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Ince Group PLC (The) Final Results

03/08/2020 7:00am

UK Regulatory (RNS & others)


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TIDMINCE

RNS Number : 8513U

Ince Group PLC (The)

03 August 2020

The Ince Group plc

("Ince" or the "Group")

Audited results for the year ended 31 March 2020

Robust results driven by strong Ince brand

 
 For the year ended 31 March (GBPm)            2020    2019   % Growth 
-------------------------------------------  ------  ------  --------- 
 Revenue                                       98.5    52.6       +87% 
 Operating profit                              26.2    15.2       +72% 
   % margin                                   26.6%   28.9%   (230)bps 
 Adjusted* profit before tax                    8.0     5.9       +36% 
 Adjusted** diluted earnings per share (p)    14.9p   18.8p      (21)% 
 Dividend per share (p)                           -    6.0p        n/a 
 Net (debt)/cash                              (9.0)   (2.9) 
-------------------------------------------  ------  ------  --------- 
 

* Adjusted profit before tax is calculated as the profit before tax after adding back non-recurring items (as shown in note 11 to the financial statements) and after deducting the non-controlling interests shown in statutory accounts

** Adjusted earnings per share is computed from adjusted profit before tax after deducting taxation

Operational highlights

-- Compound revenue growth of almost 60% p.a. since listing in 2017 (both through acquisitions and organic growth)

-- Ince international offices now fully integrated into the Group's operations giving wider sector and geographical coverage

   --      More than 10 top tier lateral hires successfully embedded in the business 
   --      Group now operates from eight jurisdictions across the UK, EMEA and Asia 

-- Collaborative selling across regions and expanded base of specialisms main driver of organic growth

   --      Successful fundraising of GBP14m in February 2020 

-- Completion and installation of wholly-owned multi-office, multi-currency practice management system.

Covid-19

-- Trading performance has been impacted in first quarter of FY 2021 by Covid-19 (c. 10% reduction in revenue versus budget)

   --      Pre-existing infrastructure allowed all locations to move instantly to offsite working 

-- Asia practices (impacted from January 2020) have now returned to their offices following Government guidance although in Hong Kong for example social distancing measures have been reintroduced. At present we are operating at pre-pandemic levels and ahead of budget in this region

-- Cash preservation through active engagement with colleagues, key suppliers and stakeholders to secure reductions and deferrals where appropriate. At 31 March 2020 cash holdings were GBP5.2 million and at 30 July 2020 were GBP6.4 million after GBP1.3 million scheduled reductions in borrowings

Financial highlights

   --      Revenue GBP98.5m (2019: GBP52.6m) +87% 
   --      Organic growth of revenue c. 5% 
   --      Operating profits GBP26.2m (2019: GBP15.2m) +72% 
   --      Adjusted* profit before tax GBP8.0m (2019: GBP5.9m) +36% 
   --      Non-recurring acquisition costs and related material items GBP1.7m (2019: GBP14.3m) 
   --      Adjusted** diluted earnings per share 14.9p (2018: 18.8p) -21%, reflecting equity issue 
   --      Dividend cancelled in view of uncertainty caused by Covid-19 (2019: 6.0p) 
   --      Net cash generated by operating activities GBP14.7m (2019: GBP5.9m) 

-- Net borrowings GBP9.0m (2018: net borrowings GBP2.9m), GBP1.2 million of external debt repaid since draw down in June 2019 and pay down continuing

-- Profit and total comprehensive income for the year GBP21.8m (2018: GBP0.8m), diluted earnings per share 11.4p (2019: loss 28.1p )

* Adjusted profit before tax is calculated as the profit before tax after adding back non-recurring items (as shown in note 11 to the financial statements) and after deducting the non-controlling interests shown in statutory accounts

** Adjusted earnings per share is computed from adjusted profit before tax after deducting taxation

Outlook

Our strategy continues to be to grow revenue profitably through adding high performing partners to a single efficient administration operation. We do this by recruiting high quality personnel, developing new business streams, acquiring complementary businesses and forging strategic alliances.

The underlying business has proven resilient and the Group now has a firmly established international presence with a very strong brand.

The Board considers that the Group has the strength, flexibility and commitment to prosper and grow for the benefit of shareholders and colleagues over the coming years. Given the Covid-19 uncertainties, it is too early to provide guidance on the results for the current year.

Adrian Biles, Group Chief Executive, commented:

"I first want to thank my colleagues around the world without whom this year's strong performance could not have been achieved. Their fortitude, hard work and flexibility during this challenging time has been remarkable.

"We can justifiably claim that this has been a year of great progress. While we narrowly missed our GBP100m revenue target, the fact that these results were achieved despite the disruption caused by Covid-19 shows the quality of the business we are building.

"This is the first announcement to include the whole of Ince for a full year. The power of the Ince brand continues to win clients and attract talent.

"Throughout the year we have recruited exceptionally high quality partners in the marine, aviation, energy and insurance sectors, expanded the overseas offices and moved into exciting high-growth sectors. Also we have welcomed Rampart Corporate Advisors Ltd together with a team of senior shipping colleagues from Bentleys, Stokes and Lowless to the Group.

"We are continuing to realise the full potential of the Ince brand and our first class people."

Presentations

A presentation for analysts and institutional investors will be held today, 3 August 2020, at 11am. All participants must pre-register with Portland Communications to attend the event via: ince@portland-communications.com.

An open presentation and Q&A for all investors will also be held via the Investor Meet Company platform on 5 August 2020 at 4pm. Investors can register for the event via: https://www.investormeetcompany.com/ince-group-plc-the/register-investor

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Ince Group plc investorrelations@incegd.com

Adrian Biles, Group Chief Executive

Simon Oakes, Chief Financial Officer

Arden Partners plc

   Nominated Advisor and Broker to the Company       +44 (0) 20 7614 5900 

John Llewellyn-Lloyd, Corporate Finance

Ciaran Walsh, Corporate Finance

Dan Gee-Summons, Corporate Finance

Fraser Marshall, Equity Sales

   Portland Communications                                               +44 (0) 7767 345 563 

Steffan Williams ince@portland-communications.com

Simon Hamer

Riku Heikkila

About The Ince Group plc

The Ince Group is an international legal and professional services business with 21 offices in eight countries across Europe, the Middle East and Asia. With some 800 people, including over 100 equity partners worldwide, The Ince Group delivers legal advice, strategic guidance and business solutions to sector leading businesses operating across numerous industries. Through its entrepreneurial culture and "one firm" approach, the business offers its clients over 150 years of expertise, insight and relationships. The Group is driven by a senior management team whose broad expertise and deep sector specialisms provide its clients with solutions to complex legal and strategic needs.

Please visit www.theincegroup.com for more information.

Chairman's statement

It gives me great pleasure to present my first report since succeeding Anthony Edwards as chairman in April this year. I and the board thank Anthony for his guidance and chairmanship through the flotation process and since the Group's admission to AIM.

The Group's turnover increased by 87% to GBP98.5 million, operating profit by 72% to GBP26.2 million and Adjusted* profit before taxation to GBP8.0 million from GBP5.9 million. Adjusted* diluted earnings per share were 14.9p, a decrease of 22% from last year reflecting the increased shares in issue. We paid a dividend of 4p per share in the year and had declared a further dividend of 2p per share for payment in April, however this was cancelled for prudence as the Covid-19 pandemic struck. The Group's results are more fully described and discussed in the following pages by our CEO and our Group FD.

The year has been another one full of challenges and successes. Continuing the integration of the two firms, their operations and their cultures has been an on-going process and the CEO develops that theme below. The results for the year were advancing well until Covid-19 appeared and global governmental actions to limit the spread progressively impacted all of our offices, starting in the Far East in January. This has dampened the outcome for the year end, however we are pleased with the substantial progress throughout the year.

I would like to place on record my thanks to all our colleagues across the Group around the world for their dedication to serving our clients particularly throughout the period of unusual working conditions.

The Group's strategy continues to be the profitable growth of income and the intellectual capital of the Group both through lateral team hires and, where appropriate, acquisitions. To this end, the Group has increased the number of equity partners to over 100 since 1 April 2019. This includes achieving control of the Ince offices in Hong Kong, Singapore, Dubai, Greece, Monaco and Germany and taking on the partners of Bentleys, Stokes and Lowless, a long established boutique London law firm specialising in shipping.

Of particular significance have been the lateral hires of three partners in Hong Kong who have driven substantial growth in that office and the hires of Julian Clark as Senior Partner of the law firm, Mark Tantam as head of consulting businesses and Alex Janes as head of EMEA offices who are all now active across the Group. The latter three have brought both significant client lists and experience of managing international professional service businesses, expanding and strengthening the Group's management team.

In late March, the Board reluctantly concluded that the Company should take the prudent action of cancelling the dividend which had been declared for payment in April as there was a high level of uncertainty about the impact of the Covid-19 pandemic. The Group has conserved cash very effectively since then and at 30 July 2020 had cash of some GBP6.4 million in the bank compared with GBP5.2 million at 31 March and we had reduced indebtedness by GBP1.3 million by scheduled repayments. Various governmental programmes which have been helpful to the Group will expire or be reduced over the next few months and there will be obligations to pay back some of this funding. Accordingly, the Board does not believe it prudent to propose a dividend at this time. The Board continues to believe that rewards for shareholders who have invested in the business are very important and the position is under continuous review.

In terms of governance, we are actively looking to recruit at least one further non-executive director and are determined to deliver a board which is balanced, diverse and inclusive in terms of area of relevant expertise, background and culture. It is very important that the boardroom has a wide range of views in order to understand, acknowledges and respond to our clients, colleagues and shareholders.

The Group now has a firmly established global presence with a very strong brand which we are continuing to build upon through lateral team hires. The world will not be the same post Covid-19, however I believe that the Group has the strength, flexibility and commitment to prosper and grow for the benefit of our valued shareholders and colleagues over the coming years. Given the Covid-19 uncertainties, it is too early to provide guidance on the results for the current year.

David Furst, Chairman

31 July 2020

* These terms are explained in the Chief Financial Officer's report

Group Chief Executive's Report

I first want to thank my colleagues around the world without whom this year's strong performance could not have been achieved. Their fortitude, hard work and flexibility during this challenging time has been remarkable.

The year has been another one of great progress for the Group, with the completion of the Ince consolidation in April 2019 which saw the overseas offices joining the Group and contributing to revenues which, despite the effects of the Covid-19 pandemic, almost reached GBP100 million.

Our strategy has been and continues to be to acquire and grow revenue through organic growth, lateral hires and, where appropriate, acquisition and to administer that revenue through a single efficient administrative operation in a low-cost environment.

Our objective at admission to AIM in August 2017 was to double revenue in three years. As we approach the third anniversary, our reported revenue has almost quadrupled, a compound growth rate of almost 60% p.a.

We have the ambition to develop a highly profitable and fast growing international legal and professional services group and have the structure and teams in place to achieve this.

Key achievements

-- From the consolidation of the Ince overseas offices in April 2019 and the integration of all of the Ince offices into the Group, the increasing collaboration between offices and practice areas has been progressively driven forwards.

-- We have also focussed on forging a common culture across the various teams and offices, aimed at embedding the Group's core values of connection, agility, clarity and entrepreneurship.

-- In mid 2019 we completed a branding review aimed at capitalising on the Group's established brand names. We also implemented a new brand style for the very strong "Ince" brand globally for most of the businesses. We have had increasing evidence of the strength of this brand and have adjusted the balance sheet intangible value to ascribe more value to the brand acquired instead of the client portfolio essentially connected to the partners of the acquired business. We recognise that the business is "sticky" to individual partners but is stickier to the Ince brand where clients have multiple touchpoints. This is reflected in the balance sheet at 31 March 2020.

-- We have begun the process of strengthening the Ince overseas offices where partner attrition had left them sub-scale. In doing this we have deliberately sought to expand the service lines offered by those offices beyond the world leading marine services which they have always provided: this has included the three Hong Kong partners taken on (as reported last year) who have been effective in developing their non-marine business in the Group very rapidly. A further four partners have joined our offices in Dubai, Gibraltar and Singapore in the second half of the year strengthening our service offering in those regions.

-- Through very senior lateral hires in the UK we have also expanded and strengthened the management team and then created an executive committee which is responsible to the Chief Executive and the board for delivering successful day-to-day operations.

-- In addition to those very senior lateral hires and the overseas lateral hires a number of focussed lateral hires in the UK have also been achieved. We have made more than 10 top tier lateral hires in the year

-- We raised GBP14.0 million of further equity capital early in 2020 and we were pleased to welcome a number of new shareholders as well as further investment by many of our existing institutional investors, private investors, partners and colleagues.

-- Perhaps the most gratifying achievement has been the way the Group has reacted to the Covid-19 pandemic: it first struck in the Far East and we closed our offices there in late January to protect personnel while continuing to operate to support our clients seamlessly. We then progressively closed each of the other offices as required. Our infrastructure and administrative services enabled all our colleagues to provide the usual high quality service our clients expect at all times. The Greater China offices were the first to re-open and they have, so far in the current financial year, performed ahead of our expectations. The EMEA and UK offices started re-opening later and are showing encouraging signs of a return to normality. That said, we continue to encourage agile working and have plans to ensure continuity of client service through any future potential lock downs across our jurisdictions.

Financial performance

We are pleased with our results, which are detailed in the Group Finance report below, with the Ince businesses delivering a full year's contribution for the first time.

The Group's revenues have grown by 87% over the year and much of this is due to the inclusion of the whole of Ince for a complete year. Within this, we estimate that organic growth was 5%

The split of the Group's revenue by business area has changed significantly over the year, with the contribution from marine, aviation and transport activities growing to represent half of the Group's revenue for the year. We are also pleased to see that the revenues generated by real estate (as a proportion of the global revenues) has dropped significantly and was significantly less than 10% in the year. These revenues, while important to the business as an adjunct to other service lines, are volatile, high risk and high maintenance and we are much more comfortable for the future of the business with such revenues at or under 10% of the whole Group.

An analyses of the revenues for the year ended 31 March 2020 by service line is set out below.

 
 Years to 31 March           2020    2019    2018 
                             GBPm    GBPm    GBPm 
 Shipping & trade            55.7     8.8       - 
 Dispute resolution          17.0    10.0     9.5 
 Corporate & tax             11.6    13.4     9.1 
 Real estate                  5.8     7.3     6.6 
 Family & private client      3.9     4.9     3.4 
 Other                        4.5     8.2     2.7 
                             98.5    52.6    31.3 
                           ------  ------  ------ 
 

Geographically, the revenue for the year ended 31 March 2020 was as below.

 
 Year to 31 March     2020 
                      GBPm 
 UK                   63.9 
 Greater China        19.6 
 Dubai                 4.9 
 Germany               3.6 
 Greece                3.5 
 Singapore             1.7 
 Gibraltar             1.3 
                    ------ 
                      98.5 
                    ------ 
 

Operational performance

We have continued to integrate all aspects of our operations onto a single administrative platform which can serve all our offices on a basis which enables appropriate regional and departmental management control. Operations are managed across all service lines to enable sensible operational decisions at global and local levels as appropriate.

As reported previously, the Group now owns a copy of the basic source code for the Group's practice management system. Over the last twelve months this has continued to be developed and is expected in the next month to deal with all London transactions regardless of origin of the transaction or execution or currency. It will then be installed in all overseas offices over coming months, becoming one of, if not the only, independent multi-office, multi-currency practice management systems available to UK based businesses which is not associated with a major data supplier and therefore subject to that supplier's own commercial imperatives. We believe that this is a significant competitive advantage.

Our core remuneration model (as well as the valuable brand "Ince" which is being enhanced and developed) continues to be a magnet for partners in other firms to join us - our results in this regard over the last twelve months evidence the powers of our brand and our remuneration structure. Our remuneration model focuses on professional practitioners being rewarded both for the billable work they do and for the income generated from their clients. Our basic model for partners continues to be refined to promote our core values and the behaviours we want to see which will drive Group profitability. We continue to focus partners financially on generating fees from their clients, on the recovery of the full value of the work undertaken and the generation of gross margin from which to cover overheads and to generate profits for shareholders.

We have placed a lot of emphasis since the Ince acquisition on the development of a culture for the Group. This culture aims to provide an environment of trust for partners and colleagues which is open and transparent and in which everyone can perform to the best of their abilities. In the context of an integration on the scale of the Ince merger, the turnover in partners and other colleagues over the period has been little different to the Group's history. The stability of partners and other colleagues is, we believe, vital in delivering the continuing satisfaction of clients and we are, therefore, unsurprised by our clients being open to using the other strengths of the Group where appropriate.

The future

We can and will do even better as the partners in the Group come to trust each other with each other's clients to develop performance. We are determined to grow our client base and intellectual capabilities and believe we have the platform to achieve this. We have built a platform which supports a substantial international business which is being incrementally grown by lateral hires and modest acquisitions - for both of which there continues to be a ready supply of opportunities.

We continue to develop the collaborative growth of the business from adding service lines supplied by new recruits in an office and from the ability to service additional needs of existing clients. This requires significant trust to be built up between partners and other colleagues across service lines and geographies.

We have made progress in our diversity and inclusion strategy, but we must continue to improve this further. The value created through diverse experiences and contributions at all levels in our business are important to our growth. We have re-established a new diversity and inclusion steering committee made up of colleagues from across the Group, who I and the board will work closely with to drive our strategy over the coming years.

Our clients are, along with its people, the Group's most valuable assets. It is because of the value we add for our clients that we can continue to do what we do best: advise them in relation to their most crucial and important business and personal needs. We need to look after our clients, make sure we are communicating with them in the right way and at the right time, and continue to deliver the high-quality legal service they have come to expect from Ince. Clear and accurate communication is key to success. The Ince Key Account Management Programme (KAM) has recently been launched for a number of clients with whom we believe we can further develop and strengthen relationships, resulting in better service for those clients and increased revenue for the Group.

Our existing client base is our most valuable marketing and business development audience so by implementing and investing in a KAM programme we will:

   --      Develop and broaden relationships with existing clients 
   --      Create greater client loyalty 

-- Through listening to clients, better understand our clients' current business along with future needs

   --      Generate greater revenue growth from clients who are managed and developed 

There are a number of active examples of this, for example, where we achieved a successful small transaction for a client in the last three years and where we are now billing that client a substantial multiple of the initial fee on an annual basis - the key as we see it is to be a trusted partner of our client, providing a range of services which enable the clients to realise increased value from their businesses.

Notwithstanding the global Covid-19 pandemic, the current year is generating opportunities to grow the business and we are seizing those opportunities.

One of our key differentiators as a listed professional services entity is the quality of our work and the quality of our people who look after our clients. While we enjoyed the benefit of a number of market leading practice areas prior to the Ince merger, without a doubt that merger brought with it a substantial body of first class business and professional partners and colleagues. We have consolidated the marketing of our client services under the Ince brand and our clients include a wide range of world leaders in shipping, energy and aviation among other sectors.

We will continue to succeed further and drive value for our shareholders by continuing to provide relevant and expert advice to our clients from understanding their business as a whole or their individual circumstances (rather than the particular legal issue they might expect to consult us on) therefore providing value to our client. This will enable us further to succeed and drive value for our shareholders.

Adrian Biles

31 July 2020

Chief Financial Officer's Report

The Group's consolidated results for the year ended 31 March 2020 show total revenue of GBP98.5 million (2019: GBP52.6 million), operating profits of GBP25.9 million (2019: GBP15.2 million) and adjusted profit before tax of GBP7.7 million (2019: GBP5.92 million).

 
 For the year ended 31 March (GBPm)            2020    2019   % Growth 
-------------------------------------------  ------  ------  --------- 
 Revenue                                       98.5    52.6       +87% 
 Operating profit                              26.2    15.2       +72% 
   % margin                                   26.6%   28.9%   (230)bps 
 Adjusted* profit before tax                    8.0     5.9       +36% 
 Adjusted** diluted earnings per share (p)    14.9p   18.8p      (21)% 
 Dividend per share (p)                           -    6.0p        n/a 
 Net (debt)/cash                              (9.0)   (2.9) 
-------------------------------------------  ------  ------  --------- 
 

The Group presents two Alternative Performance Measures ("APMs"). These APMs include adjustments for specific items in order to provide a balanced view of the underlying performance of the Group's operations.

*Adjusted profit before tax is calculated as profit before tax after:

- adding back non-recurring items of GBP1.6 million in 2020 (2019: GBP14.3 million). In 2020, these primarily relate to costs for the final phase of the Ince acquisition when new network arrangements were established with certain Ince overseas offices; and

- deducting partners' profit shares and other non-controlling interests of GBP16.4 million in 2020 (2019: GBP9.3 million). Partners' profit share and other non-controlling interests represent the costs of rewarding and motivating the relevant business generators. It is one of the largest outgoings (and variable) costs of the business and is reported in the statutory accounts as part of the non-controlling interests. The reported profit metrics therefore do not provide a true reflection of the underlying profits generated by the operations and available to equity holders. The adjusted disclosure essentially treats all forms of remuneration as operating costs of the business (just as employees' costs).

**Adjusted earnings per share is calculated by adjusting for taxation and dividing by the weighted average number of shares in issue for the period, on a diluted basis where a materially different result is produced.

The result is adjusted profit before tax and adjusted earnings per share (both for continuing operations) as shown below.

 
 For the year ended 31 March                             2020     2019 
                                                         GBPm     GBPm 
 Profit before tax from statement of comprehensive 
  income                                                23.20     0.97 
 Deduct: Non-controlling interests including 
  partners' profit shares                             (16.85)   (9.31) 
 Add: Non-recurring costs - acquisition 
  costs and material related costs                       1.66    14.26 
                                                     --------  ------- 
 Adjusted profit before tax                              8.01     5.92 
 Deduct: Taxation                                      (1.54)   (0.21) 
                                                     --------  ------- 
 Adjusted profit after tax for adjusted 
  earnings per share                                     6.47     5.71 
                                                     --------  ------- 
 

Key Performance Indicators (KPIs)

To achieve profits for shareholders, we focus the business on a small number of KPIs which we consider essential business drivers of profit growth. In simple terms, if we grow revenues, maintain or increase gross margin, constrain overheads and convert work done into cash, the profits for shareholders (as measured by adjusted profit before tax) will grow.

We therefore monitor the progress of the business through four essential KPIs:

o Revenue (measured net of disbursements and VAT)

o Gross margin percentage

o Overheads as a percentage of revenue

o Lockup

For management purposes we regard the profit and loss account as follows:

 
                                                   2020     2019 
                                                   GBPm     GBPm 
 Revenue                                           98.5     52.6 
 Production costs - employment costs             (31.6)   (12.0) 
 Production costs - non-controlling interests    (16.8)    (9.3) 
 Production costs - amortisation *                (2.0)    (1.5) 
 Production costs - other                         (4.2)    (4.2) 
                                                -------  ------- 
 Gross margin                                      43.9     25.6 
 Administrative salaries and non-productive 
  profit shares                                  (13.6)    (6.3) 
 Other overheads                                 (22.3)   (13.4) 
                                                -------  ------- 
 Adjusted profit before tax                         8.0      5.9 
                                                -------  ------- 
 

* - this represents amortisation of client portfolio intangibles of acquired businesses, recognised in in line with relevant fee billings / cash collections

Revenue is discussed in the Group Chief Executive's report above.

Production costs are the profit shares of the equity partners and the employment costs of the other fee earners together with their direct costs (such as travel) and direct support costs (such as dedicated secretaries) and provision for doubtful and bad debts (where we provide for all unsecured debts over six months old). This also includes the amortisation of client portfolios.

Gross margin is the fees charged to clients less direct production costs and is expressed as a percentage of revenue. Gross margin is in the control of the heads of each department or business unit and these individuals are rewarded with a participation in gross margin achieved in excess of 45%. In the current year (and after including amortisation which will be replaced by a partners' profit share in due course) it was 44.6% (2018: 48.6%). The current year's gross margin reflects:

- The incorporation of the gross margin profiles of the Ince overseas offices (39% in the year), which were brought into the Group in the knowledge they required a certain level of investment in fee earners through lateral hires to improve their fee earning capacity:

o This began in the year with the hiring into our Greater China practice in Q1 of a team of three partners supported by twenty fee earner colleagues into our Hong Kong office, which resulted in that region delivering gross margin of 48% for the year (GBP9.3m).

o Management is now focussing on securing lateral hires into other regions, with the recent hires in Singapore, Dubai and Gibraltar mentioned earlier.

Overheads are all the other costs of running the business - premises, insurance, computing and telephones etc. - apart from the costs of acquisitions. In the year, overheads as a percentage of fees charged to clients were 36.4% (2019: 37.4%) while our target is 30%. The target becomes more achievable the more fees are generated, so the successful deployment of lateral hires into the overseas offices will be critical to delivering this metric. As noted below, we are also reviewing our overhead cost base in the light of the impact of Covid-19.

Lock up is defined for our KPI as the value of trade debtors and work in progress compared with fees charged to clients, in each case excluding disbursements and VAT. This measure is under the control of the Client Care Partner for each client and they are guided and assisted in this by our revenue management team. Our current target for this is 100 days for the Group, although within this we expect some degree of variance across the different jurisdictions in which we operate. In the last quarter of the financial year, lock up significantly increased as Covid-19 impacted the Group, first in our Asian operations and latterly in the UK. Lock up as at 31 March 2020 was therefore 96 days. This was despite a marked slowing of debtor collections in the period immediately preceding the lockdown in the UK and a significant build up in debtors in Greater China.

Management's focus remains on achieving the above lock up, gross margin and overheads targets in the medium term. There is an aspiration of a 15% net margin but management believes 10-12% is realistically achievable in a shorter term after non-recurring expenses. Management is also closely focussed on optimising the productive capacity of fee earners and delivering organic growth through collaborative selling across our different disciplines and jurisdictions.

Funding and external facilities

In February 2020, the Group raised GBP14.0 million through a share issue of 31,214,182 new shares.

In the placing announcement for the issue of new shares, the Group indicated an intention to pay down its GBP6.5 million RCF from Barclays Bank plc. This RCF is part of the external debt facilities put in place in December 2018 at the point of the first phase of the Ince acquisition. It was planned that the repayment would take place during the financial year ending 31 March 2021.

When Covid-19 began to impact the international markets in which the Group operates, the Directors decided to delay repayment of the RCF to mitigate the adverse cash flow impacts from Covid-19. As noted below, revised forecasts, including an estimate of Covid-19's impact, show the Group will be able to meet the Barclays Bank plc external debt facilities' covenants over the next 12 months.

Balance sheet and cash flow

The acquisition of Ince gave rise to intangible assets which have been recognised in three ways - as goodwill, as client portfolio and as trademark, associated to the value of the Ince brand. A third party valuation of the Ince brand at the date of acquisition has been commissioned and an initial valuation of GBP17 million has been received and included in the balance sheet as part of the intangible asset acquisition of Ince. We have also received initial guidance that the efforts we have invested in developing the brand have significantly increased this value since acquisition. Both goodwill and the value of the trademark will be reviewed annually for impairment. The client portfolio value is being amortised over the three years during which the deferred consideration is being paid to the former Ince partners (until December 2021), at an annual charge of some GBP2 million.

At the end of the year, the balance sheet had net borrowings of GBP9.0 million (2019: net borrowings of GBP2.9 million), comprising cash and cash equivalents of GBP5.2 million and borrowings of GBP14.2 million, predominantly comprising the Barclays facilities discussed above. As noted above, this net debt position is higher than anticipated at the time of the share issue, as we have continued to use the Group's GBP6.5 million RCF whilst Covid-19 has temporarily reduced business activity and slowed cash collections in some parts of the business.

The Consolidated Statement of Cash Flow shows that the Group had GBP14.7 million of cash flow generated by operating activities (2019: GBP5.9 million).

As was outlined in last year's statutory accounts, whilst some tax losses remain available for use, this year the rate of tax (at 6.7%) has moved closer to the standard UK rate of Corporation Tax. It remains our expectation that this trend will continue moving forward. As a result of the disallowance of the amortisation of client portfolios as an expense, the effective tax rate on Adjusted Profit before tax is higher than the standard UK rate and this is expected to continue for the next financial year before returning towards that standard rate.

Covid-19

The Covid-19 virus has had a rapid and significant impact on the global economy, affecting many of the markets and sectors in which we operate. As a result of this pandemic, the level of chargeable work being done in various practice areas has reduced in particular in transactional areas such as real estate and corporate.

Accordingly, the Group has taken proactive action across all of its locations and has activated business continuity plans minimising the risk of disruption to business operations, taking account of relevant local government advice and the need to safeguard the health of our workforce. Steps have been taken to reduce / delay costs, including:

- Discretionary expenditure across all our locations has been cancelled or deferred, unless an immediate, business critical requirement is identified, and key suppliers / stakeholders have been engaged with to temporarily defer or reduce expenditure.

- The Group has taken advantage of the UK Government's furlough scheme in the case of colleagues who cannot for various reasons effectively work other than in the Group's offices and also where clients do not need servicing (for example in the residential conveyancing part of the UK business). Departmental management has been tasked with using the scheme to maintain a level of utilisation above 60%.

- All Board and most UK colleagues' salaries have been reduced on a temporary basis and partners' drawings have been reduced and profit distributions deferred.

We have been pleased with the level of engagement and support we have received from colleagues and partners as well as our supplier network. We will continue to follow the various national institutes' policies and advice and in parallel will look to continue our operations in the best and safest way possible without jeopardising anyone's health.

Furthermore, although the impact was first seen in our Asian offices in late January 2020, these offices have now seen activity levels return to levels included in the original forecast for the year ending 31 March 2021.

Going concern

In light of the impact of Covid-19, the Directors revised the original forecasts for the financial year ending 31 March 2021 to sensitise for the potential impact on profitability and cash flow over the next 12 months.

This revised model was prepared using the expected impact based on trading patterns in March and April 2020, which indicated a potential reduction in activity levels and therefore revenue of 20% to 30%. The actual adverse impact to date has not been as significant with revenues to 30 June only c.10% behind our budget prepared before Covid-19 and cash at 30 July 2020 approximately GBP6.4 million.

The cash flow forecast indicates a low point of cash across the Group in October 2020 of GBP2.7 million (with GBP8.3 of net debt), once the impact of the cash management actions described above is taken into account and after paying all debt repayments due on schedule. The Group's external debt facilities are not due for renewal until December 2021 and forecasts indicate the Group will meet its covenant requirements for the next 12 months.

Consequently, the Board of Directors expect that the Company and the Group have adequate resources to continue to trade for the next 12 months. Accordingly, these accounts have been prepared on a going concern basis.

Simon Oakes

31 July 2020

Consolidated Statement of Comprehensive Income

 
                                                       Year ended             Year ended 
                                                                )                      ) 
                                                        31-Mar-20              31-Mar-19 
                                                                )                      ) 
                                                Note      GBP'000                GBP'000 
                                                                )                      ) 
---------------------------------------------  -----  -----------  --------------------- 
 Continuing operations 
                                                           98,478                 52,576 
 Fees and commissions                            5              )                      ) 
---------------------------------------------  -----  -----------  --------------------- 
 
 Staff costs                                     6       (45,153)               (18,296) 
 Depreciation and amortisation                            (8,279)                (1,665) 
 Other operating expenses                                (19,182)               (17,406) 
 Other operating income                                     354 )                   38 ) 
---------------------------------------------  -----  -----------  --------------------- 
                                                           26,218                 15,247 
 Operating profit                                7              )                      ) 
---------------------------------------------  -----  -----------  --------------------- 
 
 Finance income                                  8          352 )                  218 ) 
 Finance expense                                 8        (1,571)                  (251) 
 Non-recurring costs                             9        (1,657)               (14,267) 
 Share of (loss)/profit of associates                       (140)                   19 ) 
---------------------------------------------  -----  -----------  --------------------- 
                                                           23,202 
 Profit before income tax                                       )                  966 ) 
 
 Income tax expense                              10       (1,543)                  (206) 
---------------------------------------------  -----  -----------  --------------------- 
                                                           21,659 
 Profit from continuing operations                              )                  760 ) 
 
 Profit from discontinued operations                        137 )                    - ) 
---------------------------------------------  -----  -----------  --------------------- 
                                                           21,796 
 Profit for the period                                          )                  760 ) 
---------------------------------------------  -----  -----------  --------------------- 
 
 Attributable to:- 
 Equity holders of the Company                            4,952 )                (8,552) 
                                                           16,844 
 Non-controlling interests                                      )                9,312 ) 
---------------------------------------------  -----  -----------  --------------------- 
                                                           21,796 
 Profit for the period                                          )                  760 ) 
---------------------------------------------  -----  -----------  --------------------- 
 
 Earnings per share 
 Basic earnings per share (pence)                11       11.78 )                (28.66) 
 Adjusted basic earnings per share 
  (pence)                                        11       15.39 )                19.15 ) 
 
 Diluted earnings per share 
 Diluted earnings per share (pence)              11       11.42 )                (28.10) 
 Adjusted diluted earnings per share 
  (pence)                                        11       14.92 )                18.77 ) 
 
 
 Other comprehensive income 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Translation of foreign operations                           35 )                    - ) 
---------------------------------------------  -----  -----------  --------------------- 
 Other comprehensive income for the 
  period                                                     35 )                    - ) 
 
 Total comprehensive income for the                        21,831 
  period                                                        )                  760 ) 
---------------------------------------------  -----  -----------  --------------------- 
 

As disclosed in note 11 adjusted profit before tax for the year is GBP8,015,000 (2019: GBP5,921,000).

There is no tax on any component of other comprehensive income or expense.

The attached notes are an integral part of these consolidated financial statements.

Statements of Financial Position

The Ince Group plc (Registered number: 03744673)

 
                                                          Restated 
                                                                 ) 
                                                 Group       Group     Company     Company 
                                                     )           )           )           ) 
                                             31-Mar-20   31-Mar-19   31-Mar-20   31-Mar-19 
                                                     )           )           )           ) 
                                               GBP'000     GBP'000     GBP'000     GBP'000 
                                      Note           )           )           )           ) 
 ASSETS 
 Non-current assets 
                                                 3,761       1,182 
 Property, plant and equipment         13            )           )        90 )         - ) 
                                                17,441 
 Right-of-use assets                   14            )         - )       696 )         - ) 
                                                80,825      74,443 
 Intangible assets                     15            )           )         - )         - ) 
                                                                        47,607 
 Investments                           16        470 )       379 )           )      47,191 
                                               102,497      76,004      48,393 
                                                     )           )           )      47,191 
                                            ----------  ----------  ----------  ---------- 
 Current assets 
                                                44,412      31,960      38,886      30,223 
 Trade and other receivables           17            )           )           )           ) 
 Corporation tax                                   - )         - )         - )       168 ) 
                                                 5,250       4,759 
 Cash and cash equivalents             18            )           )         3 )       987 ) 
                                                49,662      36,719      38,889      31,378 
                                                     )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
 
                                               152,159     112,723      87,282      78,569 
 Total assets                                        )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
 
 EQUITY 
 Capital and reserves attributable 
  the Company's equity holders 
 Share capital                         19        686 )       370 )       686 )       370 ) 
                                                24,126      11,192      24,126      11,192 
 Share premium                         20            )           )           )           ) 
 Reverse acquisition reserve           20     (24,724)    (24,724)         - )         - ) 
 Foreign exchange translation 
  reserve                              20         35 )         - )         - )         - ) 
                                                                         3,460       2,874 
 Other reserves                        20        634 )        48 )           )           ) 
                                                41,527      38,787      18,894      30,543 
 Distributable reserves                20            )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
                                                42,284      25,673      47,166      44,979 
                                                     )           )           )           ) 
                                                 9,064       5,807 
 Non-controlling interest                            )           )         - )         - ) 
                                            ----------  ----------  ----------  ---------- 
                                                51,348      31,480      47,166      44,979 
 Total equity                                        )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
 
 LIABILITIES 
 Non-current liabilities 
                                                22,453      35,431 
 Trade and other payables              21            )           )         - )         - ) 
                                                10,400       5,240      10,400       5,100 
 Borrowings                            22            )           )           )           ) 
                                                 2,189       2,050 
 Provisions                            23            )           )         - )         - ) 
                                                13,284 
 Lease liabilities                     14            )         - )       370 )         - ) 
                                            ----------  ----------  ----------  ---------- 
                                                48,326      42,721                   5,100 
                                                     )           )      10,770           ) 
 Current liabilities 
                                                39,325      27,822      27,756      27,590 
 Trade and other payables              21            )           )           )           ) 
                                                 1,372 
 Corporation tax                                     )       245 )         - )         - ) 
                                                 3,829       2,370       1,200 
 Borrowings                            22            )           )           )       900 ) 
                                                 2,407       8,085 
 Provisions                            23            )           )         - )         - ) 
                                                 5,552 
 Lease liabilities                     14            )         - )       390 )         - ) 
                                            ----------  ----------  ----------  ---------- 
                                                52,485      38,522      29,346      28,490 
                                                     )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
                                               100,811      81,243      40,116      33,590 
 Total liabilities                                   )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
                                               152,159     112,723      87,282      78,569 
 Total equity and liabilities                        )           )           )           ) 
                                            ----------  ----------  ----------  ---------- 
 

The Company has taken advantage of the exemption contained in S408 Companies Act 2006 and has not presented a separate income statement for the Company. The Company recorded a loss of GBP9,437,000 for the 12 month period ending 31 March 2020.

The financial statements were approved and authorised for issue by the Board of Directors and were signed on its behalf on 31 July 2020 by S. Oakes - Director.

The attached notes are an integral part of these consolidated financial statements.

Consolidated Statement of Cash Flows

 
                                              Group )       Group     Company     Company 
                                                                )           )           ) 
                                            12 months   12 months   12 months   12 months 
                                                 to )        to )        to )        to ) 
                                            31-Mar-20   31-Mar-19   31-Mar-20   31-Mar-19 
                                                    )           )           )           ) 
                                              GBP'000     GBP'000     GBP'000     GBP'000 
                                                    )           )           )           ) 
 Cash flows from operating activities 
 Profit before tax from continuing 
  operations                                 23,202 )       966 )     (9,269)       (886) 
 Profit before tax from discontinued 
  operations                                    137 )         - )         - )         - ) 
 Adjustments for: 
 Finance income                                 (352)       (218)         - )         - ) 
 Finance expense                              1,571 )       251 )         - )        50 ) 
                                                           14,267 
 Non-recurring costs                          1,657 )           )       391 )         - ) 
 Depreciation, amortisation and 
  impairment                                  8,279 )     1,665 )       294 )        48 ) 
 Share options expense                          172 )         - )       172 )         - ) 
 Gain on sale of discontinued 
  operations                                     (51)         - )         - )         - ) 
 Share of loss of associates                    140 )        (19)         - )         - ) 
 Net exchange differences                       (323)         - )         - )         - ) 
 Changes in operating assets 
  and liabilities (net of acquisitions): 
 Decrease/(increase) in trade 
  and other receivables                       (9,616)    (15,589)       (731)        (63) 
 (Decrease)/increase in trade 
  and other payables                          (1,787)     (1,388)       292 )        99 ) 
 (Decrease)/increase in provisions            (6,380)     6,571 )         - )         - ) 
                                           ----------  ----------  ----------  ---------- 
                                               16,649       6,506 
 Cash generated by operations                       )           )     (8,851)       (752) 
 Interest and other financial 
  costs paid                                  (1,054)        (92)       (370)        (50) 
 Tax paid                                       (896)       (554)         - )         - ) 
 Net cash generated by operating               14,699       5,860 
  activities                                        )           )     (9,221)       (802) 
                                           ----------  ----------  ----------  ---------- 
 
 Cash flows from investing activities 
 Cash paid on acquisitions (net 
  of cash acquired)                           2,078 )     (6,388)         - )         - ) 
 Payment of contingent and deferred 
  consideration                              (10,126)     (4,762)         - )         - ) 
 Payment of acquisition related 
  costs                                       (1,657)     (7,525)         - )         - ) 
 Purchase of PPE                              (1,436)         - )       (116)         - ) 
 Proceeds from disposal of PPE                    2 )         - )         - )         - ) 
 Purchase of intangible assets                (1,627)       (795)         - )         - ) 
 Disposal of subsidiary, net 
  of cash disposed of                           (191)         - )         - )         - ) 
 Interest received                              352 )       218 )         - )         - ) 
 Net cash absorbed by investing 
  activities                                 (12,605)    (19,252)       (116)         - ) 
                                           ----------  ----------  ----------  ---------- 
 
 Cash flows from financing activities 
 Movement in borrowings (including 
  finance leases)                             6,133 )     6,969 )     5,600 )     6,000 ) 
 (Advances to)/repayments by 
  subsidiaries                                    - )         - )     (8,073)    (14,157) 
                                                           11,504      14,048      11,504 
 Proceeds from issues of shares              14,046 )           )           )           ) 
 Transaction costs relating to 
  issue of shares                               (800)       (460)       (800)       (460) 
 Dividends paid                               (2,197)     (1,150)     (2,197)     (1,150) 
 Transactions with non-controlling 
  interests                                  (15,513)     (7,699)         - )         - ) 
 Direct cost of leases                           (24)         - )        (17)         - ) 
 Payment of lease liability                   (3,268)         - )       (208)         - ) 
 Net cash absorbed from financing                           9,164       8,353       1,737 
  activities                                  (1,623)           )           )           ) 
                                           ----------  ----------  ----------  ---------- 
 
 Net (decrease)/increase in cash 
  and cash equivalents                            471     (4,228)       (984)       935 ) 
 
 Cash and cash equivalents at 
  beginning of period                           4,720     8,948 )       987 )        52 ) 
 Effects of exchange rate changes 
  on cash                                           -         - )         - )         - ) 
 Cash and cash equivalents at                               4,720 
  end of period                                 5,191           )         3 )       987 ) 
                                           ----------  ----------  ----------  ---------- 
 

The attached notes are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

 
                                                           Foreign 
                                             Reverse      exchange                                     Non- 
                       Share     Share   acquisition   translation      Other   Distributable   controlling      Total 
                     capital   premium       reserve       reserve   reserves        reserves      interest     equity 
                     GBP'000   GBP'000       GBP'000       GBP'000    GBP'000         GBP'000       GBP'000    GBP'000 
                           )         )             )             )          )               )             )          ) 
 Balance at 1            288                                                           48,489         4,512     28,795 
  April 2018               )     230 )      (24,724)           - )        - )               )             )          ) 
 Profit/(loss) 
  and total 
  comprehensive 
  income/(expense)                                                                                    9,313 
  for the period         - )       - )           - )           - )        - )         (8,552)             )      761 ) 
 Dividend paid           - )       - )           - )           - )        - )         (1,150)           - )    (1,150) 
 Shares issued                  11,422                                                                          11,504 
  in period             82 )         )           - )           - )        - )             - )           - )          ) 
 Share options 
  acquired               - )       - )           - )           - )       48 )             - )           - )       48 ) 
 Share issue 
  transactions 
  costs                  - )     (460)           - )           - )        - )             - )           - )      (460) 
 Transferred to 
  members                - )       - )           - )           - )        - )             - )       (8,018)    (8,018) 
 Balance at 31           370    11,192                                     48          38,787         5,807     31,480 
  March 2019               )         )      (24,724)           - )          )               )             )          ) 
                    --------  --------  ------------  ------------  ---------  --------------  ------------  --------- 
 
 Balance at 1            370    11,192                                                 38,787         5,807     31,480 
  April 2019               )         )      (24,724)           - )       48 )               )             )          ) 
 Profit for the                                                                                      16,844     21,796 
  period                 - )       - )           - )           - )        - )         4,952 )             )          ) 
 Other 
  comprehensive 
  income                 - )       - )           - )          35 )        - )             - )           - )       35 ) 
 Dividend paid           - )       - )           - )           - )        - )         (2,212)           - )    (2,212) 
 Shares issued           316    13,734                                    414                                   14,464 
  in period                )         )           - )           - )          )             - )           - )          ) 
 Share options                                                            172 
  acquired               - )       - )           - )           - )          )             - )           - )      172 ) 
 Share issue 
  transaction 
  costs                  - )     (800)           - )           - )        - )             - )           - )      (800) 
 Transferred to 
  members                - )       - )           - )           - )        - )             - )      (13,587)   (13,587) 
 Balance at 31           686    24,126                                    634          41,527         9,064     51,348 
  March 2020               )         )      (24,724)          35 )          )               )             )          ) 
                    --------  --------  ------------  ------------  ---------  --------------  ------------  --------- 
 

As both the capital redemption reserve and retained earnings are by nature distributable these items have been presented on a combined basis in the above.

The attached notes are an integral part of these consolidated financial statements.

Company Statement of Changes in Equity

 
                                      Share     Share      Other   Distributable     Total 
                                          )         )          )               )         ) 
                                    capital   premium   reserves        reserves    equity 
                                          )         )          )               )         ) 
                                    GBP'000   GBP'000    GBP'000         GBP'000   GBP'000 
                                          )         )          )               )         ) 
 Balance at 1 April                                        2,826                    35,755 
  2018                                288 )     230 )          )        32,411 )         ) 
 Profit/(loss) and total 
  comprehensive income/(expense) 
  for the period                        - )       - )       - ))           (718)     (718) 
 Dividend paid                          - )       - )       - ))         (1,150)   (1,150) 
                                               11,422                               11,504 
 Shares issued in period               82 )         )                        - )         ) 
 Share options acquired                 - )       - )      48 ))             - )      48 ) 
 Share issue transactions 
  costs                                         (460)       - ))             - )     (460) 
 Balance at 31 March                           11,192      2,874          30,543    44,979 
  2019                                370 )         )         ))               )         ) 
                                   --------  --------  ---------  --------------  -------- 
 
 Balance at 1 April                            11,192      2,874                    44,979 
  2019                                370 )         )         ))        30,543 )         ) 
 Profit/(loss) and total 
  comprehensive income/(expense) 
  for the period                        - )       - )       - ))         (9,437)   (9,437) 
 Dividend paid                          - )       - )                    (2,212)   (2,212) 
                                               13,734                               14,464 
 Shares issued in period              316 )         )     414 ))             - )         ) 
 Share options acquired                 - )       - )     172 ))             - )     172 ) 
 Share issue transactions 
  costs                                 - )     (800)       - ))             - )     (800) 
 Balance at 31 March                           24,126      3,460          18,894    47,166 
  2020                                686 )         )         ))               )         ) 
                                   --------  --------  ---------  --------------  -------- 
 

The attached notes are an integral part of these consolidated financial statements.

Notes to the Financial Statements

   1.              General information 

The Ince Group plc (the Company) and its subsidiaries (together 'The Ince Group' or 'the Group') provide legal & professional services and independent financial advisory services to businesses and high net worth individuals in the UK.

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is Aldgate Tower, 2 Leman Street, London E1 8QN.

These consolidated financial statements have been approved for issue by the Board of Directors on 31 July 2020.

   2.              Summary of significant accounting policies 
   2.1           Basis of preparation 

These consolidated financial statements of The Ince Group plc are for the 12 month period to 31 March 2020. The financial statements have been prepared in accordance with IFRS as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on the going concern basis. In deciding this, the directors have considered the detailed budgets for the current financial year and high level budgets for the succeeding year including in both cases cash flows.

They have also considered the impact of adverse changes resulting from the major risks and uncertainties they consider apply to the group. At the date of this report, the Group is taking the Covid-19 threat to its clients, vendors, staff and overall business very seriously. The Group is taking proactive action and has activated business continuity plans, where required across the jurisdictions in which the Group operates, to minimise the risk of disruption to business operations. In doing this, the Group has taken account of government advice in the jurisdictions in which it operates and the need to safeguard the health of our clients. At this stage, the impact on our business and results is limited. We will continue to follow the various locations' national policies and advice and in parallel will do our upmost to continue our operations in the best and safest way possible without jeopardising anyone's health.

As a result of Covid-19, the Directors revised the original forecasts for the financial year ending 31 March 2021 to sensitise for the potential impact on profitability and cash flow over the next 12 months. This revised forecast indicates the Group has sufficient cash to trade for at least the next 12 months and will meet its covenant requirements under its external debt facilities in this period.

Consequently, the Board of Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the next 12 months.

The financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements. The policies set out below have been consistently applied to all the periods presented.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

The Group has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board ("IASB") that are relevant to its operations and are currently effective. A number of new or amended standards became applicable for the current reporting period, and the Group had to change its accounting policies and make retrospective adjustments as a result of adopting IFRS 16 Leases. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in Note 34. The other standards did not have any impact on the group's accounting policies and did not require retrospective adjustments.

   2.2           EU adopted IFRS not yet applied 

The Group has not adopted any standards or interpretations in advance of the required implementation dates.

   2.3           Consolidation 

Subsidiaries are entities controlled by the Company. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences to the date that control ceases.

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. Costs directly attributable to the acquisition are expensed in the period. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets and contingent liabilities acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

The Company's accounting period date 31 March is in line with its subsidiaries, except in the instance of the subsidiary Herring Parry Khan Law Office (Ince & Co Greece). This entity's results as at 31 December are consolidated, as it is considered impractical to consolidate the results at 31 March. The impact of this is not considered material and any transactions in this entity, which are considered to be material and have occurred in the period between January and March, are included in the consolidated accounts.

   2.4           Investments in subsidiaries 

Investments in subsidiaries are included at cost less provision for impairment in value.

   2.5           Investments in associates 

Associates are those entities over which the Group has significant influence, but neither control nor joint control over the financial and operating policies. Associates are accounted for using the equity method and are initially recognised at cost. The financial statements include the Group's share of total comprehensive income and equity movements of associates from the date when significant influence commences to the date the significant influence ceases.

   2.6           Segment reporting 

A business segment is a group of assets and operation engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The group's two business segments are described in the strategic report, being legal & professional services and independent financial advisory services. No segment reporting disclosures are required for these due to the fact that the smaller segment, financial services advisory, falls beneath the quantitative thresholds set out by IFRS 8 paragraph 13.

The group provides a segmental analysis to enhance the understanding of the financial statements.

   2.7           Business combinations 

The Group applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3 (R), 'Business Combinations'. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. All transaction related costs are expensed in the period they are incurred. If the consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in the income statement.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 in the income statement.

   2.8           Intangible assets 

Intangible assets include the cost of acquiring client portfolios and the Ince brand.

Client portfolios are carried at cost less accumulated amortisation losses and impairment losses. Amortisation of the cost is being provided for in line with the fees billed and cash collections being generated by the client portfolio acquired.

The Ince brand is carried based on an independent external valuation which applied a discounted cash flow model under the relief from royalty method. The brand has existed for 150 years and it has been confirmed as part of the independent valuation that it has an indefinite useful economic life.

Intangible assets also include internally generated software and intellectual property, which are held at cost less subsequent amortisation and impairment. These intangible assets are amortised at rates in order to write off the assets on a straight line basis over their estimated useful lives of between 3 and 10 years. Internally generated software are amortised at the point from which the software is considered fully functional.

The remaining amortisation period of these assets varies from 1 year - 6.5 years.

   2.9           Goodwill 

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is initially measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquired entity and the fair value of the acquirer's previously held equity interest (if any) in the entity over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.

The company tests annually whether goodwill has suffered any impairment. The carrying value of the goodwill is dependent on the future income stream from that asset.

Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level.

The determination of a CGU is judgemental. The identification of CGU's involves an assessment of whether the asset or group of assets generate independent cash flows.

For impairment purposes goodwill is tested annually at the CGU level. This was carried out at 31 March 2020. The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment are disclosed in note 15.

   2.10         Impairment of assets 

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.

Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. An impairment loss is recognised where 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 the value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Critical estimates and assumptions made

In assessing the value in use of each CGU, our calculations required estimates in relation to uncertain items, including management's expectations of future growth, operating costs, profit margins, operating cash flow and the discount rate for each CGU.

Future cash flows used in the value in use calculations, are based on the latest approved financial plans extrapolated for future periods expected to benefit from the goodwill for each CGU. The future cash flows are discounted using a post-tax discount that reflects current market assessments of the time value of money.

   2.11         Financial instruments 

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on trade date when the group is no longer a party to the contractual provisions of the instrument.

Financial assets are included on the statement of financial position as trade and other receivables and cash and cash equivalents.

Financial liabilities are included on the statement of financial position as trade and other payables and borrowings.

   (a)            Trade receivables 

Trade receivables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash receipts over the short credit period is not considered to be material. Trade receivables are reduced by appropriate allowances for estimated irrecoverable amounts.

   (b)            Trade payables 

Trade payables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material.

   (c)             Interest-bearing borrowings 

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

   2.12         Foreign currency translation 
   (a)            Functional and presentation currency 

The consolidated financial statements are presented in pounds sterling, which is the Company's functional and presentation currency.

   (b)            Transactions and balances 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

   (c)             Subsidiary accounts denominated in foreign currency 

On consolidation, assets and liabilities of non-sterling entities are translated to sterling at year-end rates of exchange, while their statements of income, other comprehensive income and cash flows are translated at monthly average rates. The resulting translation differences are recognised as currency translation differences within other comprehensive income.

   2.13         Property, plant and equipment 

Property, plant and equipment ("PPE") is shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation on assets is calculated using the straight-line method to allocate the cost of each asset less its residual value over its estimated useful life, as follows:

 
   Computers, plant and     3-10 years 
    machinery 
   Equipment                3-5 years 
   Leasehold improvements   3-5 years 
 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. Write downs and gains and losses on disposals are included in the statement of comprehensive income.

   2.14         Cash and cash equivalents 

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

   2.15         Borrowings 

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

   2.16         Deferred income tax 

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 and company financial statements. 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/loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income 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, joint ventures 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 employee benefits.

   2.17         Pension obligations 

The Group operates a pension scheme which is a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.

The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

   2.18         Profit-sharing and bonus plans 

The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to that part of the Group for which the employee is profit responsible. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

   2.19         Provisions 

Provisions for clawback of indemnity commission, pensions review, unpaid salaries and other claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the statement of financial position date.

   2.20       Revenue Recognition 

Revenue comprises the fair value of the sale of services, net of value-added tax, rebates and discounts and after eliminating sales within the Group.

Revenue from the sale of professional services is recognised as follows:

   (a)            Legal & professional services 

Revenue from the provision of legal and professional services is recognised over time in the accounting period in which services are rendered. Contracts for the provision of legal and professional services may include fixed fee arrangements, variable fee arrangements based on time and materials or contingent fee arrangements. For fixed fee arrangements, revenue is recognised based on the actual services provided to the end of the reporting period as a proportion of the total services to be provided. For variable fee contracts based on time and materials, revenue is recognised at the amount of fees that the Group has a right to invoice for services provided, based on the fee rates agreed with the client. For conditional fee arrangements, fees are billed on completion depending on the outcome of the matter (e.g. Personal Injury or Clinical Negligence cases on a 'no win, no fee' basis). Revenue in respect of contingent fee assignments, over and above any agreed minimum fee, is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved. This is generally when the matter is resolved and the outcome is known.

A receivable is recognised when a bill has been invoiced as this is the point in time that the consideration is considered unconditional because only the passage of time is required before payment is due. Where income has not been billed at the reporting date, it is included in Accrued Income.

No element of financing is deemed to exist as payment is typically due within one year of the service being performed.

   (b)            Employee benefits and financial advisory 

Revenue relating to the employee benefits and financial advisory business represents fees and life and pension commission and is recognised at a point in time. Fees are recognised when invoiced and commissions are recognised when confirmation is received from the underwriters that payment is being made to the Group. A provision is made for clawback of commission which is deducted from turnover.

   (c)             Interest income 

Interest income is recognised on a time-proportion basis using the effective interest method.

   2.20         Leases 

As explained in note 34, the Group has changed its accounting policy for leases where the Group is the lessee. The new policy is described in note 34.2 and the impact of the change in note 34.1.

Until 31 March 2019, leases of property, plant and equipment where the Group had substantially all the risks and rewards of ownership were classified as finance leases. Finance leases, were capitalised at the lease's inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment was allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, were included in other borrowings. The interest element of the finance cost was charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases were depreciated over the shorter of the asset's useful life and the lease term.

Leases where the lessor retains substantially all the risks and rewards of ownership were classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

   2.21         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. Interim dividends are recognised when paid.

   2.22         Share-based payments 

The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of any non-market vesting conditions. At each statement of financial position date, the group revises its estimate of the number of equity instruments which are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the statement of comprehensive income and a corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the statement of comprehensive income and the actual cost to the group is transferred to retained earnings. Where new shares are issued, the proceeds received are credited to share capital and share premium.

   3.              Financial risk management 
   3.1           Financial risk factors 

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and price risk), credit risk, liquidity risk, cash flow risk and fair value interest-rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. Further details are set out in note 31.

Risk management is carried out by the Board of Directors. The Board identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of Convertible loan stock and non-Convertible loan stock, and investing excess liquidity.

   (a)            Credit risk 

Because the Group has a wide range of clients, in different market sectors, it has no significant concentrations of credit risk. It has policies in place to ensure that if customers do not settle their accounts within the agreed terms then the transaction is cancelled minimising the credit exposure.

   (b)            Liquidity risk 

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities. The Group aims to maintain flexibility in funding by keeping committed credit lines available.

   (c)             Cash flow and fair value interest rate risk 

The Group's income and operating cash flows are substantially independent of changes in market interest rates. The interest rates of finance leases to which the Group is lessee are fixed at inception of the lease. These leases expose the Group to fair value interest rate risk.

The Group's cash flow interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain approximately 33 per cent of its borrowings in fixed rate instruments. At March 2020, 100 per cent of borrowings were at fixed rates.

   4.              Critical accounting estimates and judgements 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

   (a)            Estimated 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 value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate.

   (b)            Other receivables 

Other receivables represent unbilled amounts for client work and are measured initially at fair value and held at amortised cost less provisions for foreseeable losses based upon current observable data and historical trend.

   (c)             Impairment of receivables 

Receivables are held at cost less provisions for impairment. Provisions for impairment represent an allowance for doubtful debts that is estimated, based upon current observable data and historical trend.

   (d)            Valuation of intangible assets 

Business combinations are accounted for at fair value. The valuation of goodwill and acquired intangibles is calculated separately on each individual acquisition. In attributing value to intangible assets arising on acquisition, management has made certain assumptions in relation to expected growth rates, profitability, length of key customer relationships and the appropriate discount rate. The value of intangible assets at 31 March 2020 was GBP80,825,000 (2019:GBP74,443,000 restated).

   (e)            Provisions 

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured using management's best estimate of the expenditure required to settle the obligation at the reporting date and are discontinued to present value where the effect is material. The value of provisions at 31 March 2020 was GBP4,596,000 (2019: GBP10,135,000 restated).

   (f)             Amortisation of intangible assets other than goodwill 

The useful life used to amortise intangible assets relates to the expected future performance of the assets acquired and management's judgement of the period over which economic benefit will be derived from the asset.

   5.              SEGMENT INFORMATION 

Group

In the following table, revenue from contracts with customers is disaggregated by primary geographical market and major service offering:

 
                                  Legal & 
                             professional 
                                 services     Other     Total 
                                  GBP'000   GBP'000   GBP'000 
--------------------------  -------------  --------  -------- 
 Year ended 31 March 2020 
 UK                                61,740     2,120    63,860 
 Europe, Middle East & 
  Africa                           13,328         -    13,328 
 Asia                              21,290         -    21,290 
 Total Revenue                     96,358     2,120    98,478 
--------------------------  -------------  --------  -------- 
 
 Year ended 31 March 2019 
 UK                                49,835     1,944    51,779 
 Asia                                 797         -       797 
 Total Revenue                     50,632     1,944    52,576 
--------------------------  -------------  --------  -------- 
 

Non-current assets other than financial instruments and deferred tax assets by geographical areas are not presented, as this information is not provided to the chief operating decision maker of the group.

   6.              Staff costs 

Group

The average number of persons employed by the Group (excluding directors) during the period, analysed by category, was as follows:

 
                          No. of employees 
                             2020      2019 
----------------------  ---------  -------- 
 Fee earners                  342       194 
 Direct support staff         134        69 
 Support staff                258       133 
 Total                        734       396 
----------------------  ---------  -------- 
 

The aggregate employment costs of these persons were as follows:

 
                               2020      2019 
                            GBP'000   GBP'000 
-------------------------  --------  -------- 
 Wages and salaries          38,304    15,473 
 Social security costs        3,495     1,740 
 Employee benefits costs      2,088       569 
 Pension costs                1,266       514 
 Total Staff Costs           45,153    18,296 
-------------------------  --------  -------- 
 

Company

The Company has no employees (excluding directors) (2019: none); all personnel are employed by subsidiary entities.

Details of the remuneration of and transactions with directors are included in the Directors' Remuneration Report accompanying these financial statements. The directors are considered to be key management personnel.

   7.              Operating profit 

Operating profit is stated after charging/ (crediting):

 
                                      Group     Group 
                                       2020      2019 
                                    GBP'000   GBP'000 
---------------------------------  --------  -------- 
 Fees payable to the company's 
  auditor for the audit of 
  the company's annual accounts          70        54 
 Fees payable to the company's 
  auditor and its associates 
  for other services: 
    - audit of the accounts 
     of subsidiaries                    241       190 
    - audit-related assurance 
     services                            47        69 
    - other assurance services           33        73 
    - corporate finance services          -       141 
 Depreciation of tangible 
  fixed assets 
    - owned assets                    1,487        81 
    - hire purchase                       -        17 
 Depreciation of right-of-use 
  assets                              4,663         - 
 Amortisation / impairment 
  of intangible assets: 
    - turnover related                2,046       362 
    - other                              83     1,205 
 Bad debt expense                     2,041     1,764 
 Hire of plant and equipment             94       336 
 Share based payment expense            172        48 
---------------------------------  --------  -------- 
 
   8.              Finance income and expense 
 
                                    Group     Group 
                                     2020      2019 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
 Finance income 
 Bank interest receivable             347       213 
 Other income                           5         5 
                                 --------  -------- 
                                      352       218 
-------------------------------  --------  -------- 
 
 Finance expense 
 Bank interest payable               (11)      (95) 
 Hire purchase                        (3)       (5) 
 Finance charge on leases           (514)         - 
 Other loans                        (519)      (84) 
 Other interest                       (8)       (3) 
 Financial assets at fair 
  value through profit or loss      (516)      (64) 
                                  (1,571)     (251) 
-------------------------------  --------  -------- 
 
 Net finance income/(expense)     (1,219)      (33) 
-------------------------------  --------  -------- 
 
   9.              Non recurring costs 

Non recurring costs include acquisition related costs of GBP588,000 (2019: GBP5,823,000) and other material items related to the acquisition which will not recur of GBP1,069,000 (2019: GBP8,444,000) .

Acquisition related costs represent professional fees and other costs incurred in acquisitions completed or under negotiation during the year.

Other material items represent costs incurred specifically as a result of the integration activities associated with the Ince & Co acquisition. These costs include restructuring and merging of administrative functions (such as redundancy costs, the necessary hardware and software costs to enable the merging of systems and re-branding costs) and the equity fund raising. In addition, the group had certain onerous contractual costs including the costs of premises no longer being used and had to make a number of non-contractual payments to former suppliers of the Ince entities in respect of the liabilities of those entities to ensure access to continuing services.

Non recurring costs include non-audit fees payable to the Company's auditors of GBP54,000 (2019: GBP336,000) .

   10.            Taxation 
   i.    Analysis of charge in the period 
 
                              Group )   Group ) 
                               2020 )    2019 ) 
                                        GBP'000 
                            GBP'000 )         ) 
-------------------------  ----------  -------- 
 The charge for taxation 
  comprises: 
 Taxation charge for the 
  current period              1,375 )     206 ) 
 Adjustment in respect 
  of prior periods              168 )       - ) 
                              1,543 )     206 ) 
-------------------------  ----------  -------- 
 
   ii.    Factors affecting the tax charge for the period: 

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 19.0 per cent (2019:19.0 per cent). The differences are explained below:

 
                                            Group 
                                                )   Group ) 
                                             2020 
                                                )    2019 ) 
                                          GBP'000   GBP'000 
                                                )         ) 
--------------------------------------  ---------  -------- 
 Profit on ordinary activities             23,202 
  before taxation                               )     966 ) 
 Less profit arising in partnerships, 
  on which tax is payable by 
  the members personally                 (15,148)   (1,009) 
-------------------------------------- 
 Profit on ordinary activities 
  of corporate entities before              8,054 
  taxation                                      )      (43) 
--------------------------------------  ---------  -------- 
 Profit on ordinary activities 
  multiplied by the standard 
  rate of corporation tax of                1,530 
  19% (2019: 19%)                               )       (8) 
 Effects of: 
 Impact of tax exempt items                 (279)     237 ) 
 Losses (utilised) / carried 
  forward                                     - )      (23) 
  Difference in overseas tax 
   rates                                    124 )       - ) 
--------------------------------------  ---------  -------- 
 Total taxation charge for                  1,375 
  the current period                            )     206 ) 
--------------------------------------  ---------  -------- 
 
   11.            Earnings per share 

Earnings per share are based on the weighted average number of shares of the Company in issue or issued as consideration for the entities whose results are reported in the period. The number of shares and periods are as follows:

 
 1 April 2017    12,509,623 
 15 June 2017    13,417,143   Being the shares issued by the Company 
                               as consideration for the acquisition of 
                               all of the shares in issue by Culver Holdings 
                               Limited at the date of the reverse acquisition 
 4 August        28,597,310   Being the Company's issued shares on re-admission 
  2017                         to the AIM market of the London Stock Exchange 
 19 January      28,759,711   Being the Company's issued shares following 
  2018                         new shares issued to Culver Ventures Limited 
                               loan stock holders 
 12 February     36,976,730   Being the Company's issued shares following 
  2019                         new shares issued as part of an equity 
                               placing exercise 
 27 November     37,326,730   Being the Company's issued shares following 
  2020                         new shares issued as consideration on acquisition 
                               of Ince Compliance Solutions Limited 
 3 February      68,540,912   Being the Company's issued shares following 
  2020                         new shares issued as part of an equity 
                               placing exercise 
 

Basic earnings per share, shown on the statement of comprehensive income, is based on profit after tax GBP4,952,000 divided by 42,043,732 being the weighted average total number of ordinary shares in issue during the period.

Adjusted basic earnings per share, shown on the statement of comprehensive income, is based on adjusted profit before tax GBP8,015,000 after deducting tax of GBP1,543,000 divided by 42,043,732, being the weighted average total number of ordinary shares in issue during the period.

If the 2,178,562 share options issued on 31 December 2018 (described in note 12) were included the weighted average total number of shares for the period would be 43,379,204 which is applied in the calculation of diluted earnings per share, also shown on the consolidated income statement.

Adjusted profit before tax is calculated as follows:

 
                                                      Group 
                                          Group )         ) 
                                           2020 )    2019 ) 
                                          GBP'000   GBP'000 
                                                )         ) 
--------------------------------------  ---------  -------- 
 Profit before tax from statement          23,202 
  of comprehensive income                       )     966 ) 
 Deduct: Partners profit shares 
  shown as non-controlling interests     (16,844)   (9,312) 
 Add: Non-recurring expenses: 
    - Acquisition related expenditure       588 )   5,823 ) 
    - Material-related costs              1,069 )   8,444 ) 
--------------------------------------  ---------  -------- 
   Adjusted profit before tax             8,015 )   5,921 ) 
   Deduct: Income tax                     (1,543)     (206) 
-------------------------------------- 
   Adjusted profit after tax              6,472 )   5,715 ) 
--------------------------------------  ---------  -------- 
 
   12.            Share-based payment arrangements 

The Group has established the Ince Group Share Option Plan 2017 ("Plan") for the grant of share options to certain eligible employees to acquire shares in the capital of the Company in order to reward such eligible employees for their contribution to the Company's success and to provide an incentive going forward.

As part of the consideration for the acquisition of the members' interests of Ince & Co LLP, the members of Ince & Co LLP were collectively granted 2,392,846 ordinary shares of 1p each in the Group as part of the Plan on 31 December 2018. The options have a vesting period of 3 years from issue and a contractual life of 10 years.

The fair value of the employee share options has been measured using the Black-Scholes formula. Service and non-market conditions attached to the arrangements were not taken in to account measuring fair value.

At 1 April 2019 the brought forward number of ordinary shares of 1p at an exercise price of 140p was 2,392,846.

During the year, 214,284 ordinary shares of 1p at an exercise price of 140p were forfeited by resigning members of Ince & Co LLP.

At 31 March 2020 the carried forward number of ordinary shares of 1p at an exercise price of 140p was 2,178,562.

The inputs used in measurement of the fair values at grant date of the shares were as follows:

 
 Fair value                             0.24 
 Share price                            1.79 
 Exercise price                         1.40 
 Risk-free interest rate (based 
  on government bonds)                 0.59% 
 Expected volatility (weighted 
  average)                             1.14% 
 Dividend yield                        3.35% 
 Expected life (weighted average)    3 years 
----------------------------------  -------- 
 
   13.            Property, plant and equipment ("PPE") 

Group

 
                                          Furniture 
                                                  ) 
                               Land and    fittings      Leasehold 
                                      )       and )              ) 
                              buildings   equipment   Improvements 
                                      )           )              )   Total ) 
                                GBP'000     GBP'000        GBP'000   GBP'000 
                                      )           )              )         ) 
---------------------------  ----------  ----------  -------------  -------- 
 Cost 
 Balance at 1 April 2019          230 )     1,137 )            - )   1,367 ) 
 Acquisition of subsidiary 
  (note 16.1)                       - )     2,960 )        2,488 )   5,448 ) 
 Additions                          - )       572 )          865 )   1,437 ) 
 Disposals                          - )        (57)            - )      (57) 
 Exchange differences               - )       159 )           86 )     245 ) 
 Balance at 31 March 2020         230 )     4,771 )        3,439 )   8,440 ) 
---------------------------  ----------  ----------  -------------  -------- 
 Depreciation 
 Balance at 1 April 2019            - )       185 )            - )    185 )) 
 Acquisition of subsidiary 
  (note 16.1)                       - )     2,007 )          947 )   2,954 ) 
 Disposals                          - )        (55)            - )      (55) 
 Exchange differences               - )        64 )           44 )     108 ) 
 Charge for the period              - )       933 )          554 )   1,487 ) 
 Balance at 31 March 2020           - )       3,134        1,545 )   4,679 ) 
---------------------------  ----------  ----------  -------------  -------- 
 Carrying value 
 At 31 March 2019                 230 )         952            - )   1,182 ) 
 At 31 March 2020                 230 )       1,637        1,894 )   3,761 ) 
---------------------------  ----------  ----------  -------------  -------- 
 

Included in the carrying value of PPE is GBPNil (2019: GBPNil) of assets held by the Group under hire purchase or finance leases. The depreciation charge for the period for these assets was GBPNil (2019: GBP17,000).

The figures for the previous period are as follows:-

 
                                          Furniture 
                                           fittings 
                               Land and         and 
                              buildings   equipment     Total 
                                GBP'000     GBP'000   GBP'000 
---------------------------  ----------  ----------  -------- 
 Cost 
 Balance at 1 April 2018            230         223       453 
 Acquisition of subsidiary 
  (note 15)                           -         914       914 
 Additions                            -           -         - 
 Balance at 31 March 2019           230       1,137     1,367 
---------------------------  ----------  ----------  -------- 
 Depreciation 
 Balance at 1 April 2018              -          86        86 
 Charge for the period                -          99        99 
 Balance at 31 March 2019             -         185       185 
---------------------------  ----------  ----------  -------- 
 Carrying value 
 At 31 March 2018                   230         137       367 
 At 31 March 2019                   230         952     1,182 
---------------------------  ----------  ----------  -------- 
 

Company

 
                             Furniture 
                                     ) 
                              fittings      Leasehold 
                                 and )              ) 
                             equipment   Improvements     Total 
                                     )              )         ) 
                               GBP'000        GBP'000   GBP'000 
                                     )              )         ) 
--------------------------  ----------  -------------  -------- 
 Cost 
 Balance at 1 April 2019           - )            - )       - ) 
 Additions                         2 )          114 )     116 ) 
 Balance at 31 March 2020          2 )          114 )     116 ) 
--------------------------  ----------  -------------  -------- 
 Depreciation 
 Balance at 1 April 2019           - )            - )       - ) 
 Charge for the period             1 )           25 )      26 ) 
 Balance at 31 March 2020          1 )           25 )      26 ) 
--------------------------  ----------  -------------  -------- 
 Carrying value 
 At 31 March 2019                  - )            - )       - ) 
 At 31 March 2020                  1 )           89 )      90 ) 
--------------------------  ----------  -------------  -------- 
 
   14.            Leases 
   14.1         Right-of-use assets 

Group

 
                                            Furniture 
                                                    ) 
                                 Land and    fittings 
                                        )       and ) 
                                buildings   equipment 
                                        )           )   Total ) 
                                  GBP'000     GBP'000   GBP'000 
                                        )           )         ) 
-----------------------------  ----------  ----------  -------- 
                                                         10,241 
 Balance at 1 April 2019          9,958 )       283 )         ) 
                                    5,734 
 Additions                              )       292 )   6,026 ) 
 Acquisition of subsidiaries      5,945 )         - )   5,945 ) 
 Disposals                          (297)         - )     (297) 
 Exchange differences               189 )         - )     189 ) 
 Depreciation charge for 
  the year                        (4,563)       (100)   (4,663) 
                                   16,966 
 Balance at 31 March 2020               )       475 )    17,441 
-----------------------------  ----------  ----------  -------- 
 

Company

 
                                         Furniture 
                                                 ) 
                              Land and    fittings 
                                     )       and ) 
                             Buildings   equipment     Total 
                                     )           )         ) 
                               GBP'000     GBP'000   GBP'000 
                                     )           )         ) 
--------------------------  ----------  ----------  -------- 
 Balance at 1 April 2019           - )         - )       - ) 
 Additions                       964 )         - )     964 ) 
 Depreciation charge for 
  the year                       (268)         - )     (268) 
 Balance at 31 March 2020        696 )         - )     696 ) 
--------------------------  ----------  ----------  -------- 
 
   14.2          Lease Liabilities 
 
                                                     2020 
                                                  GBP'000 
----------------------------------------------   -------- 
 Maturity analysis - contractual undiscounted 
  cash flows 
 Less than one year                                 5,968 
 One to five years                                  9,918 
 More than five years                               2,050 
 Total undiscounted lease liabilities 
  at 31 March                                      17,936 
-----------------------------------------------  -------- 
 

Lease liabilities included in the statement of financial position

 
 Current          5,552 
 Non-current     13,284 
                 18,836 
 -------------  ------- 
 
   14.3          Amounts recognised in profit or loss 
 
                                                 2020 
                                              GBP'000 
------------------------------------------   -------- 
 Interest on lease liabilities                    514 
 Expenses relating to short-term 
  leases                                          336 
 Expenses relating to leases of low-value 
  assets                                           94 
-------------------------------------------  -------- 
 

Total cash outflow for leases in the year was GBP3,292,000.

Termination options are included in a number of property leases across the Group. As at 31 March 2020, potential future cash outflows of GBP24,072,000 (undiscounted) have not been included in the lease liability because it is not reasonably certain that the lease will not be terminated.

   15.            Intangible assets 

Group

 
                                                                  Internally 
                                                          Brand 
                                            Client            &    generated   Intellectual 
                              Goodwill   Portfolio   trademarks     software       Property     Total 
                               GBP'000     GBP'000      GBP'000      GBP'000        GBP'000   GBP'000 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Cost 
 At 1 April 2019 
  (as restated)                 50,820      12,219       17,000        1,248            189    81,476 
 Acquisition of subsidiary       4,227       3,248            -            -              -     7,475 
 Additions                           -           -            -        1,036              -     1,036 
 At 31 March 2020               55,047      15,467       17,000        2,284            189    89,987 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Amortisation and 
  impairment 
 At 1 April 2019                     -       6,818            -          168             47     7,033 
 Charge for period                   -       2,046            -           64             19     2,129 
 At 31 March 2020                    -       8,864            -          232             66     9,162 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Carrying value 
 At 31 March 2019               50,820       5,401       17,000        1,080            142    74,443 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 At 31 March 2020               55,047       6,603       17,000        2,052            123    80,825 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 

Client portfolio represents the acquisition of the business and certain assets from other professional services firms. The client portfolio intangible asset is carried at cost less accumulated amortisation. Amortisation is provided for in line with the fees billed and cash collections generated by the client portfolio acquired.

Brands and trademarks GBP17,000,000 (2019: GBP17,000,000) relates to the value attributed to the Ince brand that the Group acquired on 1 January 2019. This has been determined based on an external valuation report, as detailed in note 2.8.

Internally generated software includes GBP2,284,000 (2019: GBP1,248,000) of development costs relating to development of software applications. The directors have considered the carrying value of internally generated software of GBP2,052,000 (2019: GBP1,080,000) as appropriate as it is expected to create future economic benefit.

Intellectual property carrying amount includes GBP123,000 (2019: GBP142,000) of intellectual property acquired on the acquisition of certain assets and liabilities of Prolegal Limited from its administrator.

Details of the restatement of balances at 31 March 2019 are set out in note 35.

The intangible assets of the group for the prior year (restated) were as follows:-

 
                                                                    Internally 
                                                            Brand 
                                              Client            &    generated   Intellectual 
                                Goodwill   portfolio   Trademarks     software       Property     Total 
                                 GBP'000     GBP'000      GBP'000      GBP'000        GBP'000   GBP'000 
-----------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Cost 
 Balance at 1 April 
  2018                            24,150       7,719            -          453            189    32,511 
 Acquisition of subsidiary        26,387       4,500       17,000            -              -    47,887 
 Additions                           279           -            -          795              -     1,074 
 Reassessment of fair 
  value                                4           -            -            -              -         4 
 Eliminated on disposal                -           -            -            -              -         - 
 Balance at 31 March 
  2019                            50,820      12,219       17,000        1,248            189    81,476 
-----------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Amortisation and impairment 
 Balance at 1 April 
  2018                                 -       5,336            -          103             28     5,467 
 Charge for the period                 -       1,482            -           65             19     1,566 
 Eliminated on disposal                -           -            -            -              -         - 
 Balance at 31 March 
  2019                                 -       6,818            -          168             47     7,033 
-----------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 Carrying value 
 At 31 March 2018                 24,150       2,383            -          350            161    27,044 
 At 31 March 2019                 50,820       5,401       17,000        1,080            142    74,443 
-----------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 

Goodwill

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs), or group of units that are expected to benefit from that business combination and is analysed below.

 
                                                Culver 
                                                            White 
                                             Financial          & 
                               Investments    Services      Black   Regions 
                                   GBP'000     GBP'000    GBP'000   GBP'000 
----------------------------  ------------  ----------  ---------  -------- 
 Cost 
 At 1 April 2019 (restated)          8,494       4,185      2,005     8,722 
 Acquisition of subsidiary             417           -          -         - 
 Balance at 31 March 
  2020                               8,911       4,185      2,005     8,722 
----------------------------  ------------  ----------  ---------  -------- 
 Impairment 
 At 1 April 2019 and 
  31 March 2020                          -           -          -         - 
----------------------------  ------------  ----------  ---------  -------- 
 Carrying value 
 At 31 March 2019                    8,494       4,185      2,005     8,722 
----------------------------  ------------  ----------  ---------  -------- 
 At 31 March 2020                    8,911       4,185      2,005     8,722 
----------------------------  ------------  ----------  ---------  -------- 
 
 
                                    Platt, 
                                       PLI                  Total 
                                    & Ince    Overseas   Goodwill 
                                   GBP'000     GBP'000    GBP'000 
----------------------------  ------------  ----------  ---------  -------- 
 Cost 
 At 1 April 2019 (restated)         26,316       1,098     50,820 
 Acquisition of subsidiary               -       3,810      4,227 
 Balance at 31 March 
  2020                              26,316       4,908     55,047 
----------------------------  ------------  ----------  ---------  -------- 
 Impairment 
 At 1 April 2019 and 
  31 March 2020                          -           -          - 
----------------------------  ------------  ----------  ---------  -------- 
 Carrying value 
 At 31 March 2019                   26,316       1,098     50,820 
----------------------------  ------------  ----------  ---------  -------- 
 At 31 March 2020                   26,316       4,908     55,047 
----------------------------  ------------  ----------  ---------  -------- 
 

An annual goodwill impairment review was performed. The CGU's represent the smallest identifiable groups of assets that generate cash flows, and to which goodwill is allocated.

The value in use of each CGU is determined using cash flow projections derived from financial plans. This reflects management's expectations of future revenue growth, operating costs and cost reductions due to synergies, profit margins, operating cash flows based on past performance and future expectations of business performance. The cash flows have then been extended for a minimum of five years. Estimated taxation has been deducted calculated at the estimated applicable corporation tax rate, of 19% for the next two years and 17% for the years thereafter, in line with current HMRC guidance.

In respect of the above, income budgets are based on historic results adjusted for experience and capacity level of fee earning staff and known changes in circumstances. These are reviewed with the heads of department for each fee earning area. Average annual growth rate of 6.06% is based on past performance and management expectations.

Costs are largely fixed staff and establishment costs and are forecast based on the current structure of the business, adjusting for inflationary increases but not reflecting any future restructurings or cost saving measures.

The future cash flows have been discounted using a post-tax discount rate of 7.9%.

The two year financial plans include growth rates for each CGU based on the individual market assessment for each CGU.

Company

There are no intangible assets held by the company (2019: None).

   16.            Investments 

The carrying value of investments held by the group and company were as follows:

 
                              Group     Group   Company   Company 
                               2020      2019      2020      2019 
                            GBP'000   GBP'000   GBP'000   GBP'000 
-------------------------  --------  --------  --------  -------- 
 Investments in group 
  undertakings                    -         -    47,607    47,191 
 Interests in associates        470       379         -         - 
------------------------- 
                                470       379    47,607    47,191 
-------------------------  --------  --------  --------  -------- 
 
   16.1         Investments in group undertakings 

Company

 
                                Investments 
                                   in group 
                               undertakings 
                                    GBP'000 
---------------------------   ------------- 
 Cost 
 Balance at 1 April 2019             50,709 
 Additions                              416 
 Balance at 31 March 2020            51,125 
----------------------------  ------------- 
 Impairment and provisions 
 Balance at 1 April 2019              3,518 
 Impairment                               - 
 Balance at 31 March 2020             3,518 
----------------------------  ------------- 
 Carrying value 
 At 31 March 2019                    47,191 
 At 31 March 2020                    47,607 
----------------------------  ------------- 
 

On 31 March 2020, The Ince Group plc had control for the purposes of IFRS 10 of the following subsidiary undertakings which are included in the consolidated financial statements.

 
                                                                        Interest   Registered 
 UK Companies                               Principal activity              held       office 
-----------------------------------------  ------------------------  -----------  ----------- 
 Culver Holdings Limited                    Intermediate holding          Note 1          (b) 
                                             company 
 Ince Gordon Dadds Corporate                Intermediate holding          Note 1          (b) 
  Finance Limited                            company 
 Culver Financial Management                Independent financial         Note 1          (b) 
  Limited                                    advisor 
 Hanover Financial Management               Independent financial         Note 1          (b) 
  Limited                                    advisor 
 Hanover Employee Benefits Limited          Independent financial         Note 1          (b) 
                                             advisor 
 Ince Gordon Dadds Services                 Management services           Note 1          (b) 
  Limited 
 Hanover Pensions Limited                   Professional services         Note 1          (b) 
 Ince Gordon Dadds MAP Limited              Legal services                Note 1          (b) 
 GDGS (Alen-Buckley) Limited                Legal services                Note 1          (b) 
 GDGS (Metcalfes) Limited                   Legal services                Note 1          (b) 
 White & Black Limited                      Legal services                Note 1          (c) 
 e.Legal Technology Solutions               IT services                   Note 2          (b) 
  Limited 
 Ince Gordon Dadds Professional             Professional services         Note 1          (b) 
  Services Limited 
 Gordon Dadds Corporate Services            Corporate services            Note 1          (a) 
  Limited 
 Ince Gordon Dadds Talent Services          Professional services         Note 1          (b) 
  Limited 
 Ince Process Agents Limited                Legal services                Note 1          (a) 
 Culver Finance Limited                     Intermediate holding          Note 1          (b) 
                                             company 
 IGD (Cardiff) Limited                      Legal services                Note 1          (b) 
 Gordon Dadds Private Office                Legal services                Note 1          (d) 
  Limited 
 Ince Compliance Solutions Limited          Professional services         Note 1          (b) 
 
                                                                        Interest   Registered 
 UK Limited Liability Partnerships          Principal activity              held       office 
-----------------------------------------  ------------------------  -----------  ----------- 
 Ince Gordon Dadds Holdings                 Intermediate holding          Note 3          (b) 
  LLP                                        LLP 
 Ince Gordon Dadds LLP                      Legal services                Note 3          (a) 
 White & Black Legal LLP                    Legal services                Note 3          (c) 
 Ince Gordon Dadds AP LLP                   Professional services         Note 5          (b) 
 Ince Gordon Dadds CP LLP                   Professional services         Note 5          (b) 
 CW Energy LLP                              Professional services         Note 3          (b) 
 IGD International LLP                      Professional services         Note 3          (b) 
 Ince Consultancy LLP                       Professional services         Note 5          (b) 
 
                                                                      Interest     Registered 
   Overseas Companies             Location      Principal activity        held         office 
-------------------------------  ------------  --------------------  ---------  ------------- 
 Ramparts Corporate Advisors                                                              (e) 
  Limited                         Gibraltar     Legal services          Note 1 
 Penlee Legal Investments                       Professional                              (f) 
  Limited                         Guernsey       services               Note 1 
 Ramparts Corporate Services                    Professional                              (e) 
  Limited                         Gibraltar      services               Note 1 
 Ince Consulting Hong                           Professional                              (g) 
  Kong Limited                    Hong Kong      services               Note 1 
 Incisive Limited                 Hong Kong     Management services     Note 1            (g) 
 
 UK Limited Liability                                                              Registered 
  Partnerships operating                                              Interest         office 
  overseas                        Location      Principal activity        held 
-------------------------------  ------------  --------------------  ---------  ------------- 
 Ince & Co Middle East                                                                    (a) 
  LLP                             Dubai         Legal services          Note 4 
 Ince & Co Germany LLP            Germany       Legal services          Note 4            (a) 
 
                                                                      Interest     Registered 
 Overseas LLPs and Partnerships   Location      Principal activity        held         office 
-------------------------------  ------------  --------------------  ---------  ------------- 
 Ince & Co Singapore LLP          Singapore     Legal services          Note 4            (h) 
 Ince & Co (Hong Kong)            Hong Kong     Legal services          Note 4            (g) 
 Herring Parry Khan Law 
  Office                          Greece        Legal services          Note 4            (i) 
 Ince & Co Monaco SARL 
  (Monaco)                        Monaco        Legal services          Note 4            (j) 
 
 
 
 Note   The Group holds 100% of ordinary share capital. 
  1. 
 Note   The Group holds 60% of ordinary share capital. 
  2. 
 Note   The Group has 100% interest as the sole economic member. 
  3. 
 Note   Profit sharing and voting control of these entities is 
  4.     held by the local members. The entities are subject to 
         regulation by the regulator in the jurisdictions in which 
         they operate. 
 Note   The Group indirectly controls the entities by virtue of 
  5.     contractual agreements. 
 

Registered offices of all subsidiaries:

 
       Aldgate Tower, 2 Leman Street, London, United 
 (a)    Kingdom, E1 8QN 
       Llanmaes, Michaelston Road, St Fagans, Cardiff, 
 (b)    United Kingdom, CF5 6DU 
       Home Park, Grove Road, Bladon, Oxfordshire, 
 (c)    England, OX20 1FX 
       Leconfield House, Curzon Street, London, 
 (d)    United Kingdom, W1J 5JA 
       6.20 World Trade Center, 6 Bayside Road, 
 (e)    Gibraltar 
       P.O. Box 661, St. Peter Port, Guernsey, 
 (f)    GY1 3PW 
       Suites 4404-10, 44/F, One Island East, 18 
 (g)    Westlands Road, Taikoo Place, Hong Kong 
       5 Shenton Way #19-01, V on Shenton, Singapore 
 (h)    (068808) 
       The Livanos Building, 47-49 Akti Miaouli, 
 (i)    Piraeus 18536, Greece 
       Gildo Pastor Center, 7 Rue du Gabian, 98000 
 (j)    Monaco 
 
   16.2         Business combinations and acquisitions 

The details set out below provide the information required under IFRS 3 'Business Combinations' for the acquisitions that occurred during the year ended 31 March 2020.

The total amount of revenue and associated profit derived from acquired entities in the year was GBP29,749,000 and GBP29,000. An estimate of the annualised revenue and associated profit/(loss) (based on pro-rated figures) had the acquisitions occurred at the start of the year is GBP29,885,000 and (GBP42,000).

Ince & Co Overseas

With effect from 1 April 2019 the Group gained control for the purposes of IFRS 10 over the following Ince overseas network entities:

   -       Ince & Co (Hong Kong) 
   -       Ince & Co Singapore LLP 
   -       Ince & Co Middle East LLP 
   -       Herring, Parry, Khan Law Office 
   -       Ince & Co Germany LLP 

Until 31 December 2018 these entities were subsidiaries of Ince & Co International LLP (now in administration and renamed). With effect from 1 April 2019, revised arrangements were agreed with these entities which gave the group control for the purposes of IFRS 10 as shown above.

As part of the new arrangements concluded with effect from 1 April 2019, the Group has agreed to make payments to the partners of those entities depending on the levels of revenue achieved in the three year period ending 31 December 2021. Based on revenue expectations, the group currently estimates that these payments will amount in aggregate to GBP10 million over the three years of which GBP3,248,000 is regarded as the purchase of a client portfolio and will be amortised in line with the fees billed and cash collections being generated by the client portfolio acquired.

Initial consideration was GBP500,000, contingent consideration of GBP6,446,000 and goodwill of GBP3,710,000 was recognised in accounting for the acquisition.

Ramparts Corporate Services Limited

On 10th June 2019, the Group acquired 100% of the issued share capital of Ramparts Corporate Services Limited, a Gibraltar-based practice providing corporate and administrative support for listed funds and listing market instruments.

Initial consideration was GBP258,000 and goodwill of GBP100,000 was recognised in accounting for the acquisition.

Ince & Co Monaco SARL

Ince Monaco was formally consolidated into the Group on 1 November 2019. Its acquisition represents a further expansion of the global network through which the Group now operates, with the associated future benefits that is expected to bring. Accordingly, negative goodwill of GBP591,000 was recognised in accounting for the acquisition.

Ince Compliance Solutions Limited

On 27(th) November 2019, the Group acquired 100% of the issued share capital of Ince Compliance Solutions Limited (formerly Mahtcorp1 Limited), a UK based company which has the benefit of a service contract with Mark Tantam who was appointed as the Group's Global Head of Consulting.

350,000 new ordinary shares in The Ince Group plc were issued as consideration and goodwill of GBP417,000 was recognised in accounting for the acquisition.

   16.2.1      Identifiable assets acquired and liabilities assumed 

The fair values of the identifiable assets and liabilities at the date of acquisition were as follows:

 
                                            Ramparts 
                                                   )                 Ince ) 
                                           Corporate             Compliance 
                                                   )                      ) 
                                  Ince &    Services    Ince &    Solutions 
                                    Co )           )      Co )            )        Total ) 
                                Overseas     Limited    Monaco      Limited   Acquisitions 
                                       )           )         )            )              ) 
                                 GBP'000     GBP'000   GBP'000      GBP'000        GBP'000 
                                       )           )         )            )              ) 
-----------------------------  ---------  ----------  --------  -----------  ------------- 
 Property, plant and 
  equipment                      2,460 )         8 )      26 )          - )        2,494 ) 
 Right-of-use assets             5,823 )         - )     122 )          - )        5,945 ) 
 Intangible asset                3,248 )         - )       - )          - )        3,248 ) 
 Investments                         - )         - )       - )          - )            - ) 
                                  10,048                 1,128                      11,308 
 Trade and other receivables           )       132 )         )          - )              ) 
 Cash and cash equivalents       2,538 )        42 )     256 )          - )        2,836 ) 
 Trade and other payables       (12,846)        (24)     (759)          - )       (13,629) 
 Borrowings                        (494)         - )       - )          - )          (494) 
 Provisions                        (769)         - )      (60)          - )          (829) 
 Lease liabilities               (5,902)         - )     (122)          - )        (6,024) 
----------------------------- 
 Net identifiable assets 
  and liabilities                4,106 )       158 )     591 )          - )        4,855 ) 
 
 Goodwill                        3,710 )       100 )       - )        417 )        4,227 ) 
 Negative goodwill                   - )         - )     (591)          - )          (591) 
 Non-controlling interest 
  in the recognised amounts 
  of identifiable assets 
  and liabilities                  (870)         - )       - )            -          (870) 
 Total consideration             6,946 )       258 )       - )        417 )          7,621 
-----------------------------  ---------  ----------  --------  -----------  ------------- 
 
 Satisfied by: 
 Cash                              500 )       258 )       - )          - )            758 
 Equity instruments                  - )         - )       - )        417 )            417 
 Contingent consideration        6,446 )         - )       - )          - )          6,446 
 Total consideration 
  transferred                    6,946 )       258 )       - )        417 )          7,621 
-----------------------------  ---------  ----------  --------  -----------  ------------- 
 
 Net cash outflow arising 
  on acquisition: 
 Cash consideration                500 )       258 )       - )          - )            758 
 Less: cash and cash 
  equivalent balances 
  acquired                       (2,538)        (42)     (256)          - )        (2,836) 
 Net cash outflow/(inflow)       (2,038)       216 )     (256)          - )        (2,078) 
-----------------------------  ---------  ----------  --------  -----------  ------------- 
 
   16.3         Discontinued operations 

On 25(th) June 2019, the Group sold 100% of its shareholding in Allium Law Limited (formerly Thomas Simon Limited) for consideration of GBP59,000.

On 30(th) January 2020, the Group disposed of its interest and retired as a member of GD Financial Markets LLP for consideration of GBP258,000.

Financial information relating to discontinued operations for the period to the date of disposal is set out below:

 
                                                      GD ) 
                                        Allium   Financial 
                                             )           )        Total ) 
                                                   Markets   Discontinued 
                                         Law )           )              ) 
                                       Limited                 Operations 
                                             )       LLP )              ) 
                                       GBP'000     GBP'000        GBP'000 
                                             )           )              ) 
------------------------------------  --------  ----------  ------------- 
 Results of discontinued operation: 
                                                     1,366 
 Revenue                                   - )           )        1,366 ) 
 Elimination of internal revenue           - )       (314)          (314) 
                                                     1,052 
 External revenue                          - )           )        1,052 ) 
 External expenses                         - )       (966)          (966) 
 Profit before tax                         - )        86 )           86 ) 
 Income tax expense                        - )         - )            - ) 
 Profit after tax of discontinued 
  operation                                - )        86 )           86 ) 
 Gain/(loss) on disposal of 
  the subsidiary after income 
  tax                                     84 )        (33)           51 ) 
 Profit/(loss) from discontinued 
  operation                               84 )        53 )          137 ) 
------------------------------------  --------  ----------  ------------- 
 
 Consideration received or 
  receivable: 
 Cash                                     59 )         - )           59 ) 
 Deferred consideration                    - )       258 )          258 ) 
 Total consideration                      59 )       258 )          317 ) 
 Less: carrying amount of 
  net assets sold                         25 )       (570)          (545) 
 Add back: non-controlling 
  interest                                 - )       279 )          279 ) 
 Gain/(loss) on disposal of 
  the subsidiary after income 
  tax                                     84 )        (33)           51 ) 
------------------------------------  --------  ----------  ------------- 
 
 Consideration received, satisfied 
  in cash                                 59 )         - )           59 ) 
 Cash and cash equivalents 
  disposed of                              (1)       (249)          (250) 
 Net cash inflow/(outflow)                58 )       (249)          (191) 
------------------------------------  --------  ----------  ------------- 
 
   16.4         Interests in associates 

Group

 
                                                 2019 
                                     2020 )         ) 
                                    GBP'000   GBP'000 
                                          )         ) 
---------------------------------  --------  -------- 
 Cost of investment in associate      621 )     390 ) 
 Share of post-acquisition 
  loss net of dividends received      (151)      (11) 
 Carrying value of interests 
  in associates                       470 )     379 ) 
---------------------------------  --------  -------- 
 

The Group holds 100% of the New Series C Shares, representing 30% of the total share capital of James Stocks & Co (holdings) Limited, a professional services firm who specialise in corporate finance and strategic advice. James Stock & Co (holdings) Limited was incorporated and operates in Gibraltar.

Summarised financial information in respect of James Stocks & Co (holdings) Limited is set out below:

 
                       2020 )    2019 ) 
                      GBP'000   GBP'000 
                            )         ) 
-------------------  --------  -------- 
 Net profit/(loss)      (467)      77 ) 
 Net assets             192 )     148 ) 
-------------------  --------  -------- 
 
   17.            Trade and other receivables 
 
                                            Restated 
                                    Group      Group   Company   Company 
                                     2020       2019      2020      2019 
                                  GBP'000    GBP'000   GBP'000   GBP'000 
-------------------------------  --------  ---------  --------  -------- 
 Trade receivables                 26,870     15,598         -         - 
 Accrued income                     5,925      3,960         -         - 
 Other receivables                  4,033      8,570       518       153 
 Amounts due from subsidiaries          -          -    37,977    30,045 
 Prepayments                        7,584      3,832       391        25 
                                   44,412     31,960    38,886    30,223 
-------------------------------  --------  ---------  --------  -------- 
 

Trade receivables are stated including GBP3,481,000 of VAT and GBP3,412,000 of disbursements.

   18.            Cash and cash equivalents 
 
                                            Company   Company 
                        Group )     Group         )         ) 
                         2020 )      2019    2020 )    2019 ) 
                        GBP'000             GBP'000   GBP'000 
                              )   GBP'000         )         ) 
---------------------  --------  --------  --------  -------- 
 Cash in hand and at 
  bank                  5,250 )     4,759       3 )     987 ) 
 Total                  5,250 )     4,759       3 )     987 ) 
---------------------  --------  --------  --------  -------- 
 

Cash and cash equivalents include the following:

 
                              4,759 
 Cash as above      5,250 )       )   3 )   987 ) 
 Bank overdrafts       (59)    (39)   - )     - ) 
                              4,720 
 Total              5,191 )       )   3 )   987 ) 
-----------------  --------  ------  ----  ------ 
 
   19.            Share capital 
 
                                    2020      2020      2019 
                          %       Number   GBP'000   GBP'000 
---------------------  ----  -----------  --------  -------- 
 Authorised 
 Ordinary shares of 
  1p each               100   68,540,912       686       370 
                                               686       370 
---------------------  ----  -----------  --------  -------- 
 
                                    2020      2020      2019 
                          %       Number   GBP'000   GBP'000 
---------------------  ----  -----------  --------  -------- 
 Allotted, called up 
  and fully paid 
 Ordinary shares of 
  1p each               100   68,540,912       686       370 
                                               686       370 
---------------------  ----  -----------  --------  -------- 
 

Ordinary shares rank equally as regards to dividends, other distributions and return on capital. Each ordinary share carries the right to one vote.

On 27(th) November 2019, 350,000 ordinary shares were issued at 1p per share, with a nominal value of 1p per share.

On 3(rd) February 2020, 31,214,182 ordinary shares were issued at 45p per share, with a nominal value of 1p per share.

 
                                 2020      2020 
                               Number   GBP'000 
----------------------    -----------  -------- 
 Ordinary shares of 
  1p each 
 At 1 April                36,976,730       370 
 Shares issued during 
  the year                 31,564,182       316 
 At 31 March               68,540,912       686 
------------------------  -----------  -------- 
 

Details of share options issued in the year are set out in note 12.

   20.            Reserves 

Share premium represents the difference between the amount received and the par value of shares issued less transaction costs.

The reverse acquisition reserve has arisen under IFRS3 'Business Combinations' following the acquisition of The Ince Group.

Other reserves represents the impact of the valuation of share options issued in the year, details of which are set out in note 12, and the difference between fair value and nominal value of shares issued in share-for-share exchanges.

Foreign exchange translation reserve includes gains or losses in translating overseas operations into GBP sterling.

   21.            Trade and other payables 
 
                                          Restated 
                                  Group      Group   Company   Company 
                                   2020       2019      2020      2019 
                                GBP'000    GBP'000   GBP'000   GBP'000 
-----------------------------  --------  ---------  --------  -------- 
 Current: 
 Trade payables                  12,263      7,666       524       289 
 Amounts due to subsidiaries          -          -    26,621    27,187 
 Other taxes and social 
  security                        3,445      2,436        36        12 
 Other payables                   3,133      6,008         -         1 
 Deferred consideration          14,608      7,436         -         - 
 Unpaid dividends                    15          -        15         - 
 Accruals                         5,861      4,276       135       101 
                                 39,325     27,822    27,331    27,590 
-----------------------------  --------  ---------  --------  -------- 
 
 Non-current: 
 Other payables                   1,391          -         -         - 
 Deferred consideration          21,062     31,409         -         - 
 Accruals                             -      4,022         -         - 
                                 22,453     35,431         -         - 
-----------------------------  --------  ---------  --------  -------- 
 
 Total                           61,778     63,253    27,331    27,590 
-----------------------------  --------  ---------  --------  -------- 
 

Deferred consideration relates to business combinations and the purchase of client lists and relationships.

   22.        Borrowings 
 
                                    Group     Group   Company   Company 
                                     2020      2019      2020      2019 
                                  GBP'000   GBP'000   GBP'000   GBP'000 
-------------------------------  --------  --------  --------  -------- 
 Bank overdrafts                       59        39         -         - 
 Bank loans                        11,651     6,000    11,600     6,000 
 Other loans                        2,519     1,542         -         - 
 Obligations under hire 
  purchase and lease contracts          -        29         -         - 
 Total borrowings                  14,229     7,610    11,600     6,000 
-------------------------------  --------  --------  --------  -------- 
 
 Current                            3,829     2,370     1,200       900 
 Non-current                       10,400     5,240    10,400     5,100 
 Total                             14,229     7,610    11,600     6,000 
-------------------------------  --------  --------  --------  -------- 
 

The Group has a secured bank loan with Barclays Bank Plc with a carrying value of GBP5,100,000 at 31 March 2020 (2019: GBP6,000,000). The loan was entered into on 31 December 2018, has a term of three years (to be repaid in quarterly instalments which commenced from September 2019) and carries interest at LIBOR + 2.25% per annum. A GBP6,500,000 revolving credit facility was also entered into with Barclays Bank Plc at 31 December 2018, and was drawn down during the year. The loan and the revolving credit facility are both secured against certain entities within the Group and are subject to covenants which are assessed each quarter (no current or forecast breaches have been identified).

The Group has a secured bank loan with Commerz Bank with a carrying value of GBP51,000 at 31 March 2020. The Group acquired the loan through the acquisition of Ince & Co Germany LLP during the year. The loan was entered into on 1 October 2016, has a term of 4 years (to be repaid in monthly instalments which commenced from June 2017) and carries interest at 3% per annum.

Other loans of GBP2,519,000 (2019: GBP1,542,000) are unsecured and carry interest at between 3.0 per cent and 10 per cent per annum. Other loans are repayable within 12 months, except non-current other loans of GBPNil (2019: GBP126,000) which has a maturity of 1-3 years.

   23.            Provisions 

Group

 
                                Onerous 
                                      ) 
                                Lease & 
                                      ) 
                             employment 
                                      )      Other ) 
                              contracts   Provisions 
                                      )            )   Total ) 
                                GBP'000      GBP'000   GBP'000 
                                      )            )         ) 
--------------------------  -----------  -----------  -------- 
                                             7,855 ) 
 Balance at 31 March 2019                               10,135 
  (restated)                    2,280 )      7,855 )         ) 
 Provisions made                    - )        562 )     562 ) 
 Subsidiaries joining 
  the group                         - )        829 )     829 ) 
 Unwinding of discounting          12 )          - )      12 ) 
 Utilised during the year       (1,167)      (3,168)   (4,335) 
 Amounts released                   - )      (2,607)   (2,607) 
 Balance at 31 March 2020       1,125 )      3,471 )   4,596 ) 
--------------------------  -----------  -----------  -------- 
 
 Current                          684 )      1,723 )   2,407 ) 
 Non-current                      441 )      1,748 )   2,189 ) 
--------------------------  -----------  -----------  -------- 
 

Provisions categorised as current liabilities represent provisions for liabilities which have the possibility of being settled within one year.

Provisions for onerous property leases and employment contracts relate to rental costs for the Group's prior head office and agreed contractual employment arrangements for a former Ince & Co employee.

Other provisions include legacy liabilities inherited with the Ince & Co acquisition of GBP1,347,000 (2019: GBP5,731,000 restated), refurbishment costs for the Group's head office of GBPNil (2019: GBP1,357,000), and uninsured excess on potential claims of GBP897,000 (2019: GBP723,000).

   24.            Pensions 

The Group participates in a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in a fund administered by Options Corporate Pensions UK. Contributions from employers and employees totalling GBP176,000 (2019: GBP226,000) were payable to the fund at the year end and are included in payables.

   25.            Ultimate controlling party 

The Ince Group plc is owned by its shareholders and there is no ultimate controlling party.

   26.            Related party transactions 

Group

In addition to the transactions disclosed in the Directors' Remuneration Report the Group has entered into the following transactions with related parties:-

The Group occupies office accommodation at Llanmaes, St Fagans, Cardiff under arrangements with Juratone Limited, a company of which A J Biles is a director. Rent and service charges of GBP207,000 (2019: GBP202,000) were charged during the year under these arrangements and the Group charged Juratone amounts of GBP23,000 (2019: GBP13,000). At the balance sheet date an amount due to Juratone Limited of GBPNil (2019:GBPNil) is included in payables and an amount due from Juratone Limited of GBP104,000 (2019:GBP78,000) is included in receivables.

A J Biles is a designated LLP member of ACR Professional Services LLP. Professional services of GBP240,000 (2019: GBP131,940) were charged from ACR Professional Services LLP to the Group during the year. Fees and reimbursed expenses of GBP20,000 (2019: GBPNil) were charged from the Group to ACR Professional Services LLP during the year. At the balance sheet date the Group was owed GBP291,000 (2019: GBP163,000) from ACR Professional Services LLP.

The Group charged fees and reimbursed expenses of GBP322,000 (2019: GBP724,000) to e.Legal Technology Solutions Limited during the year. The Group were charged fees and reimbursed expenses of GBP907,000 (2019: GBP1,353,000) by e.Legal Technology Solutions Limited during the year. At the balance sheet date the Group owed GBP145,000 to e.Legal Technology Solutions Limited (2019: the Group was owed GBP27,000 from e.Legal Technology Solutions Limited). During the year, e.Legal Technology Solutions Limited transferred an intangible asset totalling GBP130,000 at nil gain/nil loss to the Group.

The Group charged Stann Marine Limited, a company in which a designated member of Ince Gordon Dadds AP LLP is a Director, fees under a management agreement totalling GBP211,000 (2019: GBP127,000).

The Group charged fees to associate company James Stocks & Co Limited of GBP49,000 (2019: GBP37,000) and were charged fees of GBPNil (2019: GBPNil) during the year. At the balance sheet date the Group was owed GBP119,000 (2019:GBPNil) from James Stocks & Co Limited.

The Group charged fees of GBP1,150,000 (2019: GBPNil) to Incisive Law LLC during the year. The Group was charged fees of GBP6,696,000 (2019: GBPNil) to Incisive Law LLC. At the balance sheet date the Group was owed GBP1,999,000 (2019:GBPNil) from Incisive Law LLC. Incisive Law LLC is Singapore-based a formal law alliance ("FLA") with Ince & Co Singapore LLP.

Company

In addition to the transactions disclosed in the Directors' Remuneration Report the Company has entered into the following transactions with related parties:-

The Company charged reimbursed expenses of GBP692,000 (2019:GBP177,000 ) to subsidiary undertakings during the year. At the balance sheet date an amount due from subsidiary undertakings of GBPNil (2019:GBPNil) is included in trade receivables.

The Company was charged fees and reimbursed expenses of GBP910,000 (2019:GBP76,000) by subsidiary undertakings during the year. At the balance sheet date an amount due to subsidiary undertakings of GBPNil (2019:GBPNil) is included in trade payables.

   27.            Financial risk management 

The company's operations expose it to a number of financial risks. A risk management programme has been established to protect the Group and the Company against the potential adverse effects of these financial risks. There has been no significant change in these financial risks since the prior year.

Fair value of financial instruments

Financial instruments comprise cash and cash equivalents, trade and other receivables, including sums due from subsidiaries and Loan Stock, bank and other loans, obligations under hire purchase and lease contracts and trade and other payables. In the directors' opinion the carrying value of the financial instruments approximates their fair value.

 
                                                    Restated 
                                                           ) 
                                            Group      Group   Company   Company 
                                                )          )         )         ) 
                                                        2019                2019 
                                           2020 )          )    2020 )         ) 
                                          GBP'000    GBP'000   GBP'000   GBP'000 
                                  Note          )          )         )         ) 
-------------------------------  -----  ---------  ---------  --------  -------- 
 Loans and receivables: 
                                           26,870     15,598 
 Trade receivables                 17           )          )       - )       - ) 
                                            5,925      3,960 
 Accrued income                    17           )          )       - )       - ) 
                                            5,250      4,759 
 Cash and cash equivalents         18           )          )       3 )     987 ) 
                                            4,033      8,570 
 Other receivables                 17           )          )     518 )     153 ) 
                                                                37,552    30,045 
 Amounts due from subsidiaries     17         - )        - )         )         ) 
                                           42,078     32,887    38,073    31,185 
 Total financial assets                         )          )         )         ) 
-------------------------------  -----  ---------  ---------  --------  -------- 
 
 Financial liabilities measured 
  at amortised cost: 
                                           14,229      7,610    11,600     6,000 
 Borrowings                        22           )          )         )         ) 
                                           18,836 
 Lease liabilities                 14           )        - )     760 ) 
                                           12,263      7,666 
 Trade payables                    21           )          )     524 )     289 ) 
                                            3,133      6,008 
 Other payables                    21           )          )       - )       1 ) 
                                           35,670     38,845 
 Deferred consideration            21           )          )       - )       - ) 
                                                                          27,187 
 Amounts due to subsidiaries       21         - )        - )    26,621         ) 
                                           84,131     60,129              33,477 
 Total financial liabilities                    )          )    39,505         ) 
-------------------------------  -----  ---------  ---------  --------  -------- 
 
 Total financial instruments             (42,053)   (27,242)   (1,432)   (2,292) 
-------------------------------  -----  ---------  ---------  --------  -------- 
 
   28.            Credit risk 

Customers are assessed for credit worthiness and credit limits are also imposed on customers and reviewed regularly. The maximum exposure to credit risk is the carrying value of its financial receivables, trade and other receivables and cash and cash equivalents as disclosed in the notes.

The Group holds no collateral or other credit enhancements. The receivables' age analysis is also evaluated on a regular basis for potential doubtful debts. It is management's opinion that no further provision for doubtful

debts is   required. 

Cash and cash equivalents are invested with banks with a credit rating of no less than A-1.4

Analysis of trade receivables:

 
                                                                          Bad debt       Total 
          30 days     31-60     61-90    90-180      >180     Total    ) provision    Carrying 
          or less      days      days      days      days     Gross              )      Amount 
                                                                           GBP'000 
          GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000              )     GBP'000 
------  ---------  --------  --------  --------  --------  --------  -------------  ---------- 
  2020     15,105     5,544     2,836     3,385    15,944    42,814       (15,944)      26,870 
  2019     10,435     2,889     1,606       668     5,351    20,949        (5,351)      15,598 
------  ---------  --------  --------  --------  --------  --------  -------------  ---------- 
 

The Group allows an average trade receivables payment period of 30 days after invoice date. It is the group's policy to assess receivables for recoverability on an individual basis and to make provision where it is considered necessary. In assessing recoverability the group takes into account any indicators of impairment up until the reporting date. The application of this policy generally results in debts between 31 and 180 days not being provided for unless individual circumstances indicate that a debt is impaired. Receivables over 180 days are provided for. except in circumstances where the group has security in respect of the debt or has other arrangements which satisfy the group that the debtor is in a position to pay and is intending to pay but is stopped until an event occurs (such as the grant of probate).

The directors have considered whether there is an overall change in the economic environment which changes the expected lifetime credit loss on its trade debtors and consider that the existing policy does not need varying at this yearend.

Trade receivables that are neither impaired nor past due are made up of 2,832 receivables' balances (2019: 1,429). The largest individual debtor corresponds to 3.8% (2019: 0.7%) of the total balance. Historically these receivables have always paid balances when due. The average age of these receivables is 100 days (2019: 121 days). No receivables' balances have been renegotiated during the year or in the prior year.

The group individually impaired no net balances (2019: GBPNil). The group does not hold any collateral over any balances.

   29.            Interest rate risk 

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that we use. Interest bearing assets including cash and cash equivalents are considered to be short-term liquid assets. Our interest rate liability risk arises primarily from borrowings issued at floating interest rates which exposes the group to cash flow interest rate risk. It is the group's policy to settle trade payables within the credit terms allowed and the group does therefore not incur interest on overdue balances. Borrowings are sourced from local financial markets, covering short and long-term funding. The group manages interest rate risk on borrowings by ensuring access to diverse sources of funding and reducing risks of refinancing by establishing and managing borrowings in accordance with target maturity profiles.

Interest rate exposure and sensitivity analysis:

Given the short term nature of the group and company's financial assets and liabilities no sensitivity analysis has been prepared as the impact on the financial statements would not be significant .

   30.            Foreign currency risk 

Foreign currency risk refers to the risk that the value of a financial commitment or recognised asset or liability will fluctuate due to changes in foreign currency rates. Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency.

The Group has overseas operations in Europe, Middle East and Asia and is therefore exposed to changes in the respective currencies in these territories. The Group maintains bank balances in each of the entities local currency and in other currencies as required. Cash positions are monitored and are converted to local currency at appropriate times minimising the exposure to exchange fluctuations.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts show are those reported to key management translated into GBP at the closing rate:

 
                                            Functional currency of individual entity 
                                           GBP                 EUR                 HKD 
                                       2020      2019      2020      2019      2020      2019 
                                          )         )         )         )         )         ) 
                                    GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
                                          )         )         )         )         )         ) 
---------------------------------  --------  --------  --------  --------  --------  -------- 
 Net foreign currency 
  financial assets/(liabilities) 
 GBP                                    - )       - )      (44)       - )      (76)       - ) 
                                                  328 
 EUR                                  434 )         )       - )       - )       (2)       - ) 
 HKD                                  (115)      (12)       - )       - )        -)       - ) 
                                                  531 
 RMB                                  574 )         )       - )       - )       (0)       - ) 
                                      1,901     1,088 
 USD                                      )         )     129 )       - )    3,254)       - ) 
 Other                                 11 )     (324)       (1)       - )        -)       - ) 
                                      2,804     1,612                         3,176 
                                          )         )      84 )       - )         )       - ) 
---------------------------------  --------  --------  --------  --------  --------  -------- 
 
                                           RMB                 AED                 SGD 
                                       2020                2020      2019      2020      2019 
                                          )      2019         )         )         )         ) 
                                    GBP'000             GBP'000   GBP'000   GBP'000   GBP'000 
                                          )   GBP'000         )         )         )         ) 
---------------------------------  --------  --------  --------  --------  --------  -------- 
 Net foreign currency 
  financial assets/(liabilities) 
 GBP                                    (1)       (1)      (23)       - )      187)       - ) 
 EUR                                    18)       - )       (5)       - )        -)       - ) 
 HKD                                   399)       - )        -)       - )        -)       - ) 
 RMB                                     -)       - )        -)       - )       - )       - ) 
 USD                                   647)     117 )      325)       - )      287)       - ) 
 Other                                  18)       - )       (4)       - )       (9)       - ) 
                                      1,081       117 
                                          )         )     293 )       - )     465 )       - ) 
---------------------------------  --------  --------  --------  --------  --------  -------- 
 

The following table illustrates the sensitivity of profit and equity in relating to the Group's financial assets and financial liabilities to a reasonably possible change in exchange rates, with all other variables held constant and no further foreign exchange risk management actions taken.

 
                                   Increase/(decrease) 
                                     in income before      Increase/(decrease) 
                                         taxation             in net assets 
                         Change                    2019                    2019 
                             in      2020 )           )      2020 )           ) 
                                    GBP'000     GBP'000     GBP'000     GBP'000 
                           rate           )           )           )           ) 
----------------------  -------  ----------  ----------  ----------  ---------- 
 Appreciation against 
  GBP of: 
 EUR                         6%        30 )        21 )        75 )         - ) 
 HKD                         8%         (4)         (1)       137 )         - ) 
 RMB                         7%        41 )        38 )        (92)        (20) 
 USD                         8%       151 )        86 )         - )         - ) 
----------------------  -------  ----------  ----------  ----------  ---------- 
 

The above sensitivity information was calculated by reference to carrying amounts of assets and liabilities at 31 March only. The effect on income before taxation arises in connection with monetary balances denominated in currencies other than an entity's functional currency, the effect on net assets arises principally from the translation of assets and liabilities that are not sterling functional.

The higher foreign currency exchange rate sensitivity in profit in 2020 compared to 2019 is attributable to an increase in foreign currency denominated balances following the acquisition of overseas entities into the Group.

   31.            Liquidity risk 

The group seeks to maintain sufficient cash balances.

Management reviews cash flow forecasts on a regular basis to determine whether the group has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities. The average creditor payment period is 113 days (2019: 104 days restated).

Trade and other payables and amounts due to subsidiaries are due within 12 months, the maturity of financial liabilities is set out below.

The following table sets out the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

 
                        Less than   Between 
                                3         3   Between   Between   Total contractual 
                                     and 12   1 and 2   2 and 5 
                           months    months     years     years          cash flows 
                          GBP'000   GBP'000   GBP'000   GBP'000             GBP'000 
---------------------  ----------  --------  --------  --------  ------------------ 
  31 March 2020 
 Variable interest 
  bearing                     300       951     1,200     9,200              11,651 
 Fixed interest rate 
  instruments               1,061     1,458         -         -               2,519 
 Finance leases             1,381     4,140     5,508     7,807              18,836 
                            2,742     6,659     6,708    17,007              33,006 
---------------------  ----------  --------  --------  --------  ------------------ 
 31 March 2019 
 Variable interest 
  bearing                       -       900     1,200     3,900               6,000 
 Fixed interest rate 
  instruments                 516       901        63        63               1,543 
 Finance leases                 4        13        12         -                  29 
                              520     1,814     1,275     3,963               7,572 
---------------------  ----------  --------  --------  --------  ------------------ 
 

Interest bearing financial liabilities carry interest at between 3.0 per cent and 10 per cent per annum.

The group has also access to financing facilities of GBP250,000 (2019: GBP6,750,000) as described below.

Unsecured bank overdraft facility (GBP250,000 of which GBPNil was drawn down at 31 March 2020), reviewed annually and payable at call, and a revolving credit facility (GBP6,500,000 which was fully drawn down at 31 March 2020), described in note 22:

 
                    Group     Group   Company   Company 
                     2020      2019      2020      2019 
                  GBP'000   GBP'000   GBP'000   GBP'000 
---------------  --------  --------  --------  -------- 
 Amount used            -        38         -         - 
 Amount unused        250     6,712         -     6,500 
                      250     6,750         -     6,500 
---------------  --------  --------  --------  -------- 
 
   32.            Capital management 

The company's objectives when managing capital are:

- to safeguard the company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The company sets the amount of capital in proportion to risk. The company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

The company monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt ÷ adjusted capital. Net debt is calculated as total debt (as shown in the statement of financial position) less cash and cash equivalents. Adjusted capital comprises all components of equity.

Debt-to-adjusted capital ratios

The debt adjusted capital ratios at 31 March 2020 were as follows:

 
                                                            Company    Company 
                                      Group )    Group )          )          ) 
                                       2020 )     2019 )     2020 )     2019 ) 
                                                 GBP'000    GBP'000    GBP'000 
                                    GBP'000 )          )          )          ) 
---------------------------------  ----------  ---------  ---------  --------- 
 Total debt                          14,229 )    7,610 )   11,600 )    6,000 ) 
 Less: cash and cash equivalents      (5,250)    (4,759)        (3)      (987) 
 Net debt                             8,979 )    2,851 )   11,597 )    5,013 ) 
 
 Total equity                        51,348 )   31,480 )   47,166 )   44,979 ) 
 Add: subordinated debt 
  instruments                             - )          -        - )        - ) 
                                                  31,480                44,979 
 Adjusted capital                    51,348 )          )   47,166 )          ) 
                                                  1:11.0 
 Debt-to-adjusted capital             1:5.7 )          )    1:4.1 )    1:9.0 ) 
---------------------------------  ----------  ---------  ---------  --------- 
 
   33.            Reconciliation of liabilities arising from financing activities 
 
                                 Adoption      Cash 
                        Group                     )      non-cash changes        Group 
                                                     ----------------------- 
                                of IFRS16     flows                    Other 
                         2019                     )   Acquisitions         )      2020 
                                  GBP'000   GBP'000                  GBP'000 
                      GBP'000                     )        GBP'000         )   GBP'000 
-------------------  --------  ----------  --------  -------------  --------  -------- 
                                              6,154 
 Borrowings             7,581           -         )            494       - )    14,229 
 Lease liabilities         29      10,212   (3,268)         11,895      (32)    18,836 
                                              2,886 
                        7,610      10,212         )         12,389      (32)    33,065 
-------------------  --------  ----------  --------  -------------  --------  -------- 
 
   34.           CHANGES IN ACCOUNTING POLICIES 

As the Group has applied IFRS 16 using the modified retrospective approach, comparative information has not been restated and continues to be reported under IAS 17. The table below summarises the impact of IFRS 16 on the Group's Income Statement for the year to 31 March 2020:

 
                            IAS 17           IFRS 16 
                   ---------------  ------------------------ 
                    Rental Expense   Depreciation   Interest 
                           GBP'000        GBP'000    GBP'000 
                   ---------------  -------------  --------- 
 Property                    3,705          4,563        503 
 Other equipment               103            100         11 
                   ---------------  -------------  --------- 
 Total                       3,808          4,663        514 
                   ---------------  -------------  --------- 
 
   34.1         Adjustments recognised on adoption of IFRS 16 

The Group adopted IFRS 16 retrospectively from 1 April 2019, but has not restated comparatives for previous reporting periods, as permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 April 2019.

The Group has lease contracts for various offices and IT equipment. Before the adoption of IFRS 16, leases were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line bases over the period of the lease.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 April 2019 of 3.16%.

For leases previously classified as finance leases the Group recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.

 
                                                              2020 ) 
                                                             GBP'000 
                                                                   ) 
---------------------------------------------------------  --------- 
 Operating lease commitments disclosed at 31 March 
  2019                                                       7,402 ) 
 Discounting using the lessee's incremental borrowing 
  date at the date of initial application                      (972) 
 Add: finance lease liabilities recognised as at 31 
  March 2019                                                    29 ) 
 (Less): short-term leases recognised on a straight-line 
  basis as expense                                             (344) 
 (Less): low-value leases recognised on a straight-line 
  basis as expense                                              (16) 
 Add: adjustments as a result of a different treatment 
  of extension and termination options                       4,142 ) 
 Lease liability recognised as at 1 April 2019              10,241 ) 
---------------------------------------------------------  --------- 
 Of which are: 
 Current lease liabilities                                   1,865 ) 
 Non-current lease liabilities                               8,376 ) 
---------------------------------------------------------  --------- 
                                                            10,241 ) 
---------------------------------------------------------  --------- 
 

The associated right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 31 March 2019.

The change in accounting policy affected the following items in the balance sheet on 1 April 2019:

 
                         GBP'000 
                               ) 
---------------------  --------- 
                          10,241 
 Right-of-use assets           ) 
 Sundry debtors            (101) 
 Lease liabilities      (10,212) 
 Accruals                   72 ) 
 Retained Earnings           - ) 
---------------------  --------- 
 

In applying IFRS 16 for the first time the Group has used the following practical expedients permitted by the standard:

-- The use of a single discount rate to a portfolio of leases with reasonably similar characteristics

   --      Reliance on previous assessments on whether leases are onerous 

-- The accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term

-- The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

-- The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.

   34.2         Summary of new accounting policies 

From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the lease asset is available for use by the group.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight line basis.

Lease liabilities are initially measured at the net present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Extension and termination options are included in a number of the property leases across the group. The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any period covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain to exercise an option to renew or terminate a lease. Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise, or not to exercise, the option to renew or terminate the contract. If a lease modification either increases the given lease's scope by adding the right to use of an asset then this modification is treated as a new lease.

Payments associated with short-term leases and leases of low-value assets (with a value of less than GBP10,000) are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

   35.            RESTATEMENT OF PRIOR YEAR 

During the year, additional pre-acquisition liabilities were identified resulting in restatement of the goodwill on acquisition of Ince & Co LLP. There was no impact on the 2018 results from these adjustments. In this financial year following the completion of the second stage of the Ince acquisition, a professional valuation of the branding and trademark was obtained and a detailed review of the contractual terms was undertaken which resulted in the reclassification of certain liabilities and the determination (as detailed in note 2.8) of a brand value attributable to Ince of GBP17,000,000. Data on recurring business suggested that the client portfolios were less valuable than the brand and deemed to be valued at GBP4,500,000.

The affected financial statement line items for the prior period have been restated as follows:

 
                                                      Restated 
                                                             ) 
                                 Group )               Group ) 
                                  2019 )     Change     2019 ) 
 Statement of financial          GBP'000    GBP'000    GBP'000 
  position extract                     )          )          ) 
-----------------------------  ---------  ---------  --------- 
                                                        74,443 
 Intangible assets              53,198 )     21,245          ) 
 Trade and other receivables      35,222    (3,262)     31,960 
 Trade and other payables       (48,669)   (14,584)   (63,253) 
 Provisions                      (6,736)    (3,399)   (10,135) 
----------------------------- 
 Net assets                       33,015        - )     33,015 
-----------------------------  ---------  ---------  --------- 
 

The affected line items within the Notes to the Financial Statements for the prior period have been restated as follows:

 
                                                      Restated 
                                                             ) 
                                  Group )              Group ) 
                                             Change 
                                   2019 )         )     2019 ) 
 Statement of financial           GBP'000   GBP'000    GBP'000 
  position extract                      )         )          ) 
------------------------------  ---------  --------  --------- 
                                                        50,820 
 Intangible assets - Goodwill    42,075 )   8,745 )          ) 
 Intangible assets - Client 
  portfolio                       9,901 )   (4,500)    5,401 ) 
 Intangible assets - Brand                   17,000     17,000 
  & trademarks                        - )         )          ) 
 Trade receivables                 17,229   (1,631)     15,598 
 Accrued income                     5,591   (1,631)      3,960 
 Other payables (current)         (1,344)   (4,664)    (5,208) 
 Accruals (current)               (4,158)     (118)    (4,276) 
 Deferred consideration 
  (non-current)                  (21,607)   (9,802)   (31,409) 
 Provisions (current)             (5,523)   (2,562)   (11,347) 
 Provisions (non-current)         (1,213)     (837)    (2,850) 
------------------------------ 
                                                        40,951 
 Net assets                      40,951 )       - )          ) 
------------------------------  ---------  --------  --------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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August 03, 2020 02:00 ET (06:00 GMT)

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