REG - Aquis Exchange PLC - Results for the year ended 31 December 2023
21/03/2024 07:00
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RNS Number : 6907H Aquis Exchange PLC 21 March 2024
21 March 2024
Aquis Exchange PLC
("Aquis", the "Company" or the "Group")
Results for the year ended 31 December 2023
Another year of double-digit revenue growth
Aquis Exchange PLC (AQX.L), a creator and facilitator of next-generation
financial markets, is pleased to announce its audited results for the year
ended 31 December 2023.
Financial highlights:
FY23 (£m) FY22 (£m)
Net revenue 22.7 20.1 +13%
Profit before tax 5.2 4.5 +15%
Basic EPS (p) 19.4p 17.2p +13%
Cash and cash equivalents 14.8 14.2 +4%
Net revenue split by division:
FY23 (£m) FY22 (£m)
Markets 10.9 10.3 +7%
Technologies 6.3 5.2 +22%
Data 3.7 3.0 +24%
Aquis Stock Exchange 1.8 1.6 +8%
Group Net Revenue: 22.7 20.1 +13%
Business highlights:
- Strong performance particularly noteworthy given difficult market conditions
- Clear benefit of diversified revenue streams, with revenue growth and profit
across all four divisions
- Aquis Markets increased market share following change to proprietary trading
rule in November 2023. The overall pan-European market share for December 2023
was 4.97%, up from 4.76% in November 2023 and 4.58% in October 2023.
Post-period, the average in January 2024 was 5.3% and in February 2024 had
risen to 5.46%.
- Aquis Technologies was awarded two new technology contracts in 2023, including
one for a central bank. In addition, an existing contract progressed from
design and consultancy to exchange delivery stage. The division now has nine
contracts, seven of which have recognised revenue.
- Aquis Data revenues continued to increase to £3.7m in the year and good
progress seen towards a consolidated tape.
- Aquis Stock Exchange admitted 16 new companies in 2023 - the most of any
growth exchange in the UK for the second year running.
Alasdair Haynes, CEO, Aquis Exchange PLC said:
"I am really pleased to announce that the Aquis Group has continued to deliver
a strong performance with double digit revenue and profit growth across all
divisions, despite some of the most challenging market and economic conditions
we have ever seen, which have continued into the first quarter of 2024.
"This makes it all the more noteworthy that Aquis was able to deliver growth
across all its divisions, with significant progress made on a number of
strategic initiatives, including an increase in the pan-European market share
of our Aquis Markets division, and a significant Technology contract secured
with a central bank.
"Aquis has a proven track record of growth since our IPO in 2018, and we're
more excited than ever about the opportunities ahead for all of our divisions:
from the global reach of our leading technology to the strength of our market
share, and the disproportionate upside for Aquis as the UK and EU head towards
a consolidated tape. Supporting this confidence is our strong cash position,
which enables us to grow and innovate further in coming years."
An overview of the results from Alasdair Haynes, CEO, is available to view on
this link
(https://www.brrmedia.co.uk/broadcasts-embed/65f8744a24a89cbc1652bf7f/aquis-exchange-plc-full-year-results-highlights/?popup=true)
.
The Group will be hosting webinars for analysts and retail investors today at
09:30 and 14:00 respectively.
If you would like to register for the analyst webinar, please contact
aquis@almastrategic.com (mailto:aquis@almastrategic.com) . Investors who would
like to attend the retain 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
(https://www.investormeetcompany.com/aquis-exchange-plc/register-investor) .
Investors who have already registered will be automatically invited.
-ends-
Enquiries:
Aquis Exchange PLC Tel: +44 (0)20 3597 6321
Alasdair Haynes, CEO
Richard Fisher, CFO Tel: +44 (0)20 3597 6329
Adele Gilbert, Head of Marketing & Investor Relations
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) Tel: +44 (0) 20 7523 8000
Emma Gabriel
George Grainger
VSA Capital Limited (AQSE Corporate Adviser) Tel: +44(0)20 3005 5000
Andrew Raca
Alma Strategic Communications (Financial PR Adviser) Tel: +44 (0)20 3405 0209
Josh Royston aquis@almastrategic.com (mailto:aquis@almastrategic.com)
Rebecca Sanders-Hewett
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 (https://www.youtube.com/watch?v=cQWgKDukf6Y&t=21s) 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 (https://www.youtube.com/watch?v=ztBmdLRrNYI) 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 Data (https://www.youtube.com/watch?v=rVdYS1ILwsQ&t=17s) generates
revenue from the sale of data derived from Aquis Markets and Aquis Stock
Exchange to non-Member market participants.
Aquis Stock Exchange (https://www.youtube.com/watch?v=9Wb-peKCH9A&t=45s)
(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 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
(http://www.aquis.eu/) .
Chair's Statement
Overview
It is with great pleasure that as Chair of Aquis Exchange PLC (AQXE) I am able
to report another year of increasing revenue, profit and technological
innovation.
This has been an important year for Aquis. We have become recognised for our
ability to facilitate and operate better markets for a modern economy, and we
have become a strong voice for competition and innovation. The Group continues
to make strong progress, underpinned by continued growth in each of the
Group's four business activities: Markets, Technology, Data and the Aquis
Stock Exchange. These results were particularly noteworthy given the adverse
economic and markets environment which resulted primarily from significant
interest rate increases through the course of the year as Western governments
focussed on reducing inflation.
During 2023, net revenue increased by 13% to £22.7m and profit before tax by
15% to £5.2m. Building on 2022 performance, revenue increased further through
strong contributions from the Aquis dark pool (AMP), as well as significantly
increased contributions from technology licensing and market data. We
continued to develop our presence in Europe and enhance client relationships
within the EU 27 markets.
We undertook a comprehensive rebranding exercise which reflected how the Group
has developed since its inception 10 years ago.
We have also continued to invest heavily in our technology, resulting in Aquis
becoming the first recognised investment exchange (RIE) to run a cloud-based
matching engine.
Board and Governance
There were no additions to the Board during 2023 and one departure as a result
of the retirement of Mark Spanbroek in April 2023 after 10 years with Aquis.
Mark joined the Board shortly after the Company was created and has helped
guide the evolution from startup to profitable quoted company. In anticipation
of his potential retirement, during 2022 Aquis appointed Fields Wicker-Miurin
as Senior Independent Director and Chair of the Nominations & Remuneration
Committee and Ruth Wandhöfer as Independent Non-Executive Director and member
of the Audit, Risk and Compliance Committee (ARCC) and the Aquis Europe
subsidiary Board. In January 2024, Deirdre Somers joined the ARCC.
On behalf of the whole Group, I would like to thank Mark for his advice and
counsel to Aquis.
In addition to Mark's departure, in October 2023 Jonathan Clelland announced
his intention to retire at the AGM in April 2024. Jonathan joined the company
in 2012 when it was first created, initially as CFO & COO and more
recently as CEO of AQEU, the Group's Paris subsidiary. Jonathan has been
responsible for creating and managing the Group's financial, regulatory and
administrative functions since inception and also successfully spearheaded the
IPO in June 2018, as well as the acquisition of AQSE and AMP (the Aquis dark
pool). We are incredibly grateful for Jonathan's extensive work which has
helped shape Aquis into the company it is today and wish him well in his
retirement. Following Jonathan's departure there will be two Executive
Directors on the Board: Alasdair Haynes, CEO and Richard Fisher, CFO. There
has also been a restructuring of senior management in anticipation of his
departure, with David Stevens stepping up to the COO role. This streamlined
Board will retain the balanced set of skills resulting from recruitment during
the last three years.
Culture, Stakeholder Engagement and Section 172 Duties
The Board continued its engagement with key stakeholders, particularly
focusing on employees and shareholders. This included Fields Wicker-Miurin,
Chair of the Nominations and Remuneration Committee (NRC) and me consulting
with shareholders in advance of the renewal of our Directors' Remuneration
Policy at the 2023 AGM.
During the year I retained my responsibility as the appointed representative
of the Board to liaise with employees, which provides a valuable insight into
the management and development of the Group.
Environment, Social and Corporate Responsibility
From the outset, Aquis has been committed to improving the efficiency of
markets through transparency and innovation. In addition, we aim to stimulate
growth in the economy by listening to the needs of issuers and creating a
supportive, fair and low-cost environment for capital raisers to list
instruments, particularly for innovative young companies. These initiatives
have wide corporate and social benefits in addition to helping to build Aquis'
business.
We continue to make progress on our ESG plans by measuring our carbon
footprint and have set a target to reduce our environmental impact. In
addition, we continued our financial literacy community project and increased
our staff engagement efforts, reflecting the continued growth of the
organisation.
We are proud that our Board in 2024 will comprise three women and five men. We
will continue to build the best teams at Aquis irrespective of peoples'
gender, religion, ethnicity or any other factor that is not relevant to the
job in hand. We particularly like the Gender Pay Gap measure as an objective
way of measuring the level of female seniority in the company. We remain
committed to further improving the measure of female seniority; in 2023 this
was 20% on base salary and 23% on annual bonus, an improvement on 28% and 33%
respectively last year. Our target remains to be materially better than the
average in UK financial services on this measure.
Our focus for the year ahead
We are confident that we have the resources and technology to support further
profit growth across all our business activities and we will continue to
invest in order to maintain this trajectory.
Glenn Collinson
Chair
Chief Executive's Report
Overview
This last year has been a remarkably difficult period for markets and
participants alike, with major economic headwinds throughout the year
resulting in overall pan-European volumes significantly below those of 2022.
This makes it particularly impressive that Aquis was able to deliver growth
across its divisions, with significant progress made on a number of strategic
initiatives.
The overall strong performance resulted in the Group generating a 13% growth
in net revenue (calculated by including the ECL Impairment movement on
Contract Asset balances - see Note 6 to the financial statements) to £22.7m
(net of provisions) and a profit before tax of £5.2m in 2023 compared to a
profit before tax of £4.5m in 2022. This increase provides the Group with the
right platform for continued investment and further strengthening of its
principal business activities.
The Group profited from growth in the Technologies division along with solid
performances in pan-European secondary market trading given market conditions.
The primary market activities of the Aquis Stock Exchange and data revenue
progressed well. This growth demonstrates the resilience of the diversified
business model that Aquis has created. In the Markets division, Aquis
generated a return to an overall market share of the pan-European equities
secondary market trading of approximately 5% through an innovative change to
the proprietary trading rule on its UK and EU trading platforms. Liquidity
providers on Aquis now have the option to choose if they wish to interact with
aggressive non-client proprietary trading. In addition, we made a small
investment in blocktrading technology firm OptimX Markets, to support our
planned growth in conditional order types for the Aquis Markets business.
Reflecting the increasing diversification across four business divisions, we
successfully completed a rebrand during the year. The Group now consists of
Aquis Markets (formerly referred to as the Aquis Exchange business), Aquis
Technologies, Aquis Data and Aquis Stock Exchange.
Aquis Markets
See here for an introduction to Aquis Markets
(https://youtu.be/cQWgKDukf6Y?si=gDhGB1ETjicFQsXd)
Over the period, the secondary market multilateral trading facility ("MTF")
platforms operated by the Group in London and Paris continued to grow despite
challenging economic and regulatory conditions, underpinning the resilience of
the subscription model. The number of trading members increased as well as
some members' activity levels, leading Aquis Markets revenue to increase by 7%
to £10.9m.
Overall pan-European order book volumes for equity instruments decreased by
20% vis-à-vis 2022. In spite of this, through continued development of the
product suite and the change of the proprietary trading rule on its UK and EU
trading platforms, Aquis maintained activity levels and increased revenues.
The rule change in particular demonstrates Aquis' commitment to providing
members with the greatest choice and flexibility when transacting on the MTF
platform, and resulted in immediate growth in market share, with more expected
post-period.
Aquis Markets continued to increase trading opportunities during 2023 offering
clients the ability to trade more than 3,500 stocks and ETFs across 16
European Markets as at the end of December 2023.
Aquis Technologies
See here for an introduction to Aquis Technologies
(https://youtu.be/ztBmdLRrNYI?si=B-YJgXFNmMRxHz89)
Aquis Technologies, where Aquis licenses its leading exchange related
technology to a variety of international financial services clients across
different asset classes, performed strongly in 2023. The division has a strong
pipeline and offers material future growth opportunities. Net revenue from
technology licensing in 2023 grew 22% to £6.3m, reflecting the increasing
interest in our innovative, cutting-edge in-house technology.
In 2023, Aquis Technologies renewed or extended two contracts and secured two
new contracts - including one for a central bank - bringing the total to nine.
In addition, an existing contract moved from design and consultancy to
exchange delivery stage.
Aquis Technologies achieved two notable milestones in 2023, delivering the
first exchange grade 24/7 platform and becoming the first recognised
investment exchange (RIE) to run a cloud-based matching engine. In addition,
the division made further development progress of its technology platforms to
support growth across different asset classes internationally.
Aquis Data
See here for an introduction to Aquis Data
(https://youtu.be/rVdYS1ILwsQ?si=cKRrQJwR-91IquIM)
Data revenues increased 24% in 2023 to reach £3.7m as the Group continued to
benefit from increased recognition of the quality and competitive price of
Aquis market data. Data is a key pillar of the Aquis strategic plan, and we
expect that it will continue to make a significant contribution to the Group
in the medium-term.
In addition to the contribution data brings to the Group results, management
believe in the medium-term it will increase further in importance when
consolidated tapes for the UK and Europe are implemented. Implementation
timetables from 2026 have been announced and it is widely recognised and
accepted that introducing consolidated tapes for equities should improve the
quality and pricing of market data and lead to a fairer distribution of data
fees across the various European trading venues.
Aquis Stock Exchange (AQSE)
See here for an introduction to Aquis Stock Exchange
(https://youtu.be/9Wb-peKCH9A?si=YpsvJTSiqfO8b48L)
The Aquis Stock Exchange had a successful 2023, notwithstanding the extremely
difficult IPO market in the UK (and wider markets).
The exchange attracted 16 IPOs during the year: the most of any growth company
exchange in the UK for the second year running. The business continued its
integration with the main retail investor platforms thereby ensuring access to
its broad range of companies, along with further strengthening its
relationships with market makers, corporate advisers and brokers.
We continue to see entrepreneurial, new-economy growth companies looking to
the Aquis Stock Exchange as a public markets partner, and we expect to
continue to make progress in building a competitive primary marketplace over
the years to come.
There is a clear and unique opportunity to build a pan-European,
technology-driven, listing exchange for growth companies, overcoming several
issues faced by small and mid-cap market participants today, thereby
transforming the equity market landscape.
Further Investment in Research and Development (R&D)
The Group continued to invest in R&D throughout 2023 in order to maintain
and enhance the quality of our technology and its ability to deliver new
products and platform enhancements to our clients. The successes that we have
enjoyed during 2023 reflect the benefit of these investments.
Our proven trading platform has been developed in-house and is based on
proprietary technology, which does not rely on third party software suppliers.
The quality and flexibility of Aquis technology was demonstrated through the
implementation of our cloud-based matching engine for the Aquis Stock Exchange
and creation of the first ever exchange grade 24/7 market; two examples of the
successful execution of our medium-term Group strategy.
I believe this commitment to continued investment in R&D gives us a
significant competitive advantage on functionality, price and ability to
deliver. The organisation of Aquis' technology department ensures expeditious
product development and, together with Aquis' further investment, will allow
the Group to react quickly to dynamic market conditions. We intend to continue
to work on further developments which will foster future growth.
Resources
During 2023 we continued to invest in personnel resources across a number of
departments with headcount across the London and Paris offices increasing by
14%. We intend to further strengthen our team, particularly in support of the
sales and technology activities.
We also reorganised the senior management team in November 2023 following the
announcement that Jonathan Clelland will retire in April 2024. Jonathan joined
the company at formation as CFO and COO. More recently and following Richard
Fisher's promotion to CFO, Jonathan took on the additional role of CEO of
Aquis Exchange Europe, the Group's Paris subsidiary. He has played a major
role in Aquis' success and growth over the last 11 years; but I am confident
that we have the right senior management team in place to carry on this
positive trajectory following his departure.
Outlook
Aquis enjoyed a strong finish to 2023 with an improvement in equity markets
share, technology innovations, new contracts and further investment in our key
resources.
There remains some macro-economic uncertainty which may negatively impact
equity markets; however, I believe that our strong team and technology
platform should enable us to overcome this and any future challenges. Although
it is difficult to predict with any degree of certainty the effect of these
events on the broader Group, I remain confident in our unique proposition and
our readiness to achieve the next level of operational, financial and
strategic success.
Aquis Markets has made an encouraging start to the current financial year,
particularly the growth in lit market share as clients react positively to our
rule change.
We are excited about the opportunities ahead for our Technologies division,
following the significant central bank contract win in 2023.
Aquis has grown significantly during the last five years since we listed,
underpinned by our continued investment in our business and we remain
committed to continuing this investment to support the broadening of our
market position through innovation and excellence. We will also continue to
promote the Aquis values of transparency, fairness and simplicity, enabling
our end customers to get better performance and results.
Our principal aim in the future remains to deliver robust and sustainable
returns for the benefit of shareholders and all our other stakeholders in the
medium and long term.
Our highly capable and experienced management team remains focused on serving
our clients as we grasp the opportunities ahead and, in particular, on
delivering our shared goals and technological innovations. The outlook for
2024 is currently in line with Board expectations.
Alasdair Haynes
Chief Executive Officer
Financial Review
It has been a year of strong revenue growth during 2023. The breakdown of the
net revenues is as follows:
Net revenue analysed by division:
2023 2022 YoY Growth
£ £ %
Revenue analysed by division
Markets 10,919,263 10,244,767 6.6
Technology 6,281,934 5,168,063 21.6
Stock Exchange 1,771,284 1,647,195 7.5
Market Data 3,722,237 3,002,986 24.0
22,694,718 20,063,011 13.1
The Group generated a profit before taxation for the year of £5.2m compared
to £4.5m in the previous year. The continued growth in profits during 2023 is
primarily attributable to increased exchange revenue through the growing
success of AMP and revenue growth from members' subscriptions as a result of
increased trading levels, along with increased revenue from data, technology
licensing and issuer fees.
Profit before tax increased 15% to £5.2m (2022: £4.5m) and EPS increased to
19.4p per share (2022: 17.2p). Profit before taxation is after applying
amortisation charges to internally generated intangible assets, as well as
depreciation and finance charges, which reflect the accounting treatment of
leases under IFRS 16.
The lease liabilities arising from the Group's office leases are paid over the
lease term, and attract a finance expense amounting to £103k for 2023. The
associated right of use assets are depreciated on a straight-line basis over
the life of the lease, and attract a depreciation charge of £383k for 2023.
The Group generated an income tax credit of £8k (2022: £157k) which was
driven by an increase in net deferred tax assets by £191k (2022: £302k).
This was offset by an overseas corporation tax charge of £184k (2022:
£144k).
Revenue from licensing technology contracts is subject to a provision under
IFRS 9 for Expected Credit Losses. For 2023 the application of IFRS 9 resulted
in a net impairment provision charge of £1,016k (2022: credit £133k)
recognised in the Income Statement.
The Group's cash and cash equivalents as at 31 December 2023 increased to
£14.8m (2022: £14.2m) demonstrating the Group's strong cash generation. Over
the year the Group purchased £1.2m of treasury shares used to service
employee share schemes.
Group investments, productivity and capital management
The Group continued to invest in its technology offering, including the
creation and enhancement of new order types, enhancements to the surveillance
system and auction systems and further technical development to enable
technology clients to enter different asset classes. In addition, the Group
has made further investment in personnel as it continues to develop capability
and brand awareness.
In deciding its investment plans, Group management receive a detailed analysis
of the exchange and client technical opportunities, and related time
requirements on a quarterly basis. These are used to determine personnel and
other resources requirements needed for allocation to these opportunities.
This information also includes an estimate of the deployment cost.
The Board considers that its investments have contributed to the Group's
ability to gain new clients, broaden its customer base and increase revenue.
The Group recognises the importance of continuing to enhance productivity, and
the commitment to future investment, both technically and in terms of resource
training and development. The Group has established both short and long-term
incentive plans based on performance for all employees, which are set out in
more detail in the Report of the Nomination and Remuneration Committee and
aligns the employees' interests with the long-term strategic objectives of the
Group.
The Group is required to maintain sufficient capital to meet the regulatory
obligations for all entities. These are calculated and updated annually. At 31
December 2023, the Company ICARA requirement (based on the 2022 published
financial Annual Report and Accounts) amounted to £5.2m (2022 £4.7m) and
AQSE's FRR amounted to £2.4m (2022 £2.4m). The individual entities of the
Group meet the respective FCA and ACPR capital adequacy requirements with
plenty of headroom for further investment in business operations.
Future development of the business
In order to support its long-term vision and in order to strategically
position for continued growth, Aquis has invested significantly in its
business differentiators, R&D in the technology platform, brand and
personnel resources. The Group is cognisant of the importance of such
investments to maintain innovation and strong quality delivery.
During 2023, the Group has continued to invest in AQSE, building market
presence and brand whilst also benefitting from synergies across the Group's
exchange memberships, data offering and use of technology.
Compliance with Section 172 (1) of the Companies Act 2006
Section 172 of the Companies Act 2006 requires a Director of a company to act
in the way he or she considers, in good faith, would most likely promote the
success of the company for the benefit of its members as a whole. As such,
Section 172 requires a Director to have regard, amongst other matters, to the:
· Likely consequences of any decisions in the long term ;
· Interests of the Company's employees;
· Need to foster the Company's business relationships with suppliers,
customers and others;
· Impact of the Company's operations on the community and environment;
· Desirability of the company maintaining a reputation for high
standards of business conduct; and
· Need to act fairly between all members of the company.
We set out below some examples of how the Directors have had regard to the
matters set out in Section 172(1) when discharging their Section 172 duty and
the effect of that on certain of the decisions taken by them.
Stakeholder Management
The Group complies with the requirements prescribed by Section 414CZA of the
Companies Act to disclose how the Company promotes its success for the benefit
of all stakeholders.
The Board is acutely aware that the Group's long term success and sustainable
value creation is critically reliant on maintaining good relations with all
stakeholders and ensuring that decisions are made after taking account of the
principal stakeholders' interests.
In arriving at these decisions, the Board has assessed the likely consequences
of any decision in the long term, the interests of the Group's employees, the
need to foster the Group's business relationships with suppliers, customers
and others, the impact of the Group's operations on the broader community, the
desirability of the Group maintaining a reputation for high standards of
business conduct, and the need to act fairly between shareholders of the
Company.
Details on how Aquis and its Board engage with its principal stakeholders, are
given below.
Clients
Management proactively gathers regular feedback from clients, both positive
and negative, in order to understand their ever-evolving needs, identify any
improvements that would result in better client outcomes or satisfaction and
to foster good client relations. This is regularly fed to the Board at
meetings or on an ad hoc basis, if required.
Shareholders
Executive Management meet with the key shareholders at appropriate times
during the year and provide feedback to the Board. Additionally, the Chair and
other Non-Executive Directors continued, where possible, to engage with
shareholders through one-on-one meetings. Shareholders have been extremely
appreciative of these meetings and feedback is provided to the Board in both
written and verbal updates.
Employees
The Group promotes a positive and inclusive culture. Team meetings and Group
briefings are held on a regular basis to ensure all personnel are informed of
the Group's performance and key strategic objectives and goals. Throughout the
year Glenn Collinson has acted as the Board's nominated representative for
employee engagement and facilitated meetings with employees to ensure that
their voices are heard by an independent ear on the Board.
This was complemented mid-2023 by the introduction of a monthly employee
engagement pulse survey, which allowed employees to provide feedback in
confidence. These survey results were consistently positive. The Executive
develops an action plan to address the key areas highlighted with particular
emphasis on our core values, listed later in this report, and on investing
further in employee training and career development.
Suppliers
The Group has identified key suppliers that include suppliers of office
hardware and consumables, as well as suppliers such as liquidity providers and
advisers such as auditors, brokers, recruitment agents, legal advisers and PR
consultants. The Group seeks the independent and experienced view of its key
advisers on various matters as and when required. Sometimes this is directly
with the Board, or the Board will ensure that the Executive reports on advice
provided to the Group when needed.
Regulators
The Group takes an open and co-operative approach with its regulators and
positively embraces the FCA's 11 principles of business. The Group submits
regular returns to the FCA, the ACPR and the AMF, and employees whose roles
encompass compliance activities are encouraged to attend regular external
presentations and workshops arranged by the regulators on topical issues and
receive regular professional update training. All new and existing employees
and advisers are made aware of the FCA, ACPR and AMF's principles of business,
and undergo training required by finance professionals working at an equities
exchange group. The Group arranges regular compliance assessments to provide
assurance that the Group is meeting the requirements of the regulator.
Board Effectiveness and High Standards of Business Conduct
The Board remains committed to high standards of corporate and regulatory
governance. During the year, the Board explored how to improve the Group's
cyber security risk management frameworks and became more informed about the
policy-making environment for financial markets in Europe.
Consequences of Long-Term Decisions
Considerable time was spent focusing on the Group's strategy and management
were challenged to think about the longer-term impact of decisions, how those
decisions were in line with the Group's values, the long term sustainability
of the Company and its subsidiaries and the desire to maintain its reputation.
The Board and its Committees have also further evolved during the year.
Jonathan Clelland, COO, is scheduled to retire in April 2024 and his UK and
French responsibilities are in the process of being assumed by Richard Fisher,
CFO, David Stevens, COO, and other members of the management team. In
addition, Deirdre Somers joined the Audit Committee during the year.
In order to ensure that the Group has the required skills and experience to
effectively manage the business and anticipate future changes, the Board
operates a skills matrix to map the requirements of the organisation against
the current skills and composition of the Group. Management plan to recruit
additional employees, in particular in the technology area in the UK and
France during 2024.
The Interests of Employees
The impact of COVID-19 continued to decrease over 2023; however the Board
continued to monitor the day-to-day operations, the business continuity plans
and the employees' well-being carefully throughout the year. This included
work from home issues and the office environment. The Board has also ensured
engagement with employees through the engagement survey and the nomination of
a Board representative to meet with employees when possible.
Our Purpose
In its role as a disruptor, Aquis' aim has always been to improve financial
markets by maintaining the utmost transparency and least market toxicity for
the benefit of the end investor. In this way it reduces both the explicit and
implicit costs of trading that are borne by investors.
In addition, the Group is also focused on stimulating growth in the economy by
listening to the needs of issuers and creating a supportive, fair and low-cost
environment for capital raisers to list instruments, particularly for
innovative growth companies while ensuring an appropriate balance of investor
protection
Our Culture, Diversity and Employee Well-being
The Group is committed to ethical business conduct and expects the highest
standards of integrity to be followed by the Directors and all employees. The
Aquis Group culture is underpinned by the following core values:
· Trust (integrity, competence and deliver when we say we will);
· Proactivity (discipline and initiative);
· Openness (transparency);
· Excellence (through creativity and innovation);
· Collaboration (through positive, collegiate and free thinking); and
· Respect.
Despite a further increase in employee numbers in 2023 the Group has a
relatively small resource base, and therefore has concentrated on recruiting
personnel with a high degree of specialist skills. The Group provides on-going
training and support with the aim of ensuring that personnel retain and
enhance their technical skills and that employees feel that there is
opportunity to develop within the Group. The Group also operates a flexible
working policy to ensure it takes account of individual employee requirements.
Aquis has a supportive and inclusive culture throughout the whole workforce.
We believe it is in the best interests of the Company and the wider community
to promote diversity and eliminate discrimination in the workplace. Our aim is
to ensure that all employees and job applicants are given equal opportunity
and that our organisation is representative of all sections of society. Each
employee will be respected and valued and able to give their best as a result.
The policy reinforces our commitment to providing equality and fairness to all
in our employment and not providing less favourable facilities or treatment on
the grounds of age, disability, gender reassignment, marriage and civil
partnership, pregnancy and maternity, race, ethnic origin, colour,
nationality, national origin, religion or belief, or sex and sexual
orientation.
We are opposed to all forms of unlawful and unfair discrimination. All
employees, management, agency, casual workers, and independent contractors no
matter whether they are part-time, full-time, or temporary, will be treated
fairly and with respect. When Aquis selects candidates for employment,
promotion, training, or any other benefit, it will be on the basis of their
aptitude and ability. All employees will be given help and encouragement to
develop their full potential and utilise their unique talents with the aim
that the skills and resources of our organisation will be effectively
utilised, and we will maximise the efficiency of our whole workforce.
Aquis' commitments are:
· To create an environment in which individual differences and the
contributions of all team members are recognised and valued;
· To create a working environment that promotes dignity and respect for
every employee;
· To not tolerate any form of intimidation, bullying, or harassment,
and to discipline those that breach this policy;
· To make training, development, and progression opportunities
available to all staff;
· To promote equality in the workplace;
· To encourage anyone who feels they have been subject to discrimination
to raise their concerns so we can apply corrective measures;
· To encourage employees to treat everyone with dignity and respect;
and
· To regularly review all our employment practices and procedures so
that fairness is maintained at all times.
Aquis has implemented an equality, diversity and inclusion policy which has
been communicated to all employees emphasising that they are obligated to
comply with all its requirements and promote fairness in the workplace. This
policy is also drawn to the attention of agents, stakeholders, customers and
job applicants. It is therefore very pleasing to report that gender and
non-gender diversity strengthened further during the course of the year and we
believe our diversity and inclusion policies will have a positive impact on
the successful execution of the Group strategy.
In 2021 the Group established aspirational 3-year diversity targets for the
Board and for the employees. These targets were established to underpin the
importance the Board places on this issue and to provide clear guidance and
focus on these aspirations.
The targets and progress are outlined below:
1. Reduce the gender (seniority) pay gap to 25% (salary) - below the UK
Financial Services industry average (which for 2023 is 27.9%) On track: In
2023, the gender (seniority) pay gap was 20% on base salary and 23% on base
salary plus annual bonus. This is an improvement on 2022 (28% and 33%) and on
base year 2021 (41% and 44%).
2. Increase the management team diversity ratio On track: Progress towards the
target made in 2023 following the promotions of two senior staff to ExCo.
Management intends to further improve on this metric in 2024.
3. Meet the Hampton Alexander Review target of at least 33% of board members
being female Achieved: The overall female NED ratio will stand at 37.5% after
the 2024 AGM
4. Create a targeted diversity inclusive supplementary development program for
employees who we believe have the potential to be promoted to Exco in the next
5 years On track: Management has identified a number of current employees for
the ExCo pipeline and development initiatives are in place. This pipeline
meets diversity targets.
The Group runs an annual anonymous employee survey and arranges regular
meetings with the Board nominated employee representative. In addition,
employees have regular one-to-one sessions with their immediate line manager
and annual reviews where development plans are discussed to ensure
individuals' objectives are aligned to the business strategy and to improve
levels of employee engagement.
The Group has a commitment to preventing slavery and human trafficking by
ensuring our supply agreements comply with the Modern Slavery Act 2015 ("MSA")
with zero tolerance for failings.
Consumption and the environment
It is a key objective of Aquis Exchange PLC to be able to understand and
reduce its own impact on the environment. In 2023, Aquis underwent a voluntary
carbon footprint assessment, using ESGmark® to help us calculate, report and
reduce our carbon emissions. The sources that were measured for 2023 were:
Scope 1: Fuel consumption (gas office heating in London premises)
Scope 2: Electricity consumption in London premises
Scope 3: Electricity usage from purchased data centre services, Well-To-Tank
components of fuel and electricity consumption in London premises
The carbon footprint assessment found that Aquis Exchange PLC emitted a total
of 497 tonnes of CO2e (tCO2e) in 2023, or 7.4 tCO2e per FTE, using the
market-based emissions approach.
We continue to evaluate our partners with respect to our value chain carbon
footprint. For example, the choice to use data centres with a 100% renewable
supply has reduced market-based emissions by 26% against the UK residual fuel
mix.
In 2023, Aquis Stock Exchange became the first major regulated exchange to
become cloud-based. While most major financial exchanges operate using
physical data centres, the infrastructure required to run a trading
environment is not beneficial to the environment because of the fact that
servers must always be "on" and significant duplicative processing occurs. If
trading firms could leverage all the benefits of running a cloud-based
solution, the cost optimisation, scalability and resiliency would make a
positive contribution to reducing the impact on the environment.
Our objectives for 2024 are to:
· Move towards renewable energy sources to reduce Scope 2 emissions
· Increase measurement of Scope 3 activities to provide a more complete
evaluation of our carbon footprint and opportunities for reduction.
Governance
When Aquis listed in 2018, it voluntarily chose to follow the highest
standards of corporate governance when it committed to adhering to the UK
Corporate Governance Code and the Directors have implemented appropriate
measures which have allowed Aquis to comply with all provisions of the Code
during the accounting period and up to the date of this report.
Aquis and AQSE are directly authorised and regulated by the FCA and AQEU is
regulated by the ACPR and the AMF. The Group fully complies with the relevant
rules and guidelines in all respects and monitors that compliance throughout
the year.
The Group's objective is to establish an open and cooperative relationship
with all regulators, and it positively embraces the FCA's 11 principles of
business. The Group submits regular returns to the FCA, and employees whose
roles encompass compliance activities are encouraged to attend regular
external presentations and workshops arranged by the FCA on topical issues,
and also receive regular professional update training. All new and existing
employees and advisers are made aware of the FCA's principles of business, and
undergo training required by finance professionals working at an equities
exchange group. The Group arranges regular compliance assessments to provide
assurance that the Group is meeting the requirements of the regulator.
The wider community
Aquis has been involved in a number of charitable and community enhancing
initiatives in the year. In 2023, Aquis has continued the partnership with
Ravens Wood School in Bromley to spearhead an 'Investment Club' scheme with
A-Level Economics and Business students. Aimed at increasing financial
literacy and accessibility, students received tailored talks and presentations
from members of Aquis staff on aspects of the financial services industry,
public markets and career advice. Students then created their own mockup AQSE
universe portfolios with an imaginary starting value of £50,000 using an app
developed by Aquis fed with real price data. Aquis intends to continue with
and expand this programme in future. Aquis also participated in the London
Youth Rowing Race the Thames project and employees have shown their desire to
make a difference.
Knowledge Transfer Project
Aquis has made significant progress with the University of Derby partnership:
a two-thirds government funded Knowledge Transfer Project ("KTP") that
involves industry- led research and development on Artificial Intelligence for
trading platform surveillance alerts to develop an efficient and accurate
market abuse monitoring system.
Current surveillance systems are deterministic, handcrafted, generate a high
percentage of false positive alerts and run a high risk of human fatigue
and/or boredom. Consequently, market abuse events may often be missed when
analysing a large number of false positives. As part of our mission to improve
transparency in financial markets, this partnership will publish research
papers on machine learning techniques that will mitigate human error in
detecting fraudulent trading practices that harm the integrity of, and trust
in, financial systems that are critical for the modern economy.
As part of our mandate to strive for innovation, we are excited for what the
future holds for machine learning and artificial intelligence in the trading
industry and are encouraged by the widespread support for this project.
Next steps in our ESG journey
During the strategic planning process, we assessed a number of potential ESG
initiatives. Our short-term goal is to complete the assessment of the
sustainability risk factors of the Group's day-to-day activities and translate
them into a meaningful Group-wide ESG strategy that can be woven into our main
strategic goals.
In addition, during 2024 we aim to:
· Develop a formal ESG policy;
· Set formal short, medium and longer term non-financial goals on
material ESG topics that are directly relevant to our business;
· Introduce a first round of formal initiatives to reduce ESG impact
and manage ESG risk;
· Complete a carbon footprint assessment for the Group; and
· Undertake an initial assessment of potential broader ESG initiatives
that may have a positive impact on the wider community through the Group's
role as a primary exchange.
Principal risks and uncertainties
The identification and management of risk is an integral part of the execution
of Aquis' strategic vision and operations. The below provides an overview of
the principal risks facing the Group:
Risk Cyber security
Risk Description The Group's networks and those of its third-party service providers may be
vulnerable to security risks, cyber-attack or other leakage of sensitive data.
Potential outcomes of such an attack might include outages of the market,
attacks which seek to hold Aquis to ransom, unintended movements of the
company finances or generally create reputational and financial risk.
Mitigation The Board reviews a quarterly dashboard that incorporates cyber technology
monitoring. Regular penetration tests are undertaken by a third party with the
results reviewed by the ARCC and Board and all employees undertake
cyber-training. Internal exercises to alert employees to the possibility of
phishing emails are held regularly. The MTF has "kill" switches in place which
are intended to restrict clients if rogue behaviour is evidenced. The Group
takes precautions to protect data in accordance with applicable laws.
Extensive risk management protocols are adopted in the IT control framework so
as to prevent, detect and respond proactively to cyber security attacks. The
comprehensive back up and contingency plans in place are tested regularly.
Risk Key management personnel and employees
Risk Description The Group has a relatively low headcount and hence is exposed to key person
risk. The Group's future development and prospects depend on its capacity to
attract and retain key personnel
Mitigation The Group has established emergency staffing plans for Senior Executives. The
NRC reviews immediate and medium- term succession plans and the ARCC assesses
key person risk.
Aquis employs a number of strategies to ensure the Group is able to attract
and retain a high calibre of talent. The Group employs a rigorous recruitment
process and offers competitive salaries and benefits and employee share option
schemes, whilst promoting a culture of diversity, high performance and
inclusion from the top.
The Group continues to demonstrate its ability to recruit high-quality
individuals and is clearly viewed as a dynamic and attractive employer.
Risk Client concentration
Risk Description The nature of equity financial markets is that the majority of pan-European
secondary market trading volumes are undertaken by a small pool of market
participants. This risk has been increased as some of the smaller market
participants have decided to route via larger banks that maintain direct
exchange memberships.
The Group revenue is therefore dependent on a concentrated number of customers
and significant change to a customer's flow could negatively impact revenues.
Mitigation The Group continues to broaden its client base to reduce client concentration
but recognises that volumes from smaller participants are not likely in
aggregate to be as large.
The Group has offset some of the risk of industry concentration through the
quality of the MTF exchange offering and the strengthening of the product
offering.
The Group seeks to maintain positive relationships with all current and future
members of its MTF exchange and to be vigilant for change at any client. The
Group has diversified its business activities to include primary markets,
technology sales, data and market gateways.
Risk Liquidity provision concentration -Aquis Markets
Risk Description In most trading venues globally, there is considerable symbiosis between the
venue and the liquidity providers on which the venues rely to make continuous
prices and enhance liquidity.
In Europe, where there is significant competition between a limited number of
trading venues, the ability to attract significant liquidity to the venue is
critical. The barriers to entry are even higher for new trading venues, which
must build liquidity from scratch and differentiate themselves to attract and
retain it.
Market makers themselves have differing business models and trading
strategies; as a result, they may be attracted to different types of venues
depending on the value proposition. Banks also provide liquidity on the Aquis
platform but historically this has not been as significant as the market
makers.
Aquis has a highly differentiated business model for its pan-European
secondary market trading activities compared to the incumbent platforms, both
dramatically reducing the cost of trading and also permitting market makers to
decide if they wish to interact with aggressive trading from other market
makers. This differentiated and flexible approach has been a driver of Aquis'
success to date.
The number of market makers that have trading models currently aligned with
Aquis' business philosophy is even more concentrated than on the main markets.
Therefore, Aquis has always relied heavily on a small number of key market
makers to support liquidity and a wider group to supplement it. These market
makers have not always been the same organisations and have changed over time.
Nonetheless, it is a risk that if a key market maker decides to change its
business model or philosophy it would cause a short-term disruption in the
total liquidity provided.
Risk Mitigation This risk is mitigated internally through a number of actions including those
set out below, and externally through the likely evolution of the structure of
the European equity market.
Internally, management maintain a close relationship with its market makers to
ensure that there continues to be positive synergies for all parties. Aquis
has been successful during 2023 and will continue to actively seek to grow
membership and diversify its liquidity providers.
Following the change to the proprietary trading rule in November 2023 Aquis
noted a dilution of the concentration risk away from a small number of
liquidity providers to a broader set of investor flows.
Externally, the market share growth that Aquis has achieved to date is a
strong indication of the benefits to its members and liquidity providers and
makes it likely that natural liquidity will continue to grow, making the Aquis
marketplace deeper and more attractive for all counterparties.
Additional liquidity providers are likely to follow over time as they should
be incentivised to adapt or create new models that capitalise on Aquis' value
proposition and interaction with a wider set of trading flows.
The number of liquidity providers in European equity markets is still
relatively small today, reflecting the continued need to invest in technology
and regulatory oversight. However, the Group's innovative offerings will
continue to counter this risk.
Risk Liquidity Provision Concentration -AQSE
Risk Description A relatively small population of market makers support AQSE with similar risks
to those identified above with regard to potential short-term impact if one or
more market makers were to change their business model or approach.
Mitigation The number of market makers active on AQSE has and is anticipated to increase
as the number of companies and reputation of the exchange continues to
improve.
Risk Supplier risk
Risk Description The Group is exposed to the failure of a key supplier. Examples include loss
of data supplied to Aquis which is an important input into the trading
platform.
This may impact the ability to undertake market surveillance.
Mitigation Aquis has back up plans in place for key suppliers and has agreed procedures
and thresholds in place for managing this if necessary.
Financial risks
The Group's current assets comprise cash and liquid resources including trade
receivables arising directly from its operations. The main financial risks are
capital, credit, liquidity and foreign currency risks. The Group has approved
FX hedging policies in place and as at 31 December 2023 actively managed the
balance sheet and risks with the use of financial derivatives. A significant %
of revenues remain GBP denominated whilst the Group enters into forward FX
trades as appropriate and will continue to do so in the future where any
further contracts are non-GBP denominated.
The Group has continued to increase its profits during 2023 demonstrating that
it has been able to manage strategic and operational risks; however, future
results could be negatively impacted if any of the risks outlined above were
to occur. Financial risk management disclosures have been made in Note 5 of
the Group Financial Statements accompanying this report.
Viability statement
The Directors have undertaken a detailed review of the Group's prospects,
taking account of the Group's current position and principal underlying
business risks and its prospects for the period January 2024 - December 2026.
These include considering the impact during 2023 and potential future impact
due to macroeconomic crises and/or military conflicts. The Directors consider
this to be an appropriate period considering the target business and revenue
growth, and the objective to maintain and enhance profitability during this
period.
The Group maintains a strong equity capital position which has been
strengthened during 2023 as profitability has been enhanced. This is
complemented by the Group achieving and in certain areas exceeding its goals.
Taking into account its ability to execute its principal objectives during
continued challenging circumstances, the Directors have a reasonable
expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment.
This assessment has concentrated in particular on the key differentiating
factors that the Group has established, the quality and resiliency of the
Group's technology, the brand and market position, and the reputation, quality
and experience of its key personnel. This Strategic Report was approved by the
Board of Directors on 20 March 2024 and is signed on its behalf by:
Alasdair Haynes, Chief Executive Officer
Richard Fisher, Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Group Company
2023 2022 2023 2022
Notes £ £ £ £
Profit and loss
Revenue 10 23,710,941 19,929,527 13,147,339 10,342,525
Impairment credit / (charge) on contract assets 11 (1,016,223) 133,484 (1,016,223) 133,484
11 (79,395) (12,784) (59,608) -
Impairment (charge) on trade and other receivables
Other gains 12 51,407 - 51,407 -
Operating expenses 12 (16,396,478) (14,239,918) (6,874,123) (5,616,089)
Earnings before interest, taxation, depreciation 6,270,252 5,810,309 5,248,792 4,859,920
and amortisation
Depreciation and amortisation 12 (1,372,565) (1,259,492) (1,299,276) (1,187,569)
Finance expense 12, 25 (103,249) (67,691) (88,571) (51,069)
Finance income 12 400,449 43,283 127,447 16,537
Profit before taxation 5,194,887 4,526,409 3,988,392 3,637,819
Income tax credit 14, 15 7,789 157,203 49,837 163,925
Profit for the year 5,202,676 4,683,612 4,038,229 3,801,744
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations (120,961) 181,370 - -
Other comprehensive income for the year (120,961) 181,370 - -
Total comprehensive income for the year 5,081,715 4,864,982 4,038,229 3,801,744
Earnings per share (pence)
Basic
Ordinary shares 16 19 17 15 16
Diluted
Ordinary shares 16 19 17 14 16
Consolidated Statement of Financial Position
As at 31 December 2023
Group
Company
2023 2022 2023 2022
Notes £ £ £ £
Assets
Non-current assets
Goodwill 17 83,481
83,481 - -
Intangible assets 17 1,501,885 1,032,224
1,032,224 1,501,885
Property, plant and equipment 18 3,818,841 3,628,081
4,155,215 3,350,793
Investment in subsidiaries 19 - 6,884,202
- 6,884,202
Investments 20 591,945
- 591,945 -
Investment in trusts 21 - 3,350,325
- 4,389,445
Deferred tax asset 14 1,785,331 1,456,184
1,593,931 1,506,022
Trade and other receivables 22 5,811,089 5,329,674
5,352,110 5,795,918
13,592,572 21,680,690
12,216,961 24,020,210
Current assets
Trade and other receivables 22 6,894,936 10,571,256
4,135,426 6,736,943
Derivative financial instruments 5 51,407
- 51,407 -
Cash and cash equivalents 23 14,765,910 5,595,827
14,170,965 6,356,259
Total assets 35,304,825 37,847,773
30,523,352 37,164,819
Liabilities
Current liabilities
Trade and other payables 24 4,471,470 8,992,201
4,268,735 3,665,932
Net current assets 17,240,783 7,174,882
14,037,656 9,478,677
Non-current liabilities
Lease liabilities 25 2,457,105 2,449,312
2,874,877 2,100,483
2,457,105 2,449,312
2,874,877 2,100,483
Total liabilities 6,928,575 11,441,513
7,143,612 5,766,415
Net total assets 28,376,250 26,406,260
23,379,740 31,398,404
Equity
Called up share capital 26 2,751,678 2,750,945
2,750,945 2,751,678
Share premium account 30 11,809,757 11,785,045
11,785,045 11,809,757
Other reserves 31 2,741,589 1,813,119
1,813,119 2,741,589
Treasury Shares 27 (4,389,445)
(3,350,325) - -
Retained earnings 15,519,507 10,057,151
10,316,831 14,095,380
Foreign currency translation reserve (56,836)
64,125 - -
Total equity 28,376,250 26,406,260
23,379,740 31,398,404
Statement of Changes in Equity
For the year ended 31 December 2023
Group Notes Share Capital Share Premium Share Based Payment Reserve Retained Earnings Treasury Shares Foreign Currency Translation Reserve Total
Balance at 1 January 2022 2,750,545 11,771,462 1,118,314 5,633,219 (1,526,835) (117,245) 19,629,460
Profit for the year - - - 4,683,612 - - 4,683,612
Foreign exchange differences on translation of foreign operations - - - - - 181,370 181,370
Total comprehensive income for the year - - - 4,683,612 - 181,370 4,864,982
Issue of new shares 26, 30 400 13,583 - - - - 13,983
Movement in share based payment reserve 31 - - 694,805 - - - 694,805
Movement in treasury shares 27 - - - - (1,823,490) - (1,823,490)
Balance at 31 December 2022 2,750,945 11,785,045 1,813,119 10,316,831 (3,350,325) 64,125 23,379,740
Balance at 1 January 2023 2,750,945 11,785,045 1,813,119 10,316,831 (3,350,325) 64,125 23,379,740
Profit for the year - - - 5,202,676 - - 5,202,676
Foreign exchange differences on translation of foreign operations - - - - - (120,961) (120,961)
Total comprehensive income for the year - - - 5,202,676 - (120,961) 5,081,715
Issue of new shares 26, 30 733 24,712 - - - - 25,445
Movement in share based payment reserve 31 - - 928,470 - - - 928,470
Movement in Treasury Shares 27 - - - - (1,039,120) - (1,039,120)
Balance at 31 December 2023 2,751,678 11,809,757 2,741,589 15,519,507 (4,389,445) (56,836) 28,376,250
Company Notes Share Capital Share Premium Share Based Payment Reserve Retained Earnings Total
Balance at 1 January 2022 2,750,545 11,771,462 1,448,430 6,255,407 22,225,844
Profit and total comprehensive income for the year - - - 3,801,744 3,801,744
Issue of new shares 26, 30 400 13,583 - - 13,983
Movement in share based payment reserve 31 - - 364,689 - 364,689
Balance at 31 December 2022 2,750,945 11,785,045 1,813,119 10,057,151 26,406,260
Balance at 1 January 2023 2,750,945 11,785,045 1,813,119 10,057,151 26,406,260
Profit and total comprehensive income for the year - - - 4,038,229 4,038,229
Issue of new shares 26, 30 733 24,712 - - 25,445
Movement in share based payment reserve 31 - - 928,470 - 928,470
Balance at 31 December 2023 2,751,678 11,809,757 2,741,589 14,095,380 31,398,404
Statement of Cash Flows
For the year ended 31 December 2023
Group Company
2023 2022 2023 2022
Notes £ £ £ £
Net cash flows from operating activities 28 4,103,719 4,020,715 4,340,136 2,201,847
Investing activities
Recognition of intangible assets 17 (1,081,918) (777,465) (1,081,918) (777,465)
Purchase of property, plant and equipment 18 (411,316) (769,419) (409,731) (752,938)
Investment acquisitions 20 (591,945) - (591,945) -
Interest received 12 384,712 28,722 112,154 2,416
Purchase of treasury shares - - (1,196,309) (1,955,720)
Net cash (used in) investing activities (1,700,467) (1,518,162) (3,167,749) (3,483,707)
Financing activities
Issue of new shares 26, 30 25,445 13,983 25,445 13,983
Principal portion of lease liability 5, 25 (516,482) (300,994) (437,400) (231,259)
Purchase of treasury shares (1,196,309) (1,955,720) - -
Net cash (used in) financing activities (1,687,346) (2,242,731) (411,955) (217,276)
Net increase/(decrease) in cash and cash equivalents 715,906 259,822 760,432 (1,499,136)
Cash and cash equivalents at the beginning of the year 14,170,965 14,046,399 5,595,827 7,094,963
Effect of exchange rate changes on cash and cash equivalents (120,961) (135,256) - -
Cash and cash equivalents at the end of the year 14,765,910 14,170,965 6,356,259 5,595,827
- - - -
NOTES TO THE FINANCIAL STATEMENTS
1 SIGNIFICANT CHANGES IN THE REPORTING PERIOD
The following events and transactions had an impact on the financial position
and performance of the Group and/or Company during the period:
Operating segments (Note 6) have been split into four business divisions
(previously three). Comparative disclosures for the prior year have been
updated to ensure comparability between the two reporting periods.
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
Company information
Aquis Exchange PLC is a public limited company which is incorporated and
domiciled in the United Kingdom. Its registered office is located at 63 Queen
Victoria Street, London, EC4N 4UA. The Company Number is 07909192.
Accounting convention
The Group's consolidated and the Company's financial statements are prepared
in accordance with UK-adopted international accounting standards and the
Companies Act 2006 requirements.
The financial statements have been prepared on the historical cost basis as
modified by the revaluation of financial instruments carried at fair value
through profit and loss.
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Going concern
At the time of approving the financial statements, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and thus continue to adopt
the going concern basis of accounting in preparing the financial statements.
The Group has made an increased profit in 2023 against prior year and has
substantial cash reserves and a strong balance sheet, due to high levels of
investment within the Group. There has been a growth in revenue between the
current year and comparative years. Additional revenue growth is projected for
2024, with profits forecasted for future years. In making this assessment the
Directors have considered their knowledge of internal sales pipelines
alongside expected trends in European and UK securities markets. Future
profitability is also considered from a cost perspective with assumptions used
for inflation and interest rates affecting operating expenditures and interest
income on bank deposits. The nature of Group costs are predictable and
consistent to the extent that the Directors are able to rely on current cash
positions in excess of regulatory minima to predict future cash positions.
There remains uncertainty over market conditions ahead when considering
continued military action in Ukraine, intensifying conflict in the Middle East
between Israel and Palestine and Houthi rebel activity affecting commerce in
the Red Sea, in addition to national elections in many countries, and more
specifically the upcoming General Election in the UK and Presidential Election
in the US. In spite of these factors, Aquis has demonstrated resilience during
uncertain market conditions and the Directors do not believe that there will
be a material adverse effect on Group performance.
Taking the above into account, the principal risks discussed in the Strategic
Report section of the Annual Report, the financial risks and mitigating
actions taken by management (see Note 5), and the Group's current financial
performance position, the Directors do not foresee any material uncertainty in
the Group's ability to continue to prepare the financial statements on a going
concern basis over a period of at least 12 months from the date of approval of
these financial statements.
Consolidation
In preparing these financial statements, the group has applied the
consolidation principles in IFRS 10, Consolidated Financial Statements. This
requires the Group to consolidate subsidiary entities it controls. Control is
determined based on the ability to direct the activities of the entity that
significantly affect its returns.
The Group assesses control on a continuing basis and includes entities it
controls as of the end of the reporting period.
The financial statements of the consolidated entities are prepared using
consistent accounting policies and are presented as if they were a single
economic entity. Intercompany transactions, balances, and unrealized gains and
losses on transactions between consolidated entities are eliminated in full.
The Group consolidated financial statements also include treasury shares and
cash held by two separate trusts ("the Trusts") that administers the Company's
employee share incentive plan and also hold shares purchased by the Group in
preparation for future settlement of employee share awards made to date. The
Trusts have been consolidated based on the IFRS 10 criteria for control over
the Trust being met:
• The Trusts were established to (i) facilitate the acquisition and holding
of shares under the Aquis Exchange PLC Share Incentive Plan and (ii)
facilitate the acquisition and holding of shares under the Aquis Exchange PLC
Restricted Share Plan.
• The activities of the Trusts are limited by the agreements in place; and
• The Trusts do not have any assets outside of the partnership share money
received and the shares purchased. The use of any shares or cash that remain
in the Trust funds once the trustee no longer holds any shares relating to the
SIP,RSP or PPO, is directed by the company. The Trust itself has no rights to
any dividends.
Accounting Policies
Revenue
Revenue comprises amounts derived from the provision of services which fall
within the Company's ordinary activities. It represents amounts receivable for
subscription fees, the licensing of software, the provision of data to
third-party vendors, and fees relating to listings on the Aquis Stock Exchange
(AQSE), all of which are net of value added tax. Revenue is recognised once
the performance obligations for each activity have been satisfied.
All the revenue streams are generated by contracts with customers and revenue
is therefore recognised in accordance with IFRS 15.
Revenue from exchange subscription-based services is recognised over time when
the services are rendered.
Revenue from licensing contracts is assessed for each contract and split into
five Performance Obligations (see Note 10 for further details on 'POs' and
Note 4 for Judgements and estimates):
• Project Implementation / Design fees (PO1) recognised over time as the
obligations are met;
• Licencing fees (PO2) recognised at a point in time when the licence is
transferred to the customer;
• Maintenance fees (PO3) recognised over time as the obligations are met;
• Live services fees (PO4) recognised over time as the obligations are met;
• Hosting fees (PO5) recognised over time as the obligations are met.
Revenue from the provision of data to third-party vendors is comprised of the
annual fees paid by the redistributors, member firms and multi-media firms for
access to real time and/or end of day data, and is recognised over time. An
additional monthly fee is received based on the number of users the vendors
provide the data to each month. This additional monthly fee is variable and is
based on usage for the prior month. The fee is charged in arrears and is
recognised in the month it is incurred.
Revenue from AQSE issuer fees is comprised of initial application and
admission fees, annual fees, and further issue fees, these are all recognised
over time under IFRS 15 except further issue fees which are recognised at a
point in time.
Application and admission fees are charged upfront to prospective companies
admitted to AQSE markets. These are recognised monthly over the average
expected life of company admission periods (further details about this
estimate are set out in the following section).
Annual fees are paid upfront annually by companies with securities listed on
AQSE and are recognised over the year.
Further issue fees are incurred by existing issuers who have already
contributed an application and admission fee, and are recognised at a point in
time on the date the new security is available for trade on AQSE.
Estimated listing period for Aquis Stock Exchange securities
In recognising application and admission fees, the Company determines the
expected length of time each new security will be listed on AQSE. The estimate
is based on historical analysis of listing durations in respect of the
companies listed on AQSE. The length of time a security remains listed
incorporates significant uncertainty as it is based on factors outside the
control of the Company and which are inherently difficult to predict.
Based on the available information and incorporating management's predictions,
it is currently estimated that an average security will remain listed for a
period of 9 years. Application and admission fees are recognised monthly over
a period of time.
It is estimated that a one year increase/ decrease in the deferral period
would cause a £8k decrease /£9k increase in annual revenue released
respectively. The estimated listing periods will be reassessed at each
reporting date to ensure they reflect the best estimates of the Group.
Intangible assets other than goodwill
Internally generated intangible assets
Internally developed intangible assets arising from the capitalisation of
Research and Development expenditures, product analysis, quality assurance,
and website development costs are recognised in the financial statements when
all of the following criteria are met:
• The technical feasibility of completing the intangible asset so that it
will be available for use or sale is established;
• There is an intention to complete the intangible asset and use or sell it;
• The Group has the ability to use or sell the intangible asset;
• The existence of a market for the output of the intangible asset or the
intangible asset itself or, if it is to be used internally, the usefulness of
the intangible asset can be demonstrated;
• Adequate technical, financial and other resources are available to
complete the development and to use or sell the intangible asset; and
• The Group has the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
Where the above criteria are not met, costs incurred in research and
development are recognised in the Statement of Comprehensive Income as
incurred.
Amortisation is recognised in order to write off the cost or valuation of the
assets, less their residual values over their useful lives. The development of
trading platforms has been amortised over 3 years on a straight-line basis
reflecting management's estimate of the useful life of the technology, the
rationale of which is discussed in Note 4.
Website technology and communication licences
Website technology and communication licences represent externally acquired
intangible assets and are recognised in the financial statements as the Group
receives the right to control and use the product over a period of time.
Website technology represents external development costs to design the Group's
website. Communication licences relate to licences that transfer the right to
obtain a benefit from intellectual property.
Amortisation on these assets is recognised over 3 years on a straight line
basis which represents the estimated useful life of both types of asset.
Acquisition costs of customer lists and IP Addresses
The price of and acquisition costs incurred when obtaining customer lists and
IP Addresses is capitalised in line with IAS 38. Management expects that
future economic benefits are attributable to the entity over an indefinite
term for these assets. Therefore, the useful economic life is considered
indefinite and no annual amortisation is recognised. These assets are
subsequently recognised as cost less impairment, and at each balance sheet
date Management consider any indicators of impairment which would lead to a
detailed impairment review to ascertain their carrying amount.
Business Combination
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration
transferred, which is measured at fair value. Acquisition-related costs are
expensed as incurred and recognised as non-underlying transaction costs in the
income statement.
Goodwill
In March 2020 the acquisition of AQSE gave rise to goodwill in the
consolidated financial statements. Goodwill is initially measured at cost,
being the excess of the aggregate of the consideration transferred over the
net identifiable assets acquired and liabilities assumed. Goodwill is assessed
for impairment annually, with any impairment charge recognised in the
Statement Of Comprehensive Income. Note 17 provides further detail on the
impairment assessment for goodwill as at 31 December 2023.
Property, plant and equipment (excluding right-of-use assets)
All property, plant and equipment are stated at historical cost less
depreciation or impairment. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent expenditure is included in the asset's carrying amount or is
recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. All other repair and
maintenance costs are charged to the income statement during the financial
period in which they are incurred.
Depreciation is recognised so as to write off the cost or valuation of assets,
less their residual values, over their useful lives on the following basis:
• Fixtures, fittings and equipment: 5 years straight line.
• Computer equipment: 3 - 7 years straight line.
Impairment of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Cash and cash equivalents
Cash and cash equivalents include cash at bank.
The Group and Company as regulated bodies are required to maintain liquid cash
assets as part of their prudential reporting responsibilities to external
regulators. During the financial year ended 31 December 2023 the Group was
required to maintain £4,196k of available cash assets as part of its
liquidity requirements (Company £1,710k). Further details of the Group's risk
management approach to regulatory capital commitments is included in Note 5.
Financial assets
Trade and other receivables
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. Other receivables are defined as amounts due that
are outside the ordinary course of business. If collection is expected in one
year or less (or in the normal operating cycle of the business if longer) they
are classified as current assets. Otherwise they are presented as non-current
assets.
Contract assets
Contract assets are recognised for licensing fees recognised at inception of a
licensing contract but not yet billed under IFRS 15. Contract assets are
initially measured at fair value and subsequently measured at amortised cost
and are stated net of any expected credit loss provision (ECL) recognised in
accordance with IFRS 9, as detailed in Note 11. Contract assets are presented
on the Statement of Financial Position as trade receivables. The right to
consideration becomes unconditional once the customer has been billed.
Investments
At initial recognition, the group measures investments in equity instruments
at its fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVTPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at FVTPL are expensed in profit or loss.
The group subsequently measures all equity investments at fair value. Where
the group's management has elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the group's right to receive payments is
established. Changes in the fair value of financial assets at FVPL are
recognised in other gains / (losses) in the statement of profit or loss as
applicable. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately from other changes
in fair value.
Rent deposit asset
Under IFRS 16 a rent deposit is accounted for as a financial asset if the
collateral provided to the lessor is not a payment relating to the right to
use the underlying assets and hence is not a lease payment as defined.
Impairment of financial assets
The Group has considered the impact of the application of an expected credit
loss model when calculating impairment losses on current and non-current
contract assets and other financial assets at amortised cost (presented within
trade and other receivables). In applying IFRS 9 the Group must consider the
probability of a default occurring over the contractual life of its trade
receivables and contract asset balances on initial recognition of those
assets. Note 11 details the Group's credit risk assessment procedures.
Financial liabilities
After initial recognition all financial liabilities are subsequently measured
at amortised cost using the effective interest method. The effective interest
method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash
payments (including all fees and points paid or received that form an integral
part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the amortised cost of a financial liability.
In 2023 the Group did not hold any Financial liabilities beyond Trade and
other payables and the lease liabilities recognised under IFRS 16 as described
in the "Leases" sub-section below.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not,
they are presented as non-current liabilities. Trade and other payables are
not interest bearing and are initially recognised at fair value.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried at fair
value with net changes in fair value reflected in the income statement. This
category includes derivative instruments.
Equity instruments
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or options are charged
against the share premium account.
Earnings per share
The earnings per share (EPS) calculations are based on basic earnings per
ordinary share as well as diluted earnings per ordinary share. The basic EPS
is calculated by dividing the profit after tax of the Group by the weighted
average number of ordinary shares that were in issue during the year. The
diluted EPS takes into account the dilution effects which would arise on
conversion of all outstanding share options and share awards under the
Enterprise Management Incentive (EMI) scheme.
Taxation
The tax expense/(credit) represents the sum of the tax currently
payable/(repayable) and movements in deferred tax balances.
An R&D tax credit is claimed annually from HMRC based on the employee
costs involved in developing Aquis' systems and technology.
Current tax
The current income tax charge/ (credit) is calculated on the basis of the tax
laws enacted or substantively enacted at the balance sheet date in the country
where the company operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred tax
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised, or the deferred income tax liability is
settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future measurable taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax assets and liabilities (note 15) are offset when there is
a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income taxes assets and liabilities relate
to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is an intention to
settle the balances on a net basis.
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense, unless those costs are required to be recognised as part of the cost
of group developed trading platforms.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
Termination benefits are recognised as an expense when the Group is
demonstrably committed to terminate the employment of an employee or to
provide termination benefits, as set out within IAS 19.
Retirement benefits
Pension obligations
The Group has no further payment obligations once the contributions have been
paid. The contributions are recognised as an employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to the extent
that a cash refund or a reduction in the future payments is available.
Share-based payments
EMI Options
Equity-settled share-based payments are measured at fair value at the date of
grant by reference to the fair value of the equity instruments granted using
the US Options Binomial model. The fair value determined at the grant date is
expensed on a straight-line basis over the vesting period, based on the
estimate of shares that will eventually vest. A corresponding adjustment is
made to equity.
When the terms and conditions of equity-settled share-based payments at the
time they were granted are subsequently modified, the fair value of the
share-based payment under the original terms and conditions and under the
modified terms and conditions are both determined at the date of the
modification. Any excess of the modified fair value over the original fair
value is recognised over the remaining vesting period in addition to the grant
date fair value of the original share-based payment. The share-based payment
expense is adjusted if the modified fair value is less than the original fair
value. Cancellations or settlements (including those resulting from employee
redundancies) are treated as an acceleration of vesting and the amount that
would have been recognised over the remaining vesting period is recognised
immediately.
Employee share incentive plan
Shares purchased under the share incentive plan are recognised as share-based
payments under IFRS 2. Partnership shares are purchased by employees and
matching shares are those purchased by Aquis at a ratio of 2:1. The shares are
held in a trust ("the Trust"), with matching shares required to be held for
three years before being transferred to the employee. The fair value of both
the partnership and matching shares are recognised in the share-based payment
reserve.
Partnership shares vest immediately while matching shares will vest over the
three-year holding period. The market value of shares when they are purchased
is assumed to approximate the fair value of the shares.
The cash transferred to the Trust is recognised as an investment in the
Company's accounts. In line with IFRS 10 guidance, the Trust is consolidated
in the Group accounts with the fair value of the shares held in the trust
recognised as a debit entry within equity.
Restricted share plan
The Restricted share plan is a share based scheme awarded to staff and has a
vesting period of three years after grant subject to continued employment.
Similar to share-based payments they are measured at fair value determined at
the grant date using the Black Scholes model. The fair value is expensed on a
straight-line basis over the vesting period, with the corresponding adjustment
being made to reserves.
Company Share Option Plan
The company share option plan is a share based scheme awarded to staff and has
a vesting period of three years subject to continued employment. Similar to
share-based payments they are measured at fair value determined at the grant
date using the Black Scholes model. The fair value is expensed on a
straight-line basis over the vesting period, with the corresponding adjustment
being made to reserves.
Premium Priced Options Plan
The PPO scheme is an option based share scheme and has a vesting period of
three years after the grant date subject to continued employment. Similar to
share-based payments they are measured at fair value determined at the grant
date using the Black Scholes model. The fair value is expensed on a
straight-line basis over the vesting period, with the corresponding adjustment
being made to reserves.
Leases - as a lessee
The Group assesses whether a contract is or contains a lease at inception of
the contract. The Group recognises a right of use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. Lease payments included in the measurement of the
lease liability comprise:
• Fixed lease payments (including in-substance fixed payments), less any
lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially
measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under residual value
guarantees;
• The exercise price of purchase options, if the lessee is reasonably
certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term
reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated
statement of financial position and is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the
lease payments made. The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a significant event or change in
circumstances resulting in a change in the assessment of exercise of a
purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change
in expected payment under a guaranteed residual value, in which cases the
lease liability is remeasured by discounting the revised lease payments using
an unchanged discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is
used).
• A lease contract is modified and the lease modification is not accounted
for as a separate lease, in which case the lease liability is remeasured based
on the lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the
modification.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day, less
any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment
losses. The right-of-use assets are included in property, plant and equipment
in the consolidated statement of financial position and are depreciated over
the term of the lease. The Group applies IAS 36 to determine whether a
right-of-use asset is impaired and accounts for any identified impairment loss
as described in the 'Impairment of tangible and intangible assets' policy.
Variable rents that do not depend on an index or rate are not included in the
measurement of the lease liability and the right-of-use asset.
Foreign exchange
Functional and presentation currency
Items included in the financial statements of the Group are measured using the
currency of the primary economic environment in which the entity operates. The
financial statements are presented in UK Pound Sterling (£), which is the
Group's functional and presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities denominated in
foreign currencies at year end exchange rates are recognised in profit or
loss.
All foreign exchange gains and losses recognised in the income statement are
presented net within 'operating expenses'. For the purpose of presenting
consolidated financial statements, the assets and liabilities of the Group's
foreign operations are translated at exchange rates prevailing on the
reporting date. Income and expense items are translated at the average
exchange rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in a foreign exchange translation
reserve.
On disposal of a foreign operation, exchange differences previously recognised
in other comprehensive income are reclassified to the income statement.
Foreign currency contracts used to manage foreign currency risk are accounted
for as derivatives as described above under "Financial instruments at fair
value through profit or loss".
3 ADOPTION OF NEW AND REVISED STANDARDS AND CHANGES IN ACCOUNTING POLICIES
New IFRS Standards that are effective for the current year
There were no new standards effective during the year ended 31 December 2023.
One standard has been amended and is effective as of 2023 as set out below.
This has not impacted the current year financial statements.
IFRIC agenda decision - Definition of a lease Substitution Rights (IFRS 16) - effective 1 Apr 2023
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following
Standards and Interpretations, which have not yet been applied in these
financial statements, were in issue. The Directors do not expect that the
adoption of the Standards listed below will have any impact on the financial
statements of the Group in future periods:
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
(Issued August 2023) - effective 1 Jan 2025
IFRS S2 Climate-related disclosures (Issued June 2023) - effective 1 Jan 2024
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In applying the Group's accounting policies, which are described in Note 2,
the Directors are required to make judgements, estimates and assumptions about
the carrying amount of assets and liabilities that are not readily apparent
from other sources. Management has shown these matters as judgements where
they relate to a significant policy and the judgement has a material impact on
the reported balance. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical judgements
The following are the critical judgements, apart from those involving
estimations (which are presented separately below), that the Directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in financial statements.
Judgements in relation to performance obligations
In making their judgement, the Directors considered the detailed criteria for
the recognition of revenue set out in IFRS 15, and in particular, whether
revenue is recognised at a point in time or over time. Following an assessment
of the technology licensing contract portfolio, and the obligations that Aquis
has under each contract, the Directors are satisfied that obligations
contained therein be split into the following performance obligations, and
that the revenue from each licensing contract should be assessed individually.
The identified performance obligations and the timing of revenue recognition
on delivering the licence contracts as follows:
• Implementation/ project fees: these are upfront, non-refundable fees that
a customer pays in order to obtain the user agreement. Even if the user
acceptance certificate is never issued, the implementation fee cannot be
reclaimed and so the revenue is guaranteed and can be recognised from the time
of invoice as Aquis becomes unconditionally entitled to payment but in
practice recognition will often be deferred until the work is completed.
• Licensing fees: The customer is liable to pay the monthly licensing fee
from the date of signing the user acceptance agreement (contract inception
date). At this point in time Aquis has fulfilled its promise to deliver the
licence (i.e. the system has been deployed in the client's production
environment) and this performance obligation is fulfilled. Management uses
judgement when assessing the recoverability of the licencing fees, and
recognises them only when their collection is assumed to be highly probable.
This assessment takes into consideration the current status of the client's
business, including whether the exchange system is active with products/
securities added and members trading on it. The licensing fees are recognised
at a point in time, which occurs after the contract is signed and once Aquis
is satisfied that receiving the licencing fees is highly probable.
• Maintenance fees: fees to maintain the system are recognised over the
course of the licensing contract as Aquis fulfils its performance obligation
to maintain the system. Management have estimated a fixed annual amount per
contract, which reflects the time spent supporting the client's platform and
upgrading the software in accordance with the contractual terms.
• Live services: fees charged to support infrastructure, operations, and
first-line market surveillance as part of running regulatory grade exchanges.
These services are recognised over time when Aquis provides the service.
• Hosting: these fees are charged for the use of Aquis' hardware on a
monthly basis. These services are recognised over time as the customer
requires.
Changes in identification of performance obligations could impact the timing
of revenue recognition for licensing contract assets and is thus a critical
accounting judgement.
Capitalisation of internally generated intangible assets resulting from
Research and Development
Internally generated intangible assets are capitalised when, in management's
judgement, the criteria for capitalisation under IAS 38 (listed in Note 2)
have been met. The direct costs incurred in the research and development of
Aquis' exchange platform and associated technology and systems are
capitalised. Management reviews the time spent by the development team in
developing and maintaining the systems used internally by Aquis when
determining the amount to be capitalised within each period.
Critical accounting estimates
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
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
Estimating the useful life of intangible assets
The expected useful life of most intangible asset is estimated to be 3 years,
but some intangible assets are considered to have an indefinite useful
economic life. In making this judgement management have taken into account
product upgrade cycles, the pace of change of regulation as well as
benchmarking against other companies with internal systems and technology
research and development. Intangible assets with indefinite lives are reviewed
for indicators of impairment at the end of each accounting period.
Expected credit loss of contract assets
An impairment for the expected credit loss of contract assets that arise as a
result of applying IFRS 15 to licensing revenue is required under IFRS 9. This
impairment is an accounting estimate which is calculated based on the
Directors' best estimates of the probability of default and loss given
default. The quantification of the assumptions and stresses for the year are
disclosed in Note 11 of the financial statements.
In arriving at these estimates, the Directors have assessed the range of
possible outcomes using reasonable and supportable forward-looking
information, which is based on assumptions for the future movement of
different economic drivers and how these drivers will affect each other.
Aquis' assessment of the credit risk associated with a licensing customer is
conducted at inception of the contract (but before the user agreement is
signed) and includes factors that are specific to the customer, general
economic conditions and an assessment of both the current as well as the
forecast direction of these conditions.
The credit risk assessment is conducted by means of a take-on assessment which
comprises of a series of relevant criteria for a licensing contract that are
scored according to the specific circumstances of the customer, with scores
for each parameter typically ranging from 1-5. The assessment evaluates the
following:
• Level of funding;
• Regulatory approvals;
• Market, industry and business model;
• Macro-economic forecasts;
• Corporate governance/ Group management;
• Whether the client is revenue generating;
• Level of client profitability;
• Contract length and the associated range of economic scenarios therein;
• Payment history; and
• External credit ratings.
The above assessment will determine the customer category upon inception of
the contract, and the inputs to the expected credit loss model is determined
thereon.
The credit risk assessment and associated inputs to the expected credit loss
model (probability of default and loss given default) are critical assessments
that could impact both the provision for expected credit losses as well as the
movement in the provision reflected in the income statement.
Deferred tax asset
Deferred tax assets (Note 14) are recognised to the extent that their
utilisation is probable. The utilisation of deferred tax assets will depend on
whether it is possible to generate sufficient taxable income in the respective
tax type and jurisdiction. A total net deferred tax asset is recognised in the
current period, since profitability is expected to continue for at least the
next 3 years. The deferred tax asset is calculated based on expected
profitability over this period as Aquis is a high growth company and there is
considerable uncertainty in estimating financial performance beyond this
length of time.
Various factors are used to assess the probability of the future utilisation
of deferred tax assets, including, operational plans and loss-carry forward
periods. To reflect the uncertainty in the accuracy of business forecasts, the
model uses modest growth rates and applies a probability weighting to each
type of revenue.
Share-based payments
The US binomial model and Black Scholes model are used to estimate the fair
value of the EMI, CSOP, RSP and PPO options. The resulting fair values are
recognised over the vesting period as an expense in the Income Statement, with
the corresponding amounts recognised as equity in the balance sheet. The model
requires the following inputs: grant date, exercise price, expiry, expected
life of options, expected volatility, and the risk-free interest rate. The
expected life and expected volatility require the use of estimates. Volatility
is estimated based on the historical average for the available data up to the
grant date, while the expected life of the options is based on management's
judgement of when the options will be exercised, which is assumed to be an
average of 5 years.
Valuation of derivatives
The company uses foreign currency forwards to manage its exposure to exchange
rate fluctuations. Although in the current period the reported value is
immaterial, there is potential for changes based on large currency or relative
interest rate shifts. As such, they are a source of estimation uncertainty.
Note 24 provides additional information on the fair value of derivatives.
5 FINANCIAL RISK MANAGEMENT
The Group seeks to protect its financial performance and the value of its
business from exposure to adverse changes in capital commitments, as well as
credit, liquidity and foreign exchange risks.
The Group's financial risk management approach is not speculative. The Group's
Audit, Risk and Compliance Committee provides assurance that the governance
and operational controls are effective to manage risks within the
Board-approved risk appetite, supporting a robust Group risk management
framework.
The Group's objectives when managing these risks are detailed below.
Capital risk management and capital commitments
Risk description Risk management approach
There is a risk that Group entities may not maintain sufficient capital to The Group's objectives when managing capital are to safeguard the Group's
meet their obligations. The Group comprises regulated entities. It considers ability to continue as a going concern so that it can provide returns for
that increases in the capital requirements of its regulated companies, or a shareholders and benefits for other stakeholders.
scarcity of equity (driven by its own performance or financial market
conditions) either separately or in combination are the principal risks to The Group has mitigated the level of risk significantly by ensuring that, as
managing its capital. set out within the risk description, each entity in the Group maintains a
level of capital that is well in excess of regulatory requirements.
AQXE has a total capital regulatory requirement of £5.2m as at 31 December Maintaining a strong capital structure is a key priority for the Group. If
2023, with available capital of £26.4m, reflecting a surplus of £20.1m / there was an erosion of capital for any reason the Group may issue new shares
478%. The total regulatory requirement is set as the total capital ratio plus or sell assets to ensure capital adequacy requirements continue to be met. The
Pillar 2 add on. directors have assessed the impact of a 10% fall in the Group's available
capital and concluded the impact not to be material.
Within the AQSE subsidiary the capital regulatory minima is set by the FCA
through the Financial Resource Requirement (FRR) which is currently set at The Group supports both Aquis Europe and AQSE in maintaining capital adequacy,
£2.4m. Financial resources available (representing net assets) were £2.8m at and holds sufficient capital to be able to inject capital into the businesses
31 December 2022, reflecting a £0.4m headroom above regulatory minima. as and when required, and has historically done so within AQSE after the
Company had been acquired to enable its capital to be sufficient as the
company was brought up to the current profitable trading levels evidenced from
2022.
The Group continuously monitors its level of capital in order to ensure it
remains compliant with regulatory capital requirements and performs monthly
and quarterly reporting on capital balances and associated headroom. Proposed
investment requirements, capital expenditure and potentially increasing
capital resources through equity or debt issuance are assessed annually as
part of the budgeting process, as well as on an ad-hoc basis as
required.
Credit risk
Risk description Risk management approach
The Group's credit risk relates to its customers being unable to meet their The Directors make a judgement on the credit quality of the Group's customers
obligations to the Group either in part or in full. based upon the customers' financial position, the recurring nature of billing
and collection arrangements and, historically, a low incidence of default.
Aquis' assessment of the credit risk associated with a licensing customer is
conducted at inception of the contract (but before the user agreement is
signed) and includes factors that are specific to the customer, general
economic conditions and an assessment of both the current as well as the
forecast direction of these conditions. Based on this assessment, the
prospective customer is assigned to a customer category with an appropriate
risk rating.
Aquis' credit risk management processes are applied to all trade receivables
and are calculated using a lifetime ECL method, as detailed in Note 11. The
Directors have stress tested the current approach to managing this risk and
believe it to be appropriate. If 10% of trade receivables outstanding from 31
December 2023 were to default, the hypothetical impairment charge would be
immaterial.
Liquidity Risk
Risk description Risk management approach
The Group's operations are exposed to liquidity risk to the extent that they The Group maintains sufficient liquid resources to meet its financial
are unable to meet their daily payment obligations. obligations as and when they become due in the ordinary course of business.
Management monitors forecasts of the Group's cash flow quarterly through an
assessment of cash resources that are in excess of regulatory capital
requirements. The Group is solvent with net current assets in excess of £17.2
million (2022: £14.0 million), with the majority of the debtor's book being
short term in nature. The Group is also funded entirely by equity, with no
external debt funding obligations to be met. The Directors have stress tested
the current approach to managing this risk and believe it to be appropriate.
If group net assets were to fall by 10% there would still be a significant
surplus to meet the Group's liabilities as they fall due.
Interest Rate Risk
Risk description Risk management approach
The Group is not materially exposed to market risk including interest rate Bank deposits are primarily placed over night or as interest rates have risen
(see below for FX risk). the Group has started to prudently place some funds on deposit for up to 3
months. The Directors have stress tested the current approach to managing this
risk and believe it to be appropriate. The only adverse impact would be if
interest rates were to fall and reduce interest income on bank deposits. As at
There is no negative exposure to interest rate changes since the Group and 31 December 2023 total interest income on deposits was £0.4 million (2022:
Company have no external debt obligations, and the interest rate on the lease £0.1 million).
liability is the rate implicit in the lease and as such is not subject to
change over the term of the lease.
FX Risk
Risk description Risk management approach
The Group operates in the UK and Europe, with Sterling as its principal Foreign exchange risk has previously arisen on foreign currency denominated
currency of operation. The Group invoices its customers primarily in GBP, but costs within Aquis Exchange PLC or through the translation of GBP denominated
some contracts have been structured using USD and as such foreign exchange balances within Aquis Exchange SAS. At the end of 2022 Aquis entered into a
risk arises from invoicing in USD. The Group incurs the majority of expenses USD denominated technology contract and hence opened a USD account which holds
in GBP, but some costs are denominated in USD and EUR. a low level of USD at the year end £0.2 million (2022: £0.2 million). The
contract will deliver USD cash flows in the future from 2023 and so in January
2023 Aquis entered into an FX forward arrangement to lock in the future GBP
benefit of this contract.
The value of the USD denominated contract is considered material to Group and
Company's balance sheet. However, the foreign exchange exposure for costs
invoiced in other currencies is considered immaterial.
As at the year end at 31 December 2023 the value of the FX forward was in the
money at £51,407 (2022: nil). The Directors performed stress testing on the
cost base of the group in non-functional currencies and concluded that an
An immaterial amount of cash held by Aquis Exchange Europe SAS is held in a adverse movement of 10% versus GBP would not render a material impact.
euro denominated bank account and an immaterial amount of USD held by Aquis
Exchange PLC, with the remaining cash held in Sterling denominated bank
accounts.
The statement of financial position is analysed below:
Group Amortised Cost Fair Value through P&L Fair Value through OCI Non-financial instruments Total in the Statement of Financial Position
31 December 2023
3,033,440 9,672,585 12,706,025
- -
Trade and other receivables
Cash and bank balances 14,765,910 14,765,910
- - -
Investments 591,945 591,945
- - -
Trade and other payables 2,632,181 1,311,950 3,944,131
- -
Lease Liabilities 2,984,444 2,984,444
- - -
Derivatives 51,407 51,407
- - -
Group Amortised Cost Fair Value through P&L Fair Value through OCI Non-financial instruments Total in the Statement of Financial Position
31 December 2022
Trade and other receivables 2,317,384 7,170,152 9,487,536
- -
Cash and bank balances 14,170,965 14,170,965
- - -
Trade and other payables 2,022,394 1,723,541 3,745,935
- -
Lease Liabilities 3,397,677 3,397,677
- - -
Company Amortised Cost Fair Value through P&L Fair Value through OCI Non-financial instruments Total in the Statement of Financial Position
31 December 2023
Trade and other receivables 3,009,785 9,523,076 12,532,861
- -
Cash and bank balances 6,356,259 6,356,259
- - -
Investments 591,945 591,945
- - -
Trade and other payables 2,971,755 256,777 3,228,532
- -
Lease Liabilities 2,537,883 2,537,883
- - -
Derivatives 51,407 51,407
- - -
Company Amortised Cost Fair Value through P&L Fair Value through OCI Non-financial instruments Total in the Statement of Financial Position
31 December 2022
Trade and other receivables 8,539,250 7,361,680 15,900,930
- -
Cash and bank balances 5,595,827 5,595,827
- - -
Trade and other payables 8,082,958 471,843 8,554,801
- -
Lease Liabilities 2,886,712 2,886,712
- - -
The following tables detail the Group and Company's remaining contractual
maturity for its non-derivative financial liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group or Company
can be required to pay.
Group 1 Year 2-5 years 5+ years Total
31 December 2023
Trade and other payables 3,944,131 3,944,131
- -
Lease Liabilities 527,339 1,599,056 1,337,759 3,464,154
4,471,470 1,599,056 1,337,759 7,408,285
31 December 2022
Trade and other payables 3,745,935 3,745,935
- -
Lease Liabilities 522,800 1,580,900 1,293,977 3,397,677
4,268,735 1,580,900 1,293,977 7,143,612
Company 1 Year 2-5 years 5+ years Total
31 December 2023
Trade and other payables 3,228,532 3,228,532
- -
Lease Liabilities 437,400 1,239,300 1,202,850 2,879,550
3,665,932 1,239,300 1,202,850 6,108,082
31 December 2022
Trade and other payables 8,554,801 8,554,801
- -
Lease Liabilities 437,400 1,239,300 1,210,012 2,886,712
8,992,201 1,239,300 1,210,012 11,441,513
6 OPERATING SEGMENTS
The Aquis Group can be split into four revenue streams, each offering multiple
products and services and benefitting from Group synergies. The specific focus
of these activities are:
1) Aquis Exchange - operator of MTF and related services. The Group operates
two MTFs: Aquis Exchange (AQXE), which is UK regulated and Aquis Exchange
Europe (AQEU), which is French regulated.
2) Aquis Stock Exchange (AQSE) - primary listings and trading business. Within
this division is AQSE Main Market, AQSE Growth Market, and AQSE Trading;
3) Aquis Technologies - developer of exchange technology and services. The
product offering includes Aquis Matching Engine, Aquis Market Surveillance,
Aquis Market Gateway and related services including market surveillance and
operations.
4) Aquis Data - Market Data services across the MTF and Recognised Investment
Exchanges operated by Group entities.
Aquis Exchange PLC is the parent company and comprises AQXE and Aquis
Technologies. It owns 100% of its two subsidiaries, AQEU and AQSE. Management
monitors the Group's overall performance regularly using a set of established
Key Performance Indicators including revenue, net profit and EBITDA. When
monitoring the performance of each operating segment individually, management
examines the discrete financial information available which will normally
include revenue and gross profit for each division. Assets and liabilities,
income tax and IFRS 2 charges are not reported internally to Chief Operating
Decision Maker. In line with IFRS 8 the operating segments are reported
separately as follows:
2023 Group Aquis Markets Aquis Stock Exchange Aquis Technologies Aquis Data Total
Revenue 10,919,263 1,771,284 7,298,157 3,722,237 23,710,941
Impairment credit / (charge) on Contract Assets - - (1,016,223) - (1,016,223)
Net revenue 10,919,263 1,771,284 6,281,934 3,722,237 22,694,718
Impairment (charge) on trade and other receivables - (19,787) (58,108) (1,500) (79,395)
Other gains - - 51,407 - 51,407
Costs (7,134,010) (1,634,472) (3,550,170) (2,992,168) (15,310,820)
Share based payments (499,963) (81,102) (334,162) (170,431) (1,085,658)
EBITDA 3,285,290 35,923 2,390,901 558,138 6,270,252
Depreciation, amortisation and net interest (292,793) 4,626 (583,951) (203,247) (1,075,365)
Profit before tax 2,992,497 40,549 1,806,950 354,891 5,194,887
2022 Group Aquis Markets Aquis Stock Exchange Aquis Technologies Aquis Data Total
Revenue 10,244,767 1,647,195 5,034,579 3,002,986 19,929,527
Impairment credit / (charge) on Contract Assets - - 133,484 - 133,484
Net revenue 10,244,767 1,647,195 5,168,063 3,002,986 20,063,011
Impairment (charge) on trade and other receivables - (12,784) - - (12,784)
Other gains - - - - -
Costs (6,485,855) (1,446,507) (3,037,456) (2,450,228) (13,420,046)
Share based payments (377,564) (61,247) (252,354) (128,707) (819,872)
EBITDA 3,381,348 126,657 1,878,253 424,051 5,810,309
Depreciation, amortisation and net interest (488,177) (103,202) (507,527) (184,994) (1,283,900)
Profit before tax 2,893,171 23,455 1,370,726 239,057 4,526,409
The tables above represent the segment-level information that is monitored by
the Chief Operating Decision Makers, which are the Chief Executive Officer,
Chief Operating Officer and the Chief Financial Officer. All non-current
assets (contract assets) are held centrally by Aquis Exchange PLC, other than
the lease for the Paris office assigned to AQEU. The geographical analysis of
the non-current assets is as follows; UK: £5,817k, Singapore: £3,099k and
South Africa: £1,928k, Total: £10,844k.
At a Group level revenue from any one customer does not exceed 10% of total
Group Revenue (2022: none). At a Company level revenue from two technology
licence customers exceeded 10% of total Company revenues, and amounted to
£4,171k (2022: £3,383k).
2023 Company Aquis Markets Aquis Stock Exchange Aquis Technologies Aquis Data Total
Revenue 3,994,208 - 7,298,157 1,854,974 13,147,339
Impairment credit / (charge) on Contract Assets - - (1,016,223) - (1,016,223)
Net revenue 3,994,208 - 6,281,934 1,854,974 12,131,116
Impairment (charge) on trade and other receivables - - (58,108) (1,500) (59,608)
Other gains - - 51,407 - 51,407
Costs (742,211) (3,550,170) (1,496,084) (5,788,465)
Share based payments (499,963) (81,102) (334,162) (170,431) (1,085,658)
EBITDA 2,752,034 (81,102) 2,390,901 186,959 5,248,792
Depreciation, amortisation and net interest (579,451) 4,626 (583,951) (101,624) (1,260,400)
Profit before tax 2,172,583 (76,476) 1,806,950 85,335 3,988,392
2022 Company Aquis Markets Aquis Stock Exchange Aquis Technologies Aquis Data Total
Revenue 3,894,736 - 4,970,622 1,477,167 10,342,525
Impairment credit / (charge) on Contract Assets - - 133,484 - 133,484
Net revenue 3,894,736 - 5,104,106 1,477,167 10,476,009
Impairment (charge) on trade and other receivables - - - - -
Other gains - - - - -
Costs (533,647) - (3,037,456) (1,225,114) (4,796,217)
Share based payments (377,564) (61,247) (252,354) (128,707) (819,872)
EBITDA 2,983,525 (61,247) 1,814,296 123,346 4,859,920
Depreciation, amortisation and net interest (598,622) (23,455) (507,527) (92,497) (1,222,101)
Profit before tax 2,384,903 (84,702) 1,306,769 30,849 3,637,819
7 EMPLOYEES
The monthly average number of persons (including directors) employed by the
Group during the year was:
Group 2023 2022
Number Number
Management 3 3
IT 23 20
Compliance and Surveillance 13 11
Operations 8 7
Business Development 21 18
Finance / HR / Admin 5 5
Marketing 2 2
75 66
Company 2023 2022
Number Number
Management 2 2
IT 21 18
Compliance and Surveillance 6 5
Operations 8 7
Business Development 13 10
Finance / HR / Admin 5 5
Marketing 2 2
57 49
Their aggregate remuneration was comprised of:
Group 2023 2022
£ £
Salaries and wages 7,523,034 6,598,428
Social security costs 1,056,857 967,032
Other pension costs 314,281 159,366
Share based payments 1,085,658 819,872
Employee benefits 238,727 170,102
10,218,557 8,714,800
Company 2023 2022
£ £
Salaries and wages 5,264,174 4,698,746
Social security costs 766,553 680,908
Other pension costs 207,351 116,151
Share based payments 1,085,658 819,872
Employee benefits 238,723 169,596
7,562,459 6,485,273
8 RETIREMENT BENEFIT SCHEME
Defined contribution schemes
The Group operates a defined contribution pension scheme for all qualifying
employees. The assets of the scheme are held separately from those of the
Company in an independently administered fund.
A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the
current and prior periods.
9 DIRECTOR'S REMUNERATION
Further details on Directors' remuneration are included within the Directors'
Report in the Annual Report and Accounts for 2023.
Company 2023 2022
£ £
Short-term employee benefits 1,063,558
1,096,773
Additional salary in lieu of pension contributions 23,631
26,465
Remuneration disclosed above include the following amounts paid to the highest
paid director:
2023 2022
£ £
Short-term employee benefits 420,501
419,001
Additional salary in lieu of pension contributions 14,000 12,500
There are no directors to whom retirement benefits are accruing in respect of
qualifying services. No directors exercised share options in the year (2022:
none).
10 REVENUE
An analysis of the Group's revenue by product for each segment is as follows:
2023 Group Aquis Markets Aquis Technologies Aquis Data Aquis Stock Exchange Total
Exchange fees 10,919,263 663,068 11,582,331
- -
Licence fees 7,298,157 7,298,157
- - -
Data vendor fees 3,722,237 3,722,237
- - -
Issuer fees 1,108,216 1,108,216
- - -
Total 10,919,263 7,298,157 3,722,237 1,771,284 23,710,941
2022 Group Aquis Markets Aquis Technologies Aquis Data Aquis Stock Exchange Total
Exchange fees 10,244,767 624,675 10,869,442
- -
Licence fees 5,034,579 5,034,579
- - -
Data vendor fees 3,002,986 3,002,986
- - -
Issuer fees 1,022,520 1,022,520
- - -
Total 10,244,767 5,034,579 3,002,986 1,647,195 19,929,527
2023 Company Aquis Markets Aquis Technologies Aquis Data Aquis Stock Exchange Total
Exchange fees 3,994,208 3,994,208
- - -
Licence fees 7,298,157 7,298,157
- - -
Data vendor fees 1,854,974 1,854,974
- - -
Issuer fees -
- - - -
Total 3,994,208 7,298,157 1,854,974 13,147,339
-
2022 Company Aquis Markets Aquis Technologies Aquis Data Aquis Stock Exchange Total
Exchange fees 3,894,736 3,894,736
- - -
Licence fees 4,970,622 4,970,622
- - -
Data vendor fees 1,477,167 1,477,167
- - -
Issuer fees -
- - - -
Total 3,894,736 4,970,622 1,477,167 10,342,525
-
Revenues from customers attributable to each of the following countries
Group Company
2023 2022 2023 2022
£ £ £ £
Australia 57,000 41,675 33,567 26,406
British Virgin Islands 3,625 14,467 -
-
Canada 4,150 11,853 -
-
Cayman Islands 1,160 1,422 1,119
-
China 142,000 -
- -
Colombia 39,329 -
- -
Cyprus 7,887 -
- -
Denmark 32,238 -
- -
Finland 24,000 -
- -
France 1,215,591 1,128,945 179,094 140,887
Germany 425,349 319,888 106,432 83,726
Gibraltar 4,000 -
- -
Guernsey 2,100 1,972 -
-
Hong Kong 24,000 107,525 105,681 83,135
Hungary 35,000 -
- -
Ireland 1,517,301 91,177 103,278 81,245
Isle of Man 825 -
- -
Italy 24,000 -
- -
Jersey 1,300 10,207 -
-
Kenya 14,150 -
- -
Luxembourg 2,177 17,398 21,336 16,784
Netherlands 158,239 43,147 54,841 43,141
Norway 38,025 39,784 -
-
Peru 1,972 -
- -
Singapore 483,311 -
- -
Slovenia 2,706 -
- -
South Africa 109,245 2,514,905 3,074,384 2,418,504
Spain 79,872 -
- -
Sweden 24,000 6,496 7,965 6,266
Switzerland 222,330 184,437 113,107 88,977
United Arab Emirates 17,746 -
- -
United Kingdom 17,432,294 13,602,675 7,955,010 6,257,912
United States 1,595,490 1,761,505 1,391,222 1,094,423
-
-
23,710,941 19,929,527 13,147,339 10,342,525
Subscription fees and data vendor fees:
Subscription fees and some data vendor fees are accounted for under IFRS 15
and are all recognised at point in time as they reflect variable revenue
determined on a monthly basis. In addition to the variable monthly fee some
AQSE data vendors pay an annual fee for access to real time and/or end of day
data, which is recognised over time as the performance obligation of providing
data is fulfilled.
The Group begins to recognise monthly subscription fees, data vendor fees, and
connectivity fees when the customer conformance test is satisfactorily
concluded, and an acceptance certificate is issued. This is then verified by
the customer starting to utilise the platform, which is the point in time that
the Group determines that the customer has received the benefit from the
service.
In the case of subscription, connectivity and data fees, invoices are raised
monthly in arrears and there is no obligation for a refund, return or any
other similar obligation. There is no constrained variable consideration in
any customer contracts, and the transaction price is allocated in full at a
single point in time when the customer receives the benefit from the services.
Licence fees and contract assets:
Aquis Exchange PLC provides technology services under licence to clients. The
services comprise the provision of an exchange platform and / or a
surveillance system and may also include support services comprising basic
infrastructure support or additional services. The duration of the licences
varies between 1 and 7 years and will consist of an implementation fee, and,
post implementation, a monthly licence fee for the duration of the contract.
The monthly fees also cover system maintenance and system upgrades that
typically occur every 12 - 18 months. The licensing contracts are accounted
for under IFRS 15 and any corresponding contract assets are subject to IFRS 9
provisioning, as disclosed further in Note 11. Contract liabilities arise when
consideration has been provided to Aquis prior to completion of relevant
performance obligations as outlined below. These balances typically arise when
customers pay in advance of implementation. As of the balance sheet date there
are no contract liabilities (2022: nil).
The revenue from licensing contracts with customers has been categorised
reflecting the nature, amount, customer categorisation (see also Note 4),
contract duration and uncertainty of revenue and cash flows. Revenue from
licensing contracts is assessed for each contract and is recognised as and
when each performance obligation is satisfied. A transaction price is
determined by the contractual terms of an agreement. Transaction prices are
allocated to each performance obligation based on the standalone price of the
product or service offered by the Group. The list of performance obligations
included within Aquis' Technology Licence agreements is outlined below.
For licensing contracts, the Company has assessed the expected credit loss of
each client individually. The transaction price is allocated according to the
Group's obligations to the client over the course of licence period. There is
no constrained variable consideration in any customer contracts.
The licensing fees line item also includes connectivity fees for licensing
contract customers that are recognised at a point in time as they reflect
variable revenue determined on a monthly basis, and are underpinned by a
separate agreement.
Contract Assets (Group and Company) £ £
As at 1 January 6,114,105 3,528,400
PO2: Licence fees 5,419,476 3,805,388
PO3: Maintenance fees 449,533 315,687
Net ECL (provision)/credit on contract assets (1,016,223) 133,484
Transfers to trade receivables (2,345,265) (1,756,638)
Adjustments for foreign exchange gains (141,182) 87,784
As at 31 December 8,480,444 6,114,105
The scope of a Technology Licence contract was amended during the year which
resulted in cumulative catch-up adjustments of £86,400 (2022: £191,000)
being recognised in the year despite satisfaction of their performance
obligation in prior periods.
Upon invoicing of revenues the right to consideration becomes unconditional
and thus contract asset balances have been reduced for balances transferred to
trade receivables. The unrecovered amount included in receivables is £626,607
(2022: £462,463).
Performance obligation (PO) Recognition of revenue upon completion
PO1: Implementation fees Implementation/ project fees are upfront, non-refundable fees that a customer
pays in order to obtain the user
agreement. Even if the user acceptance certificate is never issued, the
implementation fee cannot be reclaimed and so the revenue is guaranteed and
can be recognised at the time of invoice as Aquis becomes unconditionally
entitled to payment.
PO2: Licencing fees At a point in time upon signing the user acceptance agreement, as the Company
has fulfilled its promise to
deliver the licence (i.e. the system has been deployed in the client's
production environment). A corresponding
contract asset (trade receivable) is recognised to reflect the customer's
obligation to pay the monthly licensing fee over the remaining term of the
contract.
PO3: Maintenance fees Over the course of the licensing contract, as the performance obligation to
maintain the system is settled and the customer benefits from using the
system.
PO4: Live services Over the course of the licensing contract, as the performance obligation to
provide surveillance and similar core market operations tasks are settled and
the customer benefits over time.
PO5: Hosting Over the course of the licensing contract, as the performance obligation to
use Aquis' hardware and infrastructure is used over time by the customer.
The aggregate amount of the transaction price per customer category that has
been allocated to the performance obligations for the year is as follows:
Group and Company 2023
£ £ £ £ £ £
Risk category(1) 1 2 3 4 5 Total
PO1 65,000 500,000 280,630 - 845,630
-
PO2 2,550,000 2,027,500 85,586 756,390 - 5,419,476
PO3 62,457 239,453 125,000 22,623 - 449,533
PO4 - -
- - - -
PO5 42,000 - 42,000
- - -
2,677,457 2,808,953 491,216 779,013 - 6,756,639
Group and Company 2022
£ £ £ £ £ £
Risk category(1) 1 2 3 4 5 Total
PO1 236,842 - 236,842
- - -
PO2 191,000 3,382,792 231,596 - 3,805,388
-
PO3 315,687 - 315,687
- - -
506,687 3,619,634 231,596 - 4,357,917
-
The amount of revenue to be recognised from unsatisfied performance
obligations with Technology Licence customers is as follows:
Group and Company 2024 2025 2026 2027-2030 Total
As at 31 December 2023 £ £ £ £ £
PO3 671,465 437,931 437,931 823,254 2,370,581
PO4 70,000 120,000 120,000 230,000 540,000
PO5 231,000 231,000
- - -
972,465 557,931 557,931 1,053,254 3,141,581
Group and Company 2023 2024 2025 2026-2029 Total
As at 31 December 2022 £ £ £ £ £
PO3 429,384 353,197 234,245 691,179 1,708,005
PO4 -
- - - -
PO5 -
- - - -
429,384 353,197 234,245 691,179 1,708,005
(1)Customer risk category definitions: 1 - High, 2 - Moderately High, 3 -
Moderate, 4 - Moderately Low, and 5 - Low.
11 IMPAIRMENT
The Group has two types of financial asset that are subject to potential
impairment, these are contract assets relating to technology licencing
contracts within the Company and also trade receivables arising on services
provided in the AQSE subsidiary. At a Company level intercompany balances are
assessed for any ECL on outstanding receivables arising during the normal
course of business between the Parent and its subsidiaries.
The Group have concluded that trade receivables and contract assets have
different risk characteristics and therefore the Expected Credit Loss (ECL)
rates for each type of asset are measured separately. Since they comprise a
portfolio of only a small number of clients, contract assets have been
assessed on a client-by-client basis, whilst trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
Further details on both methodologies can be found below.
IFRS 9 provisioning is applied to technology licensing contract assets based
on management estimates of the collectability of contracts over their useful
life, and which are re-assessed at each renewal and also at each year-end.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for trade receivables and
contract assets and therefore the ECL for each contract is assessed on a
lifetime basis rather than at each reporting date. As the simplified approach
is adopted it is not necessary to consider the impact of a significant
increase in credit risk.
Group Company
Contract Assets Trade Receivables Contract Assets Trade Receivables
Reconciliation of opening to closing loss allowances 2023 £ £ £ £
Opening Impairment Provision at 1 January 1,347,278 58,953 1,347,278 -
ECL increase during the year - 79,395 - 59,608
Written-off financial assets - (34,845) - (1,500)
ECL on new contract assets 1,729,154 - 1,729,154 -
ECL reversed over time (712,931) - (712,931) -
Closing Impairment Provision at 31 December 2,363,501 103,503 2,363,501 58,108
Group Company
Contract Assets Trade Receivables Contract Assets Trade Receivables
Reconciliation of opening to closing loss allowances 2022 £ £ £ £
Opening Impairment Provision at 1 January 1,480,762 46,169 1,480,762 -
ECL increase during the year - 12,784 - -
ECL on new contract assets 713,230 - 713,230 -
ECL reversed over time (846,714) - (846,714) -
Closing Impairment Provision at 31 December 1,347,278 58,953 1,347,278 -
Technology Licencing Contracts
During contract negotiation Aquis assesses the potential credit risk of a
prospective client prior to committing to the contract, and the Directors
consider factors that are specific to the customer, general economic
conditions and an assessment of both the current as well as the forecast
direction of these conditions. Based on this assessment, the prospective
customer is assigned to a customer category with an appropriate risk rating.
A probability of default (PD) occurring during the lifetime of the contract
ranging from 0-50% is applied to each client based on the assigned risk
category. The credit risk of Aquis' technology clients ranges from those that
are in infant start up stages (i.e. riskier) to those that are highly liquid
and solvent conglomerates (little to no risk). As such, the Directors view the
range of PD's for the portfolio to be between 50% for those with the highest
level of risk to 0% for those that are so near to a zero level of risk that
the PD is zero in substance. The Directors are comfortable that the assigned
PD is sufficiently accurate to reflect the elevated risk associated with each
start up when considering the idiosyncratic circumstances and risk factors of
each client. The Directors would not enter into any contract where the PD is
deemed to be any higher than 50%. The portfolio of technology contracts held
by Aquis have PDs that have an observable relationship with time, i.e. the PD
will decrease each year as the contract progresses. The credit risk of the
contracts is directly linked to the success of the business and its ability to
raise capital, and each year as the business continues in operation the credit
risk decreases.
The Loss Given Default (LGD) is also quantified on a customer-by-customer
basis and is done through an assessment of the recovery rate the Directors
anticipate will be applied to the customer in the event of liquidation.
Currently the low number of technology clients allows Aquis to assess each
contract individually on the appropriate credit risk category, and this is
determined based on several factors including company specific factors and
also any future macro-economic changes, the sensitivity to these potential
changes and the impact that these may have on the recoverability of the
outstanding debt.
Although the full risk assessment is completed only at the start of the
contract, the Directors assess each contract at the balance sheet date to
determine whether the level of ECL provision, based on LGD and PD at contract
inception, remains appropriate. The Directors consider a variety of factors
specific to each customer, such as past payment history, but also assess the
intent and ability to settle contractual commitments over the remaining
contractual term, examples of which include but are not limited to,
availability and sources of funding, revenue generating activities and
profitability, and ongoing communications with the customer. Further factors
considered by the Directors throughout the contract term are included within
Note 4 under critical accounting estimates.
The Contract Asset Impairment provision as at 31 December 2023 is £2,422k
(2022: £1,348k) and has been calculated with reference to estimations based
on the PD and LGD as described above for each individual contract taking into
account the nature, amount, customer categorisation, contract duration and
uncertainty of revenue and cash flows.
The contracts are short-to-medium term in length and, as at 31 December 2023,
the average contract duration for the portfolio of technology contracts is 3.4
years. (2022: 3.1 years).
Intercompany receivables
In line with IFRS 9 the Company has considered the qualitative and
quantitative characteristics of the risk of default by its subsidiaries on
outstanding receivables. These are considered non-material, both in quantum
and in nature given regular settlement of balances and sufficient liquidity in
both subsidiaries to cover amounts due to the Parent.
Trade Receivables
In line with IFRS 9 guidance, the Group has applied a simplified "Expected
Credit Loss" (ECL) model on trade receivables where a risk of potential
non-payment may arise. In doing so the Group has considered the probability of
a default occurring over the contractual life of the financial asset on
initial recognition of the asset. Such trade receivables largely arise within
the AQSE subsidiary, with those arising in Aquis Exchange PLC predominantly
with institutions where the resultant credit risk is assessed as
non‑material, with no historical evidence of non-payment, hence no ECL
provision is recognised on trade receivables. The trade receivables are
measured at amortised cost and the calculated ECL provision is deducted from
the gross carrying amount of the assets. When a trade receivable is determined
to be uncollectible, it is written off against the provision account for trade
receivables.
The simplified provision matrix presented below is based on historic default
rates over the expected life of the trade receivables and is adjusted where
appropriate for forward-looking estimates. The trade receivables balance is
split into 8 separate categories depending on the age of each debt, ranging
from 0 days past due to over 180 days past due. An appropriate estimation of
the probability of default is applied to each category of debt, based on both
historical default rates and expectations for the future. All AQSE customers
are assessed within a single credit risk category. In determining that the
value of any potential AQXE provision is immaterial the Directors have
separated AQXE customers into three distinct risk categories based on
homogenous characteristics for each customer class. The factors used to
differentiate each credit risk category in AQXE are primarily based on the
liquidity pools of each customer class, payment history and profiles, in
addition to regulated status. The assessment of AQXE provisions as immaterial
excludes a specific provision against a specific debtor against which a
provision of £58,108 was recognised in the year. Alongside AQSE provisions
the total Group Provision at the year end was £103,503 (2022: £45,395).
The key assumptions in calculating the ECL for trade receivables are that the
probability of default increases with the age of the debt and that the debts
are homogenous, i.e. the credit risk assessment is based on age rather than by
individual client. The expected loss rates are based on historical credit
losses experienced and adjusted to reflect current and forward-looking
information. AQSE trade receivables have been assessed to have a higher risk
of impairment than the rest of the Group's trade receivables.
Trade receivables have payment terms of 30 days from the date of billing. For
debts older than 180 days, debts are assessed on a case-by-case basis and are
written off if there is no reasonable expectation of recovery. During the year
a total of £33,345 (2022: £12,784) of trade receivables were written off
relating to debts from companies that had ceased membership with AQSE and the
contractual rights to cash flows from the financial assets were deemed to have
expired.
The total loss allowance is calculated by applying the expected loss rate to
the trade receivables balance in each age bucket. The total portion of the ECL
balance relating to trade receivables as at 31 December 2023 was £103,503, of
which £45,395 related to AQSE balances (31 December 2022: £58,953). The
table below shows the allocation of provisions against AQSE Trade Receivables:
Group - 2023
Days past Due 1-29 days 30-59 days 60-89 days 90-124 days 125 - 149 days 150-179 days Over 180 days Total
0 days
Expected loss rate 0.5% 1% 3% 5% 10% 25% 50% 100%
Trade receivables 112,837 59,774 232,940 28,224 66,830 4,500 6,600 21,503 533,208
Expected loss 564 598 6,891 1,411 6,683 1,125 3,300 6,585 27,157
Specific provisions charged / (released) - - 3,320 - - - - 14,918 18,238
Total Expected Credit Losses 564 598 10,211 1,411 6,683 1,125 3,300 21,503 45,395
Group - 2022
Days past Due 1-29 days 30-59 days 60-89 days 90-124 days 125 - 149 days 150-179 days Over 180 days Total
0 days
Expected loss rate 0.5% 1% 3% 5% 10% 25% 50% 100%
Trade receivables 106,305 33,200 6,800 2,200 4,500 - 15,780 78,845 247,630
Expected loss 532 332 204 110 450 - 7,890 78,845 88,363
Specific provisions charged / (released) - - - - - - - (29,410) (29,410)
Total Expected Credit Losses 532 332 204 110 450 - 7,890 49,435 58,953
12 OPERATING EXPENSES AND OTHER GAINS AND LOSSES
Earnings before interest, taxation, depreciation and amortisation is stated
after charging:
Group Company
2023 2022 2023 2022
Other gains £ £ £ £
Fair value movements in Derivative Instruments 51,407 - 51,407 -
Other gains relate to fair value movements on derivative financial assets used
to mitigate foreign currency risk. Please see Note 5, Financial Risk
Management, for further details.
Group Company
2023 2022 2023 2022
Administrative Expenses £ £ £ £
Fees payable to the company's auditor for the audit of the company's financial 270,000 241,250 205,000 190,000
statements
Fees payable to the company's auditor for the Client Asset audit 10,700 10,000 10,700 10,000
Share-based payments 1,085,658 819,872 1,085,658 819,872
Exchange loss/(gains) 104,162 116,415 146,103 (50,269)
Employee costs 9,132,899 7,894,927 6,476,801 5,665,400
Operating costs 5,793,059 5,157,454 5,317,912 4,675,889
Intercompany recharge - - (6,368,051) (5,694,803)
16,396,478 14,239,918 6,874,123 5,616,089
Other administrative expenses comprise marketing fees, data centre and other
service fees incurred in the ordinary course of business.
The Group expends resources to build trading platforms for its own use and for
licencing to customers. Research and development costs that are not eligible
for capitalisation have been expensed in the period incurred and are
recognised in administrative expenses. In 2023 the amount recognised in the
income statement was £512,543 (2022: £536,687).
Profit before taxation is stated after charging:
Group Company
2023 2022 2023 2022
Depreciation, amortisation and finance costs £ £ £ £
Depreciation of property, plant and equipment 760,308 760,537 687,019 688,615
Amortisation of intangible assets 612,257 498,955 612,257 498,954
1,372,565 1,259,492 1,299,276 1,187,569
Group Company
2023 2022 2023 2022
£ £ £ £
Finance expense on lease liabilities (Note 25) 103,249 67,691 88,571 51,069
Finance income on lease assets (Note 25) (15,737) (14,561) (15,293) (14,121)
Interest on deposited funds (384,712) (28,722) (112,154) (2,416)
(297,200) 24,408 (38,876) 34,532
Total company expenses were as follows:
Group Company
2023 2022 2023 2022
Total expenses £ £ £ £
Expenses 17,471,843 15,523,818 8,134,523 6,838,190
13 SHARE-BASED PAYMENTS
Aquis Exchange PLC has five different share schemes which have been set up
since incorporation of which one, being the EMI scheme, is now closed to new
entrants. A new scheme, being the Premium Priced Option scheme was
introduced in
2022.
Aquis Exchange PLC has established two Trusts (see Note 21) to which it has
provided funding to allow the purchase of shares for future settlement of the
liability arising from the share awards noted
below.
The Fair Value of any awards made in the year is calculated and recognised
through the P&L over the appropriate period as set out in the detail on
each scheme below. The total costs recognised through the P&L in the Group
in 2023 was £1,086k (2022 : £820k).
Group and Company
2023 2022
£ £
Enterprise Management Incentives (EMI) scheme 11,479 58,430
Restricted Share Plan (RSP) scheme 540,304 485,860
Company Share Ownership Plan (CSOP) scheme 57,963 43,039
Premium Priced Option (PPO) scheme 299,643 69,000
Share Incentive Plan (SIP) scheme 176,269 163,543
1,085,658 819,872
The aggregate level of share options and shares awarded which existed at the
year end is 3,526,785 shares (2022: 2,209,612 shares).
Group and Company
2023 2022
£ £
Enterprise Management Incentives (EMI) scheme 899,378 906,711
Restricted Share Plan (RSP) scheme 416,572 346,742
Company Share Ownership Plan (CSOP) scheme 203,530 163,073
Premium Priced Option (PPO) scheme 1,745,443 606,931
Share Incentive Plan (SIP) scheme 261,862 186,155
3,526,785 2,209,612
Enterprise Management Incentive Plan
There is one approved EMI scheme, which was initiated in June 2018 when the
first 564,124 options were granted. In April 2020 the second allotment
(approved in and deferred from November 2019 because Aquis was in a close
period) was made with a total of 740,250 options being granted. Options vest
in 3 equal tranches, one, two and three years after grant. The options expire
after 10 years.
In accordance with IFRS 2, the Group has estimated the fair value of options
using a US binomial option valuation model and spread the estimated value
against the profit and loss account over the life of the vesting period.
Of the total number of options granted, 7,333 (2022: 3,999) were exercised,
none (2022 : Nil) expired and none (2022 : 28,295) were forfeited during 2023.
The exercise price for the options granted on 14 June 2018 is £2.69 per share
to be settled in cash at the date of exercise.
The weighted average remaining contractual life of options outstanding at the
end of the reporting period amounted to nil months (2022: nil).
The US binomial model with an average expiry duration of 5 years, volatility
of 24% and risk-free interest rate of 1.1067% was used to calculate the fair
value of the options granted on 14 June 2018. All options are exercisable at a
price of £2.69 and the weighted average expected life of the options was
estimated to be 5 years.
The exercise price for the options granted on 16 April 2020 is £3.47 per
share to be settled in cash at the date of exercise.
The weighted average remaining contractual life of options outstanding at the
end of the reporting period amounted to nil (2022: 3.5 months).
The US binomial model using an average expiry duration of 5 years, volatility
of 20% and risk-free interest rate of 0.16% was used to calculate the fair
value of the options granted on 16 April 2020. All options are exercisable at
a price of £3.47 and the weighted average remaining expected life of the
options was estimated to be 5 years.
Details of the EMI scheme are as follows:
2023 2022
Number of Shares Average Exercise Price (£) Number of Shares Average Exercise Price (£)
• Outstanding at the beginning of the period 906,711 3.30 939,005 3.29
• Granted during the period - - - -
• Forfeited during the period - - (28,295) 3.22
• Exercised during the period (7,333) 3.47 (3,999) 3.50
• Expired during the period - - - -
• Outstanding at the end of the period 899,378 3.29 906,711 3.30
• Exercisable at the end of the period 899,378 3.29 672,628 3.23
Restricted Share Plan
The Group implemented a Restricted Share Plan (RSP) senior executive option
scheme in 2020. Total grants were made in April 2023 of 72,622 at a grant
price of £4.01 (April and September 2022: 117,975 options at a grant price of
£4.81).
Options vest three years after grant, with an additional hold period of a
further 2 years for executive directors and expire after 10 years.
The Black-Scholes model with an average expiry duration of 3 years, volatility
of 21% and risk-free interest rate of 1.669% was used to calculate the fair
value of the options granted in April 2022.
The Black-Scholes model with an average expiry duration of 3 years, volatility
of 21% and risk-free interest rate of 1.891% was used to calculate the fair
value of the options granted in September 2022. The weighted average remaining
contractual life of options outstanding at the end of the reporting period
amounted to 7 years and 7 months (2022: 7 years and 0 months).
The issue price for the options granted on 26 April 2023 is £4.03 per share
to be settled in cash at the date of exercise at £0.10. The following inputs
were used in the Black Scholes model: average maturity of 3 years, volatility
of 23% and risk-free interest rate of 3.585%.
Details of the RSP scheme are as follows:
2023 2022
Number of Average Exercise Price (£) Number of Shares Average Exercise Price (£)
Shares
• Outstanding at the beginning of the period 346,742 4.85 228,767 4.88
• Granted during the period 72,622 4.01 117,975 4.81
• Forfeited during the period (2,792) 4.03 - -
• Exercised during the period - - - -
• Expired during the period - - - -
• Outstanding at the end of the period 416,572 4.71 346,742 4.85
• Exercisable at the end of the period 140,447 3.64 - -
Company Share Ownership Plan
The Group implemented a Company Share Ownership Plan (CSOP) employee option
scheme in 2021. Grants in April 2023 were made amounting to 58,225 options at
a grant price of £4.10 (April 2022: 78,053 options at a grant price of
£4.90).
Options vest three years after grant and expire after 10 years.
The Black-Scholes model with an average expiry duration of 5 years, volatility
of 21% and risk-free interest rate of 1.669% was used to calculate the fair
value of the options granted in April 2022. The weighted average remaining
contractual life of options outstanding at the end of the reporting period
amounted to 8 years and 1 months (2021: 7 years and 8 months).
The issue price for the options granted on 26 April 2023 is £4.10 per share
to be settled in cash at the date of exercise at £4.10. The following inputs
were used in the Black Scholes model: average maturity of 3 years, volatility
of 23% and risk-free interest rate of 3.585%.
Details of the CSOP scheme are as follows:
2023 2022
Number of Shares Average Exercise Price (£) Number of Shares Average Exercise Price (£)
• Outstanding at the beginning of the period 163,073 5.95 95,780 6.85
• Granted during the period 58,225 4.10 78,053 4.90
• Forfeited during the period (17,768) 5.19 (10,760) 6.39
• Exercised during the period - - - -
• Expired during the period - - - -
• Outstanding at the end of the period 203,530 5.48 163,073 5.95
• Exercisable at the end of the period 203,530 5.48 - -
Premium Priced Option Plan
The Group implemented a Premium Priced Option (PPO) option scheme in 2022
primarily focussed on Senior Executives.
Grants in April 2023 were made amounting to 1,138,512 options at a grant price
of £5.04 (June 2022: 648,811 at a grant price of £4.79).
Options vest 3 years after grant and expire after 7 years.
The Black-Scholes model with an average expiry duration of 5 years, volatility
of 22.5% and risk-free interest rate of 1.5% was used to calculate the fair
value of the options granted in June 2022. The weighted average remaining
contractual life of options outstanding at the end of the reporting period
amounted to 5 years and 6 months (2022: 6 years and 6 months).
The issue price for the options granted on June 2022 is £3.828 per share to
be settled in cash at the date of exercise at £4.785. The following inputs
were used in the Black Scholes model: average maturity of 5 years, volatility
of 22.5% and risk-free interest rate of 1.79%.
The issue price for the options granted on 26 April 2023 is £4.03 per share
to be settled in cash at the date of exercise at £5.0375. The following
inputs were used in the Black Scholes model: average maturity of 5 years,
volatility of 22.5% and risk-free interest rate of 3.723%.
Details of the PPO scheme are as follows:
2023 2022
Number of Shares Average Exercise Price (£) Number of Average Exercise Price (£)
Shares
• Outstanding at the beginning of the period 570,931 4.79 - -
• Granted during the period 1,138,512 5.04 648,811 4.79
• Forfeited during the period - - (77,880) 4.79
• Exercised during the period - - - -
• Expired during the period - - - -
• Outstanding at the end of the period 1,709,443 4.95 570,931 4.79
• Exercisable at the end of the period - - - -
Share Incentive Plan
The employee Share Incentive Plan (SIP) is administered by Equiniti ("the
Trust"). The Trust purchases shares in Aquis on the open market on behalf of
employees that have elected to take part. Employees are limited to a maximum
annual contribution of £1,800. The scheme allows employees to become
shareholders in the Company in a tax efficient manner, with the Company
purchasing two matching shares for every partnership purchased by the
employee. The terms of the matching shares include that they must be held by
the Trust for three years before they can be transferred or sold, and the
employee must remain employed with the Company throughout this period. Free
shares are also awarded to staff on an annual basis where performance criteria
are met, with the Company purchasing up to a further 2 shares for each
partnership share purchased.
The fair value of the matching and free shares purchased by the company are
expensed over the three year vesting period. Management assumes that the cost
of the shares is a close approximation of the fair value of the shares as the
market price tends to be reflective of the discounted value of research
analysts' medium-term projections.
Details of the SIP scheme are as follows:
2023 2022
Number of Shares Number of Shares
• Shares held at the beginning of the period 186,155 139,543
• Partnership shares purchased in the period 16,863 12,478
• Matching shares purchased during the period 33,726 24,956
• Free shares purchased during the period 35,673 22,465
• Exercised during the period (2,607) (9,241)
• Forfeited during the period (7,948) (4,046)
• Shares held at the end of the period 261,862 186,155
• Exercisable at the end of the period - -
14 DEFERRED TAX ASSET
A net deferred tax asset of £1,785,331 (2022: £1,593,931) at the Group and
£1,506,022 (2022: £1,456,184) at the Company relating to unused tax losses
is recognised at 31 December 2023. The losses are considered allowable to
offset against the Company's taxable profits expected to arise in the next
three accounting periods. This comprises a gross Deferred Tax Asset of
£1,884,349 (2022: £1,716,748) at the Group and £1,605,040 (2022:
£1,578,001) at the Company offset by a Deferred Tax Liability of £99,018
(2022: £122,817) at the Group and Company arising on the timing difference
between accounting depreciation and tax written down value charge.
The assessment of future taxable profits involves a significant degree of
estimation, which management have based on the latest budget for the Company
approved by the Board. The latest budget reflects a projected improvement in
trading performance which is largely due to the continued expansion of the
business as discussed in the Strategic Report. The preparation of the budget
involves a rigorous review process by the Board, whereby each revenue stream
and cost is scrutinised and challenged in detail so that the final version is
considered to be an accurate and plausible representation of what is likely to
be achieved in the period.
In calculating the deferred tax asset, management have applied a conservative
approach by using probability adjusted revenues, applying lower probabilities
to budgeted revenue from more uncertain sources such as large technology
licencing contracts, with the effect of reducing estimated profits over the
3-year period from the original forecasts. The analysis predicts profitability
is still achievable even when revenues are reduced to reflect this adjustment.
The net deferred tax balance comprises temporary differences attributable to:
Group 2023 2022
£ £
Tax losses 1,884,349 1,716,748
Fixed asset timing differences (99,018) (122,817)
Total deferred tax asset 1,785,331 1,593,931
Company 2023 2022
£ £
Tax losses 1,605,040 1,579,001
Fixed asset timing differences (99,018) (122,817)
Total deferred tax asset 1,506,022 1,456,184
Movement in deferred tax balance:
Group 2023 2022
£ £
At 1 January 1,593,931 1,292,260
Origination and reversal of timing differences 191,400 229,267
Effect of changes in tax rates - 72,404
At 31 December 1,785,331 1,593,931
Company 2023 2022
£ £
At 1 January 1,456,184 1,292,260
Origination and reversal of timing differences 49,838 124,581
Effect of changes in tax rates - 39,343
At 31 December 1,506,022 1,456,184
The Group has combined losses of £40,374,451 (2022: £46,116,352) available
for carry forward and to be used against future trading profits of the same
trade in which they were generated. This is comprised of trading generated in
the UK by Aquis Exchange PLC and Aquis Stock Exchange Limited. There are no
losses carried forward within Aquis Exchange Europe SAS.
The Company has estimated losses of £9,448,113 (2022: £11,747,647) available
for carry forward against future trading profits.
15 INCOME TAX
Group Company
2023 2022 2023 2022
£ £ £ £
Current Tax
UK Corporation tax charge - - - -
Overseas tax charges on foreign operations 183,611 144,469 - -
Total Tax Charge 183,611 144,469 - -
2023 2022 2023 2022
Deferred Tax £ £ £ £
Origination and reversal of timing differences (191,400) (229,267) (49,838) (124,581)
Effect of changes in tax rates - (72,405) - (39,344)
Total deferred tax credit (191,400) (301,672) (49,838) (163,925)
Group Company
2023 2022 2023 2022
£ £ £ £
Profit for the year before taxation 5,194,887 4,526,409 3,988,392 3,637,819
Expected tax charge based on a corporation tax rate of 23.5% (19%) 1,039,094 860,018 938,092 691,186
Expected tax charge based at effective overseas rates of 25% 182,100 177,647 - -
Fixed asset differences (57) (40,330) (57) (40,330)
Expenses not deductible for tax purposes 218,923 109,502 218,705 109,104
Other differences 857 (89,428) (655) 16
Remeasurement of deferred tax for changes in tax rates 79,085 (72,405) 72,718 (39,344)
Movement in deferred tax not recognised (1,527,791) (1,069,029) (1,278,641) (884,557)
Movement in deferred tax not recognised at overseas rates ‑ (33,178) - -
Tax Credit for the period (7,789) (157,203) (49,838) (163,925)
16 EARNINGS PER SHARE
Group Company
2023 2022 2023 2022
Number of Shares
Weighted average number of ordinary shares for basic earnings per share 26,814,102 27,210,231 27,516,188 27,508,166
Weighted average number of ordinary shares for diluted earnings per share 27,714,143 28,127,484 28,416,159 28,425,419
Earnings
Profit for the year from continued operations 5,202,676 4,683,612 4,038,229 3,801,744
Basic and diluted earnings per share (pence)
Basic earnings per ordinary share 19 17 15 14
Diluted earnings per ordinary share 19 17 14 13
Basic earnings per share is in respect of all activities of the Group and
diluted earnings per share takes into account the dilution effects which would
arise on conversion or vesting of all outstanding share options and share
awards under the Enterprise Management Incentive (EMI) scheme.
The basic EPS when adjusted for outstanding EMI options of 906,711 (2022:
937,143) and adjusted for forfeited options in the year of nil (2022: 28,295)
gives a weighted average of 28,409,489 (2022: 28,425,419).
17 INTAGIBLE ASSETS
Group and Company Developed Other Total Group
trading platforms
Intangibles
Intangible Assets
Goodwill
Cost
As at 1 January 2022 3,011,484 37,430 3,048,914 83,481
Additions 605,599 171,866 777,465 -
As at 31 December 2022 3,617,083 209,296 3,826,379 83,481
Additions 1,034,168 47,750 1,081,918 -
As at 31 December 2023 4,651,251 257,046 4,908,297 83,481
Accumulated amortisation and impairment
As at 1 January 2022 2,287,280 7,920 2,295,200 -
Charge for the year 484,915 14,040 498,955 -
As at 31 December 2022 2,772,195 21,960 2,794,155 -
Charge for the year 559,741 52,516 612,257 -
As at 31 December 2023 3,331,936 74,476 3,406,412 -
Carrying amount
As at 31 December 2023 1,319,315 182,570 1,501,885 83,481
As at 31 December 2022 844,888 187,336 1,032,224 83,481
All intangible assets within the Group are held by Company.
Other intangible assets include assets valued at £68,835 with indefinite
useful economic lives. Further information on these assets can be found in
Note 2 under the heading "Intangible assets other than Goodwill."
Goodwill
On 11 March 2020 the Group acquired Aquis Stock Exchange Limited (formerly NEX
Exchange Limited) which resulted in recognition of goodwill of £83,481. The
cash generating unit associated with the goodwill is determined to be the
assets associated with the investment in AQSE.
The goodwill arising on consolidation represents the growth potential of the
primary listings exchange and the synergies with the rest of the business.
AQSE has no intangible assets.
Impairment tests for goodwill
Goodwill has been allocated for impairment testing purposes to a cash
generating unit, being the net assets related to Aquis Stock Exchange.
The recoverable amounts of the cash generating unit has been determined based
on a value-in-use calculation using discounted cash flow forecasts based on
business plans prepared by management for a three-year period ending 31
December 2026. The two key estimates used in this model were an estimated
terminal growth rate of 2%, and a pre-tax discount factor of 12%.
The results of the testing indicated the projected value of Aquis Stock
Exchange to exceed its carrying value. As a result no impairment loss has been
recognised in the current year.
18 PROPERTY, PLANT AND EQUIPMENT
Fixtures, fittings and equipment Computer Equipment Right of Use Assets Total
Cost
As at 1 January 2022 324,461 2,389,254 4,250,452 6,964,167
Additions 167,440 601,979 - 769,419
Disposals - - - -
Foreign Currency Translation Differences - - (11,693) (11,693)
As at 31 December 2022 491,901 2,991,233 4,238,759 7,721,893
Additions (and lease adjustments) 9,379 401,937 12,618 423,934
Disposals - - - -
As at 31 December 2023 501,280 3,393,170 4,251,377 8,145,827
Accumulated depreciation and impairment
As at 1 January 2022 230,003 2,075,058 502,487 2,807,548
Charge for the year 65,263 298,052 397,222 760,537
Disposals - - -
Foreign Currency Translation Differences - - (1,407) (1,407)
As at 31 December 2022 295,266 2,373,110 898,302 3,566,678
Charge for the year 50,731 325,755 383,822 760,308
Disposals - - -
As at 31 December 2023 345,997 2,698,865 1,282,124 4,326,986
Carrying amount
As at 31 December 2023 155,283 694,305 2,969,253 3,818,841
As at 31 December 2022 196,635 618,123 3,340,457 4,155,215
Company Fixtures, fittings and equipment Computer Equipment Right of Use Assets Total
Cost
As at 1 January 2022 319,325 2,389,253 3,656,087 6,364,665
Additions 157,805 595,133 - 752,938
Disposal - - - -
As at 31 December 2022 477,130 2,984,386 3,656,087 7,117,603
Additions 9,379 400,352 - 409,731
Disposal - - - -
As at 31 December 2023 486,509 3,384,738 3,656,087 7,527,334
Accumulated depreciation and impairment
As at 1 January 2022 230,029 2,075,058 495,820 2,800,907
Charge for the year 62,746 296,005 329,864 688,615
Disposal - - - -
As at 31 December 2022 292,775 2,371,063 825,684 3,489,522
Charge for the year 47,782 323,341 315,896 687,019
Disposal - - - -
As at 31 December 2023 340,557 2,694,404 1,141,580 4,176,541
Carrying amount
As at 31 December 2023 145,952 690,334 2,514,507 3,350,793
As at 31 December 2022 184,355 613,323 2,830,403 3,628,081
19 INVESTMENT IN SUBSIDIARIES
2023 2022
Company £ £
Investment in subsidiaries 6,884,202 6,884,202
Details of the Company's subsidiaries at 31 December 2023 are set out in the
following table. The investments are measured using the equity method in Aquis
Exchange PLC's standalone accounts.
Name of undertaking Country of incorporation Ownership interest (%) Voting power held (%) Name of business Carrying amount Carrying amount
31-Dec-23 31-Dec-22
Aquis Stock Exchange UK 100 100 Recognised Investment Exchange 3,677,118 3,677,118
Aquis Exchange Europe SAS France 100 100 European Equities Exchange 3,207,084 3,207,084
6,884,202 6,884,202
The registered office of Aquis Exchange Europe SAS is 231 rue Saint Honoré,
75001 Paris, France. The registered office of Aquis Stock Exchange Limited is
63 Queen Victoria Street, EC4N 4UA,UK.
Both investments were assessed for impairment at year end and no indicators of
impairment were noted, with both Aquis Stock Exchange and Aquis Exchange
Europe SAS profitable in both 2023 and 2022. Therefore, in line with IAS 36
guidance, no impairment provision has been recognised in Aquis Exchange PLC's
financial statements.
There has been no change in the year of the carrying value of any subsidiary
(2022: no change).
20 INVESTMENT IN FINANCIAL ASSETS
2023 2022
Group and Company £ £
Financial assets measured at fair value through OCI 591,945
-
In August 2023 Aquis Exchange PLC acquired a 5.2% stake in OptimX LLC for
consideration of USD 750k. The entity is currently in the development stage of
creating blotter scraping technologies. The shares of OptimX LLC are not
listed on any public market.
The fair value of OptimX, an unlisted-equity investment falls within Level 3
of the IFRS 13 Fair Value hierarchy.
In the year of acquisition, the fair value of the Investment in OptimX as at
31 December is considered materially consistent with its acquisition price.
Therefore, no fair value movements have been recognised in other comprehensive
income.
21 INVESTMENT IN TRUSTS
The table below shows the total amount the Company has invested in the two
Trusts in respect of the share based payments arising under (i) the Employee
Share Incentive Plan and (ii) the Restricted Share Plan, Company Share
Ownership Plan and Premium Price Options plan as at the reporting date.
Investments into the Trusts are mostly comprised of cash contributions made to
acquire Company shares. Deductions from the Trusts represent vested shares
withdrawn.
2023 2022
Company £ £
Investment in Trusts 4,389,445 3,350,325
22 TRADE AND OTHER RECEIVABLES
Current Non-current Total
Group 2023 2022 2023 2022 2023 2022
£ £ £ £ £ £
Trade receivables 3,033,440 2,317,384 - - 3,033,440 2,317,384
Technology licence contract assets 3,029,766 1,104,221 5,450,678 5,009,883 8,480,444 6,114,105
Other receivables 107,183 77,635 360,411 342,227 467,594 419,861
Prepayments 724,547 636,186 - - 724,547 636,186
6,894,936 4,135,426 5,811,089 5,352,110 12,706,025 9,487,536
Current Non-current Total
Company 2023 2022 2023 2022 2023 2022
£ £ £ £ £ £
Trade receivables 2,538,127 2,053,560 - - 2,538,127 2,053,560
Technology licence contract assets 3,029,766 1,104,221 5,450,678 5,009,883 8,480,444 6,114,105
Other receivables 44,970 330,956 345,240 319,791 390,210 650,747
Intercompany receivables 471,658 6,485,690 - - 471,658 6,485,690
Prepayments 652,422 596,828 - - 652,422 596,828
6,736,943 10,571,256 5,795,918 5,329,674 12,532,861 15,900,930
The following details the trade receivables that are stated net of any credit
impairment provision, as set out previously in Note 12 in accordance with IFRS
9.
Group Company
Trade receivables 2023 2022 2023 2022
£ £ £ £
Gross trade receivables 3,136,943 2,376,337 2,596,235 2,053,560
Expected credit loss on trade receivables (103,503) (58,953) (58,108) -
Gross contract assets 10,843,945 7,461,382 10,843,945 7,461,383
Expected credit loss on contract assets (2,363,501) (1,347,278) (2,363,501) (1,347,278)
Trade receivables net of provisions 11,513,884 8,431,489 11,018,571 8,167,665
23 CASH AND CASH EQUIVALENTS
Group Company
2023 2022 2023 2022
£ £ £ £
Cash at bank 14,765,910 14,170,965 6,356,259 5,595,827
Cash and cash equivalents comprise over night and short term deposits of less
than 3 month and are held with authorised counterparties of a high credit
standing. Management does not expect any losses from non-performance by the
counterparties holding cash and cash equivalents, and there are no material
differences between their book and fair values.
Cash held by Aquis Exchange Europe SAS is predominantly held in a Sterling
denominated bank account.
24 TRADE AND OTHER PAYABLES
Group Company
2023 2022 2023 2022
Current £ £ £ £
Trade payables 759,002 510,384 674,307 510,068
Accruals 1,814,407 1,508,760 1,388,911 1,287,138
Deferred Revenue 934,423 1,358,479 - 251,250
Social security and other taxation 343,729 220,593 256,777 220,593
Intercompany payables - - 824,405 6,285,752
Other payables 58,772 3,250 84,132 -
Overseas corporation tax payable 33,798 144,469 - -
Short Term Lease Liabilities 527,339 522,800 437,400 437,400
4,471,470 4,268,735 3,665,932 8,992,201
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. These derivatives are remeasured at fair
value at each reporting date with the movement recognised in profit or losses
within other gains and losses.
Further disclosures on the Group's risk management frame on foreign exchange
risk and the use of derivatives to manage risk is discussed in Note 5. These
derivatives are the Group's only financial instrument that is measured at fair
value and are classified at level 2 of fair value hierarchy measurements.
Future cash flows are estimated based on quoted forward exchange rates and
contract forward rates. There are no significant unobservable inputs. The year
to date gain on these items is £51,407.
25 LEASES
Right of Use Assets
The right-of use asset was measured at the amount equal to the lease
liability, plus prepaid lease payments (being the unamortised portion of the
rent deposit asset). The right of use asset is depreciated over the term of
the lease and was accounted for during the year ended 31 December 2023 as
follows:
Group Company
Property Property
£ £
Carrying amount at 1 January 2022 3,747,965 3,160,267
Foreign currency translation differences (10,286)
-
Depreciation for the year (397,222) (329,864)
Carrying amount at 31 December 2022 3,340,457 2,830,403
Remeasurement of Paris lease 12,618
-
Depreciation for the year (383,822) (315,896)
Carrying amount at 31 December 2023 2,969,253 2,514,507
Rent deposit asset
The rent deposit asset (excluding the prepaid right of use portion which has
been included in the calculation of the right of use asset above) is a
financial asset measured at amortised cost and was accounted for during the
year ended 31 December 2023 as follows:
Group Company
Rent Deposit Asset Rent Deposit Asset
£ £
Carrying amount at 1 January 2022 612,042 598,141
Recovery of rent deposit (269,956) (282,315)
Finance income on rent deposit asset for the year 14,561 14,121
Carrying amount at 31 December 2022 356,647 329,947
Remeasurement of Paris lease (7,619)
-
Foreign currency translation differences (4,354)
-
Finance income on rent deposit asset for the year 15,737 15,293
Carrying amount at 31 December 2023 360,411 345,240
Lease liability
The lease liability is calculated as the net present value of the fixed
payments (including in-substance fixed payments), less any lease incentives
receivable (such as any rent-free periods). The lease payments are discounted
using the interest rate implicit in the lease. The lease liability is measured
at amortised cost and was accounted for during the year ended 31 December 2023
as follows:
Group Company
Lease Liability Lease Liability
£ £
Carrying amount at 1 January 2022 3,655,652 3,066,902
Foreign currency translation differences (24,672)
-
Finance expense on lease liability for the year 67,691 51,069
Lease payments made during the year (300,994) (231,259)
Carrying amount at 31 December 2022 3,397,677 2,886,712
Finance expense on lease liability for the year 103,249 88,571
Lease payments made during the year (516,482) (437,400)
Carrying amount at 31 December 2023 2,984,444 2,537,883
Of which are:
Current 527,339 437,400
Non-current 2,457,105 2,100,483
2,984,444 2,537,883
The non-current and current portions of the lease liability are included in
'Lease liability' and 'Other Payables' (Trade and Other Payables) on the
Statement of Financial Position respectively.
Net finance expense on leases
Group Company
2023 2022 2023 2022
£ £ £ £
Finance expense on lease liability 103,249 67,691 88,571 51,069
Finance income on rent deposit asset (15,737) (14,561) (15,293) (14,121)
Net finance expense relating to leases 87,512 53,130 73,278 36,948
The finance income and finance expense arising from the Groups 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
Group Company
2023 2022 2023 2022
£ £ £ £
Depreciation expense on right-of-use assets (383,822) (397,222) (315,896) (329,864)
Finance expense on lease liability (103,249) (67,691) (88,571) (51,069)
Finance income on rent deposit asset 15,737 14,561 15,293 14,121
Short term lease expense (43,310) (35,816)
- -
Net impact of leases on profit or (loss) (514,644) (486,168) (389,174) (366,812)
The contractual terms of the Paris lease state that lease payments are indexed
which has resulted in a remeasurement of the lease liability to reflect an
uplift of future expected payments. An undiscounted rate has been used to
remeasure the Paris lease. The Company lease based in the UK is not subject to
variable rates.
26 SHARE CAPITAL
2023 2022
Group £ £
Ordinary share capital
Issued and fully paid
27,509,448 (2022: 27,505,450) Ordinary shares of 10p each 2,750,945 2,750,545
Issue of 3,998 new shares of 10p each - 400
Issue of 7,333 new shares of 10p each 733 -
27,516,781 (2022: 27,509,448) Ordinary Shares of 10p each 2,751,678 2,750,945
27 TREASURY SHARES
Group 2023 2022
£ £
At the beginning of the year 3,350,325 1,526,835
Purchase of additional shares 1,215,243 1,952,325
Shares vested or sold by trusts (157,189) (132,230)
Change in level of surplus cash held by trusts (18,934) 3,395
At the end of the year 4,389,445 3,350,325
Treasury shares are held by the Employee Benefit Trusts. Further disclosures
about the value of shares acquired by the EBT can be read in note 21. The
Investment in Trust has been consolidated within the Group's results as the
parent company (Aquis Exchange PLC) can substantially direct the investment
activities of the Trusts, thus the Trusts' assets have been consolidated as
Treasury Shares.
In the year to 31 December 2023 331,179 shares with a nominal value of
£33,178 were bought at a total cost of £1,215,243 and held in Treasury (2022
- 481,301 shares with a nominal value of £48,130 were bought at a total cost
of £1,952,325 and held in Treasury).
As at 31 December 2023, 261,956 shares (2022: 186,155) were held in the
Employee Share Incentive Plan Trust, and a further 840,175 shares (2022:
584,797) held in the Trust relating to Restricted Share Plan, Company Share
Ownership Plan and Premium Priced Option Plan.
At 31 December 2023 £17,676, (2022: £36,610) of surplus cash was held within
the Trusts, which had yet to be used to purchase Treasury shares, but remained
under the control of the Trusts.
Group 2023 2022
£ £
Treasury Shares held 4,371,769 3,313,715
Cash Held in Employee Trusts 17,676 36,610
At the end of the year 4,389,445 3,350,325
28 CASH GENERATED BY OPERATIONS
2023 2022
Operating cash flows £ £
For the year ended 31 December 2023
Group
Profit before tax 5,194,887 4,526,409
Adjustments for:
Impairment charge/(credit) on contract assets 1,016,223 (133,484)
Impairment charge on trade and other receivables 44,550 12,784
Fair value adjustment to derivatives (51,407) -
Equity settled share based payment expense 1,085,658 819,872
Amortisation of intangible assets 612,257 498,955
Depreciation and impairment of property, plant and equipment 760,308 760,537
Finance expense 103,249 67,691
Finance income (15,737) (14,561)
Interest income (384,712) (28,722)
3,170,389 1,983,072
Movement in working capital:
Decrease/(Increase) in trade and other receivables (4,277,113) (1,409,263)
Increase/(Decrease) in trade and other payables 309,470 (1,195,918)
Cash generated by operations 4,397,633 3,904,300
Corporation taxes paid (293,914) 116,415
Net cashflow from operating activities 4,103,719 4,020,715
2023 2022
Operating cash flows £ £
For the year ended 31 December 2023
Company
Profit before tax 3,988,392 3,637,819
Adjustments for:
Impairment charge/(credit) on contract assets 1,016,223 (133,484)
Impairment charge on trade and other receivables 58,108 -
Fair value adjustment to derivatives (51,407) -
Equity settled share based payment expense 1,085,658 819,872
Amortisation of intangible assets 612,257 498,954
Depreciation and impairment of property, plant and equipment 687,019 688,615
Finance expense 88,571 51,069
Finance income (15,293) (14,121)
Interest income (112,154) (2,416)
3,368,982 1,908,489
Movement in working capital:
Decrease/(Increase) in trade and other receivables 2,309,031 (8,642,417)
(Decrease)/Increase in trade and other payables (5,326,269) 5,297,956
Cash generated by operations 4,340,136 2,201,847
Corporation taxes paid - -
Net cashflow from operating activities 4,340,136 2,201,847
29 RELATED PARTY TRANSACTIONS
Remuneration of key management personnel
The remuneration of the directors, who are key management personnel, is set
out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures. There are no directors to whom retirement benefits are
accruing in respect of qualifying services. No directors exercised share
options in the year (2022: none).
2023 2022
Group £ £
Salaries and other short term benefits 1,569,531 1,486,805
Share based payments 490,437 348,300
Total 2,059,968 1,835,105
2023 2022
Company £ £
Salaries and other short term benefits 1,123,238 1,088,008
Share based payments 246,592 174,150
Total 1,369,830 1,262,158
During the year the Group has entered into, in the ordinary course of
business, transactions with other related parties. All transactions between
Aquis Exchange Plc and its subsidiaries are eliminated on consolidation. There
are no related party balances outstanding at Group level. Costs incurred by
the Company on behalf of its subsidiary companies are recharged to these
Companies though a Management fee and service charge, which for 2023
represented a net recharge of £5,678k (2022: £5,528k) to Aquis Europe SAS
and a net recharge of £690k (2022: £450k) to Aquis Stock Exchange Limited.
The net cash payments in the year and balances outstanding at the year end
were:
Receipts and Amounts owed Amounts owed to
2023 (Payments) from related parties related parties
Company £000s £000s £000s
Aquis Stock Exchange Ltd 2,565 551 -
Aquis Europe SAS (1,385) - 904
Total 1,180 551 904
Receipts and Amounts owed Amounts owed to
2022 (Payments) from related parties related parties
Company £000s £000s £000s
Aquis Stock Exchange Ltd 600 533 -
Aquis Europe SAS (1,389) 5,953 (6,286)
Total (789) 6,486 (6,286)
30 SHARE PREMIUM ACCOUNT
Group 2023 2022
£ £
At the beginning of the year 11,785,045 11,771,462
Issue of new shares 24,712 13,583
At the end of the year 11,809,757 11,785,045
31 OTHER RESERVES
Group Company
2023 2022 2023 2022
£ £ £ £
Reserves relating to share-based payments 2,741,589 1,813,119 2,741,589 1,813,119
32 CONTROLLING PARTY
In the opinion of the Directors, there is no single overall controlling party.
No individual shareholder had a shareholding of 10% or above as at 31 December
2023.
33 EVENTS OCCURING AFTER THE REPORTING PERIOD
There are no significant post balance sheets of which the Directors are aware.
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