For immediate release

27 November 2023

Aquila Services Group plc

Unaudited Interim Results for the six months ended 30 September 2023

Aquila Services Group plc (''the Company''), is the holding company for Altair Consultancy and Advisory Services Ltd (''Altair''), Aquila Treasury and Finance Solutions Ltd ("ATFS") and Oaks Consultancy Ltd ("Oaks") which form the Group (''the Group'').

The Group works in the UK and internationally. Its expertise is in the provision, financing and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations, high level business advice to the property sector and support for organisations including multi-academy education trusts and sports foundations working in communities to improve health and well-being opportunities.

Results Highlights

*Underlying operating profit is calculated by adjusting the reported pre-tax profit for share-based payment charges and impairment of goodwill.

Dividend

The directors propose an interim dividend of 0.25p (2022: 0.25p).  This will be paid on 20 December 2023 to shareholders on the register at 8 December 2023.

A copy of the interim results will be available from the Company's website: https://aquilaservicesgroup.co.uk/investor-information

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

For further information please visit www.aquilaservicesgroup.co.uk or contact:

Aquila Services Group plc

Claire Banks

Claire.banks@aquilaservicesgrp.co.uk

Group Finance Director and Company Secretary

Tel: 020 7934 0175

Beaumont Cornish Limited, Financial Adviser

Roland Cornish / Asia Szusciak

corpfin@b-cornish.co.uk

Tel: 020 7628 3396

Chair's statement

Dear Shareholder,

I am pleased to present the half-yearly report and the interim results for the six months to 30 September 2023.

Aquila Services Group plc ("the Company") is the holding company for Altair Consultancy & Advisory Services Ltd ("Altair"), Aquila Treasury and Financial Solutions Ltd ("ATFS") and Oaks Consultancy Ltd ("Oaks") which form the Group ("the Group").

The group is an independent consultancy specializing in the provision, financing, and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations. The Group also provides high level business advice to the commercial property sector and support for organisations including multi-academy education trusts, charities and sports foundations, working in communities to improve health and well-being opportunities.

The prospect for the half year was for the business to continue the growth achieved in the second half of the financial year ended 31 March 2023. Demand for the majority of our services in many of the sectors in which we operate has continued at a high level although the wait for government to set effective procedures for education to access capital allocations continues.

However, a number of factors have impacted on the profitability and to a lesser extent turnover in the first six months.

As mentioned at the year end, 'wage inflation and skills shortages are still a significant upward pressure on our cost base'. We have, like the majority of businesses, had to respond to these pressures and with the cost of living crisis continuing, the pressure on salaries has increased and these additional costs, as well as costs of recruitment and training, have reduced profitability in the first 6 months of this financial year.

Our consultants, particularly those with specific skills, are in high demand in the sector. This has led to pressures on retention and additional costs of recruitment and training.  There is an interregnum before the new recruits are able to support the level of expertise required by our clients. We are beginning to see these pressures ease as the general recruitment market as well as the cost of living become less challenging. It is our expectation that it will be the next financial year before we can return to a position where there is stability between demand for our services and the resources that we have available.

The pressures on the property market and in particular the cross-subsidy provided to new affordable housing has impacted on our clients. To compensate, our development team have changed emphasis with consultants assisting with investment in existing housing stock with both turnover and profitability being affected during this transition.

The planned restructuring and investment in Oaks has taken longer than expected partially due to the difficulties experienced in the recruitment market. The restructuring is now largely completed but represented a significant additional cost in the first six months.

Looking forward we are now better positioned and resourced to meet the demands of a challenging market. New opportunities for the Group's services are emerging, particularly with our international work, and proposals for more diverse growth in both social and affordable housing. We do not expect that profitability in the second half will compensate for the shortfall in the first half but we confidently expect an improving position.

We are still conscious of the impact of the costs of having a full market quote on the London Stock Exchange and are continuing to examine ways the impact can be reduced with benefit to shareholders.

Turnover for the 6 months was £5,923k (£5,874k 6 months to September 2022; £12,249k 12 months to March 2023) and profit before tax, share option charges and impairment of goodwill of £99k (£308k September 2022, £806k March 2023).

The Group continues to have a strong balance sheet with no debt.  As at  30 September 2023 net current assets were £2,856k (30 September 2022 £2,715k and 31 March 2023 £3,036k).

We are confident of achieving a significant profit for the full year and will therefore maintain the interim dividend at the previous level.  The final dividend will be reviewed once we know the outcome for the full year. The interim dividend for the 6 months ended 30 September 2023 to be paid on 20 December 2023 to those shareholders on the register at 8 December 2023 will be 0.25p, (30 September 2022: 0.25p, 31 March 2023 0.5p).

We remain committed to the services that the Group offers to organisations and agencies working to provide the essential services that enhance the life opportunities of their communities. In an increasingly troubled world, finding the resources to maintain these objectives is the challenge, both to government and the many different sectors that make up our civil society. Our role in helping clients construct funding and delivery mechanisms to achieve these objectives is important. As always it is only from the commitment and expertise of all our staff that we can achieve these objectives. On behalf of the board we thank them for their efforts.

I look forward to reporting progress at the year end.

Derek Joseph - Chair

24 November 2023

The Management of the Group are pleased to present their report for the period ended 30 September 2023.

Aquila at a Glance

The Group continues to implement its business strategy to encompass all the professional consultancy services that the Group's client base demands. The Group now provides advice and support across the affordable housing, regeneration, sport, charity and education sectors.  Its purpose is to assist organisations that benefit local communities such as housing associations, local authorities, government agencies, multi-academy trusts, charities, other non-profit organisations and those set up for community benefit, as well as providing related high-level business advice to the commercial property sector. 

Business performance and position

Altair Consultancy and Advisory Services Ltd ("Altair")

Altair is a specialist management consultancy company that works with organisations that govern, manage, regulate or build housing. Operating within the UK and Europe, its international client base is increasing with continuing and new contracts in Africa and investment in expansion into Asia. 

The services that Altair offers cover housing development and regeneration, property asset management, health and safety compliance and building safety advice, strategic financial advice, governance and risk management, executive and non-executive recruitment. Our digital, transformation and people services and our technical asset team are areas of continued significant investment and growth.

Clients contract with Altair on a fixed-fee basis, through retained contracts in our finance, governance and transformation business streams, and placements for members of the property team, and increasingly for our transformation team, at client sites.

Both the consulting and property businesses have seen income remain in-line with expectations this half year. Profitability has been affected by the cost-of-living crisis, recruitment and retention and the investment in our new service lines, Commercial and Procurement and Sustainability.

The impact of the macro-economic environment was most keenly felt within our property business, clients have begun to reduce their investment in new housing development and increase investment in their current housing stock. To mitigate this, where possible, colleagues are being redeployed into the technical and asset management teams which have an increasing workload.

The business is seeing opportunity on the work clients are undertaking in preparation for the implementation of the various new Bills that have gained Royal Assent in the last six months, specifically the new consumer regulations due to come into force in April 2024.

Aquila Treasury and Financial Solutions Ltd ("ATFS")

ATFS is a specialist treasury management consultancy authorised and regulated by the Financial Conduct Authority that operates across the UK and Europe. It provides advice on treasury policy and strategy, debt and capital market finance, banking and card merchant services, value for money, and financial market information services to local authorities, charities, housing associations, education bodies, private sector housing providers and government bodies.

Work is delivered through fixed price contracts as retained general treasury advisers and information subscription agreements. Specific advisory project contracts are on a fixed fee basis, won through competitive procurement tenders, payable on agreed project milestones.

The changes in personnel within ATFS last year has meant that the business has stabilised and, although the issues within education procurement continues, the treasury advice into the housing and international markets has seen an increase in the half year. This is expected to improve in the next half.

Oaks Consultancy Limited ("Oaks")

Oaks is a specialist sports, charity, statutory and education consultancy operating within the UK and Europe with an increasing international presence. Oaks' clients include national and international sports teams and governing bodies, national and international charities, statutory organisations and local authorities, multi academy trusts and teaching school alliances, housing associations and corporate businesses.

Oaks provides consultancy advice and guidance on strategy and business planning, organisational and cultural change programmes, impact measurement, together with implementation support in relation to income generation and diversification. Contracts are delivered through a mix of fixed-fee projects and retained contracts for general advisory services.

The agreed investment in Oaks was slower than anticipated and this has affected the results this half year. With two of the three planned sector leads now in-place the expectations are that the results in the second half will recover, although not to budgeted levels.  

Investments

The Group continues to hold a 5.3% equity stake in AssetCore, a company building a financial debt management platform for the affordable housing sector.

Group-wide initiatives

ESG Group

The purpose of the ESG Group is to focus on the Environment, Social and Governance (ESG) agenda and to drive the agenda across the Group and its subsidiaries.  This includes driving Aquila's approach to being a climate conscious organisation. During the year the Group retained its Carbon Neutral Plus status and to ensure all employees are treated fairly.  The Group commit to training all employees on the importance of having an inclusive workforce.

Further information about, and activities within the groups, is available on the website.

Outlook

The outlook for the second half is positive. The housing and international markets continue to provide opportunities for the Group and the investment in the Sports, Chairty and Education sector should see an increase in contracts in the next period.

Retention and recruitment continue to be one of the major risks and there is a sharp focus on this by the leadership teams of each business within the Group. In addition, the Group remains focused on improving margins whilst retaining turnover growth.

Going concern basis

The Board updates its three-year business plan annually. This includes a review of the Company's cash flows and other key financial ratios over the period. These metrics are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast, both individually and in unison.  Where appropriate, this analysis is carried out to evaluate the potential impact of the Company's principal risks. The three-year review also makes certain assumptions about the normal level of capital investment likely to occur and considers whether additional financing facilities will be required.

The Group does not have any bank debt and remains in a strong cash position with balances at the end of September 2023 at £1.65m and net current assets at £2.86m.

The Directors continue to review the forecasts on a monthly basis applying stress tests to the reforecasts to ensure viability of the outputs. The Group continue to monitor cash balances, debtors and cash generation on a daily basis. Based on the results of these analyses, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due in the next twelve months and over the three-year period of their assessment.

Risks and uncertainties

The key risks and uncertainties relating to the Group's operations remain largely consistent with those disclosed in the Group's Annual Report and Accounts for the year ended 31 March 2023. These are listed below:

·    Financial risk

·    Unfavourable economic conditions and/or changes to government policy

·    Competition

·    Staff skills, retention, recruitment and succession

·    Data governance

The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial requirements and maintains good relationships with its clients, principal contacts within government, regulators and other key influencers within the sector.  The Group is well placed to provide the full range of services needed by its clients as the external environment changes.

A detailed explanation of the risks relevant to the Group is on Page 20 of the Annual Report and Accounts for the year ended 31 March 2023 and is available on the Company's website at www.aquilaservicesgroup.co.uk.

Fiona Underwood - Executive Director

24 November 2023

Responsibility Statement

The Directors, whose names and functions are set out at the end of this report, are responsible for preparing the Unaudited Interim Condensed Consolidated Financial Statements in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority ("DTR") and with International Accounting Standard 34 on Interim Financial reporting ("IAS 34").  The Directors confirm that, to the best of their knowledge,

(a)          this Unaudited Interim Condensed Consolidated Report, which has been prepared in accordance with UK-adopted International Accounting Standard 34 gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

(b)          the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:

§ an indication of key events occurred during the period and their impact on the Unaudited Interim Condensed Consolidated Financial Statements and a description of the principal risks and uncertainties for the second half of the financial year; and

§ material related party transactions that have taken place during the period and that have materially affected the financial position or the performance of the business during that period.

Remuneration of Directors and key management personnel

The remuneration of the key management personnel of the Group, including all directors of subsidiary companies, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

Claire Banks - Group Finance Director

24 November 2023

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2023

Condensed Consolidated Statement of Financial Position

As at 30 September 2023