REG - Aquis Exchange PLC - Interim Results
12/09/2024 07:00
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RNS Number : 8600D Aquis Exchange PLC 12 September 2024
Aquis Exchange PLC
("Aquis", the "Company" or the "Group")
Interim results for the six months ended 30 June 2024
Continued strategic progress across all divisions
Investment in Technologies division to support conversion of growing,
high-quality pipeline
Aquis Exchange PLC (AQX.L), the creator and facilitator of next-generation
financial markets, is pleased to announce its unaudited results for the six
months ended 30 June 2024.
Financial highlights:
HY24 HY23 Change
(£m)
(£m)
Net revenue 10.0 9.7 +3.5%
EBITDA 1.6 1.7 -6.5%
Profit before tax 1.1 1.1 -8.1%
Basic EPS (p) 3.0p 3.8p -0.8p
Cash and cash equivalents 14.5 13.9 +4.3%
Operational highlights
· Strategic delivery across all divisions:
- Aquis Technologies: strong growth in contract pipeline; more than half
are for national exchanges or central banks, demonstrating the evolution of
the division's client profile.
- Aquis Markets: market share up to 5.20% (FY23: 4.85%), as the benefits
of the change to the proprietary trading rule continue to flow through and
members adapt to the change.
- Aquis Data: increase in revenue, driven by new data fees for members
which came into effect in the second quarter, with further positive impact
expected as the year progresses.
- Aquis Stock Exchange: strong growth in trading, with volumes up 44% on
the prior year and £87m of funds raised, against a challenging market
backdrop.
· Post-period end:
- Announced £6.2m strategic investment in the Technologies division
over the next three financial years, to capitalise on the significant pipeline
of opportunities.
- Increased stake in OptimX Markets to 10.2%, adding additional
connectivity to Aquis Matching Pool (AMP).
Outlook
· Current trading is in line with the Board's expectations set out in
the August 2024 trading update.
· The Group has a strong cash position of £14.5m as at 30 June 2024,
providing capacity to continue to invest in growth opportunities, in line with
its medium-term strategy.
Aquis CEO, Alasdair Haynes, said:
"I am pleased with the progress made by Aquis in the first half of 2024, as we
continued to deliver against our strategy at pace. We have made meaningful
progress across all of our divisions, the majority of which have increased
revenues and maintained stable PBT, reflecting the investment plans we
communicated last year.
"There is real momentum across the business. Our pipeline in the Technologies
division has increased materially since last year and now stands at record
levels, with notable growth in the quality of the pipeline as well. Our
strategic investment in this division demonstrates our commitment to
strengthen the Group's ability to capitalise on this pipeline, and drive
further scale.
"I am excited about the future as Aquis remains well-placed to pursue the
opportunities that lie ahead, as we continue to execute our long-term growth
plan."
Enquiries:
Aquis Exchange PLC Tel: +44 (0)20 3597 6329
Alasdair Haynes, CEO investorrelations@aquis.eu
Richard Fisher, CFO
Adele Gilbert, Head of Marketing & Investor Relations
Investec Bank plc (Nominated Adviser and Broker) Tel: +44 (0)20 7597 5970
David Anderson
Lydia Zychowska
St John Hunter
Canaccord Genuity Limited (Joint Broker) Tel: +44 (0) 20 7523 8000
Emma Gabriel
George Grainger
VSA Capital Limited (AQSE Corporate Adviser) Tel: +44 (0 )20 3005 5000
Andrew Raca
MHP Group (Financial PR Adviser)
Tel: +44 (0) 20 3128 8000
Eleni Menikou Aquis@mhpgroup.com
Robert Collett-Creedy
About Aquis Exchange PLC
Aquis Exchange PLC ("Aquis") is Europe's challenger exchange, creating better
markets for a modern economy. Aquis has market-leading technology and
innovative rules for trading, and offer primary listings and secondary trading
of equities, along with global licensing of proprietary technology.
Aquis consists of four divisions:
Aquis Markets
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operates lit and dark order books, covering 16 European markets. For its lit
books, Aquis uses a subscription pricing model which works by charging users
according to the message traffic they generate, rather than a percentage of
the value of each stock that they trade.
Aquis Technologies
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is the software and technology division of Aquis. It focuses on building
better markets via the creation and licensing of cutting-edge, cost-effective
exchange infrastructure technology and services, including matching engine and
trade surveillance solutions.
Aquis Stock Exchange
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(AQSE) is a stock market providing primary and secondary markets for equity
and debt products. It is authorised as a Recognised Investment Exchange, which
allows it to operate a regulated listings venue. The AQSE Growth Market is
divided into two segments 'Access' and 'Apex'; the Access market focuses on
earlier stage growth companies, while Apex is the intended market for larger,
more established businesses.
Aquis Data
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generates revenue from the sale of data derived from Aquis Markets and Aquis
Stock Exchange to market participants.
Aquis is authorised and regulated by the UK Financial Conduct Authority and
France's Autorité de contrôle prudentiel et de résolution and L'Autorité
des marchés financiers to operate Multilateral Trading Facility businesses in
the UK & Switzerland markets and in EU27 markets respectively. Aquis
Exchange PLC is quoted on the Aquis Stock Exchange and on the AIM Market (AIM)
of the LSE. For more information, please go to www.aquis.eu
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.
In the first half of 2024, Aquis continued to deliver on its strategic
priorities, despite ongoing challenging market and economic conditions. This
progress has strengthened our position, which will enable us to better
capitalise on the growing and compelling market opportunity across all of our
divisions.
Operational Review
Aquis Technologies
Aquis Technologies is the software and technology division of Aquis. It
creates and licenses cutting-edge, cost-effective exchange infrastructure
technology and services, including matching engine and trade surveillance
solutions.
Aquis Technologies currently has eight contracts, of which six have recognised
revenue. In accordance with IFRS accounting standards, Aquis recognises
license revenue on completion of project delivery, which can lead to irregular
revenue recognition, period-on-period. The cash flow from these contracts is
consistent and is received each month over the long term.
During the period, growth of the Technologies contract pipeline accelerated to
become the strongest in the division's history. One contract was signed
subject to client funding and a further 12 opportunities are in active
discussion. Half of these are for national exchanges or central banks,
demonstrating the evolution and quality of the division's prospective client
profile.
The strategic investment, outlined below, which is being deployed to build out
a set of key additional products, is expected to both alleviate the perceived
execution risk of the current 'build on demand' approach and also to
facilitate a shorter implementation period for contracts won.
Post-period end, the Group was informed that a historical contract for a
start-up exchange would not be renewed for a reason not related to Aquis or
its technology. Whilst this is disappointing, the Group remains encouraged
by the scale of the opportunity in the Technologies division and the quality
of its pipeline.
Strategic initiatives
Management has identified significant opportunity within the Technologies
division for the provision of large multi-year contracts for the Group's
market-leading proprietary matching engine technology.
As announced on 28 August 2024, Aquis is undertaking an additional significant
investment into its Technologies division to underpin this strategic focus. By
expanding the product suite, and enhancing capabilities and expertise within
the division, this strategic investment will fundamentally change Aquis'
ability to access the total addressable market for exchange technology. By
broadening our range of asset classes, we both further support the growth of
technology contracts over the medium to long term and also better serve the
technology needs of sophisticated national exchanges and major financial
institutions.
Aquis intends to invest an additional £6.2m cash over the next three
financial years on the build-out of a set of key products required to service
the total addressable market. This investment will enhance Aquis Technologies'
competitive positioning further through provision of the capability 'on
demand' rather than a 'build on demand' approach, further streamlining
implementation and increasing our expected conversion rates. Management
expects this investment to be self-funded from Group operating cash flow.
Aquis Markets
Aquis Markets is the Group's pan-European secondary trading equities market.
It comprises the UK MTF (AQXE) and the French MTF serving EU markets (AQEU).
Aquis Markets currently operates lit and dark order books across 16 European
markets.
Over the period, the change in the proprietary trading rule which came into
effect in late 2023, had a positive impact on market share, which grew to
5.20% (FY23: 4.85%). Further progress in market share is expected as members
continue to adapt to this change.
Market conditions remain challenging, with low lit market volumes persisting.
However, the division continues to innovate and endeavour to better serve
member requirements.
Post-period end, we completed our investment in OptimX Markets, taking Aquis'
stake to 10.2%. OptimX continues to make progress against its strategic
objectives, and when live, will add additional connectivity to the Aquis
Matching Pool ('AMP') and provide members with the ability to cross large
blocks.
Aquis Data
Aquis generates revenue from the sale of data derived from Aquis Markets (AQXE
& AQEU) and Aquis Stock Exchange to non-member market participants. The
total number of market data customers by 30 June 2024 was 107 (31 December
2023: 75).
Revenues grew during the period as a result of both the growth in customer
numbers and the introduction of fees for data (which came into effect in Q2).
We expect this positive trend to continue.
The creation of a consolidated tape in both the EU and the UK presents
significant opportunity for future revenue. Over the period, we saw continued
progress towards the EU tape in particular, with ESMA publishing a timeline
further reinforcing an indicated completion date of 2025.
Aquis Stock Exchange (AQSE)
Aquis Stock Exchange is a modern market for modern businesses, bringing
positive disruption and competition to the primary listings sector in the UK,
particularly for growth companies. The Aquis Stock Exchange Growth Market is
divided into two segments, Access and Apex, with the Access market focusing on
earlier stage growth companies and Apex the intended market for larger, more
established businesses.
Tough conditions persisted in the period, with a depressed primary listings
environment across all exchanges. Aquis Stock Exchange had two IPOs in the
period, but is reassured by its larger pipeline of issuers exploring listings
in Q4 2024 or Q1 2025.
The division saw positive momentum in trading and fundraising, with a 44%
increase in the value of trading, 10% increase in the number of trades and 88%
increase in the total value of further issues compared to H1 23.
The division is profitable and we remain positive on the long-term potential
for the Aquis Stock Exchange.
Financial Review
Net revenue increased 3.5% to £10.0m (H1 23: £9.7m).
Divisional net revenues:
6 months to 6 months to Change
June 2024 (£'000s)
June 2023 (£'000s)
Markets 5,780 5,868 -1.5%
Technologies 1,214 1,133 7.1%
Data 2,153 1,840 17.0%
Aquis Stock Exchange 867 833 4.1%
10,014 9,674 3.5%
EBITDA was £1.6m, a 6.5% reduction on EBITDA of £1.7m generated in H1 23.
EBITDA has remained broadly in line with H1 23, despite an increase in
revenue, as the Group continues to re-invest profits in personnel and
technological resources to maintain the business's growth momentum.
Operating costs increased by 5.6% to £8.4m (H1 23: £8.0m) primarily
reflecting increased headcount in the period as well as inflation on both
staff cost and data centre costs, and increased data costs. A focus continues
to be recruitment in the technology development team, where a broadly stable
proportion of costs is capitalised and then amortised over three years
reflecting the ongoing value derived from these activity sets. Physical
hardware acquired is capitalised and depreciated over a three- to seven-year
useful economic life. Other costs are recognised as operating in nature and
reflected in the P&L as incurred.
Profit before tax of £1.1m includes £0.5m (H1 23: £0.3m) of income
recognised from an impairment credit per IFRS 9.
The Group continues to maintain a strong balance sheet and continues to
generate cash above operational requirements. Cash equivalents at 30 June 2024
were £14.5m (30 June 2023: £13.9m). Key cash flow movements in the period
were net cash inflows from operating activities (£1.4m). This has enabled the
ongoing transfer of funds to the Employee Benefit Trusts (£0.7m), which have
purchased shares in support of the Group share schemes, along with capital
expenditure of £0.3m.
Summary and Outlook
Despite the continued macroeconomic headwinds affecting the operating
conditions of many of our divisions, we are pleased with the strategic
progress achieved in H1 24.
We have gained market share in our Markets division. The pipeline in our
Technologies business has grown notably and through the planned strategic
investment we believe we are well positioned to continue to grow in this
division.
Starting in H2 24, our strategic investments in the Technologies division will
drive further scale and quality of contracts. Although full benefits will be
realised in the medium to long term, we are pleased with the strength of the
current pipeline and will continue to focus on securing and converting these
contracts in the short term.
The consolidated tape represents significant potential upside for Aquis.
Current trading remains in line with the Board's expectations set out in the
August 2024 trading update.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS
ENDED 30 JUNE 2024
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Note £'000 £'000 £'000
Income Statement
Revenue 3 9,518 23,711 9,342
Impairment credit / (charge) on contract assets 4 496 (1,016) 332
Impairment credit / (charge) on trade and other receivables 4 47 (80) (5)
Other (losses) / gains 5 (25) 51 (40)
Administrative expenses 6 (8,449) (16,396) (7,932)
Earnings before interest, taxation, depreciation and amortisation 1,587 6,270 1,697
Depreciation and amortisation 6 (796) (1,373) (672)
Finance expense 6,15 (40) (103) (54)
Finance income 6 301 401 174
Profit before taxation 1,052 5,195 1,145
Income tax (expense) / credit 8 (240) 8 (99)
Profit after taxation 812 5,203 1,046
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on (96) (121) (101)
translation of foreign operations
Other comprehensive loss for the period (96) (121) (101)
Total comprehensive profit 716 5,082 945
for the period
Earnings per share (pence)
Basic
Ordinary shares 9 3 19 4
Diluted
Ordinary shares 9 3 19 4
The consolidated statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Assets Note £'000 £'000 £'000
Non-current assets
Goodwill 10 83 83 83
Intangible assets 10 1,893 1,502 1,253
Property, plant and equipment 11 3,682 3,819 3,829
Deferred tax asset 7 1,785 1,785 1,594
Investments 12 592 592 -
Trade and other receivables 13 5,713 5,811 4,108
13,748 13,592 10,867
Current assets
Trade and other receivables 13 7,097 6,895 6,800
Derivative financial instruments 5 27 51 -
Cash and cash equivalents 14,545 14,766 13,905
21,669 21,712 20,705
Total assets 35,417 35,304 31,572
Liabilities
Current liabilities
Trade and other payables 14 4,011 4,469 4,455
Derivative financial instruments 5 - - 40
4,011 4,469 4,495
Non-current liabilities
Lease liabilities 15 2,241 2,457 2,667
Total liabilities 6,252 6,926 7,162
Net assets 29,165 28,378 24,410
Equity
Called up share capital 16 2,756 2,752 2,752
Share premium account 17 11,968 11,810 11,810
Other reserves 20 3,331 2,742 2,320
Treasury shares 18 (5,069) (4,389) (3,798)
Retained earnings 16,332 15,520 11,363
Foreign currency translation reserve (153) (57) (37)
Total equity 29,165 28,378 24,410
The notes to the financial statements on pages 12 to 30 form an integral part
of these financial statements. The interim financial statements were approved
by the board of directors and authorised for issue on 12 September 2024 and
are signed on its behalf by:
R Fisher A Haynes
Director Director
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED
30 JUNE 2024
Note Share Capital Share Premium Other Reserves Treasury Shares Retained Earnings Foreign Currency Translation Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 2,751 11,785 1,813 (3,350) 10,317 64 23,380
Profit for the 6-month period - - - - 1,046 - 1,046
Foreign exchange differences on translation of foreign operations - - - - - (101) (101)
Total comprehensive income - - - - 1,046 (101) 945
for the period
Issue of new shares 16,17 1 25 - - - - 26
Movement in share based payment reserve 20 - - 507 - - - 507
Movement in treasury shares 18 - - - (448) - - (448)
Balance at 30 June 2023 2,752 11,810 2,320 (3,798) 11,363 (37) 24,410
Profit for the 6-month period - - - - 4,157 - 4,157
Foreign exchange differences on translation of foreign operations - - - - - (20) (20)
Total comprehensive income - - - - 4,157 (20) 4,137
for the period
Issue of new shares 16,17 - - - - - - -
Movement in share based payment reserve 20 - - 422 - - - 422
Movement in treasury shares 18 - - - (591) - - (591)
Balance at 31 December 2023 2,752 11,810 2,742 (4,389) 15,520 (57) 28,378
Profit for the 6-month period - - - - 812 - 812
Foreign exchange differences on translation of foreign operations - - - - - (96) (96)
Total comprehensive income - - - - 812 (96) 716
for the period
Issue of new shares 16,17 4 158 - - - - 162
Movement in share based payment reserve 20 - - 589 - - - 589
Movement in treasury shares 18 - - - (680) - - (680)
Balance at 30 June 2024 2,756 11,968 3,331 (5,069) 16,332 (153) 29,165
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30
JUNE 2024
Note 6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Net cash flows from operating activities 19 1,409 4,103 911
Investing Activities
Recognition of intangible assets 10 (771) (1,082) (509)
Purchase of property, plant and equipment 11 (279) (411) (57)
Investment acquisitions 12 - (592) -
Interest received 6 285 385 169
Recovery of rent deposit 5 - -
Net cash used in investing activities (760) (1,700) (397)
Financing Activities
Issue of new shares 16,17 162 26 26
Principal portion of lease liability 15 (256) (516) (257)
Purchase of treasury shares (680) (1,197) (448)
Net cash used in financing activities (774) (1,687) (679)
Net (decrease) / increase in cash and cash equivalents (125) 716 (165)
Cash and cash equivalents at the beginning of the period 14,766 14,171 14,171
Effect of exchange rate changes on cash and cash equivalents (96) (121) (101)
Cash and cash equivalents at the end of the period 14,545 14,766 13,905
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 2024 and ending 30 June 2024 ("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 2023 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 post balance sheet events
On 31 July 2024 Aquis Exchange PLC acquired a further 5% stake in OptimX LLC,
a US-based financial services start-up focused on the block trading market
(the "investment"). This transaction was the second tranche of planned
investment rounds for which Aquis transferred US$750k for 975,000 shares,
bringing Aquis' total stake to 10.2% of the investment's total issued capital.
See note 12 for further details.
On 2 July 2024 Aquis Exchange PLC recovered its rent deposit from the landlord
of the London lease as recognised per IFRS 16. The balance recovered includes
£12k of interest generated since the initial deposit was transferred. In
total, £537k of cash was recovered, and the remaining discounted rent deposit
of £350k was immediately unwound, with gains recognised in the P&L offset
by an equal amount of losses on early disposal of Right of Use Assets. See
note 15 for further details.
3. Revenue
Revenue analysed by class of business:
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Exchange Fees 6,069 11,583 6,153
Licence Fees 718 7,298 801
Issuer Fees 578 1,108 548
Data Vendor Fees 2,153 3,722 1,840
9,518 23,711 9,342
Licence fees and contract assets:
Aquis Exchange PLC provides technology services under licence to clients. The
services comprise the provision of an exchange platform and / or a
surveillance system and may also include support services comprising basic
infrastructure support or additional services. The duration of the licences
varies between 1 and 7 years and will consist of an implementation fee, and,
post implementation, a monthly licence fee for the duration of the contract.
The monthly fees also cover system maintenance and system upgrades that
typically occur every 12 - 18 months. The licensing contracts are accounted
for under IFRS 15 and any corresponding contract assets are subject to IFRS 9
provisioning, as disclosed further in Note 4. Contract liabilities arise when
consideration has been provided to Aquis prior to completion of relevant
performance obligations as outlined below. These balances typically arise when
customers pay in advance of implementation. As of the balance sheet date there
are no contract liabilities (2023: nil).
The revenue from licensing contracts with customers has been categorised
reflecting the nature, amount, customer categorisation, contract duration and
uncertainty of revenue and cash flows. Revenue from licensing contracts is
assessed for each contract and is recognised as and when each performance
obligation is satisfied. A transaction price is determined by the contractual
terms of an agreement. Transaction prices are allocated to each performance
obligation based on the standalone price of the product or service offered by
the Group. The list of performance obligations included within Aquis'
Technology Licence agreements is outlined in previous year's Annual Report and
Accounts.
For licensing contracts, the Company has assessed the expected credit loss of
each client individually. The transaction price is allocated according to the
Group's obligations to the client over the course of licence period. There is
no constrained variable consideration in any customer contracts.
The licensing fees line item also includes connectivity fees for licensing
contract customers that are recognised at a point in time as they reflect
variable revenue determined on a monthly basis and are underpinned by a
separate agreement.
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
As at 1 January 8,481 6,114 6,114
PO2: Licence fees - 5,419 86
PO3: Maintenance fees 340 450 218
Net ECL credit / (provision) 496 (1,016) 332
on contract assets
Transfers to trade receivables (1,494) (2,345) (1,133)
Adjustments for foreign 21 (141) (29)
exchange gains / (losses)
As at end of period 7,844 8,481 5,558
4. Expected credit loss
The Group has two types of financial asset that are subject to potential
impairment, these are contract assets relating to technology licencing
contracts within the Company and also trade receivables arising on services
provided in the AQSE subsidiary.
The Group have concluded that trade receivables and contract assets have
different risk characteristics and therefore the Expected Credit Loss (ECL)
rates for each type of asset are measured separately. Since they comprise a
portfolio of only a small number of clients, contract assets have been
assessed on a client-by-client basis, whilst trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
IFRS 9 provisioning is applied to technology licensing contract assets based
on management estimates of the collectability of contracts over their useful
life, and which are re-assessed at each renewal and also at each year-end.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for trade receivables and
contract assets and therefore the ECL for each contract is assessed on a
lifetime basis rather than at each reporting date. As the simplified approach
is adopted it is not necessary to consider the impact of a significant
increase in credit risk.
The expected credit loss on licensing contract assets has been calculated in
accordance with IFRS 9:
Contract Assets Trade receivables
£'000 £'000
Opening impairment provision at 1 January 2023 1,347 59
ECL increase during the period - 5
Written-off financial assets - (14)
ECL on new contract assets 23 -
ECL reversed over time (355) -
Impairment provision at 30 June 2023 1,015 50
ECL increase during the period - 75
Written-off financial assets - (21)
ECL on new contract assets 1,707 -
ECL reversed over time (358) -
Impairment provision at 31 December 2023 2,363 104
ECL increase during the period - (47)
Written-off financial assets - -
ECL on new contract assets - -
ECL reversed over time (496) -
Impairment provision at 30 June 2024 1,867 57
5. Other gains and losses
Earnings before interest, taxation, depreciation and amortisation is stated
after charging:
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Fair value movements in derivative instruments, (losses) / gains (25) 51 (40)
In January 2023 forward contracts were taken by the Company in order to
economically hedge against foreign exchange movements in contract asset
balances denominated in US Dollars. These derivatives are remeasured at fair
value at each reporting date with the movement recognised in profit or losses
within other gains and losses.
These derivatives are measured at fair value and are classified at level 2 of
fair value hierarchy measurements. Future cash flows are estimated based on
quoted forward exchange rates and contract forward rates. There are no
significant unobservable inputs. The period to date loss on these items is
£25k.
6. Operating expenses
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Administrative Expenses
Share-based payments 589 1,086 507
Exchange (gains) / losses (82) 104 (53)
Employee costs 4,977 9,133 4,407
Operating costs 2,965 6,073 3,071
8,449 16,396 7,932
Profit before taxation is stated after charging:
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Depreciation, amortisation and finance costs
Depreciation of property plant and equipment 416 761 384
Amortisation of intangible assets 380 612 288
796 1,373 672
Operating expenses (continued)
Profit before taxation is stated after charging (continued):
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Finance expense on lease liabilities 40 103 54
(note 15)
Finance income on lease assets (5) (16) (5)
(note 15)
Interest on deposited funds (296) (385) (169)
(261) (298) (120)
Total Group expenses were as follows: 8,984 17,471 8,484
7. Deferred tax asset
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Deferred tax asset 1,785 1,785 1,594
8. Income tax
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Current tax £'000 £'000 £'000
UK Corporation tax charge - - -
Overseas tax charges on foreign operations 240 184 99
Total tax charge 240 184 99
Deferred tax
Origination and reversal of timing differences - (192) -
Effect of changes in tax rates - - -
Total tax charge - (192) -
Income tax (continued)
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Profit before tax 1,052 5,195 1,145
Expected tax charge based on a corporation tax charge of 25% 59 1,039 195
(Dec 23: 23.5% June 23: 19%)
Expected tax charge based on 240 182 99
effective overseas rates of 25%
Fixed asset differences - - (182)
Expenses not deductible for tax purposes 92 219 87
Other differences (1) 1 (7)
Remeasurement of deferred tax for changes in tax rates 8 79 (93)
Movement in deferred tax not recognised (158) (1,528) -
Tax charge / (credit) for the period 240 (8) 99
9. Earnings per share
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Number of Shares ('000)
Weighted average number of ordinary shares for basic earnings per share 26,685 26,814 26,871
Weighted average number of ordinary shares for diluted earnings per share 27,585 27,714 27,771
Earnings (£'000)
Profit for the period from continued operations 812 5,203 1,046
Basic and diluted earnings per share (pence)
Basic earnings per ordinary share 3 19 4
Diluted earnings per ordinary share 3 19 4
Basic earnings per share is in respect of all activities of the Group and
diluted earnings per share takes into account the dilution effects which would
arise on conversion or vesting of all outstanding share options and share
awards under the Enterprise Management Incentive (EMI) scheme.
The basic EPS when adjusted for outstanding EMI options of 852,378 (2023:
899,378), including forfeited options in the period of nil (2023: nil), gives
a weighted average of 27,585,823 (2023: 27,714,143).
10. Intangible assets
Developed Trading Platforms Other Intangibles Goodwill
£'000 £'000
£'000
Cost
As at 31 December 2022 3,617 209 83
Additions 468 41 -
As at 30 June 2023 4,085 250 83
Additions 566 7 -
As at 31 December 2023 4,651 257 83
Additions 770 1 -
As at 30 June 2024 5,421 258 83
Accumulated amortisation
As at 31 December 2022 2,772 22 -
Charge for the period 268 20 -
As at 30 June 2023 3,040 42 -
Charge for the period 292 32 -
As at 31 December 2023 3,332 74 -
Charge for the period 351 29 -
As at 30 June 2024 3,683 103 -
Carrying amount
As at 31 December 2022 845 187 83
As at 30 June 2023 1,045 208 83
As at 31 December 2023 1,319 183 83
As at 30 June 2024 1,738 155 83
Other intangible assets include assets valued at £69k with indefinite useful
economic lives.
Goodwill
On 11 March 2020 the Group acquired Aquis Stock Exchange Limited (formerly NEX
Exchange Limited) which resulted in recognition of goodwill of £83,481. The
cash generating unit associated with the goodwill is determined to be the
assets associated with the investment in AQSE.
The goodwill arising on consolidation represents the growth potential of the
primary listings exchange and the synergies with the rest of the business.
AQSE has no intangible assets.
Management has considered indicators of impairment to the balance of goodwill
and have noted no reason to conduct a detailed review. Therefore, the balance
remains unchanged since and no impairment losses have been recognised to date.
11. Property, plant and equipment
Fixtures, fittings and equipment Computer Equipment Right of Use Assets Total
£'000 £'000 £'000 £'000
Cost
As at 31 December 2022 492 2,991 4,239 7,722
Additions - 44 13 57
As at 30 June 2023 492 3,035 4,252 7,779
Additions 9 358 - 367
As at 31 December 2023 501 3,393 4,252 8,146
Additions 2 277 - 279
As at 30 June 2024 503 3,670 4,252 8,425
Accumulated depreciation and impairment
As at 31 December 2022 295 2,373 898 3,566
Charge for the period 30 160 194 384
As at 30 June 2023 325 2,533 1,092 3,950
Charge for the period 21 166 190 377
As at 31 December 2023 346 2,699 1,282 4,327
Charge for the period 25 199 192 416
As at 30 June 2024 371 2,898 1,474 4,743
Carrying amount
As at 31 December 2022 197 618 3,341 4,156
As at 30 June 2023 167 502 3,160 3,829
As at 31 December 2023 155 694 2,970 3,819
As at 30 June 2024 132 772 2,778 3,682
12. Investments in financial assets
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Financial assets measured at fair value through OCI 592 592 -
In August 2023 Aquis Exchange PLC acquired a 5.2% stake in OptimX LLC for
consideration of USD 750k. The entity is currently in the development stage of
creating blotter scraping technologies. The shares of OptimX LLC are not
listed on any public market.
The fair value of OptimX, an unlisted-equity investment, falls within Level 3
of the IFRS 13 Fair Value hierarchy. On initial recognition management made
the assessment to recognise movements in the fair value of the investment
through Other Comprehensive Income as the investment is not held for trading.
Management has assessed the fair value at 30 June 2024 and there was no change
in the investment's carrying value since the year end date.
In July 2024, after the period end, management invested a further $750k to
increase its stake in OptimX LLC resulting in a 10.2% stake in the entity.
There has been no change in the Group's assessment of its control over OptimX
because of that event.
13. Trade and other receivables
Current
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Trade receivables net of impairment 3,579 3,033 4,042
Technology licence contract assets 2,492 3,030 1,830
Prepayments 878 725 810
Other receivables 148 107 118
7,097 6,895 6,800
Non-Current
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Trade receivables net of impairment 5,352 5,451 3,758
Other receivables 361 360 350
5,713 5,811 4,108
Trade and other receivables (continued)
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:
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Gross trade receivables 3,636 3,137 4,092
Expected credit loss on trade receivables (57) (104) (50)
Gross contract assets 9,712 10,845 6,603
Expected credit loss on contract assets (1,868) (2,364) (1,015)
Receivables net of impairment 11,423 11,514 9,630
14. Trade and other payables
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Trade payables 505 759 244
Accruals 1,080 1,814 1,035
Social security and other taxation 757 344 663
Deferred revenue 981 934 1,959
Short term lease liabilities 527 527 527
Overseas corporation tax payable 152 34 23
Other payables 9 57 4
4,011 4,469 4,455
15. Leases
The right-of use asset was measured at the amount equal to the lease
liability, plus prepaid lease payments (being the unamortised portion of the
rent deposit asset). The right of use asset is depreciated over the term of
the lease and was accounted for during the period ended 30 June 2024 as
follows:
Right of Use Asset
Property
£'000
Carrying amount at 1 January 2023 3,341
Depreciation for the period (194)
Remeasurement of lease 13
Carrying amount at 30 June 2023 3,160
Depreciation for the period (190)
Carrying amount at 31 December 2023 2,970
Depreciation for the period (192)
Carrying amount at 30 June 2024 2,778
Leases (continued)
Rent deposit asset
The rent deposit asset (excluding the prepaid right of use portion which has
been included in the calculation of the
right of use asset above) is a financial asset measured at amortised cost and
was accounted for during the period
ended 30 June 2024 as follows:
Rent deposit asset
£'000
Carrying amount at 1 January 2023 357
Finance income on rent deposit asset for the period 5
Remeasurement of lease (12)
Carrying amount at 30 June 2023 350
Finance income on rent deposit asset for the period 11
Remeasurement of lease 4
Foreign currency translation differences (4)
Carrying amount at 31 December 2023 361
Finance income on rent deposit asset for the period 5
Recovery of rent deposit (5)
Carrying amount at 30 June 2024 361
After the period end, £536k of cash was recovered for the rent deposit asset
which included £12k of interest earned on the deposit to July 2024. The
carrying amount of the rent deposit at 30 June 2024 represented the discounted
value of the initial deposit of £437k (excluding VAT) as discounted to
reflect the time value of money; the remaining discount was unwound and
recognised in the P&L as a gain, but the was offset by a loss on early
disposal of a portion of right of use assets. The net impact in the P&L
was therefore to recognise the interest income.
Lease Liability
The lease liability is calculated as the net present value of the fixed
payments (including in-substance fixed payments), less any lease incentives
receivable (such as any rent-free periods). The lease payments are discounted
using the interest rate implicit in the lease. The lease liability is measured
at amortised cost and was accounted for during the period ended 30 June 2024
as follows:
Lease liability
£'000
Carrying amount at 1 January 2023 3,397
Finance expense on lease liability for the period 54
Lease payments made during the period (257)
Carrying amount at 30 June 2023 3,194
Finance expense on lease liability for the period 49
Lease payments made during the period (259)
Carrying amount at 31 December 2023 2,984
Finance expense on lease liability for the period 40
Lease payments made during the period (256)
Carrying amount at 30 June 2024 2,768
Of which are:
Current 527
Non-current 2,241
2,768
The non-current and current portions of the lease liability are included in
'Lease liability' and 'Other Payables' (Trade and Other Payables) on the
Statement of Financial Position respectively.
Leases (continued)
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Finance expense on lease liability 40 103 54
Finance income on rent deposit asset (5) (16) (5)
Net finance expense on leases 35 87 49
The finance income and finance expense arising from the Groups leasing
activities as a lessee have been shown net where applicable as is permitted by
IAS 32 where criteria for offsetting have been met.
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Amounts recognised in profit and loss £'000 £'000 £'000
Depreciation expense on right-of-use assets (192) (384) (194)
Finance expense on lease liability (40) (103) (54)
Finance income on rent deposit asset 5 16 5
Short term lease expense (26) (43) -
Net impact of leases on profit or (loss) (253) (514) (243)
After the period end, £536k of cash was recovered for the rent deposit asset
which included £12k of interest earned on the deposit to July 2024. The
carrying amount of the rent deposit at 30 June 2024 represented the discounted
value of the initial deposit of £437k (excluding VAT) as discounted to
reflect the time value of money; the remaining discount was unwound and
recognised in the P&L as a gain, but the was offset by a loss on early
disposal of a portion of right of use assets. The net impact in the P&L
was therefore to recognise the interest income.
Lease Liability
The lease liability is calculated as the net present value of the fixed
payments (including in-substance fixed payments), less any lease incentives
receivable (such as any rent-free periods). The lease payments are discounted
using the interest rate implicit in the lease. The lease liability is measured
at amortised cost and was accounted for during the period ended 30 June 2024
as follows:
Lease liability
£'000
Carrying amount at 1 January 2023 3,397
Finance expense on lease liability for the period 54
Lease payments made during the period (257)
Carrying amount at 30 June 2023 3,194
Finance expense on lease liability for the period 49
Lease payments made during the period (259)
Carrying amount at 31 December 2023 2,984
Finance expense on lease liability for the period 40
Lease payments made during the period (256)
Carrying amount at 30 June 2024 2,768
Of which are:
Current 527
Non-current 2,241
2,768
The non-current and current portions of the lease liability are included in
'Lease liability' and 'Other Payables' (Trade and Other Payables) on the
Statement of Financial Position respectively.
Leases (continued)
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
Finance expense on lease liability 40 103 54
Finance income on rent deposit asset (5) (16) (5)
Net finance expense on leases 35 87 49
The finance income and finance expense arising from the Groups leasing
activities as a lessee have been shown net where applicable as is permitted by
IAS 32 where criteria for offsetting have been met.
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
Amounts recognised in profit and loss £'000 £'000 £'000
Depreciation expense on right-of-use assets (192) (384) (194)
Finance expense on lease liability (40) (103) (54)
Finance income on rent deposit asset 5 16 5
Short term lease expense (26) (43) -
Net impact of leases on profit or (loss) (253) (514) (243)
16. Called up share capital
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
Ordinary share capital £'000 £'000 £'000
Issued and fully paid
27,516,781 (01 July 2023: 27,516,781; 2,752 2,752 2,751
1 January 2023: 27,509,448) Ordinary shares of 10p each
Issue of new shares following exercise of - - 1
7,333 EMI share options
Issue of new shares following exercise of 4 - -
47,000 EMI share options
27,563,781 (31 December 2023: 27,516,781; 2,756 2,752 2,752
30 June 2023: 27,516,781) Ordinary shares of 10p each
17. Share premium account
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Share premium
At beginning of the period 11,810 11,810 11,785
Issue of new shares following exercise of 7,333 EMI share options - - 25
Issue of new shares following exercise of 47,000 EMI share options 158 - -
At end of the period 11,968 11,810 11,810
18. Treasury shares
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
At beginning of period 4,389 3,798 3,350
Purchase of treasury shares 681 771 444
Shares vested or sold by trusts - (157) -
Change in level of surplus cash held by trusts (1) (23) 4
Treasury shares at close of period 5,069 4,389 3,798
Treasury shares are held by the Employee Benefit Trusts. The Investment in
Trust has been consolidated within the Group's results as the parent company
(Aquis Exchange PLC) can substantially direct the investment activities of the
Trusts, thus the Trusts' assets have been consolidated as Treasury Shares.
At 30 June 2024, £16,612 (31 December 2023: £17,676; 30 June 2023: £40,678)
of surplus cash was held within the Trusts, which had yet to be used to
purchase Treasury shares, but remained under the control of the Trusts.
As at 30/06/2024 As at 31/12/2023 As at 30/06/2023
£'000 £'000 £'000
Treasury shares held 5,052 4,372 3,757
Cash held in employee trusts 17 17 41
At the end of the year 5,069 4,389 3,798
19. Cash generated from operations
6 months ended 30/06/2024 Year ended 31/12/2023 6 months ended 30/06/2023
£'000 £'000 £'000
1,052 5,195 1,145
Profit before tax
Adjustments for:
Impairment (credit)/charge on contract assets (496) 1,016 (332)
Impairment (credit)/charge on trade and other receivables (47) 45 5
Fair value adjustment to derivatives 25 (51) 40
Equity settled share-based payment expense 589 1,086 507
Amortisation and impairment of intangible assets 380 612 288
Depreciation and impairment of property, plant and equipment 416 761 384
Finance expense 40 103 54
Finance income (5) (16) (5)
Interest income (296) (385) (169)
Movement in working capital:
Increase in trade and other receivables 415 (4,278) (901)
Increase in trade and other payables (544) 309 114
Cash generated by operations 1,529 4,397 1,130
Corporation taxes paid (120) (294) (219)
Net cash flow from operating activities 1,409 4,103 911
20. Other Reserves
£'000
As at 31 December 2022 1,813
Share-based payment expense for the 6-month period 507
As at 30 June 2023 2,320
Share-based payment expense for the 6-month period 422
As at 31 December 2023 2,742
Share-based payment expense for the 6-month period 589
As at 30 June 2024 3,331
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.
21. Controlling party
In the opinion of the Directors there is no single overall controlling party.
No individual shareholder had a shareholding of 10% or above as at 30 June
2024.
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