REG - Gateley (Holdings) - Half Year Results
15/01/2025 07:00
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RNS Number : 3320T Gateley (Holdings) PLC 15 January 2025
15 January 2025
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year results for the six months ended 31 October 2024
Strong activity in H1; full year results expected to be in line with market
consensus
Gateley, the professional services group, is pleased to announce its unaudited
results for the six months ended 31 October 2024 (the "Period" or "H1 25").
Financial Highlights
· Strong financial performance with revenue and underlying profit before tax up
5.3% (H1 24: 7.6%) and 5.9% (H1 24: 4.6%) respectively
· Activity levels across the Group increased with fee earner utilisation at 88%
(H1 24: 83%)
· Group organic revenue growth of 3.2% (H1 24: 5.1%)
· Legal services revenue grew entirely organically by 2.1% (H1 24: 2.4%)
· Revenue from consultancy services grew 13.6% to £25.7m (H1 24: £22.6m), of
which organic growth was 6.1% (H1 24: 13.5%)
· Consultancy services now 29.8% of total revenue (H1 24: 27.6%)
· Underlying operating profit margin maintained at 10.5% (H1 24: 10.5%)
· Underlying profit before tax margin increased to 12.3% (H1 24: 12.2%)
· Strong balance sheet with net cash of £1.2m at the Period end (H1 24: net
debt £2.2m)
· Proposed interim dividend of 3.3p (H1 24: 3.3p) per share
Headline and underlying H1 25 H1 24 Change
Group revenue £86.3m £82.0m 5.3%
Group underlying operating profit £9.1m £8.6m 5.8%
Group underlying profit before tax(1) £10.6m £10.0m 5.9%
Underlying diluted EPS(2) 6.63p 6.40p 3.6%
Net assets £80.8m £83.3m (3.0)%
Net cash/(debt)(3) £1.2m £(2.2)m 154.5%
Dividend 3.3p 3.3p -
Reported H1 25 H1 24 Change
Group profit before tax £3.3m £7.4m (54.8)%
Group profit after tax £1.9m £6.1m (68.7)%
Basic earnings per share ("EPS") 1.44p 4.83p (70.2)%
(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 cash/(debt) excludes IFRS 16 lease liabilities
Strategic and post-Period highlights
· Prior year acquisition of Richard Julian and Associates Limited ("RJA") has
been integrated and is performing well-ahead of initial expectations
· Ongoing investment in capacity with an increase in average fee earner
headcount of 4.4% to 1,081 in H1 25 (H1 24: 1,035)
· Continuation of strategic hiring with 10 new legal services partners joining
during H1 25
· Continued focus on alignment of stakeholders including through 70% of staff
either owning shares or currently participating in the Group's key Restricted
Share Awards Plan and Save As You Earn scheme
· Achieved all 15 responsible business objectives set out in our 2023/24
Responsible Business Report and launched 15 new objectives in our fourth
annual Responsible Business Report published on 6 August 2024
Current trading and outlook
· H1 25 outturn demonstrates the resilience derived from our ongoing investment
in a diverse range of professional services
· Activity levels increased throughout H1 25, particularly in transactional
services in Q2
· Recent organic investments are beginning to generate positive returns
alongside strong performances from our most recent acquisitions
· Promising M&A pipeline entering H2
· Our strong H1 performance leaves the Group well placed for H2. The board
expects results for the full year to be in line with market consensus
Rod Waldie, Chief Executive Officer of Gateley, said:
"I am pleased with the Group's performance in H1 25.
"The Group continues to benefit from the resilience created by our strategy of
investing in a diverse and complementary range of professional services. We
are pleased that our more recent organic investments are beginning to generate
positive returns alongside the strong performance from our recently acquired
businesses. Our balance sheet provides a strong foundation from which to
take a long-term view of potential opportunities to further invest in both
legal and consultancy services.
"Finally, as always, I would like to thank our clients for their support and
our dedicated people for their ongoing hard work, commitment and can-do
attitude."
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
Panmure Liberum - Nominated Adviser and Broker
Richard Lindley / Nikhil Varghese / Tom Scrivens Tel: +44 (0) 20 3100 2000
MANAGEMENT STATEMENT
Summary
We are pleased with the Group's performance in H1 25, which included two
erratic periods in the build-up to the UK General Election and then
post-Election to the Autumn Budget. Once again, we are reporting organic
growth in both Group revenue and underlying profit before tax. In addition,
like-for-like activity levels across the Group increased in the Period and our
outlook is more positive than at this stage in the prior year, including in
our transactional service areas, as pre-Budget uncertainty moderates and
sentiment stabilises.
This outturn is the product of the hard work and commitment of our people to
deliver the best possible outcomes for our clients. As always, we are grateful
to our colleagues across the Group.
We continue to believe in, and execute, our strategy of investing for growth
in both legal services and consultancy services, the latter now accounting for
29.8% of revenue in our uniquely diverse business model. This diversity has
been, and remains, the cornerstone of our resilient, year-on-year growth since
listing in 2015.
The professional services sector remains fragmented, and we continue to see
significant opportunities for further organic growth and selective
acquisitions, aided by the Group's strong balance sheet, and undrawn headroom
of £17m in the Group's RCF (where cash typically accounts for fifty percent
of the consideration we pay). In the Period, we made 10 lateral hires at
partner level in our legal services business and fully integrated RJA, which
is performing very well. Disciplined capital allocation remains a key priority
for us whilst maintaining a robust balance sheet.
In the near-term, our key operational focus is on driving organic revenues and
improving margin. Key components in the Group's margin improvement bridge
include pricing, WIP management and conversion into fees. All our Platforms
have been challenged with positive re-sets, against market data which
indicates that we can make improvements against each of these metrics. This
operational focus sits alongside an ongoing focus on the basics in our
business; consistent delivery of excellent service, enhancing cross-selling
opportunities and winning quality, profitable new business on each of our
Platforms.
In the Period, we published our fourth annual Responsible Business Report.
Having achieved all 15 responsible business targets set out in our prior
report, our 2024/25 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.
The board proposes an interim dividend of 3.3p per share (H1 24: 3.3p).
Current trading and outlook
The strength of our H1 performance, including improved activity levels across
the Group and the growing contribution from our recent investments, leaves us
looking forward with greater confidence.
Whilst the macro-economic position is difficult to predict, we are encouraged
by current activity levels in our transactional services teams allied to
ongoing good momentum in those of our counter-cyclical and economically
agnostic services. The benefit of the increasingly diversified business
model was seen in H1 and we expect a similar effect in H2 and we therefore
expect to deliver results for the full year in line with consensus
expectations.
Platform review
Group revenue grew by 5.3% to £86.3m for H1 25 (H1 24: £82.0m). Revenue
growth in the Group's core legal services was entirely organic at 2.1%,
growing to £60.6m (H1 24 £59.3m) whilst revenue from consultancy services
grew by 13.6% overall to £25.7m (H1 24 £22.6m). Acquired consultancy
revenue totalled £2.9m (H1 24: £1.1m) following the acquisition of RJA (in
July 2023) with organic consultancy revenue growth of 6.1% to £22.8m (H1 24:
£21.5m).
This generated an increase of 5.8% in underlying operating profit to £9.1m
(H1 24: £8.6m) and a 5.9% increase in underlying profit before tax to £10.6m
(H1 24: £10.0m). This outturn reflects the quality and breadth of the
complementary legal and consultancy advice that we deliver via our four
Platforms focused on Business Services, Corporate Services, People Services
and Property Services.
Activity levels increased throughout the course of H1 and fee earner
utilisation was ahead of the prior year as we progress into H2. Our
transactional services saw an increase in activity in Q2, initially stimulated
by the lead-in to the Autumn Budget, but continuing into Q3, as demonstrated
by 11.1% revenue growth in our Corporate Platform during the Period.
Activity in our more counter cyclical businesses remained strong, as
demonstrated by 10% growth in revenue in Gateley Smithers Purslow, delivering
specialist advice to UK property insurers, in our Property Platform.
In segmental reporting, the Group grew revenue on each of its Platforms, other
than the People Platform. In contribution margin, the Group delivered growth
on each of its Platforms, other than the Property Platform, resulting in an
overall increase of 3.3%. The reduction on the Property Platform is due to
in Period people investment in our construction, real estate dispute
resolution and house building teams at a time when activity slowed in
anticipation of the Budget but will benefit from the positive tail-winds of
already made government decisions to speed up planning and supply for building
homes in the UK.
Results Business Services Platform Corporate Platform People Platform Property Platform Total
H1 25 Revenue (£m) 14.3 18.7 9.3 44.0 86.3
Revenue growth H1 25 8.5% 11.1% (3.9)% 4.1% 5.3%
H1 24 Revenue (£m) 13.2 16.8 9.7 42.3 82.0
H1 25 contribution margin 36.8% 42.9% 37.2% 31.6% 35.5%
H1 24 contribution margin 25.0% 31.3% 29.2% 35.4% 32.2%
Business Services Platform
This Platform supports clients in dealing with their commercial agreements,
managing risks, protecting assets and resolving disputes.
Platform revenue grew by 8.5%.
In legal services, our commercial dispute resolution team, which accounted for
37% of Platform revenue for H1 25, performed in-line with its target and
carries good momentum into H2. The commercial dispute resolution team's work
is counter-cyclical or agnostic in nature, as is work undertaken by our
regulatory and business defence team.
Previously reported significant investment in our complex international
recovery ("CIR") team and class actions team continued in Period, including a
laterally hired partner, bringing total headcount in these workstreams to
28. In CIR, we are beginning to see a positive return on this investment,
where revenue is significantly ahead of prior year and the team is carrying a
number of complex, long-term mandates into H2. These have been sourced from
multiple jurisdictions, including Africa and the Middle East. We expect to
see a gradual enhancement in returns and view this team as an important part
of our strategy to generate further revenues from jurisdictions beyond the
UK. In parallel, our class actions team continues its book-build and we look
forward to attractive long-term returns from this area.
In consultancy services, both of our patent and trademark attorney businesses,
Adamson Jones and Symbiosis IP, were in-line with budgeted revenue and ahead
of their prior year positions, with Symbiosis benefitting from our prior year
investment in experts in IP valuation and commercialisation. Both have a
positive outlook. We continue to appraise opportunities to invest in
broadening our intellectual property offering.
In aggregate, consultancy revenue represented 22.9% (HY 24: 24.5%) of this
Platform's revenue.
Corporate Platform
This Platform is focused on the corporate, financial services and
restructuring markets in both transaction and business support services.
Revenue grew by 11.1%, all of which is organic growth. Each of the five
units on the Platform were ahead of their prior year position at the end of
the Period.
The corporate, banking and tax transactional teams benefitted from a spike in
activity during the post-Election, pre-Autumn Budget period. Deal volumes
and deal quality was impressive, across multiple sectors, and we acted for a
wide range of clients, dominated by private equity and acquisitive
corporates. This also cascaded work to other Platforms. Whilst initial
indications are that the Autumn Budget has done little to encourage UK growth,
currently it has not stifled our transactional services activity. In the
meantime, challenging macro-economic conditions during the Period resulted in
good activity in our restructuring advisory unit. Indications are that this
will continue throughout H2.
We saw in Period lateral partner hires to our corporate, tax and restructuring
teams, each of which is London-based and reflective of our commitment to
further enhance the quality of our offer.
This Platform is dominated by legal services and will likely remain so, with
teams drawing support from services on other Platforms. The Platform's sole
consultancy business, Gateley Global, continues to be a good cross-referrer of
opportunities across the Group whilst it significantly increased its
like-for-like revenue in Period. This predominantly resulted from being
appointed by the West Midlands Combined Authority (WMCA) to support its High
Growth Accelerator Programme, through which selected businesses access support
from Gateley Global to help overcome barriers to growth and manage
sustainability. The Group's broad range of professional services was a key
factor in WMCA appointing Gateley Global as both provider of expert support
and a conduit to wider Group services.
People Platform
This Platform supports clients dealing with and developing people and in
administering individuals' personal affairs.
Revenue on this Platform declined by 3.9%, due to significant contraction in
our private client team, where we are reducing scale and focusing on core
services to high-net-worth clients supported by the appointment of a private
client Chartered Tax Advisor with a Big Four background and high net worth
focus. Our re-cast private client offer will be stable as we enter FY 26.
Each of the other three units on this Platform delivered like-for-like
growth. Under new leadership, our legal services employment team benefitted
from strong corporate transactional activity alongside new strategic
employment work, including a bespoke service to support public and private
sector clients with internal investigations. The team is carrying strong
momentum into H2 and will benefit from legislative changes, including the
Employment Rights Bill, which is likely to be the most significant change in
employment law in a generation.
In pension services, once again, the team's performance was strong. Our
pension trustee business, Entrust, is relatively economically agnostic and
continues to deliver growth as it realises 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 up by 2% versus H1 24.
Whilst there seems to be less assessment and development work available in
the current economic climate, these businesses are winning increasing share
and mandated work is strong moving into H2. These businesses are also
working closely with our legal services employment team to maximise
opportunities arising from changing legislation in relation to diversity,
inclusion and employment rights generally.
In aggregate, consultancy revenue represented 28.8% (HY 24: 27.2%) of this
Platform's revenue.
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 resilient revenue growth of 4.1%, which
is evidence of the benefit of the deliberate mix of services on this
Platform.
In legal services, our residential development team remains the largest
segment on this Platform. Rolling data from Savills plc indicates that
housing transactions were circa 12% below pre-pandemic levels in the first
half of 2024, improving to 7% below in the three months to November 2024.
Against this data, we experienced 6% like-for-like drop in our residential
development team's revenue in Period. However, the team has been
consistently busy and is a significant referrer of work to other teams on this
and other Platforms. We anticipate a tailwind from government policy to
speed up planning for residential development and encourage housebuilders to
address supply shortfall. Our market-leading credentials and commitment to
best-in-class service in this sector are reflected in the two in Period
laterally hired partners to the team.
In commercial real estate, most sectors were and remain cautious, against
which we are very pleased with a 6% like-for-like revenue increase from this
team. We maintain a focus on both investment and development work and
supplemented the team with two lateral partner hires, one of whom brings new
environmental expertise to our offer.
Our planning and non-contentious construction teams continue to benefit from
self-generated and cross-referred opportunities, as do our real estate dispute
resolution and contentious construction teams, both counter-cyclical in nature
and both of which generated revenue growth consistent with H1 24. In Period,
we laterally hired a partner to our real estate dispute team with particular
expertise in the telecoms sector to supplement existing telecoms services in
our real estate and Gateley Hamer teams.
Taken as a whole, consultancy business revenue on this Platform grew by 15.6%
to £18.9m, of which 5.2% was organic growth. This represented 43.0% of this
Platform's revenue.
We saw particularly encouraging H1 performances by Gateley RJA and Gateley
Smithers Purslow (GSP). RJA was acquired in July 2023 and has integrated
very well. It specialises in the provision of quantity surveying and project
management services to organisations in the affordable housing sector, which
is likely to continue to benefit from government Housing Policy. It also has
expertise to support those teams in Gateley Vinden and GSP, who provide
specialist advice to UK property insurers in relation to major loss claims, a
busy and economically agnostic market.
People and operations
Our people remain our most valuable asset. We continue to adopt a measured
approach to resource whilst seeking to attract the best possible talent to
develop and enhance our services. Our average headcount grew to 1,565 as at
H1 25, representing year-on-year growth of 4.5%.
Our employee value proposition is constantly evolving, with a consistent focus
on employee engagement and inclusion to ensure that we attract and retain the
best talent. Our broad range of career opportunities is attractive and our
employee offer remains differentiated, including the ability for all of our
people to participate in share ownership. In Period we further progressed
our internal equity re-circulation plan by funding our EBT to acquire
2,026,490 shares, mainly from employee IPO beneficiaries, to warehouse in
order to satisfy future Restricted Share Award Plan issuance to partner and
partner equivalents in Group.
Operationally, our focus is on driving organic revenue and realising
efficiencies with a singular objective to improve margin, which is our key
near-term priority. Each of our Platforms is tasked with improving pricing,
WIP management and conversion into fees. We believe that there is a
significant opportunity to be captured as we make progress in these areas,
alongside the additional opportunity in optimising cross-selling across the
Group. In the meantime, the primary focuses of capital allocation remains
(1) investment in people and internal capabilities, including in Generative
AI, where we are making some good progress, (2) in selective M&A with
businesses that align with our culture and values whilst being additive in
both existing and new service lines, and (3) in returns to shareholders.
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 25 and into FY 26.
Board changes
On 22 August 2024, the board announced the appointment of Edward Knapp as an
Independent Non-Executive Director and Chair Designate. Edward subsequently
became Chair following Nigel Payne's retirement from the board on 1 November
2024.
Edward is a global business leader with extensive experience in growth
strategy design and delivery, technology, risk management and transformation
with a particular focus on professional and financial services. He has held
executive and senior leadership roles at McKinsey & Company, Barclays,
HSBC, Revolut and M&G, where he has most recently brought a particular
focus on advisory, wealth management and talent.
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 2023/2024 and, in Period, we published our fourth annual
Responsible Business Report outlining actions taken and setting targets for
2024/2025.
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;
· The launch of the Purpose Pod - Gateley's Responsible Business podcast; and
· A new strategic partnership with environmental charity the Heart of England
Forest.
We are proud of the progress that we have made since publishing our first
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.
Total expenses
Personnel costs (excluding the IFRS 2 charge) remain in line with H1 24 as a
percentage of revenue at 63.4% (H1 24: 63.4%), despite continued wage
inflation and an increased headcount as a result of targeted recruitment,
including in senior lateral hires. Average numbers of legal and professional
staff rose by 4.4% to 1,081 (H1 24: 1,035). Support staff numbers also
increased by 4.5% to 484 (H1 24: 463) as we continue to invest in our support
functions and operations to enable the Group to deliver the best possible
service to our clients.
In line with all businesses in the UK, the changes to National Insurance
contributions announced in the Autumn Budget will impact the Group's costs, by
c£1.8m in FY26. The Group is well positioned to mitigate these costs through
pricing and efficiencies in its ongoing drive for longer term margin
enhancement.
Other operating expenses, excluding non-underlying items, increased to £19.1m
(H1 24: £18.2m) as the effect of investment and the full year impact of past
acquisitions was absorbed. Overall, operating costs as a percentage of
revenue have decreased from 22.2% (in H1 24) to 22.1%. 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 £10.6m increased by 5.9% from
£10.0m in H1 24. The board recognises this improvement but sees
opportunities for further growth alongside continuing investment for future
growth.
Reported profit before tax decreased by 54.8% to £3.3m (H1 24: £7.4m) due to
H1 24 benefitting from the bargain purchase gain created on acquisition of RJA
of £3.6m. Underlying operating profit before tax increased by 5.8% to
£9.1m (H1 2: £8.6m). Profit after tax of £1.9m decreased by 68.7%, again
due mainly to the bargain purchase gain in H1 24. As a result, basic
earnings per share decreased similarly by 70.2% to 1.92p (H1 24: 4.83p).
Underlying diluted earnings per share increased by 3.6% to 6.63p (H1 24:
6.40p) after a full Period impact from new shares issued for acquisitions and
after further awards made under the Group's share option reward schemes.
Net assets and working capital
The Group's net asset position has decreased by £2.5m to £80.8m (H1 24:
£83.3m) as total assets decreased by £1.5m from reductions in non-current
assets, mainly through the amortisation of intangible assets, whilst there was
an increase in current assets, mainly being cash (£2.5m). Total liabilities
increased by £1m as increases in trade and other payables was partially
offset by a reduction in non-current assets lease liabilities.
Net cash increased in H1 25 to £1.2m from net debt of £2.2m in H1 24. Cash
generation from operating activities was £0.5m (H1 24: cash outflow of
£0.3m). Net cash outflows from financing activities increased to £5.2m (H1
24: £2.5m) due to further acquisition of own shares (of £2.8m) to support
the strategic re-circulation of equity through the Group's employee benefit
trust. Free cash flows for the Period totalled £0.5m (H1 24: £1.5m) but
reduced in H1 25 due mainly to increased corporation tax outflows.
Management continues to focus on ways of reducing working capital lock-up.
Total lock-up decreased from 164 to 163 days as a result of debtor days
improving from 98 to 91, as collection initiatives began to benefit
performance. This was mainly offset by strong organic and acquired growth
increasing WIP days from 66 to 72 days.
Dividend
The board has proposed an interim dividend of 3.3p per eligible ordinary share
(H1 24 3.3p). This dividend will be paid on 31 March 2025 to shareholders on
the Company's register on 21 February 2025, with an ex-dividend date of 20
February 2025.
Rod
Waldie
Neil Smith
Chief Executive
Officer
Chief Financial Officer
15 January 2025
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2024
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Revenue 2 86,299 81,957 172,492
Other operating income 7 20 153
Personnel costs, excluding IFRS 2 charge 3 (54,686) (51,956) (108,490)
Depreciation - Property, plant and equipment 4 (552) (566) (1,140)
Depreciation - Right-to-use asset 4 (2,131) (1,955) (3,949)
Impairment of trade receivables and contract assets (781) (718) (591)
Other operating expenses (19,079) (18,199) (38,219)
Operating profit before non-underlying operating and exceptional items 20,256
9,077 8,583
Non-underlying operating items 4 (5,895) (2,628) (7,516)
Exceptional items 4 (1,371) - (1,563)
(7,266) (2,628) (9,079)
Operating profit 1,811 5,955 11,177
Financing income 2,666 2,379 4,999
Financing expense (1,144) (958) (2,221)
Profit before tax 3,333 7,376 13,955
Taxation (1,413) (1,236) (3,881)
Profit for the period after tax attributable to equity holders of the parent 1,920 6,140 10,074
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences
- Revaluation of other investments - 129
- Exchange differences on foreign branch (181) 97 (20)
Profit for the financial period and total comprehensive income all 1,739 6,237 10,183
attributable to equity holders of the parent
Statutory earnings per share (pence)
Basic earnings per share 5 1.44p 4.83p 7.74
Diluted earnings per share 5 1.44p 4.68p 7.63
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 2024
Note Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2024 2023 2024
£'000
£'000
£'000
Non-current assets
Property, plant and equipment 1,534 1,429 1,583
Right-of-use asset 22,113 25,143 23,621
Investment property 164 164 164
Intangible assets & goodwill 7 12,314 14,650 13,768
Other intangible assets 423 803 647
Other investments 275 147 275
Deferred tax asset 373 1,230 373
Total non-current assets 37,196 43,566 40,431
Current assets
Contract assets 8 29,865 26,148 23,543
Trade and other receivables 9 72,285 73,630 82,473
Cash and cash equivalents 14,162 11,646 16,674
Total current assets 116,312 111,424 122,690
Total assets 153,508 154,990 163,121
Non-current liabilities
Other interest-bearing loans and borrowings 10 - (13,859) -
Lease liability (22,604) (26,843) (24,178)
Other payables 11 - - -
Deferred tax liability (2,628) (3,432) (2,968)
Provisions (3,725) (1,290) (3,725)
Total non-current liabilities (28,957) (45,424) (30,871)
Current liabilities
Other interest-bearing loans and borrowings (12,956) - (12,908)
Lease liability (5,083) (3,714) (4,346)
Trade and other payables 11 (25,509) (21,731) (33,112)
Provisions (175) (107) (175)
Current tax liabilities - (685) (1,378)
Total current liabilities (43,723) (26,237) (51,919)
Total liabilities (72,680) (71,661) (82,790)
NET ASSETS 80,828 83,329 80,331
EQUITY
Share capital 13,353 13,165 13,304
Share premium 211 12,479 35
Merger reserve (9,950) (9,950) (9,950)
Other reserves 19,754 19,383 19,383
Treasury reserve (2,781) (628) (4,012)
Translation reserve (252) 46 (71)
Retained earnings 60,493 48,834 61,642
TOTAL EQUITY 80,828 83,329 80,331
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2024
Unaudited Unaudited Audited
Note 6 months to 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period after tax 1,920 6,140 10,074
Adjustments for:
Depreciation and amortisation 4,361 4,087 8,015
Financial income (2,666) (2,379) (4,999)
Financial expense 575 380 1,051
Interest charge on capitalised leases 569 578 1,170
Equity settled share-based payments 961 1,500 1,686
Gain on bargain purchase - (3,509) (3,609)
Acquisition related earn-out remuneration charge 3,480 3,358 6,956
Earn-out consideration paid - acquisitions of subsidiary (401) - (3,790)
Initial consideration paid on acquisitions - (2,035) (2,035)
Loss on disposal of property, plant and equipment 39 - -
Tax expense 1,413 1,236 3,881
10,251 9,356 18,400
Decrease/(Increase) in trade and other receivables 3,594 (4,956) (10,658)
(Decrease)/increase in trade and other payables (9,889) (2,204) 8,642
Increase in provisions - - 2,503
Cash generated from operations 3,956 2,196 18,887
Tax paid (3,431) (2,521) (4,902)
Net cash flows from operating activities 525 (325) 13,985
Investing activities
Acquisition of property, plant and equipment (517) (286) (1,045)
Cash acquired on business combinations - 1,239 1,239
Interest received 2,666 2,379 4,999
Net cash flows from investing activities 2,149 3,332 5,193
Financing activities
Interest and other financial income paid (527) (297) (956)
Lease payments (2,055) (1,994) (5,091)
Receipt of new revolving credit facility, net of refinancing costs - 7,000 6,000
Acquisition of own shares (2,799) (350) (3,339)
Proceeds of sale of own shares - 399 4
Cash received for shares issued on exercise of share options 195 773 2,108
Dividends paid 6 - (7,997) (12,335)
Net cash outflow from financing activities (5,186) (2,466) (13,609)
Net (decrease)/increase in cash and cash equivalents (2,512) 541 5,569
Cash and cash equivalents at beginning of period 16,674 11,105 11,105
Cash and cash equivalents at end of period 14,162 11,646 16,674
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2024
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 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
Comprehensive income:
Profit for the year - - - - - 10,074 - 10,074
Revaluation of other investments - - - - - 129 - 129
Exchange rate differences - - - - - (20) (20)
Total comprehensive income - - - - - 10,203 (20) 10,183
Transaction with owners recognised directly in equity
Issue of share capital 640 1,919 - 3,970 - - 6,529
Cancellation of share premium account - (13,730) - - - 13,730 - -
Purchase of own shares at nominal value (166) - (166)
Sale of treasury shares - - - - 4 - - 4
Purchase of treasury shares - - - - (3,339) - - (3,339)
Recognition of tax benefit on gain from equity settled share options - - - - - (343) - (343)
Dividend paid - - - - - (12,335) - (12,335)
Share based payment transactions - - - - - 1,686 - 1,686
Total equity at 30 April 2024 13,304 35 (9,950) 19,383 (4,012) 61,642 (71) 80,331
At 1 May 2023 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
Comprehensive income:
Profit for the period - - - - - 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) 48,834 46 83,329
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2024
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 2024 (unaudited) 13,304 35 (9,950) 19,383 (4,012) 61,642 (71) 80,331
Comprehensive income:
Profit for the year - - - - - 1,920 - 1,920
Exchange rate differences - - - - - - (181) (181)
Total comprehensive income - - - - - 1,920 (181) 1,739
Transaction with owners recognised directly in equity
Share issue 49 176 - 371 - - - 596
Sale of treasury shares - - - - - - - -
Purchase of treasury shares - - - - (2,799) - - (2,799)
Dividend paid - - - - - - - -
Share options exercised by employees - - - - 4,030 (4,030) - -
Share based payment transactions - - - - - 961 - 961
Total equity at 31 October 2024 13,353 211 (9,950) 19,754 (2,781) 60,493 (252) 80,828
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 2024
1. Basis of preparation
These interim unaudited financial statements for the six months ended 31
October 2024 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 2024 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 2024 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 2024
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 any 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 operating profit and 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 operating, before tax 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 2024 31 October 2023 30 April 2023
£'000 £'000 £'000
Reported profit before tax 3,333 7,376 13,955
Adjustments for non-underlying and exceptional items:
- Amortisation of acquired intangible assets 1,454 1,279 2,483
- Share-based payment adjustment 961 1,500 1,686
- Gain on bargain purchase - (3,509) (3,609)
- Consideration treated as remuneration 3,480 3,358 6,956
- Exceptional items 1,371 - 1,563
Underlying profit before tax 10,599 10,004 23,034
6 months to 6 months to 12 Months
31 October 2024 31 October 2023 30 April 2023
£'000 £'000 £'000
Reported operating profit 1,811 5,955 11,177
Adjustments for non-underlying and exceptional items:
- Amortisation of acquired intangible assets 1,454 1,279 2,483
- Share-based payment adjustment 961 1,500 1,686
- Gain on bargain purchase - (3,509) (3,609)
- Consideration treated as remuneration 3,480 3,358 6,956
- Exceptional items 1,371 - 1,563
Underlying operating profit 9,077 8,583 20,256
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 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Operating cash flows before movements in working capital 10,251 9,356 18,400
Net working capital movement (6,295) (7,160) 487
Cash generated from operations 3,956 2,196 18,887
Repayment of lease liabilities (2,055) (1,994) (5,091)
Net interest received 2,139 2,082 4,043
Tax paid (3,431) (2,521) (4,902)
Cash outflow paid on acquisitions 401 2,035 5,825
Purchase of property, plant and equipment (517) (276) (1,045)
Free cash flows 493 1,522 17,717
b) Working capital measures
6 months to 6 months to 12 Months
31 October 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled 29,865 26,148 23,543
revenue)
Unbilled disbursements 5,772 5,816 5,389
Total WIP 35,637 31,964 28,932
Annualised revenue 181,683 177,732 173,312
WIP days 72 65 61
6 months to 6 months to 12 Months
31 October 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Debtor days
Trade receivables 50,847 53,369 58,056
Less unbilled disbursements (5,772) (5,816) (5,389)
Total debtors 45,075 47,553 52,667
Annualised revenue 181,683 177,732 173,312
Debtor days 91 98 111
6 months to 6 months to 12 Months
31 October 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Gross lock-up days
Total WIP 35,637 31,964 28,932
Total debtors 45,075 47,553 52,667
Total gross lock-up 80,712 79,517 81,599
Annualised revenue 181,683 177,732 173,312
Gross lock-up days 162 163 172
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 2024:
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 Symbiosis IP
Commercial Dispute Resolution
Intellectual Property, Commercial and Technology
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 2024
Business Services Corporate People Property Total
£'000 £'000 £'000 £'000 £'000
Segment revenue 14,325 18,701 9,253 44,020 86,299
Segment contribution 5,278 8,023 3,439 13,928 30,668
(as reported internally)
Costs not allocated to segments:
Other operating income 7
Personnel costs (8,991)
Share based payment costs (961)
Depreciation and amortisation (4,361)
Other operating expenses (9,727)
Gain on bargain purchase -
Contingent consideration treated as remuneration (3,480)
Exceptional costs (1,344)
Net financial income 1,522
Profit before tax 3,333
6 months to 31 October 2023
Business Services Corporate People Property Total
£'000 £'000 £'000 £'000 £'000
Segment revenue * 13,205 16,835 9,633 42,284 81,957
Segment contribution * 3,296 5,267 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 charge (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 expense 1,421
Profit before tax 7,376
*Restated due to internal reclassification of the Commercial legal team from
the Corporate Platform into the Business Services Platform with effect from 1
May 2024.
12 months to 30 April 2024
Business Services Corporate People Property Total
£'000 £'000 £'000 £'000 £'000
Segment revenue 24,889 37,064 19,554 90,985 172,492
Segment contribution 7,523 13,975 5,772 33,240 60,510
(as reported internally)
Costs not allocated to segments:
Other operating income 153
Personnel costs (18,087)
Share based payment charge (1,686)
Depreciation and amortisation (8,015)
Other operating expenses (16,788)
Gain on bargain purchase 3,609
Contingent consideration treated as remuneration (6,956)
Exceptional costs (1,563)
Net financial expense 2,778
Profit before tax 13,955
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 2024 31 October 2023 30 April 2024
Legal and professional staff 1,081 1,035 1,068
Administrative staff 484 463 468
1,565 1,498 1,536
The aggregate payroll costs of these persons were as follows:
6 months to 6 months to 12 months to
31 October 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Wages and salaries 47,696 45,203 94,402
Social security costs 5,398 5,136 10,928
Pension costs 1,592 1,617 3,160
54,686 51,956 108,490
4. Expenses
Included in operating profit are the following:
6 months to 6 months to 12 months to 30
31 October 2024 31 October 2023 April 2024
£'000 £'000 £'000
Depreciation on tangible assets 552 566 1,140
Depreciation on right-of-use assets 2,131 1,955 3,949
Other operating income - rent income 7 20 153
Short term and low value leases 39 38 76
Operating lease costs on property 61 89 116
Non-underlying items
6 months to 6 months to 12 months to
31 October 2024 31 October 2023 30 April 2024
Amortisation of acquisition related intangible assets 1,454 1,279 2,483
Share based payment charges 961 1,500 1,686
Gain on bargain purchase - (3,509) (3,609)
Consideration treated as remuneration 3,480 3,358 6,956
Total non-underlying items 5,895 2,628 7,516
Exceptional items
Acquisition costs - - 37
Redundancy costs 702 - 1,159
One-off remuneration charge 669 - 367
Total non-underlying and exceptional items 7,266 2,628 9,079
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2023 to 30 April 2024
2024
Number Number Number
Weighted average number of ordinary shares in issue, being weighted average 133,185,559 127,230,567 130,127,316
number of shares for calculating basic earnings per share
Shares deemed to be issued for no consideration in respect of share-based 175,796 3,985,103 1,980,638
payments
Weighted average number of ordinary shares for calculating diluted earnings 133,361,355 131,215,670 132,107,954
per share
£'000 £'000 £'000
Profit for the period after taxation and basic earnings attributable to 1,920 6,140 10,074
ordinary equity shareholders
Non-underlying and exceptional items (see note 4) 7,266 2,628 9,079
Tax on non-underlying items (343) (375) (391)
Underlying earnings before non-underlying items 8,843 8,393 18,762
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 1.44 4.83 7.74
Diluted earnings per ordinary share 1.44 4,68 7.63
Underlying basic earnings per ordinary share 6.64 6.60 14.42
Underlying diluted earnings per ordinary share 6.63 6.40 14.20
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 2024 31 October 2023 30 April 2024
£'000 £'000 £'000
Equity shares
Final dividend in respect of 2023 (6.2p per share) - paid 11 October 2023 - 7,997 -
Interim dividend in respect of 2023 (3.3p per share) - paid 21 March 2024 - - 4,338
Final dividend in respect of 2023 (6.2p per share) - paid 21 October 2023 - - 7,997
Dividends paid - 7,997 12,335
The board intends to approve an interim dividend of 3.3p (H1 24: 3.3p) per
share. This dividend will be paid on 31 March 2025 to shareholders on the
register at the close of business on 21 February 2025. The shares will go
ex-dividend on 20 February 2025. This dividend has not been recognised as a
liability in these final statements.
The Group paid a final dividend in respect of 2024 of 6.2p after the Period
end on 8 November 2024.
7 Intangible assets
Goodwill Customer list Brand names Total
£'000 £'000 £'000 £'000
Deemed cost
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
At 1 May 2023 1,550 17,261 3,518 22,329
Acquired through business combination - 3,322 - 3,322
At 30 April 2024 1,550 20,583 3,518 25,651
At 1 May 2024 1,550 20,583 3,518 25,651
Acquired through business combination - - - -
At 31 October 2024 1,550 20,583 3,518 25,651
Accumulated amortisation
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
At 1 May 2023 - 9,155 245 9,400
Charge for the year - 2,248 235 2,483
At 30 April 2024 - 11,403 480 11,883
At 1 May 2024 - 11,403 480 11,883
Charge for the period - 1,336 118 1,454
At 31 October 2024 - 12,739 598 13,337
Net Book Value
At 31 October 2023 1,550 10,062 3,038 14,650
At 30 April 2024 1,550 9,180 3,038 13,768
At 31 October 2024 1,550 7,844 2,920 12,314
Goodwill
Goodwill is allocated to the following cash generating units
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
Property Platform
Persona Associates Limited 40 40 40
Gateley Vinden Limited 934 934 934
974 974 974
Business Services Platform
Gateley Tweed (acquisition of goodwill) 576 576 576
576 576 576
1,550 1,550 1,550
A contingent consideration arrangement was entered into as part of the
acquisition of RJA Associates Limited. 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.
On 5 August 2024 £0.8m was paid to the vendors of RJA following achievement
of the first tranche earn-out hurdle.
8 Contract Assets and liabilities
Contract assets Trade receivables Contract liabilities
£'000 £'000 £'000
As at 31 October 2024 29,865 50,847 (345)
As at 31 October 2023 26,148 53,369 (341)
As at 30 April 2024 23,543 58,056 (409)
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
2024 2023 2024
£'000 £'000 £'000
Trade receivables 50,847 53,369 58,056
Prepaid consideration subject to earn-out service conditions 6,201 7,149 6,717
Prepayments 7,342 4,622 7,249
Other receivables 2,491 233 2,083
66,881 65,373 74,105
31 October
31 October 2023 30 April
2024 2024
£'000 £'000 £'000
Amounts falling due after more than one year:
Prepaid consideration subject to earn-out service conditions 5,404 8,257 8,368
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 2024 31 October 2023 30 April 2024
Fair Carrying Fair Carrying Fair Carrying
amount
amount
amount
value value value
£'000 £'000 £'000 £'000 £'000 £'000
Current liabilities
Bank borrowings 12,956 12,956 - - 12,908 12,908
Non-Current liabilities
Bank borrowings - - 13,859 13,859 - -
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
2024 2023 2024
£'000 £'000 £'000
Current
Trade payables 11,478 9,956 12,839
Other taxation and social security payable 7,717 9,347 8,143
Contingent consideration treated as remuneration - 118 324
Accruals 5,969 1,969 11,397
Deferred income 345 341 409
25,509 21,731 33,112
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 2024/25/26
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 At 1 Granted Lapsed during Exercised during period At 31 October 2024
average May during period
exercise 2024 the period
price
Years £ Number Number Number Number Number Number
RSA
RSA 21/22 - 27/4/2022 2.5 0.00 1,422,560 1,185,060 - (12,500) - 1,172,560
RSA 22/23 - 23/2/2023 3.3 0.00 1,175,000 937,500 - (37,500) - 900,000
RSA 23/24 - 21/9/2023 3.9 0.00 790,131 790,131 - (29,155) - 760,976
RSA 24/25 - 24/7/2024 4.7 0.00 - - 3,198,327 - - 3,198,327
3,387,691 2,912,691 3,198,327 (79,155) - 6,031,863
LTIPS
LTIPS 21/22 0.5 0.00 1,115,000 890,000 - (15,000) - 875,000
LTIPS 22.23 1.3 0.00 1,320,000 1,130,000 - (30,000) - 1,100,000
2,435,000 2,020,000 - (45,000) - 1,975,000
SAYE
SAYE 20/21 - 6/11/2020 0.0 1.02 2,337,197 370,982 - (179,169) (191,813) -
SAYE 21/22 - 25/8/2021 0.0 1.70 673,077 281,264 - (133,699) - 147,565
SAYE 22/23 - 22/9/2022 0.9 1.55 1,070,154 604,849 - (111,604) - 493,245
SAYE 23/24 - 3/11/2023 2.0 1.14 1,801,308 1,705,640 - (268,074) - 1,437,566
SAYE 24/25 - 18/9/2024 2.9 1.12 - - 938,984 (4,821) - 934,163
5,881,736 2,962,735 938,984 (697,367) (191,813) 3,012,539
CSOPS
CSOPS 20/21 - 7/7/2020 0.0 1.35 976,797 234,702 - (70,999) (163,703) -
CSOPS 22/23 - 14/12/2022 1.1 1.74 300,000 250,000 - (10,000) - 240,000
1,276,797 484,702 - (80,999) (163,703) 240,000
During the period 163,703 CSOP options and 191,813 SAYE options were
exercised.
On 25 July 2024 3,198,327 Restricted Share Awards were granted.
On 18 September 2024 938,984 SAYE options 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 SAYE
Grant date 25/7/24 18/9/24
Share price at date of grant £1.355 £1.36
Exercise price £nil £1.12
Volatility 27% 29%
Expected life (years) 5 3.3
Risk free rate 3.945% 3.648%
Dividend yield - 5.75%
Fair value per share
Market based performance condition - -
Non-market-based performance £1.355p £0.29
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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