16
July 2024
The
information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. It forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
Gateley (Holdings)
Plc
("Gateley", the "Group" or the "Company")
AUDITED RESULTS
2024
Fuelling growth through
continuing investment
Gateley (AIM: GTLY), the
professional services group, announces its audited results for the
year ended 30 April 2024 ("FY24" or the "Period").
The Group delivered a good financial
performance in FY24, increasing revenue by 6.0% to £172.5m,
extending Gateley's unbroken record of revenue growth since IPO in
2015. The board continued to invest for growth in line with
its stated strategy and was pleased to deliver underlying profit
before tax of £23.0m (FY23: £25.1m) after reinstating the payment
of employee bonuses this year of £4.5m (FY23: £nil), in recognition
of our people's contribution to a resilient outturn and our more
positive outlook as we move into FY25.
The balance sheet remains strong,
maintaining a net cash position. The Group has significant headroom
in its banking facilities to enable further investment in organic
and acquisitive opportunities.
Financial highlights
We present below our financial
performance for the Period both on an underlying and statutory
basis.
|
Underlying
|
FY24
|
FY23
|
Change
|
|
|
|
|
|
|
Group revenue
|
£172.5m
|
£162.7m
|
6.0%
|
|
Group underlying operating
profit1
|
£20.3m
|
£25.0m
|
(18.9)%
|
|
Group underlying profit before
tax1
|
£23.0m
|
£25.1m
|
(8.1)%
|
|
Underlying adjusted fully diluted
EPS2
|
14.20p
|
16.28p
|
(12.8)%
|
|
Dividend per share
|
9.5p
|
9.5p
|
-%
|
|
Net assets
|
£80.3m
|
£78.1m
|
2.8%
|
|
Net cash3
|
£3.8m
|
£4.3m
|
(11.6)%
|
|
Reported
|
FY24
|
FY23
|
Change
|
|
|
|
|
|
|
Group profit before tax
|
£14.0m
|
£16.2m
|
(13.9)%
|
|
Group profit after tax
|
£10.1m
|
£12.2m
|
(17.7)%
|
|
Basic earnings per share
('BEPS')
|
7.74p
|
9.77p
|
(20.8)%
|
|
·
|
Diversified business model yielding
organic revenue growth of 2.8%, comprising 0.8% in Legal and 9.1%
in Consultancy services
|
|
·
|
Consultancy revenues now 28.9% of
the Group (FY23: 25.7%)
|
|
·
|
Steadily improving activity
throughout Q4 (and ongoing) resulted in utilisation of 83% for the
Period, just below the Group's operational target of
85%.
|
|
·
|
Operating profit margin, on a
pre-bonus basis, decreased 1.0% to 14.4% (FY23: 15.4%), reflecting
salary and other cost inflation and ongoing organic and acquisitive
investment
|
|
·
|
Underlying operating profit margin
of 11.7% (FY23: 15.4%) reflects the reinstatement of Group staff
bonuses
|
|
·
|
Net assets increased by 2.8% to
£80.3m (FY23: £78.1m), including net cash of £3.8m (FY23:
£4.3m)
|
|
·
|
Proposed final dividend of 6.2p
(FY23: 6.2p), taking total dividends for the Period to 9.5p per
share (FY23: 9.5p)
|
Operational highlights
|
·
|
Average headcount at 30 April 2024
increased by 6.7% to 1,536 (FY23: 1,439), including an increase in
fee earning professional staff of 6.8% from 1,000 to
1,068
|
|
·
|
Fuelling growth through investment
in diversification and strategic hires, including:
·
Continued execution of M&A
strategy with the July 2023 acquisition of Richard Julian and
Associates Limited ("RJA")
·
Strategic hiring onto the
Business Services Platform to seed legal services class actions and
international arbitration businesses and to create an intellectual
property commercialisation and valuation offering in our patent and
trademark attorney businesses
|
|
·
|
Non-dilutive recirculation of
internal share ownership facilitated in April 2024 with the Group's
Employee Benefit Trust purchasing shares to fulfil anticipated FY25
restricted share scheme awards
|
Current trading and outlook
|
·
|
The Group continues to perform well
against its strategy set out at IPO, being to generate growth and
resilience through diversification, delivering strong returns for
our stakeholders
|
|
·
|
Ongoing investment for short-term
margin stability followed by long term improvement.
|
|
·
|
FY25 has started in line with the
board's expectations, with a good pipeline of work, including
steadily improving transactional services activity
|
Rod
Waldie, CEO of Gateley, said:
"I am pleased with our FY24 outturn
given our cautious view of market conditions during the Period,
particularly around the turn of the calendar year in H2. Our
people have worked hard to deliver another year of growth via our
increasingly diverse and resilient business model, combining
complementary legal and consultancy services.
"During the Period we continued to
make organic and acquisitive investments in both our legal and
consultancy services and in related systems. RJA Consultants
was acquired onto our Property Platform in July 2023, adding
further expertise and capacity to our quantity surveying and
project management offering. It is already performing ahead of the
board's expectation.
"Our legal services class actions
team, established in May 2023, launched its first case in late
February 2024. Our investment in this team is a high-profile
example of the type of investment that we are looking to make to
enhance our returns over the medium to longer-term.
"Our M&A and lateral hire
pipeline remains encouraging and we are committed to further
enhancing each of our Platforms as suitable opportunities arise,
aided by our net cash position and ample headroom in our banking
facilities.
"Looking forward, we are encouraged
by strengthening transactional activity levels, which began in Q4
FY24. Our immediate outlook is best characterised as
cautiously optimistic. Our resilient and financially robust
foundation, allied to our unbroken track-record of growth,
underpins our confidence to continue our long-term strategy of
investment in people and systems. This strategy has worked
well for us since IPO in 2015 and through disciplined application
of it, we ensure that the Group remains well-positioned for further
growth and enhanced returns for all stakeholders."
|
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
|
Adjusted fully 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 cash excludes IFRS 16 liabilities
|
Enquiries:
|
Gateley (Holdings) Plc
|
|
|
Neil Smith, Chief Financial
Officer
|
Tel: +44 (0) 121 234 0196
|
|
Nick Smith, Acquisitions Director
and Head of Investor Relations
|
Tel: +44 (0) 20 7653 1665
|
|
Cara Zachariou, Communications
Director
|
Tel: +44 (0) 121 234 0074 Mob: +44 (0) 7703 684
946
|
|
|
|
|
Panmure Liberum - Nominated Adviser and
Broker
Richard Lindley/Nikhil
Varghese
|
Tel: +44
(0) 20 3100 2000
|
|
|
|
|
Belvedere Communications Limited - Financial
PR
|
|
|
Cat Valentine
(cvalentine@belvederepr.com)
|
Mob: +44 (0) 7715 769 078
|
|
Keeley Clarke
(kclarke@belvederepr.com)
|
Mob: +44 (0) 7967 816 525
|
|
Llew Angus
(langus@belvederepr.com)
|
Mob: +44 (0) 7407 023 147
|
|
|
gateleypr@belvederepr.com
|
CHAIRMAN'S
STATEMENT
Summary of the year
I am delighted to present Gateley's
audited final results for the year ended 30 April 2024, another
successful year for the business and our ninth consecutive year of
revenue growth since IPO in 2015. Group revenue increased by 6.0%
to £172.5m (FY23: £162.7m) and we generated underlying profit
before tax of £23.0m (FY23: £25.1m) after reinstating the payment
of employee bonuses this year of £4.5m (FY23: £Nil). These results
have been delivered against the unwelcome backdrop of challenging
trading conditions for professional service firms allied to wage
and cost inflation. The Group has again demonstrated the strength
of its business model and the resilience created by its
diversification strategy.
In FY23 we made the difficult
decision not to make a provision for staff bonuses for that year.
For a business such as ours, where staff retention and
incentivisation are important considerations, this was not ideal.
I am therefore delighted that, this year, we have been able
to declare a bonus which reflects the contribution made by our
people to delivering a strong underlying trading performance and
our more positive outlook as we enter FY25. In doing so, we are
moving back towards a more normalised staff bonus pool with clear
intent that this remains a key component in overall reward to our
employees whilst preserving a balanced return to all of our
stakeholders. I would like to take this opportunity, on
behalf of the board, to acknowledge and thank our staff across all
levels of the Group. They have shown great adaptability to the
constant changes throughout the past few years and their dedication
towards the business, their colleagues and clients has been first
class in what was a challenging year.
We continue our strategy to
diversify the business, placing the Group in a stronger position to
deliver further profitable growth in the coming years. To support
our acquisition strategy, we retain a three-year revolving credit
facility of up to £30m. This, combined with our strong balance
sheet, places us in a good position to acquire further businesses
in the future.
As we continue to grow and
strengthen our business, the board remains committed to providing
our people with the opportunity to own shares in the Company. We
believe that employee share ownership secures a strong alignment
with the Group's external shareholders, incentivises employees and
is reflective of Gateley's long-established culture. We are
delighted that at least 70% of current staff are existing share or
option holders in the Company.
The board firmly believes that the
use of equity as an incentive and means of extending share
ownership through all levels of the Group, is a material point of
positive differentiation for Gateley in an intensely competitive
staffing environment. It is therefore an important component for
our future growth ambitions. In particular, we have worked hard
over the last 12 months to enhance our restricted share award
scheme, principally to facilitate recirculation of internally held
shares. This is our main equity incentive scheme for senior leaders
in the Group. Our enhancements present an efficient means of
maintaining significant equity at senior levels in the Group whilst
minimising external market impacts. We believe this will help
secure and enhance Gateley's position as an attractive and sought
after employer.
Responsible
Business
The board has made the further
development of Gateley's Responsible Business commitment a key
strategic priority this year.
In September 2023, we published our
third annual Responsible Business report, for which we again
received significant positive feedback. We were delighted to
achieve all 15 of our internally set responsible business targets
and are focused on reducing our CO2 emissions by 50% by 2030 and to
become net zero by 2040.
Our Responsible Business actions
focus on the wellbeing of our employees, on being a force for good
in society and within the communities in which we operate, and by
playing our part in protecting and repairing our planet. Measuring
the value and the impact we are having in all these areas is as
important as acting because it enables us to evaluate where we are
effecting change and how we can continue to improve over
time.
I am delighted with the progress we
have made and how this important initiative has been embraced
across the Group. We are committed to ensuring diversity, equality
and inclusion and our goal is to foster a positive work ethic,
whilst remaining results and client focused, and demonstrating our
commitment to doing the right thing for our people, our planet and
developing potential wherever we can.
We will publish our next Responsible
Business Report covering objectives and activity for FY24
shortly.
Board changes
David Wilton was appointed to the
board as a non-executive director and Chairman designate on 1
February 2024. The board and David subsequently agreed not to
continue with David's appointment as Chairman and David has since
stood down from the board.
The nomination committee has begun a
process to recruit a new Chairman. In the meantime, I have been
asked, and have agreed, to continue to chair the Group until a
successor is appointed.
Dividends
We have maintained dividend to
investors, recognising this is a key component of shareholder
return. An interim dividend of 3.3p per share (FY23: 3.3p)
was paid on 21 March 2024 to shareholders on the register at the
close of business on 24 February 2024. The board is pleased to
propose a final dividend of 6.2p per share (FY23: 6.2p), giving a
total dividend for the year of 9.5p per share (FY23: 9.5p), subject
to approval at the forthcoming Annual General Meeting, which will
be held on 23 September 2024. If approved, this final dividend will
be paid in October to shareholders on the register at the close of
business on 11 October 2024. The shares will go ex-dividend
on 10 October 2024.
Summary and outlook
This year has been another strong
one for Gateley. Our people have excelled in client delivery, they
have continued to overcome every challenge presented to them, and
have delivered further strategic progress for the business,
combining to generate an excellent set of results.
As we focus on service line
enhancing opportunities that meet our clients' needs and fulfil our
strategy to build a broader professional services group, our
acquisition pipeline remains strong, trading in the current year to
date has been in line with the board's expectations and we look
forward to the immediate future with cautious optimism.
Nigel Payne
Chairman
16 July 2024
CHIEF EXECUTIVE OFFICER'S
REVIEW
Introduction
I am pleased with the Group's
performance in FY24. Our teams combined to maintain Gateley's
unbroken record of year-on-year revenue growth. As always, I
am grateful to our people for their hard work and commitment to
delivering the best possible outcomes for our
clients.
During the Period we continued to
invest in people and systems to progress our strategy of building a
diverse and resilient professional services business, delivered
through each of our four Platforms of Business Services, Corporate,
People and Property. This investment necessarily includes the
need to match prevailing remuneration in a market in which there
has been high pay inflation across professional services.
Combined with the increase in our average headcount to 1,536
during the Period (FY23:1,439), this resulted in a 12.1% increase
in personnel costs, including a resumption of staff bonus awards
(£4.5m). This reflects the contribution made by our people in
delivering a strong underlying trading performance and our more
positive outlook as we move into FY25. In doing so, we are moving
back towards a more normalised staff bonus pool with clear intent
that this remains a key component in overall reward to our
employees whilst preserving a balanced return to all of our
stakeholders. Excluding this bonus provision, our personnel costs
increased 7.4%.
Our ongoing M&A strategy saw us
acquire RJA Consultants onto our Property Platform in July 2023,
contributing to growth in non-legal revenue across the Group to
£49.9m (FY23: £41.8m), or 28.9% (FY23: 25.7%) of Group revenue.
Our proposition remains unique; the ability to deliver
complementary legal and consultancy services to clients in our
chosen markets. We continue to appraise acquisition
opportunities on each of our Platforms. Whilst investment costs to
some extent impact short-term margin as acquisition, integration
and system costs are absorbed, we are confident that, in
progressing our strategy, we will generate margin-enhancing returns
in the long term.
As reported in April, we were
pleased to support our EBT in purchasing 1,864,622 shares at £1.26,
predominately from staff who were Partners at IPO. Those shares are
warehoused by the EBT to, imminently, award to certain senior staff
via our restricted share award scheme. This is a deliberate
step in our controlled, non-dilutive recirculation of internally
held shares. Our restricted share award scheme will become our sole
equity incentive scheme for our senior leaders. We will continue to
make controlled use of it, in a more meaningful way, because it is
proving to be a valuable differentiator for us in attracting and
retaining quality senior talent who are aligned with creating
long-term value for the Group and its
stakeholders.
On 15 September 2023, 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 FY24 Responsible Business Report will be
published shortly.
Finally, we are pleased to propose a
final dividend of 6.2p at the Group's AGM on 23 September 2024,
taking the total dividend for the Period to 9.5p (FY23:
9.5p).
Results overview
The Group performed well during
FY24, building on the progress reported at the half year and
delivering growth in revenue of 6.0% to £172.5m (FY23: £162.7m).
Underlying profit before tax decreased by 8.1% to £23.0m
(FY23: £25.1m), reflecting the board's decision, unlike last year,
to make a provision of £4.5m for employee bonuses. Profit
before tax decreased by 13.9% to £14.0m (FY23: £16.2m).
Profit after tax decreased by 17.7% to £10.0m (FY23:
£12.2m).
As a people business, our profit
metrics are necessarily influenced by our personnel costs.
Pay inflation across professional services of the type in the
Group has been a continuous characteristic since the end of the
pandemic. Our response has been a considered and deliberate attempt
to balance the wider capital allocation needs of the Group with the
competitive employment market in which our businesses operate.
We take reasonable steps to match market pay rates as we
continue to invest more widely in people and systems in line with
our strategy to grow our currently unique business model. Our
firm belief is that it is continual investment which will deliver
and enhance our long-term objectives and returns.
Alongside the in-Period acquisition
of RJA Consultants, strategic investments in new work streams, such
as legal services class actions and international arbitration, are
progressing well. We have also invested in AI and other new
technology products, with ongoing capital allocation to maximise
its use for margin improvement. Alongside all of this and
more general cost inflation, our FY24 results delivered another
year of solid profitability.
Once again, our outturn for the
Period was underpinned by the range and quality of legal and
consultancy services offered through our Platforms. Our
stated strategic plan at IPO was to create resilience by
diversifying our revenue streams. Nine years and 14
acquisitions later, the diversity of services we can offer helped
us weather the impact of reduced transactional services activity
throughout most of the Period, enabling us to maintain our unbroken
record of year-on-year revenue growth.
Looking forward, we are pleased to
see a continuation of the improvement we saw in transactional
services activity in Q4 FY24. Layering that improvement onto
our broader service line activity and strategic long-term
investments made in the Period positions us well for FY25 and
beyond.
Platform performance
Business Services
Platform
This Platform supports clients in
dealing with their commercial agreements, managing risks,
protecting assets and resolving disputes.
Revenue on this Platform grew by
14.0% to £24.9m, underpinned by consistently good activity
throughout the Period across the Platform's legal services dispute
resolution teams, allied to strong performance from the Platform's
patent and trademark attorney businesses.
In legal services, our regulatory
and business defence team had a record year, which is reflective of
clients' needs for specialist advice in an increasingly regulated
environment across all sectors. In addition, the dispute
resolution teams saw an increase in demand from both UK and
overseas clients. Projects from overseas clients include a
return of some activity in Central Europe alongside new mandates
from clients in the Middle East and Africa. These are
representative of new, strategically agile, steps to win specialist
work in new regions.
Buoyed by recent success in growing
dispute resolution services, we continue to make strategic
investment in specialist service lines, predominantly in
competition litigation, class actions and international arbitration
where, in all cases, we see huge opportunity. Our recently
recruited and highly regarded senior experts in international
arbitration are winning new work and forging strong credentials for
us. Alongside this, our recently formed specialist class
action team has now launched its first case.
In consultancy services, activity in
our growing patent and trademark attorney business was strong
throughout the Period. Its outturn was enhanced by the first full
year contribution from Symbiosis, specialising in the life sciences
industry and adding to Adamson Jones' expertise in engineering,
medical devices, pharmaceuticals and biotechnology. Both
businesses are working well together and with related legal
services across the Group and on shared opportunities. We
will continue to build critical mass in these services where
typical projects are long-dated and our expertise is highly valued
by clients whose businesses are founded upon ideas and inventions
that need to be protected to preserve value. More UK and
international client opportunities exist here and will be realised
as we progress our strategy to grow our business in this
space.
In aggregate, consultancy revenue
now represents 26.0% (FY23: 22.9%) of Business Services Platform
revenue.
Corporate
Platform
This Platform is focused on the
corporate, financial services and restructuring markets in both
transaction and business support services.
Currently, this Platform is
dominated by legal services, some of which were challenged by lower
volumes of transactional activity during most of FY24. As a result,
the Platform's revenue decreased by 4.4% to £37.1m. However,
it delivered a strong contribution margin.
It is likely that the Corporate
Platform will always be legal services dominated, with the
transactional teams on the Platform drawing support, particular to
each transaction, from legal and consultancy services on other
Platforms.
Whilst constrained for most of FY24,
corporate transactional activity started to return strongly in Q4,
particularly with our private equity clients and in wider M&A.
The corporate team generated a pipeline in that period
comprising an impressive list of complex, high-value transactions
across a wide range of sectors, which utilised additional legal and
consultancy services across the Group. Ultimately, the team
had another good year and the corporate unit remains our biggest
internal referrer of business, with most, if not all, other teams
benefitting in some way. The pipeline into FY25 is
good.
This pattern is also reflected in
our banking team, which had a stronger Q4 following a subdued
period due to reduced corporate transactions and bank lending.
There was some offset in the form of an increase in loan covenant
reset and refinancing work, which enabled the team to maintain
revenue levels in Period in line with FY23. This is an
excellent example of pro and counter-cyclical revenue opportunities
which exist in almost all of our legal service lines.
Our restructuring and recovery teams
are a natural counterweight to traditional transactional activity
and following a sustained period of quiet trading conditions for
some years now, revenue levels rose by 20.8% in FY24, as government
pandemic support for companies unwound and inflationary pressures
and interest rate increases impacted UK businesses. Activity
remains strong in these teams. Mandates have been generated
both in-market and internally, including working alongside experts
in Gateley Vinden and our legal services construction unit in
delivery of market-leading services to insurers who have bonded
construction projects that have become distressed.
In consultancy services, the team at
Gateley Global closed out a significant contract providing services
to help public and private sector global clients realise their
international expansion plans, inward and outward of the UK.
In addition, the team is a consistent cross-referrer of
revenue to other parts of the Group as clients require mixed
services to implement expansion.
People
Platform
This Platform supports clients in
dealing with and developing people and in administering
individuals' personal affairs.
Revenue on this Platform contracted
by 4.3% due, in part, to a reduction in headcount and
reorganisation of our legal services private client team and a
drop-off in required support to transactional teams from our legal
services employment team.
We saw strong off-set to the above
from our legal services pension team and our pension trustee
business Entrust which, together, grew revenue by 30.7%.
These relatively predictable revenue streams are a further
example of deliberately designed resilience in our model.
This is a sector where we are keen to make further investment
to service the increase in the number of pension schemes looking to
complete all liability buy-outs, and/or out-source management of
their pension schemes, working with Entrust.
t-three and Kiddy & Partners,
our talent assessment, development and cultural change businesses,
continue to attract significantly sized clients buying dual
services, with particular focus on scalable products to high growth
clients. They were pleased to maintain revenue at £6.0m
(FY23: £6.2m) alongside a strong pipeline as organisations continue
to develop their people and/or transform in some way.
In aggregate, consultancy revenue
now represents 30.8% of People Platform revenue.
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 most diverse and
mature Platform and we maintain our view that the range of
expertise now housed on this Platform puts us in position to
compete with well-established, multi-disciplinary property
consultancies in the wider market. Despite a very challenging
back drop for the property sector, revenue on our Property Platform
grew by 11.4% to £91.0m during FY24 (FY23:
£81.6m).
Whilst activity in the wider
commercial property market eased in FY23 (and continued to be
subdued throughout most of FY24), we saw and continue to see an
increase in non-transactional advisory and dispute resolution
services. This includes helping our wide range of residential
development clients navigate regulation under the high-profile
Building Safety Act (post-Grenfell) and advising on related
remediation projects. This is long-dated, specialist work in
which we continue to invest. Our construction team had a record
year and continues to be very busy. Our real estate development
team - a market leader in the warehousing and logistics sector had
a slower start to the year before returning strongly to growth.
Elsewhere, prevailing market conditions have resulted in an
increase in work helping or opposing organisations seeking to exit
commercially onerous contracts.
In our market-leading house-builder
team, we continue to act for all of the top developers, many of
whom have significantly reduced their panel of advisors in favour
of larger providers who cover all bases, which describes Gateley
both geographically and in service lines, and this should result in
more work for the team. Our clients need to continue to build
and sell and have other areas for which they require our services.
This includes shared ownership framework agreements, bulk
sales to housing associations and build-to-rent investors and
housing-led urban regeneration. We act for all of the leading
developers in this space and offer a unique combination of legal
and consultancy services covering whole project life
cycles.
In consultancy services, Gateley
Smithers Purslow ("GSP"), who deliver specialist services to the
property insurance complex claims market, contributed revenue of
£17.6m (FY23: £13.7m), representing annualised growth for that
business of 28.5%. We also saw strong revenue growth of 14.7%
from Gateley Vinden's broad range of specialist
services.
Our acquisition of surveyors Richard
Julian and Associates Limited ("RJA") in July 2023 extends our
reach to organisations that deliver affordable housing, a resilient
sector underpinned by high levels of grant to support delivery of
the Government's housing targets. The team also has
specialists in major loss property claims, which enhances related
expertise in both GSP and Gateley Vinden. RJA has had an
excellent start in Group, exceeding expectation.
FY24 consultancy revenue represented
40.5% (FY23: 38.1%) of Property Platform revenue.
Operational
review
Our operational focus has been aimed
at current and future efficiency.
AI is at the top of our agenda and
is a priority area for capital allocation, alongside investment in
acquisitions and people. We are very aware that investment in
suitably developed product will positively enhance the delivery of
some of our services and realise efficiencies which help us improve
our profitability. We have a cross-disciplinary steering group
reporting directly to the board on product assessment, procurement
and integration. Our investment in-Period included recruitment of a
specialist in-house AI development team to create bespoke
applications for both service delivery and internal uses. Our
development program will provide applications for use on each of
our client-facing Platforms and for our business support functions.
The first of our internally designed applications has just been
launched for use by the residential development team on our
Property Platform. It significantly improves turnaround of the
process that it is designed for and is verificatory of the value of
the ongoing investment that we will continue to make in AI driven
product.
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 £0.5m so far for current and future benefit.
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 FY24 and into FY25.
People and Culture
Attracting, developing and
motivating talent, at all levels across the Group, is a key
objective every year. In FY24, overall average headcount in the
Group increased by 6.7% to 1,536 (FY23: 1,439). Legal services
average headcount growth was 1.2% to 1091 employees (FY23: 1,078).
Average consultancy headcount increased by 25.4% to 445 (FY23:
355), primarily as a result of acquisitions and investment in
GSP.
The Gateley offering remains
differentiated and our broad range of career opportunities is
attractive. We continue to evolve our people strategies to
drive a stimulating, purposeful and rewarding environment in which
our people can progress their careers. We recently announced a
total of 159 internal promotions and celebrated these across the
Group.
The ability for all of our people to
participate in share ownership is attractive and represents a
recruitment differentiator. During FY24 we issued circa 3.4m shares
to participants across our various share schemes. All of this is in
line with our strategy of creating wider equity participation for
more of our people. Currently circa 70% of our people either
hold shares or participate in share schemes.
Once again, we owe the success of
our business to the quality and dedication of our people at all
levels. Clients come to us for our broad specialist knowledge
and experience and our determination to deliver results for them.
As we extend our range of services, our strong client relationships
enable more cross-selling opportunities, which remains a key focus
for us in generating further organic growth.
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 pleased 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.
Our next report will be published imminently.
Highlights from the last 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
Looking forward, we are encouraged
by strengthening levels of activity across our transactional
services teams, which began during the Spring. This is
matched by improving pipelines for those teams. Alongside
this, we continue to see good non-transactional and consultancy
business activity. Therefore, our immediate outlook is cautiously
optimistic at the beginning of a new political dawn for the
UK.
From a long-term perspective, we
remain positive as our increasingly resilient model continues to
deliver for us and gives us confidence to continue our investment
strategy for enhanced returns.
The group enters FY25 with positive
mindset and belief in strategy.
Rod
Waldie
Chief Executive Officer
16 July 2024
CHIEF FINANCIAL OFFICER'S
REVIEW
Financial overview
The Group has again grown revenue
both organically and through acquisition, despite the challenging
economic backdrop of FY24 that resulted in decreasing activity
levels throughout the year until Q4.
This year's increase in costs,
driven through a combination of inflation and investment, alongside
a return of bonuses, have checked our progression on both profit
and margin. Following strong activity levels in transactional
areas in Q4 alongside the reorganisation of specific areas of the
Group, we enter FY25 feeling confident of improving profitability
in FY25.
Our dividend yield is 6.4% using the
average share price across FY24 and, even in an environment of
higher interest rates, remains at a level which we believe is
attractive for all shareholders.
Our revolving credit facility has
significant headroom and with a closing net cash position of £3.8
million we are well-placed to capitalise on current market
conditions, as we have done previously, to enable further expansion
and growth.
Revenue and activity levels
Group total revenue grew by 6.0%
(FY23: 18.6%) to £172.5m (FY23: £162.7m), including 2.8%
organically. Revenue from core legal service lines grew
organically by 0.8% (FY23: 4.9%), while organic revenue growth from
consultancy businesses was 9.1% (FY23: 15.2%). Consultancy revenues
of £49.9m (FY23: £41.8m) now represent 28.9% (FY23: 25.7%) of total
revenue, demonstrating our strategy to build and diversify into a
broader professional services group, and further enhance our unique
offering to clients.
Fee earner utilisation levels during
FY24 returned to FY22 levels at 83%, after FY23's increase to 89%.
Alongside a static conversion of time into fees, this has
contributed to the Group's decrease in profitability. Activity in
Q4 of FY24 was 92% compared to an average of 81% in the first three
quarters. This Q4 FY24 utilisation average was 1% higher than
Q4 in FY23. We fully expect this improvement to continue as
we experience increased instructions from new areas of investments
and transactional activity continuing to build ahead of the recent
UK general elections.
During this period of reduced
activity levels, a number of key areas of the Group have been
unable to pass on the recent market-driven staff cost increases of
the last few years, whilst lead generation has remained extremely
competitive. As activity levels improve and the mix of work
changes towards recent new areas of investment, we are starting to
see rate increases work through into improved
recoveries.
However, activity in a number of our
consultancy businesses is driven by alternative factors. Gateley
Smithers Purslow ("GSP") and Gateley RJA are examples of two such
areas of the Group that have seen activity increase significantly
as a result of the rise in adverse economic climate change and
government policy in social/affordable housing, respectively.
Both businesses have experienced impressive organic growth
since joining the Group of 28.3% and 26.0% respectively.
Costs and margins
The bridge in personnel costs from
£96.8m in FY23 to £108.5m in FY24 of £11.7m arises due to a £4.5m
bonus, growth in head count and wage inflation of £4.4m, £2.4m of
new payroll costs following the July 2023 acquisition of RJA and
£0.4m of full year Symbiosis costs acquired in October 2022, both
of which were covered by revenue introduced. Average staff
headcount has increased by 6.7% from 1,439 to 1,536 total staff.
Average professional staff within this period have increased
by 6.8% from 1,000 to 1,068.
Personnel costs (before bonus) to
revenue in FY24 increased to 60.3% (FY23: 59.5%) which rises to
62.9%, as a result of the Group awarding £4.5m of bonuses for
exceptional performers during FY24. We continue to sensibly manage
this key metric as market conditions improve. The
reinstatement of a bonus and the increase in investment income from
trade related interest have both impacted our adjusted profit
before tax margin this year, which has decreased to 13.4% (FY23:
15.4%). The bonus reinstatement has reduced margin by 2.6%,
whilst the additional £2.7m of net interest income has increased
this margin by 1.6%.
Operating expenses have increased by
£2.7m or 7.6% to £38.8m (FY23: £36.1m) due mainly to the investment
in new IT systems (£0.5m) supporting new areas of work such as
Class Actions, and the additional cost of the acquisition of RJA
(£0.6m). Overall, operating overheads have increased slightly
as a percentage of revenue from 22.2% in FY23 to 22.5% in FY24 as
predicted.
The table below represents Platform
performance over the last two reported years along with each
Platform's direct contribution towards our Group's
performance.
|
|
Business
Services
£m
|
Corporate
£m
|
People
£m
|
Property
£m
|
Total
£m
|
|
FY24
|
|
|
|
|
|
|
Revenue
|
24.9
|
37.0
|
19.6
|
91.0
|
172.5
|
|
Segmental contribution
|
7.5
|
14.0
|
5.8
|
33.2
|
60.5
|
|
Contribution margin
|
30.2%
|
37.7%
|
29.5%
|
36.5%
|
35.1%
|
|
|
|
|
|
|
|
|
FY23
|
|
|
|
|
|
|
Revenue
|
21.8
|
38.8
|
20.4
|
81.7
|
162.7
|
|
Segmental contribution
|
5.3
|
13.9
|
6.0
|
31.1
|
56.3
|
|
Contribution margin
|
24.4%
|
36.0%
|
29.3%
|
38.1%
|
34.6%
|
|
|
|
|
|
|
|
|
Revenue movement (%)
|
14.0%
|
(4.4%)
|
(4.3%)
|
11.4%
|
6.0%
|
|
Contribution margin change
(%)
|
23.8%
|
4.7%
|
0.1%
|
(4.2%)
|
1.4%
|
Underlying operating profit before tax
The Group has recorded £20.3m of
underlying operating profit before tax (FY23: £25.0m). Whilst
we have continued to strategically invest across the business in
our legal and consultancy teams, a particular focus has been on
headcount investment in GSP to meet significant demand. The
reinstatement of a Group bonus (£4.5m) is the key difference
between the two years.
Our underlying trading margins have
decreased to 11.7% (FY23: 15.4%) as a factor of continued
investment for growth and ongoing inflationary pressure in our
people costs despite decreased levels of activity in certain parts
of the Group due to macro-economic factors. Nevertheless, we are
confident that our strategy of ongoing investment made by us will
result in short term margin stability followed by long term
improvement.
Underlying operating profit before
tax excludes amortisation of acquisition related intangibles, all
share-based charges and exceptional acquisition related items,
including the acquisition accounting
treatment of consideration payments on acquisitions being
reclassified as employment costs in the income statement, as well
as gains on bargain purchases arising from the related acquisition
accounting. Underlying operating profit
before tax has been calculated as an alternative performance
measure in order to provide a more meaningful measure and
year-on-year comparison of the profitability of the underlying
business.
|
|
|
|
|
Extract of UK statement of
comprehensive income
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
172,492
|
162,683
|
|
Operating profit
|
11,177
|
16,122
|
|
Operating profit margin
(%)
|
6.48
|
9.91
|
|
|
|
|
|
Reconciliation to alternative
performance measure: underlying operating profit before
tax
|
|
|
|
Operating profit
|
11,177
|
16,122
|
|
|
|
|
|
Non-underlying items
|
|
|
|
Amortisation of acquisition related
intangible assets
|
2,483
|
2,073
|
|
Share based payment charge - Gateley
Plc
|
1,625
|
1,984
|
|
Share based payment charge - Gateley
RJA Limited
|
61
|
-
|
|
Contingent consideration treated as
remuneration
|
6,956
|
6,190
|
|
Gain on bargain purchase
|
(3,609)
|
(1,389)
|
|
|
|
|
|
Acquisitions costs
|
37
|
-
|
|
One off remuneration charge -
Gateley RJA Limited
|
367
|
-
|
|
Reorganisation costs
|
1,159
|
|
|
|
|
|
|
Underlying operating profit before
tax
|
20,256
|
24,980
|
|
|
|
|
|
Adjusted underlying operating profit
margin (%)
|
11.74
|
15.36
|
Earnings Per Share (EPS)
Basic EPS decreased by 20.8% to
7.74p (FY23: 49.5% to 9.77p). Basic EPS before non-underlying
and exceptional items decreased by 13.7% to 14.42p (FY23: increased
by 12.1% to 16.71p). Diluted EPS decreased by 19.9% to 7.63p (FY23:
increased by 49.6% to 9.52p). Diluted EPS before
non-underlying and exceptional items decreased by 12.8% to 14.20p
(FY23: increased by 12.0% to 16.28p).
Share option schemes
Over 70% of our people are existing
share or option holders in the Group. The board remains
committed to providing its people with the opportunity to own
shares in the Company primarily through the continued issuance of
restricted shares awards (RSAs) across senior leaders within the
Group and our Save As You Earn ("SAYE") all staff share scheme.
Such share ownership promotes strong alignment with the Group's
external shareholders, improves our attraction to like-minded
recruits and is reflective of Gateley's culture of long-term
ownership. The RSAs, which vest on receipt, are subject to a
five-year non-dealing restriction and are forfeited should
employment cease within that period.
On 14 September 2023, Long-Term
Incentive Plan awards ("LTIP") over 727,790 Ordinary Shares vested
and were exercised on 21 September 2023 by 77 partners and PDMR's
following the conclusion of LTIP awards vested at the end of a
three-year period, with vesting and exercise dependent upon the
achievement of profit related performance conditions and continuous
employment. Profit performance during the conditional period
resulted in 68% of the total award being made.
Profits used to calculate underlying
EPS each year are disclosed below:
|
|
2024
|
2023
|
2022
|
2021
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Reported profit after tax
|
10,074
|
12,240
|
23,023
|
13,157
|
|
Adjustments for non-underlying and exceptional
items:
|
|
|
|
|
|
- Amortisation of acquired
intangible assets
|
2,483
|
2,073
|
1,581
|
2,073
|
|
- Share-based payment
adjustments
|
1,686
|
1,984
|
1,213
|
956
|
|
- Consideration treated as
remuneration
|
6,956
|
6,190
|
3,509
|
-
|
|
- Gain on bargain
purchase
|
(3,609)
|
(1,389)
|
(12,380)
|
|
|
- Reorganisation costs
|
1,159
|
-
|
-
|
-
|
|
-One off remuneration
costs
|
367
|
|
|
|
|
- Acquisition-related
costs
|
37
|
-
|
870
|
-
|
|
- Tax impact of above
|
(391)
|
(168)
|
(94)
|
-
|
|
Underlying profit after tax
|
18,762
|
20,930
|
17,722
|
16,186
|
|
|
|
|
|
|
|
Weighted average number of ordinary
shares for calculating diluted earnings per share
|
132,107,953
|
128,527,341
|
121,893,238
|
118,508,833
|
|
Underlying adjusted fully diluted EPS
|
14.20p
|
16.28p
|
14.54p
|
13.66p
|
Taxation
The Group's tax charge for the
Period was £3.9m (FY23: £4.0m) which comprised a corporation tax
charge of £4.4m (FY23: £5.0m) and a deferred tax credit of £0.5m
(FY23: credit of £1.0m).
The deferred tax charge arises due
to a combination of credits in respect of the share schemes that
have vested in past years and the release of deferred tax on
brands. The total effective rate of tax is 27.8% (FY23:
24.5%) based on reported profits before tax. The increase in
the effective rate of tax is as a result of the increase in UK
corporation tax rates and change in earn-out related consideration
remuneration charges and gains on bargain purchase from FY23 to
FY24, the net effect of which is not allowable for corporation tax
purposes.
The net deferred taxation liability
has increased to £2.6m (FY23: £2.1m) as a result of the decreased
deferred tax asset recognised on share-based payment schemes yet to
vest driven by a decrease in the Group's share price.
Dividend
The Group paid an interim dividend
of 3.3p share on 21 March 2024 and proposes a final dividend at the
Company's Annual General Meeting on 23 September 2024 of 6.2p
(FY23: 6.2p) per share, which if approved, will be paid in October
to shareholders on the register at the close of business on 11
October 2024. The shares will go ex-dividend on 10 October
2024.
Balance sheet
The Group's net asset position has
increased by £2.2m (FY23: £3.0m) to £80.3m (FY23: £78.1m), due to
the following movements:
There was a £17.9m increase in total
current assets, resulting from £4.7m additional trade and other
receivables through acquired businesses and the strong organic
growth of the Group. Contract assets ("unbilled revenue") increased
by £3.2m and cash at bank increased by £5.6m as improvements were
made in the collection of cash during this year.
Non-current assets decreased by
£3.5m, resulting predominantly from a decrease of £3.5m from a
change in property use and right of use asset values as no new
leases were entered into during FY24 as amortisation of right of
use assets were the only key movements.
The board has carefully considered the impact of
macro-economic uncertainties, on the future forecasts used in
assessing the value in use of the cash generating units to which
the goodwill and intangibles relate and determined that, despite
short term reductions, such forecasts are more than sufficient to
justify the carrying value of goodwill. Therefore, as at 30
April 2024, the board concluded that the goodwill and intangible
assets do not require impairment.
Total liabilities increased by
£12.3m, due to the reintroduction of accrued bonuses together with
increased lending from the Group's Revolving Credit Facility
following the acquisition of RJA and the payment of earn out
consideration to the vendors of GSP, offset by a reduction of £3.4m
in lease liabilities.
Cash flow
During the year, the Group increased
its usage of its Revolving Credit Facility from £6.8m to £12.9m.
The facility provides total committed funding of £30m until
April 2025 (supported by a letter of comfort for its extension to
Oct 2025), split equally between Bank of Scotland and HSBC UK, that
is specifically earmarked to fund growth and expansion via
acquisition. Interest is payable on the loan at a margin of 1.95%
above the SONIA reference rate.
The Group also has in place a
litigation funding facility for an initial £20m of funding towards
significant litigation cases, which has the ability to increase to
£50m if required. To date the Group has not yet utilised this
facility but has a number of large assignments currently being
assessed for consideration in FY25.
Cash generation remained
strong with net cash inflows from operating
activities increasing to £14.0m (from £9.7m in FY23) representing
138.8% (FY23: 79.6%) of profit after tax. The Group ended the
year with net cash of £3.8m (FY23: £4.3m), as less cash was
consumed during the financial year on creditors together with
management's sustained focus on debt collection
resulting in an improvement in debtor days.
Adjusted free cashflow during the
year from operations (after adjusting for IFRS 16 and IFRS 3
specific items noted in the table below) was £17.7m (FY23: £6.0m),
which represents an increase to 175.9% (FY23: 48.6%) of profit
after taxation ("PAT") and an increase to 92.5% (FY23: 28.2%) of
underlying PAT due to improved operational cash collection,
significant increases in interest income and the adjustments from
acquisition related activity this year being more
significant.
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Net
cash generated from operations
|
18,887
|
14,065
|
|
|
|
|
|
Tax paid
|
(4,902)
|
(4,320)
|
|
Net interest received
|
4,043
|
1,364
|
|
Cash outflow from IFRS 16 leases
(rental payments excluded from operating cash flows under IFRS
16)
|
(5,091)
|
(4,579)
|
|
Add back: Cash outflow paid on
acquisitions treated as operating activity
|
5,825
|
1,518
|
|
Purchase of property, plant and
equipment
|
(1,045)
|
(1,312)
|
|
Purchase of other intangible
assets
|
-
|
(787)
|
|
Free cash flow
|
17,717
|
5,949
|
|
|
|
|
|
Profit after tax
|
10,074
|
12,240
|
|
|
|
|
|
Free cash flow
|
175.9%
|
48.6%
|
|
Adjusted free cash flow
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Profit after tax
|
10,074
|
12,240
|
|
Non-underlying operating
items
|
7,516
|
8,858
|
|
Exceptional items
|
1,563
|
-
|
|
Underlying profit after
tax
|
19,153
|
21,098
|
|
|
|
|
|
Free cash flow
|
92.5%
|
28.2%
|
Overall, working capital levels have
increased on the previous year, as unbilled revenue represented 61
days of pro-forma net revenue compared to 53 days last year, and
Group debtor days have decreased to 111 days of pro-forma net
revenue from 113 days last year, which includes revenue from
acquisitions on a full year pro-forma basis. I am pleased we
have made good progress in debt collection with a strong finish to
the year that resulted in a pleasing net cash position. We
have made a good start to collections in FY25. Unbilled
revenue recognised in the Group's statutory accounts, from time
recorded on non-contingent work, remains low as a percentage of
revenue and totalled just £23.5m or 13.6% of revenue recognised
over the year (FY23: £20.4m or 12.5%).
Summary
FY24 continued our unbroken record
of revenue growth since IPO in 2015. Our recent acquisitions
have settled into the Group well and activity levels that were
subdued at the start of the Period, recovered strongly in Q4 and
into FY25. There is no doubt that reduced activity at a time
of continued inflation has remained a challenge to our trading
margin but I am pleased to return a bonus to staff for exceptional
performance this year alongside £23.0m of underlying profit before
tax and a 9.5p dividend to shareholders.
We remain confident that the
investments we have made, alongside an improving market, will
support our medium to longer-term growth strategy and a margin
improvement. We have maintained rigid control of costs and
improved our working capital position that supports the Group's
growth ambitions and its healthy net cash position within a strong
balance sheet with significant bank facility
headroom.
Share ownership rewards for our
staff continue to play a significant part in our vision of wider,
long-term connectivity across the Group and will deliver a
significant opportunity to all staff in FY25 and beyond.
Neil Smith
Chief Financial Officer
16 July 2024
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
for
the year ended 30 April 2024
|
|
Note
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Revenue
|
3
|
172,492
|
162,683
|
|
|
|
|
|
|
Other operating income
|
|
153
|
49
|
|
Personnel costs, excluding IFRS 2
charge
|
5
|
(108,490)
|
(96,765)
|
|
Depreciation - Property, plant and
equipment
|
11
|
(1,140)
|
(936)
|
|
Depreciation - Right-of-use
asset
|
11
|
(3,949)
|
(3,976)
|
|
Impairment of trade receivables and
contract assets
|
|
(591)
|
(1,334)
|
|
Other operating expenses, excluding
non-underlying and exceptional items
|
|
(38,219)
|
(34,741)
|
|
|
|
|
|
|
Operating profit before non-underlying and exceptional
items
|
4
|
20,256
|
24,980
|
|
|
|
|
|
|
Non-underlying operating
items
|
4
|
(7,516)
|
(8,858)
|
|
Exceptional items
|
4
|
(1,563)
|
-
|
|
|
|
(9,079)
|
(8,858)
|
|
Operating profit
|
4
|
11,177
|
16,122
|
|
|
|
|
|
|
Financial income
|
7
|
4,999
|
1,735
|
|
Financial expense
|
7
|
(2,221)
|
(1,645)
|
|
|
|
|
|
|
Profit before tax
|
|
13,955
|
16,212
|
|
|
|
|
|
|
Taxation
|
8
|
(3,881)
|
(3,972)
|
|
|
|
|
|
|
Profit for the year after tax attributable to equity holders
of the parent
|
|
10,074
|
12,240
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
Items that are or may be
reclassified subsequently to profit or loss
|
|
|
|
|
- Revaluation of other
investments
|
|
129
|
(26)
|
|
- Exchange differences on
translation of a foreign branch
|
|
(20)
|
(49)
|
|
Profit for the financial year and total comprehensive income
all attributable to equity holders of the parent
|
|
10,183
|
12,165
|
|
Statutory Earnings per share
|
|
|
|
|
Basic
|
9
|
7.74p
|
9.77p
|
|
Diluted
|
9
|
7.63p
|
9.52p
|
The results for the periods
presented above are derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 APRIL
2024
|
|
Note
|
|
2024
£'000
|
2023
£'000
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and
equipment
|
11
|
|
1,583
|
1,628
|
|
Right of use asset
|
11
|
|
23,621
|
27,098
|
|
Investment property
|
|
|
164
|
164
|
|
Deferred tax asset
|
19
|
|
373
|
830
|
|
Intangible assets &
goodwill
|
12
|
|
13,768
|
12,929
|
|
Other intangible assets
|
14
|
|
647
|
1,090
|
|
Other investments
|
|
|
275
|
147
|
|
|
|
|
40,431
|
43,886
|
|
Total non-current assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Contract assets
|
15
|
|
23,543
|
20,388
|
|
Trade and other
receivables
|
16
|
|
82,473
|
73,272
|
|
Cash and cash equivalents
|
21
|
|
16,674
|
11,105
|
|
|
|
|
|
|
|
Total current assets
|
|
|
122,690
|
104,765
|
|
|
|
|
|
|
|
Total assets
|
|
|
163,121
|
148,651
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Other interest-bearing loans and
borrowings
|
17
|
|
-
|
(6,813)
|
|
Lease liability
|
23
|
|
(24,178)
|
(28,716)
|
|
Other payables
|
18
|
|
-
|
-
|
|
Deferred tax liability
|
19
|
|
(2,968)
|
(2,941)
|
|
Provisions
|
20
|
|
(3,725)
|
(1,290)
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
(30,871)
|
(39,760)
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Other interest-bearing loans and
borrowings
|
17
|
|
(12,908)
|
-
|
|
Trade and other payables
|
18
|
|
(33,112)
|
(25,933)
|
|
Lease liability
|
23
|
|
(4,346)
|
(3,257)
|
|
Provisions
|
20
|
|
(175)
|
(107)
|
|
Current tax liabilities
|
|
|
(1,378)
|
(1,482)
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(51,919)
|
(30,779)
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
(82,790)
|
(70,539)
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
80,331
|
78,112
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
22
|
|
13,304
|
12,664
|
|
Share premium
|
|
|
35
|
11,846
|
|
Merger reserve
|
|
|
(9,950)
|
(9,950)
|
|
Other reserve
|
|
|
19,383
|
15,413
|
|
Treasury reserve
|
|
|
(4,012)
|
(677)
|
|
Translation reserve
|
|
|
(71)
|
(51)
|
|
Retained earnings
|
|
|
61,642
|
48,867
|
|
TOTAL EQUITY
|
|
|
80,331
|
78,112
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
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 2022
|
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
|
|
Transactions 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 2023
|
12,664
|
11,846
|
(9,950)
|
15,413
|
(677)
|
48,867
|
(51)
|
78,112
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
10,074
|
-
|
10,074
|
|
Revaluation of other
investments
|
-
|
-
|
-
|
-
|
-
|
129
|
-
|
129
|
|
Exchange rate differences
|
-
|
-
|
-
|
-
|
-
|
|
(20)
|
(20)
|
|
Total comprehensive
income
|
-
|
-
|
-
|
-
|
-
|
10,203
|
(20)
|
10,183
|
|
Transactions with owners
recognised directly in equity:
|
|
|
|
|
|
|
|
|
|
Issue of share capital
|
640
|
1,919
|
-
|
3,970
|
-
|
-
|
|
6,529
|
|
Cancellation of share premium
account
|
-
|
(13,730)
|
-
|
-
|
-
|
13,730
|
-
|
-
|
|
Purchase of own shares at nominal
value
|
|
|
|
|
|
(166)
|
-
|
(166)
|
|
Sale of treasury shares
|
-
|
-
|
-
|
-
|
4
|
-
|
-
|
4
|
|
Purchase of treasury
shares
|
-
|
-
|
-
|
-
|
(3,339)
|
-
|
-
|
(3,339)
|
|
Recognition of tax benefit on gain
from equity settled share options
|
-
|
-
|
-
|
-
|
-
|
(343)
|
-
|
(343)
|
|
Dividend paid
|
-
|
-
|
-
|
-
|
-
|
(12,335)
|
-
|
(12,335)
|
|
Share based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
1,686
|
-
|
1,686
|
|
|
|
|
|
|
|
|
|
|
|
Total equity at 30 April 2024
|
13,304
|
35
|
(9,950)
|
19,383
|
(4,012)
|
61,642
|
(71)
|
80,331
|
The following describes the nature
and purpose of each reserve within equity:
Share premium - Amount
subscribed for share capital in excess of nominal value together
with gains on the sale of own shares and the difference between
actual and nominal value of shares issued by the Company in the
acquisition of trade and assets.
Merger reserve - Represents the
difference between the nominal value of shares acquired by the
Company in the share for share exchange with the former Gateley
Heritage LLP members and the nominal value of shares issued to
acquire them.
Other reserve - Represents the
difference between the actual and nominal value of shares issued by
the Company in the acquisition of subsidiaries.
Treasury reserve - Represents
the repurchase of shares for future distribution by Group's
Employee Benefit Trust.
Retained earnings - All other
net gains and losses and transactions with owners not recognised
anywhere else.
Foreign currency translation reserve
- Represents the movement in exchange rates back
to the Group's functional currency of profits and losses generated
in foreign currencies.
CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 30 APRIL
2024
|
|
Note
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
Profit for the year after
tax
|
|
10,074
|
12,240
|
|
Adjustments for:
|
|
|
|
|
Depreciation and
amortisation
|
11/12/14
|
8,015
|
7,246
|
|
Financial income
|
7
|
(4,999)
|
(1,735)
|
|
Financial expense
|
7
|
1,051
|
495
|
|
Interest charge on capitalised
leases
|
7
|
1,170
|
1,150
|
|
Equity settled share-based
payments
|
6
|
1,686
|
1,100
|
|
Gain on bargain purchase
|
4
|
(3,609)
|
(1,389)
|
|
Acquisition related earn-out
remuneration charge
|
4
|
6,956
|
6,190
|
|
Earn-out consideration paid -
acquisition of subsidiary
|
|
(3,790)
|
(50)
|
|
Initial consideration paid on
acquisitions
|
|
(2,035)
|
(1,468)
|
|
Loss on disposal of property, plant
and equipment
|
4
|
-
|
82
|
|
Tax expense
|
8
|
3,881
|
3,972
|
|
|
|
18,400
|
27,833
|
|
Increase in trade and other
receivables
|
|
(10,658)
|
(6,942)
|
|
Increase/(decrease) in trade and
other payables
|
|
8,642
|
(7,259)
|
|
Increase in provisions
|
20
|
2,503
|
433
|
|
Cash generated from operations
|
|
18,887
|
14,065
|
|
Tax paid
|
|
(4,902)
|
(4,320)
|
|
Net
cash flows from operating activities
|
|
13,985
|
9,745
|
|
Investing activities
|
|
|
|
|
Acquisition of property, plant and
equipment
|
11
|
(1,045)
|
(1,312)
|
|
Acquisition of other intangible
assets
|
14
|
-
|
(787)
|
|
Cash acquired on business
combinations
|
|
1,239
|
483
|
|
Interest received
|
7
|
4,999
|
1,735
|
|
|
|
|
|
|
Net
cash generated from investing activities
|
|
5,193
|
119
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Interest and other financial income
paid
|
7
|
(956)
|
(371)
|
|
Lease repayments
|
|
(5,091)
|
(4,550)
|
|
Receipt of new revolving credit
facility
|
21
|
6,000
|
1,000
|
|
Proceeds from sale of own
shares
|
|
4
|
-
|
|
Acquisition of own shares by
Employee Benefit Trust
|
|
(3,339)
|
(416)
|
|
Cash received for shares issued on
exercise of SAYE/CSOP options
|
|
2,108
|
477
|
|
Dividends paid
|
10
|
(12,335)
|
(11,004)
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
(13,609)
|
(14,864)
|
|
Net increase/(decrease) in cash and
cash equivalents
|
|
5,569
|
(5,000)
|
|
Cash and cash equivalents at
beginning of year
|
|
11,105
|
16,105
|
|
Cash and cash equivalents at end of
year
|
21
|
16,674
|
11,105
|
NOTES TO THE FINANCIAL STATEMENTS
1.
Basis of preparation and significant accounting
policies
The financial information set out in
this financial results announcement does not constitute statutory
accounts as defined in section 435 of the Companies Act 2006. The
consolidated statement of comprehensive profit and loss and other
comprehensive income, consolidated statement of financial position,
consolidated statement of change in equity, consolidated statement
of cashflows and the associated notes have been extracted from the
Group's financial statements for the year ended 30 April 2024, upon
which the auditor's opinion is unqualified and does not include any
statement under section 498 of the Companies Act 2006. The
statutory accounts for the year ended 30 April 2024 will be
delivered to the Registrar of Companies following the Annual
General Meeting.
These condensed preliminary
financial statements for the year ended 30 April 2024 have been
prepared on the basis of the accounting policies as set out in the
2024 financial statements.
While the financial information
included in this preliminary announcement has been prepared in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards, this announcement does
not itself contain sufficient information to comply with those
standards. The Group expects to publish full financial statements
that comply with International Financial Reporting Standards in
September 2024.
1.1 Statement of Directors
responsibilities
The Directors confirm that, to the
best of their knowledge, this condensed set of consolidated
financial statements have been prepared in accordance with the AIM
Rules.
1.2 Cautionary
statement
This document contains certain
forward-looking statements with respect of the financial condition,
results, operations and business of the Group. Whilst these
statements are made in good faith based on information available at
the time of approval, these statements and forecasts inherently
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There
are a number of factors that could cause the actual results of
developments to differ materially from those expressed or implied
by these forward-looking statements and forecasts. Nothing in
this document should be construed as a profit forecast.
2.
Going concern
Having reviewed the Group's
forecasts, which includes an analysis of both short term cash flow
forecasts and longer term cash flow forecasts, the risk and
uncertainties surrounding the current and future demand for legal
services, and other reasonably possible variations in trading
performance, mitigating actions available to management the Group
expects to be able to operate within the Group's financing
facilities.
The Group's revolving credit
facility expires in April 2025 however, discussions are underway
with the Group's banks to provide a new facility, with terms
anticipated to be agreed well ahead of expiry of the current
facility. Furthermore, the Group's supportive banks have provided a
comfort letter that expresses their willingness to extend the
current facility to October 2025, should it be required.
Sensitivity analysis has been
performed in respect of specific scenarios which could negatively
impact our future performance such as lower levels of revenue
growth, lower than forecast receipts of cash, and reduced levels of
gross margin expansion. In addition, the Directors have also
considered further mitigating actions such as lower capital
expenditure and other short-term cash management activities within
the Group's control. On this basis, the Directors have a reasonable
basis to conclude that the Group is forecast to continue to trade
in line with existing financing facilities for the foreseeable
future and at least 12 months from the approval of these financial
statements.
Accordingly, the Directors continue
to adopt the going concern basis of accounting in preparing the
financial statements.
3.
Revenue and operating segments
The Chief Operating Decision Maker
("CODM") is the Strategic Board. The Group have the following four
strategic divisions, comprising both legal and consultancy
services, which are its reportable segments and referred to as it's
Platforms.
The following summary describes the
operations of each reportable segment as reported up to 30 April
2024:
|
Reportable
segment/Platforms
|
Legal service lines
|
Consultancy service lines
|
|
|
|
|
|
Corporate
|
Banking
Commercial
Corporate
Restructuring advisory
Taxation
|
GEG Services
International Investment
Services
|
|
Business services
|
Austen Hays
Commercial Dispute
Resolution
Complex International
litigation
IP
Regulatory
Reputation, media and privacy
law
|
Adamson Jones
Symbiosis IP
|
|
People
|
Employment
Pension
Private client
|
Entrust Pension
Kiddy and Partners
T-three
|
|
Property
|
Real Estate
Residential Development
Construction
Planning
Real Estate Dispute
Resolution
|
Capitus
Hamer/Persona
Smithers Purslow
Vinden
RJA
|
The revenue and operating profit are
attributable to the principal activities of the Group. A
geographical analysis of revenue is given below:
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
United Kingdom
|
156,760
|
151,489
|
|
Europe
|
9,016
|
5,459
|
|
Middle East
|
1,797
|
2,390
|
|
North and South America
|
2,478
|
1,675
|
|
Asia
|
1,878
|
1,163
|
|
Other
|
563
|
507
|
|
|
172,492
|
162,683
|
The Group has no individual
customers that represent more than 10% of revenue in either the
2024 or 2023 financial year. The Group's assets and costs are
predominately located in the UK save for those assets and costs
located in the United Arab Emirates (UAE) via its Dubai subsidiary.
Net Group assets of £0.09m (2023: Net Group assets of £0.08m)
are located in the Group's Dubai subsidiary. Revenue
generated by the Group's Dubai subsidiary to customers in the UAE
totalled £1.80m (2023: £2.39m) as disclosed above as due from the
customers in the Middle East
2024
|
|
Business
Services
|
Corporate
|
People
|
Property
|
Total
segments
|
Other
expenses
and
movement
in unbilled
revenue
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Segment revenue from
services
transferred at a point in
time
|
5,648
|
15,845
|
7,918
|
18,936
|
48,347
|
-
|
48,347
|
|
Segment revenue from
services
transferred over time
|
19,241
|
21,219
|
11,636
|
72,049
|
124,145
|
-
|
124,145
|
|
Total segmental revenue
|
24,889
|
37,064
|
19,554
|
90,985
|
172,492
|
-
|
172,492
|
|
|
|
|
|
|
|
|
|
|
Segment contribution (as
reported
internally)
|
7,523
|
13,975
|
5,772
|
33,240
|
60,510
|
-
|
60,510
|
|
Costs not allocated to segments:
|
|
|
|
|
|
|
|
|
Other operating
income
|
|
|
|
|
|
|
153
|
|
Personnel costs
|
|
|
|
|
|
|
(18,087)
|
|
Depreciation and
amortisation
|
|
|
|
|
|
|
(8,015)
|
|
Other operating expenses
|
|
|
|
|
|
|
(16,788)
|
|
Share based payment
charges
|
|
|
|
|
|
|
(1,686)
|
|
Gain on bargain purchase
|
|
|
|
|
|
|
3,609
|
|
Contingent consideration treated
as
remuneration
|
|
|
|
|
|
|
(6,956)
|
|
Exceptional items
|
|
|
|
|
|
|
(1,563)
|
|
Net financial expense
|
|
|
|
|
|
|
2,778
|
|
Profit for the financial year before
taxation
|
|
|
|
|
|
|
13,955
|
2023
|
|
Business
Services
|
Corporate
|
People
|
Property
|
Total
segments
|
Other
expense
and
movement
in unbilled
revenue
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Segment revenue from services
transferred at a point in time
|
4,952
|
16,578
|
8,409
|
17,002
|
46,941
|
1
|
46,942
|
|
Segment revenue from services
transferred over time
|
16,872
|
22,200
|
12,027
|
64,642
|
115,741
|
-
|
115,741
|
|
Total Segment revenue
|
21,824
|
38,778
|
20,436
|
81,644
|
162,682
|
1
|
162,683
|
|
|
|
|
|
|
|
|
|
|
Segment contribution (as
reported
internally)
|
5,330
|
13,948
|
5,983
|
31,037
|
56,298
|
1
|
56,299
|
|
Costs not allocated to
segments:
|
|
|
|
|
|
|
|
|
Other operating
income
|
|
|
|
|
|
|
49
|
|
Personnel costs
|
|
|
|
|
|
|
(11,091)
|
|
Depreciation and
amortisation
|
|
|
|
|
|
|
(7,246)
|
|
Other operating
expenses
|
|
|
|
|
|
|
(15,104)
|
|
Share based payment
charges
|
|
|
|
|
|
|
(1,984)
|
|
Gain on bargain purchase
|
|
|
|
|
|
|
1,389
|
|
Contingent consideration treated
as
remuneration
|
|
|
|
|
|
|
(6,190)
|
|
Exceptional costs
|
|
|
|
|
|
|
|
|
Net financial expense
|
|
|
|
|
|
|
90
|
|
Profit for the financial year before
taxation
|
|
|
|
|
|
|
16,212
|
Group entities may be engaged on a
contingent basis; in such cases the Group considers the
satisfaction of the contingent event as the sole performance
obligation within the contract. Fees are only billed once the
contingent event has been satisfied. The initial financing of these
engagements is met by the Group. Due to the nature and timing of
the billing, such engagements influence the contract asset balance
held in the balance sheet at year end. In the majority of cases the
contingent event is expected to be concluded within one year of the
engagement date. The Group operates standard payment terms of 30
days. £11.4 million (2023: £16.4m) of the current period revenue is
derived from services satisfied, in part, in the previous
period.
Services transferred over
time
For non-contingent engagements, fee
earners' hourly rates are determined at the point of engagement
with all hours attributed to the engagement fully and accurately
recorded. The recorded hours are then translated into fees to be
billed and invoiced on a monthly basis. The Group typically
operates on 30 days credit terms, in line with IFRS 15 the
performance obligations are fulfilled over time with revenue being
recognised in line with the hours worked.
Contract assets
Under IFRS 15 the Group recognises
any goods or services transferred to the customer before the
customer pays consideration, or before payment is due, as a
contract asset. These assets differ from accounts receivables.
Accounts receivable are the amounts that have been billed to the
client and the revenue recognised, whereas these contract assets
are amounts of work in progress where work has been performed, yet
the amounts have not yet been billed to the client. Due to the
nature of the services delivered by the Group the significant
component of the cost of delivery is staff costs. As a result,
there is little to no judgement exercised in determining the costs
incurred as they are driven by the time recorded by fee earners.
Contract assets are subject to impairment under IFRS
9.
No other financial information has
been disclosed as it is not provided to the CODM on a regular
basis.
Contract Liabilities
Under IFRS 15 the Group is required
to recognise contract liabilities based on those amounts recognised
against contracts for which the satisfaction of performance
obligations has not yet been met. These liabilities relate to the
deferred income recognised within Kiddy & Partners, T-three
Consulting Limited and GEG Services Limited as a result of their
billing structure. The amounts recognised reflect the agreed cost
of the services to be performed and are realised in line with the
ongoing cost of delivery. Due to the nature of the services
provided, the main component of this cost of delivery is staff
costs, as a result there is little to no judgement exercised in
determining the value of the liability held at year end.
Practical expedients under IFRS
15
Under IFRS 15 companies are required
to disclose the aggregate amount of the transaction price allocated
to the performance obligations that are unsatisfied at the end of
the reporting period. However, only a small proportion of revenue
contracts in issuance are for fixed amounts, rather the company has
a right to consideration from the customer in an amount that
corresponds directly with the value to the customer of the
business' performance completed to date. Therefore, the Group
considers it impractical to estimate the potential value of
unsatisfied performance obligations and has elected to apply the
practical expedient available under IFRS 15.
4.
Expenses and auditor's remuneration
Included in operating profit are the
following:
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Depreciation on tangible assets (see
note 11)
|
1,140
|
936
|
|
Depreciation on right-of-use asset
(see notes 11 and 23)
|
3,949
|
3,976
|
|
Short term and low value lease
payments (see note 23)
|
76
|
82
|
|
Operating lease costs on property
(see note 23)
|
116
|
166
|
|
Loss on sale of fixed
assets
|
-
|
82
|
|
|
|
|
|
|
|
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Non-underlying items
|
|
|
|
Amortisation of acquisition related
intangible assets (see note 12)
|
2,483
|
2,073
|
|
Share based payment charges -
Gateley Plc
|
1,625
|
1,984
|
|
Share based payment charges -
Gateley RJA Limited
|
61
|
-
|
|
Gain on bargain purchase
|
(3,609)
|
(1,389)
|
|
Consideration treated as
remuneration
|
6,956
|
6,190
|
|
|
7,516
|
8,858
|
|
Exceptional items
|
|
|
|
Acquisition costs
|
37
|
-
|
|
One off remuneration charge -
Gateley RJA Limited
|
367
|
-
|
|
Reorganisation costs
|
1,159
|
-
|
|
Total non-underlying and exceptional items
|
9,079
|
8,858
|
Acquisition costs relate to
third-party professional fees in connection with prospecting and
completing acquisitions during the period.
Share based payment charges in
Gateley Plc represent charges in accordance with IFRS 2 in respect
of unexercised SAYE, CSOP, LTIP and RSA schemes (See note
6).
Share based payment charges in
Gateley RJA Limited represent shares awarded to staff following the
successful acquisition of the Company (See notes 5 and
6).
Reorganisation costs relate to
restructuring and integration projects around the group.
Auditor's remuneration
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Fees payable to the Company's
Auditor in respect of audit services:
Audit of these financial
statements
|
115
|
107
|
|
Audit of financial statements
of subsidiaries of the Company
|
23
|
22
|
|
|
138
|
129
|
|
|
|
|
|
Amounts receivable by the Company's
auditor and its associates in respect of:
|
|
|
|
Other assurance services
|
37
|
34
|
Other assurance services relate to
Solicitors Accounts Rules review with associated reporting to legal
regulators. This work is entirely assurance focused.
5.
Personnel costs
The average number of persons
employed by the Group during the year, analysed by category, was as
follows:
|
|
Number of employees
|
|
|
2024
|
2023
|
|
|
|
|
|
Legal and professional
staff
|
1,068
|
1,000
|
|
Administrative staff
|
468
|
439
|
|
|
1,536
|
1,439
|
The aggregate payroll costs of these
persons were as follows:
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Wages and salaries
|
94,402
|
83,942
|
|
Social security costs
|
10,928
|
9,984
|
|
Pension costs
|
3,160
|
2,839
|
|
|
108,490
|
96,765
|
|
Non-underlying items (see note
4)
|
|
|
|
Share based payment expense -
Gateley Plc
|
1,625
|
1,984
|
|
Share based payment expense -
Gateley RJA Limited
|
61
|
-
|
|
|
110,176
|
98,749
|
6.
Share based payments
Group
At the year end the Group has nine
share based payment schemes in existence.
Save As You Earn scheme ('SAYE')
The Group operates a HMRC approved
SAYE scheme for all staff. Options under this scheme will
vest if the participant remains employed for the agreed vesting
period of three years. Upon vesting, each option allows the
holder to purchase the allocated ordinary shares at a discount of
20% of the market price determined at the grant date.
During the year 1,766,571 SAYE 19/20
options vested with 1,395,589 being exercised by 30 April 2024
leaving 370,982 options still to be exercised. New shares were
issued to satisfy these options being 1,395,589 10p shares with a
nominal value of £139,559.
Company Share Option Plan ('CSOP')
The Group operates an HMRC approved
CSOP scheme for associates, senior associates, legal directors,
equivalent positions in Gateley Group subsidiary companies and
Senior Management positions in our support teams. Options
under this scheme will vest if the participant remains employed for
the agreed vesting period of three years. Upon vesting, each
option allows the holder to purchase the allocated ordinary shares
at the price on the date of grant.
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
Share Compound Annual Growth Rate (CAGR) over the three year period
ending 30 April 2025/26
|
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.
During the year 742,998 LTIP 2020
options vested with 727,790 being exercised by 30 April 2024. New
shares were issued to satisfy these options being 727,790 10p
shares with a nominal value of £72,779.
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.
The annual awards granted under all
schemes are summarised below:
|
|
Weighted average remaining
contractual life
|
Weighted
average
exercise
price
|
Originally
granted
|
Lapsed/exercised at 30 April
2023
|
At 1 May
2022
|
Granted
during
the year
|
Lapsed during
year
|
Exercised in the
year
|
At 30 April
2023
|
|
|
|
|
Number
|
Number
|
Number
|
Number
|
Number
|
Number
|
Number
|
|
SAYE
|
|
|
|
|
|
|
|
|
|
|
SAYE 19/20 - 30
September 2019
|
0
years
|
£1.28
|
822,625
|
(774,066)
|
48,559
|
-
|
-
|
(48,559)
|
-
|
|
SAYE 20/21 - 6
November 2020
|
0
years
|
£1.02
|
2,337,197
|
(463,339)
|
1,873,858
|
-
|
(107,287)
|
(1,395,589)
|
370,982
|
|
-SAYE 21/22 - 25
August 2022
|
0.3
years
|
£1.70
|
673,077
|
(172,062)
|
501,015
|
-
|
(219,751)
|
-
|
281,264
|
|
SAYE 22/23 - 22
September 2023
|
1.4
years
|
£1.55
|
1,070,154
|
(36,850)
|
1,033,304
|
-
|
(426,326)
|
(2,129)
|
604,849
|
|
SAYE 23/24 - 3
November 2023
|
2.5
years
|
£1.14
|
-
|
-
|
-
|
1,801,308
|
(95,668)
|
-
|
1,705,640
|
|
|
|
|
4,903,053
|
(1,446,317)
|
3,456,736
|
1,801,308
|
(849,032)
|
(1,446,277)
|
2,962,735
|
|
|
|
|
|
|
|
|
|
|
|
|
CSOPS
|
|
|
|
|
|
|
|
|
|
|
CSOPS 20/21 - 7
July 2020
|
0
years
|
£1.35
|
976,797
|
(245,014)
|
731,783
|
-
|
(58,818)
|
(438,263)
|
234,702
|
|
CSOPS 22/23 - 14 December
2022
|
1.6
years
|
£1.74
|
300,000
|
(10,000)
|
290,000
|
-
|
(40,000)
|
-
|
250,000
|
|
|
|
|
1,276,797
|
(255,014)
|
1,021,783
|
-
|
(98,818)
|
(438,263)
|
484,702
|
|
LTIPS
|
|
|
|
|
|
|
|
|
|
|
LTIPS 20/21 - 22 July
2020
|
0
years
|
£0.00
|
1,405,766
|
(303,519)
|
1,102,247
|
-
|
(374,457)
|
(727,790)
|
-
|
|
LTIPS - 27 April 2022
|
1.0
years
|
£0.00
|
1,115,000
|
(90,000)
|
1,025,000
|
-
|
(135,000)
|
-
|
890,000
|
|
LTIPS 23 Feb 2023
|
1.8years
|
£0.00
|
1,320,000
|
-
|
1,320,000
|
-
|
(190,000)
|
-
|
1,130,000
|
|
|
|
|
3,840,766
|
(393,519)
|
3,447,247
|
-
|
(699,457)
|
(727,790)
|
2,020,000
|
|
RSA
|
|
|
|
|
|
|
|
|
|
|
RSA - 27 April 2022
|
3.0
years
|
£0.00
|
1,422,560
|
-
|
1,422,560
|
-
|
(237,500)
|
-
|
1,185,060
|
|
RSA 23 February
2023
|
3.8
years
|
£0.00
|
1,175,000
|
(50,000)
|
1,125,000
|
-
|
(187,500)
|
-
|
937,500
|
|
RSA 21 September 2023
|
4.4
years
|
£0.00
|
-
|
-
|
-
|
790,131
|
-
|
-
|
790,131
|
|
|
|
|
2,597,560
|
(50,000)
|
2,547,560
|
790,131
|
(425,000)
|
-
|
2,912,691
|
Fair value calculations
The award is accounted for as
equity-settled under IFRS 2. The fair value of awards which are
subject to non-market based performance conditions is calculated
using the Black Scholes option pricing model. The inputs to this
model for awards granted during the financial year are detailed
below:
|
|
SAYE
|
RSA
|
|
|
|
|
|
Grant date
|
03/11/2023
|
21/09/2023
|
|
Share price at date of
grant
|
£1.31
|
£1.54
|
|
Exercise price
|
£1.14
|
£nil
|
|
Volatility
|
18.9%
|
18.9%
|
|
Expected life (years)
|
3.3
|
5.0
|
|
Risk free rate
|
4.36%
|
4.43%
|
|
Dividend yield
|
4.50%
|
0.00%
|
|
|
|
|
|
Fair value per share
|
|
|
|
Market based performance
condition
|
-
|
-
|
|
Non-market based
performance
condition/no performance
condition
|
£0.23
|
£1.535
|
Expected volatility was determined
by using historical share price data of the Company since it listed
on 8 June 2015. The expected life used in the model has been based
on Management's expectation of the minimum and maximum exercise
period of each of the options granted.
The total charge to the income
statement for all schemes now in place, included within
non-underlying items, is £1,686,000 (2023: £1,984,000).
7.
Financial income and expense
Recognised in profit and loss
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Financial income
|
|
|
|
Interest income
|
4,999
|
1,735
|
|
Total financial income
|
4,999
|
1,735
|
|
Financial expense
|
|
|
|
Interest expense on bank borrowings
measured at amortised cost
|
(1,051)
|
(495)
|
|
Interest on lease
liability
|
(1,170)
|
(1,150)
|
|
Total financial expense
|
(2,221)
|
(1,645)
|
|
|
|
|
|
Net
financial income
|
2,778
|
90
|
|
|
|
|
8.
Taxation
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Current tax expense
|
|
|
|
Current tax on profits for the
year
|
4,341
|
4,974
|
|
Under provision of taxation in
previous period
|
73
|
58
|
|
Total current tax
|
4,414
|
5,032
|
|
|
|
|
|
Deferred tax expense
|
|
|
|
Origination and reversal of
temporary differences
|
(646)
|
(472)
|
|
Under provision on share-based
payment charges
|
113
|
(588)
|
|
Total deferred tax expense
|
(533)
|
(1,060)
|
|
|
|
|
|
Total tax expense
|
3,881
|
3,972
|
The reasons for the difference
between the actual tax charge for the year and the standard rate of
corporation tax in the United Kingdom applied to profits for the
year are as follows:
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Profit for the year (subject to corporation
tax)
|
13,955
|
16,212
|
|
|
|
|
|
Tax using the Company's
domestic tax rate of 25% (2023: 19%)
|
3,489
|
3,080
|
|
Expenses not
deductible/(deductible) for tax purposes
|
206
|
1,422
|
|
Under provision of taxation in
previous period
|
73
|
58
|
|
Over/(under) provision on
share-based payment charges
|
113
|
(588)
|
|
Total tax expense
|
3,881
|
3,972
|
The Finance Act 2021 increased the
main rate of corporation tax to 25% from 1 April 2024.
9.
Earnings per share
|
Statutory earnings per
share
|
|
|
|
|
2024
|
2023
|
|
|
Number
|
Number
|
|
|
|
|
|
Weighted average number of ordinary
shares in issue, being weighted average number of shares for
calculating basic earnings per share
|
130,127,316
|
125,244,334
|
|
Shares deemed to be issued for no
consideration in respect of share based payments
|
1,980,638
|
3,283,007
|
|
|
|
|
|
Weighted average number of ordinary shares for calculating
diluted earnings per share
|
132,107,953
|
128,527,341
|
|
|
|
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Profit for the year and basic earnings attributable to
ordinary equity shareholders
|
10,074
|
12,240
|
|
|
|
|
|
Non-underlying and exceptional items (see note
4)
|
|
|
|
Operating expenses
|
9,079
|
8,858
|
|
Tax on non-underlying and
exceptional items
|
(391)
|
(168)
|
|
Underlying earnings before non-underlying and exceptional
items
|
18,762
|
20,930
|
|
|
|
|
|
Earnings per share is calculated as
follows:
|
|
|
|
|
2024
|
2023
|
|
|
Pence
|
Pence
|
|
|
|
|
|
Basic earnings per ordinary
share
|
7.74
|
9.77
|
|
Diluted earnings per ordinary
share
|
7.63
|
9.52
|
|
|
|
|
|
Basic earnings per ordinary share
before non-underlying and exceptional items
|
14.42
|
16.71
|
|
Diluted earnings per ordinary share
before non-underlying and exceptional items
|
14.20
|
16.28
|
10.
Dividends
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Equity shares:
|
|
|
|
Interim dividend in respect of 2023
(3.3p per share) - 24 March 2023
|
-
|
4,169
|
|
Final dividend in respect of 2022
(5.5p per share) - 22 October 2022
|
-
|
6,835
|
|
Interim dividend in respect of 2024
(3.3p per share) - 21 March 2024
|
4,338
|
-
|
|
Final dividend in respect of 2023
(6.2p per share) - 23 October 2023
|
7,997
|
-
|
|
|
12,335
|
11,004
|
The board proposes to recommend a
final dividend of 6.2p (2023: 6.2p) per share at the AGM. If
approved, this dividend will be paid in October 2024 to
shareholders on the register at the close of business on 11 October
2024. The shares will go ex-dividend on 10 October 2024. This
dividend has not been recognised as a liability in these final
statements.
11.
Property, plant and equipment
|
|
Leasehold
improvements
|
Equipment
|
Fixtures
and
Fittings
|
Right-of-use
assets
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
|
Balance at 1 May 2022
|
340
|
7,232
|
5,628
|
35,428
|
48,628
|
|
Additions
|
-
|
827
|
485
|
6,447
|
7,759
|
|
Disposal
|
(27)
|
(323)
|
(88)
|
(1,722)
|
(2,160)
|
|
As at 30 April 2023
|
313
|
7,736
|
6,025
|
40,153
|
54,227
|
|
Balance at 1 May 2023
|
313
|
7,736
|
6,025
|
40,153
|
54,227
|
|
Additions
|
-
|
699
|
346
|
472
|
1,517
|
|
Arising through business
combinations
|
34
|
90
|
-
|
-
|
124
|
|
Disposal
|
-
|
(22)
|
-
|
(630)
|
(653)
|
|
As
at 30 April 2024
|
347
|
8,503
|
6,371
|
39,994
|
55,215
|
|
|
|
|
|
|
|
|
Depreciation and impairment
|
|
|
|
|
|
|
Balance at 1 May 2022
|
231
|
6,407
|
5,228
|
10,801
|
22,667
|
|
Depreciation charge for the
year
|
16
|
562
|
358
|
3,976
|
4,912
|
|
Eliminated on disposal
|
(27)
|
(247)
|
(82)
|
(1,722)
|
(2,078)
|
|
Balance at 30 April 2023
|
220
|
6,722
|
5,504
|
13,055
|
25,501
|
|
Balance at 1 May 2023
|
220
|
6,722
|
5,504
|
13,055
|
25,501
|
|
Depreciation charge for the
year
|
29
|
823
|
287
|
3,949
|
5,089
|
|
Arising through business
combinations
|
15
|
59
|
-
|
-
|
74
|
|
Eliminated on disposal
|
-
|
(22)
|
-
|
(630)
|
(652)
|
|
Balance at 30 April 2024
|
264
|
7,582
|
5,791
|
16,374
|
30,011
|
|
Net
book value
|
|
|
|
|
|
|
At 30 April 2023
|
93
|
1,014
|
521
|
27,098
|
28,726
|
|
At
30 April 2024
|
83
|
921
|
580
|
23,621
|
25,204
|
12.
Intangible assets and goodwill
|
|
Goodwill
|
Customer
lists
|
Brands
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Deemed cost
|
|
|
|
|
|
At 1 May 2022
|
1,550
|
16,261
|
3,518
|
21,329
|
|
Arising through business
combinations
|
-
|
1,000
|
-
|
1,000
|
|
At 30 April 2023
|
1,550
|
17,261
|
3,518
|
22,329
|
|
Arising through business
combinations
|
-
|
3,322
|
-
|
3,322
|
|
At
30 April 2024
|
1,550
|
20,583
|
3,518
|
25,651
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
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
|
|
Charge for the year
|
-
|
2,248
|
235
|
2,483
|
|
At
30 April 2024
|
-
|
11,403
|
480
|
11,883
|
|
Carrying amounts
|
|
|
|
|
|
At 30 April 2023
|
1,550
|
8,106
|
3,273
|
12,929
|
|
At
30 April 2024
|
1,550
|
9,180
|
3,038
|
13,768
|
Within intangible assets includes a
Gateley Smithers Purslow customer list asset of £4m (2023: £4.5m)
which has a remaining life of 9 years, and a Gateley RJA customer
list asset of £3m (2023: £nil) which has a remaining useful life of
4 years and 3 months. The entirety of the brand intangible relates
to Gateley Smithers Purslow and has a remaining life of 13
years.
Goodwill is allocated to the
following cash generating units:
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Property
Group
|
|
|
|
Gateley Capitus Limited
|
-
|
-
|
|
Gateley Hamer Limited
|
-
|
-
|
|
GCL Solicitors (acquisition of trade
and assets)
|
-
|
-
|
|
Persona Associates
Limited
|
40
|
40
|
|
Gateley Vinden Limited
|
934
|
934
|
|
Tozer Gallagher (acquisition of
trade and assets)
|
-
|
-
|
|
Gateley Smithers Purslow
Limited
|
-
|
-
|
|
Gateley RJA Limited
|
-
|
-
|
|
|
974
|
974
|
|
|
|
|
|
Employment , Pensions and
Benefits Group
|
|
|
|
Kiddy & Partners
Limited
|
-
|
-
|
|
International Investment Services
Limited
|
-
|
-
|
|
T-three Consulting
Limited
|
-
|
-
|
|
|
-
|
-
|
|
Business services
Group
|
|
|
|
Gateley Tweed (acquisition of
goodwill)
|
576
|
576
|
|
Adamson Jones IP Limited
|
-
|
-
|
|
Symbiosis IP Limited
|
-
|
-
|
|
|
576
|
576
|
|
|
1,550
|
1,550
|
Impairment testing
The Group tests goodwill annually
for impairment. The impairment test involves determining the
recoverable amount of the cash generating unit (CGU) to which the
goodwill has been allocated. The Directors believe that each
operating segment represents a cash generating unit for the
business and as a result, impairment is tested for each segment,
and all the assets of each segment are considered.
The recoverable amount is based on
the present value of expected future cash flows (value in use)
which was determined to be higher than the carrying amount of
goodwill so no impairment loss was recognised.
Value in use was determined by
discounting the future cash flows generated from the continuing
operation of the Group and was based on the following key
assumptions:
|
·
|
A pre-tax discount rate of between
12 and 21% (2023: 12-21%) was applied in determining the
recoverable amount. The discount rate is based on the Group's
average weighted cost of capital of 10.18% and adjusted according
to the risks attributable to each CGU.
|
|
·
|
The values assigned to the key
assumptions represent Management's estimate of expected future
trends and are based on both external (industry experience,
historic market performance and current estimates of risks
associated with trading conditions) and internal sources (existing
Management knowledge, track record and an in-depth understanding of
the work types being performed).
|
|
|
ᴏ
|
Growth rates of between 2% to 10%
(2023: 2-10%) are based on Management's understanding of the market
opportunities for services provided pertaining to the industry in
which each CGU is aligned.
|
|
|
ᴏ
|
Increases in costs are based on
current inflation rates and expected levels of recruitment needed
to generate predicted revenue growth.
|
|
|
ᴏ
|
Attrition rates are based on the
historic experience and trends of client activity over a two to
three year period and applied to future fee forecasts.
|
|
|
ᴏ
|
Cash flows have been typically
assessed over a five-year period which Management extrapolates cash
using a terminal value calculation based on an estimated growth
rate of 2%. The expected current UK economic growth forecasts
for the legal services market is 2%.
|
|
·
|
The Group has conducted a
sensitivity analysis on the impairment test of the CGU carrying
value. The Directors believe that any reasonably possible
change in the key assumptions on which the recoverable amount of
goodwill is based would not cause the aggregate carrying amount to
exceed the aggregate recoverable amount of the CGU.
|
13.
Acquisitions
During the year ended 30 April 2024
the Group completed one acquisition:
Acquisition of Gateley RJA Limited
On 19 July 2023 Gateley (Holdings)
Plc acquired the entire issued share capital of Richard Julian and
Associates Limited ('RJA'). RJA specialises in the provision of
quantity surveying and project management services to organisations
in the affordable housing sector.
The primary reason for the business
combination is discussed within the CEO's review.
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
|
|
|
Intangible asset relating to
customer list
|
-
|
3,322
|
3,322
|
|
|
Property, plant and
equipment
|
82
|
-
|
82
|
|
|
Cash
|
1,239
|
-
|
1,239
|
|
|
Trade receivables
|
583
|
-
|
583
|
|
|
Prepayments
|
89
|
-
|
89
|
|
|
Total assets
|
1,993
|
3,322
|
5,315
|
|
|
|
|
|
|
|
|
Trade payables
|
(7)
|
-
|
(7)
|
|
|
Accruals and other
payables
|
(399)
|
-
|
(399)
|
|
|
Corporation tax
|
(227)
|
-
|
(227)
|
|
|
Other taxes and social
security
|
(242)
|
-
|
(242)
|
|
|
Deferred tax
|
-
|
(831)
|
(831)
|
|
|
Total liabilities
|
(875)
|
(831)
|
(1,706)
|
|
|
|
|
|
|
|
|
Total identifiable net assets at
fair value
|
1,118
|
2,491
|
3,609
|
|
|
Negative goodwill arising on
acquisition
|
|
|
(3,609)
|
|
|
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 £2.1 million could be payable with any payment subject to
RJA achieving at least £4 million of revenue over the first 12
months post-acquisition, and not less than £5 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.
The negative goodwill of £3,609,000
has been recognised immediately in the statement of profit and loss
and included within non-underlying expenses.
From the date of acquisition Gateley
RJA Limited has contributed £4.2m of revenue to the Group's
Statement of Comprehensive Income together with after tax profit of
£0.7m. If the acquisition had been completed on the first day of
the financial year, Group revenue and profit after tax would have
been higher by £1.1m and £0.2m respectively.
14.
Other intangible assets
|
|
IT development
costs
£'000
|
Computer
software
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
Balance at 1 May 2022
|
258
|
440
|
698
|
|
Additions
|
24
|
763
|
787
|
|
At 30 April 2023
|
282
|
1,203
|
1,485
|
|
Additions
|
-
|
-
|
-
|
|
At 30 April 2024
|
282
|
1,203
|
1,485
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
Balance at 1 May 2022
|
-
|
134
|
134
|
|
Charge for the year
|
40
|
221
|
261
|
|
At 30 April 2023
|
40
|
355
|
395
|
|
Charge for the year
|
80
|
363
|
443
|
|
At 30 April 2024
|
120
|
718
|
838
|
|
|
|
|
|
|
Net book value at 30 April
2023
|
242
|
848
|
1,090
|
|
Net
book value at 30 April 2024
|
162
|
485
|
647
|
The Group's amortisation policy is
to amortise other intangible assets from the date they are made
available for use.
15. Contract assets and
liabilities
|
|
Contract
assets
|
Trade
receivables
|
Contract
liabilities
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
As
at 30 April 2024
|
23,543
|
58,056
|
(409)
|
|
|
|
|
|
|
As at 30 April 2023
|
20,388
|
54,167
|
(499)
|
Contract assets
Contract assets consist of unbilled
revenue in respect of professional services performed to
date.
Contract assets in relation to
non-contingent work are recognised at appropriate intervals,
normally on a monthly basis in arrears, in line with the
performance of the services and engagement obligations. Where such
matters remain unbilled at the period end the asset is valued on a
contract-by-contract basis at its expected recoverable
amount.
Contract assets in relation to
contingent work are recognised at a point in time once the
uncertainty over the contingent event has been satisfied and all
performance obligations satisfied, such that it is no longer
contingent, these matters are valued based on the expected
recoverable amount. Due to the complex nature of these matters,
they can take a considerable time to be finalised therefore
performance obligations may be settled in one period but the matter
not billed until a later financial period. Until the
performance obligations have been performed the Group does not
recognise any contract asset value at the year end.
During the year, contract assets of
£nil (2023: £nil) were acquired in business
combinations.
An impairment loss of £656,000 has
been recognised in relation to contract assets in the year (2023:
loss £542,000). This is based on the expected credit loss under
IFRS 9 of these types of assets. The contract asset loss is
estimated at 2.8% (2023: loss 2.7%) of the balance.
Contract assets recognised under IFRS 15
Under IFRS 15 the Group is required
to recognise contract assets.
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Contract asset value at 1 May
2023
|
20,388
|
17,239
|
|
Contract assets arising on
acquisition
|
-
|
-
|
|
Contract asset value added in the
year
|
24,759
|
22,333
|
|
Contract asset value realised in the
year
|
(21,604)
|
(19,184)
|
|
Contract asset value at 30 April
2024
|
23,543
|
20,388
|
The Group have applied ECLs to
unbilled revenue in order to account for the potential default on
amounts not yet billed to the client. The ECLs have been calculated
on the same basis as those applied to trade receivables.
Contract liabilities
When matters are billed in advance
or on a basis of a monthly retainer, this is recognised in contract
liabilities and released over time when the services are
performed.
Contract liabilities recognised under IFRS
15
Under IFRS 15 the Group is required
to recognise contract liabilities.
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Contract liabilities at 1 May
2023
|
499
|
569
|
|
Contract liabilities gained in the
year
|
879
|
469
|
|
Contract liabilities credited to
P&L in year
|
(969)
|
(539)
|
|
Contract liabilities at 30 April 2024
|
409
|
499
|
|
|
|
|
16.
Trade and other receivables
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Trade receivables
|
58,056
|
54,167
|
|
Prepaid consideration subject to
earn-out service conditions
|
6,717
|
6,015
|
|
Prepayments
|
7,249
|
5,777
|
|
Other receivables including
insurance receivables
|
2,083
|
233
|
|
|
74,105
|
66,192
|
|
|
|
|
|
Amounts falling due after one
year:
|
£'000
|
£'000
|
|
|
|
|
|
Prepaid consideration subject to
earn-out service conditions
|
8,368
|
7,080
|
Trade receivables
Trade receivables are recognised
when a bill has been issued to the client, as this is the point in
time that the consideration is unconditional because only the
passage of time is required before the payment is due. Trade
receivables also include disbursements.
Bills are payable within thirty days
unless otherwise agreed with the client.
All trade receivables are repayable
within one year.
Movement in loss allowance
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Brought forward provision
|
(3,825)
|
(3,941)
|
|
Recognition of provisions for
businesses acquired
|
-
|
-
|
|
Provision utilised
|
1,187
|
908
|
|
Charged to statement of profit and
loss
|
(1,062)
|
(984)
|
|
Provisions released
|
443
|
192
|
|
|
(3,257)
|
(3,825)
|
The Group applies the simplified
approach to providing for the expected credit losses under IFRS 9.
Management have also elected to apply an uplift to the IFRS 9
provision in the current year to account for the specific risks in
the subsidiary entities where the application of IFRS 9 alone is
not considered appropriate. The provision uplift is based on
Management's assessment of specific clients and related debts, this
is presented separately to the ECL provision detailed
below:
|
2024
|
Not passed
due
|
Past due 0-30
days
|
Past due 31-120
days
|
Past due greater than 120
days
|
Total
|
|
Expected credit loss rate
|
2.32%
|
2.53%
|
2.69%
|
14.86%
|
|
|
Estimated total gross carrying
amount £'000
|
35,813
|
6,777
|
4,343
|
14,380
|
61,313
|
|
Lifetime ECL £'000
|
831
|
172
|
117
|
2,137
|
3,257
|
|
2023
|
Not passed
due
|
Past due 0-30
days
|
Past due 31-120
days
|
Past due greater than 120
days
|
Total
|
|
Expected credit loss rate
|
2.98%
|
4.93%
|
5.96%
|
17.58%
|
|
|
Estimated total gross carrying
amount £'000
|
33,175
|
6,594
|
5,943
|
12,280
|
57,992
|
|
Lifetime ECL £'000
|
987
|
325
|
354
|
2,159
|
3,825
|
The carrying amount of financial
assets (including contract assets but not including equity
investments) recorded in the financial statements, which is net of
any impairment losses, represents the Group's maximum expected
exposure to credit risk. Financial assets include client and
other receivables and cash. The Group does not hold
collateral over these balances.
All the Group's trade and other
receivables have been reviewed for indicators of impairment.
The specifically impaired trade receivables are mostly due to
customers experiencing financial difficulties.
An impairment loss of £1,062,000 has
been recognised in relation to trade receivables in the year (2023:
£984,000). This is based on the expected credit loss under IFRS 9
of these types of assets. The trade receivables loss is estimated
at 1.7% (2023: 1.7%) of the balance.
17.
Other interest-bearing loans and borrowings
The contractual terms of the Group's
interest-bearing loans and borrowings, which are measured at
amortised cost, with the exception of loans to members that are
held at fair value, are described below.
|
|
2024
|
|
2023
|
|
|
|
Fair
value
|
Carrying
amount
|
Fair
value
|
Carrying
amount
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Non-Current liabilities
|
|
|
|
|
|
Bank borrowings
|
12,908
|
12,908
|
6,813
|
6,813
|
|
|
|
|
|
|
On 18 April 2022, the Company
entered into a revolving credit facility which provides total
committed funding of £30m until April 2025. Interest is payable at
a margin of 1.95% above the SONIA reference rate. A commitment fee
of one third of the applicable margin is payable on the undrawn
amounts.
As at 30 April 2024, the Group's
non-derivative financial liabilities have contractual maturities
(including interest payments where applicable) as summarised
below:
|
30 April 2024
|
Current
|
Non-current
|
|
|
Within 6
months
|
6 to 12
months
|
1 - 5
years
|
Later than
5 years
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Bank borrowings
|
-
|
14,133
|
-
|
-
|
|
Leases
|
2,721
|
2,720
|
19,855
|
7,926
|
|
Trade and other payables
|
12,839
|
-
|
-
|
-
|
|
Total
|
15,560
|
16,853
|
19,855
|
7,926
|
This compares to the maturity of the
Group's non-derivative financial liabilities in the previous
reporting period as follows:
|
30 April 2023
|
Current
|
Non-current
|
|
|
Within 6
months
|
6 to 12
months
|
1 - 5
years
|
Later than
5 years
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Bank borrowings
|
-
|
-
|
7,997
|
-
|
|
Leases
|
2,044
|
2,044
|
19,219
|
11,437
|
|
Trade and other payables
|
9,665
|
1,364
|
-
|
-
|
|
Total
|
11,709
|
3,408
|
27,216
|
11,437
|
The above amounts reflect the
contractual undiscounted cash flows, which may differ to the
carrying values of the liabilities at the reporting
date.
18.
Trade and other payables
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Current
|
|
|
|
Trade payables
|
12,839
|
9,370
|
|
Other taxation and social security
payable
|
8,143
|
9,913
|
|
Other payables
|
-
|
295
|
|
Contingent consideration treated as
remuneration
|
324
|
1,364
|
|
Accruals
|
11,397
|
4,492
|
|
Deferred income
|
409
|
499
|
|
|
33,112
|
25,933
|
19.
Deferred tax
Deferred tax assets and liabilities
are summarised below:
Deferred tax asset
The deferred tax asset recognised in
the consolidated statement of financial position represents the
future tax impact of issued share based payments schemes that are
yet to vest.
|
|
Share-based
payments
|
|
|
£'000
|
|
At 1 May 2022
|
638
|
|
Credited during the year in the
Consolidated income statement
|
590
|
|
Debited during the year to retained
earnings
|
(398)
|
|
At 1 May 2023
|
830
|
|
Debited during the year in the
consolidated income statement
|
(114)
|
|
Debited during the year to retained
earnings
|
(343)
|
|
At 30 April 2024
|
373
|
Deferred tax liability
The deferred tax liability
recognised in the Consolidated Statement of Financial Position
represents the future tax impact of the Group's benefit from
customer lists obtained through acquisitions.
|
|
Customer
lists
|
|
|
£'000
|
|
|
|
|
At 1 May 2022
|
3,089
|
|
Arising through business
combinations - Symbiosis IP Limited
|
250
|
|
Credited during the year in the
Consolidated income statement
|
(398)
|
|
At 30 April 2023
|
2,941
|
|
Arising through business
combinations - Gateley RJA Limited
|
831
|
|
Credited during the year in the
Consolidated income statement
|
(804)
|
|
At
30 April 2024
|
2,968
|
20.
Provisions
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Current provision
|
|
|
|
Professional indemnity
provision
|
175
|
107
|
|
Total current provision
|
175
|
107
|
|
|
|
|
|
Non-current provision
|
|
|
|
Professional indemnity
provision
|
3,088
|
903
|
|
Dilapidations provision
|
637
|
387
|
|
Total non-current
provision
|
3,725
|
1,290
|
|
|
|
|
|
Total provisions
|
3,900
|
1,397
|
|
|
|
|
|
Professional indemnity estimated
claim cost
|
|
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Brought forward
|
1,010
|
750
|
|
Provisions made during the
year
|
2,253
|
350
|
|
Provisions reversed during the
year
|
-
|
(90)
|
|
At end of year
|
3,263
|
1,010
|
|
|
|
|
|
Non-current
|
3,088
|
903
|
|
Current
|
175
|
107
|
|
|
3,263
|
1,010
|
The Group from time to time receives
claims in respect of alleged professional negligence which it
defends where appropriate but makes provision for the best estimate
of probable amounts considered likely to be payable as set out
above. Inevitably, these estimates depend on the outcome and
timing of future events and may need to be revised as circumstances
change. A different assessment of the likely outcome in each
case or of the probable cost involved may result in a different
level of provision recognised. Professional indemnity
Insurance cover is maintained in respect of professional negligence
claims.
Dilapidations provision
The Group has leases for a number of
offices, some of which include dilapidation clauses. The Group
maintains the office buildings throughout each lease term with
regular maintenance, however a cost is likely to arise at the end
of the lease term in order to return the space to its original
condition. Management have therefore elected to introduce a
dilapidations provision to account for the future cost. The
provision is based on Management's estimate of the total costs
across all applicable lease to be recognised on a straight line
basis over the total lease terms.
|
|
2024
£'000
|
2023
£'000
|
|
At 1 May
|
387
|
214
|
|
Provision made in the
year
|
250
|
173
|
|
At 30 April
|
637
|
387
|
21.
Net debt
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Cash and cash equivalents
|
16,674
|
11,105
|
|
Debt
|
|
|
|
Total loans brought
forward
|
(38,786)
|
(34,641)
|
|
Revolving credit facility - due in
more than one year
|
(6,095)
|
(1,098)
|
|
New lease liability in the
year
|
(1,642)
|
(7,597)
|
|
Repayment of lease
liability
|
5,091
|
4,550
|
|
Total loan carried
forward
|
(41,432)
|
(38,786)
|
|
|
|
|
|
Brought forward from previous
year
|
(27,681)
|
(18,536)
|
|
Movement during year
|
2,923
|
(9,145)
|
|
Net
debt at the year end
|
(24,758)
|
(27,681)
|
The changes in the Group's
liabilities arising from financing activities can be classified as
follows:
|
|
Long term
borrowings
|
Short term
borrowings
|
Lease
liabilities
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
1 May 2023
|
6,813
|
-
|
31,973
|
38,786
|
|
Cashflows:
|
|
|
|
|
|
Repayments
|
(5,000)
|
-
|
(5,091)
|
(10,091)
|
|
Receipt of revolving credit
facility
|
11,000
|
-
|
-
|
11,000
|
|
Non-cash
|
|
|
|
|
|
Loan arrangement fee
unwind
|
95
|
-
|
-
|
95
|
|
New lease liability in the
year
|
-
|
-
|
1,642
|
1,642
|
|
Reclassification to short term
borrowings
|
(12,908)
|
12,908
|
-
|
-
|
|
30 April 2024
|
-
|
12,908
|
28,524
|
41,432
|
|
|
Long term
borrowings
|
Short term
borrowings
|
Lease
liabilities
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
1 May 2022
|
5,715
|
-
|
28,926
|
34,641
|
|
Cashflows:
|
|
|
|
|
|
Repayments
|
(2,000)
|
-
|
(4,550)
|
(6,550)
|
|
Receipt of revolving credit
facility
|
3,000
|
-
|
-
|
3,000
|
|
Non-cash
|
|
|
|
|
|
Fair value of acquisition
|
98
|
-
|
-
|
98
|
|
New lease liability in the
year
|
-
|
-
|
7,597
|
7,597
|
|
30 April 2023
|
6,813
|
-
|
31,973
|
38,786
|
22.
Share capital
Authorised, issued and fully paid
|
|
2024
|
2024
|
2023
|
2023
|
|
|
Number
|
£
|
Number
|
£
|
|
Ordinary shares of 10p each
|
|
|
|
|
|
Brought forward
|
126,636,157
|
12,663,615
|
124,556,879
|
12,455,687
|
|
Issued on acquisition of Richard
Julian and Associates Limited
|
1,192,163
|
119,216
|
-
|
-
|
|
Issued as part of contingent
consideration of Gateley Smithers Purslow Limited
|
1,661,790
|
166,179
|
-
|
-
|
|
Issued on acquisition of Symbiosis
IP Limited
|
-
|
-
|
523,012
|
52,301
|
|
Issued as part of contingent
consideration of Tozer Gallagher LLP
|
-
|
-
|
25,071
|
2,507
|
|
Issued on vesting of RSA
|
790,131
|
79,013
|
1,175,000
|
117,500
|
|
Issued on vesting of SAYE
|
1,591,555
|
159,166
|
356,195
|
35,620
|
|
Issued on vesting of LTIP
|
727,790
|
72,779
|
-
|
-
|
|
Issued on vesting of
CSOPS
|
438,263
|
43,826
|
-
|
-
|
|
At
30 April 2024
|
133,037,849
|
13,303,784
|
126,636,157
|
12,663,615
|
|
|
|
|
|
|
The Company has one class of
Ordinary shares which carry no right to fixed income. Each share
has full rights in respect to voting.
On 19 July 2023 the Company acquired
the entire issued share capital of Richard Julian and Associates
Limited in part for the issue of 1,192,163 10p ordinary
shares.
On 2 November 2023 the Company
issued 1,661,790 10p ordinary shares to satisfy the contingent
consideration on the acquisition of Gateley Smithers Purslow
Limited.
Between 1 May 2023 and 30 April 2024
1,591,555 10p ordinary shares were issued upon vesting of the
2019/2020 SAYE schemes to participants.
On 27 September 2023 727,790 10p
ordinary shares were issued upon vesting of the 2020 LTIP scheme to
participants.
On 21 September 2023 790,131 10p
ordinary shares were issued upon issue of the FY24 RSA scheme to
participants.
23.
Leases liabilities - IFRS 16
The Group has leases for offices,
vehicles and some IT equipment, with the exception of short-term
leases and leases of low-value assets each lease is held on the
balance sheet as a right-of-use asset and corresponding lease
liability. Property leases have a remaining term of one to ten
years. Leases of vehicles and IT equipment have a term of three to
five years. Lease payments on all those recognised on the balance
sheet are fixed. Unless there is a contractual right for the Group
to sublet the asset to a third party, the right of use asset can
only be used by the Group.
The table below provides additional
information on the right-of-use assets by class of
assets:
|
|
Number of leased
assets*
|
Average length of lease
remaining
|
Opening lease
asset
£'000
|
Net
additions
£'000
|
Depreciation
£'000
|
Closing lease
asset
£'000
|
|
Office buildings
|
12
|
4.5
years
|
27,088
|
-
|
(3,849)
|
23,239
|
|
Electric Vehicles
|
13
|
2.4
years
|
-
|
472
|
(90)
|
382
|
|
IT equipment
|
1
|
0
years
|
9
|
-
|
(9)
|
-
|
* Where properties within the same
building are leased on a floor by floor basis on the same
contractual terms, the Group has elected to treat these as a
portfolio and are counted as a single leased asset within the
table
Lease liabilities are presented in
the statement of financial position as follows:
|
|
2024
£'000
|
2023
£'000
|
|
Current lease liability
|
4,346
|
3,257
|
|
Non-current lease
liability
|
24,178
|
28,716
|
A number of property leases held by
the Group include break or termination options. The lease liability
has been calculated based on the likelihood of such option being
exercised. An option would only be exercised when in line with the
Groups wider strategy.
In line with IFRS 16 Leases the Group has elected not to
recognise a lease liability for leases with a term of 12 months or
less, or for leases of low value assets. The payments made under
such leases are expensed to the profit and loss on a straight-line
basis. Any variable lease payments incurred are expensed as
incurred.
The table below shows amounts
recognised in the Statement of Comprehensive Income for short term
and low value leases as at 30 April 2023:
|
|
Property
|
Equipment
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Expenses relating to short-term
leases
|
116
|
16
|
132
|
|
Expenses relating to leases of
low-value assets, excluding short-term leases of low value
assets
|
-
|
60
|
60
|
|
|
116
|
76
|
192
|
The total minimum undiscounted lease
payments at 30 April 2024 under non-cancellable operating lease
rentals were:
|
|
30 April
2024
£'000
|
30 April
2023
£'000
|
|
|
|
|
|
Within one year
|
5,441
|
4,088
|
|
In the second to fifth year
inclusive
|
19,855
|
19,219
|
|
After five years
|
7,926
|
11,437
|
|
|
33,222
|
34,744
|
24.
Subsequent events
The Directors are not aware of any
material post balance sheet events.
25.
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'.
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Reported profit before
tax
|
13,955
|
16,212
|
|
Adjustments for non-underlying and
exceptional items:
|
|
|
|
- Amortisation of intangible
assets
|
2,483
|
2,073
|
|
- Share-based payment
adjustment
|
1,686
|
1,984
|
|
- Gain on bargain
purchase
|
(3,609)
|
(1,389)
|
|
- Consideration treated as
remuneration
|
6,956
|
6,190
|
|
- Exceptional items
|
1,563
|
-
|
|
Underlying profit before tax
|
23,034
|
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 is
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.
Underlying operating profit
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Reported operating profit
|
11,177
|
16,122
|
|
Adjustments for non-underlying and
exceptional items:
|
|
|
|
- Amortisation of intangible
assets
|
2,483
|
2,073
|
|
- Share-based payment
adjustment
|
1,686
|
1,984
|
|
- Gain on bargain
purchase
|
(3,609)
|
(1,389)
|
|
- Consideration treated as
remuneration
|
6,956
|
6,190
|
|
- Exceptional items
|
1,563
|
-
|
|
Underlying operating profit
|
20,256
|
24,980
|
Cash generated from operations
a)
Free cash flows
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Net cash generated from
operations
|
18,887
|
14,065
|
|
Repayment of lease
liabilities
|
(5,091)
|
(4,579)
|
|
Net interest received
|
4,043
|
1,364
|
|
Tax paid
|
(4,902)
|
(4,320)
|
|
Cash outflow paid on
acquisitions
|
5,825
|
1,518
|
|
Purchase of property, plant and
equipment
|
(1,045)
|
(1,312)
|
|
Purchase of other intangible
assets
|
-
|
(787)
|
|
Free cash flows
|
17,717
|
5,949
|
b)
Working capital measures
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
WIP
days
|
|
|
|
Amounts recoverable from clients in
respect of contract assets (unbilled revenue)
|
23,543
|
20,388
|
|
Unbilled disbursements
|
5,389
|
3,368
|
|
Total WIP
|
28,932
|
23,756
|
|
Annualised revenue
|
173,312
|
163,583
|
|
WIP
days
|
61
|
53
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Debtor days
|
|
|
|
Trade receivables
|
58,056
|
54,167
|
|
Less unbilled
disbursements
|
(5,389)
|
(3,368)
|
|
Total debtors
|
52,667
|
50,799
|
|
Annualised revenue
|
173,312
|
163,583
|
|
Debtor days
|
111
|
113
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Gross lock-up days
|
|
|
|
Total WIP
|
28,932
|
23,756
|
|
Total debtors
|
52,667
|
50,799
|
|
Total gross lock-up
|
81,599
|
74,555
|
|
Annualised revenue
|
173,312
|
163,583
|
|
Gross lock-up days
|
172
|
166
|
Annualised revenue reflects the
total revenue for the previous 12-month period inclusive of
pro-forma adjustments for acquisitions.
The Annual report and financial
statements will be posted to shareholders in due course. Further
copies will be available from the Company's website:
www.gateleyplc.com.