TIDMGTLY
RNS Number : 9129Z
Gateley (Holdings) PLC
17 January 2024
17 January 2024
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
(AIM:GTLY)
Half Year Results for the six months ended 31 October 2023
Resilient H1 performance; cautious on H2
Gateley, the professional services group, is pleased to announce
its unaudited results for the six months ended 31 October 2023 (the
"Period" or "H1 24").
Financial Highlights
-- Resilient financial performance with revenue and underlying
profit before tax up 7.6% (H1 23: 22.2%) and 4.6% (H1 23:
9.6%) respectively, against a challenging macro-economic backdrop
-- Group organic revenue growth of 5.1% (H1 23: 9.8%)
-- Legal services revenue grew entirely organically by 2.4% (H1
23: 8.2%)
-- Revenue from consultancy services represents 27.6% of total
revenue at GBP22.6m (H1 23: GBP18.2m or 23.9%), of which organic
growth was 13.5% (H1 23: 20.0%)
-- Underlying profit margin decreased to 12.2% (H1 23: 12.6%)
as a result of investment in future growth including a 3.5%
increase in fee earners, improved technology and continued
M&A
-- Activity levels across the Group decreased with utilisation
at 83% (H1 23: 86%)
-- Strong balance sheet with net debt of GBP2.2m at the Period
end (H1 23: net cash GBP1.1m)
-- Proposed interim dividend maintained at 3.3p (H1 23: 3.3p)
per share
H1 24 H1 23 Change
restated
Group revenue GBP82.0m GBP76.1m 7.6%
Group underlying operating profit GBP8.6m GBP10.1m (14.9)%
Group underlying profit before
tax(1) GBP10.0m GBP9.6m 4.6%
Group profit before tax GBP7.4m GBP6.3m 16.8%
Group profit after tax GBP6.1m GBP4.7m 32.0%
Basic earnings per share ("EPS") 4.83p 3.73p 29.5%
Underlying adjusted fully diluted
EPS(2) 6.40p 6.15p 4.1%
Net assets GBP83.3m GBP74.6m 11.7%
Net (debt)/cash(3) GBP(2.2)m GBP1.1m
Dividend 3.3p 3.3p
(1) Underlying operating profit and underlying profit before tax
excludes remuneration for post-combination services, gain on
bargain purchase, share-based payment charges, acquisition
related amortisation and exceptional items
(2) Underlying diluted EPS excludes remuneration for post-combination
services, gain on bargain purchase, share-based payment charges,
acquisition related amortisation and exceptional items. It
also adjusts for the future weighted average number of expected
unissued shares from granted but unexercised share options
in issue based on a share price at the end of the financial
year
(3) Net (debt)/cash excludes IFRS 16 lease liabilities
Strategic and post-Period highlights
-- Prior year acquisitions integrated and performing well
-- Ongoing investment in capacity with average fee earner headcount
increased to 1,035 in H1 24 (H1 23: 1,000)
-- S trategic h iring onto Business Services Platform to seed
legal services class action and international arbitration
teams and to create intellectual property commercialisation
and valuation in patent and trade mark attorney services
-- Continued execution of M&A strategy with the July 2023 acquisition
of Richard Julian and Associates Limited ("RJA"), a chartered
surveying practice providing quantity surveying and project
management services across a variety of construction sectors
and performing in-line with expectations
-- Achieved all 15 responsible business objectives set in our
2022/23 Responsible Business Report and launched 15 new objectives
in our third annual Responsible Business Report
-- Continued focus on alignment of stakeholders including through
70% of staff either owning shares or currently participating
in option schemes
-- Succession planning progressed with the appointment of David
Wilton as Chair Designate and Non-Executive Director, with
effect from 1 February 2024
Current trading and outlook
-- H1 24 outturn demonstrates the resilience derived from our
ongoing investment in a diverse range of professional services
businesses
-- After activity levels increased in Q2 24, Q3 to date has been
more subdued, particularly for some of our legal services
transactional teams. However, counter cyclical work activity
continues to strengthen and consultancy services are performing
strongly
-- The combination of ongoing macro-uncertainty, varying activity
levels across the Group and the natural weighting towards
the final months of the financial year makes the Group's full
year outturn more difficult than usual to forecast. However,
with the solid results delivered at the half year point, tempered
by a cautious short-term outlook, the board expects results
for the full year to be broadly in line with market consensus
Rod Waldie, Chief Executive Officer of Gateley, said:
"Given macro-economic conditions during the Period, I am pleased
with the Group's resilient H1 24 performance.
"This is testament to, firstly, our strong client relationships,
sustained by the excellent service delivered by our people and,
secondly, our strategy working in practice as we continue to
differentiate Gateley and enhance resilience via the aggregation
of, and continued investment in, complementary legal and
consultancy services on each of our Platforms.
"Our H2 24 outlook reflects our cautious view on the market
conditions we are currently experiencing. That said, I am confident
in the ability of our excellent teams to continue to rise to the
challenge for the remainder of this year, and beyond. We continue
to invest in the business and remain confident and well-positioned
to deliver our long-term ambitions."
Enquiries:
Gateley (Holdings) Plc
Neil Smith, Chief Financial Officer Tel: +44 (0) 121 234
0196
Nick Smith, Acquisitions Director and Tel +44 (0) 20 7653
Head of Investor Relations 1665
Cara Zachariou, Communications Director Tel +44 (0) 121 234
0074
Mob: +44 (0) 7703 684
946
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Anake Singh 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
The Group's performance during H1 24 is pleasing in the context
of macro-economic headwinds which continue to generate challenging
market conditions.
As always, I am grateful to all of our people for their hard
work and commitment to delivering the best outcomes for our
clients, the result of which is reflected in our 7.6% headline H1
24 revenue growth and our 4.6% growth in underlying profit before
tax.
Aided by our strong balance sheet, we maintain a long-term
commitment to growth via our disciplined diversification strategy
in both legal and consultancy services. This remains our key
differentiator and continues to enhance our resilience. In Period,
on our Property Platform, we completed the acquisition of RJA, a
chartered surveying practice providing project management and
quantity surveying services, adding to related expertise in both
Gateley Vinden and Gateley Smithers Purslow. We also made strategic
lateral hires on our Business Services Platform, firstly, to seed
specialist legal services class actions and international
arbitration teams handling complex, long-term litigation and,
secondly, in our patent and trade mark attorney businesses to add
intellectual property commercialisation and valuation services.
Whilst our investments inevitably impact short-term margin as
acquisition and integration costs are absorbed, selective strategic
investment remains one of our priorities for future growth.
In Period, we published our third annual Responsible Business
Report. Having achieved all 15 responsible business targets set in
our prior report, our 2023/24 report sets 15 new objectives in-line
with our purpose-led agenda. We have a clear recognition that
business is a key engine for change and our responsible business
journey progresses with conviction.
Our operational focus for the remainder of the financial year
remains firmly on the basics of business; consistent delivery of
excellent service, maximising cross-selling opportunities, winning
new work on each of our Platforms and cost management.
The board proposes an interim dividend of 3.3p per share (H1 23:
3.3p).
Results overview
H1 24 Group revenues grew by 7.6% to GBP82m (H1 23: GBP76.1m).
This yielded an increase of 16.8% in reported profit before tax to
GBP7.4m (restated H1 23: GBP6.3m) and a 4.6% increase in underlying
profit before tax to GBP10.0m (H1 23: GBP9.6m).
Trading conditions were generally difficult throughout the
Period. Our outturn reflects the quality and breadth of the
complementary legal and consultancy services delivered through our
Platforms. The volume of traditional transactional activity in
legal services was weaker during the Period than in H1 23. This
accounts for the slight in-Period decline in utilisation to 83%,
but still close to our typical 85% run-rate. We continued to see a
pivot towards greater activity in our more counter-cyclical service
lines. This is an ongoing characteristic. Activity in our more
economically agnostic businesses was, and remains, strong, as
demonstrated by 39.0% growth in revenue in Gateley Smithers
Purslow, delivering specialist advice from our Property Platform to
UK property insurers.
The strength of both existing operations and our balance sheet
provide the foundation for further investment in growth across our
Platforms. Our pipeline of acquisition opportunities remains good
across the Group.
Business Services Platform
This Platform supports clients in dealing with their commercial
agreements, managing risks, protecting assets and resolving
disputes.
On this Platform revenue grew by 24.7%.
Our commercial dispute resolution team and our regulatory and
business defence team, counter-cyclical in nature, are both busy
and ahead of prior year revenue.
Taken together, our patent and trade mark attorney businesses,
Adamson Jones and Symbiosis IP, are in-line with budgeted revenue
and are working well together, with a positive outlook. We continue
to invest in broadening our intellectual property offering with the
in-Period lateral hire additions of experts in IP commercialisation
and valuation. We are encouraged by further opportunities to
further strengthen our position in intellectual property advisory
services.
Revenue from our legal services complex international recoveries
litigation team remains constrained whilst the team establishes
credentials in new markets. However, activity is improving via
opportunities from those markets. In-Period, the team has been
significantly enhanced by lateral hire investment to seed our
international arbitration team. Alongside this, we have also made
lateral hire investment to establish our class actions team, a new
service line in our complex litigation offering. We are excited by
the opportunities for both teams in handling valuable long-term
mandates, from which we expect to see returns feeding-in from FY 25
onwards.
Corporate Platform
This Platform is focused on the corporate, financial services
and restructuring markets in both transaction and business support
services.
In a market where transactional activity has fallen and lead
times have extended, I was encouraged to see relatively small
revenue contraction of 5.9% on this Platform . Our traditional
transaction pipeline is reasonable but timelines for on-boarding
and completing new work are uncertain.
The Platform also houses our Restructuring Advisory team, which
is counter-cyclical in nature. Its revenue increased by 41.5% and
the team remains busy on a number of mandates, with a positive
outlook. Work here includes cross-over with specialist teams on our
Property Platform delivering market-leading services to insurers
who have bonded now distressed construction projects.
People Platform
This Platform supports clients dealing with and developing
people and in administering individuals' personal affairs.
Revenue on this Platform declined by 1.2%. In legal services,
our employment team experienced a drop-off in support work to the
transactional teams on our Corporate Platform. However, utilising
expertise established over many years in acting for The British
Medical Association, the team is now building its credentials in
assisting NHS Trusts with internal investigations. Our private
client team has undertaken some restructuring, with our core focus
remaining on high net worth clients and related opportunities.
Our legal services pensions team and our pension trustee
business, Entrust, are both relatively economically agnostic and
combined to deliver revenue growth of 52.4%. Entrust continues to
see opportunities from the increase in the number of pension
schemes looking to complete full liability buy-outs, with Entrust's
technical support.
The combined revenue of our talent assessment, development and
cultural change businesses, t-three and Kiddy & Partners is
down versus H1 23 but improvement is anticipated in H2 24. These
businesses are also working closely with our legal services
employment team to maximise opportunities arising from evolving
legislation in relation to diversity and inclusion.
Property Platform
This Platform is focused on clients' activities in real estate
development and investment and in the built environment in the
widest sense.
This remains our largest, most diverse, and most mature
Platform. Against the backdrop of challenging market conditions in
UK commercial and residential real estate, we are pleased to report
revenue growth of 12.4% on this Platform.
In legal services, our contentious construction team and real
estate dispute resolutions team are both counter-cyclical in nature
and generated revenue growth of 33.0% and 21.1% respectively from
both stand-alone mandates and in working with specialist teams on
this and other Platforms. The pipeline for both teams remain
strong.
Our residential development team is likely out-performing the
market in delivering revenue growth of 8.2%. This is testament to
the team's market-leading position.
The commercial real estate market remains subdued, and this
team's revenue contracted by 23.7% versus a more active market in
H1 23. The short-term outlook here remains uncertain. Anticipated
cuts in interest rates may stimulate the market but a number of
related billing points could be beyond full year.
Taken as a whole, consultancy business revenue on this Platform
has grown organically by 25.1% with particularly encouraging H1
performances by Gateley Capitus (GC), Gateley Vinden (GV) and
Gateley Smithers Purslow (GSP), now supplemented by the in-Period
acquisition of RJA, the seventh consulting business to be acquired
onto this Platform. RJA specialises in the provision of quantity
surveying and project management services to organisations in the
affordable housing sector. It also has expertise to support those
teams in GV and GSP, who provide specialist advice to UK property
insurers in relation to major loss claims, a busy and economically
agnostic market. RJA has integrated well during H1 24 and is
delivering in-line with pre-acquisition expectations.
Operational review
Our operational focus has been aimed at current and future
efficiency.
AI is towards the top of the agenda in most businesses. We are
very aware that ultimately, properly procured and adopted, AI will
positively transform the delivery of professional services. We
started investing in technology to enhance efficiencies some time
ago. We now have an internal steering group assessing new products,
our own product development and anticipated evolution in AI against
opportunities across the Group to enhance service delivery and/or
realise operational efficiencies. We believe that we are making
good progress and we are forming views on requisite resource and
investment to plan into FY 25 and beyond.
In Period, we acquired new systems to support the on-boarding of
a legal services team to run class action claims. This is
specialist, long-term, high value work which requires a bespoke
technology platform, in which we have invested.
We have previously reported planned rationalisation of some of
our office space. This is an on-going exercise, including the
post-Period surrender of our lease for office space in Leicester as
part of consolidation of some of our teams in the East Midlands to
our Nottingham office.
On-going integration of recently acquired businesses is
proceeding as planned, including positive enhancements to our Group
integration processes. In parallel, phase two of adoption of our
new, market-leading business management, productivity, and
financial management system (3E) is proceeding throughout FY 24 and
into FY 25.
The Board
Further to the announcement in September 2023 that Nigel Payne
will step down as Chairman at the 2024 AGM in September, we have
announced separately today that David Wilton will join the board as
Chair Designate and Non-Executive Director on 1 February 2024. I am
very much looking forward to working with David and, on behalf of
everyone at Gateley, extend a warm welcome to him.
Responsible Business
Being a Responsible Business remains an integral part of our
Purpose Statement;
"Our purpose is to deliver results that delight our clients,
inspire our people and support our communities."
We were delighted to achieve all 15 of our internally set
responsible business targets in 2022/2023 and, in-Period, we
published our third annual Responsible Business Report outlining
actions taken and setting targets for 2023/2024.
Highlights from the report include:
-- A carbon reduction plan including a commitment to achieve
net zero emissions by 2040, with interim targets set by 2030;
-- A new strategic partnership with Alzheimer's Research UK;
and
-- The launch of an internal volunteering policy which provides
opportunities for our people to volunteer with the charity,
sustainability and education partners we work with.
We are proud of the progress that we have made since publishing
our Responsible Business Strategy in October 2021. We will continue
to evaluate where we are effecting change and how we can improve
and progress over time. Our journey continues with conviction.
Current trading and outlook
Our H1 performance was solid despite an ongoing difficult
macro-economic environment.
As we said in our FY 23 announcement last September, our
expectation was that in transactional legal services trading
conditions would improve in H2 24. However, despite a stronger Q2,
market conditions remain challenging and look likely to continue
for longer than anticipated. Whilst non-transactional activity
continues to strengthen to mitigate the impact and consultancy
services activity remains robust, overall uncertain and shifting
patterns of demand lead us to adopt a cautious approach in our
outlook, which means that results for the full year are expected to
be broadly in-line with market consensus. However, the underlying
strength of our unique, diversified business model and balance
sheet, when put alongside traditional long-term drivers that
underpin demand for quality professional services, ensure that we
remain well-placed to continue our track record of growth and
realise our long-term ambitions.
In the meantime, our focus for the remainder of the year remains
firmly on the basics of business and the maximisation of revenue
and profit opportunities.
Rod Waldie
CEO
17 January 2024
CHIEF FINANCIAL OFFICER'S REVIEW
Financial overview
I'm pleased to report a resilient financial performance during
the first half of this year in which both revenue and profit growth
was good considering the ongoing economic stagnation in trading
conditions for many sectors across the UK economy.
We have made further selective medium to long term strategic
investments across our Platforms that continue our existing journey
to wider diversification in both legal and consultancy service
delivery.
Activity levels at the beginning of the Period were in line with
where FY 23 finished, however despite increases in activity during
Q2, Q3 is so far lower than expected. Whilst transactional services
remain subdued due to economic conditions, delivery of contentious
services continues to increase. This is a by-product of our
diversification in service lines and long-term underlying strategy.
Financing this transition towards increased contentious services,
requires cost investment in the near term, but will ultimately
enhance profitability in the medium to longer term. Contentious
services continue to grow as a mix of overall services and now
represent 36.7% (H1 23: 30.6%) of Group revenue. They are counter
cyclical and less volatile than transactional services during a
period of changing market conditions. However, they inherently also
take longer to convert into fees and cash.
During the Period inflation has started to reduce and interest
rates appear to have peaked which are assisting forecasting of
costs going forward, however these economic conditions are not yet
providing the stimulus for a change in non-contentious services
activity levels with any confidence.
Revenue
Group revenue grew by 7.6% to GBP82.0m for the first half of the
year, from GBP76.1m in H1 23. Revenue growth in the Group's core
legal services was entirely organic at 2.4%, growing to GBP59.3m
(H1 23 GBP57.9m), whilst revenue from consultancy services grew by
24.1% overall to GBP22.6m (H1 23 GBP18.2m). Acquired consultancy
revenue totalled GBP2.3m following the acquisitions of Symbiosis IP
and RJA, (H1 23: GBP0.2m) during the Period, with organic
consultancy revenue growth of 13.5% to GBP20.5m (H1 23:
GBP18.0m).
The Group has grown two of its four Platforms, and was broadly
flat in the People Platform, during the Period with significant
contributions made by the Property and Business Services Platforms
and expanding and diversified service offerings. Restructuring and
Banking activity on the Corporate Platform have helped to counter a
subdued corporate transactional performance leading to a revenue
decrease of 5.9% (H1 23: increase 26.0%).
Revenue Corporate Platform Business Services Platform People Platform Property Platform Total
H1 24 (GBPm) 17.9 12.1 9.7 42.3 82.0
Revenue growth H1 24 (5.9)% 24.7% (1.2)% 12.4% 7.6%
H1 23 (GBPm) 19.0 9.7 9.7 37.6 76.1
Total expenses
Personnel costs (excluding the IFRS 2 charge) have increased as
a percentage of revenue to 63.4% (H1 23: 61.7%), despite
experiencing lower wage inflation, as headcount increased from
investments made in key senior lateral hires and the recruitment of
additional people. Average numbers of legal and professional staff
rose by 3.5% to 1,035 (H1 23: 1,000) as recruitment was directed
towards consultancy services demonstrating significant demand
during the Period such as that experienced by GSP. Support staff
numbers also increased by 5.5% to 463 (H1 23: 431) as a result of
acquisitions and the expansion of our business support teams.
Other operating expenses, excluding non-underlying items,
increased to GBP18.2m (H1 23: GBP16.0m) as the effect of investment
and additional costs of acquired entities made in the Period were
absorbed. Overall, operating costs as a percentage of revenue have
increased from 21.0% to 22.2%. Our use of agile working, the new
business management system and extensive review of premises usage
will generate further 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 GBP10.0m has increased
by 4.6% from GBP9.6m in H1 23. The board is pleased with profit and
trading margin performance despite the decreased margin from
continued on-going investment decisions made. 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.
Reported profit before tax increased by 16.8% to GBP7.4m (H1 23:
GBP6.3m) as underlying operating profit before tax decreased by
14.9% to GBP8.6m (H1 23: GBP10.1m) but was offset by increases in
net interest of GBP1.4m. Profit after tax of GBP6.1m increased by
32.0% from a restated GBP4.7m and basic earnings per share
increased similarly by 29.5% to 4.83p (H1 23: restated 3.73p).
Underlying diluted earnings per share increased by 4.1% to 6.40p
(H1 23: 6.15p) after a full Period impact from new shares issued
for acquisitions and after awards made under the Group's share
option reward schemes.
As explained in our FY 23 annual accounts, certain figures
highlighted in this RNS, have been restated to reflect a change of
IFRS 3 accounting treatment for consideration paid on all relevant
historical acquisitions.
Dividend
The board proposes an interim dividend of 3.3p (H1 23: 3.3p) per
share. This dividend will be paid on 28 March 2024 to shareholders
on the register at the close of business on 23 February 2024. The
shares will go ex-dividend on 22 February 2024. This dividend has
not been recognised as a liability in the interim accounts.
Net assets
The Group's net asset position has increased by GBP8.7m to
GBP83.3m (H1 23: restated GBP74.6m) as total asset growth of
GBP11.3m was funded through the GBP4.0m increase in non-current
liabilities (primarily increased usage of our revolving credit
facility) less the decrease in current liabilities of GBP1.5m.
Net cash and working capital
Period end net cash increased by GBP0.5m compared to a decrease
of (GBP8.1m) in H1 23. Cash generation from operating activities
reduced slightly to GBP0.3m (H1 23: GBP0.0m). Cash generation from
financing activities increased to GBP3.3m (H1 23: GBP(0.2)m) due to
bank interest rates driving net interest income and cash acquired
through the acquisition of RJA, and net cash outflow from financing
activities improved to GBP(2.5)m (H1 23: GBP(8.1)m) as the Group
drew down an additional GBP7m from its RCF for the post Period end
funding of contingent consideration in respect of GSP and the
acquisition of RJA.
Free cash flows increased to GBP1.5m (H1 23: GBP(1.5)m) due to
lower net working capital following a reduction in lock up since
the end of FY 23 and the increase in interest income.
Management continues to focus on lock-up. Total lock-up
increased from 159 to 163 days as a result of strong organic and
acquired growth and the pivot to increased, longer in duration,
contentious assignments. WIP days increased from 59 to 65 days as
the Business Services Platform recognised higher contract asset
values and debtor days decreased slightly from 100 to 98 days as
the slowing of collections on the Corporate Platform was offset by
improvements in collections from our three other Platforms.
Conclusion
Despite prolonged and ongoing market uncertainty the Group has
produced further organic growth and sensibly controlled costs after
a period of significant inflation, whilst at the same time
continuing to invest in strategic opportunities. We retain
significant facility headroom to support further growth and
expansion.
Neil Smith
Chief Financial Officer
17 January 2024
Gateley (Holdings) Plc
Consolidated income statement and other comprehensive income
For the 6 months ended 31 October 2023
Note Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Revenue 2 81,957 76,143 162,683
Other operating income 20 - 49
Personnel costs, excluding IFRS
2 charge 3 (51,956) (46,981) (96,765)
Depreciation - Property, plant
and equipment 4 (566) (503) (936)
Depreciation - Right-to-use asset 4 (1,955) (1,979) (3,976)
Impairment of trade receivables
and contract assets (718) (633) (1,334)
Other operating expenses (18,199) (15,966) (34,741)
------------ ----------- -----------
Operating profit before non-underlying
operating and exceptional items 8,583 10,081 24,980
Non-underlying operating items 4 (2,628) (3,249) (8,858)
Exceptional items 4 - - -
------------ ----------- -----------
(2,628) (3,249) (8,858)
Operating profit 5,955 6,832 16,122
Financing income 2,379 302 1,735
Financing expense (958) (819) (1,645)
------------ ----------- -----------
Profit before tax 7,376 6,315 16,212
Taxation (1,236) (1,662) (3,972)
------------ ----------- -----------
Profit for the period after
tax attributable to equity holders
of the parent 6,140 4,653 12,240
------------ ----------- -----------
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences
- Revaluation of other investments - - (26)
- Exchange differences on foreign
branch 97 95 (49)
------------ ----------- -----------
Profit for the financial period
and total comprehensive income
all attributable to equity holders
of the parent 6,237 4,748 12,165
------------ ----------- -----------
Statutory earnings per share (pence)
Basic earnings per share 5 4.83p 3.73p 12.00p
Diluted earnings per share 5 4.68p 3.66p 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 2023
Note Restated
Unaudited Unaudited Audited
at at at
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 1,429 1,450 1,628
Right-of-use asset 25,143 28,486 27,098
Investment property 164 164 164
Intangible assets & goodwill 7 14,650 13,954 12,929
Other intangible assets 803 716 1,090
Other investments 147 173 147
Deferred tax asset 1,230 638 830
------------ ----------- ----------
Total non-current assets 43,566 45,581 43,886
------------ ----------- ----------
Current assets
Contract assets 8 26,148 22,255 20,388
Trade and other receivables 9 73,630 67,996 73,272
Cash and cash equivalents 11,646 7,887 11,105
------------ ----------- ----------
Total current assets 111,424 98,138 104,765
------------ ----------- ----------
Total assets 154,990 143,719 148,651
------------ ----------- ----------
Non-current liabilities
Other interest-bearing loans
and borrowings 10 (13,859) (6,765) (6,813)
Lease liability (26,843) (30,015) (28,716)
Other payables 11 - (702) -
Deferred tax liability (3,432) (3,103) (2,941)
Provisions (1,290) (863) (1,290)
Total non-current liabilities (45,424) (41,448) (39,760)
------------ ----------- ----------
Current liabilities
Lease liability (3,714) (3,234) (3,257)
Trade and other payables 11 (21,731) (23,519) (25,933)
Provisions (107) (101) (107)
Current tax liabilities (685) (843) (1,482)
Total current liabilities (26,237) (27,697) (30,779)
------------ ----------- ----------
Total liabilities (71,661) (69,145) (70,539)
------------ ----------- ----------
NET ASSETS 83,329 74,574 78,112
------------ ----------- ----------
EQUITY
Share capital 13,165 12,514 12,664
Share premium 12,479 12,378 11,846
Merger reserve (9,950) (9,950) (9,950)
Other reserves 19,383 14,465 15,413
Treasury reserve (628) (240) (677)
Translation reserve 46 93 (51)
Retained earnings 48,834 45,314 48,867
------------ ----------- ----------
TOTAL EQUITY 83,329 74,574 78,112
------------ ----------- ----------
Gateley (Holdings) Plc
Consolidated cash flow Statement
for the 6 months ended 31 October 2023
Restated
Note Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period after
tax 6,140 4,653 12,240
Adjustments for:
Depreciation and amortisation 4,087 3,594 7,246
Financial income (2,379) (302) (1,735)
Financial expense 380 283 495
Interest charge on capitalised
leases 578 536 1,150
Equity settled share-based payments 1,500 423 1,100
Gain on bargain purchase (3,509) (1,389) (1,389)
Acquisition related earn-out
remuneration charge 3,358 3,103 6,190
Earn-out consideration paid
- acquisitions of subsidiary - (50) (50)
Initial consideration paid on
acquisitions (2,035) (1,468) (1,468)
Loss on disposal of property,
plant and equipment - 122 82
Tax expense 1,236 1,662 3,972
------------ ----------- -----------
9,356 11,167 27,833
Increase in trade and other
receivables (4,956) (8,577) (6,942)
Decrease in trade and other
payables (2,204) (632) (7,259)
Increase in provisions - - 433
------------ ----------- -----------
Cash generated from operations 2,196 1,958 14,065
Tax paid (2,521) (1,937) (4,320)
------------ ----------- -----------
Net cash flows from operating
activities (325) 21 9,745
------------ ----------- -----------
Investing activities
Acquisition of property, plant
and equipment (286) (739) (1,312)
Acquisition of other intangible
assets - (216) (787)
Cash acquired on business combinations 1,239 483 483
Interest received 2,379 302 1,735
Net cash flows from investing
activities 3,332 (170) 119
------------ ----------- -----------
Financing activities
Interest and other financial
income paid (297) (283) (371)
Lease payments (1,994) (2,051) (4,550)
Receipt of new revolving credit
facility, net of refinancing
costs 7,000 1,000 1,000
Acquisition of own shares (350) (18) (416)
Proceeds of sale of own shares 399 39 -
Cash received for shares issued
on exercise of share options 773 79 477
Dividends paid 6 (7,997) (6,835) (11,004)
Net cash outflow from financing
activities (2,466) (8,069) (14,864)
------------ ----------- -----------
Net increase/(decrease) in cash
and cash equivalents 541 (8,218) (5,000)
Cash and cash equivalents at
beginning of period 11,105 16,105 16,105
------------ ----------- -----------
Cash and cash equivalents at
end of period 11,646 7,887 11,105
------------ ----------- -----------
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2023
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 (restated) 12,456 11,342 (9,950) 14,465 (261) 47,088 (2) 75,138
-------- -------- -------- -------- -------- --------- ------------ --------
Comprehensive income:
Profit for the year - - - - - 12,240 - 12,240
Revaluation of other
investments - - - - - (26) (26)
Exchange rate differences - - - - - - (49) (49)
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 12,214 (49) 12,165
Transaction with
owners recognised
directly in equity
Issue of share capital 208 504 - 948 - - - 1,660
Purchase of own shares
at nominal value - - - - - (133) - (133)
Sale of treasury
shares - - - - 20 - - 20
Purchase of treasury
shares - - - - (436) - - (436)
Recognition of tax
benefit on gain from
equity settled share
options - - - - - (398) - (398)
Dividend paid - - - - - (11,004) - (11,004)
Share based payment
transactions - - - - - 1,100 - 1,100
Total equity at
30 April 2023 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
-------- -------- -------- -------- -------- --------- ------------ --------
At 1 May 2022 (unaudited) 12,456 11,342 (9,950) 14,465 (261) 44,863 (2) 72,913
-------- -------- -------- -------- -------- --------- ------------ --------
Impact of restatement - - - - - 2,225 - 2,225
-------- -------- -------- -------- -------- --------- ------------ --------
At 1 May 2022 (restated) 12,456 11,342 (9,950) 14,465 (261) 47,088 (2) 75,138
-------- -------- -------- -------- -------- --------- ------------ --------
Comprehensive income:
Profit for the period - - - - - 4,653 - 4,653
Exchange rate differences - - - - - - 95 95
-------- -------- -------- -------- -------- --------- ------------ --------
Total comprehensive
income - - - - - 4,653 95 4,748
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 (restated) 12,514 12,378 (9,950) 14,465 (240) 45,314 93 74,574
-------- -------- -------- -------- -------- --------- ------------ --------
Gateley (Holdings) Plc
Consolidated statement of changes in equity
for the 6 months ended 31 October 2023
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 2023 (unaudited) 12,664 11,846 (9,950) 15,413 (677) 48,867 (51) 78,112
-------- -------- -------- -------- -------- --------- ------------ -------
Comprehensive income:
Profit for the year - - - - - 6,140 - 6,140
Exchange rate differences - - - - - - 97 97
-------- -------- -------- -------- -------- --------- ------------ -------
Total comprehensive
income - - - - - 6,140 97 6,237
Transaction with
owners recognised
directly in equity
Share issue 501 633 - 3,970 - - - 5,104
Sale of treasury
shares - - - - 399 - - 399
Purchase of own shares
at nominal value - - - - - (76) - (76)
Purchase of treasury
shares - - - - (350) - - (350)
Dividend paid - - - - - (7,997) - (7,997)
Recognition of tax
benefit on gain from
equity settled share
options - - - - - 400 - 400
Share based payment
transactions - - - - - 1,500 - 1,500
Total equity at
31 October 2023 13,165 12,479 (9,950) 19,383 (628) 48,334 46 83,329
-------- -------- -------- -------- -------- --------- ------------ -------
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 2023
1. Basis of preparation
These interim unaudited financial statements for the six months
ended 31 October 2023 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 2023 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
2023 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 2023 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:
-- Consideration treated as remuneration: such charges are treated
as non-underlying in order to reflect the commercial substance
of the transaction. All former vendors who remain employed
by the Group are paid at market rates and the earnout remuneration
is a function of the interpretation of IFRS, and related emerging
guidance only.
-- 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 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' 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'.
Restated
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2023
2023 2022
GBP'000 GBP'000 GBP'000
Reported profit before tax 7,376 6,315 16,212
Adjustments for non-underlying and
exceptional items:
- Amortisation of intangible assets 1,279 1,112 2,073
- Share-based payment adjustment 1,500 423 1,984
- Gain on bargain purchase (3,509) (1,389) (1,389)
- Consideration treated as remuneration 3,358 3,103 6,190
Underlying profit before tax 10,004 9,564 25,070
------------ ----------- -----------
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.
Consideration treated as remuneration: such charges are treated
as non-underlying in order to reflect the commercial substance of
the transaction. All former vendors who remain employed by the
Group are paid at market rates and the earnout remuneration is a
function of the interpretation of IFRS, and related emerging
guidance only.
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 2023
2023 2022
GBP'000 GBP'000 GBP'000
Operating cash flows before movements
in working capital 9,356 11,167 27,833
Net working capital movement (7,160) (9,209) (13,768)
----------- ----------- ---------
Cash generated from operations 2,196 1,958 14,065
Repayment of lease liabilities (1,994) (2,051) (4,579)
Net interest paid 2,082 19 1,393
Tax paid (2,521) (1,937) (4,320)
Cash outflow paid on acquisitions 2,035 1,518 1,518
Purchase of property, plant and equipment (276) (739) (1,312)
Purchase of other intangible assets - (216) (787)
----------- ----------- ---------
Free cash flows 1,522 (1,448) 5,978
----------- ----------- ---------
b) Working capital measures
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2023
2023 2022
GBP'000 GBP'000 GBP'000
WIP days
Amounts recoverable from clients in
respect of contract assets (unbilled
revenue) 26,148 22,255 20,388
Unbilled disbursements 5,816 4,255 3,368
----------- ----------- ---------
Total WIP 31,964 26,510 23,756
----------- ----------- ---------
Annualised revenue 177,732 164,100 163,583
----------- ----------- ---------
WIP days 65 59 53
----------- ----------- ---------
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2023
2023 2022
GBP'000 GBP'000 GBP'000
Debtor days
Trade receivables 53,369 49,102 54,167
Less unbilled disbursements (5,816) (4,255) (3,368)
----------- ----------- ---------
Total debtors 47,553 44,847 50,799
----------- ----------- ---------
Annualised revenue 177,732 164,100 163,583
----------- ----------- ---------
Debtor days 98 100 113
----------- ----------- ---------
6 months 6 months 12 Months
to to 30 April
31 October 31 October 2023
2023 2022
GBP'000 GBP'000 GBP'000
Gross lock-up days
Total WIP 31,964 26,510 23,756
Total debtors 47,553 44,847 50,799
----------- ----------- ---------
Total gross lock-up 79,517 71,357 74,555
----------- ----------- ---------
Annualised revenue 177,732 164,100 163,583
----------- ----------- ---------
Gross lock-up days 163 159 166
----------- ----------- ---------
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 2023:
Reportable segment Legal service lines Consultancy service
lines
Corporate Banking Gateley Global
Corporate GEG Services
Restructuring Advisory
Taxation
------------------------------- --------------------------
Business Services Austen Hays Adamson Jones
Complex International Gateley Omega
Litigation Symbiosis IP
Commercial Dispute Resolution
Intellectual Property
Regulatory and Business
Defence
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 RJA
Resolution Gateley Smithers Purslow
Residential Development Gateley Vinden (inc.
Tozer Gallagher)
------------------------------- --------------------------
.
6 months to 31 October 2023
Corporate Business Services People Property Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 17,913 12,127 9,633 42,284 81,957
--------- ----------------- ------- -------- -------
Segment contribution
(as reported internally) 5,604 2,959 2,811 14,985 26,359
Costs not allocated to segments:
Other operating income 20
Personnel costs (6,232)
Share based payment costs (1,500)
Depreciation and amortisation (4,087)
Other operating expenses (8,756)
Gain on bargain purchase 3,509
Contingent consideration treated as remuneration (3,358)
Net financial income 1,421
Profit before tax 7,376
-------
6 months to 31 October 2022 (restated)
Corporate Business People Property Total
Services
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:
Other operating income -
Personnel costs (6,770)
Share based payment charge (423)
Depreciation and amortisation (3,594)
Other operating expenses (8,212)
Gain on bargain purchase 1,389
Contingent consideration treated as remuneration (3,103)
Net financial expense (517)
Profit before tax 6,315
-------
12 months to 30 April 2023
Corporate Business People Property Total
Services
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 38,778 21,824 20,436 81,644 162,683
--------- --------- ------- -------- --------
Segment contribution
(as reported internally) 13,948 5,330 5,983 56,298 56,299
Costs not allocated to segments:
Other operating income 49
Personnel costs (11,091)
Share based payment charge (1,984)
Depreciation and amortisation (7,246)
Other operating expenses (15,104)
Gain on bargain purchase 1,389
Contingent consideration treated as remuneration (6,190)
Net financial expense 90
Profit before tax 16,212
--------
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 6 months to 12 months
to 31 October to
31 October 2022 30 April
2023 2023
Legal and professional staff 1,035 1,000 1,000
Administrative staff 463 431 439
----------- ----------- ---------
1,498 1,431 1,439
----------- ----------- ---------
The aggregate payroll costs of
these persons were as follows:
6 months 6 months to 12 months
to 31 October to
31 October 2022 30 April
2023 2023
GBP'000 GBP'000 GBP'000
Wages and salaries 45,203 40,520 83,942
Social security costs 5,136 5,071 9,984
Pension costs 1,617 1,390 2,839
----------- ----------- ---------
51,956 46,981 96,765
----------- ----------- ---------
4. Expenses
Included in operating profit are the following:
6 months 6 months 12 months
to to to 30
31 October 31 October April 2023
2023 2022
GBP'000 GBP'000 GBP'000
Depreciation on tangible assets 566 503 936
Depreciation on right-of-use
assets 1,955 1,979 3,976
Other operating income - rent
income 20 - 49
Short term and low value leases 38 37 82
Operating lease costs on property 89 - 166
Loss on disposal of fixed assets - 122 82
------------ ------------ ------------
Non-underlying items
6 months 6 months 12 months
to to to 30 April
31 October 31 October 2023
2023 2022
Amortisation of acquisition related
intangible assets 1,279 1,112 2,073
Share based payment charges 1,500 423 1,984
Gain on bargain purchase (3,509) (1,389) (1,389)
Consideration treated as remuneration 3,358 3,103 6,190
------------ ------------ -------------
Total non-underlying items 2,628 3,249 8,858
------------ ------------ -------------
Exceptional items
Redundancy costs - - -
Total non-underlying and exceptional
items 2,628 3,249 8,858
------------ ------------ -------------
5. Earnings per share
6 months 6 months 12 months
to to to 30 April
31 October 31 October 2023
2023 2022
Number Number Number
Weighted average number of ordinary
shares in issue, being weighted average
number of shares for calculating basic
earnings per share 127,230,567 124,613,926 125,244,334
Shares deemed to be issued for no
consideration in respect of share
based payments 3,985,103 2,515,736 3,283,007
----------- ----------- ------------
Weighted average number of ordinary
shares for calculating diluted earnings
per share 131,215,670 127,129,662 128,527,341
----------- ----------- ------------
GBP'000 GBP'000 GBP'000
Profit for the period after taxation
and basic earnings attributable to
ordinary equity shareholders 6,140 4,653 12,240
Non-underlying and exceptional items
(see note 4) 2,628 3,249 8,858
Tax on non-underlying items (375) (80) (168)
--------- ----------- -----------
Underlying earnings before non-underlying
items 8,393 7,822 20,930
--------- ----------- -----------
Earnings per share is calculated as Pence Pence Pence
follows:
Basic earnings per ordinary share 4.83 3.73 9.77
Diluted earnings per ordinary share 4,68 3.66 9.52
Underlying basic earnings per ordinary
share 6.60 6.28 16.71
Underlying diluted earnings per ordinary
share 6.40 6.15 16.28
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 2023
2023 2022
GBP'000 GBP'000 GBP'000
Equity shares
Final dividend in respect of 2023 (6.2p
per share) - paid 21 October 2023 7,997 - -
Interim dividend in respect of 2023
(3.3p per share) - paid 24 March 2023 - - 4,169
Final dividend in respect of 2022 (5.5p
per share) - paid 22 October 2022 - 6,835 6,835
----------- ----------- ---------
Dividends paid 7,997 6,835 11,004
----------- ----------- ---------
The board intends to approve an interim dividend of 3.3p (H1 23:
3.3p) per share. This dividend will be paid on 28 March 2024 to
shareholders on the register at the close of business on 23
February 2024. The shares will go ex-dividend on 22 February 2024.
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 2022 (restated) 1,550 16,261 3,518 21,329
Acquired through business combination - 1,000 - 1,000
-------- ------------- ----------- -------
At 31 October 2022 1,550 17,261 3,518 22,329
-------- ------------- ----------- -------
At 1 May 2022 1,550 16,261 3,518 21,329
Acquired through business combination - 1,000 - 1,000
-------- ------------- ----------- -------
At 30 April 2023 1,550 17,261 3,518 22,329
-------- ------------- ----------- -------
At 1 May 2023 1,550 17,261 3,518 22,329
Acquired through business combination - 3,000 - 3,000
At 31 October 2023 1,550 20,261 3,518 25,329
--------
Accumulated amortisation
At 1 May 2022 - 7,317 10 7,327
Charge for the period - 933 115 1,048
-------- ------------- ----------- -------
At 31 October 2022 - 8,250 125 8,375
-------- ------------- ----------- -------
At 1 May 2022 - 7,317 10 7,327
Charge for the year - 1,838 235 2,073
-------- ------------- ----------- -------
At 30 April 2023 - 9,155 245 9,400
-------- ------------- ----------- -------
At 1 May 2023 - 9,155 245 9,400
Charge for the period - 1,044 235 1,279
--------
At 31 October 2023 - 10,199 480 10,679
-------- ------------- ----------- -------
Net Book Value
At 31 October 2022 1,550 9,011 3,393 13,954
-------- ------------- ----------- -------
At 30 April 2023 1,550 8,106 3,273 12,929
-------- ------------- ----------- -------
At 31 October 2023 1,550 10,062 3,038 14,650
-------- ------------- ----------- -------
Goodwill
Goodwill is allocated to the following cash generating units
Restated
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Property Platform
Gateley Capitus Limited - - -
Gateley Hamer Limited - - -
GCL Solicitors LLP (acquisition of trade - - -
and assets)
Persona Associates Limited 40 40 40
Gateley Vinden Limited 934 934 934
Tozer Gallagher LLP (acquisition of trade - - -
and assets)
Gateley Smithers Purslow Limited - - -
Gateley RJA Limited - - -
------------ ----------- ----------
974 974 974
People Platform
Kiddy & Partners Limited - - -
Gateley Global Limited (formerly International - - -
Investment Services Limited)
t-three Consulting Limited - - -
------------ ----------- ----------
- - -
Business Services Platform
Gateley Tweed (acquisition of goodwill) 576 576 576
Adamson Jones IP Limited - - -
Symbiosis IP Limited - - -
------------ ----------- ----------
576 576 576
1,550 1,550 1,550
------------ ----------- ----------
Acquisition of Richard Julian and Associates Limited (RJA)
On 19 July 2023 Gateley (Holdings) Plc acquired the entire
issued share capital of Richard Julian and Associates Limited. RJA
specialises in the provision of quantity surveying and project
management services to organisations in the affordable housing
sector.
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 82 - 82
Intangible asset relating
to customer list - 3,000 3,000
Cash 1,239 - 1,239
Trade debtors 583 - 583
Prepayments and accrued income 89 - 89
Total assets 1,993 3,000 3,993
----------------------------------- ---------------- ----------------- ---------
Trade payables (7) - (7)
Accruals and other payables (243) - (241)
Corporation tax (227) - (227)
Other taxes and social security (242) - (242)
Lease liability - - -
Deferred tax (15) (750) (765)
----------------------------------- ---------------- ----------------- ---------
Total liabilities (734) (750) (1,484)
----------------------------------- ---------------- ----------------- ---------
Total identifiable net assets
at fair value 1,259 2,250 3,509
Negative goodwill arising
on acquisition (3,509)
----------------------------------- ---------------- ----------------- ---------
Total consideration -
----------------------------------- ---------------- ----------------- ---------
Satisfied by:
Initial cash consideration
paid 2,035
Issue of 1,192,163 new 10p
ordinary shares in Gateley
(Holdings) Plc 1,896
Contingent cash consideration
payable 1,034
Contingent share consideration
payable 1,035
Less: amounts subject to
continuing employment conditions (6,000)
Total consideration -
----------------------------------- ---------------- ----------------- ---------
Net cash outflow arising
on acquisition
Cash paid (2,035)
Net cash acquired 1,239
Net cash outflow arising
on acquisition 796
----------------------------------- ---------------- ----------------- ---------
A contingent consideration arrangement was entered into as part
of the acquisition. A further GBP2.1 million could be payable with
any payment subject to RJA achieving at least GBP4 million of
revenue over the first 12 months post-acquisition, and not less
than GBP5 million of revenue for the following 12 months. 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.
8 Contract Assets and liabilities
Contract Contract
assets liabilities
GBP'000 GBP'000
As at 31 October 2023 26,148 (341)
-------- ------------
As at 31 October 2022 22,255 (668)
-------- ------------
As at 30 April 2023 20,388 (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
Restated
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Trade receivables 53,369 49,102 54,167
Prepaid consideration subject to earn-out
service conditions 7,149 6,136 6,015
Prepayments 4,622 3,500 5,777
Other receivables 233 220 233
------------ ----------- ----------
65,373 58,958 66,192
------------ ----------- ----------
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Amounts falling due after more than
one year:
Prepaid consideration subject to earn-out
service conditions 8,257 9,038 7,080
------------ ----------- ----------
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 2023 31 October 2022 30 April 2023
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 13,859 13,859 6,765 6,765 6,813 6,813
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.
11 Trade and other payables
31 October 31 October 30 April
2023 2022 2023
GBP'000 GBP'000 GBP'000
Current
Trade payables 9,956 8,806 9,370
Other taxation and social security
payable 9,347 9,802 9,913
Other payables - - 295
Contingent consideration treated
as remuneration 118 - 1,364
Accruals and deferred income 2,310 4,911 4,991
---------- ---------- --------
21,731 23,519 25,933
---------- ---------- --------
GBP'000 GBP'000 GBP'000
Non-current
Contingent consideration treated
as remuneration - 702 -
---------- ---------- --------
- 702 -
---------- ---------- --------
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 2023/25/26
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 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 Exercised At 1 Granted Lapsed Exercised At 31
average average granted at at 30 May during during during October
remaining exercise 30 April April 2023 the period period 2023
contractual price 2023 2023 period
life
Years GBP Number Number Number Number Number Number Number Number
RSA
RSA 21/22
-
27 April
2022 3.5 GBP0.00 1,322,560 - - 1,322,560 - - 1,322,560
RSA 22/23
-
19 July
2022 3.7 GBP0.00 100,000 - - 100,000 - - -- 100,000
RSA 22/23
-
23 Feb
2023 4.3 GBP0.00 1,175,000 (50,000) - 1,125,000 - (50,000) -- 1,075,000
RSA 23/24
-
21 Sept
2023 4.8 GBP0.00 - - - - 790,131 - -- 790,131
---------- ----------- --------- --------- ------- --------- --------- ---------
2,597,560 (50,000) - 2,547,560 790,131 (50,000) - 3,287,691
---------- ----------- --------- --------- ------- --------- --------- ---------
LTIPS
LTIPS
20/21
- 22 July
2020 0.0 GBP0.00 1,405,766 (303,519) - 1,102,247 - (374,457) (727,790) -
LTIPS
21/22
- 27
April
2022 1.5 GBP0.00 1,115,000 (90,000) - 1,025,000 - (32,500) - 992,500
LTIPS
22/23
- 23
February
2023 2.3 GBP0.00 1,320,000 - - 1,320,000 - - - 1,320,000
---------- ----------- --------- --------- ------- --------- --------- ---------
3,840,766 (393,519) 3,447,247 - (406,957) (727,790) 2,312,500
---------- ----------- --------- --------- ------- --------- --------- ---------
SAYE
SAYE 19/20
-
1 October
2019 0 GBP1.28 822,625 (462,260) (311,806) 48,559 - - (48,559) -
SAYE 20/21
-
6
November
2020 0 GBP1.02 2,337,197 (463,339) - 1,873,858 - (193,928) - 1,679,930
SAYE 21/22
-
25 August
2021 0.8 GBP1.70 673,077 (172,062) - 501,015 - (68,491) - 432,524
SAYE 22/23
-
22
September
2022 1.9 GBP1.55 1,070,154 (36,850) - 1,033,304 - (107,289) - 926,015
4,903,053 (1,134,511) (311,806) 3,456,736 - (369,708) (48,559) 3,038,469
---------- ----------- --------- --------- ------- --------- --------- ---------
CSOPS
CSOPS
20/21
- 7 July
2020 0.0 GBP1.35 976,797 (245,014) - 731,783 - (33,150) (438,263) 260,370
CSOPS
22/23
- 14
December
2022 2.1 GBP1.74 300,000 (10,000) - 290,000 - (20,000) - 270,000
1,276,797 (255,014) - 1,021,783 - (53,150) (438,263) 530,370
---------- ----------- --------- --------- ------- --------- --------- ---------
During the period 703,522 CSOP options became eligible to
exercise, with 438,263 being exercised by 31 October 2023.
During the period 48,559 SAYE 19/20 options were exercised.
On 21 September 727,790 LTIP options were exercised.
On 21 September 2023 790,131 Restricted Share Awards were
granted.
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
Grant date 21/9/23
Share price at date of grant 153.5p
Exercise price GBPnil
Volatility 19%
Expected life (years) 5
Risk free rate 4.429%
Dividend yield -
Fair value per share
Market based performance -
condition
Non-market-based performance
condition/no performance
condition 153.5p
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 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
IR KQLFFZFLZBBD
(END) Dow Jones Newswires
January 17, 2024 02:00 ET (07:00 GMT)
Gateley (holdings) (LSE:GTLY)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Gateley (holdings) (LSE:GTLY)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
