Notes to the Consolidated Financial Statements continued

For the year ended 31 March 2023

Where deterioration in value is assessed to have occurred, the Group reduces the carrying value of the investment to reflect the estimated decrease. In these circumstances, the fair value of the investment is reduced by 25%, 50%, 75% or 100%, as judged appropriate by the Group.

If there is evidence of positive developments and value creation unrelated to recent investments, the Group may increase the fair value estimate of the investment. However, it is often difficult to determine the specific value attributable to those positive developments and the costs and risks associated with realising that value.

Trade and other receivables are classified as loans and receivables and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the consolidated statement of comprehensive income.

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

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities, unless required to be categorised as at fair value through profit or loss, are recorded initially at fair value and subsequently at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the consolidated statement of comprehensive income. A financial liability is derecognised only when the obligation is extinguished.

The Group operates a share based payment compensation plan, under which the entity received services from employees as consideration for equity instruments (options) of the Company. In the prior year, the options were expected to be equity-settled. Therefore, the fair value of the employee service received in exchange for the grant of the options was recognised as an expense over the vesting period, with the impact of any subsequent revisions to original estimates recognised in the consolidated statement of comprehensive income and a corresponding adjustment to equity. However, it is the Directors’ expectation that in future all such options will be cash-settled and such options, which have all vested, are now measured at fair value at the balance sheet date. The Company recognises a liability at the balance sheet date based on these fair values and changes in the value of this liability are recognised in the consolidated statement of comprehensive income. The social security contributions payable in connection with the grant of options is considered an integral part of the grant itself and, therefore, the charge is treated as a cash-settled transaction.

The Group operates a share based payment compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. Given that it is the Directors’ intention that such options will be settled in the form of cash, the options are accounted for as cash-settled and such options are measured at fair value at the balance sheet date. The Group recognises a liability at the balance sheet date based on these fair values, taking into account the estimated number of options that will actually vest and the current proportion of the vesting period. Changes in the value of this liability are recognised in the consolidated statement of comprehensive income. The social security contributions payable in connection with the grant of options is considered an integral part of the grant itself, and the charge is treated as a cash-settled transaction.

The Group makes payments for each employee to a defined contribution scheme or a scheme of their choice. The assets of the defined contribution scheme are held separately from the Group in independently administered funds. Contributions made by the Group are charged to the consolidated statement of comprehensive income in the year to which they relate.

The Group operates a management incentive plan for all employees. Before any payment to a participant becomes due, the Group must first have returned the aggregate capital raised from shareholders, together with a compounded hurdle rate of 8% per annum. At the point at which the hurdle rate has been exceeded, a provision is included for the unrealised gain due to participants. The provision is measured by reference to net assets and the capital returned to shareholders to date, with movements in the provision charged/credited to the consolidated statement of comprehensive income within administrative expenses.

Taxation expense comprises current and deferred tax recognised in the reporting year. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity when the associated tax is recognised in other comprehensive income or directly in equity, respectively.

Current and deferred taxation assets and liabilities are not discounted.

Current tax

Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the year end.

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

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

Deferred income tax 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.

Equity comprises the following: share capital represents the nominal value of equity shares;

• share premium account reflects the excess over nominal value of the fair value of consideration received for equity; capital redemption reserve reflects the buyback of share capital;

• share based payment reserve represents equity-settled share based remuneration until such instruments are exercised;