TIDMAQX
RNS Number : 6998U
Aquis Exchange PLC
30 March 2023
30 March 2023
Aquis Exchange PLC
("Aquis", the "Company" or the "Group")
Final results for the year ended 31 December 2022
24% increase in net revenue marks continuation along growth
trajectory
Aquis Exchange PLC (AQX.L), the creator and facilitator of
next-generation financial markets, is pleased to announce its
audited results for the year ended 31 December 2022.
Financial highlights:
-- Net revenue up 24% to GBP20.1m (FY21: GBP16.2m)
-- Profit before tax up 27% to GBP4.5m (FY21: GBP3.6m)
-- Underlying profit* up 41% to GBP4.7m (FY21: GBP3.3m)
-- Basic EPS of 17p (FY21: 17p)
-- Cash and cash equivalents at 31 December GBP14.2m (31
December 2021: GBP14.0m), with no debt held
Business highlights:
-- Launch of Aquis Matching Pool (AMP) further diversified
the Aquis Markets offering into dark pools, offsetting
a decrease in lit volumes across the market
-- Membership of Aquis Markets grew to 41 (FY21: 38)
-- Increasing levels of interest in Aquis Technologies' pioneering
exchange technology, with the offering expanding to include
a 24/7 Matching Engine. In 2022, Aquis Technologies extended
one contract and secured two new contracts, bringing the
total to seven
-- Despite adverse market conditions, Aquis Stock Exchange
delivered an impressive 22 new IPOs in 2022: the most
of any growth company exchange in the UK
Post-period highlights:
-- Encouraging start to current trading, with the Company's
trading in line with expectations, notwithstanding continued
macroeconomic uncertainty
-- Successfully completed a Company rebrand in Q1 23, updated
to reflect the diversification across three business units
and four revenue streams
*Underlying profit refers to profit before tax plus other
comprehensive income. This measure has been calculated in order to
make appropriate comparison with FY21, taking into account an
adjustment made for FX arising on consolidation since the
publication of FY21's ARA.
Alasdair Haynes, Chief Executive Officer of Aquis,
commented:
"I am very pleased to be reporting another year of significant
growth for Aquis, with net revenue up 24% and underlying profit
increased by 41% from FY21. The Group profited from significant
growth in the technologies division, along with strong performances
in pan-European secondary market trading, the primary market
activities of Aquis Stock Exchange and data revenue.
From the fledgling pan-European secondary market equities
trading platform that we launched a decade ago, it is edifying to
see Aquis transform into a profitable and growing Group that
creates and facilitates next-generation financial markets. In 2022,
we saw milestones reached in each division with the launch and
growth of the Aquis Matching Pool (AMP); significant interest in
Aquis Technologies' pioneering exchange technology and particularly
its cloud-native and 24/7 functionality, and an impressive 22 new
listings on the Aquis Stock Exchange - the most of any growth
exchange in the UK.
Amidst changing market dynamics in the UK and abroad, there are
significant opportunities for Aquis across all divisions, and we
are looking forward to continuing our growth strategy. Trading so
far has been in line with market expectations."
An overview of the results from Alasdair Haynes, CEO, is
available to view on this link: https://bit.ly/3lRH3DG
The Group will be hosting webinars for analysts and retail
investors today at 09.30 and 16.00 respectively.
If you would like to register for the analyst webinar, please
contact aquis@almapr.co.uk . Investors who would like to attend the
retail investor webinar can sign up to Investor Meet Company for
free and add themselves to the meeting via
https://www.investormeetcompany.com/aquis-exchange-plc/register-investor
. Investors who have already registered will be automatically
invited.
Enquiries:
Aquis Exchange PLC Tel: +44 (0) 20 3597
6321
Alasdair Haynes, CEO
Richard Fisher, CFO
Adele Gilbert, Head of Marketing
VSA Capital Limited (AQSE Corporate Tel: +44(0)20 3005 5000
Adviser)
Andrew Raca
Liberum Capital Limited (Nominated Tel: +44 (0) 20 3100
Adviser and Joint Broker) 2000
Chris Clarke
Clayton Bush
Edward Thomas
Kane Collings
Canaccord Genuity Limited (Joint Broker) Tel: +44 (0) 20 7523
8000
Emma Gabriel
Patrick Dolaghan
Alma PR (Financial PR Adviser) Tel: +44 (0)20 3405 0209
Josh Royston aquis@almapr.co.uk
Kieran Breheny
Pippa Crabtree
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 three divisions: Aquis Markets, a
subscription-based exchange offering pan-European cash equities
trading; Aquis Technologies, which develops and licenses
next-generation exchange technology globally; and Aquis Stock
Exchange, a growth and regulated primary exchange delivering
capital to companies via the listing and trading of shares.
Aquis Markets operates lit and dark order books, covering 16
European markets. For its lit books, Aquis uses a subscription
pricing model which works by charging users according to the
message traffic they generate, rather than a percentage of the
value of each stock that they trade and does not allow aggressive
non-client proprietary trading, which has resulted in lower market
impact and signalling risk on Aquis than other trading venues in
Europe.
Aquis Technologies is the software and technology division of
Aquis. It focuses on building better markets via the creation and
licensing of cutting-edge, cost-effective exchange infrastructure
technology and services, including matching engine and trade
surveillance solutions.
Aquis Stock Exchange (AQSE) is a stock market providing primary
and secondary markets for equity and debt products. It is
authorised as a Recognised Investment Exchange, which allows it to
operate a regulated listings venue. The AQSE Growth Market is
divided into two segments 'Access' and 'Apex', with different
levels of admission criteria. 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 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
Alternative Investment Market of the LSE (AIM) market. For more
information, please go to www.aquis.eu .
Chairman's statement
Overview
I have now completed my first year as Chair of Aquis Exchange
PLC (AQXE) and it is with great pleasure that I am able to report
that the Group continues to make significant progress underpinned
by strong performances from each of the Group's three business
activities. These results were particularly noteworthy given the
macro-economic challenges resulting primarily from the war in
Ukraine, residual adverse effects from COVID-19 and the requirement
to handle the impact of the UK's exit from the EU.
During 2022 net revenue increased by 24% to GBP20.1m and profit
before tax by 27% to GBP4.5m. There were significant increases in
technology licensing revenue, whilst AQSE generated a profit ahead
of schedule. Pan-European secondary market trading was strengthened
through the launch of AMP, our new dark pool activity. We continued
to develop our presence in Europe and enhance client relationships
within the EU 27 markets.
We have also continued to invest in our technology making
further significant progress through the development of 24/7
capability and exchange grade cloud platforms.
Board and Governance
We further strengthened the Aquis Exchange PLC Board ("the
Board") during 2022 through the appointment of 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 Committee
and the Aquis Europe subsidiary Board. Richard Fisher joined the
Board as CFO at the AGM in April 2022.
Fields has a distinguished career with over 40 years' experience
as an executive in financial services, a social entrepreneur
focused on leadership, and a non-executive director and committee
chair of the boards of both global companies and government
departments. From 1994-7 she led the transformation of the London
Stock Exchange (LSE) and the London equity markets while CFO and
Strategy Director, and from 2006-7 she was the only non-US member
of the NASDAQ Technical Advisory Council. Fields was one of only 6
experts (and the only British one) advising the EU Parliament on
financial services harmonisation in the lead-up to the Prospectus
Directive.
She currently serves as a non-executive director, member and
chair of key committees of the main boards of BNP Paribas (the
Eurozone's largest bank) and Scor (the world's 4th largest
reinsurance company) and is Deputy Chair of the Royal College of
Art & Design.
Ruth has considerable financial services experience. Following a
senior executive career at Citibank, she has served on a number of
Boards as an Independent Non-Executive Director including the
London Stock Exchange from 2018 to 2020 and is currently serving on
the board of Gresham Technologies PLC and Permanent TSB PLC in
Ireland.
Prior to joining Aquis as Director of Finance in April 2021,
Richard was the Director of Finance at Redwood Bank and prior to
that held a number of senior roles within RBS. Richard qualified as
an accountant (ICAEW) with PwC.
Richard Bennett retired from the Board with effect from 31st
December 2022 and Mark Spanbroek will retire on 27th April 2023.
Richard served for nine years and Mark for ten years. On behalf of
the whole Company I would like to thank them both for their service
to Aquis.
Culture, Stakeholder Engagement and Section 172 Duties
The Board continued its engagement with key stakeholders,
particularly focusing on employees and shareholders. We hosted a
very successful Capital Markets Day in November and Fields
Wicker-Miurin and myself consulted with shareholders in advance of
the renewal of our Directors' Remuneration Policy at the 2023
AGM.
During the year I assumed responsibility as the appointed
representative of the Board to liaise with employees. We also
undertook our third annual employee engagement survey and once
again overall feedback was positive.
Environment, Social and Corporate Responsibility
The Board is focussed on the Company's responsibility to
continue to grow and operate on a sustainable basis whilst playing
the role as an exchange operator in bringing issuers and investors
together to create a sustainable ecosystem where capital flows and
investment can occur. This offers us an opportunity to make a
difference not only through our own actions but also by creating an
environment for other companies and investors to make a wider
contribution.
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.
We continue to make progress on our ESG plans through
integrating diversity objectives into our business plans and
reducing our environmental impact, details of which are set out in
the Strategic Report.
We remain committed to further improving our gender balance,
making progress towards meeting the Hampton Alexander guidelines on
female representation on the Board (3 out of 9 after the 2023 AGM),
and further improving the gender pay gap measure of female
seniority in the company to 24% on base salary and 29% on base
salary plus annual bonus. Our target remains to be better than the
average in UK financial services on these measures.
Our focus for the year ahead
We are confident that we have the resources and technology to
support further profitable growth across all our business
activities and we will continue to invest for future growth. We
have strengthened the Board and it is now scaled appropriately to
meet the opportunities ahead. However, we will continue to monitor
closely the skills and experience of the Board Directors to ensure
that we are able to continue to focus on ensuring the business
delivers on its strategy across all the aspects of the
business.
Glenn Collinson
Chair
Chief Executive's Report
Overview
During 2022 Aquis celebrated its 10th anniversary. It has
already been an amazing journey from building a fledgling
pan-European secondary market equities trading platform into a
profitable Group covering primary and secondary trading and
technology licensing activities. I am confident that the next
decade will be equally, if not more, successful than the first.
There were some major economic headwinds during the year, yet
the Group dealt comfortably with these adverse conditions, despite
the significant negative effects they caused across the financial
services industry.
The Group profited from significant growth in the technologies
division along with strong performances in pan-European secondary
market trading, the primary market activities of AQSE and data
revenue. This growth demonstrates the resilience of the diversified
business model that Aquis has created. It also managed to maintain
market share of the pan-European equities secondary market trading
in excess of 5% whilst diversifying its product offering through
the launch of the Aquis Matching Pool (AMP).
This overall performance resulted in the Group reporting a 24%
growth in net revenue to GBP20.1m (net of provisions) and a profit
before tax of GBP4.5m in 2022 compared to a profit before tax of
GBP3.6m in 2021. On an underlying basis including FX movements
reported through other comprehensive income this equates to a 41%
increase in underlying profit from GBP3.3m to GBP4.7m. This
increase demonstrates the continued progress made during the last
12 months and provides the Group with the profitable platform to
continue to invest and further strengthen the synergies across its
principal business activities.
Reflecting the increasing diversification across three business
units and four revenue streams, we have successfully completed a
rebrand post-period, in Q1 2023. The Group now consists of Aquis
Markets (formerly the Aquis Exchange business), Aquis Technologies,
and Aquis Stock Exchange.
It is difficult to predict if market conditions will become more
stable in 2023, following a difficult 2022; however, I do believe
that our strong team and technology platform should enable us to
overcome these and any future challenges.
Aquis Markets
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. The number of trading members grew from 38 to 41 and a
number of members increased their activity levels, leading Aquis
Markets revenue to increase by 15% to GBP12.4m.
The market share of all pan-European trading including auctions
and dark pools was maintained through the year with the launch of
AMP, the Aquis dark pool offering offsetting a decrease in Lit
volumes. We are confident that with new innovative order types
planned to be introduced in 2023, our lower toxicity and high
available liquidity will ultimately underpin long-term market
growth. Our Market at Close ("MaC") order type, made a material
contribution to trading volumes on the platform and we anticipate
it will grow further during 2023. As the MaC allows members to
enter orders for matching on the Aquis platform at the closing
price of the primary market, we now operate across a larger
cross-section of all available trading.
Aquis Markets offered clients the ability to trade in excess of
2,000 stocks and ETFs across 16 European Markets as at the end of
December 2022. Overall, the available liquidity, equal to
approximately 23% of total pan-European equity liquidity should
underpin future market share growth.
Aquis Technologies
During 2022 Aquis made significant progress in its technology
division. This activity, where Aquis licenses its leading exchange
related technology to a variety of international financial services
clients across different asset classes, has a strong pipeline and
offers material future growth opportunities. Net revenue from
technology licensing in 2022 grew 51% to GBP5.2m, reflecting the
increasing interest in our high-calibre, in-house technology.
In 2022, Aquis Technologies extended one contract and secured
two new contracts, bringing the total to seven.
Aquis Technologies continues to develop its technology platforms
to support growth across different asset classes internationally,
delivered the first exchange grade 24/7 platform and made further
progress in the plan to create a cloud native exchange.
Aquis Market Data
Data revenues increased 29% in 2022 to reach GBP3.0m as the
Group continued to benefit from the implementation of a harmonised
data structure. 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 addition to the contribution data brings to the Group
results, it may increase further in importance in the long-term if
consolidated tapes for the UK and Europe are implemented.
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. Progress was made during the year in the UK and in Europe
where the European Council has recently agreed a mandate to
negotiate with the European Parliament on reforms that include the
establishment of a consolidated tape.
Aquis Stock Exchange (AQSE)
AQSE had a very successful 2022, moving to profitability ahead
of schedule.
The exchange attracted a further 22 IPOs during the year: the
most of any growth company exchange in the UK. The business also
made good progress in integrating with the main retail investor
platforms thereby ensuring access to its broad range of companies
and continuing to attract additional market makers, corporate
advisers and brokers.
Underpinned by the Group's proven, disruptive technology and a
track record of transparency and innovation, we have already made
material progress in building AQSE into a competitive primary
marketplace, particularly as MiFID II and the FCA Wholesale Markets
Review continues to put the traditional business model of national
exchanges under pressure.
I believe that we have a 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.
Further Investment in Research and Development (R&D)
The Group continued to invest in R&D throughout 2022 and
will continue this investment during 2023 in order to maintain and
enhance the quality of its technology and its ability to be able to
deliver new products and platform enhancements to its clients.
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 our technology
was demonstrated through the launch
of AMP, the creation of the first ever exchange grade 24/7
market and underpins our Group strategy. It is the principal reason
for the growth in our technology licensing business.
I believe this structure and continued investment in R&D
gives us a significant competitive advantage on functionality,
price and ability to deliver. Aquis' technology organisation
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 2022 we continued to invest in personnel resources across
a number of departments with headcount across
the London and Paris offices increasing by 16% and we will
continue to further strengthen our team in particular in support of
the sales and technology activities.
Outlook
In November 2022 we held our first Capital Markets Day (CMD)
which enabled us to present some of the exciting initiatives that
we will pursue over the next few years and how we believe we can
remain at the forefront of exchange technological invention.
Following the successful launch of AMP we will continue to
develop this activity and anticipate further product development in
this area during 2023.
There remains some macro-economic uncertainty; however, I
believe that our strong team and technology platform should enable
us to overcome this and any future challenges. Our technology
systems have dealt efficiently with significantly higher messaging
volumes caused by increased volatility. Although it is difficult to
forecast, with any degree of certainty, the effect of these events
on the broader Group for the time being, I remain confident in our
unique proposition and our readiness to achieve the next level of
operational, financial and strategic success.
There has been an encouraging start to the current financial
year and so far in 2023 trading continues in line with market
expectations.
We are already delivering on our vision of a transformation of
primary markets for small and mid-cap stocks through Aquis Stock
Exchange where we have a pipeline of 50-60 companies looking to IPO
and expect the growth of the Exchange to continue at pace
throughout 2023.
We continue to invest in our business to ensure that we maintain
our ability to grow. This investment will support the broadening of
our market position through innovation and excellence. We will
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 our vision for transforming primary
markets for small and mid-cap stocks.
Alasdair Haynes
Chief Executive Officer
Strategic Report
Overview of the business
Aquis Exchange PLC ("Aquis" or "the Company"), is the principal
operating company and the holding company of the Aquis exchange
activities ("the Group") which operates three principal divisions:
Aquis Markets, Aquis Technologies and Aquis Stock Exchange.
-- Aquis Markets, a pan-European Multi-Lateral Trading Facility
(MTF) operator that provides secondary market trading in
pan-European stocks that are listed on other exchanges.
-- Aquis Technologies which provides exchange and regulatory
technology to third parties.
-- Aquis Stock Exchange Limited ("AQSE") which is a Recognised
Investment Exchange ("RIE"). It runs a primary market for
small and medium size issuers and secondary market trading
in those stocks.
The Company also has a French subsidiary, Aquis Exchange Europe
SAS, ("AQEU"), an MTF established to enable European clients to
continue to trade EU stocks, which provides secondary market
trading in EU 27 stocks listed on other exchanges.
The Company and AQSE are regulated by the UK Financial Conduct
Authority ("FCA"), while AQEU is regulated by the Autorité de
Contrôle Prudentiel et de Resolution ("ACPR") and the Autorité des
Marchés Financiers ("AMF").
The Group has made significant progress in the development of
its activities since the IPO in June 2018 and is well positioned to
be recognised as one of the leading technology-led, international
exchanges driving improved transparency and fairness in the
securities trading market through the introduction and enhancement
of competition and innovation. With these guiding principles the
Group's main focus is to:
-- Capitalise on regulatory and technical shifts in market
infrastructure by providing an exchange which offers deeper
liquidity and transparency, higher quality execution for
intermediaries and investors;
-- Continue to increase the number of members of Aquis Markets
and associated trading volumes by providing a robust and
innovative platform that responds to their needs;
-- License its proven technology platform to third parties
that require cutting-edge trading or market surveillance
technology; and
-- Positively address the current market issues of large spread
and low liquidity in small and mid-cap trading through AQSE's
RIE status
The trading platform for all Group entities is run on the same
trading technology and all entities apply a unique
subscription-based pricing model based on electronic messaging
traffic for the lit market. This means that the dealing price prior
to the trade is transparent to the whole market. This is in
contrast to pricing on dark and grey markets, where price discovery
is only available to the market post-trade. For AMP (the Aquis dark
pool market) clients are charged a percentage of the value of each
transaction.
AQXE and AQEU MTFs apply a non-aggressive trading model, which
means that certain types of trading behaviour are not allowed, and
it encourages more passive trades to rest in its order book. This
creates greater depth of liquidity and less potential for
information leakage or "toxicity" in the market. Independent
studies have verified that Aquis' non-aggressive trading model has
materially lower toxicity than its competitors, which reduces
adverse price movements thereby lowering the implicit costs of
trading for the end investor. This is a significant positive
differentiating factor.
AQSE is focused on creating a primary market for growth company
issuers and a secondary market for the trading of their stocks.
Clients and Competitive Landscape
The client base of all three entities consists, principally, of
investment banks and brokers acting on behalf of institutions such
as pension funds, asset managers and retail brokers to execute
their orders and, in the case of AQSE, it includes the issuers who
wish to raise capital on the platform.
The principal competitors to Aquis' business are the incumbent
national exchanges and other pan-European trading venues. In
secondary markets they charge customers on a per transaction model
to allow fully aggressive trading.
During 2022 Aquis has consolidated its market position
commanding 5.2% market share (Q4 average) of all EU secondary
markets trading underpinned by a more diversified product offering
following the launch of AMP. This business is well positioned to
benefit from further product development and any future regulatory
changes. The institutional support for greater transparency in
European equities trading also supports future business growth.
Aquis' matching engine and surveillance technology has been
operating successfully for a number of years. It has been developed
for multi-asset class trading and is attracting customers wishing
to license the technology as the trading engine for a broad range
of instruments. The Company's principal technology customers are
new equity trading venues where the market is opening up to
competition as well as exchanges specialising in digital assets,
MTF operators across asset classes and market participants
requiring real time market surveillance. Aquis delivered a proof of
concept for cloud-based exchange technology in partnership with AWS
and the Singapore Stock Exchange and continues to see significant
interest in this space. Competitors of the licensing business are
other matching engine providers and surveillance software
providers.
We are a strong supporter of the regulatory principles such as
best execution and greater transparency for markets that have been
introduced and we are committed to complying with market
regulation. We believe that we are well placed to manage any
regulatory divergence between the UK and EU given our robust and
agile business model, our lean cost structure and our technology
leadership.
As a growth company the Key Performance Indicators (KPIs) for
the Group are principally (i) the continued growth in revenue (See
the Table below showing Group Revenue) and also (ii) the continued
growth in Profit Before Tax (PBT). In building out these KPIs
significant focus is made to the key drivers of revenue and
profitability which include for example the market share of pan
European secondary market trading. The delivery against these
principal KPIs are fundamental to the success of the Group.
In support of these KPIs the Board has established for the
senior Executives clear financial and non-financial objectives for
the Group. For 2022 these were revenue, profit before taxation,
market share of pan-European secondary market trading, quality of
technology, planning, sustainability and compliance with
regulations and corporate governance, allowing clear performance
measurement against the most important targets set by the Board.
Financial objectives represent 70% and non-financial 30%. The
financial KPIs are based on target net revenue and profit before
tax. The non- financial KPIs address strategy, resources,
information and communication. Further details are given in the
FY22 Annual Report.
Financial Review
It has been a year of very strong revenue growth during 2022.
The breakdown of the principal revenue activities is as
follows:
Group
---------- ---------- ----------
2022 2021 YoY Growth
GBP GBP %
====================================== ========== ========== ==========
Revenue analysed by class of business
Subscription fees 10,869,442 9,766,046 11
Licence fees 5,034,579 4,404,606 14
Issuer fees 1,022,520 692,743 48
Data vendor fees 3,002,986 2,319,360 29
-------------------------------------- ---------- ---------- ----------
19,929,527 17,182,755 16
-------------------------------------- ---------- ---------- ----------
The Group generated a profit before taxation for the year of
GBP4.5m compared to GBP3.6m in the previous year. The continued
growth in profits during 2022 is primarily attributable to
increased exchange revenue through the launch of AMP and as
members' subscriptions have risen as a result of increased trading
levels, as well as increased revenue from data, technology
licensing and issuer fees.
The trade receivables resulting from revenue from licensing
technology contracts attract an IFRS 9 (Expected Credit Loss on the
trade receivables arising from contract assets). This year the
application of IFRS 9 has resulted in a net impairment provision
release during the year of GBP133k (2021: charge (GBP972k)).
Profit before tax increased 27% to GBP4.5m and EPS (fully
diluted) remained at 16p per share. The 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 Group generated an income tax credit of GBP157k which was
driven by an increase of GBP301k in deferred tax assets, offset by
an overseas corporation tax charge of GBP144k.
In May 2022 Aquis relocated its London office. The lease
liabilities arising are amortised over the life of the leases,
attracting a net finance expense charge amounting to GBP53k for
2022, whereas the right of use assets are depreciated on a
straight-line basis over the life of the lease, attracting a
depreciation charge of GBP397k for 2022.
The Group's cash and cash equivalents as at 31 December 2022
were GBP14.2m (2021: GBP14.0m) maintaining the Group's strong cash
conversion rate which allowed the continued investments as set out
below. Over the year the Group deployed GBP1.95m of cash to
purchase treasury shares used to service the various employee share
schemes.
Group investments, productivity and capital management
The Group has 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 licencees to enter
different asset classes. In addition, the Group has made further
investment in personnel as it continues to develop capability and
brand awareness.
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 2022 the Company ICARA requirement
amounted to GBP4.7m (2021 GBP3.9m). 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.
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 FY22 Annual Report and aligns the employees'
interests with the long-term strategic objectives of the Group.
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
and then determine the personnel and other resources that it wishes
to allocate to these opportunities. This information also includes
an estimate of the deployment cost.
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.
AQSE
During 2022, the Group has invested significant time and
resource into AQSE re-building the market presence and brand and
has started to realise some of the anticipated 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
-- Need to act fairly between 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 S172 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. Specific stakeholder considerations undertaken by the
Board this year included, but were not limited to, the Group's
handling of the fallout from the war in Ukraine.
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 a subset of key
shareholders through one-on-one meetings. The latest round took
place in January 2023. 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 held the responsibility as the Board's nominated representative
for employee engagement and facilitated meetings with employees so
as to ensure that their voices are heard through an independent ear
from the Board.
This was complemented by the annual employee engagement survey,
which allowed employees to provide feedback in confidence. This the
4th consecutive year that the Group has run the employee engagement
survey and results have been consistently positive. The Executive
develops an action plan to address the key areas highlighted with
particular emphasis on our core values 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
also 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.
During the year the Board undertook training, which covered
reminders of Directors' duties in the UK and Europe with regards to
the regulation and oversight of financial market
infrastructures.
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 undertook
training, which covered reminders of directors' duties under UK
law, under the UK Corporate Governance Code and also under UK and
European regulation with regards to the oversight of financial
market infrastructures. Additionally, it 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
challenging management 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 has also made further progress in its succession
planning both for the Executive and the Board. Glenn Collinson was
appointed Chair with effect from 1st January 2022. The Board
appointed two new NEDs, Fields
Wicker-Miurin and Ruth Wandhöfer in anticipation of the
scheduled retirement of Richard Bennett on
31st December 2022 and Mark Spanbroek on 29th April 2023. In
addition the Board promoted Richard Fisher to the Board in March
2022 as CFO. The Board operates a skills matrix to map the
requirements of the organisation against the current skills and
composition of the Group Board and the skills and composition gaps
that will be created as the Group evolves and directors move off
the Board. This matrix is updated at least annually and was used
effectively in the search for the latest additions to the Boards of
both Aquis and AQSE.
Management plan to recruit additional employees, in particular
in the technology area in the UK and France during 2023.
COVID-19 and The Interests of Employees
The impact of COVID-19 decreased dramatically during 2022;
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 ESG journey
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. Aquis
also recognises the pivotal role it has to play in educating those
issuers about ESG and how they can set and achieve goals and
facilitating their disclosures to investors.
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 what and 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 2022 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.
The Group has a Diversity and Inclusion Policy that emphasises
Aquis' desire to create a supportive and inclusive culture amongst
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.
Therefore, the skills and resources of our organisation will be
fully 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, which Aquis believes
is good management practice and makes sound business sense.
-- 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.
-- 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. The policy is also be 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.
This year the Group has established aspirational 3-year
diversity targets for the Board and for the employees. These
targets have been established to underpin the importance the Board
places on this issue and to provide clear guidance and focus on
these aspirations. The Board had established a target to increase
the overall female NED ratio and this was achieved during the year.
The employee targets are set out below.
These are to:
1. improve all diversity ratios
2. increase the management team diversity ratios
3. decrease the female / male seniority gender pay gap
4. include more comprehensive employee statistical analysis
in the annual report
5. 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
6. implement a more comprehensive mentoring system
In addition, the Group has established targets over the next
three years (i.e. to 2025) where the aspirations are to:
-- in 2022 the gender (seniority) pay gap was 24% on base salary
and 29% on base salary plus annual bonus, an improvement
over the 2021 gap of 36% (base salary) and 41% (base salary
plus annual bonus)
-- meet the Hampton Alexander Review target of at least 33%
of board members being female
-- have a gender pay (seniority) gap no worse than the UK Financial
Services industry average
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 towards preventing slavery and human
trafficking throughout our supply agreements: the Group complies
with the Modern Slavery Act 2015 (MSA) and adopts a zero-tolerance
approach towards slavery and human trafficking and expects all
those in our supply chain (and contractors) to comply with the
MSA.
Consumption and The Environment
The Directors endeavour to promote the consumption of resources
in a manner that fosters the long-term sustainability of the
business and the environment in which it operates and are conscious
of the requirement to monitor these activities.
Although the Group has a small number of personnel and
associated office space, it recognises that it contributes directly
to carbon emissions through its consumption of energy, waste and
water, through staff travel and, indirectly, through its
consumption of supplies and equipment including office
hardware.
During the year the Group continued to promote the target of
reduced carbon emissions associated with employees commuting to the
office. In addition, the building electricity provider for the
current Aquis office obtains energy from 100% renewable electricity
and carbon neutral gas and the two data centres used by Aquis are
both powered by 100% renewable energy.
We have also continued progress on the target to deliver a cloud
native exchange. 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.
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 2022, Aquis partnered 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 mock-up AQSE
universe portfolios with an imaginary starting value of GBP50,000
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 2023 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 that
has been commissioned and begun in January 2023.
-- 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:
STRATEGIC RISKS
Risk Risk Description Mitigation
Economic landscape In March 2023 there were signs of Aquis derives revenues from both fee
stress in the banking sector with the and contractual annuity-based
default of streams, which is less
Silicon Valley Bank and acquisition impacted by cyclical market driven
of Credit Suisse by UBS. There is a trends.
risk the credit worthiness The war in Ukraine continues to cause
of historically financially robust immeasurable suffering and harm but
institutions comprising the customer it is not expected
base of AQXE might to have a material adverse effect on
increase the credit risk of the the Group's trading volumes.
parent company. Equally, a second Whilst COVID-19 had a material
order exposure is possible negative effect on the economic
for other customers who maintain landscape for many countries;
deposits with insolvent banks. the impact on the UK and European
The Economic landscape was adversely economies decreased materially during
affected during 2022 by Ukraine 2022 and it is anticipated
(particularly in respect that it will
to heightened cyber risk) and to a have less impact on total market
lesser effect the residual impacts of volumes in the future.
COVID-19 and Brexit. Pan-European trading is now executed
The speed of almost 100% by the Group's MTF
recovery may negatively affect the subsidiary in France,
Group's trading volumes resulting in AQEU, that has full regulatory
lower revenues or approval from the ACPR to allow the
increased costs. Group to continue to operate
as an MTF and it is anticipated that
this will remain the case for the
foreseeable future.
The Directors have reviewed where
possible our customer base to ensure
these entities are
not directly exposed to insolvent
credit institutions. Additionally,
swift regulatory intervention by the
Federal Deposit Insurance Corporation
secured depositors
with SVB and the acquisition of UBS
subsequent to a Swiss Central Bank
liquidity backstop
both ensure limited fallout from
these events.
-------------------------------------- --------------------------------------
Legal/Regulation The Group operates highly regulated Senior management consistently
entities, including three MTFs and an monitor regulatory developments
RIE and is required including the MiFID review
to maintain sufficient regulatory and Wholesale Markets Review, which
capital and comply with are discussed and actioned at Audit
relevant legal and regulatory Risk and Compliance
requirements necessary to operate the Committee (ARCC) meetings and engage
Group's business. All regularly and directly with
three Group entities must hold regulators including where
regulatory licences and independent appropriate formal responses to
capital minimum. consultation documents.
There is the risk that current The Board reviews a quarterly
regulation or future changes could dashboard that incorporates the
have an adverse effect on Group's behaviour and statistics
the Group. Possible impacts may be in relation to regulatory
(but are not limited to): obligations. The Board also places
Sustained downturn in revenues could considerable importance on having
put regulatory capital at risk, competent staff and advisors to help
One of the Group entities could be manage legal and regulatory risk.
subject to a fine or a lawsuit which The Board considers regulators as key
may draw on the entities' stakeholders and endeavours to
finances, maintain positive working
Change in regulation may increase relationships with the regulators for
costs for the Group or require each group entity.
unanticipated investments, Each member of the Group currently
and has sufficient excess regulatory
Inability to meet regulatory capital to deal with any
requirements could result in a unanticipated changes in regulation.
licence being withdrawn and prevent Changes in regulation are usually
the Group entity from operating its accompanied by a period of
core business. consultation that allows market
In addition, changes in tax law may participants to provide feedback
result in an increase in the overall before changes are made and a further
tax burden of the period to prepare for
Group which could have a materially change once changes in regulation are
adverse effect on cash reserves. determined.
The Group consistently reviews the
risks associated with possible
changes in tax legislation.
-------------------------------------- --------------------------------------
Competition The Group operates in a highly Aquis' competitive differentiation is
competitive global industry. underpinned by its subscription-based
The principal competitors to the model and lack
trading business are the national of aggressive trading. This is hard
exchanges, other pan-European for incumbent exchanges to replicate
MTFs / Recognised Investment without significantly
Exchanges (RIEs) which currently impacting their own revenue models
charge customers on a per which have always been based on a per
transaction model and accept both transaction basis
passive and aggressive market makers. and on charging significant data fees
These exchanges have to participants who trade
significant market share and could aggressively.
move to copy Aquis' subscription fee Whilst the effects of competitor
model and/or differentiate behaviour can never be fully
between passive and aggressive mitigated, the Company has
trading. consistently
Other competitors to the exchange increased its secondary market
business are ad hoc OTC trading and trading market share since it was
Systematic Internalisers formed. Senior management
("SIs") which operate off-exchange initiatives
models and make money through to reduce this risk include:
spreads. consistent monitoring of competitor
Additionally, the emergence of new activity and, maintaining
asset classes might reduce the close customer relationships so as to
Group's competitiveness. understand their evolving needs, and
the acquisition
of a primary listing business thereby
gaining RIE status.
Following the change in the tick size
regime for SIs in June 2021 their
competitive advantage
was removed, and their market share
gains have decreased.
New asset classes are emerging but
have yet to make a real impact on
equities trading, clearing
custodian services and settlement of
equities; however, Aquis will
continue to closely monitor
new market developments.
-------------------------------------- --------------------------------------
Intellectual property and data The Group is reliant on copyright, The Group has taken steps that are
protection trade secret protection, database consistent with industry practice to
rights and confidentiality reduce these risks
and licence agreements with its by establishing controls to protect
employees, clients and others to the confidentiality and integrity
protect its intellectual of customer information, and these
property rights. controls are consistently reviewed
The Group is subject to a number of for their effectiveness
laws relating to privacy and data at quarterly ARCC meetings.
protection, including
the UK's Data Protection Act 1988 and
the Privacy and Electronic
Communications (EC Directive)
Regulations 2003 and the EU General
Data Protection Regulation (GDPR).
-------------------------------------- --------------------------------------
OPERATIONAL RISKS
Risk Risk Description Mitigation
Technology The operation of the Group is A defining feature of the Aquis
critically reliant on the smooth and business model is its high calibre,
efficient functioning of in-house technology. The
technology. technology was built and is
Technological failures would maintained by highly skilled
negatively affect clients and the employees. Aquis actively seeks to
Group's ability to deliver retain the employees through flexible
on performance obligations. It could attractive working practices and
also result in regulatory scrutiny or remuneration policies
fines or requirements and to continually enhance the
for further investment. technology to meet client
Failure to protect the Aquis requirements.
Technology could mean that The Group's key infrastructure,
competitors get access to Aquis' development and operational
Intellectual activities are prioritised
Property (IP) or make Aquis accordingly,
susceptible to external infiltration. and resources are closely and
These risks could adversely affect consistently monitored and reviewed
the firm's financial and competitive with the aim to ensure smooth
situation. functioning of technology at all
times.
Aquis technology is securely
maintained to protect it from
unauthorised access with full back
up and version control if remediation
is required.
Aquis has system control features
that are regularly tested to protect
data and IP.
The Group maintains a Disaster
Recovery plan that encompasses input
from all departments and
is continuously monitored and
reviewed by appropriately experienced
individuals.
The comprehensive back up and
contingency plans in place are tested
regularly.
The Board reviews a quarterly
dashboard that incorporates
technology performance statistics
and operational resilience.
-------------------------------------- --------------------------------------
COVID-19 There remains a risk that the The Group continued to successfully
COVID-19 pandemic could still operate a partial remote working plan
negatively impact personnel being throughout 2022
able to operate the exchanges. and this remains in place, with all
There are also risks to clients, staff demonstrating adaptive and
liquidity providers, suppliers, flexible behaviours The
markets and the economy in processes that the Group has adopted
general. are in accordance with UK and French
Remote working practices across the government guidelines.
industry may slow new proposals or This plan mitigated against and will
development at client continue
and supplier organisations which may to mitigate against potential
have a longer- term impact on Aquis. resource shortages.
This could manifest The Group has demonstrated and is
in new members not joining any of the confident that it can operate the
Aquis entities in the anticipated exchanges remotely for
timelines or slower a prolonged period.
adoption of new products developed by The Group's clients and liquidity
Aquis. providers have also demonstrated that
they
can remotely manage their activities
successfully. Key suppliers have also
successfully adopted
disaster recovery procedures.
Aquis is not overly reliant on new
members to achieve its growth plans.
The main source of
anticipated growth in trading is from
the increase in volumes of current
customers.
-------------------------------------- --------------------------------------
Cyber security The Group's networks and those of its The Board reviews a quarterly
third-party service providers may be dashboard that incorporates cyber
vulnerable to security technology monitoring.
risks, cyber-attack or other leakage Regular penetration tests are
of sensitive data. undertaken by a third party with the
Potential outcomes of such an attack results reviewed by the
might include outages of the market, ARCC and Board and all employees
attacks which seek undertake cyber-training.
to hold Aquis to ransom, unintended Internal exercises to alert employees
movements of the company finances or to the possibility of phishing emails
generally create are held regularly.
reputational and financial risk. 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.
-------------------------------------- --------------------------------------
Key management personnel and The Group has a relatively low The Group has established emergency
employees headcount and hence is exposed to key staffing plans for Senior Executives.
person risk. The NRC reviews immediate and medium-
The Group's future development and term succession plans and the ARCC
prospects depend on its capacity to assesses key person
attract and retain risk.
key personnel. 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.
-------------------------------------- --------------------------------------
Client concentration The nature of equity financial The Group continues to broaden its
markets is that the majority of client base to reduce client
pan-European secondary market concentration but recognises
trading volumes are undertaken by a that volumes from smaller
small pool of market participants are not likely in
participants. This risk has been aggregate to be as large.
increased as some of the smaller The Group has offset some of the risk
market participants have of industry concentration through the
decided to route via larger banks quality of the
that maintain direct exchange MTF exchange offering and the
memberships. strengthening of the product
The Group revenue is therefore offering.
dependent on a concentrated number of The Group seeks to maintain positive
customers and significant relationships with all current and
change to a customer's flow could future members of
negatively impact revenues. 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.
-------------------------------------- --------------------------------------
Liquidity provision concentration - In most trading venues globally, This risk is mitigated internally
Aquis Markets there is considerable symbiosis through a number of actions including
between the venue and the those set out below,
liquidity providers on which the and externally through the likely
venues rely to make continuous prices evolution of the structure of the
and enhance liquidity. European equity market.
In Europe, where there is significant Internally, management maintain a
competition between a limited number close relationship with its market
of trading venues, makers to ensure that
the ability to attract significant there continues to be positive
liquidity to the venue is critical. synergies for all parties. Aquis is
The barriers to entry also actively seeking to
are even higher for new trading continue to grow membership and
venues, which must build liquidity diversify its liquidity providers.
from scratch and differentiate As Aquis' market share increases
themselves to attract and retain it. further, more natural liquidity
Market makers themselves have should be attracted thus
differing business models and trading diluting the concentration risk away
strategies; as a result, from a small number of liquidity
they may be attracted to different providers to a broader
types of venues depending on the set of investor flows.
value proposition. Externally, the market share growth
Aquis has a highly differentiated that Aquis has achieved to date is a
business model for its pan-European strong indication
secondary market trading of the benefits to its members and
activities compared to the incumbent liquidity providers and makes it
platforms, both dramatically reducing likely that natural liquidity
the cost of trading will continue to grow, making the
and also not permitting aggressive Aquis marketplace deeper and more
trading by market makers. This has attractive for all counterparties.
been a driver of Aquis' Additional liquidity providers are
success to date. likely to follow over time as they
The number of market makers that have should be
trading models currently aligned with incentivised to adapt or create new
Aquis' business models that capitalise on Aquis'
philosophy is even more concentrated value proposition and
than on the main markets. Therefore, interaction with a wider set of
Aquis has always trading flows.
relied heavily on a small number of The number of liquidity providers in
key market makers to support European equity markets is still
liquidity and a wider group relatively small today,
to supplement it. These market makers reflecting the continued need to
have not always been the same invest in technology and regulatory
organisations and have oversight. However, the
changed over time. Group's low toxicity model and
Nonetheless, it is a risk that if a innovative offerings will continue to
key market maker decides to change counter this risk.
its business model
or philosophy it would cause a
short-term disruption in the total
liquidity provided and could
impact Aquis' ability to
differentiate itself through the
prevention on non- aggressive trading
flow.
-------------------------------------- --------------------------------------
Liquidity Provision Concentration - A relatively small population of The number of market makers active on
AQSE market makers support AQSE with AQSE has and is anticipated to
similar risks to those identified increase as the number
above with regard to potential of companies and reputation of the
short-term impact if one or exchange continues to improve.
more market makers were to change
their business model or approach.
-------------------------------------- --------------------------------------
Supplier risk The Group is exposed to the failure Aquis has back up plans in place for
of a key supplier. Examples include key suppliers and has agreed
loss of data supplied procedures and thresholds
to Aquis which is an important input in place for managing this if
into the trading platform. necessary.
This may impact the ability to
undertake market surveillance.
-------------------------------------- --------------------------------------
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 2022 actively managed the balance sheet and
risks without the use of any financial derivatives. Previously all
revenues were GBP denominated but at the end of 2022 the Group
entered into the first contract denominated in a foreign currency.
To manage the FX risk going forward the Group entered into forward
FX trades 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 2022
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 6 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 2023 - December 2027. These include considering the
impact during 2022 and potential future impact due to Ukraine,
COVID-19 and Brexit. 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 2022 as profitability has been enhanced.
This result complemented by the Group achieving and in certain
areas exceeding its goals and taking account of its ability to
execute successfully its principal strategic objectives and
operating goals 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 and quality of the experience of its
key personnel resources.
This Strategic Report was approved by the Board of Directors on
29 March 2023 and is signed on its behalf by Alasdair Haynes, CEO,
and Richard Fisher, CFO.
Consolidated and Company Statements of Comprehensive Income
For the year ended 31 December 2022
Group Company
--------------------------------------------------- ------- ---------------------------- --------------------------
Notes 2022 2021 2022 2021
Restated Restated
GBP GBP GBP GBP
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Profit and loss
Revenue 11 19,929,527 17,182,755 10,342,525 9,243,427
Impairment credit / (charge) on contract assets 12 133,484 (972,161) 133,484 (972,161)
Impairment (charge) on trade and other receivables 12 (12,784) (28,499) - -
Operating expenses 13 (14,239,918) (11,560,000) (5,616,089) (4,038,025)
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Earnings before interest, taxation, depreciation
and amortisation 5,810,309 4,622,095 4,859,920 4,233,241
Depreciation and amortisation 13 (1,259,492) (1,032,240) (1,187,569) (1,026,980)
Net finance expense 13, 25 (53,130) (26,175) (36,948) (26,175)
Finance income 13 28,722 444 2,416 444
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Profit before taxation 4,526,409 3,564,124 3,637,819 3,180,530
Income tax credit 15, 16 157,203 1,088,543 163,925 1,088,543
Profit for the year 4,683,612 4,652,667 3,801,744 4,269,073
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
Foreign exchange differences on translation of
foreign operations 181,370 (231,412) - -
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Other comprehensive income for the year 181,370 (231,412) - -
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Total comprehensive income for the year 4,864,982 4,421,255 3,801,744 4,269,073
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Earnings per share (pence)
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Basic
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Ordinary shares 17 17 17 14 16
Diluted
--------------------------------------------------- ------- ------------- ------------- ------------ ------------
Ordinary shares 17 16 16 13 16
Consolidated Statement of Financial Position
As at 31 December 2022
Notes 2022 2021 2020
Restated Restated
GBP GBP
GBP
Assets
Non-current assets
Goodwill 18 83,481 83,481 83,481
Intangible assets 18 1,032,224 753,714 916,256
Property, plant, and equipment 19 4,155,215 4,146,333 1,578,554
Deferred tax asset 15 1,593,931 1,292,260 203,717
Trade and other receivables 22 5,352,110 2,744,656 839,630
-------------------------------------- ------ ------------ ------------ -----------
12,216,961 9,020,444 3,621,638
-------------------------------------- ------ ------------ ------------ -----------
Current assets
Trade and other receivables 22 4,135,426 3,768,946 2,890,477
Cash and cash equivalents 23 14,170,965 14,046,399 12,268,418
-------------------------------------- ------ ------------ ------------ -----------
Total assets 30,523,352 26,835,789 18,780,533
-------------------------------------- ------ ------------ ------------ -----------
Liabilities
Current liabilities
Trade and other payables 24 4,268,735 3,783,585 2,810,710
-------------------------------------- ------ ------------ ------------ -----------
Net current assets 14,037,656 14,031,760 12,348,185
-------------------------------------- ------ ------------ ------------ -----------
Non-current liabilities
Lease liabilities 25 2,874,877 3,422,744 995,081
2,874,877 3,422,744 995,081
Total liabilities 7,143,612 7,206,329 3,805,791
Net total assets 23,379,740 19,629,460 14,974,742
-------------------------------------- ------ ------------ ------------ -----------
Equity
Called up share capital 26 2,750,945 2,750,545 2,716,970
Share premium account 30 11,785,045 11,771,462 10,892,135
Other reserves 31 1,813,119 1,118,314 760,543
Treasury shares 27 (3,350,325) (1,526,835) (489,625)
Retained earnings 10,316,831 5,633,219 980,552
Foreign currency translation reserve 64,125 (117,245) 114,167
-------------------------------------- ------ ------------ ------------ -----------
Total equity 23,379,740 19,629,460 14,974,742
-------------------------------------- ------ ------------ ------------ -----------
Company Statement of Financial Position
As at 31 December 2022
Notes 2022 2021
Restated
GBP
GBP
Assets
Non-current assets
Intangible assets 18 1,032,224 753,714
Property, plant, and equipment 19 3,628,081 3,563,758
Investment in subsidiaries 20 6,884,202 6,884,203
Investment in trust 21 3,350,325 1,856,964
Deferred tax asset 15 1,456,184 1,292,260
Trade and other receivables 22 5,329,674 2,731,174
21,680,690 17,082,073
Current assets
Trade and other receivables 22 10,571,256 4,372,553
Cash and cash equivalents 23 5,595,827 7,094,964
Total assets 37,847,773 28,549,590
-------------------------------- ------ ----------- -----------
Liabilities
Current liabilities
Trade and other payables 24 8,992,201 3,407,826
Net current assets 7,174,882 8,059,691
-------------------------------- ------ ----------- -----------
Non-current liabilities
Lease liabilities 25 2,449,312 2,915,920
2,449,312 2,915,920
Total liabilities 11,441,513 6,323,746
Net total assets 26,406,260 22,225,844
-------------------------------- ------ ----------- -----------
Equity
Called up share capital 26 2,750,945 2,750,545
Share premium account 30 11,785,045 11,771,462
Other reserves 31 1,813,119 1,448,430
Retained earnings 10,057,151 6,255,407
-------------------------------- ------ ----------- -----------
Total equity 26,406,260 22,225,844
-------------------------------- ------ ----------- -----------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Group Notes Share Share Share Retained Treasury Foreign Total
Capital Premium Based Earnings Shares Currency
Payment Translation
Reserve Reserve
Balance at 1
January
2021 as
previously
stated 2,716,970 10,892,135 760,543 1,127,401 (489,625) 908 15,008,332
Prior year
adjustment - - - (146,849) - 113,259 (33,590)
------------- ------ ----------- ------------ ----------- ------------ ------------- ------------ ------------
Balance at 1
January
2021 as
restated 2,716,970 10,892,135 760,543 980,552 (489,625) 114,167 14,974,742
Profit for
the year
(restated) - - - 4,652,667 - - 4,652,667
Foreign
exchange
differences
on
translation
of foreign
operations
(restated) - - - - - (231,412) (231,412)
Issue of new
shares 26,30 33,575 879,327 - - - - 912,902
Movement in
share based
payment
reserve 31 - - 357,771 - - - 357,771
Movement in
Treasury
Shares 27 - - - - (1,037,210) - (1,037,210)
------------- ------ ----------- ------------ ----------- ------------ ------------- ------------ ------------
Balance at
31 December
2021 2,750,545 11,771,462 1,118,314 5,633,219 (1,526,835) (117,245) 19,629,460
------------- ------ ----------- ------------ ----------- ------------ ------------- ------------ ------------
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
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
------------- ------ ----------- ------------ ----------- ------------ ------------- ------------ ------------
Company Statement of Changes in Equity
For the year ended 31 December 2022
Company Notes Share Share Share Based Payment Retained Earnings Total
Capital Premium Reserve
------------------------- ------ ---------- ----------- ------------------------- ------------------ -----------
Balance at 1 January
2021 2,716,970 10,892,135 748,525 1,986,334 16,343,964
Profit for the year
(restated) - - - 4,269,073 4,269,073
Issue of new shares 26,30 33,575 879,327 - - 912,902
Movement in share based
payment reserve 31 - - 699,905 - 699,905
------------------------- ------ ---------- ----------- ------------------------- ------------------ -----------
Balance at 31 December
2021
as restated 2,750,545 11,771,462 1,448,430 6,255,407 22,225,844
------------------------- ------ ---------- ----------- ------------------------- ------------------ -----------
Balance at 1 January
2022 2,750,545 11,771,462 1,448,430 6,255,407 22,225,844
------------------------- ------ ---------- ----------- ------------------------- ------------------ -----------
Profit 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
------------------------- ------ ---------- ----------- ------------------------- ------------------ -----------
Consolidated and Company Statements of Cash Flows
For the year ended 31 December 2022
Group Company
Notes 2022 2021 2022 2021
GBP GBP GBP GBP
------------------------------------------------------ ------ ------------ ------------ ------------ ------------
Cash flows from operating activities
Cash generated/ (absorbed) by operations 28 3,961,654 3,157,518 2,164,898 2,748,347
Net finance expense on lease liabilities 53,130 (26,175) 36,948 (26,175)
Net cash outflow from operating activities 4,014,784 3,131,343 2,201,846 2,722,172
------------------------------------------------------ ------ ------------ ------------ ------------ ------------
Investing activities
Recognition of intangible assets 18 (777,465) (350,893) (777,465) (350,893)
Purchase of property, plant and equipment 19 (769,419) (319,520) (752,938) (314,385)
Capital injection into AQSE 20 - - - (400,000)
Interest received 13 34,653 444 2,416 444
Loan to Investment in Trust - - (1,955,720) (1,100,000)
Net cash used in investing activities (1,512,231) (669,969) (3,483,707) (2,164,834)
------------------------------------------------------ ------ ------------ ------------ ------------ ------------
Financing activities
Issue of new shares 13,983 912,902 13,983 912,902
Principal portion of lease liability 6,25 (300,994) (573,194) (231,259) (554,842)
Loan to employee benefit trusts 27 (1,955,720) (1,100,000) - -
Net cash used in financing activities (2,242,731) (760,292) (217,276) (358,060)
Net increase/(decrease) in cash and cash equivalents 259,822 1,701,082 (1,499,137) 915,398
Cash and cash equivalents at the beginning of the
year 23 14,046,399 12,268,418 7,094,964 6,179,566
Effect of exchange rate changes on cash and cash
equivalents (135,256) 76,899 - -
Cash and cash equivalents at the end of the year 23 14,170,965 14,046,399 5,595,827 7,094,964
------------------------------------------------------ ------ ------------ ------------ ------------ ------------
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:
Data revenues earned are now apportioned between Aquis Exchange
PLC where the underlying trade activity has arisen in the UK and
within Aquis Exchange SAS where that revenue has been derived
within the EU27 countries. There is no impact at a Group level.
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.
The Group does not hold any financial instruments at fair value
through profit or 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 2022 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 2023, with profits
forecasted for future years.
The Russia-Ukraine conflict has resulted in extremely volatile
market and there is no certainty as to when this conflict will be
resolved, however at this stage, the Directors do not believe that
this could have a material adverse effect on the group.
Taking the above into account in light of the Group's current
position and principal risks as discussed in the Strategic Report
section of this annual report, the Directors have assessed the
prospects of the Group for the foreseeable future and there is no
material uncertainty as to the Group's ability to continue to adopt
the going concern basis of accounting in preparing the financial
statements over a period from the date of approval of these
financial statements to 31 March 2024.
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 three performance obligations:
-- Project fees and maintenance fees which are recognised over
time as the obligations are met; and
-- Licensing for which fees are considered a "right to use"
licence under IFRS 15 and are therefore recognised at a point in
time when control of the licence passes to the customer.
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, variable based on usage for the prior month, 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 (see further details about this estimate 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 this period.
It is estimated that a one year increase/ decrease in the
deferral period would cause a GBP6k decrease /GBP7k 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 developed intangible assets arising from the
capitalisation of Research and Development expenditures 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 5.
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. Note 18 provides further detail on the impairment
assessment for goodwill as at 31 December 2022.
Goodwill is initially measured at cost being the amount by which
the aggregate of the consideration transferred that exceeds the net
identifiable assets acquired and liabilities assumed. The Group
assess for impairment of goodwill on an annual basis with any
impairment charge recognised in the statement of comprehensive
income.
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 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.
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 12. 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.
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;
-- The difference between the nominal amount and fair value of
the rent deposit at the commencement date represents an additional
lease payment which is prepaid and is included in initial carrying
amount of the Right of Use (RoU) asset; and
-- The prepaid RoU portion is subsequently measured in terms of
IFRS 16 i.e. is depreciated over the term of the lease.
Further disclosures are provided in Note 25.
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 12 details the Group's credit risk assessment
procedures.
Financial liabilities
All financial liabilities are measured subsequently 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 2022 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.
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
Employee Share Incentive Plan.
Taxation
The tax expense/(credit) represents the sum of the tax currently
payable/(repayable) and deferred tax.
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 were 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 share based and will vest 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.
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 option based and they will vest 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
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 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 functional currency'). The
financial statements are presented in UK Pound Sterling (GBP),
which is the Group's functional and presentation 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 the disposal of a foreign operation (i.e. a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation or a partial disposal of an interest in a joint
arrangement or an associate that includes a foreign operation of
which the retained interest becomes a financial asset), all of the
exchange differences accumulated in a foreign exchange translation
reserve in respect of that operation attributable to the owners of
the Group are reclassified to profit or loss.
3 Restatement of Prior Year Comparatives
i) AQEU has been consolidated as a EUR functional currency
subsidiary. In 2022 it was noted that certain consolidation
adjustments since incorporation should be treated differently and
this has led to a life to date adjustment of GBP195k between
Foreign Currency Translation Reserve (FCTR) and Retained Earnings,
with the 2021 comparative for expenses reduced by a corresponding
amount from GBP11,902k to GBP11,560k and a resultant increase in
Group PBT for 2021 of GBP342k to GBP3,564k. The restatement does
not impact net cash flows generated by the group.
ii) In 2020 Aquis Exchange Europe (AQEU) was established as a
100% owned subsidiary of Aquis Exchange PLC to allow the trading of
EU stocks post the Brexit transition period. In 2021 AQEU reflected
Exchange Fees of GBP5,857k that arose through the trading of the
underlying EU27 stocks. In 2022 in agreement with the local French
regulator it has been decided to reflect that element of data
revenue which is derived from EU stocks within the results for
AQEU. In 2022 this reflects GBP760k. Consequently, the 2021 Company
comparatives have been adjusted by GBP211k to reflect that element
of data revenue that is now reported within AQEU. The restatement
does not impact the Company's net operating cash flows in note
28.
Group 2021 Adjustment Restated
GBP GBP GBP
---------------------------------------------------------------------- ------------- ----------- -------------
i) Other Operating costs (Income Statement) (11,901,901) 341,901 (11,560,000)
i) Foreign Exchange differences on translation of foreign operations
(Other Comprehensive Income) 76,899 (308,311) (231,412)
---------------------------------------------------------------------- ------------- ----------- -------------
i) Retained Earnings brought forward (Equity) 1,127,401 (146,849) 980,552
i) Translation reserve brought forward (Equity) 908 113,259 114,167
i) Basic EPS (pence) 16 1 17
i) Diluted EPS (pence) 15 1 16
---------------------------------------------------------------------- ------------- ----------- -------------
Company 2021 Adjustment Restated
GBP GBP GBP
-------------------------- ---------- ----------- ----------
ii) Data Vendor Revenues 1,573,925 (211,310) 1,362,615
ii) Intercompany Payable 552,754 211,310 764,064
-------------------------- ---------- ----------- ----------
4 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 2022. Three standards have been amended and are effective
as of 2022 as set out below. These have not impacted the current
year financial statements.
Amendments to IFRS 3 Definition of a business
Amendment to IAS 16 Property, plant and equipment
Amendment to IAS 37 Provisions, contingent liabilities
and contingent assets
--------------------- -----------------------------------
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:
IFRS 17 Insurance Contracts
Amendments to IAS 1 and IAS 8 Definition of material
Amendment to IAS 12 Income taxes
------------------------------ -----------------------
There have been no changes to any accounting policies in the
year.
5 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.
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 an intangible asset is estimated to
be 3 years. 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.
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
12 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 15) 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 value of the EMI, CSOP, RSP and PPO options. The
resulting values are recognised straight-line over the vesting
period as an expense, 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
6 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 The Group's objectives when managing
may not maintain sufficient capital capital are to safeguard the Group's
to meet their obligations. The ability to continue as a going
Group comprises regulated entities. concern so that it can provide
It considers that increases in returns for shareholders and benefits
the capital requirements of its for other stakeholders.
regulated companies, or a scarcity The Group has mitigated the level
of equity (driven by its own performance of risk significantly by ensuring
or financial market conditions) that, as set out within the risk
either separately or in combination description, each entity in the
are the principal risks to managing Group maintains a level of capital
its capital. that is well in excess of regulatory
AQXE has a total capital regulatory requirements. Maintaining a strong
requirement of GBP4.7m as at 31 capital structure is a key priority
December 2022, with available for the Group. If there was an
capital of GBP22.4m, reflecting erosion of capital for any reason
a surplus of GBP17.7m / 478%. the Group may issue new shares
The total regulatory requirement or sell assets to ensure capital
is set as the total capital ratio adequacy requirements continue
plus Pillar 2 add on. to be met. The directors have
Within the AQSE subsidiary the assessed the impact of a 10% fall
capital regulatory minima is set in the Group's available capital
by the FCA through the Financial and concluded the impact not to
Resource Requirement (FRR) which be material.
is currently set at GBP2.4m. Financial The Group supports both Aquis
resources available (representing Europe and AQSE in maintaining
net assets) were GBP2.8m at 31 capital adequacy, and holds sufficient
December 2022, reflecting a GBP0.4m capital to be able to inject capital
headroom above regulatory minima. into the businesses 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 The Directors make a judgement
to its customers being unable on the credit quality of the Group's
to meet their obligations to the customers based upon the customers'
Group either in part or in full. 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 12. 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 2022 were to
default, the hypothetical impairment
charge would be immaterial.
=========================================
Liquidity Risk
Risk Description Risk management approach
The Group's operations are exposed The Group maintains sufficient
to liquidity risk to the extent liquid resources to meet its financial
that they are unable to meet their obligations as and when they become
daily payment obligations. 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 GBP14.0
million (2021: GBP14.0 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 Bank deposits are primarily placed
to market risk including interest over night or as interest rates
rate (see below for FX risk) have risen the Group has started
There is no negative exposure to prudently place some funds
to interest rate changes since on deposit for up to 3 months.
the Group and Company have no The Directors have stress tested
external debt obligations, and the current approach to managing
the interest rate on the lease this risk and believe it to be
liability is the rate implicit appropriate. The only adverse
in the lease and as such is not impact would be if interest rates
subject to change over the term were to fall and reduce interest
of the lease. income on bank deposits. As at
31 December 2022 total interest
income on deposits was immaterial.
====================================
FX Risk
Risk description Risk management approach
The Group operates in the UK and Foreign exchange risk has previously
Europe, with Sterling as its principal arisen on foreign currency denominated
currency of operation. The Group costs within Aquis Exchange PLC
companies invoice revenues and or through the translation of
incur the majority of expenses GBP denominated balances within
in GBP. A relatively small percentage Aquis Exchange SAS. At the end
of the overall Group's expenses of 2022 Aquis entered into a USD
are incurred in Euros in relation denominated technology contract
to the French subsidiary. As a and hence opened a USD account
result, foreign exchange risk which holds a low level of USD
arises mainly from the translation at the year end (GBP0.2m). The
of the Group's foreign currency contract will deliver USD cash
earnings, assets and liabilities flows in the future from 2023
into its reporting currency, Sterling. and so in January 2023 Aquis entered
An immaterial amount of cash held into an FX forward arrangement
by Aquis Exchange Europe SAS is to lock in the future GBP benefit
held in a euro denominated bank of this contract. As at the year
account and an immaterial amount end at 31 December 2022 there
of USD held by Aquis Exchange were no FX derivatives in place.
PLC, with the remaining cash held The Directors performed stress
in Sterling denominated bank accounts. testing on the cost base of the
group in non-functional currencies
and concluded that an adverse
movement of 10% versus GBP would
not render a material impact.
========================================
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
31 December 2022 1 Year 2-5 years 5+ years Total
-------------------------- ---------- ---------- ---------- ----------
Trade and other payables 3,754,935 - - 3,754,935
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
31 December 2021
-------------------------- ---------- ---------- ---------- ----------
Trade and other payables 3,575,350 - - 3,575,350
Lease Liabilities 208,236 1,623,226 1,799,519 3,630,981
3,783,586 1,623,226 1,799,519 7,206,331
-------------------------- ---------- ---------- ---------- ----------
Company
31 December 2022 1 Year 2-5 years 5+ years Total
----------------------------- ---------- ---------- ---------- -----------
Trade and other payables 8,992,201 - - 8,992,201
Lease Liabilities 437,400 1,239,300 1,210,012 2,886,712
9,429,601 1,239,300 1,210,012 11,441,513
31 December 2021 (Restated)
----------------------------- ---------- ---------- ---------- -----------
Trade and other payables 3,256,845 - - 3,256,845
Lease Liabilities 150,981 1,376,301 1,539,620 3,066,902
3,407,826 1,376,301 1,539,620 6,323,747
----------------------------- ---------- ---------- ---------- -----------
Both the Group and the Company have no derivative financial
liabilities as at 31 December 2022.
7 OPERATING SEGMENTS
The Aquis Group can be split into 3 operating segments, each
offering multiple products and services and benefitting from Group
synergies. The specific focus of these activities are:
1) Aquis Markets - operator of MTF and related services. The
Group operates two MTFs: Aquis Markets (AQXE), which is UK
regulated and Aquis Exchange Europe (AQEU), which is French
regulated. Another revenue stream for this division is the
provision of data services to third party vendors;
2) Aquis Stock Exchange (AQSE) - primary listings and trading
business. Within this division is AQSE Main Market, AQSE Growth
Market, AQSE Trading and the provision of data services;
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.
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:
2022 AQXE & AQEU AQSE Aquis Technologies Total
-------------------------------------------------- ------------ ------------ ------------------- -------------
Revenue 12,450,578 2,444,370 5,034,579 19,929,527
Impairment credit on contract assets - - 133,484 133,484
Impairment charge on trade and other receivables - (12,784) - (12,784)
Costs (8,687,263) (2,043,164) (3,509,491) (14,239,918)
EBITDA 3,763,315 388,422 1,658,572 5,810,309
Depn, amortisation and net interest (1,283,900) - - (1,283,900)
Profit Before Tax 2,479,415 388,422 1,658,572 4,526,409
2021 (Restated) AQXE & AQEU AQSE Aquis Technologies Total
-------------------------------------------------- ------------ ------------ ------------------- -------------
Revenue 10,897,483 1,880,666 4,404,606 17,182,755
Impairment charge on contract assets - - (972,648) (972,648)
Impairment charge on trade and other receivables - (28,012) - (28,012)
Costs (8,475,927) (2,074,604) (1,009,469) (11,560,000)
EBITDA 2,421,556 (221,950) 2,422,489 4,622,095
Depn, amortisation and net interest (1,057,971) - - (1,057,971)
Profit Before Tax 1,363,585 (221,950) 2,422,489 3,564,124
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 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: GBP1,815k, Singapore: GBP3,471k and South
Africa: GBP1,815k, Total: GBP7,461k. Gross revenue from one
customer amounted to GBP3,383k (2020: GBP3,785k) arising from
license and maintenance fees. There are no other customers with
revenue greater than 10% of total revenue for the Group.
8 EMPLOYEES
The monthly average number of persons (including directors)
employed by the Group during the year was:
Group 2022 2021
Number Number
----------------------------- -------- --------
Management 4 2
IT 20 19
Compliance and Surveillance 11 10
Operations 7 9
Business Development 17 8
Finance / HR / Admin 5 4
Marketing 2 2
66 54
----------------------------- -------- --------
Company 2022 2021
Number Number
----------------------------- -------- --------
Management 2 2
IT 18 18
Compliance and Surveillance 5 4
Operations 7 8
Business Development 10 5
Finance / HR / Admin 5 3
Marketing 2 2
49 42
----------------------------- -------- --------
Their aggregate remuneration was comprised of:
Group 2022 2021
GBP GBP
----------------------- ---------- ----------
Salaries and wages 6,598,427 6,129,802
Social security costs 967,032 815,822
Other pension costs 159,366 183,940
Share based payments 819,872 571,834
Employee benefits 170,102 165,617
8,714,799 7,867,015
----------------------- ---------- ----------
Company 2022 2021
GBP GBP
----------------------- ---------- ----------
Salaries and wages 4,698,746 4,605,033
Social security costs 680,908 560,051
Other pension costs 116,150 145,884
Share based payments 819,872 576,609
Employee benefits 169,596 165,357
6,485,272 6,052,934
----------------------- ---------- ----------
9 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.
10 DIRECTORS REMUNERATION
Detail on Directors remuneration are included within the
Directors Report in the FY22 Annual Report.
Group 2022 2021
GBP GBP
-------------------------------------- ---------- ----------
Salaries, fees and bonuses 1,562,555 1,052,077
Taxable benefits 49,250 35,713
Share-based payments 445,250 528,070
Remuneration for qualifying services 2,057,055 1,615,860
-------------------------------------- ---------- ----------
Remuneration disclosed above include the following amounts paid
to the highest paid director:
2022 2021
GBP GBP
-------------------------------------- -------- --------
Salaries, fees and bonuses 366,060 393,777
Taxable benefits 17,500 17,301
Share-based payments 162,500 264,035
Remuneration for qualifying services 546,060 675,113
-------------------------------------- -------- --------
Company 2022 2021
GBP GBP
-------------------------------------- ---------- ----------
Salaries, fees and bonuses 1,437,555 1,052,077
Taxable benefits 49,250 35,713
Share-based payments 445,250 528,070
Remuneration for qualifying services 1,932,055 1,615,860
-------------------------------------- ---------- ----------
11 REVENUE
An analysis of the company's revenue is as follows:
Group Company
2022 2021 2022 2021
Restated
GBP GBP GBP GBP
Revenue analysed by class of business
Exchange fees 10,869,442 9,766,046 3,894,736 3,476,206
Licence fees 5,034,579 4,404,606 4,970,622 4,404,606
Data vendor fees 3,002,986 2,319,360 1,477,167 1,362,615
Issuer fees 1,022,520 692,743 - -
19,929,527 17,182,755 10,342,525 9,243,427
--------------------------------------- ----------- ----------- ----------- ----------
Revenues from customers by class of business is as follows:
Group Company
2022 2021 2022 2021
Restated
GBP GBP GBP GBP
--------------------------------------- ----------- ----------- ----------- ----------
Revenue analysed by class of business
AQXE & AQEU
Exchange fees 10,244,767 9,323,559 3,894,736 3,476,206
Data vendor fees 2,205,811 1,573,925 1,477,167 1,362,615
AQSE
Exchange fees 624,675 442,487 - -
Data vendor fees 797,175 745,435 - -
Issuer fees 1,022,520 692,743 - -
Aquis Technologies
Licence fees 5,034,579 4,404,606 4,970,622 4,404,606
19,929,527 17,182,755 10,342,525 9,243,427
--------------------------------------- ----------- ----------- ----------- ----------
Revenues from customers attributable to each of the following
countries
Group Company
2022 2021 2022 2021
Restated
GBP GBP GBP GBP
Country
Australia 58,325 35,931 31,403 23,600
British Virgin Islands 8,575 12,473 - -
Canada 22,860 10,220 - -
Cayman Islands 14,717 1,000 - 1,000
China 25,025 - - -
Cyprus 8,075 6,800 - -
Denmark 38,259 - 10,859 -
Finland 13,500 - 8,931 -
France 1,201,936 949,349 528,432 125,915
Germany 182,715 299,801 62,080 74,829
Gibraltar 12,075 - - -
Guernsey 7,977 1,700 - -
Hong Kong 15,300 92,706 10,112 74,300
Ireland 1,422,523 78,611 463,743 72,611
Isle of Man 17,717 - - -
Italy 18,900 - 12,472 -
Jersey 23,371 8,800 - -
Kenya 4,000 - - -
Luxembourg - 15,000 - 15,000
Netherlands 47,789 37,200 31,643 38,556
New Zealand 2,425 - - -
Norway 34,950 34,300 - -
Peru - 1,700 - -
Singapore 3,646,556 - 3,646,556 -
Slovenia - 2,333 - -
South Africa 117,320 2,168,290 109,245 2,161,490
Spain 47,039 - 13,689 -
Sweden 15,300 5,600 10,112 5,600
Switzerland 197,312 159,017 69,666 79,522
United Arab Emirates 17,150 15,300 - -
United Kingdom 11,223,396 11,727,897 4,469,782 5,592,886
United States 1,484,440 1,518,727 863,800 978,118
19,929,527 17,182,755 10,342,525 9,243,427
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 obtained control of the goods.
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 obtains control of the goods.
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 12. Contract liabilities arise when consideration
has been provided to Aquis prior to completion of relevant
performance obligations as outlined below. There balances typically
arise when customers pay in advance of implementation. As of the
balance sheet date there are no contract liabilities (2021:
nil).
The revenue from licensing contracts with customers has been
categorised reflecting the nature, amount, customer categorisation
(see also Note 5), 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 balances are thus analysed:
Contract Assets (Group and Company) 2022 2021
GBP GBP
As at 1 January 5,009,162 1,749,834
New contracts 3,805,388 3,788,615
Foreign exchange gains 87,784 -
Impairment of contract assets - -
Transfers to trade receivables (1,756,639) (994,482)
Maintenance fees 315,687 465,195
7,461,382 5,009,162
------------------------------------- ------------ ----------
The scope of a Technology License contract was amended during
the year which resulted in cumulative catch-up adjustments of
GBP191,000 (2021: -GBP147,000) 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 GBP462,563 (2021:
GBP177,527).
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.
=============================================
The aggregate amount of the transaction price per customer
category that has been allocated to the performance obligations for
the year is as follows:
2022
---------- ------------------------------------------------------
Group GBP GBP GBP GBP GBP GBP
--------
Category 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
2021
Group GBP GBP GBP GBP GBP
Category 1 2 3 4 Total
PO1 - - - - -
PO2 - 3,788,615 - - 3,788,615
PO3 - 59,943 25,080 - 85,023
- 3,848,558 25,080 - 3,873,638
The amount of revenue to be recognised from unsatisfied
performance obligations with Technology License customers is as
follows:
2023 2024 2025 2026-2029 Total
As at 31 December 2022 GBP GBP GBP GBP GBP
------------------------------- -------- -------- -------- ---------- ----------
Maintenance and other support 429,384 353,197 234,245 691,179 1,708,005
Regulatory services - - - - -
429,384 353,197 234,245 691,179 1,708,005
2022 2023 2024 2025-2027 Total
As at 31 December 2021 GBP GBP GBP GBP GBP
Maintenance and other support 314,582 286,285 228,197 300,424 1,129,488
Regulatory services - - - - -
314,582 286,285 228,197 300,424 1,129,488
Customer risk category definitions: 2022: 1 - High, 2 -
Moderately High, 3 - Moderate, 4 - Moderately Low and 5 - Low.
(2021: 1 - High, 2 - Moderately High, 3 - Moderately Low and 4 -
Low)
12 IMPAIRMENT
The Group has two types of financial asset that are subject to
potential impairment, which are contract assets relating to
technology licencing contracts within the Company and also trade
receivables arising on services provided in the AQSE
subsidiary.
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
------------------------------ ------------------------------
Reconciliation of opening to closing loss allowances Contract Trade Receivables Contract Trade Receivables
2022 Assets GBP Assets GBP
GBP GBP
------------------------------------------------------ ---------- ------------------ ---------- ------------------
Opening Impairment Provision at 1 January 1,480,762 46,169 1,480,762 -
ECL increase during the year - 12,784 - -
Impairment on new contract assets 713,230 - 713,230 -
Impairment reversed over time (846,714) - (846,714) -
Closing Impairment Provision at 31 December 1,347,278 58,953 1,347,278 -
------------------------------------------------------ ---------- ------------------ ---------- ------------------
Group Company
------------------------------ ------------------------------
Reconciliation of opening to closing loss allowances Contract Trade Receivables Contract Trade Receivables
2021 Assets GBP Assets GBP
GBP GBP
------------------------------------------------------ ---------- ------------------ ---------- ------------------
Opening Impairment Provision at 1 January 508,601 17,670 508,601 -
ECL increase during the year 14,895 28,499 14,895 -
Impairment on new contract assets 1,321,449 - 1,321,449 -
Impairment reversed over time (364,183) - (364,183) -
Closing Impairment Provision at 31 December 1,480,762 46,169 1,480,762 -
------------------------------------------------------ ---------- ------------------ ---------- ------------------
Technology Licencing Contracts
During contract negotiation Aquis assesses the potential credit
risk of a prospective client prior to committing to the contract.
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.
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 model has been further enhanced
during the year to allow greater granularity by creation of an
additional category, allowing increased differentiation between
contracts. 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, which increases each year the
company successfully continues in operation.
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, Aquis regularly assesses whether macro-economic
factors could have a bearing on the success of the client and the
recoverability of the outstanding debt. At renewal a desk top
assessment is made as to whether the previous categorisation
remains appropriate.
The Contract Asset Impairment provision as at 31 December 2022
is GBP1,348k (2021: GBP1,481k) 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 2022, the average contract duration for the portfolio of
technology contracts is 3.1 years. (2021: 2.7 years).
In calculating the Impairment provision, the impact of a
significant change in macroeconomic circumstances on the expected
PD over the life of the contracts has been assessed. Management
does not believe that there is significant impact on the assessed
PDs for each of the existing contracts from these variables, with
the success of the contractual counterparts more driven through
individual factors already incorporated within the ECL assessment.
In this assessment the macroeconomic variables used are based on
3-year average forecast rates for 2023-2025, which is an
appropriate timescale based on the average contract duration. The
baseline rates are defined using the rates forecast by the Monetary
Policy Committee ("MPC"). The macroeconomic indicators used in the
analysis are as follows:
Macroeconomic Indicators - 3 year average Downside Baseline Upside
forecast % % %
------------------------------------------- --------- --------- -------
UK GDP -4.8% -0.43% 4.0%
UK Unemployment 7.9% 5.7% 3.5%
UK CPI Inflation 5.3% 2.2% -0.5%
------------------------------------------- --------- --------- -------
In order to quantify the impact of movement in credit losses
that occur as a result of macro-economic developments, the
Directors have flexed the PD associated with each client category
in three scenarios: a baseline scenario (maintaining the status
quo, keeping each assessment criteria reflecting current client
circumstances and forecast macroeconomic indicators), a downside
scenario (prolonged recession), and an upside scenario (fast
economic recovery).
The model incorporates all three possible outcomes by attaching
a probability weighting to each scenario. The range of outcomes is
detailed in the table below:
At 31 December 2022 Downside Baseline Upside
GBP GBP GBP
----------------------- ---------- ---------- ----------
Impairment provision 1,628,007 1,347,765 1,066,549
Impact on PD 5% 0% -5%
Probability weighting 25% 50% 25%
----------------------- ---------- ---------- ----------
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 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.
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 GBP12,784
(2021: GBP28,499) 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 2022 was GBP58,953 (31 December 2021: GBP46,169)
which was comprised as follows:
Group - 2022
Days past 0 1-29 30-59 60-89 90-124 days 125 - 149 150-179 Over 180 Total
Due days days days days days days 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
------------- --------- -------- ------- ------- ------------ ----------- ------------ ----------- ----------
Group - 2021
Days past 0 1-29 30-59 60-89 90-124 days 125 - 149 150-179 Over 180 Total
Due days days days days days days days
------------- -------- -------- -------- ------- ------------ ----------- ------------ ------------ ---------
Expected
loss rate 0.5% 1% w3% 5% 10% 25% 50% 100%
Trade
receivables 88,947 17,650 14,405 4,200 14,200 700 - 43,310 183,413
Expected
loss 445 177 432 210 1,420 175 - 14,811 17,670
Specific
provisions
charged /
(released) - - - - - - 28,499 28,499
Total
Expected
Credit
Losses 445 177 432 210 1,420 175 - 43,310 46,169
------------- -------- -------- -------- ------- ------------ ----------- ------------ ------------ ---------
13 OPERATING EXPENSES
Earnings before interest, taxation, depreciation and
amortisation is stated after charging:
Group Company
Administrative Expenses 2022 2021 2022 2021
Restated
GBP GBP GBP GBP
---------------------------------------------------------------- ----------- ----------- ------------ ------------
Fees payable to the company's auditor for the audit of the
company's financial statements 241,250 222,000 190,000 167,000
Fees payable to the company's auditor for the Client Asset
audit 10,000 7,500 10,000 7,500
Share-based payments 819,872 571,834 819,872 576,609
Exchange loss/(gains) 116,415 (341,877) (50,269) -
Employee costs 7,894,927 7,295,181 5,665,400 5,476,324
Operating costs (net of intercompany recharge) 5,157,454 3,805,362 (1,018,914) (2,189,408)
14,239,918 11,560,000 5,616,089 4,038,025
---------------------------------------------------------------- ----------- ----------- ------------ ------------
Other administrative expenses comprise marketing fees, data
centre and other service fees incurred in the ordinary course of
business.
Profit before taxation is stated after charging:
Group Company
Depreciation, amortisation and finance costs 2022 2021 2022 2021
GBP GBP GBP GBP
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Depreciation of property, plant and equipment 760,537 518,805 688,615 513,545
Amortisation of intangible assets 498,955 513,435 498,955 513,435
1,259,492 1,032,240 1,187,569 1,026,980
Net finance expense on lease liabilities and rent deposit asset (Note
25) 53,130 26,175 36,948 26,175
Interest on deposited funds (28,722) (444) (2,416) (444)
1,283,900 1,057,971 1,222,101 1,052,711
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Total company expenses were as follows:
Group Company
Total expenses 2022 2021 2022 2021
GBP GBP GBP GBP
---------------- ----------- ----------- ---------- ----------
Expenses 15,523,818 12,617,971 6,838,190 5,090,736
---------------- ----------- ----------- ---------- ----------
14 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 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 2022 was GBP819,872 (2021:
GBP571,834).
Group Company
------------------ ------------------
2022 2021 2022 2021
GBP GBP GBP GBP
-------------------------------------------- -------- -------- -------- --------
EMI Option Scheme 58,430 160,052 58,430 152,577
Restricted Share Plan (RSP) scheme 485,860 314,222 485,860 314,222
Company Share Ownership Plan (CSOP) scheme 43,039 19,045 43,039 19,045
Premium Priced Option (PPO) scheme 69,000 - 69,000 -
Share Incentive Plan (SIP) scheme 163,543 78,515 163,543 90,765
819,872 571,834 819,872 576,609
-------------------------------------------- -------- -------- -------- --------
The aggregate level of share options and shares awarded which
existed at the year end is 2,207,649 shares (2021: 1,401,259
shares).
Group Company
---------------------- ----------------------
2022 2021 2022 2021
GBP GBP GBP GBP
-------------------------------------------- ---------- ---------- ---------- ----------
EMI Option Scheme 904,849 937,143 904,849 937,143
Restricted Share Plan (RSP) scheme 346,624 228,768 331,292 228,768
Company Share Ownership Plan (CSOP) scheme 163,090 95,805 145,504 95,805
Premium Priced Option (PPO) scheme 606,931 - 606,931 -
Share Incentive Plan (SIP) scheme 186,155 139,543 186,155 139,543
2,207,649 1,401,259 2,174,731 1,401,259
EMI Share Options
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, 3,999 (2021: 335,753)
were exercised, none (2021: Nil) expired and 28,295 (2021: 24,526)
were forfeited during 2022.
The exercise price for the options granted on 14 June 2018 is
GBP2.69 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 (2021: 5.5 months).
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 GBP2.69 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
GBP3.47 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 1 year
and 3.5 months (2021: 2 years 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 GBP3.47 and the
weighted average remaining expected life of the options was
estimated to be 5 years.
Details of the EMI scheme are as follows:
2022 2021
-------------------------------- --------------------------------
Number of Shares Average Number of Shares Average
Exercise Exercise
Price (GBP) Price (GBP)
----------------------------------------------- ----------------- ------------- ----------------- -------------
-- Outstanding at the beginning of the period 937,143 3.31 1,297,421 3.15
-- Granted during the period - N/A - N/A
-- Forfeited during the period (28,295) 3.22 (24,526) 3.07
-- Exercised during the period (3,999) 3.50 (335,753) 2.70
-- Expired during the period - - - N/A
-- Outstanding at the end of the period 904,849 3.43 937,143 3.31
-- Exercisable at the end of the period 670,766 3.24 453,643 3.11
Restricted Share Plan
The Group implemented a Restricted Share Plan (RSP) senior
executive option scheme in 2020. Total grants were made in April
2022 of 107,527 at a grant price of GBP4.90 (April 2021: 88,320
options at a grant price of GBP6.85). A further grant was made in
September 2022 of 10,449 at a grant price of GBP3.83 (September
2021: Nil).
Options vest three years after grant, with an additional hold
period of a further 2 years 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
8 years and 7 months (2021: 8 years and 0 months).
Details of the RSP scheme are as follows:
2022 2021
-------------------------------------------- --------------------------------------------
Number of Shares Average Exercise Price Number of Shares Average Exercise Price
(GBP) (GBP)
-------------------------- ----------------- ------------------------- ----------------- -------------------------
-- Outstanding at the
beginning of the period 228,768 4.88 140,448 3.64
-- Granted during the
period 117,856 4.86 88,320 6.85
-- Forfeited during the - N/A - N/A
period
-- Exercised during the - N/A - N/A
period
-- Expired during the - - - N/A
period
-- Outstanding at the end
of the period 346,624 4.81 228,768 4.88
-- Exercisable at the end - - - -
of the period
Company Share Ownership Plan
The Group implemented a Company Share Ownership Plan (CSOP)
employee option scheme in 2021. Grants in April 2022 were made
amounting to 78,045 options at a grant price of GBP4.90 (April
2021: 100,000 options at a grant price of GBP6.85).
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 9 years
and 1 months (2021: 8 years and 8 months).
Details of the CSOP scheme are as follows:
2022 2021
----------------------- -----------------------
Number Average Number Average
of Shares Exercise of Shares Exercise
Price Price
(GBP) (GBP)
------------------------------------ ----------- ---------- ----------- ----------
-- Outstanding at the beginning of
the period 95,805 6.85 - -
-- Granted during the period 78,045 4.90 100,000 6.85
-- Forfeited during the period (10,760) 6.39 (4,195) 6.85
-- Exercised during the period - N/A - N/A
-- Expired during the period - N/A - N/A
-- Outstanding at the end of the
period 163,090 5.95 95,805 6.85
-- Exercisable at the end of the - - - -
period
Premium Priced Option Plan
The Group implemented a Premium Priced Option (PPO) option
scheme in 2022 primarily focussed on Senior Executives. Grants in
June 2022 were made amounting to 684,811 options at a grant price
of GBP3.88 (2021: No PPO options were granted).
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 6 years
and 6 months (2021: N/A).
Details of the PPO scheme are as follows:
2022 2021
----------------------- -----------------------
Number Average Number Average
of Shares Exercise of Shares Exercise
Price Price
(GBP) (GBP)
------------------------------------ ----------- ---------- ----------- ----------
-- Outstanding at the beginning of - - - -
the period
-- Granted during the period 684,811 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 606,931 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 GBP1,800.
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:
2022 2021
Number of Shares Number of Shares
-- Shares held at the beginning of the period 139,543 104,656
-- Partnership shares purchased in the period 12,478 8,611
-- Matching shares purchased during the period 24,956 17,222
-- Free shares purchased during the period 22,465 16,327
-- Exercised during the period (9,241) (6,483)
-- Forfeited during the period (4,046) (790)
-- Shares held at the end of the period 186,155 139,543
15 DEFERRED TAX ASSET
A net deferred tax asset of GBP1,593,931 (2021: GBP1,292,260) at
the Group and GBP1,456,184 (2021: GBP1,292,260 at the Company)
relating to unused tax losses has been recognised in the current
period. The losses are considered able 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
GBP1,716,748 (2021: GBP1,323,459) at the Group and GBP1,578,001
(2021: GBP1,323,459 at the Company) offset by a Deferred Tax
Liability of GBP122,817 (2021: GBP31,199) at the group and Company
arising in the Company on the timing difference on accounting
depreciation versus 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 which reflects the
improvement trading performance 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 2022 2021
GBP GBP
-------------------------------- ---------- ----------
Tax losses 1,716,748 1,323,459
Fixed asset timing differences (122,817) (31,199)
Total deferred tax asset 1,593,931 1,292,260
-------------------------------- ---------- ----------
Company 2022 2021
GBP GBP
-------------------------------- ---------- ----------
Tax losses 1,579,001 1,323,459
Fixed asset timing differences (122,817) (31,199)
Total deferred tax asset 1,456,184 1,292,260
-------------------------------- ---------- ----------
Movement in deferred tax balance:
Group 2022 2021
GBP GBP
------------------------------------------------- ---------- ----------
At 1 January 1,292,260 203,717
O rigination and reversal of timing differences 229,267 1,024,212
Effects of changes in tax rates 72,404 64,331
------------------------------------------------- ---------- ----------
At 31 December 1,593,931 1,292,260
------------------------------------------------- ---------- ----------
Company 2022 2021
GBP GBP
------------------------------------------------- ---------- ----------
At 1 January 1,292,260 203,717
O rigination and reversal of timing differences 124,581 1,024,212
Effects of changes in tax rates 39,343 64,331
At 31 December 1,456,184 1,292,260
------------------------------------------------- ---------- ----------
The Group has combined losses of GBP46,116,352 (2021:
GBP49,555,213) 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 losses generated in the UK
by Aquis Exchange PLC and Aquis Stock Exchange Limited. There are
no losses carried forward in France within Aquis Exchange Europe
SAS.
The Company has estimated losses of GBP11,747,647 (2021:
GBP14,801,969) available for carry forward against future trading
profits.
16 INCOME TAX
The credit for the year can be reconciled to the loss per the
income statement as follows:
Group Company
--------------------- -----------------
2022 2021 2022 2021
Current tax Restated Restated
GBP GBP GBP GBP
------------------------------------------- --------- ---------- ----- ----------
UK Corporation tax charge - - - -
Overseas tax charges on foreign operations 144,469 - - -
Total tax charge 144,469 - - -
------------------------------------------- --------- ---------- ----- ----------
Deferred tax GBP GBP GBP GBP
------------------------------------------------ ----------- ------------- ----------- -------------
Origination and reversal of timing differences (229,267) (1,024,212) (124,581) (1,024,212)
Effect of changes in tax rates (72,405) (64,331) (39,344) (64,331)
Total deferred tax credit (301,672) (1,088,543) (163,925) (1,088,543)
------------------------------------------------ ----------- ------------- ----------- -------------
The credit for the year can be reconciled to the loss per the
income statement as follows:
Group Company
--------------------------- --------------------------
2022 2021 2022 2021
Restated Restated
GBP GBP GBP GBP
------------------------------------------------------------- ------------ ------------- ----------- -------------
Profit for the year before taxation 4,526,409 3,564,124 3,637,819 3,180,530
Expected tax charge based on a corporation tax rate of 19% 860,018 677,184 691,186 604,301
Expected tax charge based at effective overseas rates of 25% 177,647 - - -
Fixed asset differences (40,330) (12,963) (40,330) (12,963)
Expenses not deductible for tax purposes 109,502 100,424 109,104 98,891
Additional deduction for R&D expenditure - (267,184) - (267,184)
Other differences (89,428) (1) 16 -
Remeasurement of deferred tax for changes in tax rates (72,405) (64,331) (39,344) (64,331)
Movement in deferred tax not recognised (1,069,029) (1,413,895) (884,557) (1,447,257)
Movement in deferred tax not recognised at overseas rates (33,178) (107,777) - -
Tax credit for the period (157,203) (1,088,543) (163,925) (1,088,543)
------------------------------------------------------------- ------------ ------------- ----------- -------------
17 EARNINGS PER SHARE
Group Company
------------------------ ------------------------
2021 2021
2022 Restated 2022 Restated
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Number of Shares
Weighted average number of ordinary shares for basic earnings per
share 27,508,166 27,339,947 27,508,166 27,339,947
Weighted average number of ordinary shares for diluted earnings
per share 28,425,419 28,456,875 28,425,419 28,456,875
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Earnings
Profit for the year from continued operations 4,683,612 4,652,667 3,801,744 4,269,073
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Basic and diluted earnings per share (pence)
Basic earnings per ordinary share 17 17 14 16
Diluted earnings per ordinary share 16 16 13 16
------------------------------------------------------------------ ----------- ----------- ----------- -----------
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 Employee Share
Incentive Plan (SIP).
The basic EPS when adjusted for outstanding EMI options of
937,143 (2021: 1,297,421) and adjusted for forfeited options in the
year of 28,295 (2021: 24,526) gives a weighted average of
28,425,419 (2021: 28,456,875).
18 INTANGIBLE ASSETS
Group and Company Group Other Intangibles Total Group
Developed Intangible Goodwill
trading platforms Assets
------------------------------------------- ------------------- ------------------ ------------ ----------
Cost
As at 1 January 2021 2,698,021 - 2,698,021 83,481
Additions- internally generated/ acquired 313,463 37,430 350,893 -
As at 31 December 2021 3,011,484 37,430 3,048,914 83,481
Additions- internally generated/ acquired 605,599 171,866 777,465 -
As at 31 December 2022 3,617,083 209,296 3,826,379 83,481
------------------------------------------- ------------------- ------------------ ------------ ----------
Accumulated amortisation and impairment
As at 1 January 2021 1,781,765 - 1,781,765 -
Charge for the year 505,515 7,920 513,435 -
As at 31 December 2021 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 -
------------------------------------------- ------------------- ------------------ ------------ ----------
Carrying amount
As at 31 December 2022 844,888 187,336 1,032,224 83,481
As at 31 December 2021 724,204 29,510 753,714 83,481
------------------------------------------- ------------------- ------------------ ------------ ----------
All intangible assets within the Group are held by the
Company.
Goodwill
On 11 March 2020 the Group acquired NEX Exchange Limited which
resulted in recognition of goodwill of GBP83,481. 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 2025. 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.
19 PROPERTY, PLANT AND EQUIPMENT
Group Fixtures, fittings and Computer equipment Right of use asset Total
equipment
------------------------------ ------------------------------ ------------------- ------------------- ------------
Cost
As at 1 January 2021 251,540 2,211,295 1,469,474 3.932.309
Additions 72,636 246,885 3,758,437 4,077,958
Disposals - (68,926) (963,837) (1,032,763)
Foreign Currency Translation
Differences 285 - (25,315) (25,030)
As at 31 December 2021 324,461 2,389,254 4,238,759 6,952,474
Additions 167,440 601,979 - 769,419
As at 31 December 2022 491,901 2,991,233 4,238,759 7,721,893
------------------------------ ------------------------------ ------------------- ------------------- ------------
Accumulated depreciation and
impairment
As at 1 January 2021 178,036 1,804,328 346,038 2,328,402
Charge for the year 51,938 312,092 154,775 518,805
Disposals - (41,362) - (41,362)
Foreign Currency Translation
Differences 29 - 267 296
As at 31 December 2021 230,003 2,075,058 501,080 2,806,141
Charge for the year 65,263 298,052 397,222 760,537
As at 31 December 2022 295,266 2,373,110 898,302 3,566,678
------------------------------ ------------------------------ ------------------- ------------------- ------------
Carrying amount
As at 31 December 2022 196,635 618,123 3,340,457 4,155,215
As at 31 December 2021 94,458 314,196 3,737,679 4,146,333
------------------------------ ------------------------------ ------------------- ------------------- ------------
Company Fixtures, fittings and Computer Equipment Right of Use Asset Total
equipment
------------------------------ ------------------------------ ------------------- ------------------- ------------
Cost
As at 1 January 2021 251,825 2,211,294 1,444,159 3,907,278
Additions 67,500 246,885 3,175,765 3,490,150
Disposal - (68,926) (963,837) (1,032,763)
As at 31 December 2021 319,325 2,389,253 3,656,087 6,364,665
Additions 157,805 595,133 - 752,938
As at 31 December 2022 477,130 2,984,386 3,656,087 7,117,603
------------------------------ ------------------------------ ------------------- ------------------- ------------
Accumulated depreciation and
impairment
As at 1 January 2021 178,064 1,804,328 346,332 2,328,724
Charge for the year 51,965 312,092 149,488 513,545
Disposal - (41,362) - (41,362)
As at 31 December 2021 230,029 2,075,058 495,820 2,800,907
Charge for the year 62,746 296,005 329,864 688,615
As at 31 December 2022 292,775 2,371,063 825,684 3,489,522
------------------------------ ------------------------------ ------------------- ------------------- ------------
Carrying amount
As at 31 December 2022 184,355 613,323 2,830,403 3,628,081
As at 31 December 2021 89,296 314,195 3,160,267 3,563,758
------------------------------ ------------------------------ ------------------- ------------------- ------------
20 INVESTMENT IN SUBSIDIARIES
Company 2022 2021
GBP GBP
Investment in subsidiaries 6,884,202 6,884,202
Details of the Company's subsidiaries at 31 December 2022 are
set out in the following table. The investments are measured using
the equity method in Aquis Exchange PLC's standalone accounts.
Name of Country of Ownership Voting power Nature of Carrying Carrying
undertaking incorporation interest (%) held (%) business amount amount
31-Dec-22 31-Dec-21
---------------- ---------------- --------------- --------------- -------------- --------------- ---------------
Recognised
Aquis Stock Investment
Exchange UK 100 100 Exchange 3,677,118 3,677,118
European
Aquis Exchange Equities
Europe SAS France 100 100 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 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 (2021: GBP400k increase in Aquis Stock Exchange
following a capital injection in the year) as set out in the table
below;
Company 2022 2021
GBP GBP
-------------------------------- ---------- ----------
Carrying amount at 1 January 6,884,202 6,484,202
Capital injection in the year - 400,000
Carrying amount at 31 December 6,884,202 6,884,202
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
primarily comprised of cash contributions made to acquire Company
shares. Deductions from the Trusts represent vested shares
withdrawn.
Company 2022 2021
GBP GBP
---------------------- ---------- ----------
Investment in Trusts 3,350,325 1,856,964
---------------------- ---------- ----------
22 TRADE AND OTHER RECEIVABLES
Current Non-current Total
------------------------------------ ---------------------- ---------------------- ----------------------
Group 2022 2021 2022 2021 2022 2021
GBP GBP GBP GBP GBP GBP
Trade receivables 2,317,384 1,884,329 - - 2,317,384 1,884,329
Technology licence contract assets 1,104,221 1,112,576 5,009,883 2,415,824 6,114,104 3,528,400
Other receivables 77,635 339,353 342,227 328,832 419,862 668,185
Prepayments 636,186 432,688 - - 636,186 432,688
4,135,426 3,768,946 5,352,110 2,744,656 9,487,536 6,513,602
------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Current Non-current Total
------------------------------------ ----------------------- ---------------------- -----------------------
Company 2022 2021 2022 2021 2022 2021
GBP GBP GBP GBP GBP GBP
Trade receivables 2,053,560 1,747,286 - - 2,053,560 1,747,286
Technology licence contract assets 1,104,221 1,112,576 5,009,883 2,415,824 6,114,104 3,528,400
Other receivables 330,957 313,224 319,791 315,350 650,748 628,574
Intercompany receivables 6,485,690 804,406 - - 6,485,690 804,406
Prepayments 596,828 395,061 - - 596,828 395,061
10,571,256 4,372,553 5,329,674 2,731,174 15,900,930 7,103,727
------------------------------------ ----------- ---------- ---------- ---------- ----------- ----------
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 2022 2021 2022 2021
GBP GBP GBP GBP
Gross trade receivables 2,376,337 1,930,011 2,053,560 1,747,286
Expected credit loss provision on trade receivables (58,953) (45,682) - -
Gross contract assets 7,461,382 5,009,162 7,461,382 5,009,162
Expected credit loss provision on contract assets (1,347,278) (1,480,762) (1,347,278) (1,480,762)
Trade receivables net of provisions 8,431,488 5,412,729 8,167,664 5,275,686
----------------------------------------------------- ------------ ------------ ------------ ------------
23 CASH AND CASH EQUIVALENTS
Group Company
-------------- ------------------------ ----------------------
2022 2021 2022 2021
GBP GBP GBP GBP
Cash at bank 14,170,965 14,046,399 5,595,827 7,094,964
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
Current 2022 2021 2022 2021
Restated
GBP GBP GBP GBP
Trade payables 510,384 170,934 510,068 162,989
Accruals 1,508,760 1,811,168 1,287,138 1,564,785
Deferred revenue 1,358,479 882,525 251,250 270,900
Social security and other taxation 220,593 506,638 220,593 494,107
O verseas corporation tax payable 144,469 - - -
Intercompany payables - - 6,285,752 764,064
Other payables 3,250 204,083 - -
Short term lease liabilities 522,800 208,237 437,400 150,981
4,268,735 3,783,585 8,992,201 3,407,826
------------------------------------ ---------- ---------- ---------- ----------
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 2022 as follows:
Group Company
Property Property
GBP GBP
------------------------------------- ---------- ----------
Carrying amount at 1 January 2021 1,097,827 1,097,827
Additions 3,758,437 3,175,765
Disposals (963,837) (963,837)
Depreciation for the year (154,748) (149,488)
------------------------------------- ---------- ----------
Carrying amount at 31 December 2021 3,737,679 3,160,267
Depreciation for the year (397,222) (329,864)
Carrying amount at 31 December 2022 3,340,457 2,830,403
------------------------------------- ---------- ----------
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 2022 as
follows:
Group Company
Rent Deposit Asset Rent Deposit Asset
GBP GBP
-------------------------------------- -------------------- --------------------
Carrying amount at 1 January 2021 228,765 228,765
Additions 374,442 361,932
Finance income on rent deposit asset 8,835 7,444
-------------------------------------- -------------------- --------------------
Carrying amount at 31 December 2021 612,042 598,141
Recovery of rent deposit (269,956) (282,315)
Finance income on rent deposit asset 14,561 14,121
Carrying amount at 31 December 2022 356,647 329,947
-------------------------------------- -------------------- --------------------
Of which are:
Current 10,667 10,156
Non-current 345,980 319,791
356,647 329,947
-------------------------------------- -------------------- --------------------
The non-current and current portions of the rent deposit asset
are both included in 'Other Receivables' (Trade and Other
Receivables) on the Statement of Financial Position.
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 (e.g. 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 2022 as
follows:
Group Company
Lease Liability Lease Liability
GBP GBP
-------------------------------------- ----------------- -----------------
Carrying amount at 1 January 2021 1,189,694 1,127,268
Additions 3,563,025 3,062,762
Reduction in assumed lease liability (926,304) (926,303)
Finance expense on lease liability 35,010 33,619
Lease payments made (230,445) (230,444)
Carrying amount at 31 December 2021 3,630,980 3,066,902
-------------------------------------- ----------------- -----------------
Finance expense on lease liability 67,691 51,069
Lease payments made (300,994) (231,259)
Carrying amount at 31 December 2022 3,397,677 2,886,712
-------------------------------------- ----------------- -----------------
Of which are:
Current 522,800 437,400
Non-current 2,874,877 2,449,312
3,397,677 2,886,712
-------------------------------------- ----------------- -----------------
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
2022 2021 2022 2021
GBP GBP GBP GBP
---------------------------------------- --------- -------- --------- --------
Finance expense on lease liability 67,691 35,010 51,069 33,619
Finance income on rent deposit asset (14,561) (8,835) (14,121) (7,444)
Net finance expense relating to leases 53,130 26,175 36,948 26,175
---------------------------------------- --------- -------- --------- --------
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
--------------------------------------------- ---------------------- ----------------------
2022 2021 2022 2021
GBP GBP GBP GBP
--------------------------------------------- ---------- ---------- ---------- ----------
Depreciation expense on right-of-use assets (397,222) (149,488) (329,863) (149,488)
Finance expense on lease liability (67,691) (35,010) (51,069) (33,619)
Finance income on rent deposit asset 14,561 8,835 14,121 7,444
Short term lease expense (35,816) (37,568) - -
Net impact of leases on profit for the year (486,168) (213,231) (366,811) (175,663)
--------------------------------------------- ---------- ---------- ---------- ----------
The property leases (of which there are two) in which the Group
is the lessee do not contain variable lease payment terms.
26 SHARE CAPITAL
Group 2022 2021
GBP GBP
-------------------------------------------------- ---------- ----------
Ordinary share capital
Issued and fully paid
27,505,450 (2021: 27,169,700) Ordinary shares of
10p each 2,750,545 2,716,970
Issue of 3,998 (2021: 335,750) New shares of 10p
each 400 33,575
27,509,448 (2021: 27,505,450) Ordinary Shares of
10p each 2,750,945 2,750,545
-------------------------------------------------- ---------- ----------
27 TREASURY SHARES
Group 2022 2021
GBP GBP
------------------------------------------------ ---------- ----------
At the beginning of the year 1,526,835 489,625
Purchase of additional shares 1,952,325 1,211,907
Shares vested or sold by trusts (132,230) (177,975)
Change in level of surplus cash held by trusts 3,395 3,278
At the end of the year 3,350,325 1,526,835
------------------------------------------------ ---------- ----------
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 2022 481,301 shares with a nominal
value of GBP48,130 were bought at a total cost of GBP1,952,325 and
held in Treasury (2021 - 184,887 shares with a nominal value of
GBP18,489 were bought at a total cost of GBP1,211,907 and held in
Treasury).
As at 31 December 2022, 186,155 shares (2021: 139,651) were held
in the Employee Share Incentive Plan Trust, and a further 584,797
shares (2021: 150,000) held in the Trust relating to Restricted
Share Plan, Company Share Ownership Plan and Premium Priced Option
Plan.
At 31 December 2022 GBP36,610, (2021: GBP33,215) of surplus cash
was held within the Trust, which had yet to be used to purchase
Treasury shares, but remained under the control of the Trust.
Group 2022 2021
GBP GBP
------------------------------ ---------- ----------
Treasury Shares held 3,313,715 1,493,620
Cash held in Employee Trusts 36,610 33,215
At the end of the year 3,350,325 1,526,835
------------------------------ ---------- ----------
28 CASH GENERATED BY OPERATIONS
Group 2022 2021
Restated
GBP GBP
Profit after tax 4,683,612 4,652,667
-------------------------------------------------------------- ------------ ------------
Adjustments for:
Corporation tax (157,203) (1,088,543)
Foreign exchange (gains)/losses 116,415 (341,877)
Interest Income (28,722) (444)
Amortisation and impairment of intangible assets 498,955 513,435
Depreciation and impairment of property, plant and equipment 760,537 518,805
Equity settled share based payment expense 819,872 571,834
Other (gains)/losses 58,031 316,906
Movement in working capital:
Increase in trade and other receivables (1,593,925) (2,749,906)
Increase/(decrease) in trade and other payables (1,195,918) 764,641
Cash generated by operations 3,961,654 3,157,518
-------------------------------------------------------------- ------------ ------------
Company 2022 2021
Restated
GBP GBP
-------------------------------------------------------------- ------------ ------------
Profit after tax 3,801,744 4,269,073
-------------------------------------------------------------- ------------ ------------
Adjustments for:
Deferred tax (163,925) (1,088,543)
Foreign exchange (gains) (50,269) -
Interest Income (2,416) (444)
Amortisation and impairment of intangible assets 498,955 513,435
Depreciation and impairment of property, plant and equipment 688,615 513,545
Equity settled share based payment expense 819,872 576,609
Other (gains)/losses 57,447 320,664
Movement in working capital:
Increase in trade and other receivables (8,783,081) (3,320,730)
Increase in trade and other payables 5,297,956 964,738
Cash generated by operations 2,164,898 2,748,347
-------------------------------------------------------------- ------------ ------------
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.
Group 2022 2021
GBP GBP
---------------------------------------- ---------- ----------
Salaries and other short term benefits 1,068,562 797,788
Value of share options granted 445,250 528,070
Total 1,513,812 1,325,858
---------------------------------------- ---------- ----------
During the year the Group has entered into, in the ordinary
course of business, 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 2021 represented a net
recharge of GBP 5,528 k
(2021: GBP4,965k) to Aquis Europe SAS and a net recharge of GBP
450 k (2021: GBP494k) to Aquis Stock Exchange Limited. The net cash
payments in the year and balances outstanding at the year end
were;
2022 Receipts and Amounts owed Amounts owed
Company (payments) from related to related
GBP000s parties parties
GBP000s GBP000s
-------------------------- ------------- -------------- -------------
Aquis Stock Exchange Ltd 600 533 -
Aquis Europe SAS (1,389) 5,953 (6,286)
Total (789) 6,486 (6,286)
-------------------------- ------------- -------------- -------------
2021 Receipts and (payments) Amounts owed from related parties Amounts owed to related
Company GBP000s GBP000s parties
GBP000s
-------------------------- ------------------------ ---------------------------------- ------------------------
Aquis Stock Exchange Ltd (82) 390 -
Aquis Europe SAS 193 414 553
Total 111 804 553
-------------------------- ------------------------ ---------------------------------- ------------------------
30 SHARE PREMIUM ACCOUNT
Group 2022 2021
GBP GBP
------------------------------ ----------- -----------
At the beginning of the year 11,771,462 10,892,135
Issue of new shares 13,583 879,327
At the end of the year 11,785,045 11,771,462
------------------------------ ----------- -----------
31 OTHER RESERVES
Group Company
------------------------------------------- ---------------------- ----------------------
2022 2021 2022 2021
GBP GBP GBP GBP
Reserves relating to share-based payments 1,813,119 1,118,314 1,813,119 1,448,430
------------------------------------------- ---------- ---------- ---------- ----------
The reserves relating to share-based payments reflects the
estimated fair value of the approved Employee Share Option Scheme
estimated using the US binomial and Black Scholes option valuation
models.
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 2022.
33 EVENTS OCCURING AFTER THE REPORTING PERIOD
On 10 March 2023 Silicon Valley Bank (SVB) had its assets
assumed by the Federal Deposit Insurance Corporation (FDIC) as it
became unable to fulfil consumer withdrawals and SVB (UK) was
bought by HSBC. Whilst this led to widespread unrest in financial
markets, which was further compounded by the announcement that
Credit Suisse had secured a SFr 50bn liquidity backstop from the
Swiss central bank on 16 March 2023 and then subsequently been
acquired by UBS on 19 March 2023, these events have not currently
impacted the trading performance of the Group.
At this stage, the Directors do not believe this would have a
material adverse effect on the Group and consider this to be a
non-adjusting post balance sheet event.
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END
FR UKROROAUOUUR
(END) Dow Jones Newswires
March 30, 2023 02:00 ET (06:00 GMT)
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