Final Results

RNS Number : 8302S

Gordon Dadds Group PLC

28 June 2018

 

28 June 2018

Gordon Dadds Group PLC

("Gordon Dadds" or the "Company" or the "Group")

Full year audited results for the 12 months to 31 March 2018

Gordon Dadds Group PLC (AIM: GOR), the acquisitive London-based international legal and professional services group, is pleased to announce its audited results for the year ended 31 March 2018.

Financial highlights

·     Revenue £31.24m (2017: £24.94m) +25.3%

·     Annualised revenues at the year end of more than £42m

·     Operating profits £8.80m (2017: £7.39m) +19.1%

·     Adjusted* profit before tax £2.96m (2017: £2.40m) +23.3%

·     Adjusted** earnings per share 10.46p (2017: 18.53p)

·     Dividend 4.0 pence per share (2017: nil)

·     Gross assets £55.0m (2017: £24.9m)

·     Cash balances of £8.9m at year end

* Adjusted profit before tax represents the profit before income tax after adding back non-recurring items and after deducting partners' profit shares treated in statutory accounts as non-controlling interests.

** Adjusted earnings per share is computed from adjusted profit before tax after deducting remaining non-controlling interests and taxation

Operational highlights

•      £20 million new money fund raising and admission to AIM in August 2017

·     Five acquisitions with aggregate revenues of some £14 million completed in the year and successfully integrated

·     Hong Kong office opened, now approved as a foreign law firm

·     Strong pipeline of potential acquisitions

·     Innovative remuneration model continues to attract lawyers

Adrian Biles, Chief Executive of Gordon Dadds, commented:

"This has been a year of great progress for the Group.  We have exceeded the expectations that we set for ourselves and for our shareholders.

"We have rapidly built a highly profitable and fast growing international legal and professional services group with annualised revenues of well over £40 million.

"We expect to achieve significant further growth during the year from additional acquisitions, together with organic growth arising principally from the increasing cross-referral of clients between the Group's businesses and as the more specialised businesses take advantage of the Group's full service capabilities.

"We continuously examine expansion opportunities and are engaged in discussions with firms in a number of other international jurisdictions.  In the UK, we have a good pipeline of potential acquisitions with which we are at various stages of discussion or negotiation."

FOR FURTHER INFORMATION, PLEASE CONTACT: Gordon Dadds Group plc Adrian Biles, Chief Executive Officer Christopher Yates, Chief Financial Officer	Via Newgate
Arden Partners, Nominated Adviser and broker to the Company John Llewellyn-Lloyd Ciaran Walsh	[phone]
Newgate Communications Adam Lloyd  James Ash	[phone] Email: [e-mail]

 

NOTES:

Gordon Dadds Group plc is an acquisitive legal and professional services business headquartered in London with a significant back office and technology platform based in Cardiff.

The Group targets firms of all sizes and will merge the business into the Gordon Dadds brand or allow a firm to retain their identity and culture but benefit from the back-office technology platform used by Gordon Dadds, enabling the targeting of law firms seeking an alternative solution to the regulatory and investment requirements of the UK legal market.

Gordon Dadds LLP has been operating in this way since 2013, successfully integrating firms into its cost efficient platform.

Please visit www.gordondaddsgroup.com for more information.

Chairman's statement

It is a great pleasure to present my first annual statement to shareholders, following my appointment as chairman of Gordon Dadds Group plc in August 2017 when the reverse takeover of Gordon Dadds Group Limited was completed.  It has been a year full of activity and one which has produced very satisfying results that enable the board to recommend a final dividend payable to shareholders in September 2018.

The results for the year set out in these financial statements show adjusted profit before taxation* of £2.96 million on total revenues of £31.2 million.  These results mask the growth which has been made in the year through acquisition, the majority of which occurred late in the year and therefore had little impact on revenues and profits in the year ended 31 March 2018.  In a full year, we estimate that total revenues would have been more than £42 million and profits also significantly higher.

The board's overall objective is profitably and rapidly to grow the business in professional services by acquiring additional revenue which can be efficiently processed through the group's bespoke administrative systems.  As the traditional partnership model for solicitors breaks down the Group is ideally placed for growth in the legal services sector. The Group continues to have a significant pipeline of acquisitions under consideration and is increasingly focusing on opportunities with fee income of £10 million to £100 million.

The Group has also established a presence in Hong Kong and is looking to build a significant business there, servicing the Chinese market and its ambitions outside China.  We will also examine opportunities in other overseas jurisdictions where UK law is common or international law is the main business.

The Group has the ability to deliver this objective as it has a management team that is experienced in acquisition and integration and a reward structure that is more attractive to lawyers than the traditional partnership model.  These factors are complemented by the financial strength of the balance sheet following last year's successful AIM flotation and £20 million fund raising.

At the time of flotation, it was the board's target to double fee income within three years and to grow the net margin of the group over time to 15%.  Achieving the first of these targets is imminent and management has the second, longer term, objective within its sights.

The board has recommended a dividend of 4.0p per share payable on 14 September 2018 in respect of the part of the year following flotation, which reflects the delivery of the Group's encouraging maiden results.  The board intends to pursue a progressive dividend policy reflecting profit growth, subject to the capital requirements of the Group.  It is intended that dividends will be paid twice a year with one payment in April representing around a third of the total and a larger payment in September.

Anthony Edwards, Chairman

27 June 2018

* See Finance Director's report

Group Chief Executive's report

The year has been one of great progress for the Group, which now has annualised revenues of over £42 million.  We are building a highly profitable and fast growing international legal and professional services group. Our aim was to double revenues in three years and we are well on the way to achieving that within just one.

We expect to achieve significant further growth during the year from additional acquisitions, together with organic growth arising principally from the increasing cross-referral of clients between the Group's businesses and especially as the more specialised businesses take advantage of the group's full-service capabilities.

Our flotation on AIM in August last year provided the group with a strong balance sheet from which to continue its rapid development. Almost all the staff in the Group at the time acquired shares (and no shareholders sold). It also brought the Group and its business model to the attention of a wide audience of investors and potential targets and this has assisted our growth.

Traditional legal services businesses in the UK continue to be beset by succession problems - how to release partners' capital, how to fund the necessary investments in the business, how to cope with increasing regulation.  Our model relieves the partners of such firms from these and many other problems.

The acquisitions we have completed during the year were:

·     Alen-Buckley: in June 2017 we acquired the business and certain assets of this leading South London firm of solicitors

·     CW Energy: in October 2017 we acquired the business and certain assets of this highly profitable specialist corporate tax advisory firm

·     White & Black: in January 2018 we acquired this firm of specialist corporate FinTech solicitors

·     Metcalfes: also in January 2018 we acquired the business and certain assets of this well established Bristol firm of solicitors which had just acquired with our guidance the business of a local competitor

·     Thomas Simon: in February 2018 we acquired the share capital of this Cardiff based firm of solicitors which has doubled the size of our Cardiff office to become a significant firm in the Cardiff market

These acquisitions have settled in well and the level of interaction between the businesses continues to develop as the partners in them develop a better awareness of and respect for the skills elsewhere in the Group.  Our innovative remuneration model has been specifically designed to foster this behaviour.

The Gordon Dadds core business has performed solidly in the year, showing steady growth. 

The Financial Markets consultancy business had a year of slower than budgeted growth in fee income which has accelerated since the year end and in the last month achieved record turnover of, on an annualised basis, £2.4m.

The business of the Group as a whole has produced the following contributions to turnover:

	2018	2017
Corporate & tax	23.3%	23.0%
Family & private client	10.9%	12.6%
Regulatory solutions	5.9%	4.7%
Dispute resolution	24.3%	25.1%
Real estate	21.0%	20.3%
Employment & immigration	5.9%	6.6%
PI	3.8%	3.5%
Financial services	2.9%	1.7%
Consulting	2.0%	2.4%
	100.0%	100.0%

We are seeing, emphasised by White & Black joining the Group, an increasing number of opportunities to deliver legal services in other jurisdictions where English law prevails.  We are keen to act on this.  Since the year-end we have therefore established an office in Hong Kong and obtained regulatory approvals to operate there, initially as a foreign law firm. We have also, subject to regulatory approval, formed an association with a local law firm which will enable the office to operate as a local law firm as well.  We believe that there is significant business to be derived for the whole group from local connections as well as from mainland China.

We continuously examine opportunities for expansion of the Group in other geographies and are engaged in discussions with firms in a number of other international jurisdictions. 

In the UK, we have a good pipeline of potential acquisitions at various stages of discussion or negotiation. 

Since the flotation, we have concluded that firms with an annual fee income of over £10 million are the most attractive although we can be flexible depending on practice mix and other factors. 

As important as the aggregation of fee income is, the increase to the intellectual capital of the business and the increase in the quality of its client and matter base are of greater significance.  We believe in quality over quantity.

Our core remuneration model for partners continues to be a key factor in our ability to recruit new partners and to attract acquisition targets.  This model focuses on professional practitioners being rewarded both for the billable work they do and for the income generated from their clients. In addition, the very high level of share ownership amongst partners and staff tends to drive a behaviour of cross referring work and is helpful in enabling the Group better to understand and service its clients' needs.

The model also focusses the partners' efforts on what they are well qualified to do: to advise clients.  The management of the Group's non-technical resources and control of costs is thus left in the hands of the small group of the management team who have the skill sets and focus required.  Partners are free to run their professional practice and serve their clients rather than worrying about administration or finance and management moves more volume through a fixed infrastructure cost.

The Company was the first London led law firm to float and only the second in the UK.  In recent months, the market has seen three new entrants and more are expected.  The Group is pleased to see that there is investor interest in this newly formed sub-sector of the professional services market.  We believe that Gordon Dadds is structurally better suited to rapid, acquisition-led expansion than its competitors and is striving to ensure this first-mover advantage delivers results for shareholders.

Adrian Biles

27 June 2018

Group Finance Director's report

In considering the financial extracts accompanying this statement, you should have regard to note 13.2 to the Financial Statements attached which explains the basis of accounting for the acquisition of Work Group plc.

The Group's consolidated results for the year ended 31 March 2018 show total revenues of £31.24 million (2017: £24.94 million), operating profits of £8.80 million (2017: £7.40 million) and adjusted profit before tax of £2.96 million (2017: £2.40 million).

Our favoured measure for the performance of the business is adjusted profit before tax which is struck after adding back non-recurring expenses (principally the cost of the re-organisation and flotation in the current year) and by deducting the minority interests which represent our partners' profit share during the year as set out below.

	2018 £m		2017 £m
Profit before tax from statement of comprehensive income	6.38		6.81
Deduct: Partners profit shares shown as part of non-controlling interests	(5.72)		(4.95)
Add:       Non-recurring expenses:                     flotation costs                     acquisition related expenditure	1.92 0.38		0.36 0.18
Adjusted profit before tax	2.96		2.40
Deduct: Other non-controlling interests	0.50		-
Taxation	0.03		-
Adjusted profit after tax for adjusted earnings per share	2.43		2.40

In monitoring the progress of the business and in addition to fee income (measured net of disbursements and VAT), we focus on three measurements (relative to fee income) which are driven by different aspects of the business, gross margin, lock-up and overheads.

Gross margin is the fees charged to clients less direct production costs. Production costs are the profit shares of the equity partners and employment costs of the other partners and fee earners together with their direct costs such as travel and direct support costs (such as dedicated secretaries) and provision for doubtful and bad debts, expressed as a percentage.  This measure is in the control of the heads of each department or business unit and we have a target for that reaching 50%.  In the current year (and after including amortisation which will be a partners' profit share from July 2018) it was 45.9% per cent. (2017: 44.7 per cent.).

Lock up is the value of trade debtors and work in progress compared with fees charged to clients, in each case excluding disbursements and VAT.  This measure is under the control of the Client Care Partner for each client and they are guided and assisted in this by our revenue management team.  Our target for this is immediately 100 days but we will work to a lower target over time.  At the year end and allowing for a full year's turnover of acquired businesses the target was achieved.

Overheads are all the other costs of running the business, premises, insurance, computing and telephones etc. apart from the costs of acquisitions.  In the year, overheads as a percentage of fees charged to clients were 36.0 per cent. (2017: 34.9 per cent) and our target is 30%.  The target becomes more achievable the more fees are generated, so acquisitions will aid achievement of this as the duplicated overheads of acquired businesses are eliminated over a period which did not occur in the year because of the acquisitions being late in the year.

From the above, it is clear that on achievement of the gross margin target and the overheads target, a net margin of 15% after paying one -off costs such as acquisition related costs is achievable and management is closely focussed in delivery of this over time through continuing consolidation of group functions and synergies arising on acquisitions.

We expect to make progress towards all of those targets during the current year.

At the end of the year, the balance sheet had net cash of £8.42 million (2017: net borrowings of £4.13 million).  The Consolidated Statement of Cash Flow shows that the group generated £7.86 million of free cash flow from operations (2017: £5.24m).

It should be noted that in the year we have accrued a small amount for Corporation tax for the year just ended.  In future years it is likely that the rate of tax will be close to the standard rate of Corporation Tax.

The other significant balance sheet item which has changed during the year is goodwill, reflecting the acquisitions made during the year and which, as described in the notes to the accounts, has been reviewed for impairment and none was required.

The Group has a strong balance sheet and as management delivers on target achievement shareholder value will be significantly increased.

Christopher Yates

27 June 2018

Strategic Report

The Directors present their strategic report and the audited financial statements of Gordon Dadds Group plc and the group it heads for the year ended 31 March 2018 in accordance with Section 414 of the Companies Act 2006.

OBJECTIVES AND STRATEGIES

The principal strategy of the group is to aggregate income profitably and more importantly to increase the quality of the intellectual capital of the business and the quality of its client and matter base: we want quality rather than just quantity. The strategy for doing so includes recruiting high quality personnel, streamlining systems and forging strategic alliances where appropriate together with developing new business streams.

BUSINESS REVIEW

Acquisitions

On 4 August following a takeover offer, the company acquired control of Gordon Dadds Group Limited and subsequently achieved ownership of the whole of the share capital. Gordon Dadds Group Limited was the parent company of Gordon Dadds LLP one of the top 100 firms of solicitors in the UK and a number of other professional services businesses. As the former shareholders of Gordon Dadds Group Limited were the substantial majority of the shareholders of the company before the shares issued for the £20 million fund raising, the acquisition is classed as a Reverse Acquisition under International Accounting Standards. Accordingly the accounts attached are, in fact, a continuation of the accounts of Gordon Dadds Group Limited with certain adjustments explained in the notes.

During the year the Group also made other notable acquisitions including:

·     the business and certain assets of Alen-Buckley in June 2017, a leading South London firm of solicitors

·     the business and certain assets of CW Energy LLP, a highly profitable specialist corporate tax advisory firm

·     the ordinary share capital of White & Black Limited: in January 2018, a firm of FinTech specialist solicitors

·     also in January 2018, the business and certain assets of Metcalfes, a well-established Bristol firm of solicitors which had just acquired (with our guidance) the business of a local competitor

·     in February 2018, the share capital of Thomas Simon Limited, a Cardiff based firm of solicitors which has doubled the size of our Cardiff office to become a significant firm in the Cardiff market

Results and dividends

The results of the business and the proposed dividend are covered in the other statements accompanying this report, as is a summary of the activities in the year.  The dividend of 4.0p per share will be paid on 14 September 2018 to holders on the register on 3 August 2018.

Key Performance Indicators

The Group has, since the flotation, being reassessing the KPIs on which it focuses particularly and these are described and quantified in the Group Finance Director's report.

Principal risks and uncertainties

Acquisition pipeline

The Group has been built to accommodate and integrate acquired businesses.  The Directors believe that the legal services market continues to be in a consolidation phase where firms are looking for capital or for the partners to de-risk their commitments. As a result, the directors believe that there will be a continuing pipeline of businesses available for acquisition, which will improve the Group's intellectual capital and financial results.  There is however a risk that the market will change or that other well-capitalised acquirers will complete with the Group.

Execution risk

Acquisitions made may not produce the results anticipated for a number of reasons. The Group seeks to mitigate this risk by linking the consideration for an acquisition to future performance and by aligning the interests of the vendors who are generally required to remain with the Group for a period with those of shareholders.

Reputational risk

The Group strives to maintain a reputation for delivering high quality service to its clients on a timely and cost effective basis.  Failure to achieve this to a significant extent might damage the reputation of the businesses and lead to a loss of client confidence.  The Group seeks to maintain those high standards by regular training, communication and internal review processes.

In addition and potentially creating reputational risk, there is a continuous risk that a mistake will be made or bad advice given.  The Group has substantial insurance protection against such eventualities but there can be no certainty that this will be adequate for a particular claim and any such claim will also give rise to reputation damage.

Partners and employees

The business of the Group is dependent on the continuing efforts of the partners and employees and the loss of a number of staff could have a significant impact on the Group's ability to maintain client confidence and also to grow.  The Directors believe that the Group's remuneration model encourages key revenue generators to remain with the Group and rewards them for doing so.

The Group is dependent on a number of key management staff and business generators and the loss of one or more of them could be damaging to the business.  In addition to the Group's remuneration structure, the directors strive to have succession plans in place for key individuals.

Regulatory risk

The Group is highly regulated with a number of entities regulated by the Solicitors Regulatory Authority (SRA), a business regulated by the Financial Conduct Authority (FCA) and certain activities regulated by the Institute of Chartered Accountants in England and Wales.  The Group seeks to maintain an open relationship with those regulators and to abide by the rules and regulations they publish as failure to do so has the potential to force the closure of a relevant business.

It should be noted by all shareholders and potential shareholders that, under the Rules of the SRA, if a non-solicitor comes to hold more than 10% of the voting share capital of the Company without prior approval, the SRA are entitled to withdraw the Group's authorisation to practice as solicitors.  In addition, under law and the rules of the FCA, it is an offence by an investor to acquire 10% or more of the Company without prior approval.  The directors maintain a close an eye on shareholder concentration and seeks to ensure that no breech of these limits occurs.

Market risk

In common with all businesses, an economic downturn could have a detrimental impact on the Group and its results.  The Group does, however, benefit from having a widely spread client list and a wide spread of business sectors served and these will react at different times to market conditions which should limit any damage to the Group's performance.

By order of the Board

C J Yates
Director

6 Agar Street, London, WC2N 4HN

Date: 27 June 2018
 

Directors' Remuneration Report

THE COMMITTEE

The remuneration committee is responsible for implementing the Board's policy relating to the remuneration and emoluments of the executive directors and also reviews the remuneration of the senior management. The remuneration of the non-executive directors is determined by the board.

The Remuneration Committee was chaired by Keith Cameron until 3 August 2017 and since then has been chaired by Anthony Edwards with Simon Howard and David Furst as members.

The Board considers the composition of the remuneration committee to be appropriate for the size of the Group.

GENERAL POLICY

The Group's policy is to provide remuneration packages to attract, retain and motivate directors and senior managers with a view to encouraging commitment to the development of the Group for the long term enhancement of value to shareholders.

The remuneration of partners in the business is generally through the sharing of revenues on a basis which should ensure a contribution to the Group's overheads.  Remuneration packages for employees comprise competitive basic salaries and benefits and may include performance related bonuses. The board has the facility to provide long term incentives in the form of share options to align personal reward with enhanced shareholder value. Salaries are reviewed annually with effect from 1 April. Performance targets, upon which bonuses are based, are established annually as part of the planning process and are linked to the annual budget approved by the Board, again aligning personal reward with enhanced shareholder value.

PENSIONS

The Group contributes to group personal pension plans. Pension contributions payable by the Group are based upon basic salaries.

SERVICE CONTRACTS

It is the Group's policy that directors' contracts should normally be for a period of not more than 12 months and not entitle the director to any payment on termination to which he would not have been entitled at that time had he remained with the Group.  AJ Biles and CJ Yates each have a service contract with the Company which became effective on 4 August 2017 and are terminable on twelve months' notice by either party.  The salaries were respectively £250,000 and £135,000.  AJ Biles waived his salary down to £35,000 per annum with effect from 1 November 2017.  SJ Howard had a service contract with the Company at a salary of £105,000 per annum which was terminated without compensation on 3 August 2017.  AJ Edwards, SJ Howard and DA Furst each received a letter of appointment from the Company which took effect on 4 August 2018 at salaries of £50,000, £35,000 and £30,000 respectively.  Each of those appointments was terminable on three months' notice by either party

During the year Brook Street Holdings LLP, the holding entity for the Group's legal services interests, resolved, with the approval of the Remuneration Committee, to allow Adrian Biles to participate in its profits.

DIRECTORS' REMUNERATION

The remuneration of the directors by members of the Group during the year to 31 March was:

	Basic Salary and/or  Director'sfees					Employer pension contributions
		Profit share and fees	Benefits	Total	Total
	2018	2018	2018	2018	2017	2018	2017
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
AJ Edwards	33	-	-	33	-	-	-
AJ Biles	75	169	1	245	200	-	-
CJ Yates	89	26	3	118	75
SJ Howard	68	-	3	71	136
DA Furst	28	-	-	28	10	-	-
KG Cameron	7			7	20
	300	195	7	502	441	-	-

All the directors are remunerated by the Group. The directors' fees and salaries disclosed above were paid in the period. Benefits in kind include private medical insurance and a contribution to a pension plan.

Prior to 4 August 2017, the services provided by A J Biles were supplied by ACR Professional Services LLP, of which he is a designated member and those provided by CJ Yates were supplied by CMY Services LLP of which he is a designated member. 

The Group was charged rent for office accommodation of £101,000 (2017: £101,000) by Juratone Limited, a company of which A J Biles is a director.

On 2 December 2016, the company's subsidiary Culver Limited was sold to CMY Services LLP of which C J Yates is a member for £1.  On 31 December 2017, the Company agreed to acquire Culver Limited from CMY Services LLP for £1 and subsequently completed the acquisition.

During the period, apart from the above, no director has had any material interest in any contract with the Company or its subsidiaries requiring disclosure under the provisions of the Companies Act 2006.

On behalf of the Board

C J Yates
Director

6 Agar Street, London, WC2N 4HN

Date :27 June 2018
 

Consolidated Statement of Comprehensive Income

			Year ended	Year ended
			31 March	31 March
			2018	2017
	Note		£'000	£'000
Continuing operations
Fees and commissions			31,238	24,936
Staff costs	5		(10,756)	(7,681)
Depreciation and amortisation			(2,137)	(1,902)
Other operating expenses			(9,546)	(7,961)
Operating profit	6		8,799	7,392
Finance income	7		159	201
Finance expense	7		(239)	(352)
Non recurring costs	8		(2,305)	(539)
Share of profit of associates			(37)	107
Profit before income tax			6,377	6,809
Income tax expense	9		(27)	-
Profit and total comprehensive income for the year			6,350	6,809
Attributable to:-
Equity holders of the Company			127	1,861
Non-controlling interests			6,223	4,948
Total comprehensive income for the year			6,350	6,809
Earnings per share
Basic and diluted earnings per share (pence)	10		0.55	14.37
Adjusted basic and diluted earnings per share (pence)	10		10.46	18.53

The profit for the year relates to continuing operations only.

There was no other comprehensive income in the year. There is no tax on any component of other comprehensive income or expense.

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

Statements of Financial Position         

Gordon Dadds Group plc (Registered number: 03744673)

			Group	Group	Company	Company
			31 March	31 March	31 March	31 December
			2018	2017	2018	2016
	Note		£'000	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	11		367	38	-	-
Intangible assets	12		27,044	11,639	-	-
Investments	13		267	200	47,191	-
			27,678	11,877	47,191	-
Current assets
Trade and other receivables	14		18,411	12,922	11,445	167
Cash and cash equivalents	15		8,948	130	52	531
			27,359	13,052	11,497	698
Total assets			55,037	24,929	58,688	698
EQUITY
Capital and reserves attributable to equity holders
Share capital	16		288	572	288	572
Share premium	17		230	8,240	230	8,240
Capital redemption reserve	17		46,448	-	46,448	-
Reverse acquisition reserve	17		(24,724)	(7,397)	-	-
Other reserves	17		-	-	2,826	2,826
Retained earnings			2,041	1,914	(14,307)	(12,496)
			24,283	3,329	35,755	(858)
Non-controlling interest			4,512	3,941	-	-
Total equity			28,795	7,270	35,755	(858)
LIABILITIES
Non-current liabilities
Trade and other payables	18		11,896	4,137	-	-
Borrowings	19		155	224	-	-
Provisions	20		-	-	-	-
			12,051	4,361	-	-
Current liabilities
Trade and other payables	18		13,654	8,841	22,933	1,556
Borrowings	19		372	4,034	-	-
Provisions	20		165	423	-	-
			14,191	13,928	22,933	1,556
Total liabilities			26,242	17,659	22,933	1,556
Total equity and liabilities			55,037	24,929	58,688	698

The Company has taken advantage of the exemption contained in S408 Companies Act 2006 and has not presented a separate income statement for the Company. The Company recorded a loss of £1,541,000 for the 15 month period ending 31 March 2018.

The financial statements were approved and authorised for issue by the Board of Directors and were signed on its behalf on 27 June 2018 by C.J. Yates - Director.

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

Consolidated Statement of Cash Flows                                                                   

		Group	Group	Company	Company
		Year	Year	Period	Year
		Ended	Ended	Ended	Ended
		31 March	31 March	31 March	31 December
		2018	2017	2018	2016
	Note	£'000	£'000	£'000	£'000
Cash flows from operating activities
Profit/(loss) before income tax		6,377	6,809	(1,541)	(607)
Adjustments for:
Finance income		(159)	(201)	-	(2)
Finance expense		239	352	-	-
Acquisition related costs		2,305	-	-	-
Depreciation, amortisation and impairment		2,137	1,902	-	3
Share of profits of associates		37	(107)	-	-
Changes in operating assets and liabilities (net of acquisitions):
Decrease/(increase ) in trade and other receivables		(1,491)	4,980	(47)	436
(Decrease)/increase in trade and other payables		(1,298)	(8,472)	91	(1,009)
(Decrease)/increase in provisions		(288)	199	-	-
Cash generated by operations		7,859	5,462	(1,497)	(1,179)
Interest and other financial costs paid		(184)	(227)	-	3
Income tax paid		(3)	-	-	-
Net cash generated by operating activities		7,672	5,235	(1,497)	(1,176)
Cash flows from investing activities
Cash paid on acquisitions (net of cash acquired)	13	(1,741)	(78)	(28,407)	-
Payment of contingent and deferred consideration on acquisitions		(4,824)	(1,667)	-	-
Payment of acquisition related costs		(2,305)	-	-	-
Purchase of PPE		(2)	-	-	(3)
Proceeds from disposal of PPE		-	-	-	8
Purchase of intangible assets		(130)	(103)	-	-
Purchase of interest in associates		-	(193)	-	-
Dividends received		-	100	-	-
Interest received		159	201	-	-
Net cash absorbed by investing activities		(8,843)	(1,740)	(28,407)	5
Cash flows from financing activities
Movement in borrowings (including finance leases)		(3,647)	1,107	-	-
Advances from/(to) subsidiaries		-	-	10,055	-
Proceeds from issuance of shares		19,789	-	20,232	-
Transactions costs relating to issue of shares		(862)	(200)	(862)	-
Transactions with non-controlling interests		(4,725)	(4,380)	-	-
Net cash (absorbed)/generated from financing activities		10,555	(3,473)	29,425	-
Net (decrease) / increase in cash and cash equivalents		9,384	22	(479)	(1,171)
Cash and cash equivalents at beginning of period		(436)	(458)	531	1,702
Cash and cash equivalents at end of period	15	8,948	(436)	52	531

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

Consolidated Statement of Changes in Equity

	Share capital	Share premium	Capital Redemption reserve	Reverse acquisition      reserve	Other reserves	Retained earnings	Non-  controlling       interest	Total   equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2016	572	8,240	-	(8,812)	-	20	1,943	1,963
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	-	1,861	4,948	6,809
Shares issued for acquisition	-	-	-	1,615	-	-	-	1,615
Share issue transactions costs	-	-	-	(200)	-	-	-	(200)
Transferred to members	-	-	-	-	-	33	(2,950)	(2,917)
Balance at 31 March 2017	572	8,240	-	(7,397)	-	1,914	3,941	7,270
Balance at 1 April 2017	572	8,240	-	(7,397)	-	1,914	3,941	7,270
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	-	127	6,223	6,350
Shares issued in the period	279	38,737	-	(18,784)	-	-	-	20,232
Shares issued for acquisition	-	-	-	1,457	-	-	-	1,457
Share issue transactions costs	-	(862)	-	-	-	-	-	(862)
Deferred shares cancelled	(563)	-	563	-	-	-	-	-
Share premium cancelled	-	(45,885)	45,885	-	-	-	-	-
Transferred to members	-	-	-	-	-	-	(5,652)	(5,652)
Balance at 31 March 2018	288	230	46,448	(24,724)	-	2,041	4,512	28,795

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

Statement of Changes in Equity

	Share capital	Share premium	Capital redemption         reserve	Other reserves	Retained    earnings	Total       equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2016	572	8,240	-	2,826	(11,898)	(260)
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	(598)	(598)
Balance at 31 December 2016	572	8,240	-	2,826	(12,496)	(858)
Balance at 1 January 2017	572	8,240	-	2,826	(12,496)	(858)
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	(1,541)	(1,541)
Shares issued in the period	279	38,737	-	-	-	39,016
Share issue transaction costs	-	(862)	-	-	-	(862)
Deferred shares cancelled	(563)	-	563	-	-	-
Share premium cancelled	-	(45,885)	45,885	-	-	-
Balance at 31 March 2018	288	230	46,448	2,826	(14,037)	35,755

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

Notes to the Financial Statements

1.     General information

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

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 6 Agar Street, London, WC2N 4HN.

These consolidated financial statements have been approved for issue by the Board of Directors on 27 June 2018.

2.     Summary of significant accounting policies

2.1.   Basis of preparation

These consolidated financial statements of Gordon Dadds Group plc are for the 12 month period to 31 March 2018. The financial statements have been prepared in accordance with IFRS as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on the going concern basis. In deciding this, the directors have considered the detailed budgets for the current financial year and high level budgets for the succeeding year including in both cases cash flows.  They have also considered the impact of adverse changes resulting from the major risks and uncertainties they consider apply to the group.

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

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

The Group has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board ("IASB") that are relevant to its operations and are currently effective. The adoption of these new and revised Standards and Interpretations had no material effect on the profit or loss or financial position of the Group.

2.2.   Consolidation

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

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

The Company's accounting period date 31 March is in line with its subsidiaries.

2.3            Investments in subsidiaries

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

2.4            Investments in associates

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

2.5            Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. There is only one geographical segment, being the United Kingdom.

The group's two business segments are described in the strategic report, being legal & professional services and independent financial advisory services.  No segment reporting disclosures are required for these due to the fact that the smaller segment, financial services advisory, falls beneath the quantitative thresholds set out by IFRS 8 paragraph 13.

2.6            Business combinations

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

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 in the income statement.

2.7            Intangible assets

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

Intangible assets also include internally generated software and intellectual property, which are valued at cost less subsequent amortisation and impairment. These intangible assets are amortised at rates in order to write off the assets on a straight line basis over their estimated useful lives.

2.8            Goodwill

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

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

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

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

For impairment purposes goodwill is tested annually at the CGU level.  This was carried out at 31 March 2018. The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment are disclosed in note 12.

2.9            Impairment of assets

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

Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. An impairment loss is recognised where the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the value in use.

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

Critical estimates and assumptions made

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

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

2.10          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 balance sheet as trade and other receivables and cash and cash equivalents.

Financial liabilities are included on the balance sheet as trade and other payables and borrowings.

(a)            Trade receivables

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

(b)            Trade payables

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

(c)            Interest-bearing borrowings

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

2.11          Foreign currency translation

(i)      Functional and presentation currency

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

(ii)     Transactions and balances

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

2.12          Property, plant and equipment

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

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

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

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

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

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

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

2.13          Cash and cash equivalents

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

2.14          Borrowings

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

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

2.15          Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated and company financial statements. The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit/loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future employee benefits

2.16          Pension obligations

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

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

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

2.17          Profit-sharing and bonus plans

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

2.18          Provisions

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

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

Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the balance sheet date.

2.19          Revenue recognition

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

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

(a)            Legal & professional services

Revenue relating to the legal services business represents amounts chargeable to clients during the year. Income is recognised when the company has performed services in accordance with the agreement with the relevant client and has obtained a right to consideration for those services. Where such income has not been billed at the balance sheet date, it is included as accrued income. Revenue in respect of contingent fee assignments, over and above any agreed minimum fee, is recognised when the contingent event occurs. Where such contingent event has not accrued at the balance sheet date, it is included as accrued income.

(b)            Employee benefits and financial advisory

Revenue relating to the employee benefits and financial advisory business represents fees and life and pension commission and is recognised when confirmation has been received from the underwriters that payment is being made to the Group. A provision is made for clawback of commission which is deducted from turnover.

(c)            Interest income

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

2.20          Leases

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

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

2.21          Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.  Interim dividends are recognised when paid.

3.              Financial risk management

3.3            Financial risk factors

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

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

(d)            Credit risk

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

(e)            Liquidity risk

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

(f)             Cash flow and fair value interest rate risk

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

The Group's cash flow interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain approximately 33 per cent of its borrowings in fixed rate instruments. At March 2018, 100 per cent of borrowings were at fixed rates.

4.              Critical accounting estimates and judgements

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

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

(g)            Estimated impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate.

(h)            Other receivables

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

(i)             Impairment of receivables

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

5.              Staff costs

Group

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

	Number of employees
	2018	2017
Fee earners	107	85
Support staff	122	92
Total	229	177

The aggregate employment costs of these persons were as follows:

	2018	2017
	£'000	£'000
Wages and salaries	9,198	6,615
Social security costs	911	606
Employee benefits costs	399	299
Pension costs	248	161
Total staff costs	10,756	7,681

Company             

The Company has no employees (excluding directors); all personnel are employed by subsidiary entities.

Details of the remuneration of and transactions with directors are included in the Directors' Remuneration Report on pages 15 to 16. The directors are considered to be key management personnel.

6.              Operating profit

Operating profit/(loss) is stated after charging:

	Group	Group
	2018	2017
	£'000	£'000
Fees payable to the company's auditors
-     audit fees	154	81
-     other services pursuant to legislation	50	27
Depreciation of tangible fixed assets
-     owned assets	8	12
-     hire purchase	21	21
Amortisation/impairment of intangible assets	2,109	1,869
Impairment of investments	-	-
Bad debt expense	858	558
Hire of plant and equipment	149	156
Other operating leases	1,310	1,327

7.              Finance income and expense

	Group	Group
	2018	2017
	£'000	£'000
Finance income
Bank interest receivable	116	134
Other income	43	67
	159	201
Finance expense
Bank interest payable	(2)	(1)
Hire purchase	(7)	(9)
Other loans	(183)	(166)
Other interest	8	(50)
Financial assets at fair value through profit or loss	(55)	(126)
	(239)	(352)
Net finance income/(expense)	(80)	(151)

8.              Non recurring costs

Non recurring costs include acquisition related costs of £382,000 (2017: £183,000) and exceptional costs of £1,923,000 (2017: £356,000).

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

Exceptional costs represent group restructuring, including the reverse acquisitions of Brook Street Holdings LLP and Gordon Dadds Group Limited, placing of new ordinary shares and re-admission to the AIM market of the London Stock Exchange.

Non recurring costs include non-audit fees payable to the Company's auditors of £233,000 (2017: £Nil).

9.              Taxation

Analysis of charge in the period

	Group	Group
	2018	2017
	£'000	£'000
The charge for taxation comprises:
Taxation charge for the current period	24	-
Adjustment in respect of prior periods	3	-
	27	-

(i)        Factors affecting the tax charge for the period:

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 19.0 per cent (2017:20.0 per cent). The differences are explained below:

	Group	Group
	2018	2017
	£'000	£'000
Profit on ordinary activities before taxation	6,377	6,809
Less profit arising in partnerships, on which tax is payable by the members personally	(6,216)	(4,962)
Profit on ordinary activities of corporate entities before taxation	161	1,846
Profit on ordinary activities multiplied by the standard rate of corporation tax of 19 per cent (2017:20.0 per cent)	31	369
Effects of:
Impact of tax exempt items	37	15
Losses (utilised) / carried forward	(44)	(384)
Current taxation charge	24	-
Adjustment in respect of prior periods	3
Deferred tax charge	-	-
Total taxation charge for the period	27	-

(ii)       Factors that may affect future tax charges

At 31 March 2018 the Group had unrelieved tax losses of approximately £19,000 (2017: £2.4m). The directors have not recognised a deferred tax asset in respect of these losses as it is not certain that the Group will make sufficient profits in the short term to absorb these amounts.

10.            Earnings per share

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

1 April 2016	12,732,188	being the shares issued by the Company in consideration of the acquisition of the shares in Culver Holdings LLP issued as consideration for the acquisition of Brook Street Holdings LLP
2 December 2016	13,403,110	Being the shares issued by the Company for the acquisition of the shares in issue by Culver Holdings Limited immediately following the acquisition of Brook Street Holdings LLP
31 March 2017	12,509,623	Being the shares issued by the Company for the acquisition of the shares in issue by Culver Holdings Limited immediately following the acquisition of Brook Street Holdings LLP allowing for the cancelation of shares in Culver Holdings Limited
15 June 2017	13,417,143	Being the shares issued by the Company as consideration for the acquisition of all of the shares in issue by Culver Holdings Limited at the date of the reverse acquisition
4 August 2017	28,597,310	Being the Company's issued shares on re-admission to the AIM market of the London Stock Exchange
19 January 2018	28,759,711	Being the Company's current issued shares following new shares issued to Culver Ventures Limited loan stock holders

Basic earnings per share, shown on the consolidated income statement, is based on profit after tax £127,000 divided by 23,229,943, being the weighted average total number of ordinary shares in issue during the period.

Adjusted basic earnings per share, shown on the consolidated income statement, is based on adjusted profit before tax £2,962,000 after deducting other non-controlling interests of £504,000 and tax of £27,000 divided by 23,229,943, being the weighted average total number of ordinary shares in issue during the period.

Adjusted profit before tax is calculated as follows:

	Group	Group
	2018	2017
	£'000	£'000
Profit before tax from statement of comprehensive income	6,377	6,809
Deduct: Partners profit shares shown as non-controlling interests	(5,720)	(4,948)
Add: Non-recurring expenses:
-       Flotation costs	1,923	356
-       Acquisition related expenditure	382	183
Adjusted profit before tax	2,962	2,400

11.            Property, plant and equipment ("PPE")

Group

		Furniture,
	Land and	fittings and
	buildings	equipment	Total
	£'000	£'000	£'000
Cost
Balance at 1 April 2017	-	95	95
Acquisition of subsidiary (note 13)	230	126	356
Additions	-	2	2
Balance at 31 March 2018	230	223	453
Depreciation
Balance at 1 April 2017	-	57	57
Charge for the period	-	29	29
Balance at 31 March 2018	-	86	86
Carrying value
At 31 March 2017	-	38	38
At 31 March 2018	230	137	367

Included in the carrying value of PPE is £17,000 (2017: £38,000) of assets held by the Group under hire purchase or finance leases. The depreciation charge for the period for these assets was £21,000 (2017: £33,000).

The figures for the previous period are as follows:-

	Furniture,
	fittings and
	equipment
	£'000
Cost
Balance at 1 April 2016	95
Balance at 31 March 2017	95
Depreciation
Balance at 1 April 2016 Charge for the period	24 33
Balance at 31 March 2017	57
Carrying value
At 31 March 2016	71
At 31 March 2017	38

Company

There are no PPE assets held by the Company (2017: None).

12.            Intangible assets

Group

			Internally
		Client	generated	Intellectual
	Goodwill	portfolio	software	property	Total
	£'000	£'000	£'000	£'000	£'000
Cost
Balance at 1 April 2017	6,734	8,014	323	189	15,260
Acquisition of subsidiary	17,334	-	-	-	17,334
Additions	-	-	130	-	130
Reassessment of fair value	82	-	-	-	82
Eliminated on disposal	-	(295)	-	-	(295)
Balance at 31 March 2018	24,150	7,719	453	189	32,511
Amortisation and impairment
Balance at 1 April 2017	-	3,583	38	-	3,621
Charge for the period	-	2,016	65	28	2,109
Eliminated on disposal	-	(263)	-	-	(263)
Balance at 31 March 2018	-	5,336	103	28	5,467
Carrying value
At 31 March 2017	6,734	4,431	285	189	11,639
At 31 March 2018	24,150	2,383	350	161	27,044

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.

Internally generated software includes £453,000 (2017: £323,000) of development costs relating to development of software applications. The directors have considered the carrying value of internally generated software of £350,000 (2017: £285,000) as appropriate as it is expected to create future economic benefit.

Intellectual property includes £161,000 (2017:£189,000) of intellectual property acquired on the acquisition of certain assets and liabilities of Prolegal Limited (in administration).

The Intangible assets of the group for the prior year were as follows:-

			Internally
		Client	generated	Intellectual
	Goodwill	portfolio	software	property	Total
	£'000	£'000	£'000	£'000	£'000
Cost
Balance at 1 April 2016	500	4,500	220	-	5,220
Acquisition of subsidiary	6,234	3,701	-	189	10,124
Additions	-	-	103	-	103
Eliminated on disposal	-	(187)	-	-	(187)
Balance at 31 March 2017	6,734	8,014	323	189	15,260
Amortisation and impairment
Balance at 1 April 2016	-	1,846	-	-	1,846
Charge for the period	-	1,831	38	-	1,869
Eliminated on disposal	-	(94)	-	-	(94)
Balance at 31 March 2017	-	3,583	38	-	3,621
Carrying value
At 31 March 2016	500	2,654	220	-	3,374
At 31 March 2017	6,734	4,431	285	189	11,639

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.

			Personal
	Consulting	Culver	Injury	GDLLP
	and	Financial	Legal	Legal	Alen
	Technology	Services	Services	Services	Buckley
	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April 2017	500	4,002	1,432	800	-
Acquisitions	1,251	101	3,881	2,303	1,329
Reassessment of fair value	-	82	-	-	-
At 31 March 2018	1,751	4,185	5,313	3,103	1,329
Impairment
At 1 April 2017 and 31 March 2018	-	-	-	-	-
Carrying value
At 31 March 2017	500	4,002	1,432	800	-
At 31 March 2018	1,751	4,185	5,313	3,103	1,329
			CW	White &	Total
			Energy	Black	Goodwill
			£'000	£'000	£'000
Cost
At 1 April 2017			-	-	6,734
Acquisitions			6,464	2,005	17,334
Reassessment of fair value			-	-	82
At 31 March 2018			6,464	2,005	24,150
Impairment
At 1 April 2017 and 31 March 2018			-	-	-
Carrying value
At 31 March 2017			-	-	6,734
At 31 March 2018			6,464	2,005	24,150

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

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

The future cash flows have been discounted using a post-tax discount rate of 5%.

The two year financial plans include growth rates for each CGU based on the individual market assessment for each CGU. Other than for the Consulting and Technology CGU for which includes an estimated growth rate of 10%, the other CGU's do not include any estimated any growth rates beyond the two years.

Company

There are no intangible assets held by the company (2017: None).

13.            Investments

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

		Group	Group	Company	Company
		2018	2017	2018	2017
		£'000	£'000	£'000	£'000
Shares in group undertakings		-	-	47,191	-
Interest in associates		267	200	-	-
		267	200	47,191	-

13.3          Shares in group undertakings

Company

			Shares in
			Group
			Undertakings
			£'000
Cost
Balance at 1 April 2017			3,518
Additions			47,191
Balance at 31 March 2018			50,709
Impairment and provisions
Balance at 1 April 2017			3,518
Impairment			-
Balance at 31 March 2018			3,518
Carrying value
At 31 March 2017			-
At 31 March 2018			47,191

On 31 March 2018, Gordon Dadds Group plc held a significant interest in the following subsidiary undertakings which are incorporated and operate in England and Wales and are included in the consolidated financial statements.

UK Companies	Principal activity	% of holding	Class of capital
Culver Holdings  Limited	Intermediate holding company	100%	Ordinary shares
Gordon Dadds Corporate Finance Limited	Intermediate holding company	100%	Ordinary shares
Culver Financial Management Limited	Independent financial advisor	100%	Ordinary shares
Culver Ventures Limited	Business ventures	100%	Ordinary shares
Hanover Financial  Management Limited	Independent financial advisor	100%	Ordinary shares
GD Employee Benefits Limited	Independent financial advisor	100%	Ordinary shares
Brook Street Support Services Limited	Management services	100%	Ordinary shares
Hanover Pensions Limited	Professional services	100%	Ordinary shares
Prolegal Solicitors Limited	Legal services	100%	Ordinary shares
Prolegal (Alen-Buckley) Limited	Legal services	100%	Ordinary shares
Thomas Simon Limited	Legal services	100%	Ordinary shares
White & Black Limited	Legal services	100%	Ordinary shares
e.Legal Technology Solutions Limited	IT services	60%	Ordinary shares
Gordon Dadds Professional Services Limited	Professional services	100%	Ordinary shares
Gordon Dadds Corporate Services Limited	Corporate services	100%	Ordinary shares
Penlee Legal Investments Limited	Professional services	100%	Ordinary shares
Gordon Dadds Talent Services Limited	Professional services	100%	Ordinary shares

UK Limited Liability Partnerships	Principal activity	Interest held
Brook Street Holdings LLP	Intermediate holding LLP	100% interest as a designated member
Gordon Dadds LLP	Legal services	100% interest as a designated member
Gordon Dadds GP LLP	Legal services	Effective control due to significant influence
Metcalfes Solicitors LLP	Legal services	100% interest as a designated member
White & Black Legal LLP	Legal services	100% interest as a designated member
Gordon Dadds AP LLP	Professional services	Effective control due to significant influence
Gordon Dadds ADR LLP	Professional services	Effective control due to significant influence
Gordon Dadds CP LLP	Professional services	Effective control due to significant influence
CW Energy LLP	Professional services	100% interest as a designated member
Gordon Dadds Consulting LLP	Professional services	80% interest as a designated member
GD Financial Markets LLP	Professional services	Effective control due to significant influence

13.4          Business combinations and acquisitions

The details set out below provide the information required under IFRS 3 'Business Combinations' for the acquisitions that occurred during the year ended 31 March 2018.

The total amount of revenue and associated profit derived from acquired entities in the year was £4,673,000 and £1,458,000. An estimate of the annualised revenue and associated profit (based on pro-rated figures) had the acquisitions occurred at the start of the year is £14,083,000 and £3,565,000.

Alen-Buckley LLP

On 30^th June 2017 the Group acquired the business, as a going concern, of Alen-Buckley LLP, a legal services business with focus on property and private client sectors, for consideration of £1.5m. The fair value of the net assets and liabilities acquired by the group was £180,000. Goodwill of £1.3m was recognised in accounting for the acquisition.

Following the acquisition, Alen-Buckley LLP ceased trading and its business (comprising its property, rights and assets) was transferred to Prolegal Solicitors Limited.

Acquisition-related costs of £27,000 relating to the acquisition of Alen-Buckley LLP are included in non recurring costs in profit or loss and in operating cash flows in the statement of cash flows.

Penlee Legal Investments Limited

On 5^th July 2017, the Group acquired 100% of the issued share capital of Penlee Legal Investments Limited, a consultancy services firm incorporated in the Commonwealth of the Bahamas, for consideration of £160,000. The fair value of the net assets and liabilities acquired by the group was (£67,000). Goodwill of £227,000 was recognised in accounting for the acquisition.

Work Group plc

On 4^th August 2017, the Group acquired 100% of the issued share capital of Gordon Dadds Group plc (formerly Work Group plc). This acquisition has been accounted for as a reverse acquisition under IFRS 3 'Business Combinations'. The fair value of the consideration transferred was £1.25m. The fair value of the net assets and liabilities acquired by the Group was £0.01m. Goodwill of £1.25m was recognised in accounting for the acquisition.

On 2 December 2016, the Group acquired the entire economic interest in Brook Street Holdings LLP, the holding entity for, inter alia, Gordon Dadds LLP. As in the financial statements of Culver Holdings Limited for the year ended 31 March 2017, this was treated as a reverse acquisition of Culver Holdings Limited by Brook Street Holdings LLP

CW Energy LLP

On 31^st October 2017, the Group acquired the business and certain assets of CW Energy LLP, a corporate tax advisory firm based in the City of London, for consideration of £7.1m. The fair value of the net assets and liabilities acquired by the group was £642,000. Goodwill of £6.5m was recognised in accounting for the acquisition.

Acquisition-related costs of £118,000 relating to the acquisition of CW Energy LLP are included in non recurring costs in profit or loss and in operating cash flows in the statement of cash flows.

The acquisition of CW Energy LLP has furthered the Group's intention to expand its tax advisory business.

Culver Limited

On 31^st December 2017, the Group acquired 100% of the issued share capital of Culver Limited, an independent financial advisory business based in England & Wales, for consideration of £200,000. The fair value of the net assets and liabilities acquired by the group was £99,000. Goodwill of £101,000 was recognised in accounting for the acquisition.

White & Black Limited

On 27^th December 2017, the Group acquired the business and certain assets of White & Black Limited, a specialist technology solicitors firm based in Oxford and London, for consideration of £3.5m. The fair value of the net assets and liabilities acquired by the group was £1.5m. Goodwill of £2.0m was recognised in accounting for the acquisition.

Acquisition-related costs of £72,000 relating to the acquisition of White & Black Limited are included in non recurring costs in profit or loss and in operating cash flows in the statement of cash flows.

White & Black Limited's specialist technology skills and international client base has enhanced the Group's growing corporate and dispute resolution practices and has provided cross-selling opportunities.

Metcalfes Solicitors LLP

On 16^th January 2018, the Group acquired the 100% of the members interests of Metcalfes Solicitors LLP, a firm of solicitors based in Bristol, for consideration of £4.7m. The fair value of the net assets and liabilities acquired by the group was £852,000. Goodwill of £3.9m was recognised in accounting for the acquisition.

Acquisition-related costs of £142,000 relating to the acquisition of Metcalfes Solicitors LLP are included in non recurring costs in profit or loss and in operating cash flows in the statement of cash flows.

The acquisition of Metcalfes Solicitors LLP has allowed the Group to grow its client base and has provided cross-selling opportunities.

Thomas Simon Limited

On 17^th February 2018, the Group acquired 100% of the issued share capital of Thomas Simon Limited, a firm of solicitors based in Cardiff, for consideration of £1.8m. The fair value of the net assets and liabilities acquired by the group was (£279,000). Goodwill of £2.1m was recognised in accounting for the acquisition.

Acquisition-related costs of £322,000 relating to the acquisition of Thomas Simon Limited are included in non recurring costs in profit or loss and in operating cash flows in the statement of cash flows.

Thomas Simon Limited's business has been merged with the Group's existing Cardiff operation and synergies are expected from the merging of back office support functions.

13.2.1      Identifiable assets acquired and liabilities assumed

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

			Penlee
		Alen	Legal	Work	CW
		Buckley	Investments	Group	Energy	Culver
		LLP	Limited	plc	LLP	Limited
		£'000	£'000	£'000	£'000	£'000
Property, plant and equipment		-	-	-	-	-
Trade and other receivables		180	63	137	651	150
Cash and cash equivalents		-	-	35	-	68
Trade and other payables		-	(130)	(171)	(9)	(119)
Contingent liabilities		-	-	-	-	-
Net identifiable assets and liabilities		180	(67)	1	642	99
Goodwill		1,329	227	1,251	6,464	101
Non-controlling interest in the recognised amounts of identifiable assets and liabilities		-	-	-	-	-
Total consideration		1,509	160	1,252	7,106	200
Satisfied by:
Cash		9	160	-	68	200
Equity instruments		-	-	1,252	-	-
Contingent consideration		1,500	-	-	7,038	-
Total consideration transferred		1,509	160	1,252	7,106	200
Net cash outflow arising on acquisition:
Cash consideration		9	160	-	68	200
Less: cash and cash equivalent balances acquired		-	-	(35)	-	(68)
		9	160	(35)	68	132

			White &	Metcalfes	Thomas
			Black	Solicitors	Simon	Total
			Limited	LLP	Limited	Acquisitions
			£'000	£'000	£'000	£'000
Property, plant and equipment			35	254	67	356
Trade and other receivables			1,051	1,401	532	4,165
Cash and cash equivalents			921	608	(76)	1,556
Trade and other payables			(527)	(1,381)	(802)	(3,139)
Contingent liabilities			-	(30)	-	(30)
Net identifiable assets and liabilities			1,480	852	(279)	2,908
Goodwill			2,005	3,881	2,076	17,334
Non-controlling interest in the recognised amounts of identifiable assets and liabilities			-	-	-	-
Total consideration			3,485	4,733	1,797	20,242
Satisfied by:
Cash			1,735	930	196	3,298
Equity instruments			-	-	-	1,252
Contingent consideration			1,750	3,803	1,643	15,692
Total consideration transferred			3,485	4,733	1,839	20,224
Net cash outflow arising on acquisition:
Cash consideration			1,735	930	196	3,298
Less: cash and cash equivalent balances acquired			(921)	(608)	76	(1,556)
			814	322	272	1,742

13.5          Interests in associates

Group

		2018	2017
		£'000	£'000
Cost of investment in associates		297	193
Share of post-acquisition profit net of dividends received		(30)	7
Carrying value of interests in associates		267	200

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

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

	2018	2017
	£'000	£'000
Net profit/(loss)	(104)	163
Net assets	8	122

14.            Trade and other receivables

	Group	Group	Company	Company
	2018	2017	2018	2016
	£'000	£'000	£'000	£'000
Trade receivables	10,605	6,746	13	8
Accrued income	3,514	2,343	-	-
Other receivables	2,043	1,532	46	52
Amounts due from subsidiaries	-	-	11,330	99
Prepayments	2,249	2,301	56	8
	18,411	12,922	11,445	167

15.            Cash and cash equivalents

		Group	Group	Company	Company
		2018	2017	2018	2016
		£'000	£'000	£'000	£'000
Cash in hand and at banks		8,948	130	52	531
Total		8,948	130	52	531

Cash and cash equivalents include the following:-

Cash as above		8,948	130	52	531
Bank overdrafts		-	(566)	-	-
Total		8,948	(436)	52	531

16.            Share capital

		2018	2018	2016
	%	Number	£'000	£'000
Authorised
Ordinary shares of 1p each	100.0%	28,759,711	288	572
			288	572
		2018	2018	2016
	%	Number	£'000	£'000
Allotted, called up and fully paid
Ordinary shares of 1p each	100.0%	28,759,711	288	572
			288	572

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

On 4th August 2017, the original ordinary shares were consolidated and divided into 894,453 new ordinary shares with a nominal value of 1p per share and 894,453 deferred shares with a nominal value of 63p per share.

On 4th August 2017, there was the placing of 14,285,714 ordinary shares at 140p per share, with a nominal value of 1p per share.

On 4th August 2017, 13,417,143 ordinary shares were issued at 140p per share, with a nominal value of 1p per share.

On 17th January 2018, the deferred shares which arose on the capital reorganisation in August 2017 were cancelled and credited to the capital redemption reserve.

On 20th February 2018, 162,401 ordinary shares were issued at 142.5p per share, with a nominal value of 1p per share.

17.            Reserves

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

On 17th January 2018, the share premium account of Gordon Dadds Group plc was cancelled and credited to the capital redemption reserve.

The capital redemption reserve represents distributable reserves arising from the cancellation of deferred shares and share premium.

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

Retained earnings represents the cumulative profits or losses net of dividends paid and other adjustments.

18.            Trade and other payables

		Group	Group	Company	Company
		2018	2017	2018	2016
		£'000	£'000	£'000	£'000
Current:
Trade payables		3,377	2,882	133	112
Amounts due to subsidiaries		-	-	22,629	1,343
Corporation tax payable		248	-	-	-
Other taxes and social security		1,854	821	31	18
Other payables		1,493	1,591	24	1
Deferred consideration		5,407	2,193	-	-
Accruals		1,275	1,354	116	82
		13,654	8,841	22,933	1,556
Non-current:
Deferred consideration		11,896	4,137	-	-
Total		25,550	12,978	22,933	1,556

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

19.            Borrowings

	Group	Group	Company	Company
	2018	2017	2018	2016
	£'000	£'000	£'000	£'000
Bank overdrafts	-	566	-	-
Bank loans	66	365	-	-
Loan stock	-	571	-	-
Other loans	420	2,704	-	-
Obligations under hire purchase and lease contracts	41	52	-	-
Total borrowings	527	4,258	-	-
Current	372	4,034	-	-
Non-current	155	224	-	-
Total	527	4,258	-	-

Bank loans of £66,000 (2017: £365,000) and other loans of £420,000 (2017: £2,704,000) are unsecured and carry interest at between 3.0 per cent and 12.5 per cent per annum. Bank and other loans are repayable within 12 months, except non-current other loans of £155,000 which has a maturity of 1-3 years.

Minimum lease payments under hire purchase and lease contract fall due as follows:

	Group	Group	Company	Company
	2018	2017	2018	2016
	£'000	£'000	£'000	£'000
Gross obligations repayable:
Within one year	17	17	-	-
Between 2-5 years	32	49	-	-
	49	66	-	-
Finance charges repayable:
Within one year	5	7	-	-
Between 2-5 years	3	7	-	-
	8	14	-	-
Net obligations repayable:
Within one year	12	10	-	-
Between 2-5 years	29	42	-	-
	41	52	-	-

20.            Provisions

Group

		Other
		provisions
		£'000
Balance at 1 April  2016		67
Provisions made		444
Utilised during the year		(58)
Amounts released		(30)
Balance at 31 March 2017		423
Provisions made		116
Utilised during the year		(119)
Amounts released		(255)
Balance at 31 March 2018		165
Current		165
Non-current		-

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

Other provisions include uninsured excess on potential claims of £145,000 (2017:£54,000), potential clawback of indemnity and other commissions paid of £16,000 (2014:£4,000), and provisions for costs relating to acquisitions of £4,000 (2017:£365,000).

21.            Commitments

At 31 March 2018 the Group's total commitments under non-cancellable operating leases, together with the obligations by maturity, were as follows:

	2018	2018	2017	2017
	Land and	Other	Land and	Other
	Buildings	assets	Buildings	assets
	£'000	£'000	£'000	£'000
Within one year	1,543	123	1,310	123
Between 2-5 years	1,639	254	1,709	379
More than five years	430	-	-	-
Total	3,612	377	3,019	502

At 31 March 2018 the Group had capital commitments of £Nil (2017:£Nil) contracted but not provided for in these financial statements.

22.            Pensions

The Group participates in a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in a fund administered by Carey Pensions UK. Contributions from employers and employees totalling £39,000 (2017:£25,000) were payable to the fund at the year end and are included in payables.

23.            Ultimate controlling party

Gordon Dadds Group plc is owned by its shareholders and there is no ultimate controlling party.

24.            Related party transactions

Group

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

The Group occupies office accommodation at Llanmaes, St Fagans, Cardiff under arrangements with Juratone Limited, a company of which A J Biles is a director. Rent and service charges of £180,000 (2017: £101,000) were charged during the year under these arrangements. At the balance sheet date an amount due to Juratone Limited of £Nil (2017:£30,000) is included in payables and an amount due from Juratone Limited of £44,000 (2017:£18,000) is included in receivables.

A J Biles is a designated LLP member of ACR Professional Services LLP. Professional services of £212,500 (2017: £220,000) were charged from ACR Professional Services LLP to the Group during the year. At the balance sheet date the Group was owed £64,000 from ACR Professional Services LLP (2017: the Group owed £87,000 to ACR Professional Services LLP).

The Group charged fees and reimbursed expenses of £724,000 (2017:£133,000) to e.Legal Technology Solutions Limited during the year. The Group were charged fees and reimbursed expenses of £1,353,000 (2017: £253,000) by e.Legal Technology Solutions Limited during the year. At the balance sheet date the Group was owed £259,000 from e.Legal Technology Solutions Limited (2017:the Group owed e.Legal Technology Solutions Limited £208,000).

The Group charged fees to associate company James Stocks & Co Limited of £71,000 (2017: £23,000) and were charged fees of £1,500 (2017: £1,000) during the year. At the balance sheet date the Group was owed £12,000 (2017:£2,000) from James Stocks & Co Limited.

Company

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

The Company charged reimbursed expenses of £13,000 (2017:£Nil) to subsidiary undertakings during the year. At the balance sheet date an amount due from subsidiary undertakings of £13,000 (2017:£Nil) is included in trade receivables.

The Company was charged fees and reimbursed expenses of £89,000 (2017:£Nil) by subsidiary undertakings during the year. At the balance sheet date an amount due to subsidiary undertakings of £44,000 (2017:£Nil) is included in trade payables.

25.            Financial risk management

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

Fair value of financial instruments

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

		Group	Group	Company	Company
		2018	2017	2018	2016
	Note	£'000	£'000	£'000	£'000
Loans and receivables:
Trade receivables	14	10,605	6,746	13	8
Accrued income	14	3,514	2,343	-	-
Cash and cash equivalents	15	8,948	130	52	531
Other receivables	14	2,043	1,532	46	52
Amounts due from subsidiaries	14	-	-	11,330	99
Total financial assets		25,110	10,751	11,441	690
Financial liabilities measured at amortised cost:
Borrowings	19	527	4,258	-	-
Trade payables	18	3,377	2,882	133	112
Other payables	18	1,493	1,591	24	1
Deferred consideration	18	17,303	6,330
Amounts due to subsidiaries	18	-	-	22,629	1,343
Total financial liabilities		22,700	15,601	22,786	1,456
Total financial instruments		2,410	(4,850)	(11,345)	(766)

26.            Credit risk

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

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

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

Analysis of trade receivables:

	30 days        or less	Between 31 and 60 days	Between 61 and 90 days	Between 90 and 180 days	Over 180 days	Total gross	Bad debt provision	Total carrying amount
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2018	7,496	883	633	1,593	2,666	13,271	(2,666)	10,605
2017	3,673	1,553	420	1,100	1,287	8,033	(1,287)	6,746

The Group allows an average trade receivables payment period of 30 days after invoice date. It is the group's policy to assess receivables for recoverability on an individual basis and to make provision where it is considered necessary. In assessing recoverability the group takes into account any indicators of impairment up until the reporting date. The application of this policy generally results in debts between 31 and 180 days not being provided for unless individual circumstances indicate that a debt is impaired.  Receivables over 180 days are provided for.

Trade receivables that are neither impaired nor past due are made up of 1,468 receivables' balances (2017: 942). The largest individual debtor corresponds to 1.4% (2017: 2.3%) of the total balance. Historically these receivables have always paid balances when due. The average age of these receivables is 124 days (2017: 99 days). No receivables' balances have been renegotiated during the year or in the prior year.

The group individually impaired no net balances (2017: £Nil). The group does not hold any collateral over any balances.

27.            Interest rate risk

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

Interest rate exposure and sensitivity analysis:

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

28.            Foreign currency risk

Foreign currency risk refers to the risk that the value of a financial commitment or recognised asset or liability will fluctuate due to changes in foreign currency rates. In previous years the group was exposed to foreign currency risk as a result of transactions denominated in US Dollars and Euros. The group maintained bank accounts in US dollars and converted these to Sterling at appropriate times minimising the exposure to exchange fluctuations.  At the balance sheet date the net monetary assets of the group denominated in foreign currencies translated into Sterling totalled £Nil (2017: £Nil).

No amounts were recognised directly in equity during the year or the prior year.

29.            Liquidity risk

The group seeks to maintain sufficient cash balances.

Management reviews cash flow forecasts on a regular basis to determine whether the group has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities. The average creditor payment period is 129 days (2017: 132 days).

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

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

						Total
		Less	Between	Between	Between	contractual
		than	3 and 12	1 and 2	2 and 5	cash
		3 months	months	years	years	flows
		£'000	£'000	£'000	£'000	£'000
31 March 2018
Non-interest bearing		-	-	-	-	-
Fixed interest rate instruments		113	247	63	63	486
Finance leases		4	13	17	7	41
		117	260	80	70	527
31 March 2017
Non-interest bearing		-	571	-	-	571
Fixed interest rate instruments		1,276	1,604	-	189	3,069
Finance leases		4	13	17	18	52
		1,280	2,188	17	207	3,692

Interest bearing financial liabilities carry interest at between 3.0 per cent and 12.5 per cent per annum.

The group has access to financing facilities of £600,000 (2017: £600,000) as described below.

Unsecured bank overdraft facility, reviewed annually and payable at call:

		Group	Group	Company	Company
		2018	2017	2018	2017
		£'000	£'000	£'000	£'000
Amount used		-	566	-	-
Amount unused		600	34	-	-
		600	600	-	-

30.            Capital management

The company's objectives when managing capital are:

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

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

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

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

Debt-to-adjusted capital ratios

The debt adjusted capital ratios at 31 March 2018 were as follows:

	Group	Group	Company	Company
	2018	2017	2018	2016
	£'000	£'000	£'000	£'000
Total debt	527	4,258	-	-
Less: cash and cash equivalents	(8,948)	(130)	(52)	(356)
Net debt	-	4,128	-	-
Total equity	28,795	7,270	35,755	(977)
Add: subordinated debt instruments	-	-	-	-
Adjusted capital	28,795	7,270	35,755	(977)
Debt-to-adjusted capital ratio	n/a	1:1.8	n/a	n/a

31.            Reconciliation of liabilities arising from financing activities

				Non-cash changes
		Group	Cash			Group
		2017	flows	Acquisitions	Other	2018
		£'000	£'000	£'000	£'000	£'000
Borrowings due after 1 year		182	-	-	(56)	126
Borrowings due within 1 year		3,458	(3,636)	482	56	360
Finance leases due after 1 year		42	-	-	(13)	29
Finance leases due within 1 year		10	(11)	-	13	12
		3,692	(3,647)	482	-	527

 

END

 

 

FR UBUARWAANUUR