Annual Report • Mar 31, 2017
Annual Report
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Company Registration No. 08988813 (England and Wales)
Annual report and financial statements for the year ended 31 March 2017
| Page | |
|---|---|
| Directors and Advisers | 1 |
| Chairman's Statement | 2 |
| Strategic Report | 5 |
| Directors' Report | 11 |
| Corporate Governance Statement | 15 |
| Directors' Remuneration Report | 18 |
| Statement of Directors' Responsibilities | 24 |
| Independent Auditors' Report to the Members | 26 |
| Consolidated Statement of Comprehensive Income | 28 |
| Consolidated and Company Statements of Financial Position | 29 |
| Consolidated Statement of Changes in Equity | 30 |
| Company Statement of Changes in Equity | 31 |
| Consolidated Statement of Cash Flows | 32 |
| Company Statement of Cash Flows | 33 |
| Notes to the Financial Statements | 34 |
| Notice of Annual General Meeting | 57 |
| Directors | Jeffrey C Zitron Derek M Joseph Dr Fiona M Underwood Steven F Douglas Susan M Kane J Richard Wollenberg |
Chairman Non-Executive Director Joint Chief Executive Joint Chief Executive Finance Director Non-Executive Director |
|---|---|---|
| Company Secretary | Dr Fiona M Underwood | |
| Registered office | Tempus Wharf 29A Bermondsey Wall West London SE16 4SA |
|
| Independent Auditors | Saffery Champness LLP 71 Queen Victoria Street London EC4V 4BE |
|
| Corporate Advisor | Beaumont Cornish Limited nd Floor Bowman House 2 29 Wilson Street London EC2M 2SJ |
|
| Bankers | National Westminster Bank plc 50 High Street Egham Surrey TW20 9EU |
|
| Registrars | Neville Registrars Neville House 18 Laurel Lane Halesowen B63 3DA |
|
| Company Number | 08988813 | |
| Company website | www.aquilaservicesgroup.co.uk. |
Dear Shareholder,
I am pleased to present the annual report and the Financial Statements for the year to 31 March 2017.
Aquila Services Group plc (''the Company''), previously General Industries plc, is the holding company for Altair Consultancy & Advisory Services Ltd (''Altair'') and Murja Ltd ("Murja") which form the Group (''the Group'').
The Group provides financing and management consultancy advice on all aspects of affordable housing across the United Kingdom and Republic of Ireland to housing associations, local authorities, government agencies and other non-profit organisations as well as high level business advice to the property sector.
The Group's strategy is to expand the range of professional services either through organic growth or acquisition to offer clients a 'one stop shop' for all their higher-level support requirements.
Altair is a specialist management consultancy providing professional services to local authorities, housing associations, charities, property companies, regulators and government departments. The consultancy covers the whole of the United Kingdom and in the year under review has focused on expanding into the Republic of Ireland and increasing its client base in the Midlands and North of England. This year Altair has undertaken its first consulting assignment in Africa. Altair advises on all aspects of the development and management of affordable housing for rent and sale, and on the effective management of organisations operating in this sector.
Murja is a specialist treasury management consultancy authorised and regulated by the Financial Conduct Authority. Murja advises local authorities, housing associations, colleges and other bodies on their capital funding requirements and supports them in securing debt finance. The business operates through both retained contracts with a significant number of clients and one-off specific projects which result in additional fees being generated when projects are complete.
During the year under review, the Group continued to grow both its capacity and its client-base; expanding and strengthening its consultancy capacity through the recruitment of high-calibre individuals to support the national coverage and increased product offering. The Group has developed a series of new products and services and this has provided opportunities to successfully bid for larger, and more complex, contracts.
Brexit, change in political leadership, the wider global economic uncertainty, and the recent General Election all cause uncertainty for our clients. This coupled with changes in government policy, regulation, devolution, the ever-changing funding environment, and exposure to the wider residential property market affect the clients of both subsidiaries. Changes and challenges on this scale lead to an increase in the demand for high quality consultancy advice as clients look to find ways of using resources – money, people and technology – more effectively and efficiently.
Alongside this, the public, regulators and government expect ever improving performance and quality from the Group's clients. The track record of the company's subsidiaries show that they are well placed to provide the support services and therefore the trading conditions required by our clients.
During the period of review, we have successfully partnered with 3C, a specialist IT consultancy company to increase our offering to the sector.
For the year to 31 March 2017, Group turnover rose to £5.928m, an increase of 25% over the year. Altair's consultancy and interim management business contributed £5.456m (2016: £4.628m) and Murja's £0.472m (2016: £0.118m).
Gross profit rose to £1,475k (2016: £1,288k) with operating profit, before share option charges, of £658k (2016: £545k). Operating profit took into account investment in new staff for Altair and Murja to meet growing demand, particularly, in the North of England, Midlands and Scotland. Profit after tax, attributable to shareholders, was £404k (2016: £167k1 ) and earnings per share was 1.24p (2016: 0.61p2 ).
The comparison between this reporting period, the mid-year results and the previous year's results for the Group are as follows:
| Year ended 31 | 6 months to 30 | Year ended 31 | |
|---|---|---|---|
| March 2017 | September 2016 | March 2016 | |
| (audited) | (unaudited) | (audited) | |
| £000s | £000s | £000s | |
| Turnover | 5,928 | 2,796 | 4,746 |
| Gross profit | 1,475 | 673 | 1,288 |
| Operating profit (before share option charge) |
658 | 307 | 545 |
| Share option charge | 148 | 68 | 255 |
| Operating profit (after share option charge) | 510 | 239 | 290 |
The Group has a strong balance sheet with over £2.3m in cash deposits as at 31 March 2017.
The directors propose a final dividend of 0.50p per share (2016: 0.44p), making a total dividend for the year of 0.74p per share (2016: 0.66p), an increase of 12% compared to 2016. This will be payable on 4 August 2017 to shareholders on the register at 21 July 2017.
The outlook for the Group remains positive. The affordable housing sector is a key market for the Group and the continued political pressure to deliver more homes coupled with the recent move from the government to include affordable rent within its previous sales only 'Affordable Housing Funding Programme' will enable the Group's clients to increase their delivery of new homes.
1 Adjusted Profit after Tax to exclude deemed cost of listing
2 Adjusted Earnings per share to exclude deemed cost of listing
The Housing and Planning Act 2016 has meant changes for our clients within the housing sector, although some expected policy changes have not yet come into force due to delays caused by the Referendum and the subsequent changes within the government. There will now be further delays as a result of the early General Election.
However, changes to the regulation for the housing sector in England are moving forward with the separation of the Homes and Communities Agency into two bodies: Regulation and Homes England (the investment arm) plus amendments to regulation to ensure that housing organisations are no longer classified as public bodies. These changes will translate into opportunities for the Group to increase its revenues and profitability by offering an increased range of funding advice and consultancy services.
The task for our clients will be to help the government make the case for continued support and investment in housing solutions. With the government's focus on Brexit, it is even more important that the housing sector has a coherent and well-articulated offer.
The Group will continue to work with housing providers of all types, including housing associations, local authorities, house builders and private sector providers. We will support their growth, helping them change to improve and supporting their resilience to the current and future operating environment. This coupled with our constant engagement with the policy landscape ensures that we are able to provide credible, innovative and practical solutions to our client needs.
The increasing profile of public and political debate around the funding of care and support services will also provide opportunities as well as threats for a number of our clients; we will be developing our services to provide support in this area.
We continue to investigate acquisitions and other opportunities to increase the scope and depth of the business.
May I take the opportunity to record my thanks to my fellow directors, executive team and staff of the Group. As a people-business, the Group is dependent on their enormous commitment and expertise. I look forward to reporting further progress as part of the half year results.
Jeffrey Zitron - Chairman 28 June 2017
Aquila Services Group plc (''the Company'') comprises two subsidiaries, Altair Consultancy and Advisory Services Limited ("Altair") and Murja Limited ("Murja").
Altair provides support services to enable other organisations to carry out their activities in a more efficient manner. It helps manage complex and diverse organisations through periods of significant change, driving service improvement and delivering creative solutions. Altair's traditional client base includes housing associations, charities and local authorities, although the client base also includes government departments, statutory bodies, financial institutions and other private commercial institutions.
Within the housing sector, Altair provides a broad range of advisory and consultancy services to its clients covering areas such as general management, high level executive recruitment, corporate governance, financial planning, management strategy, organisational improvement and training. We also have strong relationships with the English Regulator (the Homes and Communities Agency), Greater London Authority, Welsh Government, the Scottish Regulator, the Irish Housing Regulator and the Irish Council for Social Housing. Altair's services also cover the application of government strategies to increase the supply of affordable housing both for rent and home ownership as well as local government initiatives encouraging the transfer of public sector housing to independent vehicles. We have recently completed our first advisory assignment in Africa.
Murja specialises in providing advice to organisations principally involved in the affordable housing and education sectors in respect of debt and interest rate risk. With changes to Government policy, there is a strong and growing market for the provision of specialist treasury services to local authorities, housing associations and charities operating in the provision of affordable housing, market rent and low-cost home ownership initiatives. Housing associations and local authorities are seeking more complex legal and financial structures for both, particularly with the involvement of house builders and developers in joint ventures. The complementary services and products offered by Altair to the sector provides a significant opportunity for growth.
The strategy and objectives of the Group are:
▪ To continue exploring the opportunities that are occurring as a result of the Group's expertise in overseas markets
The year under review has achieved the following financial results.
The Group saw a 25% increase in turnover on 2016, reflecting continued growth in Altair's housing consultancy and interim management business and the successful embedding of Murja within the Group. Gross profit from the consultancy, interim management and treasury business rose by over £187k, with margins at 25%. Altair has made a substantial investment in staff over the last two years in anticipation of future growth; (after allowing for both the additional staff investment mentioned and the charge in respect of staff options) the Board anticipates that this investment will aid future profit growth. The Group is in a very strong net asset position, with over £2.3m in cash held at 31 March 2017.
The underlying business remains strong and there has been continued growth of the client base in the consultancy business outside of London and the South East. We have seen an increase in cross-company opportunities between Altair and Murja, being able to offer consulting and treasury advice to our clients both in the United Kingdom and Ireland. We have undertaken our first consultancy assignment in Africa and are hoping that this will lead to further opportunities. Our focus on the policy environment has provided Altair with the opportunity to research and publish our findings on a variety of topics; Future gazing, Innovation – the brave new world (in collaboration with the National Housing Federation), and working with the Chartered Institute of Housing and a recently merged housing association (VIVID), we are developing a practical guide to how councils and housing associations can work better together which will be published in the Autumn of 2017. We are also working with three housing organisations to deliver a leadership programme to support aspiring leaders from BME backgrounds. We will continue to seek out research opportunities to help inform the decision makers throughout the sector and government.
In the first six months of the year, Altair invested in and expanded its consultancy capacity through recruitment of new consultants focusing on increasing its national coverage and developing new products and services to reflect the changing operational and political environment of our clients. This investment has provided opportunities to bid for larger contracts and, as a consequence, has extended the consultancy pipeline. This has been aided by our partnership with 3C, a specialist IT consultancy company, and our investment in 'lean expertise' to strengthen our innovative Organisational Excellence product. Altair has also provided Human Resource and Personnel services to clients through retained contracts during the year. The core consultancy and interim business remains strong and the client base continues to grow in number and range.
Murja has similarly expanded its specialist treasury management services. A significant number of clients are on retained contracts and additional fees are secured once specific projects have been completed. During the year under review, a number of these specific projects have commenced with fees expected to accrue during the next twelve months.
The comparison between this reporting year, the mid-year results and the last reporting year are set out below:
| Year ended 31 March 2017 (audited) £000s |
6 months to 30 September 2016 (unaudited) £000s |
Year ended 31 March 2016 (audited) £000s |
|
|---|---|---|---|
| Turnover | 5,928 | 2,796 | 4,746 |
| Gross profit | 1,475 | 673 | 1,288 |
| Operating Profit | 510 | 307 | 290 |
Operating profit includes share option charge as follows:
| Share option charge | 148 | 68 | 255 |
|---|---|---|---|
| --------------------- | ----- | ---- | ----- |
The Group hasn't identified any post balance sheet events, as set out in note 27 to the Financial Statements.
The changes in the political and economic environment, the Referendum resulting in the uncertainty of the Brexit negotiations, the change in leadership of the Conservative Party, the newly elected President of the USA, and the General Election have and will continue to be a catalyst for change with our clients and all provide opportunities for the future. The Group anticipates that it will continue to expand organically through recruitment to assist the delivery of projects nationwide.
The Group will also continue to look at opportunities to expand its consultancy base through acquisition to offer an increased scope of services and products to our clients.
The Group monitors its key performance indicators (KPI's) regularly and these are set out below:
| Revenue 5,928,201 |
Gross profit 1,474,735 |
Earnings per share 1.24p |
|---|---|---|
| 4,746,144 | 1,287,612 | 0.61p3 |
| Number of clients |
New clients (%) |
Client retention rate (%) 64 |
| 194 | 68 | |
| 212 | 72 40 |
3 Adjusted Earnings per share to exclude deemed cost of listing
The principal risks currently faced by the Group are:
The main financial risks arising from the Group activities are credit risk, foreign currency risk and interest rate risk details of which can be found in Note 26 to the Financial Statements.
The Group's operating results and its financial condition may be negatively affected by a downturn in the general economic climate within the UK which consequently may have adverse effect upon government policy and spending, and private sector investments.
A reduced level of economic activity will restrict the amount of outsourcing by companies, local authorities or other bodies and result in the restriction of funding available for the purchase of such services leading to a decline in the number of firms in the sector and their profitability.
The continuing Brexit negotiations could lead to a period of uncertainty and may delay the implementation of government policy pertaining to housing. This may cause clients to review their spending with consultancy providers and lead to a reduction in projects.
The Group's future revenues and profitability will be dependent on the current UK Government's policy with regard to expenditure on service and social housing improvements and to public expenditure levels in general. The introduction of policies to restrict the income for housing providers is a risk that the Group is monitoring closely.
The UK Government and local authorities may decide in future to change their programmes and priorities including reducing present or future spending and investment where the Group would expect to compete for work.
The contracts and procurement arrangements under which companies operating in these sectors compete for new business can lead to a higher cost of procuring new contracts and the possibility of not meeting fully the terms of contracts leading to reduced margins.
The success of the Group is dependent on retaining, developing, motivating and communicating with senior management and personnel and as the business grows on recruiting appropriately skilled, competent people at all levels. The shortages in the availability of appropriately skilled personnel may have a negative effect on the Group. The Directors of the subsidiaries are expected to contribute to its ability to obtain, generate and manage opportunities.
If the Group cannot successfully attract, retain and motivate such personnel, it may not be able to maintain standards of service or continue to grow its businesses as anticipated. The loss of such personnel, or the inability to attract, retain, motivate and communicate with additional skilled employees required for their activities within an affordable cost base, could have an adverse effect on the Group's business and prospects.
The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial changes and maintains good relationships with its 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 housing providers as the external environment changes and the outlook for the business continues to be positive. A continued understanding of its position in the market and delivering value for money to clients will ensure that services and products remain competitive. In addition, the Group will ensure that its people policies are refreshed and follow good practice so that it can continue to attract and retain excellent staff.
A split of our employees and directors by gender as at the end of the year is shown below:
| Male | Female | |
|---|---|---|
| Directors of the Company | 4 | 2 |
| Directors of subsidiary companies not included in above | 3 | 0 |
| Employees in other senior management positions |
1 | 6 |
| Total senior managers other than directors of the Company | 4 | 6 |
| Other employees of the Group | 7 | 11 |
| Total employees of the Group | 15 | 19 |
The Group consults with its employees on a regular basis through direct updates and conducts an annual review of staff; results are reviewed and discussed by the Directors and an action plan agreed and discussed with all staff. The Group invests in training and developing its employees through both internal and external courses.
The Group follows the legislative requirements set out in the Equality Act 2010 which covers all aspects of equality and diversity, replacing previous legislation covering equal pay, sex, race and disability discrimination. The Group gives due consideration to all applications and provides training and the opportunity for career development wherever possible. The Board is also mindful of the Human Rights Act 1998.
We understand and effectively manage the actual and potential impact of our activities. The Group's operations are conducted such that compliance is maintained with legal requirements relating to the environment.
The Group recognises that we have a responsibility to ensure the impact of our business is positive, and that we are good corporate citizens.
We are committed to honesty and transparency in our communication with staff, external stakeholders, and customers.
We treat all those we work with equally, and do not discriminate on the basis of age, gender, sexuality, disability, ethnicity, or any other protected characteristic.
During the year, we continued our commitment to supporting a vibrant and inclusive leadership within the housing sector. In response to a Chartered Institute of Housing challenge to the sector to support the talent that is not coming through. Altair, L&Q, AmicusHorizon and the BME London Group of Housing Associations, in partnership with Roffey Park Business school, have joined forces to develop a leadership programme – Leadership 2025. This programme will help guide senior BME leaders in housing to navigate the glass maze of executive leadership and become the sector influencers of the future. We have matched the £54,000 initial investment from our partners with £10,000 of our own resources, including Partner time and project management input. The programme is set to launch in October 2017.
The Board updates its three-year business plan annually which 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 actually occurring. 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.
Based on the results of this analysis, the directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment, and thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Susan Kane – Finance Director
28 June 2017
The Directors present their report and consolidated financial statements for the year ended 31 March 2017.
Aquila Services Group plc is incorporated as a public limited company, and is registered in England and Wales with the registered number 08988813. Details of the Company's issued share capital, together with the details of the movements during the year are shown in note 17. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
The principal activities of the Group are the provision of specialist housing and treasury management consultancy services. The principal activity of the Company is that of a holding company which manages the Group's strategic direction.
The results for the Group for the year ended 31 March 2017 are set out from page 28.
The directors recommend a final dividend of 0.50p per Ordinary share to be paid on 4 August 2017 to shareholders on the register at 21 July 2017 which, together with the interim dividend of 0.24p paid on 19 December 2016, makes a total of 0.74p for the year.
The following served as directors of the Company during the period or thereafter:
| Jeffrey Zitron | Chairman | |
|---|---|---|
| Steven Douglas | Joint Chief Executive | |
| Fiona Underwood | Joint Chief Executive and Company Secretary | |
| Susan Kane | Finance Director | (appointed 27/06/16) |
| Richard Wollenberg | Non-Executive director | |
| Derek Joseph4 | Non-Executive Director | |
| Richard Murphy | Executive Director | (resigned 21/07/16) |
4 Derek Joseph was finance director up until 27 June 2016
As at 31 March 2017, the Company was aware of the following notifiable interests in its voting rights:
| Number of | Percentage of | Nature of | |
|---|---|---|---|
| Ordinary shares | Voting rights | holding | |
| Richard Wollenberg* | 3,808,406 | 11.7% | Direct |
| Steven Douglas | 3,279,440 | 10.0% | Direct |
| Chris Wood | 3,279,440 | 10.0% | Direct |
| Susan Kane | 3,279,440 | 10.0% | Direct |
| Fiona Underwood** | 3,279,440 | 10.0% | Direct |
| Derek Joseph | 2,870,403 | 8.8% | Direct |
| Jeffrey Zitron | 2,798,403 | 8.6% | Direct |
| Cardiff Property plc*** | 1,000,000 | 3.1% | Direct |
*Includes shares held by immediate family members of Richard Wollenberg
**Fiona Underwood's shares are held in a nominee account at Old Mutual plc
***Richard Wollenberg holds 44.17% of the issued share capital and voting rights of Cardiff Property plc.
The Company is not aware of any changes to the above holdings between 31 March 2017 and the date of this report.
The Directors report incorporates the Corporate Governance Statement set out on pages 15 to 17.
Subject to the Company's Articles of Association, UK legislation and any directions given by special resolution, the business of the Company is managed by the Board of directors. Details of the matters reserved for the Board can be found in the Corporate Governance Statement on pages 15 to 17.
Post balance sheet events are disclosed in note 27.
The Group / Company made no political donations during the period.
The Group / Company is compliant with the Data Protection Act 1998. It is preparing for the introduction of the General Data Protection Regulations in May 2018 by following the Information Commissioner's 12 step process and is starting this process with an information audit in July 2017.
The Group / Company has as yet minimal greenhouse gas emissions to report from the operations of the Company and its subsidiaries and does not have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2014.
Saffery Champness LLP have expressed their willingness to remain in office as Auditor and, in accordance with section 489 of the Companies Act 2006, a resolution that Saffery Champness LLP be re-appointed will be proposed at the Annual General Meeting.
are payable during the period under review.
The following table provides references to where the relevant information required by listing rule 9.8.4R is disclosed:
| Details of long term incentive schemes as required by Listing Rule 9.4.3R |
see Directors' Remuneration Report |
|---|---|
| Details of any arrangement under which a director of the Company has waived emoluments from the Company |
No such waivers |
| Details of any allotment for cash of equity securities made during the period otherwise than to the holders of such equity shares in proportion to their holdings of such equity shares and which has not been specifically authorised by the Company's shareholders |
Note 17 on page 52 |
| Details of any contract of significance subsisting during the period to which the Company, or one of its subsidiary undertakings, is a party and in which a director of the Company is or was materially interested. |
No such contracts |
| Details of any contract of significance subsisting during the period between the Company, one of its subsidiary undertakings, and a controlling shareholder. |
No such contracts |
| Details of contracts for the provision of services to the Company or any of its subsidiary undertakings by the controlling shareholder. |
No such contracts |
| Details of any arrangement under which a shareholder has waived or agreed to waive any dividends, where a shareholder has agreed to waive future dividends, details of such waiver together with those relating to dividends which |
No such waivers |
The Directors who held office at the date of approval of the Report of the Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Group's Auditor is unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Group's Auditor is aware of that information.
Susan Kane – Finance Director By order of the Board 28 June 2017
The Corporate Governance Statement forms part of the Directors' Report.
The Board is committed to maintaining appropriate standards of corporate governance. The statement below, together with the report on directors' remuneration on pages 18 to 23, explains how the company has observed principles set out in The UK Corporate Governance Code ("the Code") as relevant to the company and contains the information required by section 7 of the UK Listing Authority's Disclosure Rules and Transparency Rules. For details of the code please refer to https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-2014.pdf
Given the current size and resources of the Group, the Company has decided not to apply the Code provisions in full. A copy of the Company's corporate governance practices is available on the Company's website www. aquilaservicesgroup.co.uk.
The Board currently consists of three independent non-executive directors and three executive directors. The Board determines that Jeffrey Zitron, Derek Joseph (after resigning his role as Finance Director) and Richard Wollenberg to be independent Non-Executive Directors; its assessment is based on the fact that Jeffrey Zitron, Derek Joseph and Richard Wollenberg do not receive any additional benefits from the Group.
The Board meets regularly with senior staff throughout the year to discuss areas of operational performance, trading outlook and growth opportunities. The Board met ten times during the year.
Financial controls have been established so as to provide safeguards against unauthorised use or disposition of the assets, to maintain proper accounting records and to provide reliable financial information for internal use. Key financial controls include:
The directors consider the size of the Group and the close involvement of executive directors in the day-to-day operations makes the maintenance of an internal audit function unnecessary. The directors will continue to monitor this situation.
The Group has three committees; Audit, Remuneration and Nominations with membership of:
| Audit | Remuneration | Nominations | |
|---|---|---|---|
| Committee | Committee | Committee | |
| Jeffrey Zitron | | * | * |
| Richard Wollenberg | * | | |
| Derek Joseph | | | |
| Fiona Underwood | | ||
| Steven Douglas | | ||
| *Committee Chairman |
The audit committee, which is chaired by Richard Wollenberg, comprises all three of the independent non-executive directors, and the Company Secretary. The Board is satisfied that Richard Wollenberg has recent and relevant financial experience to guide the committee in its deliberations.
The primary responsibilities of the Audit Committee are:
The committee will meet with the external auditor at least twice a year to consider the results, internal procedures and controls, and matters raised by the auditor. The audit committee considers auditor independence and objectivity and the effectiveness of the audit process. It also considers the nature and extent of the non-audit services supplied by the auditor reviewing the ratio of audit to non-audit fees. It is a specific responsibility of the audit committee to ensure that an appropriate relationship is maintained between the company and its external auditor. The company has a policy of controlling the provision of non-audit services by the external auditor in order that their objectivity and independence are safeguarded. This control is exercised by ensuring non-audit projects where fees are expected to exceed £5,000 are subject to the prior approval of the audit committee. At least one of the members has relevant recent financial experience.
As part of the decision to recommend to the Board the re-appointment of the external auditor, the committee takes into account the tenure of the auditor in addition to the results of its review of the effectiveness of the external auditor and considers whether there should be a full tender process. There are no contractual obligations restricting the committee's choice of external auditor.
The primary responsibilities of the Nominations Committee are:
The Nominations Committee, in conjunction with Board meetings, met several times during this period.
The primary responsibilities of the Remuneration Committee are:
The report of the Remuneration Committee is set out on pages 18 to 23 of this report.
Presentations are given to institutional investors when requested, normally following the publication of the half year and full year results, when interim and annual reports are delivered to all shareholders. The results of such meetings are discussed with board members. All directors attend the Annual General Meeting at which they have the opportunity to meet with shareholders.
The information provided on this page of the Directors' Remuneration Report is not subject to Audit.
| Jeffrey Zitron |
Chairman |
|---|---|
| Richard Wollenberg | Non-executive Director |
| Derek Joseph | Non-executive Director |
I am pleased to present the Annual Report on Remuneration for the year ended 31 March 2017.
The Remuneration Committee has used the policy originally adopted in August 2015 and then revised in July 2016 to specifically link to the performance of the Group as a framework to set remuneration levels. Executive directors do not participate in decisions regarding their own remuneration. The committee has access to independent advice but during the year under review they have not sought such advice.
In setting the company's remuneration policy for directors, the Remuneration Committee has given full consideration to the best practice provisions annexed to The Financial Conduct Authority Listing Rules and the report has been prepared in accordance with Chapter 6 of the Companies Act 2006 and the Directors' Remuneration Report Regulations 2002.
The Remuneration Committee met on 25 May 2017 to discuss the remuneration for the directors of the Group. The committee agreed that there would be no changes to directors' remuneration and that the remuneration policy would remain as revised in July 2016.
The remuneration policy is designed to attract and retain executive directors and to motivate them in delivering the objectives of the Company. The policy also covers the senior management teams within the subsidiaries who are key to supporting the delivery of those objectives. The underlying principle is that employee and director share ownership is encouraged and the remuneration policy provides opportunity to reward all employees through the award of share options. This links their personal interest to the success of the company.
Jeffrey Zitron - Chairman of the Remuneration Committee
28 June 2017
The information provided on pages 19 to 21 of the Directors' Remuneration Report is subject to audit.
The remuneration of the executive directors is made up as follows:
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Derek Joseph** | 2,500 | - | - | - | - | 2,500 |
| Steven Douglas | 105,000 | 1,288 | - | - | 6,000 | 112,288 |
| Fiona Underwood | 105,000 | 1,513 | - | - | 6,000 | 112,513 |
| Richard Murphy | 36,758 | - | - | - | - | 36,758 |
| Susan Kane | 78,750 | 1,571 | - | - | - | 80,321 |
| 328,008 | 4,372 | - | - | 12,000 | 344,380 |
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 1,232 | - | - | - | - | 1,232 |
| Derek Joseph** | 6,140 | - | - | - | - | 6,140 |
| Steven Douglas | 61,110 | 740 | 20,000 | 27,200 | 7,700 | 116,750 |
| Fiona Underwood | 61,110 | 1,950 | 20,000 | 27,200 | 3,666 | 113,926 |
| Richard Murphy | 33,484 | - | - | - | - | 33,484 |
| 163,076 | 2,690 | 40,000 | 54,400 | 11,366 | 271,532 |
The remuneration of the non-executive directors is made up as follows:
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 4,482 | - | - | - | - | 4,482 |
| Jeffrey Zitron | 7,500 | - | - | - | - | 7,500 |
| Derek Joseph** | 3,000 | - | - | - | - | 3,000 |
| 14,982 | - | - | - | - | 14,982 |
| Directors' remuneration as a single figure | (2016) | |||
|---|---|---|---|---|
| -------------------------------------------- | -- | -- | -- | -------- |
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 2,389 | - | - | - | - | 2,389 |
| Jeffrey Zitron | 7,500 | - | - | - | - | 7,500 |
| Derek Joseph** | 388 | - | - | - | - | 388 |
| 10,277 | - | - | - | - | 10,277 |
*Richard Wollenberg held an executive director role up until 19 August 2015.
**Derek Joseph held a non-executive director role up until 19 August 2015, the role of Finance Director from 19 August 2015 to 27 June 2016 then a non-executive role from 28 June 2016.
The taxable benefits above represent private medical insurance.
All the executive directors of the Group's subsidiaries benefit from the executive incentive scheme ("the scheme"). Where a subsidiary is acquired during the reporting period, the Remuneration Committee (RemCo) confirms the eligibility or not of that subsidiary's executive directors for participation in the scheme for the remaining part of the year. For the year under review, the executive directors of both Altair and Murja were eligible for the executive incentive scheme.
The scheme, which is discretionary, is dependent on the performance target for the year, as set out in the remuneration policy. The scheme comprises two elements:
The target for those eligible executive directors, in-line with the 2016 revised policy, was to achieve the Group's 2016/17 outturn (reported profit before tax and exceptional items) plus 10%, adjusted for any on-off costs and expenses.
RemCo assessed the performance of the Altair and Murja executive directors against the target and the Committee's decision is shown below.
| Performance Target | Actual Performance | Maximum Possible | 2016/17 |
|---|---|---|---|
| Aquila 2016 profit | Aquila 2016 profit | award | Unconsolidated |
| increased by 10%5 | increased by 21.5% | bonus award | |
| £600,000 | £663,174 | £30,000 | £Nil |
| £600,000 | £663,174 | £100,000 share options | Nil share options |
The Committee believes that the reward payable is a fair reflection of the performance over the year.
5 Profit before tax and excluding one-off deemed cost of listing and share option charge
Share options, relating to the 2015/16 award, were awarded during the year to directors as follows:
| Type of scheme | Face value £ | Length of vesting period | |
|---|---|---|---|
| Steven Douglas | EMI | 46,000 | 3 years |
| Fiona Underwood | EMI | 46,000 | 3 years |
| Susan Kane | EMI | 46,000 | 3 years |
There are no performance measures or targets in relation to the options granted. The face value of the options has been calculated based on the share price at date of grant of 46p per share.
The total number of directors' interests in shares as at 31 March 2017 (or date of resignation) is set out below:
| Number of shares | ||
|---|---|---|
| Richard Wollenberg6 | 3,808,406 | |
| Jeffrey Zitron | 2,798,403 | |
| Derek Joseph | 2,870,403 | |
| Steven Douglas | 3,279,440 | |
| Fiona Underwood | 3,279,440 | |
| Richard Murphy | 376,344 | (resigned 21 July 2016) |
| Susan Kane | 3,279,440 |
The total number of share options in relation to each director with and without performance measures, those vested but unexercised, and those exercised, is set out below:
| With performance measures |
Without performance measures7 |
Vested but unexercised8 |
Exercised during the year |
|
|---|---|---|---|---|
| Richard Wollenberg | - | - | 515,000 | - |
| Jeffrey Zitron | - | - | 300,000 | - |
| Derek Joseph | - | - | 309,000 | - |
| Steven Douglas | - | 375,050 | 340,000 | - |
| Fiona Underwood | - | 375,050 | 340,000 | - |
| Susan Kane | - | 375,050 | 340,000 | - |
In the year ended 31 March 2017, there were no payments to past directors.
No payments were made to directors for loss of office in the year ended 31 March 2017.
6 Includes shares held by immediate family members of Richard Wollenberg
7 Are part of a total of 1,713,772 Ordinary Shares at £0.05 per share which were issued as "Rollover Options" and are exercisable in tranches from 1 April 2016 with expiry dates between 31 March 2023 and 31 March 2025
8 The Unapproved Options may be exercised at any time up to 20 July 2020
The information provided on pages 22 to 23 of the Directors' Remuneration Report is not subject to audit.
The following graph shows the company's performance since flotation, measured by total shareholder return, compared with the performance of the FTSE All Share Index also measured by total shareholder return:
Data source: London Stock Exchange
| Total Remuneration |
Annual bonuses |
Shares receivable |
Total | |
|---|---|---|---|---|
| £ | £ | £ | £ | |
| Steven Douglas | 112,288 | - | - | 112,288 |
| Fiona Underwood | 112,513 | - | - | 112,513 |
Comparison of shareholder distributions and total employee expenditure of the Group is set out below for the years ended 31 March 2016 and 31 March 2017.
| 2017 | 2016 | Change % | |
|---|---|---|---|
| £ | £ | ||
| All employee remuneration | 2,702,039 | 2,407,049 | 12.25% |
| Total dividend per share | 0.74p | 0.66p | 12.12% |
| Distributions to shareholders | 241,617 | 212,778 | 13.56% |
The Remuneration Committee proposes to continue with the policy approved by the shareholders at the 2016 Annual General Meeting.
The Group is committed to on-going shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to directors' remuneration, the reasons for any such vote will be sought, and any actions in response will be detailed here. The Directors' Remuneration Report for the period ended 31 March 2016 and the Directors Remuneration Policy were approved by shareholders at the Annual General Meeting held on 21 July 2016.
| Directors' Remuneration Report | % of votes cast |
|---|---|
| For | 100% |
| Against | 0% |
| Total votes cast | 100% |
| Directors' Remuneration Policy | % of votes cast |
| For | 100% |
| Against | 0% |
| Total votes cast | 100% |
The remuneration policy was originally set in January 2015, confirmed by the committee in August 2015 and revised in July 2016; the Remuneration Committee has reviewed the policy and agreed that it should remain unchanged.
The remuneration policy is designed to attract and retain executive directors and to motivate them in delivering the objectives of the Group. The policy also covers the senior management teams within the subsidiaries who are key to supporting the delivery of those objectives. The underlying principle is that employee and director share ownership is encouraged and the remuneration policy provides opportunity to reward all employees through the award of share options. This links their personal interest to the success of the company.
The future policy remains as revised in July 2016 and has kept the basic principles of the policy that was set in January 2015 and agreed by the Remuneration Committee in August 2015. The policy accounts for the Group as a whole to ensure that executive directors are adequately rewarded for their services and that there is a consistent approach to remuneration across the Group.
The Remuneration policy can be inspected on the Company's website www.aquilaservicesgroup.co.uk.
Jeffrey Zitron – Chairman
28 June 2017
The Directors (whose names and functions are set out on page 11) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company and Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and applicable law. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and the profit or loss of the company and the group for that period.
In preparing the Company and Group financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.
The financial statements are published on the Company's website www.aquilaservicesgroup.co.uk. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.
We confirm that to the best of our knowledge:
On behalf of the Board
28 June 2017
We have audited the financial statements of Aquila Services Group plc for the year ended 31 March 2017 set out on pages 28 to 56. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
Jamie Cassell (Senior Statutory Auditor) For and on behalf of Saffery Champness LLP Chartered Accountants Statutory Auditors 71 Queen Victoria Street London EC4V 4BE
28 June 2017
| Notes | 2017 £ |
2016 £ |
|
|---|---|---|---|
| Revenue | 4 | 5,928,201 | 4,746,144 |
| Cost of sales | 5 | (4,453,466) | (3,458,532) |
| Gross profit | 1,474,735 | 1,287,612 | |
| Administrative expenses | 5 | (964,692) | (997,786) |
| Operating profit | 510,043 | 289,826 | |
| Deemed cost of listing Finance income |
13 4 |
- 5,512 |
(3,104,527) 1,713 |
| Profit / (loss) before taxation |
6 | 515,555 | (2,812,988) |
| Income tax expense | 8 | (111,345) | (124,319) |
| Profit / (loss) for the year |
404,210 | (2,937,307) | |
| Other comprehensive income | - | - | |
| Total comprehensive income profit / (loss) for the year |
404,210 | (2,937,307) | |
| Earnings profit / (loss) per share attributable to owners of the parent |
|||
| Basic | 9 | 1.24p | (10.66p) |
| Diluted | 9 | 1.08p | (10.66p) |
| Adjusted earnings per share before deemed cost of listing |
|||
| Basic | 9 | 1.24p | 0.61p |
| Diluted | 9 | 1.08p | 0.54p |
The income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 34 to 56 form part of these financial statements.
| Note | Group 2017 £ |
Group 2016 £ |
Company 2017 £ |
Company 2016 £ |
|
|---|---|---|---|---|---|
| Non-current assets | |||||
| Intangible assets | 10 | 317,688 | 317,688 | - | - |
| Property, plant and equipment | 11 | 50,559 | 14,654 | - | - |
| Investments | 12 | - | - | 9,749,931 | 9,602,280 |
| 368,247 | 332,342 | 9,749,931 | 9,602,280 | ||
| Current assets | |||||
| Trade and other receivables | 14 | 1,350,187 | 1,158,836 | 47 | 1,770 |
| Deferred tax assets | 15 | - | 11,671 | - | - |
| Cash and bank balances | 2,312,600 | 2,552,642 | 348,062 | 341,849 | |
| 3,662,787 | 3,723,149 | 348,109 | 343,619 | ||
| Current liabilities | |||||
| Trade and other payables | 16 | 951,923 | 1,276,501 | 217,380 | 218,530 |
| Corporation tax | 134,753 | 166,769 | - | - | |
| 1,086,676 | 1,443,270 | 217,380 | 218,530 | ||
| Net current assets | 2,576,111 | 2,279,879 | 130,729 | 125,089 | |
| Net assets | 2,944,358 | 2,612,221 | 9,880,660 | 9,727,369 | |
| Equity | |||||
| Share capital | 17 | 1,632,550 | 1,630,434 | 1,632,550 | 1,630,434 |
| Share premium account | 18 | 533,235 | 533,235 | 533,235 | 533,235 |
| Reverse acquisition reserve | 18 | (4,771,47 3) |
(4,771,473) | - | - |
| Merger reserve | 18 | 7,184,334 | 7,184,334 | 7,184,334 | 7,184,334 |
| Share-based payment reserve | 20 | 422,391 | 281,586 | 422,391 | 281,586 |
| Retained (losses) / earnings | (2,056,67 9) |
(2,245,895) | 108,150 | 97,780 | |
| Equity attributable to the | |||||
| owners of the parent | 2,944,358 | 2,612,221 | 9,880,660 | 9,727,369 |
The notes on pages 34 to 56 form part of these financial statements.
As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's profit for the year was £225,364 (2016: £200,724).
The financial statements were approved by the board on 28 June 2017
Susan Kane – Finance Director
Company Registration No. 08988813
| Share capital £ |
Share premium account £ |
Reverse acquisition reserve £ |
Merger reserve £ |
Share based Payment Reserve £ |
Retained earnings / (losses) £ |
Total equity £ |
|
|---|---|---|---|---|---|---|---|
| Balance at 1 April 2015 | 515,000 | 464,960 | (857,429) | - | 17,016 | 758,752 | 898,299 |
| Issue of shares | 1,115,434 | 68,275 | - | 7,184,334 | - | - | 8,368,043 |
| Reverse acquisition | - | - | (3,914,044) | - | 11,923 | - | (3,902,121) |
| Total comprehensive income | - | - | - | - | - | (2,937,307) | (2,937,307) |
| Transfer on exercise of options | - | - | - | - | (1,960) | 1,960 | - |
| Share based payment charge | - | - | - | - | 254,607 | - | 254,607 |
| Dividend | - | - | - | - | - | (69,300) | (69,300) |
| Balance at 31 March 2016 | 1,630,434 | 533,235 | (4,771,473) | 7,184,334 | 281,586 | (2,245,895) | 2,612,221 |
| Balance at 1 April 2016 | 1,630,434 | 533,235 | (4,771,473) | 7,184,334 | 281,586 | (2,245,895) | 2,612,221 |
| Issue of shares | 2,116 | - | - | - | - | - | 2,116 |
| Total comprehensive income | - | - | - | - | - | 404,210 | 404,210 |
| Transfer on exercise of options | - | - | - | - | (6,846) | 6,846 | - |
| Share based payment charge | - | - | - | - | 147,651 | - | 147,651 |
| Dividend | - | - | - | - | - | (221,840) | (221,840) |
| Balance at 31 March 2017 | 1,632,550 | 533,235 | (4,771,473) | 7,184,334 | 422,391 | (2,056,679) | 2,944,358 |
| Share capital £ |
Share premium account £ |
Merger reserve £ |
Share based payment reserve £ |
Retained earnings / (losses) £ |
Total equity £ |
|
|---|---|---|---|---|---|---|
| Balance at 1 April 2015 | 515,000 | 464,960 | - | 17,016 | (35,604) | 961,372 |
| Issue of shares | 1,115,434 | 68,275 | 7,184,334 | - | - | 8,367,043 |
| Total comprehensive income | - | - | - | - | 200,724 | 200,724 |
| Transfer on exercise of options | - | - | - | (1,960) | 1,960 | - |
| Share based payment charge | - | - | - | 266,530 | - | 266,530 |
| Dividend | - | - | - | - | (69,300) | (69,300) |
| Balance at 31 March 2016 | 1,630,434 | 533,235 | 7,184,334 | 281,586 | 97,780 | 9,727,369 |
| Balance at 1 April 2016 | 1,630,434 | 533,235 | 7,184,334 | 281,586 | 97,780 | 9,727,369 |
| Issue of shares | 2,116 | - | - | - | - | 2,116 |
| Total comprehensive income | - | - | - | - | 225,364 | 225,364 |
| Transfer on exercise of options | - | - | - | (6,846) | 6,846 | - |
| Share based payment charge | - | - | - | 147,651 | - | 147,651 |
| Dividend | - | - | - | - | (221,840) | (221,840) |
| Balance at 31 March 2017 | 1,632,550 | 533,235 | 7,184,334 | 422,391 | 108,150 | 9,880,660 |
| 2017 £ |
2016 £ |
|
|---|---|---|
| Cash flows from operating activities | ||
| Profit / (loss) for the year |
404,210 | (2,937,307) |
| Interest received | (5,512) | (1,713) |
| Income tax expense | 111,345 | 124,319 |
| Share based payment charge | 147,651 | 254,606 |
| Deemed cost of listing | - | 3,104,527 |
| Depreciation | 11,694 | 5,457 |
| Operating cash flows before movement in working capital | 669,388 | 549,889 |
| Increase in trade and other receivables | (191,351) | (76,254) |
| (Decrease) / increase in trade and other payables |
(324,578) | 99,878 |
| Cash generated by operations | 153,459 | 573,513 |
| Income taxes paid | (131,690) | (179,445) |
| Net cash inflow from operating activities | 21,769 | 394,068 |
| Cash flows from investing activities | ||
| Interest received | 5,512 | 1,713 |
| Cash acquired on reverse acquisition | - | 795,690 |
| Cash acquired on purchase of subsidiary | - | 785,262 |
| Purchase of subsidiary | - | (899,696) |
| Purchase of property, plant and equipment | (47,599) | (16,344) |
| Proceeds from disposal of investments | - | 207,834 |
| Net cash (outflow) / inflow from investing activities |
(42,087) | 874,459 |
| Cash flows from financing activities | ||
| Proceeds of share issue | 2,116 | 239,456 |
| Dividends paid | (221,840) | (69,300) |
| Net cash (outflow) / inflow from financing activities |
(219,724) | 170,156 |
| Net (decrease)/increase in cash and cash equivalents |
(240,042) | 1,438,683 |
| Cash and cash equivalents at beginning of the year | 2,552,642 | 1,113,959 |
| Cash and cash equivalents at end of the year | 2,312,600 | 2,552,642 |
| 2017 £ |
2016 £ |
|
|---|---|---|
| Cash flows from operating activities | ||
| Profit for the year | 225,364 | 200,723 |
| Dividends received | (325,650) | (300,600) |
| Interest received | (1,024) | (1,017) |
| Operating cash flows before movement in working capital | (101,310) | (100,894) |
| Decrease in trade and other receivables | 1,723 | 16,230 |
| (Decrease) / increase in trade and other payables |
(1,150) | 215,696 |
| Net cash (outflow) / inflow from operating activities |
(100,737) | 131,032 |
| Cash flows from investing activities | ||
| Interest received | 1,024 | 1,017 |
| Dividends received | 325,650 | 300,600 |
| Purchase of subsidiary | - | (1,053,782) |
| Net cash inflow / (outflow) from investing activities |
326,674 | (752,165) |
| Cash flows from financing activities | ||
| Proceeds of share issue | 2,116 | 86,075 |
| Dividends paid | (221,840) | (69,300) |
| Net cash (outflow) / inflow from financing activities |
(219,724) | 16,775 |
| Net increase/(decrease) in cash and cash equivalents |
6,213 | (604,358) |
| Cash and cash equivalents at beginning of the year | 341,849 | 946,207 |
| Cash and cash equivalents at end of the year | 348,062 | 341,849 |
Aquila Services Group plc (''the Company'') and its subsidiaries (together, ''the Group'') provide specialist housing and treasury management consultancy services. The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.
The Company is a public limited company which is listed on the London Stock Exchange, domiciled in the United Kingdom and incorporated and registered in England and Wales. The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
The principal accounting policies applied in preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.
The financial statements of have been prepared in accordance with International Reporting Standards as adopted by the European Union (IFRSs), issued by the International Accounting Standards Board (IASB), including interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis.
The financial statements are presented in Pounds Sterling which is the Group's functional and presentational currency.
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.
On 20 August 2015, the Company became the legal parent of Altair Consultancy and Advisory Services Limited (''Altair'') through a reverse acquisition. In the judgement of the Directors, the Company was not a business as defined by IFRS 3 prior to the transaction. As such, the transaction is not considered to be a business combination and therefore is deemed to be outside the scope of IFRS 3, instead falling within the scope of IFRS 2.
The principles of IFRS 3 have been applied in identifying Altair as the accounting acquirer. The consolidated financial statements of the Company are presented as a continuation of Altair's financial statements, reflecting the commercial substance of the transaction. However, the equity structure presented in the consolidated financial statements reflects the equity structure of the Company, including the equity instruments issued as part of the transaction.
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 has the ability to use its power to affects its returns.
Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company reassesses whether or not 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.
Other than the reverse acquisition noted above, 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 comprises the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group's activity. Revenue is shown net of value added tax, returns, rebates and discounts. The Group recognises revenue when the amount of the revenue can be reliably measured and when it is probable that economic benefits will flow to the entity.
Un-invoiced fees at the balance sheet date are valued at the fair value of the consideration receivable when it is probable that economic benefits will flow to the Group. Where income is invoiced in advanced of work being completed, revenue is treated in the first instance as deferred income and recognised when the services are performed by the Group.
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 so as 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:
Computer equipment 33% per annum Fixtures and fittings 33% per annum
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.
In the company's separate annual 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.
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets can be divided into the following categories: loans and receivables, financial assets at fair value through profit or loss, available-for-sale financial assets and held-tomaturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the instruments were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.
De-recognition of financial instruments occurs when the rights to receive cash flows from investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Trade receivables are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at an effective interest rate computed at initial recognition.
Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group or Company provides money directly to a debtor with no intention of trading the receivables. Loans receivable are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in the income statement.
Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled by the Group using its 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. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
At initial recognition, financial liabilities are measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.
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.
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.
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.
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 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 pretax discount rate.
Rentals payable under operating leases, net of lease incentives, are charged to the statement of comprehensive income on a straight-line basis over the term of the lease.
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.
The Group has issued share options to certain directors and employees. The share options granted become exercisable at varying future dates. If certain conditions are met, following the vesting period, the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.
The share based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.
The fair value of share options granted is determined by applying the Black Scholes model. This model utilises inputs for the risk-free rate, expected volatility in share price, dividend yield and the current share price at fair value, which are factors determined on the date the share options are granted.
The following pronouncements have been adopted in the year and either had no impact on the financial statements or resulted in changes to presentation and disclosure only:
*Effective for annual periods beginning on or after 1 January 2016
At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the Group, which have not been applied in these financial statements, were in issue but were not yet effective. In some cases these standards and guidance have not been endorsed by the European Union.
*Effective for annual periods beginning on or after 1 January 2017 **Effective for annual periods beginning on or after 1 January 2018 ***Effective for annual periods beginning on or after 1 January 2019
The directors are evaluating the impact that these standards will have on the financial statements of the Group.
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 considered to be 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.
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 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.
The Company has granted share options to certain employees and directors of the Group. The share options granted become exercisable at varying future dates. If certain conditions are met, following the vesting period, the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.
The share based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.
Assumptions regarding the fair value of the Company's shares and assumptions regarding employee fluctuation are taken into account when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled sharebased 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.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
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.
An analysis of the Group's revenue is as follows:
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Continuing operations - rendering of services |
||
| Specialist housing consultancy income | 5,456,328 | 4,628,195 |
| Treasury management consultancy income | 471,873 | 117,949 |
| 5,928,201 | 4,746,144 | |
| Interest revenue on bank deposits | 5,512 | 1,713 |
| 5,933,713 | 4,747,857 |
The Group has three reportable segments, being consultancy, interim management and treasury management services, the results of which are included within the financial information. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker ("CODM"). In accordance with IFRS 8 'Operating Segments', information on segment assets is not shown, as this is not provided to the CODM. The Group's revenues are mainly derived from operations in the UK and ROI. As a result, the CODM does not review segments by country or continent.
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 and local authority) across the housing sector. The majority of consultancy projects run over one to two months requiring on-going business development to ensure a full pipeline of consultancy work for the employed team.
Interim Management – individuals are embedded within housing organisations (normally registered providers, local authorities and ALMOs) in a substantive role, normally for a specified period of time. Interim management provides the Group with a more extended forward sales pipeline as the average contract is for six months. This section of the business provides low risk as the interim consultants are placed on rolling contractual basis and provides minimal financial commitment as associates to the business, rather than employees, are used for these roles.
Treasury Management – a range of services providing treasury advice and fund-raising services to non-profit making organisations working in the affordable housing and education sectors. Within this segment of the business a number of client organisations enter into fixed period retainers to ensure immediate call-off of the required services.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including Directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Revenue from Consultancy | 3,712,790 | 2,974,901 |
| Revenue from Interim management | 1,743,538 | 1,653,294 |
| Revenue from Treasury management | 471,873 | 117,949 |
| 5,928,201 | 4,746,144 | |
| Cost of sales from Consultancy | 2,627,985 | 2,045,190 |
| Cost of sales from Interim management | 1,483,353 | 1,413,342 |
| Cost of sales from Treasury management | 342,128 | - |
| 4,453,466 | 3,458,532 | |
| Gross profit from Consultancy | 1,084,805 | 929,711 |
| Gross profit from Interim management | 260,185 | 239,952 |
| Gross profit from Treasury management | 129,745 | 117,949 |
| 1,474,735 | 1,287,612 | |
| Administrative expenses | (964,692) | (997,786) |
| Operating profit | 510,043 | 289,826 |
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Profit / (loss) before taxation is arrived at after charging: |
||
| Deemed cost of listing | - | 3,104,527 |
| Auditors' remuneration | 37,200 | 36,000 |
| Other fees payable to auditors: | ||
| Taxation - |
- | 12,000 |
| Corporate finance services - |
- | 25,000 |
| Depreciation of property, plant and equipment | 11,694 | 5,457 |
| Staff costs (see note 7) |
2,702,039 | 2,407,049 |
| Operating lease costs – land and buildings |
49,605 | 39,400 |
| The share option charge for the year of £147,651 administrative expenses. |
(2016: £254,607) is included within | |
| 7 Staff costs |
||
| 2017 | 2016 | |
| The average monthly number of employees (including | ||
| directors) employed by the Group was: | 37 | 30 |
| 2017 | 2016 | |
| £ | £ | |
| Aggregate remuneration (including directors) | ||
| Wages and salaries | 2,322,383 | 1,878,993 |
| Share-based payments | 147,651 | 254,607 |
| Pension contributions | 88,565 | 80,770 |
| Social security costs | 257,513 | 192,679 |
| 2,816,112 | 2,407,049 | |
| Directors' remuneration | ||
| Salary (including taxable benefits) | 347,362 | 270,443 |
| Share-based payments | 65,500 | 110,526 |
| Pension contributions | 12,000 | 11,366 |
| 424,862 | 392,335 |
The amounts set out above include remuneration to the highest paid director as follows:
| Salary (including taxable benefits) | 106,513 | 109,050 |
|---|---|---|
| Share-based payments | 22,866 | 55,263 |
| Pension contributions | 6,000 | 7,700 |
| 135,379 | 172,013 |
| 2017 £ |
2016 £ |
|
|---|---|---|
| Corporation tax: | ||
| Current year | 117,738 | 116,918 |
| Adjustment in respect of prior years |
(18,064) | - |
| 99,674 | 116,918 | |
| Deferred tax charge | 11,671 | 7,401 |
| 111,345 | 124,319 |
The tax charge for the year can be reconciled to the profit/(loss) in the income statement as follows:
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Profit/(loss) before taxation |
515,555 | (2,812,988) |
| Tax at the UK corporation tax rate of 20% (2016: 20%) | 103,111 | (562,598) |
| Expenses not deductible | 26,298 | 66,012 |
| Adjustment in respect of prior years | (18,064) | - |
| Deemed cost of listing | - | 620,905 |
| 8,234 | 686,917 | |
| Tax expense for the year | 111,345 | 124,319 |
Basic earnings per share is calculated by dividing the profit/(loss) 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.
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Profit / (loss) after tax attributable to owners of the parent |
404,210 | (2,937,307) |
| Weighted average number of shares | ||
| Basic - |
32,633,381 | 27,566,749 |
| Diluted - |
37,301,635 | 27,566,749 |
| Basic earnings/(loss) per share |
1.24p | (10.66p) |
| Diluted earnings/(loss) per share | 1.08p | (10.66p) |
| Adjusted earnings per share before deemed cost of listing |
||
| Profit / (loss) after tax attributable to owners of the parent |
404,210 | (2,937,307) |
| Deemed cost of listing | - | 3,104,527 |
| Adjusted earnings | 404,210 | 167,220 |
| Weighted average number of shares | ||
| Basic - |
32,633,381 | 27,566,749 |
| Diluted - |
37,301,635 | 30,918,874 |
| Adjusted basic earnings per share | 1.24p | 0.61p |
| Adjusted diluted earnings per share | 1.08p | 0.54p |
Potential Ordinary shares are antidilutive when their conversion to Ordinary shares would increase earnings per share or decrease loss per share from continuing operations.
| Group | Goodwill £ |
|---|---|
| Cost | |
| At 1 April 2015 |
- |
| Additions | 317,688 |
| At 31 March 2016 |
317,688 |
| Additions | - |
| At 31 March 2017 | 317,688 |
| Accumulated impairment losses At 1 April 2015 and 31 March 2016 Impairment losses for the year |
- - |
| At 31 March 2017 | - |
| Net book value | |
| At 31 March 2015 | - |
| At 31 March 2016 | 317,688 |
| At 31 March 2017 | 317,688 |
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination.
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 past experience and project work already secured for future periods. Management have projected cash flows over a period of 5 years, based on a minimum average growth rate of 10% per annum. Projected cash flows have been discounted at a rate of 5%.
| Group | Fixtures and fittings |
Computer equipment |
Total |
|---|---|---|---|
| £ | £ | £ | |
| Cost | |||
| At 1 April 2015 | - | - | - |
| Additions | - | 20,111 | 20,111 |
| At 31 March 2016 | - | 20,111 | 20,111 |
| Additions | 34,339 | 13,260 | 47,599 |
| At 31 March 2017 | 34,339 | 33,371 | 67,710 |
| Accumulated depreciation | |||
| At 1 April 2015 | - | - | - |
| Charge for the year | - | 5,457 | 5,457 |
| At 31 March 2016 | - | 5,457 | 5,457 |
| Charge for the year | 953 | 10,741 | 11,694 |
| At 31 March 2017 | 953 | 16,198 | 17,151 |
| Net book value | |||
| At 31 March 2015 | - | - | - |
| At 31 March 2016 |
- | 14,654 | 14,654 |
| At 31 March 2017 | 33,386 | 17,173 | 50,559 |
| Company | Investments in subsidiaries £ |
|---|---|
| Cost | |
| At 1 April 2015 | - |
| Additions | 9,602,280 |
| At 31 March 2016 | 9,602,280 |
| Additions | 147,651 |
| At 31 March 2017 | 9,749,931 |
| Accumulated impairment losses At 1 April 2015 and 31 March 2016 Impairment losses for the year At 31 March 2017 |
- - - |
| Net book value | |
| At 31 March 2015 | - |
| At 31 March 2016 | 9,602,280 |
| At 31 March 2017 | 9,749,931 |
The addition of £147,651 represents capital contributions made to the Company's subsidiaries in respect of the share option expense recognised in those subsidiaries on share options issued by the Company.
Details of the Company's subsidiaries at 31 March 2017 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 Treasury |
100% |
| Murja Limited | England and Wales | management 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.
On 20 August 2015, General Industries plc (now Aquila Services Group plc) became the legal parent of Altair Consultancy and Advisory Services Limited by way of reverse acquisition. The cost of the acquisition is deemed to have been incurred by Altair Consultancy and Advisory Services Limited, the legal subsidiary, in the form of equity instruments issued to the owners of the legal parent. The deemed cost of listing arising on the reverse acquisition was £3,104,527.
On 12 December 2015, the Group acquired 100% of the issued share capital of Murja Limited, thereby obtaining control. The principal activity of Murja Limited is that of treasury management services. Murja Limited was acquired so as to broaden the range of services the Group can offer.
| Group | Group | Company | Company | |
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| £ | £ | £ | £ | |
| Trade receivables | 1,153,940 | 995,660 | - | - |
| Other receivables | 11,055 | 17,081 | 47 | 1,770 |
| Prepayments and accrued income |
185,192 | 146,095 | - | - |
| 1,350,187 | 1,158,836 | 47 | 1,770 |
The directors consider that the carrying amount of trade receivables approximates to their fair value. Trade and other receivables are not considered impaired.
The aged profile of trade receivables not impaired is as follows:
| Total | <30 days | 30-60 days | 66-90 days | >90 days | |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| 31 March 2017 | 1,153,940 | 774,753 | 299,432 | 30,933 | 48,822 |
| 31 March 2016 | 995,660 | 687,310 | 236,379 | 50,149 | 21,822 |
The following are the Group's major deferred tax assets recognised and the movements thereon during the current and prior reporting period.
| Decelerated capital allowances |
Other timing differences |
Total | |
|---|---|---|---|
| £ | £ | £ | |
| At 31 March 2015 | 3,045 | 16,027 | 19,072 |
| Charge to profit or loss | (1,741) | (5,660) | (7,401) |
| At 31 March 2016 | 1,304 | 10,367 | 11,671 |
| Charge to profit or loss | (1,304) | (10,367) | (11,671) |
| At 31 March 2017 | - | - | - |
Deferred tax assets are recognised to the extent that it is probable that the future tax profits will allow the deferred tax assets to be recovered.
| Group 2017 £ |
Group 2016 £ |
Company 2017 £ |
Company 2016 £ |
|
|---|---|---|---|---|
| Trade payables Other payables Amounts owed to Group |
274,420 27,668 |
220,307 61,067 |
140 - |
19,621 - |
| undertakings | - | - | 183,865 | 183,409 |
| Taxes and social security costs | 341,020 | 354,117 | - | - |
| Accruals and deferred income | 308,815 | 641,010 | 33,375 | 15,500 |
| 951,923 | 1,276,501 | 217,380 | 218,530 |
The directors consider that the carrying amount of trade payables approximates to their fair value.
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Allotted, called up and fully paid | ||
| 32,651,003 (2016: 32,608,688) Ordinary shares of 5p each |
1,632,550 | 1,630,434 |
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 |
|
|---|---|---|---|---|
| £ | £ | £ | ||
| At 1 April 2015 | 10,300,000 | 515,000 | 464,960 | - |
| Issued at 37.5p per share on | ||||
| 19 August 2015 to acquire Altair | 21,200,000 | 1,060,000 | - | 6,890,000 |
| Issued at 46.5p per share on |
||||
| 15 December 2015 to acquire | ||||
| Murja | 120,000 | 6,000 | - | 49,800 |
| Issued at 43.65p per share on | ||||
| 11 March 2016 to acquire Murja | 632,688 | 31,634 | - | 244,534 |
| Issued at 43.65p per share on | ||||
| 11 March 2016 | 150,000 | 7,500 | 57,975 | - |
| Issued at 10p per share on | ||||
| 11 March 2016 upon exercise of | ||||
| options | 206,000 | 10,300 | 10,300 | - |
| At 31 March 2016 | 32,608,688 | 1,630,434 | 533,235 | 7,184,334 |
| Issued at 5p per share on 31 August 2016 upon exercise |
||||
| of options | 42,315 | 2,116 | - | - |
| At 31 March 2017 | 32,651,003 | 1,632,550 | 533,235 | 7,184,334 |
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 and Murja. 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.
The reverse acquisition reserve arises due to the elimination of the Company's investment in Altair. 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.
| 2017 £ |
2016 £ |
|
|---|---|---|
| Amounts recognised as distributions to equity holders | ||
| Final dividend paid of 0.44p per share | 143,478 | - |
| Interim dividend paid of 0.24p per share (2016: 0.22p) |
78,362 | 69,300 |
| 221,840 | 69,300 | |
| Proposed final dividend of 0.50p per share (2016: 0.44p) |
163,255 | 143,478 |
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend is payable on 4 August 2017 to shareholders on the Register of Members at 21 July 2017. The total recommended dividend to be paid is 0.50p per share. The payment of this dividend will not have any tax consequences for the Group.
The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme. The total expense recognised in the year to 31 March 2017 arising from sharebased payment transactions is £147,651 (2016: £254,067).
| Unapproved scheme | Number | Weighted average exercise price |
|---|---|---|
| Number of options outstanding at 1 April 2016 | 2,587,093 | £0.23 |
| Granted during period | - | - |
| Forfeited during period | - | - |
| Exercised during period | - | - |
| Number of options outstanding as at 31 March 2017 | 2,587,093 | £0.23 |
| Number of options exercisable as at 31 March 2017 |
2,587,093 | £0.23 |
The exercise price of the options outstanding at 31 March 2017 ranges between £0.10 and £0.42. The weighted average remaining contractual life of the options outstanding at 31 March 2017 is 3 years (2016: 4 years).
| EMI scheme | Number | Weighted average exercise price |
|---|---|---|
| Number of options outstanding at 1 April 2016 | 1,713,772 | £0.05 |
| Granted during period | 510,000 | £0.05 |
| Forfeited during period | (62,316) | £0.05 |
| Exercised during period | (42,315) | £0.05 |
| Number of options outstanding as at 31 March 2017 | 2,119,141 | £0.05 |
| Number of options exercisable as at 31 March 2017 |
296,208 | £0.05 |
The weighted average remaining contractual life of the options outstanding at 31 March 2017 is 8 years (2016: 9 years).
For the EMI share options granted during the year, the weighted average fair value of the options is £0.42. 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 | £0.46 |
|---|---|
| Exercise price | £0.05 |
| Expected volatility | 19.29% |
| Expected option life | 10 years |
| Risk-free rate | 0.86% |
The risk-free rate is based on the yield of a 10 year government bond.
The expected share price volatility is based on the Company's share price since 20 August 2015.
For the EMI share options exercised in the year, the share price at the date of exercise was £0.45.
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
| 2017 £ |
2016 £ |
|
|---|---|---|
| Within one year | 49,605 | 39,400 |
| In the second to fifth years inclusive | 71,106 | 91,000 |
| 120,711 | 130,400 |
Operating lease payments represent rentals payable by the Group for certain of its office properties.
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.
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Short-term employee benefits | 694,790 | 586,283 |
| Share-based payments | 112,956 | 212,116 |
| Post-retirement benefits | 12,000 | 22,934 |
| 819,746 | 821,333 |
Balances and transactions between the Group and other related parties are disclosed below:
Dividends totalling £153,646 (2016: £49,709) were paid in the year in respect of Ordinary shares held by the Company's directors.
During the year the Group charged £24,060 (2016: £24,060) to DMJ Consultancy Services Limited for administrative services, a company in which Derek Joseph serves as a director. At 31 March 2017, the balance owed to the Group by DMJ Consulting Limited was £7,219 (2016: £14,436).
During the year the Group was charged £257 (2016: £12,410) by Jeffrey Zitron for consultancy services.
Defined contribution schemes
| 2017 | 2016 | |
|---|---|---|
| £ | £ | |
| Contributions payable by the Group for the year | 88,565 | 80,770 |
In the opinion of the Directors there is no single ultimate controlling party.
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 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 2017 year end, £107,604 (2016: £68,808) is due from one customer. There are no other customers that represent more than 9% of the total balance of trade receivables. The maximum exposure to credit risk is equal to the carrying value of these instruments.
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 sufficient 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 £2,312,600 (2016: £2,552,642) at the year-end.
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.
The Group does not undertake any hedging activity in this area. The main element in interest rate risk involves sterling deposits which are placed on deposit.
Internal working capital requirements are low and are regularly monitored. Externally imposed capital requirements to which the Group is subject have been complied with in the year.
There are no post balance sheet events.
There were no capital commitments at 31 March 2017.
There were no contingent liabilities at 31 March 2017.
Notice is hereby given that the Annual General Meeting of Aquila Services Group plc will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 27 July 2017 at 4:30 pm, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 4 will be proposed as ordinary resolutions and resolutions 5 to 7 will be proposed as special resolutions:
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.
That, subject to Resolution 5 above being duly passed, the directors of the Company be and are hereby empowered, pursuant to section 570 of the Act, to allot equity securities (as defined in section 560 of the Act) 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 Act did not apply to any such allotment provided that such power shall be limited to the allotment of equity securities:
6.1 in connection with a rights issue or any other pre-emptive offer in favour of holders of equity securities where the equity securities offered to each such holder is proportionate (as nearly as may be) to the respective amounts of equity securities held by each such holder subject only to such exclusion or other arrangements as the Directors may consider appropriate to deal with fractional entitlements or legal or practical difficulties under the laws of or the requirements of any recognised regulatory body in any territory or otherwise;
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.
Registered office: By order of the board Tempus Wharf Dr Fiona May Underwood 29a Bermondsey Wall West Company Secretary London SE16 4SA 28 June 2017
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