Notes to the Consolidated Financial Statements

continued

For the year ended 31 March 2023

The financial information of the subsidiary undertakings is prepared for the same reporting period as the Company, using consistent accounting policies. Subsidiary undertakings are consolidated from the date on which control is transferred to the Group and would cease to be consolidated from the date on which control is transferred out of the Group. Intra-group transactions, profits and balances are eliminated in full on consolidation.

Fund investments (see Note 12) are not considered to be subsidiary undertakings and, therefore, are not included in the consolidated financial information.

Associates

Associates are accounted for using the equity method of accounting. Under the equity method, interests in associates are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income.

Revenue

Revenue relates to management fees that are generally earned as a fixed percentage of funds under management and are recognised as the related services are provided. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of VAT. Revenue is recognised when the Group satisfies its performance obligations, in line with IFRS 15. All revenue is generated within the United Kingdom.

Property, plant and equipment is stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price and costs directly attributable to bringing the asset to its working condition for its intended use.

Depreciation on assets is calculated, using the straight-line method, to allocate the cost to their residual values over their estimated useful lives, as follows: leasehold improvements, five years; furniture and equipment, three years; and

• computer equipment, three years.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments) less any lease incentives receivable; and

• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case, the Group’s estimated incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost and comprise: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date; any initial direct costs; and restoration costs, less any lease incentives received.

Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Where the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

The Group classifies all its investments (equity and loans), which are not subsidiaries or associates, as financial assets at fair value through profit or loss. These financial assets are initially recognised at fair value, which is most typically the transaction price, and subsequently carried at fair value with any changes in fair value recognised in profit or loss in the year in which they arise.

The Group measures the fair value of its investments in line with International Private Equity and Venture Capital Valuation 2018 Guidelines, endorsed by the British Venture Capital Association. The fair values of investments in quoted companies are based on bid prices in an active market at the reporting date.

For the Group’s investments in unquoted entities, where there are often no current earnings, no short-term future earnings or positive cash flows, it is often difficult to make reliable cash flow forecasts. The Group also considers that fair value estimates based entirely on observable market data are of greater reliability than those based on assumptions. Given these circumstances, the price of recent investment is typically considered to be the best input to derive fair value at the date of investment. As a result, the price of recent investment, by the Group or by a third party, is typically used as the de facto starting position for any fair value assessment made by the Group, albeit taking into account the following factors: the period of time for which it remains appropriate to use the price of the most recent investment; and the equity structure of a portfolio company, especially where it involves different class rights in a sale or liquidity event.

The resultant fair value may be subject to adjustment based on various performance-related factors including, inter alia: technical measures such as product development phases and patent approvals; financial measures such as changes in the rate of cash consumption; changes in profitability expectations; and market and sales measures such as product development phases, market launches and geographic expansions.

Fair value may also be subject to adjustment based on the extent to which key milestones have been achieved and prevailing market conditions, including the stability of the external environment. When contemplating the extent to which key milestones have been achieved by entities in early or development stages, the Group seeks to determine whether there is an indication of change in fair value based on performance against milestones that were set at the time of the investment, as well as taking into consideration key market drivers for the investee company and the overall economic environment.

Where the Group considers that the enterprise value derived from the price of recent investment, adjusted or unadjusted, may no longer be relevant and there are limited or no comparable entities or transactions from which to infer value, the Group may also consider more generic milestone and industry and sector analysis to determine fair value. When appropriate, the Group may also consider inputs from external advisers, analysts and consultants to assess the reasonableness of any change in fair value estimated by the Group.

At each measurement date, or if the Group considers that there is a reason to believe that the fair value might have changed between measurement dates, an assessment is made of the required adjustment to the fair value estimate of the investment. Wherever possible, the adjustment is based on objective data relating specifically to the entity in which the investment was made.