Final Results

RNS Number : 6855W

Smoove PLC

22 August 2022

Smoove plc

(The "Group", "Smoove" or the "Company")

Final Results for the 12 months to 31 March 2022

Proposed Tender Offer

Smoove plc (AIM: SMV), the customer focused technology and services business aiming to revolutionise home moving and ownership, announces its Final Results for the 12 months ended 31 March 2022 ("the Period").

This was a busy period for the Company - with continued investment in development and technology, strong growth in routes to market, instructions and completions as well as a number of new product launches and contract wins. The post Period name change and rebranding highlight management's ambition to develop a consumer-centric, data driven product suite and deliver value across all industry stakeholders, with a view to amplifying the strong progress made during the Period.

Financial Highlights

· 13% increase in revenues to £19.2m (2021: £16.9m), reflecting strong growth in broker channel, progress in developing core business and exposure to a buoyant housing market

· Gross profit of £7.8 million (2021: £6.9 million)

· Underlying EBITDA £3.8 million loss (2021: £0.4 million profit), reflecting investment in the core eConveyancer business and in new product areas

· Underlying loss before tax of £4.9m (2021: £0.9m loss)

· Statutory loss before tax of £5.4m (2021: £2.4m)

· Net cash £20.0 million (2021: £24.0 million)

Operational Highlights

· Expanded product range to support the broader home moving experience

· Enhanced capabilities across marketing, data/analytics, and technology platforms

· Conveyancing completions in the Period grew by 11% to 37,104 (2021: 33,543)

· Conveyancing instructions in the Period grew by 20% to 66,394 (2021: 55,120)

· Continued growth of broker channel with 10% growth in the number of active users to 2,207 from 1,998 at the end of FY 2021

· Several new client wins across a range of B2B and B2C channels, including Chase de Vere, Moneyfacts, and Haysto

· Strengthened existing relationships, notably the long-standing relationship with Lloyd's Banking Group - adding a new service

Post Period End Highlights

· Change of name to Smoove plc - amplifying the Group's strategy to simplify and revolutionise the home moving and ownership process

· Operational restructuring to align cost base with product development and growth strategy

· Smoove Start launched for paying customers following the successful conclusion of pilot phase

· Re-contracting with Lloyds Banking Group for the provision of conveyancing services for a further two years

· Michael Cress commenced his role as Chief Financial Officer

· Proposed tender offer to return up to £5m

Current trading and Outlook

Despite the economic headwinds facing households there is still a reasonable amount of momentum in the housing market. This, coupled with the substantial uptick in remortgaging instructions we have seen in recent eConveyancer trading, has allowed us to make a solid start to this financial year. With projections of further interest rate rises and 1.1 million homeowners on standard variable rate mortgages and a further 850,000* on tracker rates our diversified offer ensures eConveyancer is well positioned to drive scale.

Our new estate agent offering, Smoove Start, is building subscription revenue as well as expanding our services to new market segments such as property sellers. We are at the early stages of piloting Smoove Complete, a conveyancing platform for Consultant Conveyancing Lawyers, which is designed to meet the changing technological and lifestyle trends in the sector.

Our strategic approach is broadening our reach beyond our strong position in the first-time buyer market and providing a good balance across multiple audiences. The home ownership process remains broken and provides huge opportunity for radical change. We are ideally placed to take a leading role and are very optimistic given the progress over the last 12 months.

Proposed Share Buyback

The Group announces a proposed return of capital to shareholders via a tender offer of up to £5 million. The Board believes that this is the best way to achieve a balance between an immediate return of capital to shareholders whilst retaining funds to support value creating new products and business improvements.

A resolution authorising the tender offer will be put to shareholders at the annual general meeting which is expected to take place in late September. The tender offer is expected to be completed during October.

Jesper With-Fogstrup, Chief Executive, commented: " In the last year we have set out ambitious plans to make the home moving and ownership experience better for everyone. We have made significant progress in the key areas that will be the bedrock of our future success. Our proposal to return capital to shareholders will allow us to create value for investors while at the same time ensuring we retain funds to continue to invest in the technology and business developments required to deliver our strategy.

"The investment we have made in eConveyancer, including fully integrating the DigitalMove offering, has allowed us to further grow routes to market and consolidated our position as one of the leading conveyancing platforms in the UK. The improvements we continue to make are likely to drive scale and generate increasing returns.

"Overall, we are pleased with the headway we have made with our growing portfolio of products and services including the recent roll out of Smoove Start following a successful pilot with estate agents. In building our diverse range of products, we are well placed for economic uncertainty and the impact that will have on the property sector.

"The year ahead will be another opportunity to grow, as we look to continue our journey of revolutionising the home ownership market while simplifying processes and reducing the stress and frustration for everyone involved."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

Analyst Briefing: 9.30am on Monday 22 August 2022

An online briefing for analysts will be hosted by Jesper With-Fogstrup, Chief Executive Officer, and Michael Cress, Chief Financial Officer, at 9.30am today, Monday 22 August 2022, to review the results and prospects. Analysts wishing to attend should contact Walbrook PR on smoove@walbrookpr.com or 020 7933 8780.

Enquiries:

Smoove plc Jesper With-Fogstrup, CEO Michael Cress, CFO	Via Walbrook PR

Panmure Gordon (UK) Limited (NOMAD and Broker) Dominic Morley Erik Anderson	+44 (0)20 7886 2500

Walbrook PR Limited Tom Cooper/ Nick Rome	smoove@walbrookpr.com or Tel: 020 7933 8780

About Smoove:

Smoove's (hellosmoove.com ) mission is to revolutionise the home moving and owning process for everyone involved. The Company's cornerstone cloud-based platforms provide significant leverage for growth with strong, established client bases and routes to market - including mortgage brokers, conveyancers, estate agents and lenders.

eConveyancer ( https://econveyancer.com/ ) is one of the leading distribution channels for conveyancing in the UK, bringing consumers and legal professionals together via comparison services, which provide solutions for home movers and the re-mortgage market.

The Company's existing platforms have been designed with a view to adding services and reach and the Company is well placed to create exponential returns as functionality increases.

Chief Executive's statement

In my second final results statement to shareholders, I am delighted to deliver this strategic and financial performance review under our new name - Smoove plc. While we continued to work under the backdrop of a global pandemic and volatile markets, we remained focused on leveraging our strong eConveyancer business and delivering on our strategy to provide a more satisfying experience to homebuyers, sellers and industry stakeholders, while building long-term value for shareholders.

The consumer, a core part of our strategy, has never been more central to the home-moving process and we believe they deserve the best possible home moving and ownership experience. Not only are we increasingly providing the necessary digital products to manage this, but we are using our platforms to listen to and engage with our customer base to ensure we adapt the business to align with their evolving needs through proven data and analytics. In order to achieve this, we are using our robust balance sheet to strategically invest in the business to develop our technology and services and build our business for sustainable growth.

Innovating in a traditional sector is not an easy task, but we are confident in our strategy, as we continue to grow, importantly at the same time maintaining and deepening our strong relationships with partners such as Lloyds Banking Group.

Underpinning our growth

Our focus on having tech enabled data insights provides a strong foundation for sustaining and growing our business.

DigitalMove, now fully integrated into eConveyancer, has made the user experience even better, and we have received positive feedback from the market.

Significant take-up progress continues, with more than 85% of eConveyancer transactional cases now enabled on the platform, handling more than 88,000 instructions to date, compared with 51,000 in 2021.

We have built a better operating platform which is increasingly providing invaluable insights across all lines of the business allowing us to increase our distribution model and customer retention. These developments have included growth drivers such as user experience enhancements to remove conversion friction, integrating the Salesforce platform to improve customer interaction and management, pilot repeat purchase mechanics and reorganising our sales teams which has resulted in more efficient processes and improved sales results.

Our core brand

Our strong eConveyancer brand is performing well and continues to be one of the leading distribution channels for conveyancing in the UK, bringing consumers and legal professionals together via comparison services, which provide a straightforward, digitalised process for home movers and the remortgage market. We have made significant investment in this technology so that our customer-centric, data driven strategy sustains the value of this strong B2B brand.

We continue to grow our distribution network, identifying additional routes to market with both more broker networks using the platform, and also instructions from other parts of the market. We have had several significant contractual wins across a range of B2B and B2C channels, including Haysto and Chase De Vere. These new partners are pivotal to our future, as they provide increased flow of demand across our products and services. Smoove Start will provide access to the estate distribution channel for conveyancing instructions and increase the Group's exposure to property sellers, which will complement its traditional strength among first time buyers.

We have grown existing relationships, notably our long-standing relationship with Lloyds Banking Group adding a new service by providing support for a fees-assisted remortgage product line in England and Wales. This demonstrates the strength and growing importance of the broad range of solutions we are able to deliver while responding to market dynamics. This is a key part of our sustained growth, as we look to build on our existing relationships, tailoring products specifically for clients, as well as widening our offering to take advantage of growing areas of the market such as remortgages.

We are encouraged by the consistent performance of our core offering, and this has given us the ability to also expand our product range to support the broader home moving experience. Notably, we launched Smoove Start, which enables estate agents to onboard their clients with digital ID verification, anti-money laundering checks and customer details. Smoove Start, critically, allows buyers to complete property information more quickly, preparing for the legal conveyancing process earlier and speeding up the transaction time when a sale is agreed. Smoove Start also allows the home mover to instruct a conveyancer from our broad panel of trusted service providers. We are now taking this product to market following a successful pilot that provided valuable and positive feedback.

We are also at the initial stages of testing a number of other strategic initiatives. This includes exploring a new business model to improve the conveyancing experience for both consumers and conveyancers with the ultimate aim of making the entire process more efficient for everyone, as well as providing home movers with a frictionless service for accessing utility and insurance products.

Overall, we are pleased with the progress of our growing portfolio of products and services and continue to see great potential to improve the frustrating home moving experience, helping movers have a better, less stressful home moving experience through our products and services.

Elevating our operations

Smoove's successful year has been made possible by our dedicated team of experts and the investments we are making into our resources and operations. We have made important hires across the management team and in specialist roles to bring in new capabilities, especially in our technology and data teams, which are key to delivering our strategy.

In January 2022, we announced that John Williams, the Chief Financial Officer stepped down from our board, and the new Chief Financial Officer, Michael Cress, commenced his role in May 2022, just after the financial year end. I would like to take this opportunity to welcome Michael, who will help drive the growth and development of our business, harnessing his in-depth commercial knowledge and sector expertise. We are grateful to John for his hard work and commitment to Smoove over more than ten years with the business.

Looking more closely at our colleagues, we are striving to develop a diverse environment that reflects our customer-base and its changing needs. Whilst technology is key for the innovation and efficiency of the business, we recognise the importance and value of human interaction with customers and specifically being able to understand their needs and concerns. Our workplace culture is also very important to us and as we emerge from the restrictions of the pandemic into a new working landscape, we have welcomed a return to the office, but have provided our colleagues with the flexibility for hybrid working so they can choose when they come in. We are very aware of keeping our workforce happy and engaged and so will monitor how our colleagues feel about this flexibility and whether we need to change it in any way in the future. You can read more about our initiatives in the CSR section of the annual report.

We continue to invest heavily in our technology capabilities and are now a 100% Cloud business, having moved all our production hosting and services and workplace systems to the Cloud. We are also focused on consolidating onto highly scalable platform services (PaaS) to optimise our technology cost base to accommodate further growth.

Outlook

In the last year we have set out ambitious plans to make the home moving and ownership experience better for everyone. We have made significant progress in the key areas that will be the bedrock of our future success. We continue to invest in technology so that our consumer-centric, data driven strategy focuses on delivering value across all industry stakeholders.

The investment we have made in eConveyancer has allowed us to further grow routes to market and consolidate its position as one of the leading conveyancing platforms in the UK. The improvements we continue to make are likely to drive scale and generate increasing returns.

Our Smoove Start offering for estate agents will benefit from the Group's already strong credentials in the B2B market, and as we work with the industry, its development and roll out will be a core focus over the coming months. Smoove Start will benefit the eConveyancer business by broadening its distribution and diversifying the instruction mix away from the traditional focus on first time buyers.

Whilst some progress has been made on improving the way that the conveyancing industry works, there is still huge scope to make it more effective and efficient. The property conveyancing market remains fundamentally broken and is ripe for new ways of working that benefits all stakeholders. As well as utilising technology smartly to ensure a consistent and transparent process we are in an ideal position to collaborate and influence the sector to remove the complexity in the market.

There continue to be a number of challenges for the UK market, with inflation, cost of living, rising interest rates and a tight labour market being among the headwinds. The economic outlook is uncertain, particularly for first time buyers who will find it hard to buy when facing the combination of a cost-of-living crunch on real income and high house prices. That being said, we believe these conditions make our offering even more important, as consumers look for easier, more efficient processes for the home buying and moving process.

In building our diverse range of products, we believe we are well placed for economic uncertainty and the impact that will have on the property sector.

Next year will be another opportunity to grow, as we look to continue our journey of revolutionising the home ownership market while simplifying processes and reducing the stress and frustration for everyone involved.

Jesper With-Fogstrup

Chief Executive Officer

Financial review

Continuing operations

Revenue £19.2 million (2021: £16.9 million).

Gross margin £7.8 million (2021: £6.9 million).

Underlying EBITDA £(3.8) million (2021: £0.4 million)

Underlying PBT £(4.9) million (2021: £(0.9) million).

Reported PBT £(5.4) million (2021: £(2.4) million).

Results

Revenue from continuing operations increased by 13% during the year, which reflects the Group's progress in developing its core business as well as its exposure to a buoyant housing market. The strength of the market has been seen in both the home mover segment, which recovered strongly from the impact of COVID-19 as well as the remortgage segment, which has seen a surge of activity in response to increases in the Bank of England's base rate.

The underlying PBT loss has widened from £0.9 million to £4.9 million as a result of higher administrative expenses as the Group invests in both the core eConveyancer business and in new product areas to create a strong platform for future growth. Within the core business the investments have encompassed enhanced capabilities across marketing, data/analytics, and technology platforms with the aim of extracting more value from our existing relationships with introducers and conveyancers. We have already started seeing results from this, with the broadening of our relationship with Lloyds Banking Group, and a strong pipeline of new contracts.

A milestone in the Group's development of new products is the release of Smoove Start, a product for estate agents, which after the period end concluded a successful pilot during which it received strong positive feedback.

We continue to believe that these investments will generate enduring value for shareholders, but we keep the level of investment under constant to review to ensure that it is commensurate with scale of the opportunities and background market conditions.

The Group's capitalised web development expenditure was £316,000 during the period, a substantial decrease from the £831,000 reported in the prior period. The change arises primarily because development work on new product areas did not meet the criteria for capitalisation. Conversely, development expenditure not capitalised increased to £848,000 from £136,000 in the prior period.

On 8 October 2021, the Group acquired Amity Law Limited, a firm of conveyancers located in Bolton. The acquisition provides a platform for the pilot of the Group's new digital products and will accelerate its product development activities. Amity is also the foundation for Smoove Complete, the group's pilot for a flexible environment for consultant conveyancing lawyers to operate within an optimised digital and legal environment. Consideration for the acquisition was £305,000, of which £100,000 is unconditional deferred consideration payable in October 2022. Detail on the acquisition is provided in note 12. During the year Amity contributed revenues of £0.2 million.

The results for the current period include an impairment of £503,000 to the carrying value of the Group's investment in Homeowners Alliance. In the consolidated accounts the investment is accounted for an associate under the equity method of accounting. The impairment review is described in note 13.

The results for the prior period have been adjusted to exclude the contribution of Conveyancing Alliance Holdings Limited, the sale of which was completed on 27 November 2020. Consideration for the sale was £27.4 million before transaction costs. Consideration was upfront and in cash with no deferred element.

Key performance indicators

Our non-financial measures are shown below:

Continuing Operations	2022	2021

Instructions	66,394	55,120
Completions	37,104	33,543

The non-financial KPIs of instructions and completions closely mirror financial KPIs. During the year instructions increased 20% and Completions 11%. The difference in growth rate between the two measures reflects both the time lag between instructions and completions and the distribution of instructions through the reporting periods.

Cash and debt

The Group continues to hold significant cash balances, which stood at £20.0 million at year end. Cash flow during the period was £3,949,000, (2021: £21,636,000 because of subsidiary disposal) which closely tracks the underlying EBITDA reported above. As noted above, the year-on-year-reduction in cash mirrors the significant investment in eConveyancer and new product areas. Management believes that cash resources are sufficient to develop the products to completion and to transition back to profitability and cash generation.

Cash balances are allocated across three high street banks with £5m allocated to a 'Green' notice account.

Shares and dividends

No dividend was paid in the year. As the Company is pursuing a growth strategy, the Board is not recommending a final dividend be paid.

No new shares were issued in the year.

Non-IFRS profit measures

Whilst we give due prominence to the IFRS measures of profit, we feel it is useful to show non-IFRS measures which the Board review on a regular basis in order to evaluate business performance. These additional measures have the advantage of excluding major non-cash non-recurring items such as impairment charges. In addition, the Board believe that EBITDA is a metric that is commonly used by the Group's investors. Therefore, we believe that highlighting these measures in addition to the IFRS measures gives a useful insight to the readers of the report. The table below lays out two key measures and shows how they are derived:

Calculation of Non-IFRS profit measures	2022 £000's	2021 £000's
(Loss) before taxation (PBT)	(5,365)	(2,389 )
Write down of intangible asset	-	1,457
Impairment of investment	503	-
Underlying (Loss) before taxation (Underlying PBT)	(4,862)	(932)
Finance income	(25)	(16)
Finance costs	102	126
Amortisation	683	898
Depreciation	329	332
Underlying EBITDA	(3,773)	408

Michael Cress

Chief Financial Officer

Consolidated Income Statement

for the year ended 31 March 2022

	Notes	2022 £000's	2021 £000's
Continuing operations
Revenue	1	19,168	16,926
Cost of sales		(11,407)	(10,013)

Gross profit		7,761	6,913
Exceptional administrative expenses	3	-	(1,457)
Other administrative expenses		(12,577)	(7,829)
Administrative expenses		(12,577)	(9,286)

Operating loss before exceptional expenses		(4,816)	(916)
Exceptional admin expenses	3	-	(1,457)

Operating loss	2	(4,816)	(2,373)
Finance income	5	25	16
Finance costs	6	(102)	(126)
Share of results of associate	13	31	94
Impairment of associate	13	(503)	-

Loss before tax		(5, 365)	(2,389)
Tax credit	7	248	562
Loss for the financial year from continuing operations		(5,117)	(1,827)
Discontinued operations	8
Profit for the year from discontinued operations		-	1,060
Gain on disposal	26	-	18,145
Total profit for the year from discontinued operations		-	19,205
(Loss) / profit for the financial year attributable to the Group's equity shareholders		(5,117)	17,378

Loss per share from continuing operations
Basic loss per share (£)	9	(0.0789)	(0.0282)
Diluted loss per share (£)	9	(0.0789)	(0.0282)

(Loss) / earnings per share from continuing and discontinued operations
Basic (loss) / earnings per share (£)	9	(0.0789)	0.2679
Diluted (loss) / earnings per share (£)	9	(0.0789)	0.2536

Consolidated statement of comprehensive income

for the year ended 31 March 2022

2022

000's

2021

000's

(Loss) / profit for the financial year

(5,117)

17,378

Total comprehensive (loss) / profit for the financial year attributable to the owners of the parent

(5,117)

17,378

Consolidated Balance Sheet

as at 31 March 2022

	Notes	2022 £000's	2021 000's
Assets
Non-current assets
Intangible assets	14	1,432	1,799
Goodwill	11	4,745	4,524
Investment in associates	13	155	627
Property, plant and equipment	15	1,572	1,830
Long-term receivables	16	100	200
Prepayments	16	94	111
		8,098	9,091
Current assets
Trade and other receivables	16	1,545	1,452
Current tax receivable		291	249
Cash and cash equivalents	17	20,027	23,976
		21,863	25,677
Total assets		29,961	34,768

Equity and liabilities
Capital and reserves attributable to the Group's equity shareholders
Share capital	18	259	259
EBT reserve		(298)	(397)
Share premium		4,609	4,609
Capital redemption reserve		113	113
Share based payment reserve		474	418
Retained earnings		19,645	24,913
Total equity		24,802	29,915
Non-current liabilities
Lease liabilities	25	1,012	1,162
Deferred taxation	7	79	280
		1,091	1,442
Current liabilities
Trade and other payables	20	3,918	3,249
Lease liabilities	25	150	162
		4,068	3,411
Total liabilities		5,159	4,853
Total equity and liabilities		29,961	34,768

The notes to these financial statements form an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 19 August 2022 and were signed on its behalf by:

Jesper With-Fogstrup Michael Cress

Chief Executive Officer Chief Financial Officer

Smoove plc Smoove plc

Company number: 07466574

Consolidated statement of changes in equity

for the year ended 31 March 2022

	Share capital £000's	EBT reserve £000's	Share premium £000's	Capital redemption reserve £000's	Share-based payments reserve £000's	Retained earnings £000's	Total Equity £000's
Balance at 1 April 2020	259	(453)	4,609	113	427	7,624	12,579

Profit for the year	-	-	-	-	-	17,378	17,378
Total comprehensive income	-	-	-	-	-	17,378	17,378
Purchase of shares by EBT	-	(91)	-	-	-	-	(91)
Exercise of options	-	147	-	-	(10)	(89)	48
Share-based payments	-	-	-	-	1	-	1
Total transactions with owners	-	56	-	-	(9)	(89)	(42)
Balance at 31 March 2021	259	(397)	4,609	113	418	24,913	29,915

Balance at 1 April 2021	259	(397)	4,609	113	418	24,913	29,915
Loss for the year	-	-	-	-	-	(5,117)	(5,117)
Total comprehensive loss	-	-	-	-	-	(5,117)	(5,117)
Purchase of shares by EBT	-	(345)	-	-	-	-	(345)
Exercise of options	-	444	-	-	(52)	(151)	241
Share-based payments	-	-	-	-	108	-	108
Total transactions with owners	-	99	-	-	56	(151)	4
Balance at 31 March 2022	259	(298)	4,609	113	474	19,645	24,802

Consolidated statement of cash flows

for the year ended 31 March 2022

	Notes	2022 £000's	2021 000's
Cash flow from operating activities
Loss before tax from continuing operations		(5,365)	(2,389)
Profit before tax from discontinued operations	8	-	19,039
Group (loss) / profit before tax for the financial year		(5,365)	16,650
Finance income	5	(25)	(16)
Finance costs	6	102	126
Loss on disposal of plant and equipment		63	1,457
Share of profit from associate	13	(31)	(94)
Impairment of investment in associate		503	-
Amortisation	14	683	1,158
Depreciation	15	329	345
Share-based payments	19	108	1
Tax paid		(23)	(319)
Gain on disposal of discontinued operations excl. costs	26	-	(18,027)
		(3,656)	1,281
Changes in working capital
Decrease / (increase) in trade and other receivables		14	(120)
Increase in trade and other payables		413	931

Cash (used in) / from operating activities		(3,229)	2,092

Cash flow from investing activities
Purchase of intangible software assets	14	(316)	(831)
Purchase of property, plant and equipment	15	(97)	(64)
Disposal of subsidiary	26	-	26,426
Acquisition of subsidiary (net of cash acquired)	12	(135)	-
Interest received	5	25	17

Net cash (used in) / from investing activities		(523)	25,548

Cash flow from financing activities
Interest paid	6	-	(91)
Lease payments	25	(192)	(170)
Repayment of loan to associate		100	50
Movement on RCF	21	-	(4,000)
Repayment of loans	21	-	(1,750)
Shares traded by EBT		(105)	(43)

Net cash used in financing activities		(197)	(6,004)

Net (decrease) / increase in cash and cash equivalents		(3,949)	21,636

Cash and cash equivalents at beginning of financial year		23,976	2,340

Cash and cash equivalents at end of financial year		20,027	23,976

Notes to the consolidated financial statements

Principal accounting policies

Basis of preparation

The Consolidated Financial Statements of Smoove plc and its subsidiaries (together, 'the Group') have been prepared in accordance with International Financial Reporting Standards ('IFRS'), as adopted by the UK, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ('IASB') and the IFRS Interpretations Committee, and there is an on-going process of review and endorsement by the United Kingdom Endorsement Board. These accounting policies comply with each IFRS that is mandatory for accounting periods ending on 31 March 2022.

The financial statements have been prepared under the historical cost convention except for the revaluation of certain assets to fair value as explained in the accounting policies below. The principal accounting policies set out below have been consistently applied to all periods presented.

The financial information set out in this announcement does not constitute Smoove plc's statutory accounts for the year ended 31 March 2022. Statutory accounts for the year ended 31 March 2022 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Auditor has reported on those accounts; their report was unqualified, did not draw attention by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Going Concern

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group and Parent Company can continue in operational existence for the foreseeable future. Management have prepared and the board of Directors have approved cash flow forecasts for the Group for a period including 12 months from the date of signing of these Financial Statements. In doing so the Directors have considered existing commitments together with the ﬁnancial resources available to the Group.

The housing market has remained buoyant as the UK emerged from the coronavirus pandemic. Transaction volumes have varied during the period as a result of the expiry of the various stamp duty holidays. The broad trend in the market has been favourable throughout.

The sale of CAL in November 2020 transformed the liquidity of the Group with the Group having £20m net cash at the end of the period with no borrowings and VAT payments up-to-date. This enables the Group to continue with its plans to accelerate its investments from current cash reserves.

The Board looks at the sensitivity of changes in various profit and cash drivers in its business plan to determine the robustness of its cash adequacy. Reductions in margin and/or transaction volumes are tested and the Directors are confident that the Group retains sufficient cash to cope with a prolonged period of reduced revenues.

The cash flow forecasts prepared show that the Group and Parent Company can continue to operate without borrowings and maintaining substantial cash reserves through the period including 12 months from the date of signing of these financial statements.

As a result of the above, the Directors concluded that there are no material uncertainties that lead to significant doubt upon the Parent Company's and Group's ability to continue as a going concern and therefore continue to adopt the going concern basis of accounting in preparing these Financial Statements.

Basis of consolidation

The Consolidated Financial Statements incorporate the results of Smoove plc ('the Company') and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities and the ability to use its power over the investee to affect the returns from the investee.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the effective date of acquisition and up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Business combinations

The Consolidated Financial Statements consolidate those of the Parent Company and all of its subsidiaries as of 31 March 2022. All subsidiaries have a reporting date of 31 March.

The Group applies the acquisition method of accounting to account for 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. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date except in relation to leases, where the lease liability is initially measured at the present value of future lease payments using the Group's incremental borrowing rate, and the right of use asset measured at the same value with adjustment for favourable or unfavourable lease terms.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

Acquisition-related costs are expensed as incurred.

When an operation is disposed of, it is classified as a discontinued operation if it represents a separate major line of business. In this case the results of the discontinued operation and the profit or loss on disposal are aggregated in a single line item in the income statement and the prior period is restated for comparability.

Discontinued operations

A discontinued operation is a component of the Group's business, the operations and cash flows

of which can be clearly distinguished from the rest of the Group and which:

· represents a separate major line of business or geographic area of operations;

· is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or

· is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.

Interest in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The post-tax results of associates are incorporated in the Group's results using the equity method of accounting. Under the equity method, investments in associates are carried in the Consolidated Balance Sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of investment. Losses of associates in excess of the Group's interest in that associate are not recognised. Additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture or associate.

Employee benefit trust

The Directors consider that the Employee Benefit Trust (EBT) is under the de facto control of the Company as the trustees look to the Directors to determine how to dispense the assets. Therefore the assets and liabilities of the EBT have been consolidated into the Group accounts. The EBT's investment in the Company's shares is eliminated on consolidation and shown as a deduction against equity. Any assets in the EBT will cease to be recognised in the Consolidated Balance Sheet when those assets vest unconditionally in identified beneficiaries.

Revenue recognition

Revenue comprises revenue recognised in respect of services, supplied during the period and is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, based on when performance obligations have been satisfied.

Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue from a contract to provide services which are completed at an identifiable point in time is recognised when the performance obligation is met, and when all of the following conditions are satisfied:

· the amount of revenue can be measured reliably;

· it is probable that the Group will receive the consideration due under the contract;

· the stage of completion of the contract at the end of the reporting period can be measured reliably; and

· the costs incurred and the costs to complete the contract can be measured reliably.

Revenue is recognised on completion of the legal services. For a conveyancing transaction, this will be on completion of the property transaction and if the transaction falls through prior to completion no fees will be payable by the consumer to the conveyancer or by the conveyancer (customer) to the Company or by the Company to the introducer (supplier).

The proportion of the fee that the Company receives on completion of a conveyancing transaction that is remitted to a third party (introducer), such as a mortgage broker or intermediary, is recognised as a cost of sale. This is because the Group bears most of the credit risk, delivers the service and sets the pricing.

Segmental reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses related to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Chief Operating Decision Maker has been identified as the Board of Executive Directors, at which level strategic decisions are made.

Details of the Group's reporting segments are provided in note 1.

Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or as incurred.

Exceptional operating expenses are non-recurring in nature or of a size sufficient to merit separate disclosure. Items are classified as exceptional to aid the understanding of the underlying performance of the business.

Finance income and costs

Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset or liability and allocates the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

Other intangible assets

Capitalised development expenditure

An internally-generated intangible asset arising from development expenditure is recognised if, and only if, all of the following criteria have been demonstrated:

· The technical feasibility of completing the intangible asset so that it will be available for use or sale;

· The intention to complete the intangible asset and use or sell it;

· The ability to use or sell the intangible asset;

· How the intangible asset will generate probable future economic benefits;

· The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;

· The ability to measure reliably the expenditure attributable to the intangible asset during its development; and

· The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is expensed in the period in which it is incurred.

Amortisation is calculated so as to write off the cost of an asset, net of any residual value, over the estimated useful life of that asset as follows:

· Capital development expenditure - Straight line over 4 years

Brand names and customer and introducer relationships

Brand names and customer and introducer relationships acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values.

Amortisation is calculated so as to write off the cost of an asset on a straight line basis, net of any residual value, over the estimated useful life of that asset as follows:

· Customer and introducer relationships - 10 to 12 years

· Brand names - 10 years

· Acquired technology platform - 9 years

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and less any recognised impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably. All other costs, including repairs and maintenance costs, are charged to the Consolidated Income Statement in the period in which they are incurred.

Depreciation is provided on all property, plant and equipment and is calculated on a straight-line basis as follows:

· Leasehold improvements - Over the remaining life of the lease

· Computer equipment - 25% on cost

· Fixtures and fittings - 25% on cost

Depreciation is provided on cost less residual value over the asset's useful life. The residual value, depreciation methods and useful lives are annually reassessed.

Each asset's estimated useful life has been assessed with regard to its own physical life limitations and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all equipment, with annual reassessments for major items. Changes in estimates are accounted for prospectively.

The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales proceeds, net of selling costs, and the carrying amount of the asset and is recognised in the Consolidated Income Statement.

Impairment of non-current assets including goodwill

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. Each unit to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired.

At each Balance Sheet reporting date the Directors review the carrying amounts of the Group's tangible and intangible assets, other than goodwill, to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. For further details of the impairment reviews conducted see note 11.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. If the recoverable amount of a cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.

An impairment loss is recognised as an expense immediately.

An impairment loss recognised for goodwill is not reversed in subsequent periods.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior periods. A reversal of an impairment loss is recognised in the Consolidated Income Statement immediately.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of approximately three months or less.

Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets are classified into the following categories:

· amortised cost; or

· fair value through profit or loss (FVTPL); or

· fair value through other comprehensive income (FVOCI).

In the periods presented the Company does not have any financial assets categorised as FVTPL.

The classification is determined by both:

· the entity's business model for managing the financial asset; and

· the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other administrative expenses.

Subsequent measurement of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

· they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

· the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and other receivables fall into this category of financial instruments.

Financial assets at fair value through other comprehensive income (FVOCI)

The Company accounts for financial assets at FVOCI if the assets meet the following conditions:

· they are held under a business model whose objective it is 'hold to collect' the associated cash flows and sell; and

· the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset.

Impairment of financial assets

IFRS 9's impairment requirements use forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. Instruments within the scope of these requirements included loans and other debt-type financial assets measured at amortised cost, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

· financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1'), and

· financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2').

'Stage 3' would cover financial assets that have objective evidence of impairment at the reporting date.

'12-month expected credit losses' are recognised for the first category while 'lifetime expected credit losses' are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. Refer to Note 22 for further details.

Classification and measurement of financial liabilities

The Group's financial liabilities include borrowings, trade and other payables and contingent consideration.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss. Contingent consideration is measured at FVTPL.

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.

Current taxation

Current taxation for each taxable entity in the Group is based on the taxable income at the UK statutory tax rate enacted or substantively enacted at the Balance Sheet reporting date and includes adjustments to tax payable or recoverable in respect of previous periods.

Deferred taxation

Deferred taxation is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial information. However, if the deferred tax arises from the 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 or loss, it is not accounted for. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet reporting date and
are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are provided in full.

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

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Consolidated Income Statement, except where they relate to items that are charged or credited directly to equity or other comprehensive income in which case the related deferred tax is also charged or credited directly to equity or other comprehensive income.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Employment benefits

Provision is made in the financial information for all employee benefits. Liabilities for wages and salaries, including non-monetary benefit and annual leave obliged to be settled within 12 months of the Balance Sheet reporting date, are recognised in accruals.

The Group's contributions to defined contribution pension plans are charged to the Consolidated Income Statement in the period to which the contributions relate.

Leasing

The Group considers whether any new contract involving use of an asset is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and

• the Group has the right to direct the use of the identified asset throughout the period of use.

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the lessee's incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit or loss if the right-of-use asset is already reduced to zero.

On the balance sheet, right-of-use assets have been included in property, plant and equipment and lease liabilities are separately shown on the face of the balance sheet.

Equity and reserves

Equity and reserves comprise the following:

· 'Share capital' represents amounts subscribed for shares at nominal value.

· 'EBT reserve' represents cost of shares bought and sold through the Employee Benefit Trust.

· 'Share premium' represents amounts subscribed for share capital, net of issue costs, in excess of nominal value.

· 'Capital redemption reserve' represents the nominal value of re-purchased and cancelled share capital.

· 'Share-based payment reserve' represents the accumulated value of share-based payments expensed in the profit and loss less charge in relation to exercised options.

· 'Retained earnings' represents the accumulated profits and losses attributable to equity shareholders.

Share-based employee remuneration

The Group operates share option based remuneration plan for its employees. None of the Group's plans is cash settled.

Where employees are rewarded using share-based payments, the fair value of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date using the Black-Scholes model.

All share-based remuneration is ultimately recognised as an expense in profit and loss with a corresponding credit to share-based payment reserve. The expense is allocated over the vesting period. Other than the requirement to be an employee at the point of exercise there are no other vesting requirements and all share options are expected to become exercisable. Subsequent revisions to this give rise to an adjustment to cumulative share-based compensation which is recognised in the current period. The number of vested options ultimately exercised by holders does not impact the expense recorded in any period.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs, are allocated to share capital up to the nominal (par) value of the shares issued with any excess being recorded as share premium. Alternatively share options may be exercised via shares held by the EBT.

Contingent liabilities

No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

New and amended International Financial Reporting Standards adopted by the Group

There were no new standards, amendments to standards or interpretations which were effective for the first time this year and applicable to the Group.

International Financial Reporting Standards in issue but not yet effective

At the date of authorisation of these Consolidated Financial Statements, the IASB and IFRS Interpretations Committee have issued standards, interpretations and amendments which are applicable to the Group.

Whilst these standards and interpretations are not effective for, and have not been applied in the preparation of, these Consolidated Financial Statements, the following may have an impact going forward:

New/Revised International Financial Reporting Standards

Effective date:
annual periods beginning on or after:

UK adopted

Impact on Group

IAS 1

Amendments to IAS 1 Classification of Liabilities as Current or Non-current

1 January 2023

Immaterial

IAS 1

Amendments to IAS 1 Disclosure of Accounting Policies

1 January 2023

Immaterial

IFRS 3

Amendment to IFRS 3 Business Combinations

1 January 2022

Yes

Immaterial

IAS 16

Amendments to IAS 16 Property, Plant and Equipment

1 January 2022

Yes

Immaterial

IAS 37

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets

1 January 2022

Yes

Immaterial

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial information in conformity with generally accepted accounting practice requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the Balance Sheet reporting date and the reported amounts of revenues and expenses during the reporting period.

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.

Estimates

The following are the significant estimates used in applying the accounting policies of the Group that have the most significant effect on the financial statements:

Impairment review

The Group assesses the useful life of intangible assets to determine if there is a definite or indefinite period of useful economic life; this requires the exercise of judgement and directly affects the amortisation charge on the asset. The Group tests whether there are any indicators of impairment at each reporting date. Discounted cash flows are used to assess the recoverable amount of each cash generating unit, and this requires estimates to be made. If there is no appropriate method of valuation of an intangible asset, or no clear market value, management will use valuation techniques to determine the value. This will require assumptions and estimates to be made. Further detail is provided in note 14.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment. Depreciation rates are shown in the accounting policy for property, plant and equipment.

Judgements

The following are the significant judgements used in applying the accounting policies of the Group that have the most significant effect on the financial information:

Capitalisation of development expenditure

The Group applies judgement in determining whether internal research and development projects meet the qualifying criteria set out in IAS 38 for the capitalisation of development expenditure as internally generated intangible assets. The particular uncertainty and judgement centres around whether a project will be commercially successful, particularly in the pre-revenue phase.

Investment in Associates

An impairment charge of £503,000 related to the Group's investment in Homeowners Alliance was recognised during the year. The impairment judgement relies on an estimation of future cash flows of the investment discounted to its present value using a discount rate of 12.6%. The judgement also applies a minority discount of 40% reflecting the Group's lack of majority control of the investment. Further detail is provided in note 13.

Intangible assets arising from business combination

Judgement has been applied concerning the identification of intangible assets arising from the acquisition of Amity. The value of consideration paid on the acquisition, in excess of the net assets acquired, has been allocated entirely to goodwill. Furthermore, goodwill arising from the acquisition of Amity has been included within the Core CGU and therefore assessed within the impairment review of the Core CGU. This is because the value that Amity adds to the Group's product development capabilities cannot be segregated

1. Segmental reporting

Operating segments

Management identifies its operating segments based on the Group's service lines, which represent the main product and services provided by the Group. The Group of similar services which makes up the Group's Comparison Services segment represents more than 95% of the total business. Additionally, the Board reviews Group consolidated numbers when making strategic decisions and, as such, the Group considers that it has one reportable operating segment. All sales are made in the UK.

Revenues from customers who contributed more than 10% of revenues were as follows:

2022

£000's

2021

£000's

Customer 1

4,079

6,288

Customer 2

2,030

1,781

The discontinued operation that was disposed of during the prior year was not identified as a separate segment.

2. Operating (loss)

Operating (loss) is stated after charging:	2022 £000's	2021 £000's
Fees payable to the Group's auditors for the audit of the annual financial statements	60	56
Fees payable to the Group's auditors and its associates for other services to the Group:
- Audit of the accounts of subsidiaries	65	34
- Non-audit services	10	16
Amortisation	683	1,158
Depreciation	329	345
Share-based payments expense	108	1
Exceptional administrative expenses	-	1,457
Development expenditure not capitalised	848	136

3. Exceptional administrative expenses

2022

£000's

2021

000's

Write-off of capitalised development costs

1,457

The write-off of the intangible asset during the prior period relates to the decision to move DigitalMove on to a low code/no code environment. While the learnings from the original version of DigitalMove will be re-used it was not possible to separate the value of that from the actual code. For that reason, it was deemed that the amount capitalised so far and previously included within the capitalised development expenditure category of intangible fixed assets would need to be written-off and the loss on derecognition of the asset has been classified as exceptional due to both the size and the uncommon nature of the event.

4. Directors and employees

The aggregate payroll costs of the employees, including both management and Executive Directors, were as follows:

	2022 £000's	2021 £000's
Staff costs
Wages and salaries	6,538	4,975
Social security costs	655	545
Pension costs	578	424
	7,771	5,944

Average monthly number of persons employed by the Group during the year was as follows:

	2022 Number	2021 Number
By activity:
Production	60	34
Distribution	34	30
Administrative	30	27
Management	10	9
	134	100

	2022 £000's	2021 000's
Remuneration of Directors
Emoluments for qualifying services	833	801
Payments for loss of office	-	90
Pension contributions	35	28
Social security costs	84	106
	952	1,025

The emoluments above (and in the following table for Remuneration of key management) include amounts for share-based payments charges but not for the actual gain on exercise. During the period share options were exercised giving rise to a gain of £86,000 (2021: £35,000). This amount applies to the table below also.

A breakdown of the emoluments for Directors can be found in the Directors' Remuneration Report where the Highest paid Director can also be identified.

Key management personnel are identified as the Executive Directors.

	2022 £000's	2021 £000's
Remuneration of key management
Emoluments for qualifying services	671	524
Payments for loss of office	-	90
Pension contributions	30	23
Social security costs	74	79
	775	716

Payments of pensions contributions have been made on behalf of Directors.

5. Finance income

2022

£000's

2021

£000's

Bank interest

6. Finance costs

	2022 £000's	2021 000's
Interest on borrowings	-	91
Lease interest	31	35
Other interest and finance costs	71
	102	126

7. Taxation

Analysis of credit in year	2022 £000's	2021 000's
Current tax
United Kingdom
UK corporation tax on (losses) / profits for the year	(41)	24

Deferred tax
United Kingdom
Origination and reversal of temporary differences	(207)	(752)

Corporation tax credit	(248)	(728)

Continuing and discontinued operations

Continuing operations	(248)	(562)
Discontinued operations	-	259
Tax relating to disposal	-	(425)

Corporation tax credit	(248)	(728)

The differences are explained as follows:

	2022 £000's	2021 £000's
(Loss) / profit before tax	(5,364)	16,650
UK corporation tax rate	19%	19%

Expected tax (credit) / expense	(1,019)	3,164
Adjustments relating to prior year	(41)	30
Adjustment for additional R&D tax relief	-	(229)
Non-taxable gain on sale of Group company	-	(3,900)
Unused tax losses	617	208

Adjustment for non-deductible expenses
- Expenses not deductible for tax purposes	143	42
- Other permanent differences	52	(42)

Income tax credit	(248)	(728)

Deferred tax

	2022 000's	2021 £000's
Deferred tax liabilities at applicable rate for the period of 19%:
Opening balance at 1 April	280	1,045
- Property, plant and equipment and capitalised development spend temporary differences	(21)	(217)
- Deferred tax recognised on acquisitions of Legal Eye and Conveyancing Alliance	(26)	(65)
- Deferred tax released on sale of Conveyancing Alliance	-	(425)
- Deferred tax on share options	32	(58)
- Acquisition of subsidiary	6	-
- Utilisation of tax losses	(192)	-
Deferred tax liabilities - closing balance at 31 March	79	280

	2022 000's	2021 £000's
Deferred tax liabilities at period end:
Property, plant and equipment and capitalised development spend temporary differences	218	233
Deferred tax recognised on acquisitions of Legal Eye and Conveyancing Alliance	79	105
Deferred tax on share options	(26)	(58)
Tax losses	(192)	-

Deferred tax liabilities - closing balance at 31 March	79	280

A potential deferred tax asset of £916,100 (2021: £208,000) in respect of tax losses carried forward has not been recognised due to uncertainty over the availability of taxable profits in future chargeable accounting periods. The unrecognised deferred tax asset in respect of tax losses as at 31 March 2022 has been measured at 25%.

The future tax rate has not been applied to the deferred tax liabilities shown above on the basis the effect of applying the future tax rate is not material.

8. Discontinued operations

On 27 November 2020 the Group disposed of Conveyancing Alliance (Holdings) Limited and its subsidiary Conveyancing Alliance Limited, which carried out operations similar to the rest of the Group. The disposal was effected as it was felt that the disposed of companies were not core to the ambition to disrupt and transform the home moving and home owning experience for consumers. Therefore, the proceeds from the sale could be better used to help fulfil this ambition.

Details of the assets and liabilities disposed of, and the calculation of the profit on disposal, are included in note 26.

The results of the discontinued operation, which have been included in the profit for 2021, are as follows:

	2022 £'000	2021 '000
Revenue	-	4,545
Expenses	-	(3,226)
Profit before tax of discontinued operations	-	1,319
Profit on disposal of discontinued operations	-	17,720
Total profit before tax on discontinued operations	-	19,039
Tax on discontinued operations	-	(259)
Tax credit on disposal of discontinued operations	-	425
Net profit on discontinued operations attributable to owners of the company	-	19,205

	2022 £'000	2021 '000
Profit after tax of discontinued operations	-	1,060
Profit after tax on disposal of discontinued operations	-	18,145
Net profit on discontinued operations attributable to owners of the company	-	19,205

Results above for 2021 cover the 7 months to the date of disposal.

During 2021, Conveyancing Alliance Limited contributed £1,435,000 to the group's net operating cash flows and paid £31,000 in respect of investing activities and £2,008,000 in respect of financing activities.

During 2021, A profit after tax of £18,145,000 arose on disposal of Conveyancing Alliance Holdings Limited, being the difference between the proceeds of disposal and the carrying amount of the subsidiary's net assets and attributable goodwill.

9. (Loss) / earnings per share

Basic (loss) / earnings per share is calculated by dividing the (loss) / profit attributable to Ordinary Shareholders by the weighted average number of ordinary shares outstanding during the year.

From continuing and discontinued operations:

Basic (loss) / earnings per share

	2022 £	2021 £
Total basic (loss) / earnings per share	(0.0789)	0.2679

Total diluted (loss) / earnings per share	(0.0789)	0.2536

The (loss) / profit used in the calculation of basic (loss) / earnings per share were as follows:

2022

£000's

2021

£000's

(Loss) / profit used in the calculation of total basic and diluted (loss) / earnings per share

(5,117)

17,378

From continuing operations:

Basic loss per share

	2022 £	2021 £
Total basic loss per share	(0.0789)	(0.0282)

Total diluted loss per share	(0.0789)	(0.0282)

The loss used in the calculation of basic loss per share from continuing operations were as follows:

2022

£000's

2021

£000's

Loss used in the calculation of total basic and diluted loss per share

(5,117)

(1,827)

From discontinued operations:

Basic earnings per share

	2022 £	2021 £
Total basic earnings per share	-	0.2960

Total diluted earnings per share	-	0.2803

The profit used in the calculation of basic earnings per share from discontinued operations were as follows:

2022

£000's

2021

£000's

Profit used in the calculation of total basic and diluted earnings per share

19,205

The weighted average number of ordinary shares used in all of the calculations of basic (loss) / earnings per share were as follows:

Number of shares

2022

Number

2021

Number

Weighted average number of ordinary shares for the purposes of basic earnings per share

64,871,276

Taking the Group's share options into consideration in respect of the Group's weighted average number of ordinary shares for the purposes of diluted earnings per share, is as follows:

Number of shares	2022 Number	2021 Number
Dilutive (potential dilutive) effect of share options	4,149,182	3,642,014

Weighted average number of ordinary shares for the purposes of diluted earnings per share	69,020,458	68,513,290

As the Group reported a loss (2021: loss on continuing operations), outstanding share options do not further dilute the loss per share in the current period so the diluted loss per share is the same as the loss per share (2021: loss per share for continuing operations).

10. Subsidiaries

Details of the Group's subsidiaries are as follows:

Name of subsidiary	Principal activity	Class of shares	Place of incorporation and operation	% ownership held by the Group
Name of subsidiary	Principal activity	Class of shares	Place of incorporation and operation	2022	2021
United Legal Services Limited	Development and hosting of internet-based software applications for legal services businesses	Ordinary	England & Wales	100%	100%
United Home Services Limited	Development and hosting of internet-based software applications for property services businesses	Ordinary	England & Wales	100%	100%
Legal-Eye Limited	Compliance consultancy services for solicitors	Ordinary	England & Wales	100%	100%
Amity Law Limited	Solicitors	Ordinary	England & Wales	100%	-
Hello Smoove Limited	Dormant	Ordinary	England & Wales	100%	-

During the year the Group acquired a 100% interest in Amity Law Limited. Detail on the acquisition is provided in note 12. Hello Smoove Limited was incorporated on 28 February 2022 with share capital of £1.

The Group disposed of its previous 100% interests in Conveyancing Alliance (Holdings) Limited and Conveyancing Alliance Limited during the 2021 financial year. The gain on disposal is shown in note 8 and included within results from discontinued operations.

The registered office of each of the subsidiaries (except for Amity Law Limited) is the same as the registered office of the parent company: The Old Grammar School, Church Road, Thame, Oxfordshire, OX9 3AJ. The registered office of Amity Law Limited is 17-19 Lee Lane, Horwich, Bolton, Lancashire, United Kingdom, BL6 7BP.

11. Goodwill

	2022 000's	2021 £000's
Opening value at 1 April	4,524	11,008
Sale of CAL	-	(6,484)
Purchase of Amity	221	-
Closing value at 31 March	4,745	4,524

Goodwill split by CGU is as follows:

	2022 £000's	2021 £000's
Core	3,518	3,297
Legal-Eye	1,227	1,227
	4,745	4,524

The key assumptions in the performance of impairment reviews related to the projection period, the growth rate applied subsequent to this period, and the discount rate applied to projected cash flows to determine a value in use.

For Core, the recoverable amounts of intangible assets and goodwill was determined using value-in-use calculations, based on cash flow projections from a three-year forecast which has been extrapolated into perpetuity. A three-year period has been used to properly reflect a planned investment period followed by profitable growth. Goodwill arising from the acquisition of Amity has been included within the Core CGU and therefore assessed within the impairment review of the Core CGU. This is because the value that Amity adds to the Group's product development capabilities cannot be separately segregated.

For the Core GGU goodwill, the recoverable amount exceeds its holding value by £6.2 million. No reasonably plausible increase in discount rate or reduction in growth rate would give rise to an impairment of goodwill.

For Legal-Eye, the recoverable amounts of intangible assets and goodwill was determined using value-in-use calculations, based on cash flow projections from a three-year forecast which has been extrapolated into perpetuity. Its recoverable amount exceeds its holding value by £1.0 million. No reasonably plausible increase in discount rate or reduction in growth rate would give rise to an impairment of goodwill.

For both CGUs a growth rate of 2% has been applied to extrapolate the cash flows beyond the forecast periods by reference to the long-term growth rate of the UK economy.

The base post-tax discount rate for each CGU was 12.60% which reflect current market assessments of the time value of money and specific risks using external sources of data. A higher discount rate was used for new revenue streams reflecting their higher risk.

12. Business combinations

On 8 October 2021 the Group acquired 100% of the share capital of Amity Law Limited, a company whose principal activity is conveyancing legal services. The principal reason for the acquisition was to provide a platform for the pilot of the group's new digital products and to accelerate the product development process by providing faster insights into the needs of the various stakeholders in the home moving journey.

Details of the fair value of identifiable assets and liabilities acquired are shown below.

	£'000
Property, plant, and equipment	37
Trade and other receivables	92
Cash and equivalents	70
Provision for legal claims	(5)
Deferred taxation	(6)
Trade and other payables	(81)
Current tax payable	(23)
Total Net Assets	84

Fair value of consideration paid

	£'000
Cash	205
Deferred consideration	100
Total consideration	305

Goodwill (note 11)	221

The deferred consideration is not contingent and is payable in October 2022.

Acquisition costs of £44k arose as a result of the transaction and are included in administrative expenses.

The main factor leading to the recognition of goodwill is the value that Amity adds to the group's product development activities, which does not qualify for separate recognition. The goodwill recognised will not be deductible for tax purposes.

Since the acquisition date Amity has contributed to £205,000 to Group revenues and £87,000 to Group losses. If the acquisition had occurred on 1 April 2021, revenue from the Group would have been £19,494,000 and loss before tax for the group would have been (£5,376,000).

13. Investment in associates

	2022 £'000	2021 '000
Opening value at 1 April	627	533
Share of profit for the year	31	94
Impairment of associate	(503)	-
Closing value at 31 March	155	627

The Group acquired 35% of Homeowners Alliance Ltd on 29 February 2016. Homeowners Alliance Ltd's place of incorporation and operation is in the UK and its registered address is Pound House, 62a Highgate High St, London N6 5HX.

An impairment review of the investment in Homeowners Alliance has given rise to an impairment of £503,000. The review assumed a post-tax discount rate of 12.60%, long term growth rate of 2%, and a discount associated with lack of control of 40%. The impairment reflects the year-on-year decline in profits of the associate.

14. Intangible assets

	Capitalised development expenditure £000's	Acquired technology platform £000's	Customer and Introducer relationships £000's	Brands £000's	Total £000's
Cost
At 1 April 2020	5,791	1,117	3,619	568	11,095
Additions	831	-	-	-	831
Subsidiary Sale	(307)	(1,117)	(2,549)	(342)	(4,315)
Disposals	(1,688)	-	-	-	(1,688)

At 31 March 2021	4,627	-	1,070	226	5,923
Additions	316	-	-	-	316

At 31 March 2022	4,943	-	1,070	226	6,239

Accumulated amortisation
At 1 April 2020	3,024	408	1,283	229	4,944
Charge	800	73	243	40	1,156
Subsidiary Sale	(241)	(481)	(892)	(132)	(1,746)
Disposals	(230)	-	-	-	(230)

At 31 March 2021	3,353	-	634	137	4,124
Charge	551	-	109	23	683

At 31 March 2022	3,904	-	743	160	4,807

Net book value
At 1 April 2020	2,767	709	2,336	339	6,151

At 31 March 2021	1,274	-	436	89	1,799

At 31 March 2022	1,039	-	327	66	1,432

Amortisation is included within administrative expenses. Capitalised development expenditure has a remaining amortisation period of up to 4 years. Consumer and introducer relationships and brands have a remaining amortisation period of 3 years.

The loss on the derecognition of capitalised costs relating to Digital Move in the prior year is included in exceptional items and further details are given in note 3.

During the year ended 31 March 2021, the Group disposed of Conveyancing Alliance (Holdings) Limited and its subsidiary Conveyancing Alliance Limited. This meant that intangible assets originally recognised on acquisition of those companies are no longer recognised in the consolidated balance sheet and neither are the software assets those companies had developed. See Note 8 for further details.

15. Property, plant and equipment

	Leasehold improvements £000's	Right of use assets £000's	Computer equipment £000's	Fixtures and fittings £000's	Total £000's
Cost
At 1 April 2020	815	1,623	1,071	128	3,637
Additions	-	-	58	7	65
Subsidiary Sale	-	(34)	(68)	(6)	(108)
Disposals	-	-	(23)	-	(23)

At 31 March 2021	815	1,589	1,038	129	3,571
Additions	4	-	93	-	97
Subsidiary Acquisition	5	-	31	-	36
Disposals	-	-	(730)	-	(730)

At 31 March 2022	824	1,589	432	129	2,974

Accumulated depreciation
At 1 April 2020	579	121	714	83	1,497
Charge	24	167	143	11	345
Subsidiary Sale	-	(25)	(52)	(2)	(79)
Disposals	-	-	(23)	-	(23)

At 31 March 2021	604	263	781	92	1,740
Charge	27	157	135	10	329
Disposals	-	-	(667)	-	(667)

At 31 March 2022	631	420	249	102	1,402

Net book value
At 1 April 2020	236	1,502	357	45	2,140

At 31 March 2021	212	1,326	256	37	1,830

At 31 March 2022	193	1,169	183	27	1,572

Depreciation is recognised within administrative expenses.

During the year ended 31 March 2021, the Group disposed of Conveyancing Alliance (Holdings) Limited and its subsidiary Conveyancing Alliance Limited. This meant that property, plant and equipment held by those companies are no longer included in the consolidated balance sheet. See Note 8 for further details

16. Trade and other receivables

	2022 £'000	2021 £'000
Current assets
Trade receivables	977	857
Other receivables	87	52
Prepayments	481	543
	1,545	1,452

Non-current assets
Prepayments	94	111
Long-term receivables (loans to associate)	100	200
	194	311

The Directors consider the carrying value of trade and other receivables is approximate to its fair value.

Details of the Group's exposure to credit risk is given in Note 22.

17. Cash and cash equivalents

2022

£'000

2021

'000

Cash at bank (GBP)

20,027

23,976

At March 2022 and 2021 all significant cash and cash equivalents, which include deposits with maturities up to approximately three months, were deposited with major clearing banks in the UK with at least an 'A' rating.

18. Share capital

Allotted, issued and fully paid

The Company has one class of ordinary share which carries no right to fixed income nor has any preferences or restrictions attached.

	2022		2021
	No	£000's	No	£000's
Ordinary shares of £0.004 each	64,871,276	259	64,871,276	259

	64,871,276	259	64,871,276	259

As regards income and capital distributions, all categories of shares rank pari passu as if the same constituted one class of share.

	2022 Number	2021 Number
Shares issued and fully paid
Beginning of the year	64,871,276	64,871,276
New shares issue	-	-
Shares issued and fully paid	64,871,276	64,871,276

During the year the Company issued no new ordinary shares (2021: nil).

19. Share-based payments

Ordinary share options:

The Group operates an EMI share option scheme to which the Executive Directors and employees of the Group may be invited to participate by the Remuneration Committee. Options are exercisable at a price equal to the closing price of the Company's share on the day prior to the date of grant. The options vest in three equal tranches, three, four and five years after date of grant or in one tranche three years after date of grant. The options are settled in equity once exercised. Where the individual limits for an EMI scheme the options will be treated as unapproved but within the same scheme rules.

If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

Options were valued using the Black-Scholes option-pricing model using the following assumptions:

	2022	2021
Share price at date of grant	£0.785	Range of £0.539 to £0.860
Contractual life	10 years	10 years
Expected volatility	55.517%	52.045% to 55.788%
Expected dividend rate	0%	0% to 4.64%
Risk free rate	0.2825%	-0.057% to 0.2825%

The expected volatility was calculated as a 2 year volatility of the Company's share price.

Certain share options include performance conditions relating to share price and gross margin. These are classified as market conditions and did not have a material effect on the fair value of options at the date of grant.

The following table shows options issued which were outstanding as at 31 March 2022:

Date of grant	Exercise price (£)	Share price at date of grant (£)	Options in issue as 31 March 2022
18 August 2014	0.4000	0.4800	85,468
21 August 2015	0.5350	0.5350	34,520
7 November 2016	0.7025	0.7025	440,133
21 December 2016	0.7675	0.7675	151,839
28 June 2018	1.3425	1.3425	200,000
9 August 2018	1.3325	1.3325	320.000
14 July 2020	0.5390	0.5390	1,050,000
14 January 2021	0.8000	0.8000	200,000
19 February 2021	0.8600	0.8600	675,000
20 July 2021	0.7850	0.8030	500,000

The Group recognised total expenses of £108,000 (2021: £1,000) related to share options accounted for as equity-settled share-based payment transactions during the year.

The weighted average fair value of options granted in the year was £0.29 per share (2021: £0.64).

A reconciliation of option movements over the year to 31 March 2022 is shown below:

	As at 31 March 2022		As at 31 March 2021
	Number of options	Weighted average exercise price £	Number of options	Weighted average exercise price
Outstanding at 1 April	4,200,360	0.78	3,131,007	0.94

Granted	500,000	0.79	2,625,000	0.64
Forfeited prior to vesting	(622,343)	0.86	(1,437,768)	0.90
Exercised	(421,057)	0.57	(117,879)	0.40
Outstanding at 31 March	3,656,960	0.79	4,200,360	0.78

Of the share options outstanding at the year end, 883,560 were exercisable at the year end (2021: 1,029,541).

The weighted average remaining contractual life of the outstanding options was 7.5 years (2021: 7.7 years).

The weighted average share price at the date of exercise of those options exercised in the year was £0.82 per share (2021: £0.80).

20. Trade and other payables

	2022 £000's	2021 £000's
Trade payables	2,120	2,110
PAYE and social security	316	140
VAT	296	292
Other creditors	11	292
Accruals and deferred income	1,075	414
Deferred consideration	100	-
	3,918	3,249

The Directors consider the carrying value of trade and other payables is approximate to its fair value.

21. Borrowings

Reconciliation of liabilities arising from financing activities

	2022			2021
	Bank loans £'000	Leases £'000	Total debt £'000	Bank loans £'000	Leases £'000	Total debt £'000
Balance at 1 April	-	1,324	1,324	5,750	1,467	7,217
Loan or lease repayments	-	(192)	(192)	(1,750)	(170)	(1,920)
Finance charges	-	30	30	-	35	35
Disposal of subsidiary	-	-	-	-	(8)	(8)
Movement in revolving cash flow facility	-	-	-	(4,000)	-	(4,000)
Balance at 31 March	-	1,162	1,162	-	1,324	1,324

Summary of borrowing arrangements:

· In December 2016, the Group took out a five year term loan for £5 million and had a £4 million revolving cash flow facility. Both the remaining balance on the loan and the revolving cash flow facility were repaid in full during 2021 and the facilities cancelled.

· Loans were secured by way of fixed and floating charges over all assets of the Group which have now been released.

· Amounts shown represent the loan principals; accrued interest is recognised within accruals. Any amounts due at the reporting date were paid within a few days.

· During 2021 a six month repayment holiday was agreed on the term loan and a £1m overdraft agreed. However, the loan was repaid in full and the overdraft cancelled.

22. Financial instruments

Classification of financial instruments

The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component.

Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 120 days from the invoice date and failure to engage with the Group on alternative payment arrangements amongst others are considered indicators of no reasonable expectation of recovery. The Group generally has a low incidence of unpaid receivables.

The tables below set out the Group's accounting classification of each class of its financial assets and liabilities.

Financial assets

	Measured at amortised cost
	2022 £000's	2021 £000's
Trade receivables net of provision for credit losses (note 16)	977	857
Loans and other receivables (note 16)	187	252
Cash and cash equivalents (note 17)	20,027	23,976
	21,191	25,085

All of the above financial assets carrying values are approximate to their fair values, as at 31 March 2022 and 2021.

Financial liabilities

	Measured at amortised cost
	2022 000's	2021 £000's
Financial liabilities measured at amortised cost (note 20)	3,206	2,816
Borrowings (note 21)	-	-
Lease liability (note 21)	1,162	1,324
Deferred consideration (note 20)	100	-
	4,468	4,140

Financial assets and financial liabilities measured at fair value in the Consolidated Balance Sheet are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3: unobservable inputs for the asset or liability.

No financial liabilities are carried at fair value.

Financial instrument risk exposure and management

The Group's operations expose it to degrees of financial risk that include liquidity risk, credit risk and interest rate risk.

This note describes the Group's objectives, policies and process for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented in notes 16, 17, 20, and 21.

Liquidity risk

Liquidity risk is dealt with in note 23 of this financial information.

Credit risk

The Group's credit risk is primarily attributable to its cash balances and trade receivables. The Group does not have a significant concentration of risk, with exposure spread over a number of third parties.

All of the Group's trade and other receivables have been reviewed for indicators of impairment. The Group suffers a very small incidence of credit losses. However, where management views that there is a significant risk of non-payment, a specific provision for impairment is made and recognised as a deduction from trade receivables.

2022

£000's

2021

£000's

Impairment provision

The amount of trade receivables past due but not considered to be impaired at 31 March is as follows:

	2022 £000's	2021 £000's
Not more than 3 months	35	65
More than 3 months but not more than 6 months	25	22
More than 6 months but not more than 1 year	-	4
More than one year	-	-
Total	60	91

The credit risk on liquid funds is limited because the third parties are large international banks with a credit rating of at least A.

The Group's total credit risk amounts to the total of the sum of the receivables and cash and cash equivalents.

Interest rate risk

In previous periods, the Group had secured debt as disclosed in note 21. The interest on this debt was linked to LIBOR and therefore there was an interest rate risk. In the current reporting period the Group had no outstanding borrowings thus reducing interest rate exposure to the interest received on the cash held on deposit, which is immaterial.

23. Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet liabilities as they fall due.

In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all of its liabilities as they fall due. The Group monitors its levels of working capital as part of its regular reviews of financial performance. The table below shows the undiscounted cash flows on the Group's financial liabilities as at 31 March 2022 and 2021, on the basis of their earliest possible contractual maturity. The Board has concluded that the Group does have sufficient cash to meet liabilities as they fall due.

	Total £000's	Within 2 months £000's	Within 2-6 months £000's	6-12 months £000's	1-2 years £000's	Greater than 2 years £000's
At 31 March 2022
Trade payables	2,120	2,120	-	-	-	-
Other payables	11	11	-	-	-	-
Accruals	1,075	1,075	-	-	-	-
Lease liabilities	1,273	-	89	89	177	918
Deferred consideration	100	-	-	100	-	-
	4,579	3,206	89	189	177	918

	Total £000's	Within 2 months £000's	Within 2-6 months £000's	6-12 months £000's	1-2 years £000's	Greater than 2 years £000's
At 31 March 2021
Trade payables	2,110	2,110	-	-	-	-
Other payables	292	292	-	-	-	-
Accruals	414	414	-	-	-	-
Lease liabilities	1,466	16	89	89	177	1,095
	4,282	2,832	89	89	177	1,095

24. Capital management

The Group's capital management objectives are:

· To ensure the Group's ability to continue as a going concern; and

· To provide long-term returns to shareholders.

The Group defines and monitors capital on the basis of the carrying amount of equity plus its outstanding loan notes, less cash and cash equivalents as presented on the face of the Consolidated Balance Sheet.

The Board of Directors monitors the level of capital as compared to the Group's commitments and adjusts the level of capital as is determined to be necessary by issuing new shares. The Group is not subject to any externally imposed capital requirements.

These policies have not changed in the year. The Directors believe that they have been able to meet their objectives in managing the capital of the Group.

The amounts managed as capital by the Group for the reporting period under review are summarised as follows:

	2022 £000's	2021 £000's
Total Equity	24,802	29,915
Cash and cash equivalents	20,027	23,976
Capital	44,829	53,891

Total Equity	24,802	29,915
Financing	24,802	29,915

Capital-to-overall financing ratio	1.81	1.80

25. Lease arrangements

The Group does not have an option to purchase any of the leased assets at the expiry of the lease periods.

The Group has leases over two main properties, with remaining lease terms ranging from seven to nine years although there are break clauses in both leases. A further lease associated with the acquisition of Amity does not give rise to a right of use asset because management expect the lease's break clause will be exercised within one year.

Lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease liabilities at 31 March 2022 is as follows:


	Within one year	1-2 years	2-5 years	6-10 years	Total
	£000's	£000's	£000's	£000's	£000's
31 March 2022
Gross liability	177	177	532	386	1,272
Finance charges	(27)	(24)	(47)	(12)	(110)
	150	153	485	374	1,162


	Within one year	1-2 years	2-5 years	6-10 years	Total
	£000's	£000's	£000's	£000's	£000's
31 March 2021
Gross liability	193	178	532	563	1,466
Finance charges	(31)	(28)	(59)	(24)	(142)
	162	150	473	539	1,324

The total cash outflow in respect of leases during the year was £192,000.

The interest expense in the year relating to lease liabilities was £31,000.

For details of right of use assets see note 15.

26. Disposal of subsidiaries

As referred to in note 8, on 27 November 2020 the Group disposed of its interest in Conveyancing Alliance Holdings Limited and Conveyancing Alliance Limited.

The net assets of the two subsidiaries at the date of disposal were as follows:

	2021 £000's
Cash consideration received	27,355
Total Consideration received	27,355
Cash disposed of	(929)
Net cash inflow on disposal of discontinued operation	26,426

Net assets disposed of (other than cash):
Property, plant and equipment	95
Receivables	349
Prepayments	205
Trade and other payables	(54)
Accruals	(254)
Tax liabilities including VAT	(928)
Attributable goodwill	6,484
Other intangibles arising on consolidation	2,503
Net assets disposed of	8,400
Costs of disposal	306

Pre-tax gain on disposal of discontinued operation	17,720
Related tax credit	425

Gain on disposal of discontinued operation	18,145

The impact of the discontinued operation on the group's activities is disclosed in note 8.

27. Financial commitments

There are no other financial commitments.

28. Retirement benefit plans

The Group operates a defined contribution pension scheme for its employees. The pension cost charge represents contributions payable by the Group and amounted to £578,000 (2021: £424,000).

29. Related party transactions

Directors:

M Rowland

O Scott

E Bucknor

M Cress (appointed 3 May 2022)

A Weston (resigned 11 May 2021)

J Williams (resigned 3 May 2022)

For remuneration of Directors please see note 4.

Legal-Eye Ltd uses a training platform provided by DeepHarbour Ltd, a company of which Martin Rowland and his wife are the Directors and in which they own more than more than 50% of the share capital. During the year, the Group were invoiced £15,000 (2021: £13,000) by DeepHarbour Ltd for the provision of its training platform. The was no balance outstanding at the period end. The terms of the provision of the training platform were in place prior to the appointment of Martin as a Director of the Group and are considered to be at arms-length.

30. Contingent liabilities

The Directors are not aware of any contingent liabilities within the Group or the Company at 31 March 2022 and 2021.

31. Ultimate controlling party

The Directors do not consider there to be an ultimate controlling party.

32. Events after the Balance Sheet date

There have been no reportable subsequent events between 31 March 2022 and the date of signing this report.

33. Dividends paid

The Directors have recommended that no final dividend be payable in respect of the year ended 31 March 2022.

At the period end, the company's Employee benefit Trust held 357,804 (2021: 357,804) shares in the Company. It waives any dividend that may be due on that holding.

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END

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