TIDMGTLY
RNS Number : 1364Y
Gateley (Holdings) PLC
12 January 2022
12 January 2022
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year Results for the six months ended 31 October 2021
Strong growth and continued trading momentum
Gateley, the legal and professional services group, is pleased
to announce its unaudited results for the six months ended 31
October 2021 (the "Period" or "H1 22"), which show strong growth
and continued trading momentum placing the Group in a strong
position to deliver market expectations for the full year.
Financial Highlights
-- Strong financial performance with revenue and profit before
tax up 23.5% and 19.5% respectively
-- Organic growth of 23.0%
-- Revenue from consultancy (non-legal revenue services) grew
substantially, increasing 33.9% to GBP8.3m (H1 21: GBP6.2m)
-- Trading margins ahead of pre-pandemic levels with adjusted
underlying profit margin of 13.7% (H1 20: 13.3%, H1 19: 13.2%)
-- Strong activity levels across the Group with utilisation up
5ppts to 84% (H1 21 79%)
-- Operating costs remain lower than pre-pandemic levels
-- Interim dividend of 3.0p per share, in line with progressive
dividend policy (H1 21: 2.5p)
H1 22 H1 21 Change
Revenue GBP62.3m GBP50.5m +23.5%
Underlying operating profit before
tax GBP9.0m GBP8.1m +10.8%
Underlying adjusted profit before
tax(1) GBP8.5m GBP7.5m +14.1%
Profit before tax GBP7.3m GBP6.1m +19.5%
Profit after tax GBP5.9m GBP4.8m +24.7%
Basic earnings per share ("EPS") 5.00p 4.04p +23.7%
Underlying diluted EPS(2) 5.76p 4.92p +17.1%
Net assets GBP58.0m GBP49.7m +16.6%
Net cash(3) GBP8.8m GBP9.3m -4.9%
Dividend 3.0p 2.5p(4) +20%
(1) Underlying adjusted profit before tax excludes share based
payment charges, amortisation and exceptional items - See note
1.2
(2) Underlying diluted EPS excludes share based payment charges,
amortisation and exceptional items. It also adjusts for the
future weighted average number of expected unissued shares
from granted but unexercised share option schemes in issue
based on a share price at the end of the financial period
(3) Net cash/(debt) excludes IFRS 16 lease liabilities
(4) Declared as an interim dividend in June 2021
Operational and post-Period highlights
-- M&A strategy recommenced, following a pause resulting from
the COVID-19 pandemic, with the acquisitions of:
- Tozer Gallagher - adding quantity surveyors to our Property
Platform; and
- Adamson Jones - adding patent and trade mark attorneys to
our Business Services Platform
-- Average fee earner headcount stable at 794 in H1 22 (H1 21:
785), in line with our FY21 strategic decision to maintain
capacity to service returning demand. Now further enhancing
capacity with 75 new roles at all levels mandated for H2 22
-- Platforms established as the growth vectors of the business
and our financial reporting is now aligned to these . Each
Platform delivering in excess of 20% like-for-like growth
in the Period
-- Growth of staff ownership continues to strengthen with 72%
of staff either share or option holders
Current trading and outlook
-- Strong trading in H1 22 is expected to continue in H2 22,
as demand for our combined legal and consultancy services
remains high. H2 22 is also expected to reflect the normal
second-half weighting of revenues
-- On track to meet market expectations for the year ending 30
April 2022 ("FY22")
-- The Group's well-diversified and resilient business model,
combined with considerable opportunities (both organic and
acquisitive) to develop our Platforms further, gives the Board
confidence in the continued future growth of the business
Rod Waldie, Chief Executive Officer of Gateley, said:
"I would like to thank all of my colleagues for this excellent
performance in H1 22. We have delivered strong, predominately
organic, revenue and profit growth on a like-for-like basis and
have returned the Group to pre-pandemic profit margins.
"The aggregation of complementary legal and consultancy services
on our four market-facing Platforms of Corporate, Business
Services, People and Property continues to differentiate Gateley,
strengthen our appeal to clients and enhance our resilience. Our
first segmental reporting on this basis shows strong like-for-like
revenue growth in each Platform.
"Our balance sheet remains strong, and we are committed to
investing in our Platform strategy, to seize attractive growth
opportunities. Our post period end acquisition of Adamson Jones is
very recent evidence of this. Our acquisition pipeline is strong,
and we are actively engaging with opportunities for further growth
across each of the Platforms.
"Current levels of activity are expected to continue throughout
H2 22. We are therefore well positioned to deliver market
expectations for the full year."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Finance Director Tel: +44 (0) 121 234
0196
Nick Smith, Acquisitions Director and 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
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Cara Murphy Tel: +44 (0) 20 3100
2000
Belvedere Communications Limited - Financial
PR
Cat Valentine Mob: +44 (0) 7715 769
078
Keeley Clarke Mob: +44 (0) 7967 816
525
Llew Angus Mob: +44 (0) 7407 023
147
gateleypr@belvederepr.com
About us
Gateley is a legal and professional services group. Founded in
Birmingham in 1808, we have provided commercial legal services to
individuals and businesses for over 200 years. We have over 750
professional advisers and employ over 1,100 people across offices
located in Belfast, Birmingham, Bolton, Guildford, Leeds,
Leicester, London, Manchester, Newcastle, Nottingham, Reading and
Dubai.
In 2015, we were the first commercial UK law firm to list on the
London Stock Exchange's AIM Market. Our strategy is to
differentiate ourselves in a crowded marketplace, incentivise our
people to retain and attract the best talent in the industry and
diversify our income streams by acquiring complementary business
services.
For further details on Gateley Plc please visit
www.gateleyplc.com or follow us on Twitter
www.twitter.com/@GateleyGroup
CHIEF EXECUTIVE OFFICER'S REVIEW
Continued momentum
I am delighted with the Group's performance during H1 22. It is
now evident that there is a permanent change to our traditional
ways of working. Our staff have adapted incredibly well to the
agile working environment, whilst maintaining excellent levels of
service to our clients. I remain grateful to all of our people for
their energy and commitment. Like me, they are delighted to see
that the outcome of their hard work is like-for-like growth in
revenue (+23.5%) and profit before tax (+19.5%).
Market conditions have been supportive, particularly when viewed
against the same period last year. However, we are consistent in
our belief that the balance in our business model and the diversity
of services on our Platforms means that we remain resilient in all
markets.
We have declared an interim dividend of 3.0p (H1 21: 2.5p).
Activity review
Property Platform
This Platform is focused on clients' activities in real estate
development and investment, and in the built environment in the
widest sense.
Transactional activity has been strong across our legal
services, commercial property, residential development and
construction teams. Our core markets remain busy (house building,
warehousing & distribution and supported living). In our
property consultancy businesses, the Q1 22 acquisition of Tozer
Gallagher has added capacity to our built environment team in
Gateley Vinden and further enhanced our credentials in guarantee
bond claims. We have added a service line to Gateley Hamer by
investing in specialist advisors to the telecoms sector. Gateley
Capitus is seeing improved levels of activity as businesses seek to
maximise fiscal incentive opportunities. H1 22 like-for-like
revenue growth in the Property Platform is 24.3%.
People Platform
This Platform supports businesses dealing with and developing
human capital, and private clients in dealing with their personal
affairs.
H1 22 activity in our legal services employment, pensions and
private client teams was good. Our people focused consultancy
businesses had a strong H1 22 and are carrying a good pipeline of
work derived from our innovative offering. Revenue was
significantly ahead of the prior year as clients return to
investing in leadership assessment and development and cultural
change projects. The People Platform delivered like-for-like
revenue growth of 21.5%.
Corporate Platform
This Platform is focused upon the corporate, financial services
and restructuring markets in both transactional and business
support services.
Our legal services teams in corporate, banking and tax were
extremely busy throughout H1 22. Like-for-like growth on this
Platform is an impressive 47.4%, being a reflection of a buoyant
post-pandemic corporate market. The team is a leading legal
services provider in corporate M&A and has been recognised as
such during H1 21 with numerous awards, including Insider
Dealmakers Awards 2021 (Midlands) - International Deal of the Year
(Gymshark, minority Investment by General Atlantic) and SME Deal of
the Year (sale of Correla by Xoserve), Insider Dealmakers Awards
2021 (East Midlands) - Corporate Law Firm of the Year and Insider
Dealmakers Awards (Thames Valley) - Deal of the Year GBP20m+
(advising Babble on MBO of Graphite Capital). Our International
Investment Services consultancy has grown both headcount and
revenue as workflows escalate, particularly from the previously
reported long term contract with Cambridge and Peterborough
Combined Authority.
Business Services Platform
This Platform supports clients in dealing with their commercial
agreements, managing risk, protecting assets and resolving
disputes.
Our current revenues on this Platform are predominantly through
legal services. Our litigation teams remain busy on long-term
mandates for both UK and overseas clients, where our pipeline is
strong. To assist further in winning additional work, we have very
recently committed to a new GBP50m litigation funding facility for
long term complex projects. Our regulatory and business defence
team had a good H1 22 with both direct mandates and in support of
our corporate services team. Like-for-like revenue growth on this
Platform was 20.2%. The acquisition of Adamson Jones to this
Platform, announced on 10 January 2022, is directly complementary
to our legal services intellectual property offer and is an
exciting development for us. We expect to see further growth in
this space.
Platforms - Drivers for growth
We worked hard during FY21 and throughout H1 22 to embed our
Platform strategy with all of our stakeholders. Our four Platforms
are now the established growth vectors of our business and our
financial reporting is now aligned with these. Each Platform is
becoming increasingly integrated and we have amalgamated some
complementary businesses to realise operational advantage. During
H1 22, this has included conflating management of t-three and Kiddy
& Partners on our People Platform and amalgamating Tozer
Gallagher with the Gateley Vinden business on our Property
Platform.
There is clear evidence that the diversity of service lines
across the lifecycle of clients' operations on our Property and
People Platforms is helping us to win work from new and existing
clients. I am delighted that we have expanded our Business Services
Platform with the very recent acquisition of Adamson Jones, a team
of experienced and highly regarded patent and trademark attorneys.
This is our eleventh acquisition since 2015 and becomes our ninth
non-legal services business.
Our strong balance sheet gives us a good foundation for further
investment in Platform growth, which we are actively pursuing.
Operational review
We have spent many years building and growing our physical
footprint across the UK, matching our office locations with
opportunities that we see available to the Group. As a result, we
currently provide our services from most of the major commercial
centres in the UK. Our office network remains an important asset to
us but, as a result of the success of agile working which was
accelerated by the pandemic, we have been able to create
operational efficiencies through the reduction in office space,
without compromising services or growth. To date we have realised
efficiencies in Reading, Leeds, the North West and Belfast. Further
opportunities to maximise the utilisation of the Group's office
network will arise as the Group continues to grow.
Since our Admission to AIM, the Group has established a number
of share-based schemes that variously offer all staff the ability
to participate in early ownership of Gateley and share in the
rewards of that ownership as they contribute to the success of the
Group. I am delighted that 72% of current staff are now existing
share or option holders in the Group. Our ability to incentivise
people through plc share ownership provides an attractive
alternative to traditional professional services ownership models.
During the period staff exercised SAYE and CSOP options to further
widen our staff shareholder base.
Finally, during this half year period, we have been preparing
for the roll out of our new, Group-wide, financial accounting
system which is planned to "go live" at the start of June 2022. The
project team continues to work hard on the delivery of this
significant project that I have no doubt will aid future
acquisitive growth and facilitate quick system integrations across
the Group.
Purpose and ESG
During the Period, we launched our Purpose Statement: "to
delight our clients, inspire our people and support our
communities."
In tandem, we also produced our maiden Responsible Business
report.
I am really pleased that our Purpose Statement and Responsible
Business strategy have been so well received internally, with over
800 people attending our internal virtual launch event.
Our Responsible Business report, which was launched in September
2021, concluded that in terms of ESG, Gateley can make the most
positive impact with our people and in our communities by aligning
ourselves to the UK's levelling-up goals. To help us achieve this
we have partnered with the leading ESG consultancy, This is
Purpose. I am delighted with the positive traction that we have
already made since setting our long-term objectives during H1 22.
Rt. Hon Justine Greening of "This is Purpose" described our first
'Responsible Gateley' report as
"an excellent piece of work". Responsible Gateley .
Succession and Board Changes
I am pleased to announce that, subject to the completion of
customary regulatory due diligence, on 1 May 2022, Victoria Garrad
(Group HR Director) will join the Gateley (Holdings) Plc Board.
Peter Davies, our Chief Operating Officer ("COO"), will step down
from that Board as part of a planned succession which will see
Victoria take on the role of COO on 1 May 2023. Victoria has been
with Gateley since 1996. Before taking the Group HR Director role,
she was a Partner in our legal services employment team. She has
been a member of our Operations and Strategic Boards since 2011.
Peter Davies will remain on the Strategic Board and will continue
to chair our Operations Board until 30 April 2023.
Current trading and outlook
I am delighted that our decision to maintain full operating
capacity throughout FY21 has enabled us to deliver exceptional
service to clients and an excellent trading performance in what was
a busy H1 22. Activity levels and the pipeline remain robust in
both our transactional and non-transactional service lines and
across both legal and consultancy services. The Group is well
positioned to deliver further growth in the second half and achieve
results in line with market expectations for FY22.
The plan for the long-term development of our business is now
clearly characterised in our Platform Strategy. This is rooted in
understanding clients' needs and outcomes in the context of legal
and professional services. Our increasingly diverse range of
services is demonstrably enhancing opportunities and revenues. We
continue to position ourselves to invest in and grow our Platforms
to provide an increasing breadth of services to our clients,
deliver strong growth, and, therefore, maintain significant levels
of returns to our people and investors.
We strive to achieve in line with our Purpose statement.
Rod Waldie
CEO
12 January 2022
FINANCE DIRECTOR'S REVIEW
Financial overview
With activity levels remaining strong, the underlying adjusted
profit margin of 13.7% was ahead of pre-pandemic levels, which in
H1 20 was 13.3%. This has been achieved despite necessary increases
in payroll costs, that have been offset by strong growth in fees
and lower operating overhead costs, which have not yet returned to
pre-pandemic levels, and may not do so in the short to medium
term.
Our track record of delivering profit, supported by strong cash
generation and attractive investment returns, is based on a
responsible business model with a strong focus on social and
governance objectives and making sustainable decisions for the long
term.
During H2 22, as we prepare for the release of our new financial
accounting system that is scheduled to go live in June 2022, our
year end reporting period and annual audit timetable will be
disrupted. We have agreed with our auditors to delay the
performance of our annual audit from June to August for 2022 only,
which will have a knock-on effect with our usual market
announcement timetable of mid-July. To accommodate this important
phase of our expansion and technological advancement, we have
decided to delay our Final Results announcement until September
2022. The Group expects to announce its usual, full year trading
update in May 2022.
Revenue
Group revenue grew by 23.5% to GBP62.3m for the first half of
the year from GBP50.5m in H1 21. Revenue from the Group's core
legal services grew by 21.9% to GBP54.0m (H1 21 GBP44.3m) whilst
revenue from consultancy non-legal services grew by 33.9% to
GBP8.3m (H1 21 GBP6.2m). Acquired revenue during the period
totalled just GBP0.2m from the consultancy Tozer Gallagher meaning
overall organic growth was 23.0%. The Group has grown all Platforms
organically during the period and continues to diversify further
its client base and revenue mix.
Transactional activity has remained strong during the first half
of H1 22 as our Banking and Corporate teams (within our Corporate
Platform) have demonstrated 47.4% growth on H1 21 from GBP10.3m to
GBP15.2m. Whilst transactional activity was paused during the onset
of the pandemic, activity returned strongly around September 2020
and has been very busy ever since.
Within its Property Platform, Gateley's Housebuilding,
Construction and Commercial Property teams showed significant
levels of client activity as lucrative long-term projects across
its client base helped it deliver 24.3% growth from GBP21.7m to
GBP27.0m. The strength of its combined consultancy and legal
service offerings continues to benefit Gateley's ability to win and
deliver long-term infrastructure and housebuilding related
projects. These projects often span multiple years that require
professional input alongside client expertise in order to help our
clients deliver successfully. Gateley also continues to benefit
significantly from its clients' investment in warehousing and
distribution projects. Consultancy services represented GBP5.4m (H1
21 GBP4.2m) or 20% of Property Platform revenue.
The Businesses Services Group has doubled its revenue returns
from Complex Dispute Litigation work as it attracts mandates
through its established, market leading expertise. Revenues have
also increased in commercial service lines that provide ongoing
support to the Corporate Platform.
Our People Platform in H1 22 has delivered consultancy revenue
of GBP2.5m (H1 21: GBP1.7m) or 27% of total People Platform
revenue. Growth has also been delivered by the Employment and
Private Wealth legal service lines together with a strong return of
growth for the specialist change management services of t-three and
Kiddy & Partners. Their move to an agile delivery model and
change management expertise are increasing the demand for services
they can provide to clients in times of constant change for UK and
international businesses.
Business
Corporate Services People Property
Revenue Platform Platform Platform Platform Total Segments Other Total
Oct 21 15,160 9,658 9,386 26,987 61,191 1,118 62,309
Growth from
Oct 20 47.4% 20.2% 21.5% 24.3% 28.1% (58.6%) 23.5%
Oct 20 10,285 8,035 7,725 21,716 47,761 2,699 50,460
Total expenses
Personnel costs have increased as a percentage of revenue to
64.1% (H1 21: 60.9%) but are expected to return closer to historic
levels in H2 22. Average numbers of legal and professional staff
rose by 1% to 794 (H1 21: 785) whilst support staff numbers
decreased by 2.6% to 338 (H1 20: 347). We retained fee earning
capacity throughout the pandemic in order to satisfy the higher
than previously seen client demand during FY21 and into H1 22, and
now move into H2 22 with a significant list of 75 additional
recruitment requests across the Group.
The last two half year periods do not display like for like
costs as a result of the decisions the Board took on pay to address
pandemic led concerns. In April 2020 the Group cut pay by up to 20%
and froze all existing salaries until activity levels returned in
the second half of FY21. However, in H2 21 all previously deducted
pay was returned to staff and in H1 22 a comprehensive review of
salary rates was implemented to address wider market trends in,
what has now become a challenging recruitment market.
Other operating expenses, excluding non-underlying items,
decreased by 15.1% to GBP10.6m (H1 21: GBP12.5m) as expenses
remained below pre-pandemic levels due to staff and clients
continuing to work predominately from home.
Profit before tax and earnings per share
The Group has recorded strong underlying adjusted profit before
tax of GBP8.5m which has increased by 14.1% from GBP7.5m in H1 21.
This has resulted in an excellent trading margin performance of
13.7% (H1 20: 13.3%) reflecting the improving activity levels in
the business and the control of costs despite the market pressures
the sector is experiencing. We enter the second half of the
financial year having maintained fee earner headcount in order to
service the now visible increases in client activity, and whilst
government guidance currently to advise staff to work from home, we
now expect certain overhead savings to be maintained during H2.
The table below highlights the significant change we experienced
in both halves of last year and the impact of the key decisions we
took throughout that period.
H1 20 H2 20 FY20 H1 21 H2 21 FY21 H1 22
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 51.8 58.0 109.8 50.5 70.9 121.4 62.3
Other income 0.1 0.6 0.7 1.9 0.6 2.5 0
Personnel costs (32.0) (31.5) (63.5) (30.7) (46.8) (77.5) (39.9)
Overheads and depreciation (13.0) (15.3) (28.3) (13.6) (12.3) (25.9) (13.4)
------ ------ ------ ------ ------ ------ ------
Underlying operating
profit before tax 6.9 11.8 18.7 8.1 12.4 20.5 9.0
Margin (%) 13.3% 20.3% 17.0% 16.0% 17.5% 16.8% 13.7%
Utilisation (%) 81% 79% 80% 79% 98% 88% 84%
Growth (%) 10.5% 2.8% 3.5% (9.5)% 20.0% 4.7% 23.5%
------ ------ ------ ------ ------ ------ ------
Profit before tax of GBP7.3m increased by 19.5% from GBP6.1m
with profit after tax of GBP5.9m increasing by 24.7% from
GBP4.8m.
Basic earnings per share increased by 23.8% to 5.00p (H1 21:
4.04p). Underlying diluted earnings per share increased by 17.1% to
5.76p (HY 21: 4.92p).
Dividend
The Board has approved an interim dividend of 3.0p (H1 21: 2.5p
declared in June 2021) per share. This dividend will be paid on 31
March 2022 to shareholders on the register at the close of business
on 18 February 2022. The shares will go ex-dividend on 17 February
2022. This dividend has not been recognised as a liability in these
final statements.
Net assets and cash
The Group's net asset position has increased by GBP8.3m to
GBP58.0m (H1 21: GBP49.7m).
There was a GBP4.6m increase in total current assets, resulting
from GBP8.3m additional trade and other receivables available for
collection, a GBP0.6m increase in contract assets ("unbilled
revenue") together with a GBP4.3m decrease in cash at bank. Cash
has decreased due to the reinstatement of bonuses and dividends
after the outcome of the FY21 year was known.
Non-current assets decreased by GBP4.9m due to reductions in
right-of-use assets and amortisation of intangible assets in line
with contractual commitments and Group accounting policies.
Total liabilities decreased by GBP8.5m to GBP50.2m (H1 21:
58.7), mainly as a result of the decrease in corporate tax
liabilities of GBP3.3m and the reduction in lease liabilities
through scheduled repayments and crystallisation of certain
operational gearing opportunities. In addition, the repayment of
all outstanding debt before the end of FY21 has also reduced
liabilities compared to H1 21. At the Period-end, debt comprised
unsecured term loans of GBPnil (H1 21: GBP3.5m), whilst loans to
former partners of acquired businesses totalled GBPnil (H1 21:
GBP0.3m).
The Board continues to carefully monitor the impact of COVID-19
on the future forecasts used in assessing the value in use of the
cash generating units to which the goodwill and intangibles relate
and determined that despite short term reductions such forecasts
are more than sufficient to justify the carrying value of goodwill.
Therefore, as at 31 October 2021, the Board concluded that the
goodwill and intangible assets do not require impairment.
Working capital and cash generation
Total lock-up decreased from 149 to 143 days as a result of WIP
days reducing from 55 to 46 days and debtor days increasing from 94
to 97 days. Both movements are as a result of heightened billing
activity towards the end of the half year. Contract assets
(unbilled revenue) increased to GBP14.7m (H1 21: GBP14.2m) whilst
trade receivables, including unbilled disbursements, increased to
GBP38.1m (H1 21: GBP31.1m).
Cash generated from operations during the Period was GBP2.4m (H1
21: GBP12.9m) which represents 40.0% (H1 21: 271.1%) of profit
after taxation. Free cash flow decreased from GBP10.6m in H1 21 to
GBP(1.9)m as the Group used existing cash resources to satisfy the
payment of returning bonus and corporate tax outflows that were
paused during H1 21. The Group has returned to its usual profile of
annual cash outgoings as capital expenditure returned. The Group
remains debt free at present. However, this position is reviewed
regularly to ensure appropriate funding levels are in place to
support the Group's expansion as we move forward into H2 22 with
our three year GBP30m revolving credit facility.
Conclusion
The Group has delivered a strong performance in HY22 against the
backdrop of an uncertain macro environment, with activity levels,
revenue and profitability all showing improvement. Demand for
services, and capacity to deliver those services, has steadily
improved over the course of H1 22. The Group has a strong pipeline
of work coming into the second half of the financial year and
expects to maintain profit margins in the short term but use its
acquisition strategy to seek further margin enhancing acquisitions
in the medium to long term as our Platform strategy resonates wider
with existing and potential clients.
Our next two six-month periods will yield significant change for
the business, as we finalise the installation of our new Group-wide
financial accounting system and seek further opportunities to
expand the growth through sustainable organic growth and
acquisition.
Neil Smith
Finance Director
12 January 2022
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2021
Note Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Revenue 2 62,309 50,460 121,375
Other operating income - 1,871 2,451
Personnel costs 3 (39,935) (30,743) (77,460)
Depreciation - Property, plant
and equipment 4 (421) (599) (1,045)
Depreciation - Right-to-use asset 4 (1,942) (1,801) (3,751)
Impairment of trade receivables
and contract assets (475) (17) (1,834)
Other operating expenses (10,585) (12,462) (19,202)
----------- ----------- -------------
Operating profit before non-underlying
operating and exceptional items 8,951 8,076 20,534
Total non-underlying operating
items 4 (1,236) (1,367) (3,029)
----------- ----------- -------------
Operating profit 7,715 6,709 17,505
Investing income received - - -
Financing income 70 4 176
Financing expense (509) (623) (1,373)
----------- ----------- -------------
Profit before tax 7,276 6,090 16,308
Taxation (1,353) (1,339) (3,151)
=========== =========== =============
Profit for the period after tax
attributable to equity holders
of the parent 5,923 4,751 13,157
=========== =========== =============
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences
- Exchange differences on foreign
branch (5) 41 (87)
----------- ----------- -------------
Profit for the financial period
and total comprehensive income
all attributable to equity holders
of the parent 5,918 4,792 13,070
=========== =========== =============
Statutory earnings per share (pence)
Basic earnings per share 55.00p 4.04p 11.18p
Diluted earnings per share 54.94p 3.99p 11.10p
The results for the periods presented above are derived from
continuing operations. There were no other items of comprehensive
income to report.
Gateley (Holdings) Plc
Consolidated statement of financial position
at 31 October 2021
Note Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 1,343 1,373 1,323
Right-of-use asset 25,268 28,161 27,007
Investment property 164 164 164
Intangible assets & goodwill 7 15,763 17,696 15,765
Other intangible assets 245 303 282
Other investments 367 363 363
Deferred tax asset 2 - 138
------------ ------------ ----------
Total non-current assets 43,152 48,060 45,042
------------ ------------ ----------
Current assets
Contract assets 8 14,723 14,154 13,900
Trade and other receivables 9 41,390 33,114 43,093
Cash and cash equivalents 8,842 13,072 19,605
------------ ------------ ----------
Total current assets 64,955 60,340 76,598
------------ ------------ ----------
Total assets 108,107 108,400 121,640
============ ============ ==========
Non-current liabilities
Other interest-bearing loans and borrowings 10 - (1,895) -
Lease liability (26,465) (28,077) (27,702)
Other payables 11 (120) (942) (120)
Deferred tax liability (591) (965) (772)
Provisions (724) (339) (763)
Total non-current liabilities (27,900) (32,218) (29,357)
------------ ------------ ----------
Current liabilities
Other interest-bearing loans and borrowings 10 - (1,878) -
Lease liability (3,197) (3,304) (2,743)
Trade and other payables 11 (19,303) (18,086) (29,032)
Provisions (176) (359) (176)
Current tax liabilities 420 (2,840) (1,066)
Total current liabilities (22,256) (26,467) (33,017)
------------ ------------ ----------
Total liabilities (50,156) (58,685) (62,374)
============ ============ ==========
NET ASSETS 57,951 49,715 59,266
============ ============ ==========
EQUITY
Share capital 11,899 11,761 11,792
Share premium 10,430 9,153 9,421
Merger reserve (9,950) (9,950) (9,950)
Other reserves 7,097 6,815 6,815
Treasury reserve (629) (670) (312)
Translation reserve (65) 68 (60)
Retained earnings 39,169 32,538 41,560
------------ ------------ ----------
TOTAL EQUITY 57,951 49,715 59,266
============ ============ ==========
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2021
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 31 October 30 April
2021 2020 2020
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period after tax 5,923 4,751 13,157
Adjustments for:
Depreciation and amortisation 3,102 3,424 6,869
Financial income (70) (4) (176)
Financial expense 7 623 416
Interest charge on capitalised leases 502 - 957
Equity settled share-based payments 534 343 956
Tax expense 1,353 1,339 3,151
------------ ------------ -------------
11,351 10,476 25,327
Decrease/(increase) in trade and other receivables 930 4,413 (5,312)
(Decrease)/increase in trade and other payables (9,870) (1,994) 9,216
(Decrease)/increase in provisions (39) (15) 226
------------ ------------ -------------
Cash generated from operations 2,372 12,880 29,457
Tax paid (2,960) (373) (4,039)
------------ ------------ -------------
Net cash flows from operating activities (588) 12,507 25,418
------------ ------------ -------------
Investing activities
Acquisition of property, plant and equipment (434) (99) (503)
Acquisition of other intangible assets - - (10)
Cash received on sale of investment - - 11
Acquisition of other investments - (134) (134)
Contingent consideration paid - acquisition of subsidiary (617) (62) (363)
Net cash outflow from investing activities (1,051) (295) (999)
------------ ------------ -------------
Financing activities
Interest and other financial income received 70 4 176
Interest and other financial income paid (7) (623) (416)
Interest charge on capitalised leases (502) - (957)
Lease payments (986) (1,158) (2,890)
Short term bank loan proceeds - 1,697 -
Repayment of short-term bank loans - (1,032) -
Repayment of term bank loans - (235) (3,077)
Repayment of loans from former members of GCL Solicitors & Directors
of International Investment
Services - (68) (729)
Funds to former members of Gateley Tweed - (395) -
Acquisition of own shares (60) (253) (288)
Proceeds of sale of own shares 330 - 145
Cash received for shares issued on exercise of share options 879 - -
Dividends paid 6 (8,848) - -
Net cash outflow from f inancing activities (9,124) (2,063) (7,737)
------------ ------------ -------------
Net (decrease)/increase in cash and cash equivalents (10,763) 10,149 16,682
Cash and cash equivalents at beginning of period 19,605 2,923 2,923
------------ ------------ -------------
Cash and cash equivalents at end of period 8,842 13,072 19,605
============ ============ =============
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2021
Share Share Merger Other Treasury Retained Foreign 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 2020 11,761 9,153 (9,950) 6,815 (417) 27,447 27 44,836
Restated balance
at 1 May 2020
Comprehensive income:
Profit for the year - - - - - 13,157 - 13,157
Exchange rate differences - - - - - - (87) (87)
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 13,157 (87) 13,070
Transaction with
owners recognised
directly in equity
Issue of share capital 31 550 - - - - - 581
Sale of treasury
shares - (282) - - 400 - - 118
Purchase of treasury
shares - - - - (295) - - (295)
Dividend paid - - - - - - - -
Share based payment
transactions - - - - - 956 - 956
Total equity at 30
April 2021 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
======== ======== ======== ======== ======== ========= ============ =======
At 1 May 2020 (unaudited) 11,761 9,153 (9,950) 6,815 (417) 27,447 27 44,836
-------- -------- -------- -------- -------- --------- ------------ -------
Comprehensive income:
Profit for the period - - - - - 4,751 4,751
Exchange rate differences - - - - - 41 41
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 4,751 68 4,792
Transaction with
owners recognised
directly in equity
Purchase of treasury
shares - - - - (253) - - (253)
Dividend paid - - - - - - - -
Share based payment
transactions - - - - - 340 - 340
-------- -------- -------- -------- -------- --------- ------------ -------
Total equity at 31
October 2020 11,761 9,153 (9,950) 6,815 (670) 32,538 68 49,715
======== ======== ======== ======== ======== ========= ============ =======
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2021
Share Share Merger Other Treasury Retained Foreign 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 2021 (unaudited) 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
Comprehensive income:
Profit for the year - - - - - 5,923 - 5,923
Exchange rate differences - - - - - - (5) (5)
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 5,923 (5) 5,918
Transaction with
owners recognised
directly in equity
Share issue 107 1,009 - 282 - - - 1,398
Sale of treasury
shares - - - - 33 - - 33
Purchase of treasury
shares - - - - (350) - - (350)
Dividend paid - - - - - (8,848) - (8,848)
Share based payment
transactions - - - - - 534 - 534
Total equity at 31
October 2021 11,899 10,430 (9,950) 7,097 (629) 39,169 (65) 57,951
======== ======== ======== ======== ======== ========= ============ =======
The following describes the nature and purpose of each reserve
within equity:
Share premium - Amount subscribed for share capital in excess of
nominal value together with gains and losses on sale of own
shares.
Merger reserve - Represents the difference between the nominal
value of shares acquired by the Company in the share for share
exchange with the former Gateley Heritage LLP members and the
nominal value of shares issued to acquire them.
Other reserve - Represents the difference between the actual and
nominal value of shares issued by the Company in the acquisition of
subsidiaries.
Treasury reserve - Represents the repurchase of shares for
future distribution by the Group's Employee Benefit Trust.
Retained earnings - All other net gains and losses and
transactions with owners not recognised anywhere else.
Foreign currency translation reserve - Represents the movement
in exchange rates back to the Group's functional currency of
profits and losses generated in foreign currencies.
Gateley (Holdings) Plc
Notes
for the period ended 31 October 2021
1. Basis of preparation
These interim unaudited financial statements for the six months
ended 31 October 2021 have been prepared in accordance with the
accounting policies set out in the Annual Report and Financial
statements of the Group for the year ended 30 April 2021 using the
recognition and measurement principles of IFRS as applied under the
Companies Act 2006 and the AIM rules.
The comparative figures for the financial year ended 30 April
2021 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was unqualified, did not include a reference to any matters
to which the auditor drew attention by way of emphasis without
qualifying their report, and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
1.1 Accounting policies
Accounting policies remain unchanged from those accompanying the
30 April 2021 financial statements.
Non-underlying items
Non-underlying items are non-trading and or non-cash items
disclosed separately in the Consolidated Income Statement where the
quantum, nature or volatility of such items would otherwise distort
the underlying trading performance of the Group. The following are
included by the Group in its assessment of non-underlying
items:
-- Share based payment charges: such charges are treated as
non-underlying as the gain realised on the options granted is
settled in shares not cash and therefore does not impact the income
statement. The IFRS 2 charge is taken to the income statement,
these expenses are treated as non-underlying items as they are
either non-cash or non-recurring in nature.
-- Amortisation in respect of intangible fixed assets: these
costs are treated as non-underlying as they are non-cash items.
The tax effect of the above is also included if considered
significant.
Exceptional items
Exceptional items are one off transactions, unrelated to the
underlying trading performance of the Group disclosed separately in
the Consolidated Income Statement where the quantum, nature or
volatility of such items would otherwise distort the underlying
trading performance of the Group.
The following are included by the Group in its assessment of
exceptional items:
-- Gains or losses arising on disposal, closure, restructuring
or reorganisation of businesses that do not meet the definition of
discontinued operations.
-- Impairment charges in respect of intangible fixed assets:
these costs are treated as exceptional due to their one-off
nature.
-- Non-typical expenses associated with acquisitions.
-- Costs incurred as part of significant refinancing activities.
The tax effect of the above is also included if considered
significant.
Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment. In respect of
equity accounted investees, the carrying amount of goodwill is
included in the carrying amount of the investment in the
investee.
Other intangible assets
Other intangible assets, including software licences,
expenditure on internally generated goodwill, brands and software,
customer contracts and relationships are capitalised at cost and
amortised on a straight-line basis over their estimated useful
economic lives through operating expenses.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Customer lists
Customer lists that are acquired by the Group as part of a
business combination are stated at cost less accumulated
amortisation and impairment losses (see accounting policy
'Impairment of assets'). Cost reflects management's judgement of
the fair value of the individual intangible asset calculated by
reference to the net present value of future benefits accruing to
the Group from the utilisation of the asset, discounted at an
appropriate discount rate.
Brand value
Certain acquisitions have retained their trading name due to the
value of the brand in their specific market place.
Brand value is amortised over a period of three or five years
based on the Directors assessment of the future life of the brand,
supported by trading history.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of consolidated financial statements under IFRS
requires management to make estimates and assumptions which affect
the reported amount of revenues, expenses, assets and liabilities
and the disclosure of contingent liabilities. If in the future such
estimates and assumptions, which are based on Management's best
judgement at the date of preparation of the financial statements,
deviate from actual circumstances, the original estimates and
assumptions will be modified as appropriate in the period in which
the circumstances change. The key areas where a higher degree of
judgement or complexity arises, or where estimates and assumptions
are significant to the consolidated financial statements are
discussed below.
Management does not consider there to have been and critical
accounting judgements made in the financial period.
Unbilled revenue on client assignments
The valuation of unbilled revenue (on non-contingent matters)
involves detailed understanding of contractual terms with clients.
The valuation is based on an estimate of the amount expected to be
recoverable from clients on unbilled items based on such factors as
time spent, the expertise and skills provided and the stage of
completion of the assignment. The principal uncertainty over this
estimation is a result of the amounts not yet being billed to, or
recognised by the client. Provision is made for such factors as
historical recoverability rates, agreements with clients, external
expert's opinion and the potential credit risks, following
interactions between legal staff, finance and clients. Where
entitlement to revenue is certain it is recognised as recoverable
selling price. Where a matter is contingent at the statement of
financial position date, no revenue is recognised.
Valuation of intangibles
Measurement of intangible assets relating to acquisitions: In
attributing value to intangible assets arising on acquisition,
management has made certain assumptions in terms of cash flows
attributable to intellectual property and customer relationships.
The key assumptions made relate to the valuation of the brand,
where the acquired brand is retained by the entity, and the
customer list. The value of such intangibles has been estimated
based on the amount of revenue expected to be generated by them.
The revenue estimations rely on annual growth rates. Management
have selected the appropriate rates based on a combination of
observed historical growth, industry norms and forecasted
influencing factors. Management have also performed sensitivity
analysis to assess the impact of any variation to the growth rate
used. The rates applied reflect previous growth rates, with
sensitivities indicating that variations in the actual rate
achieved are unlikely to materially impact the valuation of the
intangible assets.
1.2 Alternative performance measures
Underlying adjusted profit before tax
The Directors seek to present a measure of underlying profit
performance which is not impacted by exceptional items or items
considered non-operational in nature. These include non-trading,
non-cash and one-off items disclosed separately in the consolidated
income statement where the quantum, nature or volatility of such
items are considered by management to otherwise distort the
underlying performance of the Group. This measure is described as
'underlying adjusted' and is used by management to assess and
monitor profit performance only at the before and after tax level.
In line with the board's wish to simplify reporting of profits, the
board have moved away from reporting adjusted Earnings Before
Interest Tax Depreciation and Amortisation ("EBITDA"), following
the introduction of IFRS 16 'Leases'.
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
Reported profit before tax 7,276 6,090 16,308
Adjustments for non-underlying and exceptional
items:
- Amortisation of acquired intangible
assets 702 1,024 2,073
- Share-based payment adjustment 534 343 956
Underlying adjusted profit before tax 8,512 7,457 19,337
=========== =========== =========
Amortisation of acquired intangible assets is identified as a
non-cash item released to the income statement therefore such cost
is removed when considering the underlying trading performance of
the Group by adding to profit the annual amortisation charge.
The adjustment for share-based payments relates to the impact of
the accounting standard for share-based compensation. The cost of
all share-based schemes are settled entirely by the issue of shares
where the proportions can vary from one year to another based on
events outside of the businesses control e.g., share price. Under
IFRS the anticipated future share cost is expensed to the income
statement over the vesting period. The adjustment above addresses
this by adding to profit the IFRS 2 charge in relation to
outstanding share awards. This adjustment is made so that non-cash
expenses are removed from profit.
Cash generated from operations
a) Free cash flows
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
Operating cash flows before movements
in working capital 11,351 10,476 25,327
Net working capital movement (8,979) 2,404 4,130
----------- ----------- ---------
Cash generated from operations 2,372 12,880 29,457
Repayment of lease liabilities (986) (1,158) (2,890)
Net interest paid 63 (619) (240)
Tax paid (2,960) (373) (4,039)
Purchase of property, plant and equipment (434) (99) (503)
Purchase of other intangible assets - - (10)
----------- ----------- ---------
Free cash flows (1,945) 10,631 21,775
=========== =========== =========
b) Working capital measures
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
WIP days
Amounts recoverable from clients in
respect of contract assets (unbilled
revenue) 14,723 14,154 13,900
Unbilled disbursements 2,240 2,391 2,247
----------- ----------- ---------
Total WIP 16,963 17,545 16,147
----------- ----------- ---------
Annualised revenue 135,266 110,797 121,375
----------- ----------- ---------
WIP days 46 55 49
=========== =========== =========
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
Debtor days
Amounts recoverable from clients in
respect of contract assets (unbilled
revenue) 38,059 31,065 36,680
Less unbilled disbursements (2,240) (2,391) (2,247)
----------- ----------- ---------
Total debtors 35,819 28,674 34,433
----------- ----------- ---------
Annualised revenue 135,266 110,797 121,375
----------- ----------- ---------
Debtor days 97 94 104
=========== =========== =========
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
Gross lock-up days
Total WIP 16,963 16,545 16,147
Total debtors 35,819 28,674 36,380
----------- ----------- ---------
Total gross lock-up 52,782 45,219 52,827
----------- ----------- ---------
Annualised revenue 135,266 110,797 121,375
----------- ----------- ---------
Gross lock-up days 143 149 153
=========== =========== =========
Annualised revenue reflects the total revenue for the previous
12-month period inclusive of pro-forma adjustments for
acquisitions.
1.3 Going concern
These interim accounts are prepared on a going concern basis as
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. The Group remains cash generative, with a
strong on-going trading performance.
1.4 Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this
condensed set of consolidated financial statements have been
prepared in accordance with the AIM Rules.
1.5 Cautionary statement
This document contains certain forward-looking statements in
respect of the financial condition, results, operations and
business of the Group. Whilst these statements are made in good
faith based on information available at the time of approval, these
statements and forecasts inherently involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
the actual results of developments to differ materially from those
expressed or implied by these forward-looking statements and
forecasts. Nothing in this document should be construed as a profit
forecast.
2. Operating segments
The Chief Operating Decision Maker ("CODM") is the Strategic
Board. The Group has the following strategic Platforms, which are
its reportable segments. These divisions offer a mixture of legal
and consultancy services to clients. With effect from 1 May 2021
all service lines are managed through four Platforms.
The Group has restated the segmental reporting for the
comparative periods to reflect the current operating segments in
place.
The following summary describes the operations of each
reportable segment as reported up to 31 October 2021:
Reportable segment Legal service lines Consultancy service
(Gateley Legal) lines
(Gateley Consultancy)
Corporate Banking International Investment
Corporate Services
IP, Commercial & Technology GEG Services
Restructuring Advisory
Taxation
----------------------------------------- -------------------------
Business Services Commercial Dispute Resolution/Litigation Gateley Omega
Complex & International
Recovery Work
Regulatory & Business
Defence
Tweed (reputation, media
and privacy law)
----------------------------------------- -------------------------
Employment, Pensions Employment Entrust Pension
and Benefits Pensions Kiddy & Partners
Private Client T-three
----------------------------------------- -------------------------
Property Construction Gateley Capitus
Planning Gateley Hamer (inc.
Real Estate Persona Associates)
Real Estate Dispute Gateley Vinden (inc.
Resolution Tozer Gallagher)
Residential Development
----------------------------------------- -------------------------
6 months to 31 October 2021
Corporate Business People Property Total Other* Total
Services segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 15,160 9,658 9,386 26,987 61,191 1,118 62,309
----------- --------- --------- -------- --------- ---------- -------
Segment contribution
(as reported internally) 5,895 3,349 3,490 10,717 23,451 1,118 24,569
Costs not allocated to segments:
Other operating income -
Personnel costs (5,824)
Share based payment costs (534)
Depreciation and amortisation (3,065)
Other operating expenses (7,431)
Net financial income (439)
7,276
=======
6 months to 31 October 2020
Corporate Business People Property Total Other* Total
Services segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 10,285 8,035 7,725 21,716 47,761 2,699 50,460
----------- ----------- ------- -------- -------- ---------- ---------
Segment contribution
(as reported internally) 2,411 3,358 1,872 6,672 14,313 2,699 17,012
Costs not allocated to segments:
Other operating income 1,871
Personnel costs (3,654)
Share based payment charge (343)
Depreciation and amortisation (3,424)
Other operating expenses (4,753)
Net financial expense (619)
6,090
=======
12 months to 30 April 2021
Corporate Business People Property Total Other* Total
Services segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 32,869 18,338 14,252 52,989 118,448 2,927 121,375
--------- --------- ------- -------- --------- ------- --------
Segment contribution
(as reported internally) 10,729 7,335 4,597 24,421 47,082 2,927 50,009
Costs not allocated to segments:
Other operating income 2,448
Personnel costs (8,240)
Share based payment charge (956)
Depreciation and amortisation (6,869)
Other operating expenses (18,887)
Net financial expense (1,197)
16,308
========
*Other includes expense income and movement in unbilled
revenue
No other financial information has been disclosed as it is not
provided to the CODM on a regular basis .
3. Employees
The average number of persons employed by the Group during the
period, analysed by category, was as follows:
Number of employees
6 months to 6 months to 12 months to
31 October 2021 31 October 2020 30 April 2021
Legal and professional staff 794 785 770
Administrative staff 338 347 343
---------------- ---------------- --------------
1,132 1,132 1,113
================ ================ ==============
The aggregate payroll costs of these persons were as follows:
6 months to 6 months to 12 months to
31 October 2021 31 October 2020 30 April 2021
GBP'000 GBP'000 GBP'000
Wages and salaries 35,369 27,763 55,696
Social security costs 3,664 2,330 6,280
Pension costs 902 650 1,555
---------------- ---------------- --------------
39,935 30,743 63,531
================ ================ ==============
4. Expenses
Included in operating profit are the following:
6 months 6 months 12 months
to to to 30
31 October 31 October April 2021
2021 2020
GBP'000 GBP'000 GBP'000
Depreciation on tangible assets 421 599 1,045
Depreciation on right-of-use
assets 1,942 1,801 3,751
Other operating income - rent
income - - (2)
Short term and low value leases 117 54 40
Operating lease costs on property - - 26
Foreign exchange 5 (45) 87
Profit on sale of fixed assets - - (3)
============ ============ ============
Non-underlying items
6 months 6 months 12 months
to to to 30 April
31 October 31 October 2021
2021 2020
Amortisation of intangible assets 702 1,024 2,073
Share based payment charges 534 343 956
------------ ------------ -------------
Total non-underlying items 1,236 1,367 3,029
============ ============ =============
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2020 to 30 April 2021
2021
Number Number Number
Weighted average number of ordinary shares in issue, being
weighted
average number of shares for calculating basic earnings per share 118,253,989 117,609,094 117,685,265
Shares deemed to be issued for no consideration in respect of
share
based payments 1,754,023 1,508,903 823,568
----------- ---------------- -----------------
Weighted average number of ordinary shares for calculating diluted
earnings per share 120,008,012 119,117,997 118,508,833
=========== ================ =================
GBP'000 GBP'000 GBP'000
Profit for the period after taxation and basic earnings attributable to
ordinary equity shareholders 5,923 4,751 13,157
Non-underlying items 1,236 1,367 3,029
Tax on non-underlying items (247) (260) (576)
---------- ----------- -----------
Underlying earnings before non-underlying items 6,912 5,858 15,604
========== =========== ===========
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 5.00 4.04 11.18
Diluted earnings per ordinary share 4.94 3.99 11.10
Underlying basic earnings per ordinary share 5.85 4.98 13.26
Underlying diluted earnings per ordinary share 5.76 4.92 13.17
Underlying earnings per share have been shown because the
Directors consider that this provides valuable additional
information about the underlying performance of the Group.
6. Dividends
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2021
2021 2020
GBP'000 GBP'000 GBP'000
Equity shares
Interim dividend in respect of 2021
(2.5p per share) - paid 28 June 2021 2,939,731 - -
Final dividend in respect of 2021 (5.0p
per share) - paid 8 October 2021 5,907,839 - -
----------- ----------- ---------
Dividends paid 8,847,570 - -
=========== =========== =========
The Board has approved an interim dividend of 3.0p (H1 21: nil)
per share. This dividend will be paid on 31 March 2022 to
shareholders on the register at the close of business on 18
February 2022. The shares will go ex-dividend on 17 February 2022.
This dividend has not been recognised as a liability in these final
statements.
7 Intangible assets
Goodwill Customer list and brand names Total
GBP'000 GBP'000 GBP'000
Deemed cost
At 1 May 2020 12,329 9,850 22,179
Adjustment to expected contingent consideration - Gateley Vinden
Limited 282 - 282
-------- ----------------------------- -------
At 31 October 2020 12,611 9,850 22,461
======== ============================= =======
At 1 May 2020 12,329 9,850 22,179
Adjustment (631) - (631)
-------- ----------------------------- -------
At 30 April 2021 11,698 9,850 21,548
======== ============================= =======
At 1 May 2021 11,698 9,850 21,548
Acquired through business combination 307 393 700
At 31 October 2021 12,005 10,243 22,248
========
Accumulated amortisation
At 1 May 2020 - 3,741 3,741
Charge for the period - 1,024 1,024
-------- ----------------------------- -------
At 31 October 2020 - 4,765 4,765
======== ============================= =======
At 1 May 2020 - 3,741 3,741
Charge for the year - 2,042 2,042
-------- ----------------------------- -------
At 30 April 2021 - 5,783 5,783
======== ============================= =======
At 1 May 2021 - 5,783 5,783
Charge for the period - 702 702
--------
At 31 October 2021 - 6,485 6,485
======== ============================= =======
Net Book Value
At 31 October 2020 12,611 5,085 17,696
======== ============================= =======
At 30 April 2021 11,698 4,067 15,765
======== ============================= =======
At 31 October 2021 12,005 3,758 15,763
======== ============================= =======
Goodwill
Goodwill is allocated to the following cash generating units
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Property Platform
Gateley Capitus Limited 1,515 1,515 1,515
Gateley Hamer Limited 1,161 1,161 1,161
GCL Solicitors LLP (acquisition of trade and assets) 2,900 2,900 2,900
Persona Associates Limited 40 40 40
Gateley Vinden Limited 2,259 2,254 2,259
Tozer Gallagher Limited 307 - -
---------- ---------- --------
8,182 7,870 7,875
People Platform
Kiddy & Partners Limited 1,600 1,872 1,600
International Investment Services Limited 338 338 338
t-three Consulting Limited 309 955 309
---------- ---------- --------
2,247 3,165 2,247
Business Services Platform
Gateley Tweed (acquisition of goodwill) 1,576 1,576 1,576
---------- ---------- --------
12,005 12,611 11,698
========== ========== ========
Acquisition of Tozer Gallagher LLP (Tozer)
On 22 July 2021 Gateley Vinden Limited acquired the business and
assets of Tozer Gallagher LLP, a leading practice of chartered
quantity surveys and construction consultants based in Manchester
and London. The business specialises in built environment
consultancy, fund monitoring services and surety advisory.
The amounts recognised in respect of identifiable assets
acquired and liabilities assumed are as set out in the table
below:
Pre-acquisition Policy alignment
carrying and fair value
amount adjustments Total
GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ----------------- ---------
Property, plant and equipment 7 - 7
Intangible asset relating
to customer list and brand - 392 392
Contract assets 101 - 101
Prepayments and accrued income 19 - 19
Total assets 127 392 519
--------------------------------- ---------------- ----------------- ---------
Accruals and other payables (8) - (8)
Deferred tax - (75) (75)
--------------------------------- ---------------- ----------------- ---------
Total liabilities (8) (75) (83)
--------------------------------- ---------------- ----------------- ---------
Total identifiable net assets
at fair value 119 317 436
Goodwill arising on acquisition 281
--------------------------------- ---------------- ----------------- ---------
Total consideration 717
--------------------------------- ---------------- ----------------- ---------
Satisfied by:
Initial cash consideration
paid 617
Contingent cash consideration
payable 100
Total consideration 717
--------------------------------- ---------------- ----------------- ---------
Net cash outflow arising
on acquisition
Cash paid (717)
Net cash outflow arising
on acquisition (717)
--------------------------------- ---------------- ----------------- ---------
The goodwill of GBP308,000 arising from the acquisition
represents the assembled workforce. None of the goodwill is
expected to be deductible for income tax purposes.
A contingent consideration arrangement was entered into as part
of the acquisition. This is payable based on the business'
financial performance in the 12-month period following completion
of the acquisition. The contingent consideration will be settled in
cash, with each recipient applying 50% of their contingent
consideration in subscribing for Ordinary Shares, valued at the
average 30-day closing price on the last practicable date as the
deferred consideration falls due.
8 Contract Assets and liabilities
Contract Contract
assets liabilities
GBP'000 GBP'000
As at 31 October 2021 14,723 (282)
======== ============
As at 31 October 2020 14,154 (160)
======== ============
As at 30 April 2021 13,900 (1,243)
======== ============
Contract assets
Contract assets consist of unbilled revenue in respect of
professional services performed to date.
Contract assets in relation to non-contingent work are billed at
appropriate intervals, normally on a monthly basis in arrears, in
line with the performance of the services and engagement
obligations. Where such matters remain unbilled at the period end
the asset is valued on a contract-by-contract basis at its expected
recoverable amount.
Contract assets in relation to contingent work are billed at a
point in time once the uncertainty over the contingent event has
been satisfied and all performance obligations satisfied, such that
it is no longer contingent, these matters are valued based on the
expected recoverable amount. Due to the complex nature of these
matters, they can take a considerable time to be finalised
therefore performance obligations may be settled in one period but
the matter not billed until a later financial period. Until the
performance obligations have been performed the Group does not
recognise any contract asset value at the year end.
Contract liabilities
When matters are billed in advance or on a basis of a monthly
retainer, this is recognised in contract liabilities and released
over time when the services are performed.
9 Trade and other receivables
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Trade receivables 38,059 31,065 36,680
Prepayments 3,121 1,916 5,699
Other receivables 210 133 714
---------- ---------- --------
41,390 33,114 43,093
========== ========== ========
10 Other interest-bearing loans and borrowings
The contractual terms of the Group's interest-bearing loans and
borrowings, which are measured at amortised cost, are described
below.
31 October 2021 31 October 2020 30 April 2021
Fair Carrying Fair Carrying Fair Carrying
value amount value amount value amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-Current liabilities
Unsecured long-term bank loan - - 1,895 1,895 - -
- - 1,895 1,895 - -
======= ======== ======= ======== ======= ========
Current liabilities
Unsecured long-term bank loan - - 947 947 - -
Unsecured short-term bank loan - - 665 665 - -
Loans due to former partners of Gateley Tweed LLP - - 266 266 - -
------- -------- ------- -------- ------- --------
- - 1,878 1,878 - -
======= ======== ======= ======== ======= ========
On 8 June 2015, Gateley Plc entered into two new loan agreements
of GBP5m each, GBP10m in total. On 28 October 2018 these existing
loans were re-negotiated and additional loans totalling GBP3
million were entered into. The balance of these loans were repaid
in full by the Company in April 2021.
11 Trade and other payables
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Current
Trade payables 5,878 4,988 6,086
Other taxation and social security payable 8,667 10,071 9,641
Other payables 889 184 582
Contingent consideration 235 579 135
Accruals and deferred income 3,634 2,529 12,588
---------- ---------- --------
19,303 18,351 29,032
========== ========== ========
GBP'000 GBP'000 GBP'000
Non-current
Other payables 120 130 120
Contingent consideration - 812 -
---------- ---------- --------
120 942 120
========== ========== ========
Contingent consideration
GBP0.1m of current contingent consideration represents the
earn-out sums due to the sellers of Tozer Gallagher LLP.
All contingent consideration amounts have been calculated based
on the Groups expectation of what it will pay in relation to the
earn-out clause of the relevant sale and purchase agreement. The
earn-out targets are based on the annual results, of the acquired
business. The fair value of the earn-out consideration is
calculated based on the forecasted results to give an estimate of
the final obligation capped at the maximum earn-out amount stated
in the purchase agreement.
12 Share based payments
Group
At the period end the Group has three share-based payment
schemes in operation and approved a new Long-Term Incentive Plan
(LTIP) to replace our existing SARS's scheme in January 2020.
Long Term Incentive Plan ('LTIP')
The Group has introduced an LTIP for the benefit of Executive
Directors and Senior management. Awards under the LTIP may be in
the form of an option granted to the participant to receive
ordinary shares on exercise dependent upon the achievement of
profit related performance conditions.
Performance conditions
Options granted under the LTIP are only exercisable subject to
the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of
the three-year performance period. The awards will be subject to an
adjusted fully diluted earnings per share performance measure as
described in the table below:
Adjusted, fully diluted earnings per Amount Vesting %
Share Compound Annual Growth Rate (CAGR)
over the three year period ending 30
April 2023
Below 5% 0%
-----------------------------------
5% 25%
-----------------------------------
Between 5% and 10% Straight line vesting
-----------------------------------
Above 10% 100%
-----------------------------------
The options will generally be exercisable after approval of the
financial statements during the year of exercise. The performance
period for any future awards under the LTIP will be a three-year
period from the date of grant. Vested and unvested LTIP awards are
subject to a formal malus and clawback mechanism.
Save As You Earn Scheme (SAYE)
The Group operates a HMRC approved SAYE scheme for all staff.
Options under this scheme will vest if the participant remains
employed for the agreed vesting period of three years. Upon
vesting, each option allows the holder to purchase the allocated
ordinary shares at a discount of 20% of the market price determined
at the grant date.
Company Share Option Plan (CSOP)
The group operates a HMRC approved CSOP scheme for associates,
senior associates, legal directors, equivalent positions in Gateley
Group subsidiary companies and senior management positions in our
support teams. Options under this scheme will vest if the
participant remains employed for the agreed vesting period of three
years. Upon vesting, each option allows the holder to purchase the
allocated ordinary share at the price on the date of the grant.
The Groups final Stock Appreciation Rights Scheme ('SARS')
options lapsed in the year ending 30 April 2021.
The annual awards granted under the schemes are summarised
below:
Weighted Weighted Originally Lapsed at Exercised At 1 May Granted Lapsed Exercised At 31
average average granted 30 April at 30 2021 during during during October
remaining exercise 2021 April the period period 2021
contractual price 2021 period
life
Years GBP Number Number Number Number Number Number Number Number
LTIPS
LTIPS
20/21 -
22 July
2020 1.6 GBP1.43 1,405,766 (38,339) - 1,367,427 - (67,094) -- 1,300,333
---------- --------- --------- --------- ------- --------- --------- ---------
SAYE
SAYE 18/19
- 21
September
2018 0 GBP1.33 620,335 (168,366) 451,969 - (159,169) - 292,800
SAYE 19/20
- 1
October
2019 0.8 GBP1.28 770,787 (73,964) 696,823 - - - 696,823
SAYE 20/21
- 6
November
2020 1.9 GBP1.02 2,337,353 (72,700) 2,264,653 - (45,099) - 2,219,554
SAYE 21/22
- 17
September
2021 2.9 GBP1.70 - - - 673,077 (105) - 672,972
3,728,475 315,030 3,413,445 673,077 (204,373) - 3,882,149
---------- --------- --------- --------- ------- --------- --------- ---------
CSOPS
CSOPS
17/18 - 3
October
2017 0 GBP1.65 581,162 (153,017) - 428,145 - (26,603) (401,542) -
CSOPS
18/19 -
24
October
2018 0 GBP1.44 812,131 (141,663) - 670,468 - (12,500) - 657,968
CSOPS
20/21 - 7
July 2020 1.6 GBP1.35 976,797 (57,411) - 919,386 - (97,469) - 821,917
2,370,090 352,091 2,017,999 - (136,572) (401,542) 1,479,885
---------- --------- --------- --------- ------- --------- --------- ---------
During the prior half-year period to 31 October 2020, 451,173
CSOP options became eligible to exercise once the share price
exceeds GBP1.65. At 31 October 2020 no CSOP options had been
exercised. During the period to 31 October 2021 401,542 CSOP
options were exercised. The total accrued IFRS2 charge was
GBP95,780.
During the prior half-year period to 31 October 2020, 358,865
SAYE 16/17 options became eligible to exercise once the share price
exceeded GBP1.33. At the 31 October 2020 no SAYE options had been
exercised. 358,865 new 10p shares with a nominal value of GBP35,865
were issued on 6 January 2021 following which 172,292 options were
exercised with the remaining 186,573 options being cancelled. The
total accrued IFRS2 charge was GBP155,381.
During the period 292,800 SAYE 17/18 options became eligible to
exercise once the share price exceeded GBP1.27. At the 31 October
2021 no SAYE options had been exercised of a potential 292,800 new
shares issued via a block listing in order to fully satisfy all
possible options. 292,800 new 10p shares with a nominal value of
GBP29,280 were issued on 22 October 2021. The total accrued IFRS2
charge was GBP135,000.
On 17 September 2021 a total of 673,077 options were granted
under the 21/22 SAYE scheme using an exercise price of GBP1.70.
Fair value calculations
The award is accounted for as equity-settled under IFRS 2. The
fair value of awards which are subject to non-market based
performance conditions is calculated using the Black Scholes option
pricing model. The inputs to this model for awards granted during
the financial year are detailed below:
CSOP CSOP SAYE SAYE SAYE LTIP
Grant date 7/7/20 24/10/18 17/9/21 6/11/20 30/9/19 22/7/20
Share price at date of grant GBP1.42p GBP1.44p GBP2.12p GBP1.27p GBP1.64p GBP1.44
Exercise price GBP1.42p GBP1.44p GBP1.70p GBP1.02p GBP1.27p GBP1.44
Volatility 35% 24% 35% 35% 35% 35%
Expected life (years) 3.3 3.3 3.3 3.3 3.3 3.3
Risk free rate 1% 1% 1% 1% 1% 1%
Dividend yield 4% 4.5% 3% 4% 4% 4%
Fair value per share
Market based performance condition GBP0.24p GBP0.16p GBP0.35p GBP0.33p GBP0.37p GBP1.19p
Non-market-based performance
condition/no performance condition - - - - 100%
Expected volatility was determined by using historical share
price data of the Company since it listed on 8 June 2015. The
expected life used in the model has been based of managements
expectation of the minimum and maximum exercise period of three and
three and a half years, respectively.
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END
IR FFFILLRILLIF
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