Notes to the Consolidated Financial Statements continued

For the year ended 31 March 2023

11. Leases

The Group leases its office and the financial statements include the following amounts relating to this lease:

On 15 November 2021, the Company entered into a new office lease. The lease has a contractual period of ten years, but may be cancelled by the Company on the fifth anniversary of the lease commencement date. The lease term is considered to be ten years, representing the non-cancellable lease period, as it is reasonably certain that the lease will not be cancelled. The lease provides for an annual rent of approximately £245,000, payable quarterly in advance, a six-month rent-free period from the lease commencement date and, if the Company does not cancel the lease after five years, a three-month rent-free period from the fifth anniversary of the lease commencement date.

The Company recorded a right-of-use asset of £1,962,000 and a lease liability of £1,846,000 at the lease commencement date, based on the present value of future lease payments discounted at 4% over the lease term. As the lease does not provide an implicit rate, the discount rate of 4% was the Company’s estimated incremental borrowing rate at the commencement of the lease. Rent expense is recognised on a straight-line basis over the ten year lease term, including the rent-free periods.

During the year, the Company incurred net cash outflows of £215,000 (2022: £17,000) in relation to the lease.

12. Investments held at fair value

The Directors have determined that the Company meets the definition of an investment entity as set out in IFRS 10, ‘Consolidated Financial Statements’ and, therefore, investments that are held as part of the Group’s investment portfolio are carried in the consolidated statement of financial position at fair value even though the Group may have significant influence over these companies.

At 31 March 2023, the Group held investments in the following entities: