Notes to the consolidated financial statements continued For the year ended 30 June 2025
25. Provisions continued
26. Deferred contingent consideration payable Deferred contingent consideration payable reflects the Directors’ best estimate of amounts payable in the future in respect of certain client relationships and subsidiary undertakings that were acquired by the Group. Deferred contingent consideration payable is measured at its fair value based on discounted expected future cash flows and is split between current and non-current liabilities to the extent that it is due for payment within one year of the reporting date. The movements in the total deferred contingent consideration payable balance during the financial year were as follows:
25(a) Client compensation Client compensation provisions relate to the potential liability arising from client complaints against the Group. Complaints are assessed on a case-by-case basis and provisions for compensation are made when they meet the recognition criteria. The amount recognised within provisions for client compensation represents management’s best estimate of the potential liability. The timing of the corresponding outflows is uncertain as these are made as and when claims arise. 25(b) FSCS levy Following confirmation by the FSCS in July 2025 of its final industry levy for the 2025/26 scheme year, the Group has made a provision of £817,000 (2024: £691,000) for its estimated share. 25(c) Leasehold dilapidations Leasehold dilapidations relate to dilapidation provisions expected to arise on leasehold premises held by the Group, and monies due under the contract with the assignee of leases on the Group’s leased properties. 25(d) Other provisions Other provisions include tax-related items arising from voluntary disclosures made by the Group to HMRC, following an input VAT review conducted during a prior financial year.
2025 £’000
2024 £’000
–
At 1 July Additions
1,467
15,338
–
426 341
Finance cost of deferred contingent consideration
13
Fair value adjustments
(3)
– –
Payments made during the year Share issues as consideration
(852) (625)
At 30 June
16,105
–
2025 £’000
2024 £’000
Analysed as: Amounts falling due within one year
14,176 1,929 16,105
– – –
Amounts falling due after more than one year Total deferred contingent consideration payable
During the financial year, the Group completed three acquisitions of CST, Lucas Fettes and LIFT (refer to note 14). Part of the consideration amounts payable are deferred over one and two-year periods. The deferred amount is based on client attrition levels and business profitability over the deferral period. The estimated fair value of the deferred contingent consideration at acquisition was £14,558,000. During the period from acquisition to 30 June 2025, the Group recognised a finance cost of £398,000 and a fair value adjustment of £342,000 on the amount payable. Also, during the year, the Company acquired a portfolio of financial advice clients. Part of the consideration amount, £779,000, is deferred over a year. The Company recognised a finance cost of £27,000 and £81,000 fair value increase in the deferred contingent amount. Deferred contingent consideration is classified as Level 3 within the fair value hierarchy, as defined in note 20.
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Brooks Macdonald Group plc Annual Report and Accounts 2025
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