Share	Share based
	Share	premium	payment	Retained	Total
	capital	account	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2019	1,765	1,487	668	29	3,949
Issue of shares	132	617	-	-	749
Total comprehensive income	-	-	-	200	200
Transfer on reserves	-	-	(4)	4	-
Share based payment charge	-	-	105	-	105
Dividend	-	-	-	(341)	(341)
Balance at 31 March 2020	1,897	2,104	769	(108)	4,662
Balance at 1 April 2020	1,897	2,104	769	(108)	4,662
Issue of shares	101	237	-	-	338
Total comprehensive income	-	-	-	539	539
Transfer on reserves	-	-	(277)	277	-
Share based payment charge	-	-	88	-	88
Dividend	-	-	-	(60)	(60)
Balance at 31 March 2021	1,998	2,341	580	648	5,567

 

Consolidated statement of cash flow

For the year ended 31 March 2021

	2021		2020
	£'000		£'000
Cash flows from operating activities
Profit for the year	187		126
Interest received	-		(1)
Income tax expense	89		52
Share based payment charge	88		105
Profit from associate	-		(51)
Release of contingent consideration	-		(555)
Impairment of goodwill	-		555
Loss on disposal of associate	25		-
Change in fair value of investments	50		-
Depreciation	131		134
Operating cash flows before movement in working capital	570		365
Decrease in trade and other receivables	114		122
Increase/(Decrease) in trade and other payables	246		(257)
Cash generated by operations	930		230
Income taxes paid	(75)		(139)
Net cash inflow from operating activities	855		91
Cash flows from investing activities
Interest received	-		1
Purchase of property, plant and equipment	(7)		(32)
Purchase of subsidiary	-		(544)
Proceeds from sale of associate	252		-
Net cash inflow/(outflow) from investing activities	245		(575)
Cash flows from financing activities
Lease liability payments	(79)		(66)
Proceeds of share issue	338		-
Dividends paid	(60)		(341)
Net cash inflow/(outflow) from financing activities	199		(407)
Net increase/(decrease) in cash and cash equivalents	1,299		(891)
Cash and cash equivalents at beginning of the year	828		1,719
Cash and cash equivalents at end of the year	2,127		828

 

 

 

Company statement of cash flow

For the year ended 31 March 2021

 

	2021		2020
	£'000		£'000
Cash flows from operating activities
Profit for the year	539		200
Dividends received	(1,122)		(461)
Interest received	-		(1)
Profit on disposal of associate	(26)		-
Change in fair value of investment	50		-
Depreciation	16		21
Operating cash flows before movement in working capital	(543)		(241)
(Increase) / Decrease in trade and other receivables	(597)		379
(Decrease) in trade and other payables	(110)		(37)
Cash (outflow)/inflow generated by operations	(1,250)		101
Net cash (outflow)/inflow from operating activities	(1,250)		101
Cash flows from investing activities
Interest received	-		1
Dividends received	1,122		461
Acquisition of subsidiaries	-		(544)
Proceeds from sale of associate	252		-
Net cash (outflow)/inflow from investing activities	1,374		(82)
Cash flows from financing activities
Proceeds of share issue	338		-
Dividends paid	(60)		(341)
Net cash outflow from financing activities	278		(341)
Net decrease in cash and cash equivalents	402		(322)
Cash and cash equivalents at beginning of the year	13		335
Cash and cash equivalents at end of the year	415		13

 

Notes to the financial statements

For the year ended 31 March 2021

 

1        General information

Aquila Services Group plc ('the Company') and its subsidiaries (together, 'the Group') provide specialist housing, sport, education and treasury management consultancy services.  The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.

The Company is a public limited company which is listed on the London Stock Exchange, domiciled in the United Kingdom and incorporated and registered in England and Wales.  The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

2        Accounting policies

The principal accounting policies applied in preparation of these consolidated financial statements are set out below.  These policies have been consistently applied unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, including interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on the historical cost basis except for certain assets which are carried at fair value.

The financial statements are presented in Pounds Sterling which is the functional and presentational currency of all companies within the group.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies.  The areas of critical accounting estimates and judgements are set out in note 3.

Going concern

When COVID-19 struck before the beginning of the financial year under review the Directors took immediate action and as a result a number of staff were made redundant, and some put on furlough.  Cash balances were increased through the issue of new equity.  The Group took advantage of the VAT deferral scheme which is being paid back over 10 months.  The Group has no borrowings.

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 seven employees,  all of whom have now 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:

 

Leasehold improvement	Over unexpired term of lease
Right of use assets	Over unexpired term of lease
Leasehold improvements	5 years
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.

Investment in subsidiaries

In the Company's financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company, plus any costs directly attributable to the purchase of the subsidiary.

Investment in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.  Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting.  Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of profit or loss and other comprehensive income of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate.  On acquisition of the investment in an associate, any excess of cost over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included in the carrying amount of the investment.

Investments

Investments are held at cost and reviewed annually for impairment.

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.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'.  The Group does not currently hold any financial liabilities 'at FVTPL'.

Pensions

The Group contributes to defined contribution schemes for the benefit of its directors and employees.  Contributions payable are charged to the statement of comprehensive income in the year they are payable.

Current and deferred income tax

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the profit or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.  Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled.  Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets

Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income.  No deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.

Impairment of assets

The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired.  If any such indication exists, the Group estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset.  If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.  That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.  If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate pre-tax discount rate.

Leases

The Group accounts for leases under IFRS 16. 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 9.

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.

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.  The inputs into that model are the share price at the date of the grant, the exercise price, the expected life of the option, the risk-free rate based on the yield of a 10-year government bond and the expected share price volatility based on the Company's share price.

Prior year adjustment

In the parent company balance sheet an adjustment has been made to transfer the amount of £130k from investments in subsidiaries to amounts due from group undertakings, this adjustment is to correct the accounting treatment of the hive up of the trade and assets of the acquisition in the previous year.

 

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.

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 21).

Intangible assets

On acquisition the following items are reviewed to assess if there is any value in acquiring the intangibles separately:

·    Trademarks or trade names

·    Technology based intangibles, including any IT systems

·    Artistic-related intangibles

·    Intellectual property

·    Customer-related intangibles

·    Employment contracts

The Group does not have any intangible assets from acquisitions.

 

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 balance sheet date to determine whether there is any indication of impairment.  If any such indication exists, the asset's recoverable amount is estimated, and an impairment loss is recognised where the recoverable amount is less than the carrying value of the asset.  Any impairment losses are recognised in the income statement.

The recoverable amount of the goodwill is determined from value in use calculations.  The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to income and direct costs during the period.

 

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to each acquisition of goodwill.  Discount rates of 11% and a terminal value of 1% 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 reviewed all information available at 31 March 2021 taking into account all additional information relating to market participant assumptions that is reasonably available and concluded that there is an impairment of the unquoted investment and has restated its fair value.

4        Revenue and Finance income

An analysis of the Group's revenue is as follows:
	2021		2020
	£'000		£'000
Continuing operations - rendering of services
Specialist housing consultancy income	5,961		6,729
Treasury management income	657		528
Specialist sports and education consultancy income	1,024		706
	7,642		7,963

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.

In previous years the Group had three main reporting segments the third being that of interim management. The introduction of IR35 had an impact on the interim business, with clients changing the way that they resourced executive vacancies, choosing to source in-house rather than through professional service firms. The Group took a strategic decision not to actively pursue this revenue stream and concentrate on the main operating segment of consulting and treasury management, as a result, the turnover for interim management is no longer considered by management to be a significant segment of the business.

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.

 

	2021		2020
	£'000		£'000
Revenue from Consultancy	6,985		6,640
Revenue from Interim management	-		795
Revenue from Treasury management	657		528
	7,642		7,963
Cost of sales from Consultancy	5,436		5,315
Cost of sales from Interim management	-		574
Cost of sales from Treasury management	566		322
	6,002		6,211
Gross profit from Consultancy	1,549		1,325
Gross profit from Interim management	-		221
Gross profit from Treasury management	91		206
	1,640		1,752
Administrative expenses	(1,339)		(1,626)
Operating profit	301		126

 

Within consultancy revenues, approximately 8% (2020: 7%) has arisen from the segment's largest customer; within treasury management 26% (2020: 26%).

Geographical information

Revenues from external customers, based on location of the customer, are shown below:

	2021		2020
	£'000		£'000
UK	7,057		7,368
Europe	401		279
Rest of World	184		316
	7,642		7,963

 

 

6        Profit before taxation

	2021		2020
	£'000		£'000
Profit before taxation is arrived at after charging:
Auditors' remuneration (see below)	49		42
Depreciation of property, plant and equipment (see note 11)	38		63
Depreciation of leasehold property (see note 11)	93		71
Staff costs (see note 7)	5,067		5,351
Significant reorganisation costs *	175		186
Acquisition related costs	-		51

 

* Significant restructuring costs include staff related costs of £175k (2020: £186k) arising from the redundancy costs relating to COVID-19 are provided for.

 

Breakdown of auditors' remuneration

 

	2021		2020
	£'000		£'000
Auditors' remuneration
Fees payable to the Company's auditors for the audit of the parent Company	30		23
Fees payable to the Company's auditors for the audit of the Company's subsidiaries	19		19
	49		42

 

7        Staff costs

	2021		2020
The average monthly number of employees (including directors) employed by the Group was:	76		74
	2021		2020
	£'000		£'000
Aggregate remuneration (including directors)
Wages and salaries	4,250		4,542
Share-based payments	88		105
Pension contributions	203		215
Social security costs	526		489
	5,067		5,351

 

The above amounts are net of £60k relating to income received from the Government's furlough scheme.

 

	2021		2020
	£'000		£'000
Directors' remuneration
Salary (including taxable benefits)	435		396
Share-based payments	8		20
Pension contributions	19		22
	462		438
Two directors are members of the company's defined contribution pension scheme.
The amounts set out above include remuneration to the highest paid director as follows:
	2021		2020
	£'000		£'000
Salary (including taxable benefits)	169		146
Share-based payments	5		8
Pension contributions	9		9
	183		163

 

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.

	2021		2020
	£'000		£'000
Wages and salaries	1,197		664
Share-based payments	23		29
Post-retirement benefits	44		22
	1,264		715

 

8        Taxation

	2021		2020
	£'000		£'000
Corporation tax:
Current year	89		52
The tax charge for the year can be reconciled to the profit in the income statement as follows:
	2021		2020
	£'000		£'000
Profit before taxation	276		178
Tax at the UK corporation tax rate of 19% (2020: 19%)	52		34
Post tax income from associate	-		(9)
Expenses not deductible	37		27
Tax expense for the year	89		52

 

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 21.

	2021		2020
	£'000		£'000
Profit after tax attributable to owners of the parent	187		126
Weighted average number of shares	'000		'000
-      Basic	39,282		36,285
-      Diluted	41,602		41,665
Basic earnings per share	0.48p		0.35p
Diluted earnings per share	0.45p		0.32p

 

10      Goodwill

Group			Goodwill
			£'000
Cost
At 1 April 2019			2,028
Additions			1,844
At 31 March 2020			3,872
Additions			-
At 31 March 2021			3,872
Accumulated impairment losses
At 1 April 2019			-
Impairment loss for the year			(555)
At 31 March 2020			(555)
Impairment losses for the year			-
At 31 March 2021			(555)
Net book value
At 1 April 2019			2,028
At 1 April 2020			3,317
At 31 March 2021			3,317

 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination.  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.  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 11% and a terminal value of 1.0% has been used.

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 an increase in the discount rate to 25%.

The sensitivities applied do not provide reasonable possible changes and therefore no impairment has been made.

 

11      Property, plant and equipment

 

Group	Right of use assets	Leasehold improvement	Fixtures and fittings	Computer equipment	Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April 2019	-	-	34	138	172
Additions	514	27	11	28	580
At 31 March 2020	514	27	45	166	752
Additions	-	-	-	7	7
At 31 March 2021	514	27	45	173	759
At 1 April 2019	-	-	24	76	100
Charge for the year	65	6	14	49	134
At 31 March 2020	65	6	38	125	234
Charge for the year	88	5	3	35	131
At 31 March 2021	153	11	41	160	365
Net book value
At 1 April 2019	-	-	10	62	72
At 31 March 2020	449	21	7	41	518
At 31 March 2021	361	16	4	13	394

 

Company			Computer equipment
			£'000
Cost
At 1 April 2019			64
Additions			-
At 31 March 2020			64
Additions			-
At 31 March 2021			64
Accumulated depreciation
At 1 April 2019			27
Charge for the year			21
At 31 March 2020			48
Charge for the year			16
At 31 March 2021			64
Net book value
At 1 April 2019			37
At 31 March 2020			16
At 31 March 2021			-

12      Investment in subsidiaries

Company					Investments in subsidiaries
					£'000
Cost
At 1 April 2019					2,818
Additions					1,819
At 31 March 2020					4,637
Addition					88
At 31 March 2021					4,725
Accumulated impairment losses
At 1 April 2019					-
Impairment losses for the year					555
At 31 March 2020					555
Impairment losses for the year					-
At 31 March 2021					555
Net book value
At 1 April 2019					2,818
At 31 March 2020					4,082
At 31 March 2021					4,170
Details of the Company's subsidiaries at 31 March 2021 are as follows:
	Place of incorporation and operation	Principal activity		Proportion of ownership and voting rights held
Altair Consultancy and Advisory Services Limited	England and Wales	Specialist housing consultancy		100%
Aquila Treasury and Finance Solutions Limited	England and Wales	Treasury management consultancy		100%
Oaks Consultancy Limited	England and Wales	Specialist sports and education consultancy		100%

 

The accounting reference date of each of the subsidiaries is co-terminus with that of the Company.  The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

The following companies are all dormant, the registered office of each 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	100% held by ATFS Limited		30 May
Finalysis UK Limited	England and Wales	100% held by Aquila Services Group plc		31 March

 

13      Investment in Associates

During the year the Group sold its 25% shareholding in 3C Consultants Limited under a share buyback arrangement.  The Group sold the shares for a consideration of £252k.  This resulted in a loss on investment of £25k.

 

14      Investments

	Fair Value Hierarchy	2021		2020
		£'000		£'000
Unquoted equity investments	Level 3	71		121

 

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.  As a result of the impairment review and a review of the inputs of assets and liabilities of the investment the Group consider that the carrying value requires impairment.

Financial instruments measured at fair value subsequent to initial recognition are grouped into levels 1 to 3 based on the degree to which the fair value is observable, i.e.:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

15      Trade and other receivables

		Group		Group		Company		Company
		2021		2020		2021		2020
		£'000		£'000		£'000		£'000
Trade receivables		1,862		2,063		-		-
Group undertakings		-		-		1,281		685
Other receivables		20		23		13		14
Prepayments		107		79		10		9
Contract assets		284		222		-		-
		2,273		2,387		1,304		708
	Total	<30 days		30-60 days		66-90 days		>90 days
	£'000	£'000		£'000		£'000		£'000
31 March 2021	1,862	1,704		-		26		132
31 March 2020	2,063	1,500		209		147		207

 

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.

16      Trade and other payables

 

	Group		Group		Company		Company
	2021		2020		2021		2020
	£'000		£'000		£'000		£'000
Trade payables	273		154		19		9
Other payables	50		101		-		50
Lease liabilities	85		79		-		-
Amounts owed to Group undertakings	-		-		270		390
Taxes and social security costs	825		613		-		-
Accruals	484		634		104		56
Contract liabilities	297		181		-		-
	2,014		1,762		393		505

 

Of the contract liability brought forward at the start of the year £181k (2020: £227k) was recognised in revenue in the year.

17      Long term liabilities

 

The Statement of Financial Position shows the following amounts relating to lease liabilities.

 

		2021
		£'000
At 31 March 2020		448
Decrease in lease liabilities		(79)
Closing amounts as at 31 March 2021		369
Current		85
Non-current		284

 

 

18      Share capital

 

	2021		2020
	£'000		£'000
Allotted, called up and fully paid
39,961,955 (2020: 37,947,905) Ordinary shares of 5p each	1,998		1,897

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	Amount called up and fully paid	Share premium	Merger reserve
	'000	£'000	£'000	£'000
At 31 March 2019	35,307	1,765	1,487	2,413
Issued at 28.7p per share on 14 Nov 2019	2,544	128	-	603
Cost of share issue on acquisition	-	-	(12)	-
Issued at 35p per share on 31 Jan 2020	86	4	-	26
Issued at 5p per share on 21 Feb 2020	10	-	-	-
At 31 March 2020	37,947	1,897	1,475	3,042
Issued at 10p per share on 20 Jul 2020	824	41	41	-
Issued at 23p per share on 20 Jul 2020	1,087	55	196	-
Issued at 5p per share on 15 Mar 2021	103	5	-	-
At 31 March 2021	39,961	1,998	1,712	3,042

19      Reserves

The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their nominal value and is non-distributable.

The merger relief reserve arose on the Company's acquisition of Altair.  There is no legal share premium on the shares issued as consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition.  Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer.

20      Dividends

 

	2021		2020
Amounts recognised as distributions to equity holders	£'000		£'000
Final dividend for the year ended 31 March 2020 of Nil per share (2019: 0.6p)	-		227
Interim dividend for the year ended 31 March 2021 of 0.15p per share (2020: 0.3p)	60		114
	60		341
Proposed final dividend for the year ended 31 March 2021 of 0.4p per share (2020: Nil)	160		-

 

21      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 2021 arising from share-based payment transactions is £88k (2020 expense: £105k).

 

Unapproved scheme	Number '000	Weighted average exercise price
Number of options outstanding at 1 April 2020	2,758	£0.25
Lapsed during period	(1,660)	£0.29
Exercised during period	(927)	£0.09
Number of options outstanding as at 31 March 2021	171	£0.35
Number of options exercisable as at 31 March 2021	-

 

The exercise price of the options outstanding at 31 March 2021 is 35p.  The weighted average remaining contractual life of the options outstanding at 31 March 2021 is 4 years (2020: 1 year).

EMI scheme	Number '000	Weighted average exercise price
Number of options outstanding at 1 April 2020	2,776	£0.05
Cancelled during the period	(50)	£0.05
Lapsed during period	(406)	£0.05
Number of options outstanding as at 31 March 2021	2,320

 

Number of options exercisable as at 31 March 2021

1,598

 

The weighted average remaining contractual life of the options outstanding at 31 March 2021 is 4 years (2020: 5 years).

22      Related party disclosures

Balances and transactions between the Group and other related parties are disclosed below:

Dividends totalling £17k (2020: £149k) were paid in the year in respect of Ordinary Shares held by the Company's directors.

At 31 March 2021, the balance owed to Richard Wollenberg for services as a non-executive director was £4k (2020: £8k).

Amounts paid to Derek Joseph for consultancy services £51k (2020: 24k).

23      Control

In the opinion of the Directors there is no single ultimate controlling party.

24      Financial instruments

Financial risk management

The Group's activities are exposed to a variety of market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

Credit risk

Credit risk is the risk of financial loss to the Group resulting from counterparties failing to discharge their obligations to the Group.  The Group's principal financial assets are trade and other receivables and cash and cash equivalents.

The Group considers its credit risk to be low.  Of the total trade receivables at the 2021 year-end £180k (2020: £136k) 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 reserves of £2,127k (2020: £828k) 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.

25      Post Balance Sheet event

There are no post balance sheet events.