AQSG.L Regulatory News (AQSG)

For immediate release 27 June 2022

Aquila Services Group plc

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

Annual report and financial statements

for the year ended 31 March 2022

and

Notice of AGM

Annual report

Aquila is pleased to announce its audited annual report and financial statements for the year ended 31 March 2022, extracts from which are set out below.

The Company's annual report and financial statements for the year ended 31 March 2022 will shortly be made available from the Company's website at: http://www.aquilaservicesgroup.co.uk/.

In addition, the document will be uploaded to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Financial Highlights

For the year ended 31 March 2022

*Underlying operating profit is calculated by adjusting the reported pre-tax profit for share-based payment charges and in 2021: restructuring costs related to COVID-19, acquisition costs, and impairments of investments.

Dividend

The Directors propose a final dividend of 0.4p per share (2021: 0.4p). This will be paid on 1 August 2022 to shareholders on the register at 15 July 2022.

Notice of Annual General Meeting ("AGM")

The Company's AGM will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 27 July 2022 at 3:00 pm.

The financial information set out below does not constitute the Company's statutory accounts for the period ending 31 March 2022. The financial information for 2021 is derived from the statutory accounts for that year. The auditors, Crowe U.K. LLP, have reported on the 2022 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

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

Aquila Services Group plc

Claire Banks, Group Finance Director

Tel: 020 7934 0175

Beaumont Cornish Limited, Financial Adviser

Roland Cornish

Tel: 020 7628 3396

Extracts from the Company's annual report and financial statements for the year ended 31 March 2022

Chairs statement

Dear Shareholder,

I am pleased to present the Annual Report and the Financial Statements for the year to 31 March 2022. The report is designed to provide both an overview of the Group's business and achievements as well as a summary of the results for the year. I hope shareholders will find it both helpful and informative. If you would like further information or wish to discuss the work of the Group, please do not hesitate to contact one of the Directors; details are given on Page 4.

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 ('Oaks') which form the Group ('the Group').

The Group is an independent consultancy which provides advice and support to organisations that develop and manage affordable housing, provide education and sports opportunities as well as organisations active in the charity and community sectors. Most clients are mainly public sector organisations and NGOs in both the UK and, increasingly, for support of affordable housing and communities internationally, particularly in Africa and Asia.

My statement at the interim stage for the 6 months ended 30 September 2021 emphasised how financially resilient the Group had been during a period of restricted activity due to the pandemic. Much of this was generated by our affordable housing client base with continuing demand for both the management of existing stock and new development.

During the second half of the financial year, the Group's housing related services have seen continuing increasing demand and account for the majority of the increased turnover. The sports and communities work has seen some increase but slower than expected, with education only now starting to recover. Demand in these sectors for the Group's services will improve as the services providers become fully operational and start to review their strategic options.

Against this backdrop Group results for the financial year ended 31 March 2022 are encouraging with turnover £10,119k (2021: £7,642k) increasing by 33%, underlying operating profit at £726k (2021: £614k) was up by 18% and profit after tax £579k (2021: £187k) increased by over 300%.

The Directors have declared a final dividend of 0.4p (2021: 0.4p) which totals dividends for the year of 0.6p (2021: 0.55p) an increase of 9%.

There are a number of encouraging signs as we start the new financial year. In particular the Group is starting to acquire new clients after a period when few new tenders were circulating. In the interim report, we mentioned that during the pandemic most revenue was coming from renewal of services for existing clients with few providers having the resources to test the market or develop new projects. In recent months the Group has submitted a significant number of new bids and won a high proportion of these, and other, new contracts.

A particular feature which is certainly appreciated by all our staff and executive is the dedication of everybody involved during the pandemic being recognised by our clients. Many positive comments have been received on both the continuity, reliability and quality of work and how this has enhanced our reputation.

What of the future? The major restructuring we undertook in 2020 and 2021, as described in previous reports, is now fully in place. To respond to the increasing demands of the business we continue to grow organically through both expanding our range of products and services and recruiting and training new staff. We also continue to invest in our current colleagues through internal and external training.

The Group continues to look at potential acquisitions. With higher rates of price inflation, the possibility of a recession and higher borrowing costs, potential acquisitions are becoming more realistic in their expectations. We continue to believe that this is a possible avenue of growth, especially into new markets.

Demand for housing services continues to be high and expectations are that affordable housing will benefit from any government investment packages that are prompted by higher mortgage rates or a need to stimulate the economy.

The international work is only now seeing potential expansion as travel restrictions are lifted. Much of the funding for this work comes from governments through their aid and development budgets. This will be restricted whilst, rightly, the needs of Ukraine are prioritised.

For education, sports and communities the products and structures that worked well in the housing market are being reviewed to see whether they can be adapted for these sectors and our offering consolidated into larger multi-skilled groups.

We continue to exist in an increasingly unstable and fragile geopolitical and economic environment. The range of sectors that we support and our continuing maintenance of significant reserves and cash flows enable us to grow successfully. This can also provide opportunities for the Group to enhance the services we offer. I look forward to reporting further to shareholders at the next interim stage.

We have so much to thank our loyal, hardworking and skilled staff and executive that it is difficult to single out anyone amongst them, however the leadership of Fiona Underwood, our Group Managing Director has been important to our success and she deserves a special mention in despatches.

Lastly, I need to pay tribute to Steve Douglas, our former Group Chief Executive who sadly passed away this year at the age of 57. He was a founding partner, a great ambassador of both the Group and the affordable housing sector. His work of bringing forward opportunities and justice for members of minority communities is to be remembered. He will be greatly missed by his friends and colleagues in the sector.

Derek Joseph - Chair

24 June 2022

Extract from the Strategic Report

Strategy and objectives

Aquila Services Group (Aquila) has a bold purpose to 'make a better, more sustainable and socially responsible world'. We achieve this by being a consultancy group which provides professional support services to socially focused sectors in the UK and internationally.

Our purpose is core to what we want to be across the group:

§ We want our subsidiaries to have a direct beneficial impact on communities and lives in the UK and beyond.

§ We want to offer staff the opportunity to inspire positive change in an environment with a strong social focus.

§ And we want to provide investors the opportunity of supporting an organisation that combines strong performance with a positive social outcome.

Our work helps our clients to develop a response to a changing world and make a positive difference to the communities in which they operate. At present we work with clients across housing and regeneration, sport and education, charity and government sectors. We work across the UK and increasingly internationally.

Our business as at 31 March 2022

Aquila delivers work to clients through key subsidiaries, each of which has a core market and service focus:

§ Altair provides support for affordable housing and government bodies through the development, growth, management, governance, and operation of organisations, and the improvement of services to housing customers.

§ ATFS is registered with the Financial Conduct Authority and provides advice to the affordable housing and education sectors on treasury and funding solutions.

§ Oaks works with clients in the sport and education sectors focused on strategy, business planning and income generation activities.

The Group has two employee led groups with representation across the Aquila Group. The aim is to focus activities on the environment and sustainability, equality, diversity and inclusion and promoting these initiatives amongst colleagues, making Aquila an attractive employer to work for.

Green Group

The objective of the Green Group is to reduce the Group's environmental impact, to maintain Carbon Neutral Plus status and develop further initiatives to mitigate the Group's impact on the environment.

EDI Group

The purpose of the Equality Diversity and Inclusion (EDI) Group is to drive the EDI agenda across subsidiaries including developing frameworks and raising awareness for the implementation of a range of initiatives to foster a culture of equality, diversity and inclusion at Aquila.

Further information about, and activities within the groups, is available on the website.

Principal risks and uncertainties

The principal risks currently faced by the Group are:

Financial risk

The main financial risks arising from the Group's activities are credit risk, foreign currency risk, interest rate risk and liquidity, details of which can be found in note 24 to the Financial Statements.

Unfavourable economic conditions and/or changes to government policy

The current macro-economic uncertainty resulting from COVID-19 and the conflict in Ukraine may see a reduction in business as clients spending on consultancy is curtailed. Local authorities continue to see significant pressure on budgets and may stop consultancy contracts and/or limit their commissioning of work.

The Group mitigates these risks by ensuring that each subsidiary has diversity across its client base, not relying on any one client or group of clients.

Changes to government policy may adversely affect the Group. The Group ensures that it is aware of the impact of these changes and adapts its products and services to proactively respond to this risk.

Competition

Increased competition in the market continues to pose a risk to all companies within the Group.

Staff skills, retention, recruitment and succession

As the Group is a people-based business, a significant risk is the recruitment and retention of talent. The Group has implemented a new pay-structure and succession plans within the year to mitigate this risk.

Data governance

The increase of cyber-attacks and the loss of data is a serious risk that is monitored closely. The Group complies with all relevant legislation and has invested in updated systems, security and training. The Group obtained the certification of Cyber Essentials and is in the process of applying for Plus status.

Mitigations of risk

The Group seeks to mitigate all these risks through ensuring that it monitors changes in statutory, regulatory and financial requirements and maintains good relationships with its clients, principal contacts within government, regulators and other key influencers within the sector.

The Group is well placed to provide the full range of services needed by its clients as the external environment changes. Our international work will continue to be impacted due to international travel restrictions. It is hoped these will further ease during the year.

Environment

As part of the Group's overall purpose of 'Making a better, more sustainable, socially responsible world' the need to tackle the wider climate emergency has been a focus and as a result Aquila has again achieved Carbon Neutral Plus status within the year.

Further information is on the website.

The directors (whose names and functions are set out on page 27) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company and Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and applicable law. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and the profit or loss of the Company and the Group for that period.

Statement of Directors Responsibilities in respect of the Annual Report and the Financial Statements

The directors (being Derek Joseph, Chair, Fiona Underwood, Managing Director, Claire Banks, Group Finance Director and Company Secretary and Richard Wollenberg, Non-Executive Director) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company and Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and applicable law. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and the profit or loss of the Company and the Group for that period.

In preparing the Company and Group financial statements, the directors are required to:

§ select suitable accounting policies and then apply them consistently;

§ make judgements and estimates that are reasonable and prudent;

§ present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

§ state whether IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

§ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business; and

§ provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

§ the Company and Group financial statements, prepared in accordance with IFRS as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the Group; and

§ these strategic and directors' reports include a fair review of the development and performance of the business and the position of the Company and the Group together with a description of the principal risks and uncertainties that they face.

Claire Banks - Group Finance Director

On behalf of the Board

24 June 2022

Consolidated statement of comprehensive income

For the year ended 31 March 2022

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

Consolidated statement of financial position

The financial statements were approved by the board and authorised for issue on 24 June 2022.

Claire Banks - Group Finance Director

Company statement of financial position

As at 31 March 2022

As permitted by S408 Companies Act 2006, the company has not presented its own profit and loss account. The company's loss for the year was £441k (2021: profit £539k).

The financial statements were approved by the board and authorised for issue on 24 June 2022.

Claire Banks - Group Finance Director

Company Registration No. 08988813

Consolidated statement of changes in equity

For the year ended 31 March 2022

Company statement of changes in equity

For the year ended 31 March 2022

Consolidated statement of cash flow

For the year ended 31 March 2022

Company statement of cash flow

For the year ended 31 March 2022

Notes to the financial statements

For the year ended 31 March 2022

1 General information

Aquila Services Group plc ('the Company') and its subsidiaries (together, 'the Group') provide specialist housing, sport, education and treasury management consultancy services. The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.

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

2 Accounting policies

The principal accounting policies applied in preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Accounting standards in conformity with the requirements of UK-adopted International Accounting Standards and the Companies Act 2006.

The financial statements have been prepared on the historical cost basis except for certain assets which are carried at fair value.

The financial statements are presented in Pounds Sterling which is the functional and presentational currency of all companies within the group.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas of critical accounting estimates and judgements are set out in note 3.

Going concern

The budgets and cashflow forecasts that have been produced and reviewed demonstrate that the Group is forecast to generate profits and cash in the year ended 31 March 2022 and beyond and that the Group has sufficient cash reserves to enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the financial statements.

Government Furlough scheme

The Company took advantage of the Governments furlough scheme and furloughed one employee who has since returned to work. The monies received have been offset against the employee costs.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of subsidiary entities. A subsidiary is defined as an entity over which the Company has control. Control is achieved when the Company has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity, and could use its power to affect its returns.

Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three control elements listed above.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with the Group's accounting policies.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.

Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill is not amortised but is reviewed for impairment at least annually. If the consideration is less than the fair value of the identifiable assets and liabilities acquired, the difference is recognised in the statement of comprehensive income.

Revenue recognition

The group earns income from the following principal services:

§ Revenue from consultancy services

§ Revenue from treasury management.

For all these principal services, revenue represents amounts recoverable from clients for professional services provided during the year. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.

Revenue is recognised when control of a product or service is transferred to a customer.

Revenue from fixed fee assignments is recognised over a period of time by reference to the stage of completion of the actual services provided at the reporting date, as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour hours.

Time and materials assignments are recognised as services are provided at the fee rate agreed with the client. Unbilled revenue on individual client assignments is classified as contract assets for client work within trade and other receivables. Where individual on-account billings exceed recognised revenue on a client assignment, the excess is classified as contract liabilities for client work within trade and other payables.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for use. Depreciation is recognised to write-off the cost of assets less their residual values over their estimated useful lives, using the straight-line method, on the following bases:

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.

Investment in subsidiaries

In the Company's financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company, plus any costs directly attributable to the purchase of the subsidiary.

Investments

Investments are held at fair value.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'amortised cost'. The classification depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them and is determined at the time of initial recognition. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.

Amortised cost

Financial assets at amortised cost

These assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost. With the exception of trade receivables which are initially measured at transaction price determined in accordance with IFRS 15, financial assets at amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents. Cash comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand which have a right of offset against cash balances. These instruments are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial assets at fair value through profit or loss

Assets that do not meet the criteria for amortised cost are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. The Group's financial assets measured at FVTPL comprise unquoted equity investments.

Impairment of financial assets

Impairment provisions for current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the expected credit loss for the trade receivables. Provisions are recorded net in a separate provision account with the loss being recognised in the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in credit risk since the initial recognition of the asset.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'. The Group does not currently hold any financial liabilities 'at FVTPL'.

Pensions

The Group contributes to defined contribution schemes for the benefit of its directors and employees. Contributions payable are charged to the statement of comprehensive income in the year they are payable.

Current and deferred income tax

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled. Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets

Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income. No deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.

Impairment of non-financial assets

The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate pre-tax discount rate.

Leases

Leases are accounted for on a 'right-of-use model' reflecting that, at the commencement date, the Company as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use asset. The right-of-use assets are recognised within property, plant and equipment on the face of the financial position and are presented separately in note 11.

The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. Subsequently the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is re-measured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.

Right-of-use assets are measured at cost comprising the following:

· the amount of the initial measurement of lease liability;

· any lease payments made at or before the commencement date less any lease incentives received;

· any initial direct costs; and

· restoration costs.

Subsequently the right-of-use asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight line-basis over the lease term.

The Group does not have any short-term leases of equipment or vehicles.

Share capital/equity instruments

Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.

Share-based payments

Equity-settled share-based payments to employees and directors are measured at the fair value of the equity instruments at grant date. The fair value excludes the effect of non-market-based vesting conditions.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises the estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

The fair value of the options is measured using the Black Scholes options valuation model.

Adoption of new and revised standards

No new standards were adopted in the year.

Standards issued but not yet effective

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3 Critical accounting estimates and judgements

In application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have a significant effect on the amounts recognised in the financial statements.

Work in progress within revenue recognition

Work in progress is calculated on a project by project basis using the fair value of chargeable time that is un-invoiced at the period end. Historic analysis shows that recovery rates of work in progress are very high; the Group does not expect any work in progress to be irrecoverable. Work in progress is reviewed on a monthly basis to ensure it is recognised appropriately, it is probable that economic benefits will flow to the Group and that the fair value can be reliably measured (note 4). Work in progress is accounted for under contract assets.

Share based payments

The Company has granted share options to certain employees and directors of the Group. The share options granted become exercisable at varying future dates. If certain conditions are met the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.

The share-based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.

Assumptions regarding the fair value of the Company's shares are considered when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled share-based payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of comprehensive income to reflect the services rendered as consideration during the vesting period (note 20).

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of goodwill

The carrying amounts of the Group's assets value are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated, and an impairment loss is recognised where the recoverable amount is less than the carrying value of the asset. Any impairment losses are recognised in the income statement.

The recoverable amount of the goodwill is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to income and direct costs during the period.

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to each acquisition of goodwill. Discount rates of 13.9% and a terminal value of 1% has been used.

Growth rates of 0-15% have been applied, these are based on industry rates, management's knowledge of the different businesses and the markets and the ability for the businesses to expand. The maximum period over which the cashflows are reviewed is 5 years.

Sensitivities have been applied to all assumptions.

Valuation of unquoted investments

The Group determines the fair value of these financial instruments using recent transactions or valuation models if information about recent transactions is not available. The values derived from applying these models are significantly impacted by the choice of the valuation model used and the underlying assumptions made, such as the amounts and timing of future cash flows, discount rates, volatility and credit risk.

Management has determined that a valuation based on five time annual turnover is an appropriate measure of fair value.

4 Revenue and Finance income

5 Operating segments

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

The principal activities of the Group are as follows:

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

Within this segment of the business several client organisations enter fixed period retainers to ensure immediate call-off of the required services.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's executive directors for the purpose of resource allocation and assessment of segment performance.

Within consultancy revenues, approximately 9% (2021: 8%) has arisen from the segment's largest customer; within treasury management 15% (2021: 26%).

Geographical information

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

6 Profit before taxation

* Significant restructuring costs include staff related costs of £0k (2021: £175k) arising from the redundancy costs relating to COVID-19-19 are provided for.

Breakdown of auditors' remuneration

7 Staff costs

The above amounts are net of £4k (2021:£60k) relating to income received from the Government's furlough scheme.

7 Staff costs (continued)

Remuneration of key management personnel

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

8 Taxation

9 Earnings per share

Basic earnings per share is calculated by dividing the profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. Details of which are set out in note 20.

10 Goodwill

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination. Each Subsidiary is considered to be the cash generating unit for the purpose of impairment review.

The Group tests goodwill annually for impairment, or more frequently if there are any indications that goodwill might be impaired.

The recoverable amount of goodwill is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding growth rate of client base and project fees. Management's approach to determining the values to each key assumption is based on experience and project work already secured for future periods and the expected utilisation of consultants. Management have projected cash flows over a period of five years, based on growth rates of between 0% and 15% per annum; this is based on past performance and expected future activity. A discount rate of 13.9% and a terminal value of 1.0% has been used.

Sensitivity analysis has been performed on the value in use calculations, holding all other variables constant to:

· Apply a 2-6% reduction to the forecasted turnover

· Apply a 5-10% increase in cost of sales and of overheads

· Apply an increase in the discount rate to 19%.

The sensitivities applied do not provide reasonable possible changes and therefore no impairment has been made.

11 Property, plant and equipment (Group)

12 Investment in subsidiaries

The accounting reference date of each of the subsidiaries above is co-terminus with that of the Company. The registered office of each subsidiary is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

The following companies are all dormant, the registered office of each is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.

13 Investments