Consolidated statement of cash flow

For the year ended 31 March 2023

	2023		2022
	£'000		£'000
Cash flows from operating activities
Profit for the year	518		579
Interest received	(17)		-
Income tax expense	156		139
Share based payment charge	12		8
Impairment of goodwill	120		-
Depreciation	124		118
Operating cash flows before movement in working capital	913		844
(Increase)/Decrease in trade and other receivables	(537)		(320)
(Decrease)/Increase in trade and other payables	343		(12)
Cash generated by operations	719		512
Income taxes paid	(130)		(84)
Net cash inflow from operating activities	589		428
Cash flows from investing activities
Interest received	17		-
Purchase of property, plant and equipment	(45)		(37)
Net cash (outflow)/inflow from investing activities	(28)		(37)
Cash flows from financing activities
Lease liability payments	(89)		(85)
Dividends paid	(260)		(240)
Net cash (outflow)/inflow from financing activities	(349)		(325)
Net increase in cash and cash equivalents	212		66
Cash and cash equivalents at beginning of the year	2,193		2,127
Cash and cash equivalents at end of the year	2,405		2,193

 

 

Company statement of cash flow

For the year ended 31 March 2023

 

	2023		2022
	£'000		£'000
Cash flows from operating activities
Profit/(Loss) for the year	103		(441)
Interest received	(17)		-
Dividends received	(977)		(200)
Impairment of investment	120		-
Depreciation	6		-
Operating cash flows before movement in working capital	(765)		(641)
Decrease/(Increase) in trade and other receivables	755		313
Increase/(Decrease) in trade and other payables	254		39
Cash (outflow) generated by operations	244		(289)
Net cash (outflow) from operating activities	244		(289)
Cash flows from investing activities
Interest on deposits	17		-
Purchase of plant and equipment	(15)		3
Dividends received	977		200
Net cash (outflow)/inflow from investing activities	979		203
Cash flows from financing activities
Dividends paid	(260)		(240)
Net cash (outflow) from financing activities	(260)		(240)
Net increase/(decrease) in cash and cash equivalents	963		(326)
Cash and cash equivalents at beginning of the year	89		415
Cash and cash equivalents at end of the year	1,052		89

 

Notes to the financial statements

For the year ended 31 March 2023

 

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.

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 2023 and beyond and that the Group has sufficient cash reserves to enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the financial statements.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of subsidiary entities.  A subsidiary is defined as an entity over which the Company has control.  Control is achieved when the Company has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity, and could use its power to 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.  A receivable is recognised when the services are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

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.

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.

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.

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.

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.

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).

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 16.12% and a terminal value of 1% has been used.

 

Growth rates of between 0-15% have been applied to each cash generating unit as set out in note 10 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 based on prior knowledge of the industry.

4        Revenue and Finance income

An analysis of the Group's revenue is as follows:
	2023		2022
	£'000		£'000
Continuing operations - rendering of services
Specialist housing consultancy income	10,558		8,502
Treasury management income	431		600
Specialist sports and education consultancy income	1,260		1,017
	12,249		10,119

 

Interest received on bank deposits	17		-
	12,266		10,119

 

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.

Treasury Management - 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.

	2023		2022
	£'000		£'000
Revenue from Consultancy	11,818		9,519
Revenue from Treasury management	431		600
	12,249		10,119
Cost of sales from Consultancy	9,269		7,367
Cost of sales from Treasury management	375		546
	9,644		7,913
Gross profit from Consultancy	2,550		2,152
Gross profit from Treasury management	55		54
	2,605		2,206
Administrative expenses	(1,828)		(1,488)
Operating profit	777		718

 

Within consultancy revenues, approximately 18% (2022: 9%) has arisen from the segment's largest customer L&Q; within treasury management 11% (2022: 15%).

Geographical information

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

	2023		2022
	£'000		£'000
UK	11,727		9,528
Europe	508		380
Rest of World	14		211
	12,249		10,119

6        Profit before taxation

	2023		2022
	£'000		£'000
Profit before taxation is arrived at after charging:
Auditors' remuneration (see below)	66		56
Depreciation of property, plant and equipment (see note 11)	31		25
Depreciation of leasehold property (see note 11)	93		93
Impairment of goodwill	120		-
Staff costs (see note 7)	7,180		5,879

 

Breakdown of auditors' remuneration

 

	2023		2022
	£'000		£'000
Auditors' remuneration
Fees payable to the Company's auditors for:
The audit of the parent Company	40		33
The audit of the Company's subsidiaries	21		18
The review of the interim report	3		3
The provision of a CASS assurance report to the FCA	2		2
	66		56

 

7        Staff costs

	2023		2022
The average monthly number of employees (including directors) employed by the Group was:	102		86
	2023		2022
	£'000		£'000
Aggregate remuneration (including directors)
Wages and salaries	6,153		5,171
Share-based payments	12		8
Pension contributions	314		262
Social security costs	701		438
	7,180		5,879

 

	2023		2022
	£'000		£'000
Directors' remuneration
Salary (including taxable benefits)	345		330
Share-based payments	1		5
Pension contributions	17		17
	363		352
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:
	2023		2022
	£'000		£'000
Salary (including taxable benefits)	195		177
Share-based payments	-		4
Pension contributions	10		10
	205		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.

	2023		2022
	£'000		£'000
Wages and salaries	1,036		1,186
Share-based payments	5		(7)
Post-retirement benefits	48		49
	1,089		1,228

 

8        Taxation

	2023		2022
	£'000		£'000
Corporation tax:
Current year	156		139
The tax charge for the year can be reconciled to the profit in the income statement as follows:
	2023		2022
	£'000		£'000
Profit before taxation	674		718
Tax at the UK corporation tax rate of 19% (2022: 19%)	128		136
Expenses not deductible	28		3
Tax expense for the year	156		139

 

The Finance Bill 2021 substantively enacted on 24 May 2021 included legislation increasing the UK corporation tax rate from 19% to 25% with effect from 1 April 2023.

 

 

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.

	2023		2022
	£'000		£'000
Profit after tax attributable to owners of the parent	518		579
Weighted average number of shares	'000		'000
-      Basic	39,962		39,962
-      Diluted	41,016		41,153
Basic earnings per share	1.29p		1.45p
Diluted earnings per share	1.26p		1.41p

 

10      Goodwill

Group			Goodwill
			£'000
Cost
At 1 April 2021			3,872
Additions			-
At 31 March 2022			3,872
Additions			-
At 31 March 2023			3,872
Accumulated impairment losses
At 1 April 2021			(555)
Impairment loss for the year			-
At 31 March 2022			(555)
Impairment losses for the year			(120)
At 31 March 2023			(675)
Net book value
At 1 April 2021			3,317
At 1 April 2022			3,317
At 31 March 2023			3,197

 

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 16% per annum; this is based on past performance and expected future activity.  A discount rate of 16.1% and a terminal value of 1.0% has been used.

The Growth rates for each cash generating unit is as follows. For Property 0-7% (2022: 0-7%), for Treasury 0-16% (2022: 5-6%), for Oaks 6% (2022: 9-13%)

Sensitivity analysis has been performed on the value in use calculations, holding all other variables constant to:

·    Apply a 5-10% reduction to the forecasted turnover.

·    Apply a 5-10% decrease in gross profit margins.

·    Apply an increase in the discount rate.

 

A decline in turnover of 10% would trigger an impairment in Treasury, 10% in Property and 8% in Oaks.  A decline in gross profit to 21% would trigger an impairment in Treasury, 16% in Property and 19% in Oaks.  A discount rate of 26% would trigger an impairment in Treasury, 40% in Property and 35% in Oaks. 

 

The sensitivities applied in Property and Oaks do not provide reasonable possible changes and therefore no impairment has been made.  However, an impairment has been made of £120k within Treasury due to the decline in the Education market.

 

11      Property, plant and equipment (Group)

 

Group	Right of use assets-Leasehold property	Leasehold improvement	Fixtures and fittings	Computer equipment	Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April 2021	514	27	45	173	759
Additions	-	-	-	37	37
At 31 March 2022	514	27	45	210	796
Additions	-	-	1	44	45
At 31 March 2023	514	27	46	254	841
At 1 April 2021	153	11	41	160	365
Charge for the year	88	5	3	22	118
At 31 March 2022	241	16	44	182	483
Charge for the year	88	5	2	29	124
At 31 March 2023	329	21	46	211	607
Net book value
At 1 April 2021	361	16	4	13	394
At 31 March 2022	273	11	1	28	313
At 31 March 2023	185	6	0	43	234

 

Company			Computer equipment
			£'000
Cost
At 1 April 2021			64
Additions			3
At 31 March 2022			67
Additions			15
At 31 March 2023			82
Accumulated depreciation
At 1 April 2021			64
Charge for the year			-
At 31 March 2022			64
Charge for the year			6
At 31 March 2023			70
Net book value
At 1 April 2021			-
At 31 March 2022			3
At 31 March 2023			12

12      Investment in subsidiaries

Company					Investments in subsidiaries
					£'000
Cost
At 1 April 2021					4,725
Additions					10
At 31 March 2022					4,735
Additions					12
At 31 March 2023					4,747
Accumulated impairment losses
At 1 April 2021					555
Impairment losses for the year					-
At 31 March 2022					555
Impairment losses for the year					120
At 31 March 2023					675
Net book value
At 1 April 2021					4,170
At 31 March 2022					4,180
At 31 March 2023					4,072
Details of the Company's subsidiaries at 31 March 2023 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 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.

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      Investments

	Fair Value Hierarchy	2023		2022
		£'000		£'000
Unquoted equity investments	Level 3	71		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).

14      Trade and other receivables

		Group		Group		Company		Company
		2023		2022		2023		2022
		£'000		£'000		£'000		£'000
Trade receivables		2,715		2,240		-		-
Group undertakings		-		-		195		964
Other receivables		51		35		26		10
Prepayments		102		117		15		17
Contract assets		262		201		-		-
		3,130		2,593		236		991
	Total	<30 days		30-60 days		66-90 days		>90 days
	£'000	£'000		£'000		£'000		£'000
31 March 2023	2,715	2,556		94		20		45
31 March 2022	2,240	2,182		14		23		21

 

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.

15      Trade and other payables

 

	Group		Group		Company		Company
	2023		2022		2023		2022
	£'000		£'000		£'000		£'000
Trade payables	532		510		33		11
Other payables	163		77		-		-
Amounts owed to Group undertakings	-		-		433		283
Taxes and social security costs	974		715		-		-
Accruals	357		246		228		146
Contract liabilities	473		369		-		-
	2,499		1,917		694		440

 

Of the contract liability brought forward at the start of the year £369k (2022: £297k) was recognised in revenue in the year.

16      Lease liabilities

 

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

 

		2023
		£'000
At 31 March 2022		284
Lease payments		(97)
Interest expense		8
Closing amounts as at 31 March 2023		195
Current		69
Non-current		126

 

 

17      Share capital

 

	2023		2022
	£'000		£'000
Allotted, called up and fully paid
39,961,955 (2022: 39,961,955) Ordinary shares of 5p each	1,998		1,998

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 2021	39,962	1,998	1,712	3,042
At 31 March 2022	39,962	1,998	1,712	3,042
At 31 March 2023	39,962	1,998	1,712	3,042

 

 

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

	2023		2022
Amounts recognised as distributions to equity holders	£'000		£'000
Final dividend for the year ended 31 March 2022 of 0.4p per share (2021: 0.4p)	160		160
Interim dividend for the year ended 31 March 2023 of 0.25p per share (2022: 0.2p)	100		80
	260		240
Proposed final dividend for the year ended 31 March 2023 of 0.5p per share (2022: 0.4p)	200		160

 

20      Share-based payment transactions

The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme.  The total charge in the year to 31 March 2023 arising from share-based payment transactions is £12k (2022: £8k).

 

Unapproved scheme	Number '000	Weighted average exercise price
Number of options outstanding at 1 April 2022	171	£0.35
Lapsed during period	-
Exercised during period	-
Number of options outstanding as at 31 March 2023	171
Number of options exercisable as at 31 March 2023	171

 

The exercise price of the options outstanding at 31 March 2023 is 35p.  The weighted average remaining contractual life of the options outstanding at 31 March 2023 is 2 years (2022: 3 years).

EMI scheme	Number '000	Weighted average exercise price
Number of options outstanding at 1 April 2022	1,474	£0.05
Granted during the period	931	£0.26
Lapsed during the period	(169)	£0.05
Cancelled during period	(40)	£0.26
Number of options outstanding as at 31 March 2023	2,196

 

Number of options exercisable as at 31 March 2023

1,305

 

The weighted average remaining contractual life of the options outstanding at 31 March 2023 is 5 years (2022: 3 years).

On 1 April 2022, the Company granted 930,770 options to certain employees and directors of the Group at an exercise price of 26p. The options are exercisable between 1 April 2025 and 31 March 2032. The weighted average fair value of the options at grant date was £0.0416. The fair value of the options was measured using the Black Scholes options valuation model. The inputs into that model in respect of the EMI share options were as follows:

Share price £0.26

Exercise price £0.26

Expected volatility 20.81%

Expected option life 10 years

Risk-free rate 1.3%

 

21      Related party disclosures

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

Dividends totalling £76k (2022: £70k) were paid in the year in respect of Ordinary Shares held by the Company's directors.

At 31 March 2023, the balance owed to Richard Wollenberg for services as a non-executive director was £8k (2022: £4k).

Amounts paid to Derek Joseph for consultancy services £17k (2022: £23k).

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 only deposits cash with banks that have an A rating. The Group holds cash in current and treasury reserve accounts.  The sums held in treasury reserve are on less than six-month terms, the Group has access to this cash should it be required at short notice.

The Group considers its credit risk to be low.  Of the total trade receivables at the 2023 year-end £729k (2022: £258k) 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 £2,405K (2022: £2,193k) at the year-end.

Trade payables are all less than 30days.

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 events

There are no post balance sheet events.

 

 

 

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 26 July 2023 at 12:00 midday, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 6 will be proposed as ordinary resolutions and resolutions 7 and 8 will be proposed as  special resolutions. Resolutions 6 to 8 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 2023.

 

2.   To approve the remuneration report for the period ended 31 March 2023.

 

3.   To approve the revised remuneration policy applicable for the period commencing 01 April 2023 as set out in the annual report and financial statements.

 

4.   That, following a recommendation by the directors, a final dividend payment of 0.5p per Ordinary Share shall be paid to those persons who were named on the register of shareholders on 14 July 2023.

 

5.   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.

 

Special business

 

6.   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:

 

6.1       £73,825 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

 

6.2       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 6.1 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.

 

7.   That, subject to resolution 6 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 6 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:

7.1       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;

 

7.2       in connection with the valid exercise of Options;

 

7.3       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

 

7.4       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.

 

8.   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:

 

8.1       the maximum aggregate number of Ordinary Shares that may be purchased is 3,996,196;

 

8.2       the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is £0.05;

 

8.3       the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of:

 

8.3.1    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

8.3.2    the value of an Ordinary Share calculated on the basis of the higher of the price quoted for:

8.3.3    the last independent trade of; and

8.3.4    the highest current independent bid for any number of Ordinary Shares on the Official List.

 

8.4       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:                                                                             By order of the board

Tempus Wharf                                                                                    Claire Banks

29a Bermondsey Wall West                                                               Company Secretary

London

SE16 4SA                                                                                           30 June 2023

 

Notes

 

1.          A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on his/her behalf at the meeting.  A proxy need not be a member of the company.

 

2.          You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share.  To appoint more than one proxy you may photocopy the form of proxy.  Please indicate the proxy holder's name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given.  All forms must be signed and should be returned together in the same envelope.

 

3.          A form of proxy accompanies this notice. Forms of proxy, to be valid, must be delivered to the company's registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD in accordance with the instructions printed thereon, not less than 48 hours before the time 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 29 June 2023 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 29 June 2023 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.

 

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.  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 their 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.