TIDMINCE

RNS Number : 0207H

Ince Group PLC (The)

01 December 2020

The Ince Group plc

("Ince" or the "Group" or the "Company")

Interim unaudited results for the six months to 30 September 2020

-- Robust financial performance despite Covid-19

-- Recruitment of individuals and teams continues to drive growth

-- Net debt continues to reduce

The Ince Group PLC (AIM: INCE), the international legal and professional services company, is pleased to announce its unaudited results for the six months ended 30 September 2020.

 
 For the six months ended 30         2020   2019 (restated*)   % Growth 
  September (GBPm) 
----------------------------------  -----  -----------------  --------- 
 Revenue                             48.2               45.3        +6% 
 Adjusted profit before tax**        2.52               0.15     +1580% 
 Adjusted diluted earnings/(loss) 
  per share (p)**                    3.1p             (3.9)p        N/A 
 Basic diluted earnings/(loss) 
  per share (p)                      2.1p             (5.2)p        N/A 
 Dividend per share (p)                 -               2.0p      -100% 
 Net debt                           (8.3)             (10.3) 
----------------------------------  -----  -----------------  --------- 
 

* The restatement, as detailed in the audited financial statements to 31 March 2020, reflects recognition of additional pre-acquisition liabilities associated with the Ince acquisition and of the valuation of the Ince brand as well as a detailed review of certain contractual terms in the prior period.

** Adjusted profit before tax is calculated, as shown in note 5 to the financial statements, as the profit before tax after adding back non-recurring items of GBP0.7m in 2020 (2019: GBP0.5m) and Adjusted diluted earnings per share is computed from Adjusted profit before tax after deducting taxation. Partner remuneration is now shown as an expense in the statutory format and no longer needs an adjustment for clear presentation.

Financial highlights

-- Revenue up 6% to GBP48.2m, a strong performance given the impact of Covid-19

-- Adjusted profit before tax of GBP2.52m, up from GBP0.15m

-- Organic growth over last year approximately 3%

-- Adjusted earnings per share increased to 3.1p (2019 loss of 3.9p)

-- Net debt at the period end of GBP8.3 m (31 March 2020 - GBP9.0 m) - reduced on schedule and after paying deferred consideration of GBP4.9 m

-- Further cost savings implemented throughout the period with over GBP1m to recur

Operational highlights

-- International offices' revenues all increased reflecting re-invigoration with new partners and continued expansion of services

-- UK legal practice has rebounded well from the initial Covid-19 downturn with recent months' revenues close to last year's

-- Further geographical expansion:

o New office established in Cyprus staffed by team from an established business

o New regulated consultancy opened in Abu Dhabi

-- Lateral and team hires who have joined are increasing their revenues

-- Law firm management strengthened with new Global Senior Partner and new Managing Partner - UK and Managing Partner - International

-- Remote working ability readily enhanced and extended to all staff, allowing flexibility for future operation

-- New practice management system developed and owned by the Group rolled out in the UK and ready to be rolled out in other locations when travel for training allows

Adrian Biles, Group Chief Executive, commented:

"A huge thank you to all partners and colleagues for continuing to deliver the high quality service our clients expect. In the context of the global disruptions of the pandemic, these are exceptional results.

"Lateral recruitment has taken time to expand the service lines offered in the overseas offices, but the results are beginning to be felt and I am particularly pleased with the performance of the international offices in this period.

"Our net debt continues to reduce even as we continue to pay deferred consideration for acquisitions.

"These results demonstrate that we are in a position to deliver future growth and, if that continues over coming months, we should be able to declare a dividend with the final results."

Presentations

A presentation for analysts and institutional investors will be held today, 1 December 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 1 December 2020 at 5.15pm. 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

Dan Gee-Summons, Corporate Finance

Simon Johnson, 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 nine countries across Europe, the Middle East and Asia. With over 700 people, including some 100 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, Ince 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.

Operating review

Clear growth drivers: The Group's strategy continues to be to grow income profitably by adding fee earning partners to a single efficient administrative operation. Implementation of this strategy should increase the intellectual capital of the business and the quality of its client and matter base. The delivery of this strategy includes recruiting high quality personnel, developing new business streams, acquiring complementary businesses and forging strategic alliances where appropriate.

Robust central infrastructure: To support the delivery of the strategy, the Group has a well-established platform and infrastructure.

We own our practice management system which, on an integrated basis, manages our paperwork, records time and enables billing and collection of fees. We believe that this is unique as it enables us to tailor the system to our needs when we need a refinement and removes the need to rely on external software providers. The back office for the Group is based in South Wales which is a relatively low-cost environment with an abundant pool of suitable talent.

Remuneration model key to growth: The Group has a well-developed basic remuneration structure for partners with which to reward them for delivering the behaviours management wants to see. These focus on our KPIs by growing revenues, achieving a gross margin of over 45%, billing the work done and collecting the fees. While the basic structure is well-defined, it is continually reviewed to improve its focus on achieving the right behaviours.

The efficient practice management system and the remuneration structure, allied to the strength of the Ince brand, are powerful tools in attracting the additional talent the Group seeks.

Review of the half year

The half year has been overshadowed by the global pandemic which has impacted each of our offices to differing degrees. Through the dedication and commitment of our partners and colleagues the overall result is ahead of last year and revenue in the half year has exceeded last year's. Covid-19 restricted business development and face-to-face client contact. However, all of our colleagues have adapted to the changed circumstances and ways of working and our technology platform has coped well with the entire firm at times working remotely.

We strengthened our international footprint during the first half of the year:

- In June, after lengthy negotiations with the local regulator, the Singapore office's international law practice was consolidated with the Singapore law practice of former alliance partner Incisive Law LLC, an integral member of the global Ince network.

- In July, we started a Middle East consultancy business as a specialist asset finance provider. The business is offering our clients expert consulting services, working closely with our ship finance teams in the UK, Germany, Dubai and Asia. It will initially focus on the shipping and aviation sectors. It is regulated by the Abu Dhabi Global Market's Financial Services Regulation Authority (FSRA).

- In late September, the Group opened a new office in Cyprus, another important international shipping hub, and welcomed six new colleagues who have worked together for many years. The office has a specific focus on the maritime sector but is well positioned to advise on private wealth, immigration, financial litigation and energy-related matters. Alongside the law firm, we will operate a consultancy business providing a full range of corporate support services.

We are building complementary businesses around the core strength of Ince in shipping and maritime law :

These changes are built around the core strength of the law firm in shipping and maritime law to which the Group continues its successful commitment. At the beginning of this year, we were joined by 10 partners and fee earners from Bentleys, Stokes and Lowless, a long established specialist shipping partnership in London. They have integrated smoothly with our existing team and are generating revenue as well as deepening the vast experience of the shipping team.

Lateral hires drive growth:

All of the overseas offices have increased turnover and are contributing to the Group result confirming our view that with the addition of suitable partners, close management and an emphasis on collaboration with other offices, the businesses are sound. In the UK, which represented 57% of revenues in the period, the trends noted earlier in the year are represented in the first half. In corporate and real estate there was some encouragement from increases in revenue towards the end of the half year as transactions started again. Shipping and dispute resolution, the largest practice areas in the UK, have performed solidly in the half year. Overall in the UK, the business is recovering to previous levels of revenue after a noted decline after the first lockdown.

Senior management team strengthened:

- Julian Clark has been appointed Global Senior Partner with the primary responsibility for building the market profile of the Group internationally and breaking down silos between offices and service lines. He is establishing a small number of groups focussed on the further deepening of collaboration between offices and service lines to leverage our client and talent bases which should increase revenues.

- Mark Tantam has been appointed to the new position of Managing Partner - UK and his vast experience of managing large teams of professionals at Deloitte is already benefitting the Group. Mark will retain his role as head of global consulting and, in that role, continue to develop integrated legal solutions based on a combination of legal and non-legal capabilities and identify new types of business to explore.

   -     Alex Janes has been appointed Managing Partner - International. 

- Mark and Alex will work with the Heads of Offices and Service lines to drive growth by identifying new propositions and new team hires and increase profitability by improving leverage and cash generation in the international network.

- These three will constitute the single points of contact for their areas and work closely together with the CEO and CFO to shorten reporting lines and reduce inefficiency (and cost) across the organisation.

Improving efficiency of administrative function:

The half year has also seen the business make rapid adjustments as the impact of the pandemic has been felt.

We have, selectively, reduced the number of fee earners and support staff where the medium term prospects of business sectors or support needs would not justify their retention.

The introduction of the Group's new practice management system has given fee earners and management real-time visibility of individual KPIs (including chargeable hours, WIP, billings, debtors and cash collected) which has improved efficiency. This is to be rolled out to overseas offices as soon as possible when travel for training is practicable.

Disposal of White & Black Ltd

Our aspirations for White & Black to be integrated into the wider group as its FinTech offering were not met due to the fall off of its transactional business during the first half and, subsequent to the first half, we therefore have disposed of the whole of the share capital to part of its management team for GBP0.5 million.

Financial review

The Group's consolidated results for the six months ended 30 September 2020 are ahead of last year, reflecting continued development of the business following the settling in of the Ince acquisition. The results show total revenue of GBP48.2 million (2019: GBP45.3 million) and Adjusted profit before tax of GBP2.52 million (2019: GBP0.15 million).

Alternative Performance Measures

In the past, the Group has presented two Alternative Performance Measures ("APMs") which included adjustments for specific items to provide a balanced view of the underlying performance of the Group's operations. We have added back non-recurring items and deducted partners' remuneration and other non-controlling interests from profits before striking the Adjusted profit before tax.

After further discussions with the auditors, it has been agreed that the partners' remuneration and other non-controlling interests should be treated as an expense of the business in the statutory presentation of the profits of the Group. This gives the same result in profitability as had previously been reported in the Adjusted profit before tax. In these results, therefore, the only adjustment between the statutory profits and the Adjusted profits is the adding back of non-recurring items.

A consequence of this changed treatment is that the balance sheet liability for non-controlling interests is now shown as a current liability.

The Board believes that this presentation is far clearer to investors.

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:

   --    Revenue (measured net of disbursements and VAT) 
   --    Gross margin percentage 
   --    Overheads as a percentage of revenue 
   --    Lockup 

Revenue

Revenue for the six months has grown by 6% despite the impact of Covid-19 on the business and can be analysed by geography as follows:

 
 For the six months ended 30 September     2020               2019        Growth 
                                           GBPm         (restated) 
                                                              GBPm 
 UK                                       27.26              28.49           -4% 
 Greater China                            10.76               9.33          +15% 
 Singapore                                 2.16               1.09          +99% 
 Dubai                                     2.78               2.37          +18% 
 Greece                                    2.22               1.73          +28% 
 Germany                                   2.08               1.82          +14% 
 Gibraltar                                 0.94               0.51          +82% 
 

The Group has benefitted, during the half year, from its spread of service lines as well as its geographies.

Strong performance from overseas offices

All the overseas offices have performed well through the period, increasing revenue and now contributing to Group profitability. This reflects the arrival of lateral hires in the last year and considerable local and central management attention, with an emphasis on collaboration between offices.

UK performance recovering

In the UK, which represents 57% of Group revenues, revenues declined by 4% in the period with most of the decline happening in the earlier part of the period when restrictions were more severe. Covid-19 has hit the UK harder than our international offices for a number of reasons including particularly in London, the ability and willingness of colleagues to travel into central London by public transport and restrictions on access to our main office imposed by the landlord. This has restricted the ability of partners and colleagues to meet clients.

The UK business is also more transactional than the international business and sectors such as real estate and corporate (and in particular White & Black as noted above) have been quieter. Other sectors which have been quieter include aviation, employment and private clients which are mostly undertaken in the UK practice. The comparative period also included the results of GDFM, the financial compliance consultancy business, which we withdrew from in the second half of last year.

Gross margin

Gross margin for the half year was 44.5% (2019: 41.6%) which was a very good result in the conditions against a comparative period which was early in the integration of the Ince acquisition. The Group has focussed many of the actions in response to Covid-19 on achieving a good gross margin. Typically, we have also found that gross margin improves in the second half of the year with the higher turnover against fixed salary costs.

One of the costs charged against gross margin is the provision we make against debtors in the period. This is made on a formulaic basis with all debts over six months old provided for in full, unless the debt has been collected after the period end before reporting or we have effective certainty that the debt will be collected (for example, where the debtor is a solvent estate or the Group has formal legal security). The charge is 3.0% of revenue for the period (H1 2019: 2.3%) which reflects a general slow-down in settlement of debtors which we have observed. We continue to collect these debts to a substantial extent despite having provided against them.

Lock-up

Lock-up, which represents debtors (excluding VAT and disbursements) compared with revenue, was 116 days at the half year end which is greater than last year and our target of 100 days. This has been extended particularly by Greater China's lock-up which is higher than for the rest of the Group. This is a focus for management in the short and medium term to educate both partners and clients to understand that the Group should not be a significant source of credit for the client. There are, however, cultural differences which suggest that it will take time to achieve a more satisfactory level.

Overheads

Overheads as a proportion of revenue were 39% of revenue. This is a result of overheads having been set at a time when greater growth in revenue was anticipated. Much focus has been paid to reducing overheads since Covid-19 impacted the business, but this reduction will inevitably lag the decisions to make the reductions. Management has reduced overheads in a sensible way so as to enable the business still to grow as more normal business conditions return. This measure should reduce in the full year, but progress towards the Group's target of 30% has been slowed.

Cash and borrowings

As reported earlier this year, the Group expects that net borrowings will continue to reduce, with the low point of cash occurring this month. From now to the end of the financial year, we expect that net borrowings will reduce although the extent of the reduction will depend on the extent of future business disruption as a result of the pandemic. Cash at 27 November 2020 was GBP4.5 million, approximately the same as at 30 September 2020.

Our principal borrowings are the term facility and revolving credit drawn down on 31 December 2018 when the first stage of the Ince acquisition completed. The Group has made the repayments under these facilities on schedule and has met all the covenants to which the facilities are subject. The Group continues to review opportunities to obtain new facilities which take account of the development of the Group with completion of the overseas acquisitions of Ince and the other developments of the Group over the last two years.

Deferred consideration

Deferred consideration arises from previous acquisitions where further consideration is payable to the vendors. Many commentators regard the deferred consideration on the balance sheet as a fixed amount which the Group will pay. It is important, however, to note that the amount stated in the balance sheet is management's estimate at the date of the acquisition of the liability over a number of years. It is a contingent liability. The actual amount which will be paid depends, in nearly all cases, on the level of revenue achieved by the businesses acquired. So if revenue drops, so will the deferred consideration (and in any event payments will only be made when the revenue has been collected not just been billed). Thus there is some protection against underperformance of the acquired businesses and cash is only paid out to the extent that cash has been received.

Outlook

The Board considers that the business is performing well in the circumstances and expects in the absence of further adverse events, to continue to grow profitably.

We typically observe an increase in revenues and profit in the second half of the year over the first. Although recent trading trends are encouraging, and so far in this half year are ahead of prior year trading, market uncertainties persist across our territories (in particular in the UK, linked in part to recent lockdowns). The extent to which these uncertainties may affect this seasonal trend is difficult to estimate and may impact the extent of the normal second half weighting.

We continue to look for suitable opportunities to expand the teams in all of our offices largely through lateral and team hires. In doing so, we look to expand either the client base of the Group or the service offering of particular offices or the Group as a whole.

The Board believes that working practices are likely to change rendering the Group's current office space too large or unsuitable. In this context, investors should note that the Group's material, long-term property commitments all have an opportunity for a tenant's break within the next three years. This allows the Group flexibility to meet such changed working practices and, in the medium term, the potential to achieve significant further operational cost savings.

At the current time, the Board do not consider it prudent to declare a dividend. If the current progress of the business continues and there are no more significant disruptions from the pandemic or any other unforeseen events, the Board will review the position at the time of announcing the results for the year ending 31 March 2021 with a view to recommending a final dividend for the year.

We look forward to the return to a more normal way of business and the opportunities which can be seized then.

Unaudited Consolidated Statement of Comprehensive Income

 
                                                                          Restated    Restated 
                                                           6 months       6 months   12 months 
                                                                 to             to          to 
                                                       30 September   30 September    31 March 
                                                               2020           2019        2020 
                                        Note                GBP'000        GBP'000     GBP'000 
 Continuing operations 
 Fees and commissions                    2                   48,200         45,339      98,478 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Production staff costs                  3                 (24,447)       (24,899)    (50,426) 
 Other production costs                                     (2,315)        (1,945)     (4,180) 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Gross profit                                                21,438         18,495      43,872 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Administrative staff costs              3                  (6,637)        (6,746)    (13,617) 
 Other operating expenses                                   (9,129)        (8,596)    (15,002) 
 Depreciation of property, 
  plant and equipment                                         (764)          (697)     (1,487) 
 Depreciation of right-of-use 
  asset                                                     (2,559)        (2,161)     (4,663) 
 Amortisation                                                  (79)           (42)        (83) 
 Other operating income                                         732            253         354 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Operating profit                                             3,002            506       9,374 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Finance income                                                  24            147         352 
 Finance expense - right-of-use 
  asset                                                       (306)          (246)       (514) 
 Finance expense - other                                      (221)          (167)     (1,057) 
 Non recurring costs                     4                    (685)          (461)     (1,657) 
 Share of profit of associates                                   18           (91)       (140) 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Profit/(loss) before income 
  tax                                                         1,832          (312)       6,358 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Income tax expense                                           (358)        (1,604)     (1,543) 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Profit/(loss) from continuing 
  operations                                                  1,474        (1,916)       4,815 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Discontinued operations 
 Profit from discontinued operations                              -              -         137 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Profit/(loss) for the period                                 1,474        (1,916)       4,952 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Underlying profitability:- 
 Profit before income tax                                     1,832          (312)       6,358 
 Add back: non-recurring costs                                  685            461       1,657 
 Adjusted profit before income 
  tax                                                         2,517            149       8,015 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Earnings per share 
 Basic earnings per share (pence)        5                     2.15         (5.18)       11.78 
 Adjusted basic earnings per 
  share (pence)                          5                     3.15         (3.93)       15.39 
 
 Diluted earnings per share 
 Diluted earnings per share 
  (pence)                                5                     2.08         (5.18)       11.42 
 Adjusted diluted earnings 
  per share (pence)                      5                     3.05         (3.93)       14.92 
 
 Other comprehensive income 
 Items that may be reclassified 
  subsequently to profit or 
  loss: 
 Translation of foreign operations                               31             35          35 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 Other comprehensive income 
  for the period                                                 31             35          35 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 
 Total comprehensive income 
  for the period                                              1,505        (1,881)       4,987 
-------------------------------------  -----  ---------------------  -------------  ---------- 
 

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

Unaudited Consolidated Statement of Financial Position

 
                                                                                  Restated                 Restated 
                                                               30 September   30 September                 31 March 
                                                                       2020           2019                     2020 
                                                        Note        GBP'000        GBP'000                  GBP'000 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                                        3,417          3,768                    3,761 
 Right-of-use assets                                                 14,953         14,285                   17,441 
 Intangible assets                                       6           80,787         79,995                   80,825 
 Investments                                                            545            358                      470 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
                                                                     99,702         98,406                  102,497 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 
 Current assets 
 Trade and other receivables                             7           46,167         40,233                   44,412 
 Cash and cash equivalents                               8            4,461          2,669                    5,250 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
                                                                     50,628         42,902                   49,662 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 Total assets                                                       150,330        141,308                  152,159 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 
 EQUITY 
 Capital and reserves attributable to equity holders 
 Share capital                                           9              686            370                      686 
                                        Share premium    10          24,126         11,192                   24,126 
                          Reverse acquisition reserve    10        (24,724)       (24,724)                 (24,724) 
                 Foreign exchange translation reserve    10              66             35                       35 
 Other reserves                                          10             717            145                      634 
 Retained earnings                                       10          43,001         36,134                   41,527 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 Total equity                                                        43,872         23,152                   42,284 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 
 LIABILITIES 
 Non-current liabilities 
                             Trade and other payables    11          15,639         28,019                   22,453 
 Borrowings                                              12           9,800         11,299                   10,400 
 Provisions                                                           2,258          2,454                    2,189 
 Lease liabilities                                                    8,746         12,976                   13,284 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
                                                                     36,443         54,748                   48,326 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 Current liabilities 
 Trade and other payables                                11          44,299         40,541                   39,325 
 Corporation tax                                                      1,532          1,827                    1,372 
 Borrowings                                              12           2,912          1,713                    3,829 
 Provisions                                                           1,579          7,623                    2,407 
 Lease liabilities                                                    7,327          2,255                    5,552 
 Amounts due to partners                                             12,366          9,449                    9,064 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
                                                                     70,015         63,408                   61,549 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 Total liabilities                                                  106,458        118,156                  109,875 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 Total equity and liabilities                                       150,330        141,308                  152,159 
-----------------------------------------------------  -----  -------------  -------------  ----------------------- 
 

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

Unaudited Consolidated Statement of Cash Flows

 
                                                                      Restated     Restated 
                                                       6 months       6 months     6 months 
                                                             to             to           to 
                                                                                   31 March 
                                                   30 September   30 September    September 
                                                           2020           2019         2020 
                                            Note        GBP'000        GBP'000      GBP'000 
 Cash flows from operating 
  activities 
 Profit/(loss) before income 
  tax                                                   1,832 )          (312)      6,358 ) 
 Profit before tax from discontinued 
  activities                                                - )            - )        137 ) 
 Adjustments for: 
 Partner remuneration                                   8,507 )        7,098 )     16,844 ) 
 Finance income                                            (24)          (147)        (352) 
 Finance expense                                          527 )          413 )      1,571 ) 
 Acquisition related costs                                685 )          461 )      1,657 ) 
 Depreciation, amortisation 
  and impairment                                        4,861 )        4,865 )      8,279 ) 
 Share options expense                                     83 )           97 )        172 ) 
 Gain on sale of discontinued 
  operations                                                - )            - )         (51) 
 Share of (profit)/loss of 
  associates                                               (18)           91 )        140 ) 
 Net exchange differences                                  88 )            - )        (323) 
 Changes in operating assets 
  and liabilities (net of acquisitions): 
 Decrease/(Increase) in trade 
  and other receivables                                  (20) )          545 )      (9,616) 
 (Decrease)/Increase in trade 
  and other payables                                      448 )        (6,900)      (1,787) 
 (Decrease)/Increase in provisions                        (818)          (232)      (6,380) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Cash generated by operations                          16,151 )        5,979 )     16,649 ) 
 Interest and other financial 
  costs paid                                              (527)          (413)      (1,054) 
 Tax paid                                                 (198)           (33)        (896) 
 Net cash generated by operating 
  activities                                           15,426 )        5,533 )     14,699 ) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Cash flows from investing 
  activities 
 Cash paid on acquisitions 
  (net of cash acquired)                                   49 )        2,250 )      2,078 ) 
 Payment of contingent and 
  deferred consideration on 
  acquisitions                                          (4,944)        (4,304)     (10,126) 
 Payment of acquisition related 
  costs                                                   (685)          (461)      (1,657) 
 Purchase of property, plant 
  and equipment                                           (511)          (708)      (1,436) 
 Proceeds from disposal of 
  property, plant and equipment                             - )            - )          2 ) 
 Purchase of intangible assets                            (458)          (503)      (1,627) 
 Disposal of subsidiary, net 
  of cash disposed of                                       - )            - )        (191) 
 Interest received                                         25 )          147 )        352 ) 
 Net cash absorbed by investing 
  activities                                            (6,524)        (3,579)     (12,605) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Cash flows from financing 
  activities 
 Movement in borrowings                                 (1,714)          4,663      6,133 ) 
 Proceeds from issuance of 
  shares                                                    - )            - )     14,046 ) 
 Transactions costs relating 
  to issue of shares                                        - )            - )        (800) 
 Dividends paid                                             - )          (737)      (2,197) 
 Partner remuneration payments                          (5,282)        (6,844)     (15,513) 
 Direct cost of leases                                      - )            - )         (24) 
 Payment of lease liabilities                           (2,845)        (1,274)      (3,268) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Net cash (absorbed)/generated 
  from financing activities                             (9,841)        (4,192)      (1,623) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Net (decrease) / increase 
  in cash and cash equivalents                            (939)        (2,238)        471 ) 
 Effect of exchange rate changes 
  on cash                                                  (43)          (103)          - ) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Cash and cash equivalents 
  at beginning of period                                5,191 )        4,720 )      4,720 ) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 Cash and cash equivalents 
  at end of period                           8          4,209 )        2,379 )      5,191 ) 
-----------------------------------------  -----  -------------  -------------  ----------- 
 

Unaudited Consolidated Statement of Changes in Equity

 
                                                                   Foreign 
                                                                         ) 
                                                     Reverse      Exchange 
                                                           )             )                          ) 
                               Share     Share   acquisition   translation      Other   Distributable     Total 
                                   )         )             )             )          )               )         ) 
                             capital   premium       reserve       reserve   reserves        reserves    equity 
                                   )         )             )             )          )               )         ) 
                             GBP'000   GBP'000       GBP'000       GBP'000    GBP'000         GBP'000   GBP'000 
                                   )         )             )             )          )               )         ) 
--------------------------  --------  --------  ------------  ------------  ---------  --------------  -------- 
 
 Balance at 1 April              370    11,192                                                           25,673 
  2019                             )         )      (24,724)           - )       48 )        38,787 )         ) 
 Profit/(loss) for 
  the period                     - )       - )           - )           - )        - )         (1,916)   (1,916) 
 Other comprehensive 
  income                         - )       - )           - )          35 )        - )             - )      35 ) 
 Dividends paid                  - )       - )           - )           - )        - )           (737)     (737) 
 Share options acquired          - )       - )           - )           - )       97 )             - )      97 ) 
 Balance at 30 September         370    11,192                                    145          36,134    23,152 
  2019                             )         )      (24,724)          35 )          )               )         ) 
--------------------------  --------  --------  ------------  ------------  ---------  --------------  -------- 
 
 Profit/(loss) for                                                                                        6,868 
  the period                     - )       - )           - )           - )        - )         6,868 )         ) 
 Other comprehensive 
  income                         - )       - )           - )           - )        - )             - )       - ) 
 Dividends paid                  - )       - )           - )           - )        - )         (1,475)   (1,475) 
 Shares issued in                316    13,734                                                           14,464 
  period                           )         )           - )           - )      414 )             - )         ) 
 Share options acquired          - )       - )           - )           - )       75 )             - )      75 ) 
 Share issue transactions 
  costs                          - )     (800)           - )           - )        - )             - )     (800) 
 Balance at 31 March             686    24,126                                    634          41,527    42,284 
  2020                             )         )      (24,724)          35 )          )               )         ) 
--------------------------  --------  --------  ------------  ------------  ---------  --------------  -------- 
 
 Profit/(loss) for                                                                                        1,474 
  the period                     - )       - )           - )           - )        - )         1,474 )         ) 
 Other comprehensive 
  income                         - )       - )           - )          31 )        - )             - )      31 ) 
 Dividends paid                  - )       - )           - )           - )        - )             - )       - ) 
 Share options acquired          - )       - )           - )           - )       83 )             - )      83 ) 
 Balance at 30 September                24,126                                    717          43,001    43,872 
  2020                           686         )      (24,724)          66 )          )               )         ) 
--------------------------  --------  --------  ------------  ------------  ---------  --------------  -------- 
 

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

Notes to the Financial Statements

These interim consolidated financial statements have been approved for issue by the Board of Directors on 30 November 2020.

   1.              Summary of significant accounting policies 
   1.1            Basis of preparation and significant accounting policies 

The financial information for the year ended 31 March 2020 set out in this half yearly report does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The figures for the year ended 31 March 2020 have been extracted from the Group financial statements for that year. Those financial statements have been delivered to the Registrar of Companies and included an independent auditor's report, which was unqualified and did not contain a statement under section 493 of the Companies Act 2006.

The half yearly financial information has been prepared using the same accounting policies and estimation techniques as will be adopted in the Group financial statements for the year ending 31 March 2021. The Group financial statements for the year ended 31 March 2020 were prepared under International Financial Reporting Standards as adopted by the European Union. These half yearly financial statements have been prepared on a consistent basis and format with the Group financial statements for the year ended 31 March 2020. The interim condensed consolidated financial statements for the six months ended 30 September 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 March 2020.

   1.2            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 Group company 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 consolidated statement of comprehensive income.

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 consolidated statement of comprehensive income.

   1.3           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.

   1.              Summary of significant accounting policies (continued) 
   1.3           Financial instruments (continued) 
   (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.

   1.4            Going concern 

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.

   1.5            Government grants 

During the period, the Group has been reimbursed by the UK government for a proportion of the wages of furloughed employees under the Coronavirus Job Retention Scheme (CJRS). This is in line with the definitions of grant income in IAS 20 and, for presentational purposes, the reimbursement has been classified against the costs to which it relates.

   2.              REVENUE 

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 
--------------------------  ---------------  --------  -------- 
 6 months to 30 September 
  2020 
 UK                                  26,603       655    27,258 
 Europe, Middle East 
  and Africa                          8,021         -     8,021 
 Asia                                12,921         -    12,921 
 Total revenue                       47,545       655    48,200 
--------------------------  ---------------  --------  -------- 
 
 6 months to 30 September 
  2019 
 UK                                  28,397       511    28,908 
 Europe, Middle East 
  and Africa                          5,915         -     5,915 
 Asia                                10,516         -    10,516 
--------------------------  ---------------  --------  -------- 
 Total revenue                       44,828       511    45,339 
--------------------------  ---------------  --------  -------- 
 
 Year ended 31 March 
  2020 
 UK                                  61,740     2,120    63,860 
 Europe, Middle East 
  and Africa                         13,328         -    13,328 
 Asia                                21,290         -    21,290 
--------------------------  ---------------  --------  -------- 
 Total revenue                       96,358     2,120    98,478 
--------------------------  ---------------  --------  -------- 
 
   3.              STAFF costs 

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

 
                                             Number of employees 
                             --------------------------------------------------- 
                                      6 months           6 months      12 months 
                               to 30 September    to 30 September    to 31 March 
                                          2020               2019           2020 
---------------------------  -----------------  -----------------  ------------- 
 Fee earners                               346                359            342 
 Direct production support                 129                141            134 
 Administration                            241                226            258 
---------------------------  -----------------  -----------------  ------------- 
 Total                                     716                726            734 
---------------------------  -----------------  -----------------  ------------- 
 

The aggregate staff costs of the Group were as follows:

 
                                    6 months           6 months      12 months 
                             to 30 September    to 30 September    to 31 March 
                                        2020               2019           2020 
                                     GBP'000            GBP'000        GBP'000 
-------------------------  -----------------  -----------------  ------------- 
 Wages and salaries                   17,425             19,198         38,304 
 Social security costs                 1,692              1,816          3,495 
 Employee benefits costs               1,344                930          2,088 
 Pension costs                           657                638          1,266 
 Partner remuneration*                 8,507              7,098         16,844 
 Amortisation - relating 
  to partner payments*                 1,459              1,965          2,046 
-------------------------  -----------------  -----------------  ------------- 
 Total staff costs                    31,084             31,645         64,043 
-------------------------  -----------------  -----------------  ------------- 
 

*These items are classified in production staff costs in the consolidated statement of comprehensive Income

   4.              Non Recurring costs 

Non recurring costs include acquisition related costs of GBP420,000 (2019: GBP327,000) and other material items related to the acquisition which will not recur of GBP265,000 (2019: GBP134,000).

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 fees payable to the Company's auditors of GBP111,000 (2019: GBPnil).

   5.              EARNINGS PER SHARE 

Earnings per share for the year ended 31 March 2020 and the periods ended 30 September 2020 and 30 September 2019 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 2019   36,976,730   Being the Company's issued shares at that 
                              date 
 27 November    37,326,730   Being the Company's issued shares following 
  2019                        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 consolidated statement of comprehensive income, is based on profit after tax for the period ended 30 September 2020 of GBP1,474,000 attributable to equity holders, divided by 68,540,912, being the weighted average total number of ordinary shares in issue during the period.

Adjusted basic earnings per share, shown on the consolidated statement of comprehensive income, is based on adjusted profit before tax for the period ended 30 September 2020 of GBP2,517,000 after deducting income tax of GBP358,000 divided by 68,540,912, 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 were included the weighted average total number of shares for the period would be 70,719,474, which is applied in the calculation of diluted earnings per share, also shown on the consolidated statement of comprehensive income.

Adjusted profit before tax is calculated as follows:

 
                                                  6 months       6 months   12 months 
                                                      to )           to )        to ) 
                                              30 September   30 September    31 March 
                                                         )              )           ) 
                                                    2020 )         2019 )      2020 ) 
                                                   GBP'000        GBP'000     GBP'000 
                                                         )              )           ) 
-------------------------------------------  -------------  -------------  ---------- 
 Profit before tax from 
  statement of comprehensive 
  income                                           1,832 )          (312)     6,358 ) 
 Add: Non-recurring expenses: 
 
      *    Acquisition related expenditure           420 )          327 )       588 ) 
 
      *    Other material items                      265 )          134 )     1,069 ) 
 Adjusted profit before 
  tax                                              2,517 )          149 )     8,015 ) 
 Deduct: Income tax                                  (358)        (1,604)     (1,543) 
 Adjusted profit after tax                         2,159 )        (1,455)     6,472 ) 
-------------------------------------------  -------------  -------------  ---------- 
 
   6.              Intangible assets 
 
                                                                    Internally 
                                                           Brand     generated   Intellectual 
                                             Client            & 
                              Goodwill    portfolio   trademarks      software       property         Total 
                               GBP'000      GBP'000      GBP'000       GBP'000        GBP'000       GBP'000 
---------------------------  ---------  -----------  -----------  ------------  -------------  ------------ 
 Cost 
 Balance at 1 April 
  2020                          55,047       15,467       17,000         2,284            189        89,987 
 Acquisition of subsidiary       1,042            -            -             -              -         1,042 
 Additions                           -            -            -           458              -           458 
 Reassessment of                     -            -            -             -              -             - 
  fair value 
 Balance at 30 September 
  2020                          56,089       15,467       17,000         2,742            189        91,487 
---------------------------  ---------  -----------  -----------  ------------  -------------  ------------ 
 Amortisation and 
  impairment 
 Balance at 1 April 
  2020                               -        8,864            -           232             66         9,162 
 Charge for the period               -        1,459            -            70              9         1,538 
 Balance at 30 September 
  2020                               -       10,323            -           302             75        10,700 
---------------------------  ---------  -----------  -----------  ------------  -------------  ------------ 
 Carrying value 
 At 31 March 2020               55,047        6,603       17,000         2,052            123        80,825 
---------------------------  ---------  -----------  -----------  ------------  -------------  ------------ 
 At 30 September 
  2020                         56,089         5,144       17,000         2,440            114        80,787 
---------------------------  ---------  -----------  -----------  ------------  -------------  ------------ 
 

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.

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 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.

Internally generated software includes GBP2,742,000 of development costs relating to development of software applications. The directors have considered the carrying value of internally generated software of GBP2,440,000 as appropriate as it is expected to create future economic benefit.

Intellectual property carrying amount includes GBP114,000 of intellectual property acquired on the acquisition of certain assets and liabilities of Prolegal Limited from its administrator.

The Intangible assets of the Group for the prior year 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 
 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 
---------------------------  ---------  ----------  -----------  -----------  -------------  -------- 
 
   6.              Intangible assets (continued) 

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 2020                    8,911       4,185      2,005     8,722 
 Acquisition of subsidiary              -           -          -         - 
 Balance at 30 September 
  2020                              8,911       4,185      2,005     8,722 
---------------------------  ------------  ----------  ---------  -------- 
 Impairment 
 At 1 April 2020 and 30 
  September 2020                        -           -          -         - 
---------------------------  ------------  ----------  ---------  -------- 
 Carrying value 
 At 31 March 2020                   8,911       4,185      2,005     8,722 
---------------------------  ------------  ----------  ---------  -------- 
 At 30 September 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 2020                   26,316       4,908     55,047 
 Acquisition of subsidiary              -       1,042      1,042 
 Balance at 30 September 
  2020                             26,316       5,950     56,089 
---------------------------  ------------  ----------  ---------  -------- 
 Impairment 
 At 1 April 2020 and 30 
  September 2020                        -           -          - 
---------------------------  ------------  ----------  ---------  -------- 
 Carrying value 
 At 31 March 2020                  26,316       4,098     55,047 
---------------------------  ------------  ----------  ---------  -------- 
 At 30 September 2020              26,316       5,950     56,089 
---------------------------  ------------  ----------  ---------  -------- 
 
   6.1            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 period to 30 September 2020.

On 1 June 2020, Incisive Law LLC, a law firm based in Singapore, became a Group company for the purposes of IFRS 10. Debt intruments consideration of GBP1,043,000 and goodwill of GBP1,042,000 was recognised.

   6.1.2        Identifiable assets acquired and liabilities assumed 

The fair values of the identifiable assets and liabilities of Incisive Law LLC were as follows:

 
                                     GBP'000 
                                           ) 
---------------------------------   -------- 
 Trade and other receivables         1,887 ) 
 Cash and cash equivalents              49 ) 
 Trade and other payables            (1,878) 
 Provisions                             (57) 
 Net identifiable assets and 
  liabilities                            1 ) 
 
 Goodwill                            1,042 ) 
 
 Total consideration                 1,043 ) 
----------------------------------  -------- 
 
 Satisfied by: 
 Cash                                    - ) 
 Debt instruments                    1,043 ) 
 Contingent consideration                - ) 
 Total consideration transferred     1,043 ) 
----------------------------------  -------- 
 
 Net cash outflow arising on 
  acquisition: 
 Cash consideration                      - ) 
 Less: cash and cash equivalent 
  balances acquired                     (49) 
----------------------------------  -------- 
                                        (49) 
 ---------------------------------  -------- 
 
   6.2            Discontinued operations 

There were no discontinued operations during the period to 30 September 2020.

   7.              Trade and other receivables 
 
                                         Restated 
                                                ) 
                      30 September   30 September   31 March 
                                 )              )          ) 
                            2020 )         2019 )     2020 ) 
                           GBP'000        GBP'000    GBP'000 
                                 )              )          ) 
-------------------  -------------  -------------  --------- 
                                                      26,870 
 Trade receivables        26,810 )       24,346 )          ) 
 Accrued income           10,313 )        8,986 )    5,925 ) 
 Other receivables         4,272 )        1,759 )    4,033 ) 
 Prepayments               4,772 )        5,142 )    7,584 ) 
-------------------  -------------  -------------  --------- 
                                                      44,412 
                          46,167 )       40,233 )          ) 
-------------------  -------------  -------------  --------- 
 

Trade receivables are stated including GBP2,710,000 of VAT and GBP3,766,000 of disbursements.

   8.              Cash and cash equivalents 
 
                        30 September   30 September   31 March 
                                   )              )          ) 
                              2020 )         2019 )     2020 ) 
                             GBP'000        GBP'000    GBP'000 
                                   )              )          ) 
---------------------  -------------  -------------  --------- 
 Cash in hand and at 
  banks                      4,461 )        2,669 )    5,250 ) 
---------------------  -------------  -------------  --------- 
 Total                       4,461 )        2,669 )    5,250 ) 
---------------------  -------------  -------------  --------- 
 

Cash and cash equivalents include the following:-

 
 Cash as above      4,461 )   2,669 )   5,250 ) 
 Bank overdrafts      (252)     (290)      (59) 
-----------------  --------  --------  -------- 
 Total              4,209 )   2,379 )   5,191 ) 
-----------------  --------  --------  -------- 
 
   9.              SHARE CAPITAL 
 
                                       30 September   30 September   30 September   31 March 
                                               2020           2020           2019       2020 
                                             Number        GBP'000        GBP'000    GBP'000 
------------------------------------  -------------  -------------  -------------  --------- 
 Allotted, called up and fully paid 
 Ordinary shares of 1p each              68,540,912            686            370        686 
 

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

   10.            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 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.

   11.            Trade and other payables 
 
                                              Restated 
                           30 September   30 September    31 March 
                                   2020           2019        2020 
                                GBP'000        GBP'000     GBP'000 
------------------------  -------------  -------------  ---------- 
 Current: 
 Trade payables                  12,400          9,944      12,263 
 Other taxes and social 
  security                        5,322          1,280       3,445 
 Other payables                   2,863          2,296       3,133 
 Deferred consideration          15,136         15,026      14,608 
 Unpaid dividends                    15              -          15 
 Accruals                         8,563         11,995       5,861 
------------------------  -------------  -------------  ---------- 
                                 44,299         40,541      39,325 
------------------------  -------------  -------------  ---------- 
 
 Non-current: 
 Other payables                      50          1,112       1,391 
 Deferred consideration          15,589         25,960      21,062 
 Accruals                             -            947           - 
------------------------  -------------  -------------  ---------- 
                                 15,639         28,019      22,453 
------------------------  -------------  -------------  ---------- 
 
 Total                           59,938         68,560      61,778 
------------------------  -------------  -------------  ---------- 
 

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

   12.            Borrowings 
 
                     30 September   30 September   31 March 
                             2020           2019       2020 
                          GBP'000        GBP'000    GBP'000 
------------------  -------------  -------------  --------- 
 Bank overdrafts              252            290         59 
 Bank loans                11,449         12,401     11,651 
 Other loans                1,011            321      2,519 
 Total borrowings          12,712         13,012     14,229 
------------------  -------------  -------------  --------- 
 
 Current                    2,912          1,713      3,829 
 Non-current                9,800         11,299     10,400 
------------------  -------------  -------------  --------- 
 Total                     12,712         13,012     14,229 
------------------  -------------  -------------  --------- 
 
   13.            FREE CASH FLOWS 
 
                                     6 months       6 months   12 months 
                                           to             to          to 
                                 30 September   30 September    31 March 
                                         2020           2019        2020 
                                      GBP'000        GBP'000     GBP'000 
------------------------------  -------------  -------------  ---------- 
 Cash generated by operations          16,151          5,979      16,649 
 
 Partner remuneration 
  payments                            (5,282)        (6,844)    (15,513) 
 Lease costs                          (2,845)        (1,274)     (3,292) 
 Payment of contingent 
  and deferred consideration          (4,944)        (4,304)    (10,126) 
 Purchase of property, 
  plant and equipment 
  and intangible assets                 (969)        (1,211)     (3,063) 
 Net interest received/(paid)           (502)          (266)       (702) 
 Tax paid                               (198)           (33)       (896) 
 Free cash flow                         1,411        (7,953)    (16,943) 
------------------------------  -------------  -------------  ---------- 
 
   14.            RESTATEMENT OF COMPARATIVES 

As described in the financial statements for the year ended 31 March 2020, after publication of the results to 30 September 2019 additional pre-acquisition liabilities were identified resulting in restatement of the goodwill on acquisition of Ince & Co LLP at 31 March 2019. 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 of a brand value attributable to Ince of GBP17 million. Data on recurring business suggested that the client portfolios were less valuable than the brand and deemed to be valued at GBP4.5 million. The comparative results for the six months ended 30 September 2019 and the statement of financial position at 30 September 2019 have been restated in the same way.

The comparative results for the six months ended 30 September 2019 and the twelve months ended 31 March 2020 have been restated for the re-presentation of Partners' remuneration and non-controlling interests.

Partners' remuneration and other non-controlling interests are now treated as an expense of the business and are recognised in production staff costs in the consolidated statement of comprehensive income.

The non-controlling interest liability is now presented as a current liability on the statement of financial position as amounts due to partners.

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

 
                                                              Restated 
                                                                     ) 
                                     Group )                   Group ) 
                                30 September              30 September 
                                           )                         ) 
                                      2019 )     Change         2019 ) 
 Statement of financial              GBP'000    GBP'000        GBP'000 
  position extract                         )          )              ) 
-----------------------------  -------------  ---------  ------------- 
 Intangible assets                  59,255 )     20,740       79,995 ) 
 Trade and other receivables        43,495 )    (3,262)       40,233 ) 
 Distibutable reserves              (40,024)      3,890       (36,134) 
 Amounts due to partners             (5,312)    (4,137)        (9,449) 
 Trade and other payables           (54,765)   (13,795)       (68,560) 
 Borrowings                         (13,033)         21       (13,012) 
 Provisions                          (6,641)    (3,436)       (10,077) 
 Lease liabilities                  (15,210)       (21)       (15,231) 
----------------------------- 
 Total                              (32,235)          -       (32,235) 
-----------------------------  -------------  ---------  ------------- 
 

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(END) Dow Jones Newswires

December 01, 2020 02:00 ET (07:00 GMT)

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