TIDMAQSG

RNS Number : 6826G

Aquila Services Group PLC

27 November 2020

For immediate release

27 November 2020

Aquila Services Group plc

Unaudited Interim Results for the six months ended 30 September 2020

Aquila Services Group plc ("the Company"), is the holding company for Altair Consultancy & Advisory Services Ltd ("Altair"), Aquila Treasury and Finance Solutions Ltd ("ATFS") and Oaks Consultancy Ltd ("Oaks") which form the Group ("the Group").

The Group works in the UK and internationally. Its expertise is in the provision, financing and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations, high level business advice to the property sector and support for organisations including multi-academy education trusts and sports foundations working in communities to improve health and well-being opportunities.

Results highlights

 
                                   6 Months to     6 months to       Year ended 
                                  30 Sept 2020    30 Sept 2019    31 March 2020 
                                   (unaudited)     (unaudited)        (audited) 
                                      GBP'000s        GBP'000s         GBP'000s 
 Turnover                                3,509           3,891            7,963 
 Gross profit                              658             980            1,752 
 Underlying operating profit               313             306              468 
 Share option credit/(charge)               64            (52)            (105) 
 Restructuring costs relating 
  to COVID-19                            (175)               -            (186) 
 Acquisition costs                           -               -             (51) 
 Operating profit                          202             254              126 
 Profit after tax                          174             195              126 
 EPS                                     0.45p           0.55p            0.35p 
 Cash balances                           1,443           1,127              828 
 

Underlying operating profit is shown as operating profit before share options charges, redundancy costs and costs of reorganisation. The Group uses this as a performance measure of "operational profits" providing a clearer measure year on year without the distortion of unusual items.

Dividend

The directors propose an interim dividend of 0.15p (2019: 0.30p). This will be paid on 21 December 2020 to shareholders on the register at 11 December 2020.

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014.

For further information please visit www.aquilaservicesgroup.plc.co.uk or contact:

Aquila Services Group plc

Claire Banks

Group Finance Director and Company Secretary

Tel: 020 7934 0175

Beaumont Cornish Limited, Financial Adviser

Roland Cornish

Tel: 020 7628 3396

Chair's statement

Dear Shareholder,

I am pleased to present the half-yearly report and the interim results for the six months to 30 September 2020.

Aquila Services Group plc ('the Company') is the holding company for Altair Consultancy & Advisory Services Ltd (Altair), Aquila Treasury & Financial Solutions Ltd (ATFS) and Oaks Consultancy Ltd (Oaks) which form the Group ('the Group').

The Group is an independent consultancy specialising in the provision, financing, and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations. The Group also provides high level business advice to the commercial property sector and support for organisations including multi-academy education trusts and sports foundations, working in communities to improve health and well-being opportunities.

This is not the report that I would have envisaged writing a year ago when presenting the interim report for the six months ended 30 September 2019. The ongoing strategy was to grow the business through a combination of organic growth and targeted acquisitions. These would widen both the range and depth of services that we offered to clients. The success of this strategy had been demonstrated through the acquisition of Oaks and Finalysis, and with the expansion of our international and property divisions as described in the Annual Report.

From late February 2020 to the present emphasis has changed to understanding the impact on our business of the pandemic and strategies that would protect the integrity of the Company and the resilience of its revenues. The Annual Report for the financial year ended 31 March 2020 published in July 2020 describes the immediate actions which unfortunately included a number of redundancies and the furloughing of other staff as restrictions on travel and meetings affected our contracts with clients, particularly in the public sector, whose responsibilities were necessarily diverted elsewhere. At the same time we were minimising our overheads and governance costs as well as building up our cash reserves which included a limited equity raising share issue.

I am pleased to report that on turnover of GBP3.509m (30 September 2019: GBP3.891m) the earnings before tax were GBP202k (30 September 2019: GBP254k) and that these were achieved after including GBP175k of redundancy costs (31 March 2020: GBP186k 30 September 2019: nil).

The Directors propose an interim dividend of 0.15p per share (2019: 0.30p) payable on 21 December 2020. For the full year to 31 March 2020 at the height of our concerns about the pandemic we did not recommend a final dividend, wanting to preserve as much cash in the business as possible. There are still major concerns about the future, but the Board feel confident enough to re-start the dividend stream, albeit at a lower rate. With the continuing uncertainty, it would be inappropriate to predict the position at the full year.

The above figures reflect the success of the strategy that concentrated resources on those business streams which would be least impacted by the restrictions that would be needed to contain the transmission of COVID-19 infections. We already had in place strategies for home working and a robust IT system that would support virtual meetings and easy document transmission. It was less clear how the range of clients and institutions with whom we work would adapt to these changes. I am pleased to report that these have strengthened our relationships with our clients and partners. A pleasing outcome has been bringing back all the furloughed staff and integrating them back into the business.

The financing strategy has allowed us to strengthen our balance sheet. At 30 September 2020 cash balances were approximately GBP1.4m compared to GBP1.1m at 30 September 2019 and GBP828k at 31 March 2020. As a matter of policy and preference, the Group has not entered into any external debt and has not taken part in any of the government-backed loan schemes.

We believe that the strength of our balance sheet will allow the Group to continue its growth strategy when the pandemic has been brought under control. It is possible that other specialist consultancy companies that operate in our sectors might welcome the opportunity to be part of a quoted Group with significant strength and depth.

The impact of the pandemic is not over yet. The immediate concerns of a second wave of infections and further spikes are yet to be fully realised whilst the efficacy and roll out speeds for potential vaccines are still uncertain. The significant increase in government debt of both the UK and the rest of the world as well as, potentially, lasting cultural changes, could restrict the sectors where we specialise and the level of investment in those communities. Although we are pleased at how the Group has adapted and our continuing response to a changing environment, we still need to work within the economic restraints that drive our client base.

It would have been optimistic to have predicted at the beginning of the pandemic how well we have managed eight months after lockdowns first started. This success has only been possible because of the hard work, flexibility and innovation of our staff, my fellow Group board directors, and the executive directors of our subsidiaries, all the people with whom we work and our clients. It is all of them we have to thank.

Derek Joseph - Chair

26 November 2020

Management report

The Management of the Group are pleased to present their report for the period ended 30 September 2020.

Business performance and position

Altair

Altair's business has remained in line with revised post-COVID expectations during the six months to the period ending September 2020. The action taken in the first three months, which resulted in six colleagues leaving the business due to redundancy and three placed on furlough, has enabled Altair to continue to operate profitably and commissions are now returning to pre-COVID levels. We are pleased to report that our colleagues placed on furlough returned at the beginning of August 2020.

There has been continued strong delivery from the property team with increasing focus on building safety. The technical health and safety team continued to work with clients throughout the first lockdown returning to assist with cladding safety works when the government eased restrictions in July. Other areas of the business, transformation and change and governance work continues to build. The team is fully functioning and working with clients in the new virtual norm. Our work with for-profit providers has increased as more opportunities arise with investors seeing worth in the social housing sector. The executive interim market outside of the development sphere has been challenging, and we have approached this in line with the agreed strategy highlighted in our annual report in March 2020.

Our clients are well positioned to weather the second lockdown and we will continue to support them, recognising the risks that are now coming to the fore, their customers will be affected through the worsening economic outlook, the possibility of a no-trade deal Brexit and possible negative interest rates. We welcome the publication of the housing White Paper, The Charter for Social Housing Residents and we are preparing to work closely with clients and the different regulatory bodies as this is implemented. The foundations we have laid in the first half, modernising services, developing our sustainability offer and a commercial partnership with a specialist procurement company, positions us well for the remainder of the year.

The international work has slowed due to the pandemic, work has focused on continuing and completing existing contracts. The team continues to monitor the situation and have been successful in winning some international projects during this period.

There are challenges ahead, which are detailed in our outlook report.

ATFS

The integration of Finalysis, which was acquired by the Group in January 2020, has been successful and the smooth transition of both colleagues and clients into ATFS has meant that the subsidiary has continued to perform in line with our revised post-COVID expectations.

In the first three months of the financial year, since April 2020, clients across the housing and education sectors were coping with significant changes to the way in which they operated which resulted in some treasury services being delayed. The end of the first lockdown saw re-commissioning of work although some delays were experienced within the education sector as, until September, educational institutions remained closed.

A focus on developing new products and services that will serve both the housing and education sectors will position ATFS for the second half of the year. The financial risks associated with a no-trade deal Brexit and the economic outlook will mean continued demand for debt advisory work.

Oaks

Oaks business has remained in line with pre-COVID expectations. The education sector was significantly affected at the start of the pandemic and some contracts were paused or delayed. This has now returned, and the outlook is positive.

Oak's presence in the sports sector continues to be strong, other sporting bodies are beginning to assess how the impact of the pandemic will shape how they will work in the future which has included exploring alternative funding mechanisms. The work with UEFA continues to grow and the international strategies being developed are being undertaken virtually. At the beginning of this financial year Oaks secured the 2022 Commonwealth Games England fundraising strategy.

During this half of the year the synergy between the operating subsidiaries Oaks and Altair has resulted in the first major win within the health sector, delivering a board strategy project for a Clinical Commissioning Group (CCG) There have also been opportunities for Oaks to enter the housing sector, one example is working with a longstanding client of Altair to set up an innovative social incubator investing in local start-ups to benefit customers of the association and to assist in creating sustainable communities. Further cross-Group working is anticipated in the second half of the year.

Associates and investments

On 9 October 2020 the Group sold its 25% shareholding in 3C Consultants Ltd, a company providing IT consultancy services to the housing sector under a share buyback arrangement for cost plus 15% providing the Group with a cash inflow of GBP252k.

The Group continues to hold a 6% equity stake in AssetCore, a company building a financial debt management platform for the affordable housing sector.

Group-wide initiatives

The employee-led Green Group continues its work and is currently progressing with the development and implementation of a strategy to enable the Group to become a carbon neutral organisation.

Since the financial year end, the Group has set up an employee-led Equality, Diversity and Inclusion Group (EDI). The team is working on an action plan to drive forward the EDI agenda across the Group, to raise awareness and to develop an overall framework.

We will report further on these two initiatives at the year end and will be publishing progress on our website.

Outlook

The actions that the Group took in response to the pandemic has positioned it well for the second half of the year being reported.

Challenges remain for our clients, specifically with the risks associated with the external operating environment, the constraints that remain as the United Kingdom continues with the impact of the pandemic and the possibility of a no-trade deal Brexit.

As a consequence of increased government spending to assist businesses during the pandemic, local authority funding has come under severe pressure. The Company is cognisant of the potential risk that may have on our business, although there is no immediate sign of withdrawal of services or commissioning of work. The Company maintains a broad

portfolio of clients and is not solely reliant on local authorities which serves to mitigate this potential risk.

The outlook for the international business remains challenging and the Group will continue to work closely with its partners and monitor the situation in order to be able to respond as aid and government funding becoming available.

The Company's clients have successfully adapted and demonstrated their resilience to the government's restrictions of the first lockdown and are now operating as near to 'normal' as possible. The Company's investment in IT in the previous year has meant that we have been able to adapt and continue to provide advice virtually when required. We anticipate this will continue in the second half of the year and our product development has focused on moving some services on-line which will position the company favourably with its clients and the current operating environment.

Going concern basis

The Board updates its three-year business plan annually. This includes a review of the Company's cash flows and other key financial ratios over the period. These metrics are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast, both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Company's principal risks. The three-year review also makes certain assumptions about the normal level of capital investment likely to occur and considers whether additional financing facilities will be required.

At the start of the pandemic the Group took advantage of the Government's VAT payment deferral plan and have built into the cashflow forecast the payment in March 2021. The Company did not seek assistance through the CBILS scheme but instead issued shares to a new investor to provide additional cash balances to the Group. The Group remains in a strong cash position with balances at the end of September 2020 at GBP1.4m and net current assets at GBP1.8m.

The Directors continue to review the forecasts on a monthly basis applying stress tests to the reforecasts to ensure viability of the outputs. The Group continue to monitor cash balances, debtors and cash generation on a daily basis. Based on the results of these analyses, the Directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due in the next twelve months and over the three-year period of their assessment.

Risks and uncertainties

The key risks and uncertainties relating to the Group's operations remain largely consistent with those disclosed in the Group's Annual Report and Accounts for the year ended 31 March 2020. These are listed below:

   --     Financial instruments 
   --     COVID-19 
   --     Brexit 
   --    The implementation of IR35 within the interim market 
   --    Competition 
   --    Data governance 
   --     Business conditions, general economy and geopolitical issues 
   --     Staff skills, retention, recruitment and succession 

The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial requirements and maintains good relationships with its clients, principal contacts within government, regulators and other key influencers within the sector. The Group is well placed to provide the full range of services needed by its clients as the external environment changes. Despite the impact and uncertainty of COVID-19, the outlook for the Group remains positive.

A detailed explanation of the risks relevant to the Group is on Page 9 of the Annual Report and Accounts for the year ended 31 March 2020 and is available on the Company's website at www.aquilaservicesgroup.co.uk .

Fiona Underwood - Executive Director

26 November 2020

Directors' report

Responsibility Statement

The Directors, whose names and functions are set out at the end of this report, are responsible for preparing the Unaudited Interim Condensed Consolidated Financial Statements in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority ('DTR') and with International Accounting Standard 34 on Interim Financial reporting (IAS34). The Directors confirm that, to the best of their knowledge, this Unaudited Interim Condensed Consolidated Report has been prepared in accordance with IAS34 as adopted by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:

-- an indication of key events occurred during the period and their impact on the Unaudited Interim Condensed Consolidated Financial Statements and a description of the principal risks and uncertainties for the second half of the financial year; and

-- material related party transactions that have taken place during the period and that have materially affected the financial position or the performance of the business during that period.

Related party transactions

During the 6 months to 30 September 2020, Derek Joseph was paid GBP29k (6 months to September 2019: GBP29k) which includes GBP24k (6 months to September 2019: GBP24k) of consultancy fees in relation the Group's International business. Richard Wollenberg, non-executive director, accrued fees of GBP2k (6 months to September 2019: GBP2k), the balance owed to Richard Wollenberg for services as a non-executive director was GBP2k (30 September 2019: GBP6k).

Remuneration of Directors and key management personnel

The remuneration of the key management personnel of the Group, including all directors of subsidiary companies, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

 
                                   6 months to         6 months to   Year ended 
                                  30 September        30 September     31 March 
                              2020 (unaudited)    2019 (unaudited)         2020 
                                                                      (audited) 
                                      GBP'000s            GBP'000s     GBP'000s 
 
 Short-term employee 
  benefits                                 524                 296          664 
 Share-based payments                     (20)                  27           29 
 Post-retirement benefits                   22                  10           22 
                            ------------------  ------------------  ----------- 
 
                                           526                 333          715 
                            ==================  ==================  =========== 
 

Claire Banks - Group Finance Director

26 November 2020

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2020

 
                                        Six months to 30 September 2020   Six months to 30 September 2019   Year ended 
                                                                                                              31 March 
                                                                                                                  2020 
                                                            (unaudited)                       (unaudited)    (audited) 
                                                               GBP'000s                          GBP'000s     GBP'000s 
 
 Revenue                                                          3,509                             3,891        7,963 
 
 Cost of sales                                                  (2,851)                           (2,911)      (6,211) 
                                       --------------------------------  --------------------------------  ----------- 
 
 Gross profit                                                       658                               980        1,752 
 
 Administrative expenses                                          (456)                             (726)      (1,626) 
                                       --------------------------------  --------------------------------  ----------- 
 
 Operating profit                                                   202                               254          126 
 
 Finance income                                                       -                                 -            1 
 Release of contingent consideration                                  -                                 -          555 
 Impairment of goodwill                                               -                                 -        (555) 
 Share of profits from associate                                      -                                 -           51 
 
 Profit before taxation                                             202                               254          178 
 
 Income tax expense                                                (28)                              (59)         (52) 
                                       --------------------------------  --------------------------------  ----------- 
 
 Profit for the period                                              174                               195          126 
                                       ================================  ================================  =========== 
 
 
 Earnings per share attributable to 
 owners of the parent 
 
 Weighted average number of shares:                                '000                              '000         '000 
 
        *    Basic                                               38,324                            35,308       35,272 
 
        *    Diluted                                             43,476                            40,689       40,353 
 
 Basic earnings per share                                         0.45p                             0.55p        0.35p 
 Diluted earnings per share                                       0.40p                             0.48p        0.32p 
 

Condensed Consolidated Statement of Financial Position

As at 30 September 2020

 
                                                    30 September 2020   30 September 2019    31 March 
                                                                                                 2020 
                                                          (unaudited)         (unaudited)   (audited) 
                                                             GBP'000s            GBP'000s    GBP'000s 
 Non-current assets 
 Goodwill                                                       3,317               3,779       3,317 
 Property, plant and equipment                                    451                  94         518 
 Investment in associates                                         278                 227         278 
 Investments                                                      121                 121         121 
                                                   ------------------  ------------------  ---------- 
 
                                                                4,167               4,221       4,234 
 
 Current assets 
 Trade and other receivables                                    2,275               2,261       2,387 
 Cash and bank balances                                         1,443               1,127         828 
                                                   ------------------  ------------------  ---------- 
 
                                                                3,718               3,388       3,215 
 
 Current liabilities 
 Trade and other payables                                       1,690               2,702       1,683 
 Lease liabilities                                                 86                   -          79 
 Corporation tax                                                  104                 269          76 
 
                                                                1,880               2,971       1,838 
 
 Net current assets                                             1,838                 417       1,377 
                                                   ------------------  ------------------  ---------- 
 
 Non-current lease liabilities                                    320                   -         369 
 
 
 Net assets                                                     5,685               4,638       5,242 
                                                   ==================  ==================  ========== 
 
 Equity 
 
 Share capital                                                  1,993               1,765       1,897 
 Share premium account                                          1,712               1,487       1,475 
 Merger reserve                                                 3,042               2,413       3,042 
 Share-based payment reserve                                      698                 720         769 
 Retained losses                                              (1,760)             (1,747)     (1,941) 
                                                   ------------------  ------------------  ---------- 
 
 Equity attributable to the owners of the parent                5,685               4,638       5,242 
 
 

Condensed Consolidated Statement of Changes in Equity

 
                                      Share              Share based 
                           Share    premium     Merger       payment   Retained      Total 
                         capital    account    reserve       reserve     losses     equity 
                        GBP'000s   GBP'000s   GBP'000s      GBP'000s   GBP'000s   GBP'000s 
 
 Balance at 1 
  April 2019               1,765      1,487      2,413           668    (1,730)      4,603 
 Total comprehensive 
  income                       -          -          -             -        195        195 
 Share based 
  payment charge               -          -          -            52          -         52 
 Dividend                      -          -          -                    (212)      (212) 
                       ---------  ---------  ---------  ------------  ---------  --------- 
 Balance at 30 
  September 2019           1,765      1,487      2,413           720    (1,747)      4,638 
                       ---------  ---------  ---------  ------------  ---------  --------- 
 
 Issue of shares             132       (12)        629             -          -        749 
 Transfer on 
  exercise of 
  options                      -          -          -           (4)          4          - 
 Total comprehensive 
  income                       -          -          -             -       (69)       (69) 
 Share based 
  payment charge                                                  53          -         53 
 Dividend                      -          -          -             -      (129)      (129) 
 
 Balance at 31 
  March 2020               1,897      1,475      3,042           769    (1,941)      5,242 
 Issue of shares              96        237          -             -          -        333 
 Transfer on 
  exercise of 
  options                      -          -          -           (7)          7          - 
 Total comprehensive 
  income                       -          -          -             -        174        174 
 Share based 
  payment charge               -          -          -          (64)          -       (64) 
 
 Balance at 30 
  September 2020           1,993      1,712      3,042           698    (1,760)      5,685 
                       =========  =========  =========  ============  =========  ========= 
 

Condensed Consolidated Statement of Cash Flows

for the six months ended 30 September 2020

 
                                                  Six months to 30 September   Six months to 30 September   Year ended 
                                                                                                              31 March 
                                                                        2020                         2019         2020 
                                                                 (unaudited)                  (unaudited)    (audited) 
                                                                    GBP'000s                     GBP'000s     GBP'000s 
 Cash flow from operating activities 
 Profit for the period                                                   174                          195          126 
 Interest received                                                         -                            -          (1) 
 Income tax expense                                                       28                           59           52 
 Share based payment charge                                             (64)                           52          105 
 Profit from associate                                                     -                                      (51) 
 Release of contingent consideration                                       -                                     (555) 
 Impairment of goodwill                                                    -                                       555 
 Depreciation                                                             67                           29          134 
                                                 ---------------------------  ---------------------------  ----------- 
 Operating cash flows before movement in 
  working capital                                                        205                          335          365 
 
 Decrease/(Increase) in trade and other 
  receivables                                                            112                         (67)          122 
 Increase/(Decrease) in trade and other 
  payables                                                                 7                        (390)        (257) 
                                                 ---------------------------  ---------------------------  ----------- 
 Cash generated by operations                                            324                        (122)          230 
 
 Income taxes paid                                                         -                           47        (139) 
 
 Net cash inflow/(outflow) from operating 
  activities                                                             324                         (75)           91 
 
 Cash flow from investing activities 
 Interest received                                                         -                            -            1 
 Purchase of property, plant and equipment                               (1)                         (51)         (32) 
 Purchase of Subsidiary                                                    -                        (254)        (544) 
 
 Net cash outflow from investing activities                              (1)                        (305)        (575) 
 
 Cash flows from financing activities 
 Lease liability payments                                               (41)                                      (66) 
 Proceeds of share issue                                                 333                            -            - 
 Dividends paid                                                            -                        (212)        (341) 
 
 Net cash outflow from financing activities                              292                        (212)        (407) 
                                                 ---------------------------  ---------------------------  ----------- 
 
 Net increase/(decrease) in cash and cash 
  equivalents                                                            615                        (592)        (891) 
 
 Cash and cash equivalents at beginning of the 
  period                                                                 828                        1,719        1,719 
                                                 ---------------------------  ---------------------------  ----------- 
 
 Cash and cash equivalents at end of the period                        1,443                        1,127          828 
                                                 ===========================  ===========================  =========== 
 

Notes to the Condensed set of Financial Statements

for the six months ended 30 September 2020

1. General information

The Company and its subsidiaries (together "the Group") are a major provider of consultancy services to organisations that develop, fund or manage affordable housing.

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 08988813 in England and Wales. The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

2. Basis of preparation

The Unaudited Condensed Consolidated Interim Financial Statements of the Group have been prepared on the basis of the accounting policies, presentation, methods of computation and estimation techniques used in the preparation of the audited accounts for the period ended 31 March 2020 and expected to be adopted in the financial information by the Company in preparing its annual report for the year ending 31 March 2021.

This Interim Consolidated Financial Information for the six months ended 30 September 2020 has been prepared in accordance with IAS 34, 'Interim Financial Reporting'. This Interim Consolidated Financial Information is not the Group's statutory financial statements and should be read in conjunction with the annual financial statements for the year ended 31 March 2020, which have been prepared in accordance with International Financial Reporting Standard (IFRS) and have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis of matter without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The Interim Consolidated Financial Information for the six months ended 30 September 2020 is unaudited. In the opinion of the Directors, the Interim Consolidated Financial Information presents fairly the financial position, and results from operations and cash flows for the period.

The Directors have made an assessment of the Group's ability to continue as a going concern and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing its consolidated financial statements.

The financial statements are presented in sterling, which is the Group's functional currency as the UK is the primary environment in which it operates.

3. Operating segments

The Group has two reportable segments being: consultancy, and treasury management services, the results of which are included within the financial information. In accordance with IFRS8 'Operating Segments', information on segment assets is not shown, as this is not provided to the chief operating decision-maker.

The principal activities of the Group are as follows:

Consultancy - a range of services to support the business needs of a diverse range of organisations across the housing (including housing associations and local authorities), education and sports sectors. Most consultancy projects run over one to two months and on-going business development is required to ensure a full pipeline of consultancy work for the employed team.

Treasury Management - a range of services providing treasury advice and fund-raising services to non-profit making organisations working in the affordable housing and education sectors. Within this segment of the business several client organisations enter fixed period retainers to ensure immediate call-off of the required services.

In previous years the Group had three main reporting segments the third being that of Interim Management, the impending introduction of IR35 had an impact on the interim business, with clients changing the way they resourced executive vacancies, choosing to source in-house rather than through professional services firms, the Group took a strategic decision not to actively pursue this revenue stream and concentrate on the main operating segment of Consultancy and Treasury Management, as a result the turnover for Interim Management is no longer considered by management to be a significant segment of the business.

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including Directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's executives for the purpose of resource allocation and assessment of segment performance.

 
                                        6 months      6 Months 
                                      to 30 Sept    to 30 Sept 
                                            2020          2019 
                                        GBP'000s      GBP'000s 
 
 Revenue from Consultancy                  3,132         3,320 
 Revenue from Interim Management               -           399 
 Revenue from Treasury Management            377           172 
                                    ------------  ------------ 
                                           3,509         3,891 
                                    ============  ============ 
 
 

Within consultancy revenues, approximately 5% (2019: 6%) has arisen from the segment's largest customer; within treasury management 25% (2019: 34%).

Geographical information

Revenues from external customers, based on location of the customer, are shown below:

 
                     6 months      6 months 
                   to 30 Sept    to 30 Sept 
                         2020          2019 
                     GBP'000s      GBP'000s 
 UK                     3,240         3,643 
 Europe                   188           181 
 Rest of World             81            67 
                 ------------  ------------ 
                        3,509         3,891 
                 ============  ============ 
 

4. Share capital

The Company has one class of share in issue being ordinary shares with a par value of 5p. Allotted, issued and called up ordinary shares of GBP0.05 each:

 
                              Number   Amount called up and fully paid 
                                '000                          GBP'000s 
 As at 1 April 2019           35,307                             1,765 
 Issued during the period          -                                 - 
                             -------  -------------------------------- 
 
 As at 30 September 2019      35,307                             1,765 
 Issued during the period      2,640                               132 
                             -------  -------------------------------- 
 
 As at 31 March 2020          37,947                             1,897 
 Issued during the period      1,911                                96 
                             -------  -------------------------------- 
 
 As at 30 September 2020      39,858                             1,993 
                             =======  ================================ 
 

5. Share-based payment transactions

The Company operates an Unapproved Scheme and an Enterprise Management Incentives Scheme. The total credit recognised in the period to 30 September 2020 arising from share-based payment transactions is GBP64k (the charge for the period ended 30 September 2019: GBP52k).

 
                                                          Weighted average 
 Unapproved scheme                          Number '000     exercise price 
 
 Number of options outstanding at 1 April 
  2020                                            2,758            GBP0.23 
 Granted during period                                -                  - 
 Lapsed during period                           (1,660)            GBP0.23 
 Exercised during period                          (824)            GBP0.10 
                                           ------------ 
 Number of options outstanding at 30 
  September 2020                                    274            GBP0.24 
                                           ============ 
 

The exercise price of the options outstanding at 30 September 2020 range between GBP0.05 and GBP0.35.

 
                                             Number   Weighted average 
 EMI scheme                                    '000     exercise price 
 
 Number of options outstanding at 1 April 
  2020                                        2,776            GBP0.05 
 Granted during period                            -                  - 
 Lapsed during period                         (375)            GBP0.05 
 Forfeited during period                       (31)            GBP0.05 
 Exercised during period                          -                  # 
                                            ------- 
 Number of options outstanding at 30 
  September 2020                              2,370 
                                            ======= 
 
 
 Number of options exercisable at 30 
  September 2020                       1,598   GBP0.05 
                                      ====== 
 

6. Going concern

The Group has sufficient financial resources to enable it to continue its operational activities for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis in preparing these interim accounts.

7. Dividend

An interim dividend of 0.15p will be paid on 21 December 2020 to shareholders on the register at 11 December 2020 at a cost of GBP59,788.

8. Related party disclosures

Balances and transactions between the Group and other related parties are disclosed below:

During the 6 months to 30 September 2020, Derek Joseph was paid GBP29k (6 months to September 2019: GBP29k) which includes GBP24k (6 months to September 2019: GBP24k) of consultancy fees in relation the Group's International business.

Richard Wollenberg, non-executive director, accrued fees of GBP2k (6 months to September 2019: GBP2k). At 30 September 2020, the balance owed to Richard Wollenberg for services as a non-executive director was GBP2k (2019: GBP6k).

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(END) Dow Jones Newswires

November 27, 2020 02:00 ET (07:00 GMT)