REG - Gateley (Holdings) - Half Year Results to 31 October 2021
12/01/2022 07:00
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RNS Number : 1364Y Gateley (Holdings) PLC 12 January 2022
12 January 2022
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year Results for the six months ended 31 October 2021
Strong growth and continued trading momentum
Gateley, the legal and professional services group, is pleased to announce its
unaudited results for the six months ended 31 October 2021 (the "Period" or
"H1 22"), which show strong growth and continued trading momentum placing the
Group in a strong position to deliver market expectations for the full year.
Financial Highlights
· Strong financial performance with revenue and profit before tax up 23.5% and
19.5% respectively
· Organic growth of 23.0%
· Revenue from consultancy (non-legal revenue services) grew substantially,
increasing 33.9% to £8.3m (H1 21: £6.2m)
· Trading margins ahead of pre-pandemic levels with adjusted underlying profit
margin of 13.7% (H1 20: 13.3%, H1 19: 13.2%)
· Strong activity levels across the Group with utilisation up 5ppts to 84% (H1
21 79%)
· Operating costs remain lower than pre-pandemic levels
· Interim dividend of 3.0p per share, in line with progressive dividend policy
(H1 21: 2.5p)
H1 22 H1 21 Change
Revenue £62.3m £50.5m +23.5%
Underlying operating profit before tax £9.0m £8.1m +10.8%
Underlying adjusted profit before tax(1) £8.5m £7.5m +14.1%
Profit before tax £7.3m £6.1m +19.5%
Profit after tax £5.9m £4.8m +24.7%
Basic earnings per share ("EPS") 5.00p 4.04p +23.7%
Underlying diluted EPS(2) 5.76p 4.92p +17.1%
Net assets £58.0m £49.7m +16.6%
Net cash(3) £8.8m £9.3m -4.9%
Dividend 3.0p 2.5p(4) +20%
(1) Underlying adjusted profit before tax excludes share based payment charges,
amortisation and exceptional items - See note 1.2
(2) Underlying diluted EPS excludes share based payment charges, amortisation and
exceptional items. It also adjusts for the future weighted average number of
expected unissued shares from granted but unexercised share option schemes in
issue based on a share price at the end of the financial period
(3) Net cash/(debt) excludes IFRS 16 lease liabilities
(4) Declared as an interim dividend in June 2021
Operational and post-Period highlights
· M&A strategy recommenced, following a pause resulting from the COVID-19
pandemic, with the acquisitions of:
- Tozer Gallagher - adding quantity surveyors to our Property Platform; and
- Adamson Jones - adding patent and trade mark attorneys to our Business
Services Platform
· Average fee earner headcount stable at 794 in H1 22 (H1 21: 785), in line with
our FY21 strategic decision to maintain capacity to service returning
demand. Now further enhancing capacity with 75 new roles at all levels
mandated for H2 22
· Platforms established as the growth vectors of the business and our financial
reporting is now aligned to these. Each Platform delivering in excess of 20%
like-for-like growth in the Period
· Growth of staff ownership continues to strengthen with 72% of staff either
share or option holders
Current trading and outlook
· Strong trading in H1 22 is expected to continue in H2 22, as demand for our
combined legal and consultancy services remains high. H2 22 is also expected
to reflect the normal second-half weighting of revenues
· On track to meet market expectations for the year ending 30 April 2022
("FY22")
· The Group's well-diversified and resilient business model, combined with
considerable opportunities (both organic and acquisitive) to develop our
Platforms further, gives the Board confidence in the continued future growth
of the business
Rod Waldie, Chief Executive Officer of Gateley, said:
"I would like to thank all of my colleagues for this excellent performance in
H1 22. We have delivered strong, predominately organic, revenue and profit
growth on a like-for-like basis and have returned the Group to pre-pandemic
profit margins.
"The aggregation of complementary legal and consultancy services on our four
market-facing Platforms of Corporate, Business Services, People and Property
continues to differentiate Gateley, strengthen our appeal to clients and
enhance our resilience. Our first segmental reporting on this basis shows
strong like-for-like revenue growth in each Platform.
"Our balance sheet remains strong, and we are committed to investing in our
Platform strategy, to seize attractive growth opportunities. Our post period
end acquisition of Adamson Jones is very recent evidence of this. Our
acquisition pipeline is strong, and we are actively engaging with
opportunities for further growth across each of the Platforms.
"Current levels of activity are expected to continue throughout H2 22. We
are therefore well positioned to deliver market expectations for the full
year."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Finance Director Tel: +44 (0) 121 234 0196
Nick Smith, Acquisitions Director and Head of Investor Relations Tel +44 (0) 20 7653 1665
Cara Zachariou, Head of Corporate Communications Tel +44 (0) 121 234 0074
Mob: +44 (0) 7703 684 946
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Cara Murphy Tel: +44 (0) 20 3100 2000
Belvedere Communications Limited - Financial PR
Cat Valentine Mob: +44 (0) 7715 769 078
Keeley Clarke Mob: +44 (0) 7967 816 525
Llew Angus Mob: +44 (0) 7407 023 147
gateleypr@belvederepr.com (mailto:gateleypr@belvederepr.com)
About us
Gateley is a legal and professional services group. Founded in Birmingham in
1808, we have provided commercial legal services to individuals and businesses
for over 200 years. We have over 750 professional advisers and employ over
1,100 people across offices located in Belfast, Birmingham, Bolton, Guildford,
Leeds, Leicester, London, Manchester, Newcastle, Nottingham, Reading and
Dubai.
In 2015, we were the first commercial UK law firm to list on the London Stock
Exchange's AIM Market. Our strategy is to differentiate ourselves in a crowded
marketplace, incentivise our people to retain and attract the best talent in
the industry and diversify our income streams by acquiring complementary
business services.
For further details on Gateley Plc please visit www.gateleyplc.com
(http://www.gateleyplc.com) or follow us on Twitter
www.twitter.com/@GateleyGroup (http://www.twitter.com/@GateleyGroup)
CHIEF EXECUTIVE OFFICER'S REVIEW
Continued momentum
I am delighted with the Group's performance during H1 22. It is now evident
that there is a permanent change to our traditional ways of working. Our
staff have adapted incredibly well to the agile working environment, whilst
maintaining excellent levels of service to our clients. I remain grateful to
all of our people for their energy and commitment. Like me, they are
delighted to see that the outcome of their hard work is like-for-like growth
in revenue (+23.5%) and profit before tax (+19.5%).
Market conditions have been supportive, particularly when viewed against the
same period last year. However, we are consistent in our belief that the
balance in our business model and the diversity of services on our Platforms
means that we remain resilient in all markets.
We have declared an interim dividend of 3.0p (H1 21: 2.5p).
Activity review
Property Platform
This Platform is focused on clients' activities in real estate development and
investment, and in the built environment in the widest sense.
Transactional activity has been strong across our legal services, commercial
property, residential development and construction teams. Our core markets
remain busy (house building, warehousing & distribution and supported
living). In our property consultancy businesses, the Q1 22 acquisition of
Tozer Gallagher has added capacity to our built environment team in Gateley
Vinden and further enhanced our credentials in guarantee bond claims. We
have added a service line to Gateley Hamer by investing in specialist advisors
to the telecoms sector. Gateley Capitus is seeing improved levels of
activity as businesses seek to maximise fiscal incentive opportunities. H1
22 like-for-like revenue growth in the Property Platform is 24.3%.
People Platform
This Platform supports businesses dealing with and developing human capital,
and private clients in dealing with their personal affairs.
H1 22 activity in our legal services employment, pensions and private client
teams was good. Our people focused consultancy businesses had a strong H1 22
and are carrying a good pipeline of work derived from our innovative
offering. Revenue was significantly ahead of the prior year as clients
return to investing in leadership assessment and development and cultural
change projects. The People Platform delivered like-for-like revenue growth
of 21.5%.
Corporate Platform
This Platform is focused upon the corporate, financial services and
restructuring markets in both transactional and business support services.
Our legal services teams in corporate, banking and tax were extremely busy
throughout H1 22. Like-for-like growth on this Platform is an impressive
47.4%, being a reflection of a buoyant post-pandemic corporate market. The
team is a leading legal services provider in corporate M&A and has been
recognised as such during H1 21 with numerous awards, including Insider
Dealmakers Awards 2021 (Midlands) - International Deal of the Year (Gymshark,
minority Investment by General Atlantic) and SME Deal of the Year (sale of
Correla by Xoserve), Insider Dealmakers Awards 2021 (East Midlands) -
Corporate Law Firm of the Year and Insider Dealmakers Awards (Thames Valley)
- Deal of the Year £20m+ (advising Babble on MBO of Graphite Capital). Our
International Investment Services consultancy has grown both headcount and
revenue as workflows escalate, particularly from the previously reported long
term contract with Cambridge and Peterborough Combined Authority.
Business Services Platform
This Platform supports clients in dealing with their commercial agreements,
managing risk, protecting assets and resolving disputes.
Our current revenues on this Platform are predominantly through legal
services. Our litigation teams remain busy on long-term mandates for both UK
and overseas clients, where our pipeline is strong. To assist further in
winning additional work, we have very recently committed to a new £50m
litigation funding facility for long term complex projects. Our regulatory
and business defence team had a good H1 22 with both direct mandates and in
support of our corporate services team. Like-for-like revenue growth on this
Platform was 20.2%. The acquisition of Adamson Jones to this Platform,
announced on 10 January 2022, is directly complementary to our legal services
intellectual property offer and is an exciting development for us. We expect
to see further growth in this space.
Platforms - Drivers for growth
We worked hard during FY21 and throughout H1 22 to embed our Platform strategy
with all of our stakeholders. Our four Platforms are now the established
growth vectors of our business and our financial reporting is now aligned with
these. Each Platform is becoming increasingly integrated and we have
amalgamated some complementary businesses to realise operational advantage.
During H1 22, this has included conflating management of t-three and Kiddy
& Partners on our People Platform and amalgamating Tozer Gallagher with
the Gateley Vinden business on our Property Platform.
There is clear evidence that the diversity of service lines across the
lifecycle of clients' operations on our Property and People Platforms is
helping us to win work from new and existing clients. I am delighted that we
have expanded our Business Services Platform with the very recent acquisition
of Adamson Jones, a team of experienced and highly regarded patent and
trademark attorneys. This is our eleventh acquisition since 2015 and becomes
our ninth non-legal services business.
Our strong balance sheet gives us a good foundation for further investment in
Platform growth, which we are actively pursuing.
Operational review
We have spent many years building and growing our physical footprint across
the UK, matching our office locations with opportunities that we see available
to the Group. As a result, we currently provide our services from most of
the major commercial centres in the UK. Our office network remains an
important asset to us but, as a result of the success of agile working which
was accelerated by the pandemic, we have been able to create operational
efficiencies through the reduction in office space, without compromising
services or growth. To date we have realised efficiencies in Reading, Leeds,
the North West and Belfast. Further opportunities to maximise the utilisation
of the Group's office network will arise as the Group continues to grow.
Since our Admission to AIM, the Group has established a number of share-based
schemes that variously offer all staff the ability to participate in early
ownership of Gateley and share in the rewards of that ownership as they
contribute to the success of the Group. I am delighted that 72% of current
staff are now existing share or option holders in the Group. Our ability to
incentivise people through plc share ownership provides an attractive
alternative to traditional professional services ownership models. During
the period staff exercised SAYE and CSOP options to further widen our staff
shareholder base.
Finally, during this half year period, we have been preparing for the roll out
of our new, Group-wide, financial accounting system which is planned to "go
live" at the start of June 2022. The project team continues to work hard on
the delivery of this significant project that I have no doubt will aid future
acquisitive growth and facilitate quick system integrations across the Group.
Purpose and ESG
During the Period, we launched our Purpose Statement: "to delight our clients,
inspire our people and support our communities."
In tandem, we also produced our maiden Responsible Business report.
I am really pleased that our Purpose Statement and Responsible Business
strategy have been so well received internally, with over 800 people attending
our internal virtual launch event.
Our Responsible Business report, which was launched in September 2021,
concluded that in terms of ESG, Gateley can make the most positive impact with
our people and in our communities by aligning ourselves to the UK's
levelling-up goals. To help us achieve this we have partnered with the leading
ESG consultancy, This is Purpose. I am delighted with the positive traction
that we have already made since setting our long-term objectives during H1
22. Rt. Hon Justine Greening of "This is Purpose" described our first
'Responsible Gateley' report as "an excellent piece of work". Responsible
Gateley
(https://gateleyplc.com/about-us/responsible-gateley/responsible-business-ethos/)
.
Succession and Board Changes
I am pleased to announce that, subject to the completion of customary
regulatory due diligence, on 1 May 2022, Victoria Garrad (Group HR Director)
will join the Gateley (Holdings) Plc Board. Peter Davies, our Chief Operating
Officer ("COO"), will step down from that Board as part of a planned
succession which will see Victoria take on the role of COO on 1 May 2023.
Victoria has been with Gateley since 1996. Before taking the Group HR Director
role, she was a Partner in our legal services employment team. She has been a
member of our Operations and Strategic Boards since 2011. Peter Davies will
remain on the Strategic Board and will continue to chair our Operations Board
until 30 April 2023.
Current trading and outlook
I am delighted that our decision to maintain full operating capacity
throughout FY21 has enabled us to deliver exceptional service to clients and
an excellent trading performance in what was a busy H1 22. Activity levels and
the pipeline remain robust in both our transactional and non-transactional
service lines and across both legal and consultancy services. The Group is
well positioned to deliver further growth in the second half and achieve
results in line with market expectations for FY22.
The plan for the long-term development of our business is now clearly
characterised in our Platform Strategy. This is rooted in understanding
clients' needs and outcomes in the context of legal and professional services.
Our increasingly diverse range of services is demonstrably enhancing
opportunities and revenues. We continue to position ourselves to invest in and
grow our Platforms to provide an increasing breadth of services to our
clients, deliver strong growth, and, therefore, maintain significant levels of
returns to our people and investors.
We strive to achieve in line with our Purpose statement.
Rod Waldie
CEO
12 January 2022
FINANCE DIRECTOR'S REVIEW
Financial overview
With activity levels remaining strong, the underlying adjusted profit margin
of 13.7% was ahead of pre-pandemic levels, which in H1 20 was 13.3%. This has
been achieved despite necessary increases in payroll costs, that have been
offset by strong growth in fees and lower operating overhead costs, which have
not yet returned to pre-pandemic levels, and may not do so in the short to
medium term.
Our track record of delivering profit, supported by strong cash generation and
attractive investment returns, is based on a responsible business model with a
strong focus on social and governance objectives and making sustainable
decisions for the long term.
During H2 22, as we prepare for the release of our new financial accounting
system that is scheduled to go live in June 2022, our year end reporting
period and annual audit timetable will be disrupted. We have agreed with our
auditors to delay the performance of our annual audit from June to August for
2022 only, which will have a knock-on effect with our usual market
announcement timetable of mid-July. To accommodate this important phase of our
expansion and technological advancement, we have decided to delay our Final
Results announcement until September 2022. The Group expects to announce its
usual, full year trading update in May 2022.
Revenue
Group revenue grew by 23.5% to £62.3m for the first half of the year from
£50.5m in H1 21. Revenue from the Group's core legal services grew by 21.9%
to £54.0m (H1 21 £44.3m) whilst revenue from consultancy non-legal services
grew by 33.9% to £8.3m (H1 21 £6.2m). Acquired revenue during the period
totalled just £0.2m from the consultancy Tozer Gallagher meaning overall
organic growth was 23.0%. The Group has grown all Platforms organically
during the period and continues to diversify further its client base and
revenue mix.
Transactional activity has remained strong during the first half of H1 22 as
our Banking and Corporate teams (within our Corporate Platform) have
demonstrated 47.4% growth on H1 21 from £10.3m to £15.2m. Whilst
transactional activity was paused during the onset of the pandemic, activity
returned strongly around September 2020 and has been very busy ever since.
Within its Property Platform, Gateley's Housebuilding, Construction and
Commercial Property teams showed significant levels of client activity as
lucrative long-term projects across its client base helped it deliver 24.3%
growth from £21.7m to £27.0m. The strength of its combined consultancy and
legal service offerings continues to benefit Gateley's ability to win and
deliver long-term infrastructure and housebuilding related projects. These
projects often span multiple years that require professional input alongside
client expertise in order to help our clients deliver successfully. Gateley
also continues to benefit significantly from its clients' investment in
warehousing and distribution projects. Consultancy services represented
£5.4m (H1 21 £4.2m) or 20% of Property Platform revenue.
The Businesses Services Group has doubled its revenue returns from Complex
Dispute Litigation work as it attracts mandates through its established,
market leading expertise. Revenues have also increased in commercial service
lines that provide ongoing support to the Corporate Platform.
Our People Platform in H1 22 has delivered consultancy revenue of £2.5m (H1
21: £1.7m) or 27% of total People Platform revenue. Growth has also been
delivered by the Employment and Private Wealth legal service lines together
with a strong return of growth for the specialist change management services
of t-three and Kiddy & Partners. Their move to an agile delivery model
and change management expertise are increasing the demand for services they
can provide to clients in times of constant change for UK and international
businesses.
Revenue Corporate Platform Business Services Platform People Platform Property Platform Total Segments Other Total
Oct 21 15,160 9,658 9,386 26,987 61,191 1,118 62,309
Growth from Oct 20 47.4% 20.2% 21.5% 24.3% 28.1% (58.6%) 23.5%
Oct 20 10,285 8,035 7,725 21,716 47,761 2,699 50,460
Total expenses
Personnel costs have increased as a percentage of revenue to 64.1% (H1 21:
60.9%) but are expected to return closer to historic levels in H2 22.
Average numbers of legal and professional staff rose by 1% to 794 (H1 21: 785)
whilst support staff numbers decreased by 2.6% to 338 (H1 20: 347). We
retained fee earning capacity throughout the pandemic in order to satisfy the
higher than previously seen client demand during FY21 and into H1 22, and now
move into H2 22 with a significant list of 75 additional recruitment requests
across the Group.
The last two half year periods do not display like for like costs as a result
of the decisions the Board took on pay to address pandemic led concerns. In
April 2020 the Group cut pay by up to 20% and froze all existing salaries
until activity levels returned in the second half of FY21. However, in H2 21
all previously deducted pay was returned to staff and in H1 22 a comprehensive
review of salary rates was implemented to address wider market trends in, what
has now become a challenging recruitment market.
Other operating expenses, excluding non-underlying items, decreased by 15.1%
to £10.6m (H1 21: £12.5m) as expenses remained below pre-pandemic levels due
to staff and clients continuing to work predominately from home.
Profit before tax and earnings per share
The Group has recorded strong underlying adjusted profit before tax of £8.5m
which has increased by 14.1% from £7.5m in H1 21. This has resulted in an
excellent trading margin performance of 13.7% (H1 20: 13.3%) reflecting the
improving activity levels in the business and the control of costs despite the
market pressures the sector is experiencing. We enter the second half of the
financial year having maintained fee earner headcount in order to service the
now visible increases in client activity, and whilst government guidance
currently to advise staff to work from home, we now expect certain overhead
savings to be maintained during H2.
The table below highlights the significant change we experienced in both
halves of last year and the impact of the key decisions we took throughout
that period.
H1 20 H2 20 FY20 H1 21 H2 21 FY21 H1 22
£m £m £m £m £m £m £m
Revenue 51.8 58.0 109.8 50.5 70.9 121.4 62.3
Other income 0.1 0.6 0.7 1.9 0.6 2.5 0
Personnel costs (32.0) (31.5) (63.5) (30.7) (46.8) (77.5) (39.9)
Overheads and depreciation (13.0) (15.3) (28.3) (13.6) (12.3) (25.9) (13.4)
Underlying operating profit before tax 6.9 11.8 18.7 8.1 12.4 20.5 9.0
Margin (%) 13.3% 20.3% 17.0% 16.0% 17.5% 16.8% 13.7%
Utilisation (%) 81% 79% 80% 79% 98% 88% 84%
Growth (%) 10.5% 2.8% 3.5% (9.5)% 20.0% 4.7% 23.5%
Profit before tax of £7.3m increased by 19.5% from £6.1m with profit after
tax of £5.9m increasing by 24.7% from £4.8m.
Basic earnings per share increased by 23.8% to 5.00p (H1 21: 4.04p).
Underlying diluted earnings per share increased by 17.1% to 5.76p (HY 21:
4.92p).
Dividend
The Board has approved an interim dividend of 3.0p (H1 21: 2.5p declared in
June 2021) per share. This dividend will be paid on 31 March 2022 to
shareholders on the register at the close of business on 18 February 2022.
The shares will go ex-dividend on 17 February 2022. This dividend has not
been recognised as a liability in these final statements.
Net assets and cash
The Group's net asset position has increased by £8.3m to £58.0m (H1 21:
£49.7m).
There was a £4.6m increase in total current assets, resulting from £8.3m
additional trade and other receivables available for collection, a £0.6m
increase in contract assets ("unbilled revenue") together with a £4.3m
decrease in cash at bank. Cash has decreased due to the reinstatement of
bonuses and dividends after the outcome of the FY21 year was known.
Non-current assets decreased by £4.9m due to reductions in right-of-use
assets and amortisation of intangible assets in line with contractual
commitments and Group accounting policies.
Total liabilities decreased by £8.5m to £50.2m (H1 21: 58.7), mainly as a
result of the decrease in corporate tax liabilities of £3.3m and the
reduction in lease liabilities through scheduled repayments and
crystallisation of certain operational gearing opportunities. In addition,
the repayment of all outstanding debt before the end of FY21 has also reduced
liabilities compared to H1 21. At the Period-end, debt comprised unsecured
term loans of £nil (H1 21: £3.5m), whilst loans to former partners of
acquired businesses totalled £nil (H1 21: £0.3m).
The Board continues to carefully monitor the impact of COVID-19 on the future
forecasts used in assessing the value in use of the cash generating units to
which the goodwill and intangibles relate and determined that despite short
term reductions such forecasts are more than sufficient to justify the
carrying value of goodwill. Therefore, as at 31 October 2021, the Board
concluded that the goodwill and intangible assets do not require impairment.
Working capital and cash generation
Total lock-up decreased from 149 to 143 days as a result of WIP days reducing
from 55 to 46 days and debtor days increasing from 94 to 97 days. Both
movements are as a result of heightened billing activity towards the end of
the half year. Contract assets (unbilled revenue) increased to £14.7m (H1 21:
£14.2m) whilst trade receivables, including unbilled disbursements, increased
to £38.1m (H1 21: £31.1m).
Cash generated from operations during the Period was £2.4m (H1 21: £12.9m)
which represents 40.0% (H1 21: 271.1%) of profit after taxation. Free cash
flow decreased from £10.6m in H1 21 to £(1.9)m as the Group used existing
cash resources to satisfy the payment of returning bonus and corporate tax
outflows that were paused during H1 21. The Group has returned to its usual
profile of annual cash outgoings as capital expenditure returned. The Group
remains debt free at present. However, this position is reviewed regularly to
ensure appropriate funding levels are in place to support the Group's
expansion as we move forward into H2 22 with our three year £30m revolving
credit facility.
Conclusion
The Group has delivered a strong performance in HY22 against the backdrop of
an uncertain macro environment, with activity levels, revenue and
profitability all showing improvement. Demand for services, and capacity to
deliver those services, has steadily improved over the course of H1 22. The
Group has a strong pipeline of work coming into the second half of the
financial year and expects to maintain profit margins in the short term but
use its acquisition strategy to seek further margin enhancing acquisitions in
the medium to long term as our Platform strategy resonates wider with existing
and potential clients.
Our next two six-month periods will yield significant change for the business,
as we finalise the installation of our new Group-wide financial accounting
system and seek further opportunities to expand the growth through sustainable
organic growth and acquisition.
Neil Smith
Finance Director
12 January 2022
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2021
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Revenue 2 62,309 50,460 121,375
Other operating income - 1,871 2,451
Personnel costs 3 (39,935) (30,743) (77,460)
Depreciation - Property, plant and equipment 4 (421) (599) (1,045)
Depreciation - Right-to-use asset 4 (1,942) (1,801) (3,751)
Impairment of trade receivables and contract assets (475) (17) (1,834)
Other operating expenses (10,585) (12,462) (19,202)
Operating profit before non-underlying operating and exceptional items 8,951 8,076 20,534
Total non-underlying operating items 4 (1,236) (1,367) (3,029)
Operating profit 7,715 6,709 17,505
Investing income received - - -
Financing income 70 4 176
Financing expense (509) (623) (1,373)
Profit before tax 7,276 6,090 16,308
Taxation (1,353) (1,339) (3,151)
Profit for the period after tax attributable to equity holders of the parent 5,923 4,751
13,157
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences
- Exchange differences on foreign branch (5) 41 (87)
Profit for the financial period and total comprehensive income all 5,918 4,792 13,070
attributable to equity holders of the parent
Statutory earnings per share (pence)
Basic earnings per share 5 5.00p 4.04p 11.18p
Diluted earnings per share 5 4.94p 3.99p 11.10p
The results for the periods presented above are derived from continuing
operations. There were no other items of comprehensive income to report.
Gateley (Holdings) Plc
Consolidated statement of financial position
at 31 October 2021
Note Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2021 2020 2021
£'000
£'000
£'000
Non-current assets
Property, plant and equipment 1,343 1,373 1,323
Right-of-use asset 25,268 28,161 27,007
Investment property 164 164 164
Intangible assets & goodwill 7 15,763 17,696 15,765
Other intangible assets 245 303 282
Other investments 367 363 363
Deferred tax asset 2 - 138
Total non-current assets 43,152 48,060 45,042
Current assets
Contract assets 8 14,723 14,154 13,900
Trade and other receivables 9 41,390 33,114 43,093
Cash and cash equivalents 8,842 13,072 19,605
Total current assets 64,955 60,340 76,598
Total assets 108,107 108,400 121,640
Non-current liabilities
Other interest-bearing loans and borrowings 10 - (1,895) -
Lease liability (26,465) (28,077) (27,702)
Other payables 11 (120) (942) (120)
Deferred tax liability (591) (965) (772)
Provisions (724) (339) (763)
Total non-current liabilities (27,900) (32,218) (29,357)
Current liabilities
Other interest-bearing loans and borrowings 10 - (1,878) -
Lease liability (3,197) (3,304) (2,743)
Trade and other payables 11 (19,303) (18,086) (29,032)
Provisions (176) (359) (176)
Current tax liabilities 420 (2,840) (1,066)
Total current liabilities (22,256) (26,467) (33,017)
Total liabilities (50,156) (58,685) (62,374)
NET ASSETS 57,951 49,715 59,266
EQUITY
Share capital 11,899 11,761 11,792
Share premium 10,430 9,153 9,421
Merger reserve (9,950) (9,950) (9,950)
Other reserves 7,097 6,815 6,815
Treasury reserve (629) (670) (312)
Translation reserve (65) 68 (60)
Retained earnings 39,169 32,538 41,560
TOTAL EQUITY 57,951 49,715 59,266
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2021
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 31 October 30 April
2021 2020 2020
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period after tax 5,923 4,751 13,157
Adjustments for:
Depreciation and amortisation 3,102 3,424 6,869
Financial income (70) (4) (176)
Financial expense 7 623 416
Interest charge on capitalised leases 502 - 957
Equity settled share-based payments 534 343 956
Tax expense 1,353 1,339 3,151
11,351 10,476 25,327
Decrease/(increase) in trade and other receivables 930 4,413 (5,312)
(Decrease)/increase in trade and other payables (9,870) (1,994) 9,216
(Decrease)/increase in provisions (39) (15) 226
Cash generated from operations 2,372 12,880 29,457
Tax paid (2,960) (373) (4,039)
Net cash flows from operating activities (588) 12,507 25,418
Investing activities
Acquisition of property, plant and equipment (434) (99) (503)
Acquisition of other intangible assets - - (10)
Cash received on sale of investment - - 11
Acquisition of other investments - (134) (134)
Contingent consideration paid - acquisition of subsidiary (617) (62) (363)
Net cash outflow from investing activities (1,051) (295) (999)
Financing activities
Interest and other financial income received 70 4 176
Interest and other financial income paid (7) (623) (416)
Interest charge on capitalised leases (502) - (957)
Lease payments (986) (1,158) (2,890)
Short term bank loan proceeds - 1,697 -
Repayment of short-term bank loans - (1,032) -
Repayment of term bank loans - (235) (3,077)
Repayment of loans from former members of GCL Solicitors & - (68) (729)
Directors of International Investment Services
Funds to former members of Gateley Tweed - (395) -
Acquisition of own shares (60) (253) (288)
Proceeds of sale of own shares 330 - 145
Cash received for shares issued on exercise of share options 879 - -
Dividends paid 6 (8,848) - -
Net cash outflow from financing activities (9,124) (2,063) (7,737)
Net (decrease)/increase in cash and cash equivalents (10,763) 10,149 16,682
Cash and cash equivalents at beginning of period 19,605 2,923 2,923
Cash and cash equivalents at end of period 8,842 13,072 19,605
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2021
Share Share Merger Other Treasury Retained Foreign currency translation reserve Total
capital premium reserve reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2020 11,761 9,153 (9,950) 6,815 (417) 27,447 27 44,836
Restated balance at 1 May 2020
Comprehensive income:
Profit for the year - - - - - 13,157 - 13,157
Exchange rate differences - - - - - - (87) (87)
Total comprehensive income - - - - - 13,157 (87) 13,070
Transaction with owners recognised directly in equity
Issue of share capital 31 550 - - - - - 581
Sale of treasury shares - (282) - - 400 - - 118
Purchase of treasury shares - - - - (295) - - (295)
Dividend paid - - - - - - - -
Share based payment transactions - - - - - 956 - 956
Total equity at 30 April 2021 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
At 1 May 2020 (unaudited) 11,761 9,153 (9,950) 6,815 (417) 27,447 27 44,836
Comprehensive income:
Profit for the period - - - - - 4,751 4,751
Exchange rate differences - - - - - 41 41
Total comprehensive income - - - - - 4,751 68 4,792
Transaction with owners recognised directly in equity
Purchase of treasury shares - - - - (253) - - (253)
Dividend paid - - - - - - - -
Share based payment transactions - - - - - 340 - 340
Total equity at 31 October 2020 11,761 9,153 (9,950) 6,815 (670) 32,538 68 49,715
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2021
Share Share Merger Other Treasury Retained Foreign currency translation reserve Total
capital premium reserve reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2021 (unaudited) 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
Comprehensive income:
Profit for the year - - - - - 5,923 - 5,923
Exchange rate differences - - - - - - (5) (5)
Total comprehensive income - - - - - 5,923 (5) 5,918
Transaction with owners recognised directly in equity
Share issue 107 1,009 - 282 - - - 1,398
Sale of treasury shares - - - - 33 - - 33
Purchase of treasury shares - - - - (350) - - (350)
Dividend paid - - - - - (8,848) - (8,848)
Share based payment transactions - - - - - 534 - 534
Total equity at 31 October 2021 11,899 10,430 (9,950) 7,097 (629) 39,169 (65) 57,951
The following describes the nature and purpose of each reserve within equity:
Share premium - Amount subscribed for share capital in excess of nominal value
together with gains and losses on sale of own shares.
Merger reserve - Represents the difference between the nominal value of shares
acquired by the Company in the share for share exchange with the former
Gateley Heritage LLP members and the nominal value of shares issued to acquire
them.
Other reserve - Represents the difference between the actual and nominal value
of shares issued by the Company in the acquisition of subsidiaries.
Treasury reserve - Represents the repurchase of shares for future distribution
by the Group's Employee Benefit Trust.
Retained earnings - All other net gains and losses and transactions with
owners not recognised anywhere else.
Foreign currency translation reserve - Represents the movement in exchange
rates back to the Group's functional currency of profits and losses generated
in foreign currencies.
Gateley (Holdings) Plc
Notes
for the period ended 31 October 2021
1. Basis of preparation
These interim unaudited financial statements for the six months ended 31
October 2021 have been prepared in accordance with the accounting policies set
out in the Annual Report and Financial statements of the Group for the year
ended 30 April 2021 using the recognition and measurement principles of IFRS
as applied under the Companies Act 2006 and the AIM rules.
The comparative figures for the financial year ended 30 April 2021 are not the
company's statutory accounts for that financial year. Those accounts have been
reported on by the company's auditor and delivered to the registrar of
companies. The report of the auditor was unqualified, did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
1.1 Accounting policies
Accounting policies remain unchanged from those accompanying the 30 April 2021
financial statements.
Non-underlying items
Non-underlying items are non-trading and or non-cash items disclosed
separately in the Consolidated Income Statement where the quantum, nature or
volatility of such items would otherwise distort the underlying trading
performance of the Group. The following are included by the Group in its
assessment of non-underlying items:
· Share based payment charges: such charges are treated as
non-underlying as the gain realised on the options granted is settled in
shares not cash and therefore does not impact the income statement. The IFRS 2
charge is taken to the income statement, these expenses are treated as
non-underlying items as they are either non-cash or non-recurring in nature.
· Amortisation in respect of intangible fixed assets: these costs
are treated as non-underlying as they are non-cash items.
The tax effect of the above is also included if considered significant.
Exceptional items
Exceptional items are one off transactions, unrelated to the underlying
trading performance of the Group disclosed separately in the Consolidated
Income Statement where the quantum, nature or volatility of such items would
otherwise distort the underlying trading performance of the Group.
The following are included by the Group in its assessment of exceptional
items:
· Gains or losses arising on disposal, closure, restructuring or
reorganisation of businesses that do not meet the definition of discontinued
operations.
· Impairment charges in respect of intangible fixed assets: these
costs are treated as exceptional due to their one-off nature.
· Non-typical expenses associated with acquisitions.
· Costs incurred as part of significant refinancing activities.
The tax effect of the above is also included if considered significant.
Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment. In respect of equity accounted investees, the carrying amount
of goodwill is included in the carrying amount of the investment in the
investee.
Other intangible assets
Other intangible assets, including software licences, expenditure on
internally generated goodwill, brands and software, customer contracts and
relationships are capitalised at cost and amortised on a straight-line basis
over their estimated useful economic lives through operating expenses.
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
Customer lists
Customer lists that are acquired by the Group as part of a business
combination are stated at cost less accumulated amortisation and impairment
losses (see accounting policy 'Impairment of assets'). Cost reflects
management's judgement of the fair value of the individual intangible asset
calculated by reference to the net present value of future benefits accruing
to the Group from the utilisation of the asset, discounted at an appropriate
discount rate.
Brand value
Certain acquisitions have retained their trading name due to the value of the
brand in their specific market place.
Brand value is amortised over a period of three or five years based on the
Directors assessment of the future life of the brand, supported by trading
history.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements under IFRS requires
management to make estimates and assumptions which affect the reported amount
of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities. If in the future such estimates and assumptions, which are
based on Management's best judgement at the date of preparation of the
financial statements, deviate from actual circumstances, the original
estimates and assumptions will be modified as appropriate in the period in
which the circumstances change. The key areas where a higher degree of
judgement or complexity arises, or where estimates and assumptions are
significant to the consolidated financial statements are discussed below.
Management does not consider there to have been and critical accounting
judgements made in the financial period.
Unbilled revenue on client assignments
The valuation of unbilled revenue (on non-contingent matters) involves
detailed understanding of contractual terms with clients. The valuation is
based on an estimate of the amount expected to be recoverable from clients on
unbilled items based on such factors as time spent, the expertise and skills
provided and the stage of completion of the assignment. The principal
uncertainty over this estimation is a result of the amounts not yet being
billed to, or recognised by the client. Provision is made for such factors
as historical recoverability rates, agreements with clients, external expert's
opinion and the potential credit risks, following interactions between legal
staff, finance and clients. Where entitlement to revenue is certain it is
recognised as recoverable selling price. Where a matter is contingent at the
statement of financial position date, no revenue is recognised.
Valuation of intangibles
Measurement of intangible assets relating to acquisitions: In attributing
value to intangible assets arising on acquisition, management has made certain
assumptions in terms of cash flows attributable to intellectual property and
customer relationships. The key assumptions made relate to the valuation of
the brand, where the acquired brand is retained by the entity, and the
customer list. The value of such intangibles has been estimated based on the
amount of revenue expected to be generated by them. The revenue estimations
rely on annual growth rates. Management have selected the appropriate rates
based on a combination of observed historical growth, industry norms and
forecasted influencing factors. Management have also performed sensitivity
analysis to assess the impact of any variation to the growth rate used. The
rates applied reflect previous growth rates, with sensitivities indicating
that variations in the actual rate achieved are unlikely to materially impact
the valuation of the intangible assets.
1.2 Alternative performance measures
Underlying adjusted profit before tax
The Directors seek to present a measure of underlying profit performance which
is not impacted by exceptional items or items considered non-operational in
nature. These include non-trading, non-cash and one-off items disclosed
separately in the consolidated income statement where the quantum, nature or
volatility of such items are considered by management to otherwise distort the
underlying performance of the Group. This measure is described as
'underlying adjusted' and is used by management to assess and monitor profit
performance only at the before and after tax level. In line with the board's
wish to simplify reporting of profits, the board have moved away from
reporting adjusted Earnings Before Interest Tax Depreciation and Amortisation
("EBITDA"), following the introduction of IFRS 16 'Leases'.
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Reported profit before tax 7,276 6,090 16,308
Adjustments for non-underlying and exceptional items:
- Amortisation of acquired intangible assets 702 1,024 2,073
- Share-based payment adjustment 534 343 956
Underlying adjusted profit before tax 8,512 7,457 19,337
Amortisation of acquired intangible assets is identified as a non-cash item
released to the income statement therefore such cost is removed when
considering the underlying trading performance of the Group by adding to
profit the annual amortisation charge.
The adjustment for share-based payments relates to the impact of the
accounting standard for share-based compensation. The cost of all share-based
schemes are settled entirely by the issue of shares where the proportions can
vary from one year to another based on events outside of the businesses
control e.g., share price. Under IFRS the anticipated future share cost is
expensed to the income statement over the vesting period. The adjustment above
addresses this by adding to profit the IFRS 2 charge in relation to
outstanding share awards. This adjustment is made so that non-cash expenses
are removed from profit.
Cash generated from operations
a) Free cash flows
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Operating cash flows before movements in working capital 11,351 10,476 25,327
Net working capital movement (8,979) 2,404 4,130
Cash generated from operations 2,372 12,880 29,457
Repayment of lease liabilities (986) (1,158) (2,890)
Net interest paid 63 (619) (240)
Tax paid (2,960) (373) (4,039)
Purchase of property, plant and equipment (434) (99) (503)
Purchase of other intangible assets - - (10)
Free cash flows (1,945) 10,631 21,775
b) Working capital measures
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled 14,723 14,154 13,900
revenue)
Unbilled disbursements 2,240 2,391 2,247
Total WIP 16,963 17,545 16,147
Annualised revenue 135,266 110,797 121,375
WIP days 46 55 49
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Debtor days
Amounts recoverable from clients in respect of contract assets (unbilled 38,059 31,065 36,680
revenue)
Less unbilled disbursements (2,240) (2,391) (2,247)
Total debtors 35,819 28,674 34,433
Annualised revenue 135,266 110,797 121,375
Debtor days 97 94 104
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Gross lock-up days
Total WIP 16,963 16,545 16,147
Total debtors 35,819 28,674 36,380
Total gross lock-up 52,782 45,219 52,827
Annualised revenue 135,266 110,797 121,375
Gross lock-up days 143 149 153
Annualised revenue reflects the total revenue for the previous 12-month period
inclusive of pro-forma adjustments for acquisitions.
1.3 Going concern
These interim accounts are prepared on a going concern basis as the Directors
have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. The Group
remains cash generative, with a strong on-going trading performance.
1.4 Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this condensed set
of consolidated financial statements have been prepared in accordance with the
AIM Rules.
1.5 Cautionary statement
This document contains certain forward-looking statements in respect of the
financial condition, results, operations and business of the Group. Whilst
these statements are made in good faith based on information available at the
time of approval, these statements and forecasts inherently involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. There are a number of factors that could cause the
actual results of developments to differ materially from those expressed or
implied by these forward-looking statements and forecasts. Nothing in this
document should be construed as a profit forecast.
2. Operating segments
The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group
has the following strategic Platforms, which are its reportable segments.
These divisions offer a mixture of legal and consultancy services to
clients. With effect from 1 May 2021 all service lines are managed through
four Platforms.
The Group has restated the segmental reporting for the comparative periods to
reflect the current operating segments in place.
The following summary describes the operations of each reportable segment as
reported up to 31 October 2021:
Reportable segment Legal service lines Consultancy service lines
(Gateley Legal) (Gateley Consultancy)
Corporate Banking International Investment Services
Corporate GEG Services
IP, Commercial & Technology
Restructuring Advisory
Taxation
Business Services Commercial Dispute Resolution/Litigation Gateley Omega
Complex & International Recovery Work
Regulatory & Business Defence
Tweed (reputation, media and privacy law)
Employment, Pensions and Benefits Employment Entrust Pension
Pensions Kiddy & Partners
Private Client T-three
Property Construction Gateley Capitus
Planning Gateley Hamer (inc. Persona Associates)
Real Estate Gateley Vinden (inc. Tozer Gallagher)
Real Estate Dispute Resolution
Residential Development
6 months to 31 October 2021
Corporate Business Services People Property Total Other* Total
segments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment revenue 15,160 9,658 9,386 26,987 61,191 1,118 62,309
Segment contribution 5,895 3,349 3,490 10,717 23,451 1,118 24,569
(as reported internally)
Costs not allocated to segments:
Other operating income -
Personnel costs (5,824)
Share based payment costs (534)
Depreciation and amortisation (3,065)
Other operating expenses (7,431)
Net financial income (439)
7,276
6 months to 31 October 2020
Corporate Business People Property Total Other* Total
segments
Services
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment revenue 10,285 8,035 7,725 21,716 47,761 2,699 50,460
Segment contribution 2,411 3,358 1,872 6,672 14,313 2,699 17,012
(as reported internally)
Costs not allocated to segments:
Other operating income 1,871
Personnel costs (3,654)
Share based payment charge (343)
Depreciation and amortisation (3,424)
Other operating expenses (4,753)
Net financial expense (619)
6,090
12 months to 30 April 2021
Corporate Business People Property Total Other* Total
Services
segments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment revenue 32,869 18,338 14,252 52,989 118,448 2,927 121,375
Segment contribution 10,729 7,335 4,597 24,421 47,082 2,927 50,009
(as reported internally)
Costs not allocated to segments:
Other operating income 2,448
Personnel costs (8,240)
Share based payment charge (956)
Depreciation and amortisation (6,869)
Other operating expenses (18,887)
Net financial expense (1,197)
16,308
*Other includes expense income and movement in unbilled revenue
No other financial information has been disclosed as it is not provided to the
CODM on a regular basis.
3. Employees
The average number of persons employed by the Group during the period,
analysed by category, was as follows:
Number of employees
6 months to 6 months to 12 months to
31 October 2021 31 October 2020 30 April 2021
Legal and professional staff 794 785 770
Administrative staff 338 347 343
1,132 1,132 1,113
The aggregate payroll costs of these persons were as follows:
6 months to 6 months to 12 months to
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Wages and salaries 35,369 27,763 55,696
Social security costs 3,664 2,330 6,280
Pension costs 902 650 1,555
39,935 30,743 63,531
4. Expenses
Included in operating profit are the following:
6 months to 6 months to 12 months to 30
31 October 2021 31 October 2020 April 2021
£'000 £'000 £'000
Depreciation on tangible assets 421 599 1,045
Depreciation on right-of-use assets 1,942 1,801 3,751
Other operating income - rent income - - (2)
Short term and low value leases 117 54 40
Operating lease costs on property - - 26
Foreign exchange 5 (45) 87
Profit on sale of fixed assets - - (3)
Non-underlying items
6 months to 6 months to 12 months to 30 April 2021
31 October 2021 31 October 2020
Amortisation of intangible assets 702 1,024 2,073
Share based payment charges 534 343 956
Total non-underlying items 1,236 1,367 3,029
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2020 to 30 April 2021
2021
Number Number Number
Weighted average number of ordinary shares in issue, being weighted 118,253,989 117,609,094 117,685,265
average number of shares for calculating basic earnings per share
Shares deemed to be issued for no consideration in respect of share 1,754,023 1,508,903 823,568
based payments
Weighted average number of ordinary shares for calculating diluted 120,008,012 119,117,997 118,508,833
earnings per share
£'000 £'000 £'000
Profit for the period after taxation and basic earnings attributable to 5,923 4,751 13,157
ordinary equity shareholders
Non-underlying items 1,236 1,367 3,029
Tax on non-underlying items (247) (260) (576)
Underlying earnings before non-underlying items 6,912 5,858 15,604
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 5.00 4.04 11.18
Diluted earnings per ordinary share 4.94 3.99 11.10
Underlying basic earnings per ordinary share 5.85 4.98 13.26
Underlying diluted earnings per ordinary share 5.76 4.92 13.17
Underlying earnings per share have been shown because the Directors consider
that this provides valuable additional information about the underlying
performance of the Group.
6. Dividends
6 months to 6 months to 12 Months
31 October 2021 31 October 2020 30 April 2021
£'000 £'000 £'000
Equity shares
Interim dividend in respect of 2021 (2.5p per share) - paid 28 June 2021 2,939,731 - -
Final dividend in respect of 2021 (5.0p per share) - paid 8 October 2021 5,907,839 - -
Dividends paid 8,847,570 - -
The Board has approved an interim dividend of 3.0p (H1 21: nil) per share.
This dividend will be paid on 31 March 2022 to shareholders on the register at
the close of business on 18 February 2022. The shares will go ex-dividend on
17 February 2022. This dividend has not been recognised as a liability in
these final statements.
7 Intangible assets
Goodwill Customer list and brand names Total
£'000 £'000 £'000
Deemed cost
At 1 May 2020 12,329 9,850 22,179
Adjustment to expected contingent consideration - Gateley Vinden Limited 282 - 282
At 31 October 2020 12,611 9,850 22,461
At 1 May 2020 12,329 9,850 22,179
Adjustment (631) - (631)
At 30 April 2021 11,698 9,850 21,548
At 1 May 2021 11,698 9,850 21,548
Acquired through business combination 307 393 700
At 31 October 2021 12,005 10,243 22,248
Accumulated amortisation
At 1 May 2020 - 3,741 3,741
Charge for the period - 1,024 1,024
At 31 October 2020 - 4,765 4,765
At 1 May 2020 - 3,741 3,741
Charge for the year - 2,042 2,042
At 30 April 2021 - 5,783 5,783
At 1 May 2021 - 5,783 5,783
Charge for the period - 702 702
At 31 October 2021 - 6,485 6,485
Net Book Value
At 31 October 2020 12,611 5,085 17,696
At 30 April 2021 11,698 4,067 15,765
At 31 October 2021 12,005 3,758 15,763
Goodwill
Goodwill is allocated to the following cash generating units
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
Property Platform
Gateley Capitus Limited 1,515 1,515 1,515
Gateley Hamer Limited 1,161 1,161 1,161
GCL Solicitors LLP (acquisition of trade and assets) 2,900 2,900 2,900
Persona Associates Limited 40 40 40
Gateley Vinden Limited 2,259 2,254 2,259
Tozer Gallagher Limited 307 - -
8,182 7,870 7,875
People Platform
Kiddy & Partners Limited 1,600 1,872 1,600
International Investment Services Limited 338 338 338
t-three Consulting Limited 309 955 309
2,247 3,165 2,247
Business Services Platform
Gateley Tweed (acquisition of goodwill) 1,576 1,576 1,576
12,005 12,611 11,698
Acquisition of Tozer Gallagher LLP (Tozer)
On 22 July 2021 Gateley Vinden Limited acquired the business and assets of
Tozer Gallagher LLP, a leading practice of chartered quantity surveys and
construction consultants based in Manchester and London. The business
specialises in built environment consultancy, fund monitoring services and
surety advisory.
The amounts recognised in respect of identifiable assets acquired and
liabilities assumed are as set out in the table below:
Pre-acquisition carrying amount Policy alignment Total
£'000 and fair value adjustments £'000
£'000
Property, plant and equipment 7 - 7
Intangible asset relating to customer list and brand - 392 392
Contract assets 101 - 101
Prepayments and accrued income 19 - 19
Total assets 127 392 519
Accruals and other payables (8) - (8)
Deferred tax - (75) (75)
Total liabilities (8) (75) (83)
Total identifiable net assets at fair value 119 317 436
Goodwill arising on acquisition 281
Total consideration 717
Satisfied by:
Initial cash consideration paid 617
Contingent cash consideration payable 100
Total consideration 717
Net cash outflow arising on acquisition
Cash paid (717)
Net cash outflow arising on acquisition (717)
The goodwill of £308,000 arising from the acquisition represents the
assembled workforce. None of the goodwill is expected to be deductible for
income tax purposes.
A contingent consideration arrangement was entered into as part of the
acquisition. This is payable based on the business' financial performance in
the 12-month period following completion of the acquisition. The contingent
consideration will be settled in cash, with each recipient applying 50% of
their contingent consideration in subscribing for Ordinary Shares, valued at
the average 30-day closing price on the last practicable date as the deferred
consideration falls due.
8 Contract Assets and liabilities
Contract assets Contract liabilities
£'000 £'000
As at 31 October 2021 14,723 (282)
As at 31 October 2020 14,154 (160)
As at 30 April 2021 13,900 (1,243)
Contract assets
Contract assets consist of unbilled revenue in respect of professional
services performed to date.
Contract assets in relation to non-contingent work are billed at appropriate
intervals, normally on a monthly basis in arrears, in line with the
performance of the services and engagement obligations. Where such matters
remain unbilled at the period end the asset is valued on a
contract-by-contract basis at its expected recoverable amount.
Contract assets in relation to contingent work are billed at a point in time
once the uncertainty over the contingent event has been satisfied and all
performance obligations satisfied, such that it is no longer contingent, these
matters are valued based on the expected recoverable amount. Due to the
complex nature of these matters, they can take a considerable time to be
finalised therefore performance obligations may be settled in one period but
the matter not billed until a later financial period. Until the
performance obligations have been performed the Group does not recognise any
contract asset value at the year end.
Contract liabilities
When matters are billed in advance or on a basis of a monthly retainer, this
is recognised in contract liabilities and released over time when the services
are performed.
9 Trade and other receivables
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
Trade receivables 38,059 31,065 36,680
Prepayments 3,121 1,916 5,699
Other receivables 210 133 714
41,390 33,114 43,093
10 Other interest-bearing loans and borrowings
The contractual terms of the Group's interest-bearing loans and borrowings,
which are measured at amortised cost, are described below.
31 October 2021 31 October 2020 30 April 2021
Fair Carrying Fair Carrying Fair Carrying
amount
amount
amount
value value value
£'000 £'000 £'000 £'000 £'000 £'000
Non-Current liabilities
Unsecured long-term bank loan - - 1,895 1,895 - -
- - 1,895 1,895 - -
Current liabilities
Unsecured long-term bank loan - - 947 947 - -
Unsecured short-term bank loan - - 665 665 - -
Loans due to former partners of Gateley Tweed LLP - - 266 266 - -
- - 1,878 1,878 - -
On 8 June 2015, Gateley Plc entered into two new loan agreements of £5m each,
£10m in total. On 28 October 2018 these existing loans were re-negotiated
and additional loans totalling £3 million were entered into. The balance of
these loans were repaid in full by the Company in April 2021.
11 Trade and other payables
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
Current
Trade payables 5,878 4,988 6,086
Other taxation and social security payable 8,667 10,071 9,641
Other payables 889 184 582
Contingent consideration 235 579 135
Accruals and deferred income 3,634 2,529 12,588
19,303 18,351 29,032
£'000 £'000 £'000
Non-current
Other payables 120 130 120
Contingent consideration - 812 -
120 942 120
Contingent consideration
£0.1m of current contingent consideration represents the earn-out sums due to
the sellers of Tozer Gallagher LLP.
All contingent consideration amounts have been calculated based on the Groups
expectation of what it will pay in relation to the earn-out clause of the
relevant sale and purchase agreement. The earn-out targets are based on the
annual results, of the acquired business. The fair value of the earn-out
consideration is calculated based on the forecasted results to give an
estimate of the final obligation capped at the maximum earn-out amount stated
in the purchase agreement.
12 Share based payments
Group
At the period end the Group has three share-based payment schemes in operation
and approved a new Long-Term Incentive Plan (LTIP) to replace our existing
SARS's scheme in January 2020.
Long Term Incentive Plan ('LTIP')
The Group has introduced an LTIP for the benefit of Executive Directors and
Senior management. Awards under the LTIP may be in the form of an option
granted to the participant to receive ordinary shares on exercise dependent
upon the achievement of profit related performance conditions.
Performance conditions
Options granted under the LTIP are only exercisable subject to the
satisfaction of the following performance conditions which will determine the
proportion of the option that will vest at the end of the three-year
performance period. The awards will be subject to an adjusted fully diluted
earnings per share performance measure as described in the table below:
Adjusted, fully diluted earnings per Share Compound Annual Growth Rate (CAGR) Amount Vesting %
over the three year period ending 30 April 2023
Below 5% 0%
5% 25%
Between 5% and 10% Straight line vesting
Above 10% 100%
The options will generally be exercisable after approval of the financial
statements during the year of exercise. The performance period for any future
awards under the LTIP will be a three-year period from the date of grant.
Vested and unvested LTIP awards are subject to a formal malus and clawback
mechanism.
Save As You Earn Scheme (SAYE)
The Group operates a HMRC approved SAYE scheme for all staff. Options under
this scheme will vest if the participant remains employed for the agreed
vesting period of three years. Upon vesting, each option allows the holder
to purchase the allocated ordinary shares at a discount of 20% of the market
price determined at the grant date.
Company Share Option Plan (CSOP)
The group operates a HMRC approved CSOP scheme for associates, senior
associates, legal directors, equivalent positions in Gateley Group subsidiary
companies and senior management positions in our support teams. Options under
this scheme will vest if the participant remains employed for the agreed
vesting period of three years. Upon vesting, each option allows the holder to
purchase the allocated ordinary share at the price on the date of the grant.
The Groups final Stock Appreciation Rights Scheme ('SARS') options lapsed in
the year ending 30 April 2021.
The annual awards granted under the schemes are summarised below:
Weighted average remaining contractual life Weighted Originally granted Lapsed at 30 April 2021 Exercised at 30 April 2021 At 1 May Granted Lapsed during Exercised during period At 31 October 2021
average 2021 during period
exercise the period
price
Years £ Number Number Number Number Number Number Number Number
LTIPS
LTIPS 20/21 - 22 July 2020 1.6 £1.43 1,405,766 (38,339) - 1,367,427 - (67,094) -- 1,300,333
SAYE
SAYE 18/19 - 21 September 2018 0 £1.33 620,335 (168,366) 451,969 - (159,169) - 292,800
SAYE 19/20 - 1 October 2019 0.8 £1.28 770,787 (73,964) 696,823 - - - 696,823
SAYE 20/21 - 6 November 2020 1.9 £1.02 2,337,353 (72,700) 2,264,653 - (45,099) - 2,219,554
SAYE 21/22 - 17 September 2021 2.9 £1.70 - - - 673,077 (105) - 672,972
3,728,475 315,030 3,413,445 673,077 (204,373) - 3,882,149
CSOPS
CSOPS 17/18 - 3 October 2017 0 £1.65 581,162 (153,017) - 428,145 - (26,603) (401,542) -
CSOPS 18/19 - 24 October 2018 0 £1.44 812,131 (141,663) - 670,468 - (12,500) - 657,968
CSOPS 20/21 - 7 July 2020 1.6 £1.35 976,797 (57,411) - 919,386 - (97,469) - 821,917
2,370,090 352,091 2,017,999 - (136,572) (401,542) 1,479,885
During the prior half-year period to 31 October 2020, 451,173 CSOP options
became eligible to exercise once the share price exceeds £1.65. At 31
October 2020 no CSOP options had been exercised. During the period to 31
October 2021 401,542 CSOP options were exercised. The total accrued IFRS2
charge was £95,780.
During the prior half-year period to 31 October 2020, 358,865 SAYE 16/17
options became eligible to exercise once the share price exceeded £1.33. At
the 31 October 2020 no SAYE options had been exercised. 358,865 new 10p shares
with a nominal value of £35,865 were issued on 6 January 2021 following which
172,292 options were exercised with the remaining 186,573 options being
cancelled. The total accrued IFRS2 charge was £155,381.
During the period 292,800 SAYE 17/18 options became eligible to exercise once
the share price exceeded £1.27. At the 31 October 2021 no SAYE options had
been exercised of a potential 292,800 new shares issued via a block listing in
order to fully satisfy all possible options. 292,800 new 10p shares with a
nominal value of £29,280 were issued on 22 October 2021. The total accrued
IFRS2 charge was £135,000.
On 17 September 2021 a total of 673,077 options were granted under the 21/22
SAYE scheme using an exercise price of £1.70.
Fair value calculations
The award is accounted for as equity-settled under IFRS 2. The fair value of
awards which are subject to non-market based performance conditions is
calculated using the Black Scholes option pricing model. The inputs to this
model for awards granted during the financial year are detailed below:
CSOP CSOP SAYE SAYE SAYE LTIP
Grant date 7/7/20 24/10/18 17/9/21 6/11/20 30/9/19 22/7/20
Share price at date of grant £1.42p £1.44p £2.12p £1.27p £1.64p £1.44
Exercise price £1.42p £1.44p £1.70p £1.02p £1.27p £1.44
Volatility 35% 24% 35% 35% 35% 35%
Expected life (years) 3.3 3.3 3.3 3.3 3.3 3.3
Risk free rate 1% 1% 1% 1% 1% 1%
Dividend yield 4% 4.5% 3% 4% 4% 4%
Fair value per share
Market based performance condition £0.24p £0.16p £0.35p £0.33p £0.37p £1.19p
Non-market-based performance - - - - 100%
condition/no performance condition
Expected volatility was determined by using historical share price data of the
Company since it listed on 8 June 2015. The expected life used in the model
has been based of managements expectation of the minimum and maximum exercise
period of three and three and a half years, respectively.
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