Annual report
2022
Aptitude Software Annual Report 2022
Independent Auditor
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
Financial Advisors and
Stockbrokers
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Financial Public Relations
Alma PR
71-73 Carter Lane
London
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Registrars
Link Group
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Central Square
29 Wellington Street
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Registered Office
Directors and Advisers
Ivan Martin
Non-Executive Chairman / Chair of Nomination Committee
Ivan Martin was appointed to the Board on 1 January 2016 and assumed the role of Non-Executive Chairman
on 4 March 2016. Ivan is also Non-Executive Chairman of TelcoSwitch, a privately owned provider of Unified
Communications Software as a Service. Until April 2021, Ivan was also Non-Executive Chairman of Xceptor, a
London-based international software business which was sold by CBPE Capital to Astorg Partners. Ivan has held
a number of significant Executive and Non-Executive positions in both the Technology and Financial Services
sectors. He was Chief Executive Officer of Misys Banking and Capital Markets and a main board member of Misys
plc. He was also Chairman of FDM Group from 2006 to 2019, during which time he oversaw the growth and
evolution of this company from an AIM listing to a FTSE 250 member valued at over £1billion. Ivan is a member
of various Wulstan Capital LLPs and Parch Three Estates LLP, being commercial property investment vehicles.
Hehas no other significant commitments.
Jeremy Suddards
Chief Executive Officer
Jeremy was appointed to the Aptitude Board as Chief Executive Officer Designate on 1September 2019, before
formally taking on the role of Chief Executive Officer on 17 January 2020. Jeremy joined Aptitude in January 2018
as Chief Client Officer for Europe & APAC. Prior to joining Aptitude, Jeremy undertook a number of executive
roles at Hewlett Packard Enterprise including Vice President, Financial Services Industries EMEA & Vice President
Global Accounts.
Philip Wood
Deputy Chief Executive Officer and former Chief Financial Officer
Philip Wood was appointed Chief Financial Officer on 2 January 2007. A Chartered Accountant, Philip spent seven
years with AttentiV Systems Group plc and its group companies during which time, he as Group Finance Director,
oversaw the group’s flotation in 2004 and subsequent acquisition in 2005 by Tieto Corporation. On 1 July 2019,
Philip was appointed to the expanded role of Deputy Chief Executive Officer and Chief Financial Officer to the
Group. Philip is also a Non-Executive Director and Chair of the Audit Committee of SmartSpace Software plc. Philip
Wood stepped down from his role as Chief Financial Officer on 24 January 2023 and will be stepping down from
the Board in July 2023 in order to spend more time with his young family. Details of succession plans for Philip’s
role can be found on page 43.
Barbara Moorhouse
Non-Executive Director / Senior Independent Director / Chair of Remuneration Committee
Barbara Moorhouse was appointed as a Non-Executive Director on 1 April 2017 and on 14March 2022 she was
appointed as Senior Independent Director and Chair of Remuneration Committee. Prior to this she was Chair of
the Audit Committee. Barbara has extensive senior experience in operating and financial roles across the public
and private sectors. Her most recent executive roles were as Chief Operating Officer at Westminster City Council,
and Director General at Ministry of Justice and Department for Transport. Earlier in her career, she was Chief
Financial Officer at two international listed software companies – Kewill Systems plc and Scala Business Solutions
NV. Barbara is Independent Chair of Agility Trains, a Non-Executive Director of Balfour Beatty plc, and Senior
Independent Director and Chair of the Audit Committee of Medica Group plc. Barbara was Chair of the Rail Safety
and Standards Board until 31May 2022 and on 16 January 2023 she was appointed as Non-Executive Director
and Chair-Designate of the Quality and Safety Committee of the Board of Glas Cymru, a not-for-profit company
which owns Welsh Water.
Sara Dickinson
Non-Executive Director / Chair of Audit Committee
Sara Dickinson was appointed as a Non-Executive Director on 1 October 2021 and took on the role of Chair of the
Audit Committee on 14March 2022. Sara was appointed as Chief Financial Officer of the British Standards Institute
on 24 January 2022, and prior to this, Sara was Senior Vice President of Finance at Expedia Group, and previously
the Chief Finance Officer of Expedia Partner Solutions, the global B2B technology solutions division within Expedia.
Sara has over 25 years of financial experience, as well as significant knowledge of digital finance processes and
finance transformation. Until August 2021, Sara was a Non-Executive Director and Chair of the Finance Committee
of A2Dominion, a residential property group with a debt listing on the London Stock Exchange. Sara’s other past
experience includes Commercial Finance Director at Costa Coffee, Group Financial Controller for Sage Group plc
and Vice President and European Chief Financial Officer of ebookers.
Georgina Sharley
Company Secretary
Georgina Sharley was appointed as Company Secretary on 10 December 2018. She is a member of The Chartered
Governance Institute and has 22 years’ experience in supporting United Kingdom listed companies and groups
with fulfilling their corporate governance and statutory compliance obligations.
Contents
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Contents
Strategic report
2 Key Operational and Financial Highlights
4 Chairman’s Statement
6 ChiefExecutiveOfficer’sReport
12 ReportonGroup Financial Performance
15 Non-Financial Information Statement
16 Section 172 Statement
Directors’ report
19 ReportoftheDirectors
Governance
43 Corporate Governance Statement
52 Directors’RemunerationStatement
58 Directors’RemunerationReport
Financial statements
81 IndependentAuditor’sReporttothemembersofAptitudeSoftwareGroupplc
90 Consolidated Income Statement
91 Consolidated Statement of Comprehensive Income
92 Balance Sheets
93 Consolidated Statement of Changes in Shareholders’ Equity
94 Company Statement of Changes in Shareholders’ Equity
95 StatementsofCashFlows
96 Notes to the Consolidated Financial Statements
Supplementary information
145 Shareholder Information
About Aptitude
Aptitudehelpscomplexorganizationsautomateandtransformtheirfinancialbusinessmodels.Ourcoreareasoffocusaretheacceleratingdigitalizationofthe
financefunction,andthecross-industrydrivetodeployandmanagesubscriptionofferingsatscale.Aptitudealsocontinuestosupportclientsthroughcomplex
regulationswhichoftenformthecatalystforbroaderfinancetransformation.
Financedigitalizationenablesfinance leaders to automatelegacymanuallyintensiveprocesses,improve the speed oftheirfunction,enhancethequality of
itsoutcomes, and dosoata dramatically lowercost.Aptitude’s products drawdatafrom complex, oftensiloedsystems, delivering highlevelsofautomatic
processingofcomplexaccountingcalculations,andcreatingaunifiedviewoffinance.Businessesareleftwithatransparentviewoftheirdata,deliveredat
extremeperformanceandatasignificantlylowercostofownershipimprovingtheirfinancefunctions’abilitytosupporttheirbusinessobjectives.
Subscriptionmanagementisarapidlyincreasinglycriticaldriverfornewandtraditionalbusinessesalike,whowanttomovetoorlauncharecurringrevenue
model,inwayswhichappealtotheircustomersandallowthemtooutperformtheirpeers.Aptitude’sproductspowertheacquisition,monetization,andretention
ofsubscribersstraightthroughtocomplexrevenuereporting.WithAptitude,businessescantakenewsubscription-modelstomarketquickly,retaintheirhigh-
valuerecurringrevenue,andstayonestepaheadofthecompetition.Whilstbusinesstoconsumer(B2C)subscriptionmodelsareincreasingallthetime,Aptitude
also specialises in business to business (B2B) subscriptions which are undergoing significant business model shifts post pandemic, increasing volume and
complexitywhichtheGroupisabletomanageaheadofitspeers.
Our global client base includes some of the world’s largest companies, typically organisations with complex business models, large volumes of data, and
manylegacyinternalsystems.AptitudeisheadquarteredinLondon,hasastrongandgrowingNorthAmericanandAsianpresence,andispoweredbyGlobal
TechnologyCentresinPolandandtheNorthWestofEngland.Sales,supportandimplementationservicesareprovidedfromofficesintheUnitedStates,the
UnitedKingdom,Canada,andSingapore.www.aptitudesoftware.com
Key Operational and
Financial Highlights
2
Financial HighlightsKey Operational and
Year ended 31 December 2022 2021 % Change
AnnualRecurringRevenue1(‘ARR’)atyearend £51.6m £45.0m +15%
ARRGrowth 15%
ARRGrowth(ConstantCurrency
2
) 9%
TotalRevenue £74.4m £59.3m +25%
RecurringRevenue
3
£50.5m £40.1m +26%
Non-RecurringServicesRevenue £23.9m £19.2m +24%
Cash and cash equivalents at year end £29.2m £29.1m –
Net Funds
4
£15.9m £16.1m -1%
AdjustedOperatingMargin
5
10% 17% -7%
AdjustedOperatingProfit
5
£7.5m £9.9m -24%
StatutoryOperatingProfit £3.7m £6.5m -43%
Basic Earnings per Share 4.5p 9.0p -50%
FinalOrdinaryDividendperShare 3.6p 3.6p –
FullYearOrdinaryDividendperShare 5.4p 5.4p –
• AnnualRecurringRevenue(‘ARR’)growthof15%inabsolutetermsand9%onaConstantCurrencybasis
• TotalRevenuegrewby25%to£74.4millioninlinewithmarketexpectations(2021:£59.3million),OrganicGrowth
6
of 14%
• RecurringRevenue,thestrategicfocusoftheGroup,grew26%to£50.5million(2021:£40.1million),OrganicGrowth
of11%representing68%oftotalrevenue(2021:68%)
• In line with expectations and the Group’s previously communicated investment plans, the increased investment
intheGroup’s two strategic growth drivers offinancedigitalizationand subscription management has tempered
Adjusted Operating Profits which reduced to £7.5 million (2021: £9.9 million) consequentially impacting adjusted
operating margin
• Balancesheetstrongwithyear-endcashof£29.2million(2021:£29.1million)following£3.8millionnetcorporate
cashflows.NetFunds
4
of£15.9million(2021:£16.1million)
Strategic Progress:
• TheGroup’ssuiteofproductswhichisalignedtolong-termandnon-cyclicalstrategicdriversoffinancedigitalization
andsubscriptionmanagement,is expected to drive an acceleration in growthofAnnualRecurringRevenue and
margin
• Fynapse,theGroup’snextgenerationstrategicdigitalfinanceplatform,launchedinMarch2022isalreadycontributing
to Aptitude’s success
• the signing of a major new partnership agreement with Microsoft. Fynapse will be the only product with its
capabilitytobedeeplyintegratedwithMicrosoftDynamics365FinanceandoperateontheMicrosoftAzure
cloud platform
• the successful delivery of Fynapse to Aptitude's charter client in the US telco market and their subsequent
commitmenttoamulti-yearsubscriptionagreement
• continuedstronginterestinthisnewhighermarginofferingfromexistingclients,prospectsandpartners
• MPPGlobal,acquiredinOctober2021,isnowfullyintegratedpositioningAptitudetofullyrealisetheopportunity
withinthesubscriptionmanagementmarket
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3
Business Highlights:
• MultipleAptitudeAccountingHubnewbusinesssuccessesinbankingandinsurance,demonstratingthattheGroup
issuccessfullypivotingawayfromcompliancetomeetagrowingbroaderneedforfinanceautomation
• LandmarkwinforeSuitetoprovidesubscriptionmanagementcapabilitytooneofthelargestglobalbroadcasters
andmediacontentowners
• FurthereSuitenewbusinesssuccessachievedthroughboththewell-developedchannelpartnersaswellasdirect
salesinbothtraditionalandemergingmarketsdemonstratingthebreadthoftheproduct’scapabilities
• ContinueddemandforAREV,Aptitude’srevenuemanagementplatform,includingamulti-yearagreementwithaUS
analyticssoftwareprovider
Outlook:
• The Group remains focused on delivery against three go-to-market pillars: finance digitalization, subscription
management and partner execution
• Within finance digitalization the focus is on securing new Fynapse clients, the development of the strategically
promisingMicrosoftpartnershipandtheupcominggo-liveofFynapse’scharterclient
• Withinsubscriptionmanagement,keyactivitieswillcentreonexecutingonanumberofexcitingopportunitieswith
theexistingproductsetandunlockingvolumesubscriptionsinnewclientssignedin2022
• WeareconfidentthattheseactivitieswillleadtoanaccelerationinthegrowthofAnnualRecurringRevenuewhich,
asthehighermarginrecurringrevenuegrowsasaproportionofoverallrevenue,willleadtoincreasesintheGroup’s
overallmargins.
Throughoutthisannouncement:
1 AnnualRecurring Revenue (‘ARR’) isthe value of Aptitude’srecurringrevenue at a specificpoint in time, normalisedtoa one-year period. ARRincludesrecurring
revenuescontractedbutyettocommenceandexcludesrecurringrevenueswhich,atthatpointintime,arebeingreceivedbutareknowntobeterminatinginthefuture.
IncludedinARR,forthefirsttime,arerecurringrevenuesfromtheGroup’ssolutionmanagementservices,comparativeshavebeenadjustedtoincludesuchrecurring
revenuecontracts.TheARRat31December2022fromsolutionmanagementserviceswas£4.5million(31December2021:£3.4million).
2 ConstantCurrencyiscalculatedbycomparingthe2022resultswith2021resultsretranslatedattheratesofexchangeprevailingduring2022.
3 Recurring Revenue includes, for the first time (classified as non-recurring services revenue in 2021), revenues from the Group’s solution management services,
comparativeshavebeenadjustedaccordingly.The2022revenuefromsolutionmanagementserviceswas£3.8million(2021:£3.1million).
4 NetFundsrepresentscashandcashequivalentslessfinanceobligations,whichincludescapitalleaseobligationsandaloan.
5 AdjustedOperatingProfitandAdjustedOperatingMarginexcludenon-underlyingoperatingitems,unlessstatedtothecontrary.Furtherdetailinrespectofthenon-
underlyingoperatingitemscanbefoundwithinNote3.
6 OrganicGrowthexcludesthecontributionfromMPPGlobalinboth2022and2021,theyearofitsacquisition.
Certainnon-IFRSfinancialmeasures(e.g.AdjustedOperatingProfit)areincludedwhichassistmanagementincomparingperformanceonaconsistentbasis.
Chairman’s
Statement
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4
StatementChairman’s
Overview
Aptitudehasmadegoodstrategicprogressintheyear,particularlywithFynapse,thenewplatformattheheartofthe
Group’splansforfinancedigitalization.LaunchedinMarch2022,Fynapseprovidesclientswithnextgenerationdigital
financecapabilities,whileitsopenarchitectureallowspartnerstobuildpracticesusingFynapse’scorecapabilitiesand
cloudnativetechnologies,providingcompetitivedifferentiation.
Highlightssincethelaunchoftheplatforminclude:
• thesigningofaglobalpartnershipagreementwithMicrosofttodeeplyintegrateFynapsewithMicrosoftDynamics
365Financeandtomarkettogetherthecombinedsolution
• thesuccessfuldeliveryofFynapsetoAptitude’scharterclientintheUStelcomarketandtheirsubsequententryinto
amulti-yearsubscriptionagreement
• strongpositiveinterestinthisnewhighermarginofferingfromexistingclients,prospectsandpartners
Thisexcellentprogressprovidesconfidencethat,goingforward,Fynapsewillleadtoanaccelerationinthegrowthof
AnnualRecurringRevenueandenhancedgrossmarginsfortheGroup.
AptitudehasalsocompletedthefullintegrationoftheMPPGlobalbusinesswhichwasacquiredinOctober2021.eSuite,
theplatformbroughtintotheGroupwiththeacquisition,togetherwithourlong-standingrevenuemanagementplatforms
providetheGroupwithstrongcapabilitytoaddressthegrowthdriverofsubscriptionmanagement.Severalnewbusiness
successesintheyear,togetherwiththebenefitsarisingfromtheintegration,provideconfidencethatsustainedgrowth
canbeachievedwiththisproductsettomeetgrowingmarketdemand.
ThetechnologypartnershipwithMicrosoftrepresentsaveryexcitingopportunityfortheGroupandhasthepotentialto
provideamaterialaccelerationintheadoptionofFynapse.WiththeGroupcontinuingtoinvestinitshigh-qualitypartner
network,severalnewclientshavebeensecureddirectlybypartnersineachoftheGroup’stwostrategicgrowthdrivers.
Assetoutinourtradingupdateof24January2023,notwithstandingthisgoodprogress,theBoardismonitoringthe
widereconomicenvironmentanditspotentialimpactonourclients’andprospects’procurementdecisions.Asever,but
particularlygiventhecurrenteconomicenvironment,theBoardiscarefullymanaginginvestmentlevelsinthebusiness,
whilstmaintainingmomentumonFynapseandotherstrategicpriorities.
TheBoardisconsiderateoftheimpactonemployeesinareaswhereinvestmentisbeingmoderated,aswellasonthe
widerteam.ItisthereforeimportantthattheGroupcontinuestoinvestinthesupportofitstalentedandcommittedteam.
TheappointmentofaChiefPeopleOfficerinApril2022hasledtoseveralinitiativesandprogrammesbeinglaunched
withafocusonthefurtherdevelopmentofleadershipcapabilitiesandtheGroup’spropositionto,andconnectionwith,its
employees.Aptituderemainsfocusedonpromotingequality,diversityandinclusionamongitsworkforcewithanumber
ofimprovementsintheseareasachievedintheyearoutlinedwithintheChiefExecutiveOfficer’sreport.
Board changes
As previously announced, Philip Wood, Deputy Chief Executive Officerand previously Chief Financial Officer, will be
retiringfromtheBoardinJuly2023.PhilipjoinedtheBoardin2007andafter16yearswiththeGroupisplanningacareer
sabbaticaltospendmoretimewithhisyoungfamily.TheBoardisverygratefulforhiskeyroleintransformingtheGroup
tofocus on the Aptitude brand and the expansion of the productrange, laying the foundationsfor Fynapse and the
additionofrevenueandsubscriptionmanagement.
HavingpreviouslyheldaseniorfinancepositionwithintheGroup,MikeJohnshassteppeduptotheroleofActingChief
FinancialOfficerwhilstaformalselectionprocessisconducted.PhilipwillcontinuehisresponsibilitiesasDeputyChief
ExecutiveOfficeruntilhisdepartureinJuly.
Dividend
TheBoardhasproposedanunchangedfinaldividendof3.60pencepershare(2021:3.60pence),makingatotalordinary
dividendof5.40pencepersharefortheyear(2021:5.40pence).SubjecttoshareholderapprovalattheGroup’sAnnual
General Meeting on 17 May 2023, the proposed finaldividend will be paid on 16 June 2023 to shareholders on the
registerat26May2023.
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Outlook
TheGroup is well positioned in its two strategic markets of financedigitalization and subscription management.The
milestonesachievedwithFynapseinparticularprovidetheGroupwithconfidenceingrowthandprofitabilityforfuture
years.
Ivan Martin
Chairman
20March2023
Chief Executive Officer’s
Report
6
Report
Chief Executive Officer’s
Introduction
strengthistheabilityofitstechnologyandpeopletohandlethecomplexityothersolutionsareunableto,putsimply
“whereothersseecomplexity,weseeopportunity”.
Financedigitalizationenablesfinanceleaderstoautomatelegacymanuallyintensiveprocesses,improvethespeedof
theirfunction,enhancethequalityofitsoutcomes,anddosoatadramaticallylowercost.Aptitude’sproductsdrawdata
from complex, often siloed systems, delivering high levels of automatic processing of complex accounting calculations,
andcreating aunifiedviewoffinance.Businessesareleftwithatransparentviewoftheir data,deliveredat extreme
performanceandatasignificantlylowercostofownershipimprovingtheirfinancefunctions'abilitytosupporttheirshort,
mediumandlongtermbusinessobjectives.
Subscriptionmanagementisrapidlybecominga strategicimperativefornew andtraditionalbusinessesalikeasthey
moveto orlauncharecurringrevenuemodel.Aptitude'sproductspowertheacquisition,monetization,andretention
of subscribers straight through to complex revenue reporting. With Aptitude, businesses can take new subscription-
modelstomarketquickly,retaintheirhigh-valuerecurringrevenue,andstayonestepaheadofthecompetition.Whilst
theprevalenceofbusinesstoconsumer(B2C)subscriptionmodelsisincreasing,Aptitudealsospecialisesinbusinessto
business(B2B)subscriptionswiththeinherentcomplexitywhichtheGroupisabletomanageaheadofitspeers.
Ourglobalclientbaseincludessomeoftheworld'slargestcompanies,typicallyorganisationswithcomplexbusiness
models,largevolumesofdata,andnumerousinternalsystems.Whilstourproductsarerelevantforallsectors,theGroup
hasestablishedastrongpresenceinbanking,insuranceandtechnology,mediaandtelecom('TMT')complementedby
clientsinaseriesofothernewadvancedindustries.
Thebusinessgeneratesrevenuefromitssoftwarethroughacombinationoflicencefees(allannualrecurringlicences),
software maintenance/support, software subscriptions for its cloud-based offerings and implementation and other
recurring support services including the growing solution management service “Assure”. The eSuite product also
generatesincrementalrevenuethroughchargingvolume-basedusageandfinancialtransactionfees.
Softwaredevelopment,togetherwithagrowingnumberofotherservices,continuestobeperformedattheAptitude
GlobalTechnologyCentresinPolandandintheNorthWestofEngland.Sales,supportandimplementationservicesare
providedfromAptitude'sofficesinLondon,NorthWestEngland,NorthAmericaandSingapore.
Corporate Strategy
Aptitude’s strategy is focused on providing innovative finance digitalization and subscription management software
servingagrowingnumberofC-suitestakeholders.
TheGroupprogressedanumberofstrategicactivitiesduring2022,withdetailsoftheseprovidedinthesectionsbelow.
Theseactivitiesarefocusedoncontinuingtodriveanaccelerationofgrowthinrecurringrevenueswhichrepresent68%
ofoverallrevenue(2021:68%).Thegrowthintheproportionofsuchrevenuesinthebusinesswill,induecourse,lead
tobothanincreaseinoperatingmargins,giventhehighermarginsachievablefromtheserecurringrevenues,andeven
greaterfuturerevenuevisibility.
Aptitudeisfullyfocusedonitstwostrategicgrowthdriversoffinancedigitalizationandsubscriptionmanagementand
doesnotanticipateanycorporateactivity tobroadenitsproduct portfoliointheshortterm.Notwithstandingthis, the
Groupmay,inthefuture,identifysmallbolt-onacquisitionopportunitiestodeepenitsexistingcapabilitieswhichAptitude
wouldbewellpositionedtoprogress given its existing cash resources.
Finance Digitalization
Market Drivers
Qualityofdata,speedofreportingandcostcontinuetobethetopdriversontheCFO’sagendaastheyareincreasingly
challengedbythedemandsofoperatinginadigitalworldwithgrowingregulatoryandcostpressures.Thesedemands
resultinanincreaseinthecomplexity,volumeandnumberofsourcesoffinancedata,andtheincreasingrequirement
fordecisionmakingtomoveatthepaceofthebusinessinrealtime.Aptitude’sproductsetiswellpositionedtoaddress
theserequirements.
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Finance Digitalization Products
Fynapse,theGroup'snextgenerationdigitalfinanceplatform,waslaunchedinMarch2022withsignificantmilestones
achievedintheyear.NewbusinesssuccessalsocontinuestobeachievedwiththeestablishedAptitudeAccountingHub
andAptitudeInsuranceCalculationEngineapplications.
Thefinancedigitalizationproductset,thelargestcontributortotheGroup’srecurringrevenuebase,deliveredparticularly
stronggrowthinAnnualRecurringRevenueintheyearwithabalancedperformancebetweennewbusinessadditions
andthegrowthofexistingclientsthroughup-sellandpriceincreases.Thisrobustperformanceunderlinesthestrengthof
thelong-termopportunitywithFynapseforwhichwecontinuetoseestrongpipelinegenerationacrossourkeyindustries
ofbanking,insuranceandtechnology,mediaandtelecom.
Fynapse
Fynapse is a modular, cloud native, high performance finance platform addressing an organisations' need to drive finance
digitalizationtounderpinthetransformationoftheirwiderbusinesses.TheapplicationbuildsonthesuccessfulAptitude
Accounting Hub, centralising and automating finance, accounting and reporting processes, creating a deep level of
operational intelligence for our clients. It delivers a brand-new user centric interface with a consolidated, yet highly
granular,viewoffinancialdatawhichenhancesbusinessinsightstoassistdecisionmaking.Thecapabilitiesoftheproduct
enableevengreaterautomationofmanualaccountingprocesses,reducingon-goingoperationalcostsanddrivingan
improvedtotalcostofownershipforthefinancefunction.
Themodulardesignandeaseofintegrationalsoallowsthemarketopportunitytoextendbeyondourcurrentindustries
intoadjacentverticals,shorteningtypicallylongimplementationcyclesandallowingourpartnernetworktoimplement
efficiently,withminimalriskanddeliveringafastertimetovalue.
AstrategicglobalpartnershipwithMicrosoft,signedinDecember2022,isexpectedtobeamaterialcontributortothe
successofFynapsegloballyinthemediumandlongtermacrossallindustrysectors.UnderthisagreementFynapsewill
betheonlyproductwithitscapabilitiestobedeeplyintegratedwithMicrosoftDynamics365Financeandoperateon
theMicrosoftAzurecloudplatform.ThiscombinedsolutionwillprovideAptitudeandMicrosoftclientswiththeabilityto
unifydatafromvariousfinancialsystemstoincreasescalability,gaintheagilitytorapidlyadoptnewregulations,automate
manualprocesseswhilstdeliveringbetterbusinessinsightsandreducingthecostofthefinancefunction.
InadditiontotheMicrosoftpartnershipthereisstronginterestfromconsultancieswhoareattractedtotheopendesign
ofFynapse.Thisopendesignprovidespartnerswiththeopportunitytoco-createandlicensetheirownIPbuiltonthe
Fynapse platform, further accelerating and differentiating their services. It is pleasing to report that this capability is
proving an attractive proposition for the Big-4 accountancy firms and is highly differentiated from the more generalist
providersinthemarket.
Fynapse has been successfully delivered to the charter client in the US telco market and a multi-year subscription
agreementisnow inplace.Theimplementation projectwiththecharter clientisprogressingwell andisexpectedto
go-liveinmid-2023asplanned.Additionally,thereareanumberofpipelineopportunitiesprogressingpositivelyandthe
Groupislookingforwardtoannouncingnewuserstotheplatformin2023.
The strategic investment continues to grow the capabilities ofFynapse with development performed at the Aptitude
GlobalTechnologyCentreinWroclaw,Poland.TheoverallcostofourinvestmentinFynapseincreasedin2022to£4.9
million(2021:£1.5million)allofwhichisexpensed.2023willseemodestgrowthininvestmentinFynapse,withAptitude’s
overallresearch&developmentexpenditureexpectedtobeconsistentwith2022.
TheGrouphasconfidenceinthesuccessofFynapsewhichisexpectedtobeakeygrowthdriverforthebusinessin
futureyears.
Aptitude Insurance Calculation Engine
AptitudeInsuranceCalculationEngine('AICE')isastrategic,transformationalapplicationprovidingvaluetoaninsurer
beyondaddressingtherequirementsofIFRS17(effectiveforaccountingperiodscommencing1January2023).Beyond
compliancetheapplicationenablesdatainsightsanddecisionsupportdeliveringlong-termbusinessbenefits.
Whilsttheexpectedmodestlevelofnewbusinesssuccesswasachievedin2022withAICE,severalexistingclientsopted
tocontract for Aptitude’s Assure managed services offering. Assure provides clients withadditional services beyond
Chief Executive Officer’s
Report
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8
Aptitude’s standard offering with its revenues recurring in nature and included within the Group’s Annual Recurring
Revenueforthefirsttime.
Whilstfurther new business success may be achieved in 2023, a keyfocus will be upgradingAICE users to Assure.
ProjectstoimplementAICEclientscontinuewithanumberexpectedtocompleteinthefirsthalfoftheyearinlinewith
theeffectivedateoftheIFRS17.
Aptitude Accounting Hub
The Aptitude Accounting Hub (‘AAH’) is the Group’s established product which centralises and automates finance,
accountingandreportingprocesses, creating a deep level of operational intelligenceforourclient.It also delivers a
consolidated,yethighlygranular,singleviewoffinancialdatawhichenhancesbusinessinsightstoassistdecisionmaking.
The Group continued to achieve new businesssuccess in 2022with AAH, bothon a standalonebasis as wellas in
conjunctionwiththesaleoftheAptitudeInsuranceCalculationEngine.
AmaterialnewcontractwithanUSheadquarteredgiftandpaymentscompanywassuccessfullysignedearlyintheyear.
Workingcloselywithoneofourpartners,theopportunitywassecuredbydemonstratingamoreconfigurableandfinance
enabledsolutionthanourcompetitors,whilealsoconveyingourstrongexpertiseandproventrackrecordatscaleinthe
accountinghubspace.
Inthesecondhalfoftheyearamaterialmulti-yearagreementfortheAptitudeAccountingHubwassignedwithoneof
Australia’s largest banks to replace their in-house finance datawarehouse and underpin their finance transformation
programme.Additionally,acontractwassecuredwithalargeUSinsurerpriortotheendof2022tosupporttheirfinance
digitalizationprogramme.
Theseclients,togetherwiththeEuropeanbankcontractedintheopeningmonthsof2023,haveoptedforthisproductto
accessexistingcapabilitiesinAAH.
Subscription Management
Market Drivers
The subscription economy is continuing to expand into new sectors as the benefits of subscription based recurring
incomeareincreasinglyvaluedmorethantraditionalnon-recurringrevenues.TheGrouphasseenthisphenomenonin
broadersectorssuchashigh-techadvancedindustries,medicaldevicesandautomotive.Asorganisationsmovetothese
businessmodelstheyrequirenewsystemstomanagethesesubscriptionsandrequirenewcapabilitiestoaddressthe
complexitiesofrevenuerecognitioninherentwithcomplexsubscriptions.
Aptitude's products are focused on the needs of the world's largest companies, organisations with highly complex
businessmodelsanddataprocessingrequirementswhichgeneralistprovidersareunabletoaddress.
Subscription Management Products
Whilst good levels of new business success and growth of existing accounts was achieved in 2022, overall Annual
RecurringRevenuegrowthwassubduedduetoanunusuallyhighlevelofchurnin2022.Impactingallproductswithin
subscriptionmanagementthereareseveralunderlyingreasonsfortheelevatedlevelofterminations,includingbusiness
failure and corporate events (especially clients being acquired) which are more prevalent in the markets particularly
targetedbythesubscriptionmanagementproductset.Whilst2022hasseenanegativeimpactfromthedynamicnature
ofthemarketsthatarethefocusofthesubscriptionmanagementproductset,thisdynamismhashistoricallydelivered,
andisexpectedtodosoagaininthefuture,strongorganicgrowthopportunitieswithintheexistingclient base.
eSuite
eSuiteisamodular,cloudbasedend-to-endSaaSsolutionforlarge,international,enterprisecustomersacrossthemedia
andpublishingsectoraswellasagrowingnumberofotherverticalssuchasautomotive.
Theapplication is focused on thesubscription economy and provides identitymanagement, CRM, automated billing,
payment processing, and churn management capabilities, enabling businesses to acquire, monetize and optimise
customerssubscriptions.NowintegratedwiththeGroup'srevenuemanagementoffering,Aptitudecanofferanend-to-
endsubscription,billing&revenuemanagementautomationsolutionwhichisexpectedtoprovidefurtheropportunities
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9
for automation and growth within the existing customer base while also supporting new business opportunities.
Conversations are continuing with an existing eSuite client to adopt AREV, Aptitude’s leading revenue management
product,toaddresstheirrevenuemanagementrequirements.
AkeyhighlightforeSuiteintheperiodwasthelandmarkwintoprovidesubscriptionmanagementcapabilitytooneof
thelargestglobalbroadcasterandmediacontentownerswithpotentialforconsiderableexpansioninAnnualRecurring
Revenueoncetheofferingisfullylaunchedin2023.Contributingtosecuringthisnewcontractwastheearliersuccess
achievedwithaleadingbroadcasterandmediacontentownerintheUnitedKingdom,aprojectthatsuccessfullywent
liveinthefirsthalfoftheyear.
Several new business clients were also secured in the second half of the year across various sectors and regions
demonstratingthestrengthandflexibilityoftheproduct.Therevenuemodelforthisproductisheavilyweightedtowards
usagecharges,asaresulttheadditionofthesenewcontractstoAnnualRecurringRevenueintheyearwasinsufficient
tofullymitigatetheimpactofthecontractcancellationsreceivedintheyear.
The eSuite team is now fully integrated and benefitting from the expertise and processes of the wider Group. This,
togetherwiththepipelineofneweSuiteopportunitiesandtheAnnualRecurringRevenuegeneratedoncetherecently
securedclientsgo-live,isexpectedtoleadtoanimprovedperformancefromthisproductin2023.
Aptitude Revenue Management (‘ARM’)
TheARMapplicationsenablefinanceteamstoautomatetheirrevenuemanagementfunctionstoaddressthedemands
ofthesubscription economy,withthemarketopportunity now extendingbeyondourcurrent industries intoadjacent
verticalsincludinghigh-techadvancedindustriesandmedicaldevices.
Theapplicationssimplifythewholerevenuelifecycle,fromcontractordertorevenuerecognition,reportingandforecasting
andgosignificantlybeyondcoreIFRS15/ASC606compliancetoallowtotalcontrolovercomplexrevenuemanagement
forallcontracttypesrangingfromsubscription-basedrevenuemodelstocomplexmulti-partorbundledcontractsinthe
businesstobusinessspace.Thiscapabilityallowsbusinessestounderstandandcontrolcentrallythefinancialimpact
ofalltheircommercialpropositions,thequalityoftheirrevenuetypesaswellasprovidingnewandvaluableinsightsto
supportfuturebusinessdecisionmakingsuchastheintroductionofnewproductsindifferentmarkets.
Anumberofmajornewbusinesssuccesseswereachievedin2022,aparticularhighlightbeingamulti-yearagreement
forAREVwithaverylargeprivately-ownedUSanalyticssoftwareprovider.
AswitheSuite,ahighernumberofcancellationshavebeenreceivedin2022thanwehadexperiencedinprioryears
therebysubduinggrowthinAnnualRecurringRevenueforARMproducts.In addition to cancellations arising from
corporateactivity,thecurrenteconomicclimatehasledtoahigherlevelofscrutinybyaverysmallnumberofclients
oftheirprojectpaybackperiodsorexternalspendresultingintheirwidertransformationprogrammesbeingpausedor
suspended.Discussionswiththesmallnumberofaffectedclientsareon-goingtoagreethebasisofcancellation.
Software-as-a-Service (‘SaaS’) Progression and Margin Evolution
Asexpected,growthinSaaSAnnualRecurringRevenue(‘ARR’)hasacceleratedatthefasterConstantCurrencygrowth
rateof15%(totalARRConstantCurrencygrowthof9%)andnowrepresents44%ofARR(2021:41%).Whilstallproducts
soldintheyeararecapableofbeingdeployedbySaaS,forprincipallyregulatoryreasonsaverysmallnumberofclients
continuetoopttodeployourtechnologyontheirowninfrastructure.On-premiseARRgrewonaConstantCurrencybasis
by4%.
Ouron-premiseclientscurrentlydrivethehighestgrossmargins.Aspreviouslyreported,marginshavebeenimpactedby
the accelerated adoption of cloud technologies on our traditional solution portfolio given the cost profile of the Group’s
establishedproductswhendeployedasSaaS.ThelaunchofFynapse,withitscloud-nativecapabilities,isexpectedto
enablesignificantlyhighermarginson this solution to be achieved compared to the Group’s existing SaaSdeployed
productsandwillalsoenablethemigrationofthecurrenton-premiseclientstothishighermarginofferinginthemedium
term.
Solution Management Services (‘Aptitude Assure’)
ThisserviceextendstheresponsibilitiesofAptitudebeyondtraditionalsoftwaremaintenanceservicestoincludethose
thathavetypicallybeenperformedbytheclients'ownITteams.Theseincludethemonitoringofsystemperformance,
Chief Executive Officer’s
Report
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useradministration,releasemanagementandfunctionalenhancements.Theteamprovidingtheseremoteservicestoour
clientsisnowofcriticalmassandabletoprovideefficienciestoourclientsacrossthemajorityoftheGroup'sapplications.
WithseveralAptitudeInsuranceCalculationEngineclientscontractingintheyear,ConstantCurrencygrowthof32%in
theAnnualRecurringRevenue(‘ARR’)wasachieved.ARRfromthisservice,nowincludedwithintheGroup’soverallARR
andrecurringrevenues,is£4.5million(31December2021:£3.4million).WithfurtherAICEclientsapproachinggo-live
furtheropportunitiesexisttocontinuethesuccessfulgrowthinthisserviceintheyearahead.
Implementation Services
Aptitude provides implementation services to its clients, with the scale of such services depending on the nature of
theapplication,thesizeoftheopportunityandthebalanceofresponsibilitiesbetweenAptitudeanditspartners.The
Group'sservicesareprovidedbyasignificantpoolof highlyskilledindividuals,providingdeepdomainandtechnical
expertisewhichishighlyvaluedbyourclientsandprovideadifferentiatorcomparedtoourcompetitors.Demandfor
implementationservicesfromtheGroup'son-goingprojectshasbeenstrongin2022,withclientsfrequentlyrequesting
additionalservices.
ThebusinesscontinuestoexpandtheenablementofitspartnernetworktofacilitatetheirabilitytoimplementAptitude’s
productsuitereliablyandefficiently.Whilstthisenablementwillleadtoagreaterproportionofservicesbeingprovided
bypartners,itremainsimportanttomaintainahigh-qualitydeliverycapabilitytoensurethattheGroupcancontinueto
supportitspartnersandprovideitsexpertisetoourlargestclientswhowishtoreceiveourservicesdirectly.
Partner Network
ThegrowthanddevelopmentofAptitude'shigh-qualitypartnernetworkcontinuestobeastrategicpriority.Whilstmany
prospectsaresourceddirectlybytheGroup'sownsalesandmarketingteams,theglobalreachofourpartnersandthe
depthoftheirrelationshipswithlargebusinessesprovideAptitudewithanincreasingnumberofadvancedopportunities,
enhancedmarketcoverageandintelligence.Inadditiontothenewbusinessbenefitsprovidedbythepartnernetwork,
theimplementationexpertiseandcapabilitiesofourpartnerssupportstheGroup'sstrategicdrivetoincreasesoftware
feesfasterthanitsservices,leadingtoaricherrevenuemix.
ABig-4accountancyfirmwasappointedascharterpartnerforFynapseatthetimeofitslaunchandhasledtoaglobal
launchofourpartnershiptoitsinternalpartnercommunitywiththedevelopmentofdedicatedcentresofexcellencefor
integrationcapability.WearealsoenjoyinginterestfromanumberofadditionalpartnersinthecapabilitiesofFynapse.
AfurtherhighlighthasbeentheagreementtoprovidefinanceautomationtoaBig-4accountancyfirm’smergersand
acquisitionspracticeenablingthemtoacceleratethepost-acquisitionintegrationoftheirclients’financefunctionsleading
tomultiplenewclientengagements.
WhilsttheBig-4accountingfirmshaveglobalreach,forspecificapplicationsinspecificjurisdictionsitcanbebeneficialto
workcloselywithmorespecialisedpartnerorganisations.Thebenefitsofthisapproacharedemonstratedbythesuccess
theGroupishavingwithitseSuitepartnersinmarketswhichwouldbechallengingtounlockwithouttheassistanceofour
partnerssuchasJapan,MiddleEastandalsocentralEurope.
ThetechnologyandgotomarketpartnershipwithMicrosoftisoutlinedinthesectiononFynapseaboveandprovidesthe
Groupwitharealopportunitytoacceleratetheadoptionofournewplatform.
Aptitude Global Technology Centres
InvestmentcontinuesintheGroup'stwotechnologycentresinPolandandtheNorthWestofEngland.Overalltherewere
244employeesattheGlobalTechnologyCentreinPolandat31December2022(31December2021:198)withafurther
52employees(31December2021:45)focusedondesign,development,implementationandsupportbasedintheNorth
WestofEngland.InvestmentremainsfocusedonbothFynapseandeSuiteinthesetwocentres.
TheGroup’scapabilitiesinPolandprovidestheGroupwithcontinuingcostadvantages,however,wageinflationhasbeen
significantlyhigherinthisterritorythanelsewherewithintheGroupgivenboththecompetitivenessoftheemployment
marketfortechnologistsinPolandaswellasthe country’sunderlyinginflation.Tohelpaddressthesepressures,the
Grouphasinvestedinbothlocalseniormanagementandinthepeopleandtalentteamtosupportanumberofinitiatives
tooptimiserecruitmentandretention.TheGroup’sinitiativesonretentionhavebeenlargelysuccessfulwithemployee
attritionwithinthetechnologycentreinPolandduringthecourseof2022reducingto15%(2021:20%).
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Our People
Aptitude’scontinuedprogresshasbeenachievedthroughthetalent,commitmentandincrediblehardworkofitspeople.
TheBoardwishestothankitsemployeesforboththeiroutstandingcommitmentandthecontinuedexcellentsupport
theyprovidetothebusiness,clientsandpartners.
Overall Group headcount increased by 11% inthe year to527 (2021: 476)as the businesscontinued to investin the
evolutionofourtechnologyandthestrengtheningofanumberofotherteams.
Aptitude remains fully committed to promoting equality, diversity and inclusion among its workforce, and to driving
continuous improvements in these areas. During 2022 the Group established a Diversity & Inclusion SteerCo, which
is formed of18 employees across 5 countries. Key milestones and areas of focus for 2022 included the formulation
andadoptionofanewEquality,DiversityandInclusionPolicy,raisingawarenessthroughactivitiesandeventsandthat
promoteinclusivity,andthelaunchofaWomeninLeadershipinitiative.TheSteerCohasalsoidentifiedaforward-looking
programmeofeventsandobjectivesfor2023andbeyond.
ToensuretheGroupcarriesonattractingemployeestoworkonitsstrategicpriorities,andretainingthemosttalentedof
individuals,thebusinesshascontinuedtobuildontheinvestmentsinourpeople.Particularhighlightsinclude:
• introduction of a leadershipcareer framework that defines leadership skills anddevelopment at all levels of the
organisation from early careers to senior leaders; and
• investmentinlearningsolutionsthatallowourpeople,whoareoperatinginahybridworld,tobenefitfrommore
flexibledevelopmentthroughinvestmentinlearningplatforms
Focus Areas for 2023
TheGroupremainsfocusedondeliveryagainstthreego-to-marketpillars:financedigitalization,subscriptionmanagement
andpartnerexecution,supportedbyourongoingfocusonpeopleexcellenceandfinancialconfidence.Withinfinance
digitalizationwearefocusedonsecuringnewFynapseclients,thedevelopmentofthestrategicallypromisingMicrosoft
partnershipandtheupcominggo-liveofFynapse’scharterclient.Withinsubscriptionmanagement,keyactivitieswillcentre
onexecutingonanumberofexcitingopportunitieswithourexistingproductsetandunlockingvolumesubscriptions
inour2022newclients.Underpinningthis,ourwiderpartnerrelationshipswillcontinuetodeepenasweaddfurther
partners to support and market our solutions. Supplementing these pillars, we will continue to invest in our people,
seekingtoretainandgrowourteamscapabilities,withanethosofdiversityandinclusion.
WeareconfidentthattheseactivitieswillleadtoanaccelerationinthegrowthofAnnualRecurringRevenuewhich,as
thehighermarginrecurringrevenuegrowsasaproportionofoverallrevenue,willleadtoincreasesintheGroup’soverall
margin.
Outlook
Overall,wearepleasedwithboththeoperationalandstrategicprogressachievedin2022and,whilstwatchfulofthe
global economic environment, the Board is confident that the Group’s performance for 2023 will be in line with its
expectations.
Jeremy Suddards
Chief Executive Officer
20March2023
Group Financial
Performance
12
PerformanceGroup Financial
Revenue
Totalrevenuegrewby25%to£74.4million(2021:£59.3million),organicgrowthof14%.
Recurring Revenues
AnnualRecurringRevenue(‘ARR’)grewby9%onaConstantCurrencybasisintheyearto£51.6millionat31December
2022(31December2021:£47.5million,30June2022:£49.2million,bothrestatedfortheprevailingexchangeratesat
31December2022).
ARRisthekeyfinancialmetricfortheGroup.IncludedwithinARRareAptitude’sannuallicencefeesandmaintenancefor
itson-premiseclientsandsubscriptionfeesfortheGroup’sSaaSclients.Inaddition,andincludedforthefirsttimein2022,
aretheGroup’srevenuesfromitsSolutionManagementServiceoffering(‘AptitudeAssure’),thisofferingcontributedARR
at31December2022of£4.5million(31December2021:£3.4million).Comparativeshavebeenupdatedaccordingly.
NetRetentionRateintheyearwas102%(2021:102%)(measuredbythetotalvalueofon-goingARRattheyear-endfrom
clientsinplaceatthestartoftheyearasapercentageoftheopeningARRfromthoseclientsonaConstantCurrency
basis).TheGroupbenefittedfromstandardinflationaryclauseswithinthemajorityofitscontracts,however,aspreviously
outlined,therewereanunusuallyhighernumberofcancellationsandreductions(e.g.clientsreducingtheirexpenditure
byremovingincrementalservices)thatreducedthebenefitoftheseincreases.
Recurringrevenuesrecognisedin2022increasedby26%to£50.5million(2021:£40.1million),representingOrganic
Growthof11%.eSuite,theproduct broughtintotheGroup in2021throughtheacquisitionofMPP Globalcontributed
recurringrevenueintheyearof£8.3million(2021:£1.9million).
Recurringrevenues,astrategicfocusfortheGroup,continuetogrowandnowrepresent68%ofoverallrevenue(2021:
68%).ItisakeypartoftheGroup’sstrategytoincreasethispercentagewhilstmaximisingthegrowthrateofAptitude’s
ARR,astrategywhichinduecoursewillleadtogrowthinoperatingmargingiventhemargindifferentialbetweenrecurring
andnon-recurringrevenuesdespitethegrowingSaaSelementandtheaccompanyinginfrastructureandservicingcosts.
Non-Recurring Revenue
Non-recurringrevenue,comprisedofimplementationservicesandsoftwaredevelopment,totalled£23.9millionforthe
yearended31December2022(2021:£19.2million)representing24%overallgrowthand21%OrganicGrowth.Inaddition
to the benefit of the 2021 acquisition of MPP Global, services revenues grew in the year due to 2021 non-recurring
revenuebeingnegativelyimpactedbythedisruptiontoourkeymarketsrelatedtothepandemic.Includedwithinthetotal
non-recurringrevenuefor2022isservicesrevenuegeneratedbyeSuiteof£1.0million(2021:£0.4million).
Research & Development Expenditure
Totalexpenditureonproductmanagement,research&developmentincreasedintheyearended31December2022to
£17.0million(2021:£10.6million).Oftheincrease,£3.5millionisattributabletothefullyearcostsoftheeSuiteteamwhich
wasbroughtintotheGroupaspartoftheMPPGlobalacquisitioninOctober2021.Theremainingincreaseof£2.9million
isprincipallyattributabletothegrowinginvestmentinFynapseaswellastheimpactofthehighrateofinflationcurrently
experienced in Poland. Whilst the growth in 2023 of the Group’s investment in Fynapse will be modest, the careful
managementofinvestmentinthebroaderproductsetisexpectedtoresultinAptitude’soverallresearch&development
expenditurebeingconsistentwith2022despitethecontinuedinflationarypressures.
The Board has continued to determine that none of the internal research & development costs incurred during the year
meetthecriteriaforcapitalisation.Consequently,thesehavebeenexpensedasincurredthroughtheincomestatement.
Operating Profit and Margins
Adjusted Operating Profit for the year ended 31 December 2022 was in line with expectations at £7.5 million (2021:
£9.9 million). Adjusted OperatingMargin reduced in line with expectation to10% (2021: 17%) as the Group increased
investment in both Fynapseand the integration of eSuite and AptitudeRevenue Management. Operating profit on a
statutorybasiswas£3.7million(2021:£6.5million).
Inadditiontotheincreasedinvestmentoutlinedabove,theacceleratedadoptionofcloudtechnologiesimpactsmargin
expectationsgiventhecostprofileofanumberoftheGroup’sproductswhendeployedasSaaS.ThelaunchofFynapse,
withitscloud-nativecapabilities,isexpectedtoenhancemargins.
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13
Aswithmanytechnologybusinesses,theGrouphasexperiencedincreasedinflationarypressureswithinitscostbasewith
inflationparticularlystronginPoland,averaging14%in2022(UnitedKingdom9%,UnitedStates8%).Whilstthemajority
ofclientcontractsallowforinflationaryincreasestobeappliedtorecurringfees,thereareanumberofexceptionsto
this including the recentlyacquired client bases where a project ison-going to move those clients onto theGroup’s
standardinflationaryclauseswherepossible.Furthermore,services’dayratestypicallycanonlybeincreasedafterthe
initialimplementationforaclienthasconcluded.OverallelevatedinflationdoesnotbenefittheGroupandisoneofthe
contributingfactorstotheneedtocarefullymanageinvestmentlevelsacrossthebusinesswhilstensuringmomentumis
maintainedontheGroup’sstrategicpriorities.
Foreign Exchange
With42%(2021:51%)oftheGroup’srevenuesbeinggeneratedfromNorthAmericanclients,themajorityofwhichare
invoicedin USDollars,thefinancialresultsareimpactedbychangesintheUSdollar exchangerate.Aptitude’s2021
revenueandAdjustedOperatingProfitwouldhavebeenreportedat£59.8millionand£10.5millionrespectivelyona
ConstantCurrencybasis(comparedtoactualresultof£59.3millionand£9.9million).ConstantCurrencyiscalculatedby
comparingthe2022resultswith2021resultsretranslatedattheratesofexchangeprevailingduring2022.
Non-Underlying Items
Non-underlying items of £3.8 million (2021: £3.4 million) are principally related to the £0.4 million (2021: £2.0 million)
of final deal and integration costs incurred on the MPP Global acquisition and intangible amortisation of £3.4 million
(2021:£1.4million).TheincreaseinintangibleamortisationisattributabletothefullyearcostrelatingtotheMPPGlobal
acquisitioncompletedinOctober2021.
Taxation
The total tax charge before adjusting for the impact of non-underlying and other sundry items of £1.4 million (2021:
£1.6 million) represents 19.6% of the Group’s profit before tax (2021: 17.1%), broadly in line with the United Kingdom
corporatetaxrateof19%.
Statutory Results
TheGroupreportedaprofitfortheyearattributabletoequityshareholdersof£2.6million(2021:£5.1million).
Earnings per Share
AdjustedBasicEarningsperSharedecreased,asexpectedduetotheplannedinvestmentinthebusiness,by30%to
9.9pence(2021:14.2pence).Asaresultofboththisinvestmentandanincreaseinnon-underlyingcostsincurred,Basic
EarningsperSharereducedto4.5pence(2021:9.0pence).
Dividend
Afinalordinarydividendof3.60pencepershareisproposed(2021:3.60pence),makingatotalordinarydividendof
5.40pencepersharefortheyear(2021:5.40pence).
Balance Sheet
The Group continues to have a strong balance sheet with net assets at 31 December 2022 of £60.5 million (2021:
£57.2million).Followingnetcorporatecashoutflows(mainlydividendsandloanpayments)of£3.8millionintheyear,cash
at31December2022was£29.2million(31December2021:£29.1million)andnetfundsof£15.9million(31December
2021:£16.1million).
Cash conversion was below the prior year’s exceptional performance with the collection of some recurring revenue
invoices extending into the new year. Trade receivables at 31 December 2022 increased to £10.1 million (2021: £8.8
million)ofwhich£4.1million(2021:£1.5million)wereoverdueforpaymentattheyearend.Oftheseoverduebalances
£2.8millionhasbeencollectedat17March2023with£1.3millionremainingoutstanding,ofwhich£1.2millioniseither
impairedordeferred.DSO(debtordays)increasedto46at31December2022(2021:37).
NotwithstandingtheincreaseinAnnualRecurringRevenuetheGroup’sdeferredincomeat31December2022reduced
to£29.6million(2021:£30.9million)duetoanumberoffactors.Oneofthekeyreasonsforthereductionisthatforasmall
Group Financial
Performance
14
numberofmaterialnewbusinesscontractssignedinthefinalweeksof2022(andthereforeincludedinAnnualRecurring
Revenueattheyear-end)invoices were not issued until 2023. An additional contributory reason for thereductionin
deferredincomeisduetomulti-yearadvancepaymentsofAnnualLicenceFeesbyasmallnumberofclientsinprior
years,resultinginreduceddeferredincomefromtheseclientsat31December2022.Nomulti-yearadvancepayments
werereceivedin2022.
Philip Wood
DeputyChiefExecutiveOfficer
20March2023
Non-Financial Information
Statement
15
StatementNon-Financial Information
Thefollowingchartsummariseswhereyoucanfindfurtherinformationoneachofthekeyareasofdisclosurerequiredby
S414Cands414CDoftheCompaniesAct.
RelatedGrouppolicies Relatedprincipalrisks Page
Environmental matters – Health, safety & environment – Climate change
– Safety
31
Employees – Security
– People
–Talentandcapability
– Safety
27
Social matters –Charitablecontributions&socialsponsorships –Politicalrisk 17
Human rights – People
– Human rights
– Key personnel
–RussianinvasionofUkraine
28
Anti-briberyandcorruption –Anti-bribery&corruption – Compliance 38
– Non-financialkeyperformanceindicatorsallowustoassessprogressagainstobjectivesandmonitorthedevelopment
andperformanceofspecificareasofthebusiness.Thesearesetoutonpage 69.
– FurtherinformationonGrouppoliciescanbefoundonaptitudesoftware.com.
– FulldetailsoftheGroup’sprincipalriskscanbefoundonpages 22 to 24.
– DisclosuresbasedontheprinciplesofTask Force on Climate-relatedFinancialDisclosures(TCFD)aredetailedon
pages32 to37.
– DisclosuresrelatingtothegenderdiversityoftheGroupcanbefoundonpage 29.
Engagement with the Group’s Stakeholders
(Section 172 Statement)
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16
(Section172Statement)Engagement with the Group’s
Stakeholders
TheDirectorsareawareoftheirstatutorydutytopromotethesuccessoftheCompany,asrequiredbySection172ofthe
CompaniesAct2006.
AsstatedintheAct,thismeanshavingregardto,amongstotherthings:
• Thelikelyconsequencesofanydecisionsinthelongterm;
• the interests of employees;
• theneedtofosterbusinessrelationshipswithsuppliers,customersandothers;
• the impact of operations on the community and environment;
• thedesirabilityofmaintainingareputationforhighstandardsofbusinessconduct;and
• theneedtoactfairlyasbetweenmembersoftheCompany.
ThisdutyunderpinstheBoard’sdecision-makingprocessesandtheGroup’sstrategicdirection,withdueconsideration
giventothelong-termimpactofitsdecisionsonshareholders,employees,customersandwiderstakeholders.Practical
measuresthattheBoardtakestoensuretheinterestsofthesestakeholdersarereflectedintheBoard’sdecisionmaking
processareasfollows:
Workforce engagement
TheBoardisfullycommittedtoensuringthattheopinionsofemployeesacrossallregionsandbusinessareasareregularly
soughtandfactoredintoitsdecision-makingprocess.TheGrouphasputinplaceextensivemeasurestoengagewithits
employeesandthesearedescribedinfullintheDirectors’Reportonpage19includingpracticalexamplesofhowthese
havebeenappliedduringtheyear.ThroughtheseengagementactivitiestheBoardisabletogatheropinionsandideas
fromthewiderworkforce,identifyanycommunicationgapsorcommonareasofconcernandaddressthesethroughthe
Group’sactivities.
The Board receives regular reports on employee matters from the Group’s Chief People Officer, including information
relatingtoemployeesatisfaction,engagementlevels,recruitment,retentionandtraininganddevelopment.
Shareholder engagement
The Board engages with institutional shareholders via investor roadshow programmes which are undertaken via a
combinationofinpersonmeetingsandvideoconferencemeetings.Regularupdatesarereceivedontheviewsofthe
Group’smajorinvestorsandthesearefactoredintotheBoard’sdecision-makingprocessandtoensurethattheGroup’s
marketcommunicationsmeetinvestorneeds.
AllshareholdersareencouragedtosubmitquestionspriortotheAnnualGeneralMeetingandtolodgetheirvotesahead
ofthemeetingtoensurethatthesearecounted.TheAnnualReportissenttoshareholdersatleast20workingdays
beforetheAnnualGeneralMeetingandeachissueforconsiderationattheAnnualGeneralMeetingisproposedasa
separateresolution.AllDirectorsgenerallyattendtheAnnualGeneralMeeting.
During2022theGroupcommunicateddirectlywithitsmajorinvestorsontheforthcomingrenewalofitsRemuneration
Policy and Executive remuneration arrangements and responded in full to any queries that arose during this process.The
vastmajorityofresponsesweresupportiveoftheapproachbeingtaken.Furtherdetailsofthisconsultation process can
befoundintheDirectors’RemunerationStatementonpage52.
Client engagement
TheGroupisproactiveinengagingdirectlywithitsclientstomonitorandcontinuallyimproveitsservicedeliveryand
clientsatisfactionlevels.TheBoardreceivesmonthlyreportsonclientrelatedmatters,includingsupportticketlevels,
servicesdeliveryandprojectstatusreports,whichenableittoidentifyanytrendsoranyareasrequiringspecificoversight
orinvestment.Intheeventthatanyconcernsareraisedbyclients,theGroupensuresthattheseareaddressedswiftly
andthatproactiveengagementoccurstoensureongoinghighstandardsofservicedelivery.
TheGroupseeksdirectengagementwithclientsthroughregularClientAdvisoryBoardsineachregionandthesedirectly
informitsproductdevelopmentandinnovationstrategies.TheGroupalsoholdsCFOForumsforprospective and existing
clientstoactivelyengageinwide-rangingdiscussionsaroundpertinentissuesandpublishesitsDigitalCFOmagazine
offeringexpertcommentaryaroundsimilarissues.Feedbackreceivedfromclientsthroughtheseforumsandthrough
regularday to day interaction withthe Group’s client-facing teams were used toinform the Board’s decision making
processduringtheyearinrelationtoproductstrategy,investmentprioritiesandservicedeliverymodels.
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17
Strategic partner engagement
The Group works with a range of leading organisations to deliver long-term value to its clients, including advisory,
consulting, integration and technology providers that bring complementary services and solutions to its client base.
TheGroupengages withitspartnersthrough regularproductandthoughtleadership briefingsandacomprehensive
salesanddeliveryenablementprogram.TheBoardactivelyencouragesfeedbackfromtheGroup’spartnerfirmsonthe
qualityofitsservicesandproductstosupportcontinuousimprovement.
Duringtheyear,theGroupidentifiedanewstrategicpartnershipopportunitywithMicrosoftinrespectofFynapse and
MicrosoftDynamics365Finance,andthispartnershipwasformalisedinDecember2022.Regulartwowayengagement
betweenAptitudeandMicrosoftwasundertakenduring2022toshapethispartnershiparrangement,forthebenefitof
bothorganisations’stakeholders.
Supplier engagement
TheGroupengagescloselywithitssuppliersandhasinternalprocedurestoensurethatappropriateduediligenceis
undertakenonthesefirms.Engagementwithanynewsuppliersissubjecttoaformalprocessandrequiresfinalapproval
fromanExecutiveDirector.SignificantsuppliercontractsofarecurringnaturerequireapprovalfromtheBoardasawhole.
SuppliersarechosenaccordingtotheirabilitytomeettheGroup’sownhighstandardsandtodemonstratevaluesthat
areconsistentwiththoseoftheGroup.Regularengagementtakesplacewithkeysuppliers,monitoringtheirperformance
againstcontractualobligationsandprovidingregularfeedbackinordertofosterandsupportlong-termrelationshipsfor
thebenefitoftheGroup.IntheeventthatdeliverystandardsdonotmeettheGroup’sexpectations,proactivestepswill
betakentocommunicateandaddressthesedirectlywiththesuppliertoensurethatthereisnodetrimentalimpactupon
theGroup’sactivities.
DuringtheyearengagementactivitieswiththeGroup’ssuppliersincludedareviewofsuppliersinconjunctionwiththe
integrationofMPPGlobalSolutionsintothewiderAptitudegroup,toensurethatthesuppliersfortheGroupasawhole
werebestplacedtomeetisoperationalneeds.
Engagement with the wider community
TheBoardensuresthatthedecisionsmadeareresponsibleandethicalbytakingintoconsiderationthewidersociety
externaltotheorganisation.TheGroupiscommittedtocontributingtowardsthecommunitiesinwhichitoperatesasa
business.
The Group operates a charitable donation scheme whereby it will match the funds raised by employees for specific
charities(ona£for£basis)upto£500perevent.TheGroupalsosupportsororganisesregularactivitiestoincrease
awarenessandraisefundsforitschosencharitiesbothintheUnitedKingdomandinternationally.TheGroup’scharitable
activitiesareco-ordinatedbyitsregionalsocialcommitteesandemployeesareactivelyencouragedtopartakeinthem
ataregionallevel.Akeyfocusforusin2022wastosupportthepeopleofUkrainewherewehelpedtoraisefundsand
donatedtoanumberofcharities,aswellassupportingemployeesinPolandtohostUkrainiannationalsintheirhomes.
Additionally other key initiatives included sponsoring employees from a number of our locations to take part in the
JPMorganCorporateChallengeandourteaminBostoncompletingaBasketballHoopschallenge,alloftheseraising
moneyforcharitiessuchasNSPCCintheUK,IndigenousMarathonProjectinAustraliaandtheAlzheimer’sAssociation
intheUSA.
TheGrouphasawrittenpolicyonModernSlaveryandHumanTrafficking,whichisreviewedonanannualbasisbythe
BoardandispublishedontheGroup’swebsite.
The environment
As a provider of software solutions, the Group’s operations have a relatively limited impact on the environment.
However,theBoardiscommittedtoimplementingmeasuresthatwillresultinincrementalimprovementstotheGroup’s
environmental impact, such as minimising paper usage, considering the environmental credentials of its office spaces
andbyavoidingunnecessarytravelandusingvideo-basedmeetingfacilitieswhereappropriate.Theentireworkforceis
providedwiththetechnologyandflexibilitytoworkremotelytominimisetravel.
The Board is committed to providing stakeholders with an increasing amount of transparency on its environmental
credentialsandreportsonbothitsscope1andscope2carbonemissions.TheGroupispleasedtoreportthatithasagain
seenasignificantyearonyearreductioninitscarbonemissionsthisyearalongsideanumberofproactivemeasures
thatincrementallyreduceitsenergyconsumption.In2023,theGroupintendstoundertakeascope3footprintanalysis
andtosetsciencebasedtargetstoachieveanetzeropositionby2050.Detailsofthe Group’s environmental policy and
Engagement with the Group’s Stakeholders
(Section 172 Statement)
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emissionsreportingcanbefoundintheDirectors’Reportonpages31 to 37.TheGroupalsoreportsonitscompliance
withtherecommendationsoftheTaskforceonClimate-relatedFinancialDisclosures("TCFD"),whichcanbefoundon
page32.
Maintaining a reputation for high standards of business conduct
TheBoardismindfulthatthecontinuedgrowthandsuccessoftheGroupisdependentuponmaintaininghighstandards
ofbusinessconduct,including:
• theabilitytosuccessfullycompetewithinthemarket,toattractandretainclients,andtoservicetheseclientstoa
high standard;
• theabilitytoattractandretainhighqualityemployees;
• theabilitytoattractinvestorsandtomeettheirexpectationsofgoodgovernanceandsoundbusinessconduct;and
• theabilitytomeettheGroup’sregulatoryobligations,andtomeettheexpectationsofrelevantregulatorybodies.
ThisawarenessunderpinstheformulationoftheGroup’sstrategyandisevidentthroughouttheBoard’sdecisionmaking
process.
Ensuring that members of the Company are treated fairly
The Board ensures that the Group’s shareholders are treated equally and fairly, regardless of the size of their shareholding
or their status as a private or institutional shareholder. The Group provides clear and timely communications to all
shareholdersin their chosen communicationmedium, as well as viathe Group’s website andvia a Regulatory News
Service.AllholdersofOrdinarysharesareeligibletoreceivedividendpaymentsandtovoteatgeneralmeetingsofthe
Company.
PhilipWood,asaDirectoroftheGroup,approvedalloftheStatementscontainedwithintheStrategicReportonbehalf
oftheBoard.
By Order of the Board
Philip Wood
DeputyChiefExecutiveOfficer
20March2023
Report of the
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TheDirectorsofAptitudeSoftwareGroupplc(the“Company”)presenttheirreportandtheauditedconsolidatedfinancial
statementsoftheGroupfortheyearended31December2022.
Results and Dividends
The results for the year are set out in the financial statements and notes that appear on pages 90 to 144.Asexplainedin
theChairman’sStatement,theDirectorsproposethepaymentofafinaldividendof3.6pencepershare,makingatotal
of5.4pencepersharefortheyear(2021total:5.4pence).Subjecttoshareholderapproval,theproposedfinaldividend
willbepaidon16June2023toshareholdersontheregisteratcloseofbusinesson26May2023.
The ordinary dividends paid in 2022 totalled£3.1million(2021:£3.1million).
Principal Activities
Aptitude Software Group plc is a specialist provider of finance digitalization and subscription management software.
TheCompanyanditssubsidiariestogetherarereferredtointhisAnnualReportas“theGroup”.TheGroup’sproducts
andservicesaredetailedwithintheChiefExecutiveOfficer’sReport.
Key Performance Indicators
KeyPerformanceIndicatorsaresetfortheGroupandcanbefoundinthereportsonpage2.TheseareRevenueGrowth,
OperatingProfit(beforeNon-UnderlyingItems)GrowthandAnnualRecurringRevenueGrowth.
Board Changes
Peter Whiting, former Senior Independent Director and Chair of the Remuneration Committee, stepped down from
the Board on 28 April 2022. A structured transition plan was executed ahead of Peter’s retirement from the Board,
asdescribedonpage43.
On 24 January 2023 the Group announced that Philip Wood, Deputy Chief Executive Officer and previously Chief
FinancialOfficer,willstepdownfromtheBoardinJuly2023.PhilipjoinedtheBoardin2007andafter16yearswith
theGroupisplanningacareersabbaticaltospendmoretimewithhisyoungfamily.Asaresult,MikeJohns,whohas
previouslyheldaseniorfinancepositionwithintheGroup,hasassumedtheroleofActingChiefFinancialOfficerwhilsta
formalselectionprocessisconducted.PhilipwillcontinuehisresponsibilitiesasDeputyChiefExecutiveOfficeruntilhis
departureinJuly2023.Philipwillthereforeseekre-electionbyshareholdersatthe2023AnnualGeneralMeeting,but
withtheunderstandingthatthisre-electionwillonlycovertheperiodfromtheconclusionofthe2023AnnualGeneral
MeetingtothedateofhisresignationfromtheBoardinJuly2023.
Future Developments
DetailsoftheGroup’sfuturedevelopmentsareprovidedwithintheStrategicReport,seetheChiefExecutiveOfficer’s
Reportonpage6fordetails.
Principal Risks and Uncertainties
ThemanagementofthebusinessandtheexecutionoftheGroup’sstrategyaresubjecttoseveralrisks.Risks are formally
reviewedbytheBoardandappropriateprocessesputinplacetomonitorandmitigatesuchriskswherefeasible.Tools
usedbytheBoardtomonitorkeyrisksincludetheregularreviewofrisk-rateddashboardsandprojectstatusreports,as
wellasad-hocupdatesonpotentialemergingrisksthatcouldthreatentheGroup’sperformanceorachievementofits
strategicobjectives,suchascompetitoractivityandregulatorychange.Wherenewrisksare then identified, the potential
impactoftheseareassessed,proportionatemitigatingactionsareputinplace,andthesearesubjecttoongoingreview.
External advice is sought where appropriate to support this process, such as the activities of the Internal Audit and
ImprovementProcessdescribedonpage47.TheprincipalbusinessrisksfortheGroup,asat 20March2023,aresetout
inthetableonpages22 to 24.
DirectorsReportofthe
Report of the
Directors
20
DirectorsReportofthe
TheBoard’songoingreviewofemergingpotentialriskshas notidentifiedanybeyondthosedetailedinthePrincipal
Risksand Uncertaintiesdetailedonpages22 to 24,whichincludestheimpactoffutureinflationaryandinterestrate
increasesupontheGroupandtherisksassociatedwithvolatilemacro-economicconditions.Inundertakingthisreviewof
its Principal risks,theBoardalsoconsideredtherisksassociatedwithCOVID-19,theUK’swithdrawalfromtheEuropean
Union and climate change. The Board concluded that these risks were not considered to be principal risks, for the
reasonsexplainedbelow:
COVID-19
ThedirectimpactoftheCOVID-19pandemicupontheGroupin2021and2022waslimitedandtheBoardhasnoreasonto
believethatthiswillchangein2023.Whiletheriskofaresurgenceofthepandemichastheabilitytoimpactallmembers
of society, the Group has demonstrated that it is able to continue to operate successfully throughout the pandemic,
duetoitsworkforce’sabilitytoworkremotelyandtocontinuetosell,implementanddevelopsoftware.TheGroupalso
continuedtohaveminimalexposurethroughitsclientbasetothoseindustriesmostseverelyimpactedbythepandemic,
suchasretail,travelandleisure.Thisareawillcontinuetobecloselymonitored,butatpresentisnotconsideredtobea
principalrisk.
United Kingdom’s withdrawal from the European Union
On 31 January 2020 the United Kingdom left the European Union (“EU”). The transitional period was completed on
31December2020andnewrulesontrade,travelandbusinessfortheUnited KingdomandEUtookeffecton1January
2021.Sincethatdate,theimpactontheGroupofthesechangeshavebeenminimal.Newprocedureshavebeenputin
placeregardingadministrativeaspectsofemployeetravelbetweentheUnited KingdomandEUcountries,butthesehave
nothadanymaterialimpactontheabilityofouremployeestotravelbetweentheGroup’sregionallocations.Anyfurther
developmentsrelatingto the United Kingdom’s regulatory andlegalframeworkwill continue to be monitored, butat
presenttheGroupisnotawareofanysuchchangesthatmightpresentamaterialrisktothebusiness.
Emerging risks including climate change
TheBoardhasalsoconsideredwhetherthereareanynewemergingpotentialrisksthatcouldhaveamaterialimpacton
theGroup,includingclimate-relatedrisk.ForthereasonsdetailedintheGroup’sstatementonitscompliancewiththe
TaskForceofClimate-relatedFinancialDisclosuresonpage32,exposuretoclimate-relatedriskisconsideredtobelow
and has therefore has notbeenclassifiedasanemergingriskinthecontextoftheGroup’soperations.
Statement of Directors’ responsibilities
TheDirectorsareresponsibleforpreparingtheStrategicReportandtheDirectors’Report,theDirectors’Remuneration
Report,theseparateCorporateGovernanceStatementandthefinancialstatementsinaccordancewithapplicablelaw
andregulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year.
TheDirectorshaveelectedundercompanylawandarerequiredundertheListingRulesoftheFinancialConductAuthority
topreparetheGroupfinancialstatementsinaccordanceUK-adoptedInternationalAccountingStandards.
TheGroupfinancialstatementsarerequiredbylawandUK-adoptedInternationalAccountingStandardstopresentfairly
the financial position and performance of the Group. The Companies Act 2006 provides in relation tosuch financial
statementsthatreferencesintherelevantpartofthatActtofinancialstatementsgivingatrueandfairviewarereferences
totheirachievingafairpresentation.
UndercompanylawtheDirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrue
andfairviewofthestateofaffairsoftheGroupandoftheprofitorlossoftheGroupforthatperiod.
InpreparingeachoftheGroupfinancialstatements,theDirectorsarerequiredto:
• selectsuitableaccountingpoliciesandthenapplythemconsistently;
• makejudgementsandaccountingestimatesthatarereasonableandprudent;
• statewhethertheyhavebeenpreparedinaccordancewithUK-adoptedInternationalAccountingStandards;and
• preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheGroupwill
continueinbusiness.
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The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandenable
themtoensurethatthefinancialstatementsandtheDirectors’RemunerationReportcomplywiththeCompaniesAct
2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheGroupandhencefortakingreasonablestepsforthe
preventionanddetectionoffraudandotherirregularities.
Directors’ statement pursuant to the Disclosure and Transparency Rules
EachoftheDirectors,whosenamesandfunctionsarelistedintheDirectorsandAdviserssection,confirmthat,tothe
bestofeachperson’sknowledge:
• thefinancialstatements,preparedinaccordancewiththeapplicablesetofaccountingstandards,giveatrueandfair
viewoftheassets,liabilities,financialpositionandprofit and lossesoftheCompanyandtheundertakingsincluded
intheconsolidationtakenasawhole;and
• theDirectors’ReportcontainedintheAnnualReportincludesafairreviewofthedevelopmentandperformanceof
thebusinessandthepositionoftheCompanyandtheundertakingsincludedintheconsolidationtakenasawhole,
togetherwithadescriptionoftheprincipalrisksanduncertaintiesthattheyface.
TheDirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedonthe
AptitudeSoftwareGroupplcwebsite.
LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfrom
legislationinotherjurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and financial statements, taken as a whole, is fair, balanced and
understandableandprovidestheinformationnecessaryforshareholderstoassesstheGroupandCompany’sposition
andperformance,businessmodelandstrategy.
EachoftheDirectors,whosenamesandfunctionsarelistedatthestartofthisreportconfirmthat,tothebestoftheir
knowledge:
• the Company financial statements, which have been prepared in accordance with United Kingdom-adopted
international accounting standards and company law, give a true and fair view of the assets, liabilities, financial
position and profit and losses of the Company;
• theGroupfinancialstatements,whichhavebeenpreparedinaccordancewithUnited Kingdom-adopted international
accountingstandardsandcompanylaw,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofit
and losses of the Group; and
• the Report of the Directors includes a fair review of the development and performance of thebusiness and the
positionoftheGroupandCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.
Board and Committee roles and responsibilities
DetailsofthekeyresponsibilitiesoftheBoard,itsindividualmembersandtheCommitteesoftheBoardarepublishedon
theGroup’swebsiteatwww.aptitudesoftware.com/investor-relations/directors-governance/.
Report of the
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Table detailing Principal Risks and Uncertainties
PrincipalRisksand
Uncertainties Explanation MitigatingAction
If the Group does not
successfully expand or enhance
its product offerings or respond
effectively to technological
change, the business may be
negatively affected.
The Group’s future performance will depend on the successful
development, introduction and market acceptance of new
and enhanced products that address client requirements in a
cost‑effective manner. If the Group does not expand or enhance
its product offerings or respond effectively to technological
change, its business may be negatively affected. Additionally,
there is a risk that the Group’s technology approach will not
achieve broad market acceptance or that other technologies
or solutions will supplant the Group’s approach. Some of the
Group’s markets are characterised by rapid technology change,
frequent introduction of new products, changes in client
requirements and evolving industry standards. The launch of
Fynapse, Aptitude’s next generation strategic digital finance
platform, is central to the Group’s product strategy. Should the
adoption of Fynapse not be as successful an expected, this will
impact the Group’s future growth and success.
The Group has well-developed product
roadmaps for its key software products.
Thedevelopment of the product roadmaps is
a result of close liaison with prospects, clients,
partners and other organisations. In addition,
there is proactive monitoring of forthcoming
regulations to identify required changes to
existing products and opportunities for the
development of new products.
Prior to the development and launch of Fynapse,
extensive market research and client consultation
was conducted, to satisfy the Board that there
was sufficient demand in the existing client base
and the market generally for the product.
The Group’s reputation as a
quality professional service
provider may be adversely
affected by any failure to
optimise its deployed products
or meet its contractual
obligations, client expectations
or agreed service levels.
The Group’s ability to attract new clients or retain existing
clients is largely dependent on its ability to provide reliable
high‑quality products and services to them and to maintain
a good reputation. Because many of the engagements of
the Group involve projects that are critical to the business
operations and information systems of clients, the failure or
inability of the Group to meet a client’s expectations could
have an adverse effect on the client’s operations and could
result in damage to the reputation of the Group. Certain
contracts may provide for a reduction in fees payable by the
client if service levels fall below certain specified thresholds,
thus potentially reducing or eliminating the profit margin on
any particular contract. If the Group fails to meet its contractual
obligations or perform to client expectations, it could be
subject to legal liability or damage to its reputation and the
client may ultimately be entitled to terminate the contract.
The Group employs highly skilled personnel and
has business processes in place to endeavour
to ensure that any lapse is quickly identified
and addressed. In addition, significant issues
and client escalations are reported to senior
management and, if appropriate, the Board.
The Board reviews monthly dashboards on
project delivery and client-related risks.
Demand for the Group’s
products may be adversely
affected if economic and market
conditions are unfavourable.
Adverse economic conditions worldwide can contribute
to slowdowns in the Information Technology spending
environment and may impact the Group’s business, resulting
in reduced demand for its products as a result of decreased
spending by clients and increased price competition for the
Group’s products. This reduced demand could be attributable
to a reduction in the number and impact of accounting and/or
regulatory changes that have contributed to recent demand
within the business for its products. The Group’s revenues,
expenses and operating results could vary significantly from
period to period as a result of a variety of factors, some of
which are outside the Directors’ control.
The Group’s preferred annual licence fee or
subscription model generates recurring revenue
which provides some resilience against the full
effects of market deterioration. Additionally, the
Group operates in multiple geographic regions
and, while it has a material exposure to the
financial services sector, operates in a number
of business sectors.
The present macro-economic environment is
being monitored closely in conjunction with
regular pipeline reviews.
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PrincipalRisksand
Uncertainties Explanation MitigatingAction
There is substantial competition
in the Group’s markets which
could adversely affect the
Group.
Some of the markets for the Group’s products are competitive,
rapidly evolving and subject to rapid technological change.
As a result, the Group expects competition to persist, intensify
and increase in the future. There are no substantial barriers to
entry into these markets and some of the Group’s competitors
are large organisations with far greater financial resources
than Aptitude.
The Group’s ability to compete is dependent upon many
factors within and beyond the Group’s control, including:
(a) Timing and market acceptance of new solutions and
enhancements to existing solutions developed by the
Group and its competitors;
(b) performance, ease of use and reliability of the Group’s
products;
(c) price;
(d) client service and support; and
(e) sales and marketing efforts.
The Group maintains and enhances its
competitive position by retaining highly
specialised domain knowledge within its chosen
markets enabling it to develop, implement and
support its market‑leading products. The Group
constantly seeks to improve the implementation
and support services provided to its clients, whilst
the Aptitude Innovation Centre located in Poland
provides the Group with a cost‑efficient and high
performing development centre. Market trends
are carefully monitored to ensure any threats to
the Group’s competitive position are identified at
the earliest opportunity.
The Group’s software products
may contain undetected errors
producing incorrect results or
otherwise fail to process data at
sufficient speed.
The Group’s products involve sophisticated technology that
performs critical functions to highly demanding standards.
Software products as complex as those offered by the Group
might contain undetected errors or failures. If flaws in design,
production, assembly or testing of the Group’s products (by
the Group or the Group’s suppliers) were to occur, the Group
could experience a rate of failure in its products that would
result in substantial repair, replacement or service costs and
potential liability and damage to the Group’s reputation. The
Group will not be able to be certain that, despite testing by
the Group and by current and prospective clients, flaws will
not be found in products or product enhancements. Any flaws
found may cause substantial harm to the Group’s reputation
and result in additional unplanned expenses to remedy any
defects, and liability stemming from such defects, as well as a
loss of revenue and profit.
Development activities including software quality
are reviewed in regular meetings with senior
management. The Group has established robust
development and testing processes and has
made a number of recent investments to further
strengthen this area of the business.
If the Group loses its key
personnel or cannot recruit
additional personnel, the
Group’s business may suffer.
The Group’s success greatly depends on its ability to hire,
train, retain and motivate qualified personnel, particularly in
sales, marketing, research and development, consultancy
services and support. The Group faces significant competition
for individuals with the skills required to perform the services
the Group will offer. If the Group is unable to attract and retain
qualified personnel it could be prevented from effectively
managing and expanding its business. In addition, if the Group
is unable to assign suitably qualified staff to its implementation
projects there is increased risk of project failure with the
consequences as outlined in the earlier sections.
The Group makes ongoing investments in
its employees, including the provision of
Group‑wide share option schemes, regularly
updated Company-wide communication
programmes and staff surveys, as well as a focus
on strengthening the culture of the business
through a number of employee engagement
initiatives.
Potential future acquisitions
by the Group may have
unexpected material adverse
consequences.
Acquisitions have been, and continue to be, part of the
strategy for the Group. Acquisitions involve numerous risks
which may have unexpected material adverse consequences.
Acquisitions are carefully assessed by the Board
in respect of their alignment with the Group’s
acquisition strategy. The Group benefits from
significant acquisition experience following the
completion of seven acquisitions since 2014
and seeks to perform thorough due diligence,
supported by the appropriate use of external
advisers, to help identify any unexpected material
adverse consequences. MPP Global Solutions
was acquired by the Group in 2021 and has
now been successfully integrated into the wider
Group from an operational perspective.
Report of the
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PrincipalRisksand
Uncertainties Explanation MitigatingAction
The Group’s activities may result
in the loss or disclosure of client
data.
The Group is implementing its products and services for a
number of clients where the Group’s employees potentially
have access to sensitive client data and sensitive data
of clients’ own clients. There is a risk that there could be
unauthorised access to, or disclosure or loss of, such data,
whether inadvertently or maliciously. In such circumstances
the Group is likely to be subject to legal liability and/or material
damage to its reputation and the client may ultimately be
entitled to terminate the contract.
There is a risk that implementation revenues are impacted and
project milestones delayed.
Employees are trained in the importance of data
security with background checks performed
at recruitment and for certain other roles at
regular intervals. A leading third party provider
is engaged to undertake ongoing information
security training for employees, as well as
simulated ‘phishing’ exercises and monitoring.
The Group seeks to continually enhance and
invest in its data security arrangements.
Future inflationary increases
could affect the Group’s
margins.
Any significant inflationary increases would quickly impact the
Group’s cost base, with a delay of potentially over 12 months
before increased costs can be passed to clients. Services’
day rates typically cannot be increased during the initial
implementation for a client.
The inflationary environment continues to be
closely monitored, and commercial modelling
undertaken to assess the impact of inflationary
increases. The Group is able to reduce the
exposure in its client contracts with the majority
allowing for inflationary increases to be applied
to fees.
Future interest rate changes
could impact the cost of
borrowing.
The Group has a loan with Bank of Ireland (see page 136 for
details). Any significant future interest rate changes could
impact the cost of borrowing for the Group.
The Group has entered in to an interest rate
swap so that there is no change to interest
payable pursuant to changes in interest rates.
The Group also has significant cash balances and
seeks to maximise the interest earned on these
(see page 136 for further details).
The risk that the invasion of
Ukraine by Russia will have an
adverse impact on the Group’s
activities and operations.
During February 2022, Russia launched an illegal invasion
in Ukraine. The humanitarian and economic consequences
have been and continue to be significant for both Ukraine
and Russia. There is also a risk of potential impact for other
countries in mainland Europe.
The Group does not have any operations,
employees or clients in either Ukraine or
Russia. At present there is no direct impact
upon the Group. The Group does have an
operational presence in mainland Europe and
therefore the situation continues to be closely
monitored and business contingency plans have
been formulated. These plans will continue
to be evolved in response to any significant
developments in the situation.
The risk of the failure of key
banking counterparties holding
the Group’s cash balances.
The current economic environment has increased the risk of
the insolvency of key banking counterparties as demonstrated
by the challenges encountered by Silicon Valley Bank in
March 2023, this may lead to loss of all or part of cash held
with such counterparty.
The Board regularly reviews its banking
counterparties to ensure risk is minimised with
the significant majority of the Group’s cash
resources held with the largest clearing banks in
the United Kingdom.
Going Concern and Long-Term Viability Statement
InaccordancewithProvision31ofthe2018UKCorporateGovernanceCode(“theCode”),theDirectorshaveassessed
theprospectsoftheGroupoveralongerperiodthanthe12monthsrequiredbythe“GoingConcern”provisionaspartof
ourviabilityreviewsetoutbelow.Seepage96fortheGroup’sassessmentongoingconcernto31December2025,which
hasbeendefinedasthegoingconcernassessmentperiod.TheBoarddeterminedthatitwouldbereasonabletoperform
areview of the Group’s cash flows and other key financial indicatorsof three years andconsidered this appropriate
giventheperiodalignstheGroup’sviabilitystatementwithitsplanningtimehorizoninrespectofitsthree-yearstrategic
planandissuitablegiventhenatureandinvestmentcycleofatechnologybusiness.Cashflowsoverthisperiodhave
arelativelyhighdegreeofpredictability,asthebusinesscontinuestogrowitssoftwarerevenues.Projectionsbeyond
thisperiodbecomelessreliablegiventheinherentuncertaintyoftechnologyandmarketdevelopments,supplemented
bytheuncertaintiessurroundingtheglobaleconomy.TheDirectorshavenoreasontobelievetheGroupwouldnotbe
viableoveralongerperiod.However,duetothisuncertainty,theDirectorsconsiderathree-yearperiodtobeappropriate
informingareasonableexpectationontheGroup’slonger-termviability.
Informingaviabilitystatement, the Directors carried outarobustassessmentoftheprincipalrisksand uncertainties
thatcouldimpairthesolvencyandliquidityoftheGroup.ThisisbasedontheGroup’scurrentposition,itsstrategy,and
associatedprincipalriskswithscenariosincludinganassessmentoftheGroup’slonger-termprospects.The Group is
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operating in a net current asset positionatthebalancesheetdateandretainssignificantcashbalancesbenefitingfrom
itsannuallicencefeeorsubscriptionmodelinwhichthemajorityofitscustomerspayannuallyinadvance.
Scenariomodelsarereviewedbythe BoardandtheAudit Committeeandareafoundationforthe Group’sstrategic
plan.Thefinancialforecastscontainedintheplanmakecertainassumptionsabouttheuptakeofnewannuallicences
and subscriptions and the performance of other core revenue streams. As part of the assessment the Group stress
teststheplanusingvariousscenarios.Toachievethis,managementreviewedtheprincipalrisksandconsideredwhich
mightthreatentheGroup’sviability.Inidentifyingtheseprincipalrisks,theGroupconcludedthatthecurrentlevelof
future contracted revenue, totalling £91.4mat31December2022,wouldrequirebeingsupplementedby£20.5million
ofrevenuerealisedfromeithernew businessopportunitiesorgenerated fromthebaseacrossthethreeyear period
whichiswellbelowplannedlevels.Acrosseachofthescenariostested,theGrouphas also not factored in any structural
changestoitscostbasebeingmadetoensureitremainsviable.Itwasthereforedeterminedthatnoneoftheindividual
risks would in isolation compromise the Group’s viability, andso several different severe scenarios were considered
wheretheprincipalrisksaroseincombination.
Thescenariosconsideredtobethemostsignificantinperformingtheassessmentofviabilityandthecombinationof
principalrisksinvolvedaredetailedonthefollowingpage,allofwhichareconsideredextremelyremote,inadditionthe
GroupsetsoutseparateassessmentsofwhytheGroupbelievesthatthesedonotrepresentriskswhichmightthreaten
theviabilityoftheGroup.
Principal Risks
• TheriskthattheGroupfailstocomplywithitscontractualand legal obligations, including those relating to data
confidentiality,resultingindamages,regulatorypenaltiesandfines.
• The risk thatthe Group utilises a significant proportion of its existing cash reserves to implement an acquisition
strategywhichdoesnotyieldtheexpectedreturnoninvestment.
• TheGroupdecidestoperformasignificantreturnofvaluetoshareholdersimmediatelypriortoasteepdownturnin
performance.
• Theriskthebusinessfailstoattractnewclientsorretainexistingclientsasaresultofweaknesseswithinitsproduct
suiteorservicedeliverymodel.
• TheriskofinsolvencyofkeybankingcounterpartiesusedbytheGroup,whichcouldleadtothelossofallorpartof
thecashheldwithanysuchcounterparty.
Mitigations
• TheGroupoperateswithastrongcontrolenvironmentwhichincludescloseoversightbymanagementonallmatters.
Whererequiredthisincludestheuseofexternaladvisersandinsurancecoverwhichmaymitigatetheimpactofa
possiblematerialbreach.
• TheGrouphassignificantacquisitionexperiencefollowingthecompletionofsevenacquisitionssince2014,including
theacquisitionofMPPGlobalSolutionsLimitedon9October2021.Anyfutureopportunitiesarerequiredtomeetthe
Group’s strict criteria of comprising complementary technologies focused on Aptitude’sproductsuite.Furthermore
appropriateduediligenceonanypotentialacquisitionsisperformedwithfindingspresentedtotheBoard.
• The Group has substantial levels of future contracted revenue visibility and retains significant cash balances
benefittingfromitslong-termannuallicenceandsubscriptionmodelinwhichtheoverwhelmingmajorityofitsclients
payannuallyinadvance.
• Thebusinesscurrentlyoperateswithamoderatelevelofdebtfinancinginplace.TheGroup’sexistingfacilityallows
foradditionalfinancingtobedrawnonwhichwouldassistincoveringshorttermcashflowsifnecessary.
• Cash conservation measures could include a review of the Group’s dividend policy along with the flexibility to
implementanumberofcostreductionmeasures.
Developments in Ukraine
TheGroupiscontinuingtocloselymonitorthesituationinUkraine.Thebusinesshasnofacilitiesordependenciesinthe
country,butinviewofitsmainlandEuropeoperations,businesscontingencyplanninghasbeingundertakentomitigate
any potential disruption to the Group’soperationsthatmightresultshouldtherebeanescalationoftheconflictintoother
Europeancountries.
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Future inflation increases
TheGroupiscloselymonitoringinflationlevelsandplanningforanysignificantfutureincreasesthatmightarise.Increasing
inflationcouldhaveanimpactontheGroup’smarginsintheshorttermastheGroup’sabilitytorecovertheseincreased
costsfromitsclientbasewouldnottakeimmediateeffectandwoulddependuponthecommercialtermsagreedwithits
clients.
Climate-related risk
InaccordancewiththerecommendationsoftheTaskForceonClimate-relatedFinancialDisclosures("TCFD"),theGroup
hasassessedthepotentialimpactofclimaterelatedriskonitsoperationsanddeterminedthatthesetobelow.Fulldetails
ofhowtheGroupcomplieswithTCFDrecommendationscanbefoundonpage32.
Other risks
Whilst other risks were considered in respect of a new market disruptor, the collapse of new business activity and
defaultingontheloanfacilitythesewerenotconsideredassevereasthescenariosoutlinedabovegiventhelevelof
future contracted revenue visibility and cash generation achieved through the Group’s multi-year annual licence and
subscriptionmodelcombinedwiththeamountofvariablecostbasethebusinessoperateswith.
Scenario modelling
The likelihood of each principal risk occurring, and the potential impact was modelled across various scenarios by
managementwhoevaluatedthepossibleconsequences,primarilythroughareductioninoperatingprofit, ranging from
a reduction of 50% to 70%,andnetcashin-flows.Theseimpactswerebasedonsimilareventsinthepublicdomainand
internalestimates.TheDirectorsreviewedanddiscussedtheprocessundertakenbymanagement,andalsoreviewed
the results of reverse stress testing performed to provide an illustration of the reduction in operating profit across the
threeyearperiodthatwouldberequiredinorderfortheGrouptoeitherbreachitsexternalloancovenantsorexhaust
allavailablecash.Basedonthistestingitwasdeterminedthatthecurrentleveloffuturecontractedrevenue,totalling
£91.4millionat31December2022,wouldrequirebeingsupplementedby£20.5million of revenue realised from either
newbusinessopportunitiesorgeneratedfromthebaseacrossthethreeyearperiodwhichiswellbelowplannedlevels,
andtherefore undrawnfacilitateswouldnotberequiredtobedrawndown.Acrosseachofthescenariostested,the
Grouphavealsonotfactoredinanystructuralchangestoitscostbasebeingmadetoensureitremainsviable.
Basedonthe resultsofthereview theDirectorsconfirmthatthey haveareasonableexpectationthat theGroupwill
continuetooperateandmeetitsliabilities,astheyfalldue,forthenextthreeyears.TheDirectors’assessmenthasbeen
madewithreferencetotheGroup’s currentpositionandprospects, theGroup’scurrentstrategy,theBoard’scurrent
riskappetiteandtheGroup’sprincipalrisksandhowthesearemanaged.TheGroupretainssignificantcashbalances
benefittingfromitsannuallicenseandsubscriptionmodelinwhichtheoverwhelmingmajorityofitsclientspayannually
inadvance.
Application of the 2018 UK Corporate Governance Code
TheBoardseekstocontinuallystrengthenitsexistinggoodgovernanceframeworkinlinewiththerequirementsofthe
2018UKCorporateGovernanceCode(the“Code”).DuringtheyeartheadditionalmeasuresputinplacebytheBoard
included:
• furtheractivitiesthatstrengthenedtheBoard’sengagementwiththewiderworkforceandenabledittotakeinto
considerationtheviewpointsandconcernsofemployees,asdescribedonpages27 to 28, including onsite employee
engagementsessionsattheGroup’sBoston,WroclawandUnited Kingdom offices;
• formulationandadoptionofanewEquality, Diversity and InclusionPolicy,asdescribedindetailonpage28;
• abespokeinternally-ledannualBoardEffectivenessReview,asdescribedonpage45;
• proactiveengagementwithmajorinvestorsontherenewaloftheGroup’sRemunerationPolicywhichwillbesubject
toshareholderapprovalatthe2023AnnualGeneralMeetingandtheapproachtoExecutiveDirectorremuneration,
asdescribedonpage54; and
• ensuring a smooth transition of the chairmanship of the Audit and Remuneration Committees, as described on
page44.
Fulldetails ofhowtheCompanyhasappliedtheprinciplesoftheCodethroughouttheyear canbefound withinthe
Corporate Governance Statement on pages 43 to 51.
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Responsibility for Environmental, Social and Governance matters
All members of the Board, together with senior management and the Company Secretary, take an active role in
shapingandmonitoringtheGroup’senvironmental,socialandgovernance(“ESG”)activitiesanditisappropriatethat
thisresponsibilityissharedcollectively.However,toensurethatESGmattersaregiventhoroughconsiderationbythe
Boardonanongoingbasisandapproachedinaco-ordinatedmanner,theBoardhas designated an individual Board
member withresponsibilityfor the oversight of the Group’s ESG activities, to ensure that ESG considerations are fully
embeddedintheGroup’soperations,Boardprocessesandstrategicdirection.ThiswasPhilipWoodthroughouttheyear
ended31December2022.InviewofPhilipWood’spendingdeparturefromthebusinessinJuly2023,SaraDickinson,
Non-ExecutiveDirectorandChairoftheAuditCommittee, has nowtakenonthisresponsibility.Inadditiontothis,Jeremy
Suddards,ChiefExecutiveOfficer,istheExecutivesponsorfortheGroup’sDiversityandInclusionstrategy and activities,
as detailed on page 29.
Engagement with supplier and customers
TheGroupproactivelyengageswithitssuppliers,clientsandotherbusinessrelationshipsonaregularbasis,toensurethat
relationshipsfunctioneffectivelyandsupportthelong-termsuccessoftheGroup.DetailsofhowtheGroupundertakes
thisengagementcanbefoundintheSection172statementonpages16 to 18.
Purpose, culture and values
TheGroup’scorepurposeistocreateaworldoffinancialconfidence.ThispurposeisattheheartoftheGroup’sstated
strategy,vision,missionandcorporatevalues,andisclearlyarticulatedthroughoutthebusiness,acrossallregions.Itwould
notbepossiblefortheGrouptoachievethispurposewithoutintelligent,highlyskilledandmotivatedemployeesandthis
awarenessunderpinsitscultureofcollaboration,innovation,highqualitydeliveryandongoingpersonalandprofessional
development for all of its employees. The behaviours and values which underpin the culture of the organisation are
embeddedinpersonalobjectivesatalllevelsandfeatureintheGroup’semployeerecognitionprocess.TheGroupis
committedtoensuringthatitspurposeandvaluesremainrelevantandmeaningfultoemployees.Therefore,inSeptember
2022itlaunchedaprojecttorefreshitsvaluesthroughaseriesofemployeeworkshops.Over100employeesvoluntarily
participatedintheseworkshops, across four regions.Theoutputfromthesesessionswill be used toshapeupdated
valuesandaculturecodeduring2023.
Engagement with the workforce
Duringtheyear,BarbaraMoorhouseandSaraDickinsonwerethedesignatedNon-ExecutiveDirectorswhowerejointly
responsibleforensuringthateffectiveengagementoccurswiththewiderworkforce.Subsequenttotheyearend,the
BoardhasagreedthatthisresponsibilitywillbeundertakenbyBarbaraMoorhousewithsupportfromtheGroup’s Chief
PeopleOfficer.
During2022theGroupcontinuedtoexpanditsrangeofemployeeengagementactivitiesensuringthattheviewsand
opinionsofemployeesareheardandthatitscorporatevaluesareupheld.Duringtheyearended31December2022
theseactivitiesincluded:
• onsitevisitsbytheBoardtotheGroup’sWroclaw,Boston,London,WarringtonandManchesteroffices,includingall
employee face-to-faceengagementsessionswiththeNon-ExecutiveDirectors.Videolinkswereprovidedtothose
employeesthatwerenotabletoattendinperson;
• onetoonesessionsbetweenleadershipteammembersandtheNon-ExecutiveDirectors;
• regularattendancebymembersofseniormanagementatBoardmeetingstopresentontheirrespectiveareasof
expertise including sales, product and technology, professional services and people and culture;
• ongoingprogrammeofemployeeengagementsurveysandrequestsforfeedback,theresultsofwhicharereviewed
quarterlybytheBoardandonanongoingbasisbyseniormanagement;
• regularallemployeecallsandfinancialupdateswithallregions,withfrequentNon-ExecutiveDirectorattendance
andcontribution.Feedbackfromemployeesontheusefulnessofthesecallsandaswellas suggestions for future
topics; and
• thelaunchofanewGroup-wideleadershipprogrammeduringtheyear.
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During the year, the Board took into consideration the interests and viewpoints of employees when developing its
policiesandapproachonpeopleandculture,reward,traininganddevelopment,diversityandinclusionandemployee
communications.InJanuary2023,theGrouphasalsoinvitedallemployeestocontributeideasandsuggestionsonthe
Group’snewobjectivesframeworkthatwillbeimplementedlaterthisyear.
Duringtheyear,theGroupalsocontinuedtoevolveonlinemethodsofsupportingemployeeengagementandwell-being
including:
• scheduledprogrammeofregular online team meetings and business updates, withcontributionsfromthewider
workforceaswellastheseniormanagement;
• onlineactivitiessuchaswellbeingsessions,onlinecompetitions,socialeventsandclubsco-ordinatedbytheGroup’s
regional employee social committees; and
• onlineemployeerecognitionprogramme,throughwhichemployeesareencouragedtorecognisebehavioursand
highqualitycontributionsfromcolleagueswhichreflecttheAptitudevalues.
The Group continues to operate a Save As You Earn Scheme and an International Share Save Scheme for employees
acrosstheGroup.TheseschemesencouragetheinvolvementofemployeesintheGroup’sperformanceandthisassists
inachievingacommonawarenessonthepartofemployeesofthefinancialandeconomicfactorsthataffecttheGroup’s
performance.TheBoardhas issued annualinvitationstoemployeestojoin these schemesandcontinuestobevery
encouragedbythehighlevelsofparticipationamongstemployeesacrosstheGroup.Asat31December2022, 48% of
theGroup’semployeeswerepartofitssharesaveschemes.
Equality, Diversity and Inclusion Policy
TheGroupisstronglycommittedtoencouragingequality,diversityandinclusionamongourworkforce,andeliminating
discrimination.EveryoneiswelcomeatAptitudeandweencourageourteammemberstobringtheirwholeselvesto
work.Ourpeoplearechampionsofcreatingacultureofbelonging,supportandtrustandweworkwithotherswhoare
alignedwiththese values.
Weaimforourteamstobetrulyrepresentativeofallsectionsofsocietyandtoensurethatourclients,partnersandeach
employeefeeltheybelong,thatthey’rerespectedandabletoalwayspresenttheirauthenticself.
Wehaveazero-toleranceapproachagainstintentionaldiscriminationbyanyoneatAptitude.Wealsostronglyencourage
thesameapproachfromourclients,partners,suppliersandinourcommunities.
WebelievethateveryonehasavoiceatAptitudeandtogetherourdiversevoicesfueltheverybestinnovationthat’s
celebratedandadmiredbyothers.Creatingacultureofbelonging,supportandtrustnotonlypositivelyimpactseveryone
atAptitude,weworkwithclientsandpartnerswhosharethesamevaluesandthisinturnhasapositiveimpactonour
businessoutcomesbutalsoforthoseweworkwith.
Equality,Diversityand InclusionmatterstotheGroupbecauseitenablesusto:
• better understand and meet the needs of our clients, placing us ahead of the competition;
• attractandretaintheverybestpeople,supportingthemtoflourishandfullycontributeatwork; and
• buildondifferentperspectives&experiencetocontinuouslyimproveandexcelatwhatwedo.
The Group is committedtofosteringacontinuousimprovementapproachtoEquality,Diversityand Inclusion and has
identifiedanumberofspecificareasoffocusforthenextthreeyearstosupportthis.Thesecommitmentshavebeen
sharedinternallywithallemployeesinconjunctionwiththecommunicationofthenewpolicy.
TheGroup’spoliciesremainconsistentwiththerequirementsoftheUniversalDeclarationonHumanRightsandthespirit
oftheInternationalLabourOrganisationcorelabourstandards.
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Diversity and Inclusion strategy and objectives
Progress made during 2022
AllmembersoftheGroup’ssenior management teamweregivenDiversityandInclusionrelatedpersonalobjectiveswhich
formedpartoftheir2022measurableobjectives.JeremySuddards,ChiefExecutiveOfficer,sponsoredtheestablishment
of the Group’s DiversityandInclusionSteerCo,whichiscomprisedof18employeesacross5countries.Theirfocusfor
2022 was to progress the areas of Diversity and Inclusion focus identified in 2021 and to turn these into actionable
outcomes.TheDiversityandInclusionSteerComadegoodprogress,withsomeoftheirachievementslistedbelow:
• the formulation of thenewEquality,DiversityandInclusionPolicywhichhasbeenformallyapprovedbyboththe
senior management team and the Board;
• the publication of a Diversity and Inclusion Philosophy to all Aptitude team members, including guidelines on
communicationtoensurethisisinlinewiththeGroup’sDiversity and Inclusion mindset;
• thelaunchofaGroupinternalcommunicationchannel‘WeareAptitude’whichisusedtoengageourteammembers
withSteerCoactivities,celebrateDiversity and InclusionacrosstheorganisationandembedtheseintotheGroup’s
values and culture; and
• raisingawarenessthrougharegularseriesofactivitiesandeventsacrossthewholeoftheyeartopromoteawareness
of Diversity and Inclusion.TheseincludedaseriesofworkshopsduringNeurodiversityAwarenessMonth,celebrating
WomeninLeadershipandsharingunderstandingofreligiousbeliefsondaysofcelebrationforanumberofdifferent
faiths.
Progress we intend to make in 2023
AreasidentifiedbytheDiversityandInclusionSteerCothatwillbefocusedonin2023includethefollowing:
• increasingawarenessandunderstandingoftheGroup’sDiversityandInclusion philosophy, through a programme of
initiativesfor2023thatincludesocialmediacampaignsandafullreviewoftheGroup’swebsite;
• rolling out DiversityandInclusiontrainingacrosstheorganisationandthelaunchof‘Lean-InCircles’during2023
(thesearerecognisedsupportnetworksforsmallgroupsofwomen;theirmissionbeingtoempowerallwomento
achievetheirambitions,seewww.Leanin.orgforfurtherinformation);
• improving transparency in the Group’s peoplephilosophiesduring2023,includingafocusoncareerdevelopment
pathsandtransparentleadershipdevelopmentframework;and
• buildingupontheDiversityandInclusiondataalreadyheldbytheGroupbyproactivelyencouragingemployeesto
voluntarilyupdatetheirpersonaldatarelatingtogender,disabilityandethnicity(seebelowforfurtherinformation).
Gender diversity
ThefollowingtablereportsonthegenderdiversityoftheGroup’semployeeson31December2022:
Board
Diversity
TopLeadership
Diversity
TotalWorkforce
Diversity
2022 2021 2022 2021 2022 2021
Men 3 4 6 8 368 352
Women 2 2 4 4 159 124
Total employees 5 6 10 12 527 476
Men% 60% 67% 60% 67% 70% 74%
Women% 40% 33% 40% 33% 30% 26%
Asof31December2022,theBoardcomprisedthreemaleDirectors(60%)andtwofemaleDirectors(40%).TheGroup’s
topleadershipconsistedofsixmen(60%)andfourwomen(40%).Topleadershipisdefinedasthoseresponsibleforthe
planning,directingandcontrollingtheactivitiesoftheGroup.
TheBoardis thereforepleasedtoconfirm thatitalreadycomplies withtheFRC’sforthcomingrecommendationsthat
atleast40%oftheBoardiscomprisedofwomen,andthatoneofitstopleadershiprolesisheldbyawoman(Barbara
MoorhouseistheGroup’sSeniorIndependentDirector).
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The Group has not set itself quantitative targets to increase the gender diversity of its Board and senior management and
allappointmentswillultimatelybemadeonmerit.TheBoardisneverthelesspleasedtobeabletodemonstratepositive
progressinthisareaoverthepast12months.Everyeffortis,andwillcontinuetobe,madetoattractagenderdiverse
pool of candidates for any senior appointments in order to support and encourage female representation in the Group’s
leadershipteaminfutureyears.
The Group continues to take proactive steps to gradually improve female representation throughout the workforce
over time and to ensure that female employees are fully supported in their personal and professional development
pathsandencouragedtoflourishandgrowwithintheorganisation.ThisincludedthelaunchofitsWomeninLeadership
developmentprogrammeinDecember2022andensuringthatgenderdiversityformspartoftheGroup’scurrentDiversity
and Inclusion strategy, asdescribedonpage29.
Gender pay gap reporting
AstheGrouphasfewerthan250employeesintheUnitedKingdom,itisnotrequiredtopublishagenderpaygapreport.
However,theGrouphasinternalprocessestoensurethatsalarylevelsandsalaryincreasesarefairandcomparablefor
maleandfemaleemployeesinequivalentroles.TheseareoverseenbytheGroup’sChiefPeopleOfficerandExecutive
Directorsforthewiderworkforce,andbytheRemunerationCommitteeforseniormanagement.
TheGroupundertookitsfirstinternalgenderpaygapanalysisfor4April2022(inlinewiththeGovernment’sannual
‘snap-shot’dateforgenderpaygapreporting).ThisanalysishasbeenreviewedbytheBoardandcarefulconsideration
was given as to whether to voluntarily disclose data from this analysis in the 2022 Annual Report and Accounts.
It was concluded that the 2022 data did not provide a meaningful baseline from which it could accurately measure
progressyearonyear.TheprimaryreasonforthisisthattheGroupacquiredMPPGlobalSolutionsinOctober2021,
with these employees now making up a significant proportion of the Group’s UK workforce. As the Group does not
havecomprehensivedatarelatingtovariableremunerationforMPPemployeespriortotheacquisitiondate,thedata
is incomplete in this respect. Secondly, the Group undertook an internal restructure during the year, including some
changeswithinseniormanagement,shortlyafterthesnap-shotdate.
AfurtherinternalgenderpaygapanalysiswillbeundertakenforApril2023whichwillprovideamoremeaningful and
accuratepicture.Basedontheindicativefindingsofthe2022review,itisanticipatedthatthe2023analysiswillshow
thattheGroup'sUKgender pay gap is broadlyinlinewiththatoftheUKtechnology sector. Both the 2022 and the
2023genderpaygapanalyseswillalsobesharedwiththeGroup’sDiversityandInclusionSteerCoforitsreviewand
consideration.
Broader diversity data
TheGroupiscommittedtounderstandingthediversityofitsworkforcebeyondgenderrepresentationandbeingableto
sharebroaderdiversitydatawithitsstakeholders.Evolvingthisdataandincreasingtransparencyinthisareaisoneofthe
Group’s stated DiversityandInclusionobjectivesfor2023.However,asaglobalorganisation,Aptitudemustadhereto
regionalrequirementsintermsofhowthisdataiscollectedandused,andthisincludesobtainingexpresspermissionsfrom
non-United Kingdomemployeesincertaincases.TheregionaldistributionoftheGroup’semployeesasat31December
2022wasasfollows:Poland46%;UnitedKingdom34%; North America 17%; Singapore 2%; other regions1%.
The DiversityandInclusionSteerCoisworkingproactivelywithallemployeestoencouragethemtovoluntarilyshare
thisdatainorderthatitcanbeusedtofurtherimprovetheGroup’sunderstandingofthediversityofitsworkforceandto
inform its DiversityandInclusionstrategy.Thisworkwillcontinuethroughout2023anditisintendedthatdataonethnicity
anddisabilitydiversityfortheGroup’swiderworkforcewillbepublishedinthe2023AnnualReport.
This year, the Board and senior management is pleased to be able to lead by example and show a commitment to
progressinthisareabyvoluntarilydisclosinginformationrelatingtotheethnicityanddisabilitydiversity of the Board and
its top leadership team. Thetenmembersofthetop leadership team(definedasthoseresponsibleforplanning,directing
andcontrollingtheactivitiesoftheGroup),wereaskedtovoluntarilydisclosetheirethnicityandwhethertheyheldany
disabilities,usingdescriptorsagreed by the DiversityandInclusionSteerCo.Allmembersof thetop leadership team
describedtheirethnicityas‘white’.Ninemembersrespondedthattheyhadnodisabilities.Onememberconfirmedthat
theypreferrednottosaywhethertheyhadanydisabilities.
TheBoardisawarethatitdoesnotcurrentlycomplywiththeFRC’srecommendationthatatleastonememberofthe
Boardbefrom anon-whiteethnicminority background,whichitwillbe requiredtoreportagainstin its2023Annual
Report.AnyfutureappointmentstotheBoardwillcontinuetobemadeonmerit,butasisalreadythecase,theNomination
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Committeewillproactivelyseektoaccessandattractadiversepoolofcandidatesforconsideration during the recruitment
process.
Environmental Policy
As a supplier of software solutions, the Group has no manufacturing facilities and its premises exclusively comprise
ofofficespaces.Anyobsoleteofficeequipment and computers are resold or recycledtotheextentpracticable.The
Grouphasrecyclingfacilitiesinallitsofficesanduseofwastepaperisminimisedbypromotingapaperlessprocessand
downloadablesoftwareproducts.TheGrouprecognisesthatitsactivitiesshouldbecarriedoutinanenvironmentally
friendlymannerandthereforeaimsto:
• complywithrelevantenvironmentallegislation;
• reducewasteand,wherepracticable,re-useandrecycleconsumables;
• disposeofnon-recyclableitemsinanenvironmentallyfriendlymanner;
• minimise the consumption of energy and resources in the Group’s operations; and
• reduce the environmental impact of the Group’s activities and where possible increase the procurement of
environmentallyfriendlyproducts.
WhilenotwithintheGroup’simmediatecontrol,theGroupalsotakesintoconsiderationtheenvironmentalcredentialsof
datacentresandprovidersofCloudserviceswhenselectingthesekeysuppliers.
Energy and Carbon Action
Approach in 2022
Duringtheyear,theGroupcontinuedtofacilitatethefollowingarrangementstominimizeitsenergyusageandemissions:
• hybrid working practices enabling employees to combine remote working with office-based working thereby
removing any unnecessary travel to and from offices;
• whereappropriate,theimplementationofclientprojectsonaremotebasis,toavoidunnecessaryinternationaltravel
byemployees;
• theuseofadatacentreinPolandwhereelectricityispurchasedfromrenewableenergysourcesandthesitehasan
environmentalmanagementsystemthatiscompliantwiththeISO14001;and
• akeyprovideroftheGroup’scloudinfrastructurebeingcommittedtopoweringitsoperationswith100%renewable
energyby2025.DatacentresusedbytheGroupinOregonandFrankfurtareconfirmedasbeingcarbonneutral.
2023 and beyond
In early 2023 the Group took the decision to dispose of its Warrington lease, as this large office space was highly
under-utilised.TheGroupwillcontinuetoreviewallpropertyusageoverthecomingyear,toensurethatitsleasedoffice
spacesareusedefficientlyandmeettheevolvingneedsoftheworkforce.Whenselectinganyneworreplacementoffice
spaces, environmental considerations aregivenhighprecedenceinthedecision-makingprocess.
ThisyeartheGroupisalsoseekingtominimizeitspaperusageandtheassociatedphysicaldistribution,byencouraging
shareholderstoreceivetheircommunicationsfromtheGroup,includingtheAnnualReportandAccounts,byelectronic,
ratherthanprintedmeans.Printeddocumentswillstillbeprovidedtothoseshareholdersthatexpresslyrequesttocontinue
withpaper-basedcommunications,butintheabsenceofsuchanelection,electroniccommunicationswillbecomethe
defaultmeansofcommunication.TheBoardhopesthatshareholderswillbesupportiveofthisinitiativetominimizewaste
andincreaseefficienciesforthebenefitofboththeenvironmentandthebusiness.Pleaserefertotheletterenclosedwith
thisAnnualReportforfurtherinformation.
Climate-related and carbon emissions reporting
TheGroupcurrentlyreportsitsscope1andscope2emissions,whichcanbefoundonpages36 to 37.TheGroupis
committedtofurtherevolvingitscarbonemissionsandenergyusageanalysisandreportingovertimeandintendsto
commencescope3analysisin2023.TheGroupalsoreportsonitscompliancewiththerecommendationsoftheTask
ForceforClimate-relatedDisclosures(“TCFD”),whichcanbefoundonpages32 to 33.TheGroup’sTCFDreportcontains
furtherinformationabouttheGroup’sapproachtoclimate-relatedmetricsandtargetsanditspathtoanetzeroposition.
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Compliance with the recommendations of the Task Force on
Climate-related Financial Disclosures (“TCFD”)
This is the Group’s second year of reporting against the recommendations of theTCFD and the Board is pleased to have
furtherenhancedthisreportinginlinewiththerecommendations.InrecognitionofListingRule9.8.6R(8),thefollowing
pagessetoutourclimate-relatedfinancialdisclosuresconsistentwiththeTCFDRecommendationsandRecommended
Disclosures as detailed in “Recommendations of the Task Forceon Climate-related Financial Disclosures” 2017, with
useofadditional guidancefrom“ImplementingtheRecommendations of theTaskForceon Climate-related Financial
Disclosures”2021.SetoutbelowaretheareaswheretheGroupisconsistentwiththerecommendations,orwhereit is
notfullyconsistent,howitplanstoachievethis:
Recommendation Recommended disclosures Reference Compliance Comments and next steps
Governance
Disclose the organisation’s
governance around climate‑
related risks and opportunities
a) Describe the Board’s oversight of climate‑
related risks and opportunities
Page 32 Partially consistent We have reviewed our climate-related
governance structure this year and are
implementing measures so that from 2023
we will be fully consistent as explained
below.
b) Describe management’s role in assessing
and managing climate‑related risks and
opportunities
Page 32 Partially consistent
Strategy
Disclose the actual and potential
impacts of climate-related
risks and opportunities on the
organisation’s businesses,
strategy, and financial planning
where such information is
material
a) Describe the climate‑related risks and
opportunities the organisation has identified
over the short, medium, and long term
Page 33 Fully consistent Progress to be continued in 2023.
b) Describe the impact of climate‑related
risks and opportunities on the organisation’s
businesses, strategy, and financial planning
Page 33 Fully consistent Progress to be continued in 2023.
c) Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower scenario
Page 33 Fully consistent Progress to be continued in 2023.
Risk management
Disclose how the organisation
identifies, assesses, and
manages climate‑related risks
a) Describe the organisation’s processes for
identifying and assessing climate‑related
risks
Page 33 Fully consistent Progress to be continued in 2023.
b) Describe the organisation’s processes for
managing climate‑related risks
Page 33 Fully consistent Progress to be continued in 2023.
c) Describe how processes for identifying,
assessing, and managing climate‑related
risks are integrated into the organisation’s
overall risk management
Page 33 Fully consistent Progress to be continued in 2023.
Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate‑related risks
and opportunities where such
information is material
a) Disclose the metrics used by the
organisation to assess climate‑ related risks
and opportunities in line with its strategy
and risk management process
Page 35 Fully consistent Progress to be continued in 2023.
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks
Page 35 Fully consistent In 2023 the Group’s intention is to carry out
a full scope 3 footprint.
c) Describe the targets used by the
organisation to manage climate‑related
risks and opportunities and performance
against targets
Page 35 Partially consistent It is the Group's intention during 2023
to set science‑based targets which are
aligned to a 1.5°C pathway for its scope, 1, 2
and 3 emissions.
Governance
Board level
During the year the Board has undertaken a review of its governance processes relating to climate-related risk and
identifiedanumberofareasforfurtherenhancement.
Throughout the year, the Board had overall responsibility for the management of climate-related matters, including
oversightofclimate-relatedrisksandopportunities.Forexample,theBoardconsidersenvironmentalfactors,including
impactonclimatechange,whenconsideringitssuppliers(datacentres)ornewofficespaces.Fromastrategicperspective,
PhilipWood,DeputyChiefExecutiveOfficerandpreviouslyChiefFinancialOfficer,hasbeenthedesignatedDirectorwith
responsibilityforensuringthattheBoardfulfilsitsclimate-relatedobligationsthroughouttheyearended31December
2022.
From 2023 onwards, climate-related matters will be discussed bi-annually at Board meetings, including monitoring
emissionsfigures,renewableenergyusage,andoversightofotherkeysustainabilityinitiatives.InviewofPhilipWood’s
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pending departure from the business in July 2023, Sara Dickinson, an independent Non-Executive Director and
Chair of the Audit Committee,isnowthedesignatedDirectorwithresponsibilityforensuringthattheBoardmeetsits
climate-relatedobligations.TheBoardissupportedandinformedonclimate-relatedissuesviatheCompanySecretary,
senior management and the Audit Committee.
Management level
At management level, environmental, social and governanceresponsibilities,includingclimate-related matter,sitwiththe
Group’s senior management team.Thesenior management teamisledbyJeremySuddards,ChiefExecutiveOfficer,and
isresponsibleforprovidingoversightofsustainabilityinitiativesatanoperationallevel.Thesenior management team
meetsmonthlybutwillprovidetheBoardwithupdatesonclimate-relatedissuesbi-annually,orwheneverpertinentissues
arise.Theseupdatescouldincludeprogressagainstenvironmentalinitiativesaswellasupdatedemissionsfigures.The
senior management teamcontributestotheidentification,assessment,andmitigationofclimaterisk.
Risk management
The Group has considered all risk and opportunity categories outlined in the TCFD guidance, including existing and
emergingregulatoryrequirements.However,notallriskcategoriesareapplicableormaterialtothebusiness.
During the year, climate-related risks and opportunities were assessed in the context of the Group’s existing risk
managementprocesses(asdetailedonpage32)toallowfortheirrelativesignificancetobedetermined.Theclimate-related
riskassessmenthasbeencarriedoutoverthefollowingtimehorizons:
• Short-term:Nowto2024:AlignswiththeGroup’sshortestofficeleases.
• Medium-term:2024to2027:Alignswiththe Group’smedium-termofficeleases.
• Long-term:2027to2050:AlignstotheUKGovernment’s Net Zero pledge and the longer-term physical impacts of
climatechange.
Whendeterminingthefinancialimpactofouridentifiedclimate-relatedrisks,amaterialitythresholdhasbeenusedthat
isconsistentwiththeexternalauditmaterialitylevel.Thislevelissetas5%ofadjustedprofitbeforetaxandallofour
identifiedclimate-relatedrisksareestimatedtofallbelowthislevel.AstheGroup’soperationshavearelativelylimited
impactupontheenvironment,climatechangewasnotidentifiedasanemergingormaterialriskinthecontextofthe
Group’sactivities.
From2023onwards,theAuditCommitteewilltwiceyearlyformallyreviewanddocumentprincipalandemergingrisks,
including climate change. This assessment takes into consideration the likelihood and potential impact of each risk,
allowingthematerialityoftherisksandopportunitiestobedeterminedandidentifyingthoseriskswhichneedfurther
investigation.
Strategy
The Group recognises the significant potential impact of climate change on environmental and economic systems.
However,asatechnologybusiness,itsclimateexposureislowandtheimpactofidentifiedclimate-relatedrisksislimited.
Threeclimate-relatedscenarioshavebeenselectedtounderstandtheimpactofclimatechangeontheGroup’sstrategy:
• Net Zero 2050
(NZE)
1
:LowcarbonscenariothatmeetstheTCFD’srequirementofabelow2°Cscenario.
• Stated Policies Scenario
(STEPS):Mediumcarbonscenariowhichrepresentstherollforwardofannouncedpolicies.
• RCP 8.5
2
:Highcarbonscenariowhichincludesextremephysicalclimateriskswithlimitedglobalmitigation.
1 https://www.iea.org/reports/world-energy-outlook-2022"WorldEnergyOutlook2022,IEA,Paris
2 IPCC,2014:ClimateChange2014:SynthesisReport.ContributionofWorkingGroupsI,IIandIIItotheFifthAssessmentReportoftheIntergovernmentalPanelonClimate
Change
Each of the Group’s climate-relatedrisksandopportunitieshavebeenanalysedandquantifiedunderthethreescenariosin
linewithdefinitionsforriskimpactoutlinedabove.Theconclusionofthisisthatthebusinessisresilienttoclimatechange.
Theneedforafundamentalchangetobusinessstrategyoradditionalspendasaresultofclimatechangeisunlikely
tooccur.TheGroupwill,however,continuetodevelopitsanalysisasnewdataismadeavailablebothinternallyand
externallyanditwillcontinuetomonitoritsclimateexposuresandactionplansthroughitsriskmanagementframework
andgovernancestructure.
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Climate-related Risks
Twoclimate-relatedrisksthatcouldhavealimitedfinancialimpactontheorganisationhavebeenidentified.
Risk 1. Carbon pricing in the value chain
2. Reputational risks linked to sustainability
performance & reporting
Type Transition (current and emerging regulation) Transition (market); policy and legal
Area Upstream Own operations
Primary potential financial impact Increased cost of purchased goods and services and
inbound transportation
Reputation, higher cost of capital, lower business
opportunities
Time horizon Medium term Medium term
Likelihood Likely Likely
Impact Low Low
Location or service most impacted Purchased goods and services Across the Group
Metrics used to track risks Scope 3 emissions (to be calculated in 2023) Scope 1 and 2 emissions; external environmental, social
and governance ratings.
Risk description and mitigation The Group’s principal value chain emissions originate
from our data centre suppliers. As such suppliers come
under carbon pricing mechanisms, or carbon border
adjustments, this could result in the supplier passing
on the added cost from the carbon tax. The Group
plans to carry out a full scope 3 footprint analysis to
fully understand its upstream emissions exposures.
Even without a full scope 3 analysis, there is comfort
that three of its primary data centres have targets
to be net zero by 2040 at the latest, meaning that a
significant portion of its scope 3 emissions footprint
will be offset with the achievement of these targets. In
addition, the Group have already carried out several
initiatives to reduce our scope 3 emission exposure.
These include hybrid working to reduce commuting
emissions, continuing to implement client projects
on a remote basis where appropriate, resulting in an
ongoing reduction of international travel by employees,
and choosing data centres and cloud infrastructure
providers that are committed to purchasing electricity
from renewable sources. This potential risk would be
greater under the Net Zero 2050 scenario.
There is a rising trend from investors and financial
institutions of incorporating sustainability criteria into
their assessments, with climate change being the
major issue. This is likely to be of greater risk under
the net zero 2050 scenario. Investors are aligning their
portfolios to net zero as well as other environmental,
social and governance metrics and companies face
disinvestment if plans are insufficient. Currently our
lenders have not tied our debt to sustainability criteria
but we will continue to monitor this to ensure we
are in line with their expectations on climate-related
performance. The Group’s current debt levels are also
relatively low, and debt facilities have been secured
in the medium term. We also continue to monitor our
clients’ and our employees’ expectations in this area.
Consideration of other climate-related risks:
Thefollowingriskswerealsoidentified,butweredeemedimmaterial:
Physicalrisks:
a) UnderscenarioRCP8.5,onethirdoftheGroup’sexistingsitesareprojectedtobeinhighorextremelyhighwater
stressedareasby2040
1
.However,wateruseisnotsignificanttotheGroup’soperations.
b) AlloftheGroup’ssitesareinareasofalowtomediumriskofriverineflooding.
c) Exposuretoinsurancecompaniesas clients whichthemselvescouldbeatriskfromhighpay-outsduetoclimate-related
events,suchasstormsorflooding.
1 AssessedusingtheWorldResourcesInstitute’s(“WRI”)AqueductWaterRiskAtlastool.Areasofextremelyhighwaterstress,accordingtotheWRIdefinition,areareas
wherehumandemandforwaterexceeds80%ofresources
Transitionalrisks:
d) Exposuretocarbonpricinginownoperations.Asatechnologycompany,theGroup’soperationsarenotcarbon
intensive,whichlimitsitsexposuretocarbonpricerisksinitsoperations.
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Climate-related Opportunities
Thefollowingclimate-relatedopportunitieshavebeenidentified:
Opportunity
1. Zero emission energy
(e.g.self-generation,RenewalEnergyGuaranteesof
OriginandPowerPurchasingAgreements)
2. Managing resource efficiency (energy,resource
andwaterefficiencies)
Type Energy Source Resource efficiency
Area Operations Operations
Primary potential financial impact Decreased costs Decreased costs
Time horizon Medium‑term Medium‑term
Likelihood Likely Very likely
Impact Medium‑low Medium
Location or service most impacted Office buildings Office buildings
Metrics used to track risks % renewable energy usage Energy and waste consumption
Opportunity description and strategy to capitalise Transitioning to renewable electricity sources (either via
self‑generation or through contracted electricity supply
from power purchase agreements and Renewable
Energy Guarantees of Origin certificates (“REGOs”))
can help in reducing market‑based scope 2 emissions
to zero. Investment in self‑generation would likely
be unfeasible given the Group’s relatively short-term
lease agreements and energy requirements. As the
Group’s office locations are not owned, negotiation with
landlords or REGOs are required to make the switch to
renewables. In the future, the Group can prioritise office
locations with high energy efficiency and access to self‑
generated renewable energy facilities e.g. solar panels,
when looking for new office space. This opportunity will
be greater under the Net Zero 2050 scenario.
The Group aims to reduce and recycle waste wherever
possible and this year there will be a specific focus
on reducing the Group’s remaining paper‑based
communications by encouraging more shareholders
to receive corporate communications electronically.
In addition, improvement of energy efficiency and
reduction of energy consumption with the involvement
of its landlords will provide further opportunities. The
refit of the London office in December 2021 had a key
focus on environmental efficiency, going forward the
selection of any new or replacement office spaces in
the Group’s other regions will be approached similarly.
This opportunity will be greater under the Net Zero
2050 scenario.
Consideration of other climate-related opportunities
One further potential opportunity was also identified, but deemed immaterial at present. The Group is exploring the
application of its products to environmental, social and governancefinancialreportingobligations and engaging with
partners and clients to monitor evolving trends in this area. While it is currently too early to quantify any potential
opportunityfortheGroupinthisarea,workstreamsassociatedwiththisinitiativewillbecontinuedin2023.
Metrics and targets
The Group currently reportsonscope1and2greenhousegas(GHG)emissions,calculatedin-linewiththeGreenhouse
GasProtocol:ACorporateAccountingandReportingStandard.Italsodisclosesitsemissionsintensityandtotalenergy
consumption(seepage37).
TheGrouprecognisesthatglobalwarmingisdrivingclimatechangeandthatgovernments,industryandsocietyneed
toacttomitigatetheeffects.WhiletheGroup’scarbonemissionsarerelativelylow,theBoardremainsfullycommitted
tocontinuingtoreduceitsscope1andscope2emissionseachyearandwillseektodothisbyactivelyencouragingits
landlordstoswitchtorenewableenergysourcesandbycontinuingtoconsiderenergyefficiencywhenselectingany
futureofficepremises.
TheBoardhascarefullyconsideredwhetheritiscurrentlypossiblefortheGrouptosetquantitativetargetsduringto
reduceitsemissionsbyspecificamountsoveradefinedtimeperiod.Itwasconcludedthattodothisinameaningful
manner,theBoardrequiresafullanalysisoftheGroup’sscope3emissionsfootprintandanalysisoftheinitiatives,timing,
andstrategyrequiredtoachievethisambition,whichitwillundertakethisyear.
Itistherefore theGroup’sintentionduring 2023tosetscience-based targets(verifiedbythe ScienceBasedTargets
initiative)whicharealignedtoa‘1.5°C’pathwayforitsscope1,2and3emissions.Thesewillincludenear-termtargetsand
atargetfornetzerofortheGroup’sownoperationsandthoseofitssupplychainby2050,orearlier.
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Energy and Carbon Reporting
The Group is committed to monitoring andreducingitsemissionsyear-on-yearandisawareofitsreportingobligations
underTheCompanies(Directors’Report)andLimitedLiabilityPartnerships(EnergyandCarbonReport)Regulations2018.
2022 performance
The Group calculates itsenvironmentalimpactacrossscope1(directemissions)and2(indirectemissions)emissions
sources.Emissionsarepresentedonbothalocationandmarketbasis. Onalocationbasisourscope1and2emissions
are 244 tCO
2
e (2021: 285 tCO
2
e), a 14% reduction year-on-year. The Group calculates and tracks emission intensity
metrics onarevenuebasis.Emissionsof3.3 tCO
2
e per £1,000,000 turnover are reported for 2022, a reduction of 31%
yearonyear.
The Board is very pleased to report these further significant reductions is its energy use and associated emissions this
year.ThemovetoanewmoreenergyefficientofficeinLondoninDecember2021wasbyfarthemostsignificantfactor
inachievingthesereductions.TheEnergyEfficiencyratingofthenewoffice is C, representing a significant improvement
onthepreviousLondonofficespace(EnergyEfficiencyratingofE).Therefitof the office received a Gold SKA fit-out
sustainabilityrating. Othercontributingfactors included the continuationofahybridworkingpolicyacrossall offices; and
thewarmerwinterinEuropewhichislikelytohaveresultedinlowergasusageinthePolandofficethisyear.
2022 reporting methodology
Thissectionhasbeenpreparedforthereportingperiodof1January2022to31December2022usingthereporting
periodofJanuary2021toDecember2021forcomparison,aswellasincludingtheGHGemissionsfrom2017-2020 as a
pointofreference.
TheGrouphasdefineditsorganisationalboundaryusinganoperationalcontrolapproach.The Group’s figures include
allsites,excludingdatafortheWarringtonoffice,onthebasisthatthesitewasacquiredinlate2021andhassincebeen
disposed.Thisapproachwillalsoallowforcomparabilityinhistoricandfuturereportingyears. For transparency purposes,
theWarringtonsitegeneratedscope1emissionsof2tCO
2
e,scope2emissions(locationbased)of6tCO
2
e and used
40,833kWhoftotalenergyduring2022.IftheWarringtonofficehadbeenincludedintheGroup’s2022locationbased
emissions, the reduction in totalscope1andscope2(locationbased)emissionswouldhavebeen12%, as opposed to
14%.
GHGemissionshavebeencalculatedfrombusinessactivitiesinaccordancewiththeprinciplesandrequirementsofthe
WorldResourcesInstitute(WRI)GHGProtocol:ACorporateAccountingandReportingStandard(revisedversion)and
EnvironmentalReportingGuidelines:IncludingStreamlinedEnergyandCarbonReportingrequirements(March2019).
Emissionshavebeencalculatedusingtheappropriateconversionfactors(e.g.DEFRA2022andIEA2022).
run head 2run head 1
37
Emissions and energy usage from 2017 to 2022
GlobalemissionstCO
2
e
1
Emissions source 2017 2018 2019 2020 2021 2022
Group
YOY
Natural gas 60 55 53 33 31 26 -16%
Company cars
2
2 1 2 2 2 – -100%
Refrigerant 5 4 21 3 – – N/A
Total Scope 1 67 60 76 38 33 26 -21%
Scope2(Locationbased) 445 418 444 321 252 218 -13%
Scope2(Marketbased) 568 366 306 289 -6%
Total Scope 1 + 2 Location based 512 478 520 359 285 244 -14%
Total Scope 1 + 2 Market based 644 404 339 315 -7%
Intensity metric, £m turnover 57.3 59.3 74.4
Normaliser, tCO
2
e per £m turnover 6.3 4.8 3.3 -31%
TotalEnergyUsage(kWh)
3
676,626 517,396 -24%
2021 – 2022 emissions and energy usage comparison
Globalemissions tCO
2
e
1
Emissions source FY 2021 FY 2022
UK
Global
exUK UK
Global
exUK
UK
YOY
Global
exUK
YOY
Group
YOY
Natural gas – 31 – 26 N/A -16% -16%
Company cars
2
– 2 – – N/A -100% -100%
Refrigerant
3
– – – – N/A N/A N/A
Total Scope 1 – 33 – 26 N/A -21% -21%
Scope2(Locationbased) 30 222 7 211 -77% -5% -13%
Scope2(Marketbased) 44 262 12 277 -73% 6% -6%
Total Scope 1 + 2 Location based 30 255 7 237 -77% -7% -14%
TotalScope1+2Marketbased 44 295 12 303 -73% 3% -7%
TotalEnergyUsage(kWh)
4
139,846 536,780 34,810 482,586 -75% -10% -24%
1 These figures are in CO
2
eincludingGHGsinadditiontocarbondioxideandarepartiallybasedonthecountry-specificCO
2
emissionfactorsdevelopedbytheInternational
EnergyAgency,©OECD/IEA2022buttheresultingworkhasbeenpreparedbyAptitudeanddoesnotnecessarilyreflecttheviewsoftheInternationalEnergyAgency.
2 During2022theGrouphadnocompanycarsinuse.
3 Norefrigerantswereconsumedin2022(thishavingbeenatthediscretionofthelandlordoftheGroup’sleasedofficesduring2022).
4 EnergyreportingincludeskWhfromscope1andscope2,convertingunitsofmeasureintokWhifrequired.
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Conflicts of Interest and Whistle-blowing Policy
TheGrouphaswrittenpoliciesregardingtheavoidanceofConflictsofInterestandBriberyandCorruption,includinga
giftsandhospitalitypolicy.AllemployeesarerequiredtoreadandacknowledgethesepoliciesonjoiningtheGroup,
aswellasanysubsequentupdates.
DirectorsarerequiredtodeclareanyactualorpotentialconflictsofinterestwithintheBoarddecisionmakingprocess
and,shouldanysuchconflictsarise,absentthemselvesfromdiscussionsrelatingtothatitemofbusiness.
TheGrouphasawrittenwhistle-blowingpolicywhichisclearlysetoutintheemployeehandbook.Thepolicyenables
workers (including employees and other individuals performing functions for Aptitude, such as agency workers and
contractors)tovoiceanyconcernsinaresponsibleandeffectivemanner.Thepolicystatesthatifaworkerdiscovers
informationwhichtheybelieveshowsseriousmalpracticeorwrongdoingwithintheorganisationthenthisinformation
shouldbedisclosedinternally without fearofreprisal.Adedicatedemail address isprovidedforanywhistle-blowing
concernstoberaised,whichwillbesenttoanindependentnon-executiveBoardmember.Allmatterswillbetreated
withthestrictestconfidenceandtheworker’sidentitywillnotbedisclosedwithouthis/herpriorconsent.Theworker’s
concernswillbeconsideredandfurtherinvestigationundertakenasnecessary.Ifduringtheinvestigationitisdeemed
necessaryfortheidentityoftheworkertobedisclosed,his/herconsentwillbesought.Thematterwillthenbereportedto
theBoardwherebyappropriateactionwillbetaken.Onconclusionofanyinvestigation,asfarasappropriate,theworker
maybeinformedoftheoutcomeandwhataction,ifany,theBoardhastaken,orproposestotake.
Political Donations
TheGroupmadenopoliticaldonationsintheyear(2021:£nil).
Substantial Shareholdings
InaccordancewiththeDisclosureandTransparencyRulesoftheFinancialConductAuthority.Asat31December2022
and as at 20March2023,theCompanyhadbeenadvisedofthefollowingnotifiableinterestsinitsvotingrights:
Numberof
shares as at
31December
2022
% of issued
share capital
as at
31December
2022
1
Numberof
shares held
at 20March
2023
% of issued
share capital
as at
20March
2023
2
CanaccordGenuityGroupInc. 6,802,632 11.9% 6,834,082 11.9%
Schroders plc 6,778,750 11.8% 6,778,750 11.8%
MrsCBarbour,MrBBarbour&BankofNewYorkMellon
(Brussels(Pooled))
4,409,689 7.7 % 4,409,689 7.7%
InvescoLimited 3,104,058 5.4% 3,104,058 5.4%
LongPathSmallerCompaniesFund,LP 2,942,587 5.1% 5,740,410 10.0%
JupiterFundManagementplc 2,739,836 4.8% 2,739,836 4.8%
HeraldInvestmentManagement 1,963,889 3.4% 1,963,889 3.4%
1 Calculatedbyreferencetothenumberofsharesinissueasat31December2022,being57,377,611.
2 Calculatedbyreferencetothenumberofsharesinissueasat20 March2023,being57,377,611.
ThenumberofsharesprovidedinthetableabovereflecttheamountsnotifiedtotheGroupbyeachshareholderatthe
timeoftheTR1announcements.
run head 2run head 1
39
Share Capital
At 20March2023theCompanyhadasingleclassofsharecapitalwhichisdividedintoordinarysharesof71/3pence
each.
Rights and Obligations Attaching to Shares
Voting in Meetings of the Company
Votingatageneralmeetingshallbeonashowofhandsunlessapollisdemanded.Onashowofhands,everyshareholder
presentinpersonandeveryproxydulyappointedbyashareholdershallhaveonevote.Onapoll,everyshareholderwho
ispresentinpersonorbyproxyshallhaveonevoteforeveryshareofwhichheorsheistheholder.
Noshareholdershallbeentitledtovoteatanygeneralmeetingorclassmeetinginrespectofsharesheldbyhimorher
ifanycallorothersumthenpayablebyhimorherinrespectofthatshareremainsunpaid.Currently,allissuedshares
arefullypaid.
Deadlines for Voting Rights
Full details of the deadlines for exercising voting rights in respect of the resolutions to beconsidered at the Annual
GeneralMeetingtobeheldon16May2023aresetoutintheNoticeofMeetingwhichaccompaniesthisreport.
Dividends and Distributions
SubjecttotheprovisionsoftheCompaniesAct2006,theCompanymay,byordinaryresolution,declareadividendtobe
paidtoshareholdersbutnodividendshallexceedtheamountrecommendedbytheBoard.TheBoardmaypayinterim
dividendsorspecial dividendsofsuchamounts, onsuchdatesandin respectofsuchperiodsas theBoardthinkfit.
IfintheopinionoftheBoardtheprofitsavailablefordistributionjustifysuchpayments,theBoardmaydeclareandpay
thefixeddividendsonanyclassofsharescarryingafixeddividend(ifany).Alldividendsshallbeapportionedandpaid
pro-rataaccordingtotheamountspaidupontheshares.
Transfer of shares
SubjecttotheArticles,anyshareholdermaytransferalloranyofhisorhercertifiedsharesinwritingbyaninstrumentof
transferinanyusualformorinanyotherformwhichtheBoardmayapprove.TheBoardmay,atitsabsolutediscretionand
withoutgivinganyreasons,declinetoregisteranyinstrumentoftransferofacertifiedsharewhichisnotafullypaidshare
providedthat,whereanysuchsharesareadmittedtotheOfficialListoftheFinancialConductAuthority,suchdiscretion
maynotbeexercisedinsuchawayastopreventdealingsinthesharesofthatclassfromtakingplaceonanopenand
properbasis.TheBoardmaydeclinetorecogniseanyinstrumentoftransferrelatingtosharesincertificatedformunless
itisinrespectofonlyoneclassofshareandislodged(dulystamped)attheCompany’sregisteredofficeorsuchother
placeastheBoardhaveappointedaccompaniedbytherelevantsharecertificate(s)andsuchotherevidenceasthe
Boardmayreasonablyrequiretoshowingtherightofthetransferortomakethetransfer(and,iftheinstrumentoftransfer
isexecutedbysomeotherpersononhisorherbehalf,theauthorityofthatpersonsotodo).Inthecaseofatransferof
shares in certificated form a recognised clearing house or a nominee of a recognised clearing house or of a recognised
investmentexchangethelodgementofsharecertificateswillonlybenecessaryifandtotheextentthatcertificateshave
beenissuedinrespectofthesharesinquestion.TheDirectorsmayalsorefusetoregisteranallotmentortransferof
shares(whetherfullypaidornot)infavourofmorethanfourtransferees.SubjecttotheArticlesandtheCRESTRules
(asdefinedintheUncertificatedSecuritiesRegulations,asamended),andapartfromanyclassofwhollydematerialised
security,theBoardmaypermitanyclassofsharesintheCompanytobeheldinuncertificatedformand,subjecttothe
Articles,titletouncertificatedsharestobetransferredbymeansofarelevantsystem.
Change of Control
UnderthetermsoftheCompany’sshareoptionschemes,uponachangeofcontroloftheCompanyfollowingatakeover
bid,anoptionholdershallbeentitledtoexercisetherelevantoptionwithinatimeperiodofnotmorethansix(6)months.
ThiswouldallowtheexerciseofawardssubjecttothediscretionoftheRemunerationCommitteeastowhetherrelevant
performanceconditions havebeensufficientlysatisfied.Thereareasmallnumberofclientcontractswhich includea
changeofcontrolclauseinrelationtotheGroup.
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Amendment to the Articles
AmendmentstotheArticlesmaybemadeinaccordancewiththeprovisionsoftheCompaniesAct2006bywayofa
specialresolutioningeneralmeeting.
Appointment and Replacement of Directors
UnlessanduntilotherwisedeterminedbyordinaryresolutionoftheCompany,Directorsshallbenolessthantwo(2)and
nomorethanten(10)innumber.DirectorsmaybeappointedbytheCompanybyordinaryresolutionorbytheBoard.
ADirectorappointedbytheBoardholdsofficeonlyuntilthenextAnnualGeneralMeetingandthenshallbeeligiblefor
re-electionbytheshareholders.
TheBoardmayfromtimetotimeappointoneormoreDirectorstoundertakesuchservicesfortheCompanythatthe
Boardmaydecideandsuchpersons(otherthanthosewhoholdanexecutiveofficeorareemployeesoftheCompany
oranysubsidiary)willbeentitledtobepaidsuchfeesastheBoardwilldeterminefortheirservicestotheCompany
asDirectorsbut willnotexceedin aggregatethesumof £1,000,000perannum(excluding bonusarrangementsand
incentiveschemesoftheCompany)orsuchgreatersumastheCompanyingeneralmeetingmaydetermine.
The Company by ordinary resolution, of which special notice has been given, may remove any Director before the
expirationofhisorhertermofofficeandtheCompanymayelectanotherpersoninplaceofaDirectorsoremovedfrom
office.
TheofficeofDirectorshallbevacatedif:
(i) HeorsheinwritingresignsorofferstoresignandtheDirectorsacceptsuchoffer;
(ii) anorderismadebyanycourtclaimingthatheorsheisormaybesufferingfromamentaldisorder;
(iii) heorsheisabsentwithoutpermissionoftheBoardfrommeetingsforsixmonthsandtheBoardresolvesthathisor
her office is vacated;
(iv) heorshebecomesbankruptorcompoundswithhisorhercreditorsgenerally;
(v) heorsheisprohibitedbylawfrombeingaDirector;
(vi) heorsheisremovedfromofficepursuanttotheArticles;or
(vii) aregisteredmedicalpractitionerwhoistreatingthatpersongivesawrittenopiniontotheCompanystatingthatthe
DirectorhasbecomephysicallyormentallyincapableofactingasaDirectorandmayremainsoformorethanthree
months.
Repurchase of Own Shares
AttheAnnualGeneralMeetingheldon28April2022membersrenewedtheauthorityundersection701oftheCompanies
Act2006tomakemarketpurchasesontheLondonStockExchangeofupto5,720,270ordinarysharesof71/3pence
each.
Theminimumpricewhichcouldbepaidforeachsharewas71/3pence.
Themaximumpricewhichcouldbepaidforeachsharewasanamountequalto:
(a) 105%oftheaverageofthemiddlemarketquotationsforashareasderivedfromtheLondonStockExchangeDaily
Official List for the five business daysimmediately preceding theday on whichthe Company agreesto buy the
shares concerned; or
(b) thehigherofthepriceofthelastindependenttradeofanyshareandthehighestcurrentbidforashareasstipulated
by Article 5(1) of Commission Regulation (EC) 22 December 2003 implementing the Market Abuse Directive as
regardsexemptionsforbuybackprogrammesandstabilisationoffinancialinstruments(2273/2003).
Noshareshavebeenpurchasedunderthisrenewedauthority.AresolutiontogivetheDirectorsfurtherauthorityforthe
CompanytopurchaseitsownsharesistobeproposedattheforthcomingAnnualGeneralMeetingon17May2023.
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41
Significant Contracts
TheredidnotexistatanytimeduringtheyearanycontractinvolvingtheCompanyoranyofitssubsidiariesinwhicha
DirectoroftheCompanywasorismateriallyinterestedoranycontractwhichwaseitheracontractofsignificancewitha
controllingshareholderoracontractfortheprovisionofservicebyacontrollingshareholder.Relatedpartytransactions
aredisclosedonpage144.
Directors
DetailsofDirectorswhohaveheldofficeduringtheyearanduptothedateofsigningthesefinancialstatementsare
givenbelow:
IvanMartin(Chair)
Jeremy Suddards
PhilipWood
BarbaraMoorhouse
SaraDickinson
PeterWhiting(resigned28April2022)
BiographicaldetailsofthecurrentDirectorsaregivenontheinsidefrontcoverofthisAnnualReport.TheCompany’s
ArticlesofAssociationrequireDirectorstoretireandofferthemselvesforre-electionatleasteverythreeyears,however,
theBoardhastakenthedecisionthatallDirectorsshallretireandofferthemselvesforre-electionateachAnnualGeneral
Meeting,inaccordancewiththerecommendationofthe2018CorporateGovernanceCode.
PhilipWoodwillbesteppingdownfromtheBoardinJuly2023,butwillneverthelessseekre-electionbyshareholders
atthe2023AnnualGeneralMeeting.Thiswillbeconditionaluponhisre-electioncontinuingonlyupuntilhisplanned
departureinJuly2023.
TheCompanyhaspurchasedandmaintainedthroughouttheyearDirectors’andOfficers’liabilityinsuranceinrespect
ofitselfanditsDirectors.TheDirectorsalsohavethebenefitoftheindemnityprovisioncontainedatArticle138ofthe
Company’sArticlesofAssociation.PursuanttothisArticle138,theCompanyhasgrantedindemnitiesforthebenefitof
currentandfutureDirectorsof,andtheCompanySecretaryof,theCompanyinrespectofliabilitieswhichmayattachto
themintheircapacityasDirectorsof,orCompanySecretaryof,theCompanytotheextentpermittedbylawandalso
committedtomaintaindirectors’andofficers’insurancecover.Qualifyingthirdpartyindemnityprovisions(asdefinedby
section234oftheCompaniesAct2006)wereinforceduringtheyearended31December2022andcontinueinforce,in
relationtocertainlossesandliabilitieswhichtheDirectors(orCompanySecretary)mayincurtothirdpartiesinthecourse
ofactingasDirectors(orCompanySecretary).
Treasury and Foreign Exchange
TheGrouphasinplaceappropriatetreasurypoliciesandprocedures,whichareapprovedbytheBoard.Thetreasury
functionmanagesinterestratesforbothborrowingsandcashdepositsfortheGroupandisalsoresponsibleforensuring
thereareappropriatefacilitiesavailabletomeettheGroup’sstrategicplans.
InordertomitigateandmanageexchangerateriskarisinginrespectoftheGroup’sInnovationCentreinPoland,theGroup
routinelyentersintoforwardcontractsinrespectofmonthlytransactionswiththatpartoftheGroup’sbusiness.Inthe
meantime,theGroupcontinuestomonitorexchangerateriskgenerallyinrespectofotherforeigncurrencyexposures.
Inorder tomitigateandmanageinterestraterisktheGrouphasinplaceaneffectiveinterestratehedgetomanage
exposureonborrowings.Aninterestrateswapisusedasacashflowhedgeoffutureinterestpayments,whichhas the
effectofincreasingtheproportionoffixedinterestdebt.
Thesetreasurypoliciesandproceduresareregularlymonitoredandreviewed.ItistheGroup’spolicynottoundertake
speculativetransactionswhichcreateadditionalexposuresoverandabovethosearisingfromnormaltradingactivity.
Seepage107forfurtherinformationontheGroup’smanagementoffinancialrisk.
Report of the
Directors
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42
Overseas subsidiaries and branches
DetailsoftheGroup’s subsidiaries, including those in overseas jurisdictions, aredisclosedinNote 12 to the financial
statements. The Group also currently operates overseas branches in the following countries: Australia, Hong Kong,
Ireland,Netherlands,SingaporeandSwitzerland.
Section 172 Statement
The Section 172 Statement is included in the strategic report across pages 16 to 18 and includes details of how the
Directorshavehadregardfortheneedtofostergoodbusinessrelationshipswithcustomers,suppliersandothers.
Auditors and Disclosure of Information to Auditor
AsfarastheDirectorsareaware,thereisnorelevantauditinformation(asdefinedbysection418(3)oftheCompanies
Act2006)ofwhichtheCompany’sauditorsareunawareandeachoftheDirectorshastakenthestepsthattheyought
tohavetakenasDirectorsinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthatthe
Company’sauditorsareawareofthatinformation.
RSMUKAuditLLPwereappointedasauditorson17September2021.Aresolutionregardingtheirre-appointmentwillbe
proposedatthe2023AnnualGeneralMeeting.
Corporate Governance
TheGroup’sstatementoncorporategovernanceisincludedintheCorporateGovernanceStatementonpages43 to 51
andincorporatedintothisReportoftheDirectorsbyreference.
Annual General Meeting
TheforthcomingAnnualGeneralMeetingwillbeheldat9.00amonWednesday17May2023attheofficesofAptitude
SoftwareGroupplc,8thFloor,138Cheapside,LondonEC2V6BJ.TheNoticeoftheAnnualGeneralMeetingcontainsthe
fulltextofresolutionstobeproposed.
ShareholdersarealsoinvitedtosubmitquestionsaheadoftheAnnualGeneralMeeting.PleaserefertotheNoticeof
AnnualGeneralMeetingfordetailsofhowtoappointtheChairmanasaproxyandhowtosubmitquestionsaheadofthe
AnnualGeneralMeeting.
By Order of the Board
Georgina Sharley
Company Secretary
20March2023
Corporate Governance
Statement
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StatementCorporate Governance
Statement of Compliance
The Group has applied the main principles set out in the July 2018 edition of the UK Corporate Governance Code
(“Code”), which is available to view on the website of the Financial Reporting Council (www.frc.org.uk).
The Group has complied with the Code throughout the year ended 31 December 2022. A full statement of compliance
with the principles of the Code is on pages50 and 51.
Board of Directors
Function and operation of the Board
The Board of Directors meets regularly to review strategic, operational and financial matters, including proposed
acquisitions and divestments, and has a formal schedule of matters reserved to it for decision. It approves the interim and
preliminary financial statements, the annual report, the annual financial plan, significant contracts and capital investment
in addition to reviewing the effectiveness of the internal control systems and business risks faced by the Group. Where
appropriate, it has delegated authority to committees of Directors. Information is supplied to the Board in advance of
meetings and the Chairman ensures that all Directors are properly briefed on the matters being discussed. The Board
also benefits from a rolling series of presentations by members of senior management on different areas of the Group’s
business.
All Directors have access to the advice and services of the Company Secretary or a suitably qualified alternative, and all
the Directors are able to take independent professional advice, if necessary, at the Company’s expense.
The Chairman is responsible for leading the Board, setting its agenda and ensuring its effectiveness. The Chief Executive
Officer is responsible for managing the business.
Changes to the Non-Executive Directors and Committee structures during the year
Peter Whiting, former Non-Executive Director, Senior Independent Director and Chair of the Remuneration Committee,
did not seek re-election at the 2022 Annual General Meeting, having served on the Board since 2 February 2012.
On 16 March 2022, Barbara Moorhouse, Non-Executive Director and former Chair of the Audit Committee, assumed
the responsibilities of Chair of the Remuneration Committee and Senior Independent Director. On the same date, Sara
Dickinson stepped into the role of Chair of the Audit Committee.
Future change to Board of Directors
On 24 January 2023 the Group announced that Philip Wood, Deputy Chief Executive Officer and former Chief Financial
Officer, will step down from the Board in July 2023. Philip joined the Board in 2007 and after 16 years with the Group is
planning a career sabbatical to spend more time with his young family. Having previously held a senior finance position
within the Group, Mike Johns is currently performing the role of Acting Chief Financial Officer whilst a formal selection
process is conducted for the role of Chief Financial Officer. Philip will continue his responsibilities as Deputy Chief
Executive Officer until his departure in July 2023. Following the completion of this selection process the number of
Executive Directors on the Board will remain as two.
Independence and re-election of Directors
In accordance with the recommendations of the UK Corporate Governance Code, a majority of the Board is comprised
of independent Non-Executive Directors. Non-Executive Directors are appointed for specified terms, up to a maximum of
three years, and re-appointment is not automatic. There is a formal selection process to appoint Non-Executive Directors
which is led by a separate Nomination Committee.
Barbara Moorhouse is the Senior Independent Director. The Senior Independent Director provides shareholders with
someone to whom they can turn if ever they have concerns which they cannot address through the normal channels, for
example with the Chairman or Executive Directors. They are also available as an intermediary between other Directors
and the Chairman. Whilst there were no requests from Directors or shareholders for access to the Senior Independent
Director during the year, the role serves as an important check and balance in the Company’s governance process.
Notwithstanding the Company’s Articles of Association, all Directors voluntarily offer themselves for annual re-appointment
by shareholders, in accordance with the recommendations of the 2018 Corporate Governance Code. While Philip Wood
will be stepping down from the Board in July 2023, he will nevertheless seek re-election by shareholders at the 2023
Corporate Governance
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Annual General Meeting, in respect of the period from the conclusion of that meeting through to his resignation as a
Director of the Company in July 2023.
The Board considers that all of the current Non-Executive Directors are independent in character and judgement from the
management of the Company and free from any business or other relationship which could materially interfere with the
exercise of their independent judgement. The Non-Executive Directors hold periodic discussions without the Executive
Directors present, in order to provide a forum in which the performance and actions of the executive team and the wider
business can be discussed freely.
Board Committees
The Company has a Nomination Committee, a Remuneration Committee and an Audit Committee. Each of these
Committees have written terms of reference which clearly specify their authority and duties and those terms of reference
are available upon the Company’s website or by written request to the Company.
Nomination Committee
Ivan Martin is Chair of the Nomination Committee. During the year, the Committee also comprised Barbara Moorhouse
and Sara Dickinson.
The Nomination Committee meets at least once a year, and its main responsibilities are to:
• review the structure, size and composition of the Board, its Committees and the senior management team, including
its balance of skills and experience (including gender balance and broader diversity) and make recommendations to
the Board with regard to any changes;
• oversee the process for Board and senior management appointments and recommend new appointments to the
Board for approval;
• consider succession for Directors and senior management, including the identification and assessment of potential
candidates and making recommendations to the Board for its approval; and
• oversee the annual Board effectiveness review process.
During the year, the Committee met three times, with all members present. In addition to this, a separate meeting to
review the effectiveness of the Board was also overseen by the Nomination Committee.
During the year the Committee:
• Carried out a review of the skills of each of the Directors and the independence of each of the independent Non-
Executive Directors prior to the 2022 Annual General Meeting and recommended Directors for election or re-election
at the 2022 Annual General Meeting;
• undertook a full review of succession plans for the Executive Directors and senior management, considering both
short term emergency and long-term planning scenarios, and executive talent management and development;
• oversaw the recruitment and selection of Jennie Mead, Chief People Office. An independent external executive
search firm, Paskpartnership was engaged to support this search. None of the Board have any connection with this
firm; and
• undertook a structured, internally-led Board effectiveness review.
The Committee’s focus in 2023 will be to continue its work in relation to succession planning and executive talent
management. This will include overseeing the selection process for the Group’s future Chief Financial Officer in view of
Philip Wood’s pending departure in July 2023.
The Board and the Committee recognises the importance of promoting all aspects of diversity, including gender, throughout
the Group. When considering any new appointments to the Board, candidates will be chosen against criteria, including
their balance of skills, business experience, independence, qualifications, knowledge, diversity and other factors relevant
to the Board operating effectively. Successful candidates are chosen on merit against these criteria, regardless of race,
gender or religious beliefs, but every effort is made to ensure that a diverse pool of potential candidates is reached via
the recruitment process.
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45
StatementCorporate Governance
Annual Review of Performance and Effectiveness
The annual review of Board effectiveness for the year ended 31 December 2021 took place on 7 March 2022, as detailed
on page 38 of the 2021 Annual Report.
The annual review of Board effectiveness for the year ended 31 December 2022 took place on 3 March 2023.
TheCommittee gave careful consideration as to whether to appoint an independent third party to conduct this review,
with regard to both the potential benefits and cost of doing so. On balance, the Committee concluded that it would be
most appropriate to undertake an internally facilitated review for the year ended 31 December 2022.
The internally-led review for the year ended 31 December 2022 was comprised of a review of the agreed actions from
the previous year’s Board effectiveness review including progress made against these; a review of the strategic decisions
taken by the Board and its Committees over the past 12 months; a review of the collective effectiveness of the Board and
its Committees; and a review of the individual effectiveness of each Board member and the Company Secretary.
The review took the form of a dedicated session held outside of a scheduled Board meeting, and was supported by
materials prepared by the Company Secretary that were circulated in advance, including suggested discussion topics and
areas that the Board might wish to consider as part of the review.
The review of each individual Director, the Chair and the Company Secretary was undertaken without them being present,
taking into consideration performance over the year, their continuing effectiveness and any future development needs.
Feedback to Directors was provided on a one-to-one basis by the Chair of the Board. Feedback was provided to the
Company Secretary by the Deputy Chief Executive Officer. In the case of the Chair, feedback was provided by the Senior
Independent Director.
Actions and objectives were identified from the review and progress against these will be monitored during the year.
Remuneration Committee
Barbara Moorhouse was appointed as Chair of the Remuneration Committee on 16 March 2022. Prior to this, Barbara had
served on the Remuneration Committee since her appointment in 2017.
During the year, the Committee also comprised Ivan Martin and Sara Dickinson. The Remuneration Committee’s Statement
appears on pages 52 to 57 and the Directors’ Remuneration Report appears on pages 58 to 80.
The Remuneration Committee ensures that remuneration of the Executive Directors and senior management is fair,
proportionate and aligned to the strategy of the Group. The Committee meets regularly without the Executive Directors
and senior management present and considers any remuneration decisions in the context of those for the wider workforce
and the financial performance of the Group.
Audit Committee
Sara Dickinson was appointed as Chair of the Audit Committee on 16 March 2022. Sara holds extensive recent and
relevant financial experience as a Chief Financial Officer and is a qualified accountant. During the year the Audit Committee
was comprised of two members, Sara Dickinson and Barbara Moorhouse. In accordance with the recommendations of
the 2018 Corporate Governance Code, Ivan Martin does not serve on the Audit Committee, however, he does attend
meetings of the Committee in the capacity of an observer.
This Report outlines the Audit Committee’s activities and areas of focus during the year.
The Committee provides support to the Board in meeting its statutory responsibilities as set out in the UK Corporate
Governance Code, which requires that Audit Committees have competence relevant to the sector in which the Company
operates. The Board’s view is that the skills and experience of the Audit Committee members are very much relevant to
the Group’s business, as evidenced by the biographies within the Directors and Advisers page at the front of this report.
The Audit Committee also monitors the integrity of the financial statements of the Company and meets regularly with
management and the Company’s external auditors to review and monitor the financial reporting process, the statutory
audit of the consolidated financial statements, audit procedures, risk management, internal controls and financial matters.
RSM UK Audit LLP (RSM) is the Company’s external auditor. RSM have conducted the audit of the Company’s financial
statements for the financial year to 31 December 2022 and their re-appointment as auditor for the following financial year
will be subject to approval by shareholders at the 2023 Annual General Meeting.
External audit partners are rotated every five years (seven years for subsidiary companies). The current external audit
partner is Graham Ricketts who was appointed on 17 September 2021.
Corporate Governance
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The external auditors present in advance of the year end their approach to the forthcoming audit, and present their
findings from the audit following the completion of their work. The Audit Committee assesses the performance of the
external auditors on an annual basis and based on this review the Audit Committee recommends the appointment,
re-appointment or removal of the Company’s external auditors to the Board.
The number of meetings of the Committee and the details of attendance by Committee members are set out at page48.
The Executive Directors attended the Audit Committee meetings throughout 2022 by invitation. The Audit Committee
meets at least annually with the Company’s external auditors without the other Directors present. The external auditors
have unrestricted access to the Audit Committee.
The Audit Committee considers that, in some circumstances, the external auditors’ understanding of the business can
be beneficial in improving the efficiency and effectiveness of advisory work and, therefore, it has been considered
appropriate that the external auditors can be engaged for non-audit services related to certain financial matters where
permitted by the UK Ethical Standards. Both the Committee and the Board keep the external auditor’s independence
under close scrutiny. The Committee also continues to keep under review the nature of the work and level of fees paid
to the external auditors for non-audit work and considers that this has not affected the external auditors’ objectivity and
independence. The Committee delegates the authority for approval of such work to the Executive Directors where the
level of fees involved is clearly trivial. The Group also receives a formal statement of independence and objectivity from
the external auditors each year.
The Audit Committee reports to the Board on how it has discharged its responsibilities. This includes identifying the
significant issues that it has considered in relation to the financial statements and how these issues were addressed,
its assessment of the effectiveness of the external audit process and its recommendation on the reappointment of the
Company’s external auditors together with any other issues on which the Board has asked the Audit Committee’s opinion.
Significant Judgements
The significant judgements considered by the Audit Committee in its review of the financial statements are set out below.
Revenue Recognition
Embedded within the Group’s policy on revenue recognition are a number of areas in which management assumptions
and estimates are necessary.
These principally comprise:
• the assessment on inception of each contract of whether ongoing contractual obligations, charged as software
maintenance, represent a separately distinct performance obligation and promise from the licence;
• the determination of whether these revenues should be recognised over time and the period across which revenue
recognition should take place;
• the assessment that development activity, determined as being the most reasonable measure of recognising software
revenue, is consistent across the period;
• the evaluation by management on a contract-by-contract basis of where revenue should be constrained to the
amount of any amount invoiced and paid. This exists in customers where the product has not yet been deployed into
a live client environment and sufficient challenges exist that would cast doubt over future economic benefits being
realised by the business;
• whether the entry into annual renewal periods represents a new contract; and
• the evaluation of whether implementation services represent a distinct performance obligation and promise from the
licence.
In undertaking their review, the Audit Committee receives both an overview of significant contracts entered into during
the course of the year along with a sample of other contracts entered into prior to 2022 which provides the opportunity
to discuss the impact and application of each of these assumptions and estimates on the contracts selected. The Audit
Committee carefully considered and discussed with the external auditors the revenue recognition on these contracts and
concluded that they are satisfied with the accounting treatment.
As part of the Audit Committee’s normal activities the Committee was provided with an overview of significant balances,
including deferred income, together with the movement on those balances since the previous year end.
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The Committee concluded that the recognition of revenue continues to be in line with the Group’s accounting policy on
revenue recognition.
Annual Goodwill Impairment Review
Goodwill is a material asset on the Group’s balance sheet, and it is the Group’s policy to annually test the asset for
impairment. The judgements in relation to goodwill impairment testing relate to the assumptions applied in calculating
the value in use of the Aptitude business. The key assumptions applied in the calculation relate to the future performance
expectations of the business. Plans prepared by senior management supporting the future performance expectations
used in the calculation were reviewed and approved by the Board. The Audit Committee received a presentation on the
outcome of the impairment review performed by senior management. The Audit Committee concluded that there was no
requirement to impair the carrying value of goodwill at the year end.
Development Costs
As the Group continues to grow its product suite it incurs a significant level of associated costs which this year totalled
£17.0 million. A key area of judgment in respect of development costs is whether any of these meet the criteria set out in
IAS 38 for capitalisation.
The Audit Committee received a presentation from management outlining the review performed on all development
costs incurred during the year against the relevant criteria and concluded that no capitalisation was required.
Tax
The Group operates in a number of territories which increases the complexity of the Group’s tax affairs. Senior management
provide regular updates of the Group’s tax status to the Board and Audit Committee for consideration. The Group
continues to assess the risk that some elements of its supplies in certain USA states would have been subject to sales tax
in previous periods as a result of recent changes in the interpretation and application of sales tax regulations in the USA.
The business continues to work with its external advisors on ensuring it applies sales tax to any new contracts in the USA
where required. In all other aspects the Audit Committee is currently satisfied with the tax position of the Group.
Internal Audit / Assurance Programme
The Group has an internal audit / assurance process, to focus on key areas of risk, both financial and operational within
the business. The Audit Committee, with engagement from the wider Board and senior management, determines the
areas of focus for the programme, such as the review of specific business processes and the improvement and testing
of operational controls. Specialist external organisations with relevant experience in the technology sector are engaged
to support the programme, bringing independence and wider industry knowledge to the process. The results of all work
undertaken under the programme are presented to the Audit Committee.
During the year, the primary focus of the programme was a review of the Group’s product development function, undertaken
by an independent third party firm. The findings of this exercise were presented to the Audit Committee and have been
utilised to shape and inform the Group’s product development strategy, including resourcing and investment priorities.
Progress against the resulting planned product development activities plan is being driven by senior management and is
being monitored by both the Audit Committee and the Board.
During the year, the programme activities also included review of the MPP Global Solutions acquisition which was made
in October 2021 against the original strategic objectives for the acquisition. From this review it was agreed that progress
against these objectives would be reviewed on a six monthly basis.
In 2023, the activities of the programme are expected to include a review of the Group’s internal forecasting process, a
follow up review on the 2022 review of the product development function, and a follow up review on the findings on of
the review of the Aptitude Solutions Delivery Framework undertaken during 2021 to ensure that this remains effective
and fit for purpose.
Accounting Standards
There have not been any new accounting standards effective during the year which had any significant impact on the
Group’s accounting policies and disclosures in these financial statements. The Audit Committee continues to monitor the
application of relevant accounting standards to the Group including standards which are not yet effective, engaging with
the external auditors on this subject as appropriate. None of the new standards which are effective for periods beginning
after 1 January 2023 are expected to have a significant effect on the consolidated financial statements of the Group.
Corporate Governance
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Audit Committee evaluation
During the year, as part of the review of Board effectiveness overseen by the Nomination Committee, the Committee
carried out an evaluation of its effectiveness and concluded that it continued to carry out its role effectively.
Board Attendance
Details of the number of meetings of the Board and its Committees (at which only certain Directors are required to attend)
and individual attendances by Directors are set out in the table below.
Board
Meetings
Audit
Committee
Remuneration
Committee
Nomination
Committee
Number of Meetings held in 2022 9 4 6 3
Ivan Martin 9/9 4/4 6/6 3/3
Jeremy Suddards 9/9 4/4 6/6 3/3
Philip Wood 9/9 4/4 6/6 3/3
Barbara Moorhouse 9/9 4/4 6/6 3/3
Sara Dickinson 9/9 4/4 6/6 3/3
Peter Whiting (resigned on 28 April 2022*) 2/2 1/1 2/2 1/1
Executive Directors attended some committee meetings by invitation. In the case of meetings of the Remuneration
Committee, attendance was for only part of the meetings in question, and the Executive Directors left the meetings when
discussions about their own remuneration were taking place.
During the year, a total of 9 additional ad-hoc Board and Board Committee meetings were also held which are not
included in the above figures, for the purpose of discussing ad-hoc or time sensitive matters. Furthermore, 5 meetings of
a sub-committee relating to the exercise of options under the Company’s share option schemes were held.
* Peter Whiting’s attendance is shown in relation to meetings held during the year prior to his resignation on 28 April 2022.
Management Meetings
The Group’s senior management team meets on a monthly basis and is chaired by Jeremy Suddards, Chief Executive
Officer. Quarterly Business Review meetings are also held with regional management teams within the business to
monitor financial position, sales activities and operational performance.
Capital Structure
The information required pursuant to the Disclosure Guidance and Transparency Rules is detailed on page38.
Social, Ethical and Environmental Risks
The Board takes regular account of the significance of social, environmental and ethical (“SEE”) matters to the Group’s
business of providing software and services.
The Board considers that it has received adequate information to enable it to assess any significant risks to the Company’s
short-term and long-term value arising from SEE matters and has concluded that the risks associated with SEE matters are
minimal. The Board will continue to monitor those risks on an ongoing basis and will implement appropriate policies and
procedures if those risks become significant.
Internal Control
The Group maintains an ongoing process in respect of internal control to safeguard shareholders’ investments and the
Group’s assets and to facilitate the effective and efficient operation of the Group.
These processes enable the Group to respond appropriately, and in a timely fashion, to significant business, operational,
financial, compliance and other risks, (in accordance with the Code), which may otherwise prevent the achievement of
the Group’s objectives.
The Group recognises that it operates in a competitive market that can be affected by factors and events outside its
control. Details of the principal risks identified by the Group are set out in the table on pages22 to 24. The Group is
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committed to mitigating risks arising wherever possible and reviews the risks impacting the business on an ongoing basis.
The Board consider that internal controls, rigorously applied and monitored, are an essential tool in mitigating risks.
The key elements of Group internal control, which have been effective during 2022 and up to the date of approval of
these financial statements, are set out below:
• the existence of a clear organisational structure with defined lines of responsibility and delegation of authority from
the Board to its Executive Directors and operating businesses;
• a procedure for the regular review of business issues and risks by the operating business;
• a planning and management reporting system operated by the operating business and the Executive Directors; and
• the establishment of prudent operating and financial policies.
The Directors have overall responsibility for establishing financial and other reporting procedures to provide them with a
reasonable basis on which to make proper judgements as to the financial position and prospects of the Group, and have
responsibility for establishing the Group’s system of internal control and for monitoring its effectiveness.
The Group’s systems are designed to provide Directors with reasonable assurance that physical and financial assets
are safeguarded, transactions are authorised and properly recorded, and material errors and irregularities are either
prevented or detected with minimum delay. However, systems of internal financial control can provide only reasonable
and not absolute assurance against material misstatement or loss.
The key features of the systems of internal financial control include:
• financial planning process with an annual financial plan approved by the Board. The plan is regularly updated
providing an updated forecast for the year;
• monthly comparison of actual results against plan;
• written procedures detailing operational and financial internal control policies which are reviewed on a regular basis;
• regular reporting to the Board on tax, treasury and legal matters;
• defined investment control guidelines and procedures; and
• periodic reviews by the Audit Committee of the Group’s systems and procedures.
Most of the Group’s financial and management information is processed and stored on computer systems. The Group is
dependent on systems that require sophisticated computer networks. The Group has established controls and procedures
over the security of data held on such systems, including business continuity arrangements.
Controls in respect of financial reporting and the production of the consolidated financial statements are well established.
Group accounting policies are consistently applied and review and reconciliation controls operate effectively. Standard
reporting packages are used by all Group entities to ensure consistent and standard information is available for the
production of the consolidated financial statements.
On behalf of the Board, the Audit Committee has reviewed the key risks facing the Group, and the operation and
effectiveness of its framework of internal control for the year ended 31December 2022, and up to the date of approval
of the Annual Report.
Corporate Governance
Statement
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Application of the 2018 Corporate Governance Code
Main Principles Group Compliance Statement
1. Leadership and Company Purpose
A. A successful company is led by an effective and
entrepreneurial board, whose role is to promote
the long-term sustainable success of the company,
generating value for shareholders and contributing to
wider society.
The Directors bring a broad range of skills and experience to the Board, as shown by their biographies on the
inside of the front cover.
The Directors’ responsibilities are outlined in the Report of the Directors. The Board meets regularly on a formal
basis and for additional ad hoc meetings as necessary.
The Board ensures that appropriate governance mechanisms are in place to support the delivery of the Group's
strategy. These include written terms of reference for the Board and its Committees and effective communication
channels between the Board, senior management and the wider workforce to enable strategic objectives to be
clearly communicated and progress against these monitored.
B. The board should establish the company’s purpose,
values and strategy, and satisfy itself that these and its
culture are aligned. All directors must act with integrity,
lead by example and promote the desired culture.
The Group has a clearly articulated corporate purpose, mission, vision and values. The Board ensures that these
are clearly communicated, understood and demonstrated across the business.
The Board reviews the Group’s strategy on a regular basis with input from senior management to shape and
implement this.
C. The board should ensure that the necessary
resources are in place for the company to meet its
objectives and measure performance against them.
The board should also establish a framework of
prudent and effective controls, which enable risk to be
assessed and managed.
The Board reviews the Company’s performance against its targets and objectives on a monthly basis, with
reference to reports and KPIs prepared by the business.
The principal risks impacting the Company are set out on pages22 to 24.
D. In order for the company to meet its responsibilities
to shareholders and stakeholders, the board should
ensure effective engagement with, and encourage
participation from, these parties.
The Chairman and the Executive Directors meet with key shareholders at least annually and seek their views on
significant matters relating to strategy and governance. This is undertaken via investor meetings in conjunction with
the publication of results, plus individual meetings with key shareholders upon request. Non-Executive Directors
are also available to meet institutional shareholders if requested. The Remuneration Committee Chair ensures that
major investors are actively consulted with on key remuneration matters and responds to any investor questions on
remuneration.
The Company arranges for the Notice of the Annual General Meeting and related papers to be sent to
shareholders at least 20 working days before the meeting and for other general meetings at least 14 clear days
before the meeting. In normal circumstances, all continuing Directors make themselves available at the Annual
General Meeting to respond to any questions raised by shareholders in attendance.
E. The board should ensure that workforce policies
and practices are consistent with the company’s
values and support its long-term sustainable success.
The workforce should be able to raise any matters of
concern.
During the year, the independent Non-Executive Directors, held joint responsibility for engaging with the wider
workforce. The Board, as a whole, reviews engagement activities on a quarterly basis. Subsequent to the year end,
Barbara Moorhouse has been appointed as the designated independent Non-Executive Director with responsibility
for overseeing wider workforce engagement.
Employees are able to raise any concerns with the Senior Independent Director.
2. Division of Responsibilities
F. The chair leads the board and is responsible for its
overall effectiveness in directing the company. They
should demonstrate objective judgement throughout
their tenure and promote a culture of openness and
debate. In addition, the chair facilitates constructive
board relations and the effective contribution of all
non-executive directors, and ensures that directors
receive accurate, timely and clear information.
The Chairman is responsible for setting the Board’s agenda and ensuring that adequate time is available for
discussion of all agenda items, including strategic issues. He promotes a culture of openness and debate by
facilitating the effective contribution of Non-Executive Directors and ensuring constructive relations between
Executive and Non-Executive Directors. In addition, he ensures that the Directors receive accurate, timely and clear
information through Board materials circulated in advance of Board meetings.
G. The board should include an appropriate
combination of executive and non-executive (and, in
particular, independent non-executive) directors, such
that no one individual or small group of individuals
dominates the board’s decision-making process.
There should be a clear division of responsibilities
between the leadership of the board and the
executive leadership of the company’s business.
The Board has an independent Non-Executive Chairman and Executive Directors are responsible for the running of
the Group. All of the Non-Executive Directors are considered by the Board to be independent of the management of
the Company and free from any business or other relationship which could materially interfere with the exercise of
their independent judgment. The Board has included at least three independent Non-Executive Directors (including
the Non-Executive Chairman) at all times during 2022.
Barbara Moorhouse is the appointed Senior Independent Non-Executive Director (“SID”). The SID provides a
sounding board for the Chairman and serves as an intermediary for the other Directors when necessary. The SID
is available to shareholders if they have concerns which contact through the normal channels of the Chairman
or the Executive Directors fail to resolve or for which such contact is inappropriate. The Chairman periodically
holds meetings with the Non-Executive Directors without the Executive Directors being present. Led by the Senior
Independent Director, the Non-Executive Directors meet without the Chairman at least annually to appraise the
Chairman’s performance and on such other occasions as are deemed appropriate.
If the Directors have concerns which cannot be resolved about the running of the Company or a proposed action,
then they ensure that their concerns are recorded in the Board minutes. On their resignation, a Non-Executive
Director must provide a written statement to the Chairman, for circulation to the Board, if they have any such
concerns. The responsibilities of each Non-Executive Board member, the Board as a whole, and the Committees of
the Board are available to view on the Investor section of the Group's website.
H. Non-executive directors should have sufficient
time to meet their board responsibilities. They should
provide constructive challenge, strategic guidance,
offer specialist advice and hold management to
account.
The other significant commitments of the Chairman and the Non-Executive Directors are disclosed in the Annual
Report. Any changes to such commitments are reported to the Board as they arise, and their impact explained in
the next Annual Report. Executive Directors will not be given permission by the Board to take on more than one
directorship in another Company.
The terms and conditions of appointment of Non-Executive Directors are made available for inspection. The letter
of appointment sets out the expected time commitment. The appointed Non-Executive Directors have undertaken
that they will have sufficient time to meet what is expected of them.
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I. The board, supported by the company secretary,
should ensure that it has the policies, processes,
information, time and resources it needs in order to
function effectively and efficiently.
The Board is supplied with management accounts and operational reviews prior to each meeting.
The Board ensures that Directors, especially Non-Executive Directors, have access to independent professional
advice at the Company’s expense where they judge it necessary to discharge their responsibility as Directors.
All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for
ensuring that Board procedures are complied with. The appointment and removal of the Company Secretary is a
matter for the Board as a whole.
3. Composition, Succession and Evaluation
J. Appointments to the board should be subject to a
formal, rigorous and transparent procedure, and an
effective succession plan should be maintained for
board and senior management. Both appointments
and succession plans should be based on merit and
objective criteria and, within this context, should
promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
A separate Nomination Committee, comprising all the Non-Executive Directors (including the Non-Executive
Chairman), is responsible for identifying and nominating candidates to fill Board vacancies and for ensuring that
succession planning happens on an ongoing basis. A disclosure in relation to the composition and activities of the
Nomination Committee under Code Provision 23 is set out on page44.
The Board's approach to Diversity and Inclusion and strategic objectives linked to promoting diversity within the
Group can be found on page 29.
Details of the diversity of the Board and how the Board will approach any future appointments can be found on
page 30.
K. The board and its committees should have a
combination of skills, experience and knowledge.
Consideration should be given to the length of service
of the board as a whole and membership regularly
refreshed.
The Chairman ensures that new Directors receive an induction on joining the Board. Any training needs required
by the Directors will be discussed with the Chairman.
All Directors have extensive business experience and possess relevant and updated skills and knowledge to
perform their duties. Length of service and succession planning for the Board is considered as part of the annual
review of Board effectiveness.
L. Annual evaluation of the board should consider its
composition, diversity and how effectively members
work together to achieve objectives. Individual
evaluation should demonstrate whether each director
continues to contribute effectively.
An annual review of the effectiveness of the Board, its Committees, the Directors and the Company Secretary
is undertaken, prior to Directors being offered for re-election by shareholders. Details of how this review was
conducted in respect of the year ended 31 December 2022 can be found on page45.
The Executive Directors also receive an annual performance appraisal as part of the Management Bonus Scheme.
The performance of each Board Committee is reviewed on an annual basis.
Non-Executive Directors are appointed for specific terms, up to a maximum of three years and re-appointment is
not automatic. The Articles of Association require one-third of Directors to retire in rotation at each Annual General
Meeting, but all Directors voluntarily offer themselves for annual re-election by shareholders. The Board sets out to
shareholders in papers accompanying a resolution to elect a Non-Executive Director the reasons why they believe
an individual should be elected. The Chairman confirms to shareholders when proposing re-election that the Non-
Executive Director’s performance remains effective.
4. Audit, Risk and Internal Control
M. The board should establish formal and transparent
policies and procedures to ensure the independence
and effectiveness of internal and external audit
functions and satisfy itself on the integrity of financial
and narrative statements.
The Company operates an internal Assurance and Improvement Programme which is overseen by the Audit
Committee and endorsed by the Board.
The Audit Committee monitors and assesses the independence and effectiveness of the external Auditor. It does
this through feedback from the Executive Directors, senior management and other employees who are involved
with the external audit process. Consideration is given to the comprehensiveness of the audit planning documents
and the effectiveness of the communication of the audit plan to the Committee.
The Audit Committee ensures that it meets with the external Auditor without the presence of the Executive
Directors at least once a year.
The Audit Committee is comprised of all Non-Executive Directors, excluding the Non-Executive Chair, in
accordance with the recommendations of the 2018 Corporate Governance Code. The Audit Committee meets
at least three times a year. The Board ensures that at least one member of the Audit Committee has recent and
relevant financial experience and that all members have competence and experience relevant to the sector in
which the Company operates.
N. The board should present a fair, balanced and
understandable assessment of the company’s position
and prospects.
The Board considers that the Strategic Report and Financial Statements for the year ended 31December 2022
present a fair and balanced assessment of the Group’s performance and conditions.
O. The board should establish procedures to manage
risk, oversee the internal control framework, and
determine the nature and extent of the principal risks
the company is willing to take in order to achieve.
The internal Assurance and Improvement Programme monitors key risk factors impacting the Group. External
organisations with industry specific and risk management expertise are utilised to support this programme where
appropriate. A summary of the principal risk factors impacting the Group are set out on pages22 to 24.
5. Remuneration
P. Remuneration policies and practices should be
designed to support strategy and promote long-term
sustainable success. Executive remuneration should
be aligned to company purpose and values, and
be clearly linked to the successful delivery of the
company’s long-term strategy.
Financial and non-financial objectives are set for Executive Directors and performance against these determine
Executive bonus levels. These objectives are directly linked to the purpose and long-term strategy of the Group.
The Remuneration Policy is regularly reviewed to ensure that this supports the long-term success of the Group. The
current Remuneration Policy was adopted by Shareholders in 2020. An updated Remuneration Policy will be put to
Shareholders at the Annual General Meeting to be held in May 2023. The Remuneration Committee has proactively
engaged with major investors on the proposed updates to the Remuneration Policy and the implementation of the
Remuneration Policy in 2023.
Further details can be found on page 52.
Q. A formal and transparent procedure for developing
policy on executive remuneration and determining
director and senior management remuneration should
be established. No director should be involved in
deciding their own remuneration outcome.
The Remuneration Committee has delegated responsibility for setting the remuneration of the Executive Directors
and the Group’s senior management, including the Company Secretary. A disclosure in relation to the composition
of the Remuneration Committee is set out on page45.
Reference is made to information from independent sources when setting remuneration outcomes, including
advice from external remuneration consultants and, if required the Company’s Human Resources function.
R. Directors should exercise independent judgement
and discretion when authorising remuneration
outcomes, taking account of company and individual
performance, and wider circumstances.
Executive Directors were invited to attend parts of the Committee’s meetings in 2022, however, no Director was
present during a discussion regarding his remuneration.
The Remuneration Committee will exercise its powers of discretion, where appropriate, to ensure fair and
reasonable remuneration outcomes for Executive Directors in the context of both the Group and individual
performance.
Non-Executive Directors’ fees are approved by the Board as a whole.
Directors’ Remuneration
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StatementDirectors’ Remuneration
Introduction
On behalf of the Board, I am pleased to present the Remuneration Committee’s (“Committee”) report of the Directors’
remuneration for the year ended 31 December 2022. This report summarises the Committee’s decisions in relation to
Directors’ remuneration in 2022, describes the proposed updates to the Directors’ Remuneration Policy (“Policy”), and
details how the Committee proposes to implement the new Policy in 2023.
Business context and wider workforce remuneration
The Group’s ability to deliver against its strategic objectives is reliant on having a highly skilled workforce to develop
and implement its products. People are therefore at the very centre of our growth strategy. Aptitude is a global company
with a relatively small employee population. Our major centres of employment are the UK, Poland and North America
with additional staff in other jurisdictions including Singapore and Australia. A number of factors impact recruitment and
retention in each of these markets, with current local inflationary trends being an important influence. In April 2022, the
Group awarded pay rises having regard to those markets’ inflation rates.
We believe that the employment markets for the sector will remain highly competitive in the coming years and we are
mindful of this when shaping our recruitment and retention strategies. We have always ensured that our approach to
executive remuneration is closely aligned to that of our wider workforce, for example in relation to retirement benefits,
and we shall continue to take this approach in 2023 and beyond.
Future Board changes
As explained on page 4, Philip Wood, Deputy Chief Executive Officer and previously Chief Financial Officer, will leave
Aptitude in July 2023. The Committee will therefore be responsible for setting the remuneration of a new Chief Financial
Officer in 2023 once the formal selection process has been completed. Factors that will be taken into consideration
when setting this package will include the level of skill and expertise of the individual, market rates in the sector and the
overall remuneration structure for the Group’s broader leadership team. Naturally, the arrangements will be in line with
our Remuneration Policy and our stated approach to the recruitment of new Executive Directors, as set out on page 44.
Philip will continue to receive his salary, pension and benefits until the date on which he leaves, albeit on a reducing basis
as his time commitment to the Group reduces. Philip will not be eligible to earn a bonus for the proportion of 2023 for
which he is employed and will not receive a Performance Share Plan (“PSP”) award for 2023. In line with the Policy, Philip
Wood will retain his Deferred Bonus Plan (“DBP”) awards (including those to be granted in respect of the 2022 bonus) and
his PSP awards granted in 2018 and 2019 for which the performance periods have ended. These retained PSP and DBP
awards will remain subject to the existing timelines. His other PSP awards will lapse.
Our Directors’ Remuneration Policy
Our current Directors’ Remuneration Policy was approved by shareholders at the Company’s 2020 Annual General
Meeting, with over 93% of votes in favour of it. The next shareholder vote on the Policy will take place at this year’s Annual
General Meeting.
The Committee has reviewed the existing policy and has concluded that it remains broadly fit for purpose. The proposed
updates will ensure that there is sufficient flexibility in the Policy for the next three years to enable us to attract, retain and
incentivise high calibre individuals and maximise the Group’s growth potential. Some additional headrooms are therefore
being proposed in relation to incentive pay opportunities, to allow for any material trends in recruitment practice and
degree of competition in senior executive appointments.
There is no intention to utilise the additional headrooms in the year ended 31 December 2023 or in future years unlessa
business response is required to employment market trends. The additional headrooms will not be used in relation to the
recruitment of Philip's Wood replacement in 2023. However, over the three year period of this policy, we need to ensure
that we have sufficient flexibility to address potential market dynamics across our geographic regions.
The proposed amended policy is set out below as Part A of this report. The proposed updates can be summarised as
follows:
• Management Bonus Scheme - Quantum (annual bonus): In the current Policy, the maximum annual bonus award is
125% of salary. An increase to 150% of salary is proposed. The opportunity will remain at 125% in 2023 and there is
no present intention to utilise the additional headroom beyond 2023 unless required.
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• Management Bonus Scheme – Deferral: The current Policy provides for deferral into shares for two years of 20% of
any bonus earned. This will remain unchanged.
• Performance Share Plan (“PSP”): The current Policy permits the grant of PSP awards at the maximum of 125% of
salary. As with the annual bonus, an increase to 150% is proposed, to ensure we have flexibility over the life of the
new Policy. The PSP opportunity will remain at 125% in 2023 and there is no present intention to utilise this additional
headroom in future years except in relation to market changes. The 200% of salary exceptional circumstances limit
for the PSP will not be increased in the new Policy. A separate resolution will be proposed at the 2023 Annual
General Meeting to make a corresponding change to the limit in the PSP rules.
• Retirement Benefits: The current Policy provides for the Group to match Director contributions on a 2:1 basis with
employer contributions not exceeding 6% of basic salary. In line with usual practice, the current Policy permits a
cash allowance in lieu of pension to be provided. The 6% of salary level is consistent with the pension contributions
provided to the wider workforce. The new Policy will retain the alignment with the wider workforce, but include a
minor new flexibility to increase the contribution if the wider workforce rate is increased.
• Recruitment Policy: Each of our Executive Directors has a service contract with a 6 month notice period. In the new
Policy, we will include flexibility to set a notice period of up to 12 months for any newly appointed Executive Director,
and we would utilise that flexibility only on the basis the notice period was the same from both the new Executive
Director and from Aptitude.
The principles of our existing Policy will remain largely unchanged. However, to align with leadership and talent development
across all levels of the Company, we are placing additional emphasis to the importance of talent management and
employee retention within these. These principles are set out below, with the updated wording shown in bold:
• Ensuring remuneration arrangements support Aptitude’s business strategy, including the attraction and retention
of a motivated and talented workforce.
• Aligning the interests of Executive Directors and senior management with those of the shareholders.
• Encouraging behaviours which will enhance the performance of Aptitude and reward achievement of its strategic
and financial goals.
• Determining remuneration by reference to individual performance, experience and prevailing market conditions, with
a view to providing a package appropriate to the responsibilities involved.
• Ensuring that an appropriate proportion of the overall remuneration package is incentive pay, which is earned for the
delivery of stretching performance conditions.
Approach to Executive Remuneration in 2022
Salaries
The Executive Directors’ salaries were increased with effect from 1 April 2022 as disclosed in the 2021 Remuneration
Report. Jeremy Suddards’ salary was increased to £315,000, being the second part of a phased increase across 2021
and 2022, since his promotion to the Board in September 2019. Philip Wood’s salary increased to £266,746 in line with
the salary increases received by the wider workforce. The Group’s approach to Executive Director salaries for 2023 is
discussed on page 58.
Variable remuneration outcomes:
The overall performance of the Group in 2022 is discussed in the Strategic Report on pages 2 to 42.
Management Bonus Scheme
In line with our usual practice, the 2022 maximum bonus opportunity for 2022 was of 125% of salary. As in previous
years, 75% of the bonus opportunity was based on performance against financial metrics, being a combination of Annual
Recurring Revenue (“ARR”) and Operating Profit achieved in the year (weighted 50:50), with the remaining 25% based on
non-financial objectives specific to each individual. Details of the financial and non-financial performance measures set
for the year ended 31 December 2022 and the achievements against them are set out on page 69.
The Committee determined that Jeremy Suddards’ 2022 objectives were partially met and consequently he earned a
bonus of £65,707 (20.9% of salary out of a maximum of 125% of salary) for the year ended 31 December 2022.
Directors’ Remuneration
Statement
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Philip Wood’s objectives were also partially met and he earned a bonus of £48,973 (18.36% of salary out of a maximum of
125% of salary) for the year ended 31 December 2022.
20% of each Executive Director’s bonus will again be paid in the form of shares deferred for a period of two years.
Performance Share Plan awards granted in 2022
In our 2021 Directors’ Remuneration Report we said that awards could be granted up to a maximum of 125% of salary.
We made our annual grant of PSP awards on 22 November 2022, at 125% of salary for Jeremy Suddards and 100% of
salary for Philip Wood. Ahead of making the 2022 grant, we recognised that, given the prevailing share price it was
appropriate to reduce the number of shares that would be awarded to each Executive Director, and a 10% reduction to
the number of shares was therefore applied. Accordingly on 22 November 2022, Jeremy Suddards and Philip Wood
were granted Performance Share Plan awards over 98,300 and 66,593 shares respectively. Philip Wood's award will
lapse when he leaves the business in July 2023. The level of the reduction was determined by balancing the experience
of shareholders and the need to provide a meaningful incentive to the Executive Directors, which included taking into
account the relatively modest starting level of the grant. The Committee retains the discretion to adjust at vesting to
ensure that the vesting outcome reflects the overall financial performance of the Group.
The performance conditions for the awards granted in 2022 are 75% attributable to TSR and 25% attributable to EPS
growth, which is consistent with the approach taken in 2021. The rationale for the 75:25 weighting is to align the 2022
performance measures with the Group’s strategic focus of maximising revenue growth in order to support long term
growth in the Group’s share price. Details of the performance measures are set out on page 69. EPS will be assessed
following the end of 2024, with TSR assessed over three years from the date of grant of the awards. The awards will be
subject to a two year holding period following the end of the TSR performance period.
Vesting of Performance Share Plan awards
No PSP awards were capable of vesting in respect of a performance period ending in 2022.
Consultation with shareholders
We recognise the importance of engagement with shareholders in relation to our remuneration arrangements. In March
2022, we wrote to our major investors to explain our approach to Executive Director salary increases on 1 April 2022,
as had been initially communicated in the 2021 Directors’ Remuneration Report. No significant concerns were raised by
investors in connection with our approach.
In relation to our Remuneration Policy, we wrote to our major investors and proxy advisors in December 2022, setting out
the proposed updates that will be subject to Shareholder approval at the 2023 Annual General Meeting, and explaining
our intended approach to executive remuneration in 2023. We received responses from 12 of the 16 major investors, and
were pleased to have the opportunity to listen to their views in relation to our proposals.
I am pleased to confirm that the majority of investors with whom we engaged were supportive of the proposed updates.
We would like to thank the investors that took the time to give us specific and direct feedback on their views.
Employee incentivisation and engagement
Remuneration packages for our Executive Directors are focused on meeting performance targets and personal objectives
that support the delivery of the Group’s agreed strategy and growth plans. To the maximum extent possible, this
approach is extended across the wider leadership team and beyond. For leadership team members this is achieved
through participation in the PSP and management bonus scheme. All wider workforce members are eligible to join our
Sharesave Scheme and to participate in the Group profit share scheme, sales commission or other variable pay plans
(depending upon the nature of their role). Outcomes under each of these schemes and bonus plans are supervised by
the Remuneration Committee and the Board.
The Committee engages directly with the Executive Directors to explain the link between the performance measures for
the annual bonus (with particular focus on the non-financial measures) and the PSP awards and the Group’s strategy and
growth plans. Under the guidance of the Committee, the Executive Directors engage with the senior management on an
equivalent basis, via a combination of collective team briefings and one-to-one sessions, which provide the opportunity
for discussions and questions on remuneration arrangements. Senior management then cascade this information deeper
into the wider workforce as appropriate.
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Ongoing feedback is also sought from the wider workforce on a range of satisfaction measures, including pay and
benefits through various regular forums and methods, and these results are shared with management and the Committee
members on a regular basis.
Approach to Executive Director remuneration in 2023
The Group’s approach to remuneration in 2023 will be in line with the Policy and in accordance with the recommendations
of the 2018 UK Corporate Governance Code.
As explained above, the updated Policy, which will be subject to Shareholder approval at the 2023 AGM, contains some
additional headrooms in relation to incentive pay opportunities to allow for any material developments in recruitment
practice and degree of competition in senior executive appointments over the three year life of the policy. There is no
intention to utilise the additional head rooms in 2023, nor any intention to utilise these in future years unless significant
changes inemployment market trends and dynamics require a business response. The additional headrooms will ensure
that we have sufficient flexibility to address potential market dynamics across our geographic regions.
Our approach to Executive Remuneration in 2023 will be as follows:
Executive Director base salary increases
Jeremy Suddards’ salary will be increased with effect from 1 April 2023 to £326,970, an increase of 3.8%, which is in line
with the applied increase being awarded to the UK workforce on 1 April 2023 and below the average increase for the
Group’s entire workforce. For all our employees, including the wider workforce and the Executive Directors, we maintain a
watching brief on the competitiveness of base salary levels and, should these become misaligned, we may look to review
and address these, subject to continued strong corporate and individual performance.
Philip Wood will not receive a salary increase on 1 April 2023 in view of his planned departure from the business in July
2023.
Management Bonus Scheme
For 2023, the maximum bonus opportunity for Executive Directors will be 125% of salary, in line with 2022. The level of
bonuses earned will be subject to the achievement of appropriate performance measures. 75% of the opportunity will
be based on financial performance measures (expected to be based on Operating Profit and Annual Recurring Revenue
with an equal weighting) and 25% on non-financial measures linked to the delivery of the Group’s key strategic goals.
Thepayment of any bonus in respect of non-financial measures will be conditional on the achievement of a financial
underpin. A bonus deferral mechanism will continue to be applied, meaning that 20% of any bonus payment earned will
be subject to a deferral period of two years and payable in shares. Philip Wood will not be eligible to earn a bonus for
2023.
PSP awards
The maximum PSP opportunity will be up to 125% of salary, in line with 2022. We will grant PSP awards after the release
of the half yearly results and will have regard to share price performance and other relevant factors when confirming the
grants. Philip Wood will not receive a PSP award in respect of 2023.
The performance measures will include a relative Total Shareholder Return (“TSR”) measure for at least 50% of the award
and at least one other financial metric, such as EPS. The TSR measure will compare the Group’s TSR performance against
a comparator group consisting of the FTSE SmallCap Index (excluding investment trusts) over a three year period from
the date of grant, with 25% vesting for median performance rising to 100% for upper-quartile performance. In line with the
Group’s usual practice, awards are intended to be granted following announcement of the interim results. The weighting
of the performance measures and the performance targets for the other financial metric will be disclosed both at grant
and in the 2023 Directors’ Remuneration Report.
Retirement benefits
Pension contributions for Executive Directors remain at 6% of salary in accordance with the Directors’ Remuneration
Policy, a level which is consistent with pension contributions provided to the wider workforce.
Looking ahead – key focus areas for the Committee for 2023
A priority for the Committee in 2023 will be to shape the remuneration package for a new Chief Financial Officer to
support the formal selection process conducted by the Nomination Committee. In the intervening period, the Committee
Directors’ Remuneration
Statement
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is also responsible for ensuring that the remuneration arrangements for the Acting Chief Financial Officer, Mike Johns,
are appropriate.
As part of our revised people strategies to support talent management, we will want to consider how best to balance the
Remuneration Policy applied to the Executive Directors with the approach to other members of our leadership teams,
especially those based in geographies other than the UK. We intend to consider whether there might be new remuneration
strategies more appropriate below the level of Executive Directors. For the entire workforce, consideration will also be
given to the impact of broader macro-economic factors including inflationary trends.
Reporting and policy requirements
This report comprises:
Part A being the Directors’ Remuneration Policy, which sets out our forward-looking remuneration policy for Directors
and will be subject to a binding vote at the 2023 Annual General Meeting. Subject to that vote, it will come into force with
effect from the close of that meeting; and
Part B being the Annual Report on Remuneration, which provides details of the amounts earned by Directors in respect of
the year ended 31 December 2022. This will be subject to an advisory vote at the 2023 Annual General Meeting.
Compliance
This report (comprising this introduction and Parts A and B) has been prepared in accordance with the Companies Act
2006 and The Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008. It also meets
the requirements of the FCA’s Listing Rules and the Disclosure and Transparency Rules. The Committee has further
adopted the principles of good governance as set out in the 2018 version of the UK Corporate Governance Code, in
respect of the year ended 31 December 2022.
The Group employs fewer than 250 employees in the United Kingdom and accordingly is not required to disclose a
Chief Executive Officer (“CEO”) pay ratio calculation. During 2022 the Remuneration Committee did conduct an initial
internal assessment of the CEO pay against the wider workforce. Given that most of its workforce is outside of the UK,
the Group established that there is a tension between the desire to measure and voluntarily publish the CEO pay ratio
and operating within a global environment in multiple countries. The Group considers that the publication of such a
calculation would not provide a meaningful disclosure given the geographical spread of the workforce and the impact of
location on appropriate levels of remuneration. However it did conclude that the CEO pay ratio would be below median
in comparison to its peer group.
The Group has internal processes in place to ensure that pay levels across the Group are fair in relation to industry
levels, role type and also across men and women within the Group. Further details of how the Group ensures this can be
found on page 29. Information in relation to wider workforce remuneration is provided to the Committee in order that its
decisions on remuneration for Executive Directors and senior management are taken in the context of wider workforce
pay.
How the Committee has addressed Provision 40 of the UK Corporate Governance
Code
Clarity
Performance metrics and personal objectives for the executive team reflect the Group’s targets and strategic objectives
and performance against these is scrutinised by the Committee. A balance is thereby achieved between the interests of
the Group’s shareholders, its wider stakeholders and incentivising the executive team.
Simplicity
The elements of the Group’s executive remuneration packages are clearly communicated internally and externally and
are in line with accepted market practice, avoiding unnecessary complexities and ensuring transparency. As noted above,
during 2023 the Committee will be considering in particular the approach to remuneration arrangements for members of
our leadership team other than Executive Directors, having regard to where they are based in addition to other relevant
factors.
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Risk
Performance metrics and personal objectives are set at levels that are considered stretching but achievable.
Remuneration packages are reviewed by the Committee to ensure that these are market-competitive and allow the
Group to attract and retain talented employees with the skills and capabilities that are necessary to drive forward the
growth and success of the Group.
PSP awards granted to Executive Directors are subject to a total vesting period of five years. In-service and post-employment
shareholding guidelines and a bonus deferral arrangement are in place to support long term engagement and discourage
short-termism.
As explained above, during 2022 the Committee reduced the number of shares subject to the Executive Directors' PSP
awards having regard to the share price at the time of grant. This action mitigated the risk of windfall gains arising in
respect of these awards.
Predictability
Details of ‘minimum’, ‘on-target’, ‘maximum’, and ‘maximum’ (with an assumed 50% share price increase) remuneration
that may be earned by the Executive Directors in the forthcoming year are clearly shown on page 62.
Proportionality
Salary reviews are considered in the context of those being awarded to the wider workforce. Pension arrangements are
also in line with the wider workforce.
The vesting of Performance Share Plan awards is subject to a financial underpin and the Committee has the ability to vary
any formulaic vesting outcomes.
Alignment to culture
Performance metrics and personal objectives are intentionally aligned with the Group’s corporate purpose, values and
strategic objectives. These values are embedded in the remuneration arrangements for all levels of the organisation in
order to support the collective delivery of the Group’s strategy.
Directors’ Remuneration
Report
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ReportDirectors’ Remuneration
A. DIRECTORS’ REMUNERATION POLICY (“POLICY”)
This part of the Report sets out the Company’s Directors’ Remuneration Policy, which, subject to shareholder approval
at the 2023 Annual General Meeting, shall take binding effect from the close of that meeting. This part of the Report is
unaudited.
The differences between this Policy and the Directors’ Remuneration Policy approved at the Company’s 2020 Annual
General Meeting and the rationale for them are summarised in the Remuneration Committee Chair’s statement on page52.
Remuneration policy for Executive Directors
Executive Directors’ Policy Table
Purpose and link to
strategy Operation Maximum opportunity Performance metrics
Basic salary
To pay a competitive basic salary to
attract, retain and motivate the talent
required to operate and develop the
Group’s businesses and to develop and
deliver the Group’s strategy.
Basic salaries are ordinarily reviewed
on an annual basis taking into account
a number of factors including (but not
limited to):
(i) scope of the role;
(ii) performance and experience of the
individual;
(iii) pay levels at comparable companies;
and
(iv) pay and conditions elsewhere in the
Group.
Basic salaries are reviewed when an
individual changes role or responsibilities.
While no maximum salary level has been
set, salary increases will typically not
exceed the increases awarded to other
employees in the Group (in percentage of
salary terms).
In appropriate circumstances, increases of
a higher amount may be made taking into
account individual circumstances such as:
• an increase in scope or responsibility
of the individual’s role;
• development of the individual
within the role (including enhanced
performance);
• alignment to market level; and
• a change in the size or complexity of
the business.
None, although overall performance
of the individual will be taken into
consideration by the Committee when
setting and reviewing salary levels.
Retirement benefits
To provide an opportunity for Executives
to build up income for retirement.
All Executive Directors are eligible
to participate in the Group Personal
Pension Scheme on the same terms
as other employees. In appropriate
circumstances, Executive Directors may
receive a cash allowance in lieu of a
pension contribution, or a combination
of a pension contribution and a cash
allowance.
Pension contribution
The Group matches employee
contributions on a 2:1 basis with employer
contributions not exceeding 6% of basic
salary. No element other than basic salary
is pensionable.
Cash allowance
The maximum cash allowance (after
deducting any employer pension
contribution) is 6% of basic salary.
The maximum pension contribution and/or
cash allowance may be increased to take
account of any increase to the retirement
benefits provision for the wider workforce.
None.
Benefits
To provide market-competitive benefits.
Executive Directors receive benefits which
consist primarily of income protection in
the event of long-term ill health, private
healthcare insurance and death-in-service
benefits.
Other benefits may be provided based
on individual circumstances, such as
relocation and travel expenses.
No maximum value of benefits has been
set as benefits vary by role. However, the
level of benefits provided is set at a level
which the Committee considers to be
sufficient based on the role and individual
circumstances.
None.
Management Bonus Scheme
To incentivise and reward strong
performance against financial and non-
financial annual targets, thus delivering
value to shareholders.
The Committee assesses actual
performance compared to the
performance targets following the
completion of the financial year and
determines the bonus payable to each
individual.
The Committee has discretion to amend
the pay-out should any formulaic outcome
not reflect the Committee’s assessment
of overall business performance or
if it considers the formulaic output
inappropriate in the context of
circumstances that were unexpected or
unforeseen.
For Executive Directors, 20% of any bonus
earned will be deferred into shares for a
period of two years, with the remainder
payable in cash.
Deferred bonus awards may take the form
of nil (or nominal) cost options, conditional
awards of shares or such other form as
has the same economic effect.
The maximum annual opportunity is 150%
of salary.
Performance measures and targets
(and their weightings where there is
more than one measure) are set by the
Committee on an annual basis to reflect
the Company’s strategic priorities.
At least 75% of the opportunity will be
based on key financial measures, and the
balance will be based on non-financial
measures.
Financial measures
Up to 50% of the maximum payable in
respect of a financial measure will be paid
for on target performance, increasing to
100% for stretch performance.
Non-financial measures
Vesting in respect of any non-financial
measure will be between 0% and 100%
based on the Committee’s assessment of
the extent to which the relevant measure
is achieved. Vesting in respect of any
non-financial measure will ordinarily be
subject to the satisfaction of a financial
performance underpin.
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59
Executive Directors’ Policy Table (continued)
Purpose and
link to strategy Operation Maximum opportunity Performance metrics
An additional payment may be made in
respect of shares subject to deferred
bonus awards to reflect the value
of dividends paid during the period
beginning with the date of grant and
ending with the date of release (this
payment may assume the reinvestment
of dividends into additional shares on a
cumulative basis).
Bonuses are subject to malus and
clawback provisions as referred to below
the table.
Performance Share Plan (“PSP”)
To drive sustained long-term
performance that supports the creation
of shareholder value.
The PSP is used to provide a meaningful
reward to Executive Directors linked to
the long-term success of the business, by
delivering annual awards in the form of
nil (or nominal)-cost options, conditional
awards of shares or such other form as
has the same economic effect.
Awards will be granted subject to
performance conditions, assessed over a
period of at least three years, but will not
vest or become exercisable until the end
of a holding period of two years from the
date on which the performance conditions
are assessed.
Alternatively, awards may be granted on
the basis that the participant is entitled to
acquire shares following the assessment
of the applicable performance conditions
but that (other than as regards sales to
cover tax liabilities) the award will not vest
(so that the participant is able to dispose
of those shares) until the end of the
holding period.
The Committee has discretion to vary the
formulaic vesting outturn if it considers
that the outturn does not reflect the
Committee’s assessment of performance
or is not appropriate in the context of
circumstances that were unexpected or
unforeseen at grant.
An additional payment may be made in
respect of shares which vest under the
PSP to reflect the value of dividends
during any period beginning with the date
of grant and ending with the final day
of the holding period (this payment may
assume the reinvestment of dividends into
additional shares on a cumulative basis).
Awards under the PSP are subject
to malus and clawback provisions as
referred to below the table.
The Committee may, at its discretion,
structure awards as Qualifying PSP
awards comprising both a tax qualifying
option and an ordinary PSP award, with
the ordinary PSP award scaled back at
exercise to take account of any gain
made on the exercise of the tax qualifying
option. The provisions of the Policy apply
to the tax qualifying option to the extent
permitted by the relevant tax legislation.
The PSP provides for awards of up to a
maximum limit of 150% of basic salary
in respect of any financial year of the
Company in normal circumstances.
In exceptional circumstances (such as
on the recruitment of a new Executive
Director) awards in respect of any
financial year may be granted at the level
of up to 200% of salary.
Where an award is granted as a
Qualifying PSP Award, the shares subject
to the tax qualifying option are not taken
into account for the purposes of these
limits, reflecting the “scale back” referred
to in the “Operation” column.
Vesting of PSP awards is subject to
performance against demanding
performance measures. Performance
metrics will ordinarily be based on
financial measures (such as EPS and
TSR) and provide for 25% of the award
to vest for achieving a threshold level
of performance, with vesting typically
increasing on a straight line basis to
full vesting for meeting or exceeding
a stretching maximum level of
performance.
Save As You Earn Scheme
To give all employees in the Group the
opportunity to buy shares.
All qualifying employees and Executive
Directors of the Group are invited to
participate on the same basis.
Awards in the United Kingdom
must comply with certain legislative
requirements to benefit from beneficial
tax treatment.
Employees can save up to £500 per
month (or such higher amount as is
permitted under the relevant legislation)
for a three or five year period, and can
then use those savings to acquire shares
at the end of the period at an exercise
price set at the start of the savings
contract at a discount of up to 20% to the
market value of a share (or such higher
percentage as is permitted under the
applicable legislation).
None.
Directors’ Remuneration
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Notes to the Policy Table
Selection of performance measures
The performance measures under the Management Bonus Scheme and PSP are selected to reflect the main KPIs and
strategic priorities for the Group. The Committee’s policy is to set performance targets which are both stretching and
achievable and that the maximum outcomes are only available for outstanding performance.
Performance conditions applying to subsisting awards may be amended or substituted by the Committee if an event
occurs (such as a change in strategy, a material acquisition or divestment of a Group business or a change in prevailing
market conditions) which causes the Committee to determine that the measures are no longer appropriate and that
amendment is required in order that they achieve their original purpose.
Operation of share plans
The Committee has discretion to operate the Company’s share plans (including the PSP, the Deferred Bonus Plan, the
Save As You Earn Scheme and the International Sharesave Scheme) in accordance with their terms, including the ability to
settle awards, in whole or in part, in cash and to adjust the terms of awards in the event of any variation of the Company’s
share capital or any demerger, delisting, special dividend or other relevant event. The Committee has no intention to
settle any Executive Director’s award in cash and would do so only in exceptional circumstances, such as where there
was a regulatory restriction on the delivery of shares, or in respect of any tax liability arising in respect of an award.
Shareholding guidelines
During employment, Executive Directors are expected to acquire and retain shares with a value equal to 200% of their
base salary, by the end of the three year period following their appointment to the Board. Directors are not expected to
acquire shares in the market in order to meet this guideline, but instead are expected to retain shares acquired through
the Group’s share plans in order to meet this shareholding guideline. Shares subject to PSP awards which have vested
but which remain subject to a holding period, shares subject to vested but unexercised PSP awards and shares subject
to deferred bonus awards count towards the guideline on a net of assumed tax basis. Shareholdings will be valued on an
annual basis at 31December for the purpose of this guideline.
Other senior executives must retain half of the after-tax number of shares they acquire pursuant to the Performance Share
Plan until the day that their shareholding has a value equal to their basic salary.
The Company adopted a post-employment shareholding requirement during 2020. Shares are subject to this requirement
only if they are acquired from share plan awards (Performance Share Plan or deferred bonuses) granted after 1January
2020. Following employment, an Executive Director must retain:
• until the audit sign-off of the financial statements for the year in which they leave the business, such of their shares
which are subject to the post-employment requirement as are equal to the shareholding guideline that applies during
employment (currently 200% of salary); and
• until the audit sign-off of the financial statements for the following year, such of those shares as are equal to 50% of
the shareholding guideline that applies during employment;
or in either case and if fewer, all of those shares.
Malus and clawback
Malus may be applied before a bonus is paid or before the assessment of performance conditions in relation to a PSP
award. Clawback may be applied to a cash bonus after it has been paid and to a Deferred Bonus Plan award before it
vests. Clawback may be applied to a cash bonus for up to two years after payment and to a PSP award for up to two years
following the assessment of performance conditions (i.e. up to the end of the two year holding period).
Malus and clawback may be applied in the event of a material misstatement of accounts, an error in assessing performance
conditions, misconduct on the part of the participant, fraud, malpractice, corporate failure, serious reputational damage or
a material failure of risk management.
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61
Remuneration policy for Non-Executive Directors
The Policy for Non-Executive Directors is set by the Board having taken account of the fees in other companies of similar
size and the limits set in the Company’s Articles of Association. When recruiting Non-Executive Directors, theremuneration
offered will be in line with the Policy table below.
Non-Executive Directors’ Policy Table
Purpose and
link to strategy Operation Maximum opportunity Performance measures
Fees
To attract and retain Non-Executive
Directors of the highest calibre with
broad commercial and other experience
relevant to the Company.
Each Non-Executive Director is paid a
basic fee. Additional fees are payable for
acting as Senior Independent Director
and as Chairman of the Audit and
Remuneration Committees and may be
paid for other roles or increased time
commitments. A fee for the Chairman
of the Nomination Committee was
introduced with effect from 1 April 2021.
The fees paid to the Non-Executive
Directors are determined by the Board.
Fee levels are determined by reference
to fees paid to Non-Executive Directors
in similar sized businesses and the
expected time commitment and
complexity of the role.
The Non-Executive Directors are not
eligible to participate in the Company’s
performance-related incentive plans or
pension arrangements.
Non-Executive Directors may be eligible
to receive benefits such as the use of
secretarial support, travel costs and
other benefits that may be considered
appropriate.
Non-Executive Director fees are typically
reviewed by the Board every year with
any adjustments ordinarily effective from
1 April each year.
Increases typically do not exceed those
of the wider workforce, however, in
appropriate circumstances, increases of
a higher amount may be made taking
into account individual circumstances
such as:
• an increase in scope or responsibility of
the individual’s role;
• alignment to market level; and
• a change in the size or complexity of
the business.
The maximum aggregate fees for all
Non-Executive Directors will remain
within the limit permitted by the
Company’s Articles of Association from
time to time.
None.
Remuneration policy for other employees across the Group
The Company’s approach to annual salary reviews is consistent across the Group, with consideration given to the scope
of the role, level of experience, responsibility, individual performance and pay levels in comparable companies. Interim
salary reviews are typically only proposed where an employee has a change in role or the scope of their role increases.
The Group offers four variable pay schemes to permanent employees of the Group who do not participate in the
Management Bonus Scheme. These are the Sales Commission Plans, the Consultants’ Bonus Scheme, the Variable
Compensation Scheme and the Annual Profit Share Bonus Plan. Employees participate in one of these schemes only.
All employees are eligible for potential inclusion in the PSP (subject to approval by the Remuneration Committee) and are
eligible to receive option grants. Under normal conditions, performance conditions are consistent for all participants, while
award sizes vary by organisational level. Historically, our normal approach has been to apply performance conditions on a
consistent basis for all participants in the PSP. Having regard to the international spread of our employees who participate
in the PSP, including our growing North American presence, Aptitude may consider making awards of restricted stock to
certain non-Board members in the future, as permitted by the existing rules of the PSP. The size of any restricted stock
award would be reduced relative to the size of any PSP award and vesting would be subject to continued employment.
Due consideration would also be given to generally accepted good practice when issuing and operating any restricted
stock awards.
All qualifying employees are offered the opportunity to save and buy shares through the Save As You Earn Scheme or
International Sharesave Scheme up to the same maximum level (or substantially equivalent maximum level for employees
outside the United Kingdom), thus giving them the opportunity to be shareholders. However, the Executive Directors do
not currently intend to participate in the Save As You Earn Scheme.
Directors’ Remuneration
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62
Illustrations of the application of the Executive Directors’ Remuneration
Policy
The following charts set out an illustration in line with the Policy set out above of the potential remuneration in 2023 for
the Executive Directors. For Jeremy Suddards and in line with the regulations, the charts show the potential split between
the different elements of remuneration under four different performance scenarios: ‘minimum’, ‘on-target’, ‘maximum’,
and ‘maximum’ with an assumed 50% share price increase.
As Philip Wood will be stepping down from the Board in July 2023 and will neither be eligible to earn a bonus in respect of
2023 nor be granted a PSP award for 2023, the approach to the illustration as it relates to him is different to the approach
to the illustrations as it relates to Jeremy Suddards, as Philip Wood will only earn his fixed remuneration, which will not
differ depending upon the performance achieved. Accordingly, only one scenario is shown for Philip Wood.
Jeremy Suddards
Potential reward opportunities are based on the Policy. For simplicity, the salary for the full year is based on the salary
that will apply with effect from 1 April 2023 as referred to on page 68, with pension and incentive opportunities based on
this salary. Benefits are based on the 2022 benefits figure from the single total figure of remuneration table on page68.
The ‘minimum’ scenario shows basic salary, pension and benefits (i.e. fixed remuneration) which are the only elements of
the Executive Directors’ remuneration packages which are not at risk.
The ‘on-target’ scenario reflects fixed remuneration as above plus a target payout of 50% of maximum from the
Management Bonus Scheme (i.e. 62.5% of salary, 125% of salary being the maximum). In this scenario it is assumed that
Jeremy Suddards is granted PSP awards of a value equivalent to 125% of his basic salary with 50% of the maximum (i.e.
62.5% of salary) ultimately vesting.
The ‘maximum’ scenario reflects fixed remuneration as above plus full vesting of the Management Bonus Scheme (125%
of salary). In this scenario it is assumed that Jeremy Suddards is granted PSP awards of a value equivalent to 125% of his
basic salary with the full award ultimately vesting.
The ‘maximum’ with an assumed 50% share price increase is based on the same assumptions as for the ‘maximum’
scenario, but with an assumed 50% increase in the share price for the purposes of the PSP element.
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pensionbenefits ManagementBonusScheme Performance
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63
Philip Wood
The illustration for Philip Wood is based on the basic salary, pension and benefits (i.e. fixed remuneration) he will earn until
the date on which he leaves, with salary and pension calculated by reference to a reducing basis as his time commitment
to the Group reduces and benefits based on the 2022 benefits figure from the single total figure of remuneration table on
page 68 and then pro-rated to reflect his part year of service in 2023.
performance
benefits
Approach to Recruitment of Directors
Executive Directors
When hiring a new Executive Director, or promoting to the Board from within the Group, the Committee will typically
align the package with the above Policy. The Committee may, in order to secure the services of a candidate with the
suitable skills to execute the Company’s strategy, include other elements of pay; however, this discretion is capped and
subject to the principles set out below. The maximum level of variable remuneration that may be granted (excluding any
“buy-out” award as referred to below) is 350% of salary (assuming a 150% of salary annual bonus, and a PSP award at the
exceptional limit of 200% of salary which would only be awarded where necessary to secure a candidate of appropriate
quality and experience). Where an individual has contractual commitments made prior to their promotion to the Board,
the Company will continue to honour these remuneration arrangements.
Component Approach
Basic salary The basic salaries of new appointees will be determined by reference to the experience and skills of the individual, internal
relativities, their current basic salary and relevant market data. Where new appointees have initial basic salaries set below a market
competitive level, it may be increased to a market competitive rate over such period as the Committee determines, subject to their
development in the role.
Retirement benefits Retirement benefits will be determined in accordance with the Policy table above.
Benefits Benefits will be determined in accordance with the Policy table above, and may include relocation, travel and subsistence payments
in appropriate circumstances.
Management Bonus Scheme The scheme described in the Policy table will apply to new appointees with the relevant maximum ordinarily being pro-rated to reflect
the proportion of employment over the year. Non-financial performance measures will be tailored towards the individual Executive
Director.
PSP New appointees who have been invited to participate in the PSP will be granted awards as described in the Policy table. In
accordance with the Policy table and the plan rules, in exceptional circumstances in order to enable the Company to recruit an
Executive with the experience and skills to execute the Company’s strategy, awards may be granted up to the level of 200% of salary.
Save As You Earn Scheme New appointees will be invited to participate in the SAYE Scheme on the same basis as other employees and Executive Directors.
In determining appropriate remuneration packages for new Executive Directors, the Committee will take into consideration
all relevant factors (including quantum, the nature of remuneration and where the candidate was recruited from) to ensure
that the arrangements are in the best interests of the Company and its shareholders.
An Executive Director may be recruited at a point in a financial year when it would be inappropriate to provide a bonus or
long term incentive award for that year (for example, because there would not be sufficient time to assess performance).
In these circumstances, subject to the limit on variable remuneration set out above, the quantum of that Executive
Directors’ Remuneration
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Director’s bonus or long-term incentive award in respect of the months employed during that financial year may be
transferred to the subsequent financial year so that the Executive Director is rewarded on a fair and reasonable basis.
The Committee may alter the performance measures and weightings and vesting, deferral and holding periods of the
Management Bonus Scheme and long-term incentive award if the Committee considers that the circumstances of the
recruitment merit such an alteration – the rationale will be clearly explained in a subsequent Directors’ Remuneration
Report.
In addition, the Committee reserves the right to make an award in respect of a new appointment to ‘buy out’ incentive
arrangements forfeited on leaving a previous employer. In doing so, the Committee will consider relevant factors including
any performance conditions attached to these awards and the likelihood of those conditions being met. The Committee
will generally seek to structure any buy-out awards or payments on a comparable basis to the forfeited arrangements and
to limit any such award to the expected value of the forfeited arrangements.
Share awards will be granted under the Company’s existing share plans as far as possible, but the Company may adopt
additional arrangements as permitted by the Listing Rules to facilitate the recruitment of an Executive Director.
Non-Executive Directors
In recruiting a new Non-Executive Director, the Committee will use the Policy as set out in the table on page61. A basic fee
in line with the prevailing fee schedule would be payable for Board membership, with additional fees payable for acting as
Senior Independent Director or Chairman of the Audit, Remuneration or Nomination Committees or other responsibilities
or time commitments as appropriate.
Directors’ Service Contracts
Executive Director service contracts, including arrangements for early termination, are carefully considered by the
Committee. Each current Executive Director has a rolling service contract with the Group which can be terminated with
written notice in accordance with the table below. Such contracts provide for an obligation to pay salary plus pension and
benefits for any portion of the notice period waived by the Group. Executive Director service contracts are available to
view at the Company’s registered office. The Committee reserves the right to offer a notice period of up to 12 months in
the case of any Executive Director appointed after the approval of this Policy, provided that the length of the notice period
would be the same whether given by the Executive Director or the Company.
Executive Director
Date of
service
contract
Notice
period
from the
individual
Notice
period
from the
employer
Philip Wood
1
21 October 2006 6 months 6 months
Jeremy Suddards
2
29 January 2018 6 months 6 months
1 Philip Wood has tendered his resignation and his employment will cease in July 2023.
2 Jeremy joined the Group in 2018, before joining the Board on 1 September 2019.
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65
The table below summarises how the awards under the Management Bonus Scheme and long-term incentives are
typically treated in specific circumstances:
Reason for leaving Treatment
Management Bonus Scheme
Retirement, ill-health, disability,
death, redundancy or other
reasons at the discretion of the
Committee
The Committee may consider it appropriate to award a bonus depending on the relevant termination scenario. The payment of any
bonus will be subject to the satisfaction of the relevant performance conditions and will ordinarily be reduced to reflect the proportion
of the bonus year for which the Executive Director was in service (although the Committee has discretion to waive this time based
reduction).
Any such bonus will typically be paid following the end of the bonus year, although the Committee retains discretion to pay the bonus
at the date of cessation (and to assess performance conditions accordingly).
Other reason Awards lapse on the date of termination.
Deferred Bonus Awards
Gross misconduct Awards lapse on the date of termination.
Other reason Awards will ordinarily continue and become exercisable on the ordinary vesting date, although the Committee retains discretion to
release any such award on the date of termination in appropriate circumstances (such as in the event of cessation due to death or
ill-health). In either case, the award will vest in full, unless the Committee determines the award should vest on a pro-rata basis to take
account of the proportion of the deferral period that has elapsed at termination.
Performance Share Plan
Death
Awards can be exercised within 12 months from the date of death (or, if the Committee so decides, from a later date, not being later than the
date on which the award would ordinarily have vested) on a pro-rata basis (by reference to the proportion of the performance period that
has elapsed) and to the extent that performance conditions have been met (as assessed by the Committee where awards vest before the
end of the original performance period). However, the Committee reserves the right to disapply pro-rating.
Ill-health, disability, or redundancy,
or any other reason at the
discretion of the Committee
Cessation during the performance period
Awards will ordinarily continue and can be exercised within 6 months from the vesting date at the end of the holding period on a pro-
rata basis (by reference to the proportion of the performance period that has elapsed) and to the extent that performance conditions
have been met. However, the Committee reserves the right to disapply pro-rating and to allow the early vesting and exercise of an
award at the date of cessation (and to assess performance conditions accordingly) or at some other date such as following the end of
the performance period if the award would otherwise be subject to a holding period.
Cessation during the holding period
Awards will ordinarily continue and can be exercised within 6 months from the vesting date at the end of the holding period to the
extent that performance conditions have been met. However, the Committee reserves the right to allow the vesting and early exercise
of the award at the date of cessation.
Other reason
Cessation during the performance period
Awards lapse on the date of termination.
Cessation during the holding period
Awards will ordinarily continue and can be exercised within 6 months from the ordinary vesting date at the end of the holding period
to the extent that performance conditions have been met, unless the cessation is due to misconduct in which case the award will
lapse.
Where the cessation is other than due to misconduct, the Committee reserves the right to permit the award to vest and become
exercisable at the date of cessation.
Change of control
Awards under the PSP may vest and be exercised early on the change of control or other relevant event, or awards may
be exchanged for awards in a new company. Where awards vest, they can be exercised on a pro-rata basis (by reference
to the proportion of the performance period that has elapsed) and to the extent that performance conditions have been
met (as assessed by the Committee), although the Committee reserves the right to disapply pro-rating. Awards under
the DBP will vest on a change of control (or may be exchanged for awards in a new company). Options under the Save
As You Earn Scheme or International Sharesave Scheme may vest early in the event of a change of control to the extent
permitted by the rules of the scheme (or may be exchanged for new options); the rules of the scheme do not permit the
exercise of discretion as to the treatment on a change of control.
Other payments
In appropriate circumstances, payments may also be made in respect of accrued holiday, legal fees and outplacement
services. The Committee reserves the right to make any other payments in connection with a Director’s cessation of
office of employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of
damages for breach of such an obligation) or by way of settlement of any claim arising in connection with the cessation.
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Non-Executive Directors’ Terms of Appointment
Subject to annual re-election by shareholders, Non-Executive Directors are appointed for an initial term of approximately
three years. Subsequent terms of three years may be awarded. Details of the Non-Executive Directors’ terms of
appointment are shown in the table below and copies of the Non-Executive Directors’ terms of appointment are available
to view at the Company’s registered office. The appointment, re-appointment and the remuneration of Non-Executive
Directors are matters reserved for the full Board.
Initial
agreement date
Date of
appointment
Expiry date
of current
agreement
Ivan Martin 21 October 2015 1 January 2016 31 December 2024
Barbara Moorhouse 27 February 2017 1 April 2017 1March 2026
Sara Dickinson 1 October 2021 1 October 2021 1 October 2024
Legacy arrangements
The Committee reserves the right to make any remuneration payment and/or payment for loss of office (including
exercising any discretions available to it in connection with such payments) notwithstanding that they are not in line with
the Policy set out above where the terms of the payment were agreed:
1. before the Policy came into effect (and, in the case of a payment agreed on or after 28 April 2014, where the terms
of the payment are in line with the directors’ remuneration policy applying at the date at which the payment was
agreed); or
2. at a time when the relevant individual was not a director of the Company (or other person to whom the Policy set
out above applies) and, in the opinion of the Committee, the payment was not in consideration for the individual
becoming a director (or other such person) of the Company.
For these purposes, the term “payment” includes the satisfaction of awards of variable remuneration and in relation to an
award over shares the terms of the payment are agreed at the time the award is granted.
Executive Directors – External appointments
The Executive Directors may accept external appointments of non-executive directorship in order to broaden their
experience for the benefit of the Company. Such appointments are subject to approval by the Board in each case, and
the Executive Director may retain any fees paid in respect of such a directorship.
Consideration of conditions elsewhere in the Company
Although the Committee does not consult directly with employees on Executive Director remuneration policy, the
Committee does consider general basic salary increases across the Company, remuneration arrangements and
employment conditions, such as pension arrangements, for the broader employee population when determining
remuneration policy for the Executive Directors.
Consideration of shareholder views
The Committee is committed to an open and transparent dialogue with shareholders on matters relating to remuneration.
When determining remuneration, the Committee takes into account views of shareholders and investor guidelines.
The Committee is always open to feedback from shareholders on remuneration policy and arrangements and commits
to undergoing shareholder consultation in advance of any significant changes to remuneration policy. Details of the
shareholder consultation that was undertaken in relation to the proposed updates to the Remuneration Policy which will
be subject to shareholder approval at the 2023 Annual General Meeting can be found on page 54.
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B ANNUAL REPORT ON REMUNERATION
The following section provides details of how the Company’s Remuneration Policy was implemented during the year
ended 31 December 2022 along with information on how the Policy is to be applied in 2023 and other required disclosures.
Thesections of the report which are audited are clearly identified as such in the section heading.
Role of the Remuneration Committee
The Committee’s primary function is to ensure that the delivery of the Company’s strategy is supported by the Company’s
Remuneration Policy (“Policy”). The Committee’s responsibilities during 2022 included:
• Ensuring the Company's existing Policy was appropriately implemented during the year;
• reviewing the Company’s existing Policy and shaping proposed updates to this, prior to consulting with major
investors on this subject;
• approving remuneration packages for each of the Executive Directors, senior management and the Company
Secretary;
• determining the terms on which Performance Share Plan (“PSP”) awards are made; and
• reviewing and setting performance targets for incentive plans.
The Committee’s full terms of reference provide further details of the roles and responsibilities of the Committee and are
available on the Company’s website.
Remuneration Committee membership in 2022
The membership of the Remuneration Committee as at 31 December 2022 comprised Barbara Moorhouse (Committee
Chair), Ivan Martin and Sara Dickinson.
Only Committee members have the right to attend Committee meetings, though other individuals such as the Executive
Directors may attend by invitation. Deloitte LLP was appointed by the Committee to provide independent advice. Other
external consultants provide advice to the Committee from time to time. No individuals are involved in decisions relating
to their own remuneration.
The Committee held 6 scheduled meeting, plus a number of additional ad hoc meetings for the purpose of approving
specific matters, such as share option exercises, during the financial year. Details of members’ attendance at meetings
are provided in the Corporate Governance section on page48.
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Single total figure of remuneration (audited)
Executive Directors
The table below sets out a single figure for the total remuneration received by each Executive Director for the year ended
31 December 2022 and the prior year.
Jeremy
Suddards
Philip
Wood
2022
£
2021
£
2022
£
2021
£
Basic Salary 307,500 276,250 258,769 250,880
Taxable Benefits
1
1,286 1,344 1,716 1,860
Pension
2
17,100 15,000 15,170 14,700
Management Bonus
3
65,707 167,081 48,973 156,129
Long Term Incentives
4
– 118,732 – 87,266
Total
391,593 578,407 324,628 510,835
Total Fixed Remuneration
325,886 292,594 275,655 267,440
Total Variable Remuneration
65,707 285,813 48,973 243,395
1 Taxable benefits consist primarily of private healthcare insurance.
2 The Company paid £17,100 to Jeremy Suddards (2021: £15,000) and £15,170 to Philip Wood (2021: £14,700) into a self–invested personal pension scheme.
3 See below for details of bonuses earned under the Management Bonus Scheme in respect of 2022.
4 In the 2021 Directors' Remuneration Report, the value of the awards vesting in respect of the performance period ended 31December 2021 was calculated by reference
to the three month average share price up to 31 December 2021 (being £5.904). The values have been updated to reflect the share price on the date of vesting (13 May
2022), being £3.30. No share options have vested in relation to a performance period ended 31 December 2022.
Non-Executive Directors
The table below sets out a single figure for the total remuneration received by each Non-Executive Director (including
Ivan Martin, Non-Executive Chairman) who served during the year ended 31 December 2022 and the prior year. As the
Non-Executive Directors do not participate in any variable remuneration arrangement, separate sub-totals for fixed and
variable remuneration are not included.
Ivan
Martin
Barbara
Moorhouse
Sara
Dickinson
2
Peter
Whiting
3
2022
£
2021
£
2022
£
2021
£
2022
£
2021
£
2022
£
2021
£
Basic Salary
1
154,584 146,195 49,901 47,194 49,901 11,981 15,182 47,194
Committee Fees 6,247 4,500 14,223 8,390 7,136 – 3,728 14,283
Total 160,831 150,695 64,124 55,584 57,037 11,981 18,910 61,477
1 Non-Executive Directors' fees were increased with effect from 1 April 2022 as disclosed in the 2021 Directors' Remuneration Report.
2 Sara Dickinson was appointed as a Non-Executive Director on 1 October 2021.
3 Peter Whiting stepped down from the Board on 28 April 2022.
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Incentive outcomes for the year ended 31 December 2022 (audited)
Management Bonus Scheme in respect of 2022 performance
The 2022 Management Bonus Scheme for Executive Directors is determined by the Committee by reference to the Group’s
financial performance (as regards 75% of the opportunity, being a maximum of 93.75% of salary) and the achievement by
each Executive Director of non-financial performance measures (as regards 25% of the opportunity, being a maximum of
31.25% of salary) with a maximum overall opportunity of 125% of salary. 20% of the bonus earned is payable in the form
of shares, deferred for two years. The deferred shares will be granted following the release of the 2022 Annual Results.
Financial performance measures (75% of the bonus opportunity)
The table below details the financial performance conditions that were set for the business for 2022.
Jeremy Suddards’ and Philip Wood’s Management Bonus Scheme entitlements were calculated by reference to these
performance conditions.
Measure Weighting
Threshold
at which
bonuses
accrued
On-target
performance
level
Stretch
performance
Level
Actual
performance
level
Bonus
earned
(% of salary)
Recurring revenue base
1
50% of the financial
measures opportunity
£47.8m £50.8m £53.9m £4 7.1m 0%
Operating profit
2
50% of the financial
measures opportunity
£7.5m £8.7m £11.1m £7.8m 5.9%
1 The recurring revenue base target was set on a constant currency basis, using a planned conversion rate from USD of 1.35. The actual reported result of £47.1million
was converted using the prevailing year end USD rate of 1.21. The actual performance of £47.1 million excludes the contribution from the Group's solution management
services of £4.5 million, which if added equals the disclosed Recurring Revenue of £51.6 million.
2 Operating profit has been adjusted to remove the impact of any non-underlying items. The target and actual operating profit amounts are shown prior to any adjustments
for the Management Bonus Scheme.
Non-financial performance measures (25% of the bonus opportunity)
The performance of Jeremy Suddards and Philip Wood was assessed by the Remuneration Committee against a number
of metrics reflecting the Board’s key strategic goals for the year, as stated below. The non-financial element of the
Management Bonus Scheme was subject to a financial performance underpin, only being payable if the threshold level
of Operating Profit was met for 2022.
The following non-financial measures were set for Jeremy Suddards for the year ended 31 December 2022:
1) Successfully deliver the Fynapse launch, resulting in charter client sales in North America and International in both
the TMT and Financial Services sectors.
2) Deliver the MPP Global Solutions business case sales plan and complete planning and execution for the overall
integration of MPP into the wider organisation by the end of 2022.
3) Implement the Product and Technology operating model as informed by the external due diligence review delivered
in Q1 2022, with clear measures for improvements in software quality and productivity in H2 2022. To be measured
by improvements in software quality and productivity and reduced support tickets in H2 2022.
4) Execute the 2022 People strategy with the new Chief People Officer by end of Q3 2022 including key pillars of
succession, retention, high performing culture and third party resource options. To be demonstrated by improved
employee engagement scores and reduced attrition, and the role of the Diversity and Inclusion Steer Co executive
sponsor.
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Having considered the progress made against each of these objectives, the Committee concluded that it was appropriate
to pay Jeremy Suddards a bonus of 15.00% of his salary under the non-financial element of the 2022 bonus (the maximum
possible payment being 31.25% of salary, and the on-target payment being 15.63% of salary). This payment reflects the
fact that while some strong progress was made against certain objectives, the overall progress was slightly below the
level expected to merit an on-target payment. The Committee also considered the fact that 2022 was a transitional year
for the Group, with significant investment made in the product suite. Progress made against each of the objectives during
the year was as follows:
1) Fynapse was successfully launched in March 2022 and delivered to a charter client in the US telco market, which is
expected to go live in mid-2023. Securing a global partnership agreement with Microsoft to integrate Fynapse into
Microsoft Dynamics 365 Finance was a major achievement. Building upon and delivering against existing pipeline
opportunities for Fynapse is a key focus for 2023 and is central to the Group’s strategic growth plans.
2) The operational integration of MPP into the wider Aptitude group was successfully completed in October 2022 and
laid strong foundations for future growth of subscription management services. However, the MPP Global plan for
2022 was not met. While good levels of new business and growth of existing accounts in 2022 was seen, overall
recurring revenue growth for subscription management services was subdued by unusually high levels of client
churn.
3) Significant progress was made during the year in relation to the product and technology operating model, with clear
improvements in oversight and control mechanisms, visibility of workflows and productivity levels and the resolution
of issues. Positive results against agreed milestones have been evidenced, including a reduction in high priority
support tickets, an increase in bug resolution rates and an increase in technology employees net promotor scores.
Ensuring that the product and technology teams work seamlessly with the go to market and client facing teams
remains a focus for 2023.
4) Strong progress was seen in the evolution of the Group’s people strategy throughout the year. The successful
recruitment of a new Chief People Officer was completed in May 2022 and this had a very positive impact on
people-based initiatives during the year, including the establishment of a new leadership programme and a reduction
in third party recruitment agency fees. A good baseline has now been established for further improving retention,
performance and employee engagement in 2023. An active role has been played by Jeremy as executive sponsor
of the Group’s Diversity and Inclusion SteerCo, with output from this Group during the year including a new Diversity
and Inclusion Policy and setting new Diversity and Inclusion strategic objectives.
The following non-financial measures were set for Philip Wood for the year ended 31 December 2022:
1) Leadership of the acquired MPP Global business until the time of its full integration into the wider group. Successful
leadership will be demonstrated by adherence to key financial metrics and progress towards key non-financial
objectives of the business e.g. the achievement of first cross sell between the two organisations.
2) Provide commercial leadership for the launch of Fynapse, with a focus on both the commercial and pricing model
together with driving a competitive cost structure for providing Fynapse as a SaaS offering. Successful achievement
of this objective to be demonstrated by the market’s acceptance of the commercial and pricing principles of Fynapse
together with acceptable profitability of Fynapse as a SaaS offering.
3) Continue to develop the senior management team financial management skills including financial planning skills,
adherence to plans and financial business case preparation. Successful achievement of this objective will be
demonstrated by strong financial accountability by the senior management team and improved quality of business
case submissions.
4) As the designated Board member responsible for Environmental, Social and Governance matters, successful
sponsorship of key environmental, social and governance initiatives in 2022.
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Having considered the progress made against each of these objectives, the Committee concluded that it was appropriate
to pay Philip Wood a bonus of 12.50% of his salary under the non-financial element of the 2022 bonus (the maximum
possible payment being 31.25% of salary, and the on-target payment being 15.63% of salary). This payment reflects
the fact that while some good progress was made against certain objectives, the overall progress was below the level
expected to merit an on-target payment. The Committee also considered the fact that 2022 was a transitional year for
the Group, with significant investment made in the product suite. Progress made against each of the objectives during
the year was as follows:
1) Philip provided strong leadership to the MPP business prior to its operational integration into the wider Aptitude
group in October 2022, with key talent being retained and reduced attrition levels from 2021. Strong foundations
were laid for future growth of subscription management services, but the MPP Global plan for 2022 was not met.
While good levels of new business and growth of existing accounts in 2022 was seen, overall recurring revenue
growth for subscription management services was subdued by high levels of client churn.
2) While Fynapse was successfully launched in March 2023, revised timelines for the delivery of Fynapse have meant
that the market’s acceptance of the commercial and pricing principles of Fynapse continue to be fully shaped and
were not launched in 2022. Good progress nevertheless continues to be made in this area. Internal SaaS pricing
models and cost base models are now in place and being used by the business.
3) Philip led a number of initiatives in the year to develop the senior management team’s financial management and
planning skills during the year. This has resulted in improved quality of the business cases and regional financial
updates presented to the Board. Some progress towards embedding greater financial accountability within the
senior management team was also evident during the year. The professional progression and development of key
individuals within the Finance team has also occurred, including the internal promotion of Regional Finance Directors.
4) During the year Philip oversaw the Group’s environmental, social and governance strategies, including the further
development of its climate-related disclosures in line with the recommendations of the Task Force on Climate-related
Financial Disclosures. The Group’s 2022 diversity disclosures have also been enhanced and Philip has supported
the representation of his team members on the Group’s Diversity and Inclusion StreerCo.
2022 Management Bonus – Overall Outcome
Overall
(% achievement)
Financial
(75% of award)
Non-financial
(25% of award)
Total bonus
payable*
Jeremy Suddards 20.86% 5.86% 15.00% £65,707
Philip Wood 18.36% 5.86% 12.50% £48,973
* 20% of the bonus payments shown are subject to a deferral period of two years and payable in shares. Deferred bonus awards are not subject to any additional
performance conditions and are treated on cessation of employment in accordance with the Directors' Remuneration Policy.
PSP awards vesting in respect of performance in 2022
There were no PSP awards that vested in relation to a performance period ending in the year ended 31 December 2022.
The PSP awards granted on 7 September 2020 are subject to a three year TSR only performance condition which will end
on 7 September 2023, as explained in the 2020 Directors’ Remuneration Report.
PSP awards vesting in respect of performance in 2021
In the 2021 Directors’ Remuneration Report estimated vesting rates were provided for awards held by Jeremy Suddards
and Philip Wood that were granted during 2019 and were expected to vest by reference to the three year performance
period ended 31 December 2021. The Committee confirms that the actual vesting rates for these awards were the same
as the estimates provided within the 2021 Annual Report and Accounts. In the single total figure of remuneration table in
the 2021 Directors’ Remuneration Report, these awards were valued by reference to the three month average share price
up to 31 December 2021 (being £5.904). In the single total figure of remuneration table on page 68, the values have been
updated to reflect the actual share price on the date of vesting, being £3.30.
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72
Share awards granted during the year (audited)
On 22 November 2022 share options under the Performance Share Plan were awarded to Jeremy Suddards and Philip
Wood. Each award was granted in the form of an option with an exercise price of 7 1/3 pence per share. The awards
granted to Jeremy Suddards were based upon 125% of salary and the awards granted to Philip Wood were based upon
100% of salary, with a reduction of 10% applied to the number of shares in each Executive Director's award, in view of the
reduction of the Group’s share price in the 12 months prior to the date of grant.
Executive Director
Number of
shares subject
to award Basis of award
Face value of
award
1
% of award
vesting for
threshold
performance
Jeremy Suddards 98,300 125% of salary, less a 10%
reduction in the number
of shares awarded
£354,372 25%
Philip Wood 66,593
2
100% of salary, less a 10%
reduction in the number
of shares awarded
£240,068 25%
1 Based on a share price of £3.605 being the average of the mid-market closing share price on the three days prior to the date of grant.
2 These awards will lapse when Philip Wood steps down from the Board in July 2023.
The vesting of these options is subject to the satisfaction of the performance conditions based on:
(a) as regards 75% of the shares subject to the options, the Company’s Total Shareholder Return (‘TSR’) measured over
the period of three years commencing on the date of grant, compared with the TSR of a comparator group consisting of
the companies constituting the FTSE SmallCap Index (excluding investment trusts) as follows:
Percentage of the options subject to the
TSR performance condition that vests
Rank of the Company’s TSR against the TSR of the
members of the comparator Group
0% Below median
25% Median
Determined on a straight-line basis between 25% and 100% Between median and upper quartile
100% Upper quartile or above
(b) as regards the other 25% of the shares subject to the options, the Company’s Earnings Per Share (EPS) at the end of
a period of three financial years ending with 2024, as follows:
Percentage of the options subject to the
EPS performance condition that vests
Diluted EPS for the final year of the performance
period
0% Less than 16.4 pence
25% 16.4 pence
Determined on a straight-line basis between 25% and 100% Between 16.4 pence and 18.8 pence
100% 18.8 pence or more
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73
The awards are also subject to a further underpin condition. No element of any award will vest unless the Committee
determines that the level of vesting reflects the overall financial performance of the Group over the performance period.
These awards are subject to a two-year holding period following the end of the performance period, at the end of which
they will vest and can be exercised.
All 2022 awards are subject to downward adjustment should the Committee conclude that the formulaic vesting does not
reflect the Committee’s assessment of performance.
Termination payments and payments to past Directors (audited)
No termination payments or payments to past Directors (beyond those relating to normal fees) were made during the
year.
Philip Wood, Deputy Chief Executive Officer and former Chief Financial Officer, will be stepping down from the Board
in July 2023. Philip will continue to receive his salary, pension and benefits until the date on which he leaves, pro-rated
accordingly for the reduction in his hours that will occur during that period. Philip will not be eligible to earn a bonus for
the proportion of 2023 for which he is employed. Philip will not receive a PSP award for 2023. In line with the Policy, Philip
Wood will retain his DBP awards (including those to be granted in respect of the 2022 bonus) and his PSP awards granted
in 2018 and 2019 for which the performance periods have ended. These retained PSP and DBP awards will remain subject
to the existing timelines. His other PSP awards will lapse.
Implementation of Remuneration Policy for 2023
Basic salary
Market positioning of basic salary is reviewed on an individual basis, by reference to individual performance, experience and
market conditions with a view to providing a package which is appropriate for the responsibilities involved. Asexplained
on page 55, the salary of Jeremy Suddards will be increased on 1 April 2023 from £315,000 to £326,970 (3.8%). Philip
Wood will not receive a salary increase on 1 April 2023 in view of his planned departure from the business in July 2023.
Management Bonus Scheme
It is proposed that in the updated Remuneration Policy, the maximum bonus opportunity for Executive Directors will be
increased from 125% of salary to 150% of salary in order to provide flexibility over the life of the policy. However, for 2023
the maximum bonus opportunity will remain at 125% of salary, with 50% of the maximum paid for on target performance.
Bonuses will be based on performance compared to a number of financial metrics (as regards 75% of the overall
opportunity) and the achievement of a number of non-financial performance measures set for the year (as regards 25%
of the overall opportunity). The financial metrics are expected to include Operating Profit and Annual Recurring Revenue
growth. The non-financial performance measures will be subject to a financial underpin. In the view of the Committee
the measures and targets are commercially sensitive as they give competitors information in relation to the Company’s
targets and plans. Information will be disclosed when no longer considered commercially sensitive, as with the disclosure
of the 2022 bonus outturn on pages69 and 71. 20% of any bonus earned will be deferred into shares for a period of two
years. Deferred shares will be granted following announcement of the Company’s results by which the bonus payment
was determined. An additional payment may also be made in shares to reflect the value of any dividends paid during the
two year deferral period.
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74
Long-term incentives
Awards under the PSP will be granted to Executive Directors in 2023. It is proposed that in the updated Remuneration
Policy, the maximum grant of PSP for Executive Directors will be increased from 125% of salary to 150% of salary in order
to provide flexibility over the life of the policy. However, in 2023 the maximum PSP opportunity will remain at 125% of
salary. The performance measures will include a relative TSR measure for at least 50% of the award and at least one
other financial metric, such as EPS. As with the awards granted in 2022, the TSR performance measure will compare
the Company’s TSR performance with a comparator group consisting of the FTSE SmallCap Index (excluding investment
trusts), with 25% of the TSR element vesting for performance at median, rising to 100% for upper-quartile performance.
TSR performance will be assessed over the three year period from the date of grant. Details of the other financial measure
(and of the associated targets) and of the weightings between the measures will be disclosed both at grant and in
the 2023 Directors’ Remuneration Report. Targets will be set to ensure that full vesting requires the achievement of
stretching levels of performance, with threshold performance delivering 25% vesting. The awards will be subject to a two
year holding period following the end of the performance period, at the end of which they will vest and can be exercised.
An additional payment will also be made in shares to reflect the value of any dividends paid during the two year holding
period.
Non-Executive Director fees
Fees for the Chairman and Non-Executive Directors were increased with effect from 1 April 2022, in line with the review
of the average wider workforce salaries in the United Kingdom and North America regions. The fees payable to the
Chairman and Non-Executive Directors will be increased by 3.8% on 1 April 2023, which is in line with the applied salary
increase being awarded to the United Kingdom wider workforce and below the average salary increase for the Group's
entire workforce.
Fee at
31 December
2022
Fee at
1 April
2023
Chairman £156,625 £162,575
Basic Non-Executive Director fee £50,560 £52,480
Audit Committee Chair fee £8,990 £9,330
Remuneration Committee Chair fee £7,865 £8,165
Senior Independent Director fee £7,865 £8,165
Nomination Committee Chair fee £6,330 £6,570
The Board of Directors meets without the Non-Executive Directors present to review the Non-Executive Director and
Non-Executive Chairman fees and these are set with consideration to salary increases received by the wider workforce.
Percentage change in Directors’ remuneration
The table below shows the percentage change in Directors’ remuneration from the prior year compared to the average
percentage change in remuneration for all other employees. The reporting regulations require that the average percentage
change for other employees is based on the employees of Aptitude Software Group plc. However, the Company only
has two employees other than the Directors. Therefore, to provide a meaningful comparison, and consistent with the
approach in prior years, this is based on all United Kingdom employees in the Group, which is considered the most
appropriate comparator group. For the purposes of this disclosure, remuneration comprises salary, benefits (excluding
pension) and annual bonus earned in respect of variable pay paid in the year only.
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75
Financial
year
2
Salary
Taxable
benefits
Single year
variable
Executive Directors
Jeremy Suddards
2021 - 2022 11.3% (4.3%) (60.7%)
2020 - 2021 10.5% 3.7% 182.4%
2019 - 2020 0.0% N/A N/A
Philip Wood
2021 - 2022 3.1% (7.8%) (68.6%)
2020 - 2021 3.5% 7.0 % 169.3%
2019 - 2020 -2.5% 17.6% -41.3%
Non-Executive Directors
Ivan Martin
3
2021 - 2022 6.7% N/A N/A
2020 - 2021 6.8% N/A N/A
2019 - 2020 0.0% N/A N/A
Barbara Moorhouse
2021 - 2022 15.4% N/A N/A
2020 - 2021 3.6% N/A N/A
2019 - 2020 0.0% N/A N/A
Sara Dickinson
4
2021 - 2022 19.9% N/A N/A
2020 - 2021 N/A N/A N/A
2019 - 2020 N/A N/A N/A
Peter Whiting
5
2021 - 2022 N/A – –
2020 - 2021 5.8% N/A N/A
2019 - 2020 0.0% N/A N/A
Other employees
1
2021 - 2022 7.7% 29.6% 106.3%
2020 - 2021 4.3% 22.0% 0.6%
2019 - 2020 1.6% 3.0% 34.1%
1 Based on the United Kingdom employees only as the most appropriate comparator group.
2 Explanatory notes relating to the prior year figures are included in the relevant year's Directors' Remuneration Report.
3 The salary received by Ivan Martin during 2021 and 2022 included the addition of a fee for Chairing the Nomination Committee.
4 Sara Dickinson was appointed on 1 October 2021 and therefore her 2021 salary has been annualised for comparative purposes.
5 Peter Whiting resigned on 28 April 2022 and therefore a salary increase % from 2021 to 2022 is not shown.
Relative importance of spend on pay
The table below shows the percentage change in spend on pay and shareholder distributions (i.e. dividends and share
buybacks) from the financial year ended 31December 2021 to the financial year ended 31December 2022, based upon
continuing operations.
% change
2022
£000
2021
£000
Return to shareholders in year 1.2% 3,093 3,057
Employee remuneration
1
28.8% 45,622 35,412
1 Significant increase in employee remuneration from 2021 to 2022 was impacted by the acquisition of MPP Global Solutions Limited in October 2021.
Directors’ Remuneration
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76
Comparison of Company performance
The following graph shows the Company’s performance, measured by total shareholder return, compared with the
performance of the FTSE SmallCap Index for the ten years ended 31December 2022. The Committee considers that the
FTSE SmallCap Index is the most appropriate comparison across the period given the similarities between the Company
and the companies forming this index.
0
100
200
300
400
500
600
700
800
Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Dec 2021
Dec 2022
Aptitude
FTSE SmallCap
Value of £100 invested on 31 December 2012
Total Shareholder Return (rebased to £100)
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77
Table of historic remuneration (audited)
The table below details the total remuneration, bonus award as a percentage of maximum opportunity and long-term
incentive awards vesting as a percentage of maximum opportunity for the Group’s senior executive officer(s) for each of
the years from 2013 - 2022 (inclusive).
Year
Total
Remuneration
Bonus
Award as a
percentage
of maximum
opportunity
Long term
incentives
vesting as a
percentage
of maximum
opportunity
2022 Jeremy Suddards (Chief Executive Officer) £391,593 16.69%
1
n/a
2
2021 Jeremy Suddards (Chief Executive Officer) £578,407 46.90% 43.2%
2020 Jeremy Suddards (Chief Executive Officer) £387,630 78.67% 26.60%
2019 Tom Crawford (Chief Executive Officer, Aptitude Software Group plc –
retired 17 January 2020)
£1,634,545 0.00% 100.00%/
75.50%
2018 Simon Baines (Chief Executive Officer, Microgen Financial Systems) £776,610 0.00% 100.00%
Tom Crawford (Chief Executive Officer, Aptitude Software) £858,130 0.00% 100.00%
2017 Simon Baines (Chief Executive Officer, Microgen Financial Systems) £270,075 35.25% n/a
Tom Crawford (Chief Executive Officer, Aptitude Software) £433,437 86.25% n/a
2016 Simon Baines (Chief Executive Officer, Microgen Financial Systems) £1,141,653 50.00% 98.53%
Tom Crawford (Chief Executive Officer, Aptitude Software) £1,269,113 92.50% 98.53%
2015 Martyn Ratcliffe (Executive Chairman) £199,375 n/a n/a
2014 Martyn Ratcliffe (Executive Chairman) £275,000 n/a n/a
2013 Martyn Ratcliffe (Executive Chairman) £216,667 n/a n/a
1 The maximum bonus opportunity for 2022 was 125% of salary. Jeremy Suddards received a bonus of 20.86% of salary (being 16.69% of the maximum opportunity).
2 There were no Performance Share Plan awards that vested in relation to a period ended 31 December 2022.
Explanatory notes relating to the prior years' figures are included in previous Directors' Remuneration Reports.
Directors’ Remuneration
Report
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78
Directors’ shareholdings and shareholding requirement (audited)
The interests of those persons who served as Directors during 2022 and their families in the ordinary shares of the
Company as at 31 December 2022 (or, if earlier, the date of their retirement from the Board) were as follows:
Ordinary shares at
31December 2022 (or,
if earlier, the date of
retirement from
the Board)
Ordinary
shares at
31December
2021
Ivan Martin 225,000 175,000
Philip Wood 216,341 196,875
Barbara Moorhouse – –
Jeremy Suddards 24,924 9,339
Sara Dickinson – –
Peter Whiting
1
N/A 16,332
1 Resigned on 28 April 2022
There have been no changes since 31 December 2022 to the shareholdings of any current Director. None of the Directors
had an interest in the shares of any subsidiary undertaking of the Company or in any significant contracts of the Group.
Details of Directors’ interests in shares and options under Company long-term incentives are set out in the sections below.
Under the Remuneration Policy which was approved by shareholders at the 2020 Annual General Meeting and the
Remuneration Policy for which approval is to be sought at the 2023 Annual General Meeting, Executive Directors are
expected to acquire and retain shares with a value equal to 200% of their base salary, by the end of the three year period
following their appointment to the Board. Further information on this shareholding guideline can be found on page60.
Philip Wood has achieved this level of shareholding, and Jeremy Suddards is working towards it.
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Directors’ interests under Company share plans (audited)
The table below shows the interests of each Director who served during 2022 as at 31 December 2022 in the Company’s
share plans.
Director Grant
Shares
subject to
award as at
1January
2022
Granted
in 2022
Exercised
in 2022
Lapsed
in 2022
Shares
subject to
awards as at
31 December
2022 Status
Jeremy Suddards 2019
2
85,179 – – 48,382 36,797 Vested but unexercised
2020
4
69,321 – – – 69,321 Unvested, subject to
performance conditions
2021
5
57,676 – – – 57,676 Unvested, subject to
performance conditions
2022 – 98,300 – – 98,300 Unvested, subject to
performance conditions
212,176 98,300 – 48,382 262,094
Philip Wood
7
2017
1
35,096 – 35,096 – – Exercised
2018
2
13,246 – – – 13,246 Vested but unexercised
2019
3
62,606 – – 35,561 27,045 Vested but unexercised
2020
4
54,348 – – – 54,348 Unvested, subject to
performance conditions
2021
5
40,934 – – – 40,934 Unvested, subject to
performance conditions
2022 – 66,593 – – 66,593 Unvested, subject to
performance conditions
206,230 66,593 35,096 35,561 202,166
1 The awards granted in 2017 were subject to a performance condition described on page 49 of the 2017 Annual Report and Accounts.
2 The awards granted in 2018 are subject to a performance condition described on page 51 of the 2018 Annual Report and Accounts.
3 The awards granted in 2019 are subject to a performance condition described on pages 53 and 54 of the 2019 Annual Report and Accounts. The awards will vest by
reference to a performance period ended 31 December 2021.
4 The awards granted in 2020 are subject to a performance condition described on page 57 of the 2020 Annual Report and Accounts.
5 The awards granted in 2021 are subject to a performance condition described on page 64 of the 2021 Annual Report and Accounts.
6 The awards granted in 2022 are subject to a performance condition described on page 72 of this report.
7 Philip Wood will step down from the Board in July 2023. His PSP awards granted in 2018 and 2019 will be retained upon his resignation. His other PSP awards will lapse.
Advisors
In fulfilling its role, the Committee seeks professional advice when considered appropriate to do so. Deloitte LLP is
retained to provide independent advice on executive remuneration to the Committee as required. Independent advisors
on executive remuneration, were made available to the Committee during the year. Deloitte LLP’s total fees for the
provision of remuneration services to the Committee in 2022 were £28,750 (2021: £14,825). After careful consideration
the Committee is satisfied that the advice provided by Deloitte LLP is independent. Deloitte LLP also advise the Group on
the operation of its share plans, associated tax matters and remuneration disclosure matters.
Deloitte LLP is a founder member of the Remuneration Consultants Group and adheres to its Code of Conduct for
consultants to Remuneration Committees of United Kingdom-listed companies, details of which can be found at
www.remunerationconsultantsgroup.com.
Directors’ Remuneration
Report
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80
Statement of Shareholder voting
At the Annual General Meeting of the Company on 28 April 2020, the Directors’ Remuneration Policy was approved by
shareholders as follows:
Approval of the Directors’ Remuneration Policy
Total
number
of votes
% of votes
cast
For (including discretionary) 36,118,282 93.98%
Against 2,313,377 6.02%
Total votes cast (excluding withheld votes) 38,431,659 100.00%
Votes withheld 952,444
Total votes cast (including withheld votes) 39,384,103
At the Annual General Meeting of the Company on 28April 2022, the Directors’ Remuneration Report for the year ended
31December 2021 was approved by shareholders as follows:
Approval of the Directors’ Remuneration Report for the year ended
31December 2021
Total
number
of votes
% of votes
cast
For (including discretionary) 47,015,834 95.83%
Against 2,047,082 4.17%
Total votes cast (excluding withheld votes) 49,062,916 100.00%
Votes withheld 1,459
Total votes cast (including withheld votes) 49,064,375
Note: Withheld votes are not included in the final voting figures as they are not recognised as a vote in law.
The Remuneration Report was approved by a duly authorised Committee of the Board of Directors on 20March 2023
and signed on its behalf by:
Barbara Moorhouse
Chair of the Remuneration Committee
20March 2023
Independent Auditor’s Report
to the members of Aptitude Software Group plc
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to the members of Aptitude
Software Group plc
Independent Auditor’s Report
Opinion
We have audited the financial statements of Aptitude Software Group plc (the ‘parent company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2022 which comprise the Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated and Company Balance Sheets, Consolidated Statement of Changes
in Shareholders’ Equity, Company Statement of Changes in Shareholders’ Equity, Consolidated and Company Statement
of Cash Flows, and notes to the financial statements, including significant accounting policies. The financial reporting
framework that has been applied in the preparation of the Group financial statements is applicable law and UK‑adopted
International Accounting Standards. The financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and UK‑adopted International Accounting Standards and, as
regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at
31 December 2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK‑adopted International Accounting
Standards;
• the parent company financial statements have been properly prepared in accordance with UK‑adopted International
Accounting Standards and as applied in accordance with the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Summary of our audit approach
Key audit matters Group
• Revenue recognition
Parent Company
• None
Materiality Group
• Overall materiality: £316,000 (2021: £402,000)
• Performance materiality: £237,000 (2021: £301,000)
Parent Company
• Overall materiality: £125,000 (2021: £150,000)
• Performance materiality: £93,700 (2021: £112,500)
Scope Our audit procedures covered (excluding desktop review procedures) 100% of revenue,
100% of total assets and 99% of profit before tax.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group
and parent company financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall
audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the Group and parent company financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter
description
The Group discloses the following revenue streams:
• Recurring revenue of £50.5m (2021: £40.1m)
• Non‑recurring revenue of £23.9m (2021: £19.2m)
The Group’s key revenue recognition policies are set out on pages 98 to 101 to the financial
statements and the critical accounting judgements and estimates relating to revenue
recognition are set out on pages 112 to 115.
Given the level of judgement and estimates involved in revenue recognition, we have
identified this as a potential fraud risk area and a key audit matter.
Software related revenue
For software related revenue we have identified revenue recognition on new contracts
signed in the year, along with those with manual IFRS 15 adjustments at the year‑end to be
a significant risk of fraud.
Management have made the assessment that there is no “primary and dominant”
component of the licence and maintenance contracts and therefore the software related
revenue should be recognised as a combined performance obligation over time in line with
consistent development activity.
The key judgements and estimates in the recognition of software related revenue are:
• Assessment of software‑based activity as a single performance obligation;
• Assessment of implementation and solution management services revenue as a
separate performance obligation;
• Recognition of revenue over time based on consistent development activity;
• The revenue constraints applied before the go‑live date due to uncertain
implementation periods.
Services related revenue
A significant risk of fraud has been identified in respect of occurrence of services revenue
and completeness of the provision recognised for additional time and materials cost of
implementation, which involves significant management estimates of the costs which
could be incurred subsequent to the year end to deliver and complete the service to client
expectations.
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How the matter was
addressed in the audit
Our audit work included but was not restricted to:
• Obtaining an understanding of the process and controls around revenue recognition;
• Reviewing the Group’s revenue recognition policy, including supporting accounting
papers, to assess whether performance obligations have been appropriately identified
and recognised in line with IFRS 15;
• Auditing the disclosures in the financial statements and evaluating whether the policy
for revenue recognition is appropriately explained and critical judgements and key
sources of estimation uncertainty are appropriately disclosed.
Specifically for software related revenue, our audit work included but was not restricted to:
• Auditing the IFRS 15 calculations confirming the methodology applied is in line with the
Group’s revenue recognition accounting policy;
• Agreeing inputs to the IFRS 15 calculations to signed customer contracts, and
recalculating the expected revenue and comparing this to the actual revenue
recognised;
• Obtaining invoices for a sample of amounts invoiced and tracing through to bank
receipt;
• Holding discussions with project managers regarding the key assumptions and
judgements made, in particular around the estimated “go‑live” date and the likelihood
of the contract reaching that point;
• Reviewing historic cancelled contracts to assess the appropriateness of limiting
revenue recognised to invoiced amounts pre go‑live date and testing the application
of the revenue recognition constraint to contracts in the period;
• Performing completeness checks by reviewing a list of approved contracts from the
contract sales and management system and checking revenue has been recognised
for all active contracts in the year, in line with the revenue recognition policy;
• Obtaining and reviewing “product roadmaps” to support management’s assertion that
there is a “stand ready” performance obligation.
Specifically for services related revenue, our audit work included but was not restricted to:
• Testing the controls over approval of Statements of Works and timesheet reports prior
to billing;
• Verifying revenue recognised in the period to Statement of Works, supporting
agreements, sales invoices and employee timesheets where applicable;
• Testing completeness and accuracy of timesheet data;
• Testing the accuracy and completeness of revenue deferred based on management's
estimate of additional effort required to satisfy certain contractual obligations without
incremental charge;
• Completing targeted testing procedures for revenue recognised around the reporting
date through review of timesheet data reconciled to customer invoices, and accrued
revenue adjustment.
Key observations Details of the key judgements and estimates applied in respect of revenue recognition
are disclosed in “Critical accounting estimates and judgements section of the Accounting
Policies included in the financial statements. Based on the results of the audit procedures
outlined above, we have no observations to report.
Independent Auditor’s Report
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Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing
and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the
financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the
qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as
follows:
Group Parent company
Overall materiality £316,000 (2021: £402,000) £125,000 (2021: £150,000)
Basis for determining
overall materiality
4.8% of profit before tax adjusted to
exclude amortisation charged in the year
to better reflect the adjusted operating
profit highlighted by management to users
of the financial statements.
0.2% of net assets
Rationale for benchmark
applied
As a listed entity, a profit‑driven figure
is considered the most appropriate
benchmark for users of the financial
statement.
Net assets is considered to be the most
appropriate benchmark for the parent
company as it is primarily a holding
company.
Performance materiality £237,000 (2021: £301,000) £93,700 (2021: £112,500)
Basis for determining
performance materiality
75% of overall materiality 75% of overall materiality
Reporting of
misstatements to the
Audit Committee
Misstatements in excess of £15,800 and
misstatements below that threshold
that, in our view, warranted reporting on
qualitative grounds.
Misstatements in excess of £6,250 and
misstatements below that threshold
that, in our view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
The Group consists of 9 components, located in the following countries:
• United Kingdom
• United States
• Canada
• Poland
• Singapore
Full scope audits were performed for 5 components, targeted audit procedures for 2 components and analytical
procedures at Group level for the remaining 2 components.
The coverage achieved by our audit procedures was:
Number of
components Revenue Total assets
Profit before
tax
Full scope audit 5 97% 96% 87%
Targeted audit procedures 2 3% 4% 12%
Analytical procedures at Group level 2 ‑ ‑ 1%
Total 9 100% 100% 100%
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Targeted audit procedures were performed on components which are not financially significant by size but include a
significant risk. The targeted audit procedures included testing of revenue and the associated balance sheet amounts as
described in the key audit matter section above.
Further specific audit procedures over the Group consolidation and areas of significant judgement including impairment
of goodwill, share based payments and taxation were performed.
All audit work was completed by the Group audit team and no component auditors were used in our audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s
and parent company’s ability to continue to adopt the going concern basis of accounting included:
• Checking the arithmetic accuracy of the forecasts that form the basis of the Directors’ going concern assessment
and Viability statement;
• Corroborating the cash balance that is used as the starting point for the forecasts by confirming to bank confirmations;
• Challenging management’s forecasts and comparing the 2023 budget to YTD results and order book;
• Assessing covenant compliance within the period and agreeing that management forecasts and viability statement
data is compliant with coventant requirements;
• Assessing the assumptions made in management’s stress‑testing;
• Completing further sensitivity analysis and stress‑testing;
• Auditing the disclosures in the financial statements in respect of going concern and viability.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s or the parent company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the entity reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Independent Auditor’s Report
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Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements and those reports have been prepared in
accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial reporting processes
and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and
Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements; and
• information about the company’s corporate governance code and practices and about its administrative, management
and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in
the course of the audit, we have not identified material misstatements in:
• the Strategic Report or the Directors’ Report; or
• the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the parent company.
Corporate governance statement
We have reviewed the directors’ statement in relation to going concern, longer‑term viability and that part of the Corporate
Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 24 to 26;
• Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on pages 24 to 25;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation
and meets its liabilities set out on page 26;
• Directors’ statement on fair, balanced and understandable set out on page 21;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page25;
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87
• Section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on pages 48 to 49; and,
• Section describing the work of the audit committee set out on pages 45 to 48.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on pages 20 to 21, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities are instances of non‑compliance with laws and regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination
of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances
of non‑compliance with other laws and regulations that may have a material effect on the financial statements, and to
respond appropriately to identified or suspected non‑compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial
statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to
fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure
that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the prevention
and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group audit
engagement team:
• obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks
that the Group and parent company operate in and how the Group and parent company are complying with the legal
and regulatory frameworks;
• inquired of management, and those charged with governance, about their own identification and assessment of the
risks of irregularities, including any known actual, suspected or alleged instances of fraud;
• discussed matters about non‑compliance with laws and regulations and how fraud might occur including assessment
of how and where the financial statements may be susceptible to fraud.
Independent Auditor’s Report
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88
The most significant laws and regulations were determined as follows:
Legislation /
Regulation
Additional audit procedures performed by the Group audit
engagement team included:
UK-adopted IAS and
Companies Act 2006
• Review of the financial statement disclosures and testing to supporting documentation;
• Completion of disclosure checklists to identify areas of non‑compliance.
Tax compliance
regulations
• Inspection of advice received from internal / external tax advisors;
• Consultation with a tax specialist regarding the approach taken to the audit of tax;
• Consideration of whether any matter identified during the audit required reporting to
an appropriate authority outside the entity.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk Audit procedures performed by the audit engagement team:
Revenue recognition • The audit procedures performed in relation to revenue recognition are documented in
the key audit matters section of our audit report.
Treatment of
development costs
• Reviewing management’s paper considering the application of IAS 38 and the
treatment used by the Group;
• Reviewing project roadmaps, meeting minutes and RNS announcements for any
projects which may indicate amounts should have been capitalised during the period;
• Interviewing relevant personnel to understand the nature of development activities
undertaken during the year and challenging management on the justification for
noncapitalisation.
Management override
of controls
• Testing the appropriateness of journal entries and other adjustments;
• Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias;
• Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by management in September 2021 to audit
the financial statements for the year ending 31 December 2021 and subsequent financial periods.
The period of total uninterrupted consecutive appointment is 2 years, covering the years ending December 2021 to
December 2022.
The non‑audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company
and we remain independent of the Group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee in accordance with ISAs (UK).
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Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements will form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed
on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF
RTS’). This auditor’s report provides no assurance over whether the annual financial report has been prepared using the
single electronic format specified in the ESEF RTS.
Graham Ricketts (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
20 March 2023
Consolidated
Income Statement
for the year ended 31 December 2022
90
Consolidated Income Statement for the year ended 31 December 2022
Year ended 31 Dec 2022 Year ended 31 Dec 2021
Note
Before non‑
underlying
items
Non‑
underlying
items Total
Before non‑
underlying
items
Non‑
underlying
items Total
£000 £000 £000 £000 £000 £000
Revenue 1,2 74,394 – 74,394 59,330 – 59,330
Operating costs 3 (66,887 ) (3,822 ) (70,709 ) (49,430 ) (3,439 ) (52,869 )
Operating profit 3 7,507 (3,822 ) 3,685 9,900 (3,439 ) 6,461
Finance income 5 18 – 18 6 – 6
Finance costs 5 (498 ) – (498 ) (238 ) – (238 )
Net finance costs (480 ) – (480 ) (232 ) – (232 )
Profit before income tax 7,027 (3,822 ) 3,205 9,668 (3,439 ) 6,229
Income tax expense 6 (1,481 ) 871 (610 ) (1,634 ) 479 (1,155 )
Profit for the period from
continuing operations 5,546 (2,951 ) 2,595 8,034 (2,960 ) 5,074
Earnings per share
Basic 7 4.5 p 9.0 p
Diluted 7 4.5 p 8.9 p
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2022
91
for the year ended 31 December 2022of Comprehensive IncomeConsolidated Statement
Note
Group
Year ended
31 Dec
2022
Group
Year ended
31 Dec
2021
£000 £000
Profit for the year 2,595 5,074
Other comprehensive income/(expense)
Items that will or may be reclassified to profit or loss:
Cash flow hedges reclassified to income statement 25 187
Gain/(loss) on effective cash flow hedges 25 1,445 (222 )
Currency translation difference
Deferred tax on cash flow hedges (335 ) –
Other comprehensive income/(expense) for the year, net of tax 3,269 (447 )
Total comprehensive income for the year 5,864 4,627
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
Balance
Sheets
for the year ended 31 December 2022
92
for the year ended 31 December 2022SheetsBalance
Note
Group
As at
31 Dec 2022
Group
As at
31 Dec 2021
Company
As at
31 Dec 2022
Company
As at
31 Dec 2021
£000 £000 £000 £000
ASSETS
Non‑current assets
Property, plant and equipment including right‑of‑use assets 9 5,103 4,261 15 13
Goodwill 10 46,006 46,006 – –
Intangible assets 11 21,120 24,502 – –
Investments in subsidiaries 12 – – 68,510 67,838
Other long‑term assets 13 1,307 1,354 – –
Deferred tax assets 15 423 115 – 147
Current assets
Trade and other receivables 16 12,297 10,775 452 295
Financial assets – derivative financial instruments 17 1,339 – 812 –
Current income tax assets 14 1,352 1,168 1,951 500
Cash and cash equivalents 18 29,245 29,064 14,340 19,498
Total assets 118,192 117,245 86,080 88,291
LIABILITIES
Current liabilities
Financial liabilities
– borrowings 19 (1,250 ) (313 ) (1,250) (313)
– derivative financial instruments 17 – (293 ) – (29)
Trade and other payables 20 (38,146 ) (40,284 ) (14,982) (14,379)
Capital lease obligations 21 (553 ) (273 ) – –
Current income tax liabilities (119 ) (353 ) – –
Provisions 22 (114 ) – – –
(40,182 ) (41,516 ) (16,232) (14,721)
Net current assets/(liabilities) 4,051 (509 ) 1,323 5,572
Non-current liabilities
Financial liabilities – borrowings 19 (8,347 ) (9,573 ) (8,347) (9,573)
Capital lease obligations 21 (3,196 ) (2,777 ) – –
Provisions 22 (202 ) (379 ) – –
Deferred tax liabilities 15 (5,724 ) (5,811 ) (116) –
(17,469 ) (18,540 ) (8,463) (9,573)
NET ASSETS
SHAREHOLDERS’ EQUITY
Share capital 23 4,204 4,194 4,204 4,194
Share premium account 24 11,959 11,946 11,959 11,946
Capital redemption reserve 12,372 12,372 12,372 12,372
Other reserves 25 35,199 33,902 17,978 17,369
(Accumulated losses)/retained earnings 26 (3,286 ) (3,346 ) 14,872 18,116
Foreign currency translation reserve 93 (1,879 ) – –
TOTAL EQUITY 60,541 57,189 61,385 63,997
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
In addition, under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present
its own income statement. The loss for the year of the Company was £791,000 (2021: loss for the year £1,918,000),
see note 26 for details.
The financial statements on pages 90 to 144 were authorised for issue by the Board of Directors on 20 March 2023 and
were signed on its behalf by:
Ivan Martin Philip Wood
Director Director
Company Registered Number: 01602662
Consolidated Statement
of Changes in Shareholders’ Equity
for the year ended 31 December 2022
93
Attributable to owners of the Parent
Note
Share
capital
Share
premium
account
(Accumulated
losses)/
retained
earnings
Foreign
currency
translation
reserve
Capital
redemption
reserve
Other
reserves
Total
equity
£000 £000 £000 £000 £000 £000 £000
Group
Balance at 1 January 2021 4,143 7,828 (6,165 ) (1,654 ) 12,372 34,124 50,648
Profit for the year 26 – – 5,074 – – – 5,074
Cash flow hedges
- net fair value losses in the year 25 – – – – – (222 ) (222 )
Exchange rate adjustments – – – (225 ) – – (225 )
Total comprehensive income for the year – – 5,074 (225 ) – (222 ) 4,627
Shares issued under share option schemes 23‑24 15 953 – – – – 968
Share consideration on acquisition 23‑24 36 3,165 – – – – 3,201
Share options – value of employee service 26 – – 612 – – – 612
Deferred tax on share options 15 – – 190 – – – 190
Dividends to equity holders of the company 8 – – (3,057 ) – – – (3,057 )
Total Contributions by and distributions to
owners of the company recognised directly in
equity 51 4,118 (2,255 ) – – – 1,914
Balance at 31 December 2021 4,194 11,946 (3,346 ) (1,879 ) 12,372 33,902 57,189
Profit for the year 26 – – 2,595 – – – 2,595
Cash flow hedges reclassified to income
statement 25 – – – – – 187 187
Gain on effective cash flow hedges 25 – – – – – 1,445 1,445
Deferred tax on cash flow hedges 25 – – – – – (335 ) (335 )
Exchange rate adjustments – – – 1,972 – – 1,972
Total comprehensive income for the year – – 2,595 1,972 – 1,297 5,864
Shares issued under share option schemes 23‑24 10 13 – – – – 23
Share options – value of employee service 26 – – 695 – – – 695
Deferred tax on share options 15 – – (137 ) – – – (137 )
Dividends to equity holders of the company 8 – – (3,093 ) – – – (3,093 )
Total Contributions by and distributions to
owners of the company recognised directly in
equity 10 13 (2,535 ) – – – (2,512 )
Balance at 31 December 2022 4,204 11,959 (3,286 ) 93 12,372 35,199 60,541
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
Company Statement
of Changes in Shareholders’ Equity
for the year ended 31 December 2022
94
for the year ended 31 December 2022
of Changes in Shareholders’
Equity
Company Statement
Attributable to owners of the Company
Share
capital
Share
premium
account
Retained
earnings
Capital
redemption
reserve
Other
reserves
Total
equity
Company £000 £000 £000 £000 £000 £000
Balance at 1 January 2021 4,143 7,828 22,407 12,372 17,398 64,148
Loss for the year 26 – – (1,918) – – (1,918)
Cash flow hedges
Loss on effective cash flow hedges 25 – – – – (29) (29)
Total comprehensive (expense) for the year – – (1,918) – (29) (1,947)
Shares issued under share option schemes 23‑24 15 953 – – – 968
Share consideration on acquisition 23‑24 36 3,165 – – – 3,201
Share options – value of employee service 26 – – 612 – – 612
Deferred tax on share options 15 – – 72 – – 72
Dividends to equity holders of the company 8 – – (3,057) – – (3,057)
Total Contributions by and distributions to owners of the
company recognised directly in equity
51 4,118 (2,373) – – 1,796
Balance at 31 December 2021 4,194 11,946 18,116 12,372 17,369 63,997
Loss for the year 26 – – (791) – – (791)
Cash flow hedges
Gain on effective cash flow hedges 25 – – – – 812 812
Deferred tax on cash flow hedges 25 – – – – (203) (203)
Total comprehensive income/(expense) for the year – – (791) – 609 (182)
Shares issued under share option schemes 23‑24 10 13 – – – 23
Share options – value of employee service 26 – – 695 – – 695
Deferred tax on share options 15 – – (55) – – (55)
Dividends to equity holders of the company 8 – – (3,093) – – (3,093)
Total Contributions by and distributions to owners of the
company recognised directly in equity 10 13 (2,453) – – (2,430)
Balance at 31 December 2022 4,204 11,959 14,872 12,372 17,978 61,385
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
Statements
of Cash Flow
for the year ended 31 December 2022
95
for the year ended 31 December 2022of Cash FlowStatements
Note
Group
Year ended
31 Dec 2022
Group
Year ended
31 Dec 2021
Company
Year ended
31 Dec 2022
Company
Year ended
31 Dec 2021
Cash flows from operating activities £000 £000 £000 £000
Cash generated from/(used in) operations 27 5,272 11,890 (1,203) (1,501)
Interest paid (498 ) (238 ) (375) (95)
Income tax (paid)/received (1,597 ) 262 (1,451) –
Net cash flows generated from/(used in) operating activities 3,177 11,914 (3,029) (1,596)
Cash flows from investing activities
Purchase of property, plant and equipment, excluding right‑of‑use
assets 9 (831 ) (1,232 ) (11) (1)
Acquisition of subsidiary, net of cash acquired 28 – (33,112 ) – (35,426)
Interest received 18 6 18 6
Net cash (used in)/generated from investing activities (813 ) (34,338 ) 7 (35,421)
Cash flows from financing activities
Net proceeds from issuance of ordinary shares 24 23 968 23 968
Dividends paid to company’s shareholders 8 (3,093 ) (3,057 ) (3,093) (3,057)
Repayments of loan 19 (313 ) – (313) –
Repayment of capital lease obligations 21 (405 ) (756 ) – –
Drawdown of loan, net of arrangement fee 19 – 9,880 – 9,880
Amounts received from group undertakings 20 – – 59,184 22,704
Amounts borrowed from group undertakings 20 – – (57,937) (11,327)
Net cash (used in)/generated from financing activities (3,788 ) 7,035 (2,136) 19,168
Net decrease in cash and cash equivalents (1,424 ) (15,389 ) (5,158) (17,849)
Cash, cash equivalents and bank overdrafts at beginning of year 18 29,064 44,822 19,498 37,347
Exchange rate gains / (losses) on cash and cash equivalents 1,605 (369 ) – –
Cash and cash equivalents at end of year 18 29,245 29,064 14,340 19,498
Liabilities from financing activities Other assets
Borrowings Leases Subtotal Cash Total
£000 £000 £000 £000 £000
Net funds as at 1 January 2022 (9,886 ) (3,050 ) (12,936 ) 29,064 16,128
Financing cash flows 289 405 694 (1,424 ) (730 )
New leases – (830 ) (830 ) – (830 )
Foreign exchange adjustments – (274 ) (274 ) 1,605 1,331
Interest expense (498 ) (148 ) (646 ) – (646 )
Interest payments (presented as operating cash flows) 498 148 646 – 646
Net funds as at 31 December 2022 (9,597 ) (3,749 ) (13,346 ) 29,245 15,899
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and
that are subject to an insignificant risk of changes in value.
The accounting policies and notes on pages 96 to 144 are an integral part of these consolidated financial statements.
Notes to the
Consolidated Financial Statements
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96
Notes to the Consolidated Financial
Statements
ACCOUNTING POLICIES
General information
The Company is a public company limited by shares and incorporated and domiciled in England and Wales .
The Group consolidated financial statements were authorised for issue by the Board of Directors on 20 March 2023.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of Aptitude Software Group plc have been prepared in accordance with UK-adopted
International Accounting Standards in conformity with the requirements of the Companies Act 2006 and the disclosure
guidance and transparency rules sourcebook of the United Kingdom’s Financial Conduct Authority. The consolidated
financial statements have been prepared under the historical cost basis, as modified by the revaluation of financial assets
and financial liabilities (including derivatives) which are recognised at fair value.
The presentation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to
the consolidated financial statements are disclosed on pages 112 and 115.
Amounts presented have been disclosed to the nearest £’000 unless otherwise stated.
Going Concern
After reviewing the Group’s forecasts and projections, the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the foreseeable future. The Directors have prepared
forecasts for going concern until 31 December 2025 which show that the Group will have sufficient cash to operate and
meet their operating liabilities as and when they fall due for a period of at least 12 months from the date of approval of
these financial statements. The Group therefore continues to adopt the going concern basis in preparing its financial
statements. Information used to make this decision is detailed below.
A scenario testing exercise was performed for the period covered by the going concern forecast, including considering
management’s base case forecast and an extreme downside scenario where no new customers were won, which is far
more pessimistic than current situations may suggest. In all scenarios Aptitude remains comfortably profitable and cash
generative in the years under review. Financial performance in 2023 is not expected to be materially impacted from
current year levels due to the long-range revenue visibility achieved through the recurring revenue business model.
These recurring revenues, representing over 60% of total revenue, are resilient given the nature of the Group’s enterprise
applications which are typically heavily integrated and central to clients’ mission-critical long-term financial reporting and
subscription management processes, underpinned by minimum contractual terms of up to six years at inception.
The Directors are reassured that the Group is financially robust benefitting from a cash balance at 31 December 2022 of
£29.2 million and net funds of £15.9 million. Additionally, the Group is cash generative and profitable, reporting Adjusted
Operating Profit in the year of £7.5 million. See page 2 for definitions of how these metrics are calculated.
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97
Supplementing these strengths, Aptitude benefits from a diverse client base, across multiple geographies and industries.
The business benefits from a recurring revenue model in which software licence and subscription fees are typically
received annually in advance.
Changes in Accounting policy and disclosures
(a) New standards, interpretations and amendments effective from 1 January 2022
The Group has applied the following new standards, amendments and interpretations for the first time for their
annual reporting period commencing 1 January 2022:
• Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from Single Transaction
• Amendments to IAS 8: Definition of Accounting Estimates
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies
• Amendments to IAS 1: Classification of Liabilities as Current or Non-Current
• Amendments to IFRS 16: Leases – Lease Liability in a Sale and Leaseback
• Amendments to IFRS 10 and IAS 28: Consolidated Financial Statements and Investments in Associates and Joint
Ventures
The adoption of these standards did not have a material impact on the Group’s consolidated financial statements.
(b) New standards and interpretations that have not been early adopted.
None of the new standards, amendments and interpretations, which are effective for periods beginning after 1 January
2023 and which have not been adopted early, are expected to have a significant effect on the consolidated financial
statements of the Group.
Basis of consolidation
The financial statements of the Group comprise the financial statements of the Company, Aptitude Software Group plc
and its subsidiary undertakings (“subsidiaries”) prepared at the consolidated statement of financial position date.
Subsidiaries are entities controlled by the Group. The Group has control over an entity where the Group is exposed to,
or has rights to, variable returns from its involvement within the entity and it has the power over the entity to effect those
returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered
when assessing control. The Group also assesses existence of control where it does not have more than 50% of the voting
power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise
in circumstances where the size and dispersion of holdings of other shareholders give the Group the power to govern
the financial and operating activities. The results of subsidiaries are consolidated from the date on which control passes
to the Group. Results of disposed subsidiaries are consolidated up to the date on which control passes from the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at acquisition date, irrespective
of the extent of any minority interest. The excess of cost of acquisition over the fair value of the Group’s share of the
identifiable net assets is recorded as goodwill.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated.
Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting
policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.
Notes to the
Consolidated Financial Statements
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98
Revenue recognition
Revenue comprises the transaction price, being the amount of consideration the Group expects to be entitled to in
exchange for transferring promised goods or services to a customer in the ordinary course of the Group’s activities.
Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.
The Group derives its revenues from the following categories:-
– software based activity relating to the Group’s intellectual property (comprising software licences, maintenance,
support, software subscription fees, financial transactions, usage fees along with funded development and
related consultancy); and
– general consultancy services.
The Group recognises revenue from each of these categories as follows:-
Software based activity
Software licence, software subscription and maintenance fees
The Group licences its software on an Annual Licence Fee, Initial Licence Fee or Perpetual Licence Fee basis. The Group
also has a number of Software-as-a-Service offerings with software subscription fees being recognised in the same
manner as Annual Licence Fees.
Within the policy, the Group references three distinct periods which drives the method by which these revenues are
recognised, being the initial contractual term, the auto-renewal period and the optimisation period. These periods and the
relationship between them is outlined below:
– Initial contractual term – The period over which the transaction price for each contract is recognised.
– Auto renewal period – On conclusion of the initial contractual term, customers enter into auto renewal periods
which are typically twelve months in length. Under the terms of the contract the customer has no material right
to enter into these renewal periods which consequently have been determined as representing a new contract
under IFRS 15.
– Optimisation period – The period assessed by management on inception of the contract over which the revenues
are recognised, representing the duration of time during which the most significant optimisation and functional
enhancement of the software is undertaken. Where this period is greater in length than the initial term of the
contract, the revenues recognised across the contractual term are capped at the total value of the contract.
Assessment of performance obligations
On inception of each contract, the Group assesses whether ongoing contractual obligations, charged as software
maintenance, represent a separately distinct performance obligation and promise from either the licence or subscription
fees. If not distinct, the software licence and maintenance fees form part of a combined performance obligation. If the
licence/subscription is distinct it is recognised separately from the other performance obligations at the time of the
delivery of the licenced software.
In assessing whether a licence is distinct from the software maintenance, the Group considers the scope of maintenance
services being provided which extends to the significant continuing requirement to:
– optimise functionality within the software;
– optimise performance of the software; and
– provide technical and functional enhancements to ensure continued user regulatory compliance.
For all existing contracts, it is determined that the software licence/subscription and maintenance fees form part of a
combined performance obligation. The transaction price agreed in the licence and maintenance contract is therefore
allocated in full to this combined performance obligation with the selling price determined by way of the fixed annual
licence or subscription fees paid annually in advance.
run head 2run head 1
99
How the combined performance obligation is recognised
Where the software licence, subscription and maintenance fees meet the criteria of a combined performance obligation,
the Group determines for each contract the most appropriate method of recognising revenue. This assessment was
completed with reference to paragraph 35 of IFRS 15, in which it was determined that the criteria within Paragraph 35(a)
had been met in respect of recognising the combined performance obligation over time. This is through the customer
simultaneously receiving the benefit of accessing and utilising the software from inception of the contract across the
period due to the need for the software to adapt over time to the changing needs of the client and complexities of the
regulatory environment.
Method of revenue recognition in respect of the performance obligations
In determining the most accurate measure of recognising revenue, the business concluded that this should be done
in line with the development activity related to the relevant product. This development activity incorporates the effort
incurred in optimising both the functionality and performance of the software whilst providing technical and functional
enhancements.
Measurement of the development activity is completed by way of the input method, with management providing an initial
estimate of the overall expected development hours to be incurred across the contract period. This estimate is then
reviewed against actual hours incurred at the end of each reporting period.
Once the Group concludes on the revenue recognition profile, the business determines on a contract by contract basis
the period over which the revenues are recognised. This period is defined as the optimisation period and represents the
duration of time assessed by management during which the most significant optimisation and functional enhancement of
the software is undertaken.
For both periods presented, all contracts assessed were considered to have a consistent development activity based on
management’s assessment of the overall development hours expected to be incurred across the optimisation period.
This assessment was supported by the review against actual hours incurred at the end of each reporting period.
Revenue recognition constraint
Given the highly specialised nature of the software and demands of the customer, the implementation of this software
(provided through a separate statement of work) is complex and frequently involves multi-phase roll outs which identify
new requirements over an extended period of time. Consequently, the period prior to the successful integration of
the Group’s application with the customer’s system (or Go-Live date), provides enhanced levels of contractual risk for
the Group in respect of the licence and maintenance agreement. Under the terms of the contract, both parties have
enforceable rights and obligations to terminate over the length of the agreement to the extent that the implementation of
the software is not feasible.
Consequently, during the period from the Group initially licencing its software to the product being deployed into a live
client environment, an ongoing assessment is performed by management on a contract by contract basis to determine
if sufficient challenges exist that would cast doubt over future economic benefits being realised by the business. Where
such challenges exist, the revenue recognised across the period is constrained to the value of any amount invoiced
and paid prior to the end of the reporting date, with this being assessed as the consideration during the period up to
deployment. Once the software is deployed, the amount of revenue recognised is adjusted so that it is proportional to
the Group’s development effort to date against the total expected development hours to be incurred across the contract
period.
Revenue recognition where the optimisation period is longer than initial term of the contract
Where the optimisation period for a client is assessed by management as being greater than the initial term of the
contract, being the minimum term of the signed contract before auto renewal, the revenues recognised across the initial
term are equal to the total value of the contract.
Entry into auto-renewal periods during the optimisation period
Where a client’s initial contract term is shorter than the optimisation period assessed by management, the client will enter
auto renewal periods. Per IFRS 15, the Group has concluded that the entry into each auto renewal period represents a new
contract due to the customer having no material right under the terms of the contract to enter into these renewal periods.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
100
Consequently, an assessment of whether the licence and maintenance services still represent a combined performance
obligation is performed.
In assessing whether a licence is distinct from the software maintenance, the Group determined that the scope of
maintenance services being provided aligns with the assessment made on inception of the contract and therefore for all
existing contracts continue to form part of a combined performance obligation.
On completion of this assessment, the Group has determined that the development activity should continue to be utilised
as the most appropriate method of recognising revenue across the auto-renewal period.
Entry into auto-renewal periods post optimisation period
The transfer of the combined performance obligation is considered complete once the optimisation period concludes at
which point all clients have entered their auto renewal period. Per IFRS 15, the Group has concluded that the entry into
each auto renewal period represents a new contract under which an assessment of whether the licence and maintenance
services still represent a combined performance obligation is performed. This conclusion was underpinned by the
customer having no material right under the terms of the contract to enter into these renewal periods.
In assessing whether the licence is distinct from the software maintenance, the Group considers the following:-
– the level of interrelation between the software licence and services provided;
– the continuing requirements of the client to receive highly functioning, serviced software; and
– the contractual terms and conditions set out in the annual renewal period and whether they are consistent with
the initial term
For both the current and prior year, the Group has determined that the licence and maintenance services for all existing
contracts entering their auto renewal period post optimisation period still represent a combined performance obligation.
On completion of this assessment, the Group determines for each contract the most appropriate revenue recognition
method and has concluded that the development activity related to the relevant product should continue to be utilised.
The annual licence and subscription fee is then recognised across the auto renewal period based on the application of
this method. In all current cases, the development activity is determined to be consistent across the auto-renewal period
in accordance with paragraph B18 of IFRS 15.
Product specific consultancy (implementation services)
Consultancy services which relate to a project which includes the Group’s software is contracted for on either a time
and materials basis or fixed priced basis and represents a distinct performance obligation from the software licence,
software subscription and maintenance fees. Time and materials consultancy is recognised in the period it is performed
in. Fixed price or shared risk work is recognised on a percentage completion basis of the remaining unbilled milestones.
The percentage completed is determined with reference to effort incurred to date and effort required to complete the
development or consultancy. This method, used to calculate revenue recognition, is appropriate on the basis that the
services are transferred to the customer as the development or consultancy work occurs.
For any contract involving a client licencing one of the Group’s products, an assessment is made by management at
the year-end of the expected amount of any additional consultancy effort to be provided to satisfy certain contractual
obligations without incremental charge. Where such effort is anticipated, an accompanying deferral is calculated based
on the value of this time if charged to the client and is recognised through the deferral of revenues.
Financial transactions and usage fees
Financial transactions and usage fees are billed to clients utilising the e-Suite software on a monthly basis based on a
per transaction fee. The volume of transactions generated each month is driven wholly by the client, with no minimum
commitment fee in place. Revenue generated from financial transaction and usage contracts is therefore recognised in
the month they arise.
Solution management services
Solution management services go beyond the Group’s software maintenance services to include services typically
performed by the clients’ own IT teams, including for example, the monitoring of system performance, user administration
and release management. The client will commit to a monthly, quarterly or annual fee that covers an agreed level of
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101
services. Revenue from solution management services are recognised on a straight-line basis over the period of the
services being provided.
Support fees
Support fees are billed to clients where the Group’s software is licensed by a client and that client contracts with the
Group for support relating to the solution. The client will commit to a minimum monthly, quarterly or annual fee that covers
an agreed level of support and then agrees additional fees for support used over and above the minimum commitment.
Revenue from support contracts are recognised as the fees are earned.
Funded development
Where customers wish to accelerate the product development, the Group undertakes funded development work. Revenue
for funded development work is recognised on a percentage completed basis after deferring a proportion of the revenue
to cover the resolution of any issues arising after the enhancement has been delivered to the customer. The percentage
completed is determined with reference to effort required to complete the development. Once the enhancement has
been accepted by the customer the deferred portion of the revenue is recognised.
Commissions
Software sales commission costs meet the definition under IFRS 15 of incremental costs of obtaining a contract. As a
result, an asset is recognised at inception of the contract for the total value of commissions payable which will typically
be amortised across the optimisation period, this being the period assessed by management over which significant
modification and optimisation is required in respect of each client.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to key decision makers.
These decision makers are responsible for allocating resources and assessing performance of the operating segments.
The primary segmental reporting is by operating segment, the Group operates only one segment, this being the Aptitude
business. The chief operational decision makers for the segment are Jeremy Suddards (Chief Executive Officer) and Philip
Wood (Deputy Chief Executive Officer).
Non-underlying items
Non-underlying items are significant items of income or expense which are disclosed and described separately in the
accounts where it is necessary to do so in order to provide a better understanding of the financial performance of the
Group. These items include the costs of acquiring a Group subsidiary, post acquisition and group restructuring costs, and
the amortisation of acquired intangibles.
Property, plant and equipment including right-of-use assets
Property, plant and equipment is shown at historic purchase cost less accumulated depreciation and adjusted for any
impairment. Right-of-use assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term, full details of the initial recognition
and ongoing measurement of these assets is provided within the leasing policy note on page 104. Land is not depreciated.
Costs include expenditure that is directly attributable to the acquisition of the items.
Depreciation is provided on assets so as to write off the cost of property, plant and equipment less their residual value
over their estimated useful economic lives by equal annual instalments at the following rates.
Leasehold improvements 10 – 20 per cent (or the life of the lease if shorter)
Plant and machinery 10 – 50 per cent
Fixtures and fittings 10 – 20 per cent
Estimation of the useful economic life includes an assessment of the expected rate of technological developments and
the intensity at which the assets are expected to be used.
The assets’ residual values and useful economic lives are reviewed, and adjusted if appropriate, at each balance sheet
date.
Notes to the
Consolidated Financial Statements
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102
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value
of the identifiable net assets acquired. Goodwill is capitalised on the balance sheet and subject to an annual impairment
test. The carrying value of goodwill is cost less accumulated impairment. Goodwill is allocated to cash generating units
for the purpose of impairment testing. The allocation is made to those cash generating units that are expected to benefit
from the business combinations in which the goodwill arose. The Group is currently treated as a single CGU. Impairment
reviews are carried out by the Board at least annually. Impairments to goodwill are charged to the income statement in
the period in which they arise.
Intangible assets
Research and Development (“R&D”)
Research expenditure is expensed to the income statement as incurred. Costs incurred on internal development projects
relating to new or substantially improved products are recognised as intangible assets from the date upon which all IAS
38 criteria have been satisfied.
In assessing the IAS 38 criteria it is considered that because of the challenges presented by the complexity of underlying
software development issues and the competitive nature of the markets in which we operate, the technical feasibility and
future probability of development has only been satisfied once the product is deployed into a live customer environment.
Accordingly development costs have not been capitalised. The Group however continues to assess the eligibility of
development costs for capitalisation on a project-by-project basis.
Costs which are incurred after the general release of internally generated software, or costs which are incurred in order
to enhance existing products by way of minor or major upgrades, or other changes in software functionality, do not satisfy
the criteria in order to capitalise. Such expenditure is therefore recognised as an expense in the period in which they are
incurred and included within research and development expense in the income statement.
Externally acquired software intellectual property rights
Rights in externally acquired software assets are capitalised at cost and amortised over their estimated useful economic
life. Useful economic life is assessed on an individual basis.
Software Intellectual Property Rights
Software Intellectual Property Rights (“IPR”) is recognised only on acquisition. The fair value is derived based on time
spent on the project at an average daily cost rate. The carrying value is stated at fair value at acquisition less accumulated
amortisation and impairment losses. The useful economic life is assessed on an individual basis. Amortisation is charged
on a straight line basis over the estimated useful economic life of the assets.
Customer relationships
Client relationships are recognised only on acquisition. The fair value in respect of the Revstream acquisition is derived
based on discounted cash flows from estimated recurring revenue streams. The fair value in respect of the MPP Global
acquisition is derived based on the value of customer related assets based on future cash flows should those assets be
replaced. The carrying value is stated at fair value at acquisition less accumulated amortisation and impairment losses.
The useful economic life is assessed on an individual basis. Amortisation is charged on a straight line basis over the
estimated economic useful life of the assets.
For details about amortisation methods and periods used by the Group for intangible assets see note 11.
Interest income and expense
Interest is recognised using the effective interest method.
Impairment of non-financial assets
Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for impairment
and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets
that are subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the
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103
carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date. Any impairment of goodwill is not reversed.
Investments
Investments in subsidiaries are stated in the financial statements of the Company at cost less any provision for impairment.
Cash and cash equivalents
Cash is defined as cash in hand and on demand deposits. Cash equivalents are defined as short term, highly liquid
investments with original maturities of three months or less.
Share-based payments
The Group operates share-based compensation plans that are equity settled. The fair value of the employee services
received in exchange for the grant of the options is recognised as an expense in the Group income statement over the
vesting period with a corresponding adjustment to equity. The expense for options granted is included within operating
costs. The charge taken to the Company income statement reflects only those options granted to employees of the
Company with the remainder granted to employees employed under subsidiary companies. These options are treated in
a similar manner to capital contributions with an addition to investments.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to
become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
Where the options granted have market based vesting conditions attached, the Group utilises the Monte Carlo pricing
model. For all other option grants the Black Scholes pricing model is applied.
Further details on the Group’s share based compensation plans are provided in note 30.
Foreign currency
Items included within the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates. The consolidated financial statements are presented in
sterling, which is the Group’s presentational currency.
Foreign transactions are translated into the functional currency at the exchange rate ruling when the transaction is entered
into. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
income statement.
On consolidation, the balance sheet of each overseas subsidiary is translated at the closing rate at the date of the
balance sheet, and the income and expenses for each income statement are translated at the average exchange rate
for the period subject to revenue from overseas subsidiaries’ quarterly, half yearly or annual invoices for Annual Licence
Fees or Maintenance being recognised at the exchange rate at the point of invoicing. Exchange gains and losses arising
thereon are recognised as a separate component of equity. The main overseas balance sheets requiring translation are
denominated in US Dollar, Singapore Dollar, Polish Zloty and Canadian Dollar.
Exchange differences arising from the translation of the net investment in foreign subsidiaries are taken to shareholders’
equity on consolidation. When a foreign operation is sold, such exchange differences are recognised in the income
statement as part of the gain or loss on sale.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
104
Pensions
The Group operates defined contribution retirement benefit plans in respect of its UK employees and for employees
in certain overseas territories. Employee and employer contributions are based on basic earnings for the current year.
The schemes are funded by payments to trustee-administered funds completely independent of the Group’s finances.
The expense is recognised on a monthly basis as accrued. The Group has no further payment obligations once the
contributions have been paid.
Tax incentive schemes
Entities within the Group are entitled to claim special tax deductions in relation to qualifying research and development
expenditure. The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax
payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as
deferred tax assets.
Current and deferred income tax
The charge for current tax is based on the results for the year as adjusted for items which are non-assessable or disallowed.
It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred
income tax is not accounted for, if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit and loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except
where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Trade and other receivables
Trade and other receivables are recognised initially at transaction price and to the extent that it is deemed necessary are
subsequently measured at amortised cost using the effective interest method, less provision for impairment. The Group
assesses impairment on a forward-looking basis using the expected credit loss method and has applied the simplified
approach which permits the use of the lifetime expected loss provision for all trade and other receivables.
The amount of any provision is recognised in the income statement within other operating costs.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. Trade payables are generally settled on 30 day terms.
Leasing
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
• The contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be
physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a
substantive substitution right, then the asset is not identified
• The Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the
period of use; and
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105
• The Group has the right to direct the use of the asset. The Group has this right when it has the decision-making
rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where all
the decisions about how and for what purpose the asset is used are predetermined, the Group has the right to
direct the use of the asset if either:
– The Group has the right to operate the asset; or
– The Group designed the asset in a way that predetermines how and for what purpose it will be used.
On lease commencement date, the Group recognises a right–of–use asset and a lease liability. The right–of–use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle, less any
lease incentives received.
The right–of–use asset is subsequently depreciated using the straight–line method from the commencement date to the
earlier of the end of the useful life of the right–of–use asset or the end of the lease term. The estimated useful life of the
right–of–use asset is periodically reviewed and if applicable, adjusted for certain re–measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate adjusted for lease specific and asset specific terms where required. Generally, the Group uses
its incremental borrowing rate as the discount rate adjusted for lease specific and asset specific terms where required.
Lease payments included in the measurement of the lease liability comprise:
– Fixed payments, including in-substance fixed payments;
– Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date; and
– Lease payments in an option renewal period if the Group is reasonably certain to exercise an extension option,
and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at the present value of the future minimum lease payments discounted at the incremental
rate of borrowing. It is remeasured when there is a change in future lease payments arising from a change in an index or
rate, or if the Group changes its assessment of whether it will exercise an extension or termination option.
Where the Group leases properties with no defined lease term, management have made an estimate of the remaining
lease term on commencement date based on their view of the business needs. The lease liability is then remeasured if
circumstances arise which change management’s perception of the remaining lease term and subsequent future lease
payments.
If the contract includes options to break or terminate the lease which are at the right of the lessor, the Group measures
the lease term based on the expectation that these will lapse unless it has been made aware at the time of adoption. If
subsequently the lessor decides to exercise any of these options, the lease liability is then remeasured due to the change
in future lease payments.
When the lease liability is remeasured in the above circumstances, a corresponding adjustment is made to the carrying
value of the right-of-use asset, or is recorded in the profit or loss if the carrying value of the right-of-use asset has been
reduced to zero.
Where the Group has a legal obligation for future expenditure in relation to onerous lease properties which are either
vacant or being sublet, the right-of-use asset is adjusted by the present value of management’s best estimate of the
expenditure required to settle the present obligation. The discount rate used to determine the present value reflects
current market assessments of the time value of money and the risks specific to the lease agreement.
The Group presents right-of-use assets within “property, plant and equipment” and lease liabilities in “capital lease
obligations”.
Short term lease and leases of low-value assets
The Group has elected to take the exemption not to recognise right–of–use assets and lease liabilities for short–term
leases that have a lease term of 12 months or less and leases of low–value assets. The Group defines leases of low-value
assets as being any lease agreement where the total value of payments made across the lease term is less than £5,000.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
106
The Group recognises the lease payments associated with these leases as an expense on a straight–line basis over the
lease.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Provisions
Provisions are created on the Group’s leased properties where it has a legal obligation to return them to their fair condition
at the end of their respective lease terms. The provision is measured at the present value of management’s best estimate
of the future expected repair costs required at the balance sheet date. The discount rate used to determine the present
value reflects the current market assessments of the time value of money and the risks specific to the liability.
Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Company’s shareholders or in respect of interim dividends when they
are paid.
Dividend income
Dividend income to the Company received from subsidiary investments is recognised in the Company income statement
in the period in which it is paid.
Derivative financial instruments and hedging activities
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposure.
Derivatives are initially recognised and measured at fair value on the date a derivative contract is entered into and
subsequently measured at fair value. The gain or loss on re-measurement is taken to the income statement except
where the derivative is a designated hedging instrument. The accounting treatment of derivatives classified as hedges
depends on their designation, which occurs on the date that the derivative contract is committed to. At inception of the
hedge relationship, the Group documents the economic relationship between the hedging instruments and the hedged
items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the
cash flows of hedged items. The Group documents its risk management objectives and strategy for undertaking its
hedging transactions. At the year-end the Group has designated its derivatives as a hedge of the cost of a highly probable
forecasted transaction commitment (‘cash flow hedge’). Gains or losses on cash flow hedges that are regarded as highly
effective are recognised in other comprehensive income. If the forecasted transaction or commitment results in future
income or expenditure, gains or losses deferred in other comprehensive income are transferred to the income statement
in the same period as the underlying income or expenditure. The ineffective portions of the gain or loss on the hedging
instrument are not recognised in other comprehensive income, rather they are recognised immediately in profit or loss.
For the portion of hedges deemed ineffective or transactions that do not qualify for hedge accounting under IFRS 9, any
change in assets or liabilities is recognised immediately in the income statement. When a hedging instrument expires or
is sold, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecasted
transaction is ultimately recognised in the income statement.
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107
FINANCIAL RISK MANAGEMENT
The Group’s trading, multi-national operations and debt financing expose it to financial risks that include the effects of
changes in foreign currency exchange rates, credit risk, liquidity and interest rates.
The Group manages these risks so as to limit any adverse effects on the financial performance of the Group.
(a) Market risk – Foreign exchange
The Group’s major foreign exchange exposures are to the Polish Zloty, US Dollar, Canadian Dollar and Singapore Dollar.
Group policy in this area is to eliminate foreign currency cash flows between Group companies once the size and timing
of transactions can be predicted with sufficient certainty. This has been achieved by hedging Polish Zloty cash outflows
12 months in advance by using forward foreign currency contracts. These have the effect of fixing the sterling amount of
Polish Zlotys to be paid in the future. The average remaining life of the forward exchange contracts at 31 December 2022
was 6 months (2021: 6 months).
Given the above policy, the table below approximates the impact on the Group’s profit before tax of a 5% exchange rate
movement (strengthening of sterling against the specified currency) of the Group’s major non sterling trading currencies
during the year.
2022
£000
2021
£000
Polish Zloty (38) 53
US Dollar 56 91
Canadian Dollar (5) 17
Singapore Dollar 47 63
60 224
In addition, the table below approximates the impact on the profit or loss of translation on the Group’s financial assets and
liabilities of a 5% exchange rate movement (strengthening of the sterling against the specified currency) of the Group’s
major non sterling trading currencies.
2022
£000
2021
£000
Polish Zloty 14 42
US Dollar (841) (411)
Canadian Dollar (9) (4)
Singapore Dollar 3 5
(833) (368)
For both of the tables displayed above, a 5% weakening of sterling against the relevant currency, there would be a
comparable but opposite impact on the profit.
Management have reviewed the 5% exchange rate movement and acknowledged it is an appropriate value in calculating
the impact of foreign exchange exposures.
The Group’s exposure to foreign currency risk thethe end of the reporting period, expressed in Local Currency Units, was
as follows:
2022 2021
PLN
CU ‘000
USD
CU ‘000
CAD
CU ‘000
SGD
CU ‘000
PLN
CU ‘000
USD
CU ‘000
CAD
CU ‘000
SGD
CU ‘000
Trade receivables – 6,273 – 178 – 3,970 – 232
Trade payables
(1,152) (120) (2) – (474) (184) (3) (16)
Foreign currency forwards
Buy foreign currency
(cash flow hedges)
73,100 – – – 47,750 – – –
Notes to the
Consolidated Financial Statements
run head 1 run head 2
108
(b) Market risk – Interest rate
The Group’s major interest rate exposures during the year arose from both interest payable on borrowings and interest
earned on its cash balances.
In respect of interest payable on borrowings, it is the Group’s policy to enter into an interest rate swap so that there is
no change in interest payable pursuant to changes in interest rates. The fixed interest rate payable on the Group’s credit
facility is 2.95% (2021: 2.95%).
The Group’s policy on interest earned from its cash balances is to maximise the return (subject to the constraints imposed
by the need to limit credit and liquidity risk as detailed below).
Given the above policies the table below approximates the impact on the Group’s profit before tax of a increase of 100
basis points in interest rates during the year.
2022
£000
2021
£000
Increase in interest receivable on cash balances
248 402
For a decrease of 100 basis points in interest rates, there would be a comparable but opposite impact on profit.
(c) Credit risk
The Group’s major credit risk exposures arise from its cash and trade receivable balances. The Group’s policies in this
area are:
– in respect of cash balances to ensure that deposits are always held across at least 2 financial institutions; and
– in respect of trade receivables, the client or prospective client’s credit risk is assessed at the commencement
of any new project with payment terms agreed which are appropriate. Regular receivable reports are provided
to senior management and in addition credit insurance is maintained as appropriate for a number of trade
receivable balances.
The table below shows the credit rating and balance of the six major counterparties at the balance sheet date:
Counterparty
Current Rating
(Moody’s)
31 December
2022
Balance
£000
31 December
2021
Balance
£000
Bank A A3 7,345 14,952
Bank B A3 12,261 8,051
Bank C Aa3 6,171 4,542
25,777 27,545
Customer A Baa3 540 1,382
Customer B Baa3 401 814
Customer C A 399 696
1,340 2,892
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables and accrued income have been grouped based on shared
credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2022
and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to
reflect current and forwardlooking information on macroeconomic factors affecting the ability of the customers to settle
the receivables.
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109
The contract assets relate to unbilled WIP and have substantially the same risk characteristics as the trade receivables for
the same type of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a
reasonable approximation of the loss rates for contract assets.
The gross trade receivables amount included within the loss allowance calculation has been adjusted for elements which
carry no expected credit loss; these being both the upfront annual licence fees and amounts covered by credit insurance
which the Group maintains.
Where the Company holds intercompany loan amounts due from fellow group subsidiaries, IFRS 9 requires the
measurement of expected credit losses. These loans were determined to be stage 1 intercompany loans for the purposes
of the IFRS 9 impairment model and consequently a twelve month expected credit loss was calculated.
On that basis, the loss allowance as at 31 December 2022 for the Group was calculated as follows (2021: £21,000):
Group
Not past due
£000
Less than
one month
overdue
£000
One to two
months
overdue
£000
Two to three
months
overdue
£000
More than
three months
overdue
£000
Total
£000
Expected loss rate 1% 5% 10% 15% 20%
Net carrying amount – trade receivables** 1,116 546 265 23 232 2,182
Amounts subject to loss allowance 1,116 546 265 23 232 2,182
Specific loss allowance – – 143 – 222 365
Loss allowance 11 27 12 3 3 56
Total
11 27 155 3 225 421
** Net carrying amount excludes the value of annual licence fees and amounts covered by credit insurance.
The loss allowance for the Company was calculated as being £nil (2021: £nil).
Trade receivables are written off where there is no reasonable expectation of recovery.
(d) Liquidity risk
The Group’s major liquidity exposures arise from the need to settle its trade, employee and taxation liabilities as they fall
due.
Whilst the Group is comfortably able to finance all of these payments out of operating cash flows, policies are in place to
further limit exposure to liquidity risk:
– surplus cash is never deposited for maturities of longer than 110 days; and
– uncommitted facilities will be entered into to support any specific expansion opportunities that arise.
Management monitors forecasts of the Group’s liquidity reserve on the basis of expected cash flow. The Group’s liquidity
management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary
to meet these.
The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed
in the table are the contractual undiscounted cash flows including interest.
Group
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
After
5 years
£000
At 31 December 2022
Borrowings 1,569 1,525 7,568 –
Capital lease obligations 642 914 1,370 1,387
Trade and other payables 7,212 – – –
9,423 2,439 8,938 1,387
Notes to the
Consolidated Financial Statements
run head 1 run head 2
110
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
After
5 years
£000
At 31 December 2021
Borrowings 734 1,643 9,339 –
Capital lease obligations 617 690 1,620 1,632
Derivative financial instruments 293 – – –
Trade and other payables 8,358 – – –
10,002 2,333 10,959 1,632
Company
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
At 31 December 2022
Borrowings 1,569 1,525 7,568
Trade and other payables 14,982 – –
16,551 1,525 7,568
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
At 31 December 2021
Borrowings 734 1,643 9,339
Trade and other payables 14,350 – –
15,084 1,643 9,339
The table below analyses the Group’s derivative financial instruments which will be settled on a gross basis into the
relevant maturity groups based on the remaining period at the balance sheet to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
At 31 December 2022
Forward foreign exchange contracts
– cash flow hedges
Outflow (13,045) – –
Inflow 13,716 – –
Interest rate swap
– cash flow hedges
Outflow (319) (655) –
Inflow 467 960 –
819 128 –
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111
Less than
1 year
£000
Between
1 and 2 years
£000
Between
2 and 5 years
£000
At 31 December 2021
Forward foreign exchange contracts
– cash flow hedges
Outflow (8,865) – –
Inflow 8,601 – –
Interest rate swap
- cash flow hedges
Outflow (422) (393) (902)
Inflow 493 457 1,034
(193) 64 132
Fair value estimation
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade
and other payables, and loans and borrowings (including capitalised lease obligations), however, due to their short term
nature and ability to be liquidated at short notice their carrying value approximates their fair value.
Financial instruments measured at fair value
The fair value hierarchy of the financial instruments measures at fair value is provided below.
Level 2
2022
£’000
2021
£’000
Financial Assets
Derivative financial assets (designated hedge instruments)
1,339 –
1,339 –
Financial Liabilities
Derivative financial liabilities (designated hedge instruments)
– 293
– 293
The derivative financial assets and liabilities have been valued using the market approach, using actual market transactions
for similar assets and liabilities, which are considered to be Level 2 inputs. There were no changes to the valuation
techniques used in the year. There were no transfers between levels during the year.
Capital risk management
The Group’s capital is considered by the Board to be the equity of the Company’s shareholders and includes the Group’s
tangible and intangible fixed assets and cash and debt balances. The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust
the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Aptitude Software Group plc manage the capital structure based on the economic conditions and the risk characteristics
of the Group. The Board reviews the capital structure regularly. No changes were made to our objectives and processes
during 2022.
Our general funding policy is to raise long term debt when required to meet the anticipated requirements of the Group.
Details of the Group’s existing loan facility is provided in note 19 to the financial statements.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
112
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Accounting judgments
(a) Recognition of revenue
The policy for the recognition of software licences, maintenance and subscription fees is detailed on pages 97 to 101.
Assessment of performance obligations
For Annual Licence Fees, the Group determines for each contract whether ongoing contractual software maintenance
and subscription fees represent a performance obligation that is distinct from the licence. For all existing contracts, it is
determined that the ongoing contractual obligations form part of a combined performance obligation with the software
licence. This is through the customer simultaneously receiving the benefit of accessing and utilising the software from
inception of the contract across the period due to the need for the software to adapt over time to the changing needs and
complexities of the regulatory environment.
For product specific consultancy, the Group also concludes for each contract as to whether this represents a separate,
distinct performance obligation from the licence. For all existing contracts, the services being provided met the criteria of
being a separate, distinct performance obligation on the basis that contractually the customer could choose to purchase
the services elsewhere without significantly affecting the promises included in the licence and maintenance agreement.
How the combined performance obligation should be recognised
Once the Group concludes on the revenue recognition profile, the business determines on a contract by contract basis
the period over which the revenues are recognised. This period is defined as the optimisation period and represents the
duration of time assessed by management during which the most significant optimisation and functional enhancements
of the software is undertaken. Where the optimisation period for a client is assessed by management as being greater
than the initial term of the contract, the revenues recognised across the minimum term are equal to the total value of the
contract.
Revenue recognition constraint
During the period from the Group initially licencing its software to the product being deployed into a live client environment,
an ongoing assessment is performed by management on a contract by contract basis to determine if sufficient challenges
exist that would cast doubt over future economic benefits being realised by the business. Where such challenges exist,
the revenue recognised across the period is constrained to the value of any amount invoiced and paid prior to the end of
the reporting date, with this being assessed as the consideration during the period up to deployment. Once the software
is deployed, the amount of revenue recognised is adjusted so that it is proportional to the Group’s development effort to
date against the total expected development hours to be incurred across the contract period.
Product specific consultancy deferral
For any implementation service contract where the client is contracting on a time and materials basis, an assessment
is made by management at the year-end of the expected amount of any additional consultancy effort to be provided to
satisfy certain contractual obligations without incremental charge. Where such effort is anticipated, an accompanying
deferral is calculated based on the value of this time if charged to the client and is recognised through the deferral of
revenues.
(b) Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which
goodwill has been allocated. The judgement is in relation to the allocation to a single CGU. The Group has determined
that it has only one cash generating unit at the year end, this being the Aptitude business.
This determination was made with reference to the following principal factors:
• Information provided to management and the Board utilised to assess the performance of the business and make
decisions is done on a consolidated Group basis;
• Key management personnel are compensated based on the performance of the business as a whole;
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113
• Operating and capital budgets are only approved or modified by management based on financial information for the
business as a whole;
• Clients are serviced across the Group’s global offices meaning each regions cash inflows and assets are not
independent from other regions; and
• Clients often purchase one or more of the Group’s highly complementary and integrated products as part of an all-in
price removing any possibility to accurately determine the recoverable amount on each. Consequently, the products’
cash inflows and assets are not independent from other products.
(c) Impairment of other intangibles
The Group also assesses annually any indicators that other intangible assets might be impaired. The impairment tests
are based on value-in-use calculations on a similar basis to that used in the impairment of Goodwill calculation and is
therefore subject to the same estimates by management.
Impairments recognised during the year are performed against the carrying value of other intangible assets. The impairment
is recognised in the income statement in the period which it is deemed to arise.
(d) Impairment of investments
The Group has also carried out an impairment review on the value of investments held in the Company. Where the
investment is held in a company which has an ongoing trade, the value is derived by a value in use calculation of the cash
generating units. This is done on a similar basis to that used in the impairment of goodwill calculation as detailed above
and is therefore subject to the same estimates by management. Where the investment is held in a company which is no
longer trading, the value is derived from the carrying value of the net assets on the balance sheet of that entity.
(e) Development costs
The Group invests on a continual basis in the development of new and enhanced features in the product suite. There is
a continual process of enhancements to and expansion of the overall product suite with judgement required in assessing
whether the development costs meet the criteria for capitalisation. These judgements have been applied consistently
year to year. In making this judgement, the Group evaluates, amongst other factors, whether there are future economic
benefits beyond the current period, the stage at which technical feasibility has been achieved, management’s intention to
complete and use or sell the product, the likelihood of success, availability of technical and financial resources to complete
the development phase and management’s ability to measure reliably the expenditure attributable to the project.
Judgement is therefore required in determining the practice for capitalising development costs. The accounting policy for
research and product development is detailed on page 102 and in the current year there are no development expenses
that have been capitalised (2021: £nil). The total product management, research and development expenditure in the
period is £17.0 million (2021: £10.6 million).
Given the challenges surrounding the complexity of underlying software development issues and the competitive nature
of the markets in which we operate, technical feasibility and future probability of development has only been satisfied once
the product is deployed into a live client environment. Accordingly, these development costs have not been capitalised.
Costs which are incurred after the general release of internally generated software, or costs which are incurred in order
to enhance existing products by way of minor or major upgrades, or other changes in software functionality, do not satisfy
the criteria in order to capitalise. Such expenditure is therefore recognised as an expense in the period in which it is
incurred and included within research and development expense in the income statement.
(f) Contingent liabilities
The Group reviews any potential claims, if applicable, to assess if there are any possible obligations, as it has yet to be
confirmed whether the entity has a present obligation, or any present obligations of which it is either not probable that
an outflow of resources embodying economic benefits will be required to settle the obligation, or a sufficiently reliable
estimate of the amount of the obligation cannot be made. Where any of these conditions are met, a contingent liability is
disclosed (see Note 33).
Notes to the
Consolidated Financial Statements
run head 1 run head 2
114
Accounting estimates
(a) Recognition of revenue
Method of recognising revenue
Where the software licence and maintenance fees meet the criteria of a combined performance obligation, the Group
determines for each contract the most appropriate method of recognising revenue in line with development activity
related to the relevant product. Measurement of the development activity is completed by way of the input method, with
management providing an initial estimate of the overall expected development hours to be incurred across the period.
This estimate is then reviewed against actual hours incurred at the end of each reporting period.
The estimation of the development activity, principally the number of hours anticipated to be incurred, impacts all customer
contracts and therefore as at 31 December 2022, the deferred income balance of £29.6 million (2021: £30.9 million) and
accrued income balance £1.1 million (2021: £0.5 million) have been calculated pursuant to estimates. Sensitivity analysis
was performed with management considering the impact of a 5% proportional movement in the estimated development
effort and determined that in all cases, with all other variables being held constant, the impact on the assets and liabilities
presented across both periods was not material.
Fixed price projects
Fixed priced development or consultancy projects also require estimates in respect of the percentage completion of
each project. As at 31 December 2022 the value of these projects totalled £0.1 million (2021: £0.5 million) and have
been calculated pursuant to estimates. Sensitivity analysis was performed with management considering the impact of a
reasonable proportional movement in the estimated percentage completion and determined that in all cases the impact
on the assets and liabilities presented across both periods was not material.
Product specific consultancy deferral
As outlined with the accounting judgments applied to the recognition of revenue, management make a deferral of
revenue at the year-end of the expected amount of any additional consultancy effort to be provided to satisfy certain
contractual obligations without incremental charge. Where such effort is anticipated, management estimate the amount
required along with the accompanying value of this time if charged to the client. Sensitivity analysis was performed with
management considering the impact of a reasonable proportional movement in the estimated consultancy effort and
determined that in all cases the impact on the assets and liabilities presented across both periods was not material.
(b) Taxation
Income tax
The actual tax the Group pays on its profits is determined according to complex tax laws and regulations. Where the
effect of these laws and regulations is unclear, judgements and estimates are used in determining the liability for the
tax to be paid on past profits which are then recognised in the financial statements. The Group believes the estimates,
assumptions and judgements are reasonable but this can involve complex issues which may take a number of years to
resolve. The final determination of prior year tax liabilities could be different from the estimates reflected in the financial
statements and may result in the recognition of an additional tax expense or tax credit in the income statement.
Deferred tax assets and liabilities require management judgement in determining the amount to be recognised.
In particular, judgement is used when assessing the extent to which deferred tax assets should be recognised with
consideration given to the timing and level of future taxable income.
USA sales and use tax
The Group continues to review its liability to tax its supplies in a number of states following changes in the interpretation
and application of sales tax regulations in the USA. Whilst for the majority of states this review has been concluded, the
Group still considers that there is risk, principally within the acquired MPP Global business, that some elements of its
supplies in a few remaining states would have been subject to sales tax in previous periods. Consequently, the Group
holds a provision totalling £0.3 million (2021: £0.3 million) at the year-end equating to the potential historic sales tax
liability the business is exposed to as a result of the risk of non-recoverability from its clients who will bear these costs
run head 2run head 1
115
going forwards. The value of this provision has been determined based on management’s estimate of which supplies it
believes are captured by the regulation, which clients we have a risk of non-recoverability from and over what historic
period this provision should be held against.
Sensitivity analysis was performed with management considering the impact of a reasonable proportional movement
in the estimates applied and determined that in all cases the impact on the assets and liabilities presented across both
periods was not material.
(c) Intangibles valuation on acquisition
In 2021 the Group completed the acquisition of MPP Global which included the recognition of intangible assets whose value
was calculated pursuant to estimates. In respect of the customer relationship and software IPR intangibles recognised,
the key estimates underpinning the valuation methodology were:
• Forecast attrition rate applied within the customer base
• Profitability profiles of new and existing customers
• Level of capital expenditure and working capital requirements within the business
• Annual obsolescence rate
• Contributory asset charges for each class of asset
• Forecast revenue and profit profile for the business
• Useful economic life
During the year, the Group found no material change in the key estimates used in the valuation methodology.
(d) Impairment of goodwill
The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash
generating unit and a suitable discount rate in order to calculate present value. The discount rate applied in the value in
use calculation approximates to the Group’s Weighted Average Cost of Capital.
The Group annually reviews the goodwill valuation based on various scenarios and each of these scenarios have different
growth rate assumptions. The growth rate assumptions are in relation to periods covered by Board approved plans.
Details of these scenarios, growth rate assumptions and sensitivities are provided in note 10.
Impairment reviews during the year are performed against the carrying value of goodwill. The impairment is recognised
in the income statements in the period which it is deemed to arise.
(e) Impairment of receivables
The Group assesses the recoverability of receivables as at the balance sheet date. Where the Group assess recoverability
will be unlikely, an impairment is made to the receivable and recognised in the income statement (see Note 16).
Notes to the
Consolidated Financial Statements
run head 1 run head 2
116
Consolidated
Financial Statements
Notes to the
1. Segmental information
Business segments
The Board has determined the operating segments based on the reports it receives from management to make
strategic decisions.
The only business segment for both periods was Aptitude and therefore no segmental analysis is provided for this
or the corresponding period.
The principal activity of the Group throughout 2021 and 2022 was the provision of business-critical software and
services.
(a) Geographical segments
The Group has two geographical segments for reporting purposes, the United Kingdom and the Rest of the World.
The following table provides an analysis of the Group’s sales by origin and by destination along with the profit
before tax.
Sales revenue by origin Sales revenue by destination Profit before income tax
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
United Kingdom 39,329 32,265 15,809 11,353 76 4,134
Rest of World 35,065 27,065 58,585 47,977 3,129 2,095
74,394 59,330 74,394 59,330 3,205 6,229
The following is an analysis of the carrying amount of non-current assets (excluding deferred and income tax assets),
additions to property, plant and equipment (excluding right-of-use asset additions resulting from property lease
agreements) and intangible assets, analysed by the geographical area in which the assets are located.
Carrying amount of
non-current assets Capital expenditure
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
United Kingdom 57,414 61,196 349 843
Rest of World 16,122 14,927 482 389
73,536 76,123 831 1,232
The Company’s business is to invest in its subsidiaries and, therefore, it operates in a single segment.
run head 2run head 1
117
2. Revenue from contracts with customers
(a) Analysis of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services in the following major product lines and
geographical regions:
Continuing operations
Recurring revenue Non-recurring revenue
Year ended 31 Dec 22
United
Kingdom
£000
Rest of World
£000
Total
£000
United
Kingdom
£000
Rest of World
£000
Total
£000
Total
£000
Revenue from external
customers 11,393 39,141 50,534 4,416 19,444 23,860 74,394
Recurring revenue Non-recurring revenue
Year ended 31 Dec 21
United
Kingdom
£000
Rest of World
£000
Total
£000
United
Kingdom
£000
Rest of World
£000 £000
Total
£000
Revenue from external
customers 8,453 31,633 40,086 2,900 16,344 19,244 59,330
All of the revenue displayed in the above table is recognised over time in line with the Group’s accounting policy
detailed on pages 97 to 101 and has been generated from contracts with customers.
For recurring revenue, the Group typically receives payment for its licence and maintenance fees annually in advance
of the performance obligations being satisfied. Non-recurring revenue is paid as and when either the services have
been provided or, in the case of fixed price projects in line with the payment schedule.
During both periods presented the Group had no customers whose revenue represented an amount equal to or
exceeding 10% of total revenue.
(b) Assets and liabilities related to contracts with customers
The Group has recognised assets and liabilities relating to contracts with customers. These amounts are classified
as accrued and deferred income respectively for the purposes of this report and are displayed within notes 16 and
20.
(i) Significant movements in accrued and deferred income
Accrued income has increased against the prior year to £1,114,000 at 31 December 2022 (31 December 2021:
£523,000) due to timing differences on when the software or service was provided against when it has been
invoiced to the customer.
Deferred income has reduced in the year to £29.6 million (31 December 2021: £30.9 million). The reduction,
despite the increase in Annual Recurring Revenue in 2022, is attributable to a number of factors. One of the key
reasons for the reduction is that for a small number of material new business contracts signed in the final weeks of
2022 (and therefore included in Annual Recurring Revenue at the year-end) invoices were not issued until 2023.
An additional contributory reason for the reduction in deferred income is due to multi-year advance payments of
Annual Licence Fees by a small number of clients in prior years, resulting in reduced deferred income from these
clients at 31 December 2022. No multi-year advance payments were received in 2022.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
118
2. Revenue from contracts with customers (continued)
(ii) Revenue recognised in relation to deferred income
The following table shows how much of the revenue recognised in the current reporting period relates to the
release of the carried-forward deferred income balance on 31 December of the previous period:
Group
Year ended
31 Dec 2022
£000
Group
Year ended
31 Dec 2021
£000
Revenue recognised that was included in the deferred income balance at 31 December of the previous period 29,025 23,504
(iii) Revenue yet to be recognised on long-term contracts
The following table details the value of future contracted revenue resulting from the Group’s fixed price long term
software and services contracts which is yet to be recognised in the income statement due to the relevant contractual
performance obligations not being satisfied before the year end. These amounts are set to be recognised in the
Group’s income statement across the period 1 January 2023 to 31 December 2028 on a contract by contract basis
as and when the performance obligations are met:
Group
As at
31 Dec 2022
£000
Group
As at
31 Dec 2021
£000
Aggregate amount of future contracted revenue in relation to long-term software and service contracts that is
not recognised in the income statement as at 31 December 91,416 87,260
Group
As at
31 Dec 2022
Group
As at
31 Dec 2021
Revenue to be recognised in the Group's income statement:
Within one year 35,169 37,425
Within two to five years 56,103 49,236
After five years 144 599
91,416 87,260
All other software and service contracts are billed based on time incurred. As permitted under IFRS 15, these
amounts have been excluded for the purposes of the above calculation given the variable nature.
(iv) Assets recognised from costs to fulfil a contract
In addition to the contract balances disclosed above, the Group has also recognised an asset in relation to the
commission costs of obtaining a contract. This is amortised on a straight-line basis over the optimisation period
assessed by management and presented within other long-term assets in the balance sheet. See further details on
the optimisation period within the revenue recognition policy.
Group
As at
31 Dec 2022
£000
Group
As at
31 Dec 2021
£000
Asset recognised from costs incurred to fulfil a contract at 31 December 1,307 1,354
Amortisation recognised as cost of providing services during the year from continuing operations 572 638
run head 2run head 1
119
3 Operating profit
The following items are included in operating costs:
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Employee benefit expense (note 4) 45,622 35,412
Depreciation 1,132 1,179
Other operating costs 20,133 12,839
66,887 49,430
Non-underlying operating costs:
Amortisation of intangibles 3,382 1,418
Acquisition and associated reorganisation costs 440 2,021
3,822 3,439
70,709 52,869
The acquisition and associated reorganisation costs are in relation to the continued integration of MPP Global into
the Group.
Profit from continuing operations has been arrived at after charging:
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Net foreign exchange gains 64 345
Research and development costs 17,031 10,593
Depreciation of property, plant and equipment 1,137 1,179
Repairs and maintenance expenditure on property, plant and equipment 240 234
Low value or short term rental expense 218 14
During the year the Group obtained the following services from the Group’s auditors at costs as detailed below:
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Fees payable to Company’s auditors for the audit of the Parent Company and consolidated financial statements 130 135
Fees payable to the Company’s auditors and its associates for other services:
– the audit of Company’s subsidiaries pursuant to legislation 101 75
– audit of acquisition accounting - 25
231 235
A description of the work of the Audit Committee is included in the corporate governance statement on pages 43
to 51 and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit
services are provided by the auditors.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
120
4 Employees and directors
Group
Year ended
31 Dec 2022
£000
Group
Year ended
31 Dec 2021
£000
Company
Year ended
31 Dec 2022
£000
Company
Year ended
31 Dec 2021
£000
Employee benefit expense during the year
Wages and salaries 40,440 31,113 752 972
Social security costs 3,229 2,741 134 128
Other pension costs 1,258 946 25 26
Share based payment costs on share options 695 612 37 5
45,622 35,412 948 1,131
Average monthly number of employees (including directors) for the Group and Company:
Group
Year ended
31 Dec 2022
Number
Group
Year ended
31 Dec 2021
Number
Company
Year ended
31 Dec 2022
Number
Company
Year ended
31 Dec 2021
Number
By location:
United Kingdom 182 124 7 8
Rest of World 316 262 - -
498 386 7 8
Group headcount at 31 December 2022 was 527 (2021: 476).
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Key management compensation:
Short-term employee benefits 2,473 2,496
Social security costs 316 275
Post employment benefits 85 86
Share based payment costs on share options 429 264
3,303 3,121
Key management compensation for the Group includes the Board of the Company and senior executives within the
Group.
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Directors
Short-term employee benefits 1,129 1,129
Socical security costs 160 136
Post employment benefits 32 30
Share based payment costs on share options 213 70
1,534 1,365
Average monthly number of Directors and senior executives in respect of continuing operations were 10 (2021: 11).
The key management figures given above include the Directors of Aptitude Software Group plc.
The information on Directors’ remuneration required by the Companies Act and the Listing Rules of the Financial
Conduct Authority is contained in the Directors’ Remuneration Report on pages 52 to 80. Amounts displayed
throughout the tables above exclude the impact of long term incentive awards and Deferred Bonus Plan awards
which have either been exercised in the year or have vested but are yet to be exercised.
run head 2run head 1
121
5 Net finance cost
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Finance income
Interest on bank deposits 18 6
18 6
Finance cost
Interest payable on bank borrowings (350) (89)
Interest payable on capital lease obligations (124) (143)
Amortisation of loan arrangement fee (24) (6)
(498) (238)
Net finance cost (480) (232)
6 Income tax expense
Analysis of charge in the year
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Current tax:
– tax charge on underlying items (1,051) (1,005)
– adjustment to tax in respect of prior periods on underlying items (344) (256)
– adjustment to tax in respect of prior periods on non-underlying items – 134
Total current tax (1,395) (1,127)
Deferred tax (note 15):
– tax charge on underlying items (111) (354)
– tax credit on non-underlying items 871 346
– adjustment to tax in respect of prior periods on underlying items 25 (20)
Total deferred tax 785 (28)
Income tax expense (610) (1,155)
The net adjustment to tax in respect of prior periods on underlying items totalling £319,000 (2021: £276,000) relates
to the reduction in the assumed benefit from research and development relief in the UK.
UK corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
UK corporation tax rates substantively enacted as part of the March 2021 Bill included an increase of the rate to 25%
from 1 April 2023 with a retention of the current rate of 19% for years starting April 2020 to April 2022.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
122
6 Income tax expense (continued)
The tax for the year is equal to (2021: lower than) the standard rate of corporation tax in the UK of 19% (2021: 19%).
The differences are explained below:
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Profit before tax 3,205 6,229
Tax at the UK corporation tax rate of 19% (2021: 19%) (610) (1,184)
Effects of:
Adjustment to tax in respect of prior periods (319) (142)
Adjustment in respect of foreign tax rates (138) (35)
Expenses not deductible for tax purposes – (12)
Non-underlying expenses not deductible for tax purposes (45) (384)
Other (303) 105
Research and development tax relief 561 408
Recognition of tax losses not recognised as a deferred tax asset 214 160
Tax losses not recognised as a deferred tax asset - (84)
Change in future tax rates 30 13
Total taxation (610) (1,155)
The total tax charge of £610,000 (2021: £1,155,000) represents 19.0% (2021: 18.54%) of the Group profit before tax
of £3,205,000 (2021: £6,229,000).
After adjusting for the impact of non-underlying items, change in tax rates, share based payment charge and prior
year tax charge, the tax charge for the year of £1,375,000 (2021: £1,652,000) represents 19.57% (2021: 17.10%), which
is the tax rate used for calculating the adjusted earnings per share.
run head 2run head 1
123
7 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares in the form of
share options granted to employees where the exercise price is less than the average market price of the Company’s
ordinary shares during the year.
The calculation of the basic and diluted earnings per share is based on the following data:
Year ended 31 Dec 2022 Year ended 31 Dec 2021
Earnings
£000
Weighted
average
number of
shares
(in thousands)
Per-share
amount
pence
Earnings
£000
Weighted
average
number of
shares
(in thousands)
Per-share
amount
pence
Basic EPS
Earnings attributable to ordinary shareholders 2,595 57,288 4.5 5,074 56,675 9.0
Effect of dilutive securities:
– share options - 819 (0.0) - 432 (0.1)
Diluted EPS 2,595 58,107 4.5 5,074 57,107 8.9
To provide an indication of the underlying operating performance per share the adjusted profit after tax figure
shown below excludes non-underlying and other items and has a tax charge using the effective rate of 19.57% (2021:
17.10%).
Year ended 31 Dec 2022 Year ended 31 Dec 2021
Basic EPS
pence
Diluted EPS
pence
Basic EPS
pence
Diluted EPS
pence
Earnings per share 4.5 4.5 9.0 8.9
Non-underlying items net of tax 5.2 5.1 5.2 5.2
Prior years’ tax charge 0.6 0.6 0.3 0.2
Recognition of tax losses (0.4) (0.4) (0.3) (0.3)
Adjusted earnings per share 9.9 9.8 14.2 14.0
Year ended
31 Dec 2022
£000
Year ended
31 Dec 2021
£000
Profit before tax and non-underlying items 7,027 9,668
Tax charge at a rate of 19.57% (2021: 17.10%) (1,375) (1,652)
5,652 8,016
Prior years’ tax charge (320) (142)
Non-underlying items net of tax (2,951) (2,960)
Recognition of tax losses 214 160
Profit on ordinary activities after tax 2,595 5,074
Notes to the
Consolidated Financial Statements
run head 1 run head 2
124
8 Dividends
2022
pence
per share
2021
pence
per share
2022
£000
2021
£000
Dividends paid:
Interim dividend 1.80 1.80 1,032 1,019
Final dividend (prior year) 3.60 3.60 2,061 2,038
5.40 5.40 3,093 3,057
Proposed but not recognised as a liability:
Final dividend (current year) 3.60 3.60 2,064 2,059
The proposed final dividend was approved by the Board on 20 March 2023 but was not included as a liability as at
31 December 2022, in accordance with IAS 10 ‘Events after the Balance Sheet date’. If approved by the shareholders
at the Annual General Meeting this final dividend will be payable on 16 June 2023 to shareholders on the register
at the close of business on 26 May 2023.
9 Property, plant and equipment including right-of-use assets
Right-of-use
assets
£000
Leasehold
improvements
£000
Plant &
machinery
£000
Fixtures &
fittings
£000
Total
£000
Group
Cost
At 1 January 2022 6,334 621 4,539 440 11,934
Additions 829 - 766 65 1,660
Disposals (2,549) - (75) (11) (2,635)
Exchange movements - - 153 - 153
At 31 December 2022 4,614 621 5,383 494 11,112
Accumulated depreciation
At 1 January 2022 3,555 77 3,718 323 7,673
Charge for the year (note 3) 498 91 443 100 1,132
Disposals (2,549) - (75) (3) (2,627)
Exchange movements - - (169) - (169)
At 31 December 2022 1,504 168 3,917 420 6,009
Net book amount
At 31 December 2022 3,110 453 1,466 74 5,103
run head 2run head 1
125
9 Property, plant and equipment including right-of-use assets
(continued)
Right-of-use
assets
£000
Leasehold
improvements
£000
Plant &
machinery
£000
Fixtures &
fittings
£000
Total
£000
Group
Cost
At 1 January 2021 6,547 424 4,942 455 12,368
Additions 2,599 510 623 99 3,831
On acquisition of subsidiary 216 - 21 - 237
Disposals (3,028) (304) (868) (108) (4,308)
Exchange movements - (9) (179) (6) (194)
At 31 December 2021 6,334 621 4,539 440 11,934
Accumulated depreciation
At 1 January 2021 4,953 379 4,293 349 9,974
Charge for the year (note 3) 604 6 496 73 1,179
Disposals (2,002) (304) (868) (97) (3,271)
Exchange movements - (4) (203) (2) (209)
At 31 December 2021 3,555 77 3,718 323 7,673
Net book amount
At 31 December 2021 2,779 544 821 117 4,261
All the Group's right-of-use assets relate to the capital lease agreements for various office space.
Plant &
machinery
£000
Total
£000
Company
Cost
At 1 January 2022 441 441
Additions 11 11
At 31 December 2022 452 452
Accumulated depreciation
At 1 January 2022 428 428
Charge for the year 9 9
At 31 December 2022 437 437
Net book amount
At 31 December 2022 15 15
Notes to the
Consolidated Financial Statements
run head 1 run head 2
126
9 Property, plant and equipment including right-of-use assets
(continued)
Plant &
machinery
£000
Total
£000
Company
Cost
At 1 January 2021 440 440
Additions 1 1
Disposals - -
At 31 December 2021 441 441
Accumulated depreciation
At 1 January 2021 404 404
Charge for the year 24 24
Disposals - -
At 31 December 2021 428 428
Net book amount
At 31 December 2021 13 13
10 Goodwill
31 Dec 2022
£000
31 Dec 2021
£000
Cost
At 1 January 46,006 23,787
Acquisition of subsidiary (note 28) - 22,219
At 31 December 46,006 46,006
Net book amount 46,006 46,006
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are
expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:
Aptitude
£000
Total
£000
At 1 January and 31 December 2022 46,006 46,006
The acquisition of a subsidiary totalling £22.2 million in 2021 represents the amount of goodwill on acquisition of the
MPP Global Solutions business, which was acquired on 9 October 2021, see note 28 for details.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be
impaired.
The group is a single CGU and determining whether goodwill is impaired requires an estimation of the value in use
of the CGU to which all goodwill has been allocated. The value in use calculation requires the Group to estimate the
future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value.
For the purposes of performing the goodwill impairment review, the Group have utilised the Board approved plans
for the three-year period to 31st December 2025 followed by anticipated growth in operating profit of 10% per annum
for the period 2026-2027. The growth rates and assumptions applied were based on the Group’s assessment of the
future opportunities within the market.
run head 2run head 1
127
10 Goodwill (continued)
The terminal growth rates for the period after 2027 are no greater than 2.25% (2021: 2.25%) per annum. The utilisation
of deferred tax losses to offset the tax payable has not been considered. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market
assessments of the time value of money and the risks specific to the asset. The discount rate applied to the CGU
was 13.5% (2021: 13.1%).
Sensitivity analysis was performed on the business with a reasonable proportional movement in any combination of
the assumptions not resulting in an impairment.
11 Intangible assets
Software IPR
£000
Customer
relationships
£000
Total
£000
Group
Cost
At 1 January 2022 17,872 10,869 28,741
At 31 December 2022 17,872 10,869 28,741
Accumulated amortisation and impairment
At 1 January 2022 2,535 1,704 4,239
Amortisation 2,109 1,273 3,382
At 31 December 2022 4,644 2,977 7,621
Net book amount
At 31 December 2022 13,228 7,892 21,120
Software IPR
£000
Customer
relationships
£000
Total
£000
Group
Cost
At 1 January 2021 5,012 3,449 8,461
Acquisition (note 28) 12,860 7,420 20,280
At 31 December 2021 17,872 10,869 28,741
Accumulated amortisation and impairment
At 1 January 2021 1,671 1,150 2,821
Amortisation 864 554 1,418
At 31 December 2021 2,535 1,704 4,239
Net book amount
At 31 December 2021 15,337 9,165 24,502
The Company held no intangible assets during the year (2021: £nil).
The externally acquired software intellectual property rights (IPR) relates to expected future benefits of software
and development projects in progress at the date of acquisition. As at 31 December 2022 no internal research
and development costs have been capitalised. The client relationships relate to expected benefits to be obtained
from recurring levels of business from clients obtained as a result of acquisitions. The useful lives of the intangible
assets acquired as part of the acquisition of Revstream in 2017 have been determined as 10 years in respect of
both software IPR and customer relationships (2021: 10 years). The useful lives of the intangible assets acquired as
part of the acquisition of MPP Global in 2021 have been determined as 8 years in respect of both software IPR and
customer relationships (2021: 8 years).
The amortisation charge in the year is shown in non-underlying costs.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
128
12 Investments in subsidiaries
The Group did not hold any investments in 2022 (2021: £nil).
2022
£000
2021
£000
Company
Cost
At 1 January 96,788 57,126
Additions (note 28) - 39,055
Share based payments – share options granted to employees of subsidiaries 672 607
At 31 December 97,460 96,788
Impairment
At 1 January and 31 December 28,950 28,950
Net book amount
At 31 December 68,510 67,838
Investments are held at cost less provisions for impairment. If there is an impairment trigger then the recoverable
amounts of the investments are determined by calculating a value in use for the appropriate subsidiary investment.
Management estimates discount rates using pre–tax rates that reflect current market assessments of the time value
of money and the risks specific to the subsidiary investments.
Where the investment is held in a company which is no longer trading, the value is derived from the carrying value
of the net assets on the balance sheet of that entity.
The Directors consider the value of the investments to be supported by their underlying assets and consider there
to be no indicators of impairment.
Subsidiaries Country Activity
Aptitude Software (Canada) Limited * Canada Employment and Group Services
Aptitude Software Inc.* USA Software and Services
Aptitude Software Limited England & Wales Software and Services
Aptitude Software (Poland) sp. z o.o.* Poland Development
Aptitude Software (Singapore) pte. Limited Singapore Software and Services
Aptitude Revstream Inc.* USA Software and Services
MPP Global Solutions Limited England & Wales Software and Services
MPP Global Solutions Inc* USA Software and Services
MPP Global Solutions kk* Japan Software and Services
* Indirectly held by Aptitude Software Group plc
As at 31 December 2022, the Company owns 100% of the ordinary share capital and share premium in the above
subsidiaries.
run head 2run head 1
129
12 Investments in subsidiaries (continued)
The registered office of the Group’s principal subsidiaries which is not that of the Company are detailed below:
Subsidiary Registered office
Aptitude Software (Canada) Limited 1055 West Georgia Street, Suite 1500 Royal Centre, PO Box 11117, Vancouver, British
Columbia, V6E 4N7, Canada
Aptitude Software Inc CT Corporation System, 111 8th Avenue, New York, 10011
Aptitude Software (Poland) sp. z o.o. ul. Muchoborska 6, 54-424 Wroclaw, Poland
Aptitude Software (Singapore) pte. Limited 600 North Bridge Road, 23-01 Parkway Square, Singapore (188778)
Aptitude RevStream Inc. Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle Delaware, 19801
MPP Global Solutions Inc CT Corporation System, 111 8th Avenue, New York, 10011
MPP Global Solutions kk Tobu Bidg 6F, 6 Chrome-28-9 Jingumae, Shibuya, Tokyo 150-0001
13 Other long-term assets
Group
2022
£000
Group
2021
£000
Prepaid commission costs 1,307 1,354
Per IFRS 15, the Group’s assessment is that commission incurred on software licence sales meets the definition of
incremental costs of obtaining a contract. An asset is therefore recognised at inception of the contract for the total
value of commissions payable which is then amortised across the optimisation period assessed for each customer.
Further detail on the optimisation period can be found in the Group’s revenue recognition policy detailed on page 98.
The Company held no other long term assets during the year (2021: £nil).
14 Income tax assets
As at 31 December 2022, the Group has income tax assets totalling £1,352,000 (2021: £1,168,000), all of which is
expected to be recovered within 12 months. These amounts have been created through the benefit from additional
research and development relief and share option deductions and are refundable from the relevant tax authorities
or offset against future tax instalments.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
130
15 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% for all
balances unless recoverable before 1 April 2023 (2021: 19% for balances expected to be recovered within 12 months
and 25% for all subsequent periods). USA deferred tax is calculated using an effective rate of 27% being made up
of 21% federal and 6% state tax (2021: 28% made up of 21% federal and 7% state tax).
Deferred tax
Group
2022
£000
Group
2021
£000
Company
2022
£000
Company
2021
£000
Deferred tax
– Deferred tax assets 423 115 – 147
– Deferred tax liabilities (5,724) (5,811) (116) –
Deferred tax (liability)/asset (5,301) (5,696) (116) 147
Net deferred tax (liability)/ asset
Group
2022
£000
Group
2021
£000
Company
2022
£000
Company
2021
£000
At 1 January (5,696) (788) 147 67
Total (charge) to income statement for the year (116) (387) (28) (4)
(Charge)/credit to equity (note 26) (137) 190 (55) 72
Charge to other comprehensive income (note 25) (335) – (203) –
On acquisition of subsidiaries – (5,070) – –
Exchange differences 82 – – –
Non-underlying deferred tax credit to the income statement for the year 871 346 – –
Changes in tax rate 30 13 23 12
At 31 December (5,301) (5,696) (116) 147
Deferred tax assets have been recognised in respect of taxable losses and other temporary differences giving rise
to deferred tax assets where it is probable that these assets will be recovered.
Deferred tax asset
Accelerated
capital
allowances
£000
Short term
timing
differences
£000
Share-based
payments
£000
Taxable
trading losses
£000
Total
£000
Group
At 1 January 2021 40 757 124 – 921
Total charge to income statement for the year (40) (259) (6) – (305)
Credit to equity (note 26) – – 190 – 190
Changes in tax rate – 29 9 – 38
At 31 December 2021 – 527 317 – 844
Total (charge)/credit to income statement for the year – (176) 8 – (168)
Charge to equity (note 26) – – (137) – (137)
Changes in tax rate – 72 11 – 83
At 31 December 2022 – 423 199 – 622
Amounts offset against deferred tax liability – – (199) – (199)
Net deferred tax asset at 31 December 2022 – 423 – – 423
run head 2run head 1
131
15 Deferred tax (continued)
At 31 December 2022, the Group had unused tax losses totalling £1,029,000 (2021: £1,029,000) available for
offset against future profits. No deferred tax asset has been recognised in respect of the these losses due to the
unpredictability of future profit streams.
Accelerated
capital
allowances
£000
Short term
timing
differences
£000
Share-based
payments
£000
Cash flow
hedge
£000
Total
£000
Company
At 1 January 2021 33 1 33 – 67
Total (charge)/credit to income statement for the year (4) 3 (3) – (4)
Change in tax rate 12 – – – 12
Credit to equity (note 26) – – 72 – 72
At 31 December 2021 41 4 102 – 147
Total (charge) to income statement for the year (7) – (21) – (28)
Change in tax rate 23 – – – 23
(Charge) to equity (note 26) – – (55) – (55)
Charge to other comprehensive income (note 25) – – – (203) (203)
At 31 December 2022 57 4 26 (203) (116)
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
Deferred tax liability arising on cash flow hedges, acquisitions of intangible fixed assets and accelerated depreciation:
Accelerated
depreciation
£000
Share-based
payments
£000
Cash flow
hedges
£000
Total
£000
Group
At 1 January 2021 (61) (1,648) – (1,709)
Non-underlying deferred tax credit to the income statement for the year – 346 – 346
On acquisition of subsidiary – (5,070) – (5,070)
Total credit to income statement for the year (82) – – (82)
Change in tax rate (37) 12 – (25)
At 31 December 2021 (180) (6,360) – (6,540)
Non-underlying deferred tax credit to the income statement for the year – 871 871
Total credit to income statement for the year 79 – – 79
Charge to other comprehensive income (note 25) – – (335) (335)
Change in tax rate 2 – – 2
At 31 December 2022 (99) (5,489) (335) (5,923)
Deferred tax asset amounts offset against deferred tax liability 199
Net deferred tax liability at 31 December 2022 (5,724)
Explanation of the movements in the year is provided on page 130.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
132
16 Trade and other receivables
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Company
31 Dec 2022
£000
Company
31 Dec 2021
£000
Trade receivables 10,091 8,833 – –
Less: provision for impairment of receivables (421) (21) – –
Trade receivables – net 9,670 8,812 – –
Other receivables – 330 – –
Prepayments 1,513 1,110 452 295
Accrued income 1,114 523 – –
12,297 10,775 452 295
Within the trade receivables balance of £10,091,000 (2021: £8,833,000) there are balances totalling £4,057,000
(2021: £1,544,000) which, at 31 December 2022, were overdue for payment. Of this balance £2,841,000 (2021:
£1,341,000) has been collected at 17 March 2023 (2021: 14 March 2022). The ageing of the trade receivables is as
follows:
Trade receivables
The ageing of the trade receivables is as follows:
31 Dec 2022
£000
31 Dec 2021
£000
Not past due 6,034 7,289
Past due
Less than one month overdue 1,484 1,146
One to two months overdue 1,479 346
Two to three months overdue 352 41
More than three months overdue 742 11
At 31 December 10,091 8,833
The Company had no trade receivables in either year.
Trade and other receivables are denominated in the following currencies:
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Company
31 Dec 2022
£000
Company
31 Dec 2021
£000
Sterling 5,415 6,458 452 295
United States Dollars 6,683 4,243 – –
Other 199 74 – –
12,297 10,775 452 295
Movements on the provision for impairment of trade receivables are as follows:
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
At 1 January 21 –
Charged to income statement 35 21
Specific provision charged to income statement 365 –
At 31 December 421 21
Movements in the provision for impaired trade receivables have been included in the income statement under other
operating costs. No amounts were written off as unrecoverable to the income statement during the year (2021: £nil).
The increase in the provision for impairment of receivables is in respect of outstanding invoices from a client which
has ceased the implementation of the Group’s products. Non–trade receivables do not contain any impaired assets.
run head 2run head 1
133
16 Trade and other receivables (continued)
Whilst the Group retains credit insurance in respect of certain balances, the maximum exposure to credit risk at the
reporting date is the fair value of each receivable class mentioned above. No collateral is held as security against
these assets.
17 Financial instruments
At the balance sheet date, the fair value of outstanding forward foreign exchange contracts and the interest rate
swap are:
31 Dec 2022 31 Dec 2021
Group
Assets
£000
Liabilities
£000
Assets
£000
Liabilities
£000
Interest rate swaps – cash flow hedges 812 – – 29
Forward foreign exchange contracts – cash flow hedges 527 – – 264
1,339 – – 293
31 Dec 2022 31 Dec 2021
Company
Assets
£000
Liabilities
£000
Assets
£000
Liabilities
£000
Interest rate swaps – cash flow hedges 812 – 29
812 – – 29
Total derivatives designated as hedging instruments
The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets/liabilities in the
consolidated statement of financial position.
Currency derivatives
As in previous years, forward foreign exchange contracts are used to hedge a proportion of both the Group’s
forecast Polish Zloty denominated costs over the next 12 months. The forward exchange contracts mature across
the year.
The notional principal amounts outstanding at the balance sheet date are as follows:
31 Dec 2022
£000
31 Dec 2021
£000
Forward foreign exchange contracts – Polish Zloty 13,045 8,865
There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign
exchange contracts match the terms of highly probable forecast transactions (i.e. notional amount and expected
payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of
the foreign exchange contracts are identical to the hedged risk components. To test hedge effectiveness, the Group
uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments
against the changes in the fair value of the hedged items attributable to the hedged risks.
In these hedge relationships, the main sources of ineffectiveness are:
• Differences in the timing of the cash flows of the hedged items and the hedging instruments
• Different indices (and accordingly different curves) linked to the hedged risk of the hedged items and hedging
instruments
Notes to the
Consolidated Financial Statements
run head 1 run head 2
134
17 Financial instruments (continued)
• The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and
hedged items
• Changes to the forecasted amount of cash flows of hedged items and hedging instruments.
At 31 December 2022, the fair value of the Group’s currency derivatives is estimated to be an asset of approximately
£527,000, (2021: £264,000 of liabilities), based on quoted market values.
The forward contracts are designated as effective as cash flow hedges in accordance with IFRS 9 ‘Financial
Instruments’. The fair value has been recognised in other comprehensive income and presented in the hedging
reserve in equity.
Derivatives designated in hedging relationships at 31 December 2022:
Maturity
Polish Zloty (highly probable forecast purchase) 1-6 months 6-12 months Total
Notional amount (£000) 6,798 6,247 13,045
Average GBP:Zloty contract value 5.59 5.62 5.60
Derivatives designated in hedging relationships at 31 December 2021:
Maturity
Polish Zloty (highly probable forecast purchase) 1-6 months 6-12 months Total
Notional amount (£000) 4,126 4,739 8,865
Average GBP:Zloty contract value 5.31 5.45 5.39
The ineffectiveness recognised in the income statement for the year ending 31 December 2022 was £43,000
(2021: £nil). The amount recycled to the income statement in respect of contracts that matured in 2022 was a loss
of £187,000 (2021: £nil).
The effective fair value gain from hedging recognised in other comprehensive income during the year ending
31 December 2022 was £604,000 (2021: expense of £222,000).
Interest rate swap
The Group and Company entered into floating-to-fixed interest rate swaps to hedge the fair value interest rate risk
arising where it has borrowed at floating rates.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest
rate swap contract match the terms of highly probable forecast transactions (i.e. notional amount and expected
payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of
the interest rate swap contract are identical to the hedged risk components. To test hedge effectiveness, the Group
uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments
against the changes in the fair value of the hedged items attributable to the hedged risks.
At 31 December 2022, the fair value of the Group’s currency derivatives is estimated to be an asset of approximately
£812,000 (2021: £29,000 liability) based on discounting the expected future cash flows at prevailing interest rates
and are based on market prices at the balance sheet date.
The interest rate swap is designated as an effective cash flow hedge in accordance with IFRS 9 ‘Financial
Instruments’. The fair value movement has been recognised in other comprehensive income and presented in the
hedging reserve in equity.
run head 2run head 1
135
17 Financial instruments (continued)
Derivatives designated in hedging relationships at 31 December 2022:
Fixed to
floating
Floating to
fixed
Notional amount (£000) 9,688 9,688
Weighted average hedged rate SONIA + 1.75% 2.95%
The ineffectiveness recognised in the income statement for the year ending 31 December 2022 was £nil
(2021: £nil).
The effective fair value gain from hedging recognised in other comprehensive income during the year ending 31
December 2022 was £841,000 (2021: £29,000 expense).
Fair values of non-derivative financial assets and financial liabilities
Where market values are not available, fair values of financial assets and financial liabilities have been calculated
by discounting expected future cash flows at prevailing interest rates and by applying year-end exchange rates.
31 Dec 2022 31 Dec 2021
Note
Book value
£000
Fair value
£000
Book value
£000
Fair value
£000
Group
Cash at bank and in hand 18 29,245 29,245 29,064 29,064
31 Dec 2022 31 Dec 2021
Note
Book value
£000
Fair value
£000
Book value
£000
Fair value
£000
Company
Cash at bank and in hand 18 14,340 14,340 19,498 19,498
The carrying amount of borrowings, short term payables and receivables, net of impairment, is equal to their fair
value.
Neither the Group or the Company defaulted on any loans during the year. In addition the Group and Company did
not breach the terms of any loan agreements during the year.
Credit quality of financial assets
The credit quality of financial assets can be assessed by reference to the customer type.
Group
2022
£000
2021
£000
Trade receivables
Banks and financial institutions 1,641 1,935
Other corporates 4,393 5,354
Total current trade receivables 6,034 7,289
Overdue trade receivables 4,057 1,544
Total trade receivables
10,091 8,833
Notes to the
Consolidated Financial Statements
run head 1 run head 2
136
17 Financial instruments (continued)
Cash at bank and short-term bank deposits
Current Rating
(Moody’s)
2022
£000
2021
£000
A3 22,666 –
Aa3 6,468 27,545
Aa1 111 –
A2 – 1,417
Aa2 – 102
29,245 29,064
None of the financial assets that are fully performing have been renegotiated in the last year.
18 Cash and cash equivalents
Cash and cash equivalents are denominated in the following currencies:
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Company
31 Dec 2022
£000
Company
31 Dec 2021
£000
Sterling 15,525 19,641 14,340 19,498
United States Dollar 13,112 8,574 – –
Euros 212 361 – –
Canadian Dollar 285 227 – –
Polish Zloty 44 225 – –
Singapore Dollar 49 29 – –
Japanese Yen 18 7 – –
Cash at bank and in hand 29,245 29,064 14,340 19,498
The effective interest rate on short term deposits was 0.0% (2021: 0.0%).
19 Financial liabilities
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Company
31 Dec 2022
£000
Company
31 Dec 2021
£000
Bank loan 9,597 9,886 9,597 9,886
The borrowings are repayable as follows:
Within one year 1,250 313 1,250 313
In the second year 8,438 1,250 8,438 1,250
In the third to fifth years inclusive – 8,437 – 8,437
9,688 10,000 9,688 10,000
Unamortised prepaid facility arrangement fees (91) (114) (91) (114)
As at 31 December 9,597 9,886 9,597 9,886
On 15 October 2021, the Group and Company entered into a loan agreement with Bank of Ireland consisting of a
£10 million term loan in addition to a revolving credit facility of £10 million. The loan is secured on all the assets of
the Group. Operating covenants are limited to the Group’s net debt leverage and interest cover. The term loan is
repayable over three years with an initial 12-month repayment holiday followed by annual capital repayments of
£1,250,000. The Group can request a further one year extension to the loan. At the end of the term, a bullet payment
for the remaining balance of the loan is due. The loan is denominated in Pound Sterling and carries interest at
SONIA plus 1.75%. The Group entered into an interest swap on 2 November 2021, effectively fixing the interest rate
at 2.95% over the term of the loan.
run head 2run head 1
137
20 Trade and other payables
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Company
31 Dec 2022
£000
Company
31 Dec 2021
£000
Trade payables 826 1,290 63 102
Amounts owed to group undertakings – – 14,330 13,083
Other tax and social security payable 1,370 1,216 – 29
Other payables 204 405 – 428
Accruals 6,183 6,462 589 737
Deferred income 29,563 30,911 – –
38,146 40,284 14,982 14,379
The amounts owed to group undertakings are unsecured, interest free and repayable upon demand.
Deferred income has reduced in the year to £29.6 million (31 December 2021: £30.9 million). The reduction,
despite the increase in Annual Recurring Revenue in 2022, is attributable to a number of factors. One of the key
reasons for the reduction is that for a small number of material new business contracts signed in the final weeks of
2022 (and therefore included in Annual Recurring Revenue at the year-end) invoices were not issued until 2023.
An additional contributory reason for the reduction in deferred income is due to multi-year advance payments of
Annual Licence Fees by a small number of clients in prior years, resulting in reduced deferred income from these
clients at 31 December 2022. No multi-year advance payments were received in 2022.
The Company borrowed £1,247,000 from group undertakings during the year (2021: borrowed £11,377,000 to
group undertakings) representing the movement on the net amount owed to or from group undertakings from
the start of the year to the year end. These amounts are detailed in both note 16 and the table above with the
cash impact incorporating non-cash movements totalling £nil (2021: £259,000). Gross borrowings during the year
totalled £59,184,000 net of £57,937,000 payments (2021: borrowings of £22,704,000 net of £11,327,000 payments).
The movements in the year are in relation to the Group's treasury arrangements.
21 Capital lease obligations
The Group leases various office spaces which, following the adoption of IFRS 16, met the criteria set out to be
recognised as capital lease agreements.
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Amounts payable under capital lease arrangements:
Within one year 642 387
Within two to five years 2,284 1,624
After five years 1,387 1,632
Total 4,313 3,643
Less: future finance charges (564) (593)
Present value of lease obligations 3,749 3,050
Less: Amount due for settlement within 12 months (shown under current liabilities) (553) (273)
As at 31 December 3,196 2,777
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
The present value of financial lease liabilities is split as follows:
Within one year 553 273
Within two to five years 1,897 1,287
After five years 1,299 1,490
3,749 3,050
Notes to the
Consolidated Financial Statements
run head 1 run head 2
138
21 Capital lease obligations (continued)
The Company had no capital lease obligations during the year (2021: £nil).
Group
31 Dec 2022
£000
Group
31 Dec 2021
£000
Liability as at 1 January 3,050 1,853
Additions 830 2,599
Interest 123 143
On acquisition of subsidiary (note 28) – 279
De-recognition – (1,026)
Foreign exchange 151 (42)
Repayments (405) (756)
Liability as at 31 December 3,749 3,050
Total cash outflows from all leases totalled £716,000 (2021: £999,000), of which £311,000 (2021: £243,000) related
to short term or low value leases. These amounts are displayed within the cash flows from operating activities in the
statement of cash flows.
22 Provisions
Provisions
31 Dec 2022
£000
31 Dec 2021
£000
Group
At 1 January 379 441
Charged to income statement (76) (142)
On acquisition of subsidiary – 89
Foreign exchange 13 (9)
At 31 December 316 379
Provisions have been analysed between current and non-current as follows:
Provisions
31 Dec 2022
£000
31 Dec 2021
£000
Current 114 –
Non-current 202 379
316 379
£273,000 (2021: £334,000) of the total provision at 31 December 2022 of £316,000 (2021: £379,000) relates to the
cost of dilapidations in respect of its occupied leasehold premises. The remaining £43,000 (2021: £45,000) is in
relation to Poland pension provisions.
All of the non-current provision is expected to unwind within 2 to 5 years (2021: £379,000).
run head 2run head 1
139
23 Share capital
31 Dec 2022 31 Dec 2021
Number £000 Number £000
Group and company
Ordinary shares of 7 1/3p each
Issued and fully paid:
At 1 January 57,199,448 4,194 56,428,967 4,143
Issued under share option schemes 138,163 10 277,944 15
Equity consideration on acquisition – – 492,537 36
At 31 December 57,337,611 4,204 57,199,448 4,194
The number of ordinary shares for which Aptitude employees hold options and the period to which the options are
exercisable are as follows (note 30):
Period
Year of
grant
Exercise
price
2022
Number
2021
Number
Between March 2022 and 10 August 2027 2017 6 3/7p – 75,327
Between 30 August 2023 and 10 August 2028 2018 6 3/7p 28,431 28,431
Between 1 November 2021 and 1 May 2022 2018 410.0p – 4,390
Between 1 November 2021 and 1 May 2022 2018 418.0p – 27,376
Between 12 March 2022 and 10 August 2029 2019 7 1/3p 63,842 147,786
Between 12 March 2024 and 10 August 2029 2019 7 1/3p 3,572 89,206
Between 1 November 2022 and 1 May 2023 2019 590.0p 2,623 11,565
Between 1 November 2022 and 1 May 2023 2019 600.0p 64,678 90,322
Between 12 March 2022 and 10 August 2029 2020 7 1/3p 179,000 253,278
Between 12 March 2024 and 10 August 2029 2020 7 1/3p 123,669 123,669
Between 1 November 2023 and 1 May 2024 2020 460.0p 221,357 316,169
Between 1 November 2023 and 1 May 2024 2020 446.0p 40,058 72,337
Between 12 March 2023 and 10 August 2030 2021 7 1/3p 207,076 268,156
Between 12 March 2025 and 10 August 2030 2021 7 1/3p 98,610 98,610
Between 1 November 2024 and 1 May 2025 2021 692.0p 10,671 20,987
Between 1 November 2024 and 1 May 2025 2021 700.0p 61,720 117,404
Between 22 November 2025 and 22 May 2032 2022 7 1/3p 460,351 –
Between 22 November 2027 and 22 May 2032 2022 7 1/3p 164,893 –
Between 1 December 2025 and 1 May 2026 2022 372.5p 118,761 –
Between 1 December 2025 and 1 May 2026 2022 335.0p 465,798 –
2,315,110 1,745,013
24 Share premium account
2022
£000
2021
£000
Group and Company
At 1 January 11,946 7,828
Premium on shares issued during the year under the share option schemes 13 953
Premium on shares issued as part of equity consideration on acquisition – 3,165
At 31 December 11,959 11,946
The total net proceeds from the issuance of shares during the year was £23,000 (2021: £968,000) with £10,000
(2021: £15,000) of this being recognised within share capital, being the nominal value of shares issued. The remaining
amount represents the premium on issue which is detailed in the table above.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
140
25 Other reserves
Derivatives
hedge
reserve
£000
Merger
reserve
£000
Total
£000
Group
Cash flow hedges
At 1 January 2021 (71) 34,195 34,124
Net fair value losses in the period (222) – (222)
At 31 December 2021 (293) 34,195 33,902
Cash flow hedges reclassified to income statement
187 – 187
Gain on effective cash flow hedges 1,445 – 1,445
Deferred tax on cash flow hedges (335) – (335)
At 31 December 2022
1,004 34,195 35,199
Derivatives
hedge
reserve
£000
Merger
reserve
£000
Total
£000
Company
Cash flow hedges
At 1 January 2021 – 17,398 17,398
(Loss) on effective cash flow hedges (29) – (29)
At 31 December 2021
(29) 17,398 17,369
Gain on effective cash flow hedges 812 – 812
Deferred tax on cash flow hedges (203) – (203)
At 31 December 2022 580 17,398 17,978
26 (Accumulated losses)/retained earnings
Group
£000
Company
£000
At 1 January 2021 (6,165) 22,407
Profit/(loss) for the year 5,074 (1,918)
Share options – value of employee service (note 30) 612 612
Deferred tax on share options (note 15) 190 72
Dividends paid (note 8) (3,057) (3,057)
At 31 December 2021 (3,346) 18,116
Profit/(loss) for the year 2,595 (791)
Share options – value of employee service (note 30) 695 695
Deferred tax on share options (note 15) (137) (55)
Dividends paid (note 8) (3,093) (3,093)
At 31 December 2022 (3,286) 14,872
The loss for the financial year dealt with in the financial statements of the Company was £791,000 (2021: loss of
£1,918,000). As permitted by Section 408 of the Companies Act 2006, no separate income statement or statement
of comprehensive income is presented in respect of the Company.
Of the Company’s £14,872,000 retained earnings, £12,998,000 (2021: £16,822,000) is distributable to shareholders
following adjustment for the cumulative impact of share options value of service through reserves.
run head 2run head 1
141
27 Cash flows from operating activities
Reconciliation of profit before tax to net cash generated from operations:
Group
Year ended
31 Dec 2022
£000
Group
Year ended
31 Dec 2021
£000
Company
Year ended
31 Dec 2022
£000
Company
Year ended
31 Dec 2021
£000
Profit before tax for the period 3,205 6,229 (791) (1,928)
Adjustments for:
Depreciation 1,132 1,179 9 24
Amortisation 3,382 1,418 – –
Share-based payment expense 695 612 22 5
Finance income (18) (6) (18) (6)
Finance costs 498 238 375 95
Changes in working capital:
(Increase)/decrease in receivables (1,485) (1,561) (157) (78)
(Decrease)/increase in payables (2,137) 3,930 (643) 387
(Decrease) in provisions – (149) – –
Cash generated from/(used in) operations 5,272 11,890 (1,203) (1,501)
28 Acquisitions
MPP Global Solutions Limited (‘MPP Global’)
On 9 October 2021 the Group acquired the entire share capital and voting rights of MPP Global Solutions Limited for
consideration of £39.1 million, which included £35.4 million of cash. Of the consideration, £35.4 million was payable
in cash at completion, £3.2 million was satisfied by the issue of 492,537 new ordinary shares with a fair value of
650 pence on date of acquisition with the balance being settled by way of tax relief consideration totalling the 2020
R&D credit receivable by the business on submission of their UK tax return.
29 Commitments
The Group and Company have no commitments other than short term leases or a lease of low-value assets during
the year (2021: £nil).
Notes to the
Consolidated Financial Statements
run head 1 run head 2
142
30 Share based payments
Performance Share Plan (PSP)
Under the 2016 Performance Share Plan (PSP), the Remuneration Committee is allowed to grant conditional
allocations of par value options in the Company to key executives. The contractual life of an option is 10 years.
The PSP is considered a Long Term Incentive Plan (LTIP) award.
629,518 options were granted on 22 November 2022 (2021: 370,578 awards granted). The performance conditions
are in line with those described for the executive Directors on page 72.
The inputs inserted into the Monte Carlo Pricing model for the options granted in 2022 are detailed below.
Item Value
Exercise price 7 1/3p
Expected volatility 40%
Dividend yield 1.5%
Risk-free interest rate 3.0%
Share price at grant date 363p
For the calculation of the expected volatility, historical share price volatility was used as a guide over a commensurate
period to the expected term of awards.
At the year end there were 53 (2021: 49) employees currently participating in the scheme. Exercise of an option is
subject to continued employment.
Details of the share options outstanding under the PSP during the year are as follows:
2022 2021
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
Outstanding at 1 January 1,084,463 7.25p 942,279 6.72p
Granted 629,518 7 1/3p 370,578 7 1/3p
Exercised (134,902) 6.43p (50,939) 6.43p
Lapsed (249,635) 7 1/3p (177,455) 6.52p
Outstanding at 31 December 1,329,444 7.32p 1,084,463 7.25p
Exercisable at 31 December 3,572 7 1/3p – 6.43p
134,902 (2021: 50,939) PSP share options were exercised in 2022. The weighted average share price at the date of
exercise for share options exercised during 2022 under the Share Option Plans was 317p (2021: 674p).
The options outstanding at the end of the year have an expected weighted average remaining contractual life of
9.66 years (2021: 8.58 years).
run head 2run head 1
143
30 Share based payments (continued)
Share Option Plans
The Group has set up several Share Option Plans, under which the Remuneration Committee can grant options over
shares in the Company to employees of the Group. Options are granted with a fixed exercise price equal to the
market price of the shares under option at the date of grant. The contractual life of an option is 3.5 years. Following
the introduction of a new sharesave scheme in 2018, 272 employees (2021: 279) currently participate in these Plans.
Options granted under the Share Option Plans will become exercisable on the third anniversary of the date of grant,
subject to specific criteria being met.
Exercise of an option is subject to continued employment.
Details of the share options outstanding under the Share Option Plans during the year are as follows:
2022 2021
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
Outstanding at 1 January 660,550 505.58p 827,337 452.25p
Granted 589,932 342.55p 140,992 698.66p
Exercised (3,261) 416.92p (227,005) 427.43p
Lapsed (261,555) 548.11p (80,774) 515.95p
Forfeited – – –
Outstanding at 31 December 985,666 397.02p 660,550 505.58p
Exercisable at 31 December 67,301 599.61p 31,766 416.89p
The inputs inserted into the Black Scholes Pricing model for the options granted in 2022 are detailed below.
Value
Item UK International
Exercise price 373p 335p
Expected volatility 40.10% 40.10%
Dividend yield 1.52% 1.52%
Risk-free interest rate 3.13% 3.13%
Expected cancellation rate 5% 5%
Share price at grant date 355p 355p
For the calculation of the expected volatility, historical share price volatility was used as a guide over a commensurate
period to the expected term of awards.
The weighted average share price at the date of exercise for share options exercised during the year under the
Share Option Plans was 509.0p (2021: 629.3p).
The options outstanding at the end of the year have an expected weighted average remaining contractual life of
3.63 years (2021: 2.29 years).
The Group recognised total expenses of £695,000 (2021: £612,000) related to equity-settled share-based payment
transactions during the year. After deferred tax, the total charge in the income statement was £617,000 (2021:
£617,000). There was a deferred tax charge of £137,000 (2021: credit of £190,000) taken directly to equity.
The Company recognised total expenses of £22,000 (2021: £5,000) related to equity-settled share-based payment
transactions during the year. After deferred tax, the total charge in the income statement was £8,000 (2021: £8,000).
There was a deferred tax charge of £55,000 (2021: deferred tax credit of £72,000) taken directly to equity.
Notes to the
Consolidated Financial Statements
run head 1 run head 2
144
31 Retirement benefit schemes
The Group operates defined contribution retirement benefit plans for qualifying employees in the UK. The assets of
the plans are held separately from those of the Group in funds under the control of trustees.
The Group also operates defined contribution retirement benefit plans for its overseas employees with contributions
up to 6% of basic salary.
The total expense in the income statement of £1,258,000 (2021: £946,000) represents contributions payable to
these plans by the Group at rates specified in the rules of the plans. As at 31 December 2022, contributions totalling
£29,000 (2021: £36,000) due in respect of the 2022 reporting year had not been paid over to the plans and were
included within accruals. All amounts were paid over subsequent to the balance sheet date.
32 Related party transactions
Group
The following transactions were carried out with related parties:
During 2022, the Group entered into transactions with a subsidiary of FDM Group (Holdings) plc, a Company
for which Peter Whiting (non-executive Director) is currently a non-executive Director. FDM Group (Holdings) plc
provided consultancy services to the Group during the year at a cost of £42,000 (2021: £42,000). Peter Whiting
stepped down from his role as non-executive Director in April 2022.
The Company acts as the Group’s treasury vehicle and during the year owed a net £14,330,000 to its subsidiary
companies (2021: £13,083,000).
There were no further related party transactions in the year ended 31 December 2022 (2021: £nil), as defined by
International Accounting Standard No 24 “Related Party Disclosures” other than key management compensation
as disclosed in note 4.
33 Contingent liabilities
The implementation of the Group’s products are frequently part of wider finance transformation programmes involving
a number of different suppliers and partners. This environment can result in project scope changes, resulting in
timeline extensions and budgetary demands. In this background, two clients have ceased the implementation of
the Group’s products and provided the Group with correspondence terminating their multi-year agreement alleging
contractual breaches by Aptitude and claiming damages. The Group has rejected both the purported termination
of the two agreements and claim for damages and has notified the clients of the charges due to Aptitude under
the minimum terms of their agreements. The Group has assessed that they do not consider that it will be probable
that there will be a cash outflow and therefore no provision has been recognised at 31 December 2022. The Group
expects the matter to be resolved in the next year.
Shareholder
Information
run head 2run head 1
145
InformationShareholder
Size of shareholding
Number of
shareholders
Percentage of
shareholders
Number of
shares
Percentage of
issued shares
1 – 1,000 507 56.7% 146,994 0.2%
1,001 – 5,000 194 21.7% 441,070 0.8%
5,001 – 50,000 114 12.7% 1,854,597 3.2%
50,001 – 500,000 55 6.2% 9,788,954 17.1 %
500,001 – above 24 2.7% 45,105,996 78.7%
Total 894 100% 57,337,611 100%
Investor Type
Number of
shareholders
Percentage of
shareholders
Number of
shares
Percentage of
issued shares
Nominee Companies 176 19.7% 47,529,984 82.9%
Bank & Bank Nominees 6 0.7% 4,829,517 8.4%
Private Shareholders 666 74.5% 2,051,998 3.6%
Pension Funds 0 0% 0 0%
Limited Companies 13 1.4% 70,299 0.1%
Other Institutions 9 1% 2,837,545 4.9%
Deceased Shareholders 24 2.7% 18,268 0.1%
Total 894 100% 57,337,611 100%
Registered Office
and Group Head Office
Registrar
Link Group
10
th
Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
8
th
Floor
138 Cheapside
London
EC2V 6BJ
Telephone:(0) 203 3687 3200
e-mail: investors@aptitudesoftware.com
Telephone: 0871 664 0300
e-mail: shareholderenquiries@linkgroup.co.uk
Aptitude Software Group plc ordinary shares are listed on the main market of the London Stock Exchange.
Shareholders’ enquiries
Enquiries regarding shareholdings or dividends should in the first instance be addressed to Link Group.
Please note that calls will cost 12p per minute plus network extras. Lines are open 9.00 am – 5.30 pm Monday to Friday,
excluding public holidays.
Annual General Meeting
The forthcoming Annual General Meeting will be held at 9.00 a.m. on Wednesday, 17 May 2023 at 8th Floor,
138 Cheapside, London EC2V 6BJ. Details are given in a separate notice to shareholders enclosed with this Annual
Report. A copy of the Notice of Annual General Meeting together with this Annual Report is posted on the Company’s
website www.aptitudesoftware.com. Shareholders are encouraged to vote by proxy and to submit any questions ahead
of the meeting. Details of how to do this are contained in the Notice of Annual General Meeting.
© Aptitude Software Limited 2014 - 2023. All Rights Reserved. APTITUDE, APTITUDE ACCOUNTING HUB, APTITUDE
LEASE ACCOUNTING ENGINE, REVSTREAM, APTITUDE REVENUE RECOGNITION ENGINE, FYNAPSE and the triangle
device are trademarks of Aptitude Software Limited. Aptitude – U.S. and European Patents Pending and Granted. For more
information, please refer to: https:// www.aptitudesoftware.com/patentsandtrademarks
www.aptitudesoftware.com
Contact us
London
Cheapside House
138 Cheapside,
London, EC2V 6BJ
Tel: 44 (0)20 3687 3200
Toronto
Suite 700
2 Bloor Street West
Toronto, Ontario M4W 3R1
Tel: +1 (416) 642 6508
Boston
Suite 1310
101 Federal Street
Boston, MA 02110
Tel: +1 (857) 201-3432
Warrington
401 Faraday Street
Birchwood Park,
Warrington, WA3 6GA
Tel: +44 844 873 1418
Singapore
Centennial Tower, Level 17
3 Temasek Avenue
039190 Singapore
Tel: +65 82282403
Wrocław
ul. Muchoborska 6
54-424 Wrocław
Poland
Tel: +48 71 35 83 010
Aptitude Software Annual Report 2022