Notes to the consolidated financial statements continued For the year ended 30 June 2025
IFRS 18 Presentation and Disclosures in Financial Statements IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of information in the financial statements. The standard aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of comprehensive income. IFRS 18 replaces IAS 1 Presentation of Financial Statements, although the standard is not yet endorsed by the UK Endorsement Board. IFRS 18 is expected to have a significant impact on the Group’s financial statements, although it is only expected to have an impact on the presentation and disclosure of the financial statements and is not expected to have an impact on recognition and measurement. IFRS 19 Subsidiaries without Public Accountability: Disclosures IFRS 19 specifies the reduced disclosure requirements an eligible subsidiary is permitted to apply instead of the disclosure requirements in other IFRS standards. The standard is not yet endorsed by the UK Endorsement Board and is not expected to impact the Group’s financial statements. 4. Material accounting policies The accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all years presented, unless otherwise stated. 4(a) Critical accounting estimates and significant judgements The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions. Use of currently available information and application of judgement are inherent in the formation of estimates. Actual results in the future may differ from those reported. In this regard, the Directors believe that the areas where critical accounting estimations are used, relate to the measurement of intangible assets, assumptions used in the goodwill impairment reviews and the measurement of contingent deferred consideration receivable/payable. There are no areas of significant judgement that have been identified. The consolidated financial statements include other areas of judgement and accounting estimates. Whilst these areas do not meet the definition under IAS 1 of significant accounting estimates or critical accounting judgements, the recognition and measurement of certain material assets and liabilities are based on assumptions and/or are subject to longer-term uncertainties. The underlying assumptions and estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised only if the revision affects both current and future periods. Further information about critical accounting estimates and sources of estimation uncertainty are set out below. 3. New standards, amendments to standards and interpretations adopted by the Group in the year continued
Intangible assets – client relationship contracts and goodwill impairment reviews The Group has acquired client relationships and the associated investment management and financial advice contracts as part of business combinations, through separate purchase or with newly employed teams of fund managers, as described in note 17. In assessing the fair value of these assets, the Group has estimated their finite life based on information about the typical length of existing client relationships. Acquired client relationship contracts are amortised on a straight-line basis over their estimated useful lives, ranging from six to twenty years. If the useful economic lives of the client relationship intangible assets held by the Group at 30 June 2025 were to reduce by two years, the estimated charge would have increased by £1,263,000. Goodwill recognised as part of a business combination is not amortised but instead reviewed annually for impairment, or when a change in circumstances indicates that it might be impaired. The recoverable amounts of cash-generating units (“CGUs”) are determined by value-in-use calculations, which require the use of estimates to derive the projected future cash flows attributable to each unit. Details of the more significant assumptions and sensitivity analysis are given in note 17. In assessing the value of client relationships and the associated investment management and financial advice contracts and goodwill, the Group prepares forecasts for the cash flows acquired and discounts to a net present value. The key assumptions in these forecasts are the pre-tax discount rate and projected revenue growth. The pre-tax discount rate is adjusted from a post-tax discount rate derived from the Group’s weighted average cost of capital (“WACC”), adjusted for any specific risks for the relevant CGU. The Group uses the capital asset pricing model (“CAPM”) to estimate the WACC, which is calculated at the point of acquisition for a business combination, or the relevant reporting period date. Key inputs include the risk-free rate, market risk premium, the Group’s adjusted beta with reference to beta data from peer- listed companies, small company premium and any risk-adjusted premium for the relevant CGU. Further details on discount rates used for each CGU are provided in note 17. Deferred contingent consideration receivable and payable Deferred contingent consideration arose during the year in connection with the Group’s acquisition and disposal activities. These amounts represent portions of the transaction price that are payable or receivable at a future date, subject to the achievement of specific conditions or milestones. These typically include performance targets, client retention thresholds, or other contractual criteria agreed between the parties. Deferred contingent consideration payable and receivable is measured at fair value and recognised within net finance income in the consolidated statement of comprehensive income in each reporting period.
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Brooks Macdonald Group plc Annual Report and Accounts 2025
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