REG - Gateley (Holdings) - Half Year Results
17/01/2024 07:00
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RNS Number : 9129Z Gateley (Holdings) PLC 17 January 2024
17 January 2024
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year Results for the six months ended 31 October 2023
Resilient H1 performance; cautious on H2
Gateley, the professional services group, is pleased to announce its unaudited
results for the six months ended 31 October 2023 (the "Period" or "H1 24").
Financial Highlights
· Resilient financial performance with revenue and underlying profit before tax
up 7.6% (H1 23: 22.2%) and 4.6% (H1 23: 9.6%) respectively, against a
challenging macro-economic backdrop
· Group organic revenue growth of 5.1% (H1 23: 9.8%)
· Legal services revenue grew entirely organically by 2.4% (H1 23: 8.2%)
· Revenue from consultancy services represents 27.6% of total revenue at £22.6m
(H1 23: £18.2m or 23.9%), of which organic growth was 13.5% (H1 23: 20.0%)
· Underlying profit margin decreased to 12.2% (H1 23: 12.6%) as a result of
investment in future growth including a 3.5% increase in fee earners, improved
technology and continued M&A
· Activity levels across the Group decreased with utilisation at 83% (H1 23:
86%)
· Strong balance sheet with net debt of £2.2m at the Period end (H1 23: net
cash £1.1m)
· Proposed interim dividend maintained at 3.3p (H1 23: 3.3p) per share
H1 24 H1 23 Change
restated
Group revenue £82.0m £76.1m 7.6%
Group underlying operating profit £8.6m £10.1m (14.9)%
Group underlying profit before tax(1) £10.0m £9.6m 4.6%
Group profit before tax £7.4m £6.3m 16.8%
Group profit after tax £6.1m £4.7m 32.0%
Basic earnings per share ("EPS") 4.83p 3.73p 29.5%
Underlying adjusted fully diluted EPS(2) 6.40p 6.15p 4.1%
Net assets £83.3m £74.6m 11.7%
Net (debt)/cash(3) £(2.2)m £1.1m
Dividend 3.3p 3.3p
(1) Underlying operating profit and underlying profit before tax excludes
remuneration for post-combination services, gain on bargain purchase,
share-based payment charges, acquisition related amortisation and exceptional
items
(2) Underlying diluted EPS excludes remuneration for post-combination services,
gain on bargain purchase, share-based payment charges, acquisition related
amortisation and exceptional items. It also adjusts for the future weighted
average number of expected unissued shares from granted but unexercised share
options in issue based on a share price at the end of the financial year
(3) Net (debt)/cash excludes IFRS 16 lease liabilities
Strategic and post-Period highlights
· Prior year acquisitions integrated and performing well
· Ongoing investment in capacity with average fee earner headcount increased to
1,035 in H1 24 (H1 23: 1,000)
· Strategic hiring onto Business Services Platform to seed legal services class
action and international arbitration teams and to create intellectual property
commercialisation and valuation in patent and trade mark attorney services
· Continued execution of M&A strategy with the July 2023 acquisition of
Richard Julian and Associates Limited ("RJA"), a chartered surveying practice
providing quantity surveying and project management services across a variety
of construction sectors and performing in-line with expectations
· Achieved all 15 responsible business objectives set in our 2022/23 Responsible
Business Report and launched 15 new objectives in our third annual Responsible
Business Report
· Continued focus on alignment of stakeholders including through 70% of staff
either owning shares or currently participating in option schemes
· Succession planning progressed with the appointment of David Wilton as Chair
Designate and Non-Executive Director, with effect from 1 February 2024
Current trading and outlook
· H1 24 outturn demonstrates the resilience derived from our ongoing investment
in a diverse range of professional services businesses
· After activity levels increased in Q2 24, Q3 to date has been more subdued,
particularly for some of our legal services transactional teams. However,
counter cyclical work activity continues to strengthen and consultancy
services are performing strongly
· The combination of ongoing macro-uncertainty, varying activity levels across
the Group and the natural weighting towards the final months of the financial
year makes the Group's full year outturn more difficult than usual to
forecast. However, with the solid results delivered at the half year point,
tempered by a cautious short-term outlook, the board expects results for the
full year to be broadly in line with market consensus
Rod Waldie, Chief Executive Officer of Gateley, said:
"Given macro-economic conditions during the Period, I am pleased with the
Group's resilient H1 24 performance.
"This is testament to, firstly, our strong client relationships, sustained by
the excellent service delivered by our people and, secondly, our strategy
working in practice as we continue to differentiate Gateley and enhance
resilience via the aggregation of, and continued investment in, complementary
legal and consultancy services on each of our Platforms.
"Our H2 24 outlook reflects our cautious view on the market conditions we are
currently experiencing. That said, I am confident in the ability of our
excellent teams to continue to rise to the challenge for the remainder of this
year, and beyond. We continue to invest in the business and remain confident
and well-positioned to deliver our long-term ambitions."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Chief Financial Officer Tel: +44 (0) 121 234 0196
Nick Smith, Acquisitions Director and Head of Investor Relations Tel +44 (0) 20 7653 1665
Cara Zachariou, Communications Director Tel +44 (0) 121 234 0074
Mob: +44 (0) 7703 684 946
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Anake Singh 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)
CHIEF EXECUTIVE OFFICER'S REVIEW
Summary
The Group's performance during H1 24 is pleasing in the context of
macro-economic headwinds which continue to generate challenging market
conditions.
As always, I am grateful to all of our people for their hard work and
commitment to delivering the best outcomes for our clients, the result of
which is reflected in our 7.6% headline H1 24 revenue growth and our 4.6%
growth in underlying profit before tax.
Aided by our strong balance sheet, we maintain a long-term commitment to
growth via our disciplined diversification strategy in both legal and
consultancy services. This remains our key differentiator and continues to
enhance our resilience. In Period, on our Property Platform, we completed
the acquisition of RJA, a chartered surveying practice providing project
management and quantity surveying services, adding to related expertise in
both Gateley Vinden and Gateley Smithers Purslow. We also made strategic
lateral hires on our Business Services Platform, firstly, to seed specialist
legal services class actions and international arbitration teams handling
complex, long-term litigation and, secondly, in our patent and trade mark
attorney businesses to add intellectual property commercialisation and
valuation services. Whilst our investments inevitably impact short-term
margin as acquisition and integration costs are absorbed, selective strategic
investment remains one of our priorities for future growth.
In Period, we published our third annual Responsible Business Report. Having
achieved all 15 responsible business targets set in our prior report, our
2023/24 report sets 15 new objectives in-line with our purpose-led agenda.
We have a clear recognition that business is a key engine for change and our
responsible business journey progresses with conviction.
Our operational focus for the remainder of the financial year remains firmly
on the basics of business; consistent delivery of excellent service,
maximising cross-selling opportunities, winning new work on each of our
Platforms and cost management.
The board proposes an interim dividend of 3.3p per share (H1 23: 3.3p).
Results overview
H1 24 Group revenues grew by 7.6% to £82m (H1 23: £76.1m). This yielded an
increase of 16.8% in reported profit before tax to £7.4m (restated H1 23:
£6.3m) and a 4.6% increase in underlying profit before tax to £10.0m (H1 23:
£9.6m).
Trading conditions were generally difficult throughout the Period. Our
outturn reflects the quality and breadth of the complementary legal and
consultancy services delivered through our Platforms. The volume of
traditional transactional activity in legal services was weaker during the
Period than in H1 23. This accounts for the slight in-Period decline in
utilisation to 83%, but still close to our typical 85% run-rate. We
continued to see a pivot towards greater activity in our more counter-cyclical
service lines. This is an ongoing characteristic. Activity in our more
economically agnostic businesses was, and remains, strong, as demonstrated by
39.0% growth in revenue in Gateley Smithers Purslow, delivering specialist
advice from our Property Platform to UK property insurers.
The strength of both existing operations and our balance sheet provide the
foundation for further investment in growth across our Platforms. Our
pipeline of acquisition opportunities remains good across the Group.
Business Services Platform
This Platform supports clients in dealing with their commercial agreements,
managing risks, protecting assets and resolving disputes.
On this Platform revenue grew by 24.7%.
Our commercial dispute resolution team and our regulatory and business defence
team, counter-cyclical in nature, are both busy and ahead of prior year
revenue.
Taken together, our patent and trade mark attorney businesses, Adamson Jones
and Symbiosis IP, are in-line with budgeted revenue and are working well
together, with a positive outlook. We continue to invest in broadening our
intellectual property offering with the in-Period lateral hire additions of
experts in IP commercialisation and valuation. We are encouraged by further
opportunities to further strengthen our position in intellectual property
advisory services.
Revenue from our legal services complex international recoveries litigation
team remains constrained whilst the team establishes credentials in new
markets. However, activity is improving via opportunities from those
markets. In-Period, the team has been significantly enhanced by lateral hire
investment to seed our international arbitration team. Alongside this, we
have also made lateral hire investment to establish our class actions team, a
new service line in our complex litigation offering. We are excited by the
opportunities for both teams in handling valuable long-term mandates, from
which we expect to see returns feeding-in from FY 25 onwards.
Corporate Platform
This Platform is focused on the corporate, financial services and
restructuring markets in both transaction and business support services.
In a market where transactional activity has fallen and lead times have
extended, I was encouraged to see relatively small revenue contraction of 5.9%
on this Platform . Our traditional transaction pipeline is reasonable but
timelines for on-boarding and completing new work are uncertain.
The Platform also houses our Restructuring Advisory team, which is
counter-cyclical in nature. Its revenue increased by 41.5% and the team
remains busy on a number of mandates, with a positive outlook. Work here
includes cross-over with specialist teams on our Property Platform delivering
market-leading services to insurers who have bonded now distressed
construction projects.
People Platform
This Platform supports clients dealing with and developing people and in
administering individuals' personal affairs.
Revenue on this Platform declined by 1.2%. In legal services, our employment
team experienced a drop-off in support work to the transactional teams on our
Corporate Platform. However, utilising expertise established over many years
in acting for The British Medical Association, the team is now building its
credentials in assisting NHS Trusts with internal investigations. Our
private client team has undertaken some restructuring, with our core focus
remaining on high net worth clients and related opportunities.
Our legal services pensions team and our pension trustee business, Entrust,
are both relatively economically agnostic and combined to deliver revenue
growth of 52.4%. Entrust continues to see opportunities from the increase in
the number of pension schemes looking to complete full liability buy-outs,
with Entrust's technical support.
The combined revenue of our talent assessment, development and cultural change
businesses, t-three and Kiddy & Partners is down versus H1 23 but
improvement is anticipated in H2 24. These businesses are also working closely
with our legal services employment team to maximise opportunities arising from
evolving legislation in relation to diversity and inclusion.
Property Platform
This Platform is focused on clients' activities in real estate development and
investment and in the built environment in the widest sense.
This remains our largest, most diverse, and most mature Platform. Against
the backdrop of challenging market conditions in UK commercial and residential
real estate, we are pleased to report revenue growth of 12.4% on this
Platform.
In legal services, our contentious construction team and real estate dispute
resolutions team are both counter-cyclical in nature and generated revenue
growth of 33.0% and 21.1% respectively from both stand-alone mandates and in
working with specialist teams on this and other Platforms. The pipeline for
both teams remain strong.
Our residential development team is likely out-performing the market in
delivering revenue growth of 8.2%. This is testament to the team's
market-leading position.
The commercial real estate market remains subdued, and this team's revenue
contracted by 23.7% versus a more active market in H1 23. The short-term
outlook here remains uncertain. Anticipated cuts in interest rates may
stimulate the market but a number of related billing points could be beyond
full year.
Taken as a whole, consultancy business revenue on this Platform has grown
organically by 25.1% with particularly encouraging H1 performances by Gateley
Capitus (GC), Gateley Vinden (GV) and Gateley Smithers Purslow (GSP), now
supplemented by the in-Period acquisition of RJA, the seventh consulting
business to be acquired onto this Platform. RJA specialises in the provision
of quantity surveying and project management services to organisations in the
affordable housing sector. It also has expertise to support those teams in
GV and GSP, who provide specialist advice to UK property insurers in relation
to major loss claims, a busy and economically agnostic market. RJA has
integrated well during H1 24 and is delivering in-line with pre-acquisition
expectations.
Operational review
Our operational focus has been aimed at current and future efficiency.
AI is towards the top of the agenda in most businesses. We are very aware
that ultimately, properly procured and adopted, AI will positively transform
the delivery of professional services. We started investing in technology to
enhance efficiencies some time ago. We now have an internal steering group
assessing new products, our own product development and anticipated evolution
in AI against opportunities across the Group to enhance service delivery
and/or realise operational efficiencies. We believe that we are making good
progress and we are forming views on requisite resource and investment to plan
into FY 25 and beyond.
In Period, we acquired new systems to support the on-boarding of a legal
services team to run class action claims. This is specialist, long-term,
high value work which requires a bespoke technology platform, in which we have
invested.
We have previously reported planned rationalisation of some of our office
space. This is an on-going exercise, including the post-Period surrender of
our lease for office space in Leicester as part of consolidation of some of
our teams in the East Midlands to our Nottingham office.
On-going integration of recently acquired businesses is proceeding as planned,
including positive enhancements to our Group integration processes. In
parallel, phase two of adoption of our new, market-leading business
management, productivity, and financial management system (3E) is proceeding
throughout FY 24 and into FY 25.
The Board
Further to the announcement in September 2023 that Nigel Payne will step down
as Chairman at the 2024 AGM in September, we have announced separately today
that David Wilton will join the board as Chair Designate and Non-Executive
Director on 1 February 2024. I am very much looking forward to working with
David and, on behalf of everyone at Gateley, extend a warm welcome to him.
Responsible Business
Being a Responsible Business remains an integral part of our Purpose
Statement;
"Our purpose is to deliver results that delight our clients, inspire our
people and support our communities."
We were delighted to achieve all 15 of our internally set responsible business
targets in 2022/2023 and, in-Period, we published our third annual Responsible
Business Report outlining actions taken and setting targets for 2023/2024.
Highlights from the report include:
· A carbon reduction plan including a commitment to achieve net zero emissions
by 2040, with interim targets set by 2030;
· A new strategic partnership with Alzheimer's Research UK; and
· The launch of an internal volunteering policy which provides opportunities for
our people to volunteer with the charity, sustainability and education
partners we work with.
We are proud of the progress that we have made since publishing our
Responsible Business Strategy in October 2021. We will continue to evaluate
where we are effecting change and how we can improve and progress over time.
Our journey continues with conviction.
Current trading and outlook
Our H1 performance was solid despite an ongoing difficult macro-economic
environment.
As we said in our FY 23 announcement last September, our expectation was that
in transactional legal services trading conditions would improve in H2 24.
However, despite a stronger Q2, market conditions remain challenging and look
likely to continue for longer than anticipated. Whilst non-transactional
activity continues to strengthen to mitigate the impact and consultancy
services activity remains robust, overall uncertain and shifting patterns of
demand lead us to adopt a cautious approach in our outlook, which means that
results for the full year are expected to be broadly in-line with market
consensus. However, the underlying strength of our unique, diversified
business model and balance sheet, when put alongside traditional long-term
drivers that underpin demand for quality professional services, ensure that we
remain well-placed to continue our track record of growth and realise our
long-term ambitions.
In the meantime, our focus for the remainder of the year remains firmly on the
basics of business and the maximisation of revenue and profit opportunities.
Rod Waldie
CEO
17 January 2024
CHIEF FINANCIAL OFFICER'S REVIEW
Financial overview
I'm pleased to report a resilient financial performance during the first half
of this year in which both revenue and profit growth was good considering the
ongoing economic stagnation in trading conditions for many sectors across the
UK economy.
We have made further selective medium to long term strategic investments
across our Platforms that continue our existing journey to wider
diversification in both legal and consultancy service delivery.
Activity levels at the beginning of the Period were in line with where FY 23
finished, however despite increases in activity during Q2, Q3 is so far lower
than expected. Whilst transactional services remain subdued due to economic
conditions, delivery of contentious services continues to increase. This is
a by-product of our diversification in service lines and long-term underlying
strategy. Financing this transition towards increased contentious services,
requires cost investment in the near term, but will ultimately enhance
profitability in the medium to longer term. Contentious services continue to
grow as a mix of overall services and now represent 36.7% (H1 23: 30.6%) of
Group revenue. They are counter cyclical and less volatile than
transactional services during a period of changing market conditions.
However, they inherently also take longer to convert into fees and cash.
During the Period inflation has started to reduce and interest rates appear to
have peaked which are assisting forecasting of costs going forward, however
these economic conditions are not yet providing the stimulus for a change in
non-contentious services activity levels with any confidence.
Revenue
Group revenue grew by 7.6% to £82.0m for the first half of the year, from
£76.1m in H1 23. Revenue growth in the Group's core legal services was
entirely organic at 2.4%, growing to £59.3m (H1 23 £57.9m), whilst revenue
from consultancy services grew by 24.1% overall to £22.6m (H1 23 £18.2m).
Acquired consultancy revenue totalled £2.3m following the acquisitions of
Symbiosis IP and RJA, (H1 23: £0.2m) during the Period, with organic
consultancy revenue growth of 13.5% to £20.5m (H1 23: £18.0m).
The Group has grown two of its four Platforms, and was broadly flat in the
People Platform, during the Period with significant contributions made by the
Property and Business Services Platforms and expanding and diversified service
offerings. Restructuring and Banking activity on the Corporate Platform have
helped to counter a subdued corporate transactional performance leading to a
revenue decrease of 5.9% (H1 23: increase 26.0%).
Revenue Corporate Platform Business Services Platform People Platform Property Platform Total
H1 24 (£m) 17.9 12.1 9.7 42.3 82.0
Revenue growth H1 24 (5.9)% 24.7% (1.2)% 12.4% 7.6%
H1 23 (£m) 19.0 9.7 9.7 37.6 76.1
Total expenses
Personnel costs (excluding the IFRS 2 charge) have increased as a percentage
of revenue to 63.4% (H1 23: 61.7%), despite experiencing lower wage inflation,
as headcount increased from investments made in key senior lateral hires and
the recruitment of additional people. Average numbers of legal and
professional staff rose by 3.5% to 1,035 (H1 23: 1,000) as recruitment was
directed towards consultancy services demonstrating significant demand during
the Period such as that experienced by GSP. Support staff numbers also
increased by 5.5% to 463 (H1 23: 431) as a result of acquisitions and the
expansion of our business support teams.
Other operating expenses, excluding non-underlying items, increased to £18.2m
(H1 23: £16.0m) as the effect of investment and additional costs of acquired
entities made in the Period were absorbed. Overall, operating costs as a
percentage of revenue have increased from 21.0% to 22.2%. Our use of agile
working, the new business management system and extensive review of premises
usage will generate further medium-term cost savings, where appropriate,
without damaging the resources available to clients and staff. In
particular, our new business management system will enhance centralised
control, support operational efficiencies and drive a level of consistency
across the processing of all client and Group data.
Profit before tax and earnings per share
Underlying adjusted profit before tax of £10.0m has increased by 4.6% from
£9.6m in H1 23. The board is pleased with profit and trading margin
performance despite the decreased margin from continued on-going investment
decisions made. We enter the second half of the financial year having
maintained fee earner headcount in counter cyclical work types in order to
match the changing client activity patterns and in the knowledge that we have
a resilient and diverse spectrum of service lines from which to increase
market share.
Reported profit before tax increased by 16.8% to £7.4m (H1 23: £6.3m) as
underlying operating profit before tax decreased by 14.9% to £8.6m (H1 23:
£10.1m) but was offset by increases in net interest of £1.4m. Profit after
tax of £6.1m increased by 32.0% from a restated £4.7m and basic earnings per
share increased similarly by 29.5% to 4.83p (H1 23: restated 3.73p).
Underlying diluted earnings per share increased by 4.1% to 6.40p (H1 23:
6.15p) after a full Period impact from new shares issued for acquisitions and
after awards made under the Group's share option reward schemes.
As explained in our FY 23 annual accounts, certain figures highlighted in this
RNS, have been restated to reflect a change of IFRS 3 accounting treatment for
consideration paid on all relevant historical acquisitions.
Dividend
The board proposes an interim dividend of 3.3p (H1 23: 3.3p) per share. This
dividend will be paid on 28 March 2024 to shareholders on the register at the
close of business on 23 February 2024. The shares will go ex-dividend on 22
February 2024. This dividend has not been recognised as a liability in the
interim accounts.
Net assets
The Group's net asset position has increased by £8.7m to £83.3m (H1 23:
restated £74.6m) as total asset growth of £11.3m was funded through the
£4.0m increase in non-current liabilities (primarily increased usage of our
revolving credit facility) less the decrease in current liabilities of £1.5m.
Net cash and working capital
Period end net cash increased by £0.5m compared to a decrease of (£8.1m) in
H1 23. Cash generation from operating activities reduced slightly to £0.3m
(H1 23: £0.0m). Cash generation from financing activities increased to £3.3m
(H1 23: £(0.2)m) due to bank interest rates driving net interest income and
cash acquired through the acquisition of RJA, and net cash outflow from
financing activities improved to £(2.5)m (H1 23: £(8.1)m) as the Group drew
down an additional £7m from its RCF for the post Period end funding of
contingent consideration in respect of GSP and the acquisition of RJA.
Free cash flows increased to £1.5m (H1 23: £(1.5)m) due to lower net working
capital following a reduction in lock up since the end of FY 23 and the
increase in interest income.
Management continues to focus on lock-up. Total lock-up increased from 159
to 163 days as a result of strong organic and acquired growth and the pivot to
increased, longer in duration, contentious assignments. WIP days increased
from 59 to 65 days as the Business Services Platform recognised higher
contract asset values and debtor days decreased slightly from 100 to 98 days
as the slowing of collections on the Corporate Platform was offset by
improvements in collections from our three other Platforms.
Conclusion
Despite prolonged and ongoing market uncertainty the Group has produced
further organic growth and sensibly controlled costs after a period of
significant inflation, whilst at the same time continuing to invest in
strategic opportunities. We retain significant facility headroom to support
further growth and expansion.
Neil Smith
Chief Financial Officer
17 January 2024
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2023
Note Restated
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Revenue 2 81,957 76,143 162,683
Other operating income 20 - 49
Personnel costs, excluding IFRS 2 charge 3 (51,956) (46,981) (96,765)
Depreciation - Property, plant and equipment 4 (566) (503) (936)
Depreciation - Right-to-use asset 4 (1,955) (1,979) (3,976)
Impairment of trade receivables and contract assets (718) (633) (1,334)
Other operating expenses (18,199) (15,966) (34,741)
Operating profit before non-underlying operating and exceptional items 10,081 24,980
8,583
Non-underlying operating items 4 (2,628) (3,249) (8,858)
Exceptional items 4 - - -
(2,628) (3,249) (8,858)
Operating profit 5,955 6,832 16,122
Financing income 2,379 302 1,735
Financing expense (958) (819) (1,645)
Profit before tax 7,376 6,315 16,212
Taxation (1,236) (1,662) (3,972)
Profit for the period after tax attributable to equity holders of the parent 6,140 4,653
12,240
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences
- Revaluation of other investments - - (26)
- Exchange differences on foreign branch 97 95 (49)
Profit for the financial period and total comprehensive income all 6,237 4,748 12,165
attributable to equity holders of the parent
Statutory earnings per share (pence)
Basic earnings per share 5 4.83p 3.73p 12.00p
Diluted earnings per share 5 4.68p 3.66p 11.71p
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 2023
Note Restated
Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2023 2022 2023
£'000
£'000
£'000
Non-current assets
Property, plant and equipment 1,429 1,450 1,628
Right-of-use asset 25,143 28,486 27,098
Investment property 164 164 164
Intangible assets & goodwill 7 14,650 13,954 12,929
Other intangible assets 803 716 1,090
Other investments 147 173 147
Deferred tax asset 1,230 638 830
Total non-current assets 43,566 45,581 43,886
Current assets
Contract assets 8 26,148 22,255 20,388
Trade and other receivables 9 73,630 67,996 73,272
Cash and cash equivalents 11,646 7,887 11,105
Total current assets 111,424 98,138 104,765
Total assets 154,990 143,719 148,651
Non-current liabilities
Other interest-bearing loans and borrowings 10 (13,859) (6,765) (6,813)
Lease liability (26,843) (30,015) (28,716)
Other payables 11 - (702) -
Deferred tax liability (3,432) (3,103) (2,941)
Provisions (1,290) (863) (1,290)
Total non-current liabilities (45,424) (41,448) (39,760)
Current liabilities
Lease liability (3,714) (3,234) (3,257)
Trade and other payables 11 (21,731) (23,519) (25,933)
Provisions (107) (101) (107)
Current tax liabilities (685) (843) (1,482)
Total current liabilities (26,237) (27,697) (30,779)
Total liabilities (71,661) (69,145) (70,539)
NET ASSETS 83,329 74,574 78,112
EQUITY
Share capital 13,165 12,514 12,664
Share premium 12,479 12,378 11,846
Merger reserve (9,950) (9,950) (9,950)
Other reserves 19,383 14,465 15,413
Treasury reserve (628) (240) (677)
Translation reserve 46 93 (51)
Retained earnings 48,834 45,314 48,867
TOTAL EQUITY 83,329 74,574 78,112
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2023
Restated
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period after tax 6,140 4,653 12,240
Adjustments for:
Depreciation and amortisation 4,087 3,594 7,246
Financial income (2,379) (302) (1,735)
Financial expense 380 283 495
Interest charge on capitalised leases 578 536 1,150
Equity settled share-based payments 1,500 423 1,100
Gain on bargain purchase (3,509) (1,389) (1,389)
Acquisition related earn-out remuneration charge 3,358 3,103 6,190
Earn-out consideration paid - acquisitions of subsidiary - (50) (50)
Initial consideration paid on acquisitions (2,035) (1,468) (1,468)
Loss on disposal of property, plant and equipment - 122 82
Tax expense 1,236 1,662 3,972
9,356 11,167 27,833
Increase in trade and other receivables (4,956) (8,577) (6,942)
Decrease in trade and other payables (2,204) (632) (7,259)
Increase in provisions - - 433
Cash generated from operations 2,196 1,958 14,065
Tax paid (2,521) (1,937) (4,320)
Net cash flows from operating activities (325) 21 9,745
Investing activities
Acquisition of property, plant and equipment (286) (739) (1,312)
Acquisition of other intangible assets - (216) (787)
Cash acquired on business combinations 1,239 483 483
Interest received 2,379 302 1,735
Net cash flows from investing activities 3,332 (170) 119
Financing activities
Interest and other financial income paid (297) (283) (371)
Lease payments (1,994) (2,051) (4,550)
Receipt of new revolving credit facility, net of refinancing costs 7,000 1,000 1,000
Acquisition of own shares (350) (18) (416)
Proceeds of sale of own shares 399 39 -
Cash received for shares issued on exercise of share options 773 79 477
Dividends paid 6 (7,997) (6,835) (11,004)
Net cash outflow from financing activities (2,466) (8,069) (14,864)
Net increase/(decrease) in cash and cash equivalents 541 (8,218) (5,000)
Cash and cash equivalents at beginning of period 11,105 16,105 16,105
Cash and cash equivalents at end of period 11,646 7,887 11,105
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2023
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 2022 (restated) 12,456 11,342 (9,950) 14,465 (261) 47,088 (2) 75,138
Comprehensive income:
Profit for the year - - - - - 12,240 - 12,240
Revaluation of other investments - - - - - (26) (26)
Exchange rate differences - - - - - - (49) (49)
Total comprehensive income - - - - - 12,214 (49) 12,165
Transaction with owners recognised directly in equity
Issue of share capital 208 504 - 948 - - - 1,660
Purchase of own shares at nominal value - - - - - (133) - (133)
Sale of treasury shares - - - - 20 - - 20
Purchase of treasury shares - - - - (436) - - (436)
Recognition of tax benefit on gain from equity settled share options - - - - - (398) - (398)
Dividend paid - - - - - (11,004) - (11,004)
Share based payment transactions - - - - - 1,100 - 1,100
Total equity at 30 April 2023 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
At 1 May 2022 (unaudited) 12,456 11,342 (9,950) 14,465 (261) 44,863 (2) 72,913
Impact of restatement - - - - - 2,225 - 2,225
At 1 May 2022 (restated) 12,456 11,342 (9,950) 14,465 (261) 47,088 (2) 75,138
Comprehensive income:
Profit for the period - - - - - 4,653 - 4,653
Exchange rate differences - - - - - - 95 95
Total comprehensive income - - - - - 4,653 95 4,748
Transaction with owners recognised directly in equity
Share issue 58 1,036 - - - - - 1,094
Sale of treasury shares - - - - 39 - - 39
Purchase of own shares at nominal value - - - - - (15) - (15)
Purchase of treasury shares - - - - (18) - - (18)
Dividend paid - - - - - (6,835) - (6,835)
Share based payment transactions - - - - - 423 - 423
Total equity at 31 October 2022 (restated) 12,514 12,378 (9,950) 14,465 (240) 45,314 93 74,574
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2023
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 2023 (unaudited) 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
Comprehensive income:
Profit for the year - - - - - 6,140 - 6,140
Exchange rate differences - - - - - - 97 97
Total comprehensive income - - - - - 6,140 97 6,237
Transaction with owners recognised directly in equity
Share issue 501 633 - 3,970 - - - 5,104
Sale of treasury shares - - - - 399 - - 399
Purchase of own shares at nominal value - - - - - (76) - (76)
Purchase of treasury shares - - - - (350) - - (350)
Dividend paid - - - - - (7,997) - (7,997)
Recognition of tax benefit on gain from equity settled share options - - - - - 400 - 400
Share based payment transactions - - - - - 1,500 - 1,500
Total equity at 31 October 2023 13,165 12,479 (9,950) 19,383 (628) 48,334 46 83,329
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 2023
1. Basis of preparation
These interim unaudited financial statements for the six months ended 31
October 2023 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 2023 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 2023 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 2023
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:
· Consideration treated as remuneration: such charges are treated as
non-underlying in order to reflect the commercial substance of the
transaction. All former vendors who remain employed by the Group are paid at
market rates and the earnout remuneration is a function of the interpretation
of IFRS, and related emerging guidance only.
· 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 marketplace.
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 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' 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'.
Restated
6 months to 6 months to 12 Months
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Reported profit before tax 7,376 6,315 16,212
Adjustments for non-underlying and exceptional items:
- Amortisation of intangible assets 1,279 1,112 2,073
- Share-based payment adjustment 1,500 423 1,984
- Gain on bargain purchase (3,509) (1,389) (1,389)
- Consideration treated as remuneration 3,358 3,103 6,190
Underlying profit before tax 10,004 9,564 25,070
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.
Consideration treated as remuneration: such charges are treated as
non-underlying in order to reflect the commercial substance of the
transaction. All former vendors who remain employed by the Group are paid at
market rates and the earnout remuneration is a function of the interpretation
of IFRS, and related emerging guidance only.
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 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Operating cash flows before movements in working capital 9,356 11,167 27,833
Net working capital movement (7,160) (9,209) (13,768)
Cash generated from operations 2,196 1,958 14,065
Repayment of lease liabilities (1,994) (2,051) (4,579)
Net interest paid 2,082 19 1,393
Tax paid (2,521) (1,937) (4,320)
Cash outflow paid on acquisitions 2,035 1,518 1,518
Purchase of property, plant and equipment (276) (739) (1,312)
Purchase of other intangible assets - (216) (787)
Free cash flows 1,522 (1,448) 5,978
b) Working capital measures
6 months to 6 months to 12 Months
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled 26,148 22,255 20,388
revenue)
Unbilled disbursements 5,816 4,255 3,368
Total WIP 31,964 26,510 23,756
Annualised revenue 177,732 164,100 163,583
WIP days 65 59 53
6 months to 6 months to 12 Months
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Debtor days
Trade receivables 53,369 49,102 54,167
Less unbilled disbursements (5,816) (4,255) (3,368)
Total debtors 47,553 44,847 50,799
Annualised revenue 177,732 164,100 163,583
Debtor days 98 100 113
6 months to 6 months to 12 Months
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Gross lock-up days
Total WIP 31,964 26,510 23,756
Total debtors 47,553 44,847 50,799
Total gross lock-up 79,517 71,357 74,555
Annualised revenue 177,732 164,100 163,583
Gross lock-up days 163 159 166
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 2022 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 2023:
Reportable segment Legal service lines Consultancy service lines
Corporate Banking Gateley Global
Corporate GEG Services
Restructuring Advisory
Taxation
Business Services Austen Hays Adamson Jones
Complex International Litigation Gateley Omega
Commercial Dispute Resolution Symbiosis IP
Intellectual Property
Regulatory and Business Defence
Reputation, media and privacy law
People Employment Entrust Pension
Pensions Kiddy & Partners
Private Client t-three
Property Construction Gateley Capitus
Planning Gateley Hamer (inc. Persona Associates)
Real Estate Gateley RJA
Real Estate Dispute Resolution Gateley Smithers Purslow
Residential Development Gateley Vinden (inc. Tozer Gallagher)
.
6 months to 31 October 2023
Corporate Business Services People Property Total
£'000 £'000 £'000 £'000 £'000
Segment revenue 17,913 12,127 9,633 42,284 81,957
Segment contribution 5,604 2,959 2,811 14,985 26,359
(as reported internally)
Costs not allocated to segments:
Other operating income 20
Personnel costs (6,232)
Share based payment costs (1,500)
Depreciation and amortisation (4,087)
Other operating expenses (8,756)
Gain on bargain purchase 3,509
Contingent consideration treated as remuneration (3,358)
Net financial income 1,421
Profit before tax 7,376
6 months to 31 October 2022 (restated)
Corporate Business People Property Total
Services
£'000 £'000 £'000 £'000 £'000
Segment revenue 19,046 9,728 9,745 37,624 76,143
Segment contribution 8,347 2,437 3,196 13,565 27,545
(as reported internally)
Costs not allocated to segments:
Other operating income -
Personnel costs (6,770)
Share based payment charge (423)
Depreciation and amortisation (3,594)
Other operating expenses (8,212)
Gain on bargain purchase 1,389
Contingent consideration treated as remuneration (3,103)
Net financial expense (517)
Profit before tax 6,315
12 months to 30 April 2023
Corporate Business People Property Total
Services
£'000 £'000 £'000 £'000 £'000
Segment revenue 38,778 21,824 20,436 81,644 162,683
Segment contribution 13,948 5,330 5,983 56,298 56,299
(as reported internally)
Costs not allocated to segments:
Other operating income 49
Personnel costs (11,091)
Share based payment charge (1,984)
Depreciation and amortisation (7,246)
Other operating expenses (15,104)
Gain on bargain purchase 1,389
Contingent consideration treated as remuneration (6,190)
Net financial expense 90
Profit before tax 16,212
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 2023 31 October 2022 30 April 2023
Legal and professional staff 1,035 1,000 1,000
Administrative staff 463 431 439
1,498 1,431 1,439
The aggregate payroll costs of these persons were as follows:
6 months to 6 months to 12 months to
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Wages and salaries 45,203 40,520 83,942
Social security costs 5,136 5,071 9,984
Pension costs 1,617 1,390 2,839
51,956 46,981 96,765
4. Expenses
Included in operating profit are the following:
6 months to 6 months to 12 months to 30
31 October 2023 31 October 2022 April 2023
£'000 £'000 £'000
Depreciation on tangible assets 566 503 936
Depreciation on right-of-use assets 1,955 1,979 3,976
Other operating income - rent income 20 - 49
Short term and low value leases 38 37 82
Operating lease costs on property 89 - 166
Loss on disposal of fixed assets - 122 82
Non-underlying items
6 months to 6 months to 12 months to 30 April 2023
31 October 2023 31 October 2022
Amortisation of acquisition related intangible assets 1,279 1,112 2,073
Share based payment charges 1,500 423 1,984
Gain on bargain purchase (3,509) (1,389) (1,389)
Consideration treated as remuneration 3,358 3,103 6,190
Total non-underlying items 2,628 3,249 8,858
Exceptional items
Redundancy costs - - -
Total non-underlying and exceptional items 2,628 3,249 8,858
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2022 to 30 April 2023
2023
Number Number Number
Weighted average number of ordinary shares in issue, being weighted average 127,230,567 124,613,926 125,244,334
number of shares for calculating basic earnings per share
Shares deemed to be issued for no consideration in respect of share based 3,985,103 2,515,736 3,283,007
payments
Weighted average number of ordinary shares for calculating diluted earnings 131,215,670 127,129,662 128,527,341
per share
£'000 £'000 £'000
Profit for the period after taxation and basic earnings attributable to 6,140 4,653 12,240
ordinary equity shareholders
Non-underlying and exceptional items (see note 4) 2,628 3,249 8,858
Tax on non-underlying items (375) (80) (168)
Underlying earnings before non-underlying items 8,393 7,822 20,930
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 4.83 3.73 9.77
Diluted earnings per ordinary share 4,68 3.66 9.52
Underlying basic earnings per ordinary share 6.60 6.28 16.71
Underlying diluted earnings per ordinary share 6.40 6.15 16.28
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 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Equity shares
Final dividend in respect of 2023 (6.2p per share) - paid 21 October 2023 7,997 - -
Interim dividend in respect of 2023 (3.3p per share) - paid 24 March 2023 - - 4,169
Final dividend in respect of 2022 (5.5p per share) - paid 22 October 2022 - 6,835 6,835
Dividends paid 7,997 6,835 11,004
The board intends to approve an interim dividend of 3.3p (H1 23: 3.3p) per
share. This dividend will be paid on 28 March 2024 to shareholders on the
register at the close of business on 23 February 2024. The shares will go
ex-dividend on 22 February 2024. This dividend has not been recognised as a
liability in these final statements.
7 Intangible assets
Goodwill Customer list Brand names Total
£'000 £'000 £'000 £'000
Deemed cost
At 1 May 2022 (restated) 1,550 16,261 3,518 21,329
Acquired through business combination - 1,000 - 1,000
At 31 October 2022 1,550 17,261 3,518 22,329
At 1 May 2022 1,550 16,261 3,518 21,329
Acquired through business combination - 1,000 - 1,000
At 30 April 2023 1,550 17,261 3,518 22,329
At 1 May 2023 1,550 17,261 3,518 22,329
Acquired through business combination - 3,000 - 3,000
At 31 October 2023 1,550 20,261 3,518 25,329
Accumulated amortisation
At 1 May 2022 - 7,317 10 7,327
Charge for the period - 933 115 1,048
At 31 October 2022 - 8,250 125 8,375
At 1 May 2022 - 7,317 10 7,327
Charge for the year - 1,838 235 2,073
At 30 April 2023 - 9,155 245 9,400
At 1 May 2023 - 9,155 245 9,400
Charge for the period - 1,044 235 1,279
At 31 October 2023 - 10,199 480 10,679
Net Book Value
At 31 October 2022 1,550 9,011 3,393 13,954
At 30 April 2023 1,550 8,106 3,273 12,929
At 31 October 2023 1,550 10,062 3,038 14,650
Goodwill
Goodwill is allocated to the following cash generating units
Restated
31 October 31 October 30 April
2023 2022 2023
£'000 £'000 £'000
Property Platform
Gateley Capitus Limited - - -
Gateley Hamer Limited - - -
GCL Solicitors LLP (acquisition of trade and assets) - - -
Persona Associates Limited 40 40 40
Gateley Vinden Limited 934 934 934
Tozer Gallagher LLP (acquisition of trade and assets) - - -
Gateley Smithers Purslow Limited - - -
Gateley RJA Limited - - -
974 974 974
People Platform
Kiddy & Partners Limited - - -
Gateley Global Limited (formerly International Investment Services Limited) - - -
t-three Consulting Limited - - -
- - -
Business Services Platform
Gateley Tweed (acquisition of goodwill) 576 576 576
Adamson Jones IP Limited - - -
Symbiosis IP Limited - - -
576 576 576
1,550 1,550 1,550
Acquisition of Richard Julian and Associates Limited (RJA)
On 19 July 2023 Gateley (Holdings) Plc acquired the entire issued share
capital of Richard Julian and Associates Limited. RJA specialises in the
provision of quantity surveying and project management services to
organisations in the affordable housing sector.
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 and fair value adjustments Total
£'000 £'000 £'000
Property, plant and equipment 82 - 82
Intangible asset relating to customer list - 3,000 3,000
Cash 1,239 - 1,239
Trade debtors 583 - 583
Prepayments and accrued income 89 - 89
Total assets 1,993 3,000 3,993
Trade payables (7) - (7)
Accruals and other payables (243) - (241)
Corporation tax (227) - (227)
Other taxes and social security (242) - (242)
Lease liability - - -
Deferred tax (15) (750) (765)
Total liabilities (734) (750) (1,484)
Total identifiable net assets at fair value 1,259 2,250 3,509
Negative goodwill arising on acquisition (3,509)
Total consideration -
Satisfied by:
Initial cash consideration paid 2,035
Issue of 1,192,163 new 10p ordinary shares in Gateley (Holdings) Plc 1,896
Contingent cash consideration payable 1,034
Contingent share consideration payable 1,035
Less: amounts subject to continuing employment conditions (6,000)
Total consideration -
Net cash outflow arising on acquisition
Cash paid (2,035)
Net cash acquired 1,239
Net cash outflow arising on acquisition 796
A contingent consideration arrangement was entered into as part of the
acquisition. A further £2.1 million could be payable with any payment
subject to RJA achieving at least £4 million of revenue over the first 12
months post-acquisition, and not less than £5 million of revenue for the
following 12 months. Such payment is to be split in shares and cash as agreed
between the Sellers and the Company, providing no Seller is entitled to
receive more than 50% of their total consideration in cash.
8 Contract Assets and liabilities
Contract assets Contract liabilities
£'000 £'000
As at 31 October 2023 26,148 (341)
As at 31 October 2022 22,255 (668)
As at 30 April 2023 20,388 (569)
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
Restated
31 October 31 October 30 April
2023 2022 2023
£'000 £'000 £'000
Trade receivables 53,369 49,102 54,167
Prepaid consideration subject to earn-out service conditions 7,149 6,136 6,015
Prepayments 4,622 3,500 5,777
Other receivables 233 220 233
65,373 58,958 66,192
31 October 31 October 30 April
2023 2022 2023
£'000 £'000 £'000
Amounts falling due after more than one year:
Prepaid consideration subject to earn-out service conditions 8,257 9,038 7,080
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 2023 31 October 2022 30 April 2023
Fair Carrying Fair Carrying Fair Carrying
amount
amount
amount
value value value
£'000 £'000 £'000 £'000 £'000 £'000
Non-Current liabilities
Bank borrowings 13,859 13,859 6,765 6,765 6,813 6,813
On 18 April 2022, the Company entered into a revolving credit facility which
provides total committed funding of £30m until April 2025. Interest is
payable at a margin of 1.95% above the SONIA reference rate.
11 Trade and other payables
31 October 31 October 30 April
2023 2022 2023
£'000 £'000 £'000
Current
Trade payables 9,956 8,806 9,370
Other taxation and social security payable 9,347 9,802 9,913
Other payables - - 295
Contingent consideration treated as remuneration 118 - 1,364
Accruals and deferred income 2,310 4,911 4,991
21,731 23,519 25,933
£'000 £'000 £'000
Non-current
Contingent consideration treated as remuneration - 702 -
- 702 -
12 Share based payments
Group
At the period end the Group has four share-based payment schemes in operation.
Long Term Incentive Plan ('LTIP')
The Group operates 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 2023/25/26
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.
Restricted Share Award Plan ('RSA')
The Group operates an RSA for the benefit of Senior Management. Awards under
the RSA entitle the option holder to participate in dividends however, the
shares are restricted for a period of 5 years from issue, such that they
cannot be traded.
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 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 annual awards granted under the schemes are summarised below:
Weighted average remaining contractual life Weighted Originally granted Lapsed at Exercised at 30 April 2023 At 1 Granted Lapsed during Exercised during period At 31 October 2023
average 30 April 2023 May during period
exercise 2023 the period
price
Years £ Number Number Number Number Number Number Number Number
RSA
RSA 21/22 - 27 April 2022 3.5 £0.00 1,322,560 - - 1,322,560 - - 1,322,560
RSA 22/23 - 19 July 2022 3.7 £0.00 100,000 - - 100,000 - - -- 100,000
RSA 22/23 - 23 Feb 2023 4.3 £0.00 1,175,000 (50,000) - 1,125,000 - (50,000) -- 1,075,000
RSA 23/24 - 21 Sept 2023 4.8 £0.00 - - - - 790,131 - -- 790,131
2,597,560 (50,000) - 2,547,560 790,131 (50,000) - 3,287,691
LTIPS
LTIPS 20/21 - 22 July 2020 0.0 £0.00 1,405,766 (303,519) - 1,102,247 - (374,457) (727,790) -
LTIPS 21/22 - 27 April 2022 1.5 £0.00 1,115,000 (90,000) - 1,025,000 - (32,500) - 992,500
LTIPS 22/23 - 23 February 2023 2.3 £0.00 1,320,000 - - 1,320,000 - - - 1,320,000
3,840,766 (393,519) 3,447,247 - (406,957) (727,790) 2,312,500
SAYE
SAYE 19/20 - 1 October 2019 0 £1.28 822,625 (462,260) (311,806) 48,559 - - (48,559) -
SAYE 20/21 - 6 November 2020 0 £1.02 2,337,197 (463,339) - 1,873,858 - (193,928) - 1,679,930
SAYE 21/22 - 25 August 2021 0.8 £1.70 673,077 (172,062) - 501,015 - (68,491) - 432,524
SAYE 22/23 - 22 September 2022 1.9 £1.55 1,070,154 (36,850) - 1,033,304 - (107,289) - 926,015
4,903,053 (1,134,511) (311,806) 3,456,736 - (369,708) (48,559) 3,038,469
CSOPS
CSOPS 20/21 - 7 July 2020 0.0 £1.35 976,797 (245,014) - 731,783 - (33,150) (438,263) 260,370
CSOPS 22/23 - 14 December 2022 2.1 £1.74 300,000 (10,000) - 290,000 - (20,000) - 270,000
1,276,797 (255,014) - 1,021,783 - (53,150) (438,263) 530,370
During the period 703,522 CSOP options became eligible to exercise, with
438,263 being exercised by 31 October 2023.
During the period 48,559 SAYE 19/20 options were exercised.
On 21 September 727,790 LTIP options were exercised.
On 21 September 2023 790,131 Restricted Share Awards were granted.
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:
RSA
Grant date 21/9/23
Share price at date of grant 153.5p
Exercise price £nil
Volatility 19%
Expected life (years) 5
Risk free rate 4.429%
Dividend yield -
Fair value per share
Market based performance condition -
Non-market-based performance 153.5p
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 on Management's expectation of the minimum and maximum exercise
period of each of the options granted.
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