TIDMGTLY
RNS Number : 6688I
Gateley (Holdings) PLC
20 April 2022
20 April 2022
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European (withdrawal) act
2018. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
GATELEY (HOLDINGS) PLC
("Gateley", the "Company" or the "Group")
(AIM:GTLY)
ACQUISITION OF SMITHERS PURSLOW
Further execution of the Group's Platform Strategy
Gateley, the legal and professional services group, is pleased
to announce the acquisition of SP 2018 Limited and its subsidiaries
(together "Smithers Purslow" or "the Acquisition") for a total
maximum consideration of GBP20.0 million, with an initial
consideration of GBP12.15 million payable on completion c. 56% in
shares and c. 44% in cash.
Smithers Purslow is a rapidly growing multi-disciplinary
chartered surveying practice, comprising building and quantity
surveyors and civil and structural engineers. Specialising in
services to the property insurance claims market, it resolves high
value claims for insurers, policy holders and their advisers.
Acquisition highlights
-- Further execution of Platform Strategy - expanding Gateley's
strong Property Platform
-- Highly regarded in its market, Smithers Purslow provides
a well-established presence in the sizeable and fast-growing,
high-value property insurance claims market
-- Expected to be earnings enhancing in the first year post
acquisition, the year ending 30 April 2023 ("FY23")
-- Incentivised senior management team will continue to lead
the business, renamed Gateley Smithers Purslow
-- Compound organic growth of at least 20% per annum in revenue
and EBITDA over the last five years
-- Revenue of GBP11.7 million and adjusted profit before tax([1])
of GBP2.5 million in the year ended 30 September 2021
-- With a total maximum consideration of GBP20.0 million, this
is Gateley's largest acquisition to date
(1) Adjusted profit before tax is after adjusting for the
difference between pre and post deal salaries of key directors of
Smithers Purslow.
Overview of Smithers Purslow
Established in 1978, Smithers Purslow is a multi-disciplinary
chartered surveying practice, comprising building and quantity
surveyors and civil and structural engineers. Its core market is
high value property insurance claims in the UK. The practice is
well established and highly regarded in its market, generating
recurring business from a large proportion of its insurance company
clients.
Smithers Purslow operates from ten regional offices across the
UK and employs 130 staff. Its aim is to be recognised as the best
provider of building and construction professional services to the
UK insurance market. Its blue-chip client base includes insurance
companies, utility companies and property managers and high net
worth individuals.
Financials
Smithers Purslow is an established, profitable and cash
generative business, which has delivered compound annual growth in
revenue and EBITDA of more than 20 per cent over the last five
years. In the year ended 30 September 2021, organic revenue
increased by 22.3 per cent to GBP11.7 million, generating adjusted
profit before tax(1.) of GBP2.5 million.
Net assets of Smithers Purslow at completion will be not less
than GBP4.5 million, including net cash of approximately GBP0.2
million.
Acquisition rationale
Smithers Purslow gives Gateley significantly deeper reach into
the UK's sizeable and growing high-value property insurance claims
market.
The Acquisition is a significant step forward in delivery of the
Group's Platform Strategy, to acquire and grow complementary
professional services businesses, and is a further demonstration of
Gateley's commitment to invest in growth.
Property is one of Gateley's four Platforms, the others being
Business Services, Corporate and People. These Platforms are
market-facing structures on which the Group clusters complementary
legal and consultancy services, directed at Gateley's chosen
markets.
Smithers Purslow complements the existing expertise at Gateley
Vinden, acquired by the Group in 2020 and supplemented by the
addition of Tozer Gallagher in 2021, further enhancing the Group's
already strong and growing Property Platform.
The Board expects the Acquisition to be earnings enhancing from
the first year post acquisition, being FY23.
Terms of the Acquisition
Under the terms of the Acquisition, Gateley has acquired the
entire issued share capital of SP 2018 Limited from the existing
management team and their related parties (the "Sellers") for total
maximum consideration of GBP20.0 million, on a debt free, cash
free, normalised working capital basis. The initial consideration
of GBP12.15 million will be satisfied on completion in part by the
issuance of 3,312,322 ordinary shares of 10 pence each in the
capital of Gateley ("Ordinary Shares") at a price of GBP 2.05 per
Ordinary Share. The initial cash consideration of c. GBP5.4 million
will be funded from Gateley's new revolving credit facility
announced on 19 April 2022.
Up to a further GBP7.85 million could be payable with any
payment subject to Smithers Purslow achieving at least GBP4.5
million of EBITDA over the 24 months to 30 September 2023. Such
payment to be split in shares and cash as agreed between the
Sellers and the Company, providing no Seller is entitled to receive
more than 50% of their total consideration in cash.
Smithers Purslow will trade under the name Gateley Smithers
Purslow with immediate effect. Managing Director, Stephen Fraser
and Senior Director, Andrew Bussey will continue to lead the
Gateley Smithers Purslow management board. Both Stephen and Andrew
have been with Smithers Purslow for over 25 years.
Issue of new Ordinary Shares and total voting rights
As part of the consideration payable on completion, 3,312,322
Ordinary Shares are to be issued, as noted above. Application will
be made to the London Stock Exchange for the 3,312,322 new Ordinary
Shares to be admitted to trading on AIM ("Admission"). It is
expected that Admission will take place at 8.00am on 25 April
2022.
The new Ordinary Shares will rank pari passu with the existing
Ordinary Shares in issue. Following Admission, Gateley's total
issued share capital will comprise 123,072,222 Ordinary Shares.
This number may be used by shareholders in Gateley as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the share capital of Gateley under the FCA's
Disclosure Guidance and Transparency Rules.
Rod Waldie, Gateley Chief Executive Officer, said:
"We are delighted to welcome the Smithers Purslow team to the
Group. This is another dynamic business that further expands the
breadth of capability in our already strong Property Platform.
Smithers Purslow's growth over the last decade has been impressive
and it is a highly regarded market leader in the property insurance
claims sector, in which we see significant opportunity to develop
broader and deeper relationships with insurers and insurance
intermediaries.
"The existing synergies between Smithers Purslow and Gateley
Vinden, across a number of their multi-disciplinary service lines,
extend the depth of our expertise and provide additional capacity
to maximise on the opportunities presented in this sizeable and
growing market and the wider built-environment consultancy
space.
"This is our largest acquisition to date and is a clear
demonstration of our commitment to invest and grow our
market-facing Platforms, as well as to continue to strengthen our
resilience through diversification."
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
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