TIDMGTLY
RNS Number : 0468N
Gateley (Holdings) PLC
18 January 2023
18 January 2023
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year Results for the six months ended 31 October 2022
Strong H1 in a challenging market
Gateley, the legal and professional services group, is pleased
to announce its unaudited results for the six months ended 31
October 2022 (the "Period" or "H1 23"), which show a strong
performance as the Company continues to execute its diversification
and growth strategy.
Financial Highlights
-- Strong financial performance with revenue and profit before
tax up 22.2% (H1 22: 23.5%) and 9.6% (H1 22: 19.5%) respectively
-- Group organic revenue growth of 9.8% (H1 22: 22.7%)
-- Legal services revenue grew entirely organically by 8.2% (H1
22: 21.9%)
-- Revenue from consultancy services grew substantially, increasing
104.5% to GBP18.2m (H1 22: GBP8.9m), of which organic revenue
growth was 20.0%
-- Adjusted underlying profit margin decreased to 12.6% (H1 22:
13.7%) as certain operating costs, previously restricted by
the pandemic, returned
-- Strong activity levels across the Group with utilisation up
2% to 86% (H1 22: 84%)
-- Ongoing M&A strategy reduces net cash to GBP1.1m (H1 22: GBP8.8m)
-- Strong balance sheet and significant headroom in revolving
credit facility assisting our growth strategy
-- Proposed interim dividend of 3.3p per share, in line with
progressive dividend policy (H1 22: 3.0p)
H1 23 H1 22 Change
Revenue GBP76.1m GBP62.3m +22.2%
Underlying operating profit before
tax GBP10.1m GBP9.0m +12.2%
Underlying adjusted profit before
tax(1) GBP9.6m GBP8.5m +12.9%
Profit before tax GBP8.0m GBP7.3m +9.6%
Profit after tax GBP6.4m GBP5.9m +8.5%
Basic earnings per share ("EPS") 5.11p 5.00p +2.2%
Underlying diluted EPS(2) 6.15p 5.76p +6.8%
Net assets GBP74.1m GBP58.0m +27.8%
Net cash(3) GBP1.1m GBP8.8m -87.5%
Dividend 3.3p 3.0p 10.0%
(1) Underlying adjusted profit before tax excludes share-based
payment charges, amortisation and exceptional items
(2) Underlying diluted EPS excludes share-based payment charges,
amortisation and exceptional items. It also adjusts for the
future weighted average number of expected unissued shares
from granted but unexercised share option schemes in issue
based on a share price at the end of the financial period
(3) Net cash excludes IFRS 16 lease liabilities
Operational and post-Period highlights
-- Ongoing investment in capacity as average fee earner headcount
increased to 1,000 in H1 23 (H1 22: 794)
-- Recent acquisitions integrating and performing in-line with
expectations
-- Acquisition of Symbiosis, a chartered patent attorney firm
specialising in IP services for the life sciences industry
completed in October 2022
-- Investment in and on-going adoption of new business management
system to support operational efficiencies and enhance management
controls and decision making
-- Achieved 13 of the 16 first set of Responsible Business objectives
and publication of our second annual Responsible Business
Report
-- "One team" business culture continues to be demonstrated through
65% of staff either owning shares or currently participating
in option schemes
Current trading and outlook
-- Growing, diversified and resilient business model, combined
with a strong H1 23 performance, leaves the Group well-placed
to navigate the more challenging economic environment that
is beginning to emerge in the second half of the financial
year
-- The Group maintains a strong balance sheet to deliver future
investment to enhance returns from diverse but complementary
workstreams and secure long-term, sustainable growth and results.
-- The board proposes an interim dividend of 3.3p per share,
reflecting the stated policy of paying an interim dividend
that is one third of the targeted full year dividend
Rod Waldie, Chief Executive Officer of Gateley, said:
"We are delighted to report further growth derived from the
increasing diversity of services on our Platforms, which now house
over 1,000 fee earners. Our Group revenue and profit grew strongly,
increasing by 22.2% and 9.6% respectively, within which revenue
from our consultancy services grew, including by acquisition, by
104.5%.
"I thank our clients for the opportunity to work with them on a
broad range of important mandates and our people for their hard
work and dedication to deliver results.
"I'm proud of the progress that we are making against our
Responsible Business strategy. In particular, supporting our
communities is an important part of our purpose as a business and
we will further connect our exceptionally talented people with
organisations who provide community support in the regions in which
we operate, recognising that business is a key engine of
change.
"During the Period, we saw political and economic instability
manifesting in uncertainty and temporary paralysis in a number of
sectors. This is an ongoing situation and the economy is
approaching a fork in the road where in all likelihood there is a
wide range of possible outcomes across different sectors. In the
meantime, we continue to invest in our offering and in our people
so that our business remains fully equipped to deliver as positions
settle in our target markets. The combined legal and consultancy
offering on our Platforms, remains unique and the outlook on each
of the Platforms is positive. We look forward to 2023 with a degree
of cautious confidence."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Finance Director Tel: +44 (0) 121 234
0196
Nick Smith, Acquisitions Director and Tel +44 (0) 20 7653
Head of Investor Relations 1665
Cara Zachariou, Head of Corporate Communications Tel +44 (0) 121 234
0074
Mob: +44 (0) 7703 684
946
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Cara Murphy Tel: +44 (0) 20 3100
2000
Belvedere Communications Limited - Financial
PR
Cat Valentine Mob: +44 (0) 7715 769
078
Keeley Clarke Mob: +44 (0) 7967 816
525
Llew Angus Mob: +44 (0) 7407 023
147
gateleypr@belvederepr.com
CHIEF EXECUTIVE OFFICER'S REVIEW
Summary
I am very pleased with the Group's performance during H1 23.
Throughout the Period, global events created significant
uncertainty resulting in a challenging macro-economic back drop,
which remains uncertain. Despite this, our team worked tirelessly
with clients to deliver these excellent results.
I remain grateful to all of our people for their energy and
commitment. I am delighted that the outcome of their hard work is
reflected in our 22.2% headline H1 23 revenue growth, of which 9.8%
was organic, and our 9.6% growth in profit before tax.
Also, we have delivered against our Responsible Business
targets, achieving in the first year since we published our
Responsible Business strategy, 13 out of the 16 targets set. In
doing so, we have enhanced our recognition that business is a key
engine for change. We recognise that, over time, an integrated
Responsible Business strategy develops solutions that positively
impact all three bases of people, planet and profit. Our journey
here advances with conviction.
We continue to operate and invest in a differentiated, resilient
and growing business, which has been designed to perform,
regardless of the economic environment. H1 23's results extend our
unbroken track record of year-on-year revenue and profit
growth.
The board proposes an interim dividend of 3.3p (H1 22:
3.0p).
Results overview
H1 23 Group revenues grew by 22.2% to GBP76.1m (H1 22:
GBP62.3m). This yielded an increase of 9.6% in reported profit
before tax to GBP8.0m (H1 22: GBP7.3m) and a 9.8% increase in
underlying adjusted profit before tax to GBP9.6m (H1 22:
GBP8.5m).
Our strong revenue performance results from excellent advice
provided through the unique combination and growing range of
professional services on our well-established Platforms. We are
particularly pleased to be releasing a second consecutive set of
results showing 20% or more organic revenue growth in our
consultancy services.
The strength of both existing operations and our balance sheet
provide the foundation for further investment in Platform growth.
Our pipeline of acquisition opportunities remains good across the
Group.
Property Platform
Whilst all of our Platforms showed good momentum, the Property
Platform grew strongly by 36.7% (H1 22: 20.0%) and remains our most
mature, diversified Platform. The range of expertise on this
Platform was expanded by the acquisition of Gateley Smithers
Purslow ("GSP") late in H2 22. It is the latest of the six
consulting business acquisitions made onto the Platform. GSP
specialises in providing technical advice and support to the UK
insurance industry in handling complex property claims. It
integrated well during H1 23 and is delivering results in line with
pre-acquisition expectations. Consultancy businesses now generate
32.6% (H1 22: 19.4%) of Property Platform revenue and are
performing excellently alongside our established legal property
service lines in both contentious and non-contentious work streams.
In our view, the range and depth of expertise now housed on our
Property Platform puts it in direct competition with
well-established multi-disciplinary property consultancies in the
market.
People Platform
Our People Platform delivered results which were, overall,
similar to H1 22. We saw healthy performance in our pensions, legal
and consultancy businesses. Employment legal services revenue
decreased as clients' HR teams returned to business-as-usual
activities post the pandemic hiatus. However, this was offset by
growth in our people consultancy service line revenue as,
post-pandemic, clients re-focus on leadership identification and
development and cultural change projects. Consultancy revenues have
matured to represent 32.9% of H1 23 People Platform revenue (H1 22:
31.3%) and the consultancy pipeline remains good.
Business Services Platform
The Business Services Platform contracted marginally in H1 23. A
significant factor here is much reduced activity in our legal
services' complex international recoveries litigation team, which
continues to adjust to global events, particularly the war in
Ukraine, where it holds a number of paused mandates. The team has
established a new pipeline of business. However, by nature, these
are long-term projects and FY 23 revenue for the team will be
dictated by litigation timetables. A return to significant growth
is expected in FY 24 and beyond. Other components of the Platform
performed well, including new additions to the Group. In
particular, whilst currently modest, our Patent and Trademark
Attorney business, established in the Group in FY 22, was expanded
by the in-Period acquisition of Symbiosis, which is a patent
attorney consultancy servicing exclusively the life sciences
industry. Symbiosis is performing well and represents a
strategically important step for us in expanding the consultancy
expertise that we are able to offer to clients from the patent and
trademark attorney component of this Platform. We will endeavour to
make further acquisitions to continue to add new industry coverage
to our patent and trademark business as part of our strategy to
broaden our IP/intangible assets offering in both legal and
consultancy services.
Corporate Platform
Activity levels remained strong across our legal services
dominated Corporate Platform, which grew by 26.0%, buoyed by strong
UK M&A and Private Equity markets throughout most of H1 23.
Activity levels on this Platform reduced towards the end of H1 23
in line with shifting market dynamics. However, our immediate
pipeline remains healthy.
Operational review
The significant investment in, and phase one adoption of, our
new market-leading business management, productivity, and financial
system ("3E") was a major project during H1 23. This followed
relatively soon after the adoption of newly-integrated client
onboarding and time recording systems. Together these systems are
important upgrades for our growing and increasingly sophisticated
group of professional services businesses. They deliberately
include significant capacity to expand in line with headcount as we
expand and grow the Group. They also materially assist in the
integration of our businesses and, generation of operational
efficiencies, as well as enhancing internal controls and risk
management processes. This ability to drive further scale through
our internal systems will help sustain and improve our margins over
the medium to longer term. We saw some inevitable disruption in
those parts of the Group that were involved in moving to 3E,
despite which we delivered a strong H1 outturn. I would like to
thank the excellent team of people who are managing the new system
implementation and all of my colleagues for their engagement and
patience with this important project. Despite the expenditure on
these essential and forward-looking investments we maintained a
like-for-like increase in profitability and a net cash
position.
The integration of our recent acquisitions was also an important
operational focus for us during H1 23 (and is ongoing). GSP,
acquired late in H2 22, is our largest acquisition to date and like
each of our acquired businesses, GSP has an entrepreneurial
management team which is supported by our operational integration
team. The ongoing integration exercise is proceeding as planned.
The process has resulted in positive enhancements to our now
well-developed Group integration methodology. In parallel, GSP has
performed as we expected, added to its headcount during the Period
and has identified opportunities for further growth.
We have spent many years building and growing our physical
footprint across the UK, matching our office locations with
opportunities that we see available to the Group. As a result, we
currently provide our services from most of the major commercial
centres in the UK. Our office network remains an important asset to
us but, as a result of the success of agile working, integration of
acquired businesses has included realisation of some operational
efficiencies through rationalisation of some of our office space.
For example, during H1 23, we relocated Nottingham and
Leicester-based Adamson Jones colleagues to our existing Nottingham
office and Manchester-based GSP colleagues to our existing
Manchester office. Not only does this generate office cost savings
but, importantly, the aggregation of locally-based Group colleagues
assists with integration, familiarisation with the wider Group and,
ultimately, realisation of mutual opportunities. There are firm
plans to save future costs in this way with the relocation of GSP
colleagues in Reading and Leeds to our existing offices in those
cities.
Our office premises strategy in H1 23 (and ongoing) includes
enhancement of workspace attractiveness with innovative floor
layouts and upgrades in technology.
H1 23 saw a return to more familiar levels of recruitment, with
significant further additions via acquisitions resulting in overall
average headcount climbing to 1,431 in the Period (H1 22: 1,132).
Average fee earner headcount increased by 206 from H1 22, whilst
administrative staff headcount increased by 93 to 431 (H1 22: 338).
The Gateley offering, underpinned by our unique identity and
long-established one-team culture, remains differentiated and
attractive.
Wage cost inflation experienced across the global legal industry
over the last two years, resulting from strong client demand, looks
like it is beginning to settle. Businesses in the professional
services sector are still adjusting through FY 23 to the higher
salary levels but it will take time for the full impact of the
personnel cost increases of the last two years to be fully
absorbed. In the meantime, it remains important to offer our people
stimulating, purposeful and rewarding career opportunities . As we
grow and diversify our range of businesses, we are able to offer an
increasingly broad spectrum of career opportunities to our people.
In addition, the ability for our colleagues to participate in share
ownership remains an attractive proposition and recruitment
differentiator.
Responsible Business
We published our Responsible Business Strategy in October 2021.
The launch was supported by leaders from the Better Business Act
and the Purpose Coalition, who helped us frame our objectives
against the backdrop of the UK's levelling-up goals, particularly
those that relate to our people and the communities in which we
operate.
Being a Responsible Business is now an integral part of our
Purpose Statement:
"Our purpose is to deliver results that delight our clients,
inspire our people and support our communities"
During the first year of our Responsible Business journey, we
have recognised that business is a key engine of change and that
being a Responsible Business builds greater trust and strengthens
relationships with clients, employees, investors and the
communities in which we operate, all of which, in time, will
generate greater value. Over the last 12 months, our strategy has
gained real momentum, generating enthusiasm and engagement right
across the Group. I'm very pleased with the progress that we're
making as set out in our second annual Responsible Business report,
released in December 2022 and available on the investors page of
our Group external website.
Highlights from 2022 include:
-- Recruitment of Gateley's first Responsible Business Manager.
A real statement of intent. She is dedicated to delivering
the Group's Responsible Business strategy
-- Launch of our partnership with the University Academy 92 ("UA92")
in Manchester, connecting UA92 with colleagues, clients, and
contacts to raise awareness of what that organisation is doing
in the region to support students from diverse backgrounds
through higher education
-- Launch of our partnership with the NSPCC to raise awareness
and support fundraising
-- Continuation of our partnership with SportsAid, providing
financial and development support to 12 of the UK's brightest
young sporting prospects
I'm delighted that we achieved 13 out of our 16 objectives set
in year one and that we're making good progress with the other
three, whilst maintaining momentum by setting a further 15 new
objectives. Our journey advances with conviction.
Current trading and outlook
The solid foundations on which our business is built have
enabled the Group to deliver strong H1 23 results, in a period
which was widely impacted by macroeconomic events. One of the key
objectives of our IPO in 2015 was to transition the business into a
structure that would enable it to build a strong balance sheet and
deliver the investment needed to drive the business forward. We are
delivering on this objective and will continue in this vein.
Our growth strategy is to deliver enhanced returns from an
increasingly diversified but complementary set of workstreams. By
deliberately building-out each of our Platforms with a mix of
services some of which fare best in a growing economy and some when
times are more difficult, we are investing to strengthen overall,
and secure long-term, sustainable growth and results. Hence, whilst
in recent weeks we have begun to see transactional activity levels
reduce slightly from the unprecedented highs of FY 22 and H1 23, we
are also seeing revenues beginning to pivot towards some of our
more counter-cyclical lines. As such the Group is operating as it
is designed to do, which gives us confidence that, notwithstanding
prevailing economic winds, the Group will extend its decades-long
track record of uninterrupted growth.
We are confident of our ability to expand and perform well and,
with a degree of caution, view the Group's prospects for the year
ahead and beyond positively.
Rod Waldie
CEO
18 January 2023
FINANCE DIRECTOR'S REVIEW
Financial overview
As a result of strong H1 23 trading, the board is pleased with
an underlying adjusted profit margin of 12.6%, even after
significant cost inflationary pressure and material strategic
investment in our IT infrastructure. The unprecedented demand for
professional staff in the UK has led to double-digit increases in
payroll costs during H1 23. However, whilst operating overheads
grew, they remain below pre-pandemic levels, and the Group has
invested in staff activities and encouraged a partial return of
both marketing and travelling costs in order to increase ongoing
face-to-face client interaction.
Our track record of delivering profit, supported by strong cash
generation and attractive investment returns, is based on a
responsible business model with a strong focus on social and
governance objectives and making sustainable decisions for the long
term.
A strategic focus and effort in June 2022 was the successful
migration onto our new business management system. I'm extremely
pleased with how successfully the business handled such a
significant and disruptive exercise, and I would like to thank all
staff involved in the project for their dedication and hard work in
making this transition a tremendous success.
Revenue
Group revenue grew by 22.2% to GBP76.1m for the first half of
the year, from GBP62.3m in H1 22. Revenue growth in the Group's
core legal services was entirely organic at 8.2%, growing to
GBP57.9m (H1 22 GBP53.5m), whilst revenue from consultancy
non-legal services grew by 104.5% overall to GBP18.2m (H1 22
GBP8.9m). Acquired consultancy revenue totalled GBP8.2m (H1 22:
GBP0.4m) during the period, with organic consultancy revenue growth
of 20.0% to GBP10.0m (H1 22: GBP8.4m).
The Group has grown three of its four Platforms during the
Period and continues to further diversify its client base and
revenue mix, thereby increasing its sales reach and share of the
professional services market. Transactional activity has remained
strong during the first half of H1 23 as the Corporate Platform
once again delivered high deal volumes, resulting in Platform
revenue growth of 26.0% (H1 22: 47.4%). Likewise, the Property
Platform also delivered strong growth overall, including the
significant revenue contribution of GSP. Organic Property Platform
revenue growth was 16.3% as a result of strong growth in
construction legal services of 21% and consultancy service revenue
growth of 40.0% from the Gateley Vinden team. Commercial property
legal services grew revenues by 6.0%. Although transactional
housebuilder revenues decreased by 1.0%, comparing very favourably
against market-wide trends, instructions from housebuilders extend
to other teams, including contributing to growth in Construction
legal services as housebuilder clients increasingly required
specialist advice on the high profile Building Safety Act.
The Business Services Platform is working well with its newly
formed joint legal and consultancy intellectual property service
lines including Adamson Jones, purchased in January 2022 and the
more recently acquired Symbiosis, purchased in October 2022. As a
result of the exceptional events in Eastern Europe, our complex
international dispute resolution team has seen a decrease in H1 23
activity which is offsetting the growth across other areas of the
Platform. However, we expect a significant increase in litigation
activity during H2 23. Our complex international dispute resolution
offering represents only part of our group-wide contentious
services offering and as markets turn across all of our Platforms
demand for counter-cyclical service line support is increasing.
More generally in a challenging economic environment the
Business Services Platform is well positioned to capitalise on
opportunities that arise.
The People Platform grew by 0.4% with strong demand for services
and 6.0% growth across our consultancy businesses, t-three and
Kiddy & Partners, off-set by a decrease in employment legal
service activity that benefitted from pandemic-led advice in the
prior year. The launch of our fully integrated t-three and Kiddy
& Partners service delivery model, which focuses on both talent
assessment and development, and cultural change programmes, has
proven to represent a strong sales proposition to a corporate
client base inevitably needing to adjust and change as a result of
the pandemic and even more recent challenges to traditional
operating models.
Business Services
Revenue Corporate Platform Platform People Platform Property Platform Total
H1 23 19,046 9,728 9,745 37,624 76,143
Revenue growth H1 23 26.0% (2.3)% 0.4% 36.7% 22.2%
H1 22 15,118 9,960 9,706 27,525 62,309
Total expenses
Personnel costs (excluding IFRS 2 charge) have decreased as a
percentage of revenue to 61.7% (H1 22: 64.1%) as strong H1 23
revenue growth covered the effect of H1 23 pay and headcount
increases. Average numbers of legal and professional staff rose by
25.9% to 1,000 as a result principally of acquisitions (H1 22:
794). Support staff numbers also increased by 27.5% to 431 (H1 22:
338) also principally as a result of acquisitions.
Other operating expenses, excluding non-underlying items,
increased to GBP16.0m (H1 22: GBP10.6m) as GBP2.8m of additional
costs are now included from acquired entities. In addition, certain
necessary appropriate post-pandemic increases in operating costs,
restricted by the pandemic, returned such as travel, marketing and
the re-introduction of strategic senior leaders' conferences and
all staff events. The majority of such costs are first half
weighted, alongside consultancy costs incurred as part of the
installation of our new business management system in June 2022.
Overall ongoing like-for-like operating costs, as a percentage of
revenue, remain in line with management's expectations. Our use of
agile working, the new business management system and extensive
review of premises usage will generate medium-term cost savings,
where appropriate, without damaging the resources available to
clients and staff. In particular, our new business management
system will enhance centralised control, support operational
efficiencies and drive a level of consistency across the processing
of all client and Group data.
Profit before tax and earnings per share
Underlying adjusted profit before tax of GBP9.6m has increased
by 12.9% from GBP8.5m in H1 22. The board is pleased with profit
and trading margin performance despite the H1 distractions brought
about by the change in business management systems, the uncertainty
of the economic climate and the demand for talent across the
industry creating continuing pressure on salary levels. We enter
the second half of the financial year having maintained fee earner
headcount in counter cyclical work types in order to match the
changing client activity patterns and in the knowledge that we have
a resilient and diverse spectrum of service lines from which to
increase market share.
Profit before tax of GBP8.0m increased by 9.6% due to strong H1
revenue growth absorbing the current key inflationary effects and a
H1 weighting on discretionary spend on specific operating costs
such as the installation of the new business management system.
Profit after tax of GBP6.4m increased by 8.5% from GBP5.9m and
basic earnings per share increased by 2.2% to 5.11p (H1 22: 5.00p)
after a full period impact from new shares issued for acquisitions
and after awards made under the Group's share option reward
schemes. Underlying diluted earnings per share increased by 6.8% to
6.15p (H1 22: 5.76p).
Dividend
The board proposes an interim dividend of 3.3p (H1 22: 3.0p) per
share. This dividend will be paid on 31 March 2023 to shareholders
on the register at the close of business on 24 February 2023. The
shares will go ex-dividend on 23 February 2023. This dividend has
not been recognised as a liability in the interim accounts.
Net assets
The Group's net asset position has increased by GBP16.1m to
GBP74.1m (H1 22: GBP58.0m) principally as a result of the
acquisition of three complementary consultancy services businesses
since H1 22.
Working capital and cash generation
Total lock-up increased from 143 to 159 days as a result of
strong organic and acquisitive growth, with WIP days increasing
from 46 to 59 days and debtor days increasing slightly (in part due
to adopting the new business management system integration
processes) from 97 to 100 days. Group-wide activity remained strong
in H1 23 despite political and economic uncertainty delaying
completion of certain assignments and recoveries, and we remain
focused on lock-up management.
Cash generated from operations during the Period was GBP1.6m (H1
22: GBP(0.6)m) which represents 25.5% (H1 22: (9.9)%) of profit
after taxation. Working capital movements typically reduce H1 free
cash flows before they reverse in H2 as revenue and profit
weighting is greater and outflows are much lower. Free cash flow
improved from GBP(2.4)m in H1 22 to GBP(1.4)m in H1 23. The Group
has utilised GBP6.8m (H1 22: GBPnil) of its GBP30m revolving credit
facility, which is in place to support the Group's expansion
through acquisition.
Conclusion
The Group has delivered a strong performance in H1 23 against
the backdrop of an uncertain macro environment, with activity
levels, revenue and profitability advancing once again. The Group
looks to expand its strong organic growth trajectory across all of
its Platforms and retains significant facility headroom in order to
further expand sales resilience through acquisition.
Neil Smith
Finance Director
18 January 2023
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2022
Note Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
Revenue 2 76,143 62,309 137,249
Other operating income - - -
Personnel costs, excluding IFRS
2 charge 3 (46,981) (39,935) (86,517)
Depreciation - Property, plant
and equipment 4 (503) (421) (851)
Depreciation - Right-to-use
asset 4 (1,979) (1,942) (3,783)
Impairment of trade receivables
and contract assets (633) (475) (866)
Other operating expenses (15,966) (10,585) (22,716)
----------- ----------- -------------
Operating profit before non-underlying
operating and exceptional items 10,081 8,951 22,516
Non-underlying operating items 4 (1,535) (1,236) (2,659)
Exceptional items 4 - - (870)
----------- ----------- -------------
(1,535) (1,236) (3,529)
Operating profit 8,546 7,715 18,987
Financing income 890 70 194
Financing expense (1,407) (509) (1,149)
----------- ----------- -------------
Profit before tax 8,029 7,276 18,032
Taxation (1,662) (1,353) (3,753)
=========== =========== =============
Profit for the period after
tax attributable to equity holders
of the parent 6,367 5,923 14,279
=========== =========== =============
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences
- Revaluation of other investments - - (190)
- Exchange differences on foreign
branch 95 (5) 58
----------- ----------- -------------
Profit for the financial period
and total comprehensive income
all attributable to equity holders
of the parent 6,462 5,918 14,147
=========== =========== =============
Statutory earnings per share (pence)
Basic earnings per share 5 5.11p 5.00p 12.00p
Diluted earnings per share 5 5.01p 4.94p 11.71p
The results for the periods presented above are derived from
continuing operations. There were no other items of comprehensive
income to report.
Gateley (Holdings) Plc
Consolidated statement of financial position
at 31 October 2022
Note Unaudited at Unaudited at Audited at
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 1,450 1,343 1,334
Right-of-use asset 28,486 25,268 24,627
Investment property 164 164 164
Intangible assets & goodwill 7 33,655 15,763 32,590
Other intangible assets 716 245 564
Other investments 173 367 173
Deferred tax asset 638 2 638
------------ ------------ ----------
Total non-current assets 65,282 43,152 60,090
------------ ------------ ----------
Current assets
Contract assets 8 22,255 14,723 17,239
Trade and other receivables 9 52,822 41,390 56,168
Cash and cash equivalents 7,887 8,842 16,105
------------ ------------ ----------
Total current assets 82,964 64,955 89,512
------------ ------------ ----------
Total assets 148,246 108,107 149,602
============ ============ ==========
Non-current liabilities
Other interest-bearing loans and borrowings 10 (6,765) - (5,715)
Lease liability (30,015) (26,465) (25,207)
Other payables 11 (5,740) (120) (5,360)
Deferred tax liability (3,103) (591) (3,089)
Provisions (863) (724) (863)
Total non-current liabilities (46,486) (27,900) (40,234)
------------ ------------ ----------
Current liabilities
Lease liability (3,234) (3,197) (3,719)
Trade and other payables 11 (23,519) (19,303) (31,793)
Provisions (101) (176) (101)
Current tax liabilities (843) 420 (842)
Total current liabilities (27,697) (22,256) (36,455)
------------ ------------ ----------
Total liabilities (74,183) (50,156) (76,689)
============ ============ ==========
NET ASSETS 74,063 57,951 72,913
============ ============ ==========
EQUITY
Share capital 12,514 11,899 12,456
Share premium 12,378 10,430 11,342
Merger reserve (9,950) (9,950) (9,950)
Other reserves 14,465 7,097 14,465
Treasury reserve (240) (629) (261)
Translation reserve 93 (65) (2)
Retained earnings 44,803 39,169 44,863
------------ ------------ ----------
TOTAL EQUITY 74,063 57,951 72,913
============ ============ ==========
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2022
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period after tax 6,367 5,923 14,279
Adjustments for:
Depreciation and amortisation 3,594 3,102 6,215
Financial income (890) (70) (194)
Financial expense 871 7 201
Release of contingent consideration - - (135)
Interest charge on capitalised leases 536 502 948
Equity settled share-based payments 423 534 1,213
Loss on disposal of property, plant and equipment 122 - 16
Tax expense 1,662 1,353 3,753
------------ ------------ -------------
12,685 11,351 26,296
(Increase)/decrease in trade and other receivables (1,308) 930 (10,233)
(Decrease)/increase in trade and other payables (7,817) (9,870) 758
(Decrease)/increase in provisions - (39) 25
------------ ------------ -------------
Cash generated from operations 3,560 2,372 16,846
Tax paid (1,937) (2,960) (4,497)
------------ ------------ -------------
Net cash flows from operating activities 1,623 (588) 12,349
------------ ------------ -------------
Investing activities
Acquisition of property, plant and equipment (739) (434) (775)
Acquisition of other intangible assets (216) - (319)
Contingent consideration paid - acquisition of subsidiary (100) - -
Consideration paid on acquisitions, net of cash acquired (1,019) (617) (5,982)
Interest received 890 70 194
Net cash outflow from investing activities (1,184) (981) (6,882)
------------ ------------ -------------
Financing activities
Interest and other financial income paid (871) (7) (201)
Lease payments (2,051) (1,488) (3,870)
Receipt of new revolving credit facility, net of refinancing costs 1,000 - 5,715
Acquisition of own shares (18) (60) (39)
Proceeds of sale of own shares 39 330 90
Cash received for shares issued on exercise of share options 79 879 1,768
Dividends paid 6 (6,835) (8,848) (12,430)
Net cash outflow from f inancing activities (8,657) (9,194) (8,967)
------------ ------------ -------------
Net decrease in cash and cash equivalents (8,218) (10,763) (3,500)
Cash and cash equivalents at beginning of period 16,105 19,605 19,605
------------ ------------ -------------
Cash and cash equivalents at end of period 7,887 8,842 16,105
============ ============ =============
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2022
Share Share Merger Other Treasury Retained Foreign Total
capital premium reserve reserve reserve earnings currency equity
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2021 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)
Exchange rate
differences - - - - - - 58 58
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 14,089 58 14,147
Transaction 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
======== ======== ======== ======== ======== ========= ============ ========
At 1 May 2021
(unaudited) 11,792 9,421 (9,950) 6,815 (312) 41,560 (60) 59,266
-------- -------- -------- -------- -------- --------- ------------ --------
Comprehensive
income:
Profit for the
period - - - - - 5,923 5,923
Exchange rate
differences - - - - - - (5) (5)
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 5,923 (5) 5,918
Transaction with
owners recognised
directly in equity
Share issue 107 1,009 - 282 - - - 1,398
Sale of treasury
shares - - - - 33 - - 33
Purchase of treasury
shares - - - - (350) - - (350)
Dividend paid - - - - - (8,848) - (8,848)
Share based payment
transactions - - - - - 534 - 534
-------- -------- -------- -------- -------- --------- ------------ --------
Total equity
at 31 October
2021 11,899 10,430 (9,950) 7,097 (629) 39,169 65 57,951
======== ======== ======== ======== ======== ========= ============ ========
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2022
Share Share Merger Other Treasury Retained Foreign Total
capital premium reserve reserve reserve earnings currency equity
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2022
(unaudited) 12,456 11,342 (9,950) 14,465 (261) 44,863 (2) 72,913
-------- -------- -------- -------- -------- --------- ------------ -------
Comprehensive
income:
Profit for the
year - - - - - 6,367 - 6,367
Exchange rate
differences - - - - - - 95 95
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 6,367 95 6,462
Transaction
with owners recognised
directly in equity
Share issue 58 1,036 - - - - - 1,094
Sale of treasury
shares - - - - 39 - - 39
Purchase of own
shares at nominal
value (15) - (15)
Purchase of treasury
shares - - - - (18) - - (18)
Dividend paid - - - - - (6,835) - (6,835)
Share based payment
transactions - - - - - 423 - 423
Total equity
at 31 October
2022 12,514 12,378 (9,950) 14,465 (240) 44,803 93 74,063
======== ======== ======== ======== ======== ========= ============ =======
The following describes the nature and purpose of each reserve
within equity:
Share premium - Amount subscribed for share capital in excess of
nominal value together with gains and losses on sale of own
shares.
Merger reserve - Represents the difference between the nominal
value of shares acquired by the Company in the share for share
exchange with the former Gateley Heritage LLP members and the
nominal value of shares issued to acquire them.
Other reserve - Represents the difference between the actual and
nominal value of shares issued by the Company in the acquisition of
subsidiaries.
Treasury reserve - Represents the repurchase of shares for
future distribution by the Group's Employee Benefit Trust.
Retained earnings - All other net gains and losses and
transactions with owners not recognised anywhere else.
Foreign currency translation reserve - Represents the movement
in exchange rates back to the Group's functional currency of
profits and losses generated in foreign currencies.
Gateley (Holdings) Plc
Notes
for the period ended 31 October 2022
1. Basis of preparation
These interim unaudited financial statements for the six months
ended 31 October 2022 have been prepared in accordance with the
accounting policies set out in the Annual Report and Financial
statements of the Group for the year ended 30 April 2022 using the
recognition and measurement principles of IFRS as applied under the
Companies Act 2006 and the AIM rules.
The comparative figures for the financial year ended 30 April
2022 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was unqualified, did not include a reference to any matters
to which the auditor drew attention by way of emphasis without
qualifying their report, and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
1.1 Accounting policies
Accounting policies remain unchanged from those accompanying the
30 April 2022 financial statements.
Non-underlying items
Non-underlying items are non-trading and or non-cash items
disclosed separately in the Consolidated Income Statement where the
quantum, nature or volatility of such items would otherwise distort
the underlying trading performance of the Group. The following are
included by the Group in its assessment of non-underlying
items:
-- Share based payment charges: such charges are treated as
non-underlying as the gain realised on the options granted is
settled in shares not cash and therefore does not impact the income
statement. The IFRS 2 charge is taken to the income statement,
these expenses are treated as non-underlying items as they are
either non-cash or non-recurring in nature.
-- Amortisation in respect of intangible fixed assets: these
costs are treated as non-underlying as they are non-cash items.
The tax effect of the above is also included if considered
significant.
Exceptional items
Exceptional items are one off transactions, unrelated to the
underlying trading performance of the Group disclosed separately in
the Consolidated Income Statement where the quantum, nature or
volatility of such items would otherwise distort the underlying
trading performance of the Group.
The following are included by the Group in its assessment of
exceptional items:
-- Gains or losses arising on disposal, closure, restructuring
or reorganisation of businesses that do not meet the definition of
discontinued operations.
-- Impairment charges in respect of intangible fixed assets:
these costs are treated as exceptional due to their one-off
nature.
-- Non-typical expenses associated with acquisitions.
-- Costs incurred as part of significant refinancing activities.
The tax effect of the above is also included if considered
significant.
Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment. In respect of
equity accounted investees, the carrying amount of goodwill is
included in the carrying amount of the investment in the
investee.
Other intangible assets
Other intangible assets, including software licences,
expenditure on internally generated goodwill, brands and software,
customer contracts and relationships are capitalised at cost and
amortised on a straight-line basis over their estimated useful
economic lives through operating expenses.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Customer lists
Customer lists that are acquired by the Group as part of a
business combination are stated at cost less accumulated
amortisation and impairment losses (see accounting policy
'Impairment of assets'). Cost reflects management's judgement of
the fair value of the individual intangible asset calculated by
reference to the net present value of future benefits accruing to
the Group from the utilisation of the asset, discounted at an
appropriate discount rate.
Brand value
Certain acquisitions have retained their trading name due to the
value of the brand in their specific marketplace.
Brand value is amortised over a period of three or five years
based on the Directors' assessment of the future life of the brand,
supported by trading history.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of consolidated financial statements under IFRS
requires management to make estimates and assumptions which affect
the reported amount of revenues, expenses, assets and liabilities
and the disclosure of contingent liabilities. If in the future such
estimates and assumptions, which are based on Management's best
judgement at the date of preparation of the financial statements,
deviate from actual circumstances, the original estimates and
assumptions will be modified as appropriate in the period in which
the circumstances change. The key areas where a higher degree of
judgement or complexity arises, or where estimates and assumptions
are significant to the consolidated financial statements are
discussed below.
Management does not consider there to have been and critical
accounting judgements made in the financial period.
Unbilled revenue on client assignments
The valuation of unbilled revenue (on non-contingent matters)
involves detailed understanding of contractual terms with clients.
The valuation is based on an estimate of the amount expected to be
recoverable from clients on unbilled items based on such factors as
time spent, the expertise and skills provided and the stage of
completion of the assignment. The principal uncertainty over this
estimation is a result of the amounts not yet being billed to, or
recognised by the client. Provision is made for such factors as
historical recoverability rates, agreements with clients, external
expert's opinion and the potential credit risks, following
interactions between legal staff, finance and clients. Where
entitlement to revenue is certain it is recognised as recoverable
selling price. Where a matter is contingent at the statement of
financial position date, no revenue is recognised.
Valuation of intangibles
Measurement of intangible assets relating to acquisitions: In
attributing value to intangible assets arising on acquisition,
management has made certain assumptions in terms of cash flows
attributable to intellectual property and customer relationships.
The key assumptions made relate to the valuation of the brand,
where the acquired brand is retained by the entity, and the
customer list. The value of such intangibles has been estimated
based on the amount of revenue expected to be generated by them.
The revenue estimations rely on annual growth rates. Management
have selected the appropriate rates based on a combination of
observed historical growth, industry norms and forecasted
influencing factors. Management have also performed sensitivity
analysis to assess the impact of any variation to the growth rate
used. The rates applied reflect previous growth rates, with
sensitivities indicating that variations in the actual rate
achieved are unlikely to materially impact the valuation of the
intangible assets.
1.2 Alternative performance measures
Underlying adjusted profit before tax
The Directors seek to present a measure of underlying profit
performance which is not impacted by exceptional items or items
considered non-operational in nature. These include non-trading,
non-cash and one-off items disclosed separately in the consolidated
income statement where the quantum, nature or volatility of such
items are considered by management to otherwise distort the
underlying performance of the Group. This measure is described as
'underlying adjusted' and is used by management to assess and
monitor profit performance only at the before and after tax level.
In line with the board's wish to simplify reporting of profits, the
board have moved away from reporting adjusted Earnings Before
Interest Tax Depreciation and Amortisation ("EBITDA"), following
the introduction of IFRS 16 'Leases'.
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
Reported profit before tax 8,029 7,276 18,032
Adjustments for non-underlying and
exceptional items:
- Amortisation of intangible assets 1,112 702 1,581
- Share-based payment adjustment 423 534 1,213
Underlying adjusted profit before tax 9,564 8,512 20,826
=========== =========== =========
Amortisation of acquired intangible assets is identified as a
non-cash item released to the income statement therefore such cost
is removed when considering the underlying trading performance of
the Group by adding to profit the annual amortisation charge.
The adjustment for share-based payments relates to the impact of
the accounting standard for share-based compensation. The cost of
all share-based schemes are settled entirely by the issue of shares
where the proportions can vary from one year to another based on
events outside of the businesses control e.g., share price. Under
IFRS the anticipated future share cost is expensed to the income
statement over the vesting period. The adjustment above addresses
this by adding to profit the IFRS 2 charge in relation to
outstanding share awards. This adjustment is made so that non-cash
expenses are removed from profit.
Cash generated from operations
a) Free cash flows
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
Operating cash flows before movements
in working capital 12,685 11,351 26,296
Net working capital movement (9,125) (8,979) (9,450)
----------- ----------- ---------
Cash generated from operations 3,560 2,372 16,846
Repayment of lease liabilities (2,051) (1,488) (3,870)
Net interest paid (19) 63 7
Tax paid (1,937) (2,960) (4,497)
Purchase of property, plant and equipment (739) (434) (775)
Purchase of other intangible assets (216) - (319)
----------- ----------- ---------
Free cash flows (1,402) (2,447) 7,392
=========== =========== =========
b) Working capital measures
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
WIP days
Amounts recoverable from clients in
respect of contract assets (unbilled
revenue) 22,255 14,723 17,239
Unbilled disbursements 4,255 2,240 3,088
----------- ----------- ---------
Total WIP 26,510 16,963 20,328
----------- ----------- ---------
Annualised revenue 164,100 135,266 151,662
----------- ----------- ---------
WIP days 59 46 49
=========== =========== =========
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
Debtor days
Trade receivables 49,102 38,059 50,201
Less unbilled disbursements (4,255) (2,240) (3,088)
----------- ----------- ---------
Total debtors 44,847 35,819 47,113
----------- ----------- ---------
Annualised revenue 164,100 135,266 151,662
----------- ----------- ---------
Debtor days 100 97 113
=========== =========== =========
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
Gross lock-up days
Total WIP 26,510 16,963 20,328
Total debtors 44,847 35,819 47,113
----------- ----------- ---------
Total gross lock-up 71,357 52,782 67,441
----------- ----------- ---------
Annualised revenue 164,100 135,266 164,100
----------- ----------- ---------
Gross lock-up days 159 143 162
=========== =========== =========
Annualised revenue reflects the total revenue for the previous
12-month period inclusive of pro-forma adjustments for
acquisitions.
1.3 Going concern
These interim accounts are prepared on a going concern basis as
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. The Group remains cash generative, with a
strong on-going trading performance.
1.4 Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this
condensed set of consolidated financial statements have been
prepared in accordance with the AIM Rules.
1.5 Cautionary statement
This document contains certain forward-looking statements in
respect of the financial condition, results, operations and
business of the Group. Whilst these statements are made in good
faith based on information available at the time of approval, these
statements and forecasts inherently involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
the actual results of developments to differ materially from those
expressed or implied by these forward-looking statements and
forecasts. Nothing in this document should be construed as a profit
forecast.
2. Operating segments
The Chief Operating Decision Maker ("CODM") is the Strategic
Board. The Group has the following strategic Platforms, which are
its reportable segments. These divisions offer a mixture of legal
and consultancy services to clients. With effect from 1 May 2022
all service lines are managed through four Platforms.
The Group has restated the segmental reporting for the
comparative periods to reflect the current operating segments in
place
The following summary describes the operations of each
reportable segment as reported up to 31 October 2022:
Reportable segment Legal service lines Consultancy service
(Gateley Legal inc. lines
Dubai Branch) (Gateley Consultancy)
Corporate Banking Gateley Global (formerly
Corporate International Investment
Commercial, Technology Services)
& Data GEG Services
Restructuring Advisory
Taxation
------------------------------------------ --------------------------
Business Services Complex and International Adamson Jones
Recovery Gateley Omega
Commercial Dispute Resolution/Litigation Symbiosis IP
Intellectual Property
Regulatory and Business
Defence
Tweed (reputation, media
and privacy law)
------------------------------------------ --------------------------
People Employment Entrust Pension
Pensions Kiddy & Partners
Private Client t-three
------------------------------------------ --------------------------
Property Construction Gateley Capitus
Planning Gateley Hamer (inc.
Real Estate Persona Associates)
Real Estate Dispute Gateley Smithers Purslow
Resolution Gateley Vinden (inc.
Residential Development Tozer Gallagher)
Unit
------------------------------------------ --------------------------
6 months to 31 October 2022
Corporate Business Services People Property Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 19,046 9,728 9,745 37,624 76,143
--------- ----------------- ------- -------- -------
Segment contribution
(as reported internally) 8,347 2,437 3,196 13,565 27,545
Costs not allocated to segments:
Personnel costs (6,770)
Share based payment costs (423)
Depreciation and amortisation (3,594)
Other operating expenses (8,212)
Net financial expense (517)
-------
8,029
=======
6 months to 31 October 2021
Corporate Business People Property Total
Services
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 15,118 9,960 9,706 27,526 62,309
--------- --------- ------- -------- -------
Segment contribution
(as reported internally) 5,893 3,651 3,810 11,215 24,569
Costs not allocated to segments:
Other operating income -
Personnel costs (5,824)
Share based payment charge (534)
Depreciation and amortisation (3,065)
Other operating expenses (7,431)
Net financial expense (439)
-------
7,276
=======
12 months to 30 April 2022
Corporate Business People Property Total
Services
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 38,123 18,035 19,172 61,919 137,249
--------- --------- ------- -------- --------
Segment contribution
(as reported internally) 15,432 5,811 6,926 23,456 51,624
Costs not allocated to segments:
Other operating income -
Personnel costs (10,487)
Share based payment charge (1,213)
Depreciation and amortisation (6,215)
Other operating expenses (13,852)
Exceptional items (870)
Net financial expense (955)
18,032
========
Management has updated its segmental reporting in the current
and previous periods to display revenue and contribution values
previously disclosed as "Other" into the relevant Platforms to
which they belong. "Other" includes expense income and movement in
unbilled revenue. Prior to this change in disclosure GBP643,000 and
GBP1,118,000 was disclosed as "Other" in the 12 months to 30 April
2022 and the 6 months to 31 October 2021, respectively.
No other financial information has been disclosed as it is not
provided to the CODM on a regular basis.
3. Employees
The average number of persons employed by the Group during the
period, analysed by category, was as follows:
Number of employees
6 months to 6 months to 12 months to
31 October 2022 31 October 2021 30 April 2022
Legal and professional staff 1,000 794 800
Administrative staff 431 338 350
---------------- ---------------- --------------
1,431 1,132 1,150
================ ================ ==============
The aggregate payroll costs of these persons were as follows:
6 months to 6 months to 12 months to
31 October 2022 31 October 2021 30 April 2022
GBP'000 GBP'000 GBP'000
Wages and salaries 40,520 35,369 76,672
Social security costs 5,071 3,664 7,769
Pension costs 1,390 902 2,076
---------------- ---------------- --------------
46,981 39,935 86,517
================ ================ ==============
4. Expenses
Included in operating profit are the following:
6 months 6 months 12 months
to to to 30
31 October 31 October April 2022
2022 2021
GBP'000 GBP'000 GBP'000
Depreciation on tangible assets 503 421 851
Depreciation on right-of-use
assets 1,979 1,942 3,783
Other operating income - rent - - -
income
Short term and low value leases 37 117 75
Operating lease costs on property - - -
Foreign exchange (95) 5 (58)
Loss on disposal of fixed assets 122 - 16
============ ============ ============
Non-underlying items
6 months 6 months 12 months
to to to 30 April
31 October 31 October 2022
2022 2021
Amortisation of intangible assets 1,112 702 1,581
Share based payment charges 423 534 1,213
Release of contingent consideration
- International Investment Services
Limited - - (135)
------------ ------------ -------------
Total non-underlying items 1,535 1,236 2,659
------------ ------------ -------------
Exceptional items
Acquisition costs - - 373
One off remuneration charge -
Gateley Smithers Purslow Limited - - 497
------------ ------------ -------------
Total non-underlying and exceptional
items 1,535 1,236 3,529
============ ============ =============
5. Earnings per share
6 months to 6 months to 12 months
31 October 31 October 2021 to 30 April 2022
2022
Number Number Number
Weighted average number of ordinary shares in issue, being
weighted
average number of shares for calculating basic earnings per share 124,613,926 118,253,989 118,961,047
Shares deemed to be issued for no consideration in respect of
share
based payments 2,515,736 1,754,023 2,932,191
----------- ---------------- -------------------
Weighted average number of ordinary shares for calculating diluted
earnings per share 127,129,662 120,008,012 121,893,238
=========== ================ ===================
GBP'000 GBP'000 GBP'000
Profit for the period after taxation and basic earnings attributable to
ordinary equity shareholders 6,367 5,923 14,279
Non-underlying and exceptional items (see note 4) 1,535 1,236 3,529
Tax on non-underlying items (80) (247) (370)
---------- ------------ -----------
Underlying earnings before non-underlying items 7,822 6,912 17,438
========== ============ ===========
Earnings per share is calculated as follows: Pence Pence Pence
Basic earnings per ordinary share 5.11 5.00 12.00
Diluted earnings per ordinary share 5.01 4.94 11.71
Underlying basic earnings per ordinary share 6.28 5.85 14.66
Underlying diluted earnings per ordinary share 6.15 5.76 14.31
Underlying earnings per share have been shown because the
Directors consider that this provides valuable additional
information about the underlying performance of the Group.
6. Dividends
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
Equity shares
Final dividend in respect of 2022 (5.5p
per share) - paid 21 October 2022 6,835 - -
Interim dividend in respect of 2022
(3.0p per share) - paid 31 March 2022 - - 3,582
Interim dividend in respect of 2021
(2.5p per share) - paid 28 June 2021 - 2,940 2,940
Final dividend in respect of 2021 (5.0p
per share) - paid 8 October 2021 - 5,908 5,908
----------- ----------- ---------
Dividends paid 6,835 8,848 12,430
=========== =========== =========
The board intends to approve an interim dividend of 3.30p (H1
22: 3.0p) per share. This dividend will be paid on 31 March 2023 to
shareholders on the register at the close of business on 24
February 2023. The shares will go ex-dividend on 23 February 2023.
This dividend has not been recognised as a liability in these final
statements.
7 Intangible assets
Goodwill Customer list Brand names Total
GBP'000 GBP'000 GBP'000 GBP'000
Deemed cost
At 1 May 2021 11,698 9,850 - 21,548
Acquired through business combination 307 393 - 700
-------- ------------- ----------- -------
At 31 October 2021 12,005 10,243 - 22,248
======== ============= =========== =======
At 1 May 2021 11,698 9,850 - 21,548
Acquired through business combination 8,440 6,411 3,518 18,369
-------- ------------- ----------- -------
At 30 April 2022 20,138 16,261 3,518 39,917
======== ============= =========== =======
At 1 May 2022 20,138 16,261 3,518 39,917
Acquired through business combination 1,113 1,000 - 2,113
At 31 October 2022 21,251 17,261 3,518 42,030
========
Accumulated amortisation
At 1 May 2021 - 5,783 - 5,783
Charge for the period - 702 - 702
-------- ------------- ----------- -------
At 31 October 2021 - 6,485 - 6,485
======== ============= =========== =======
At 1 May 2021 - 5,783 - 5,783
Charge for the year - 1,534 10 1,544
-------- ------------- ----------- -------
At 30 April 2022 - 7,317 10 7,327
======== ============= =========== =======
At 1 May 2022 - 7,327 10 7,327
Charge for the period - 1,048 115 1,048
--------
At 31 October 2022 - 8,250 125 8,375
======== ============= =========== =======
Net Book Value
At 31 October 2021 12,005 3,758 - 15,763
======== ============= =========== =======
At 30 April 2022 20,138 8,944 3,508 32,590
======== ============= =========== =======
At 31 October 2022 21,251 9,011 3,393 33,655
======== ============= =========== =======
Goodwill
Goodwill is allocated to the following cash generating units
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
Property Platform
Gateley Capitus Limited 1,515 1,515 1,515
Gateley Hamer Limited 1,161 1,161 1,161
GCL Solicitors LLP (acquisition of trade and assets) 2,900 2,900 2,900
Persona Associates Limited 40 40 40
Gateley Vinden Limited 2,259 2,259 2,259
Tozer Gallagher LLP (acquisition of trade and assets) 405 307 405
Gateley Smithers Purslow Limited 6,605 - 6,605
---------- ---------- --------
14,885 8,182 14,885
People Platform
Kiddy & Partners Limited 1,600 1,600 1,600
Gateley Global Limited (formerly International Investment Services Limited) 338 338 338
t-three Consulting Limited 309 309 309
---------- ---------- --------
2,247 2,247 2,247
Business Services Platform
Gateley Tweed (acquisition of goodwill) 1,576 1,576 1,576
Adamson Jones IP Limited 1,430 - 1,430
Symbiosis IP Limited 1,113 - -
---------- ---------- --------
4,119 1,576 3,006
21,251 12,005 20,138
========== ========== ========
Acquisition of Symbiosis IP Limited (Symbiosis IP)
On 3 October 2022 Adamson Jones IP Limited acquired the entire
issued share capital of Symbiosis IP Limited. Symbiosis 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 value
amount adjustments Total
GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ----------------- ---------
Property, plant and equipment 2 23 25
Intangible asset relating
to customer list - 1,000 1,000
Cash 480 - 480
Trade debtors 327 - 327
Prepayments and accrued income 35 - 35
Total assets 844 1,023 1,867
--------------------------------- ---------------- ----------------- ---------
Trade payables (119) - (119)
Accruals and other payables (3) - (3)
Corporation tax (40) - (40)
Other taxes and social security (46) - (46)
Lease liability - (23) (23)
Deferred tax - (250) (250)
--------------------------------- ---------------- ----------------- ---------
Total liabilities (208) (273) (481)
--------------------------------- ---------------- ----------------- ---------
Total identifiable net assets
at fair value 636 750 1,386
Goodwill arising on acquisition 1,113
--------------------------------- ---------------- ----------------- ---------
Total consideration 2,499
--------------------------------- ---------------- ----------------- ---------
Satisfied by:
Initial cash consideration
paid 1,499
Issue of 523,012 new 10p
ordinary shares in Gateley
(Holdings) Plc 1,000
Total consideration 2,499
--------------------------------- ---------------- ----------------- ---------
Net cash outflow arising
on acquisition
Cash paid (1,499)
Net cash acquired 480
Net cash outflow arising
on acquisition (1,019)
--------------------------------- ---------------- ----------------- ---------
The goodwill of GBP1,113,000 arising from the acquisition
represents the assembled workforce. None of the goodwill is
expected to be deductible for income tax purposes.
8 Contract Assets and liabilities
Contract Contract
assets liabilities
GBP'000 GBP'000
As at 31 October 2022 22,255 (668)
======== ============
As at 31 October 2021 14,723 (282)
======== ============
As at 30 April 2022 17,239 (569)
======== ============
Contract assets
Contract assets consist of unbilled revenue in respect of
professional services performed to date.
Contract assets in relation to non-contingent work are billed at
appropriate intervals, normally on a monthly basis in arrears, in
line with the performance of the services and engagement
obligations. Where such matters remain unbilled at the period end
the asset is valued on a contract-by-contract basis at its expected
recoverable amount.
Contract assets in relation to contingent work are billed at a
point in time once the uncertainty over the contingent event has
been satisfied and all performance obligations satisfied, such that
it is no longer contingent, these matters are valued based on the
expected recoverable amount. Due to the complex nature of these
matters, they can take a considerable time to be finalised
therefore performance obligations may be settled in one period but
the matter not billed until a later financial period. Until the
performance obligations have been performed the Group does not
recognise any contract asset value at the year end.
Contract liabilities
When matters are billed in advance or on a basis of a monthly
retainer, this is recognised in contract liabilities and released
over time when the services are performed.
9 Trade and other receivables
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
Trade receivables 49,102 38,059 50,201
Prepayments 3,500 3,121 5,626
Other receivables 220 210 341
---------- ---------- --------
52,822 41,390 56,168
========== ========== ========
10 Other interest-bearing loans and borrowings
The contractual terms of the Group's interest-bearing loans and
borrowings, which are measured at amortised cost, are described
below.
31 October 2022 31 October 2021 30 April 2022
Fair Carrying Fair Carrying Fair Carrying
value amount value amount value amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-Current liabilities
Bank borrowings 6,765 6,765 - - 5,715 5,715
Contingent consideration 5,740 5,740 - - 5,360 5,360
12,505 12,505 - - 11,075 11,075
======= ======== ======= ======== ======= ========
Current liabilities
Unsecured long-term bank loan - - - - - -
Unsecured short-term bank loan - - - - - -
Loans due to former partners of Gateley Tweed LLP - - - - - -
------- -------- ------- -------- ------- --------
- - - - - -
======= ======== ======= ======== ======= ========
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. A further GBP1m was drawn down on 3
October 2022 in order to fund the initial cash consideration in the
acquisition of Symbiosis IP Limited.
11 Trade and other payables
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
Current
Trade payables 8,806 5,878 7,935
Other taxation and social security payable 9,802 8,667 10,122
Other payables - 889 374
Contingent consideration - 235 100
Accruals and deferred income 4,911 3,634 13,262
---------- ---------- --------
23,519 19,303 31,793
========== ========== ========
GBP'000 GBP'000 GBP'000
Non-current
Other payables - 120 -
Contingent consideration 5,740 - 5,360
---------- ---------- --------
5,740 120 5,360
========== ========== ========
Contingent consideration
GBP0.1m of current contingent consideration represents the
earn-out sums due to the sellers of Tozer Gallagher LLP.
All contingent consideration amounts have been calculated based
on the Groups expectation of what it will pay in relation to the
earn-out clause of the relevant sale and purchase agreement. The
earn-out targets are based on the annual results, of the acquired
business. The fair value of the earn-out consideration is
calculated based on the forecasted results to give an estimate of
the final obligation capped at the maximum earn-out amount stated
in the purchase agreement.
12 Share based payments
Group
At the period end the Group has four share-based payment schemes
in operation.
Long Term Incentive Plan ('LTIP')
The Group operates an LTIP for the benefit of Executive
Directors and Senior Management. Awards under the LTIP may be in
the form of an option granted to the participant to receive
ordinary shares on exercise dependent upon the achievement of
profit related performance conditions.
Performance conditions
Options granted under the LTIP are only exercisable subject to
the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of
the three-year performance period. The awards will be subject to an
adjusted fully diluted earnings per share performance measure as
described in the table below:
Adjusted, fully diluted earnings per Amount Vesting %
Share Compound Annual Growth Rate (CAGR)
over the three year period ending 30
April 2023/25
Below 5% 0%
-----------------------------------
5% 25%
-----------------------------------
Between 5% and 10% Straight line vesting
-----------------------------------
Above 10% 100%
-----------------------------------
The options will generally be exercisable after approval of the
financial statements during the year of exercise. The performance
period for any future awards under the LTIP will be a three-year
period from the date of grant. Vested and unvested LTIP awards are
subject to a formal malus and clawback mechanism.
Restricted Share Award Plan ('RSA')
The Group operates an RSA for the benefit of Senior Management.
Awards under the RSA entitle the option holder to participate in
dividends however, the shares are restricted for a period of 5
years from issue, such that they cannot be traded.
Save As You Earn Scheme (SAYE)
The Group operates a HMRC approved SAYE scheme for all staff.
Options under this scheme will vest if the participant remains
employed for the agreed vesting period of three years. Upon
vesting, each option allows the holder to purchase the allocated
ordinary shares at a discount of 20% of the market price determined
at the grant date.
Company Share Option Plan (CSOP)
The Group operates a HMRC approved CSOP scheme for associates,
senior associates, legal directors, equivalent positions in Gateley
Group subsidiary companies and senior management positions in our
support teams. Options under this scheme will vest if the
participant remains employed for the agreed vesting period of three
years. Upon vesting, each option allows the holder to purchase the
allocated ordinary share at the price on the date of the grant.
The annual awards granted under the schemes are summarised
below:
Weighted Weighted Originally Lapsed at Exercised At 1 Granted Lapsed Exercised At 31
average average granted 30 April at 30 May during during during October
remaining exercise 2022 April 2022 the period period 2022
contractual price 2022 period
life
Years GBP Number Number Number Number Number Number Number Number
RSA
RSA 21/22
- 27
April
2022 4.5 GBP0.00 1,422,560 - - 1,422,560 - - 1,422,560
RSA 22/23
- 19 July
2022 4.8 GBP0.00 - - - - 100,000 - -- 100,000
---------- --------- --------- --------- --------- --------- --------- ---------
1,422,560 - - 1,422,560 100,000 - - 1,522,560
---------- --------- --------- --------- --------- --------- --------- ---------
LTIPS
LTIPS
20/21 -
22 July
2020 0.6 GBP0.00 1,405,766 (169,331) - 1,236,435 - (70,289) 1,166,146
LTIPS
21/22 -
27 April
2022 2.4 GBP0.00 1,115,000 - - 1,115,000 - (12,500) - 1,102,500
---------- --------- --------- --------- --------- --------- --------- ---------
2,520,766 (169,331) 2,351,435 - (82,789) - 2,268,646
---------- --------- --------- --------- --------- --------- --------- ---------
SAYE
SAYE 18/19
- 21
September
2018 0 GBP1.27 620,432 (212,469) (237,450) 170,513 - (131,092) (39,421) -
SAYE 19/20
- 1
October
2019 0 GBP1.28 822,625 (218,412) - 604,213 - (228,462) - 375,751
SAYE 20/21
- 6
November
2020 1.0 GBP1.02 2,337,197 (219,826) - 2,117,371 - (148,579) - 1,968,792
SAYE 21/22
- 25
August
2021 1.8 GBP1.70 673,077 (17,042) - 656,035 - (62,776) - 593,259
SAYE 22/23
- 22
September
2022 2.9 GBP1.55 - - - - 1,070,154 - - 1,070,154
4,453,331 (667,749) (237,450) 3,548,132 1,070,154 (570,909) (39,421) 4,007,956
---------- --------- --------- --------- --------- --------- --------- ---------
CSOPS
CSOPS
18/19 -
24
October
2018 0 GBP1.44 812,131 (180,551) (447,494) 184,086 - (62,470) (121,616) -
CSOPS
20/21 - 7
July 2020 0.8 GBP1.35 976,797 (147,045) - 829,752 - (58,707) - 771,045
1,788,928 (327,596) (447,494) 1,013,838 - (121,177) (121,616) 771,045
---------- --------- --------- --------- --------- --------- --------- ---------
During the period to 30 April 2022, 631,580 CSOP options became
eligible to exercise, with 447,494 being exercised by 30 April
2022. Of the remaining 184,086 options, 121,616 were exercised
during the period to 31 October 2022 with 64,470 having lapsed
during the period. The total accrued IFRS2 charge was
GBP108,421.
During the period 375,751 SAYE 18/19 options became eligible to
exercise. At the 31 October 2022 no SAYE options had been exercised
of a potential 375,751 new shares issued via a block listing in
order to fully satisfy all possible options. The total accrued
IFRS2 charge was GBP168,000.
On 22 September 2022 a total of 1,070,154 options were granted
under the 22/22 SAYE scheme using an exercise price of GBP1.55.
Fair value calculations
The award is accounted for as equity-settled under IFRS 2. The
fair value of awards which are subject to non-market based
performance conditions is calculated using the Black Scholes option
pricing model. The inputs to this model for awards granted during
the financial year are detailed below:
RSA SAYE
Grant date 19/7/22 22/9/22
Share price at date of grant 190.5p 199p
Exercise price GBPnil 155p
Volatility 32% 31%
Expected life (years) 5 3.3
Risk free rate 1.905% 3.473%
Dividend yield - 4.29%
Fair value per share
Market based performance condition - -
Non-market-based performance
condition/no performance condition 190.5p 55p
Expected volatility was determined by using historical share
price data of the Company since it listed on 8 June 2015. The
expected life used in the model has been based on Management's
expectation of the minimum and maximum exercise period of each of
the options granted.
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END
IR FDLLFXFLFBBE
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