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)
----------------------------- ------------- --------- -------------
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014
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December 01, 2020 02:00 ET (07:00 GMT)
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