Interim Results

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
(£m)

HY23
(£m)

Change

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

Alasdair Haynes, CEO

Richard Fisher, CFO

Adele Gilbert, Head of Marketing & Investor Relations

 

Tel: +44 (0)20 3597 6329

investorrelations@aquis.eu

Investec Bank plc (Nominated Adviser and Broker)

David Anderson

Lydia Zychowska

St John Hunter

 

Tel: +44 (0)20 7597 5970

Canaccord Genuity Limited (Joint Broker)

Emma Gabriel

George Grainger 

 

 Tel: +44 (0) 20 7523 8000

  

 

VSA Capital Limited (AQSE Corporate Adviser)

Andrew Raca


MHP Group (Financial PR Adviser)

Eleni Menikou

Robert Collett-Creedy

Tel: +44 (0 )20 3005 5000

 


Tel: +44 (0) 20 3128 8000

Aquis@mhpgroup.com

 

 

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 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 is the software and technology division of Aquis. It focuses on building better markets via the creation and licensing of cutting-edge, cost-effective exchange infrastructure technology and services, including matching engine and trade surveillance solutions.

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

Aquis Data 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.

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
June 2024 (£'000s)

6 months to
June 2023 (£'000s)

Change

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

translation of foreign operations

 


(96)


(121)


(101)

 

Other comprehensive loss for the period

 

 


(96)

 

(121)

 

 (101)

 

Total comprehensive profit

for the period

 

716

 

5,082

 

945

 

 

 






 

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

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

Director

A Haynes

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

for the period

-

 

-

 

-

 

-

 

1,046

 

(101)

 

945

 

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

for the period

-

 

-

 

-

 

-

 

4,157

 

(20)

 

4,137

 

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

for the period

-

 

-

 

-

 

-

 

812

 

(96)

 

716

 

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)

on contract assets

496


(1,016)


332

 

Transfers to trade receivables

(1,494)


(2,345)


(1,133)

 

Adjustments for foreign

exchange gains / (losses)

21


(141)


(29)

 

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

(note 15)

40


103


54

Finance income on lease assets

(note 15)

(5)


(16)


(5)

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%

(Dec 23: 23.5% June 23: 19%)

59


1,039


195

Expected tax charge based on

effective overseas rates of 25%

240


182


99

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

Cost







As at 31 December 2022


2,991


4,239


7,722

Additions


44


13


57

As at 30 June 2023


3,035


4,252


7,779

Additions


358


-


367

As at 31 December 2023


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


2,373


898


3,566

Charge for the period


160


194


384

As at 30 June 2023


2,533


1,092


3,950

Charge for the period


166


190


377

As at 31 December 2023


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


618


3,341


4,156

As at 30 June 2023


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

 

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;

1 January 2023: 27,509,448) Ordinary shares of 10p each

2,752


2,752


2,751

Issue of new shares following exercise of

7,333 EMI share options

-


-


1

Issue of new shares following exercise of

47,000 EMI share options

4


-


-

27,563,781 (31 December 2023: 27,516,781;

30 June 2023: 27,516,781) Ordinary shares of 10p each

2,756

 

2,752

 

2,752

 

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

 

Profit before tax

1,052

 

5,195

 

1,145







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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