediate family members of Richard Wollenberg 3 Includes shares held by persons associated with Fiona Underwood Aquila Services Group plc 50 Directors’ Remuneration Report Directors’ Remuneration Report 51 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; as part of the work undertaken by the Employee led EDI group this data will be published on the Group’s website. 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. 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. 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 2021 was approved by shareholders at the Annual General Meeting held on 28 July 2021. The Directors’ Remuneration Policy was approved by shareholders at the Annual General Meeting held on 29 July 2020. Directors’ Remuneration Report (2021 Annual General Meeting) % of votes cast Directors’ Remuneration Report (2020 Annual General Meeting) % of votes cast For Against Abstention 93% For 0% Against 7% Abstention Total votes cast 100% Total votes cast 98% 2% 0% 100% Policy Report Implementation of remuneration policy in the following year. The remuneration policy was approved at the AGM on 29 July 2020, all the provisions in the policy continue to apply. Future policy table The following tables provides a summary of the key components of the remuneration package for executive directors: Salary Benefits Pensions Annual bonus Share options Summary of approach Performance criteria 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 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 None To incentivise and reward for achievement of in-year objectives linked to the performance of the individual and the Group up to 30% of their annual salary. Up to 10% based on personal objectives as agreed by the remuneration committee. An additional 20% based on the performance of the Group. Awards of share options are made subject to an annual profit performance period. The maximum award is 30% of annual salary. Share options are awarded for Group performance in excess of 5% year on year and are at the discretion of the remuneration of salary. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 52 Directors’ Remuneration Report Directors’ Remuneration Report 53 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 subject to any restrictions during meetings with shareholders throughout the year and will use these views to formulate any changes to the remuneration policy. – Richard Wollenberg - Chair of the Remuneration Committee 24 June 2022 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. 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. - AQUILA SRVS GRP - FTSE ALL-SHARE 150.00% 100.00% 50.00% 0.00% -50.00% 1month 2015 2016 2017 2019 2020 2021 2022 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 54 Statement of Directors’ Responsibilities Independent Auditors’ Report to the Members 55 Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements The directors (whose names and functions are set out on page 37) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company and Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and applicable law. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and the profit or loss of the Company and the Group for that period. In preparing the Company and Group financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • • • • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; state whether IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business; and provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company and Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. We confirm that to the best of our knowledge: • • the Company and Group financial statements, prepared in accordance with IFRS as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the 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 the Group together with a description of the principal risks and uncertainties that they face. – Claire Banks – Group Finance Director On behalf of the Board 24 June 2022 ~ ~ Independent Auditor’s Report to the Members of Aquila Services Group plc Opinion Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We have audited the financial statements of Aquila Services Group plc (the “Company”) and its subsidiaries (the ‘Group’) for the year ended 31 March 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK-adopted international reporting standards and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: • • • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2022 and of the Group’s profit for the year then ended; the financial statements have been properly prepared in accordance with UK-adopted international reporting standards; and the financial statements have been prepared in accordance with the Companies Act 2006. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 56 Independent Auditors’ Report to the Members Independent Auditors’ Report to the Members 57 Conclusions relating to going concern Overview of our audit approach In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Parent Company’s ability to continue to adopt the going concern basis of accounting included the following: • • • obtaining management’s going concern assessment and challenging, where appropriate, the assumptions used; testing the mathematical accuracy of the models used by management in their assessment and considering the reasonableness of those models, including comparison to actual results achieved in the year and the evaluation of downside sensitivities; and discussing with management and evaluating their assessment of the Group and the Company’s liquidity requirements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Scope of our audit The group comprises the Parent Company and its wholly-owned subsidiaries, all of which are based in the UK and audited by the group audit team. 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 Group financial statements as a whole to be £50,000 (2021: £52,000), based on 7% of profit before tax. Materiality for the Parent Company was set at £45,000 (2021: £29,000), based on 0.9% of the parent company’s total assets. We use a different level of materiality (‘performance materiality’) 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. Performance materiality was set at 70% of materiality for the financial statements as a whole, which equates to £35,000 (2021: £39,000) for the group and £31,500 (2021: £21,250) for the parent company. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. We agreed with the Audit Committee to report to it all identified misstatement in excess of £2,500 (2021: £2,000). Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds. 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. We set out below those matters we identified as key audit matters. This is not a complete list of all risks identified by our audit. Key audit matter Carrying value of goodwill (Group) Accounting policy (page 58) and Note 10 of the financial statements At 31 March 2022, the group has goodwill with a carrying value of £3,317,000 attributable to three different cash generating units. In carrying out impairment reviews, management use assumptions and estimates of future trading performance of the cash generating units. The significant assumptions include forecast revenues, gross margin, future overheads and the discount rate. Management has disclosed the results of its sensitivity analysis in Note 10. This matter was considered a key audit matter due to the extent of audit effort and judgement required to assess the reasonableness of the forecast revenue, growth rates, discount rates and other assumptions used in the impairment review. How the scope of our audit addressed the key audit matter 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 suitability and integrity of the underlying valuation model. Using management’s model we considered how sensitive the impairment assessment was by applying alternative assumptions and compared the results to those from management. This assisted us in understanding the conditions when an impairment would need to be recognised. We also considered actual results against management forecasts from prior years. We challenged management on the assumptions used in the model and requested the model to be refined to provide a more reliable basis for the impairment assessment. Based on the evidence obtained, we are satisfied with management’s assessment that no impairment charge is required in the current year in respect of goodwill. 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 58 Independent Auditors’ Report to the Members Independent Auditors’ Report to the Members 59 Other information The directors are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 Matters on which we are required to report by exception 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 strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or the Company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit Responsibilities of the directors for the financial statements As explained more fully in the directors’ responsibilities statement set out on page 43, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and taxation legislation. We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management, inappropriate revenue recognition and judgement surrounding the carrying value of goodwill. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, corroborating amounts recognised to supporting documentation on a sample basis and ensuring accounting policies are appropriate under the relevant accounting standards and applicable law. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations. 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 60 Independent Auditors’ Report to the Members Consolidated Statement of Comprehensive Income 61 Other matters which we are required to address We were appointed by the Board on 21 March 2019 to audit the financial statements for the year ending 31 March 2019 and subsequent periods. Our total uninterrupted period of engagement is four years, covering the years ending 31 March 2019 to 31 March 2022. 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. – Steve Gale - (Senior Statutory Auditor) For and on behalf of Crowe U.K. LLP 55 Ludgate Hill London EC4M 7JW 24 June 2022 Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Consolidated statement of comprehensive income For the year ended 31 March 2022 Revenue Cost of sales Gross profit Administrative expenses Operating profit Loss on disposal of 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 Notes 4 5 5 6 8 9 9 2022 £’000 10,119 (7,913) 2,206 (1,488) 718 - 718 (139) 579 - 579 1.45p 1.41p 2021 £’000 7,642 (6,002) 1,640 (1,339) 301 (25) 276 (89) 187 - 187 0.48p 0.45p The income statement has been prepared on the basis that all operations are continuing operations. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 62 Consolidated Statement of Financial Position Company Statement of Financial Position 63 Consolidated statement of financial position As at 31 March 2022 Company statement of financial position As at 31 March 2022 Notes Group 2022 £’000 Group 2021 £’000 Notes Company 2022 £’000 Company 2021 £’000 Non-current assets Goodwill Property, plant and equipment 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 Equity attributable to the owners of the parent Annual report and financial statements for the year ended 31 March 2022 10 11 13 14 15 16 16 17 17 17 20 3,317 313 71 3,701 2,593 2,193 4,786 1,917 88 144 2,149 2,637 196 6,142 1,998 1,712 3,042 415 3,317 394 71 3,782 2,273 2,127 4,400 1,929 85 89 2,103 2,297 284 5,795 1,998 1,712 3,042 580 Non-current assets Property, plant and equipment Investments in subsidiaries Investments Current assets Trade and other receivables Cash and bank balances Current liabilities Trade and other payables Net current assets Net assets Equity Share capital Share premium account Share-based payment reserve Retained earnings Equity attributable to the owners of the parent (1,025) (1,537) 6,142 5,795 As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss account. The company’s loss for the year was £441k (2021: profit £539k). The financial statements were approved by the board and authorised for issue on 24 June 2022. 11 12 13 14 15 17 17 20 3 4,180 71 4,254 991 89 1,080 440 440 640 4,894 1,998 2,341 415 140 - 4,170 71 4,241 1,304 415 1,719 393 393 1,326 5,567 1,998 2,341 580 648 4,894 5,567 – Claire Banks – Group Finance Director Company Registration No. 08988813 Aquila Services Group plc ' 64 Consolidated Statement of Changes in Equity Company Statement of Changes in Equity 65 Consolidated statement of changes in equity For the year ended 31 March 2022 Company statement of changes in equity For the year ended 31 March 2022 Share Capital £’000 Share Premium account £’000 Merger reserve £’000 Share based payment reserve £’000 Retained losses £’000 Total equity £’000 Balance at 1 April 2020 1,897 1,475 3,042 769 (1,941) 5,242 Total comprehensive income Issue of shares Transfer on reserves Share based payment charge Dividend - 101 - - - - 237 - - - - - - - - - - (277) 88 - 187 - 277 - 187 338 - 88 (60) (60) Balance at 31 March 2021 1,998 1,712 3,042 580 (1,537) 5,795 Balance at 1 April 2021 1,998 1,712 3,042 580 (1,537) 5,795 Total comprehensive income Transfer on reserves Share based payment charge Dividend - - - - - - - - - - - - - (173) 8 - 579 173 - (240) Balance at 31 March 2022 1,998 1,712 3,042 415 (1,025) 579 - 8 (240) 6,142 Share capital £’000 Share premium account £’000 Share based payment reserve £’000 Retained earnings £’000 Total equity £’000 Balance at 1 April 2020 1,897 2,104 769 (108) 4,662 Total comprehensive income Issues of shares Transfer on reserves Share based payment charge Dividend - 101 - - - - 237 - - - Balance at 31 March 2021 1,998 2,341 Balance at 1 April 2021 1,998 2,341 Total comprehensive income Transfer on reserves Share based payment charge Dividend - - - - - - - - - - (277) 88 - 580 580 - (173) 8 - Balance at 31 March 2022 1,998 2,341 415 539 - 277 - (60) 648 648 (441) 173 - (240) 140 539 338 - 88 (60) 5,567 5,567 (441) - 8 (240) 4,894 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 66 Consolidated Statement of Cash Flow Company Statement of Cash Flow 67 Consolidated statement of cash flow For the year ended 31 March 2022 Company statement of cash flow For the year ended 31 March 2022 Cash flows from operating activities Profit for the year Income tax expense Share based payment charge Loss on disposal of associate Change in fair value of investments Depreciation Operating cash flows before movement in working capital (Increase)/Decrease 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 Purchase of property, plant and equipment Proceeds from sale of associate Net cash (outflow)/inflow from investing activities Cash flows from financing activities Lease liability payments Proceeds of share issue Dividends paid Net cash (outflow)/inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2022 £’000 2021 £’000 579 139 8 - - 118 844 (320) (12) 512 (84) 428 (37) - (37) (85) - (240) (325) 66 2,127 2,193 187 89 88 25 50 131 570 114 246 930 (75) 855 (7) 252 245 (79) 338 (60) 199 1,299 828 2,127 Cash flows from operating activities (Loss) Profit for the year Dividends received Profit on disposal of associate Change in fair value of investment Depreciation Operating cash flows before movement in working capital Decrease/(Increase) in trade and other receivables Increase/(Decrease) in trade and other payables Cash (outflow) generated by operations Net cash (outflow) from operating activities Cash flows from investing activities Purchase of plant and equipment Dividends received Proceeds from sale of associate Net cash (outflow)/inflow from investing activities Cash flows from financing activities Proceeds of share issue Dividends paid Net cash (outflow)/inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2022 £’000 (441) (200) - - - (641) 313 39 (289) (289) 3 200 - 203 - (240) (240) (326) 415 89 2021 £’000 539 (1,122) (26) 50 16 (543) (597) (110) (1,250) (1,250) - 1,122 252 1,374 338 (60) 278 402 13 415 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 68 Notes to the Financial Statements Notes to the Financial Statements 69 Notes to the financial statements (continued) For the year ended 31 March 2022 1. General information 2. Accounting policies 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. 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 Accounting standards in conformity with the requirements of UK-adopted International Accounting Standards and the Companies Act 2006. 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 The budgets and cashflow forecasts that have been produced and reviewed demonstrate that the Group is forecast to generate profits and cash in the year ended 31 March 2022 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. Government Furlough scheme The Company took advantage of the Governments furlough scheme and furloughed one employee who has since returned to work. The monies received have been offset against the employee costs. 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 affect its returns. Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three control elements listed above. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with the Group’s accounting policies. Business combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill is not amortised but is reviewed for impairment at least annually. If the consideration is less than the fair value of the identifiable assets and liabilities acquired, the difference is recognised in the statement of comprehensive income. Revenue recognition The group earns income from the following principal services: • • Revenue from consultancy services. Revenue from treasury management. For all these principal services, revenue represents amounts recoverable from clients for professional services provided during the year. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. Revenue is recognised when control of a product or service is transferred to a customer. Revenue from fixed fee assignments is recognised over a period of time by reference to the stage of completion of the actual services provided at the reporting date, as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour hours. Time and materials assignments are recognised as services are provided at the fee rate agreed with the client. Unbilled revenue on individual client assignments is classified as contract assets 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: Right of use assets Over unexpired term of lease Leasehold improvements Over unexpired term of lease Fixtures, fittings and equipment 3-4 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 70 Notes to the Financial Statements Notes to the Financial Statements 71 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. Investments Investments are held at fair value. Financial instruments Financial assets and financial liabilities are recognised on the Group’s Statement of Financial Position 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 FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL 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 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. Annual report and financial statements for the year ended 31 March 2022 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 non-financial assets The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined. The recoverable amount of an asset or a cash- generating unit is the higher of its fair value less costs to sell and its value in use. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Aquila Services Group plc 72 Notes to the Financial Statements Notes to the Financial Statements 73 3. Critical accounting estimates and judgements In application of the Group’s accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgements in applying the Group’s accounting policies The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Group’s accounting policies and that have a significant effect on the amounts recognised in the financial statements. 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). Work in progress is accounted for under contract assets. 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 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 are considered when measuring the value of share-based payments for employees, which are required to be accounted for as equity- settled share-based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of comprehensive income to reflect the services rendered as consideration during the vesting period (note 20). 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 reporting 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. Adoption of new and revised standards No new standards were adopted in the year. 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. 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 Leases are accounted for on a ‘right-of-use model’ reflecting that, at the commencement date, the Company as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use asset. The right-of-use assets are recognised within property, plant and equipment on the face of the financial position and are presented separately in note 11. The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. Subsequently the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is re-measured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments. 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. Subsequently the right-of-use asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight line-basis over the lease term. The Group does not have any short-term leases of equipment or vehicles. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 74 Notes to the Financial Statements Notes to the Financial Statements 75 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that may have a significant risk of causing 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 reporting 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 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 13.9% and a terminal value of 1% has been used. Growth rates of 0-15% have been applied, these are based on industry rates, management’s knowledge of the different businesses and the markets and the ability for the businesses to expand. The maximum period over which the cashflows are reviewed is 5 years. Sensitivities have been applied to all assumptions. Valuation of unquoted investments The Group determines the fair value of these financial instruments using recent transactions or valuation models if information about recent transactions is not available. The values derived from applying these models are significantly impacted by the choice of the valuation model used and the underlying assumptions made, such as the amounts and timing of future cash flows, discount rates, volatility and credit risk. Management has determined that a valuation based on five times annual turnover is an appropriate measure 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 income Specialist sports and education consultancy income 2022 £’000 8,502 600 1,017 10,119 2021 £’000 5,961 657 1,024 7,642 5. Operating segments The Group has two reportable segments; consultancy and treasury management services, the results of which are included within the financial information. In accordance with IFRS8 ‘Operating Segments’, information on segment assets is not shown, as this is not provided to the chief operating decision-maker. The principal activities of the Group are as follows: Consultancy – a range of services to support the business needs of a diverse range of organisations (including housing associations, 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. 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 executive directors for the purpose of resource allocation and assessment of segment performance. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 76 Notes to the Financial Statements Notes to the Financial Statements 77 5. Operating segments (continued) Revenue from Consultancy Revenue from Treasury management Cost of sales from Consultancy Cost of sales from Treasury management Gross profit from Consultancy Gross profit from Treasury management Geographical information Revenues from external customers, based on location of the customer, are shown below: UK Europe Rest of World 2022 £’000 9,519 600 10,119 7,367 546 7,913 2,152 54 2,206 2021 £’000 6,985 657 7,642 5,436 566 6,002 1,549 91 1,640 2022 £’000 9,528 380 211 10,119 2021 £’000 7,057 401 184 7,642 Administrative expenses Operating profit (1,488) 718 (1,339) 301 Within consultancy revenues, approximately 9% (2021: 8%) has arisen from the segment’s largest customer; within treasury management 15% (2021: 26%). Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 78 Notes to the Financial Statements Notes to the Financial Statements 79 6. Profit before taxation 7. Staff costs Profit before taxation is arrived at after charging: Auditors’ remuneration (see below) Depreciation of property, plant and equipment (see note 11) Depreciation of leasehold property (see note 11) Staff costs (see note 7) Significant reorganisation costs * * Significant restructuring costs include staff related costs of £0k (2021: £175k) arising from the redundancy costs relating to COVID-19 are provided for. Breakdown of auditors’ remuneration Auditors’ remuneration Fees payable to the Company’s auditors for: The audit of the parent Company The audit of the Company’s subsidiaries The review of the interim report The provision of a CASS assurance report to the FCA 2022 £’000 56 25 93 5,879 - 2021 £’000 53 38 93 5,067 175 2022 £’000 2021 £’000 33 18 3 2 56 30 17 4 2 53 The average monthly number of employees (including directors) employed by the Group was: 86 76 2022 2021 2022 £’000 5,171 8 262 438 5,879 330 5 17 352 2021 £’000 4,250 88 203 526 5,067 435 8 19 462 Aggregate remuneration (including directors) Wages and salaries Share-based payments Pension contributions Social security costs Directors’ remuneration Salary (including taxable benefits) Share-based payments Pension contributions The above amounts are net of £4k (2021:£60k) relating to income received from the Government’s furlough scheme. Two directors are members of the company’s defined contribution pension scheme. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 80 Notes to the Financial Statements Notes to the Financial Statements 81 7. Staff costs (continued) 8. Taxation The amounts set out above include remuneration to the highest paid director as follows: Salary (including taxable benefits) Share-based payments Pension contributions 2022 £’000 177 4 10 191 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. Wages and salaries Share-based payments Post-retirement benefits 2022 £’000 1,186 (7) 49 1,228 2021 £’000 169 5 9 183 2021 £’000 1,197 23 44 1,264 Corporation tax: Current year 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% (2021: 19%) Expenses not deductible Tax expense for the year 9. Earnings per share Basic earnings per share is calculated by dividing the profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. Details of which are set out in note 20. Profit after tax attributable to owners of the parent Weighted average number of shares - Basic - Diluted Basic earnings per share Diluted earnings per share 2022 £’000 2021 £’000 139 89 718 136 3 139 276 52 37 89 2022 £’000 579 ’000 39,962 41,153 1.45p 1.41p 2021 £’000 187 ’000 39,282 41,602 0.48p 0.45p Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 82 Notes to the Financial Statements Notes to the Financial Statements 83 10. Goodwill Group Cost At 1 April 2020 Additions At 31 March 2021 Additions At 31 March 2022 Accumulated impairment losses At 1 April 2020 Impairment loss for the year At 31 March 2021 Impairment loss for the year At 31 March 2022 Net book value At 1 April 2020 At 1 April 2021 At 31 March 2022 Sensitivity analysis has been performed on the value in use calculations, holding all other variables constant to: • Apply a 2-6% reduction to the forecasted turnover • Apply a 5-10% increase in cost of sales and of overheads • Apply an increase in the discount rate to 19%. The sensitivities applied do not provide reasonable possible changes and therefore no impairment has been made. Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination. Each Subsidiary is considered to be the cash generating unit for the purpose of impairment review. 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 and the expected utilisation of consultants. Management have projected cash flows over a period of five years, based on growth rates of between 0% and 15% per annum; this is based on past performance and expected future activity. A discount rate of 13.9% and a terminal value of 1.0% has been used. Goodwill £’000 3,872 - 3,872 - 3,872 (555) - (555) - (555) 3,317 3,317 3,317 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 84 Notes to the Financial Statements Notes to the Financial Statements 85 11. Property, plant and equipment (Group) Group Cost At 1 April 2020 Additions At 31 March 2021 Additions At 31 March 2022 At 1 April 2020 Charge for the year At 31 March 2021 Charge for the year At 31 March 2022 Net book value At 1 April 2020 At 31 March 2021 At 31 March 2022 Right of use assets- Leasehold property £’000 Leasehold improvement £’000 Fixtures and fittings £’000 Computer equipment £’000 Total £’000 514 - 514 - 514 65 88 153 88 241 449 361 273 27 - 27 - 27 6 5 11 5 16 21 16 11 45 - 45 - 45 38 3 41 3 44 7 4 1 166 7 173 37 210 125 35 160 22 182 41 13 28 752 7 759 37 796 234 131 365 118 483 518 394 313 Company Cost At 1 April 2020 Additions At 31 March 2021 Additions At 31 March 2022 Accumulated depreciation At 1 April 2020 Charge for the year At 31 March 2021 Charge for the year At 31 March 2022 Net book value At 1 April 2020 At 31 March 2021 At 31 March 2022 Computer equipment £’000 64 - 64 3 67 48 16 64 - 64 16 - 3 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 86 Notes to the Financial Statements Notes to the Financial Statements 87 12. Investments in subsidiaries Company Cost At 1 April 2020 Additions At 31 March 2021 Addition At 31 March 2022 Accumulated impairment losses At 1 April 2020 Impairment losses for the year At 31 March 2021 Impairment losses for the year At 31 March 2022 Net book value At 1 April 2020 At 31 March 2021 At 31 March 2022 Investments in subsidiaries £’000 4,637 88 4,725 10 4,735 555 - 555 - 555 4,082 4,170 4,180 Details of the Company’s subsidiaries at 31 March 2022 are as follows: Place of incorporation and operation Principal activity Proportion of ownership and voting rights held England and Wales Specialist housing consultancy 100% England and Wales Treasury management consultancy 100% Altair Consultancy and Advisory Services Limited Aquila Treasury and Finance Solutions Limited Oaks Consultancy Limited England and Wales Specialist sports and education consultancy 100% The accounting reference date of each of the subsidiaries above is co-terminus with that of the Company. The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA. Place of incorporation and operation Proportion of ownership and voting rights held Accounting reference date Altair International Consultancy Limited England and Wales 100% held by Aquila Services Group plc 31 August Murja Limited England and Wales Finalysis UK Limited England and Wales 100% held by ATFS Limited 30 May 100% held by Aquila Services Group plc 31 March Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 88 Notes to the Financial Statements Notes to the Financial Statements 89 13. Investments 14. Trade and other receivables Unquoted equity investments Fair Value Hierarchy Level 3 2022 £’000 71 2021 £’000 71 The Group has a 5.3% 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). Trade receivables Group undertakings Other receivables Prepayments Contract assets Group 2022 £’000 Group 2021 £’000 Company 2022 £’000 Company 2021 £’000 2,240 1,862 - 35 117 201 - 20 107 284 - 964 10 17 - - 1,281 13 10 - 2,593 2,273 991 1,304 Total £’000 <30 days £’000 30-60 days £’000 66-90 days £’000 >90 days £’000 31 March 2022 31 March 2021 2,240 1,862 2,182 1,704 14 - 23 26 21 132 No expected credit loss is recognised in the accounts. The Group does 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 90 Notes to the Financial Statements Notes to the Financial Statements 91 15. Trade and other payables 17. Share capital Group 2022 £’000 Group 2021 £’000 Company 2022 £’000 Company 2021 £’000 Trade payables Other payables Amounts owed to Group undertakings Taxes and social security costs Accruals Contract liabilities 510 77 - 715 246 369 273 50 - 825 484 297 1,917 1,929 11 - 283 - 146 - 440 Of the contract liability brought forward at the start of the year £297k (2021: £181k) was recognised in revenue in the year. 16. Long term liabilities The Statement of Financial Position shows the following amounts relating to lease liabilities. At 31 March 2021 Decrease in lease liabilities Closing amounts as at 31 March 2022 Current Non-current 19 - 270 - 104 - 393 2022 £’000 369 (85) 284 88 196 Allotted, called up and fully paid 39,961,955 (2021: 39,961,955) Ordinary shares of 5p each 1,998 1,998 2022 £’000 2021 £’000 The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company. A reconciliation of share capital, share premium account and merger reserve is set out below: Number of Ordinary shares ’000 Amount called up and fully paid £’000 Share premium £’000 Merger reserve £’000 At 31 March 2020 37,947 1,897 1,475 3,042 Issued at 10p per share on 20 Jul 2020 Issued at 23p per share on 20 Jul 2020 Issued at 5p per share on 15 Mar 2021 At 31 March 2021 At 31 March 2022 824 1,088 103 39,962 39,962 41 55 5 1,998 1,998 41 196 - 1,712 1,712 - - - 3,042 3,042 Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 92 Notes to the Financial Statements Notes to the Financial Statements 93 18. Reserves The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their nominal value and is non-distributable. The merger relief reserve arose on the Company’s acquisition of Altair. There is no legal share premium on the shares issued as consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition. Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer. 19. Dividends Amounts recognised as distributions to equity holders Final dividend for the year ended 31 March 2021 of 0.4p per share (2020: Nil) Interim dividend for the year ended 31 March 2022 of 0.2p per share (2021: 0.15p) Proposed final dividend for the year ended 31 March 2022 of 0.4p per share (2021: 0.4p) 2022 £’000 2021 £’000 160 80 240 160 - 60 60 160 20. Share-based payment transactions The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme. The total amount recognised in the year to 31 March 2022 arising from share-based payment transactions is £8k (2021 expense: £88k). Unapproved scheme Number of options outstanding at 1 April 2021 Lapsed during period Exercised during period Number of options outstanding as at 31 March 2022 Number of options exercisable as at 31 March 2022 Number ’000 Weighted average exercise price £0.35 171 - - 171 171 The exercise price of the options outstanding at 31 March 2022 is 35p. The weighted average remaining contractual life of the options outstanding at 31 March 2022 is 3 years (2021: 4 years). EMI scheme Number of options outstanding at 1 April 2021 Cancelled during the period Lapsed during period Number of options outstanding as at 31 March 2022 Number of options exercisable as at 31 March 2022 Number ’000 Weighted average exercise price £0.05 2,230 (96) (750) 1,474 1,474 The weighted average remaining contractual life of the options outstanding at 31 March 2022 is 3 years (2021: 4 years). 21. Related party disclosures Balances and transactions between the Group and other related parties are disclosed below: Dividends totalling £70k (2021: £17k) were paid in the year in respect of Ordinary Shares held by the Company’s directors. At 31 March 2022, the balance owed to Richard Wollenberg for services as a non-executive director was £4k (2021: £4k). Amounts paid to Derek Joseph for consultancy services £23k (2021: £51k). Annual report and financial statements for the year ended 31 March 2022 Aquila Swervices Group plc 94 Notes to the Financial Statements 95 22. Control In the opinion of the Directors there is no single ultimate controlling party. 23. 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 2022 year-end £258k (2021: £180k) is due from one customer. There are no other customers that represent more than 10% 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 balances of £2,193k (2021: £2,127k) 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 Group’s 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. 24. Post Balance Sheet event There are no post balance sheet events. Annual report and financial statements for the year ended 31 March 2022 Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting (AGM) of Aquila Services Group plc will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 27 July 2022 at 3:00 pm, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 7 will be proposed as ordinary resolutions and resolution 8 and 9 will be proposed as a special resolution. Resolutions 7 to 9 are items of special business. Ordinary business 1. To receive the reports of the directors and auditor and the financial statements for the period ended 31 March 2022. 2. To approve the remuneration report for the period ended 31 March 2022. 3. That, following a recommendation by the directors, a final dividend payment of 0.4p per Ordinary Share shall be paid to those persons who were named on the register of shareholders on 15 July 2022. 4. That Crowe UK LLP be and is hereby reappointed as auditor of the Company and that the directors be authorised to determine the auditor’s remuneration. 5. To re-elect as a director, Fiona Underwood, who was re-appointed at the AGM held on 24 July 2019. 6. To re-elect as a director, Claire Banks, who was appointed at the AGM held on 24 July 2019. Special business 7. 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: 7.1 7.2 £82,259 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 in any other case, £666,033 (such amount to be reduced by the nominal amount of any equity securities allotted pursuant to the authorities in paragraph 7.1 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. 8. That, subject to Resolution 7 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 7 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: Aquila Services Group plc 96 97 8.1 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; 8.2 in connect in connection with the valid exercise of Options; 8.3 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 8.4 otherwise, up to a maximum nominal amount of £99,905. 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. 9. 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: 9.1 the maximum aggregate number of Ordinary Shares that may be purchased is 3,996,196; 9.2 the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is £0.05; 9.3 the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of: 9.3.1 105 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 9.3.2 the value of an Ordinary Share calculated on the basis of the higher of the price quoted for: 9.3.3 the last independent trade of; and 9.3.4 the highest current independent bid for any number of Ordinary Shares on the Official List. 9.4 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 24 June 2022 Notes to the notice of the Annual General Meeting 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 set 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 24 June 2022 the company’s issued share capital comprised 39,961,955 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 24 June 2022 is 39,961,955. 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. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc 99 98 10. If you are a person who has been nominated under section 146 of the Act to enjoy information rights (a ‘Nominated Person’), you may have a right under an agreement between you and the member of the company who has nominated you to have information rights (a ‘Relevant Member’) to be appointed or to have someone else appointed as a proxy for the meeting. If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights. Your main point of contact in terms of your investment in the company remains the Relevant Member (or, perhaps, your custodian or broker) and you should continue to contact them (and not the company) regarding any changes or queries relating to your personal details and your interest in the company (including any administrative matters). The only exception to this is where the company expressly requests a response from you. 11. Members satisfying the thresholds in section 338 of the Act may require the company to give, to members of the company entitled to receive notice of the Annual General Meeting, notice of a resolution which those members intend to move (and which may properly be moved) at the Annual General Meeting. A resolution may properly be moved at the Annual General Meeting unless (i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the company’s constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which may be dealt with at the Annual General Meeting includes a resolution circulated pursuant to this right. A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting. 12. Members satisfying the thresholds in section 338A of the Act may request the company to include in the business to be dealt with at the Annual General Meeting any matter (other than a proposed resolution) which may properly be included in the business at the Annual General Meeting. A matter may properly be included in the business at the Annual General Meeting unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the matter to be included in the business, must be accompanied by a statement setting out the grounds for the request, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting. 13. Members satisfying the thresholds in section 527 of the Act can require the company to publish a statement on its website setting out any matter relating to (i) the audit of the company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an auditor of the company ceasing to hold office since the last Annual General Meeting, which the members propose to raise at the meeting. The company cannot require the members requesting the publication to pay its expenses. Any statement placed on the website must also be sent to the company’s auditor no later than the time it makes its statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the company has been required to publish on its website pursuant to this right. 14. Copies of the directors’ service contracts will be available for inspection at the registered office of the company during usual business hours from the date of this notice until the date of the Annual General Meeting, and also during and at least fifteen minutes before the beginning of the Annual General Meeting. Annual report and financial statements for the year ended 31 March 2022 Aquila Services Group plc Directors Derek Joseph Non-Executive Chair Dr Fiona Underwood Group Managing Director Claire Banks Group Finance Director Richard Wollenberg Non-Executive Director Company Secretary Claire Banks Registered Office Tempus Wharf 29a Bermondsey Wall West London SE16 4SA Independent Auditors Crowe U.K. LLP 55 Ludgate Hill London EC4M 7JW Corporate Advisor Beaumont Cornish Limited Building 3 566 Chiswick High Road London W4 5YA Bankers National Westminster Bank plc 50 High Street Egham Surrey TW20 9EU Registrars Neville Registrars Limited Neville House Steelpark Road Halesowen B62 8HD Company Number 08988813 Company Site aquilaservicesgroup.co.uk London Stock Exchange londonstockexchange.com/stock/ AQSG/aquila-services-group-plc/ company-page
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