Aquis Exchange Plc

Earnings Release • Sep 21, 2023

National Storage Mechanism | Additional information

RNS Number : 1316N

Aquis Exchange PLC

21 September 2023

21 September 2023

Aquis Exchange PLC

("Aquis", the "Company" or the "Group")

Interim results for the six months ended 30 June 2023

Continued momentum with increased revenue across all divisions

Aquis Exchange PLC (AQX.L), the creator and facilitator of next-generation financial markets, is pleased to announce its unaudited results for the six months ended 30 June 2023.

Highlights:

·	Net revenue up 17% to £9.7m (H122: £8.3m)
·	EBITDA up 26% to £1.7m (H122: £1.3m)
·	Profit before tax up 64% to £1.1m (H122: £0.7m)
·	Basic earnings per share 3.8p (H122: 2.5p)
·	Cash and cash equivalents of £13.9m (H122: £13.3m)
·	All four divisions were profitable in the period:

	o	Aquis Markets - Further diversification of the product suite, with addition of Dark to Lit Sweep
	o	Aquis Technologies - Contract pipeline continues to develop in line with expectations
	o	Aquis Data - Revenues up 34%; significant progress towards an EU consolidated tape
	o	Aquis Stock Exchange - Welcomed five new listings despite tough market conditions and low admissions throughout the market

Post-period highlights:

·	Change to Aquis' proprietary trading rule announced, further enhancing range of execution options available to members
·	Investment in OptimX Markets adds additional connectivity to Aquis Matching Pool (AMP) and provides clients with ability to cross large blocks

Aquis CEO, Alasdair Haynes said:

"2023 so far has been a year of continued momentum for Aquis, with revenues continuing to increase across all divisions.

"Following the successful integration of the Aquis Matching Pool in 2022, Aquis Markets has seen increased revenues. We have also worked to further diversify the products that will be made available to members, adding block trading via OptimX Markets and changing our proprietary trading rule to give members greater execution choice along with best execution outcomes.  These changes are laying the foundations for future growth in market share over the medium-term.

"Our technology contract pipeline has continued to develop as expected, with a renewal and an extension over the period demonstrating the long-term nature of these relationships.

"Within Aquis Data, we were pleased to see significant progress towards an EU consolidated tape during the period, which is likely to disproportionately benefit Aquis.

"And finally despite challenging market conditions, we remain positive on the long-term potential of the Aquis Stock Exchange, which remains profitable.

"With economic uncertainty continuing to affect all market participants, we are pleased to be delivering continued growth, strategic progress and value for shareholders. We have had a positive start to 2023, with continued revenue growth across all divisions and trading remains in line with Board expectations for the full year."

An overview of the results from Alasdair Haynes is available to view on this link.

The Group will be hosting webinars for analysts and retail investors today at 9.30 and 16.00 respectively.

If you would like to register for the analyst webinar, please contact aquis@almapr.co.uk. Investors who would like to attend the retail investor webinar can sign up to Investor Meet Company for free and add themselves to the meeting via https://www.investormeetcompany.com/aquis-exchange-plc/register-investor. Investors who have already registered will be automatically invited.

Enquiries:

Aquis Exchange PLC	Tel: +44 (0)20 3597 6321
Alasdair Haynes, CEO
Richard Fisher, CFO Adele Gilbert, Head of Marketing	Tel: +44 (0)20 3597 6329
Investec Bank plc (Nominated Adviser and Broker)	Tel: +44 (0)20 7597 4000
David Anderson
Bruce Garrow
Lydia Zychowska St John Hunter Canaccord Genuity Limited (Joint Broker) Emma Gabriel George Grainger VSA Capital Limited (AQSE Corporate Adviser) Andrew Raca	Tel: +44 (0) 20 7523 8000 Tel: +44(0)20 3005 5000
Alma PR (Financial PR Adviser)	Tel: +44 (0)20 3405 0209
Josh Royston Rebecca Sanders-Hewett	aquis@almapr.co.uk
Kieran Breheny

Notes to editors:

About Aquis Exchange PLC

Aquis Exchange PLC ("Aquis") is a creator and facilitator of next-generation financial markets, through the provision of accessible, simple and efficient stock exchanges, trading venues and technology.

Aquis consists of four divisions:

Aquis Markets operates lit and dark order books, covering 16 European markets. For its lit books, Aquis uses a subscription pricing model which works by charging users according to the message traffic they generate, rather than a percentage of the value of each stock that they trade.

Aquis Technologies is the software and technology division of Aquis. It focuses on building better markets via the creation and licensing of cutting-edge, cost-effective exchange infrastructure technology and services, including matching engine and trade surveillance solutions.

Aquis Stock Exchange (AQSE) is a stock market providing primary and secondary markets for equity and debt products. It is authorised as a Recognised Investment Exchange, which allows it to operate a regulated listings venue. The AQSE Growth Market is divided into two segments 'Access' and 'Apex'; the Access market focuses on earlier stage growth companies, while Apex is the intended market for larger, more established businesses.

Aquis Data generates revenue from the sale of data derived from Aquis Markets and Aquis Stock Exchange to non-Member market participants.

Aquis is authorised and regulated by the UK Financial Conduct Authority and France's Autorité de contrôle prudentiel et de résolution and L'Autorité des marchés financiers to operate Multilateral Trading Facility businesses in the UK & Switzerland markets and in EU27 markets respectively. Aquis Exchange PLC is quoted on the Aquis Stock Exchange and on the AIM Market (AIM) of the LSE. For more information, please go to www.aquis.eu.

Interim Report

The six months to 30 June 2023 has been another strong period of profitable growth as revenues increase across all divisions, as we build on our achievements in 2022. Alongside this, we have continued to make good operational progress in all areas to expand our market opportunity. Achieving this despite challenging economic circumstances reflects our strong operational resilience and the continued demand for our offering across all three divisions.

Operational Review

We have continued our planned investment in key business areas such as growing our technology development team. These investments enable us to maintain our internally used Aquis technology set and support the ongoing growth in our technology licencing business.

The performance of Aquis Markets has progressed well. Exchange revenue increased by £0.8m (14%) from £5.1m to £5.9m. Since Aquis Matching Pool (AMP) was launched in 2022, trading volumes have increased with a closing 0.76% market share by 30 June 2023 (0.84% at 30 December 2022) demonstrating the resilience of the Aquis platform despite difficult market conditions. 

The Aquis Technologies contract pipeline has developed in line with expectations, and multiple renewals and/or extensions over the period continues to demonstrate customer loyalty and stickiness of revenue. The average maturity of a technology contract has increased further to 3.4 years.

On Aquis Stock Exchange, issuer revenue increased by 29%, reaching £0.8m as the number of admissions continues to grow despite a generally challenging economic climate for raising finance and a reduction in new issues. There are currently 104 securities on AQSE.

Aquis Markets

Continued revenue growth in the core business; ongoing success of AMP despite challenging market conditions; foundations laid for future market share gains through additional products and innovative rule change

Aquis Markets is the Group's pan-European secondary trading equities market. It comprises the UK MTF (AQXE) and the French MTF serving EU markets (AQEU). Aquis Markets currently offers over 2,100 stocks and ETFs across 16 European markets. A significant proportion of Markets activity is now being executed on AQEU, the Group's French MTF serving EU markets.

Average market share in 1H23 was 5.1% (5.0% 1H22). Market conditions remain challenging with lower lit market volumes across the board, but in the period Aquis has continued to grow its product offering with the introduction of our Dark to Lit Order Sweep functionality and also seen strong growth in our Auction on Demand (AoD) product.

Aquis Matching Pool: Following the acquisition of the business assets comprising the UBS MTF, Aquis has seen pleasing levels of activity with the number of members and levels of trading experienced to date growing from those seen at acquisition, with Management confident of future opportunities to grow.

Post-period end, Aquis Markets announced a change to the proprietary trading rule on its UK and EU trading platforms. In response to member demand, the rule change will allow liquidity providers the option to choose if they wish to interact with aggressive non-client proprietary trading or not; providing members with greater choice and immediacy of execution. We expect this to positively contribute to our growth in market share over the medium term.

Aquis Technologies

Progress made on a number of projects with continuing revenues from existing relationships

Aquis licenses its leading exchange-related technology through its Aquis Technologies division. Aquis Technologies creates and licenses technology for high volume, low latency trading platforms, complex connectivity solutions and real-time trade monitoring and surveillance systems for banks, brokers, investment firms and exchanges.

Aquis recognises license revenue on completion of project delivery in accordance with IFRS accounting standards, which can lead to lumpy revenue recognition, period on period. Despite the financial reporting requirements under revenue recognition standards, these contracts provide consistent long-term cash inflows for the business.

During 1H23, significant progress was made on several projects, namely where regulatory work had been completed on behalf of one customer and additional licences were provided to another existing customer. The work undertaken by the technologies team will pave the way for further offerings in the future. As a result, net revenues in the technology division have remained steady at £1.1m in 1H23 (£1.1m in 1H22).

In Q1 2023 Aquis Equinox, the world's first 24/7, no downtime, matching engine was launched, and the division continues to make exciting progress in its cloud services offering which will not only lead to future synergies within the Group's trading platforms, but also for new and existing technology licencing customers.

Aquis Technologies currently has seven contracts, on which five have recognised revenue. Management expects that revenue will be recognised on one of the two remaining contracts in H2 2023.

Aquis Data

Aquis generates revenue from the sale of data derived from Aquis Markets (AQXE & AQEU) and Aquis Stock Exchange to non-Member market participants. The total number of market data customers by 30 June 2023 was 85.

Revenue from market data vendors increased significantly by £0.5m (34%) to £1.8m for the six-month period compared to the 2022 equivalent, with continued growth in both terminal use and non-display licences across the period.

The creation of a consolidated tape in both the UK and EU presents opportunity for future revenue. There was progress made on the EU consolidated tape during the period, with administrative process to follow. The advent of an equities consolidated tape in either jurisdiction would disproportionately benefit Aquis.

Aquis Stock Exchange (AQSE)

Momentum building despite wider slowdown in market activity

Aquis Stock Exchange is a modern market for modern businesses, bringing positive disruption and competition to the listed SME sector. As one of the only two existing options for growing SMEs looking to IPO in the UK, Aquis' vision is for Aquis Stock Exchange to become the home for quality growth businesses, applying core Aquis values such as transparency and innovation.

Five admissions were completed during 1H23 (six at our principal competitor) compared to 12 during 1H22. This was reflective of a general slowdown in IPO activity across the market due to challenging economic conditions.

All Aquis Stock Exchange IPOs were well supported and there is a very strong pipeline of high growth and 'new economy' businesses.

Having achieved profitability ahead of forecasts in 2022, it is good to see the resilience of earnings with profitability maintained despite challenging IPO market conditions.

Financial Review

Net revenue increased 17% to £9.7m (1H22: £8.3m) and the EBITDA profit for the half year was £1.7m, a 26% increase on the EBITDA profit of £1.4m generated in 1H22. This EBITDA profit and the profit before tax of £1.1m includes £0.3m of income recognised from an impairment credit per IFRS 9 consistent with the 1H22 impairment credit.

Divisional revenue:

	6 months to June 2023 (£'000s)	6 months to June 2022 (£'000s)
Markets	5,869	5,112
Technologies	1,132	1,087
Data	1,840	1,376
Aquis Stock Exchange	832	699
	9,673	8,274

EBITDA has improved with revenue growth ahead of the controlled increase in costs during 1H 2023 and the back end of last year as the Group continued to invest in personnel and technological resources. The Group will continue to invest in the future to maintain the business's growth momentum.

Operating costs have increased by 15% to £8.0m (H1 2022: £6.9m) reflecting primarily increased headcount in the period as well as inflation on both staff cost and data centre costs and increased data costs. Aquis continues to seek and be able to recruit top talent. A focus continues to be recruitment in the development team, where a broadly stable proportion of costs is capitalised and then amortised over three years reflecting the ongoing value derived from these activity sets. Physical hardware acquired is capitalised and depreciated over a three year useful economic life. Other costs are recognised as operating in nature and reflected in the P&L as incurred.

The Group continues to maintain a strong balance sheet and cash equivalents at 30 June 2023 were £13.9m (30 June 2022: £13.3m). The Group continues to generate cash above operational requirement which has allowed the ongoing transfer of funds to the Group Trusts which have purchased shares in support of the Group share schemes.

Summary and Outlook

2023 so far has been a year of continued momentum for Aquis, with revenues continuing to increase across all divisions.

Following the successful integration of the Aquis Matching Pool in 2022, Aquis Markets has seen increased revenues. We have also worked to further diversify the products that will be made available to members, adding block trading via OptimX Markets and changing our proprietary trading rule to give members greater execution choice along with best execution outcomes.  These changes are laying the foundations for future growth in market share over the medium-term.

Our technology contract pipeline has continued to develop as expected, with a renewal and an extension over the period demonstrating the long-term nature of these relationships.

Within Aquis Data, we were pleased to see here was significant progress towards an EU consolidated tape during the period, which is likely to disproportionately benefit Aquis.

And finally, despite challenging market conditions, we remain positive on the long-term potential of the Aquis Stock Exchange, which remains profitable.

With economic uncertainty continuing to affect all market participants, we are pleased to be delivering continued growth, strategic progress and value for shareholders. We have had a positive start to 2023, with continued revenue growth across all divisions and trading remains in line with Board expectations for the full year.

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2023

			6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
	Note		£'000		£'000		£'000
Income Statement
Revenue	3		9,342		19,930		7,849
Impairment credit/(charge) on contract assets	4		331		132		425
Impairment credit / (charge) on trade and other receivables	4		-		(13)		26
Administrative expenses			(7,976)		(14,239)		(6,956)
Operating profit			1,697		5,810		1,344
Investment income	5		169		29		4
Depreciation and amortisation	7,8		(672)		(1,259)		(627)
Net finance costs	19		(49)		(53)		(22)
Profit before taxation			1,145		4,527		699
Income tax (charge)/credit	11		(99)		157		-
Profit after taxation			1,046		4,684		699
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations, net of tax	18		(37)		181		(42)
Other comprehensive loss for the year			(37)		181		(42)
Total comprehensive profit for the year			1,009		4,865		657
Earnings per share (pence)
Basic
Ordinary shares	6		3.8		17.0		2.5
Diluted
Ordinary shares	6		3.6		16.5		2.5

The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023

			6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
	Note		£'000		£'000		£'000
Assets
Non-current assets
Goodwill	7		83		83		83
Intangible assets	7		1,253		1,032		772
Property, plant and equipment	8		3,829		4,156		4,263
Deferred tax asset	10		1,594		1,594		1,292
Trade and other receivables	9		5,938		5,352		4,714
			12,697		12,217		11,124
Current assets
Trade and other receivables	9		4,970		4,135		2,786
Cash and cash equivalents			13,905		14,171		13,320
			18,875		18,306		16,106
Total assets			31,572		30,523		27,230
Liabilities
Current liabilities
Trade and other payables	12		4,495		4,268		4,453
Non-current liabilities
Lease liabilities	19		2,667		2,875		3,214
Total liabilities			7,162		7,143		7,667
Net assets			24,410		23,380		19,563
Equity
Called up share capital	13		2,752		2,751		2,751
Share premium account	14		11,810		11,785		11,780
Other reserves	15		2,320		1,813		1,860
Treasury shares	17		(3,798)		(3,350)		(3,001)
Retained earnings	16		11,363		10,317		6,332
Foreign currency translation reserve	17		(37)		64		(159)
Total equity			24,410		23,380		19,563

The notes to the financial statements on pages 10 to 22 form an integral part of these financial statements. The interim financial statements were approved by the board of directors and authorised for issue on 21 September 2023 and are signed on its behalf by:

R Fisher Director	A Haynes Director

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2023

	Note	Share Capital		Share Premium		Other Reserves		Treasury Shares		Retained Earnings		Foreign Currency Translation Reserve
		£'000		£'000		£'000		£'000		£'000		£'000		£'000
Balance at 1 January 2022		2,751		11,771		1,118		(1,527)		5,633		(117)		19,629
Profit for the 6-month period ended 30/06/2022										699				699
Issue of new shares				9										9
Movement in share option reserve						742								742
Movement in treasury shares								(1,474)						(1,474)
Foreign exchange differences on translation of foreign operations												(42)		(42)
Balance at 30 June 2022		2,751		11,780		1,860		(3,001)		6,332		(159)		19,563
Profit for the 6 month period ended 31/12/2022										3,985				4,180
Issue of new shares				5										5
Movement in share option Reserve						(47)								(47)
Movement in treasury shares								(349)						(349)
Foreign exchange differences on translation of foreign operations												223		28
Balance at 31 December 2022		2,751		11,785		1,813		(3,350)		10,317		64
Profit for the 6-month period ended 30/06/2023										1,046				1,046
Issue of new shares	13,14	1		25										26
Movement in share option reserve	15					507								507
Movement in treasury shares	17							(448)						(448)
Foreign exchange differences on translation of foreign operations	18											(101)		(101)
Balance at 30 June 2023		2,752		11,810		2,320		(3,798)		11,363		(37)		24,410

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2023

			Note	6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
				£'000		£'000		£'000
Cash flows from operating activities
	Cash generated/absorbed by operations		20	1,101		3,962		1,082
	Overseas tax paid			(219)		-		-
	Finance expense on lease liabilities		19	49		53		22
	Net cash inflow from operating activities			931		4,015		1,104
Investing Activities
	Recognition of intangible assets		7	(509)		(778)		(282)
	Purchase of property, plant and equipment		8	(57)		(769)		(480)
	Interest received		5	169		35		4
	Net cash used in / generated by investing activities			(397)		(1,512)		(758)
Financing Activities
	Proceeds from share issue		13,14	26		14		9
	Purchase of treasury shares		17	(448)		(1,956)		(1,000)
	Principal portion of lease liability		19	(257)		(301)		(39)
	Net cash (used in)/ generated by financing activities			(679)		(2,243)		(1,030)
Net increase/(decrease) in cash and cash equivalents				(145)		260		(684)
Cash and cash equivalents at the beginning of the period				14,171		14,046		14,046
Effect of exchange rate changes on cash and cash equivalents				(121)		(135)		(42)
Cash and cash equivalents at the end of the period				13,905		14,171		13,320

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS

1.     Basis of preparation of half-year report

This condensed consolidated interim financial report for the half-year reporting period beginning 1 January 2023 and ending 30 June 2023 ("interim period") has been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.

The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2022 and any public announcements made by Aquis Exchange PLC ("Aquis" or the "Company") during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

2.     Significant post balance sheet events

On 7 August 2023 Aquis Exchange PLC acquired a minority stake in OptimX Markets Inc. (OptimX), a US-based financial services start-up focused on the block trading market (the "Investment"). The investment is split into two tranches: Aquis will subscribe US$0.75m out of a total first tranche of US$3.0m payable in cash, followed by a second tranche in 12 months of a further US$0.75m out of a total $3.0m payable in cash. It is expected that Jonathan Clelland, COO of Aquis, will join the board of OptimX as a Non-Executive Director in due course.  OptimX is a new venture and so has not yet generated any profits or losses.

3.     Revenue

An analysis of the Group's revenue is as follows:

	6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
	£'000		£'000		£'000
Exchange Fees	6,154		10,869		5,387
Licence Fees	801		5,035		662
Issuer Fees	547		1,023		424
Data Vendor Fees	1,840		3,003		1,376
	9,342		19,930		7,849

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

4.     Expected credit loss

The expected credit loss on licensing contract assets has been calculated in accordance with IFRS 9: 

		£'000
As at 31/12/2021		1,478
Expected credit loss reversal for the period		(425)
As at 30/06/2022		1,053
Expected credit loss charge for the period		293
As at 31/12/2022		1,346
Expected credit loss reversal for the period		(331)
As at 30/06/2023		1,015

The expected credit loss on trade receivables has been calculated in accordance with IFRS 9: 

		£'000
As at 31/12/2021		46
Expected credit loss reversal for the period		27
As at 30/06/2022		73
Expected credit loss charge for the period		(14)
As at 31/12/2022		59
Expected credit loss reversal for the period		-
As at 30/06/2023		59

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

5.     Investment income

		6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
		£'000		£'000		£'000
Interest income on bank deposits		169		29		4

6.     Earnings per share

	6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
Number of Shares ('000)
Weighted average number of ordinary shares for basic earnings per share	27,510		27,509		27,509
Weighted average number of ordinary shares for diluted earnings per share	28,796		28,425		28,431
Earnings (£'000)
Profit for the period from continued operations	1,046		4,684		699
Basic and diluted earnings per share (pence)
Basic earnings per ordinary share	3.8		17.0		2.5
Diluted earnings per ordinary share	3.6		16.5		2.5

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

7.     Intangible assets

	Group Developed Trading Platforms	Other Intangibles	Goodwill
	£'000	£'000	£'000
Cost
As at 31/12/2021	3,011	37	83
Additions	282	-	-
As at 30/06/2022	3,293	37	83
Additions	324	172	-
As at 31/12/2022	3,617	209	83
Additions	468	41	-
As at 30/06/2023	4,085	250	83
Accumulated amortisation and impairment
As at 31/12/2021	2,286	8	-
Charge for the period	258	6	-
As at 30/06/2022	2,544	14	-
Charge for the period	228	8	-
As at 31/12/2022	2,772	22	-
Charge for the period	268	20	-
As at 30/06/2023	3,040	42	-
Carrying amount
As at 31/12/2021	725	29	83
As at 30/06/2022	749	23	83
As at 31/12/2022	845	187	83
As at 30/06/2023	1,045	208	83

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

8.     Property, plant and equipment

	Fixtures, fittings and equipment		Computer Equipment		Right of Use Asset		Total
	£'000		£'000		£'000		£'000
Cost
As at 31/12/2021	324		2,389		4,239		6,952
Additions & disposals	168		312		-		480
As at 30/06/2022	492		2,701		4,239		7,432
Additions & disposals	-		290		-		290
As at 31/12/2022	492		2,991		4,239		7,722
Additions & disposals	-		44		13		57
As at 30/06/2023	492		3,035		4,252		7,779
Accumulated depreciation and impairment
As at 31/12/2021	230		2,075		501		2,806
Charge for the period	38		152		173		363
As at 30/06/2022	268		2,227		674		3,169
Charge for the period	27		146		224		397
As at 31/12/2022	295		2,373		898		3,566
Charge for the period	30		160		194		384
As at 30/06/2023	325		2,533		1092		3,950
Carrying amount
As at 31/12/2021	94		314		3,738		4,146
As at 30/06/2022	224		474		3,565		4,263
As at 31/12/2022	197		618		3,341		4,156
As at 30/06/2023	167		502		3,160		3,829

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

9.     Trade and other receivables

	Current
	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Trade receivables net of impairment	4,042		3,421		2,096
Prepayments	810		636		683
Other receivables	129		78		7
	4,981		4,135		2,786
	Non-Current
	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Trade receivables net of impairment	5,588		5,010		4,079
Other receivables	339		342		635
	5,927		5,352		4,714

Trade receivables are stated net of any credit impairment provision as set out previously in Note 3 in accordance with IFRS 9, as illustrated below:

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Gross trade receivables	10,704		9,837		7,319
Expected credit losses on contract assets	(1,015)		(1,347)		(1,055)
Provisions against trade receivables	(59)		(59)		(73)
Trade receivables net of impairment	9,630		8,431		6,175

Impairment includes the expected credit loss on licencing contract assets stated in Note 4.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

10.   Deferred tax asset

A deferred tax asset was initially recognised in the year ended 31 December 2020, due to the Group becoming profitable for the first time. The Group is expected to continue to be profitable in future years, with the value of the deferred tax asset to be reassessed annually at year end. 

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Deferred tax asset	1,594		1,594		1,292

11.   Income tax

The income tax charge/(credit) can be reconciled to the result per the Statement of Comprehensive Income as follows:

				6 months to 30/06/2023		Year ended 31/12/2022		6 months to 30/06/2022
				£'000		£'000		£'000
Current tax
	UK Corporation tax charge			-		-		-
	Overseas tax charges on foreign operations			99		144		-
	Total tax charge			99		144		-
Deferred tax
	Origination and reversal of timing differences			-		(229)		-
	Effect of changes in tax rates			-		(72)		-
	Total deferred tax (credit)			-		(301)		-
				6 months to 30/06/2023		Year ended 31/12/2022		6 months to 30/06/2022
				£'000		£'000		£'000
Profit before tax				1,145		4,527		699
	Expected tax charge based on a corporation tax charge of 19%			195		860		100
	Expected tax charge based on effective overseas rates of 25%			99		177		61
	Fixed asset differences			(182)		(40)		(111)
	Expenses not deductible for tax purposes			87		109		53
	Other differences			(7)		(89)		(46)
	Remeasurement of deferred tax for changes in tax rates			(93)		(72)		(57)
	Movement in deferred tax not recognised			-		(1,069)		-
	Movement in deferred tax not recognised at overseas rates			-		(33)		-
	Tax charge/(credit) for the period			99		(157)		(1,030)

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

12.   Trade and other payables

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
Trade payables	244		510		499
Accruals	1,035		1,509		1,076
Social security and other taxation	663		221		755
Deferred revenue	1,959		1,358		1,604
Short term lease liabilities	527		523		434
Overseas corporation tax payable	23		144		-
Derivatives	40		-		-
Other payables	4		3		85
	4,495		4,268		4,453

In January 2023 forward contracts were taken by the Company in order to economically hedge against foreign exchange movements in contract asset balances denominated in US Dollars (see note 9). These derivatives are remeasured at each reporting sheet date with the movement recognised in Profit and Loss. The year to date loss on these items is £40k.

13.   Called up share capital

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Ordinary share capital
Issued and fully paid
27,149,559 Ordinary shares of 10p each	2,751		2,751		2,751
Issue of new shares following exercise of 3,999 EMI share options	-		-		-
Issue of new shares following exercise of 7,333 EMI share options	1		-		-
Ordinary share capital	2,752		2,751		2,751

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

14.   Share premium account

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
Share premium
At beginning of year	11,785		11,771		11,771
Issue of new shares following exercise of 3,999 EMI share options	-		14		9
Issue of new shares following exercise of 7,333 EMI share options	25		-		-
Share premium	11,810		11,785		11,780

15.   Other Reserves

	£'000
As at 31/12/2021	1,118
Share-based payment expense for the 6-month period ended 30/06/2022	742
As at 30/06/2022	1,860
Share-based payment expense for the 6-month period ended 31/12/2022	(47)
As at 31/12/2022	1,813
Share-based payment expense for the 6-month period ended 30/06/2023	507
As at 30/06/2023	2,320

The reserves relating to share-based payments reflects the estimated value of the approved employee share option schemes, which include the EMI, CSOP, PPO and Restricted Share options. The valuation of the options granted is estimated using a US binomial or Black Scholes model. Also included in the share-based payment reserve are the treasury shares purchased by the Trust under the Share Incentive Plan.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

16.   Retained earnings

	£'000
As at 31/12/2021	5,633
Profit for the 6-month period ended 30/06/2022	699
As at 30/06/2022	6,332
Profit for the 6-month period ended 31/12/2022	3,985
As at 31/12/2022	10,317
Profit for the 6-month period ended 30/06/2023	1,046
As at 30/06/2023	11,363

17.   Treasury shares

Treasury shares are purchased by the Trusts under the Employee Share Plans. The Trusts are consolidated within the Group financial statements and the value of the shares held at the balance sheet date is shown below.

	As at 30/06/2023		As at 31/12/2022		As at 30/06/2022
	£'000		£'000		£'000
At beginning of period	3,350		1,527		1,527
Purchase of treasury shares	448		1,823		1,474
Treasury shares at close of period	3,798		3,350		3,001

18.   Foreign currency translation reserve

The translation of the European subsidiary into the functional currency of the group results in foreign exchange differences that have been recognised in Other Comprehensive Income ('OCI') for the group which have been accumulated in a separate component of equity as illustrated below.

	6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
	£'000		£'000		£'000
At the beginning of the year/period	64		(159)		(117)
Foreign exchange differences on translation of foreign operations recognised in OCI	(101)		223		(42)
At the end of the year/period	(37)		64		(159)

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

19.   IFRS 16 Leases

The impact on the Group's assets and liabilities, and the related effects on profit and loss, of the Group's leasing activities

(the Group as a lessee) are detailed below.

Right of Use Asset

	Property
	£'000
Carrying amount at 1 January 2022	3,738
Depreciation for the period	(173)
Carrying amount at 30 June 2022	3,565
Depreciation for the period	(225)
Carrying amount at 31 December 2022	3,340
Remeasurement of lease	13
Depreciation for the period	(194)
Carrying amount at 30 June 2023	3,159

Rent deposit asset

	Rent deposit asset
	£'000
Carrying amount at 1 January 2022	616
Finance income on rent deposit asset for the period	11
Carrying amount at 30 June 2022	627
Finance income on rent deposit asset for the period	4
Recovery of rent deposit	(274)
Carrying amount at 31 December 2022	357
Remeasurement of lease	(12)
Finance income on rent deposit asset for the period	5
Carrying amount at 30 June 2023	350

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

Lease liability

	Lease liability
	£'000
Carrying amount at 1 January 2022	3,630
Finance expense on lease liability for the period	33
Lease payments made during the period	(39)
Carrying amount at 30 June 2022	3,629
Finance expense on lease liability for the period	35
Lease payments made during the period	(262)
Carrying amount at 31 December 2022	3,397
Finance expense on lease liability for the period	54
Lease payments made during the period	(257)
Carrying amount at 30 June 2023	3,194
Of which are:
Current	527
Non-current	2,667
	3,194

Net finance expense on leases

	6 months ended 30/06/2023	Year ended 31/12/2022	6 months ended 30/06/2022
	£'000	£'000	£'000
Finance expense on lease liability	54	68	33
Finance income on rent deposit asset	(5)	(15)	(11)
Net finance expense relating to leases	49	53	22

The finance income and finance expense arising from the Group's leasing activities as a lessee have been shown net where applicable

as is permitted by IAS 32 where criteria for offsetting have been met.

Amounts recognised in profit and loss

	6 months ended 30/06/2023	Year ended 31/12/2022	6 months ended 30/06/2022
	£'000	£'000	£'000
Depreciation expense on right-of-use assets	(194)	(397)	(173)
Finance expense on lease liability	(54)	(68)	(33)
Finance income on rent deposit asset	5	15	11
Net impact of leases on profit or loss	(243)	(450)	(195)

The total cash outflow for leases amounted to £217k in the 6 months to 30 June 2023.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

20.   Cash generated from operations

	6 months ended 30/06/2023		Year ended 31/12/2022		6 months ended 30/06/2022
	£'000		£'000		£'000
Profit after tax	1,046		4,684		699
Adjustments for:
Income tax	99		144		-
Deferred tax	-		(301)		-
Foreign exchange (gains)/losses	(13)		116		-
Investment revenue	(169)		(29)		(4)
Amortisation and impairment of intangible assets	288		499		264
Depreciation of property, plant and equipment	384		761		363
Equity settled share-based payment expense	507		820		289
Other (gains)/losses	(69)		58		(4)
Movement in working capital:
Increase in trade and other receivables	(1,199)		(1,594)		(986)
Increase in trade and other payables	227		(1,196)		461
Cash generated by operations	1,101		3,962		1,082

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