Half-year Results

RNS Number : 6585X

Gordon Dadds Group PLC

28 November 2017

 

28 November 2017

Gordon Dadds Group PLC

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

Half year results for the six months ended 30 September 2017

Gordon Dadds Group PLC (AIM: GOR), the acquisitive London-based legal and professional services business, is pleased to announce its unaudited results for the six months ended 30 September 2017.

Financial highlights

·     Revenue ahead by 14.5% to £12.89m (H1 2016 £11.26m)

·     Operating profits increased by 44.0% to £3.47m (H1 2016 £2.41m)

·     Adjusted profit before tax* increased by 103% to £0.58m (H1 2016 £0.28m)

·     Adjusted earnings per share* 2.26p (H1 2016 2.24p)

·     Strong balance sheet with gross assets of £40.8million and significant cash resources - net cash** £12.53m at 30 September 2017

*Adjusted profit before tax represents the profit before income tax after adding back exceptional items and deducting partners' profit shares of £2.653m and Adjusted earnings per share represents earnings per share based on the Adjusted profit before tax

** Net cash represents cash less borrowings

Operational highlights

·     Successful stock market flotation on 4 August raising £20 million for working capital and expansion

·     Acquisition of Alen-Buckley, a leading South London solicitors firm, in June 2017

·     First acquisition since IPO of CW Energy, the specialist tax consultants, in October 2017

·     Significant pipeline of potential acquisitions

Adrian Biles, Chief Executive of Gordon Dadds, commented:

"The Group has traded to our expectations through a period when sectors of the market have been hesitant given political and BREXIT uncertainty.  The acquisitions made through the last eighteen months have bedded in very well and are contributing positively to the Group.  The considerable benefits of being able to offer multiple services to clients from each part of the Group, with the associated multiple touch points and increases in revenue, are beginning to be realised and will continue to improve the Group's performance. 

"The market opportunity we identified at the time of our listing, to consolidate the legal services market in England and Wales, continues to be compelling and has been subsequently emphasised by the further development and execution of our mergers and acquisitions pipeline.

"We expect that the pace of change in the legal sector will accelerate as the desire for firms to release their partners' capital increases.  Any downturn in the economy or substantive increase in bank lending rates will generate further opportunities for both corporate and lateral profitable expansion. The platform and strategy for growth that the Board has put in place means the Company is exceptionally well placed to take advantage of this ever-growing opportunity."

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 Lydia Thompson 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. It operates through two distinct business channels, Gordon Dadds LLP and Prolegal Solicitors Limited, to integrate law firms seeking to gain scale in the UK.

Gordon Dadds:

Gordon Dadds LLP targets firms with annual fee income of £10m+.

Prolegal:

Prolegal Solicitors Limited acquires and manages firms with £2m - £10m annual fee income. These firms retain their identity and culture and also benefit from the back-office technology platform used by Gordon Dadds which allows Prolegal to target law firms seeking an alternative solution to the regulatory and investment requirements of the UK legal market.

The Gordon Dadds model offers a number of advantages to target firms:

•            Partners are not required to borrow to fund capital contributions and capital is built up over time out of profit share;

•            Each partner receives as their profit share a percentage of his or her personal billings, allowing partners to achieve a significant uplift to what he or she might achieve in a traditional partnership practice;

•            The Gordon Dadds model, with its clear division between management and back office on the one hand, and client acquisition and servicing on the other, allows partners to devote time to their respective practice areas; and

•            Gordon Dadds Group plc's corporate structure enables partners to acquire and retain an enduring investment in the business through equity ownership.

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

Review of the period

This has been a period of exciting change for the Group with its flotation and the strengthening of its balance sheet which puts the Group, with its acquisitive business model, in a strong position to grow rapidly and profitably, taking advantage of the current opportunity in legal services.

During the half year we successfully acquired Alen-Buckley, a high quality South London solicitors' practice.  Alen-Buckley is already generating additional business for the Group as a whole through cross referral of clients as well as continuing to generate income from its well established existing business.

We continue to look for attractive opportunities for further acquisitions, have completed one acquisition since the year end as referred to below and have a good pipeline of potential acquisitions with whom we are actively engaging.

While there can be no certainty of concluding a transaction with any of the firms in the pipeline, it is clear that there is considerable genuine interest in our model of providing for the following:

•         Acquisition of partners' goodwill

•         De-risking partners from capital provision

•         Insulation of partners from all business liabilities

•         Retention of existing branding and culture

•         Access to cash and IT resources

Our current pipeline consists of firms with incomes of between £1 million and £6 million principally based in the Midlands and the South of England and Wales.

As indicated in the Admission Document for the flotation, we are developing plans to harness the intellectual capital of the former Work Group business and applying that to the professional services market.

Finance and results

In considering the financial extracts accompanying this statement, you should have regard to notes 1.2 and 5.1 to the Financial Statements attached which explains the basis of accounting.

During the first six months of the year much effort and productive capacity was focussed on achieving the successful flotation of the Group on AIM.  Notwithstanding that, overall the business achieved turnover in line with market expectations.  Strong results were achieved by the Dispute Resolution, Regulatory Solutions and Taxation segments of the business. Against this, Property has operated in a very competitive sector where activity has been weaker and Corporate has been actively involved in our flotation which reduced their external billings.  In the Property segment we are continuing a programme of moving the work done to our Cardiff office and have been making personnel changes to enable this.  We are also taking increasing care in selecting the work we undertake.  We currently see the remainder of the year as continuing these trends with good pipelines particularly in Dispute Resolution, Tax and Regulatory Solutions, Corporate is seeing an increased level of activity while property will be behind our expectations on fees generated.  Overall, fee income is expected to be in line with market expectations for the year as a whole.

During the first half of the year, a part of the Corporate Department's productive capacity was directed to the flotation of the Group.  The costs of this have been separately identified but has had the effect of increasing the partners' profit share as a percentage of turnover which should return to normal levels in the second half of the year.

The acquisition of Alen-Buckley has been successful and, as well as continuing to trade positively, is producing new clients for Gordon Dadds as the expertise available at Gordon Dadds is made available to its clients.  The acquisitions made in the second half of the financial year ended 31 March 2017 (the Immigration business and the Hanover companies) have settled in well and are both making good progress.  Our small personal injury business is making limited progress and we are examining ways to address this.

The Group's balance sheet has been strengthened substantially by the funds raised at the flotation, with cash in the balance sheet and a significant reduction in the short term borrowings which had been used to fund expansion before the flotation.  The balance of the short term borrowings will be repaid in accordance with their terms by the end of the financial year.  The Group's lock-up as a whole has expanded as a result of the acquisitions of Alen-Buckley and Hanover.  Within Gordon Dadds itself, the lock-up has extended by a few days but attention continues to be focussed on managing this and we continue our prudent policy of providing against all debtors and work-in-progress over 180 days old unless we have security or similar assurance of collection.  We are expecting to apply to the Court shortly for permission to reduce the share capital and share premium as approved by shareholders in August.

Outlook

Since the period end, we have completed the acquisition of CW Energy. The taxation team was already busy and this acquisition is expected to develop this segment further with the ability to refer work from existing clients into that team and vice versa. We are also expecting the GD Financial Markets consultancy business to contribute more to the Group during the second half following their recent approval as a supplier to one of the major clearing banks in the UK.

It is normal in the Group's business for trading to be weighted towards the second half of the year and this year is no exception.  The outlook for the current business of the Group is to continue to trade in line with the market's expectations for the year as a whole against a market which is clearly influenced by BREXIT and political uncertainty.

The Group is in a strong position to develop with the existing pipeline to progress its acquisitive policy aiming for a doubling of revenues in the foreseeable future alongside growth of net margin. 

We therefore look forward to reporting further progress in the rest of the year to March 2018 and to the declaration, as expected, of a final dividend in respect of the period.

Unaudited Consolidated Statement of Comprehensive Income

		6 Months ended	6 Months ended	Year ended
		30 September 2017	30 September 2016	31 March 2017
	Note	£'000	£'000	£'000
Continuing operations
Revenue		12,894	11,265	24,936
Staff costs	2	(4,845)	(3,587)	(7,681)
Depreciation and amortisation		(977)	(905)	(1,902)
Other operating expenses		(3,601)	(4,362)	(7,961)
Operating profit		3,471	2,411	7,392
Finance income		24	48	201
Finance expense		(200)	(116)	(352)
Exceptional items	3	(1,916)	-	(539)
Share of profit of associates		(63)	187	107
Profit before income tax		1,316	2,530	6,809
Income tax expense		(3)	-	-
Profit and total comprehensive income for the year		1,313	2,530	6,809
Attributable to:-
Equity holders of the Company		(1,513)	285	1,861
Non-controlling interests		2,826	2,245	4,948
Total comprehensive income for the year		1,313	2,530	6,809
Earnings per share
Basic and diluted earnings per share (pence)	4	(8.47)	2.24	14.37
Pre-exceptional basic earnings per share (pence)	4	2.26	2.24	18.53

The profit for the year relates to continuing operations only.

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

Unaudited Consolidated Statement of Financial Position              

		30 September 2017	30 September 2016	31 March 2017
	Note	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		28	51	38
Intangible assets	5	13,544	6,996	11,639
Investments		172	237	200
		13,744	7,284	11,877
Current assets
Trade and other receivables	6	12,940	9,534	12,922
Cash and cash equivalents		14,113	64	130
		27,053	9,598	13,052
Total assets		40,797	16,882	24,929
EQUITY
Capital and reserves attributable to equity holders
Share capital	7	850	572	572
Share premium	8	45,884	8,240	8,240
Reverse acquisition reserve	8	(24,723)	(8,812)	(7,397)
Retained earnings	8	401	305	1,914
		22,412	305	3,329
Non-controlling interest		4,086	3,478	3,941
Total equity		26,498	3,783	7,270
LIABILITIES
Non-current liabilities
Trade and other payables	9	3,126	3,116	4,137
Borrowings	10	161	214	224
Provisions		-	-	-
		3,287	3,330	4,361
Current liabilities
Trade and other payables	9	9,020	8,144	8,841
Borrowings	10	1,419	1,612	4,034
Provisions		573	13	423
		11,012	9,769	13,298
Total liabilities		14,299	13,099	17,659
Total equity and liabilities		40,797	16,882	24,929

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

                                                                                                                        

Unaudited Consolidated Statement of Cash Flows                                             

		6 Months 30 September 2017	6 Months 30 September 2016	Year ended 31 March 2017
	Note
		£'000	£'000	£'000
Cash flows from operating activities
Profit before income tax		1,316	2,530	6,809
Adjustments for:
Finance income		(24)	(48)	(201)
Finance expense		200	116	352
Depreciation, amortisation and impairment		977	906	1,902
Share of profits of associates		63	(187)	(107)
Changes in operating assets and liabilities (net of acquisitions):
Decrease/(Increase) in trade and other receivables		302	2,911	4,980
(Decrease)/Increase in trade and other payables		(1,322)	(2,743)	(8,472)
(Decrease)/Increase in provisions		150	(53)	199
Cash generated by operations		1,662	3,432	5,462
Interest and other financial costs paid		(173)	(89)	(227)
Tax paid		(3)	-	-
Net cash generated by operating activities		1,486	3,343	5,235
Cash flows from investing activities
Cash paid on acquisitions		(1,648)	(670)	(1,745)
Purchase of property, plant and equipment		-	-	-
Purchase of intangible assets		(20)	(6)	(103)
Purchase of interest in associates		(35)	(149)	(193)
Dividends received		-	100	100
Interest received		24	48	201
Net cash absorbed by investing activities		(1,679)	(677)	(1,740)
Cash flows from financing activities
Movement in borrowings (including finance leases)		(2,112)	(712)	1,107
Proceeds from issues of shares		20,205	-	-
Transactions costs relating to issue of shares		(861)	-	(200)
Partner drawings		(2,491)	(2,141)	(4,380)
Net cash (absorbed)/generated from financing activities		14,742	(2,853)	(3,473)
Net (decrease) / increase in cash and cash equivalents		14,549	(187)	22
Cash and cash equivalents at beginning of period		(436)	(458)	(458)
Cash and cash equivalents at end of period		14,113	(645)	(436)

 

Unaudited Consolidated Statement of Changes in Equity

	Share capital	Share premium	Reverse acquisition      reserve	Other reserves	Retained earnings	Non-  controlling       interest	Total   equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2016 restated	572	8,240	(8,812)	-	20	1,943	1,963
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	285	2,245	2,530
Transferred to members	-	-	-	-	-	(710)	(710)
Balance at 30 September 2016	572	8,240	(8,812)	-	305	3,478	3,783
Balance at 1 October 2016	572	8,240	(8,812)	-	305	3,478	3,783
Profit/(loss) and total comprehensive income/(expense) for the period	-	-	-	-	1,576	2,703	4,279
Shares issued for acquisition	-	-	1,615	-	-	-	1,615
Share issue transactions costs	-	-	(200)		-	-	(200)
Transferred to members	-	-	-	-	33	(2,240)	(2,207)
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	-	-	-	-	(1,513)	2,826	1,313
Shares issued for acquisition	278	38,505	(17,326)	-	-	-	21,457
Share issue transactions costs	-	(861)	-	-	-	-	(861)
Transferred to members	-	-	-	-	-	(2,681)	(2,681)
Balance at 30 September 2017	850	45,884	(24,723)	-	401	4,086	26,498

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

Notes to the Financial Statements

These interim consolidated financial statements have been approved for issue by the Board of Directors on 27 November 2017.

1.              Summary of significant accounting policies

1.1            Basis of preparation and significant accounting policies

1. Accounting policies

The financial information for the year ended 31 March 2017 set out in this half yearly report does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The figures for the year ended 31 March 2017 have been extracted from the Group financial statements for that year. Those financial statements have been delivered to the Registrar of Companies and included an independent auditor's report, which was unqualified and did not contain a statement under section 493 of the Companies Act 2006.

The half yearly financial information has been prepared using the same accounting policies and estimation techniques as will be adopted in the Group financial statements for the year ending 31 March 2018. The Group financial statements for the year ended 31 March 2017 were prepared under International Financial Reporting Standards as adopted by the European Union. These half yearly financial statements have been prepared on a consistent basis and format with the Group financial statements for the year ended 31 March 2017. The provisions of IAS 34 'Interim Financial Reporting' have not been applied in full.

1.2            Business combinations

The Group applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3 '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.

1.3           Financial instruments

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

Financial assets are included on the 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.

1.4            Going concern

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

2.              STAFF AND PARTNERS

The average number of staff and partners during the period, analysed by category, was as follows:

	6 Months  to 30 September 2017	6 Months to 30 September 2016	Year ended 31 March 2017
Fee earners	139	125	128
Back office support staff	32	29	31
Other support staff	76	54	57
Total	247	208	216

The aggregate employment costs and remuneration of staff and partners were as follows:          

	6 Months to 30 September  2017	6 Months to 30 September 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Wages and salaries	4,163	3,042	6,615
Social security costs	402	337	606
Employee benefits costs	171	130	299
Pension costs	109	78	161
Total staff costs	4,845	3,587	7,681
Partners remuneration	2,826	2,245	4,948
Total staff and partner costs	7,671	5,832	12,629

3.              Exceptional items

Exceptional items of £1,916,000 relate to the costs to the business of the Group of the flotation and acquisitions.  They comprise the costs of the supply of services and goods by third parties of £1,070,000 and the internal professional costs of £846,000 for the services (principally legal services) which could have been supplied by third parties but which were supplied by the group itself, of which £302,000 related to partners' profit shares and £544,000 to staff costs in each case including the overheads normally applied to such direct costs.  The basis of internal charging is considered not to contain a profit element to the Group..

Prior year exceptional items represent acquisition related costs for professional and other fees in respect of acquisitions completed or under negotiation during the year.

4.              EARNINGS PER SHARE

Earnings per share for the year ended 31 March 2017 and 30 September 2017 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 current issued shares.

Basic Earnings per share, shown on the consolidated income statement, is based on profit after tax (£1,611,000) divided by 17,856,409, being the weighted average total number of ordinary shares in issue during the period.

Pre-exceptional Basic Earnings per share, shown on the consolidated income statement, is based on profit after tax with non-recurring costs added back divided by 17,856,409; being the weighted average total number of ordinary shares in issue during the period.

5.              Intangible assets

			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	2,830	-	-	-	2,830
Additions	-	-	20	-	20
Revaluation/adjustment to cost	24	-	-	-	24
Balance at 30 September 2017	9,588	8,014	343	189	18,134
Amortisation and impairment
Balance at 1 April 2017	-	3,583	38	-	3,621
Charge for the period	-	946	23	-	969
Balance at 30 September 2017	-	4,529	61	-	4,590
Carrying value
At 31 March 2017	6,734	4,431	285	189	11,639
At 30 September 2017	9,588	3,485	282	189	13,544

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.

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 £343,000 (2017: £323,000) of development costs relating to development of a software application. The directors have considered the carrying value of internally generated software of £282,000 (2017: £285,000) as appropriate as it is expected to create future economic benefit.

Intellectual property includes £189,000 (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
Subsidiaries joining the group	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
Eliminated on disposal	-	(94)	-	-	(94)
Charge for the period	-	1,831	38	-	1,869
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 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.

The goodwill of the Group is analysed as follows:

		Gordon
	Consulting	Dadds	Prolegal		Platt &
	and	Group	Solicitors	Hanover	Associates
	Technology	Limited	Limited	Companies	Limited
	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April 2017	500	3,392	1,432	610	800
Acquisitions	-	-	-	-	-
Revaluation/adjustment to cost	-	-	23	-	-
At 30 September 2017	500	3,392	1,455	610	800
Impairment
At 1 April 2017	-	-	-	-	-
Impairment in year	-	-	-	-	-
At 30 September 2017	-	-	-	-	-
Carrying value
At 31 March 2017	500	3,392	1,432	610	800
At 30 September 2017	500	3,392	1,455	610	800
		Penlee
		Legal	Work	Alen
		Investments	Group	Buckley
		Limited	plc	LLP	Total
		£'000	£'000	£'000	£'000
Cost
At 1 April 2017		-	-	-	6,734
Acquisitions		227	1,246	1,357	2,830
Revaluation/adjustment to cost		-	-	-	23
At 30 September 2017		227	1,246	1,357	9,588
Impairment
At 1 April 2017		-	-	-	-
Impairment in year		-	-	-	-
At 30 September 2017		-	-	-	-
Carrying value
At 31 March 2017		-	-	-	6,734
At 30 September 2017		227	1,246	1,357	9,588

5.1            Business combinations and acquisitions

The details set out below provide the information required under IFRS 3 'Business Combinations' for the acquisitions that occurred during the period to 30 September 2017.

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 a consideration of £1.54m. The fair value of the net assets and liabilities acquired by the group was £183,000. Goodwill of £1.36m 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 £96,000 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 a 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

5.1.2        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
		Buckley	Investments	Group	Total
		LLP	Limited	plc	Acquisitions
		£'000	£'000	£'000	£'000
Property, plant and equipment		-	-	-	-
Identifiable intangible assets		-	-	-	-
Trade and other receivables		183	63	136	382
Cash and cash equivalents		-	-	35	35
Trade and other payables		-	(130)	(165)	(295)
Contingent liabilities		-	-	-	-
Net identifiable assets and liabilities		183	(67)	6	122
Goodwill		1,357	227	1,246	2,830
Non-controlling interest in the recognised amounts of identifiable assets and liabilities		-	-	-	-
Total consideration		1,540	160	1,252	2,952
Satisfied by:
Cash		6	160	-	166
Equity instruments		-	-	1,252	1,252
Contingent consideration		1,534	-	-	1,534
Total consideration transferred		1,540	160	1,252	2,952
Net cash outflow arising on acquisition:
Cash consideration		(6)	(160)	-	(166)
Less: cash and cash equivalent balances acquired		-	-	35	35
		(6)	(160)	35	(131)

5.2            Disposals

There were no disposals in the group for the period to 30 September 2017.

6.              Trade and other receivables

	Group	Group	Group
	6 Months to 30 September2017	6 Months to 30 September 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Trade receivables	6,599	5,209	6,746
Accrued income	2,873	1,793	2,343
Other receivables	1,830	1,619	1,532
Amounts due from subsidiaries	-	-	-
Prepayments	1,638	913	2,301
	12,940	9,534	12,922

 

7.              SHARE CAPITAL

	September 2017	September 2017	March 2017	September 2016
	Number	£'000	£'000	£'000
Allotted, called up and fully paid
Ordinary shares of 1p each	28,597,310	286	572	572
Deferred shares of 63p each	894,453	564	-	-
		850	572	572

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

Deferred shares carry no right to vote.

On 4th August 2017, the original ordinary shares were consolidated and divided into new 1p ordinary shares and 63p deferred shares.

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.

8.              Reserves

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

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

Other reserves include the reverse acquisition reserve arising under IFRS3 'Business Combinations'.

9.              Trade and other payables

		Group	Group	Group
		6 Months to 30 September2017	6 Months to 30 September 2016	Year ended 31 March 2017
		£'000	£'000	£'000
Current:
Trade payables		2,638	2,369	2,882
Amounts due to subsidiaries		-	-	-
Other taxes and social security		1,221	697	821
Deferred consideration		3,265	2,855	2,193
Other payables		570	1,094	1,591
Accruals		1,326	1,129	1,354
		9,020	8,144	8,841
Non-current:
Deferred consideration		3,126	3,116	4,137
Total		12,146	11,260	12,978

10.            Borrowings

	Group	Group	Group
	6 Months to 30 September 2017	6 Months to 30 September 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Bank overdrafts	-	708	566
Bank loans	826	-	365
Loan stock	-	-	571
Other loans	707	1,061	2,704
Obligations under hire purchase and lease contracts	47	57	52
Total borrowings	1,580	1,826	4,258
Current	1,419	1,612	4,034
Non-current	161	214	224
Total	1,580	1,826	4,258

Bank loans of £826,000 (2017: £365,000) and other loans of £707,000 (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 £189,000 which has a maturity of 1-3 years.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

 

END

 

 

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