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Gateley (Holdings) PLC  -  GTLY   

Results for the six months ended 31 October 2016

Released 07:00 06-Dec-2016

RNS Number : 0236R
Gateley (Holdings) PLC
06 December 2016
 



For Immediate Release

6 December 2016

 

 

Gateley (Holdings) Plc

 

("Gateley" or the "Group")

 

Half Year Results for the six months ended 31 October 2016

 

 

 

Gateley (AIM:GTLY), a national commercial law firm and complementary business services group, is pleased to announce its unaudited results for the six months ended 31 October 2016 ("the period").

Financial Highlights

·      Revenue increased 18.9% (2015: 10.9%) to £35.2m (2015: £29.6m)

·      Adjusted EBITDA* increased 11.1% (2015: 40.6%) to £5.0m (2015: £4.5m)

·      Profit before tax increased 44.8% (2015: 11.5%) to £4.2m (2015: £2.9m)

·      Basic EPS increased 55% (2015: 5%) to 3.1p (2015: 2.0p)

·      Interim dividend increased 16% to 2.2p per ordinary share (2015: 1.895p)

·      Strong cash generation

* Adjusted EBITDA excludes income or expenses that relate to non-underlying items and non-cash charges relating to share based payments

Operational Highlights

·      Successful acquisition of two complementary businesses with integration progressing well:

Gateley Capitus Limited was acquired in April 2016

Gateley Hamer Limited was acquired in September 2016

·      Expansion of legal services via investment in our new Reading office in the 5 months since opening (including the appointment of 5 legal partners)

·      Staff numbers increased by 12.7% since October 2015 to 701

·      All staff SAYE share scheme introduced in August 2016 together with a further Stock Appreciation Rights Scheme issue on 7 October for partners.  CSOP scheme for middle management to be introduced before 31 December 2016

·      Strengthening balance sheet with gross assets of £41.6m (2015: £40.7m)

·      Expanding shareholder base following the successful sale of former partner shares in October 2016 increasing Group free float from 30% to 34.3%



 

Michael Ward, CEO of Gateley, commented:

"Trading for the first half of the year has been good, with growth in revenue and operating profit supported by strong cash generation in line with the Board's expectations.  I am pleased to report continued expansion of service lines and the successful acquisition of our second complementary business services company, Gateley Hamer Limited.  Significant progress is being made with recruitment in our new Reading office, whilst careful and considered expansion of existing services lines continues to position us well for the second half of the year.  Our broad client base has started to benefit from our new complementary business service lines and our people are showing exceptional long term commitment to the strategy, evidenced by a 43% take up by staff in our all staff share scheme, materially ahead of normal take-up rates for such schemes.  Given the progress made by the business, the Board is pleased to announce an increase in our interim dividend to 2.2p per share.

 

"Opportunities for organic growth continue as our market share remains small relative to the overall size of the UK commercial legal sector.  We remain on track to deliver against our expectations for the year and continue to look to maximise synergies from our recent acquisitions as their services continue to attract further interest from new and existing clients. We are very pleased with the progress made by the Group since IPO and the Board look forward with optimism given the opportunities it believes exist."

 

Enquiries:

 

Gateley (Holdings) Plc


Neil Smith, Finance Director

+44 121 234 0196

Nick Smith, Acquisitions Director and Head of Investor Relations

+44 20 7653 1665

Dawn Roberts/Matt Taylor, Interim Head of Communications

+44 7720 095114/+44 121 221 7852



Cantor Fitzgerald Europe - Nominated adviser and broker

+44 20 7894 7000

David Foreman, Marc Milmo, Michael Reynolds (Corporate Finance)


Mark Westcott , Alex Pollen, Caspar Shand Kydd (Sales)




IFC Advisory - Financial PR adviser

+44 20 3053 8671

Tim Metcalfe, Graham Herring, Heather Armstrong, Miles Nolan


 



 

CEO Operational Review

 

Introduction

I am pleased to report that the Group has performed well in its start to its second year as a public company.  In a market that continues to be challenging, the Board has remained focused on the execution of our stated strategy of long term organic and acquisitive growth.  The Group has made excellent progress since our successful AIM IPO, all of which has been made possible by the positive reaction to our flotation by our diversified client base and excellent staff.

 

Financial Results

The Group reports a strong trading performance with increases against last year in both revenue (up 18.9% to £35.2m) and adjusted EBITDA (up 11.1% to £5.0m).  Our transition from LLP to Plc has been smooth and with the strong cash generation of the business our balance sheet continues to strengthen.  We have invested for the long-term future of the business and are pleased to propose an increase in the interim dividend to 2.2p (2015: 1.895p) in line with expectations.

 

Operational Review

Whilst growth in our divisions is encouraging, it is also important to highlight that the Group operates through a diverse and resilient business structure that performs well in both good as well as more challenging economic environments. 

 

Since 1 May 2015 we have welcomed 15 new lateral legal partner hires to the Group across our offices evidencing our ability to continue to attract and retain talent.  In addition, 4 senior associates have been promoted to legal partner with effect from 1 May 2016.  Our overall staff numbers continue to increase as our measured expansion across legal and now non-legal complementary business services enhances our offering to new and existing clients.  Our new SAYE and CSOP schemes will assist with our incentivisation strategy to enable all staff to obtain equity ownership in the business.

 

We announced the opening of a new office in Reading on 1 November 2015 and officially moved into new leasehold premises at The Blade on 1 June 2016.  Staff numbers in Reading have risen to 13, including 5 legal partners, and recruitment continues to progress well.

 

We continue to successfully maintain our presence on legal panels and have been reappointed to all national panels that have required retendering during this period.

 

Whilst we have never owned any assets in Scotland, post period end, we received six months' notice of termination of our affiliation agreement with HBJ in Scotland.  We will be looking to enter into new arrangements with another firm in Scotland in the first half of next year.

Acquisitions

At the time of the Group's AIM IPO, we stated that the Group would seek to acquire businesses offering complementary professional and other specialist services to clients in Gateley's target markets.  In April 2016 we successfully completed our first acquisition of a non-legal fiscal incentives business, Gateley Capitus Limited, consistent with our stated growth strategy.  This was followed by our second acquisition, Gateley Hamer Limited, a specialist property consultancy.  We are pleased to report that integration of both businesses is progressing well as their respective Midlands operations have been moved into Gateley's Birmingham office and Gateley Capitus' office in Northern Ireland has been moved to a new Belfast city centre location.  Both acquisitions have also been rebranded.  The reception from the marketplace to our enlarged service offering has been encouraging.  We continue to explore acquisitions of further businesses providing complementary professional services to enable us to further diversify our income streams going forward.

Current trading and outlook

Trading is robust and we anticipate this will continue into the second half of the current financial year.  We are confident that our business is well balanced and resilient and we remain focused on delivering another year of growth in our core services and exploiting synergies between all Group companies whilst looking to continue to enhance our offering to clients through further acquisitions.

 

 

Michael Ward

CEO

6 December 2016

 

 

 

Finance Director's Review

 

The Group's results for the 6 month period ended 31 October 2016 continue to demonstrate a healthy balance of solid, profitable organic revenue and EBITDA growth as we look to further increase our market share in the national commercial legal market and benefit from the implementation of our acquisition strategy.  We have worked hard to fully integrate two excellent complementary professional services businesses in Gateley Capitus and Gateley Hamer and welcome the diversification these new businesses and their professionals bring to our expanding Group.

 

The Group has delivered a solid return for investors since its IPO and has continued, with these results, to demonstrate that it has adjusted to life in the public markets.  We have increased our adjusted EPS to 3.09p (2015 2.88p) and strengthened our balance sheet as we have moved from LLP to Plc.

 

Revenues grew by 18.9% (2015: 10.9%) to £35.2m (2015: £29.6m) as the Group's well balanced, resilient mix of work types continued to serve our clients well.

 

Adjusted EBITDA1 increased by 11.1% to £5.0m (2015 £4.5m) despite the Board making a net investment in our new Reading office of more than £0.6m in the period.  Profit before tax increased to £4.2m (2015: £2.9m).

 

Total operating costs rose by 16.4% to £30.5m (2015: £26.2m) as we continue to invest in building a full service offering in Reading and increase the number of professional and support staff we employ across the Group.  Our average number of legal staff numbers rose by 6.2% to 410 during the period (2015: 386).  Personnel costs rose accordingly by 18.9% to 21.4m (2015: £18.0m).  Personnel costs as a percentage of revenue were maintained at a similar rate to the prior year.  As expected, due to the number of new starters, especially in Reading, utilisation of fee generating staff reduced to 83% (2015: 85%).

 

1 Adjusted for depreciation, amortisation and non-underlying items and non-cash charges relating to share base payments

 

Balance sheet, cash flow and financing

 

The Group continues to build a strong balance sheet with gross assets of £41.6m (2015: £40.7m) including cash and cash equivalents of £2.2m (2015: £7.8m). The Group's cash generation remains strong as the time taken to collect debts continues to improve.  Following the cash outlay of £1.0m on the acquisition of Gateley Capitus the Group has, during September, funded a further £0.5m of the cash consideration in respect of the acquisition of Gateley Hamer.  Deferred consideration of £0.05m and £1.1m remain outstanding on the acquisitions of Gateley Capitus and Gateley Hamer, respectively.  £0.65m is anticipated to be payable within one year, with £0.5m payable within two years.

 

Total net debt has reduced to £7.4m (2015: £12.0m) as the Group continues to manage working capital well.

 

Earnings per share and Dividend

 

Adjusted basic earnings per share was 3.09p (2015: 2.88p).  Basic and diluted earnings per share was 3.09p (2015: 2.03p).  The Board today declares an interim dividend of 2.2 pence per share which will be paid in early March 2017 to shareholders on the register at the close of business on 10 February 2017.  The shares will go ex-dividend on 9 February 2017.

 

 

Neil Smith

Finance Director

6 December 2016

 



Gateley (Holdings) Plc

Consolidated income statement and other comprehensive income (Unaudited)

For the 6 months ended 31 October 2016

 


Notes

Unaudited

6 months to

31 October 2016

 

Unaudited

6 months to

31 October 2015

Audited

12 months to

30 April 2016



£000

£000

£000






Revenue

2

35,153

29,636

67,061






Other operating income


197

149

442

Personnel costs

3

(21,378)

(18,014)

(38,951)

Depreciation and amortisation


(569)

(357)

(687)

Other operating expenses


(9,101)

(8,324)

(16,605)











Adjusted EBITDA


4,971

4,473

12,928

Share based payments


(100)

(100)

(125)

Depreciation and amortisation


(569)

(357)

(687)

Non-underlying items





One off professional costs


-

(171)

(101)

Admission costs


-

(755)

(755)






Operating profit


4,302

3,090

11,260






Net financing expense


(84)

(160)

(226)






Profit before tax


4,218

2,930

11,034






Taxation


(926)

(800)

(2,448)






Profit for the year after tax


3,292

2,130

8,586






Total comprehensive income for the period, net of tax


3,292

2,130

8,586






 

Earnings per share (pence)

Basic and diluted earnings per share

4

3.09

2.03

8.18

Adjusted basic earnings per share

4

3.09

2.88

8.98






Proposed interim dividend per share

5

2.20

1.895

 

The results for the periods presented above are derived from continuing operations.

 

 



Gateley (Holdings) Plc

Consolidated statement of financial position

at 31 October 2016


 

 

 

 

Unaudited at

31 October

2016

Unaudited at

31 October

2015

Audited at

30 April

2016


Note

£000

£000

£000

ASSETS





Non-current assets





Property, plant and equipment


2,019

1,422

1,478

Investment property


164

164

164

Intangible assets & goodwill

6

4,119

-

2,515

Investments


85

70

85






Total non-current assets


6,387

1,656

4,242






Current assets





Trade and other receivables

7

33,023

31,238

33,696

Cash and cash equivalents


2,214

7,808

9,795






Total current assets


35,237

39,046

43,491






Total assets


41,624

40,702

47,733






Non-current liabilities










Other interest-bearing loans and borrowings

8

(5,950)

(9,458)

(7,438)

Other payables

9

(654)

-

(154)

Deferred tax liability


(295)

-

(200)

Provisions


(755)

(339)

(339)






Total non-current liabilities


(7,654)

(9,797)

(8,131)






Current liabilities





Other interest-bearing loans and borrowings

8

(3,705)

(10,304)

(6,583)

Trade and other payables

9

(17,553)

(13,366)

(20,038)

Provisions


(150)

(150)

(257)






Total current liabilities


(21,408)

(23,820)

(26,878)






Total liabilities


(29,062)

(33,617)

(35,009)






NET ASSETS


12,562

7,085

12,724






EQUITY





 Share capital

10

10,678

10,527

10,640

 Share premium


4,333

4,333

4,332

 Merger reserve


(9,950)

(9,950)

(9,950)

 Other reserves


1,418

-

1,013

 Treasury reserve


(29)

(55)

(27)

 Retained earnings


6,112

2,230

6,716






TOTAL EQUITY


12,562

7,085

12,724

 



 

Gateley (Holdings) Plc

Consolidated cash flow statement

for the 6 months ended 31 October 2016



Unaudited

6 months to

31 October

2016

Unaudited

6 months to

31 October

2015

Audited

12 months to

30 April

2016



£000

£000

£000

Cash flows from operating activities

 

Note




Profit for the period


3,292

2,130

8,586





  Depreciation and amortisation


374

357

687

  Amortisation of intangible assets


195

-

-

  Financial income


(153)

(121)

(265)

  Financial expense


237

280

491

  Equity settled share based payments


100

100

125

  Profit on disposal of property, plant and equipment


-

(2)

(8)

  Tax expense


926

800

2,448



4,971

3,544

12,064

  Increase in trade and other receivables


1,022

457

(1,387)

  Increase in trade and other payables


(2,783)

(1,087)

4,605

  Increase in provisions


309

(48)

59

Cash generated from operations


3,519

2,866

15,341

Tax expense paid


(1,526)

-

(1,007)

Net cash flows from operating activities


1,993

2,866

14,334






Investing activities





Interest and other financial income paid


(84)

(159)

(226)

Acquisition of property, plant and equipment


(899)

(280)

(670)

Purchase of other investments


-

-

(15)

Consideration paid on acquisition of subsidiary

12

(508)

-

(1,592)

Cash received on acquisition of subsidiary

12

280

2,719

350

Proceeds from sale of property, plant and equipment


-

2

16

Net cash (outflow)/inflow investing activities


(1,211)

2,282

(2,137)






Financing activities





Issue of ordinary shares, net of issue costs


-

4,910

4,910

Proceeds from new term bank loans


-

9,907

9,907

Repayment of term bank loans


(990)

-

(989)

Repayment of loans from former members of Gateley Heritage LLP


(3,375)

(5,402)

(10,153)

Repayment of fixed capital from former members of Gateley Heritage LLP


-

(6,717)

(6,717)

Transactions with Gateley EBT Limited


(2)

-

(27)

Dividends paid

5

(3,996)

-

(1,995)

Payment of finance lease liabilities


-

(38)

(57)

Net cash (outflow)/inflow financing activities


(8,363)

2,660

(5,121)






Net (decrease)/increase in cash and cash equivalents


(7,581)

7,808

7,076

Cash and cash equivalents at beginning of period


9,795

-

2,719






Cash and cash equivalents at end of period


2,214

7,808

9,795






 



 

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2016

 


Share

capital

Share

premium

Merger

reserve

Other

reserve

Treasury reserve

Retained

earnings

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

































At 1 May 2015

10,000

-

(9,950)

-

-

-

50

Total comprehensive income for the year

-

-

-

-

-

8,586

8,586

Repurchase of treasury shares

-

-

-

-

(27)

-

(27)

Issue of shares

640

4,482

-

1,013

-

-

6,135

Share issue costs

-

(150)

-

-

-

-

(150)

Dividend paid

-

-

-

-

-

(1,995)

(1,995)

Share based payment transactions

-

-

-

-

-

125

125

Total equity at 30 April 2016

10,640

4,332

(9,950)

1,013

(27)

6,716

12,724

















At 1 May 2015

10,000

-

(9,950)

-

-

-

50

Total comprehensive income for the period

-

-

-

-

-

2,130

2,130

Repurchase of treasury shares

-

-

-

-

(55)

-

(55)

Issue of shares

527

4,483

-

-

-

-

5,010

Share issue costs

-

(150)

-

-

-

-

(150)

Share based payment transactions

-

-

-

-

-

100

100

Total equity at 31 October 2015

10,527

4,333

(9,950)

-

(55)

2,230

7,085

















At 1 May 2016

10,640

4,332

(9,950)

1,013

(27)

6,716

12,724

Total comprehensive income for the period

-

-

-

-

-

3,292

3,292

Repurchase of treasury shares

-

-

-

-

(2)

-

(2)

Issue of shares

38

1

-

419

-

-

458

Share issue costs

-

-

-

(14)

-

-

(14)

Dividend paid

-

-

-

-

-

(3,996)

(3,996)

Share based payment transactions

-

-

-

-

-

100

100

Total equity at 31 October 2016

10,678

4,333

(9,950)

1,418

(29)

6,112

12,562

 

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

 

Share premium - Amount subscribed for share capital in excess of nominal value.

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.

 

 

 

 



 

Gateley (Holdings) Plc

Notes

for the year ended 30 April 2016

1              Basis of preparation and significant accounting policies

These interim unaudited financial statements for the six months ended 31 October 2016 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 2016.

The recognition and measurement requirements of all International Financial Reporting Standards ('IFRSs'), International Accounting Standards ('IAS') and interpretations currently endorsed by the International Accounting Standards Board ('IASB') and its committees as adopted by the EU and as required to be adopted by AIM listed companies have been applied.  AIM-listed companies are not required to comply with IAS 34 'Interim Financial Reporting' and accordingly the Company has taken advantage of this exemption.

The financial information contained in this interim report does not constitute statutory accounts for the six months ended 31 October 2016 or 31 October 2015 and should be read in conjunction with the statutory accounts for the 30 April 2016.  The auditors have reported on those accounts.

The condensed unaudited financial statements for the six months to 31 October 2016 have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

 

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.  On 1 June 2015 the Group acquired two unsecured term loans for £5m each repayable quarterly over five years.  These term loan facilities contain financial covenants which the Group continues and is forecast to comply with for the foreseeable future.  Additional unsecured 12 month overdraft facilities of up to £5m in total are also currently available to the Group.

 

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.

 

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              Operating segments

The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group has the following five strategic divisions, which are its reportable segments.  These divisions offer different products and services and are managed separately because they report different specialisms from the legal teams in those divisions.

The following summary describes the operations of each reportable segment:

Reportable segment

Operations

Banking and Financial Services

Provision of legal advice in respect of asset finance, banking and corporate recovery services

Corporate

Provision of legal advice in respect of corporate, private client, family and taxation services

Business Services

Provision of legal advice in respect of commercial, commercial dispute resolution, litigation, regulatory, shipping, transport and insurance services

Employees, Pensions and Benefits

Provision of legal advice in respect of employment and pension services, including Entrust Pension Limited's trustee advisory services

Property

Provision of legal advice in respect of construction, planning, real estate and residential development services, Gateley Capitus tax incentives services and Gateley Hamer property consultancy services

31 October 2016


Banking and
Financial
 Services

Corporate

Business
Services

Employee
Pensions

and
Benefits

Property

Total
segments

Other expense

and movement

in unbilled

 revenue

Total


£000

£000

£000

£000

£000

£000

£000

£000

Segment revenue

5,343

6,257

5,461

3,423

13,519

34,003

1,150

35,153

Segment contribution

(as reported internally)

1,330

1,758

2,496

1,171

6,466

13,220

1,150

14,362

Costs not allocated to segments:









  Other operating income








197

  Personnel costs








(3,314)

  Depreciation and amortisation








(569)

  Other operating expenses








(6,374)

Net financial expense








(84)

Profit for the financial period before taxation and non-underlying items








4,218

31 October 2015


Banking and
Financial
 Services

Corporate

Business
Services

Employee

Pensions

and
Benefits

Property

Total
segments

Other expenses

 and movement

 in unbilled

 revenue

Total


£000

£000

£000

£000

£000

£000

£000

£000

Segment revenue

5,051

5,210

4,442

3,688

10,116

28,507

1,129

29,636

Pro-forma segment contribution

(as reported internally)

1,820

1,568

2,017

1,679

4,813

11,897

1,129

13,026

Costs not allocated to segments:









  Other operating income








149

  Personnel costs








(3,101)

  Depreciation and amortisation








(357)

  Other operating expenses








(5,701)

Net financial expense








(160)

Profit for the financial period before taxation and non-underlying items








3,856

 



30 April 2016


Banking and
Financial
 Services

Corporate

Business
Services

Employee

Pensions

and
Benefits

Property

Total
segments

Other expenses

 and movement

 in unbilled

 revenue

Total


£000

£000

£000

£000

£000

£000

£000

£000

Segment revenue

13,550

11,345

10,295

7,273

22,349

64,812

2,249

67,061

Pro-forma segment contribution

(as reported internally)

6,304

3,157

4,037

2,456

10,132

26,086

2,249

28,335

Costs not allocated to segments:









  Other operating income








442

  Personnel costs








(3,882)

  Depreciation and amortisation








(687)

  Other operating expenses








(12,092)

Net financial expense








(226)

Profit for the financial year before taxation and non-underlying items








11,890

 

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

3          Staff numbers and costs

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 2016

6 months to

31 October 2015

12 months to

30 April 2016





Legal staff

410

386

392

Surveyors

9

-

-

Administrative staff

253

231

230


672

617

622

 

The aggregate payroll costs of these persons were as follows:





£000

£000

£000





Wages and salaries

18,938

15,870

34,733

Social security costs

2,007

1,757

3,491

Pension costs

333

287

602

Share based payments expenses

100

100

125


21,378

18,014

38,951

4              Earnings per share


6 months to

31 October 2016

6 months to

31 October 2015

12 months to

30 April 2016


Number

Number

Number





Weighted average number of ordinary shares for calculating basic and diluted earnings per share

106,461,584

104,725,070

104,928,209










£000

£000

£000





Profit for the period and basic earnings attributable to ordinary equity shareholders

3,292

2,130

8,586



 





Non-underlying items




Operating expenses and finance costs

-

926

856

Tax on non-underlying items

-

(36)

(20)

Underlying earnings before non-underlying items

3,292

3,020

9,422





Earnings per share is calculated as follows:





Pence

Pence

Pence





Basic earnings per ordinary share

3.09p

2.03p

8.18p

Diluted earnings per ordinary share

3.09p

2.03p

8.18p





Basic earnings per ordinary share after non-underlying items

3.09p

2.88p

8.98p

Diluted earnings per ordinary share after non-underlying items

3.09p

2.88p

8.98p

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

 

5              Dividends

6 months to

31 October 2016

6 months to

31 October 2015







3,996

-

3,996

-





2,349

1,995

2,349

1,995

The Board has approved an interim dividend of 2.2p (2016: 1.895p) per share. This dividend will be paid in early March 2017 to shareholders on the register at the close of business on 10 February 2017.  The shares will go ex-dividend on 9 February 2017.  This dividend has not been recognised as a liability in these final statements.

6          Intangible assets

 


Customer list

 and brand

 names

Goodwill

 

Total


£000

£000

£000

Cost




At 1 May 2015 and 31 October 2015

-

-

-





At 1 November 2015

-

-

-

Acquired through business combination

1,000

1,515

2,515

At 30 April 2016

1,000

1,515

2,515





At 1 May 2016

1,000

1,515

2,515

Acquired through business combination

638

1,161

1,799

At 31 October 2016

1,638

2,676

4,314





Accumulated amortisation

At 1 May 2015, 31 October 2015 and 30 April 2016

 

-

 

-

 

-





At 1 May 2016

-

-

-

Charge for the period

195

-

195

At 31 October 2016

195

-

195





Net Book Value

At 1 May 2015 and 31 October 2015

 

-

 

-

 

-





At 30 April 2016

1,000

1,515

2,515





At 31 October 2016

1,443

2,676

4,119

 

Goodwill

Goodwill is allocated to the following cash generating units


31 October

2016

31 October

2015

30 April

2016


£000 

£000

£000





Gateley Capitus Limited

1,515

-

1,515

Gateley Hamer Limited (Formerly Hamer Associates Limited)

1,161

-

-


2,676

-

1,515

 

7          Trade and other receivables






31 October

2016

31 October
2015

30 April
2016


£000 

£000

£000





Trade receivables

20,501

19,967

20,759

Unbilled revenue

10,532

9,314

9,881

Prepayments and accrued income

1,990

1,957

3,056


33,023

31,238

33,696





8          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 2016

31 October 2015

30 April 2016


Fair

value

Carrying
amount

Fair

value

Carrying
amount

Fair

value

Carrying
amount


£000

£000

£000

£000

£000

£000

Non-Current liabilities







Unsecured bank loan

5,950

5,950

7,920

7,920

6,938

6,938

Loans from former members

-

-

1,538

1,538

500

500


5,950

5,950

9,458

9,458

7,438

7,438








Current liabilities







Unsecured bank loan

1,978

1,978

1,987

1,987

1,980

1,980

Loans from former members

1,727

1,727

8,317

8,317

4,603

4,603


3,705

3,705

10,304

10,304

6,583

6,583

The unsecured overdraft facilities totalling £5m (2015 £7m) are repayable on demand.

The unsecured term loans are repayable quarterly over five years commencing on 8 November 2015.  Interest is chargeable at 2.25% over LIBOR.

The loans from former members are repayable quarterly over a period of not less than two years commencing, May 2015 and there being adequate working capital facilities, in the opinion of the board of directors, within the Group available to accommodate such payments.  Interest is chargeable at 0.5% over Bank of England base rate. 


9          Trade and other payables






31 October

2016

31 October

2015

30 April

2016


£000

£000

£000

Current




Trade payables

4,541

3,474

5,844

Other taxation and social security payable

5,259

3,833

4,153

Other payables

701

493

653

Contingent consideration (a & b)

637

-

220

Accruals and deferred income

6,415

5,547

7,727

Obligations under finance leases

-

19

-


17,553

13,366

18,597






£000

£000

£000

Non-current




Other payables

154

-

154

Contingent consideration (b)

500

-

-


654

-

154

(a) £0.054m of contingent consideration represents the balance of consideration payable to the sellers of Gateley Capitus Limited (formerly Capitus Limited) upon collection of acquired assets.

(b) £1.083m of contingent consideration represents the earn-out sums payable to the sellers of Gateley Hamer Limited (formerly Hamer Associates Limited).  It has been calculated based on the Group's expectation of what it will pay in relation to the earn-out clause of the 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 by weighting the probability of achieving these targets to give an estimate of the final obligation.  In accordance with the terms of the sale and purchase agreement the total earn-out cannot exceed £1.083m.

 

10           Share capital

Authorised, issued and fully paid


Number

£

Ordinary shares of 10p each



Shares issued on incorporation - 13 November 2014

10

1

Shares issued on acquisition of business

100,000,001

10,000,000

Shares issued on initial public offering

5,274,148

527,415

At 31 October 2015

105,274,159

10,527,416

Issued on acquisition of Gateley Capitus Limited

1,122,753

112,275

At 30 April 2016

106,396,912

10,639,691

Issued on acquisition of Gateley Hamer Limited

388,029

38,803

At 31 October 2016

106,784,941

10,678,494




On 8 April 2016 the Group acquired the entire issued share capital of Gateley Capitus Limited (formerly Capitus Limited) in part for the issue of 1,122,753 10p ordinary shares.

On 16 September 2016 the Group acquired the entire issued share capital of Gateley Hamer Limited (formerly Hamer Associates Limited) in part for the issue of 388,029 10p ordinary shares.



 

11           Share based payments

Group

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

Stock Appreciation Rights Scheme (SARS)

This Scheme is a discretionary executive reward plan which allows the Group to grant conditional share awards or nil cost options to selected executives at the discretion of the Remuneration Committee. 

The awards vest after a 3 year performance period, subject to the achievement of performance measures based on increase in the share price.

Save As You Earn Scheme (SAYE)

The scheme is open to all staff allowing them the opportunity to purchase shares in the Group.  Individuals can save between £5 and £500 each month for a period of 3 years, at which time they will have the option to use those savings to purchase shares at the exercise price.

The annual awards granted under the schemes are summarised below:

 


Weighted average remaining contractual life

Weighted

average

exercise

price

At 1 May

2016

Granted

During

the period

At 31 October 2016






Number

SARS






SARS 15/16 - 8 June 2015

1.6 years

£1.0997

7,050,000

-

7,050,000

SARS 16/17 - 7 October 2016

2.9 years

£1.3880

-

10,850,000

10,850,000




7,050,000

10,850,000

17,900,000

SAYE






SAYE 16/17- 1 October 2016

2.9 years

£0.95

-

1,166,779

1,166,779

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:


SAR 15/16

SAR 16/17

SAYE

Grant date

8 June 2015

7 October 2016

1 October 2016





Share price at date of grant

£0.95p

£1.20p

£1.20p

Exercise price

£1.10p

£1.39p

£0.95p

Volatility

24%

24%

24%

Expected life

3.3 years

3.3 years

3.3 years

Risk free rate

1%

1%

1%

Dividend yield

6%

6%

6%





Fair value per share




Market based performance condition

£0.05p

£0.07p

£0.19p

Non-market based performance condition

-

-

20%

 

As the Group had only limited share price history at the date of grant, expected volatility was based on a proxy volatility determined from the median volatility of a group of appropriate comparator companies. For the same reason, a similar approach was followed to derive the dividend yield. Expected life has been taken to be between the minimum and maximum exercise period of 3 and 3.5 years, respectively.



 

12           Business combinations

Acquisition of Gateley Hamer Limited ("GHL") (Formerly Hamer Associates Limited).

 

On 16 September 2016 the Company acquired 100% of the voting equity interest of GHL, a specialist property consultant business.  The acquisition has been accounted for using the acquisition method.  The fair value of the identifiable assets and liabilities of GHL as at the date of the acquisition was:


Pre-acquisition

carrying amount

Policy alignment and fair value adjustments

Total


£'000

£'000

£000





Property, plant and equipment

16

-

16

Intangible asset relating to customer list and brand

-

638

638

Cash and short term deposits

335

-

335

Trade receivables

280

-

280

Prepayments and accrued income

14

-

14

Total assets

645

638

1,283





Trade payables

-

-

-

Other taxation and social security payable

(206)

-

(206)

Accruals

(54)

-

(54)

Deferred tax

-

(134)

(134)

Total liabilities

(260)

(134)

(394)





Total identifiable net assets at fair value

385

504

889

Goodwill arising on acquisition



1,161

Total acquisition cost



2,050








Initial cash consideration paid



508

Issue of new 10p ordinary shares in Gateley (Holdings) Plc



459

Deferred share consideration payable



542

Deferred cash consideration payable



541




2,050







Cash paid



(508)

Acquisition costs



-

Net cash acquired with subsidiary (Included in cash flows from investing activities)



280

Net cash outflow



(228)





From the date of acquisition GHL, has contributed £0.3m to revenue and £0.1m to Group profit for the period.  If the combination had taken place at the beginning of the year, Group revenue from continuing operations would have been £0.6m and the profit for the period would have been £0.2m.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

 

 

- Ends -


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Results for the six months ended 31 October 2016 - RNS