Limited Liability Partnership registration number OC437420 (England and Wales)
HODGE JONES & ALLEN LLP
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
Tavistock House South
Tavistock Square
Rayner Essex LLP
London
Chartered Accountants
WC1H 9LG
HODGE JONES & ALLEN LLP
LIMITED LIABILITY PARTNERSHIP INFORMATION
Designated members
Patrick Allen
Rajesh Chada
Julie Hardy
Jayesh Kunwardia
Agata Usewicz
Leticia Williams
Chun Wong
LLP registration number
OC437420
Registered office
180 North Gower Street
London
NW1 2NB
Auditor
Rayner Essex LLP
Tavistock House South
Tavistock Square
London
WC1H 9LG
HODGE JONES & ALLEN LLP
CONTENTS
Page
Members' report
1 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8 - 9
Reconciliation of members' interests
10 - 11
Statement of cash flows
12
Notes to the financial statements
13 - 26
HODGE JONES & ALLEN LLP
MEMBERS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -

The members present their annual report and financial statements for the year ended 30 April 2023.

Principal activities

The principal activity of the limited liability partnership is the provision of legal services.

Fair review of the business

Hodge Jones & Allen LLP was incorporated on 14 May 2021.

 

The business of Hodge Jones & Allen commenced in 1977 and has been running for 46 years. The firm remains true to its founding ethos which means acting primarily for individuals who wish to defend or assert their rights against corporate opponents including government, local authorities, insurance companies and other corporate bodies.

 

The firm acts for clients involved in high profile cases, such as group actions and for clients with a wide range of other personal legal matters. Initially much of the work of the business was funded by legal aid but this has declined steadily over the years, with a significant amount of the business performed under conditional fee arrangements.

 

On 15 October 2021, Hodge Jones & Allen LLP purchased the non-legal aid business from Hodge Jones & Allen Solicitors Limited, a company under common control, and commenced trading on this date.

 

Members' drawings, contributions and repayments

Members are remunerated solely out of the profits of the LLP and are personally responsible for funding their pensions.  The Management Committee sets members’ profit shares and reviews allocations on an annual basis.

 

Members’ profit shares comprise interest on members’ capital accounts, a fixed profit share element and a balance based on service and performance.

 

The members’ drawing policy allows each member to draw a proportion of their profit share on a monthly basis, subject to the cash requirements of the business.

 

The taxation payable on the LLP’s profits is a personal liability of the members during the year.  Retention from profits earned up to the balance sheet date is made to fund the payment of taxation on members’ behalf.

 

Capital is subscribed by the members as agreed by them with the LLP from time to time. On exit from the LLP, capital and current accounts are repaid in 72 equal instalments.

Designated members

The designated members who held office during the year and up to the date of signature of the financial statements were as follows:

Patrick Allen
Rajesh Chada
Julie Hardy
Jayesh Kunwardia
Agata Usewicz
Leticia Williams
Chun Wong
Auditor

The auditor, Rayner Essex LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

HODGE JONES & ALLEN LLP
MEMBERS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
Statement of members' responsibilities

The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the limited liability partnership and of the profit or loss of the limited liability partnership for that period. In preparing these financial statements, the members are required to:

 

The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the limited liability partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Principal risks and uncertainties

The principal risk and uncertainties have been divided into three categories, market and regulatory risk, staff retention and recruitment and liquidity.

 

Market and regulatory risk

There have been changes over the last 12 years introduced by government to the recovery of costs in civil proceedings particularly under no-win no fee arrangements.  The firm has adjusted to those changes.  Further changes are expected with the raising of the small claims limit.  The firm is adjusting to these changes by concentrating on multi-track personal injury work.

 

Staff retention and recruitment

The firm continues to attract and retain high quality staff and the performance of staff through the year has been exceptional.  We will continue to focus on our staff to provide appropriate reward and support so they can continue to deliver a first class service to our clients.

 

Liquidity

A significant proportion of the business is undertaken under conditional fee arrangements, which results in a significant upfront investment of time with the timing of quantum of revenue on each case being unpredictable. The associated liquidity risk continues to be addressed and managed through the financial support from its bank as well as backing from Patrick Allen. The bank has indicated that they will continue to provide support with the extension of the overdraft facility, and Patrick Allen has confirmed he will also provide financial support, if required, for a period of at least 12 months from the date of signing the Financial Statements, subject to no change in ownership.

 

Key Performance Indicators

The key performance indicators of the LLP include the monitoring of Work in Progress along with recovery rates. Fee earners are expected to monitor their time and fee targets, the firm also continually review the type and level of cases that are taken on.

HODGE JONES & ALLEN LLP
MEMBERS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
Future developments

The directors are confident that Hodge Jones & Allen LLP will continue to deliver a strong business.

 

The firm continues to attract high-profile multi-party actions. The firm is engaged in respect of the Essex Mental Health Inquiry. The successful outcome of this multi-party action will improve the cash position of the firm for the next two to three years.

 

Post year end, the firm has undertaken an exercise to streamline costs within the business to improve both cash flow and profitability.

Approved by the members on 17 January 2024 and signed on behalf by:
17 January 2024
Patrick Allen
Designated Member
HODGE JONES & ALLEN LLP
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HODGE JONES & ALLEN LLP
- 4 -
Opinion

We have audited the financial statements of Hodge Jones & Allen LLP (the 'limited liability partnership') for the year ended 30 April 2023 which comprise the statement of comprehensive income, the balance sheet, the reconciliation of members' interests, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the limited liability partnership in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the limited liability partnership’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the members with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The members are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

HODGE JONES & ALLEN LLP
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HODGE JONES & ALLEN LLP
- 5 -
Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion:

 

Responsibilities of members

As explained more fully in the members' responsibilities statement, the members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the members are responsible for assessing the limited liability partnership's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the members either intend to liquidate the limited liability partnership or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities including fraud

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

HODGE JONES & ALLEN LLP
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HODGE JONES & ALLEN LLP
- 6 -

We assessed the susceptibility of the limited liability partnership's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

To address the risk of fraud through management bias and override of controls, we;

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limited the audit procedures required to identify non-compliance with laws and regulations to enquiry of the members and other management and inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the limited liability partnership's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed.

Lucy Kate Ghawss ACA
Senior Statutory Auditor
For and on behalf of Rayner Essex LLP
17 January 2024
Chartered Accountants
Statutory Auditor
Tavistock House South
Tavistock Square
London
WC1H 9LG
HODGE JONES & ALLEN LLP
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2023
- 7 -
Year
Period
ended
ended
30 April
30 April
2023
2022
Notes
£
£
Turnover
3
9,369,087
5,114,899
Administrative expenses
(9,318,905)
(5,096,138)
Other operating income
29,445
15,079
Operating profit
4
79,627
33,840
Interest receivable and similar income
7
21,511
345
Interest payable and similar expenses
8
(271,458)
(63,374)
Loss for the financial year before members' remuneration and profit shares
(170,320)
(29,189)
Members' remuneration charged as an expense
6
170,320
29,189
Result for the financial year available for discretionary division among members
-
-

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

HODGE JONES & ALLEN LLP
BALANCE SHEET
AS AT
30 APRIL 2023
30 April 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
9
9,401,822
10,513,367
Other intangible assets
9
54,750
100,777
Total intangible assets
9,456,572
10,614,144
Tangible assets
10
272,427
291,149
Investments
11
100,000
100,000
9,828,999
11,005,293
Current assets
Debtors
12
9,208,682
7,934,545
Creditors: amounts falling due within one year
13
(7,288,166)
(6,929,989)
Net current assets
1,920,516
1,004,556
Total assets less current liabilities
11,749,515
12,009,849
Creditors: amounts falling due after more than one year
14
(2,891,114)
(3,491,795)
Provisions for liabilities
Provisions
17
(706,250)
(631,250)
Net assets attributable to members
8,152,151
7,886,804
Represented by:
Loans and other debts due to members within one year
Amounts due in respect of profits
529,404
264,057
Members' other interests
Members' capital classified as equity
7,622,747
7,622,747
8,152,151
7,886,804
Total members' interests
Amounts due from members
(2,001,964)
(591,582)
Loans and other debts due to members
529,404
264,057
Members' other interests
7,622,747
7,622,747
6,150,187
7,295,222
HODGE JONES & ALLEN LLP
BALANCE SHEET (CONTINUED)
AS AT
30 APRIL 2023
30 April 2023
- 9 -
These financial statements have been prepared in accordance with the provisions relating to medium-sized limited liability partnerships.
The financial statements were approved by the members and authorised for issue on 17 January 2024 and are signed on their behalf by:
17 January 2024
Patrick Allen
Designated member
Limited Liability Partnership registration number OC437420 (England and Wales)
HODGE JONES & ALLEN LLP
RECONCILIATION OF MEMBERS' INTERESTS
FOR THE YEAR ENDED 30 APRIL 2023
- 10 -
Current financial year
EQUITY
DEBT
TOTAL
Members' other interests
Loans and other debts due to members less any amounts due from members in debtors
MEMBERS'
INTERESTS
Members' capital
Other amounts
Total
Total
2023
£
£
£
£
Amounts due to members
264,057
Amounts due from members
(591,582)
Members' interests at 1 May 2022
7,622,747
(327,525)
(327,525)
7,295,222
Members' remuneration charged as an expense, including employment costs and retirement benefit costs
-
(170,320)
(170,320)
(170,320)
Result for the financial year available for discretionary division among members
-
-
-
-
Members' interests after loss and remuneration for the year
7,622,747
(497,845)
(497,845)
7,124,902
Drawings on account and distributions of profit
-
(974,715)
(974,715)
(974,715)
Members' interests at 30 April 2023
7,622,747
(1,472,560)
(1,472,560)
6,150,187
Amounts due to members
529,404
Amounts due from members, included in debtors
(2,001,964)
(1,472,560)
HODGE JONES & ALLEN LLP
RECONCILIATION OF MEMBERS' INTERESTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 11 -
Prior financial year
EQUITY
DEBT
TOTAL
Members' other interests
Loans and other debts due to members less any amounts due from members in debtors
MEMBERS'
INTERESTS
Members' capital
Other amounts
Total
Total
2022
£
£
£
£
Members' interests at 14 May 2021
-
-
-
-
Members' remuneration charged as an expense, including employment costs and retirement benefit costs
-
(29,189)
(29,189)
(29,189)
Result for the financial year available for discretionary division among members
-
-
-
-
Members' interests after loss and remuneration for the period
-
(29,189)
(29,189)
(29,189)
Introduced by members
7,622,747
-
-
7,622,747
Drawings on account and distributions of profit
-
(298,336)
(298,336)
(298,336)
Members' interests at 30 April 2022
7,622,747
(327,525)
(327,525)
7,295,222
Amounts due to members
264,057
Amounts due from members, included in debtors
(591,582)
(327,525)
HODGE JONES & ALLEN LLP
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
1,350,995
764,070
Interest paid
(271,458)
(63,374)
Net cash inflow from operating activities
1,079,537
700,696
Investing activities
Purchase of tangible fixed assets
(79,181)
(44,813)
Purchase of trade
-
(12,816,691)
Purchase of investments
-
(100,000)
Interest received
21,511
345
Net cash used in investing activities
(57,670)
(12,961,159)
Financing activities
Capital introduced by members (classified as debt or equity)
-
7,622,747
Payments to members
(974,715)
(298,336)
Proceeds from borrowings
1,216,576
2,472,528
Repayment of borrowings
(861,871)
(86,896)
Proceeds from new bank loans
-
1,700,000
Repayment of bank loans
(304,874)
(234,417)
Payment of finance leases obligations
(15,254)
(3,744)
Net cash (used in)/generated from financing activities
(940,138)
11,171,882
Net increase/(decrease) in cash and cash equivalents
81,729
(1,088,581)
Cash and cash equivalents at beginning of year
(1,088,581)
-
Cash and cash equivalents at end of year
(1,006,852)
(1,088,581)
Relating to:
Bank overdrafts included in creditors payable within one year
(1,006,852)
(1,088,581)
HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 13 -
1
Accounting policies
Limited liability partnership information

Hodge Jones & Allen LLP is a limited liability partnership incorporated in England and Wales. The registered office is 180 North Gower Street, London, NW1 2NB.

 

The principal activity of the limited liability partnership is the provision of legal services.

1.1
Reporting period

This reporting period covers the full year to 30 April 2023. The prior year was the first reporting period from incorporation on 14 May 2021 to 30 April 2022.

1.2
Accounting convention

These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the limited liability partnership. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.3
Going concern

The bank has indicated that they will continue to provide support with the extension of the overdraft facility, and Patrick Allen has confirmed he will also provide financial support, if required, for a period of at least 12 months from the date of signing the Financial Statements, subject to no change in ownership.

 

Post year end, the firm has undertaken an exercise to streamline costs within the business to improve both cash flow and profitability.

 

Based on the above support and reviewing profit and cash flow forecasts for the period to 30 April 2025, the directors have concluded that the company has adequate available cash resources to pay its debts as they fall due for the foreseeable future and, as a result, have prepared the accounts on the going concern basis.

1.4
Turnover

Turnover represents the fair value of professional services provided to clients during the period. Turnover is recognised as contract activity progresses and the right to consideration based on time spent, and expertise provided and expenses incurred, exclusive of VAT. Any unbilled work in progress is recognised and based on actual average historical recovery rate over the past 2 years.

 

Turnover in respect of contingent fee assignments is recognised in the period in which the contingent event occurs and once the fee is assured i.e. once a settlement has been agreed. The valuation of accrued income is based on actual average historical recovery rate over the past 2 years.

1.5
Members' participating interests

Members' participation rights are the rights of a member against the LLP that arise under the members' agreement.

 

Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 14 -

All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.

 

Where there exists an asset and liability component in respect of an individual member’s participation rights, they are presented on a gross basis unless the LLP has both a legally enforceable right to set off the recognised amounts, and it intends either to settle on a net basis or to settle and realise these amounts simultaneously, in which case they are presented net.

Other amounts applied to members, for example remuneration paid under an employment contract and interest on capital balances, are treated in the same way as all other divisions of profits, as described above, according to whether the LLP has, in each case, an unconditional right to refuse payment. Amounts payable to members under employment contracts and unavoidable interest on members' capital are charged to 'Members remuneration charged as an expense' in the relevant year.

Remuneration that is paid under a contract to provide services to the LLP, which may be referred to as a contract of employment are classified within Operating Cash Flow in the cash flow statement. In addition drawings on account and distribution of profits are also classified as operating cash flows

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software licenses
25-33% straight line
Website costs
25% straight line
1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 15 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold property improvements
Over the period of the lease
Fixtures, fittings & office equipment
25% straight line
Computer equipment
20-25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

1.10
Impairment of fixed assets

At each reporting period end date, the limited liability partnership reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the limited liability partnership estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.12
Financial instruments

The limited liability partnership has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the limited liability partnership's statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 16 -
Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the limited liability partnership after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from related parties and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 17 -
1.13
Provisions

Provisions are recognised when the limited liability partnership has a legal or constructive present obligation as a result of a past event, it is probable that the limited liability partnership will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.14
Retirement benefits and post retirement payments to members

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.15
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.16
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

2
Judgements and key sources of estimation uncertainty

In the application of the limited liability partnership’s accounting policies, the members are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 18 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Work in progress and accrued income

The partnership's revenue recognition policies are central to how the business values work carried out in each financial year. These policies require estimates to be made in respect of work in progress and accrued income which require assessments and judgements. Work in progress is valued based on actual average recovery rates, this is calculated based on cases settled during the previous 2 years and excludes contingent fee arrangement cases. Once a case is settled the work in progress value is transferred to accrued income based on a fee earners assessment using the external cost drafters for support in calculating the estimate. Contingent fee arrangement cases are recognised when the case is settled and the revenue can be reliably estimated.

 

Change in accounting estimate

During the year the LLP changed the way in which they estimated the value of accrued income for those cases which had been settled, including contingent fee arrangement cases. Previously the estimate was based on the fee earners assessment which was very judgemental. Therefore this has now been changed to be based on actual average recovery rates so that it remains in line with the Work in Progress estimation technique and is less judgemental. There has been no change in the recognition criteria, just a change in the valuation estimation technique. The change in estimate has resulted in an increase in profit of £360,468.

Provisions

Provisions are recognised at the statement of financial position date at management’s best estimate of the expenditure required to settle the present obligation. The carrying amounts of provisions are regularly reviewed and adjusted for new facts or changes in law, technology or financial markets

3
Turnover

An analysis of the limited liability partnership's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Legal services
9,369,087
5,114,899
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
9,369,087
5,114,899
2023
2022
£
£
Other significant revenue
Grants received
-
12,318
HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 19 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(12,318)
Fees payable to the LLP's auditor for the audit of the LLP's financial statements
20,625
18,750
Depreciation of owned tangible fixed assets
81,997
38,478
Depreciation of tangible fixed assets held under finance leases
15,906
5,419
Amortisation of intangible assets
1,157,572
631,420
Operating lease charges
780,118
425,144
5
Employees

The average number of persons (excluding members) employed by the partnership during the year was:

2023
2022
Number
Number
Fee earning
81
73
Administration
58
48
Total
139
121

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
4,743,028
2,349,580
Social security costs
517,519
274,281
Pension costs
124,729
119,858
5,385,276
2,743,719
6
Members' remuneration
2023
2022
Number
Number
Average number of members during the year
7
7
2023
2022
Members' remuneration comprises:
£
£
Remuneration under participation rights
(766,033)
(244,954)
Mandatory interest payments
595,713
215,765
(170,320)
(29,189)
HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 20 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
21,511
345
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
271,458
63,374
9
Intangible fixed assets
Goodwill
Software licenses
Website costs
Total
£
£
£
£
Cost
At 1 May 2022 and 30 April 2023
11,115,454
37,729
92,381
11,245,564
Amortisation and impairment
At 1 May 2022
602,087
11,067
18,266
631,420
Amortisation charged for the year
1,111,545
14,713
31,314
1,157,572
At 30 April 2023
1,713,632
25,780
49,580
1,788,992
Carrying amount
At 30 April 2023
9,401,822
11,949
42,801
9,456,572
At 30 April 2022
10,513,367
26,662
74,115
10,614,144

On 15 October 2021, Hodge Jones & Allen LLP purchased the non-legal aid business from Hodge Jones & Allen Solicitors Limited, a company under common control, for £12,816,691 based on an external valuation. The goodwill represents the difference between the amount paid and the net assets acquired.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
10
Tangible fixed assets
Leasehold property improvements
Fixtures, fittings & office equipment
Computer equipment
Total
£
£
£
£
Cost
At 1 May 2022
13,807
185,138
136,101
335,046
Additions
-
-
79,181
79,181
At 30 April 2023
13,807
185,138
215,282
414,227
Depreciation and impairment
At 1 May 2022
3,788
26,518
13,591
43,897
Depreciation charged in the year
6,493
46,284
45,126
97,903
At 30 April 2023
10,281
72,802
58,717
141,800
Carrying amount
At 30 April 2023
3,526
112,336
156,565
272,427
At 30 April 2022
10,019
158,620
122,510
291,149

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts. The depreciation charge in respect of such assets amounted to £5,419 for the year.

2023
2022
£
£
Computer equipment
53,368
69,275
11
Fixed asset investments
2023
2022
£
£
Unlisted investments
100,000
100,000

The investment represents 100% of the share capital of a dormant subsidiary, Hodge Jones & Allen Trust Corporation Limited, a company incorporated in the United Kingdom.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 22 -
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,239,606
4,375,699
Amounts owed by members
2,001,964
591,582
Other debtors
16,739
400,886
Prepayments and accrued income
2,655,995
2,309,500
8,914,304
7,677,667
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
294,378
256,878
Total debtors
9,208,682
7,934,545

The debtor due in greater than one year is in relation to amounts owing from Hodge Jones & Allen Solicitors Limited representing their contribution to the dilapidations provision.

13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
1,330,656
1,393,455
Obligations under finance leases
16
16,765
15,142
Other borrowings
15
886,084
271,379
Trade creditors
3,498,438
4,125,705
Other taxation and social security
596,448
274,974
Other creditors
34,452
35,290
Accruals and deferred income
925,323
814,044
7,288,166
6,929,989

Included in trade creditors is £2,907,299 (2022: £3,442,473) relating to disbursements for which there is a corresponding balance included within trade debtors.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 23 -
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
997,930
1,321,734
Obligations under finance leases
16
38,931
55,808
Other borrowings
15
1,854,253
2,114,253
2,891,114
3,491,795

Bank loans are secured by fixed and floating charges over the LLP's assets.

15
Loans and overdrafts
2023
2022
£
£
Bank loans
1,321,734
1,626,608
Bank overdrafts
1,006,852
1,088,581
Other loans
2,740,337
2,385,632
5,068,923
5,100,821
Payable within one year
2,216,740
1,664,834
Payable after one year
2,852,183
3,435,987

Bank overdrafts and loans are secured by fixed and floating charges over the LLP's assets.

16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
16,765
15,142
Within two and five years
38,931
55,808
55,696
70,950

Finance lease payments represent rentals payable by the limited liability partnership for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

17
Provisions for liabilities
2023
2022
£
£
Dilapidation provision
706,250
631,250
HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
17
Provisions for liabilities
(Continued)
- 24 -
Movements on provisions:
Dilapidation provision
£
At 1 May 2022
631,250
Additional provisions in the year
75,000
At 30 April 2023
706,250

Provisions comprise the partners estimate, based on a third party report, for dilapidations on the rented office premises that may fall due at the end of the lease term. The lease is due to expire in December 2023.

18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
124,729
119,858

The limited liability partnership operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the limited liability partnership in an independently administered fund.

19
Operating lease commitments
Lessee

At the reporting end date the limited liability partnership had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
652,088
1,117,292
Between two and five years
30,289
682,375
682,377
1,799,667
HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 25 -
20
Related party transactions

On 15 October 2021, Hodge Jones & Allen LLP purchased the non-legal aid business from Hodge Jones & Allen Solicitors Limited, a company under common control, for a total consideration of £12,816,691 including assets, liabilities and goodwill.

 

In the year, the limited liability partnership recharged Hodge Jones & Allen Solicitors Limited for shared costs for a net amount of £3,529,567 (2022: £1,131,624).

 

At the year end, Hodge Jones & Allen Solicitors Limited owed the limited liability partnership £33,976 (2022: £383,465) in relation to recharged expenses, and £294,378 (2022: £256,878) in relation to a contribution towards dilapidations due in greater than 1 year.

 

At the year end, the limited liability partnership owed Hodge Jones & Allen Solicitors Limited £767,250 (2022: £560,124) in relation to intercompany loans.

 

The bank holds cross guarantees with Hodge Jones & Allen Solicitors Limited.

21
Members' transactions

Members of the limited liability partnership have provided guarantees as follows:

 

P Allen         £2,300,000

R Chada        £200,000

J Kunwardia    £200,000

C Wong        £200,000

A Usewicz    £200,000

L Williams    £200,000

 

All guarantees accrue interest at 5%.

 

P Allen's guarantee contains a fixed and floating charge over the assets of the partnership.

 

Other loans outstanding of £536,419 have been guaranteed by members.

22
Ultimate controlling party

The ultimate controlling party is Patrick Allen.

HODGE JONES & ALLEN LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 26 -
23
Cash generated from operations
2023
2022
£
£
Loss for the year
(170,320)
(29,189)
Adjustments for:
Finance costs recognised in profit or loss
271,458
63,374
Investment income recognised in profit or loss
(21,511)
(345)
Amortisation and impairment of intangible assets
1,157,572
631,420
Depreciation and impairment of tangible fixed assets
97,903
43,897
Increase in provisions
75,000
40,625
Movements in working capital:
Decrease/(increase) in debtors
136,245
(826,799)
(Decrease)/increase in creditors
(195,352)
841,087
Cash generated from operations
1,350,995
764,070
24
Analysis of changes in net debt
1 May 2022
Cash flows
30 April 2023
£
£
£
Bank overdrafts
(1,088,581)
81,729
(1,006,852)
Borrowings excluding overdrafts
(4,012,240)
(49,831)
(4,062,071)
Obligations under finance leases
(70,950)
15,254
(55,696)
Balances before members' debt
(5,171,771)
47,152
(5,124,619)
Loans and other debts due to members:
- Other amounts due to members
(264,057)
(265,347)
(529,404)
Balances including members' debt
(5,435,828)
(218,195)
(5,654,023)
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