TIDMGTLY
RNS Number : 6664Z
Gateley (Holdings) PLC
14 January 2020
14 January 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
Half Year Results for the six months ended 31 October 2019
Increased breadth and depth delivering strong first half
performance
Gateley (AIM:GTLY), the legal and professional services group,
is pleased to announce its unaudited results for the six months
ended 31 October 2019 ("the Period"), demonstrating a strong
performance with double digit growth in profitability and
revenue.
Financial Highlights
-- Revenue increased by 11.8% (10.5% organic) to GBP51.8m (H1
19: GBP46.4m)
-- Revenue derived 93.7% from legal and 6.3% from non-legal services
(H1 19: 94.8%, 5.2%)
-- Profit before tax increased by 10.2% to GBP5.5m (H1 19: GBP5.0m)
-- Profit after tax increased by 12.0% to GBP4.4m (H1 19: GBP3.9m)
-- Basic EPS increased by 10.11% to 3.92p (H1 19: 3.56p), underlying
fully diluted EPS increased by 8.75% to 4.60p (H1 19: 4.23p)
*
-- Strong cash generation from operations of GBP6.3m (H1 19:
GBP4.3m)
-- Robust balance sheet, net assets increased GBP7.9m to GBP31.0m
(H1 19: GBP23.1m) and net debt down GBP6m to GBP2.1m (H1 19:
GBP8.2m)
-- Proposed interim dividend up 11.5% to 2.9p per share (H1 19:
2.6p)
* Underlying fully diluted EPS excludes share based payment
charges, amortisation and exceptional items. It also adjusts for
the future weighted average number of expected unissued shares from
granted but unexercised share option schemes in issue based on a
share price at the end of the financial year (note 5)
Operational Highlights
-- Further investment in driving organic growth with average
fee earning staff increasing by 21.9% to 673 (H1 19: 552)
and average total staff increasing by 15.2% to 998 (H1 19:
866)
-- Total staff as at the date of this announcement of 1,038 (H1
19: 928)
-- New five-year Orderly Market Agreement in place covering the
period from June 2020 to June 2025
-- New staff Long Term Incentive Plan ("LTIP"), replacing the
previous Stock Appreciation Rights Scheme ("SARS") and providing
both long-term incentives and clarity on potential dilution
-- Two complementary acquisitions completed:
- Persona Associates Limited, land referencing consultants,
in July 2019
- T-three Group, human capital consultants, in December 2019
-- Awarded UK Law firm of the year 2019 at the British Legal
Business Awards
Michael Ward, CEO of Gateley, said:
"The Board is pleased with the Group's first half performance,
delivering another strong set of results and reflecting our broad,
well-balanced service offering and our ability to both expand and
invest for the long-term benefit of the Group's stakeholders.
Investment in our staff complement continues, with employee
headcount now exceeding 1,000. As we grow, we continue to support
our employee aspirations through both exciting career progression
opportunities in an expanding business together with the delivery
of meaningful shareholdings being achieved via our range of share
schemes.
"Exceeding our client's expectations remains at the forefront of
our service ethos and true to our culture and beliefs. We believe
the Group is well placed to continue to expand. We remain confident
that the business is well positioned to deliver in line with market
expectations for the full year."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Finance Director Tel: +44 (0) 121 234
0196
Nick Smith, Acquisitions Director and Tel +44 (0) 20 7653
Head of Investor Relations 1665
Cara Zachariou, Head of Corporate Communications Tel +44 (0) 121 234
0074
Mob: +44 (0) 7703 684
946
finnCap - Nominated adviser and broker Tel +44 (0) 20 7220
0575
Matt Goode / James Thompson (Corporate
Finance)
Andrew Burdis (ECM)
N+1 Singer - Joint broker Tel +44 (0) 20 7496
3000
Richard Lindley / Peter Steel (Corporate
Finance)
Rachel Hayes (Corporate Broking)
Belvedere Communications Limited - Financial
PR
Cat Valentine (cvalentine@belvederepr.com) Mob: +44 (0) 7715 769
078
Keeley Clarke (kclarke@belvederepr.com) Mob: +44 (0) 7967 816
525
About us
Gateley is a legal and professional services group. Founded in
Birmingham in 1808, we have provided commercial legal services to
individuals and businesses for over 200 years.
We have over 700 professional advisers and employ over 1,000
people across offices located in Belfast, Birmingham, Cambridge,
Guildford, Leeds, Leicester, London, Manchester, Nottingham,
Reading and Dubai.
In 2015, we were the first commercial UK law firm to list on the
London Stock Exchange's AIM Market. Our strategy is to
differentiate ourselves in a crowded marketplace, incentivise our
people to retain and attract the best talent in the industry and
diversify our income streams by acquiring complementary business
services.
For further details on Gateley Plc please visit
www.gateleyplc.com or follow us on Twitter
www.twitter.com/@GateleyPLC.
Chief Executive Officer's Review
Introduction
I am delighted with the performance of our legal and
professional services group in the first half of the financial
year, where not only has our core legal services business performed
well but we have continued to seize opportunities to invest for
future growth through further expanding our staff complement and
diversifying our income streams through two more strategic
acquisitions.
Persona Associates Limited (Persona) and T-three Group Limited
(T-three) have joined the Gateley Group since our last year end.
I'm confident they have widened our go-to-market options and
strengthened two previous non-legal acquisitions, those of Gateley
Hamer Limited (Hamer) and Kiddy and Partners (Kiddy). I expect both
new businesses to enhance the delivery capabilities of all our
previous acquisitions and importantly our legal service lines by
offering choice and opportunity to clients through the creation of
two very unique business offerings in attractive markets with
exciting prospects.
As we approach our fifth year on AIM, having been the first UK
commercial law firm to take the bold step of changing our business
structure to enhance the opportunities available to the Group I am
pleased to be handing the CEO role of the business over to Rod
Waldie at a time of exciting opportunity in the legal and
professional services market. During our time on AIM clients,
investors and staff have all benefitted from our strong performance
that has seen us grow turnover and profits by over 70%, double our
share price and provide even further diversification away from
being just a purely legal services business. The transition to
Rod's leadership was announced in July 2019 and I'm pleased to say
that the business is on course to effect a smooth transition from 1
May of this year. Succession planning is an important part of
Gateley's corporate governance and is key to ensuring that the
prosperity and collaborative culture of the business is maintained
over the long term.
We pride ourselves on being a forward-thinking business, which
provides straight-talking advice to a wide range of clients and
delivers sustainable profitable growth and income returns to our
shareholders.
Financial Results
Our strategy and cultural advantage continues to deliver growth
in revenue, profit and cash generation. Our diverse revenue streams
have grown by 11.8% in the Period, predominantly organically,
whilst profit before tax increased by 10.2% and profit after tax by
12.0%. Strong cash generation has resulted in net debt at 31
October 2019 of GBP2.1m, the lowest level since admission to AIM.
Our investment in recruitment and branding provides an
ever-stronger base from which to move forward as a team. We
strengthen and build our national teams carefully, investigating
each business and investment case and also ensuring a good cultural
fit.
The strength in depth of our core legal business creates
appealing opportunities across many business types and sectors.
Whilst transactional activity levels across Corporate, Banking and
Financial Services and Property segments remain significant, our
long-established expertise in Employment and Business Services,
such as litigation and dispute resolution work, has produced
significant returns against a backdrop of a challenging property
market and unprecedented political uncertainty. The strength of our
connections nationally, across boardrooms and intermediaries, and
our reputation for quality teams with a genuine focus on client
service, result in repeat instructions across many sectors.
The Board is committed to maintaining a progressive dividend
policy and is pleased to declare a further increase of 11.5% in the
level of the interim dividend to 2.9 pence per ordinary share (H1
19: 2.6 pence). The interim dividend will be paid on 31 March 2020
to shareholders on the register at the close of business on 21
February 2020. The ex-dividend date will be 20 February 2020.
Operational Review
It was extremely pleasing to see Gateley win the 2019 UK Law
firm of the year at the British Legal Business Awards in November
2019. In addition we once again topped the Experian MarketIQ league
tables, as the leading legal deal advisor in the UK based on
volume, and received recognition through numerous regional and
national corporate awards.
In the Period we saw significant growth in our fee earning
staff, ending the period at record levels. We established a Private
Wealth team operating nationally out of London, and expanded our
regional Housebuilding practice across the UK. We bolstered our
Corporate team in London and added strategic Real Estate expertise
in growing office locations in Leicester and Leeds. The reach of
our litigation and restructuring legal teams was also expanded
during the Period with work predominately sourced from overseas,
where expertise in the UK legal system is a priority for
clients.
We recruited five new partners in the Period and promoted six
staff members to partner, demonstrating the ongoing attractiveness
of Gateley to partners wishing to develop or establish long term
careers with us. Our team approach to sharing clients and
opportunities, enhanced by our non-legal complementary businesses,
remains a significant draw at the top end of the recruitment
market. Whilst growth generated from laterally recruited partners
can sometimes create a temporary lag in activity and ultimately
fees, due to individual's restrictive covenants or the time it
takes for new partners' former clients to change legal service
provider, we remain confident of the robustness in our take-on
procedures to ensure our recruits are the right long-term cultural
fit.
Our existing share schemes are now delivering tangible benefits
to staff as reward for their loyalty and performance. Our second
Stock Appreciation Rights Scheme ("SARS") vested on 1 October 2019,
resulting in over 0.9m additional new shares (net of tax
liabilities) being awarded to partner level staff whilst our first
SAYE scheme vested on 1 October 2019, delivering a 70% return on
staff investments resulting in 0.8m shares being received across
all staff levels. Our initial middle management CSOP reward scheme
matured on 20 December 2019, this scheme is aimed at beginning the
shareholding journey of our dedicated junior lawyers, professionals
and management level support staff, which will also provide
meaningful returns for the hard work of staff over the last three
years.
As announced on 17 October 2019, the Group has also introduced a
new five-year Orderly Market Agreement that will commence at the
end of the current five-year agreement on 8 June 2020 and expire on
8 June 2025. We remain focused on investing in the right people to
join the Gateley team and our plc status supports this by providing
an attractive alternative to traditional law firm ownership models.
A new Long-Term Incentive Plan ("LTIP") has also been introduced to
replace our existing SARS, creating greater alignment to the profit
performance of the Group and greater clarity over the impact of
dilution going forward.
We have committed to a new ten-year lease on our second largest
office, Manchester and will shortly be relocating our 90+ strong
Guildford team to larger nearby offices to facilitate further
expansion of services across the south of England, also on a
ten-year lease. We have taken office space back from a
long-standing sub-tenant in Paternoster Square, London due to the
continued growth of the office, including the facilitation of
London bases for Kiddy, Hamer and Capitus. Our existing London base
provides niche service lines and acts as a gateway for our national
and international clients.
Acquisitions
Our acquisition strategy focuses on niche businesses which can
complement our core legal services offering. All our acquisitions
to date have been in growth phase, with their owners seeking the
right business partner to enhance the next stage of their growth
and provide a platform for integrated expansion. Our established
culture and national network help achieve this. Our wide and
diverse client base continues to benefit from the added value
services provided by our enlarged legal and professional services
group. We have this year focused on expanding two of our
established acquisitions, Hamer and Kiddy, by acquiring the
strategically aligned and established businesses of Persona and
T-three.
We were delighted to welcome the Persona team on board at the
end of July 2019. Persona and Hamer have worked together on a
number of long-term projects in recent years, and there are many
synergies that will benefit clients. There is also an opportunity
for Persona to develop within our Property group, as Hamer has done
in the last three years, and we look forward to supporting its
future development in line with our growth plans.
More recently, in December 2019, we were delighted to welcome
the T-three team to our growing Group. We see huge potential from
the expansion of our Human Capital consultancy services, as T-three
and Kiddy complement each other's strengths. Both businesses sit
within our Employment, Pensions and Benefits group.
All our acquisitions have been immediately earnings
enhancing.
Current trading and outlook
Opportunities for growth continue to present themselves and the
Board strongly believes that the potential remains to broaden our
proposition for our clients and investors. We continue to strive to
enhance our offering for the benefit of all stakeholders and build
upon our proven reputation and track record for the delivery of a
quality service, and strong revenue and profit growth with high
levels of cash generation.
As we approach the end of our first five years on AIM, I am
pleased with how the business has performed and delivered on its to
commitments to staff, clients and investors. The Board remains
confident that Gateley is well positioned to deliver a performance
for the full year in line with market expectations.
Michael Ward
CEO
14 January 2020
Finance Director's Review
Financial Highlights
Revenue for the period increased by 11.8% to GBP51.8m (H1 19:
GBP46.4m) of which organic growth was 10.5%. Revenue from the
Group's core legal services was GBP48.6m (H1 19 GBP44.0m) and from
non-legal services was GBP3.2m (H1 19 GBP2.4m). Following the
acquisition of T-three in December 2019, non-legal revenues are
anticipated to generate not less than GBP14m in the year to 30
April 2020. The Group continues to demonstrate annual revenue and
profit growth, whilst actively seeking opportunities for greater
strategic expansion. Headcount once again increased to meet client
demand and we continue to attract senior (revenue generating)
hires. We have secured a number of good own commercial property
deals in Manchester and Guildford that will increase our
operational capacity and reduce cash outflow over the
medium-term.
Our strong performance in Mergers & Acquisitions and Private
Equity have been complemented by growth in our revenues from
Employment, Pensions and Benefits and Business Services. Kiddy
continues to perform well and will be further complemented
following the acquisition of T-three in December 2019.
Cross-selling remains a primary focus across all our business lines
and our diversification across complementary services continues to
create opportunities across the Group. Against the backdrop of a
more generally uncertain commercial property market during 2019 our
Property group has demonstrated marginal revenue growth of 1.5%
during the period which we believe outperforms the wider market and
follows a strong performance during the equivalent H1 19 period.
Gateley is well placed to take advantage of opportunities at both
regional and national level in the UK's construction, property
development and housing markets which rely upon long-term
specialist legal support. Our acquisition of Persona, which
specialises in land referencing consultancy also gives us much
earlier visibility on long term infrastructure projects.
Total expenses increased by 10.9% to GBP45.9m (H1 19: GBP41.4m)
due to continued organic expansion across services lines and
geographical locations to meet growing client demand and service
delivery aspirations, staying ahead of technology advancements and
capitalising on the significant opportunities being created. Growth
in expenses has been driven mainly by the expansion in staff
numbers. Average numbers of legal and professional staff rose by
21.9% to 673 (H1 19: 552) whilst support staff numbers rose 3.5% to
325 (H1 19: 314). Personnel costs, including increased share-based
payment charges, rose by 10.5% from GBP29.5m to GBP32.5m. However,
personnel costs as a percentage of fees reduced to 62.8% of revenue
from 63.5% in H1 19. Excluding share-based payment charges, staff
costs also fell to 61.8% of revenue from 62.7% in H1 19.
Other operating expenses increased by 11.6% to GBP13.5m (H1 19:
GBP12.1m). This increase was predominately due to GBP0.4m of Kiddy
operating costs as H1 20 includes six months of trading compared
with four months in H1 19, GBP0.1m of costs from four months of
overheads following the acquisition of Persona, together with
planned overhead expenditure on information technology (GBP0.5m),
rebranding (GBP0.2m), and increased travel and accommodation costs
(GBP0.1m) together with an increase in marketing activity in H1 19
compared to the same period last year (GBP0.1m).
Profit before tax (PBT) of GBP5.5m increased by 10.2% from
GBP5.0m resulting in a PBT margin of 10.7% (H1 19: 10.8%).
Earnings Per Share
Basic earnings per share increased by 10.11% to 3.92p (H1 19:
3.56p). Underlying diluted earnings per share increased by 8.75% to
4.60p (HY 19: 4.23p).
Taxation
The effective rate of taxation on profit on ordinary activities
was 21.1% (HY 19: 22.4%). The deferred taxation liability carried
forward at H1 20 was GBP0.6m (H1 19: GBP0.6m). The Group has made
payments on account of tax totalling GBP1.7m in the period (H1 19:
GBP1.4m).
Dividend
The Board's dividend policy reflects the strong long-term cash
generation and earnings potential of the Group, distributing up to
70% of profit after tax (PAT) each year to shareholders. The Board
proposes an interim dividend of 2.9p (H1 19: 2.6p) per share that
will be paid on 31 March 2020 to shareholders on the register at
the close of business on 21 February 2020. The shares will go
ex-dividend on 20 February 2020. This ensures shareholders'
dividend growth is in line with PAT growth of 12.0% (H1 19:
18.0%).
Acquisitions
Persona was acquired for an initial consideration of GBP0.4m
rising to a maximum of GBP0.45m following the successful relocation
of this Horsham based land referencing consultancy and its staff to
our new Guildford office. T-three was acquired after the period end
for an initial consideration of GBP3.17m rising to a maximum
GBP4.07m based on performance over the next two full financial
years ending April 2021 and 2022.
Net assets and net debt
The Group net asset position has increased by GBP7.9m to
GBP31.0m (HY 19: 23.1m) due to the following movements:
-- GBP1.3m increase in non-current assets due to intangible assets
-- GBP4.9m increase in total current assets resulting from GBP2.5m
more trade and other receivables available for collection
and GBP2.4m of cash at the bank
-- GBP4.6m decrease in total liabilities, before IFRS 16 lease
liabilities, mainly as a result of the repayment of total
debt
Total net debt decreased to GBP2.1m from GBP8.2m at H1 19 due to
strong cash generation, and in contrast to last year, cash was not
used to provide short term funding of the Group Employee Benefit
Trust during the period.
Debt at the Period end comprises of the following items:
-- Unsecured term loans of GBP4.4m (H1 19: GBP7.0m), of which
GBP2.6m is repayable within the next 12 months, followed by
a further GBP1.8m on a quarterly basis to September 2023
-- Loans from former partners of acquired businesses GBP0.2m
(H1 19: GBP0.9m)
Working capital and cash flow
Trade receivables totalled GBP32.2m compared to GBP30.5m at the
end of H1 19. The additional GBP1.7m in trade debtors is
proportionate with the growth of the Group. Overall the Group has
seen an improvement of 9 debtor days due to a focus on working
capital and collection processes. The Board are pleased with the
progress made here but believe we can improve further as a result
of initiatives being run across the Group.
At the period end unbilled revenue recognised in its statutory
accounts from time recorded on non-contingent work totalled
GBP12.2m or 11.2% of revenue recognised over the last 12 months
compared to 12.2% for the previous H1 19 and 10.3% at the end of
FY19 where the billing cycle is most active ahead of the Group's
April year end.
Cash generated during the period from operations was GBP6.3m (H1
19: GBP4.3m) which represents 143.8% (H1 19: 110.5%) of profit
after taxation. Capital expenditure decreased to GBP0.9m (H1 19:
GBP1.3m). Cash outflow from financing activities of GBP5.9m was
similar to outflows of GBP5.7m at H1 19, as higher dividend and
loan repayments were offset by the receipt of cash from the sale of
shares issued and subsequently sold by various option holders in
order to settle options exercised-related personal tax liabilities.
The Group continues to operate with a low level of gearing and
fixed term debt. This position is reviewed regularly to ensure
appropriate funding levels are in place to support the Group's
expansion.
Neil Smith
Finance Director
14 January 2020
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2019
Note Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Revenue 2 51,826 46,370 103,471
Other operating income 127 150 313
Personnel costs 4 (32,543) (29,454) (63,412)
Depreciation - Property, plant
and equipment (575) (548) (1,122)
Depreciation - Right-of-use
asset* (1,655) - -
Amortisation 7 (534) (645) (1,406)
Other operating expenses * (10,750) (10,912) (21,974)
----------- ----------- -------------
Operating profit 5,896 4,961 15,870
Net financing (expense)/income
* (350) 72 75
----------- ----------- -------------
Profit before tax 5,546 5,033 15,945
Taxation (1,172) (1,126) (2,904)
=========== =========== =============
Profit for the period after
tax attributable to equity holders
of the parent 4,374 3,907 13,041
=========== =========== =============
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences
- Exchange differences on foreign
branch - 59 (25)
----------- ----------- -------------
Profit for the financial period
and total comprehensive income
all attributable to equity holders
of the parent 4,374 3,966 13,016
=========== =========== =============
Statutory earnings per share (pence)
Basic earnings per share 53.92 3.56 11.83
Diluted earnings per share 53.86 3.50 11.61
Dividend per share 62.90 2.60 8.00
* The adoption of IFRS 16 in the 6 months to 31 October 2019
resulted in an increase in depreciation of GBP1.655m and finance
costs of GBP0.385m. Other operating expenses reduced by
GBP2.077m.
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 2019 Note Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 2,358 2,277 2,017
Right-of-use asset 22,421 - -
Investment property 164 164 164
Intangible assets & goodwill 7 10,088 9,438 10,430
Other intangible assets 592 35 289
Other investments 55 85 85
------------ ------------ ----------
Total non-current assets 35,678 11,999 12,985
------------ ------------ ----------
Current assets
Trade and other receivables 8 45,937 43,529 47,206
Deferred tax asset 49 - 428
Cash and cash equivalents 2,420 - 2,887
------------ ------------ ----------
Total current assets 48,406 43,529 50,521
------------ ------------ ----------
Total assets 84,084 55,528 63,506
============ ============ ==========
Non-current liabilities
Other interest-bearing loans and borrowings 9 (1,785) (4,522) (3,076)
Other payables 10 (695) (964) (983)
Deferred tax liability (578) (566) (388)
Provisions (339) (505) (339)
Lease liability (21,536) - -
------------ ------------ ----------
Total non-current liabilities (24,933) (6,557) (4,786)
------------ ------------ ----------
Current liabilities
Bank overdraft - (352) -
Other interest-bearing loans and borrowings 9 (2,766) (3,280) (3,044)
Trade and other payables 10 (21,371) (20,421) (23,727)
Provisions (130) (275) (291)
Current tax liabilities (275) (1,560) (1,074)
Lease liability (3,611) - -
------------ ------------ ----------
Total current liabilities (28,153) (25,888) (28,136)
------------ ------------ ----------
Total liabilities (53,086) (32,445) (32,922)
============ ============ ==========
NET ASSETS 30,998 23,083 30,584
============ ============ ==========
EQUITY
Share capital 11,377 11,086 11,086
Share premium 7,244 4,069 6,755
Merger reserve (9,950) (9,950) (9,950)
Other reserves 2,501 4,296 1,770
Treasury reserve (99) (1,729) (1,057)
Translation reserve 9 82 (2)
Retained earnings 19,916 15,229 21,982
------------ ------------ ----------
TOTAL EQUITY 30,998 23,083 30,584
============ ============ ==========
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2019
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period after tax 4,374 3,907 13,041
Adjustments for:
Depreciation and amortisation 2,764 1,193 2,528
Financial income (248) (73) (523)
Financial expense 598 1 448
Exceptional items - 61 -
Equity settled share-based payments 510 379 655
Profit on disposal of property, plant and equipment - - (3)
Write off of investment 30 - -
Tax expense 1,172 1,126 2,904
------------ ------------ -------------
9,200 6,594 19,050
Decrease/(increase) in trade and other receivables 1,318 89 (3,946)
(Decrease)/increase in trade and other payables (2,433) (1,095) 37
(Decrease)/increase in provisions (161) 175 25
------------ ------------ -------------
Cash generated from operations 7,924 5,763 15,166
Tax paid (1,663) (1,445) (3,075)
------------ ------------ -------------
Net cash flows from operating activities 6,261 4,318 12,091
------------ ------------ -------------
Investing activities
Acquisition of property, plant and equipment (598) (591) (1,010)
Acquisition of other intangible assets (303) - (276)
Cash received on disposal of property, plant and equipment - - 3
Consideration paid on acquisition of Kiddy & Partners - (426) (426)
Consideration paid on acquisition of GCL Solicitors, net of cash
acquired - (2,016) (2,016)
Consideration paid on acquisition of IIS, net of cash acquired - - (84)
Deferred consideration paid - acquisition of subsidiary - (235) (236)
Consideration paid on acquisition of Persona Associates Limited, net
of cash acquired (3) - -
Net cash outflow from investing activities (904) (3,268) (4,045)
------------ ------------ -------------
Financing activities
Interest and other financial income received 248 73 523
Interest and other financial income paid (213) (1) (448)
Dividends paid 6 (6,007) (5,264) (8,118)
Receipt of new term bank loans - 2,970 2,970
Repayment of term bank loans (1,283) (980) (2,278)
Repayment of loans from former members of GCL Solicitors & Directors
of IIS (286) (574) (904)
Funding by EBT of SARS shares - (1,866) (1,863)
Acquisition of own shares (486) - (109)
Proceeds from sale of own shares 729 - 767
Exceptional items - (61) -
Amounts received for SARS shares issued 1,474 - -
Net cash outflow from financing activities (5,824) (5,703) (9,460)
------------ ------------ -------------
Net decrease in cash and cash equivalents (467) (4,653) (1,414)
Cash and cash equivalents at beginning of period 2,887 4,301 4,301
------------ ------------ -------------
Cash and cash equivalents/(bank overdraft) at end
of period 2,420 (352) 2,887
============ ============ =============
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2019
Share Share Merger Other Treasury Retained Foreign Total
capital premium reserve reserve reserve earnings currency equity
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2018 10,688 4,576 (9,950) 1,547 (15) 16,119 23 22,988
Adjustment from adoption
of IFRS 9 (net of
tax) - - - - - (353) - (353)
-------- -------- -------- -------- -------- --------- ------------ -------
Restated balance
at 1 May 2018 10,688 4,576 (9,950) 1,547 (15) 15,766 23 22,635
Comprehensive income:
Profit for the year - - - - - 13,041 - 13,041
Exchange rate differences - - - - - - (25) (25)
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 13,041 (25) 13,016
Transaction with
owners recognised
directly in equity
Issue of share capital 398 2,151 - 223 - - - 2,772
Recognition of tax
benefit on gain from
equity settled share
options - - - - - 726 - 726
Purchase of own shares
at nominal value - - - - - (242) - (242)
Reclassification
of gain on own shares - 28 - - - (28) - -
Sale of treasury
shares - - - - 791 - - 791
Purchase of treasury
shares - - - - (1,833) - - (1,833)
Dividend paid - - - - - (8,118) - (8,118)
Share based payment
transactions - - - - - 655 - 655
Deferred tax on equity
settled element of
share-based payment
charge - - - - - 182 - 182
Total equity at 30
April 2019 11,086 6,755 (9,950) 1,770 (1,057) 21,982 (2) 30,584
======== ======== ======== ======== ======== ========= ============ =======
At 1 May 2018 (unaudited)
Comprehensive income: 10,688 4,576 (9,950) 1,547 (15) 16,119 23 22,988
Profit for the period - - - - - 3,907 - 3,907
Exchange rate differences - - - - - - 59 59
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 3,907 59 3,966
Transaction with
owners recognised
directly in equity
Sale of treasury
shares - - - - (1,714) 88 - (1,626)
Issue of shares 398 - - 2,374 - - - 2,772
Reclassification
of loss on own shares - (507) - - - - - (507)
Dividend paid - - - - - (5,264) - (5,264)
Share based payment
transactions - - - 375 - 379 - 754
-------- -------- -------- -------- -------- --------- ------------ -------
Total equity at 31
October 2018 11,086 4,069 (9,950) 4,296 (1,729) 15,229 82 23,083
======== ======== ======== ======== ======== ========= ============ =======
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2019
Share Share Merger Other Treasury Retained Foreign Total
capital premium reserve reserve reserve earnings currency equity
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2019 (unaudited) 11,086 6,755 (9,950) 1,770 (1,057) 21,982 (2) 30,584
Adjustment from adoption
of IFRS 16 (net of
tax) - - - - - (702) - (702)
-------- -------- -------- -------- -------- --------- ------------ -------
Restated balance
at 1 May 2019 11,086 6,755 (9,950) 1,770 (1,057) 21,280 (2) 29,882
Comprehensive income:
Profit for the year - - - - - 4,374 - 4,374
Exchange rate differences - - - - - - 11 11
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 4,374 11 4,385
Transaction with
owners recognised
directly in equity
Issue of share capital 291 489 - 731 - - - 1,511
Recognition of tax
benefit on gain from
equity settled share
options - - - - - 228 - 228
Release of deferred
tax - - - - - (469) - (469)
Sale of treasury
shares - - - - 1,517 - - 1,517
Purchase of treasury
shares - - - - (559) - - (559)
Dividend paid - - - - - (6,007) - (6,007)
Share based payment
transactions - - - - - 510 - 510
Total equity at 30
April 2019 11,377 7,244 (9,950) 2,501 (99) 19,916 9 30,998
======== ======== ======== ======== ======== ========= ============ =======
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 2019
1. Basis of preparation
These interim unaudited financial statements for the six months
ended 31 October 2019 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 2019, with the
additional application of IFRS 16 Leases.
1.1 Accounting policies
Leases
IFRS 16 replaces the previous guidance on lease accounting,
which includes IAS 17 'Leases' and IFRIC 4 'Determining whether an
arrangement contains a lease'. The standard is effective for
periods beginning on or after 1 January 2019 and has been applied
from 1 May 2019. The standard requires lessees to account for most
contracts using the on-balance sheet model, with the distinction
between operating and finance leases being removed. There is no
change to revenue recognition methodology for lessor operating
leases. The standard provides certain exemptions from recognising
leases on the balance sheet, including where the asset is of low
value or the lease term is twelve months or less. In addition, the
standard makes changes to the definition of a lease to focus on,
amongst other things, which party has the right to direct the use
of the asset.
Under IFRS 16 the Group will be required to recognise
right-of-use assets and lease liabilities on the balance sheet. The
right-of-use asset is initially measured at cost and subsequently
measured at cost (subject to certain exceptions) less accumulated
depreciation and impairment losses, adjusted for any re-measurement
of the lease liability. Liabilities are measured based on the
present value of future lease payment over the lease term
discounted at the Group's incremental borrowing rate. Subsequently,
the lease liability is adjusted for interest and lease payments, as
well as the impact of the lease modifications, amongst others.
The Group has applied the modified retrospective approach and
therefore has not restated comparatives for previous reporting
periods. On adoption of the standard the Group has elected to use
the following practical expedients:
- The Group has elected to recognise those leases identified as
an operating lease under IAS 17 without cause to reassess each
lease separately
- The Group has elected to treat leases with similar
characteristics as a portfolio of leases, applying a single
discount rate to them all
- The Group has excluded initial direct costs from the measurement of the right-to-use asset
- The Group has used hindsight in determining the lease term
where the contract contains options to extend or terminate the
lease
- The Group have elected not to recognise a right-to-use asset
or lease liability for leases with a remaining term of 12 months or
less
- The Group has elected not to recognise a right-to-use asset or
lease liability for leases of low value assets or car leases where
these are not considered material to the Group.
Impact on the balance sheet
30 April IFRS 16 Impact 1 May 2019
2019 GBP'000 GBP'000
GBP'000
Non-current assets
Property, plant and equipment 2,017 - 2,017
Right-of-use asset - 24,360 24,360
Investment property 164 - 164
Intangible assets & goodwill 10,430 - 10,430
Other intangible assets 289 - 289
Other investments 85 - 85
--------- --------------- -----------
Total non-current assets 12,985 24,360 37,345
========= =============== ===========
Current assets
Trade and other receivables 47,206 (103) 47,103
Deferred tax asset 428 - 428
Cash and cash equivalents 2,887 - 2,887
--------- --------------- -----------
Total current assets 50,521 (103) 50,418
Non-current liabilities
Other interest-bearing loans
& borrowings (3,076) - (3,076)
Other payables (983) - (983)
Deferred tax (388) - (388)
Provisions (339) - (339)
Lease liability - (23,481) (23,481)
--------- --------------- -----------
Total non-current liabilities (4,786) (23,481) (28,267)
========= =============== ===========
Current liabilities
Other interest-bearing loans
& borrowings (3,044) - (3,044)
Trade and other payables (23,727) 2,251 (21,476)
Provisions (291) - (291)
Current tax (1,074) - (1,074)
Lease liability - (3,729) (3,729)
--------- --------------- -----------
Total current liabilities (28,136) (1,478) (29,614)
========= =============== ===========
Net assets 30,584 (702) (29,882)
========= =============== ===========
Operating lease commitments disclosed at 30 April 2019 26,089
Less: short term leases recognised on a straight-line
basis as expense (326)
Add: Additional lease components recognised 3,390
Impact of discounting (1,943)
--------
Lease liability recognised as at 1 May 2019 27,210
========
Current lease liability 3,729
Non-current lease liability 23,481
--------
27,210
========
Under the modified retrospective approach adopted by the Group,
comparatives are not restated, the table below shows the impact of
IFRS 16 on the Group's income statement for the six-month period to
31 October 2019:
IAS 17 Impact of IFRS 16
IFRS 16
GBP'000 GBP'000 GBP'000
Rental expense (2,007) 2,007 -
Depreciation - (1,655) (1,655)
--------- ---------- ---------
Administrative expenses (2,007) 352 (1,655)
Operating profit (2,007) 352 (1,655)
--------- ---------- ---------
Interest payable on leases - (385) (385)
--------- ---------- ---------
Profit before tax (2,007) (33) (2,040)
========= ========== =========
1.2 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. On 1 June 2015 the Group
acquired two unsecured term loans for GBP5m each repayable
quarterly over five years. The facilities were extended by a total
of GBP3m in October 2018. These term loan facilities contain
financial covenants which the Group is forecast to comply with for
the foreseeable future. Additional overdraft facilities of up to
GBP10m (2019: GBP8m) in total are also available to the Group.
1.3 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.
1.4 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 five strategic divisions, which
are its reportable segments. These divisions offer different
products and services and are managed separately because they
report different specialisms from the legal teams in those
divisions.
The following summary describes the operations of each
reportable segment:
Reportable segment Operations
Banking and Financial Provision of legal advice in respect of asset
Services finance, banking and restructuring services.
Corporate Provision of legal advice in respect of corporate,
family, private client and taxation services.
Business Services Provision of legal advice in respect of commercial,
commercial dispute resolution, litigation, regulatory,
shipping, transport and insurance services.
Employees, Pensions Provision of legal advice in respect of employment
and Benefits and pension services, including Entrust Pension
Limited's trustee services and global mobility
consultancy. Also includes Kiddy & Partners
human capital consultancy, providing assessment,
talent management and leadership development
and International Investment Services Limited,
providing consultancy services to potential
UK investors.
Property Provision of legal advice in respect of construction,
planning, real estate and residential development
services. Also includes Gateley Capitus Limited's
tax incentives services, Gateley Hamer Limited's
easement and wayleave and compulsory purchase
order services and Persona Associates Limited's
land referencing consultancy services.
31 October 2019
Banking and Corporate Business Employee Property Total Other expense Total
Financial Services Pensions segments and movement
Services and in unbilled
Benefits revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 8,091 10,485 6,492 6,150 19,828 51,046 780 51,826
------------ --------- --------- --------- -------- --------- ------------- -------
Segment contribution
(as reported internally) 2,750 4,249 2,319 1,807 6,437 17,562 780 18,342
Costs not allocated to
segments:
Other operating income 127
Personnel costs (3,401)
Share based payment costs (510)
Depreciation and
amortisation (2,764)
Other operating expenses (5,898)
Net financial income (350)
-------
Profit for the financial period before
taxation 5,546
=======
31 October 2018
Banking and Corporate Business Employee Property Total Other Total
Financial Services Pensions segments expenses
Services and and movement
Benefits in unbilled
revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 8,427 7,300 6,046 4,834 19,502 46,109 261 46,370
------------ --------- --------- --------- -------- --------- ------------- -------
Pro-forma segment
contribution
(as reported internally) 3,385 1,729 2,580 2,125 7,634 17,453 261 17,714
Costs not allocated to
segments:
Other operating income 150
Personnel costs (3,499)
Share based payment
charge (379)
Depreciation and
amortisation (1,193)
Other operating expenses (7,771)
Net financial expense 72
(61)
Profit for the financial period before
taxation 5,033
=======
30 April 2019
Banking and Corporate Business Employee Property Total Other Total
Financial Services Pensions segments expenses
Services and and movement
Benefits in unbilled
revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 16,979 16,912 13,436 11,092 43,425 101,844 1,627 103,471
----------- --------- --------- --------- -------- --------- ------------- --------
Pro-forma segment
contribution
(as reported internally) 6,447 4,994 5,987 3,994 19,810 41,232 1,627 42,859
Costs not allocated to
segments:
Other operating income 313
Personnel costs (7,006)
Share based payment
charge (655)
Depreciation and
amortisation (2,528)
Other operating expenses (17,052)
Net financial expense 75
Exceptional costs (61)
--------
Profit for the financial year before
taxation 15,945
========
No other financial information has been disclosed as it is not
provided to the CODM on a regular basis.
3. Alternative performance measures
Underlying profit
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'.
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2019
2019 2018
GBP'000 GBP'000 GBP'000
Reported profit before tax 5,546 5,033 15,945
Adjustments for non-underlying items:
- Amortisation of acquired intangible
assets 534 645 1,406
- Share-based payment adjustment 510 379 655
- Acquisition-related costs - 61 61
----------- ----------- ---------
Underlying profit before tax 6,590 6,118 18,067
=========== =========== =========
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2019
2019 2018
GBP'000 GBP'000 GBP'000
Reported profit after tax 4,374 3,907 13,041
Adjustments for non-underlying items:
- Anticipated impact of IFRS 16 if it
had been adopted in earlier years - (166) (313)
- Amortisation of acquired intangible
assets 534 645 1,406
- Share-based payment adjustment 510 379 655
- Acquisition-related costs - 61 61
----------- ----------- ---------
Underlying profit after tax 5,418 4,826 14,850
=========== =========== =========
Amortisation of acquired intangible assets is identified as a
non-cash item released to the income statement therefore such cost
is removed when considering the underlying trading performance of
the Group by adding to profit the annual amortisation charge.
The adjustment for share-based payments relates to the impact of
the accounting standard for share-based compensation. The cost of
all share-based schemes are settled entirely by the issue of shares
where the proportions can vary from one year to another based on
events outside of the businesses control e.g. share price. Under
IFRS the anticipated future share cost is expensed to the income
statement over the vesting period. The adjustment above addresses
this by adding to profit the IFRS 2 charge in relation to
outstanding share awards. This adjustment is made so that non-cash
expenses are removed from profit.
Acquisition related costs consist of nil (2019: GBP0.061m)
relating to one off costs incurred in making acquisitions are
removed by adding to profit these actual costs in the year they are
incurred.
Underlying Fully Diluted Earnings Per Share ('EPS')
The Group has introduced a new Long-Term Incentive Plan ('LTIP')
share scheme that aligns share option reward distribution with
compound annual growth in EPS over a three-year vesting period
based on underlying trading profit after tax rather than share
price. The LTIP scheme uses EPS growth based on underlying profit
after tax as the most appropriately aligned profit measure that
staff participating within the scheme can be held accountable
against and is referred to as underlying fully diluted EPS. Profits
used to calculate underlying EPS are disclosed above.
4. 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 2019 31 October 2018 30 April 2019
Legal and professional staff 673 552 610
Administrative staff 325 314 297
---------------- ---------------- --------------
998 866 907
================ ================ ==============
6 months to 6 months to 12 months to
The aggregate payroll costs of these persons were as follows: 31 October 2019 31 October 2018 30 April 2019
GBP'000 GBP'000 GBP'000
Wages and salaries 28,055 25,685 54,341
Social security costs 3,250 2,878 7,289
Pension costs 728 512 1,127
Share based payments expenses 510 379 655
---------------- ---------------- --------------
32,543 29,454 63,412
================ ================ ==============
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2018 to 30 April 2019
2019
Number Number Number
Weighted average number of ordinary shares in issue, being weighted
average number of shares for calculating basic earnings per share 111,577,259 109,856,888 110,207,707
Shares deemed to be issued for no consideration in respect of share
based payments 1,871,872 1,920,871 2,072,862
----------- ---------------- -----------------
Weighted average number of ordinary shares for calculating diluted
earnings per share 113,449,131 111,777,759 112,280,569
=========== ================ =================
GBP'000 GBP'000 GBP'000
Profit for the period after taxation and basic earnings attributable
to ordinary equity shareholders 4,374 3,907 13,041
Non-underlying items 1,044 1,085 2,122
Tax on non-underlying items (198) (206) (403)
----------- ---------------- -----------------
Underlying earnings before non-underlying items 5,220 4,786 14,760
=========== ================ =================
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 3.92 3.56 11.83
Diluted earnings per ordinary share 3.86 3.50 11.61
Underlying basic earnings per ordinary share 4.68 4.36 13.39
Underlying diluted earnings per ordinary share 4.60 4.23 13.15
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 6 months 12 Months
to to 30 April
31 October 31 October 2019
2019 2018
GBP'000 GBP'000 GBP'000
Equity shares
Final dividend in respect of 2018 (4.8p
per share) - Paid 5 October 2018 - 5,264 5,264
Interim dividend in respect of 2019 (2.6p
per share) - Paid 15 March 2019 - - 2,854
Final dividend in respect of 2019 (5.4p
per share) - Paid 15 October 2019 6,007 - -
----------- ----------- ---------
Dividends paid 6,007 5,264 8,118
=========== =========== =========
The Board has approved an interim dividend of 2.9p (2018: 2.6p)
per share. This dividend will be paid on 31 March 2020 to
shareholders on the register at the close of business on 21
February 2020. The shares will go ex-dividend on 20 February 2020.
This dividend has not been recognised as a liability in these final
statements.
7. Intangible assets
Goodwill Customer list Total
and brand
names
GBP'000 GBP'000 GBP'000
Deemed cost
At 1 May 2018 2,676 1,638 4,314
Acquired through business combination 3,958 2,830 6,788
-------- ------------- -------
At 31 October 2018 6,634 4,468 11,102
======== ============= =======
At 1 May 2018 2,676 1,638 4,314
Acquired through business combination 5,729 2,786 8,515
-------- ------------- -------
At 30 April 2019 8,405 4,424 12,829
======== ============= =======
At 1 May 2019 8,405 4,424 12,829
Acquired through business combination 192 - 193
-------- ------------- -------
At 31 October 2019 8,597 4,424 13,022
========
Accumulated amortisation
At 1 May 2018 - 1,019 1,019
Charge for the period - 645 645
-------- ------------- -------
At 31 October 2018 - 1,664 1,664
======== ============= =======
At 1 May 2018 - 1,019 1,019
Charge for the year - 1,380 1,380
-------- ------------- -------
At 30 April 2019 - 2,399 2,399
======== ============= =======
At 1 May 2019 - 2,399 2,399
Charge for the period - 534 534
--------
At 31 October 2019 - 2,933 2,933
======== ============= =======
Net Book Value
At 31 October 2018 6,634 2,804 9,438
======== ============= =======
At 30 April 2019 8,405 2,025 10,430
======== ============= =======
At 31 October 2019 8,597 1,491 10,088
======== ============= =======
Goodwill
Goodwill is allocated to the following cash generating units
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Gateley Capitus Limited 1,515 1,515 1,515
Gateley Hamer Limited 1,161 1,161 1,161
Kiddy & Partners Limited 2,491 1,491 2,491
GCL Solicitors LLP (acquisition of trade and assets) 2,900 2,467 2,900
International Investment Services Limited 338 - 338
Persona Associates Limited 192 - -
---------- ---------- --------
8,597 6,634 8,405
========== ========== ========
8. Trade and other receivables
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Trade receivables 32,238 30,447 33,909
Unbilled revenue 12,153 11,458 10,671
Prepayments 1,546 1,624 2,584
Other receivables - - 42
---------- ---------- --------
45,937 43,529 47,206
========== ========== ========
9. 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 2019 31 October 2018 30 April 2019
Fair Carrying Fair Carrying Fair Carrying
value amount value amount value amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-Current liabilities
Unsecured bank loan 1,785 1,785 4,352 4,352 3,076 3,076
Loans from former members of GCL - - 170 170 - -
------- -------- ------- -------- ------- --------
1,785 1,785 4,522 4,522 3,076 3,076
======= ======== ======= ======== ======= ========
Current liabilities
Unsecured bank loan 2,582 2,582 2,600 2,600 2,574 2,574
Loans from former members of GCL 156 156 680 680 425 425
Loans from Director of IIS 28 28 - - 45 45
------- -------- ------- -------- ------- --------
2,766 2,766 3,280 3,280 3,044 3,044
======= ======== ======= ======== ======= ========
The unsecured overdraft facilities totalling GBP10m (31 October
2018 GBP8m, 30 April 2019 GBP8m) are repayable on demand.
The unsecured term loans are repayable quarterly over five years
commencing on 8 November 2015. Interest is chargeable at 2.25% over
LIBOR.
On the acquisition of the trade and assets of GCL Solicitors LLP
the amounts due to members of GBP1.28m were converted into loans
from former members repayable over a two-year period from the date
of acquisition on 23 May 2018.
10. Trade and other payables
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Current
Trade payables 5,041 4,912 4,769
Other taxation and social security payable 5,732 6,088 6,437
Other payables 1,956 392 167
Contingent consideration 1,159 311 1,428
Accruals and deferred income 7,483 8,718 10,926
---------- ---------- --------
21,371 20,421 23,727
========== ========== ========
GBP'000 GBP'000 GBP'000
Non-current
Other payables 134 127 128
Contingent consideration 561 837 855
---------- ---------- --------
695 964 983
========== ========== ========
Contingent consideration
GBP1.159m of current and GBP0.4m of non-current contingent
consideration represents the earn-out sums payable to the sellers
of Kiddy & Partners.
GBP0.1m of non-current contingent consideration represents the
earn-out sums payable to the seller of International Investment
Services Limited
GBP0.1m of non-current contingent consideration represents the
earn-out sums payable to the seller of Persona Associates
Limited.
All contingent consideration amounts have been calculated based
on the Groups expectation of what it will pay in relation to the
earn-out clause of the relevant sale and purchase agreement. The
earn-out targets are based on the annual results, or in the case of
Persona a relocation of staff, of the acquired business. The fair
value of the earn-out consideration is calculated based on the
forecasted results to give an estimate of the final obligation
capped at the maximum earn-out amount stated in the purchase
agreement.
11. Share based payments
Group
At the period end the Group has three share-based payment
schemes in operation and approved a new Long-Term Incentive Plan
(LTIP) to replace our existing SARS's scheme in January 2020.
Stock Appreciation Rights Scheme ('SARS')
This SARS is a discretionary executive reward plan which allows
the Group to grant conditional share awards or nil cost options to
selected executives at the discretion of the Remuneration
Committee.
The awards vest after a three-year performance period. On
exercise, participants will receive the growth in value of the
share options between the date of grant and the date of exercise in
excess of the hurdle rate. The hurdle rate is currently set at
115.765% of the market value of the underlying shares on the date
of grant.
The SARS awards and resultant number of shares granted is
detailed below:
Reference
shares in Number
issue at Price at of shares
exercise Price at exercise Growth at exercise
date grant date date Growth value price
Number GBP GBP GBP GBP'000 Number
SARS 15/16 6,650,000 1.10 1.72 0.62 4,123 2,397,093
SARS 17/18 10,225,000 1.39 1.65 0.26 2,658 1,623,648
The below table shows the estimated number of shares to be
issued under the last remaining SARS scheme in issue based on the
Company's share price at the balance sheet date of GBP1.62:
Reference
shares Number
in issue Price at Estimated of shares
at 31 October Price at 31 October Estimated growth at exercise
2019 grant date 2019 growth value price
Number GBP GBP GBP GBP'000 Number
SARS 17/18 6,750,000 GBP1.83 GBP1.62 (GBP0.21) - -
Save As You Earn Scheme (SAYE)
The Group operates a HMRC approved SAYE scheme for all staff.
Options under this scheme will vest if the participant remains
employed for the agreed vesting period of three years. Upon
vesting, each option allows the holder to purchase the allocated
ordinary shares at a discount of 20% of the market price determined
at the grant date.
Company Share Option Plan (CSOP)
The group operates a HMRC approved CSOP scheme for associates,
senior associates, legal directors, equivalent positions in Gateley
Group subsidiary companies and senior management positions in our
support teams. Options under this scheme will vest if the
participant remains employed for the agreed vesting period of three
years. Upon vesting, each option allows the holder to purchase the
allocated ordinary share at the price on the date of the grant.
The annual awards granted under the schemes are summarised
below:
Weighted Weighted Originally Lapsed at 30 At 1 May Granted Lapsed At 31
average average granted April 2019 2019 during during October 2020
remaining exercise the period period
contractual price
life
Number Number Number Number Number
SARS
SARS 17/18 -
3 October
2017 0.9 years GBP1.83 7,050,000 (300,000) 6,750,000 - - 6,750,000
------------ ------------ --------- ----------- ------------ ------------
SAYE
SAYE 17/18-
15
September
2017 0.9 years GBP1.33 556,296 (60,732) 495,664 - (70,234) 425.430
SAYE 18/19 -
21
September
2018 1.9 years GBP1.35 620,335 (19,874) 600,461 - (10,245) 590,216
SAYE 19/20 -
1 October
2019 2.9 years GBP1.27 - - - 821,038 - 821,038
------------ ------------ --------- ----------- ------------ ------------
1,176,631 (80,606) 1,096,125 821,038 (80,479) 1,836,684
------------ ------------ --------- ----------- ------------ ------------
CSOPS
CSOPS 16/17
- 20
December
2016 0.2 years GBP1.31 940,685 (219,943) 720,742 - (11,495) 709,247
CSOPS 17/18
- 3 October
2017 0.9 years GBP1.65 581,162 (92,114) 489,048 - (21,210) 467,838
CSOPS 18/19
- 24
October
2018 2.0 years GBP1.44 812,131 (22,916) 789,215 - (26,388) 762,827
------------ ------------ --------- ----------- ------------ ------------
1,521,847 (191,127) 1,330,720 812,131 (143,845) 1,939,912
------------ ------------ --------- ----------- ------------ ------------
During the period 10,225,000 SARS 16/17 options vested resulting
in the issue of 1,623,648 new 10p shares with a nominal value of
GBP162,365 where issued on 8 October 2019. The accrued IFRS2 charge
of GBP847,770 has been released against other reserves.
During the period 767,015 SAYE 16/17 options vested out of a
potential 853,598 new shares issued via a block listing in order to
fully satisfy all possible options. 853,598 new 10p shares with a
nominal value of GBP85,360 where issued on 1 October 2019. The
accrued IFRS2 charge of GBP243,984 has been released against other
reserves.
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 period are detailed below:
SAYE 19/20
Grant date 1 October 2019
Share price at date of grant GBP1.64
Exercise price GBP1.27
Volatility 24%
Expected life 3.3 years
Risk free rate 1%
Dividend yield 4%
Fair value per share
Market based performance condition GBP0.37
Non-market-based performance condition -
--------------
As the Group measures share-based payment charges at fair value
at the date of grant. Fair value is measured using the Black
Scholes model. Volatility is measured over the 3 years prior to the
date of grant to match the vesting period of the award. Dividend
yield is measured using the Group's expected average dividend yield
over the vesting period. Expected life has been taken to be between
the minimum and maximum exercise period of 3 and 3.5 years,
respectively.
12. Business combinations
Acquisition of Persona Associates Limited ("Persona")
On 30 July 2019 Gateley (Holdings) Plc acquired the entire
issued share capital of Persona, one of the UK's longest
established and leading land referencing consultancies. Persona
advises on some of the UK's largest infrastructure and regeneration
projects, providing expertise on statutory processes relating to
long-term infrastructure projects involving Compulsory Purchase
Orders, Development Consent Orders and transport and Works Act
Orders.
From the date of acquisition Persona has contributed GBP0.1m to
revenue and GBP0.03m to Group profit for the period.
13. Post balance sheet events
Gateley (Holdings) Plc acquired the entire share capital of
T-three Group Limited ("T-three) on 12 December 2019 for a
consideration of GBP3.4m, including up to GBP0.9m of which is
deferred. T-three complements Kiddy & Partners, which Gateley
acquired in July 2018, and together these businesses create one of
the largest specialist Human Capital consultancy businesses in the
UK. Under the terms of the acquisition Gateley will acquire T-three
for a consideration of GBP3.4m on a debt free, cash free normalised
level of working capital basis, settled on a 50% cash and 50%
shares basis. 944,855 new Ordinary shares of 10p each were issued
on 12 December 2019 as part of the initial share consideration.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KXLFFBFLLBBF
(END) Dow Jones Newswires
January 14, 2020 02:00 ET (07:00 GMT)
Gateley (holdings) (LSE:GTLY)
Historical Stock Chart
From Apr 2024 to May 2024
Gateley (holdings) (LSE:GTLY)
Historical Stock Chart
From May 2023 to May 2024