18 January 2022

 

The following amendment has been made to the 'Half Year Results for the six months ended 31 October 2021' announcement released on 12 January 2022 at 07:00 under RNS No 1364Y. 

Aggregate payroll costs in Note 3 for the 12 months to 30 April 2021 should have read as below:

			12 months to 30 April 2021
			£'000
Wages and salaries			68,020
Social security costs			7,736
Pension costs			1,704
			77,460

All other details remain unchanged. 

The full amended text is shown below.

 

 

Gateley (Holdings) Plc

("Gateley", the "Group" or the "Company")

(AIM:GTLY)

 

Half Year Results for the six months ended 31 October 2021

 

Strong growth and continued trading momentum

 

Gateley, the legal and professional services group, is pleased to announce its unaudited results for the six months ended 31 October 2021 (the "Period" or "H1 22"), which show strong growth and continued trading momentum placing the Group in a strong position to deliver market expectations for the full year.

 

Financial Highlights

 

·	Strong financial performance with revenue and profit before tax up 23.5% and 19.5% respectively
·	Organic growth of 23.0%
·	Revenue from consultancy (non-legal revenue services) grew substantially, increasing 33.9% to £8.3m (H1 21: £6.2m)
·	Trading margins ahead of pre-pandemic levels with adjusted underlying profit margin of 13.7% (H1 20: 13.3%, H1 19: 13.2%)
·	Strong activity levels across the Group with utilisation up 5ppts to 84% (H1 21 79%)
·	Operating costs remain lower than pre-pandemic levels
·	Interim dividend of 3.0p per share, in line with progressive dividend policy (H1 21: 2.5p)

 

	H1 22	H1 21	Change
Revenue	£62.3m	£50.5m	+23.5%
Underlying operating profit before tax	£9.0m	£8.1m	+10.8%
Underlying adjusted profit before tax1	£8.5m	£7.5m	+14.1%
Profit before tax	£7.3m	£6.1m	+19.5%
Profit after tax	£5.9m	£4.8m	+24.7%
Basic earnings per share ("EPS")	5.00p	4.04p	+23.7%
Underlying diluted EPS2	5.76p	4.92p	+17.1%
Net assets	£58.0m	£49.7m	+16.6%
Net cash3	£8.8m	£9.3m	-4.9%
Dividend	3.0p	2.5p4	+20%

 

1	Underlying adjusted profit before tax excludes share based payment charges, amortisation and exceptional items - See note 1.2
2	Underlying diluted EPS excludes share based payment charges, amortisation and exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share option schemes in issue based on a share price at the end of the financial period
3	Net cash/(debt) excludes IFRS 16 lease liabilities
4	Declared as an interim dividend in June 2021

 

Operational and post-Period highlights

 

·	M&A strategy recommenced, following a pause resulting from the COVID-19 pandemic, with the acquisitions of: -  Tozer Gallagher - adding quantity surveyors to our Property Platform; and -  Adamson Jones - adding patent and trade mark attorneys to our Business Services Platform
·	Average fee earner headcount stable at 794 in H1 22 (H1 21: 785), in line with our FY21 strategic decision to maintain capacity to service returning demand.  Now further enhancing capacity with 75 new roles at all levels mandated for H2 22
·	Platforms established as the growth vectors of the business and our financial reporting is now aligned to these. Each Platform delivering in excess of 20% like-for-like growth in the Period
·	Growth of staff ownership continues to strengthen with 72% of staff either share or option holders

 

Current trading and outlook

 

·	Strong trading in H1 22 is expected to continue in H2 22, as demand for our combined legal and consultancy services remains high. H2 22 is also expected to reflect the normal second-half weighting of revenues
·	On track to meet market expectations for the year ending 30 April 2022 ("FY22")
·	The Group's well-diversified and resilient business model, combined with considerable opportunities (both organic and acquisitive) to develop our Platforms further, gives the Board confidence in the continued future growth of the business

 

Rod Waldie, Chief Executive Officer of Gateley, said:

 

"I would like to thank all of my colleagues for this excellent performance in H1 22.  We have delivered strong, predominately organic, revenue and profit growth on a like-for-like basis and have returned the Group to pre-pandemic profit margins.

 

"The aggregation of complementary legal and consultancy services on our four market-facing Platforms of Corporate, Business Services, People and Property continues to differentiate Gateley, strengthen our appeal to clients and enhance our resilience.  Our first segmental reporting on this basis shows strong like-for-like revenue growth in each Platform.

 

"Our balance sheet remains strong, and we are committed to investing in our Platform strategy, to seize attractive growth opportunities.  Our post period end acquisition of Adamson Jones is very recent evidence of this.  Our acquisition pipeline is strong, and we are actively engaging with opportunities for further growth across each of the Platforms.

 

"Current levels of activity are expected to continue throughout H2 22.  We are therefore well positioned to deliver market expectations for the full year."

 

Enquiries:

 

Gateley (Holdings) Plc
Neil Smith, Finance Director	Tel: +44 (0) 121 234 0196
Nick Smith, Acquisitions Director and Head of Investor Relations	Tel +44 (0) 20 7653 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
	[email protected]

 

About us

 

Gateley is a legal and professional services group. Founded in Birmingham in 1808, we have provided commercial legal services to individuals and businesses for over 200 years. We have over 750 professional advisers and employ over 1,100 people across offices located in Belfast, Birmingham, Bolton, Guildford, Leeds, Leicester, London, Manchester, Newcastle, Nottingham, Reading and Dubai.

 

In 2015, we were the first commercial UK law firm to list on the London Stock Exchange's AIM Market. Our strategy is to differentiate ourselves in a crowded marketplace, incentivise our people to retain and attract the best talent in the industry and diversify our income streams by acquiring complementary business services.

 

For further details on Gateley Plc please visit www.gateleyplc.com or follow us on Twitter    www.twitter.com/@GateleyGroup

CHIEF EXECUTIVE OFFICER'S REVIEW

 

Continued momentum

 

I am delighted with the Group's performance during H1 22.  It is now evident that there is a permanent change to our traditional ways of working.  Our staff have adapted incredibly well to the agile working environment, whilst maintaining excellent levels of service to our clients.  I remain grateful to all of our people for their energy and commitment.  Like me, they are delighted to see that the outcome of their hard work is like-for-like growth in revenue (+23.5%) and profit before tax (+19.5%).

 

Market conditions have been supportive, particularly when viewed against the same period last year.  However, we are consistent in our belief that the balance in our business model and the diversity of services on our Platforms means that we remain resilient in all markets.

 

We have declared an interim dividend of 3.0p (H1 21: 2.5p).

 

Activity review

 

Property Platform

 

This Platform is focused on clients' activities in real estate development and investment, and in the built environment in the widest sense.

 

Transactional activity has been strong across our legal services, commercial property, residential development and construction teams.  Our core markets remain busy (house building, warehousing & distribution and supported living).  In our property consultancy businesses, the Q1 22 acquisition of Tozer Gallagher has added capacity to our built environment team in Gateley Vinden and further enhanced our credentials in guarantee bond claims.  We have added a service line to Gateley Hamer by investing in specialist advisors to the telecoms sector.  Gateley Capitus is seeing improved levels of activity as businesses seek to maximise fiscal incentive opportunities.  H1 22 like-for-like revenue growth in the Property Platform is 24.3%.

 

People Platform

 

This Platform supports businesses dealing with and developing human capital, and private clients in dealing with their personal affairs.

 

H1 22 activity in our legal services employment, pensions and private client teams was good.  Our people focused consultancy businesses had a strong H1 22 and are carrying a good pipeline of work derived from our innovative offering.  Revenue was significantly ahead of the prior year as clients return to investing in leadership assessment and development and cultural change projects.  The People Platform delivered like-for-like revenue growth of 21.5%.

 

Corporate Platform

 

This Platform is focused upon the corporate, financial services and restructuring markets in both transactional and business support services.

 

Our legal services teams in corporate, banking and tax were extremely busy throughout H1 22.  Like-for-like growth on this Platform is an impressive 47.4%, being a reflection of a buoyant post-pandemic corporate market.  The team is a leading legal services provider in corporate M&A and has been recognised as such during H1 21 with numerous awards, including Insider Dealmakers Awards 2021 (Midlands) - International Deal of the Year (Gymshark, minority Investment by General Atlantic) and SME Deal of the Year (sale of Correla by Xoserve), Insider Dealmakers Awards 2021 (East Midlands) - Corporate Law Firm of the Year and Insider  Dealmakers Awards (Thames Valley) - Deal of the Year £20m+ (advising Babble on MBO of Graphite Capital).  Our International Investment Services consultancy has grown both headcount and revenue as workflows escalate, particularly from the previously reported long term contract with Cambridge and Peterborough Combined Authority.

 

Business Services Platform

 

This Platform supports clients in dealing with their commercial agreements, managing risk, protecting assets and resolving disputes.

 

Our current revenues on this Platform are predominantly through legal services.  Our litigation teams remain busy on long-term mandates for both UK and overseas clients, where our pipeline is strong.  To assist further in winning additional work, we have very recently committed to a new £50m litigation funding facility for long term complex projects.  Our regulatory and business defence team had a good H1 22 with both direct mandates and in support of our corporate services team.  Like-for-like revenue growth on this Platform was 20.2%.  The acquisition of Adamson Jones to this Platform, announced on 10 January 2022, is directly complementary to our legal services intellectual property offer and is an exciting development for us.  We expect to see further growth in this space.

 

Platforms - Drivers for growth

 

We worked hard during FY21 and throughout H1 22 to embed our Platform strategy with all of our stakeholders.  Our four Platforms are now the established growth vectors of our business and our financial reporting is now aligned with these.  Each Platform is becoming increasingly integrated and we have amalgamated some complementary businesses to realise operational advantage.  During H1 22, this has included conflating management of t-three and Kiddy & Partners on our People Platform and amalgamating Tozer Gallagher with the Gateley Vinden business on our Property Platform.

 

There is clear evidence that the diversity of service lines across the lifecycle of clients' operations on our Property and People Platforms is helping us to win work from new and existing clients.  I am delighted that we have expanded our Business Services Platform with the very recent acquisition of Adamson Jones, a team of experienced and highly regarded patent and trademark attorneys.  This is our eleventh acquisition since 2015 and becomes our ninth non-legal services business.

 

Our strong balance sheet gives us a good foundation for further investment in Platform growth, which we are actively pursuing.

 

Operational review

 

We have spent many years building and growing our physical footprint across the UK, matching our office locations with opportunities that we see available to the Group.  As a result, we currently provide our services from most of the major commercial centres in the UK.  Our office network remains an important asset to us but, as a result of the success of agile working which was accelerated by the pandemic, we have been able to create operational efficiencies through the reduction in office space, without compromising services or growth. To date we have realised efficiencies in Reading, Leeds, the North West and Belfast. Further opportunities to maximise the utilisation of the Group's office network will arise as the Group continues to grow.

 

Since our Admission to AIM, the Group has established a number of share-based schemes that variously offer all staff the ability to participate in early ownership of Gateley and share in the rewards of that ownership as they contribute to the success of the Group. I am delighted that 72% of current staff are now existing share or option holders in the Group.  Our ability to incentivise people through plc share ownership provides an attractive alternative to traditional professional services ownership models.  During the period staff exercised SAYE and CSOP options to further widen our staff shareholder base.

 

Finally, during this half year period, we have been preparing for the roll out of our new, Group-wide, financial accounting system which is planned to "go live" at the start of June 2022.  The project team continues to work hard on the delivery of this significant project that I have no doubt will aid future acquisitive growth and facilitate quick system integrations across the Group.

 

Purpose and ESG

 

During the Period, we launched our Purpose Statement: "to delight our clients, inspire our people and support our communities."

 

In tandem, we also produced our maiden Responsible Business report.

 

I am really pleased that our Purpose Statement and Responsible Business strategy have been so well received internally, with over 800 people attending our internal virtual launch event.

 

Our Responsible Business report, which was launched in September 2021, concluded that in terms of ESG, Gateley can make the most positive impact with our people and in our communities by aligning ourselves to the UK's levelling-up goals. To help us achieve this we have partnered with the leading ESG consultancy, This is Purpose.  I am delighted with the positive traction that we have already made since setting our long-term objectives during H1 22.  Rt. Hon Justine Greening of "This is Purpose" described our first 'Responsible Gateley' report as "an excellent piece of work".   Responsible Gateley.

 

Succession and Board Changes

I am pleased to announce that, subject to the completion of customary regulatory due diligence, on 1 May 2022, Victoria Garrad (Group HR Director) will join the Gateley (Holdings) Plc Board. Peter Davies, our Chief Operating Officer ("COO"), will step down from that Board as part of a planned succession which will see Victoria take on the role of COO on 1 May 2023. Victoria has been with Gateley since 1996. Before taking the Group HR Director role, she was a Partner in our legal services employment team. She has been a member of our Operations and Strategic Boards since 2011. Peter Davies will remain on the Strategic Board and will continue to chair our Operations Board until 30 April 2023.

 

Current trading and outlook

 

I am delighted that our decision to maintain full operating capacity throughout FY21 has enabled us to deliver exceptional service to clients and an excellent trading performance in what was a busy H1 22. Activity levels and the pipeline remain robust in both our transactional and non-transactional service lines and across both legal and consultancy services. The Group is well positioned to deliver further growth in the second half and achieve results in line with market expectations for FY22.

 

The plan for the long-term development of our business is now clearly characterised in our Platform Strategy. This is rooted in understanding clients' needs and outcomes in the context of legal and professional services. Our increasingly diverse range of services is demonstrably enhancing opportunities and revenues. We continue to position ourselves to invest in and grow our Platforms to provide an increasing breadth of services to our clients, deliver strong growth, and, therefore, maintain significant levels of returns to our people and investors.

 

We strive to achieve in line with our Purpose statement.

 

Rod Waldie

CEO

12 January 2022

FINANCE DIRECTOR'S REVIEW

 

Financial overview

 

With activity levels remaining strong, the underlying adjusted profit margin of 13.7% was ahead of pre-pandemic levels, which in H1 20 was 13.3%. This has been achieved despite necessary increases in payroll costs, that have been offset by strong growth in fees and lower operating overhead costs, which have not yet returned to pre-pandemic levels, and may not do so in the short to medium term.

 

Our track record of delivering profit, supported by strong cash generation and attractive investment returns, is based on a responsible business model with a strong focus on social and governance objectives and making sustainable decisions for the long term.

 

During H2 22, as we prepare for the release of our new financial accounting system that is scheduled to go live in June 2022, our year end reporting period and annual audit timetable will be disrupted. We have agreed with our auditors to delay the performance of our annual audit from June to August for 2022 only, which will have a knock-on effect with our usual market announcement timetable of mid-July. To accommodate this important phase of our expansion and technological advancement, we have decided to delay our Final Results announcement until September 2022. The Group expects to announce its usual, full year trading update in May 2022.

 

Revenue

 

Group revenue grew by 23.5% to £62.3m for the first half of the year from £50.5m in H1 21.  Revenue from the Group's core legal services grew by 21.9% to £54.0m (H1 21 £44.3m) whilst revenue from consultancy non-legal services grew by 33.9% to £8.3m (H1 21 £6.2m).  Acquired revenue during the period totalled just £0.2m from the consultancy Tozer Gallagher meaning overall organic growth was 23.0%.  The Group has grown all Platforms organically during the period and continues to diversify further its client base and revenue mix.

 

Transactional activity has remained strong during the first half of H1 22 as our Banking and Corporate teams (within our Corporate Platform) have demonstrated 47.4% growth on H1 21 from £10.3m to £15.2m.  Whilst transactional activity was paused during the onset of the pandemic, activity returned strongly around September 2020 and has been very busy ever since.  

 

Within its Property Platform, Gateley's Housebuilding, Construction and Commercial Property teams showed significant levels of client activity as lucrative long-term projects across its client base helped it deliver 24.3% growth from £21.7m to £27.0m.  The strength of its combined consultancy and legal service offerings continues to benefit Gateley's ability to win and deliver long-term infrastructure and housebuilding related projects.  These projects often span multiple years that require professional input alongside client expertise in order to help our clients deliver successfully.  Gateley also continues to benefit significantly from its clients' investment in warehousing and distribution projects.  Consultancy services represented £5.4m (H1 21 £4.2m) or 20% of Property Platform revenue.

 

The Businesses Services Group has doubled its revenue returns from Complex Dispute Litigation work as it attracts mandates through its established, market leading expertise.  Revenues have also increased in commercial service lines that provide ongoing support to the Corporate Platform.

 

Our People Platform in H1 22 has delivered consultancy revenue of £2.5m (H1 21: £1.7m) or 27% of total People Platform revenue.  Growth has also been delivered by the Employment and Private Wealth legal service lines together with a strong return of growth for the specialist change management services of t-three and Kiddy & Partners.  Their move to an agile delivery model and change management expertise are increasing the demand for services they can provide to clients in times of constant change for UK and international businesses.

 

Revenue	Corporate Platform	Business Services Platform	People Platform	Property Platform	Total Segments	Other	Total
Oct 21	15,160	9,658	9,386	26,987	61,191	1,118	62,309
Growth from Oct 20	47.4%	20.2%	21.5%	24.3%	28.1%	(58.6%)	23.5%
Oct 20	10,285	8,035	7,725	21,716	47,761	2,699	50,460

 

Total expenses

 

Personnel costs have increased as a percentage of revenue to 64.1% (H1 21: 60.9%) but are expected to return closer to historic levels in H2 22.  Average numbers of legal and professional staff rose by 1% to 794 (H1 21: 785) whilst support staff numbers decreased by 2.6% to 338 (H1 20: 347).  We retained fee earning capacity throughout the pandemic in order to satisfy the higher than previously seen client demand during FY21 and into H1 22, and now move into H2 22 with a significant list of 75 additional recruitment requests across the Group.

 

The last two half year periods do not display like for like costs as a result of the decisions the Board took on pay to address pandemic led concerns. In April 2020 the Group cut pay by up to 20% and froze all existing salaries until activity levels returned in the second half of FY21.  However, in H2 21 all previously deducted pay was returned to staff and in H1 22 a comprehensive review of salary rates was implemented to address wider market trends in, what has now become a challenging recruitment market.

 

Other operating expenses, excluding non-underlying items, decreased by 15.1% to £10.6m (H1 21: £12.5m) as expenses remained below pre-pandemic levels due to staff and clients continuing to work predominately from home.

 

Profit before tax and earnings per share

 

The Group has recorded strong underlying adjusted profit before tax of £8.5m which has increased by 14.1% from £7.5m in H1 21. This has resulted in an excellent trading margin performance of 13.7% (H1 20: 13.3%) reflecting the improving activity levels in the business and the control of costs despite the market pressures the sector is experiencing.  We enter the second half of the financial year having maintained fee earner headcount in order to service the now visible increases in client activity, and whilst government guidance currently to advise staff to work from home, we now expect certain overhead savings to be maintained during H2.

 

The table below highlights the significant change we experienced in both halves of last year and the impact of the key decisions we took throughout that period.

 

	H1 20 £m	H2 20 £m	FY20 £m	H1 21 £m	H2 21 £m	FY21 £m	H1 22 £m
Revenue	51.8	58.0	109.8	50.5	70.9	121.4	62.3
Other income	0.1	0.6	0.7	1.9	0.6	2.5	0
Personnel costs	(32.0)	(31.5)	(63.5)	(30.7)	(46.8)	(77.5)	(39.9)
Overheads and depreciation	(13.0)	(15.3)	(28.3)	(13.6)	(12.3)	(25.9)	(13.4)
Underlying operating profit before tax	6.9	11.8	18.7	8.1	12.4	20.5	9.0
Margin (%)	13.3%	20.3%	17.0%	16.0%	17.5%	16.8%	13.7%
Utilisation (%)	81%	79%	80%	79%	98%	88%	84%
Growth (%)	10.5%	2.8%	3.5%	(9.5)%	20.0%	4.7%	23.5%

 

Profit before tax of £7.3m increased by 19.5% from £6.1m with profit after tax of £5.9m increasing by 24.7% from £4.8m.

 

Basic earnings per share increased by 23.8% to 5.00p (H1 21: 4.04p). Underlying diluted earnings per share increased by 17.1% to 5.76p (HY 21: 4.92p).

 

Dividend

 

The Board has approved an interim dividend of 3.0p (H1 21: 2.5p declared in June 2021) per share. This dividend will be paid on 31 March 2022 to shareholders on the register at the close of business on 18 February 2022.  The shares will go ex-dividend on 17 February 2022.  This dividend has not been recognised as a liability in these final statements.

 

Net assets and cash

 

The Group's net asset position has increased by £8.3m to £58.0m (H1 21: £49.7m).

 

There was a £4.6m increase in total current assets, resulting from £8.3m additional trade and other receivables available for collection, a £0.6m increase in contract assets ("unbilled revenue") together with a £4.3m decrease in cash at bank.  Cash has decreased due to the reinstatement of bonuses and dividends after the outcome of the FY21 year was known.

 

Non-current assets decreased by £4.9m due to reductions in right-of-use assets and amortisation of intangible assets in line with contractual commitments and Group accounting policies.

 

Total liabilities decreased by £8.5m to £50.2m (H1 21: 58.7), mainly as a result of the decrease in corporate tax liabilities of £3.3m and the reduction in lease liabilities through scheduled repayments and crystallisation of certain operational gearing opportunities.  In addition, the repayment of all outstanding debt before the end of FY21 has also reduced liabilities compared to H1 21.  At the Period-end, debt comprised unsecured term loans of £nil (H1 21: £3.5m), whilst loans to former partners of acquired businesses totalled £nil (H1 21: £0.3m).

 

The Board continues to carefully monitor the impact of COVID-19 on the future forecasts used in assessing the value in use of the cash generating units to which the goodwill and intangibles relate and determined that despite short term reductions such forecasts are more than sufficient to justify the carrying value of goodwill.  Therefore, as at 31 October 2021, the Board concluded that the goodwill and intangible assets do not require impairment.

 

Working capital and cash generation

 

Total lock-up decreased from 149 to 143 days as a result of WIP days reducing from 55 to 46 days and debtor days increasing from 94 to 97 days.  Both movements are as a result of heightened billing activity towards the end of the half year. Contract assets (unbilled revenue) increased to £14.7m (H1 21: £14.2m) whilst trade receivables, including unbilled disbursements, increased to £38.1m (H1 21: £31.1m).

 

Cash generated from operations during the Period was £2.4m (H1 21: £12.9m) which represents 40.0% (H1 21: 271.1%) of profit after taxation.  Free cash flow decreased from £10.6m in H1 21 to £(1.9)m as the Group used existing cash resources to satisfy the payment of returning bonus and corporate tax outflows that were paused during H1 21.  The Group has returned to its usual profile of annual cash outgoings as capital expenditure returned. The Group remains debt free at present. However, this position is reviewed regularly to ensure appropriate funding levels are in place to support the Group's expansion as we move forward into H2 22 with our three year £30m revolving credit facility.

 

Conclusion

 

The Group has delivered a strong performance in HY22 against the backdrop of an uncertain macro environment, with activity levels, revenue and profitability all showing improvement. Demand for services, and capacity to deliver those services, has steadily improved over the course of H1 22. The Group has a strong pipeline of work coming into the second half of the financial year and expects to maintain profit margins in the short term but use its acquisition strategy to seek further margin enhancing acquisitions in the medium to long term as our Platform strategy resonates wider with existing and potential clients.

 

Our next two six-month periods will yield significant change for the business, as we finalise the installation of our new Group-wide financial accounting system and seek further opportunities to expand the growth through sustainable organic growth and acquisition.

 

Neil Smith

Finance Director

12 January 2022

Gateley (Holdings) Plc

Consolidated income statement and other comprehensive income

For the 6 months ended 31 October 2021

 

	Note	Unaudited 6 months to 31 October 2021	Unaudited 6 months to 31 October 2020	Audited 12 months to 30 April 2021
		£'000	£'000	£'000
Revenue	2	62,309	50,460	121,375
Other operating income		-	1,871	2,451
Personnel costs	3	(39,935)	(30,743)	(77,460)
Depreciation - Property, plant and equipment	4	(421)	(599)	(1,045)
Depreciation - Right-to-use asset	4	(1,942)	(1,801)	(3,751)
Impairment of trade receivables and contract assets		(475)	(17)	(1,834)
Other operating expenses		(10,585)	(12,462)	(19,202)
Operating profit before non-underlying operating and exceptional items		8,951	8,076	20,534
Total non-underlying operating items	4	(1,236)	(1,367)	(3,029)
Operating profit		7,715	6,709	17,505
Investing income received		-	-	-
Financing income		70	4	176
Financing expense		(509)	(623)	(1,373)
Profit before tax		7,276	6,090	16,308
Taxation		(1,353)	(1,339)	(3,151)
Profit for the period after tax attributable to equity holders of the parent		5,923	4,751	13,157
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences
- Exchange differences on foreign branch		(5)	41	(87)
Profit for the financial period and total comprehensive income all attributable to equity holders of the parent		5,918	4,792	13,070

 

Statutory earnings per share (pence)

Basic earnings per share	5	5.00p	4.04p	11.18p
Diluted earnings per share	5	4.94p	3.99p	11.10p

 

The results for the periods presented above are derived from continuing operations. There were no other items of comprehensive income to report.

Gateley (Holdings) Plc

Consolidated statement of financial position

at 31 October 2021

 

	Note	Unaudited at 31 October 2021 £'000	Unaudited at 31 October 2020 £'000	Audited at 30 April 2021 £'000
Non-current assets
Property, plant and equipment		1,343	1,373	1,323
Right-of-use asset		25,268	28,161	27,007
Investment property		164	164	164
Intangible assets & goodwill	7	15,763	17,696	15,765
Other intangible assets		245	303	282
Other investments		367	363	363
Deferred tax asset		2	-	138
Total non-current assets		43,152	48,060	45,042
Current assets
Contract assets	8	14,723	14,154	13,900
Trade and other receivables	9	41,390	33,114	43,093
Cash and cash equivalents		8,842	13,072	19,605
Total current assets		64,955	60,340	76,598
Total assets		108,107	108,400	121,640
Non-current liabilities
Other interest-bearing loans and borrowings	10	-	(1,895)	-
Lease liability		(26,465)	(28,077)	(27,702)
Other payables	11	(120)	(942)	(120)
Deferred tax liability		(591)	(965)	(772)
Provisions		(724)	(339)	(763)
Total non-current liabilities		(27,900)	(32,218)	(29,357)
Current liabilities
Other interest-bearing loans and borrowings	10	-	(1,878)	-
Lease liability		(3,197)	(3,304)	(2,743)
Trade and other payables	11	(19,303)	(18,086)	(29,032)
Provisions		(176)	(359)	(176)
Current tax liabilities		420	(2,840)	(1,066)
Total current liabilities		(22,256)	(26,467)	(33,017)
Total liabilities		(50,156)	(58,685)	(62,374)
NET ASSETS		57,951	49,715	59,266
EQUITY
Share capital		11,899	11,761	11,792
Share premium		10,430	9,153	9,421
Merger reserve		(9,950)	(9,950)	(9,950)
Other reserves		7,097	6,815	6,815
Treasury reserve		(629)	(670)	(312)
Translation reserve		(65)	68	(60)
Retained earnings		39,169	32,538	41,560
TOTAL EQUITY		57,951	49,715	59,266

 

Gateley (Holdings) Plc

Consolidated cash flow Statement

for the 6 months ended 31 October 2021

 

	Note	Unaudited 6 months to 31 October 2021	Unaudited 6 months to 31 October 2020	Audited 12 months to 30 April 2020
		£'000	£'000	£'000
Cash flows from operating activities
Profit for the period after tax		5,923	4,751	13,157
Adjustments for:
Depreciation and amortisation		3,102	3,424	6,869
Financial income		(70)	(4)	(176)
Financial expense		7	623	416
Interest charge on capitalised leases		502	-	957
Equity settled share-based payments		534	343	956
Tax expense		1,353	1,339	3,151
		11,351	10,476	25,327
Decrease/(increase) in trade and other receivables		930	4,413	(5,312)
(Decrease)/increase in trade and other payables		(9,870)	(1,994)	9,216
(Decrease)/increase in provisions		(39)	(15)	226
Cash generated from operations		2,372	12,880	29,457
Tax paid		(2,960)	(373)	(4,039)
Net cash flows from operating activities		(588)	12,507	25,418
Investing activities
Acquisition of property, plant and equipment		(434)	(99)	(503)
Acquisition of other intangible assets		-	-	(10)
Cash received on sale of investment		-	-	11
Acquisition of other investments		-	(134)	(134)
Contingent consideration paid - acquisition of subsidiary		(617)	(62)	(363)
Net cash outflow from investing activities		(1,051)	(295)	(999)
Financing activities
Interest and other financial income received		70	4	176
Interest and other financial income paid		(7)	(623)	(416)
Interest charge on capitalised leases		(502)	-	(957)
Lease payments		(986)	(1,158)	(2,890)
Short term bank loan proceeds		-	1,697	-
Repayment of short-term bank loans		-	(1,032)	-
Repayment of term bank loans		-	(235)	(3,077)
Repayment of loans from former members of GCL Solicitors    & Directors of International Investment Services		-	(68)	(729)
Funds to former members of Gateley Tweed		-	(395)	-
Acquisition of own shares		(60)	(253)	(288)
Proceeds of sale of own shares		330	-	145
Cash received for shares issued on exercise of share options		879	-	-
Dividends paid	6	(8,848)	-	-
Net cash outflow from financing activities		(9,124)	(2,063)	(7,737)
Net (decrease)/increase in cash and cash equivalents		(10,763)	10,149	16,682
Cash and cash equivalents at beginning of period		19,605	2,923	2,923
Cash and cash equivalents at end of period		8,842	13,072	19,605

 

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2021

 

	Share capital	Share premium	Merger reserve	Other reserve	Treasury reserve	Retained earnings	Foreign currency translation reserve	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2020	11,761	9,153	(9,950)	6,815	(417)	27,447	27	44,836
Restated balance at 1 May 2020
Comprehensive income:
Profit for the year	-	-	-	-	-	13,157	-	13,157
Exchange rate differences	-	-	-	-	-	-	(87)	(87)
Total comprehensive income	-	-	-	-	-	13,157	(87)	13,070
Transaction with owners recognised directly in equity
Issue of share capital	31	550	-	-	-	-	-	581
Sale of treasury shares	-	(282)	-	-	400	-	-	118
Purchase of treasury shares	-	-	-	-	(295)	-	-	(295)
Dividend paid	-	-	-	-	-	-	-	-
Share based payment transactions	-	-	-	-	-	956	-	956
Total equity at 30 April 2021	11,792	9,421	(9,950)	6,815	(312)	41,560	(60)	59,266
At 1 May 2020 (unaudited)	11,761	9,153	(9,950)	6,815	(417)	27,447	27	44,836
Comprehensive income:
Profit for the period	-	-	-	-	-	4,751		4,751
Exchange rate differences	-	-	-	-	-		41	41
Total comprehensive income	-	-	-	-	-	4,751	68	4,792
Transaction with owners recognised directly in equity
Purchase of treasury shares	-	-	-	-	(253)	-	-	(253)
Dividend paid	-	-	-	-	-	-	-	-
Share based payment transactions	-	-	-	-	-	340	-	340
Total equity at 31 October 2020	11,761	9,153	(9,950)	6,815	(670)	32,538	68	49,715

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2021

 

	Share capital	Share premium	Merger reserve	Other reserve	Treasury reserve	Retained earnings	Foreign currency translation reserve	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2021 (unaudited)	11,792	9,421	(9,950)	6,815	(312)	41,560	(60)	59,266
Comprehensive income:
Profit for the year	-	-	-	-	-	5,923	-	5,923
Exchange rate differences	-	-	-	-	-	-	(5)	(5)
Total comprehensive income	-	-	-	-	-	5,923	(5)	5,918
Transaction with owners recognised directly in equity
Share issue	107	1,009	-	282	-	-	-	1,398
Sale of treasury shares	-	-	-	-	33	-	-	33
Purchase of treasury shares	-	-	-	-	(350)	-	-	(350)
Dividend paid	-	-	-	-	-	(8,848)	-	(8,848)
Share based payment transactions	-	-	-	-	-	534	-	534
Total equity at 31 October 2021	11,899	10,430	(9,950)	7,097	(629)	39,169	(65)	57,951

 

The following describes the nature and purpose of each reserve within equity:

 

Share premium - Amount subscribed for share capital in excess of nominal value together with gains and losses on sale of own shares.

 

Merger reserve - Represents the difference between the nominal value of shares acquired by the Company in the share for share exchange with the former Gateley Heritage LLP members and the nominal value of shares issued to acquire them.

 

Other reserve - Represents the difference between the actual and nominal value of shares issued by the Company in the acquisition of subsidiaries.

 

Treasury reserve - Represents the repurchase of shares for future distribution by the Group's Employee Benefit Trust.

 

Retained earnings - All other net gains and losses and transactions with owners not recognised anywhere else.

 

Foreign currency translation reserve - Represents the movement in exchange rates back to the Group's functional currency of profits and losses generated in foreign currencies.

Gateley (Holdings) Plc

Notes

for the period ended 31 October 2021

1.            Basis of preparation

These interim unaudited financial statements for the six months ended 31 October 2021 have been prepared in accordance with the accounting policies set out in the Annual Report and Financial statements of the Group for the year ended 30 April 2021 using the recognition and measurement principles of IFRS as applied under the Companies Act 2006 and the AIM rules.

The comparative figures for the financial year ended 30 April 2021 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

1.1          Accounting policies

Accounting policies remain unchanged from those accompanying the 30 April 2021 financial statements. 

Non-underlying items

Non-underlying items are non-trading and or non-cash items disclosed separately in the Consolidated Income Statement where the quantum, nature or volatility of such items would otherwise distort the underlying trading performance of the Group. The following are included by the Group in its assessment of non-underlying items:

 

·      Share based payment charges: such charges are treated as non-underlying as the gain realised on the options granted is settled in shares not cash and therefore does not impact the income statement. The IFRS 2 charge is taken to the income statement, these expenses are treated as non-underlying items as they are either non-cash or non-recurring in nature.

·      Amortisation in respect of intangible fixed assets: these costs are treated as non-underlying as they are non-cash items.

The tax effect of the above is also included if considered significant.

Exceptional items

Exceptional items are one off transactions, unrelated to the underlying trading performance of the Group disclosed separately in the Consolidated Income Statement where the quantum, nature or volatility of such items would otherwise distort the underlying trading performance of the Group.

 

The following are included by the Group in its assessment of exceptional items:

 

·      Gains or losses arising on disposal, closure, restructuring or reorganisation of businesses that do not meet the definition of discontinued operations.

·      Impairment charges in respect of intangible fixed assets: these costs are treated as exceptional due to their one-off nature.

·      Non-typical expenses associated with acquisitions.

·      Costs incurred as part of significant refinancing activities.

The tax effect of the above is also included if considered significant.

Intangible assets and goodwill

Goodwill

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment in the investee.

Other intangible assets

Other intangible assets, including software licences, expenditure on internally generated goodwill, brands and software, customer contracts and relationships are capitalised at cost and amortised on a straight-line basis over their estimated useful economic lives through operating expenses.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.

Customer lists

Customer lists that are acquired by the Group as part of a business combination are stated at cost less accumulated amortisation and impairment losses (see accounting policy 'Impairment of assets'). Cost reflects management's judgement of the fair value of the individual intangible asset calculated by reference to the net present value of future benefits accruing to the Group from the utilisation of the asset, discounted at an appropriate discount rate.

 

Brand value

 

Certain acquisitions have retained their trading name due to the value of the brand in their specific market place.

Brand value is amortised over a period of three or five years based on the Directors assessment of the future life of the brand, supported by trading history.

 

Critical accounting judgements and key sources of estimation uncertainty

The preparation of consolidated financial statements under IFRS requires management to make estimates and assumptions which affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities.  If in the future such estimates and assumptions, which are based on Management's best judgement at the date of preparation of the financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.  The key areas where a higher degree of judgement or complexity arises, or where estimates and assumptions are significant to the consolidated financial statements are discussed below. 

Management does not consider there to have been and critical accounting judgements made in the financial period.

Unbilled revenue on client assignments

The valuation of unbilled revenue (on non-contingent matters) involves detailed understanding of contractual terms with clients.  The valuation is based on an estimate of the amount expected to be recoverable from clients on unbilled items based on such factors as time spent, the expertise and skills provided and the stage of completion of the assignment. The principal uncertainty over this estimation is a result of the amounts not yet being billed to, or recognised by the client.   Provision is made for such factors as historical recoverability rates, agreements with clients, external expert's opinion and the potential credit risks, following interactions between legal staff, finance and clients.  Where entitlement to revenue is certain it is recognised as recoverable selling price.  Where a matter is contingent at the statement of financial position date, no revenue is recognised.

Valuation of intangibles

Measurement of intangible assets relating to acquisitions:  In attributing value to intangible assets arising on acquisition, management has made certain assumptions in terms of cash flows attributable to intellectual property and customer relationships. The key assumptions made relate to the valuation of the brand, where the acquired brand is retained by the entity, and the customer list. The value of such intangibles has been estimated based on the amount of revenue expected to be generated by them. The revenue estimations rely on annual growth rates. Management have selected the appropriate rates based on a combination of observed historical growth, industry norms and forecasted influencing factors. Management have also performed sensitivity analysis to assess the impact of any variation to the growth rate used. The rates applied reflect previous growth rates, with sensitivities indicating that variations in the actual rate achieved are unlikely to materially impact the valuation of the intangible assets.

1.2          Alternative performance measures

Underlying adjusted profit before tax

 

The Directors seek to present a measure of underlying profit performance which is not impacted by exceptional items or items considered non-operational in nature. These include non-trading, non-cash and one-off items disclosed separately in the consolidated income statement where the quantum, nature or volatility of such items are considered by management to otherwise distort the underlying performance of the Group.  This measure is described as 'underlying adjusted' and is used by management to assess and monitor profit performance only at the before and after tax level.  In line with the board's wish to simplify reporting of profits, the board have moved away from reporting adjusted Earnings Before Interest Tax Depreciation and Amortisation ("EBITDA"), following the introduction of IFRS 16 'Leases'.

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
Reported profit before tax	7,276	6,090	16,308
Adjustments for non-underlying and exceptional items:
- Amortisation of acquired intangible assets	702	1,024	2,073
- Share-based payment adjustment	534	343	956
Underlying adjusted profit before tax	8,512	7,457	19,337

Amortisation of acquired intangible assets is identified as a non-cash item released to the income statement therefore such cost is removed when considering the underlying trading performance of the Group by adding to profit the annual amortisation charge.

The adjustment for share-based payments relates to the impact of the accounting standard for share-based compensation. The cost of all share-based schemes are settled entirely by the issue of shares where the proportions can vary from one year to another based on events outside of the businesses control e.g., share price. Under IFRS the anticipated future share cost is expensed to the income statement over the vesting period. The adjustment above addresses this by adding to profit the IFRS 2 charge in relation to outstanding share awards.  This adjustment is made so that non-cash expenses are removed from profit.

 

Cash generated from operations

 

a)  Free cash flows

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
Operating cash flows before movements in working capital	11,351	10,476	25,327
Net working capital movement	(8,979)	2,404	4,130
Cash generated from operations	2,372	12,880	29,457
Repayment of lease liabilities	(986)	(1,158)	(2,890)
Net interest paid	63	(619)	(240)
Tax paid	(2,960)	(373)	(4,039)
Purchase of property, plant and equipment	(434)	(99)	(503)
Purchase of other intangible assets	-	-	(10)
Free cash flows	(1,945)	10,631	21,775

 

b)  Working capital measures

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled revenue)	14,723	14,154	13,900
Unbilled disbursements	2,240	2,391	2,247
Total WIP	16,963	17,545	16,147
Annualised revenue	135,266	110,797	121,375
WIP days	46	55	49

 

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
Debtor days
Amounts recoverable from clients in respect of contract assets (unbilled revenue)	38,059	31,065	36,680
Less unbilled disbursements	(2,240)	(2,391)	(2,247)
Total debtors	35,819	28,674	34,433
Annualised revenue	135,266	110,797	121,375
Debtor days	97	94	104

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
Gross lock-up days
Total WIP	16,963	16,545	16,147
Total debtors	35,819	28,674	36,380
Total gross lock-up	52,782	45,219	52,827
Annualised revenue	135,266	110,797	121,375
Gross lock-up days	143	149	153

 

Annualised revenue reflects the total revenue for the previous 12-month period inclusive of pro-forma adjustments for acquisitions.

1.3          Going concern

These interim accounts are prepared on a going concern basis as the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  The Group remains cash generative, with a strong on-going trading performance.

 

1.4          Statement of Directors' responsibilities

The Directors confirm that, to the best of their knowledge, this condensed set of consolidated financial statements have been prepared in accordance with the AIM Rules.

 

1.5          Cautionary statement

This document contains certain forward-looking statements in respect of the financial condition, results, operations and business of the Group.  Whilst these statements are made in good faith based on information available at the time of approval, these statements and forecasts inherently involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.  There are a number of factors that could cause the actual results of developments to differ materially from those expressed or implied by these forward-looking statements and forecasts.  Nothing in this document should be construed as a profit forecast.

2.            Operating segments

The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group has the following strategic Platforms, which are its reportable segments.  These divisions offer a mixture of legal and consultancy services to clients.  With effect from 1 May 2021 all service lines are managed through four Platforms.

The Group has restated the segmental reporting for the comparative periods to reflect the current operating segments in place

The following summary describes the operations of each reportable segment as reported up to 31 October 2021:

Reportable segment	Legal service lines (Gateley Legal)	Consultancy service lines (Gateley Consultancy)
Corporate	Banking Corporate IP, Commercial & Technology Restructuring Advisory Taxation	International Investment Services GEG Services
Business Services	Commercial Dispute Resolution/Litigation Complex & International Recovery Work Regulatory & Business Defence Tweed (reputation, media and privacy law)	Gateley Omega
Employment, Pensions and Benefits	Employment Pensions Private Client	Entrust Pension Kiddy & Partners T-three
Property	Construction Planning Real Estate Real Estate Dispute Resolution Residential Development	Gateley Capitus Gateley Hamer (inc. Persona Associates) Gateley Vinden (inc. Tozer Gallagher)

.

6 months to 31 October 2021

				Corporate		Business Services	People		Property	Total segments	Other*	Total
				£'000		£'000	£'000		£'000	£'000	£'000	£'000
Segment revenue				15,160		9,658	9,386		26,987	61,191	1,118	62,309
Segment contribution  (as reported internally)				5,895		3,349	3,490		10,717	23,451	1,118	24,569
Costs not allocated to segments:
Other operating income												-
Personnel costs												(5,824)
Share based payment costs												(534)
Depreciation and amortisation												(3,065)
Other operating expenses												(7,431)
Net financial income												(439)
												7,276

6 months to 31 October 2020

				Corporate		Business Services		People	Property	Total segments	Other*		Total
				£'000		£'000		£'000	£'000	£'000	£'000		£'000
Segment revenue				10,285		8,035		7,725	21,716	47,761	2,699		50,460
Segment contribution  (as reported internally)				2,411		3,358		1,872	6,672	14,313	2,699		17,012
Costs not allocated to segments:
Other operating income													1,871
Personnel costs													(3,654)
Share based payment charge													(343)
Depreciation and amortisation													(3,424)
Other operating expenses													(4,753)
Net financial expense													(619)
												6,090

12 months to 30 April 2021

	Corporate	Business Services	People	Property	Total segments	Other*	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Segment revenue	32,869	18,338	14,252	52,989	118,448	2,927	121,375
Segment contribution  (as reported internally)	10,729	7,335	4,597	24,421	47,082	2,927	50,009
Costs not allocated to segments:
Other operating income							2,448
Personnel costs							(8,240)
Share based payment charge							(956)
Depreciation and amortisation							(6,869)
Other operating expenses							(18,887)
Net financial expense							(1,197)
							16,308

*Other includes expense income and movement in unbilled revenue

No other financial information has been disclosed as it is not provided to the CODM on a regular basis.

 

3.            Employees

The average number of persons employed by the Group during the period, analysed by category, was as follows:

		Number of employees
		6 months to 31 October 2021	6 months to 31 October 2020	12 months to 30 April 2021
Legal and professional staff		794	785	770
Administrative staff		338	347	343
		1,132	1,132	1,113
The aggregate payroll costs of these persons were as follows:
	6 months to 31 October 2021		6 months to 31 October 2020	12 months to 30 April 2021
	£'000		£'000	£'000
Wages and salaries	35,369		27,763	68,020
Social security costs	3,664		2,330	7,736
Pension costs	902		650	1,704
	39,935		30,743	77,460

4.            Expenses

Included in operating profit are the following:

 

	6 months to 31 October 2021	6 months to 31 October 2020	12 months to 30 April 2021
	£'000	£'000	£'000
Depreciation on tangible assets	421	599	1,045
Depreciation on right-of-use assets	1,942	1,801	3,751
Other operating income - rent income	-	-	(2)
Short term and low value leases	117	54	40
Operating lease costs on property	-	-	26
Foreign exchange	5	(45)	87
Profit on sale of fixed assets	-	-	(3)

 

Non-underlying items

	6 months to 31 October 2021	6 months to 31 October 2020	12 months to 30 April 2021
Amortisation of intangible assets	702	1,024	2,073
Share based payment charges	534	343	956
Total non-underlying items	1,236	1,367	3,029

5.            Earnings per share

	6 months to 31 October 2021	6 months to 31 October 2020	12 months to 30 April 2021
	Number	Number	Number
Weighted average number of ordinary shares in issue, being weighted average number of shares for calculating basic earnings per share	118,253,989	117,609,094	117,685,265
Shares deemed to be issued for no consideration in respect of share based payments	1,754,023	1,508,903	823,568
Weighted average number of ordinary shares for calculating diluted earnings per share	120,008,012	119,117,997	118,508,833

 

		£'000	£'000	£'000
Profit for the period after taxation and basic earnings attributable to ordinary equity shareholders		5,923	4,751	13,157
Non-underlying items		1,236	1,367	3,029
Tax on non-underlying items		(247)	(260)	(576)
Underlying earnings before non-underlying items		6,912	5,858	15,604
Earnings per share is calculated as follows:	Pence		Pence	Pence
Basic earnings per ordinary share	5.00		4.04	11.18
Diluted earnings per ordinary share	4.94		3.99	11.10
Underlying basic earnings per ordinary share	5.85		4.98	13.26
Underlying diluted earnings per ordinary share	5.76		4.92	13.17

 

Underlying earnings per share have been shown because the Directors consider that this provides valuable additional information about the underlying performance of the Group.

 

6.            Dividends

	6 months to 31 October 2021	6 months to 31 October 2020	12 Months 30 April 2021
	£'000	£'000	£'000
Equity shares
Interim dividend in respect of 2021 (2.5p per share) - paid 28 June 2021	2,939,731	-	-
Final dividend in respect of 2021 (5.0p per share) - paid 8 October 2021	5,907,839	-	-
Dividends paid	8,847,570	-	-

The Board has approved an interim dividend of 3.0p (H1 21: nil) per share. This dividend will be paid on 31 March 2022 to shareholders on the register at the close of business on 18 February 2022.  The shares will go ex-dividend on 17 February 2022.  This dividend has not been recognised as a liability in these final statements.

7          Intangible assets

		Goodwill	Customer list and brand names	Total
		£'000	£'000	£'000
Deemed cost
At 1 May 2020		12,329	9,850	22,179
Adjustment to expected contingent consideration - Gateley Vinden Limited		282	-	282
At 31 October 2020		12,611	9,850	22,461
At 1 May 2020		12,329	9,850	22,179
Adjustment		(631)	-	(631)
At 30 April 2021		11,698	9,850	21,548
At 1 May 2021		11,698	9,850	21,548
Acquired through business combination		307	393	700
At 31 October 2021		12,005	10,243	22,248
Accumulated amortisation
At 1 May 2020		-	3,741	3,741
Charge for the period		-	1,024	1,024
At 31 October 2020		-	4,765	4,765
At 1 May 2020		-	3,741	3,741
Charge for the year		-	2,042	2,042
At 30 April 2021		-	5,783	5,783
At 1 May 2021		-	5,783	5,783
Charge for the period		-	702	702
At 31 October 2021		-	6,485	6,485
Net Book Value
At 31 October 2020		12,611	5,085	17,696
At 30 April 2021		11,698	4,067	15,765
At 31 October 2021		12,005	3,758	15,763

Goodwill

Goodwill is allocated to the following cash generating units

	31 October 2021	31 October 2020	30 April 2021
	£'000	£'000	£'000
Property Platform
Gateley Capitus Limited	1,515	1,515	1,515
Gateley Hamer Limited	1,161	1,161	1,161
GCL Solicitors LLP (acquisition of trade and assets)	2,900	2,900	2,900
Persona Associates Limited	40	40	40
Gateley Vinden Limited	2,259	2,254	2,259
Tozer Gallagher Limited	307	-	-
	8,182	7,870	7,875
People Platform
Kiddy & Partners Limited	1,600	1,872	1,600
International Investment Services Limited	338	338	338
t-three Consulting Limited	309	955	309
	2,247	3,165	2,247
Business Services Platform
Gateley Tweed (acquisition of goodwill)	1,576	1,576	1,576
	12,005	12,611	11,698

 

Acquisition of Tozer Gallagher LLP (Tozer)

On 22 July 2021 Gateley Vinden Limited acquired the business and assets of Tozer Gallagher LLP, a leading practice of chartered quantity surveys and construction consultants based in Manchester and London. The business specialises in built environment consultancy, fund monitoring services and surety advisory.

The amounts recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below:

	Pre-acquisition carrying amount £'000	Policy alignment and fair value adjustments £'000	Total £'000
Property, plant and equipment	7	-	7
Intangible asset relating to customer list and brand	-	392	392
Contract assets	101	-	101
Prepayments and accrued income	19	-	19
Total assets	127	392	519
Accruals and other payables	(8)	-	(8)
Deferred tax	-	(75)	(75)
Total liabilities	(8)	(75)	(83)
Total identifiable net assets at fair value	119	317	436
Goodwill arising on acquisition			281
Total consideration			717
Satisfied by:
Initial cash consideration paid			617
Contingent cash consideration payable			100
Total consideration			717
Net cash outflow arising on acquisition
Cash paid			(717)
Net cash outflow arising on acquisition			(717)

The goodwill of £308,000 arising from the acquisition represents the assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.

A contingent consideration arrangement was entered into as part of the acquisition. This is payable based on the business' financial performance in the 12-month period following completion of the acquisition. The contingent consideration will be settled in cash, with each recipient applying 50% of their contingent consideration in subscribing for Ordinary Shares, valued at the average 30-day closing price on the last practicable date as the deferred consideration falls due.

 

8          Contract Assets and liabilities

	Contract assets	Contract liabilities
	£'000	£'000
As at 31 October 2021	14,723	(282)
As at 31 October 2020	14,154	(160)
As at 30 April 2021	13,900	(1,243)

Contract assets

Contract assets consist of unbilled revenue in respect of professional services performed to date.

 

Contract assets in relation to non-contingent work are billed at appropriate intervals, normally on a monthly basis in arrears, in line with the performance of the services and engagement obligations. Where such matters remain unbilled at the period end the asset is valued on a contract-by-contract basis at its expected recoverable amount.

 

Contract assets in relation to contingent work are billed at a point in time once the uncertainty over the contingent event has been satisfied and all performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance obligations may be settled in one period but the matter not billed until a later financial period.   Until the performance obligations have been performed the Group does not recognise any contract asset value at the year end.

 

 

Contract liabilities

 

When matters are billed in advance or on a basis of a monthly retainer, this is recognised in contract liabilities and released over time when the services are performed.

 

9             Trade and other receivables

	31 October 2021	31 October 2020	30 April 2021
	£'000	£'000	£'000
Trade receivables	38,059	31,065	36,680
Prepayments	3,121	1,916	5,699
Other receivables	210	133	714
	41,390	33,114	43,093

10         Other interest-bearing loans and borrowings

The contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost, are described below.

	31 October 2021		31 October 2020		30 April 2021
	Fair value	Carrying amount	Fair value	Carrying amount	Fair value	Carrying amount
	£'000	£'000	£'000	£'000	£'000	£'000
Non-Current liabilities
Unsecured long-term bank loan	-	-	1,895	1,895	-	-
	-	-	1,895	1,895	-	-
Current liabilities
Unsecured long-term bank loan	-	-	947	947	-	-
Unsecured short-term bank loan	-	-	665	665	-	-
Loans due to former partners of Gateley Tweed LLP	-	-	266	266	-	-
	-	-	1,878	1,878	-	-

On 8 June 2015, Gateley Plc entered into two new loan agreements of £5m each, £10m in total.  On 28 October 2018 these existing loans were re-negotiated and additional loans totalling £3 million were entered into.  The balance of these loans were repaid in full by the Company in April 2021.

 

 

11         Trade and other payables

	31 October 2021	31 October 2020	30 April 2021
	£'000	£'000	£'000
Current
Trade payables	5,878	4,988	6,086
Other taxation and social security payable	8,667	10,071	9,641
Other payables	889	184	582
Contingent consideration	235	579	135
Accruals and deferred income	3,634	2,529	12,588
	19,303	18,351	29,032
	£'000	£'000	£'000
Non-current
Other payables	120	130	120
Contingent consideration	-	812	-
	120	942	120

Contingent consideration

£0.1m of current contingent consideration represents the earn-out sums due to the sellers of Tozer Gallagher LLP.

All contingent consideration amounts have been calculated based on the Groups expectation of what it will pay in relation to the earn-out clause of the relevant sale and purchase agreement. The earn-out targets are based on the annual results, of the acquired business. The fair value of the earn-out consideration is calculated based on the forecasted results to give an estimate of the final obligation capped at the maximum earn-out amount stated in the purchase agreement.

 

12         Share based payments

Group

At the period end the Group has three share-based payment schemes in operation and approved a new Long-Term Incentive Plan (LTIP) to replace our existing SARS's scheme in January 2020.

Long Term Incentive Plan ('LTIP')

The Group has introduced an LTIP for the benefit of Executive Directors and Senior management.  Awards under the LTIP may be in the form of an option granted to the participant to receive ordinary shares on exercise dependent upon the achievement of profit related performance conditions.

Performance conditions

Options granted under the LTIP are only exercisable subject to the satisfaction of the following performance conditions which will determine the proportion of the option that will vest at the end of the three-year performance period.  The awards will be subject to an adjusted fully diluted earnings per share performance measure as described in the table below:

Adjusted, fully diluted earnings per Share Compound Annual Growth Rate (CAGR) over the three year period ending 30 April 2023	Amount Vesting %
Below 5%	0%
5%	25%
Between 5% and 10%	Straight line vesting
Above 10%	100%

 

The options will generally be exercisable after approval of the financial statements during the year of exercise. The performance period for any future awards under the LTIP will be a three-year period from the date of grant.  Vested and unvested LTIP awards are subject to a formal malus and clawback mechanism.

 

 

Save As You Earn Scheme (SAYE)

The Group operates a HMRC approved SAYE scheme for all staff.  Options under this scheme will vest if the participant remains employed for the agreed vesting period of three years.  Upon vesting, each option allows the holder to purchase the allocated ordinary shares at a discount of 20% of the market price determined at the grant date.

Company Share Option Plan (CSOP)

The group operates a HMRC approved CSOP scheme for associates, senior associates, legal directors, equivalent positions in Gateley Group subsidiary companies and senior management positions in our support teams. Options under this scheme will vest if the participant remains employed for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase the allocated ordinary share at the price on the date of the grant.

The Groups final Stock Appreciation Rights Scheme ('SARS') options lapsed in the year ending 30 April 2021.

The annual awards granted under the schemes are summarised below:

 

	Weighted average remaining contractual life	Weighted average exercise price	Originally granted	Lapsed at 30 April 2021	Exercised at 30 April 2021	At 1 May 2021	Granted during the period	Lapsed during period	Exercised during period	At 31 October 2021
	Years	£	Number	Number	Number	Number	Number	Number	Number	Number
LTIPS
LTIPS 20/21 - 22 July 2020	1.6	£1.43	1,405,766	(38,339)	-	1,367,427	-	(67,094)	--	1,300,333
SAYE
SAYE 18/19 - 21 September 2018	0	£1.33	620,335	(168,366)		451,969	-	(159,169)	-	292,800
SAYE 19/20 - 1 October 2019	0.8	£1.28	770,787	(73,964)		696,823	-	-	-	696,823
SAYE 20/21 - 6 November 2020	1.9	£1.02	2,337,353	(72,700)		2,264,653	-	(45,099)	-	2,219,554
SAYE 21/22 - 17 September 2021	2.9	£1.70	-	-		-	673,077	(105)	-	672,972
			3,728,475	315,030		3,413,445	673,077	(204,373)	-	3,882,149
CSOPS
CSOPS 17/18 - 3 October 2017	0	£1.65	581,162	(153,017)	-	428,145	-	(26,603)	(401,542)	-
CSOPS 18/19 - 24 October 2018	0	£1.44	812,131	(141,663)	-	670,468	-	(12,500)	-	657,968
CSOPS 20/21 - 7 July 2020	1.6	£1.35	976,797	(57,411)	-	919,386	-	(97,469)	-	821,917
			2,370,090	352,091		2,017,999	-	(136,572)	(401,542)	1,479,885

During the prior half-year period to 31 October 2020, 451,173 CSOP options became eligible to exercise once the share price exceeds £1.65.  At 31 October 2020 no CSOP options had been exercised. During the period to 31 October 2021 401,542 CSOP options were exercised.  The total accrued IFRS2 charge was £95,780.

During the prior half-year period to 31 October 2020, 358,865 SAYE 16/17 options became eligible to exercise once the share price exceeded £1.33.  At the 31 October 2020 no SAYE options had been exercised. 358,865 new 10p shares with a nominal value of £35,865 were issued on 6 January 2021 following which 172,292 options were exercised with the remaining 186,573 options being cancelled.  The total accrued IFRS2 charge was £155,381.

During the period 292,800 SAYE 17/18 options became eligible to exercise once the share price exceeded £1.27.  At the 31 October 2021 no SAYE options had been exercised of a potential 292,800 new shares issued via a block listing in order to fully satisfy all possible options. 292,800 new 10p shares with a nominal value of £29,280 were issued on 22 October 2021.  The total accrued IFRS2 charge was £135,000.

On 17 September 2021 a total of 673,077 options were granted under the 21/22 SAYE scheme using an exercise price of £1.70.

 

Fair value calculations

The award is accounted for as equity-settled under IFRS 2.  The fair value of awards which are subject to non-market based performance conditions is calculated using the Black Scholes option pricing model. The inputs to this model for awards granted during the financial year are detailed below:

 

	CSOP	CSOP	SAYE	SAYE	SAYE	LTIP
Grant date	7/7/20	24/10/18	17/9/21	6/11/20	30/9/19	22/7/20
Share price at date of grant	£1.42p	£1.44p	£2.12p	£1.27p	£1.64p	£1.44
Exercise price	£1.42p	£1.44p	£1.70p	£1.02p	£1.27p	£1.44
Volatility	35%	24%	35%	35%	35%	35%
Expected life (years)	3.3	3.3	3.3	3.3	3.3	3.3
Risk free rate	1%	1%	1%	1%	1%	1%
Dividend yield	4%	4.5%	3%	4%	4%	4%
Fair value per share
Market based performance condition	£0.24p	£0.16p	£0.35p	£0.33p	£0.37p	£1.19p
Non-market-based performance condition/no performance condition		-	-	-	-	100%

Expected volatility was determined by using historical share price data of the Company since it listed on 8 June 2015.  The expected life used in the model has been based of managements expectation of the minimum and maximum exercise period of three and three and a half years, respectively.