Aquis Exchange Regulatory News (AQX)

22 September 2022

Aquis Exchange PLC

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

Interim results for the six months ended 30 June 2022

Continued revenue growth and investment in the future

Aquis Exchange PLC (AQX.L), the exchange services group, is pleased to announce its unaudited results for the six months ended 30 June 2022.

Highlights:

All three divisions were profitable in the period.

Post-period highlights:

Alasdair Haynes, Chief Executive Officer of Aquis, commented:

"Our revenues have continued to increase, reflecting the strong momentum across the Group. This growth has been driven by increased contributions from the principal business divisions: pan-European secondary trading, technology sales, primary issuers and data revenues. The continued strength of our offering in this division is demonstrated by our finishing with 5.20% of all pan-European secondary trading by the end of 2Q22. We are also particularly encouraged by the number of new significant technology licenses that continue to be signed as this growing division becomes an increasingly material and important part of our business.

Aquis also successfully completed the asset purchase of the Aquis Matching Pool from UBS and is now able to offer a full product suite to its customers. We will continue to enhance this area and look forward to offering further product innovation in this space to enable clients to execute the trading strategies they wish.

While we anticipate the prevailing economic uncertainty will continue to impact market participants in the short to medium term, we have demonstrated we have the right model, team, technology and vision to deliver shareholder value and look to the future with confidence."

An overview of the results from Alasdair Haynes, CEO, is available to view on this link:

https://www.brrmedia.co.uk/broadcasts-embed/

The Group will be hosting webinars for analysts and retail investors today at 9.30 and 14.30 respectively.

If you would like to register for the analyst webinar, please contact aquis@almapr.co.uk . Investors who would like to attend the retail investor webinar can sign up to Investor Meet Company for free and add themselves to the meeting via https://www.investormeetcompany.com/aquis-exchange-plc/register-investor . Investors who have already registered will be automatically invited.

(1) Net revenue of £8.3m comprises revenues of £7.9m and impairment credit of £0.4m

Enquiries:

Notes to Editors

About Aquis Exchange PLC

Aquis Exchange PLC and its subsidiaries are an exchange services group, which operate a pan-European cash equities trading businesses (Aquis Exchange), a growth and regulated primary market (Aquis Stock Exchange/AQSE) and develop/license exchange software to third parties (Aquis Technologies).

Aquis Exchange is authorised and regulated by the UK Financial Conduct Authority and France's Autorité des Marchés Financiers to operate Multilateral Trading Facility businesses in the UK/Switzerland and in EU27 respectively. Aquis Exchange operates lit and dark order books, covering 16 European markets. For its lit books, Aquis Exchange uses a subscription pricing model which works by charging users according to the message traffic they generate, rather than a percentage of the value of each stock that they trade and does not allow aggressive non-client proprietary trading, which has resulted in lower market impact and signalling risk on Aquis Exchange than other trading venues in Europe.

Aquis Stock Exchange (AQSE) is a stock market providing primary and secondary markets for equity and debt products. It is authorised as a Recognised Investment Exchange, which allows it to operate a regulated listings venue. The AQSE Growth Market is divided into two segments 'Access' and 'Apex', with different levels of admission criteria. The Access market focuses on earlier stage growth companies, while Apex is the intended market for larger, more established businesses.

Aquis Technologies is the software and technology division of Aquis Exchange PLC. It creates and licenses cutting-edge, cost-effective matching engine and trade surveillance technology for banks, brokers, investment firms and exchanges.

Aquis Exchange PLC is quoted on the Aquis Stock Exchange and on the Alternative Investment Market of the LSE (AIM) market. For more information, please go to www.aquis.eu.

Chief Executive Officer's Report

The six months to 30 June 2022 has been another strong period of growth as we build on the revenues achieved during 2021. In addition, we have made good operational progress in all areas to help drive us towards our long-term goals. The fact that we have achieved all this amidst the continued challenging economic circumstances demonstrates our strong operational resilience and the continued demand for our unique offering.

We are very pleased to have acquired and smoothly integrated the Aquis Matching Pool ("AMP") into our suite of product offerings.

Operational Review

Aquis continued to develop its three divisions throughout the period:

· Aquis Exchange (AQX): its pan-European lit equities market; which now includes its dark pool vehicle AMP;

· Aquis Stock Exchange (AQSE): a primary listings market for small and mid-cap companies;

· Aquis Technologies: a multi-asset class technology licensing service to an international client base

The Group's Market Data income stream (generated through the sale of AQX and AQSE data) has continued to grow during the period.

This has enabled us to continue our strong growth as synergies are developed and the business potential is harnessed.

In the last six months we have accelerated our planned investment in key business areas such as growing our technology development team. This investment both allows us to maintain our internally used Aquis technology set and will help drive the ongoing growth in our technology licencing business.

The Exchanges

The performance of both Aquis Exchange and Aquis Stock Exchange has progressed well. Exchange revenue increased by £0.5m (10%) from £4.9 million to £5.4 million and the number of Members grew from 39 to 42. Aquis Exchange Members decreased their trading volumes in the period, with an 8% softening in the average monthly usage in terms of chargeable orders (2Q 2022 vs 4Q 2021), reflecting the prevailing volatile market conditions. Despite this reduction the number of monthly subscriptions slightly rose. On average, there were nine Members using the top three (four post new top tier in May) subscription pricing tiers and 24 in the other five tiers, with nine liquidity providers.

Issuer revenue increased, reaching £0.4million as the number of admissions on AQSE grew year-on-year.

As the business moves forward, we anticipate AQSE and AQX will become increasingly integrated, allowing Members to benefit from the breadth of the Group's offering.

Aquis Exchange

Continued revenue growth in the core business despite tough market conditions

Aquis Exchange (AQX) is the Group's pan-European lit secondary trading equities market. It comprises the UK MTF (AQXE) and the French MTF serving EU markets (AQEU).

Aquis Exchange's market share of all pan-European trading had declined during the end of 2021 and start of 2022 but has averaged in excess of this level during the period since the half year close, reflecting an improved performance and also the inclusion of market share from AMP. Total market share was 5.2% by close of 2Q22 (5.35% 4Q21, 5.77% 2Q21).

Aquis Matching Pool: Following the acquisition of the UBS MTF, Aquis is pleased to note the seamless transition of activity with the number of members and levels of trading experienced to date post acquisition consistent on that previously seen, with Management confident that future opportunities to grow from this current base are available through 2022 and beyond.

Aquis Exchange currently has an offering in excess of 2,100 stocks and ETFs across 16 European markets with the Czech market added in the period. A significant proportion of Exchange activity is now being executed on AQEU, the Group's French MTF serving EU markets.

Available liquidity on the exchange was at 23% in 1H22 (22% in 1H21) and it is expected this will continue to underpin future anticipated growth.

The recognition that Aquis Exchange's toxicity is materially lower than its competitors continues to grow amongst investment managers and the wider market. With several market drivers pushing market participants towards lower toxicity, the opportunity for Aquis Exchange to attract a wider membership from across Europe and to facilitate increased trading volumes remains significant.

Aquis Stock Exchange (AQSE)

Momentum building despite difficult market conditions

AQSE is a modern market for modern businesses, bringing positive disruption and competition to the listed SME sector. As one of the only two existing options for growing SMEs looking to IPO in the UK, Aquis' vision is for AQSE to become the home for quality growth businesses, applying core Aquis values such as transparency and innovation.

12 admissions were completed during 1H22 (joint with our principal competitor) compared to 14 during 1H21. All were well supported and there is a very strong pipeline of high growth and 'new economy' businesses in conversation with AQSE regarding IPO.

Revenue growth coupled with achieving the targeted cost synergies and savings has significantly reduced the loss generated by AQSE such that the division is currently forecast to at least break even for the financial year 2022.

Aquis Technologies

Progress made on a number of projects

Aquis licenses its leading exchange-related technology through its Aquis Technologies division. Aquis Technologies creates and licenses technology for high volume, low latency trading platforms, complex connectivity solutions and real-time trade monitoring and surveillance systems for banks, brokers, investment firms and exchanges.

Aquis recognises license revenue on completion of project delivery in accordance with IFRS accounting statutes, which can lead to lumpy revenue recognition, period on period. During 1H22 significant progress was made on a number of projects; and Aquis notes one new contract has been signed in the period, and a further one prior to this results announcement however, there were no completed projects during the period, consistent on 1H21. As a result, Aquis Technologies' revenue (net of provision releases) is below that recognised in 2H21, but remains significantly above that recognised in 1H21, increasing to £1.1m (1H21: £0.6m) net of provisions.

The successful exchange cloud technology Proof of Concept (PoC) completed in 2021 has continued to demonstrate the quality of the Aquis Technologies offering and has resulted in a number of new exchange platform prospects. The investment we have made in the first half of 2022 has allowed us to further develop our innovative technology which is at the core of Aquis Technologies, and we will be focused on furthering the growth of the Technologies division, developing its products and services to help its clients with the challenges they face and ensuring the high-performance systems continue to be enhanced.

Aquis Market Data

Aquis generates revenue from the sale of data derived from AQX (AQXE & AQEU) and AQSE to non-Member market participants.

Revenue from market data vendors increased significantly by £0.3m, 29%, to £1.4m for the six-month period compared to the 2021 equivalent, with continued growth in both terminal use and non-display licences across the period.

Financial Review

Net revenue increased 21% to £8.3m (1H21: £6.9m) and the EBITDA profit for the half year was £1.4m, broadly in line with the EBITDA profit of £1.6m generated in 1H21. This EBITDA profit and the profit before tax of £0.7m includes £0.4m of income recognised from an impairment credit per IFRS 9 consistent with the 1H21 impairment credit. The EBITDA has remained broadly consistent as the Group made some controlled increases in costs during both in 1H 2022 and the back end of last year as it continued to invest in personnel and technological resources. The Group will continue to invest in the future to maintain the business' growth momentum.

The Group's cash and cash equivalents as at 30 June 2022 were £13.3 million (30 June 2021: £13.9 million).

Summary and Outlook

Our strategic goal remains to become one of the leading exchange groups through delivering best-in-class trading opportunities, underpinned by our commitment to first class client service, transparency, simplicity and best-in-class technology. To this end, our investment in R&D will help improve the trading experience for clients, as well as improving our market position and providing further growth and value creation for shareholders. We continue to make significant investment in our technology, sales and marketing activities, in particular in cloud technology, to support our long-term growth aspirations across all activities.

Alongside this we are working to enhance our software licensing activities and build presence internationally. We are pleased to have made significant progress on a number of material technology contracts post-period end that will support the second half performance and into FY23, as this growing division becomes an increasingly important part of our business.

Looking forward, our focus continues to be on executing on our core growth strategy; increasing trading volumes and improving fundraising prospects for small and mid-cap companies. Notwithstanding the macroeconomic uncertainty, current trading is tracking in line with market expectations for the full year.

We have built good momentum over the past few years, despite facing numerous challenges along the way. This demonstrated the strength of our team and our offering, and I am excited to see what we can achieve across the next six months.

Alasdair Haynes

Chief Executive Officer

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2022

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

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022

The notes to the financial statements on pages 6 to 16 form an integral part of these financial statements. The interim financial statements were approved by the board of directors and authorised for issue on 22 September 2022 and are signed on its behalf by:

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2022

AQUIS EXCHANGE PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2022

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation of half-year report

This condensed consolidated interim financial report for the half-year reporting period beginning 1 January 2022 and ending 30 June 2022 ("interim period") has been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.

The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021 and any public announcements made by Aquis Exchange PLC ("Aquis" or the "Company") during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

2. Significant changes in the current reporting period

The financial position and performance of the Group was not affected by any specific events and transactions during the six months to 30 June 2022. However, it is worth noting the following:

· On 4 April 2022, the group assumed the business activities of UBS MTF, the non-displayed matching pool. This initiative represented a significant extension of the equities trading services the group offers its clients and complements its existing suite of lit liquidity pools and range of order types.

3. Revenue

An analysis of the Group's revenue is as follows:

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

4. Expected credit loss

The expected credit loss on licensing contract assets has been calculated in accordance with IFRS 9: 

5. Investment income

6. Earnings per share

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

7. Intangible assets

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

8. Property, plant and equipment

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

9. Trade and other receivables

Trade receivables are stated net of any credit impairment provision as set out previously in Note 3 in accordance with IFRS 9, as illustrated below:

Impairment includes the expected credit loss on licencing contract assets stated in Note 4.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. Deferred tax asset

A deferred tax asset was recognised in the year ended 31 December 2020, due to the Group becoming profitable for the first time. The Group is expected to continue to be profitable in future years, with the value of the deferred tax asset to be reassessed annually at year end. 

11. Trade and other payables

12. Called up share capital

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

13. Share premium account

14. Other Reserves

The reserves relating to share-based payments reflects the estimated value of the approved employee share option schemes, which include the EMI, CSOP, PPO and Restricted Share options. The valuation of the options granted is estimated using a US binomial or Black Scholes model. Also included in the share-based payment reserve are the treasury shares purchased by the Trust under the Share Incentive Plan.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

15. Retained earnings

16. Treasury shares

Treasury shares are purchased by a Trust under the Employee Share Plans. The Trust is consolidated within the Group financial statements and the value of the shares held at the balance sheet date is shown below.

17. Foreign currency translation reserve

The translation of the European subsidiary into the functional currency of the group results in foreign exchange differences that have been recognised in Other Comprehensive Income ('OCI') for the group which have been accumulated in a separate component of equity as illustrated below.

AQUIS EXCHANGE PLC

NOTES TO THE FINANCIAL STATEMENTS (continued)

18. IFRS 16 Leases