CUKG_Limited - Accounts

• Select suitable accounting policies and then apply them consistently;

• Make judgements and estimates that are reasonable;

• State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions, disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with company law.  They have a general responsibility for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that they have compiled with the above requirements in preparing the financial statements.

IFRS 9 Financial Instruments: ‘Classification and Measurement' IFRS 15 ‘Revenue from contracts with customers' IFRS 16 ‘Leases' Amendments to IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations' Amendments to IAS 1 ‘Presentation of Financial Statements' There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee • The ability to use its power over the investee to affect its returns Generally, there is a presumption that a majority of voting rights results in control.  To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement(s) with the other vote holders of the investee • Rights arising from other contractual arrangements • The Group's voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of Comprehensive Income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.  When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.  If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with the changes in fair value recognised in the statement of profit or loss. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed).  If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date.  If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.  For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.  Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal.  Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

• Expected to be realised or intended to sold or consumed in the normal operating cycle • Held primarily for the purpose of trading • Expected to be realised within twelve months after the reporting period, or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current. A liability is current when: • It is expected to be settled in the normal operating cycle • It is held primarily for the purpose of trading • It is due to be settled within twelve months of the reporting period, or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Services provided to clients that have not been invoiced to clients as at the date of the Statement of Financial Position are recognised as revenue and accrued under trade and other receivables.  Revenue 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, regardless of when the payment is received.  Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.  The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent.  The Group has concluded that it is acting as a principal in all of its revenue arrangements.  The following specific recognition criteria must also be met before revenue is recognised Revenue is recognised by reference to the stage of completion of the contracted services determined by the value of the services provided at the Statement of Financial Position date as a proportion of the total value of the engagement. Fees in advance in respect of contracted services are time apportioned to the respective accounting periods, and those billed but not yet earned are included in deferred income.

Transactions and balances Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date. Differences arising on settlement or translation of monetary items are recognised in the Statement of Comprehensive Income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

Current tax payable is based on taxable profit for the year.  Taxable profit differs from profit as reported in the Statement of Comprehensive Income because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.  It is accounted for using the liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets in instalments over the expected useful lives as follows: Leasehold improvements period of lease Fixtures and fittings 5 years Office equipment 5 years Computer equipment 4 years

Rentals payable under operating leases are charged to Statement of Comprehensive Income on a straight-line basis over the term of the relevant lease.  Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired.  The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.  Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

The key estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include the judgement used in the carrying amounts of the intangibles assets, deferred tax asset and estimation of work in progress. As detailed in Note 2.4.9, estimated irrecoverable amounts are based on the aging of the receivables balances and historical experience.  Revenue relating to work in progress is recognised by reference to the stage of completion of the value of services provided as a proportion to the total value of the engagement. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised.  Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. As detailed in Note 2.4.7, the carrying amounts of intangible assets are based on management's estimate of an assets finite life.  This involves making assumption of the how the future service requirements of the existing client base will change over time as the demographics, economics, tax, regulatory and statutory requirements evolve.

Acquisition of subsidiary undertaking Under an agreement dated 4 December 2015, the Company acquired the entire share capital of Crestbridge UK Limited (formerly CUKL Limited) for a consideration of £3,351,604. The fair value of the intangible asset has been estimated as set out in Note 12. None of the Goodwill recognised is expected to be deductible for income tax purposes. The consideration was satisfied as follows Discounted  Present Value £ Cash settled 1,000,000 Dec 16 Loan notes 869,565 Dec 18 Loan notes 657,516 Share premium on 40,000 ordinary shares issued in the Company 824,523 Purchase Consideration 3,351,604 The Group performed its annual impairment test in June 2016.  The recoverable amount of the professional accounting & corporate administration Cash Generating Unit (CGU) was £2,724,319 as at that date, has been determined based on a value in use calculation using cash flow projections from financial plan approved by senior management covering a five-year period.  The projected cash flows have been updated to reflect a lower trajectory growth rate for their respective services.  The pre-tax discount rate applied to cash flow projections is 15% and cash flows beyond the five-year period are extrapolated using a 25.0% growth rate that is the comparable to the long-term average achieved by the wider Crestbridge Group.  Management did not identify an impairment for this CGU. The calculation of value in use for the CGU is most sensitive to the following assumptions: • Gross margins • Discount rates • Growth rates used to extrapolate cash flows beyond the forecast period Gross margins - Gross margins are based on the average values achieved in the wider Crestbridge Group and also in the current budget. Decreased demand can lead to a decline in the gross margin.  A decrease in the gross margin by 6% would result in an impairment in the CGU. Discount rates - Discount rates represent the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group's investors.  The cost of debt is based on the interest-bearing borrowings the Group is obliged to service.  An increase in the discount rate of 4.1% would lead to an impairment in the CGU. Growth rate estimates - Rates are based on the longer term historical growth achieved by the wider Crestbridge Group.  A decrease in the projected growth rate of 8 % would lead to an impairment in the CGU.

On 4th December 2015 Crestbridge UK Limited, purchased a real estate oriented book of business with a client annuity revenue stream of circa £1m per annum and assets with a nominal value of £11 as part of a joint venture arrangement between WSM Partners LLP and Crestbridge Corporate Holdings Limited (“CCHL”).  The consideration paid by Crestbridge UK Limited amounted to £1m, of which £626,975 was determined to be consideration paid for the existing book of business (the “customer list”) transferred with the residual being considered as goodwill and payment for the separate tangible assets transferred (note 11).  The consideration for the purchase was provided by CCHL. The fair value of the separable intangible estimated on acquisition was determined through applying a discounted cash flow technique to the projected earnings to be derived from the customer list over its expected useful life.  The key assumptions applied were: ·         An assumed discount rate of 15% reflecting the estimated cost of capital of the business ·         A finite useful life of the customer list of 10 years ·         A growth factor of 3% As noted above, the Directors have considered that the customer list has an expected finite life of 10 years and are amortising the cost over its useful life through the Consolidated Statement of Comprehensive Income.  The amortisation will be charged to the Statement of Comprehensive income based on the expected revenue profile generated from the customers forming part of the customer list.  This will result in accelerated recognition of amortisation in earlier years due to the expected profile of losses of these customers over the 10 year period.

The requirement for impairment is analysed at each reporting date on an individual basis.  As at 30 June 2016 there were no trade receivables that were considered impaired and as a result no specific provision has been made for doubtful debts. The Group considers the concentration of risk with respect to trade receivables as low, as its customers are generally corporate customers with substantial investment portfolios.

Deferred fees represent amounts invoiced in advance in respect of contracted services which will be time apportioned over the respective accounting periods in which the income is earned.

Whilst the facility is repayable on demand, the Directors are of the opinion that the ultimate parent company would not seek repayment of the loan, or any part thereof, until such time as the Group is in a position to do so.

CCHL has provided a letter of support confirming that they will provide the necessary resources to enable the Group to continue its normal course of operations.

30 Jun 2016 £ 714,666 1,748,380 2,463,043 2,910,403 (1,651,620) 1,258,783 1.96

Foreign exchange risk The Group exposure to foreign exchange risk is minimal as the majority of the Group's transactions are in pound sterling, which is the Group's functional and presentational currency. Cash flow and interest rate risk As the Group has a letter of financial support from its ultimate parent and the interest charged on its related party loan may be varied at any time by the ultimate parent company, its income and operating cash flows are substantially independent of changes in market interest rates.

Fee income of £2,753 was recognised in the period to 30 June 2016 from Crestbridge Limited, a company with common ownership, for accounting services provided on an arms-length basis. Management fees of £64,500 were charged by Crestbridge Limited to the Group during the period and included under administrative expenses in the Consolidated Statement of Comprehensive Income.  The management fees represent the charge for managerial, financial, information technology, human resources and marketing services provided.