Half Year Results

RNS Number : 0468N

Gateley (Holdings) PLC

18 January 2023

 

18 January 2023

Gateley (Holdings) Plc

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

(AIM:GTLY)

Half Year Results for the six months ended 31 October 2022

Strong H1 in a challenging market

Gateley, the legal and professional services group, is pleased to announce its unaudited results for the six months ended 31 October 2022 (the "Period" or "H1 23"), which show a strong performance as the Company continues to execute its diversification and growth strategy. 

Financial Highlights

·	Strong financial performance with revenue and profit before tax up 22.2% (H1 22: 23.5%) and 9.6% (H1 22: 19.5%) respectively
·	Group organic revenue growth of 9.8% (H1 22: 22.7%)
·	Legal services revenue grew entirely organically by 8.2% (H1 22: 21.9%)
·	Revenue from consultancy services grew substantially, increasing 104.5% to £18.2m (H1 22: £8.9m), of which organic revenue growth was 20.0%
·	Adjusted underlying profit margin decreased to 12.6% (H1 22: 13.7%) as certain operating costs, previously restricted by the pandemic, returned
·	Strong activity levels across the Group with utilisation up 2% to 86% (H1 22: 84%)
·	Ongoing M&A strategy reduces net cash to £1.1m (H1 22: £8.8m)
·	Strong balance sheet and significant headroom in revolving credit facility assisting our growth strategy
·	Proposed interim dividend of 3.3p per share, in line with progressive dividend policy (H1 22: 3.0p)

	H1 23	H1 22	Change
Revenue	£76.1m	£62.3m	+22.2%
Underlying operating profit before tax	£10.1m	£9.0m	+12.2%
Underlying adjusted profit before tax1	£9.6m	£8.5m	+12.9%
Profit before tax	£8.0m	£7.3m	+9.6%
Profit after tax	£6.4m	£5.9m	+8.5%
Basic earnings per share ("EPS")	5.11p	5.00p	+2.2%
Underlying diluted EPS2	6.15p	5.76p	+6.8%
Net assets	£74.1m	£58.0m	+27.8%
Net cash3	£1.1m	£8.8m	-87.5%
Dividend	3.3p	3.0p	10.0%

1	Underlying adjusted profit before tax excludes share-based payment charges, amortisation and exceptional items
2	Underlying diluted EPS excludes share-based payment charges, amortisation and exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share option schemes in issue based on a share price at the end of the financial period
3	Net cash excludes IFRS 16 lease liabilities

Operational and post-Period highlights

·	Ongoing investment in capacity as average fee earner headcount increased to 1,000 in H1 23 (H1 22: 794)
·	Recent acquisitions integrating and performing in-line with expectations
·	Acquisition of Symbiosis, a chartered patent attorney firm specialising in IP services for the life sciences industry completed in October 2022
·	Investment in and on-going adoption of new business management system to support operational efficiencies and enhance management controls and decision making
·	Achieved 13 of the 16 first set of Responsible Business objectives and publication of our second annual Responsible Business Report
·	"One team" business culture continues to be demonstrated through 65% of staff either owning shares or currently participating in option schemes

Current trading and outlook

·	Growing, diversified and resilient business model, combined with a strong H1 23 performance, leaves the Group well-placed to navigate the more challenging economic environment that is beginning to emerge in the second half of the financial year
·	The Group maintains a strong balance sheet to deliver future investment to enhance returns from diverse but complementary workstreams and secure long-term, sustainable growth and results.
·	The board proposes an interim dividend of 3.3p per share, reflecting the stated policy of paying an interim dividend that is one third of the targeted full year dividend

Rod Waldie, Chief Executive Officer of Gateley, said:

"We are delighted to report further growth derived from the increasing diversity of services on our Platforms, which now house over 1,000 fee earners.  Our Group revenue and profit grew strongly, increasing by 22.2% and 9.6% respectively, within which revenue from our consultancy services grew, including by acquisition, by 104.5%. 

"I thank our clients for the opportunity to work with them on a broad range of important mandates and our people for their hard work and dedication to deliver results.

"I'm proud of the progress that we are making against our Responsible Business strategy.  In particular, supporting our communities is an important part of our purpose as a business and we will further connect our exceptionally talented people with organisations who provide community support in the regions in which we operate, recognising that business is a key engine of change.

"During the Period, we saw political and economic instability manifesting in uncertainty and temporary paralysis in a number of sectors.  This is an ongoing situation and the economy is approaching a fork in the road where in all likelihood there is a wide range of possible outcomes across different sectors.  In the meantime, we continue to invest in our offering and in our people so that our business remains fully equipped to deliver as positions settle in our target markets. The combined legal and consultancy offering on our Platforms, remains unique and the outlook on each of the Platforms is positive.  We look forward to 2023 with a degree of cautious confidence."

Enquiries:

Gateley (Holdings) Plc
Neil Smith, Finance Director	Tel: [phone]
Nick Smith, Acquisitions Director and Head of Investor Relations	Tel [phone]
Cara Zachariou, Head of Corporate Communications	Tel [phone] Mob: [phone]
Liberum - Nominated adviser and Broker
Richard Lindley / Ben Cryer / Cara Murphy	Tel: [phone]
Belvedere Communications Limited - Financial PR
Cat Valentine	Mob: [phone]
Keeley Clarke	Mob: [phone]
Llew Angus	Mob: [phone]
	[e-mail]

CHIEF EXECUTIVE OFFICER'S REVIEW

Summary

I am very pleased with the Group's performance during H1 23. Throughout the Period, global events created significant uncertainty resulting in a challenging macro-economic back drop, which remains uncertain.  Despite this, our team worked tirelessly with clients to deliver these excellent results.

I remain grateful to all of our people for their energy and commitment.  I am delighted that the outcome of their hard work is reflected in our 22.2% headline H1 23 revenue growth, of which 9.8% was organic, and our 9.6% growth in profit before tax.

Also, we have delivered against our Responsible Business targets, achieving in the first year since we published our Responsible Business strategy, 13 out of the 16 targets set. In doing so, we have enhanced our recognition that business is a key engine for change.  We recognise that, over time, an integrated Responsible Business strategy develops solutions that positively impact all three bases of people, planet and profit.  Our journey here advances with conviction.

We continue to operate and invest in a differentiated, resilient and growing business, which has been designed to perform, regardless of the economic environment. H1 23's results extend our unbroken track record of year-on-year revenue and profit growth.

The board proposes an interim dividend of 3.3p (H1 22: 3.0p).

Results overview

H1 23 Group revenues grew by 22.2% to £76.1m (H1 22: £62.3m).  This yielded an increase of 9.6% in reported profit before tax to £8.0m (H1 22: £7.3m) and a 9.8% increase in underlying adjusted profit before tax to £9.6m (H1 22: £8.5m).

Our strong revenue performance results from excellent advice provided through the unique combination and growing range of professional services on our well-established Platforms. We are particularly pleased to be releasing a second consecutive set of results showing 20% or more organic revenue growth in our consultancy services. 

The strength of both existing operations and our balance sheet provide the foundation for further investment in Platform growth.  Our pipeline of acquisition opportunities remains good across the Group.

Property Platform

Whilst all of our Platforms showed good momentum, the Property Platform grew strongly by 36.7% (H1 22: 20.0%) and remains our most mature, diversified Platform.  The range of expertise on this Platform was expanded by the acquisition of Gateley Smithers Purslow ("GSP") late in H2 22.  It is the latest of the six consulting business acquisitions made onto the Platform. GSP specialises in providing technical advice and support to the UK insurance industry in handling complex property claims.  It integrated well during H1 23 and is delivering results in line with pre-acquisition expectations.  Consultancy businesses now generate 32.6% (H1 22: 19.4%) of Property Platform revenue and are performing excellently alongside our established legal property service lines in both contentious and non-contentious work streams.  In our view, the range and depth of expertise now housed on our Property Platform puts it in direct competition with well-established multi-disciplinary property consultancies in the market.

People Platform

Our People Platform delivered results which were, overall, similar to H1 22.  We saw healthy performance in our pensions, legal and consultancy businesses.  Employment legal services revenue decreased as clients' HR teams returned to business-as-usual activities post the pandemic hiatus.  However, this was offset by growth in our people consultancy service line revenue as, post-pandemic, clients re-focus on leadership identification and development and cultural change projects.  Consultancy revenues have matured to represent 32.9% of H1 23 People Platform revenue (H1 22: 31.3%) and the consultancy pipeline remains good.

Business Services Platform

The Business Services Platform contracted marginally in H1 23.  A significant factor here is much reduced activity in our legal services' complex international recoveries litigation team, which continues to adjust to global events, particularly the war in Ukraine, where it holds a number of paused mandates.  The team has established a new pipeline of business.  However, by nature, these are long-term projects and FY 23 revenue for the team will be dictated by litigation timetables.  A return to significant growth is expected in FY 24 and beyond. Other components of the Platform performed well, including new additions to the Group.  In particular, whilst currently modest, our Patent and Trademark Attorney business, established in the Group in FY 22, was expanded by the in-Period acquisition of Symbiosis, which is a patent attorney consultancy servicing exclusively the life sciences industry.  Symbiosis is performing well and represents a strategically important step for us in expanding the consultancy expertise that we are able to offer to clients from the patent and trademark attorney component of this Platform.  We will endeavour to make further acquisitions to continue to add new industry coverage to our patent and trademark business as part of our strategy to broaden our IP/intangible assets offering in both legal and consultancy services.

Corporate Platform

Activity levels remained strong across our legal services dominated Corporate Platform, which grew by 26.0%, buoyed by strong UK M&A and Private Equity markets throughout most of H1 23.  Activity levels on this Platform reduced towards the end of H1 23 in line with shifting market dynamics.  However, our immediate pipeline remains healthy.

Operational review

The significant investment in, and phase one adoption of, our new market-leading business management, productivity, and financial system ("3E") was a major project during H1 23.  This followed relatively soon after the adoption of newly-integrated client onboarding and time recording systems.  Together these systems are important upgrades for our growing and increasingly sophisticated group of professional services businesses.  They deliberately include significant capacity to expand in line with headcount as we expand and grow the Group. They also materially assist in the integration of our businesses and, generation of operational efficiencies, as well as enhancing internal controls and risk management processes.  This ability to drive further scale through our internal systems will help sustain and improve our margins over the medium to longer term.  We saw some inevitable disruption in those parts of the Group that were involved in moving to 3E, despite which we delivered a strong H1 outturn.  I would like to thank the excellent team of people who are managing the new system implementation and all of my colleagues for their engagement and patience with this important project.  Despite the expenditure on these essential and forward-looking investments we maintained a like-for-like increase in profitability and a net cash position.

The integration of our recent acquisitions was also an important operational focus for us during H1 23 (and is ongoing).  GSP, acquired late in H2 22, is our largest acquisition to date and like each of our acquired businesses, GSP has an entrepreneurial management team which is supported by our operational integration team. The ongoing integration exercise is proceeding as planned. The process has resulted in positive enhancements to our now well-developed Group integration methodology. In parallel, GSP has performed as we expected, added to its headcount during the Period and has identified opportunities for further growth. 

We have spent many years building and growing our physical footprint across the UK, matching our office locations with opportunities that we see available to the Group.  As a result, we currently provide our services from most of the major commercial centres in the UK.  Our office network remains an important asset to us but, as a result of the success of agile working, integration of acquired businesses has included realisation of some operational efficiencies through rationalisation of some of our office space.  For example, during H1 23, we relocated Nottingham and Leicester-based Adamson Jones colleagues to our existing Nottingham office and Manchester-based GSP colleagues to our existing Manchester office.  Not only does this generate office cost savings but, importantly, the aggregation of locally-based Group colleagues assists with integration, familiarisation with the wider Group and, ultimately, realisation of mutual opportunities.  There are firm plans to save future costs in this way with the relocation of GSP colleagues in Reading and Leeds to our existing offices in those cities.

Our office premises strategy in H1 23 (and ongoing) includes enhancement of workspace attractiveness with innovative floor layouts and upgrades in technology.

H1 23 saw a return to more familiar levels of recruitment, with significant further additions via acquisitions resulting in overall average headcount climbing to 1,431 in the Period (H1 22: 1,132).  Average fee earner headcount increased by 206 from H1 22, whilst administrative staff headcount increased by 93 to 431 (H1 22: 338). The Gateley offering, underpinned by our unique identity and long-established one-team culture, remains differentiated and attractive. 

Wage cost inflation experienced across the global legal industry over the last two years, resulting from strong client demand, looks like it is beginning to settle.  Businesses in the professional services sector are still adjusting through FY 23 to the higher salary levels but it will take time for the full impact of the personnel cost increases of the last two years to be fully absorbed.  In the meantime, it remains important to offer our people stimulating, purposeful and rewarding career opportunities .  As we grow and diversify our range of businesses, we are able to offer an increasingly broad spectrum of career opportunities to our people.  In addition, the ability for our colleagues to participate in share ownership remains an attractive proposition and recruitment differentiator. 

Responsible Business

We published our Responsible Business Strategy in October 2021.  The launch was supported by leaders from the Better Business Act and the Purpose Coalition, who helped us frame our objectives against the backdrop of the UK's levelling-up goals, particularly those that relate to our people and the communities in which we operate. 

Being a Responsible Business is now an integral part of our Purpose Statement:

"Our purpose is to deliver results that delight our clients, inspire our people and support our communities"

During the first year of our Responsible Business journey, we have recognised that business is a key engine of change and that being a Responsible Business builds greater trust and strengthens relationships with clients, employees, investors and the communities in which we operate, all of which, in time, will generate greater value.  Over the last 12 months, our strategy has gained real momentum, generating enthusiasm and engagement right across the Group.  I'm very pleased with the progress that we're making as set out in our second annual Responsible Business report, released in December 2022 and available on the investors page of our Group external website. 

Highlights from 2022 include:

·	Recruitment of Gateley's first Responsible Business Manager.  A real statement of intent.  She is dedicated to delivering the Group's Responsible Business strategy
·	Launch of our partnership with the University Academy 92 ("UA92") in Manchester, connecting UA92 with colleagues, clients, and contacts to raise awareness of what that organisation is doing in the region to support students from diverse backgrounds through higher education
·	Launch of our partnership with the NSPCC to raise awareness and support fundraising
·	Continuation of our partnership with SportsAid, providing financial and development support to 12 of the UK's brightest young sporting prospects

I'm delighted that we achieved 13 out of our 16 objectives set in year one and that we're making good progress with the other three, whilst maintaining momentum by setting a further 15 new objectives.  Our journey advances with conviction.

Current trading and outlook

The solid foundations on which our business is built have enabled the Group to deliver strong H1 23 results, in a period which was widely impacted by macroeconomic events.  One of the key objectives of our IPO in 2015 was to transition the business into a structure that would enable it to build a strong balance sheet and deliver the investment needed to drive the business forward. We are delivering on this objective and will continue in this vein.

Our growth strategy is to deliver enhanced returns from an increasingly diversified but complementary set of workstreams.  By deliberately building-out each of our Platforms with a mix of services some of which fare best in a growing economy and some when times are more difficult, we are investing to strengthen overall, and secure long-term, sustainable growth and results.  Hence, whilst in recent weeks we have begun to see transactional activity levels reduce slightly from the unprecedented highs of FY 22 and H1 23, we are also seeing revenues beginning to pivot towards some of our more counter-cyclical lines.  As such the Group is operating as it is designed to do, which gives us confidence that, notwithstanding prevailing economic winds, the Group will extend its decades-long track record of uninterrupted growth.

We are confident of our ability to expand and perform well and, with a degree of caution, view the Group's prospects for the year ahead and beyond positively.

Rod Waldie

CEO

18 January 2023

FINANCE DIRECTOR'S REVIEW

Financial overview

As a result of strong H1 23 trading, the board is pleased with an underlying adjusted profit margin of 12.6%, even after significant cost inflationary pressure and material strategic investment in our IT infrastructure. The unprecedented demand for professional staff in the UK has led to double-digit increases in payroll costs during H1 23.  However, whilst operating overheads grew, they remain below pre-pandemic levels, and the Group has invested in staff activities and encouraged a partial return of both marketing and travelling costs in order to increase ongoing face-to-face client interaction.

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

A strategic focus and effort in June 2022 was the successful migration onto our new business management system.  I'm extremely pleased with how successfully the business handled such a significant and disruptive exercise, and I would like to thank all staff involved in the project for their dedication and hard work in making this transition a tremendous success.

Revenue

Group revenue grew by 22.2% to £76.1m for the first half of the year, from £62.3m in H1 22.  Revenue growth in the Group's core legal services was entirely organic at 8.2%, growing to £57.9m (H1 22 £53.5m), whilst revenue from consultancy non-legal services grew by 104.5% overall to £18.2m (H1 22 £8.9m).  Acquired consultancy revenue totalled £8.2m (H1 22: £0.4m) during the period, with organic consultancy revenue growth of 20.0% to £10.0m (H1 22: £8.4m).

The Group has grown three of its four Platforms during the Period and continues to further diversify its client base and revenue mix, thereby increasing its sales reach and share of the professional services market.  Transactional activity has remained strong during the first half of H1 23 as the Corporate Platform once again delivered high deal volumes, resulting in Platform revenue growth of 26.0% (H1 22: 47.4%).  Likewise, the Property Platform also delivered strong growth overall, including the significant revenue contribution of GSP.  Organic Property Platform revenue growth was 16.3% as a result of strong growth in construction legal services of 21% and consultancy service revenue growth of 40.0% from the Gateley Vinden team.  Commercial property legal services grew revenues by 6.0%. Although transactional housebuilder revenues decreased by 1.0%, comparing very favourably against market-wide trends, instructions from housebuilders extend to other teams, including contributing to growth in Construction legal services as housebuilder clients increasingly required specialist advice on the high profile Building Safety Act.

The Business Services Platform is working well with its newly formed joint legal and consultancy intellectual property service lines including Adamson Jones, purchased in January 2022 and the more recently acquired Symbiosis, purchased in October 2022.  As a result of the exceptional events in Eastern Europe, our complex international dispute resolution team has seen a decrease in H1 23 activity which is offsetting the growth across other areas of the Platform. However, we expect a significant increase in litigation activity during H2 23. Our complex international dispute resolution offering represents only part of our group-wide contentious services offering and as markets turn across all of our Platforms demand for counter-cyclical service line support is increasing.

More generally in a challenging economic environment the Business Services Platform is well positioned to capitalise on opportunities that arise.

The People Platform grew by 0.4% with strong demand for services and 6.0% growth across our consultancy businesses, t-three and Kiddy & Partners, off-set by a decrease in employment legal service activity that benefitted from pandemic-led advice in the prior year.  The launch of our fully integrated t-three and Kiddy & Partners service delivery model, which focuses on both talent assessment and development, and cultural change programmes, has proven to represent a strong sales proposition to a corporate client base inevitably needing to adjust and change as a result of the pandemic and even more recent challenges to traditional operating models.

Revenue	Corporate Platform	Business Services Platform	People Platform	Property Platform	Total
H1 23	19,046	9,728	9,745	37,624	76,143
Revenue growth H1 23	26.0%	(2.3)%	0.4%	36.7%	22.2%
H1 22	15,118	9,960	9,706	27,525	62,309

Total expenses

Personnel costs (excluding IFRS 2 charge) have decreased as a percentage of revenue to 61.7% (H1 22: 64.1%) as strong H1 23 revenue growth covered the effect of H1 23 pay and headcount increases.  Average numbers of legal and professional staff rose by 25.9% to 1,000 as a result principally of acquisitions (H1 22: 794).  Support staff numbers also increased by 27.5% to 431 (H1 22: 338) also principally as a result of acquisitions.

Other operating expenses, excluding non-underlying items, increased to £16.0m (H1 22: £10.6m) as £2.8m of additional costs are now included from acquired entities.  In addition, certain necessary appropriate post-pandemic increases in operating costs, restricted by the pandemic, returned such as travel, marketing and the re-introduction of strategic senior leaders' conferences and all staff events. The majority of such costs are first half weighted, alongside consultancy costs incurred as part of the installation of our new business management system in June 2022.  Overall ongoing like-for-like operating costs, as a percentage of revenue, remain in line with management's expectations.  Our use of agile working, the new business management system and extensive review of premises usage will generate medium-term cost savings, where appropriate, without damaging the resources available to clients and staff.  In particular, our new business management system will enhance centralised control, support operational efficiencies and drive a level of consistency across the processing of all client and Group data.

Profit before tax and earnings per share

Underlying adjusted profit before tax of £9.6m has increased by 12.9% from £8.5m in H1 22.  The board is pleased with profit and trading margin performance despite the H1 distractions brought about by the change in business management systems, the uncertainty of the economic climate and the demand for talent across the industry creating continuing pressure on salary levels.  We enter the second half of the financial year having maintained fee earner headcount in counter cyclical work types in order to match the changing client activity patterns and in the knowledge that we have a resilient and diverse spectrum of service lines from which to increase market share.

Profit before tax of £8.0m increased by 9.6% due to strong H1 revenue growth absorbing the current key inflationary effects and a H1 weighting on discretionary spend on specific operating costs such as the installation of the new business management system. Profit after tax of £6.4m increased by 8.5% from £5.9m and basic earnings per share increased by 2.2% to 5.11p (H1 22: 5.00p) after a full period impact from new shares issued for acquisitions and after awards made under the Group's share option reward schemes.  Underlying diluted earnings per share increased by 6.8% to 6.15p (H1 22: 5.76p).

Dividend

The board proposes an interim dividend of 3.3p (H1 22: 3.0p) per share. This dividend will be paid on 31 March 2023 to shareholders on the register at the close of business on 24 February 2023.  The shares will go ex-dividend on 23 February 2023.  This dividend has not been recognised as a liability in the interim accounts.

Net assets

The Group's net asset position has increased by £16.1m to £74.1m (H1 22: £58.0m) principally as a result of the acquisition of three complementary consultancy services businesses since H1 22.

Working capital and cash generation

Total lock-up increased from 143 to 159 days as a result of strong organic and acquisitive growth, with WIP days increasing from 46 to 59 days and debtor days increasing slightly (in part due to adopting the new business management system integration processes) from 97 to 100 days.  Group-wide activity remained strong in H1 23 despite political and economic uncertainty delaying completion of certain assignments and recoveries, and we remain focused on lock-up management.

Cash generated from operations during the Period was £1.6m (H1 22: £(0.6)m) which represents 25.5% (H1 22: (9.9)%) of profit after taxation.  Working capital movements typically reduce H1 free cash flows before they reverse in H2 as revenue and profit weighting is greater and outflows are much lower.  Free cash flow improved from £(2.4)m in H1 22 to £(1.4)m in H1 23.  The Group has utilised £6.8m (H1 22: £nil) of its £30m revolving credit facility, which is in place to support the Group's expansion through acquisition.

Conclusion

The Group has delivered a strong performance in H1 23 against the backdrop of an uncertain macro environment, with activity levels, revenue and profitability advancing once again.  The Group looks to expand its strong organic growth trajectory across all of its Platforms and retains significant facility headroom in order to further expand sales resilience through acquisition.

Neil Smith

Finance Director

18 January 2023

Gateley (Holdings) Plc

Consolidated income statement and other comprehensive income

For the 6 months ended 31 October 2022

	Note	Unaudited 6 months to 31 October 2022	Unaudited 6 months to 31 October 2021	Audited 12 months to 30 April 2022
		£'000	£'000	£'000
Revenue	2	76,143	62,309	137,249
Other operating income		-	-	-
Personnel costs, excluding IFRS 2 charge	3	(46,981)	(39,935)	(86,517)
Depreciation - Property, plant and equipment	4	(503)	(421)	(851)
Depreciation - Right-to-use asset	4	(1,979)	(1,942)	(3,783)
Impairment of trade receivables and contract assets		(633)	(475)	(866)
Other operating expenses		(15,966)	(10,585)	(22,716)
Operating profit before non-underlying operating and exceptional items		10,081	8,951	22,516
Non-underlying operating items	4	(1,535)	(1,236)	(2,659)
Exceptional items	4	-	-	(870)
		(1,535)	(1,236)	(3,529)
Operating profit		8,546	7,715	18,987
Financing income		890	70	194
Financing expense		(1,407)	(509)	(1,149)
Profit before tax		8,029	7,276	18,032
Taxation		(1,662)	(1,353)	(3,753)
Profit for the period after tax attributable to equity holders of the parent		6,367	5,923	14,279
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences
- Revaluation of other investments		-	-	(190)
- Exchange differences on foreign branch		95	(5)	58
Profit for the financial period and total comprehensive income all attributable to equity holders of the parent		6,462	5,918	14,147

Statutory earnings per share (pence)

Basic earnings per share	5	5.11p	5.00p	12.00p
Diluted earnings per share	5	5.01p	4.94p	11.71p

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

Gateley (Holdings) Plc

Consolidated statement of financial position

at 31 October 2022

	Note	Unaudited at 31 October 2022 £'000	Unaudited at 31 October 2021 £'000	Audited at 30 April 2022 £'000
Non-current assets
Property, plant and equipment		1,450	1,343	1,334
Right-of-use asset		28,486	25,268	24,627
Investment property		164	164	164
Intangible assets & goodwill	7	33,655	15,763	32,590
Other intangible assets		716	245	564
Other investments		173	367	173
Deferred tax asset		638	2	638
Total non-current assets		65,282	43,152	60,090
Current assets
Contract assets	8	22,255	14,723	17,239
Trade and other receivables	9	52,822	41,390	56,168
Cash and cash equivalents		7,887	8,842	16,105
Total current assets		82,964	64,955	89,512
Total assets		148,246	108,107	149,602
Non-current liabilities
Other interest-bearing loans and borrowings	10	(6,765)	-	(5,715)
Lease liability		(30,015)	(26,465)	(25,207)
Other payables	11	(5,740)	(120)	(5,360)
Deferred tax liability		(3,103)	(591)	(3,089)
Provisions		(863)	(724)	(863)
Total non-current liabilities		(46,486)	(27,900)	(40,234)
Current liabilities
Lease liability		(3,234)	(3,197)	(3,719)
Trade and other payables	11	(23,519)	(19,303)	(31,793)
Provisions		(101)	(176)	(101)
Current tax liabilities		(843)	420	(842)
Total current liabilities		(27,697)	(22,256)	(36,455)
Total liabilities		(74,183)	(50,156)	(76,689)
NET ASSETS		74,063	57,951	72,913
EQUITY
Share capital		12,514	11,899	12,456
Share premium		12,378	10,430	11,342
Merger reserve		(9,950)	(9,950)	(9,950)
Other reserves		14,465	7,097	14,465
Treasury reserve		(240)	(629)	(261)
Translation reserve		93	(65)	(2)
Retained earnings		44,803	39,169	44,863
TOTAL EQUITY		74,063	57,951	72,913

Gateley (Holdings) Plc

Consolidated cash flow Statement

for the 6 months ended 31 October 2022

	Note	Unaudited 6 months to 31 October 2022	Unaudited 6 months to 31 October 2021	Audited 12 months to 30 April 2021
		£'000	£'000	£'000
Cash flows from operating activities
Profit for the period after tax		6,367	5,923	14,279
Adjustments for:
Depreciation and amortisation		3,594	3,102	6,215
Financial income		(890)	(70)	(194)
Financial expense		871	7	201
Release of contingent consideration		-	-	(135)
Interest charge on capitalised leases		536	502	948
Equity settled share-based payments		423	534	1,213
Loss on disposal of property, plant and equipment		122	-	16
Tax expense		1,662	1,353	3,753
		12,685	11,351	26,296
(Increase)/decrease in trade and other receivables		(1,308)	930	(10,233)
(Decrease)/increase in trade and other payables		(7,817)	(9,870)	758
(Decrease)/increase in provisions		-	(39)	25
Cash generated from operations		3,560	2,372	16,846
Tax paid		(1,937)	(2,960)	(4,497)
Net cash flows from operating activities		1,623	(588)	12,349
Investing activities
Acquisition of property, plant and equipment		(739)	(434)	(775)
Acquisition of other intangible assets		(216)	-	(319)
Contingent consideration paid - acquisition of subsidiary		(100)	-	-
Consideration paid on acquisitions, net of cash acquired		(1,019)	(617)	(5,982)
Interest received		890	70	194
Net cash outflow from investing activities		(1,184)	(981)	(6,882)
Financing activities
Interest and other financial income paid		(871)	(7)	(201)
Lease payments		(2,051)	(1,488)	(3,870)
Receipt of new revolving credit facility, net of refinancing costs		1,000	-	5,715
Acquisition of own shares		(18)	(60)	(39)
Proceeds of sale of own shares		39	330	90
Cash received for shares issued on exercise of share options		79	879	1,768
Dividends paid	6	(6,835)	(8,848)	(12,430)
Net cash outflow from f inancing activities		(8,657)	(9,194)	(8,967)
Net decrease in cash and cash equivalents		(8,218)	(10,763)	(3,500)
Cash and cash equivalents at beginning of period		16,105	19,605	19,605
Cash and cash equivalents at end of period		7,887	8,842	16,105

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2022

	Share capital	Share premium	Merger reserve	Other reserve	Treasury reserve	Retained earnings	Foreign currency translation reserve	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2021	11,792	9,421	(9,950)	6,815	(312)	41,560	(60)	59,266
Comprehensive income:
Profit for the year	-	-	-	-	-	14,279	-	14,279
Revaluation of other investments	-	-	-	-	-	(190)
Exchange rate differences	-	-	-	-	-	-	58	58
Total comprehensive income	-	-	-	-	-	14,089	58	14,147
Transaction with owners recognised directly in equity
Issue of share capital	664	1,921	-	7,650	-	-	-	10,235
Purchase of own shares at nominal value	-	-	-	-	-	(132)	-	(132)
Sale of treasury shares	-	-	-	-	127	-	-	127
Purchase of treasury shares	-	-	-	-	(76)	-	-	(76)
Recognition of tax benefit on gain from equity settled share options	-	-	-	-	-	563	-	563
Dividend paid	-	-	-	-	-	(12,430)	-	(12,430)
Share based payment transactions	-	-	-	-	-	1,213	-	1,213
Total equity at 30 April 2022	12,456	11,342	(9,950)	14,465	(261)	44,863	(2)	72,913
At 1 May 2021 (unaudited)	11,792	9,421	(9,950)	6,815	(312)	41,560	(60)	59,266
Comprehensive income:
Profit for the period	-	-	-	-	-	5,923		5,923
Exchange rate differences	-	-	-	-	-	-	(5)	(5)
Total comprehensive income	-	-	-	-	-	5,923	(5)	5,918
Transaction with owners recognised directly in equity
Share issue	107	1,009	-	282	-	-	-	1,398
Sale of treasury shares	-	-	-	-	33	-	-	33
Purchase of treasury shares	-	-	-	-	(350)	-	-	(350)
Dividend paid	-	-	-	-	-	(8,848)	-	(8,848)
Share based payment transactions	-	-	-	-	-	534	-	534
Total equity at 31 October 2021	11,899	10,430	(9,950)	7,097	(629)	39,169	65	57,951

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2022

	Share 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 (unaudited)	12,456	11,342	(9,950)	14,465	(261)	44,863	(2)	72,913
Comprehensive income:
Profit for the year	-	-	-	-	-	6,367	-	6,367
Exchange rate differences	-	-	-	-	-	-	95	95
Total comprehensive income	-	-	-	-	-	6,367	95	6,462
Transaction with owners recognised directly in equity
Share issue	58	1,036	-	-	-	-	-	1,094
Sale of treasury shares	-	-	-	-	39	-	-	39
Purchase of own shares at nominal value						(15)	-	(15)
Purchase of treasury shares	-	-	-	-	(18)	-	-	(18)
Dividend paid	-	-	-	-	-	(6,835)	-	(6,835)
Share based payment transactions	-	-	-	-	-	423	-	423
Total equity at 31 October 2022	12,514	12,378	(9,950)	14,465	(240)	44,803	93	74,063

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

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

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

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

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

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

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

Gateley (Holdings) Plc

Notes

for the period ended 31 October 2022

1.  Basis of preparation

These interim unaudited financial statements for the six months ended 31 October 2022 have been prepared in accordance with the accounting policies set out in the Annual Report and Financial statements of the Group for the year ended 30 April 2022 using the recognition and measurement principles of IFRS as applied under the Companies Act 2006 and the AIM rules.

The comparative figures for the financial year ended 30 April 2022 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

1.1  Accounting policies

Accounting policies remain unchanged from those accompanying the 30 April 2022 financial statements. 

Non-underlying items

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

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

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

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

Exceptional items

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

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

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

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

· Non-typical expenses associated with acquisitions.

· Costs incurred as part of significant refinancing activities.

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

Intangible assets and goodwill

Goodwill

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

Other intangible assets

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

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

Customer lists

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

Brand value

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

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

Critical accounting judgements and key sources of estimation uncertainty

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

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

Unbilled revenue on client assignments

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

Valuation of intangibles

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

1.2  Alternative performance measures

Underlying adjusted profit before tax

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

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
Reported profit before tax	8,029	7,276	18,032
Adjustments for non-underlying and exceptional items:
- Amortisation of intangible assets	1,112	702	1,581
- Share-based payment adjustment	423	534	1,213
Underlying adjusted profit before tax	9,564	8,512	20,826

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

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

Cash generated from operations

a)  Free cash flows

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
Operating cash flows before movements in working capital	12,685	11,351	26,296
Net working capital movement	(9,125)	(8,979)	(9,450)
Cash generated from operations	3,560	2,372	16,846
Repayment of lease liabilities	(2,051)	(1,488)	(3,870)
Net interest paid	(19)	63	7
Tax paid	(1,937)	(2,960)	(4,497)
Purchase of property, plant and equipment	(739)	(434)	(775)
Purchase of other intangible assets	(216)	-	(319)
Free cash flows	(1,402)	(2,447)	7,392

b)  Working capital measures

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled revenue)	22,255	14,723	17,239
Unbilled disbursements	4,255	2,240	3,088
Total WIP	26,510	16,963	20,328
Annualised revenue	164,100	135,266	151,662
WIP days	59	46	49

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
Debtor days
Trade receivables	49,102	38,059	50,201
Less unbilled disbursements	(4,255)	(2,240)	(3,088)
Total debtors	44,847	35,819	47,113
Annualised revenue	164,100	135,266	151,662
Debtor days	100	97	113

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
Gross lock-up days
Total WIP	26,510	16,963	20,328
Total debtors	44,847	35,819	47,113
Total gross lock-up	71,357	52,782	67,441
Annualised revenue	164,100	135,266	164,100
Gross lock-up days	159	143	162

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

1.3  Going concern

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

1.4  Statement of Directors' responsibilities

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

1.5  Cautionary statement

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

2.  Operating segments

The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group has the following strategic Platforms, which are its reportable segments.  These divisions offer a mixture of legal and consultancy services to clients.  With effect from 1 May 2022 all service lines are managed through four Platforms.

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

The following summary describes the operations of each reportable segment as reported up to 31 October 2022:

Reportable segment	Legal service lines (Gateley Legal inc. Dubai Branch)	Consultancy service lines (Gateley Consultancy)
Corporate	Banking Corporate Commercial, Technology & Data Restructuring Advisory Taxation	Gateley Global (formerly International Investment Services) GEG Services
Business Services	Complex and International Recovery Commercial Dispute Resolution/Litigation Intellectual Property Regulatory and Business Defence Tweed (reputation, media and privacy law)	Adamson Jones Gateley Omega Symbiosis IP
People	Employment Pensions Private Client	Entrust Pension Kiddy & Partners t-three
Property	Construction Planning Real Estate Real Estate Dispute Resolution Residential Development Unit	Gateley Capitus Gateley Hamer (inc. Persona Associates) Gateley Smithers Purslow Gateley Vinden (inc. Tozer Gallagher)

6 months to 31 October 2022

	Corporate	Business Services	People	Property	Total
	£'000	£'000	£'000	£'000	£'000
Segment revenue	19,046	9,728	9,745	37,624	76,143
Segment contribution  (as reported internally)	8,347	2,437	3,196	13,565	27,545
Costs not allocated to segments:
Personnel costs					(6,770)
Share based payment costs					(423)
Depreciation and amortisation					(3,594)
Other operating expenses					(8,212)
Net financial expense					(517)
					8,029

6 months to 31 October 2021

	Corporate	Business Services	People	Property	Total
	£'000	£'000	£'000	£'000	£'000
Segment revenue	15,118	9,960	9,706	27,526	62,309
Segment contribution  (as reported internally)	5,893	3,651	3,810	11,215	24,569
Costs not allocated to segments:
Other operating income					-
Personnel costs					(5,824)
Share based payment charge					(534)
Depreciation and amortisation					(3,065)
Other operating expenses					(7,431)
Net financial expense					(439)
					7,276

12 months to 30 April 2022

	Corporate	Business Services	People	Property	Total
	£'000	£'000	£'000	£'000	£'000
Segment revenue	38,123	18,035	19,172	61,919	137,249
Segment contribution  (as reported internally)	15,432	5,811	6,926	23,456	51,624
Costs not allocated to segments:
Other operating income					-
Personnel costs					(10,487)
Share based payment charge					(1,213)
Depreciation and amortisation					(6,215)
Other operating expenses					(13,852)
Exceptional items					(870)
Net financial expense					(955)
					18,032

Management has updated its segmental reporting in the current and previous periods to display revenue and contribution values previously disclosed as "Other" into the relevant Platforms to which they belong. "Other" includes expense income and movement in unbilled revenue.  Prior to this change in disclosure £643,000 and £1,118,000 was disclosed as "Other" in the 12 months to 30 April 2022 and the 6 months to 31 October 2021, respectively.

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

3.  Employees

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

	Number of employees
	6 months to 31 October 2022	6 months to 31 October 2021	12 months to 30 April 2022
Legal and professional staff	1,000	794	800
Administrative staff	431	338	350
	1,431	1,132	1,150
The aggregate payroll costs of these persons were as follows:
	6 months to 31 October 2022	6 months to 31 October 2021	12 months to 30 April 2022
	£'000	£'000	£'000
Wages and salaries	40,520	35,369	76,672
Social security costs	5,071	3,664	7,769
Pension costs	1,390	902	2,076
	46,981	39,935	86,517

4.  Expenses

Included in operating profit are the following:

	6 months to 31 October 2022	6 months to 31 October 2021	12 months to 30 April 2022
	£'000	£'000	£'000
Depreciation on tangible assets	503	421	851
Depreciation on right-of-use assets	1,979	1,942	3,783
Other operating income - rent income	-	-	-
Short term and low value leases	37	117	75
Operating lease costs on property	-	-	-
Foreign exchange	(95)	5	(58)
Loss on disposal of fixed assets	122	-	16

Non-underlying items

	6 months to 31 October 2022	6 months to 31 October 2021	12 months to 30 April 2022
Amortisation of intangible assets	1,112	702	1,581
Share based payment charges	423	534	1,213
Release of contingent consideration - International Investment Services Limited	-	-	(135)
Total non-underlying items	1,535	1,236	2,659
Exceptional  items
Acquisition costs	-	-	373
One off remuneration charge - Gateley Smithers Purslow Limited	-	-	497
Total non-underlying and exceptional items	1,535	1,236	3,529

5.  Earnings per share

	6 months to 31 October 2022	6 months to 31 October 2021	12 months to 30 April 2022
	Number	Number	Number
Weighted average number of ordinary shares in issue, being weighted average number of shares for calculating basic earnings per share	124,613,926	118,253,989	118,961,047
Shares deemed to be issued for no consideration in respect of share based payments	2,515,736	1,754,023	2,932,191
Weighted average number of ordinary shares for calculating diluted earnings per share	127,129,662	120,008,012	121,893,238

		£'000	£'000	£'000
Profit for the period after taxation and basic earnings attributable to ordinary equity shareholders		6,367	5,923	14,279
Non-underlying and exceptional items (see note 4)		1,535	1,236	3,529
Tax on non-underlying items		(80)	(247)	(370)
Underlying earnings before non-underlying items		7,822	6,912	17,438
Earnings per share is calculated as follows:	Pence		Pence	Pence
Basic earnings per ordinary share	5.11		5.00	12.00
Diluted earnings per ordinary share	5.01		4.94	11.71
Underlying basic earnings per ordinary share	6.28		5.85	14.66
Underlying diluted earnings per ordinary share	6.15		5.76	14.31

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

6.  Dividends

	6 months to 31 October 2022	6 months to 31 October 2021	12 Months 30 April 2022
	£'000	£'000	£'000
Equity shares
Final dividend in respect of 2022 (5.5p per share) - paid 21 October 2022	6,835	-	-
Interim dividend in respect of 2022 (3.0p per share) - paid 31 March 2022	-	-	3,582
Interim dividend in respect of 2021 (2.5p per share) - paid 28 June 2021	-	2,940	2,940
Final dividend in respect of 2021 (5.0p per share) - paid 8 October 2021	-	5,908	5,908
Dividends paid	6,835	8,848	12,430

The board intends to approve an interim dividend of 3.30p (H1 22: 3.0p) per share. This dividend will be paid on 31 March 2023 to shareholders on the register at the close of business on 24 February 2023.  The shares will go ex-dividend on 23 February 2023.  This dividend has not been recognised as a liability in these final statements.

7  Intangible assets

	Goodwill	Customer list	Brand names	Total
	£'000	£'000	£'000	£'000
Deemed cost
At 1 May 2021	11,698	9,850	-	21,548
Acquired through business combination	307	393	-	700
At 31 October 2021	12,005	10,243	-	22,248
At 1 May 2021	11,698	9,850	-	21,548
Acquired through business combination	8,440	6,411	3,518	18,369
At 30 April 2022	20,138	16,261	3,518	39,917
At 1 May 2022	20,138	16,261	3,518	39,917
Acquired through business combination	1,113	1,000	-	2,113
At 31 October 2022	21,251	17,261	3,518	42,030
Accumulated amortisation
At 1 May 2021	-	5,783	-	5,783
Charge for the period	-	702	-	702
At 31 October 2021	-	6,485	-	6,485
At 1 May 2021	-	5,783	-	5,783
Charge for the year	-	1,534	10	1,544
At 30 April 2022	-	7,317	10	7,327
At 1 May 2022	-	7,327	10	7,327
Charge for the period	-	1,048	115	1,048
At 31 October 2022	-	8,250	125	8,375
Net Book Value
At 31 October 2021	12,005	3,758	-	15,763
At 30 April 2022	20,138	8,944	3,508	32,590
At 31 October 2022	21,251	9,011	3,393	33,655

Goodwill

Goodwill is allocated to the following cash generating units

	31 October 2022	31 October 2021	30 April 2022
	£'000	£'000	£'000
Property Platform
Gateley Capitus Limited	1,515	1,515	1,515
Gateley Hamer Limited	1,161	1,161	1,161
GCL Solicitors LLP (acquisition of trade and assets)	2,900	2,900	2,900
Persona Associates Limited	40	40	40
Gateley Vinden Limited	2,259	2,259	2,259
Tozer Gallagher LLP (acquisition of trade and assets)	405	307	405
Gateley Smithers Purslow Limited	6,605	-	6,605
	14,885	8,182	14,885
People Platform
Kiddy & Partners Limited	1,600	1,600	1,600
Gateley Global Limited (formerly International Investment Services Limited)	338	338	338
t-three Consulting Limited	309	309	309
	2,247	2,247	2,247
Business Services Platform
Gateley Tweed (acquisition of goodwill)	1,576	1,576	1,576
Adamson Jones IP Limited	1,430	-	1,430
Symbiosis IP Limited	1,113	-	-
	4,119	1,576	3,006
	21,251	12,005	20,138

Acquisition of Symbiosis IP Limited (Symbiosis IP)

On 3 October 2022 Adamson Jones IP Limited acquired the entire issued share capital of Symbiosis IP Limited. Symbiosis provides intellectual property (IP) services encompassing patent, design and trademark protection advice in the UK, Europe and around the world.

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

	Pre-acquisition carrying amount £'000	Policy alignment and fair value adjustments £'000	Total £'000
Property, plant and equipment	2	23	25
Intangible asset relating to customer list	-	1,000	1,000
Cash	480	-	480
Trade debtors	327	-	327
Prepayments and accrued income	35	-	35
Total assets	844	1,023	1,867
Trade payables	(119)	-	(119)
Accruals and other payables	(3)	-	(3)
Corporation tax	(40)	-	(40)
Other taxes and social security	(46)	-	(46)
Lease liability	-	(23)	(23)
Deferred tax	-	(250)	(250)
Total liabilities	(208)	(273)	(481)
Total identifiable net assets at fair value	636	750	1,386
Goodwill arising on acquisition			1,113
Total consideration			2,499
Satisfied by:
Initial cash consideration paid			1,499
Issue of 523,012 new 10p ordinary shares in Gateley (Holdings) Plc			1,000
Total consideration			2,499
Net cash outflow arising on acquisition
Cash paid			(1,499)
Net cash acquired			480
Net cash outflow arising on acquisition			(1,019)

The goodwill of £1,113,000 arising from the acquisition represents the assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.

8   Contract Assets and liabilities

	Contract assets	Contract liabilities
	£'000	£'000
As at 31 October 2022	22,255	(668)
As at 31 October 2021	14,723	(282)
As at 30 April 2022	17,239	(569)

Contract assets

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

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

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

Contract liabilities

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

9  Trade and other receivables

	31 October 2022	31 October 2021	30 April 2022
	£'000	£'000	£'000
Trade receivables	49,102	38,059	50,201
Prepayments	3,500	3,121	5,626
Other receivables	220	210	341
	52,822	41,390	56,168

10   Other interest-bearing loans and borrowings

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

	31 October 2022		31 October 2021		30 April 2022
	Fair value	Carrying amount	Fair value	Carrying amount	Fair value	Carrying amount
	£'000	£'000	£'000	£'000	£'000	£'000
Non-Current liabilities
Bank borrowings	6,765	6,765	-	-	5,715	5,715
Contingent consideration	5,740	5,740	-	-	5,360	5,360
	12,505	12,505	-	-	11,075	11,075
Current liabilities
Unsecured long-term bank loan	-	-	-	-	-	-
Unsecured short-term bank loan	-	-	-	-	-	-
Loans due to former partners of Gateley Tweed LLP	-	-	-	-	-	-
	-	-	-	-	-	-

On 18 April 2022, the Company entered into a revolving credit facility which provides total committed funding of £30m until April 2025. Interest is payable at a margin of 1.95% above the SONIA reference rate. On 19 April 2022 £6m was drawdown against the facility in order to fund the initial cash consideration in the acquisition of SP 2018 Limited. A further £1m was drawn down on 3 October 2022 in order to fund the initial cash consideration in the acquisition of Symbiosis IP Limited.

11   Trade and other payables

	31 October 2022	31 October 2021	30 April 2022
	£'000	£'000	£'000
Current
Trade payables	8,806	5,878	7,935
Other taxation and social security payable	9,802	8,667	10,122
Other payables	-	889	374
Contingent consideration	-	235	100
Accruals and deferred income	4,911	3,634	13,262
	23,519	19,303	31,793
	£'000	£'000	£'000
Non-current
Other payables	-	120	-
Contingent consideration	5,740	-	5,360
	5,740	120	5,360

Contingent consideration

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

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

12   Share based payments

Group

At the period end the Group has four share-based payment schemes in operation.

Long Term Incentive Plan ('LTIP')

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

Performance conditions

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

Adjusted, fully diluted earnings per Share Compound Annual Growth Rate (CAGR) over the three year period ending 30 April 2023/25	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.

Restricted Share Award Plan ('RSA')

The Group operates  an RSA for the benefit of Senior Management. Awards under the RSA entitle the option holder to participate in dividends however, the shares are restricted for a period of 5 years from issue, such that they cannot be traded.

Save As You Earn Scheme (SAYE)

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

Company Share Option Plan (CSOP)

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

The annual awards granted under the schemes are summarised below:

	Weighted average remaining contractual life	Weighted average exercise price	Originally granted	Lapsed at 30 April 2022	Exercised at 30 April 2022	At 1 May 2022	Granted during the period	Lapsed during period	Exercised during period	At 31 October 2022
	Years	£	Number	Number	Number	Number	Number	Number	Number	Number
RSA
RSA 21/22 - 27 April 2022	4.5	£0.00	1,422,560	-	-	1,422,560	-	-		1,422,560
RSA 22/23 - 19 July 2022	4.8	£0.00	-	-	-	-	100,000	-	--	100,000
			1,422,560	-	-	1,422,560	100,000	-	-	1,522,560
LTIPS
LTIPS 20/21 - 22 July 2020	0.6	£0.00	1,405,766	(169,331)	-	1,236,435	-	(70,289)		1,166,146
LTIPS 21/22 - 27 April 2022	2.4	£0.00	1,115,000	-	-	1,115,000	-	(12,500)	-	1,102,500
			2,520,766	(169,331)		2,351,435	-	(82,789)	-	2,268,646
SAYE
SAYE 18/19 - 21 September 2018	0	£1.27	620,432	(212,469)	(237,450)	170,513	-	(131,092)	(39,421)	-
SAYE 19/20 - 1 October 2019	0	£1.28	822,625	(218,412)	-	604,213	-	(228,462)	-	375,751
SAYE 20/21 - 6 November 2020	1.0	£1.02	2,337,197	(219,826)	-	2,117,371	-	(148,579)	-	1,968,792
SAYE 21/22 - 25 August 2021	1.8	£1.70	673,077	(17,042)	-	656,035	-	(62,776)	-	593,259
SAYE 22/23 - 22 September 2022	2.9	£1.55	-	-	-	-	1,070,154	-	-	1,070,154
			4,453,331	(667,749)	(237,450)	3,548,132	1,070,154	(570,909)	(39,421)	4,007,956
CSOPS
CSOPS 18/19 - 24 October 2018	0	£1.44	812,131	(180,551)	(447,494)	184,086	-	(62,470)	(121,616)	-
CSOPS 20/21 - 7 July 2020	0.8	£1.35	976,797	(147,045)	-	829,752	-	(58,707)	-	771,045
			1,788,928	(327,596)	(447,494)	1,013,838	-	(121,177)	(121,616)	771,045

During the period to 30 April 2022, 631,580 CSOP options became eligible to exercise, with 447,494 being exercised by 30 April 2022. Of the remaining 184,086 options, 121,616 were exercised during the period to 31 October 2022 with 64,470 having lapsed during the period. The total accrued IFRS2 charge was £108,421.

During the period 375,751 SAYE 18/19 options became eligible to exercise. At the 31 October 2022 no SAYE options had been exercised of a potential 375,751 new shares issued via a block listing in order to fully satisfy all possible options. The total accrued IFRS2 charge was £168,000.

On 22 September 2022 a total of 1,070,154 options were granted under the 22/22 SAYE scheme using an exercise price of £1.55.

Fair value calculations

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

	RSA	SAYE
Grant date	19/7/22	22/9/22
Share price at date of grant	190.5p	199p
Exercise price	£nil	155p
Volatility	32%	31%
Expected life (years)	5	3.3
Risk free rate	1.905%	3.473%
Dividend yield	-	4.29%
Fair value per share
Market based performance condition	-	-
Non-market-based performance condition/no performance condition	190.5p	55p

Expected volatility was determined by using historical share price data of the Company since it listed on 8 June 2015. The expected life used in the model has been based on Management's expectation of the minimum and maximum exercise period of each of the options granted.

 

END

 

 

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