TIDMGTLY
RNS Number : 1880Z
Gateley (Holdings) PLC
13 September 2022
13 September 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. It forms part of United Kingdom
domestic law by virtue of the European Union (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 "Group" or the "Company")
AUDITED PRELIMINARY RESULTS 2022
Strong results, further growth and demonstrable resilience
Gateley (AIM: GTLY), the legal and professional services group,
announces its audited preliminary results for the year ended 30
April 2022 ("FY22" or the "Period"), which continued the Group's
pre and post IPO unbroken record of year-on-year revenue and profit
growth, and out-performed market expectations set at the start of
the year.
The Group delivered a strong financial performance in FY22,
achieving significant organic growth and strengthening the business
further through diversification and investment into new
complementary service lines, while maintaining control on costs in
the face of market specific and macro-economic headwinds. The
balance sheet remains strong and the Group has significant headroom
in its banking facilities to invest in further organic and
acquisitive growth opportunities.
Financial highlights
FY22 FY21 Change
Group revenue GBP137.2m GBP121.4m +13.0%
Group underlying operating profit
before tax(1) GBP22.5m GBP20.5m +9.8%
Group underlying profit before
tax GBP21.6m GBP19.3m +11.9%
Group profit before tax GBP18.0m GBP16.3m +10.4%
Group profit after tax GBP14.3m GBP13.2m +8.3%
Basic earnings per share ('EPS') 12.00p 11.18p +7.3%
Adjusted fully diluted EPS(2) 14.31p 13.17p +8.7%
Net assets GBP72.9m GBP59.3m +22.9%
Net cash(3) GBP10.4m GBP19.6m -GBP9.2m
(1) Underlying operating profit before tax and underlying
profit before tax excludes share based payment charges,
amortisation and exceptional items
(2) Adjusted 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
(3) Net cash excludes IFRS 16 liabilities
-- Group organic revenue growth was 10.9%, comprising 8.7%
in legal service lines and 26.7% in consultancy services
-- Total growth in non-legal revenues of 44.9%, as complementary
consultancy services contributed GBP21.3m or 15.5% of total
revenues (FY21: GBP14.7m or 11.5%)
-- Adjusted underlying operating profit margin broadly maintained
at 16.4% (FY21: 16.9%)
-- Net assets increased by 22.9% to GBP72.9m
-- "Gateley Agile" initiative, which builds on flexible working
introduced during the pandemic, continues to deliver cost
savings, mitigating some inflationary pressure
-- Personnel costs declined as a percentage of Group revenue
to 63.0% (FY21: 63.8%)
-- Proposed final dividend of 5.5p (FY21: 5.0p) taking total
dividends for the Period to 8.5p (FY21: 7.5p)
-- Group dividend policy remains to distribute up to 70% of
our after-tax profits each year
Strategic Highlights
-- Three earnings-enhancing acquisitions completed in the Period,
expanding the Group's Property and Business Services Platforms
-- Total headcount at 30 April 2022 of 1,368 (FY21: 1,081). Total
headcount of professional staff increased by 23.6% from 767
to 948
-- New Revolving Credit Facility of GBP30m agreed in April 2022,
providing increased funding flexibility to support the Group's
growth strategy
Current Trading and Outlook
-- Good pipeline of new work and current year activity levels
are in-line with the board's expectations
-- Encouraging pipeline of acquisition growth opportunities
-- Platform strategy progressing and delivering to plan with on-going
integration of all acquired businesses and consequent widening
and enhancement of client engagement in FY23 and beyond positively
-- The board maintains its expectations for growth in FY23
Rod Waldie, CEO of Gateley, said:
"I am delighted with the Group's performance in FY22. We have
delivered another set of strong revenue and profit growth figures
whilst continuing to strengthen our balance sheet. Legal services
generated solid organic revenue growth, comparing favourably with
reported UK legal industry performance. Our consultancy service
lines delivered impressive organic growth of 26.7% resulting in
overall consolidated Group organic revenue growth of 10.9%.
"I am particularly pleased that we completed three exciting
consultancy acquisitions in the Period and achieved annualised
consultancy revenue of over c.GBP32m as we continue to grow our
complementary services, diversifying our offering and deepening our
connections with our clients.
"I thank our ever-expanding client base for their trust and
support throughout FY22 and for giving us the opportunity to work
with them on high quality mandates. We remain committed to our
purpose of delivering results that delight our clients, inspire our
people and support our communities. We have a good pipeline of work
and maintain our expectations for growth in FY23, despite the
well-reported inflationary pressures. We look forward to continuing
to grow the Group, both organically and via acquisition."
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 Tel: +44 (0) 20 3100
Richard Lindley/Ben Cryer/Cara Murphy 2000
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
Llew Angus (langus@belvederepr.com) Mob: +44 (0) 7407 023
147
gateleypr@belvederepr.com
CHAIRMAN'S STATEMENT
Summary of the year
I am delighted to welcome you to Gateley's audited final results
for the year ended 30 April 2022, a successful year for Gateley in
which the Group has continued its unbroken record of year-on-year
revenue and profit growth.
With revenue increasing by 13.0% to GBP137.2m and underlying
profit before tax increasing by 11.9% to GBP21.6m, Gateley has
again demonstrated the resilience of its business model and
diversification strategy. These strong results led to a 22.9%
increase in Group net assets to GBP72.9m (FY21: GBP59.3m), and an
increase of 8.7% in adjusted fully diluted earnings per share to
14.31p per share (FY21: 13.17p).
I am particularly proud that this year's strong performance has
been delivered despite disrupted circumstances. With the economic
recovery from COVID-19 somewhat compromised by inflationary
pressures, with uncertainty as a consequence of the terrible events
in Ukraine and with the onset of higher than usual wage inflation
within the legal and indeed other service sectors, Gateley has
navigated the year well and I could not be more pleased with the
resulting benefits for all of our stakeholders.
Delivering our strategy
During the year we have delivered on our strategic intent to
further diversify the business, placing the Group in a strong
position to deliver further profitable growth in the coming
years.
In doing so, we have also expanded the breadth and depth of our
offering with Group representation in four new geographies as part
of the newly-acquired Smithers Purslow business.
Our staff have shown great adaptability to the constant changes
throughout the past few years and their dedication towards the
business, their colleagues and clients has been first class.
Within our consultancy businesses, overall headcount increased
by 169.4% to 291 (FY21: 108) and fee-earner staff by 123.5% to 219
(FY21: 98). Together with three consultancy businesses acquired
during the year, annualised revenues from this part of the Group
now contribute revenues of over GBP32m, further diversifying our
service offering and deepening our relationships with our clients
in so doing.
As part of our present and future acquisition strategy, we
committed to a three-year revolving credit facility of up to
GBP30.0m to assist with acquisitions. This combined with our ever
strengthening balance sheet places us in a good position to
continue with acquisitions.
As we continue to grow and strengthen our business, the board
remains committed to providing its people with the opportunity to
own shares in the Company. We believe that employee share ownership
secures a strong alignment with the Group's external shareholders,
incentivises employees and is reflective of Gateley's
long-established culture. At least 75% of current staff are
existing share or option holders in the Company.
Responsible Business
The board has made the introduction of Gateley's Responsible
Business commitments a key strategic priority this year. Working
together with The Purpose Coalition, an independent ESG consultancy
who helped us develop our own set of levelling up goals, in August
2021 we published Gateley's Responsible Business report, for which
we have received significant positive feedback.
The report outlines the plans and priorities which we are
working to deliver over the coming years. They are set out under
three broad categories being: People, Potential and Planet. I am
delighted with the progress we have made in the year and also with
how this important initiative has been readily embraced across the
Group. We are committed to ensuring diversity, equality and
inclusion across all three of these categories: our goal is to
foster a positive work ethic, whilst remaining results and client
focused, and demonstrate our commitment to doing the right thing
for our people, our planet and developing potential wherever we
can.
Dividends
An interim dividend of 3p per share (FY21: 2.5p) was paid on the
31 March 2022 to shareholders on the register at the close of
business on 18 February 2022. The board is pleased to propose a
final dividend of 5.5p per share (FY21: 5.0p), giving a total
dividend for the year of 8.5p per share (FY21: 7.5p), subject to
approval at the forthcoming Annual General Meeting, which will be
held on 20(th) October 2022. If approved, this final dividend will
be paid in October to shareholders on the register at the close of
business on 23 September 2022. The shares will go ex-dividend on 22
September 2022.
The board's dividend policy remains to distribute up to 70% of
profit after tax to shareholders, typically one third following its
half year results and two thirds after the full year results are
known.
Summary and outlook
This year has been another strong year for Gateley. Our people
have excelled in client delivery, they have continued to overcome
every challenge presented to them, and have delivered further
strategic progress for the business, combining to generate an
excellent set of results for the benefit of all of our
stakeholders.
As we focus on service line enhancing opportunities that meet
our clients' needs and fulfil our strategy to build a broader
professional services group, our acquisition pipeline remains
strong, trading in the current year is in line with the board's
expectations and we look forward to the future with confidence.
Nigel Payne
Chairman
13 September 2022
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
I am delighted by the Group's performance in FY22; another year
in which global events created significant uncertainty, but
nonetheless another year in which the Group produced an excellent
result. We closed the Period ahead of market expectations whilst
continuing our investment strategy, further strengthening our
offering to clients and also our balance sheet.
We continue to operate and invest in a differentiated, resilient
and growing business, which has been deliberately designed to
perform, regardless of the economic environment, and FY22's results
continue Gateley's unbroken record of year-on-year revenue and
profit growth.
Since IPO in 2015 we have acquired ten complementary consultancy
businesses which have broadened and diversified our offering and,
as planned, enhanced our financial strength. We focus our Group on
four strategic markets (our "Platforms"): Business Services,
Corporate, People and Property, each of which now comprises a
complementary mixture of legal and consulting businesses.
Approximately 20% of annualised Group revenues are now consulting
revenues, with significant additional diversification
opportunities. Our balance sheet was further strengthened during
the Period with year-end net assets and net cash of GBP72.9m (FY21:
GBP59.3m) and GBP10.4m (FY21: GBP19.6m) respectively. As a result,
we remain well-placed to weather any further storms, but also to
continue our acquisition strategy.
The ongoing enhancement and strengthening of our business is
why, in the seven years since flotation, we have been able to
deliver compound annual revenue growth of 12.3%, compound profit
before tax growth of 9.0% and, including the proposed final
dividend proposed today, income to shareholders of 43.24 pence per
share in aggregate.
Results overview
FY22 Group revenues grew by 13.0% to GBP137.2m (FY21:
GBP121.4m). Agile working, a necessity during the pandemic, is now
a key element of our operating model, enabling us to continue to
deliver cost efficiencies. As pandemic restrictions were lifted we
were able to finalise the integration of the acquisitions that
completed shortly before the pandemic impacted. Although our
acquisition strategy is focused on driving additional revenue, cost
efficiencies are a welcome by-product. The results yielded an
increase of 10.4% in profit before tax to GBP18.0m (FY21:
GBP16.3m). Underlying adjusted profit before tax increased by 9.8%
to GBP22.5m (FY21: GBP20.5m) and profit after tax increased by 8.3%
to GBP14.3m (FY21: GBP13.2m).
Our strong revenue performance is undoubtedly a result of the
quality, depth and breadth of our professional services
offering.
Following on from the very strong second half performance in
FY21, activity levels remained strong across the Corporate
Platform, which grew by 12.7%, buoyed by the continuing strength of
the UK M&A and Private Equity markets. The Property Platform
grew by 15.7%, enhanced by greater market share and a widening
range of mandates in our increasingly diverse property consultancy
businesses, which generated 21.0% of Property Platform revenue. The
People Platform saw a return to significant growth across both its
legal and consultancy service lines, in which combined revenue grew
by 20.8%. The Business Services Platform grew by 14.6% as we
expanded our market share in existing workstreams and through the
addition of Adamson Jones IP Limited, Patent and Trademark
Attorneys.
People and Culture
FY22 saw a return to more familiar recruitment levels as
headcount increased by 287 during the Period. This includes 145 new
colleagues who joined the Group as a result of the three
acquisitions completed in the Period, Tozer Gallagher in July 2021,
Adamson Jones in January 2022 and Smithers Purslow in April 2022.
After a pause in recruitment in the initial stages of the Covid 19
pandemic, the market has hardened with many factors now influencing
peoples' career decisions. The Gateley offering remains
differentiated and attractive with a growing range of businesses
across the Group. As the Group continues to expand, we are able to
offer a broad range of career opportunities across our Platforms,
which are underpinned by a unique identity and strong team
culture.
We owe the success of our business to the quality and dedication
of our teams. FY22 saw significant ongoing disruption caused by the
pandemic, but our teams, supported by our earlier investments in
technology and our "one-team" culture, met demand to deliver
excellent client service and excellent results for the Group.
The Period also saw the beginnings of wage cost inflation across
the UK legal industry, as strong client demand continued across the
sector. Although this first impacted international firms in the
City and whilst the highest, headline-grabbing salaries remain in
that part of the market, gradually the trend spread across all UK
legal markets. The result has and continues to be that legal
businesses struggling to grow and/or whose financial and
remuneration models are not sufficiently strong or flexible have
lost people where they cannot meet salary expectations. We believe
that economic headwinds are likely to temper future rates of wage
cost increase, and in any event within Gateley our differentiated
model and our ability to offer share ownership to all of our people
continues to stand us in good stead.
Our continuing programme of service line diversification not
only drives additional sales, but also creates skill set/talent
pool diversification, adding operational and financial resilience
for the Group and diluting the impact of trends affecting specific
professional disciplines. Wage cost inflation seen in the legal
sector in FY22 was less visible within our consultancy businesses
and with approximately 23% of our professional staff qualified in
disciplines other than law that too provided a degree of resilience
and sheltering for the Group.
After external consultation, the Group has introduced a new
Restricted Share Award Plan ("RSA") and also awarded a second
vintage of awards under the existing Long Term Incentive Plan
("LTIP"). The RSA forms part of the Group's retention and
incentivisation policy for emerging senior talent. It supports
long-term share ownership for people who are promoted to Partner or
Partner-equivalent roles. It is a continuation of the board's
strategy to differentiate the position of a Partner or equivalent
at Gateley from that of a Partner in traditionally structured
professional services businesses.
Responsible Business
Our Responsible Business commitment is a key strategic priority,
which runs through the core of our organisation. Our first
Responsible Business report, published in August 2021, outlined the
objectives we committed to working towards during FY22 and beyond.
These objectives flowed out of our work with The Purpose Coalition,
the independent ESG consultancy who helped us develop our own set
of levelling up goals. Other members of the Purpose Coalition
include Amazon, bp, Compass Group, the BBC, Direct Line Group,
Cisco and the NHS. In FY22 our objectives fell under three
categories: People, Potential and Planet. I am delighted with the
progress we made in the Period, with just a few of the highlights
including:
People
-- Maintaining our Glassdoor ranking, recognised as the only UK
legal business to rank in the top 25 companies for senior
leadership
-- Maintaining our Investors in People standard
-- Securing our Disability Confident employer status
-- Launching our fifth internal diversity and inclusion network
group; Ability, which raises awareness around neurodiversity and
supporting colleagues with any disabilities
Potential
-- Continued support of Birmingham City University STEAMHouse,
exploring other opportunities to add value to their start-ups
-- Announcing our partnership with UA92 in Manchester, which
aims to make higher education accessible to all, through its
founding principles of accessibility, social mobility and
inclusivity
-- Becoming the UK's first Patron of 'Make Good Grow', a social
enterprise founded on the principles of uniting good businesses
with good causes
-- Continuing our SportsAid partnership; providing financial and
personal development support to ten of our country's brightest
young sporting prospects
Planet
-- Maintaining reductions in travel through the continued use of
virtual meetings where appropriate
-- Continued adherence to Group-wide "paper light" strategy
-- Encouraging our people to submit their sustainability pledges
and the positive actions we will take to protect our planet
Operational Review
By the start of the Period our teams had already demonstrated
their ability to deliver via a more flexible, agile model. They had
also, like so many other sectors of UK and international markets,
confirmed their wish to maintain that flexibility even after the
pandemic has passed. Those factors combined to create a management
focus for driving ongoing efficiency. Under the "Gateley Agile"
initiative we made a number of changes to premises, including the
move to a smaller footprint in Reading, vacating our Leicester
office as part of conflation of a number of services into one East
Midlands offering located in our existing Nottingham office, and
combining Gateley Tweed, Gateley Capitus and Gateley Legal into one
Belfast office.
As pandemic restrictions were gradually lifted throughout the
course of the Period we were able to increase our efforts towards
fully integrating recently acquired businesses. Whilst we had of
course done the best we could to continue integration programmes
during the pandemic, our efforts in the early part of the Period
were limited broadly to matters capable of being dealt with
virtually. That created certain limitations, not just in physical
terms where opportunities which existed to merge offices and reduce
duplicated costs could not be implemented until the latter half of
the Period, but also in people and cultural integration terms. By
the end of the Period we were back on track with our integration
programme.
Throughout the Period we continued to invest across the Group in
growing and strengthening our teams. Overall headcount in the Group
increased by 26.5% to 1,368 (FY21: 1,081). Legal services
professional headcount growth was 9.0% to 729 employees (FY21:
669). The growth of our consultancy businesses' contribution in the
Period was matched by continued investment and diversification into
consultancy operations, with overall consultancy headcount
increasing by 169.4% to 291 (FY21: 108) and fee-earner consultancy
staff up by 123.5% to 219 (FY21: 98).
In H2 FY22 work commenced on the Phase 1 implementation of our
new core IT "practice management" system. We identified over three
years ago that our core systems needed replacing with new
technology. That new technology was needed to provide improved
management information within one financial system, to better
support acquisitive growth and seamless integration in a more
stable and robust IT system which can grow with us; and to create
new processes to enable us to work as efficiently as possible for
our clients. Phase 1 implementation, which resulted in over 80% of
staff adopting the new system on 22 June 2022, is progressing well.
We inevitably encountered some system interruptions in the days
post-launch but these were all well-within expectations and, as
such, represented no significant overall business interruption or
disruption. The balance of all staff are expected to come onto the
new system in one final phase during FY23.
Our Acquisition Strategy
After deliberately pausing acquisition activity at the start of
the pandemic, we considered that market conditions had stabilised
sufficiently by the beginning of FY22 for us to recommence it. We
completed three acquisitions during the Period, two onto our
Property Platform and our first onto our Business Services
Platform. During the Period we committed to a three-year revolving
credit facility of up to GBP30.0m to assist with acquisitions. To
date, we have only used this for the acquisition of Gateley
Smithers Purslow and only drawn down GBP6 .0m.
In July 2021 we acquired Tozer Gallagher, a leading practice of
chartered quantity surveyors and construction consultants based in
Manchester and London. The business specialises in built
environment consultancy, fund monitoring services and surety
advisory, and dovetails with the operations of Gateley Vinden,
which was acquired in March 2020. The surety advisory expertise
within Tozer Gallagher adds further strength to Gateley Vinden's
business but also complements the specialist surety work undertaken
by Gateley Legal's surety practice team. The internationally
recognised experts within Gateley Legal's surety team have a proven
track record in advising on contentious and non-contentious issues
relating to any surety. Since acquisition and despite the pandemic
to some extent frustrating immediate integration efforts, Tozer
Gallagher has traded strongly.
In January 2022 we completed the acquisition of Patent and
Trademark Attorneys, Adamson Jones; the first acquisition onto our
Business Services Platform. The business has a broad range of
technical expertise including biotechnology, engineering,
pharmaceuticals and software and acts for clients from large
multinational and national organisations, to universities and SMEs.
The Adamson Jones team has 25 staff in offices in Nottingham and
Leicester. The acquisition sets a solid foundation for the
development, on the Business Services Platform, of complementary
businesses with an IP and brands focus, working alongside the
existing team within Gateley Legal, and enabling the Group to widen
its scope in an area where it already has a well-established and
continually growing client base. The business has traded well since
acquisition and Adamson Jones staff have relocated into existing
Gateley Group offices in the Midlands.
In April 2022 we completed the acquisition of Smithers Purslow,
our largest acquisition to date and our seventh onto our Property
Platform, currently our largest and most mature Platform. 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. The business operates
from ten regional offices across the UK and employs 130 staff. Its
blue-chip client base includes insurance and utility companies,
property managers and high net worth individuals. It complements
existing expertise at Gateley Vinden and Tozer Gallagher, further
enhancing the Group's already strong and growing Property
Platform.
Our Platform Strategy
Prudent management and a strong balance sheet enable us to drive
incremental value through acquisitions. As new businesses are added
and integrated onto each Platform, we now see the model working
exactly as we would expect, driving more revenue from existing
clients, creating routes into new clients for other parts of the
business to cross sell services and continually diversifying and
strengthening revenue streams.
Gateley Hamer, our property consultancy specialising in
Compulsory Purchase Orders, easements and wayleaves, infrastructure
projects, land referencing and public inquiries produced another
strong performance. The business again posted strong organic top
line growth of 41.5% but also added another core service line in
the shape of telecoms infrastructure.
Pleasingly, positive momentum and a return to growth flowed
through into our People Platform consultancies, Kiddy &
Partners and t-three, during the Period. This was in part due to
increased demand for services as client HR Directors and Heads of
Talent saw development budgets, frozen during the pandemic,
released once again to them. However, also of significant benefit
was the successful integration of those two businesses into one
assessment, development and cultural change-facing offering. Our
integrated proposition and service offering went live in January
driving excellent client feedback and securing significant new
mandates.
Overall, our acquired consultancies performed strongly during
the Period, contributing 15.5% to total Group revenues and
supporting revenue growth in each of our four Platforms.
Current trading and outlook
The solid foundations on which our business is built have
enabled the Group to deliver strong results in a period which was
impacted widely by macro events. One of the key objectives of our
IPO in 2015 was to move the business into a structure that would
enable it to build a strong balance sheet and deliver the future
investment needed to drive the business forward. We are delivering
on this objective and will continue in this vein.
The business is continuing to demonstrate its resilience in the
current financial year, with Q1 FY23 utilisation across the Group
and against our historic averages supporting the board's positive
outlook, and with current trading in-line with the board's
expectations.
Our financial position is such that we will continue with our
acquisitions programme. The pipeline is strong and opportunities
are under consideration on each of our four Platforms.
We have confidence in our ability to perform well, even
accepting current indicators for the wider economic environment,
and continue to view the Group's prospects for year ahead and
beyond positively.
Rod Waldie
Chief Executive Officer
13 September 2022
FINANCE DIRECTOR'S REVIEW
Financial overview
In FY22, the Group demonstrated strong growth in revenue and
adjusted profit before tax ahead of consensus market expectations
set at the start of the year, with revenue up 13.0% to GBP137.2m
including organic revenue growth from legal service lines of 8.7%
alongside exceptional organic growth of 26.7% from consultancy
service lines.
The measures taken by the Group to embrace changes in working
practices driven by the pandemic resulted in another year of lower
costs as a percentage of revenue. We continue to explore further
cost reduction initiatives, such as our ongoing premises strategy,
as part of our "Gateley Agile" initiative, designed to help
mitigate the widely reported upward increase in staff costs in the
sector, and broader inflationary pressures.
We completed three acquisitions during the Period, which are
integrating well. We have established a new revolving credit
facility which was part used for our largest acquisition since
listing, Gateley Smithers Purslow, and we remain well-placed with a
strong balance sheet .
FY22 continues our long track record of delivering profitable
annual results and attractive investment returns, which once again
enable strong dividend growth through the proposed final dividend
of 5.5p, taking total dividends to 8.5p in respect of the
Period.
Revenue
Group total revenue grew by 13.0% (FY21: 10.5%) to GBP137.2m
(FY21: GBP121.4m). Revenue from core legal service lines grew
organically by 8.7% (FY21: 5.5%). In addition, total revenue from
complementary consultancy businesses grew by 44.9% to GBP21.3m or
15.5% of total revenues (FY21: GBP14.7m or 11.5%), highlighting the
on-going success of our Platforms diversification strategy.
Platform performance
At the start of FY22 the Group presented segmental reporting on
our Group Platform structure.
As the Group has continued its headcount investment across each
Platform, margin performance has fluctuated dependent upon the
stage of Platform investment. We have increased staff numbers
within our Business Services and Property platforms during FY22 to
meet expected increases in demand in FY23. These investments have
predominately driven decreases in their FY22 margins. However,
despite our strategy of continual investment and the unique wage
cost inflation seen in the legal sector, the Group has lowered its
percentage of personnel costs to revenue in FY22 to 63.0% (FY21:
63.9%) and will continue to sensibly manage this key metric as
market conditions evolve. Retention of staff remains key to the
success of the Group which we believe is well served by our unique
culture, business structure and the vast number of career
opportunities in a growing, resilient Group which continues to
deliver quality advice to a quality client base.
The table below represents this performance over the last two
reported years along with each Platform's direct contribution
towards our one profit view of the Group's performance.
Business
Services Corporate People Property Total
GBPm GBPm GBPm GBPm GBPm
FY22
Revenue 18.0 38.1 19.2 61.3 136.6
Segmental contribution 5.7 15.4 6.9 23.0 51.0
Contribution margin 31.7% 40.4% 35.9% 37.5% 37.3%
FY21
Revenue 15.7 33.8 15.9 53.0 118.4
Segmental contributions 6.4 11.4 4.9 24.4 47.1
Contribution margin 40.8% 33.7% 30.8% 46.0% 39.8%
Revenue movement (%) 14.6% 12.7% 20.8% 15.7% 15.4%
Contribution margin change
(%) (9.1)% 6.7% 5.1% (8.5)% (2.5)%
--------- --------- ------ -------- ------
Business Services Platform
Our Business Services Platform revenues grew by 14.6%. It offers
a broad balance of services across many clients and industries as
well as continuing to support our transactional works streams. Its
mix of services in both complex litigation and in more
transactional-led commercial services are now being widened further
through the acquisition of Patent and Trade Mark Attorneys, Adamson
Jones. The addition of these IP and brands focused services,
working alongside the existing team within Gateley Legal, will
enable the Group to widen its scope in an area where it already has
a well-established and continually growing client-base. This
Platform was held back during the year on commercial and
international-led litigation assignments of a contingent nature
that have not achieved the fee levels we had hoped for due to
Russia's invasion of Ukraine, where in both jurisdictions we held
litigation mandates. We have maintained these international teams
but shifted our geographical focus to new jurisdictions which have
already generated an attractive pipeline of complex international
litigation assignments.
Corporate Platform
Our Corporate Platform produced another strong performance
generating revenue growth of 12.7% and a significantly stronger
contribution margin. Our continued strength of relationships with
Private Equity and M&A clients continues to serve the Group
well as activity in this area remains strong in FY23. Our banking
team within this Platform also posted another strong year of growth
alongside our growing tax team. Recruitment to service demand
across the Platform remains a challenge, however staff numbers have
increased and we take a highly-skilled team into FY23 with
confidence. Whilst corporate transactional activity within our
client base currently shows no signs of relenting, traditional
restructuring and recovery activities remained subdued during the
Period, with upticks in activity post year-end as wider economic
conditions impose challenges for UK businesses.
People Platform
This Platform grew by 20.8% due to the significant return of
demand for services across our consultancy businesses, t-three and
Kiddy & Partners ("Kiddy"), after the pandemic and also after
the launch of their integrated service delivery model to corporate
clients. Their focus on talent assessment and development and
cultural change has proven to represent a strong sales proposition
to a client base inevitably needing to adjust and change as a
result of the pandemic. Our national private client team performed
well alongside our more traditional, but established, employment
legal and pension trustee led services. Contribution margins
increased as a result of a return to greater activity using these
established existing teams at a higher level of activity during
FY22.
Property Platform
Our Property Platform reporting segment grew revenue strongly by
15.7% as we took advantage of opportunities generated by our most
mature Platform. It operates at regional and national levels in the
UK's commercial property, development and housing markets, which
rely upon long-term specialist multi-disciplinary legal and
consulting support. There was growth across both contentious and
non-contentious service lines in areas such as construction
disputes, plus we also saw strong growth in our specialist Gateley
Hamer consultancy business which increased revenue by 42% during
the year. We have recruited to meet FY23 demand in both existing
and new service lines within Gateley Hamer, which is primarily why
direct contribution has declined. Tozer Gallagher and Smithers
Purslow have both enjoyed a strong first part year within the
Group. Post year-end, Tozer Gallagher has exceeded revenue
expectations which will lead to achievement of its earn-out and a
further GBP0.1m of consideration being payable.
Underlying operating profit before tax
The Group has recorded strong underlying operating profit before
tax of GBP22.5m which has increased by 9.8% from GBP20.5m in FY21.
Our strategy to maintain fee earner headcount in order to service
increased client activity has been supported by our recruitment
activity this year. Continuing robust demand in the UK's legal
services industry has led to continued pressure in the legal
recruitment market and, as previously highlighted, our underlying
trading margins have decreased slightly to 16.4% (FY21: 16.9%).
We are not yet seeing this pressure relent as we move into FY23
and we have undertaken another comprehensive salary review in a
continually changing professional services industry in order to
remain competitive in the legal recruitment market. We have always
operated an all-staff bonus scheme which typically amounts to c10%
of our annual salary costs. We see such a scheme, in which
performance is directly linked to the Group's performance, as a key
management strategy, whereby staff are incentivised accordingly to
drive Group performance but management is also able to retain a
significant element of discretion in matching remuneration with
Group "one profit" performance. We have not changed our strategy on
this incentivisation tool, which sits alongside extremely
attractive staff share plans and ensures the whole business is
culturally aligned.
Underlying operating profit before tax excludes amortisation of
intangibles, all share-based charges and exceptional acquisition
related items. Underlying operating profit before tax has been
calculated as an alternative performance measure in order to
provide a more meaningful measure and year-on-year comparison of
the profitability of the underlying business.
Extract of UK statement of comprehensive income 2022 2021
GBP'000 GBP'000
Revenue 137,249 121,375
Operating profit 18,987 17,505
Operating profit margin (%) 13.83 14.42
Reconciliation to alternative performance measure: underlying operating profit before tax
Operating profit 18,987 17,505
Non-underlying items
Amortisation of intangible assets 1,581 2,073
Share based payment charge - Gateley Plc 1,100 956
Share based payment charge - Gateley Smithers Purslow Limited 113 -
Release of contingent consideration - International Investment Services Limited (135) -
Exceptional items
Acquisitions costs 373 -
One off remuneration charge - Gateley Smithers Purslow Limited 497 -
Underlying operating profit before tax 22,516 20,534
======= =======
Adjusted underlying operating profit margin (%) 16.41 16.92
Personnel costs and operating expenses
Our total personnel costs increased by 11.7% (FY21: 21.9%) to
GBP86.5m, due to the full-year cost of staff introduced to the
business through acquisitions made during the year together with a
return to recruitment in order to expand capacity to meet client
demands. In total, seven (FY21: six) new legal Partners joined the
business and we made eight (FY21: nine) internal promotions to
legal Partner.
Average numbers of legal and professional staff rose by 3.9%
(FY21: 9.1%) to 800 (FY21: 770), whilst support staff numbers
increase marginally to 350 (FY21: 343). Personnel costs as a
percentage of fees decreased to 63.0% of revenue from 63.8% in
FY21, excluding share-based payment charges.
Operating expenses have increased in line with top line growth
of the Group, including in specific areas such as travel, marketing
and premises related spending following a partial return to office
working, and due to the effects of current UK-wide inflation
impacting running costs. Whilst other operating expenses increased
by GBP2.6m or 12.4% to GBP23.6m (FY21: GBP21.0m), overheads remain
well-managed as a percentage of revenue, as demonstrated by their
decrease as a percentage of revenue from 17.3% in FY21 to 17.2% in
FY22.
Earnings Per Share (EPS)
Basic EPS increased by 7.3% to 12.00p (FY21: 8.1% to 11.18p).
Basic EPS before non-underlying and exceptional items increased by
10.6% to 14.66p (FY21: 4.5% to 13.26p). Diluted EPS increased by
5.50% to 11.71p (FY21: 9.5% to 11.10p). Diluted EPS before
non-underlying and exceptional items increased by 8.7% to 14.31p
(FY21: 5.8% to 13.17p).
Share option schemes
The board remains committed to providing its people with the
opportunity to own shares in the Company, as further evidenced by
the introduction of the new RSA during the year. Such share
ownership promotes strong alignment with the Group's external
shareholders, incentivises employees and is reflective of Gateley's
long-established culture. At least 75% of current staff are
existing share or option holders in the Group.
The awards, which vest on receipt, are made when an individual
is promoted to Partner or an equivalent position. Awards are
subject to a five-year non-dealing restriction and are forfeited
should employment cease within that period. 1,267,560 shares were
awarded on 27 April 2022 as part of one-off awards to people who
were non-equity Partners at the date of Gateley's IPO in June 2015,
with a further 100,000 shares being awarded shortly after the FY22
financial year-end to newly promoted Partner or Partner-equivalent
since then.
The board also announced at the end of FY22, a second vintage of
LTIP awards to certain Executive Directors and Senior Management
over up to 1,115,000 Ordinary Shares of 10 pence each in the
Company ("Ordinary Shares"). Awards under the LTIP vest at the end
of a three-year period, dependent upon the achievement of profit
related performance conditions and continuous employment.
Profits used to calculate underlying EPS each year are disclosed
below:
2022 2021 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Reported profit after tax 14,279 13,157 11,723 13,041
Adjustments for non-underlying and exceptional items:
- Anticipated impact of IFRS 16 if it had been adopted in earlier years - - - (313)
- Amortisation of acquired intangible assets 1,581 2,073 1,375 1,406
- Share-based payment adjustments 1,213 956 1,355 655
- Release of contingent consideration - International Investment Services (135) - - -
Limited
- Impairment of software development costs - - 463 -
- Acquisition-related costs 870 - 107 61
-------- -------- -------- --------
Underlying profit after tax 17,808 16,186 15,023 14,850
======== ======== ======== ========
Weighted average number of ordinary shares for calculating
diluted earnings per share 121,893,238 118,508,833 115,599,727 112,280,569
============ ============ ============ ============
Underlying adjusted fully diluted EPS 14.61p 13.66p 13.00p 13.23p
============ ============ ============ ============
Taxation
The Group's tax charge for the Period was GBP3.8m (FY21:
GBP3.2m) which comprised a corporation tax charge of GBP4.0m (FY21:
GBP3.7m) and a deferred tax credit of GBP0.2m (FY21: credit of
GBP0.5m).
The deferred tax charge arises due to a combination of credits
in respect of the share schemes that have vested in past years and
the release of deferred tax on brands. The total effective rate of
tax is 20.8% (FY21: 19.3%) based on reported profits before tax.
The increase is as a result of the decrease in the tax allowable
benefit arising from the exercise of nil cost share options from
levels experienced in previous years.
The net deferred taxation liability increased to GBP2.5m (FY21:
GBP0.6m) as a result of the deferred tax charge arising from
business combinations during the year.
Dividend
The Group paid an interim dividend of 3.0p per share on 31 March
2022 and proposes a final dividend at the Company's Annual General
Meeting on 20 October 2022 of 5.5p (FY21: 5.0p) per share, which if
approved, will be paid in late-October 2022 to shareholders on the
register at the close of business on 23 September 2022. The shares
will go ex-dividend on 22 September 2022. Our dividend policy
remains to distribute up to 70% of our after-tax profits each
year.
Balance sheet
The Group's net asset position has increased by GBP13.6m (FY21:
GBP14.5m) to GBP72.9m (FY21: GBP59.3m), due to the following
movements:
There was a GBP13.4m increase in total current assets, resulting
from GBP13.1m additional trade and other receivables through
acquired businesses and the strong organic growth of the Group.
Contract assets ("unbilled revenue") increased by GBP3.3m and cash
at bank decreased by GBP3.5m as excess cash was redeployed into
acquisitions and to support working capital required for continued
growth.
Non-current assets increased by GBP14.5m, resulting from a
decrease of GBP2.4m from a change in property use and right of use
asset values and an increase of GBP16.8m in intangible assets and
goodwill following the three acquisitions made during the year.
The board has carefully considered 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 30 April 2022, the board concluded that the
goodwill and intangible assets do not require impairment.
Total liabilities increased by GBP14.3m, due mainly to the
drawdown of the RCF and creation of GBP5.7m of debt in connection
with the acquisitions of Gateley Smithers Purslow together with the
recognition of GBP5.4m of deferred consideration and GBP2.1m of
deferred taxation on acquired intangibles, also in connection with
the same acquisition.
Working capital and cash flow
During the year the Group agreed a new revolving credit facility
with Bank of Scotland and HSBC UK. The facility provides total
committed funding of GBP30m until April 2025, split equally between
Bank of Scotland and HSBC UK. It replaces the Group's existing
GBP8m overdraft facilities with Bank of Scotland and HSBC UK, with
the dual bank club providing increased flexibility to the Group to
support future growth and expansion via acquisition. Interest is
payable on the loan at a margin of 1.95% above the SONIA reference
rate.
The Group also has in place a litigation funding facility for an
initial GBP20m of funding towards significant litigation cases,
which has the ability to increase to GBP50m if required. To date
the Group has not yet utilised this facility but has a number of
large assignments currently being assessed for consideration in
FY23.
Cash generation was once again good with net cash inflows from
operating activities of GBP12.3m (FY21: GBP25.4m) representing
86.5% (FY21: 193.2%) of profit after tax. The Group ended the year
with net cash of GBP10.4m (FY21: GBP19.6m), the result of continued
strong trading and also management's sustained focus on cost
efficiencies and costs management .
Free cashflow during the year from operations (post cashflow
from IFRS 16 leases) was GBP7.4m (FY21: GBP20.8m), which represents
51.7% (FY21: 158.2%) of profit after taxation. After conserving
excess cash in FY21 as a result of decisions taken at the outset of
the pandemic, FY22 has experienced the adverse effects caused by
the timing of increases in cash movements from trade receivables as
the business returned to growth and normal levels of trading
related outgoings.
2022 2021
GBP'000 GBP'000
Net cash generated from operations 16,846 29,457
Tax paid (4,497) (4,039)
Net interest paid (7) (240)
Cash outflow from IFRS 16 leases (rental payments excluded from operating cash flows
under IFRS 16) (3,870) (3,847)
Purchase of property, plant and equipment (775) (503)
Purchase of other intangible assets (319) (10)
------- -------
Free cash flow 7,378 20,818
Underlying profit after tax 14,279 13,157
Free cash flow (%) 51.7% 158.2%
At the year-end, unbilled revenue recognised in the Group's
statutory accounts, from time recorded on non-contingent work,
totalled GBP17.2m or 12.5% of revenue recognised over the year
(FY21: GBP13.9m or 11.5%). Unbilled revenue represented 49 days in
line with last year, of Pro-forma net revenue. Group debtor days
have increased to 113 days compared to 104 days in FY21 of
Pro-forma net revenue. Pro-forma net revenue includes revenue from
acquisitions on a full year pro-forma basis. As the Group grows so
has our volume of unpaid debts. This year especially the heightened
activity levels of year billing and the growth of the Group through
acquisition, alongside the position of the easter holidays, have
all combined towards the increase in debtor days. We had a higher
number of litigation and recovery assignments in particular at the
year-end that have since been settled or are close to resolution
that will generate settlement of certain outstanding debts. We have
also made a good start to collections in FY23, despite the impact
of the significant change in financial systems in June 2022.
Concert Party update
Following consultation with The Takeover Panel ("the Panel"), it
has agreed that the concert party will be amended.
At the time of the IPO it was agreed with the Panel that the
Directors, Existing Shareholders and the Company's Employee Benefit
Trust (once established), each as defined in Gateley's admission
document published on 1 June 2015, were acting in concert in
respect of Gateley.
Gateley has now agreed with the Panel that the Gateley EBT along
with the following individuals and their respective connected
persons form the concert party in relation to Gateley pursuant to
The Takeover Code:
Rod Waldie Chief Executive Officer
Michael Ward Executive Director
Neil Smith Finance Director
Peter Davies Chief Operating Officer and member of the
Strategic Board
Callum Nuttall Member of the Strategic Board
Paul Hayward Former member of the Strategic Board
Brendan McGeever Former member of the Strategic Board
As at the date of this announcement, the concert party members,
including the EBT, hold, in aggregate, 9.29 per cent. of the
Company's voting share capital.
Summary
Results for FY22 reflect another strong year for the Group. They
include significant organic growth and a return to our acquisitions
plan with the addition of some excellent new complementary service
lines that further enhance Group revenue diversification. We have
maintained control of costs despite both market specific and
macro-economic conditions, and we have produced a strengthened
balance sheet with significant facility headroom to further expand
the Group both organically and through acquisition. The Group is
actively pursuing a strong pipeline of M&A opportunities.
Post year-end, we have enhanced our financial systems platform
in order to drive greater efficiencies in the future and we
continue to look at initiatives to balance off further increased
cost pressures from wage and inflationary pressures.
Neil Smith
Finance Director
13 September 2022
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 30 April 2022
Note 2022 2021
GBP'000 GBP'000
Revenue 3 137,249 121,375
Other operating income - 2,451
Personnel costs, excluding IFRS 2 charge 5 (86,517) (77,460)
Depreciation - Property, plant and equipment 11 (851) (1,045)
Depreciation - Right-of-use asset 11 (3,783) (3,751)
Impairment of trade receivables and contract
assets 15/16 (866) (1,834)
Other operating expenses, excluding non-underlying
and exceptional items (22,716) (19,202)
-------- --------
Operating profit before non-underlying and
exceptional items 4 22,516 20,534
Non-underlying operating items 4 (2,659) (3,029)
Exceptional items 4 (870) -
-------- --------
(3,529) (3,029)
Operating profit 4 18,987 17,505
Financial income 7 194 176
Financial expense 7 (1,149) (1,373)
-------- --------
Profit before tax 18,032 16,308
Taxation 8 (3,753) (3,151)
-------- --------
Profit for the year after tax attributable
to equity holders of the parent 14,279 13,157
======== ========
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss
- Revaluation of other investments (190) -
- Exchange differences on foreign branch 58 (87)
-------- --------
Profit for the financial year and total
comprehensive income all attributable to
equity holders of the parent 14,147 13,070
======== ========
Statutory Earnings per share
Basic 912.00p 11.18p
Diluted 911.71p 11.10p
The results for the periods presented above are derived from
continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 APRIL
2022
Note 2022 2021
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11 1,334 1,323
Right of use asset 11 24,627 27,007
Investment property 164 164
Intangible assets & goodwill 12 32,590 15,765
Other intangible assets 14 564 282
Other investments 173 363
-------- --------
59,452 44,904
Total non-current assets
Current assets
Contract assets 15 17,239 13,900
Trade and other receivables 16 56,168 43,093
Deferred tax asset 19 638 138
Cash and cash equivalents 21 16,105 19,605
-------- --------
Total current assets 90,150 76,736
-------- --------
Total assets 149,602 121,640
======== ========
Non-current liabilities
Other interest-bearing loans and borrowings 17 (5,715) -
Lease liability 24 (25,207) (27,702)
Other payables 18 (5,360) (120)
Deferred tax liability 2193 (3,089) (772)
Provisions 20 (863) (763)
-------- --------
Total non-current liabilities (40,234) (29,357)
-------- --------
Current liabilities
Trade and other payables 18 (31,793) (29,032)
Lease liability 24 (3,719) (2,743)
Provisions 20 (101) (176)
Current tax liabilities (842) (1,066)
-------- --------
Total current liabilities (36,455) (33,017)
-------- --------
Total liabilities (76,689) (62,374)
======== ========
NET ASSETS 72,913 59,266
======== ========
EQUITY
Share capital 22 12,456 11,792
Share premium 11,342 9,421
Merger reserve (9,950) (9,950)
Other reserve 14,465 6,815
Treasury reserve (261) (312)
Translation reserve (2) (60)
Retained earnings 44,863 41,560
-------- --------
TOTAL EQUITY 72,913 59,266
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share Merger Other Treasury Retained translation Total
capital premium reserve reserve reserve earnings reserve Equity
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
Comprehensive income:
Profit for the year - - - - - 13,157 - 13,157
Exchange rate differences - - - - - - (87) (87)
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 13,157 (87) 13,070
Transactions 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)
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 2021 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
Comprehensive income:
Profit for the year - - - - - 14,279 - 14,279
Revaluation of other
investments - - - - - (190) - (190)
Exchange rate differences - - - - - - 58 58
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 14,089 58 14,147
Transactions with
owners
recognised directly
in equity:
Issue of share capital 664 1,921 - 7,650 - - - 10,235
Purchase of own shares
at nominal value - - - - - (132) - (132)
Sale of treasury shares - - - - 127 - - 127
Purchase of treasury
shares - - - - (76) - - (76)
Recognition of tax
benefit on gain from
equity settled share
options - - - - - 563 - 563
Dividend paid - - - - - (12,430) - (12,430)
Share based payment
transactions - - - - - 1,213 - 1,213
Total equity at 30
April 2022 12,456 11,342 (9,950) 14,465 (261) 44,863 (2) 72,913
======== ======== ======== ======== ======== ========= ============ ========
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 on the sale of own shares and the
difference between actual and nominal value of shares issued by the
Company in the acquisition of trade and assets.
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 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.
CONSOLIDATED CASH FLOW STATEMENT FOR YEARED 30 APRIL 2022
Note 2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year after tax 14,279 13,157
Adjustments for:
Depreciation and amortisation 11/12/14 6,215 6,869
Financial income 7 (194) (176)
Financial expense 7 201 416
Release of contingent consideration 4 (135) -
Interest charge on capitalised leases 7 948 957
Equity settled share-based payments 5 1,213 956
Loss/(profit) on disposal of property,
plant and equipment 4 16 (3)
Tax expense 8 3,753 3,151
--------- --------
26,296 25,327
Increase in trade and other receivables (10,233) (5,312)
Increase in trade and other payables 758 9,216
Increase in provisions 20 25 226
--------- --------
Cash generated from operations 16,846 29,457
Tax paid (4,497) (4,039)
--------- --------
Net cash flows from operating activities 12,349 25,418
--------- --------
Investing activities
Acquisition of property, plant and equipment 11 (775) (503)
Acquisition of other intangible assets 14 (319) (10)
Cash received on disposal of property,
plant and equipment - 11
Acquisition of other investments - (134)
Contingent consideration paid - acquisition
of subsidiary - (363)
Consideration paid on acquisitions,
net of cash acquired (5,982) -
Interest received 7 194 176
Net cash used in investing activities (6,882) (823)
--------- --------
Financing activities
Interest and other financial income
paid 7 (201) (416)
Lease repayments (3,870) (3,847)
Receipt of new revolving credit facility,
net of refinancing costs 17 5,715 -
Repayment of term bank loans 17 - (3,077)
Repayment of loans from former members
of GCL Solicitors & Directors of IIS 17 - (729)
Proceeds from sale of own shares 90 145
Acquisition of own shares (39) (288)
Cash received for shares issued on exercise
of SAYE/CSOP/SARS options 1,768 299
Dividends paid 10 (12,430) -
Net cash used in financing activities (8,967) (7,913)
--------- --------
Net increase in cash and cash equivalents (3,500) 16,682
Cash and cash equivalents at beginning
of year 19,605 2,923
--------- --------
Cash and cash equivalents at end of
year 21 16,105 19,605
========= ========
NOTES TO THE FINANCIAL STATEMENTS
1 Basis of preparation and significant accounting policies
The financial information set out in this financial results
announcement does not constitute statutory accounts as defined in
section 435 of the Companies Act 2006. The consolidated statement
of comprehensive profit and loss and other comprehensive income,
consolidated statement of financial position, consolidated
statement of change in equity, consolidated statement of cashflows
and the associated notes have been extracted from the Group's
financial statements for the year ended 30 April 2022, upon which
the auditor's opinion is unqualified and does not include any
statement under section 498 of the Companies Act 2006. The
statutory accounts for the year ended 30 April 2022 will be
delivered to the Registrar of Companies following the Annual
General Meeting.
These condensed preliminary financial statements for the year
ended 30 April 2022 have been prepared on the basis of the
accounting policies as set out in the 2022 financial
statements.
The recognition and measurement requirements of all
International Financial Reporting Standards ('IFRSs'),
International Accounting Standards ('IAS') and interpretations
currently endorsed by the International Accounting Standards Board
('IASB') and its committees as adopted by the UK and as required to
be adopted by AIM listed companies have been applied.
1.1 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.
1.2 Cautionary statement
This document contains certain forward-looking statements with
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 Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Finance Directors review, together with the
financial position of the Group, its cash flows, liquidity position
and borrowings. Financial projections have been prepared to October
2023 which show positive earnings and cash flow generation. The
COVID-19 situation during the previous financial year created an
unprecedented and constantly changing challenge to all businesses.
Management successfully navigated the business through the impact
of the pandemic on the Group's financial performance. The Group
typically applies sensitivities (informed by the past experiences
of the Group since the onset of the pandemic, including the Group's
time recording activity, fee generation and cash collections) to
any current financial projections based on various downside
scenarios to illustrate the potential impact from a downturn in
client activity or any increases in costs.
The Group's liquidity position has been enhanced during the year
as the board has worked closely with its supportive banks in order
to switch its funding line from an uncommitted overdraft facility
to a three-year revolving credit facility. As at 30 April 2022 the
Group has net cash of GBP10.4m and continues to sensibly managed
cash position within permitted covenants relating to its new
facility.
The Group expects to be able to operate within the Group's
existing financing facilities for the foreseeable future and
currently demonstrates significant debt capacity headroom based on
its strong financial performance. Accordingly, the Directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future and they have adopted the going concern basis of accounting
in preparing the annual Group financial statements.
3 Revenue and operating segments
The Chief Operating Decision Maker ("CODM") is the Strategic
Board. The Group have the following four strategic divisions, 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 two separately reporting
lines renamed Gateley Legal and Gateley Consultancy.
The following summary describes the operations of each
reportable segment as reported up to 30 April 2022 and also the new
service lines:
Reportable segment Legal service lines Consultancy service
(Gateley Legal) lines
(Gateley Consultancy)
Corporate Banking International Investment
Corporate Services
Restructuring advisory GEG Services
Taxation
------------------------------------------ -------------------------
Business services Commercial Adamson Jones
Commercial Dispute Resolution/Litigation
Tweed (reputation, media
and privacy law)
------------------------------------------ -------------------------
People Employment Entrust
Pension Kiddy and Partners
Private client T-three
------------------------------------------ -------------------------
Property Real Estate Capitus
Residential Development Hamer/Persona
Construction Smithers Purslow
Planning Vinden
------------------------------------------ -------------------------
The revenue and operating profit are attributable to the
principal activities of the Group. A geographical analysis of
revenue is given below:
2022 2021
GBP'000 GBP'000
United Kingdom 127,386 109,934
Europe 5,336 6,231
Middle East 923 937
North and South America 692 1,045
Asia 1,501 802
Other 1,411 2,426
------- -------
137,249 121,375
======= =======
The Group has no individual customers that represent more than
10% of revenue in either the 2022 or 2021 financial year. The
Group's assets and costs are predominately located in the UK save
for those assets and costs located in the United Arab Emirates
(UAE) via its Dubai subsidiary. Net Group assets of GBP0.08m (2021:
Net Group assets of GBP0.07m) are located in the Group's Dubai
subsidiary. Revenue generated by the Group's Dubai subsidiary to
customers in the UAE totalled GBP0.92m (2021: GBP0.94m) as
disclosed above as due from the customers in the Middle East.
2022
Other expense
and movement
Business Total in unbilled
Corporate Services People Property segments revenue Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue from services transferred
at a point in time 10,175 3,467 5,901 10,994 30,537 305 30,842
Segment revenue from services transferred
over time 27,889 14,490 13,264 50,426 106,069 338 106,407
--------- --------- ------- -------- --------- ------------- --------
Total Segment revenue 38,064 17,957 19,165 61,420 136,606 643 137,249
--------- --------- ------- -------- --------- ------------- --------
Segment contribution (as reported
internally) 15,373 5,733 6,919 22,956 50,981 643 51,624
Costs not allocated to segments:
Other operating income -
Personnel costs (10,487)
Depreciation and amortisation (6,215)
Other operating expenses (13,852)
Share based payment charges (1,213)
Exceptional costs (870)
Net financial expense (955)
--------
Profit for the financial year before
taxation 18,032
========
2021
Employee Other expenses
Banking and Pensions and movement
Financial Business and Total in unbilled
Services Corporate Services Benefits Property segments revenue Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue from
services
transferred at a point
in time 3,239 7,437 1,357 3,780 13,289 29,102 1,361 30,463
Segment revenue from
services
transferred over time 12,774 14,450 11,996 10,472 39,654 89,346 1,566 90,912
----------- --------- --------- --------- -------- --------- -------------- --------
Total segmental revenue 16,013 21,887 13,353 14,252 52,943 118,448 2,927 121,375
----------- --------- --------- --------- -------- --------- -------------- --------
Segment contribution
(as reported
internally) 5,291 7,100 5,688 4,597 24,406 47,082 2,927 50,009
Costs not allocated to
segments:
Other operating income 2,448
Personnel costs (8,240)
Depreciation and
amortisation (6,869)
Other operating
expenses (18,887)
Share based payment
charge (956)
Exceptional costs -
Net financial expense (1,197)
Profit for the
financial year
before taxation 16,308
========
Group entities may be engaged on a contingent basis; in such
cases the Group consider the satisfaction of the contingent event
as the sole performance obligation within the contract. Fees are
only billed once the contingent event has been satisfied. The
initial financing of these engagement types is met by the Group.
Due to the nature and timing of the billing, such engagements
influence the contract asset balance held in the balance sheet at
year end. In the majority of cases the contingent event is expected
to be concluded within one year of the engagement date. The Group
operates standard payment terms of 30 days. GBP9.2 million of the
current period revenue is derived from services satisfied, in part,
in the previous period.
Services transferred over time
For non-contingent engagements, fee earners' hourly rates are
determined at the point of engagement with all hours attributed to
the engagement fully and accurately recorded. The recorded hours
are then translated into fees to be billed and invoiced on a
monthly basis. The Group typically operates on 30 days credit
terms, in line with IFRS 15 the performance obligations are
fulfilled over time with revenue being recognised in line with the
hours worked.
Contract assets
Under IFRS 15 the Group recognises any goods or services
transferred to the customer before the customer pays consideration,
or before payment is due, as a contract asset . These assets differ
from accounts receivables. Accounts receivable are the amounts that
have been billed to the client and the revenue recognised, whereas
these contract assets are amounts of work in progress where work
has been performed, yet the amounts have not yet been billed to the
client. Due to the nature of the services delivered by the Group
the significant component of the cost of delivery is staff costs.
As a result, there is little to no judgement exercised in
determining the costs incurred as they are driven by the time
recorded by fee earners. Contract assets are subject to impairment
under IFRS 9.
No other financial information has been disclosed as it is not
provided to the CODM on a regular basis.
Contract Liabilities
Under IFRS 15 the Group is required to recognise contract
liabilities based on those amounts recognised against contracts for
which the satisfaction of performance obligations has not yet been
met. These liabilities relate to the deferred income recognised
within Kiddy & Partners, T-three Consulting Limited and GEG
Services Limited as a result of their billing structure. The
amounts recognised reflect the agreed cost of the services to be
performed and are realised in line with the ongoing cost of
delivery. Due to the nature of the services provided, the main
component of this cost of delivery is staff costs, as a result
there is little to no judgement exercised in determining the value
of the liability held at year end.
Practical expedients under IFRS 15
Under IFRS 15 companies are required to disclose the aggregate
amount of the transaction price allocated to the performance
obligations that are unsatisfied at the end of the reporting
period. However, only a small proportion of revenue contracts in
issuance are for fixed amounts, rather the company has a right to
consideration from the customer in an amount that corresponds
directly with the value to the customer of the business'
performance completed to date. Therefore, the Group considers it
impractical to estimate the potential value of unsatisfied
performance obligations and has elected to apply the practical
expedient available under IFRS 15.
4 Expenses and auditor's remuneration
Included in operating profit are the following:
2022 2021
GBP'000 GBP'000
Depreciation on tangible assets (see note 11) 851 1,045
Depreciation on right-of-use asset (see notes
11 and 24) 3,783 3,751
Short term and low value lease payments (see
note 24) 75 40
Operating lease costs on property (see note 24) - 26
Other operating income - rent received - (2)
Foreign exchange (gains)/losses (58) 87
Loss/(profit) on sale of fixed assets 16 (3)
======= =======
2022 2021
GBP'000 GBP'000
Non-underlying items
Amortisation of intangible assets (see notes
12 and 14) 1,581 2,073
Share based payment charges - Gateley Plc 1,100 956
Share based payment charges - Gateley Smithers
Purslow Limited 113 -
Release of contingent consideration - International
Investment Services Limited (135) -
2,659 3,029
Exceptional items
Acquisition costs 373 -
One off remuneration charge - Gateley Smithers
Purslow Limited 497 -
Total non-underlying and exceptional items 3,529 3,029
======= =======
Acquisition costs in the 2022 financial year represent
professional fees in respect of the acquisition of SP 2018 Limited,
Adamson Jones Holdings Limited and the business and assets of Tozer
Gallagher LLP.
Share based payment charges in Gateley Plc represent charges in
accordance with IFRS 2 in respect of unexercised SAYE, CSOP, LTIP
and RSA schemes (See note 6).
Share based payment charges in Gateley Smithers Purslow Limited
represent shares awarded to staff following the successful
acquisition of SP 2018 Limited (See note 5 and 6).
Auditor's remuneration
2022 2021
GBP'000 GBP'000
Fees payable to the Company's Auditor in respect
of audit services:
Audit of these financial statements 85 73
Audit of financial statements of subsidiaries
of the Company 20 15
------- -------
105 88
======= =======
Amounts receivable by the Company's auditor
and its associates in respect of:
Other assurance services 31 44
======= =======
Other assurance services relate to Solicitors Accounts Rules
review with associated reporting to legal regulators. This work is
entirely assurance focused.
5 Personnel costs
The average number of persons employed by the Group during the
year, analysed by category, was as follows:
Number of employees
2022 2021
Legal and professional staff 800 770
Administrative staff 350 343
---------- ----------
1,150 1,113
========== ==========
The aggregate payroll costs of these persons were as
follows:
2022 2021
GBP'000 GBP'000
Wages and salaries 76,672 68,020
Social security costs 7,769 7,736
Pension costs 2,076 1,704
------- -------
86,517 77,460
Non-underlying items (see note 4)
Share based payment expense - Gateley Plc 1,100 956
Share based payment expense - Gateley Smithers
Purslow Limited 113 -
------- -------
87,730 78,416
======= =======
6 Share based payments
Group
At the year end the Group has nine share based payment schemes
in existence.
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.
During the year 64,549 SAYE 17/18 options were exercised and the
remaining 193,063 had lapsed by 30 April 2022. The accumulated
IFRS2 charge of GBP155,381 was recycled through retained earnings
in the prior period.
During the year 407,963 SAYE 18/19 options vested with 237,450
being exercised by 30 April 2022 leaving 170,513 options still to
be exercised. New shares were issued to satisfy these options being
237,450 10p shares with a nominal value of GBP23,745. The
accumulated IFRS2 charge of GBP135,078 has been recycled through
retained earnings.
Company Share Option Plan ('CSOP')
The Group operates an 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 shares at the price on the date of grant.
During the year 401,542 CSOPS 17/18 options were exercised and
the remaining 26,603 had lapsed by 30 April 2022. New shares were
issued to satisfy these options being 410,632 10p shares with a
nominal value of GBP41,063. The accrued IFRS2 charge of GBP95,780
was recycled through retained earnings in the prior period.
During the year 631,580 CSOPS 18/19 options vested with 447,494
being exercised by 30 April 2022 leaving 184,086 options still to
be exercised. New shares were issued to satisfy these options being
447,494 10p shares with a nominal value of GBP44,749. The
accumulated IFRS2 charge of GBP108,421 has been recycled through
retained earnings.
Long Term Incentive Plan ('LTIP')
The Group operates an LTIP for the benefit of Executive
Directors and Senior Management. Awards under the LTIP may be in
the form of an option granted to the participant to receive
ordinary shares on exercise dependent upon the achievement of
profit related performance conditions.
Performance conditions
Options granted under the LTIP are only exercisable subject to
the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of
the three-year performance period. The awards will be subject to an
adjusted fully diluted earnings per share performance measure as
described in the table below:
Adjusted, fully diluted earnings per Amount Vesting %
Share Compound Annual Growth Rate (CAGR)
over the three year period ending 30
April 2023/2025
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.
Grant of equity share options under the LTIP
Certain senior employees and Executive Directors were granted
options on 27 April 2022 based on performance conditions commencing
on 1 May 2022. In total, 1,115,000 options have been granted which,
subject to satisfying the above performance conditions, will vest
in the year ending 30 April 2025.
Restricted Share Award Plan ('RSA')
The Group has introduced during the year an RSA for the benefit
of Senior Management. Awards under the RSA entitle the option
holder to participate in dividends however, the shares are
restricted for a period of 5 years from issue, such that they
cannot be traded.
The annual awards granted under all schemes are summarised
below:
Weighted
average Weighted
remaining average Lapsed at Granted Lapsed Exercised
contractual exercise Originally 30 April At 1 May during during in the At 30
life price granted 2021 2021 the year year year April 2022
Number Number Number Number Number Number Number
SAYE
SAYE 17/18-
15
September
2017 0 years GBP1.33 556,296 (298,684) 257,612 - (193,063) (64,549) -
SAYE 18/19
- 21
September
2018 0 years GBP1.27 620,432 (168,463) 451,969 - (44,006) (237,450) 170,513
SAYE 19/20
- 30
September
2019 0.4 years GBP1.28 822,625 (125,652) 696,973 - (92,760) - 604,213
SAYE 20/21
- 6
November
2020 1.5 years GBP1.02 2,337,197 (47,113) 2,290,084 - (172,713) - 2,117,371
SAYE 21/22
- 25
August
2022 2.3 years GBP1.70 - - - 673,077 (14,925) - 658,152
---------- --------- --------- --------- ---------- ---------- ----------
4,336,550 (639,912) 3,696,638 673,077 (517,467) (301,999) 3,550,249
---------- --------- --------- --------- ---------- ---------- ----------
CSOPS
CSOPS 17/18
- 3
October
2017 0 years GBP1.65 581,162 (153,017) 428,145 - (26,603) (401,542) -
CSOPS 18/19
- 24
October
2018 0 years GBP1.44 812,131 (127,774) 684,357 - (52,777) (447,494) 184,086
CSOPS 20/21
- 7
July 2020 1.2 years GBP1.35 976,797 (57,411) 919,386 - (89,634) - 829,752
---------- --------- --------- --------- ---------- ---------- ----------
2,370,090 (338,202) 2,031,888 - (169,014) (849,036) 1,013,838
---------- --------- --------- --------- ---------- ---------- ----------
LTIPS
LTIPS 20/21
- 22
July 2020 1.2 years GBP0.00 1,405,766 (38,339) 1,367,427 - (130,992) - 1,236,435
LTIPS 27
April 2022 3.0 years GBP0.00 - - - 1,115,000 - - 1,115,000
---------- --------- --------- --------- ---------- ---------- ----------
1,405,766 (38,339) 1,367,427 1,115,000 (130,992) - 2,351,435
---------- --------- --------- --------- ---------- ---------- ----------
RSARSA
RSA 27 April 2022 5.0 years GBP0.00 ---1,422,560 --1,422,560
--------- ---------
---1,422,560 --1,422,560
--------- ---------
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:
SAYE LTIP RSA
Grant date 25/8/21 27/4/21 27/4/22
Share price at date of grant GBP2.115 GBP2.175 GBP2.175
Exercise price GBP1.70 n/a n/a
Volatility 29% 33% 33%
Expected life (years) 3.3 3.3 5.0
Risk free rate 0.227% 1.522% 1.575%
Dividend yield 4.53% 4.53% 0%
Fair value per share
Market based performance condition - - -
Non-market based performance GBP0.44 GBP1.87 GBP2.175
condition/no performance condition
------- ------- --------
Expected volatility was determined by using historical share
price data of the Company since it listed on 8 June 2015. The
expected life used in the model has been based on Management's
expectation of the minimum and maximum exercise period of each of
the options granted.
The total charge to the income statement for all schemes now in
place, included within non-underlying items, is GBP1,213,000 (2021:
GBP956,000).
7 Financial income and expense
Recognised in profit and loss
2022 2021
GBP'000 GBP'000
Financial income
Interest income 194 176
------- -------
Total financial income 194 176
======= =======
Financial expense
Interest expense on bank borrowings measured
at amortised cost (201) (416)
Interest on lease liability (948) (957)
------- -------
Total financial expense (1,149) (1,373)
======= =======
Net financial expense (955) (1,197)
8 Taxation
2022 2021
GBP'000 GBP'000
Current tax expense
Current tax on profits for the year 3,949 3,749
Under/(over) provision of taxation in previous
period 15 (43)
------- -------
Total current tax 3,964 3,706
======= =======
Deferred tax expense
Origination and reversal of temporary differences (211) (436)
Under provision on share-based payment charges - (119)
------- -------
Total deferred tax expense (211) (555)
======= =======
Total tax expense 3,753 3,151
======= =======
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to profits for the year are as follows:
2022 2021
GBP'000 GBP'000
Profit for the year (subject to corporation
tax) 18,032 16,308
------- -------
Tax using the Company's domestic tax rate
of 19% 3,426 3,099
Expenses not deductible for tax purposes 312 214
Under/(over) provision of taxation in previous
period 15 (43)
Under provision on share-based payment charges - (119)
------- -------
Total tax expense 3,753 3,151
======= =======
The Finance Act 2021 increased the main rate of corporation tax
to 25% from 1 April 2023. Closing deferred tax balances have
therefore been valued at 19% or 25% (2021: 19%) depending on the
date they expect to fully unwind.
9 Earnings per share
Statutory earnings per share
2022 2021
Number Number
Weighted average number of ordinary shares in
issue, being weighted average number of shares
for calculating basic earnings per share 118,961,047 117,685,265
Shares deemed to be issued for no consideration
in respect of share based payments 2,932,191 823,568
Weighted average number of ordinary shares for
calculating diluted earnings per share 121,893,238 118,508,833
=========== ===========
2022 2021
GBP'000 GBP'000
Profit for the year and basic earnings attributable
to ordinary equity shareholders 14,279 13,157
Non-underlying and exceptional items (see note
4)
Operating expenses 3,529 3,029
Tax on non-underlying and exceptional items (370) (576)
----------- -----------
Underlying earnings before non-underlying and
exceptional items 17,438 15,604
Earnings per share is calculated as follows:
2022 2021
Pence Pence
Basic earnings per ordinary share 12.00 11.18
Diluted earnings per ordinary share 11.71 11.10
Basic earnings per ordinary share before non-underlying
and exceptional items 14.66 13.26
Diluted earnings per ordinary share before non-underlying
and exceptional items 14.31 13.17
10 Dividends
2022 2021
GBP'000 GBP'000
Equity shares:
Interim dividend in respect of 2021 (2.5p per
share) - 28 June 2021 2,940 -
Final dividend in respect of 2021 (5p per share)
- 8 October 2021 5,908 -
Interim dividend in respect of 2022 (3p per share)
- 31 March 2022 3,582 -
------- -------
12,430 -
======= =======
The board proposes to recommend a final dividend of 5.5p (2021:
5p) per share at the AGM. If approved, this dividend will be paid
in mid October 2022 to shareholders on the register at the close of
business on 23 September 2022. The shares will go ex-dividend on 22
September 2022. This dividend has not been recognised as a
liability in these final statements.
11 Property, plant and equipment
Fixtures
Leasehold and Right-of-use
improvements Equipment Fittings assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 May 2020 462 6,207 5,226 26,146 38,041
Additions - 302 201 9,238 9,741
Disposal (145) (16) (31) (1,359) (1,551)
------------- --------- --------- ------------ -------
As at 30 April 2021 317 6,493 5,396 34,025 46,231
Balance at 1 May 2021 317 6,493 5,396 34,025 46,231
Arising on acquisition
after fair value adjustments 266 63 793 1,122
Additions 23 583 169 610 1,385
Disposal - (110) - - (110)
------------- --------- --------- ------------ -------
As at 30 April 2022 340 7,232 5,628 35,428 48,628
------------- --------- --------- ------------ -------
Depreciation and impairment
Balance at 1 May 2020 327 5,157 4,538 3,267 13,289
Depreciation charge for
the year 23 670 352 3,751 4,796
Eliminated on disposal (141) (13) (30) - (184)
------------- --------- --------- ------------ -------
Balance at 30 April 2021 209 5,814 4,860 7,018 17,901
------------- --------- --------- ------------ -------
Balance at 1 May 2021 209 5,814 4,860 7,018 17,901
Arising on acquisition
after fair value adjustments - 173 53 - 226
Depreciation charge for
the year 22 514 315 3,783 4,634
Eliminated on disposal - (94) - - (94)
Balance at 30 April 2022 231 6,407 5,228 10,801 22,667
------------- --------- --------- ------------ -------
Net book value
------------- --------- --------- ------------ -------
At 30 April 2021 108 679 536 27,007 28,330
------------- --------- --------- ------------ -------
At 30 April 2022 109 825 400 24,627 25,961
------------- --------- --------- ------------ -------
12 Intangible assets and goodwill
Goodwill Customer Total
lists and
brands
GBP'000 GBP'000 GBP'000
Deemed cost
At 1 May 2020 12,329 9,850 22,179
Adjustment (631) - (631)
At 30 April 2021 11,698 9,850 21,548
Arising through business combinations 8,440 9,929 18,369
At 30 April 2022 20,138 19,779 39,917
Amortisation
At 1 May 2020 - 3,741 3,741
Charge for the year - 2,042 2,042
-------- ---------- -------
At 30 April 2021 - 5,783 5,783
Charge for the year - 1,544 1,544
-------- ---------- -------
At 30 April 2022 - 7,327 7,327
======== ========== =======
Carrying amounts
At 30 April 2021 11,698 4,067 15,765
======== ========== =======
At 30 April 2022 20,138 12,452 32,590
======== ========== =======
Goodwill is allocated to the following cash generating
units:
2022 2021
GBP'000 GBP'000
Property Group
Gateley Capitus Limited 1,515 1,515
Gateley Hamer Limited 1,161 1,161
GCL Solicitors (acquisition of trade and assets) 2,900 2,900
Persona Associates Limited 40 40
Gateley Vinden Limited 2,259 2,259
Tozer Gallagher (acquisition of trade and assets) 405 -
Gateley Smithers Purslow Limited 6,605 -
------- -------
14,885 7,875
Employment , Pensions and Benefits Group
Kiddy & Partners Limited 1,600 1,600
International Investment Services Limited 338 338
T-three Consulting Limited 309 309
------- -------
2,247 2,247
Business services Group
Gateley Tweed (acquisition of goodwill) 1,576 1,576
Adamson Jones IP Limited 1,430 -
3,006 1,576
------- -------
20,138 11,698
======= =======
Impairment testing
The Group tests goodwill annually for impairment. The impairment
test involves determining the recoverable amount of the cash
generating unit (CGU) to which the goodwill has been allocated. The
Directors believe that each operating segment represents a cash
generating unit for the business and as a result, impairment is
tested for each segment, and all the assets of each segment are
considered.
The recoverable amount is based on the present value of expected
future cash flows (value in use) which was determined to be higher
than the carrying amount of goodwill so no impairment loss was
recognised.
Value in use was determined by discounting the future cash flows
generated from the continuing operation of the Group and was based
on the following key assumptions:
-- A pre-tax discount rate of between 12 and 21% (2021: 12-21%)
was applied in determining the recoverable amount. The discount
rate is based on the Group's average weighted cost of capital of
10.18% and adjusted according to the risks attributable to each
CGU.
-- The values assigned to the key assumptions represent
Management's estimate of expected future trends and are based on
both external (industry experience, historic market performance and
current estimates of risks associated with trading conditions) and
internal sources (existing Management knowledge, track record and
an in-depth understanding of the work types being performed).
o Growth rates of between 2% to 10% (2021: -25-10%) are based on
Management's understanding of the market opportunities for services
provided pertaining to the industry in which each CGU is
aligned.
o Increases in costs are based on current inflation rates and
expected levels of recruitment needed to generate predicted revenue
growth.
o Attrition rates are based on the historic experience and
trends of client activity over a two to three year period and
applied to future fee forecasts.
o Cash flows have been typically assessed over a five-year
period which Management extrapolates cash using a terminal value
calculation based on an estimated growth rate of 2%. The expected
current UK economic growth forecasts for the legal services market
is 2%.
-- The Group has conducted a sensitivity analysis on the
impairment test of the CGU carrying value. The Directors believe
that any reasonably possible change in the key assumptions on which
the recoverable amount of goodwill is based would not cause the
aggregate carrying amount to exceed the aggregate recoverable
amount of the CGU.
13 Acquisitions
During the year ended 30 April 2022 the Group completed three
acquisitions, the table below summarises the consideration
paid:
Total
GBP'000
Total fair value of identifiable assets and liabilities
acquired 12,380
Goodwill 8,440
---------
Total consideration 20,820
=========
Satisfied by:
Cash 7,033
Equity instruments 8,335
Contingent cash consideration payable 2,776
Contingent shares consideration payable 2,676
---------
Total consideration 20,820
=========
Net cash outflows arising on acquisition
Cash consideration (7,033)
Acquisition costs (373)
Net cash acquired 1,051
---------
Net cash outflow arising on acquisition (6,355)
=========
Details of individual acquisitions are included below:
Acquisition of Tozer Gallagher LLP
On 22 July 2021 Gateley Vinden Limited acquired the business and
assets of Tozer Gallagher LLP, a leading practice of chartered
quantity surveyors and construction consultants. Tozer Gallagher
was founded over 30 years ago and is a nationally recognised and
highly respected practice of chartered quantity surveyors 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
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Property, plant and equipment 7 36 43
Intangible asset relating to customer
list and brand - 393 393
Prepayments 14 - 14
Accrued income 101 - 101
Total assets 122 429 551
---------------- ------------------- ---------
Accruals and other payables (4) - (4)
Lease liability - (36) (36)
Deferred tax - (98) (98)
---------------- ------------------- ---------
Total liabilities (4) (134) (138)
---------------- ------------------- ---------
Total identifiable net assets at fair
value 118 295 413
Goodwill arising on acquisition 405
---------
Total consideration 818
---------
Satisfied by:
Initial cash consideration paid 418
Issue of 142,179 new 10p ordinary shares
in Gateley (Holdings) Plc 300
Contingent cash consideration payable 100
------
Total consideration 818
------
Net cash outflow arising on acquisition
Cash consideration (418)
Net cash acquired -
------
Net cash outflow arising on acquisition (418)
------
The goodwill of GBP405,000 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 contingent on Tozer Gallagher achieving
revenue in excess of GBP850k in the 12 month period ending 21 July
2022. The sellers will receive GBP1 of contingent consideration for
every GBP1 they exceed GBP850k up to a maximum consideration of
GBP0.1m. The contingent consideration totalling GBP100,000 was
settled during August 2022.
From the date of acquisition Tozer Gallagher has contributed
GBP0.7m of revenue to the Group's Statement of Comprehensive
Income. If the acquisition had been completed on the first day of
the financial year, Group revenue would have been higher by
GBP0.2m. The profit contributed is not separately identifiable due
to its trade and assets being incorporated into Gateley Vinden
Limited upon acquisition.
Acquisition of the Adamson Jones Holdings Limited ("Adamson
Jones")
On 7 January 2022 the Company acquired the entire issued share
capital of Adamson Jones via the acquisition of the entire issued
share capital of Adamson Jones Holdings Limited that owns 100% of
the entire issued share capital of Adamson Jones IP Limited.
Adamson Jones provides intellectual property (IP) services
encompassing patent, design and trademark protection advice in the
UK, Europe and around the world.
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
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Property, plant and equipment 38 - 38
Cash 48 - 48
Intangible asset relating to customer list
and brand - 1,067 1,067
Trade receivables 564 - 564
Total assets 650 1,067 1,717
---------------- ------------------- ---------
Trade payables (257) - (257)
Deferred income (11) - (11)
Accruals and other payables (30) - (30)
Other tax and social security (82) - (82)
Deferred tax - (267) (267)
---------------- ------------------- ---------
Total liabilities (380) (267) (647)
---------------- ------------------- ---------
Total identifiable net assets at fair value 270 800 1,070
Goodwill arising on acquisition 1,430
---------
Total consideration 2,500
---------
Satisfied by:
Initial cash consideration paid 1,255
Issue of 543,668 new 10p ordinary shares
in Gateley (Holdings) Plc 1,245
Total consideration 2,500
---------
Net cash outflow arising on acquisition
Cash paid (1,255)
Acquisition costs (36)
Net cash acquired 48
---------
Net cash outflow arising on acquisition (1,243)
---------
The goodwill of GBP1,430,000 arising from the acquisition
represents the assembled workforce. None of the goodwill is
expected to be deductible for income tax purposes.
From the date of acquisition Adamson Jones has contributed
GBP1.2m of revenue to the Group's Statement of Comprehensive Income
together with after tax profit of GBP0.1m. If the acquisition had
been completed on the first day of the financial year, Group
revenue and profit after tax would have been higher by GBP2.4m and
GBP0.3m respectively.
Acquisition of Gateley Smithers Purslow Limited (formerly
Smithers Purslow Limited) ('Smithers Purslow')
On 19 April 2022 Gateley (Holdings) Plc acquired the entire
issued share capital of Gateley Smithers Purslow Limited (formerly
Smithers Purslow Limited) via the acquisition of the entire issued
share capital of SP 2018 Limited. Smithers Purslow is a specialist
business offering corporate advisory, dispute and consultancy to
the built environment in the property and construction markets.
Pre-acquisition Policy alignment
carrying and fair
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Property, plant and equipment 69 757 826
Intangible asset relating to customer
list and brand - 8,469 8,469
Work in progress 2,560 - 2,560
Cash 1,003 - 1,003
Trade receivables 2,531 - 2,531
Prepayments and accrued income 411 - 411
Total assets 6,574 9,226 15,800
================ =================== =========
Trade payables (417) - (417)
Accruals and other payables (559) - (559)
Current tax (406) - (406)
Lease liability - (757) (757)
Contingent liability (50) (50)
Other tax and social security (585) - (585)
Deferred tax (12) (2,117) (2,129)
---------------- ------------------- ---------
Total liabilities (1,979) (2,924) (4,903)
================ =================== =========
`
Total identifiable net liabilities at
fair value 4,595 6,302 10,897
Goodwill arising on acquisition 6,605
---------
Total consideration 17,502
=========
Satisfied by:
Initial cash consideration paid 5,360
Issue of 3,312,322 new 10p ordinary
shares in Gateley (Holdings) Plc 6,790
Contingent cash consideration payable 2,676
Contingent share consideration payable 2,676
Total consideration 17,502
=========
Net cash outflow arising on acquisition
Cash paid (5,360)
Acquisition costs (192)
Net cash acquired 1,003
Net cash outflow arising on acquisition (4,549)
=========
The goodwill of GBP6,605,000 arising from the acquisition
represents the assembled workforce. None of the goodwill is
expected to be deductible for income tax purposes. All the effects
of this acquisition on the Group's assets and liabilities are
disclosed as provisional due to the proximity of the
acquisition
to the balance sheet date.
A contingent consideration arrangement was entered into as part
of the acquisition. 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 is to be split in shares and cash as agreed between the
Sellers and the Company, providing no Seller is entitled to receive
more than 50% of their total consideration in cash.
From the date of acquisition Smithers Purslow has contributed
GBP0.6m of revenue to the Group's Statement of Comprehensive Income
together with after tax profit (before exceptional items) of
GBP0.2m. If the acquisition had been completed on the first day of
the financial year, Group revenue and profit after tax would have
been higher by GBP11.4m and GBP1.2m respectively.
14 Other intangible assets
IT development costs Computer
GBP'000 software Total
GBP'000 GBP'000
Cost
Balance at 1 May 2020 258 111 369
Additions - 10 10
- - -
-------------------- --------- ---------
At 30 April 2021 258 121 379
Additions - 319 319
At 30 April 2022 258 440 698
==================== ========= =========
Amortisation
Balance at 1 May 2020 - 66 66
Charge for the year - 31 31
-------------------- --------- ---------
At 30 April 2021 - 97 97
Charge for the year - 37 37
-------------------- --------- ---------
At 30 April 2022 - 134 134
==================== ========= =========
Net book amount at 30 April 2021 258 24 282
-------------------- --------- ---------
Net book amount at 30 April 2022 258 306 564
==================== ========= =========
The Group's amortisation policy, is to amortise other intangible
assets from the date they are made available for use. As at 30
April 2022 the software relating to the IT development costs was
not available for use, therefore no amortisation has been
recognised. The software came into use following the period
end.
15 Contract assets and liabilities
Contract Trade Contract
assets receivables liabilities
GBP'000 GBP'000 GBP'000
As at 30 April 2022 17,239 50,201 (569)
======== ============ ============
As at 30 April 2021 13,900 36,680 (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
recognised 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 recognised 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.
During the year, contract assets of GBP2,661,000 (2021: GBPnil)
were acquired in business combinations.
An impairment loss of GBP108,000 has been recognised in relation
to contract assets in the year (2021: gain GBP89,000). This is
based on the expected credit loss under IFRS 9 of these types of
assets. The contract asset loss is estimated at 0.6% (2021: gain
0.6%) of the balance.
Contract assets recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract
assets.
2022 2021
GBP'000 GBP'000
Contract asset value at 1 May 2021 13,900 11,684
Contract assets arising on acquisition 2,661 -
Contract asset value added in the year 19,237 17,452
Contract asset value realised in the year (18,559) (15,236)
--------- ---------
Contract asset value at 30 April 2022 17,239 13,900
========= =========
The Group have applied ECLs to unbilled revenue in order to
account for the potential default on amounts not yet billed to the
client. The ECLs have been calculated on the same basis as those
applied to trade receivables.
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.
Contract liabilities recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract
liabilities.
2022 2021
GBP'000 GBP'000
Contract liabilities at 1 May 2021 1,243 70
Contract liabilities gained in the year 533 1,207
Contract liabilities credited to P&L in year (1,207) (34)
-------- --------
Contract liabilities at 30 April 2022 569 1,243
-------- --------
16 Trade and other receivables
2022 2021
GBP'000 GBP'000
Trade receivables 50,201 36,680
Prepayments 5,626 5,699
Other receivables including insurance receivables 341 714
56,168 43,093
======= =======
Trade receivables
Trade receivables are recognised when a bill has been issued to
the client, as this is the point in time that the consideration is
unconditional because only the passage of time is required before
the payment is due. Trade receivables also includes
disbursements.
Bills are payable within thirty days unless otherwise agreed
with the client.
All trade receivables are repayable within one year.
Movement in loss allowance
2022 2021
GBP'000 GBP'000
Brought forward provision (4,171) (2,967)
Recognition of provisions for businesses acquired (173) -
Provision utilised 1,161 719
Charged to statement of profit and loss (1,173) (2,391)
Provisions released 415 468
(3,941) (4,171)
======= =======
The Group applies the simplified approach to providing for the
expected credit losses under IFRS 9. Management have also elected
to apply an uplift to the IFRS 9 provision in the current year to
account for the specific risks in the subsidiary entities where the
application of IFRS 9 alone is not considered appropriate. The
provision uplift is based on Management's assessment of specific
clients and related debts, this is presented separately to the ECL
provision detailed below:
Past due
greater
Not passed Past due Past due than 120
due 0-30 days 31-120 days days Total
Expected credit
loss rate 3.60% 4.45% 5.11% 18.53%
Estimated total
gross carrying
amount GBP'000 31,544 4,642 5,429 12,526 54,141
----------- ----------- ------------- ---------- -------
Lifetime ECL GBP'000 1,136 207 277 2,321 3,941
The carrying amount of financial assets (including contract
assets but not including equity investments) recorded in the
financial statements, which is net of any impairment losses,
represents the Group's maximum expected exposure to credit risk.
Financial assets include client and other receivables and cash. The
Group does not hold collateral over these balances.
All the Group's trade and other receivables have been reviewed
for indicators of impairment. The specifically impaired trade
receivables are mostly due to customers experiencing financial
difficulties.
An impairment loss of GBP1,173,000 has been recognised in
relation to trade receivables in the year (2021: GBP1,525,000).
This is based on the expected credit loss under IFRS 9 of these
types of assets. The trade receivables loss is estimated at 2.3%
(2021: 3.7%) of the balance.
17 Other interest-bearing loans and borrowings
The contractual terms of the Group's interest-bearing loans and
borrowings, which are measured at amortised cost, with the
exception of loans to members that are held at fair value, are
described below.
2022 2021
Fair Carrying Fair Carrying
value amount value amount
GBP'000 GBP'000 GBP'000 GBP'000
Non-Current liabilities
Bank borrowings 5,715 5,715 - -
======= ======== ======= ========
On 18 April 2022, the Company entered into a revolving credit
facility which provides total committed funding of GBP30m until
April 2025. Interest is payable at a margin of 1.95% above the
SONIA reference rate. On 19 April 2022 GBP6m was drawdown against
the facility in order to fund the initial cash consideration in the
acquisition of SP 2018 Limited.
As at 30 April 2022, the Group's non-derivative financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:
30 April 2022 Current Non-current
Within 6 to 1 - 5 Later than
6 months 12 months years 5 years
GBP'000 GBP'000 GBP'000 GBP'000
Bank borrowings - - 6,000 -
Trade and other payables 8,309 - - -
--------- ---------- ------- ----------
Total 8,309 - 6,000 -
========= ========== ======= ==========
This compares to the maturity of the Group's non-derivative
financial liabilities in the previous reporting period as
follows:
30 April 2021 Current Non-current
Within 6 to 1 - 5 Later than
6 months 12 months years 5 years
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 8,130 - 120 -
--------- ---------- ------- ----------
Total 8,130 - 120 -
========= ========== ======= ==========
The above amounts reflect the contractual undiscounted cash
flows, which may differ to the carrying values of the liabilities
at the reporting date.
18 Trade and other payables
2022 2021
GBP'000 GBP'000
Current
Trade payables 7,935 6,086
Other taxation and social security payable 10,122 9,641
Other payables 374 582
Contingent consideration 100 135
Accruals 12,693 11,345
Deferred income 569 1,243
------- -------
31,793 29,032
======= =======
Non-current GBP'000 GBP'000
Other payables - 120
Contingent consideration 5,360 -
------- -------
5,360 120
======= =======
GBP100,000 of current contingent consideration represents the
earn-out sums payable to the sellers of Tozer Gallagher LLP.
All contingent consideration is Level Three in the fair value
hierarchy as there are no observable inputs. Amounts have been
calculated based on the Group's expectation of what it will pay in
relation to the earn-out clause of the relevant sale and purchase
agreement discounted to present value. 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, using EBIT growth rate ranges from 2-10%, to
give an estimate of the final obligation capped at the maximum
earn-out amount stated in the purchase agreement. Where contingent
consideration is due over a period of more than one year the value
of the consideration is discounted and recorded at the present
value. The discount rate applied in determining the present value
of contingent consideration is 4.75%.
19 Deferred tax
Deferred tax assets and liabilities are summarised below:
Deferred tax asset
The deferred tax asset recognised in the consolidated statement
of financial position represents the future tax impact of issued
share based payments schemes that are yet to vest.
Share-based
payments
GBP'000
At 1 May 2021 138
Credited during the year to retained earnings 563
Debited during the year in the Consolidated income statement (63)
------------
At 30 April 2022 638
============
Deferred tax liability
The deferred tax liability recognised in the Consolidated
Statement of Financial Position represents the future tax impact of
the Group's benefit from customer lists obtained through
acquisitions .
Customer lists
GBP'000
At 1 May 2020 1,208
Credited during the year in the Consolidated income statement (436)
--------------
At 30 April 2021 772
Arising through business combinations - Tozer Gallagher LLP,
Adamson Jones Holdings Limited and SP 2018 Limited 2,482
Credited during the year in the Consolidated income statement (165)
At 30 April 2022 3,089
==============
20 Provisions
2022 2021
GBP'000 GBP'000
Current provision
Professional indemnity provision 101 176
-------- --------
Total current provision 101 176
-------- --------
Non-current provision
Professional indemnity provision 649 549
Dilapidations provision 214 214
-------- --------
Total non-current provision 863 763
-------- --------
Total provisions 964 939
======== ========
Professional indemnity estimated claim cost
2022 2021
GBP'000 GBP'000
Brought forward 725 713
Provisions made during the year 35 385
Provisions reversed during the year (10) (373)
-------- ----------
At end of year 750 725
======== ==========
Non-current 649 549
Current 101 176
-------- ----------
750 725
======== ==========
The Group from time to time receives claims in respect of
alleged professional negligence which it defends where appropriate
but makes provision for the best estimate of probable amounts
considered likely to be payable as set out above. Inevitably, these
estimates depend on the outcome and timing of future events and may
need to be revised as circumstances change. A different assessment
of the likely outcome in each case or of the probable cost involved
may result in a different level of provision recognised.
Professional indemnity Insurance cover is maintained in respect of
professional negligence claims.
Dilapidations provision
The Group has leases for a number of offices, some of which
include dilapidation clauses. The Group maintains the office
buildings throughout each lease term with regular maintenance,
however a cost is likely to arise at the end of the lease term in
order to return the space to its original condition. Management
have therefore elected to introduce a dilapidations provision to
account for the future cost. The provision is based on Management's
estimate of the total costs across all applicable lease to be
recognised on a straight line basis over the total lease terms.
2022 2021
GBP'000 GBP'000
At 1 May 214 -
Provision made in the year - 214
---------- ----------
At 30 April 214 214
========== ==========
21 Net debt
2022 2021
GBP'000 GBP'000
Cash and cash equivalents 16,105 19,605
Debt
Total loans brought forward (30,445) (29,262)
Revolving credit facility - due in more than
one year (5,715) -
New lease liability in the year (2,351) (9,385)
Repayment of loans from former members - 729
Repayment of term loans - 3,077
Termination of lease - 1,359
Repayment of lease liability 3,870 3,037
-------- --------
Total loan carried forward (34,641) (30,445)
Brought forward from previous year (10,840) (26,339)
Movement during year (7,696) 15,499
-------- --------
Net debt at the year end (18,536) (10,840)
======== ========
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Long term Short Lease Total
borrowings term borrowings liabilities
GBP'000 GBP'000 GBP'000 GBP'000
1 May 2021 - - 30,445 30,445
Cashflows:
Repayments - - (3,870) (3,870)
Receipt of revolving credit facility 5,715 - - 5,715
Non-cash
Fair value on acquisition - - 793 793
New lease liability in the year - - 1,558 1,558
30 April 2022 5,715 - 28,926 34,641
=========== ================ ============ =======
Long term Short Lease Total
borrowings term borrowings liabilities
GBP'000 GBP'000 GBP'000 GBP'000
1 May 2020 3,077 729 25,456 29,262
Cashflows:
Repayments (3,077) (729) (3,037) (6,843)
Non-cash
New lease liability in the year - - 8,026 8,026
----------- ---------------- ------------ -------
30 April 2021 - - 30,445 30,445
=========== ================ ============ =======
22 Share capital
Authorised, issued and fully paid
2022 2022 2021 2021
Number GBP Number GBP
Ordinary shares of 10p each
Brought forward 117,914,205 11,791,420 117,609,094 11,760,909
Issued on acquisition of
Tozer Gallagher LLP 142,179 14,218 - -
Issued on acquisition of
Adamson Jones IP Limited 543,668 54,367 - -
Issued on acquisition of Gateley
Smithers Purslow Limited 3,312,322 331,232 - -
Issued as part of contingent
consideration of Gateley Vinden
Limited - - 197,368 19,737
Issued on vesting of RSA 1,477,560 147,756 - -
Issued on vesting of SAYE 308,819 30,882 107,743 10,774
Issued on vesting of CSOPS 858,126 85,813 - -
----------- ---------- ----------- ----------
At 30 April 2022 124,556,879 12,455,688 117,914,205 11,791,420
=========== ========== =========== ==========
The Company has one class of Ordinary shares which carry no
right to fixed income.
On 22 July 2021 the Group acquired the trade and assets of Tozer
Gallagher LLP in part for the issue of 142,179 10p ordinary
shares.
On 9 January 2022 the Company acquired Adamson Jones IP Limited
and dormant group companies in part for the issue of 543,668 10p
ordinary shares.
On 19 April 2022 the Company acquired Gateley Smithers Purslow
Limited (Formerly Smithers Purslow Limited) and other group
companies in part for the issue of 3,312,322 10p ordinary
shares.
Between 1 May 2021 and 19 April 2022 308,819 10p ordinary shares
were issued upon vesting of the 2018 SAYE schemes to
participants.
Between 3 August 2021 and 1 November 2021 858,126 10p ordinary
shares were issued upon vesting of the 2018 CSOP schemes to
participants.
On 27 April 2022 1,477,560 10p ordinary shares were issued upon
vesting of the 2022 RSA scheme to participants.
23 Capital commitments
In 2021 the Group entered a contract with a provider of legal
technology for the development of a new practice management system,
with Thomson Reuters for the installation of their market leading
practice management system. The cost of the contractual capital
commitment was GBP1.1million and was incurred across calendar years
2021 and 2022. The outstanding obligation at year end is
GBPnil.
24 Leases liabilities - IFRS 16
The Group has leases for offices, vehicles and some IT
equipment, with the exception of short-term leases and leases of
low-value assets each lease is held on the balance sheet as a
right-of-use asset and corresponding lease liability. Property
leases have a remaining term of one to ten years. Leases of
vehicles and IT equipment have a term of three to five years. Lease
payments on all those recognised on the balance sheet are fixed.
Unless there is a contractual right for the Group to sublet the
asset to a third party, the right of use asset can only be used by
the Group.
The table below provides additional information on the
right-of-use assets by class of assets:
Average
Number length Opening Closing
of leased of lease lease asset Net additions Depreciation lease asset
assets* remaining GBP'000 GBP'000 GBP'000 GBP'000
Office
buildings 17 5.9 years 26,986 1,397 (3,767) 24,616
IT equipment 2 2years 21 6 (16) 11
* Where properties within the same building are leased on a
floor by floor basis on the same contractual terms, the Group has
elected to treat these as a portfolio and are counted as a single
leased asset within the table
Lease liabilities are presented in the statement of financial
position as follows:
2022 2021
GBP'000 GBP'000
Current lease liability 3,719 2,743
Non-current lease liability 25,207 27,702
A number of property leases held by the Group include break or
termination options. The lease liability has been calculated based
on the likelihood of such option being exercised. An option would
only be exercised when in line with the Groups wider strategy.
In line with IFRS 16 Leases the Group has elected not to
recognise a lease liability for leases with a term of 12 months or
less, or for leases of low value assets. The payments made under
such leases are expensed to the profit and loss on a straight-line
basis. Any variable lease payments incurred are expensed as
incurred.
The table below shows amounts recognised in the Statement of
Comprehensive Income for short term and low value leases as at 30
April 2022:
Property Equipment Total
GBP'000 GBP'000 GBP'000
Expenses relating to short-term leases 26 23 49
Expenses relating to leases of low-value
assets, excluding short-term leases
of low value assets - 17 17
-------- --------- -------
26 40 66
======== ========= =======
The total minimum undiscounted lease payments at 30 April 2022
under non-cancellable operating lease rentals were:
30 April 2022 30 April
GBP'000 2021
GBP'000
Within one year 4,645 3,024
In the second to fifth year inclusive 22,435 15,921
After five years 16,606 13,822
43,686 32,767
============= ========
The Annual report and financial statements will be posted to
shareholders in due course. Further copies will be available from
the Company's website: www.gateleyplc.com.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR LTMTTMTMBTTT
(END) Dow Jones Newswires
September 13, 2022 02:01 ET (06:01 GMT)
Gateley (holdings) (LSE:GTLY)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gateley (holdings) (LSE:GTLY)
Historical Stock Chart
From Apr 2023 to Apr 2024
