REG - Aquila Services Grp - Annual Financial Report and Notice of AGM
For immediate release 24 June 2021
Aquila Services Group plc
("Aquila", the "Company" or the "Group")
Annual report and financial statements
for the year ended 31 March 2021
and
Notice of AGM
Annual report
Aquila is pleased to announce its audited annual report and financial statements for the year ended 31 March 2021, extracts from which are set out below.
The Company's annual report and financial statements for the year ended 31 March 2021 are being posted to shareholders today and will shortly be made available from the Company's website at: http://www.aquilaservicesgroup.co.uk/.
In addition, the document will be uploaded to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Financial Highlights
For the year ended 31 March 2021
Revenue
£7,642k
(2020: £7,963k)
Gross profit
£1,640k
(2020: £1,752k)
Gross profit margin
21%
(2020: 22%)
Underlying operating profit*
£614k
(2020: £468k)
Statutory profit after tax
£187k
(2020: £126k)
Statutory earnings per share
0.48p
(2020: 0.35p)
Cash generated by operations
£930k
(2020: £230k)
Cash balances
£2,127k
(2020: £828k)
Total dividend payable
0.55p per share
(2020: 0.30p)
*Underlying operating profit is calculated by adjusting the reported pre-tax profit for profit/(loss) on disposals, restructuring costs related to COVID-19, share-based payment charges, acquisition costs, share of profits from associate companies and impairments of investments.
Dividend
The Directors propose a final dividend of 0.4p per share (2020: Nil). This will be paid on 2 August 2021 to shareholders on the register at 16 July 2021.
Notice of Annual General Meeting ("AGM")
The Company's AGM will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 28 July 2021 at 3:00 pm.
This year the AGM will continue with the special measures adopted for the AGM in 2020 to protect the health and safety of Shareholders and others in attendance at the AGM. The AGM will be run as a closed meeting with the minimum number of shareholders present (or via video conferencing in accordance with the Company's articles of association) to ensure that the meeting is quorate and conducted without a presentation or a question and answer session. Shareholders are invited to submit written questions for the Board to consider, questions can be pre-submitted in advance of the AGM via e-mail to the Company Secretary, claire.banks@aquilaservicesgrp.co.uk, up to 9:00am on 27 July 2021, being the working day before the AGM. The Board requests that no Shareholders attend the meeting in person and any Shareholders that do attend (other than to form a quorum) will be refused entry. Accordingly, Shareholders are encouraged to vote on the resolutions by proxy and the votes on each resolution will be taken on a poll. You can vote by completing and returning the proxy form which accompanies this Report and Accounts.
The Board will continue to keep Government guidance under review and may, if necessary, make further changes to the arrangements for the AGM. Further announcements and information will be provided as required and Shareholders should continue to monitor the Company's website at https://aquilaservicesgroup.co.uk/ for any up-dates.
The financial information set out below does not constitute the Company's statutory accounts for the period ending 31 March 2021. The financial information for 2020 is derived from the statutory accounts for that year. The auditors, Crowe U.K. LLP, have reported on the 2021 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.
For further information please visit www.aquilaservicesgroup.co.uk or contact:
Aquila Services Group plc
Claire Banks, Group Finance Director
Tel: 020 7934 0175
Beaumont Cornish Limited, Financial Adviser
Roland Cornish
Tel: 020 7628 3396
Extracts from the Company's annual report and financial statements for the year ended 31 March 2021
Chair's Statement
Dear Shareholder,
I am pleased to present the annual report and the financial statements for the year to 31 March 2021. The report is designed to provide both an overview of the Group's business and achievements, as well as a summary of the results for the year. I hope shareholders will find it both helpful and informative. If you would like further information or wish to discuss the work of the Group, please do not hesitate to contact one of the directors; details are given on page 4.
My letters to shareholders included in last year's final report and the interim report for this year concentrated on the actions we took to counter the impact of the pandemic and increase the financial resilience of the Group. Looking back, I am pleased to report that because we took timely and appropriate decisions, the Group has emerged with a stronger, more resilient and agile business model and increased reserves.
In global terms, the impact of the pandemic is still ongoing. The pace of economic recovery in the UK, the third wave in Europe and the disastrous effects being seen for some of our international partners in Africa and Asia mean we remain cautious.
At the interim stage, trading profits were lower than the previous comparable period, both from lower turnover and the costs of restructuring. I am pleased to report the second half of the year had no further disruptive events and trading continued to improve. Turnover was only slightly below previous years and reported profits are higher after restructuring costs and the impairment of our investment in AssetCore. Cash balances have significantly increased and with a continuation of the uplift in trading for the first few months of this year, we are optimistic. The Group is pleased to return to the dividend list and its confidence has enabled the proposed final dividend to be recommended at a level reflecting pre-pandemic trading.
Elsewhere in this report there is a summary of trading for each of the three businesses of the Group, so here I want to concentrate on the opportunities to grow the existing businesses, both organically and by acquisitions.
Altair Consultancy and Advisory Services Ltd (Altair) has four major business streams: Property, Governance and Financial Support, Transformation and Change and Altair International. Predominantly the first three activities work for a wide range of local authorities, housing associations and charities but with an increasing number of commercial organisations, mainly operating in the UK housing sector. Altair International's major clients are through multi-national agencies such as the World Bank or specific government agencies wanting to support affordable housing programmes and infrastructure development in Africa and Asia.
For all activities the contracts generated, mainly from existing clients, have kept our team of consultants working at full stretch. With the impact of the pandemic on travel, conferences and marketing, the opportunity to grow the client base has been restricted. We are now actively looking to expand our team of consultants and in particular our range of expertise by identifying disciplines that we do not currently offer. We will do this by recruitment and by acquisition, neither of which will be easy and will take time.
The well-publicised demand for specialists in fire safety and achieving targets for decarbonisation of residential accommodation has meant these skills are in short supply. To expand our team we will need to both recruit and continue to train our own. As the regulations governing the organisations with which we work get more complex, the skills that we need are in higher demand. To make the Group more attractive to new recruits and to retain our existing specialists, we have restructured our remuneration packages to offer better rewards and increased opportunities.
For Altair International, the restrictions on travel which meant having to manage projects either virtually or through locally based contractors have restricted being preferred bidders for larger new opportunities. As, hopefully, these restrictions begin to lift then we will expand the team and the product range.
During the year, we reviewed a limited number of acquisition opportunities none of which met our minimum criteria. Often the expectations of the acquisition price were well beyond our valuation yet private equity companies, who from our perception had little experience of the businesses, were willing to pay significantly higher sums. There are identified businesses in which we would be interested and for which we could provide opportunities for both the owners and their consultants. We expect that these opportunities will become more available when expectations of anticipated values are more realistic.
Oaks Consultancy Limited (Oaks) is a consultancy that works mainly in the education and sports sector but is increasingly working with Altair consultants to develop the offering in both the health and housing sectors. Clients include, some of England's largest multi academy trusts, many of the UK's national governing bodies of sport, community development work for Premier League football clubs and international strategic planning an implementation for UEFA and its 55 member associations. The year under review was the first full year within the Group and probably suffered the most from the effects of the pandemic with many of the sports organisations significantly reducing their activities or closing, similarly for many in the education field. Despite this, performance exceeded our expectations and we are now looking forward to a year of expansion.
Oaks is working on a number of new products including providing ongoing digital support for many of its clients and ongoing assistance as organisations strive to rebuild their impact and finances following a period of shutdown. For some clients this may mean merging with other organisations and we are now developing templates and processes to help these organisations manage effectively in a more challenging environment. This expansion will be supported by a programme of recruitment and we have started looking for acquisitions that would complement the range of skills and client base.
Aquila Treasury and Finance Solutions Ltd (ATFS) is our treasury consultancy registered with the FCA. Previously concentrating only on the affordable housing sector, with our latest acquisition we now provide treasury and banking support within the education sector. The education sector was heavily impacted by the pandemic and the temporary closure of many educational establishments resulted in a more challenging year for ATFS.
The current financial year will focus on our planned succession within the company and the development of further products specific to the education sector. The programme of recruitment and restructuring has already started, with the aim of completing the first phase by the half year and the second phase by the end of this financial year.
At the beginning of the Chairman's Statement last year, I invoked the old Chinese greeting of 'may you live in interesting times'. Looking forward, we see that we are well placed to grow the business and its profitability. This should benefit the support we provide to our clients, the opportunities and rewards for our employees and the financial returns to our shareholders. We are an incremental business and these benefits are for the medium term rather than a short term strategy.
We want our stakeholders to be pleased to be involved with a group that is striving for a better world, whether this be from our business in helping households have access to better quality, affordable homes, the ability to participate in sports, receive a better education or have improved access to health services. We want this to be reflected in how we operate so we are currently working on programmes to reduce our carbon footprint and ensure that the diversity and opportunities for those we employ and recruit reflect both the need for an equal society and address inequalities. On Page 11 we introduce our staff groups, Green and EDI, reviewing ways we can improve our methods of working to minimise our carbon footprint and for recruitment, management and employment procedures to encourage equality, diversity and inclusion.
As a result of the restructuring, I accepted, on a temporary basis, the role of Executive Chair. Fiona Underwood as the Chief Executive of Altair worked with me to coordinate activities at Group level. I am pleased to formally announce that Fiona has accepted the role of Group Managing Director and I will relinquish much of my executive responsibilities.
To concentrate efforts on managing the operational responsibilities of the Group, the subsidiary boards' membership were restructured to be executive-led. This puts more responsibility on Group board to provide wider experience and strategic guidance. We are currently reviewing options to add relevant skills and experience and also with an eye on our succession requirements.
Typically the Group Chair ends the report by singling out individuals who have made important contributions during the year. For the year under review, this is an impossible task. All have contributed over and above the call of duty and turned what could have been a year of challenge to a year of success.
What I will do is personally thank my fellow Group board members who work with me. They also put in untiring efforts and were always able to provide an air of optimism which I appreciated.
Let's now look forward with confidence to keeping the growth of the business on track and for everybody involved, whether clients, employees or investors, to be proud and supportive of the Group's achievements.
Derek Joseph - Chair
23 June 2021
Extract from the Strategic Report
Strategy and objectives
Aquila Services Group (Aquila) has a bold purpose to 'make a better, more sustainable and socially responsible world'. We achieve this by being a consultancy group which provides professional support services to socially focused sectors in the UK and internationally.
Our purpose is core to what we want to be across the group:
§ We want our subsidiaries to have a direct beneficial impact on communities and lives in the UK and beyond.
§ We want to offer staff the opportunity to inspire positive change in an environment with a strong social focus.
§ And we want to provide investors the opportunity of supporting an organisation that combines strong performance with a positive social outcome.
Our work helps our clients to develop a response to a changing world and make a positive difference to the communities in which they operate. At present we work with clients across housing and regeneration, sport and education, charity and government sectors. We work across the UK and increasingly internationally.
Our business as at 31 March 2021
Aquila delivers work to clients through key subsidiaries, each of which has a core market and service focus:
· Altair provides support for affordable housing and government bodies through the development, growth, management, governance, and operation of organisations, and the improvement of services to housing customers.
· ATFS is registered with the Financial Conduct Authority and provides advice to the affordable housing and education sectors on treasury and funding solutions.
· Oaks works with clients in the sport and education sectors focused on strategy, business planning and income generation activities.
Within the year of reporting the Group has set up two employee led groups with representation across the Aquila Group. The aim is to focus activities on the environment and sustainability, equality, diversity and inclusion and promoting these initiatives amongst colleagues, making Aquila an attractive employer to work for.
Green Group
The objective of the Green Group is to reduce the Group's environmental impact, to maintain Carbon Neutral Plus status and develop further initiatives to mitigate the Group's impact on the environment.
EDI Group
The purpose of the Equality Diversity and Inclusion (EDI) Group is to drive the EDI agenda across subsidiaries including developing frameworks and raising awareness for the implementation of a range of initiatives to foster a culture of equality, diversity and inclusion at Aquila.
Further information about, and activities within the groups, is available on the website.
Principal risks and uncertainties
The principal risks currently faced by the Group are:
Financial risk
The main financial risks arising from the Group's activities are credit risk, foreign currency risk, interest rate risk and liquidity, details of which can be found in note 24 to the Financial Statements.
Unfavourable economic conditions and/or changes to government policy
The impact of COVID-19 will affect the macro-economic environment for some time, although the stimulus provided by the government has helped businesses during the last year. The sectors that the Group operates within may see a reduction in business as clients spending on consultancy is curtailed. Local authorities continue to see significant pressure on budgets and may stop all consultancy contracts or commissioning work.
The Group mitigates these risks by ensuring that each subsidiary has diversity across its client base, not relying on any one client or group of clients.
Changes to government policy may adversely affect the Group. The Group ensures that it is aware of the impact of these changes and adapts its products and services to proactively respond to this risk.
The implementation of IR35 within the interim market was implemented on 1 April 2021. The Group has changed the way it works with clients although IR35 will continue to affect this part of the business.
COVID-19
The return to normal business may take longer than anticipated and the possibility of continued disruption and/or further waves could mean that procurement and commissioning of projects is delayed or cancelled.
Competition
Increased competition in the market continues to pose a risk to all companies within the Group.
Staff skills, retention, recruitment and succession
As the Group is a people-based business, a significant risk is the recruitment and retention of talent. The Group has implemented succession plans within the year to mitigate this risk.
Data governance
The increase of cyber-attacks and the loss of data is a serious risk that is monitored closely. The Group complies with all relevant legislation and has invested in updated systems, security and training during the year and will commit to having Cyber Essential Plus status within the coming year.
Mitigations of risk
The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial requirements and maintains good relationships with its clients, principal contacts within government, regulators and other key influencers within the sector.
The Group is well placed to provide the full range of services needed by its clients as the external environment changes and the UK unlocks further from the pandemic. Our international work will continue to be impacted due to international travel restrictions. It is hoped these will ease during the year.
Environment
As part of the Group's overall purpose of 'Making a better, more sustainable, socially responsible world' the need to tackle the wider climate emergency has been a focus and as a result Aquila has achieved Carbon Neutral Plus status within the year.
Further information is on the website.
Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements
The directors (being Derek Joseph, Executive Chair, Fiona Underwood, Executive Director, Claire Banks, Group Finance Director and Company Secretary and Richard Wollenberg, Non-Executive Director) 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 pursuant to Regulation (EC) No 1606/2002 as it applies in 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:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
· state whether IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business; and
· provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.
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.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
· the Company and Group financial statements, prepared in accordance with IFRS as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the Group; and
· these strategic and directors' reports include a fair review of the development and performance of the business and the position of the Company and the Group together with a description of the principal risks and uncertainties that they face.
Claire Banks - Group Finance Director
On behalf of the Board
23 June 2021
Consolidated statement of comprehensive income
For the year ended 31 March 2021
Notes
2021
2020
£'000
£'000
Revenue
4
7,642
7,963
Cost of sales
5
(6,002)
(6,211)
Gross profit
1,640
1,752
Administrative expenses
5
(1,339)
(1,626)
Operating profit
301
126
Finance income
4
-
1
Release of contingent consideration
10
-
555
Impairment of goodwill
10
-
(555)
Share of profits from associate
13
-
51
Loss on disposal of associate
13
(25)
-
Profit before taxation
6
276
178
Income tax expense
8
(89)
(52)
Profit for the year
187
126
Other comprehensive income
-
-
Total comprehensive income for the year
187
126
Earnings per share attributable to owners of the parent
Basic
9
0.48p
0.35p
Diluted
9
0.45p
0.32p
The income statement has been prepared on the basis that all operations are continuing operations.
Consolidated statement of financial position
As at 31 March 2021
Group
Group
2021
2020
Notes
£'000
£'000
Non-current assets
Goodwill
10
3,317
3,317
Property, plant and equipment
11
394
518
Investment in associates
13
-
278
Investments
14
71
121
3,782
4,234
Current assets
Trade and other receivables
15
2,273
2,387
Cash and bank balances
2,127
828
4,400
3,215
Current liabilities
Trade and other payables
16
1,929
1,683
Lease liabilities
16
85
79
Corporation tax
89
76
2,103
1,838
Net current assets
2,297
1,377
Non-current lease liabilities
17
284
369
Net assets
5,795
5,242
Equity
Share capital
18
1,998
1,897
Share premium account
18
1,712
1,475
Merger reserve
18
3,042
3,042
Share-based payment reserve
21
580
769
Retained losses
(1,537)
(1,941)
Equity attributable to the owners of the parent
5,795
5,242
The financial statements were approved by the board and authorised for issue on 23 June 2021.
Claire Banks - Group Finance Director
Company statement of financial position
As at 31 March 2021
Company
Company
2021
2020
Notes
£'000
£'000
Non-current assets
Property, plant and equipment
11
-
16
Investment in subsidiaries
12
4,170
4,082
Investment in associates
13
-
227
Investments
14
71
121
4,241
4,446
Current assets
Trade and other receivables
15
1,304
708
Cash and bank balances
415
13
1,719
721
Current liabilities
Trade and other payables
16
393
505
393
505
Net current assets
1,326
216
Net assets
5,567
4,662
Equity
Share capital
18
1,998
1,897
Share premium account
18
2,341
2,104
Share-based payment reserve
21
580
769
Retained earnings/(losses)
648
(108)
Equity attributable to the owners of the parent
5,567
4,662
As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss account. The company's profit for the year was £539k (2020: £200k).
The financial statements were approved by the board and authorised for issue on 23 June 2021.
Claire Banks - Group Finance Director
Company Registration No. 08988813
Consolidated statement of changes in equity
For the year ended 31 March 2021
Share
Share based
Share
premium
Merger
payment
Retained
Total
capital
account
reserve
reserve
losses
equity
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 1 April 2019
1,765
1,487
2,413
668
(1,730)
4,603
Issue of shares
132
(12)
629
-
-
749
Transfer on reserves
-
-
-
(4)
4
-
Total comprehensive income
-
-
-
-
126
126
Share based payment charge
-
-
-
105
-
105
Dividend
-
-
-
-
(341)
(341)
Balance at 31 March 2020
1,897
1,475
3,042
769
(1,941)
5,242
Balance at 1 April 2020
1,897
1,475
3,042
769
(1,941)
5,242
Issue of shares
101
237
-
-
-
338
Transfer on reserves
-
-
-
(277)
277
-
Total comprehensive income
-
-
-
-
187
187
Share based payment charge
-
-
-
88
-
88
Dividend
-
-
-
-
(60)
(60)
Balance at 31 March 2021
1,998
1,712
3,042
580
(1,537)
5,795
Company statement of changes in equity
For the year ended 31 March 2021
Share
Share based
Share
premium
payment
Retained
Total
capital
account
reserve
earnings
equity
£'000
£'000
£'000
£'000
£'000
Balance at 1 April 2019
1,765
1,487
668
29
3,949
Issue of shares
132
617
-
-
749
Total comprehensive income
-
-
-
200
200
Transfer on reserves
-
-
(4)
4
-
Share based payment charge
-
-
105
-
105
Dividend
-
-
-
(341)
(341)
Balance at 31 March 2020
1,897
2,104
769
(108)
4,662
Balance at 1 April 2020
1,897
2,104
769
(108)
4,662
Issue of shares
101
237
-
-
338
Total comprehensive income
-
-
-
539
539
Transfer on reserves
-
-
(277)
277
-
Share based payment charge
-
-
88
-
88
Dividend
-
-
-
(60)
(60)
Balance at 31 March 2021
1,998
2,341
580
648
5,567
Consolidated statement of cash flow
For the year ended 31 March 2021
2021
2020
£'000
£'000
Cash flows from operating activities
Profit for the year
187
126
Interest received
-
(1)
Income tax expense
89
52
Share based payment charge
88
105
Profit from associate
-
(51)
Release of contingent consideration
-
(555)
Impairment of goodwill
-
555
Loss on disposal of associate
25
-
Change in fair value of investments
50
-
Depreciation
131
134
Operating cash flows before movement in working capital
570
365
Decrease in trade and other receivables
114
122
Increase/(Decrease) in trade and other payables
246
(257)
Cash generated by operations
930
230
Income taxes paid
(75)
(139)
Net cash inflow from operating activities
855
91
Cash flows from investing activities
Interest received
-
1
Purchase of property, plant and equipment
(7)
(32)
Purchase of subsidiary
-
(544)
Proceeds from sale of associate
252
-
Net cash inflow/(outflow) from investing activities
245
(575)
Cash flows from financing activities
Lease liability payments
(79)
(66)
Proceeds of share issue
338
-
Dividends paid
(60)
(341)
Net cash inflow/(outflow) from financing activities
199
(407)
Net increase/(decrease) in cash and cash equivalents
1,299
(891)
Cash and cash equivalents at beginning of the year
828
1,719
Cash and cash equivalents at end of the year
2,127
828
Company statement of cash flow
For the year ended 31 March 2021
2021
2020
£'000
£'000
Cash flows from operating activities
Profit for the year
539
200
Dividends received
(1,122)
(461)
Interest received
-
(1)
Profit on disposal of associate
(26)
-
Change in fair value of investment
50
-
Depreciation
16
21
Operating cash flows before movement in working capital
(543)
(241)
(Increase) / Decrease in trade and other receivables
(597)
379
(Decrease) in trade and other payables
(110)
(37)
Cash (outflow)/inflow generated by operations
(1,250)
101
Net cash (outflow)/inflow from operating activities
(1,250)
101
Cash flows from investing activities
Interest received
-
1
Dividends received
1,122
461
Acquisition of subsidiaries
-
(544)
Proceeds from sale of associate
252
-
Net cash (outflow)/inflow from investing activities
1,374
(82)
Cash flows from financing activities
Proceeds of share issue
338
-
Dividends paid
(60)
(341)
Net cash outflow from financing activities
278
(341)
Net decrease in cash and cash equivalents
402
(322)
Cash and cash equivalents at beginning of the year
13
335
Cash and cash equivalents at end of the year
415
13
Notes to the financial statements
For the year ended 31 March 2021
1 General information
Aquila Services Group plc ('the Company') and its subsidiaries (together, 'the Group') provide specialist housing, sport, education and treasury management consultancy services. The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.
The Company is a public limited company which is listed on the London Stock Exchange, domiciled in the United Kingdom and incorporated and registered in England and Wales. The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
2 Accounting policies
The principal accounting policies applied in preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, including interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis except for certain assets which are carried at fair value.
The financial statements are presented in Pounds Sterling which is the functional and presentational currency of all companies within the group.
The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas of critical accounting estimates and judgements are set out in note 3.
Going concern
When COVID-19 struck before the beginning of the financial year under review the Directors took immediate action and as a result a number of staff were made redundant, and some put on furlough. Cash balances were increased through the issue of new equity. The Group took advantage of the VAT deferral scheme which is being paid back over 10 months. The Group has no borrowings.
The budgets and cashflow forecasts that have been produced and reviewed demonstrate that the Group is forecast to generate profits and cash in the year ended 31 March 2022 and beyond and that the Group has sufficient cash reserves to enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the financial statements.
Government Furlough scheme
The Company took advantage of the Governments furlough scheme and furloughed seven employees, all of whom have now returned to work. The monies received have been offset against the employee costs.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of subsidiary entities. A subsidiary is defined as an entity over which the Company has control. Control is achieved when the Company has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity, and could use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three control elements listed above.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with the Group's accounting policies.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.
Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill is not amortised but is reviewed for impairment at least annually. If the consideration is less than the fair value of the identifiable assets and liabilities acquired, the difference is recognised in the statement of comprehensive income.
Revenue recognition
The group earns income from the following principal services:
§ Revenue from consultancy services
§ Revenue from treasury management.
For all these principal services, revenue represents amounts recoverable from clients for professional services provided during the year. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.
Revenue is recognised when control of a product or service is transferred to a customer.
Revenue from fixed fee assignments is recognised over a period of time by reference to the stage of completion of the actual services provided at the reporting date, as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour hours.
Time and materials assignments are recognised as services are provided at the fee rate agreed with the client. Unbilled revenue on individual client assignments is classified as contract assets for client work within trade and other receivables. Where individual on-account billings exceed recognised revenue on a client assignment, the excess is classified as contract liabilities for client work within trade and other payables.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for use. Depreciation is recognised to write-off the cost of assets less their residual values over their estimated useful lives, using the straight-line method, on the following bases:
Leasehold improvement
Over unexpired term of lease
Right of use assets
Over unexpired term of lease
Leasehold improvements
5 years
Fixtures, fittings and equipment
3-4 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.
Investment in subsidiaries
In the Company's financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company, plus any costs directly attributable to the purchase of the subsidiary.
Investment in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of profit or loss and other comprehensive income of the associate.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of cost over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included in the carrying amount of the investment.
Investments
Investments are held at cost and reviewed annually for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'amortised cost'. The classification depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them and is determined at the time of initial recognition. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.
Amortised cost
Financial assets at amortised cost
These assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost. With the exception of trade receivables which are initially measured at transaction price determined in accordance with IFRS 15, financial assets at amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents. Cash comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand which have a right of offset against cash balances. These instruments are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Financial assets at fair value through profit or loss
Assets that do not meet the criteria for amortised cost are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. The Group's financial assets measured at FVTPL comprise unquoted equity investments.
Impairment of financial assets
Impairment provisions for current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the expected credit loss for the trade receivables. Provisions are recorded net in a separate provision account with the loss being recognised in the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in credit risk since the initial recognition of the asset.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'. The Group does not currently hold any financial liabilities 'at FVTPL'.
Pensions
The Group contributes to defined contribution schemes for the benefit of its directors and employees. Contributions payable are charged to the statement of comprehensive income in the year they are payable.
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled. Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets
Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income. No deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.
Impairment of assets
The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss.
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate pre-tax discount rate.
Leases
The Group accounts for leases under IFRS 16. Leases are accounted for on a 'right-of-use model' reflecting that, at the commencement date, the Company as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use asset. The right-of-use assets are recognised within property, plant and equipment on the face of the financial position and are presented separately in note 9.
The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. Subsequently the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is re-measured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability;
· any lease payments made at or before the commencement date less any lease incentives received;
· any initial direct costs; and
· restoration costs.
Subsequently the right-of-use asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight line-basis over the lease term.
The Group does not have any short-term leases of equipment or vehicles.
Share capital/equity instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
Share-based payments
Equity-settled share-based payments to employees and directors are measured at the fair value of the equity instruments at grant date. The fair value excludes the effect of non-market-based vesting conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises the estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
The fair value of the options is measured using the Black Scholes options valuation model. The inputs into that model are the share price at the date of the grant, the exercise price, the expected life of the option, the risk-free rate based on the yield of a 10-year government bond and the expected share price volatility based on the Company's share price.
Prior year adjustment
In the parent company balance sheet an adjustment has been made to transfer the amount of £130k from investments in subsidiaries to amounts due from group undertakings, this adjustment is to correct the accounting treatment of the hive up of the trade and assets of the acquisition in the previous year.
Adoption of new and revised standards
No new standards were adopted in the year.
Standards issued but not yet effective
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
3 Critical accounting estimates and judgements
In application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have a significant effect on the amounts recognised in the financial statements.
Work in progress within revenue recognition
Work in progress is calculated on a project by project basis using the fair value of chargeable time that is un-invoiced at the period end. Historic analysis shows that recovery rates of work in progress are very high; the Group does not expect any work in progress to be irrecoverable. Work in progress is reviewed on a monthly basis to ensure it is recognised appropriately, it is probable that economic benefits will flow to the Group and that the fair value can be reliably measured (note 4). Work in progress is accounted for under contract assets.
Share based payments
The Company has granted share options to certain employees and directors of the Group. The share options granted become exercisable at varying future dates. If certain conditions are met the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.
The share-based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.
Assumptions regarding the fair value of the Company's shares are considered when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled share-based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of comprehensive income to reflect the services rendered as consideration during the vesting period (note 21).
Intangible assets
On acquisition the following items are reviewed to assess if there is any value in acquiring the intangibles separately:
· Trademarks or trade names
· Technology based intangibles, including any IT systems
· Artistic-related intangibles
· Intellectual property
· Customer-related intangibles
· Employment contracts
The Group does not have any intangible assets from acquisitions.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Impairment of goodwill
The carrying amounts of the Group's assets value are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated, and an impairment loss is recognised where the recoverable amount is less than the carrying value of the asset. Any impairment losses are recognised in the income statement.
The recoverable amount of the goodwill is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to income and direct costs during the period.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to each acquisition of goodwill. Discount rates of 11% and a terminal value of 1% has been used.
Growth rates of 0-15% have been applied, these are based on industry rates, management's knowledge of the different businesses and the markets and the ability for the businesses to expand. The maximum period over which the cashflows are reviewed is 5 years.
Sensitivities have been applied to all assumptions.
Valuation of unquoted investments
The Group determines the fair value of these financial instruments using recent transactions or valuation models if information about recent transactions is not available. The values derived from applying these models are significantly impacted by the choice of the valuation model used and the underlying assumptions made, such as the amounts and timing of future cash flows, discount rates, volatility and credit risk.
Management reviewed all information available at 31 March 2021 taking into account all additional information relating to market participant assumptions that is reasonably available and concluded that there is an impairment of the unquoted investment and has restated its fair value.
4 Revenue and Finance income
An analysis of the Group's revenue is as follows:
2021
2020
£'000
£'000
Continuing operations - rendering of services
Specialist housing consultancy income
5,961
6,729
Treasury management income
657
528
Specialist sports and education consultancy income
1,024
706
7,642
7,963
5 Operating segments
The Group has two reportable segments; consultancy and treasury management services, the results of which are included within the financial information. In accordance with IFRS8 'Operating Segments', information on segment assets is not shown, as this is not provided to the chief operating decision-maker.
The principal activities of the Group are as follows:
Consultancy - a range of services to support the business needs of a diverse range of organisations (including housing associations, local authorities, multi academy trusts and sporting businesses) across the housing, education and sports sectors. Most consultancy projects run over one to two months and on-going business development is required to ensure a full pipeline of consultancy work for the employed team.
Within this segment of the business several client organisations enter fixed period retainers to ensure immediate call-off of the required services.
In previous years the Group had three main reporting segments the third being that of interim management. The introduction of IR35 had an impact on the interim business, with clients changing the way that they resourced executive vacancies, choosing to source in-house rather than through professional service firms. The Group took a strategic decision not to actively pursue this revenue stream and concentrate on the main operating segment of consulting and treasury management, as a result, the turnover for interim management is no longer considered by management to be a significant segment of the business.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's executive directors for the purpose of resource allocation and assessment of segment performance.
2021
2020
£'000
£'000
Revenue from Consultancy
6,985
6,640
Revenue from Interim management
-
795
Revenue from Treasury management
657
528
7,642
7,963
Cost of sales from Consultancy
5,436
5,315
Cost of sales from Interim management
-
574
Cost of sales from Treasury management
566
322
6,002
6,211
Gross profit from Consultancy
1,549
1,325
Gross profit from Interim management
-
221
Gross profit from Treasury management
91
206
1,640
1,752
Administrative expenses
(1,339)
(1,626)
Operating profit
301
126
Within consultancy revenues, approximately 8% (2020: 7%) has arisen from the segment's largest customer; within treasury management 26% (2020: 26%).
Geographical information
Revenues from external customers, based on location of the customer, are shown below:
2021
2020
£'000
£'000
UK
7,057
7,368
Europe
401
279
Rest of World
184
316
7,642
7,963
6 Profit before taxation
2021
2020
£'000
£'000
Profit before taxation is arrived at after charging:
Auditors' remuneration (see below)
49
42
Depreciation of property, plant and equipment (see note 11)
38
63
Depreciation of leasehold property (see note 11)
93
71
Staff costs (see note 7)
5,067
5,351
Significant reorganisation costs *
175
186
Acquisition related costs
-
51
* Significant restructuring costs include staff related costs of £175k (2020: £186k) arising from the redundancy costs relating to COVID-19 are provided for.
Breakdown of auditors' remuneration
2021
2020
£'000
£'000
Auditors' remuneration
Fees payable to the Company's auditors for the audit of the parent Company
30
23
Fees payable to the Company's auditors for the audit of the Company's subsidiaries
19
19
49
42
7 Staff costs
2021
2020
The average monthly number of employees (including directors) employed by the Group was:
76
74
2021
2020
£'000
£'000
Aggregate remuneration (including directors)
Wages and salaries
4,250
4,542
Share-based payments
88
105
Pension contributions
203
215
Social security costs
526
489
5,067
5,351
The above amounts are net of £60k relating to income received from the Government's furlough scheme.
2021
2020
£'000
£'000
Directors' remuneration
Salary (including taxable benefits)
435
396
Share-based payments
8
20
Pension contributions
19
22
462
438
Two directors are members of the company's defined contribution pension scheme.
The amounts set out above include remuneration to the highest paid director as follows:
2021
2020
£'000
£'000
Salary (including taxable benefits)
169
146
Share-based payments
5
8
Pension contributions
9
9
183
163
Remuneration of key management personnel
The remuneration of the key management personnel of the Group, including all directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
2021
2020
£'000
£'000
Wages and salaries
1,197
664
Share-based payments
23
29
Post-retirement benefits
44
22
1,264
715
8 Taxation
2021
2020
£'000
£'000
Corporation tax:
Current year
89
52
The tax charge for the year can be reconciled to the profit in the income statement as follows:
2021
2020
£'000
£'000
Profit before taxation
276
178
Tax at the UK corporation tax rate of 19% (2020: 19%)
52
34
Post tax income from associate
-
(9)
Expenses not deductible
37
27
Tax expense for the year
89
52
9 Earnings per share
Basic earnings per share is calculated by dividing the profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. Details of which are set out in note 21.
2021
2020
£'000
£'000
Profit after tax attributable to owners of the parent
187
126
Weighted average number of shares
'000
'000
- Basic
39,282
36,285
- Diluted
41,602
41,665
Basic earnings per share
0.48p
0.35p
Diluted earnings per share
0.45p
0.32p
10 Goodwill
Group
Goodwill
£'000
Cost
At 1 April 2019
2,028
Additions
1,844
At 31 March 2020
3,872
Additions
-
At 31 March 2021
3,872
Accumulated impairment losses
At 1 April 2019
-
Impairment loss for the year
(555)
At 31 March 2020
(555)
Impairment losses for the year
-
At 31 March 2021
(555)
Net book value
At 1 April 2019
2,028
At 1 April 2020
3,317
At 31 March 2021
3,317
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination. Each Subsidiary is considered to be the cash generating unit for the purpose of impairment review.
The Group tests goodwill annually for impairment, or more frequently if there are any indications that goodwill might be impaired.
The recoverable amount of goodwill is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding growth rate of client base and project fees. Management's approach to determining the values to each key assumption is based on experience and project work already secured for future periods. Management have projected cash flows over a period of five years, based on growth rates of between 0% and 15% per annum; this is based on past performance and expected future activity. A discount rate of 11% and a terminal value of 1.0% has been used.
Sensitivity analysis has been performed on the value in use calculations, holding all other variables constant to:
· Apply a 2-6% reduction to the forecasted turnover
· Apply an increase in the discount rate to 25%.
The sensitivities applied do not provide reasonable possible changes and therefore no impairment has been made.
11 Property, plant and equipment
Group
Right of use assets
Leasehold improvement
Fixtures and fittings
Computer equipment
Total
£'000
£'000
£'000
£'000
£'000
Cost
At 1 April 2019
-
-
34
138
172
Additions
514
27
11
28
580
At 31 March 2020
514
27
45
166
752
Additions
-
-
-
7
7
At 31 March 2021
514
27
45
173
759
At 1 April 2019
-
-
24
76
100
Charge for the year
65
6
14
49
134
At 31 March 2020
65
6
38
125
234
Charge for the year
88
5
3
35
131
At 31 March 2021
153
11
41
160
365
Net book value
At 1 April 2019
-
-
10
62
72
At 31 March 2020
449
21
7
41
518
At 31 March 2021
361
16
4
13
394
Company
Computer equipment
£'000
Cost
At 1 April 2019
64
Additions
-
At 31 March 2020
64
Additions
-
At 31 March 2021
64
Accumulated depreciation
At 1 April 2019
27
Charge for the year
21
At 31 March 2020
48
Charge for the year
16
At 31 March 2021
64
Net book value
At 1 April 2019
37
At 31 March 2020
16
At 31 March 2021
-
12 Investment in subsidiaries
Company
Investments in subsidiaries
£'000
Cost
At 1 April 2019
2,818
Additions
1,819
At 31 March 2020
4,637
Addition
88
At 31 March 2021
4,725
Accumulated impairment losses
At 1 April 2019
-
Impairment losses for the year
555
At 31 March 2020
555
Impairment losses for the year
-
At 31 March 2021
555
Net book value
At 1 April 2019
2,818
At 31 March 2020
4,082
At 31 March 2021
4,170
Details of the Company's subsidiaries at 31 March 2021 are as follows:
Place of incorporation and operation
Principal activity
Proportion of ownership and voting rights held
Altair Consultancy and Advisory Services Limited
England and Wales
Specialist housing consultancy
100%
Aquila Treasury and Finance Solutions Limited
England and Wales
Treasury management consultancy
100%
Oaks Consultancy Limited
England and Wales
Specialist sports and education consultancy
100%
The accounting reference date of each of the subsidiaries is co-terminus with that of the Company. The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
The following companies are all dormant, the registered office of each is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
Place of incorporation and operation
Proportion of ownership and voting rights held
Accounting reference date
Altair International Consultancy Limited
England and Wales
100% held by Aquila Services Group plc
31 August
Murja Limited
England and Wales
100% held by ATFS Limited
30 May
Finalysis UK Limited
England and Wales
100% held by Aquila Services Group plc
31 March
13 Investment in Associates
During the year the Group sold its 25% shareholding in 3C Consultants Limited under a share buyback arrangement. The Group sold the shares for a consideration of £252k. This resulted in a loss on investment of £25k.
14 Investments
Fair Value Hierarchy
2021
2020
£'000
£'000
Unquoted equity investments
Level 3
71
121
The Group has a 5.3% equity shareholding in AssetCore Limited an unquoted company. AssetCore's principal activity is a cloud-based platform used to manage loan security within the affordable housing sector. As explained in Note 3, based on the information available at the reporting date the directors consider cost to be an appropriate estimate of fair value. As a result of the impairment review and a review of the inputs of assets and liabilities of the investment the Group consider that the carrying value requires impairment.
Financial instruments measured at fair value subsequent to initial recognition are grouped into levels 1 to 3 based on the degree to which the fair value is observable, i.e.:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
15 Trade and other receivables
Group
Group
Company
Company
2021
2020
2021
2020
£'000
£'000
£'000
£'000
Trade receivables
1,862
2,063
-
-
Group undertakings
-
-
1,281
685
Other receivables
20
23
13
14
Prepayments
107
79
10
9
Contract assets
284
222
-
-
2,273
2,387
1,304
708
Total
<30 days
30-60 days
66-90 days
>90 days
£'000
£'000
£'000
£'000
£'000
31 March 2021
1,862
1,704
-
26
132
31 March 2020
2,063
1,500
209
147
207
No expected credit loss is recognised in the accounts. The Group does not expect any debts not to be paid. The directors have reviewed the provision for expected credit loss and have not identified any which need to be provided for.
16 Trade and other payables
Group
Group
Company
Company
2021
2020
2021
2020
£'000
£'000
£'000
£'000
Trade payables
273
154
19
9
Other payables
50
101
-
50
Lease liabilities
85
79
-
-
Amounts owed to Group undertakings
-
-
270
390
Taxes and social security costs
825
613
-
-
Accruals
484
634
104
56
Contract liabilities
297
181
-
-
2,014
1,762
393
505
Of the contract liability brought forward at the start of the year £181k (2020: £227k) was recognised in revenue in the year.
17 Long term liabilities
The Statement of Financial Position shows the following amounts relating to lease liabilities.
2021
£'000
At 31 March 2020
448
Decrease in lease liabilities
(79)
Closing amounts as at 31 March 2021
369
Current
85
Non-current
284
18 Share capital
2021
2020
£'000
£'000
Allotted, called up and fully paid
39,961,955 (2020: 37,947,905) Ordinary shares of 5p each
1,998
1,897
The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
A reconciliation of share capital, share premium account and merger reserve is set out below:
Number of Ordinary shares
Amount called up and fully paid
Share premium
Merger reserve
'000
£'000
£'000
£'000
At 31 March 2019
35,307
1,765
1,487
2,413
Issued at 28.7p per share on 14 Nov 2019
2,544
128
-
603
Cost of share issue on acquisition
-
-
(12)
-
Issued at 35p per share on 31 Jan 2020
86
4
-
26
Issued at 5p per share on 21 Feb 2020
10
-
-
-
At 31 March 2020
37,947
1,897
1,475
3,042
Issued at 10p per share on 20 Jul 2020
824
41
41
-
Issued at 23p per share on 20 Jul 2020
1,087
55
196
-
Issued at 5p per share on 15 Mar 2021
103
5
-
-
At 31 March 2021
39,961
1,998
1,712
3,042
19 Reserves
The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their nominal value and is non-distributable.
The merger relief reserve arose on the Company's acquisition of Altair. There is no legal share premium on the shares issued as consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition. Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer.
20 Dividends
2021
2020
Amounts recognised as distributions to equity holders
£'000
£'000
Final dividend for the year ended 31 March 2020 of Nil per share (2019: 0.6p)
-
227
Interim dividend for the year ended 31 March 2021 of 0.15p per share (2020: 0.3p)
60
114
60
341
Proposed final dividend for the year ended 31 March 2021 of 0.4p per share (2020: Nil)
160
-
21 Share-based payment transactions
The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme. The total amount recognised in the year to 31 March 2021 arising from share-based payment transactions is £88k (2020 expense: £105k).
Unapproved scheme
Number '000
Weighted average
exercise price
Number of options outstanding at 1 April 2020
2,758
£0.25
Lapsed during period
(1,660)
£0.29
Exercised during period
(927)
£0.09
Number of options outstanding as at 31 March 2021
171
£0.35
Number of options exercisable as at 31 March 2021
-
The exercise price of the options outstanding at 31 March 2021 is 35p. The weighted average remaining contractual life of the options outstanding at 31 March 2021 is 4 years (2020: 1 year).
EMI scheme
Number
'000
Weighted average exercise price
Number of options outstanding at 1 April 2020
2,776
£0.05
Cancelled during the period
(50)
£0.05
Lapsed during period
(406)
£0.05
Number of options outstanding as at 31 March 2021
2,320
Number of options exercisable as at 31 March 2021
1,598
The weighted average remaining contractual life of the options outstanding at 31 March 2021 is 4 years (2020: 5 years).
22 Related party disclosures
Balances and transactions between the Group and other related parties are disclosed below:
Dividends totalling £17k (2020: £149k) were paid in the year in respect of Ordinary Shares held by the Company's directors.
At 31 March 2021, the balance owed to Richard Wollenberg for services as a non-executive director was £4k (2020: £8k).
Amounts paid to Derek Joseph for consultancy services £51k (2020: 24k).
23 Control
In the opinion of the Directors there is no single ultimate controlling party.
24 Financial instruments
Financial risk management
The Group's activities are exposed to a variety of market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.
Credit risk
Credit risk is the risk of financial loss to the Group resulting from counterparties failing to discharge their obligations to the Group. The Group's principal financial assets are trade and other receivables and cash and cash equivalents.
The Group considers its credit risk to be low. Of the total trade receivables at the 2021 year-end £180k (2020: £136k) is due from one customer.
There are no other customers that represent more than 10% of the total balance of trade receivables. The maximum exposure to credit risk is equal to the carrying value of these instruments.
Liquidity risk
Liquidity risk is the risk of the Group being unable to meet its liabilities as they fall due. The Group manages liquidity risk by maintaining enough cash reserves and holding banking facilities, and by continuously monitoring forecast and actual cash flows. In addition, the Group is a cash generative business with income being received regularly over the course of the year. The Group held cash reserves of £2,127k (2020: £828k) at the year-end.
Foreign currency risk
Foreign exchange risk is the risk of loss due to adverse movements in the exchange rates affecting the Group's profits and cash flows. Only a very small number of clients are invoiced in Euros and USD and the foreign exchange exposure is not considered a significant risk. The Group's principal financial assets are cash and cash equivalents and trade and other receivables, which are almost exclusively denominated in Pounds Sterling.
Interest rate risk
The Group does not undertake any hedging activity in this area. The main element in interest rate risk involves sterling deposits.
Capital risk management
Internal working capital requirements are low and are regularly monitored.
The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide return for shareholders, benefits for other stakeholders and to maintain optimal capital structure and to reduce the cost of capital.
In order to ensure an appropriate return for shareholder capital invested in the Group, management thoroughly evaluates all material projects and potential acquisitions and has them approved by the Board of Directors where applicable.
The Group monitors capital on a short- and medium-term view.
25 Post Balance Sheet event
There are no post balance sheet events.
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