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Gateley (Holdings) PLC  -  GTLY   

Results for the six months ended 31 October 2017

Released 07:00 05-Dec-2017

RNS Number : 3622Y
Gateley (Holdings) PLC
05 December 2017
 

For Immediate Release

5 December 2017

Gateley (Holdings) Plc

 

("Gateley" or the "Group")

 

Half Year Results for the six months ended 31 October 2017

 

 

 

Gateley (AIM:GTLY), the national commercial law firm and complementary professional services group, is pleased to announce its unaudited results for the six months ended 31 October 2017 ("the Period").

Financial Highlights

·    Revenue up 9.8% to £38.6m (2016: £35.2m)

·    Adjusted EBITDA* up 6.3% to £5.3m (2016: £5.0m)

·    Profit before tax constant at £4.2m following further investment in the business through additional staff and service lines

·    Strong and strengthening balance sheet with net assets of £16.4m (2016: £12.6m)

·    Basic EPS constant at 3.1p

·    Interim dividend of 2.2p per ordinary share (2016: 2.2p)

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

Operational Highlights

·    Activity levels remain robust enabling continued investment in the growth of the business

·    Total headcount up 6.4% in the Period to 763 including six new legal partner hires

·    Continued successful integration of Gateley Capitus and Gateley Hamer acquisitions creating cross sell opportunities

·    Investment in new Global Mobility consulting service line

·    Further staff share options were issued in the Period under existing SAYE, SARS and CSOP schemes

·  Group free float up from 34.0% to 40.3% and institutional shareholder register expanded following the successful and oversubscribed placing of former partner shares in October 2017

 

 

Michael Ward, CEO of Gateley, commented:

"I am delighted with the performance of the business in the first half of the financial year. We have seen robust activity levels across the Group yielding a 9.8% increase in revenue enabling us to further invest in the business through additional staff and service lines. Whilst we remain focused on seeking further acquisition opportunities, our ability to achieve organic growth by attracting talent, recruiting into growing service lines and delivering excellent customer service to our growing client base places us in a strong position for the second half of the year. 

Our new Global Mobility service line is our latest example of strategic investment which, alongside our existing clients and contacts, will enable us to capitalise on the opportunities which we expect to emerge in an environment of ongoing political and economic uncertainty.  Our acquisitions to date, Gateley Capitus and Gateley Hamer, are performing well with a distinctive cross-sell that is proving attractive to new and existing clients.

We continue to invest in our people through the release of further share options and I am delighted that participation remains strong across professional and support staff alike.  We were also extremely pleased with the recent institutional placing which was oversubscribed.  We saw strong demand from both existing and new institutions, as well as good internal take up from both longstanding employees and recent joiners.

The Board looks forward to the second half of the financial year with continued confidence." 

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

Cara Zachariou, Head of Communications

+44 121 234 0074 or

+44 7703 684 946

 

 

Cantor Fitzgerald Europe - Nominated adviser and broker

+44 20 7894 7000

David Foreman, Marc Milmo, Callum Butterfield (Corporate Finance)

 

Caspar Shand Kydd, Alex Pollen (Sales)

 

 

 

Arden Partners- Broker

 

John Llewellyn-Lloyd, Benjamin Cryer (Corporate Finance)

+44 20 7614 5900

James Reed-Daunter (Corporate Broking)

 

 

 

IFC Advisory - Financial PR adviser

+44 20 3053 8671

Tim Metcalfe, Graham Herring, Miles Nolan

 

 

 

 

CEO Operational Review

 

Introduction

I am pleased to report that the Group has performed well in the first half of its third year as a public company.  In a market that continues to be challenging, the Board has remained focused on the execution of its stated strategy of long term organic and acquisitive growth.  The Group has made excellent progress since its admission to AIM, all of which continues to be made possible by our excellent staff and continued investment in the business.

 

Financial Results

Trading in the Period has been robust with increases in activity levels across the Group generating revenue up 9.8% to £38.6m and adjusted EBITDA up 6.3% to £5.3m.  We continue to seize growth opportunities as they arise and invest in the long-term future of the business via strategic recruitment and investment in new, complementary service lines.  We are pleased to propose an interim dividend of 2.2p per share (2016: 2.2p).

 

Operational Review

In line with our overall growth strategy, we have continued to take advantage of our brand recognition opportunities, service line enhancements and the delivery of excellent levels of client service.  Whilst we remain focused on seeking further acquisition opportunities, our ability to achieve organic growth by attracting talent and recruiting into growing service lines places us in a strong position for the second half of the year. 

 

Our new Global Mobility service line is our latest example of strategic investment. This new service line is a complementary business service focusing on the selection and relocation of employees for international assignments, as well as the logistics, activities and events that occur before, during and after these assignments. Opportunities for this unique client offering exist in a variety of areas including offshoring and nearshoring, Brexit planning and individual senior executive cross-border relocations. Global mobility assignments have increased by 25% in the past decade and forecasters are predicting that this trend will continue with a further 50% increase in assignments by 2020. This new service line, alongside our existing clients and contacts, will enable us to capitalise on the opportunities which we expect to emerge in an environment of ongoing political and economic uncertainty.  Gateley Capitus and Gateley Hamer are also performing well with a distinctive cross-sell that is proving attractive to clients.

 

Whilst the 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 and more challenging economic environments.  Our differentiated model continues to attract excellent talent from around the industry.  We continue to secure the best lawyers who are looking for a strong business with a defined and distinctive strategic plan supported by a strengthening balance sheet and continued investment.  Since 1 May 2017 we have welcomed a further six new lateral legal partner hires to the Group.  In addition, we have also promoted six senior associates to partner.  Our overall staff numbers continue to increase as our measured expansion across legal and non-legal complementary business services enhances our offering to new and existing clients. Since April 2017, total staff numbers have increased by 6.4% to 763.

 

A fundamental feature of our business model is the equity incentivisation of our staff, enabling them to share in the success of the business as it grows. Our SARS, CSOP and SAYE schemes form a key part of our incentivisation strategy, enabling all our staff to obtain equity ownership in the business.

 

Acquisitions

The Board remains focused in its search to acquire businesses offering complementary professional and other specialist services which will assist in further expanding and diversifying our income streams.  We are pleased with how well our first two acquisitions of non-legal complementary professional businesses have integrated with the existing legal business.  Importantly we are very encouraged by how cross selling opportunities from these acquisitions are starting to feed through into our pipeline of new work.

 

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. We look forward to the second half of the year with confidence and anticipate revenues in the second half to deliver Group performance for the full year in line with market expectations.

 

Michael Ward

CEO

5 December 2017

 

 

Finance Director's Review

Activity levels within the Group remain ahead of current revenue growth.  The Board continues to invest in the business through additional staff hires and enhanced service lines so as to take advantage of compelling market growth opportunities.  Revenue for the Period is up 9.8% to £38.6m (2016: £35.2m). 

 

Transactional advisory activity services across our Corporate, Property, Banking and Financial Services lines have delivered double digit revenue growth together with improved divisional profitability from the expansion of those teams below partner level.  Revenue was further enhanced by improved contributions from our complementary professional services businesses of Gateley Capitus and Gateley Hamer as their revenues totalled £1.3m (2016: £0.8m) representing 1.4% of the aforementioned 9.8% growth at the half year.

 

Operating costs have also increased by £3.4m, including a £2.9m increase in personnel costs, the majority of which arose from new recruitment resulting in operating profit for the Period of £4.4m (2016: £4.3m).  Adjusted EBITDA1 increased by 6.3% from £5.0m to £5.3m for the Period.  This has been achieved through tight control of Group operating expenses as the business continues to expand.

 

The Group continues to strive to deliver value both to investors and clients alike as we invest in the expansion of professional and support staff across the business that is critical to meeting client demands.  The Group is well positioned to capitalise on emerging opportunities in the second half of the year.  The Group is adept at meeting the challenge common within legal service businesses, whereby we expect to show a strong second half to the financial year with transactional activity remaining prominent.  The Group is performing in line with historical activity levels between the first and second half of the year.

 

Our average number of legal and professional staff numbers rose by 7.2% to 490 during the Period (2016: 6.9% to 419).  Personnel costs rose accordingly by 13.6% to £24.3m (2016: £21.4m).  Personnel costs as a percentage of revenue rose 2.1% from 60.8% to 62.9% as a result of increased annual pay awards together with enhanced staff recruitment including key appointments in Business Development, Global Mobility Services and other key professional positions.  New and existing staff have generated a 16% increase in Group work in progress in the Period, flowing through into H2 18 continued fee growth. Utilisation of fee generating staff has also improved to 85% (2016: 83%).

 

A constant interim dividend in line with EPS performance continues to reward both internal and external investors.  When considering the increased investment in staff during the Period we are pleased to have maintained adjusted EPS at 3.1p (2016 3.1p) at the half year end. 

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 focus on strengthening its balance sheet as net assets increased to £16.4m (2016: £12.6m).  Total net debt has reduced to £7.1m (2016: £7.4m) following the final repayment of loans due to former partners in May 17.  Bank overdrafts totalled negative £1.2m (Cash and cash equivalents 2016: £2.2m) as cash generation in certain service lines was behind initial budgeted expectations at the half year.  Collection of debts remains a key focus for the Group as we head into the second half of the year.  Whilst net debt continues to reduce the Group awaits settlement on certain litigation cases.  Whilst this work is part of our broad-based service offering there can be delays in settlement of these long term projects which impacts on current working capital levels.

 

Further deferred consideration totalling £0.125m was paid in October in respect of the successful recruitment of a successor to Charles Hamer within Gateley Hamer.  A further £0.8m of deferred consideration remains payable on achievement of agreed earn out targets.

 

Earnings per share and dividend

Basic earnings per share were 3.1p (2016: 3.1p).  Diluted earnings per share reduced to 2.95p (2016: 3.09p).  The Board today declares an interim dividend of 2.2 pence per share which will be paid in early March 2018 to shareholders on the register at the close of business on 16 February 2018.  The shares will go ex-dividend on 15 February 2018.

 

 

Neil Smith

Finance Director

5 December 2017

 

 

Gateley (Holdings) Plc

Consolidated income statement and other comprehensive income (Unaudited)

For the 6 months ended 31 October 2017

 

 

Notes

Unaudited

6 months to

31 October 2017

Unaudited

6 months to

31 October 2016

Audited

12 months to

30 April 2017

 

 

£'000

£'000

£'000

 

 

 

 

 

Revenue

2

38,605

35,153

77,587

 

 

 

 

 

Other operating income

 

143

197

445

Personnel costs

3

(24,276)

(21,378)

(45,558)

Depreciation and amortisation

 

(751)

(569)

(1,291)

Other operating expenses

 

(9,352)

(9,101)

(17,871)

 

 

 

 

 

Operating profit

 

4,369

4,302

13,312

 

 

 

 

 

Adjusted EBITDA

 

5,282

4,971

14,928

Share based payment charges

 

(162)

(100)

(325)

Depreciation and amortisation

 

(751)

(569)

(1,291)

 

 

 

 

 

Net financing expense

 

(125)

(84)

(199)

 

 

 

 

 

Profit before tax

 

4,244

4,218

13,113

 

 

 

 

 

Taxation

 

(932)

(926)

(3,058)

 

 

 

 

 

Profit for the period after tax attributable to equity holders of the parent

 

3,312

3,292

10,055

 

 

 

 

 

Other comprehensive income

 

 

 

 

Items that are or may be reclassified subsequently to profit or loss

 

 

 

 

Foreign exchange translation differences

 

 

 

 

- Exchange differences on foreign branch

 

-

-

81

Profit for the financial period and total comprehensive income all attributable to equity holders of the parent

 

3,312

3,292

10,136

 

 

 

 

 

Statutory earnings per share (pence)
 

Basic and adjusted earnings per share

4

3.10

3.09

9.43

Diluted earnings per share

4

2.95

3.09

9.35

 

 

 

 

 

Proposed interim dividend per share

5

2.20

2.20

 

 

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 2017
 

 

 

 

 

 

Unaudited at

31 October

2017

Unaudited at

31 October

2016

Audited at

30 April

2017

 

Note

£'000

£'000

£'000

Non-current assets

 

 

 

 

Property, plant and equipment

 

2,125

2,019

2,160

Investment property

 

164

164

164

Intangible assets & goodwill

6

3,568

4,119

3,842

Other investments

 

85

85

85

 

 

 

 

 

Total non-current assets

 

5,942

6,387

6,251

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

7

38,429

33,023

39,086

Cash and cash equivalents

 

-

2,214

2,696

 

 

 

 

 

Total current assets

 

38,429

35,237

41,782

 

 

 

 

 

Total assets

 

44,371

41,624

48,033

 

 

 

 

 

Non-current liabilities

 

 

 

 

Other interest-bearing loans and borrowings

8

(3,970)

(5,950)

(4,958)

Other payables

9

(126)

(654)

-

Deferred tax liability

 

(184)

(295)

(239)

Provisions

 

(339)

(755)

(381)

 

 

 

 

 

Total non-current liabilities

 

(4,619)

(7,654)

(5,578)

 

 

 

 

 

Current liabilities

 

 

 

 

Bank overdraft

 

(1,164)

-

-

Other interest-bearing loans and borrowings

8

(1,975)

(3,705)

(2,531)

Trade and other payables

9

(18,983)

(16,712)

(20,629)

Provisions

 

(266)

(150)

(210)

Current tax Liabilities

 

(964)

(841)

(1,655)

 

 

 

 

 

Total current liabilities

 

(23,352)

(21,408)

(25,025)

 

 

 

 

 

Total liabilities

 

(27,971)

(29,062)

(30,603)

 

 

 

 

 

NET ASSETS

 

16,400

12,562

17,430

 

 

 

 

 

EQUITY

 

 

 

 

  Share capital

 

10,688

10,678

10,688

  Share premium

 

4,332

4,332

4,332

  Merger reserve

 

(9,950)

(9,950)

(9,950)

  Other reserves

 

1,547

1,419

1,547

  Treasury reserve

 

(53)

(29)

(132)

  Translation reserve

 

81

-

81

  Retained earnings

 

9,755

6,112

10,864

 

 

 

 

 

TOTAL EQUITY

 

16,400

12,562

17,430

 

 

 

Gateley (Holdings) Plc

Consolidated cash flow Statement

for the 6 months ended 31 October 2017

 

 

Unaudited

6 months to

31 October

2017

Unaudited

6 months to

31 October

2016

Audited

12 months to

30 April

2017

 

 

£'000

£'000

£'000

Cash flows from operating activities

 

Note

 

 

 

Profit for the period after tax

 

3,312

3,292

10,055

Adjustments for:

 

 

 

 

  Depreciation and amortisation

 

477

374

1,291

  Amortisation of intangible assets

 

274

195

-

  Financial income

 

(62)

(153)

(237)

  Financial expense

 

187

237

436

  Equity settled share based payments

 

162

100

325

  Profit on disposal of property, plant and equipment

 

-

-

2

  Tax expense

 

932

926

3,058

 

 

5,282

4,971

14,930

  Increase in trade and other receivables

 

657

1,022

(5,041)

  Increase in trade and other payables

 

(1,449)

(2,783)

636

  Increase in provisions

 

14

309

(5)

Cash generated from operations

 

4,504

3,519

10,520

Tax paid

 

(1,623)

(1,526)

(2,844)

Net cash flows from operating activities

 

2,881

1,993

7,676

 

 

 

 

 

Investing activities

 

 

 

 

Acquisition of property, plant and equipment

 

(442)

(899)

(1,485)

Consideration paid on acquisition of subsidiary

 

(125)

(508)

(508)

Cash received on acquisition of subsidiary

 

-

280

280

Net cash outflow from investing activities

 

(567)

(1,127)

(1,713)

 

 

 

 

 

Financing activities

 

 

 

 

Interest and other financial income paid

 

(125)

(84)

(183)

Dividends paid

5

(4,690)

(3,996)

(6,342)

Repayment of term bank loans/borrowings

 

(993)

(990)

(1,980)

Repayment of loans from former members of Gateley

Heritage LLP

 

(551)

(3,375)

(4,552)

Acquisition of own shares - Gateley EBT Limited

 

(6)

-

(164)

Cash received from sale or locked in return of own

shares - Gateley EBT Limited

 

242

-

159

Other transactions with Gateley EBT Limited

 

(51)

(2)

-

Net cash outflow from financing activities

 

(6,174)

(8,447)

(13,062)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(3,860)

(7,581)

(7,099)

Cash and cash equivalents at beginning of period

 

2,696

9,795

9,795

 

 

 

 

 

(Bank overdraft)/Cash and cash equivalents at end of period

 

(1,164)

2,214

2,696

 

 

 

 

 

 

 

 

Gateley (Holdings) Plc

Consolidated statement of changes in equity

for the 6 months ended 31 October 2017

 

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 2016

10,640

4,332

(9,950)

1,013

(27)

6,716

-

12,724

Comprehensive income:

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

10,055

-

10,055

Exchange rate differences

-

-

-

-

-

-

81

81

Total comprehensive income

-

-

-

-

-

10,055

81

10,136

Transaction with owners recognised directly in equity

 

 

 

 

 

 

 

 

Repurchase of treasury shares

-

-

-

-

(164)

-

-

(164)

Cash gain into employee benefit trust from lock in arrangements

-

-

-

-

-

110

-

110

Issue of shares

48

-

-

534

-

-

-

582

Sale of treasury shares

-

 

-

-

59

-

-

59

Dividend paid

-

-

-

-

-

(6,342)

-

(6,342)

Share based payment transactions

-

-

-

-

-

325

-

325

Total equity at 30 April 2017

10,688

4,332

(9,950)

1,547

(132)

10,864

81

17,430

 

 

 

 

 

 

 

 

 

At 1 May 2016 (unaudited)

10,640

4,332

(9,950)

1,013

(27)

6,716

-

12,724

Comprehensive income:

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

3,292

-

3,292

Total comprehensive income

-

-

-

-

-

3,292

-

3,292

Transaction with owners recognised directly in equity

 

 

 

 

 

 

 

 

Repurchase of treasury shares

-

-

-

-

(2)

-

-

(2)

Issue of shares

38

-

-

419

-

-

-

457

Share issue costs

-

-

-

(13)

-

-

-

(13)

Dividend paid

-

-

-

-

-

(3,996)

-

(3,996)

Share based payment transactions

-

-

-

-

-

100

-

100

Total equity at 31 October 2016

10,678

4,332

(9,950)

1,419

(29)

6,112

-

12,562

 

 

 

 

 

 

 

 

 

At 1 May 2017 (unaudited)

10,688

4,332

(9,950)

1,547

(132)

10,864

81

17,430

Comprehensive income:

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

3,312

-

3,312

Total comprehensive income

-

-

-

-

-

3,312

-

3,312

Transaction with owners recognised directly in equity

 

 

 

 

 

 

 

 

Sale of treasury shares

-

-

-

-

79

107

-

186

Issue of shares

-

-

-

-

-

-

-

-

Dividend paid

-

-

-

-

-

(4,690)

-

(4,690)

Share based payment transactions

-

-

-

-

-

162

-

162

Total equity at 31 October 2017

10,688

4,332

(9,950)

1,547

(53)

9,755

81

16,400

 

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 2017

1              Basis of preparation and significant accounting policies

These interim unaudited financial statements for the six months ended 31 October 2017 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 2017.

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 2017 or 31 October 2016 and should be read in conjunction with the statutory accounts for the 30 April 2017 and 30 April 2016.  The auditors have reported on those accounts.

The condensed unaudited financial statements for the six months to 31 October 2017 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 is forecast to comply with for the foreseeable future.  Additional overdraft facilities of up to £8m in total are also 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 financial disputes and regulation (formerly asset finance), banking and restructuring (formerly 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 (including Global Mobility consultancy services) and pension services, including Entrust Pension Limited's trustee 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 2017

 

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

6,408

7,731

5,283

3,602

14,899

37,923

682

38,605

Segment contribution

(as reported internally)

2,015

2,380

2,278

1,233

7,368

15,274

682

15,956

Costs not allocated to segments:

 

 

 

 

 

 

 

 

  Other operating income

 

 

 

 

 

 

 

143

  Personnel costs

 

 

 

 

 

 

 

(3,263)

  Depreciation and amortisation

 

 

 

 

 

 

 

(750)

  Other operating expenses

 

 

 

 

 

 

 

(7,717)

Net financial expense

 

 

 

 

 

 

 

(125)

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

 

 

 

 

 

 

 

4,244

 

 

31 October 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

5,343

6,257

5,461

3,423

13,519

34,003

1,150

35,153

Pro-forma segment contribution

(as reported internally)

1,250

1,667

2,420

1,124

6,278

12,740

1,150

13,890

Costs not allocated to segments:

 

 

 

 

 

 

 

 

  Other operating income

 

 

 

 

 

 

 

197

  Personnel costs

 

 

 

 

 

 

 

(2,842)

  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

30 April 2017

 

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

15,146

14,074

10,946

7,130

28,562

75,858

1,729

77,587

Pro-forma segment contribution

(as reported internally)

6,306

4,082

4,542

2,645

12,978

30,553

1,729

32,282

Costs not allocated to segments:

 

 

 

 

 

 

 

445

  Other operating income

 

 

 

 

 

 

 

 

  Personnel costs

 

 

 

 

 

 

 

(5,391)

  Depreciation and amortisation

 

 

 

 

 

 

 

(1,282)

  Other operating expenses

 

 

 

 

 

 

 

(12,742)

Net financial expense

 

 

 

 

 

 

 

(199)

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

 

 

 

 

 

 

 

13,113

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 2017

6 months to

31 October 2016

12 months to

30 April 2017

 

 

 

 

Legal and professional staff

490

419

457

Administrative staff

244

253

239

 

734

672

696

 

 

 

 

 

The aggregate payroll costs of these persons were as follows:

6 months to

31 October 2017

6 months to

31 October 2016

12 months to

30 April 2017

 

£'000

£'000

£'000

 

 

 

 

Wages and salaries

21,242

18,938

40,458

Social security costs

2,487

2,007

4,075

Pension costs

385

333

700

Share based payments expenses

162

100

325

 

24,276

21,378

45,558

4              Earnings per share

 

6 months to

31 October 2017

6 months to

31 October 2016

12 months to

30 April 2017

 

Number

Number

Number

 

 

 

 

Weighted average number of ordinary shares in issue, being weighted average number of shares for calculating basic earnings per share

106,881,953

106,461,584

106,663,150

Shares deemed to be issued for no consideration in respect of share based payments

5,248,775

-

759,599

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

112,130,728

106,461,584

107,422,749

 

 

 

 

 

£'000

£'000

£'000

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

3,312

3,292

10,055

 

 

 

 

Earnings per share is calculated as follows:

Pence

Pence

Pence

 

 

 

 

Basic earnings per ordinary share

3.10

3.09p

9.43p

Diluted earnings per ordinary share

2.95

3.09p

9.35p

 

 

 

 

Basic earnings per ordinary share after non-underlying items

3.00

3.09p

9.43p

Diluted earnings per ordinary share after non-underlying items

2.95

3.09p

9.35p

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 2017

6 months to

31 October 2016

12 Months

30 April 2017

 

£'000

£'000

£'000

Equity shares

 

 

 

Final dividend in respect of 2016 (3.746p per share) 28 September 2016

-

3,996

3,996

Interim dividend in respect of 2017 (2.2p per share) 3 March 2017

-

-

2,346

Final dividend in respect of 2017 (4.4p per share) 4 October 2017

-

-

Dividends paid

3,996

6,342

 

 

 

 

The Board has approved an interim dividend of 2.2p (2016: 2.2p) per share. This dividend will be paid in early March 2018 to shareholders on the register at the close of business on 16 February 2018.  The shares will go ex-dividend on 15 February 2018.  This dividend has not been recognised as a liability in these final statements.

 

 

6              Intangible assets

 

 

Goodwill

 

Customer list

 and brand

 names

Total

 

 

£'000

£'000

£'000

Deemed cost

 

 

 

 

At 1 May 2016

 

1,515

1,000

2,515

Acquired through business combination

 

1,161

638

1,799

At 31 October 2016

 

2,676

1,638

4,314

 

 

 

 

 

At 1 May 2016

 

1,515

1,000

2,515

Acquired through business combination

 

1,161

638

1,799

At 30 April 2017

 

2,676

1,638

4,314

 

 

 

 

 

At 1 May 2017 and at 31 October 2017

 

2,676

1,638

4,314

 

 

 

 

 

Accumulated amortisation

 

 

 

 

At 1 May 2016

 

-

-

-

Charge for the period

 

-

195

195

At 31 October 2016

 

-

195

195

 

 

 

 

 

At 1 May 2016

 

-

-

-

Charge for the year

 

-

472

472

At 30 April 2017

 

-

472

472

 

 

 

 

 

At 1 May 2017

 

-

472

472

Charge for the period

 

-

274

274

At 31 October 2017

 

-

746

746

 

 

 

 

 

Net Book Value

 

 

 

 

At 31 October 2016

 

2,676

1,443

4,119

 

 

 

 

 

At 30 April 2017

 

2,676

1,166

3,842

 

 

 

 

 

At 31 October 2017

 

2,676

892

3,568

Goodwill

Goodwill is allocated to the following cash generating units

 

31 October

2017

31 October

2016

30 April

2017

 

£'000 

£'000

£'000

 

 

 

 

Gateley Capitus Limited

1,515

1,515

1,515

Gateley Hamer Limited

1,161

1,161

1,161

 

2,676

2,676

2,676

 

7          Trade and other receivables

 

31 October

2017

31 October

2016

30 April

2017

 

£'000 

£'000

£'000

 

 

 

 

Trade receivables

25,486

20,501

26,132

Unbilled revenue

10,892

10,532

10,487

Prepayments and accrued income

2,051

1,990

2,467

 

38,429

33,023

39,086

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 2017

31 October 2016

30 April 2017

 

Fair

value

Carrying
amount

Fair

value

Carrying
amount

Fair

value

Carrying
amount

 

£'000

£'000

£'000

£'000

£'000

£'000

Non-Current liabilities

 

 

 

 

 

 

Unsecured bank loan

3,970

3,970

5,950

5,950

4,958

4,958

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Unsecured bank loan

1,975

1,975

1,978

1,978

1,980

1,980

Loans from former members

-

-

1,727

1,727

551

551

 

1,975

1,975

3,705

3,705

2,531

2,531

The unsecured overdraft facilities totalling £8m (31 October 2016 £7m, 30 April 2017 £5m) 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 were repayable quarterly over a period of not less than two years commencing, May 2015 and all loans were repaid in May 2017.

9          Trade and other payables

 

 

 

 

 

31 October

2017

31 October

2016

30 April

2017

 

£'000

£'000

£'000

Current

 

 

 

Trade payables

5,013

4,541

5,204

Other taxation and social security payable

6,591

4,418

4,671

Other payables

295

701

394

Contingent consideration (a & b)

887

637

1,001

Accruals and deferred income

6,197

6,415

9,359

 

18,983

16,712

20,629

 

 

 

 

 

£'000

£'000

£'000

Non-current

 

 

 

Other payables

126

154

-

Contingent consideration (b)

-

500

-

 

126

654

-

(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) £0.833m 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 based payments

Group

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

Stock Appreciation Rights Scheme ('SARS')

This SARS 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.  On exercise, participants will receive the growth in value of the share options between the date of grant and the date of exercise in excess of the hurdle rate.  The hurdle rate is currently set at 115.765% of the market value of the underlying shares on the date of grant.

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

At 1 May

2017

Granted

during

the period

At 31 October 2017

 

 

 

 

 

Number

SARS

 

 

 

 

 

SARS 15/16 - 8 June 2015

0.6 years

£1.10

7,050,000

-

7,050,000

SARS 16/17 - 7 October 2016

1.9 years

£1.39

10,850,000

-

10,850,000

SARS 17/18 - 3 October 2017

2.9 years

£1.83

-

7,050,000

7,050,000

 

 

 

17,900,000

7,050,000

24,950,000

SAYE

 

 

 

 

 

SAYE 16/17- 1 September 2016

1.9 years

£0.95

1,166,779

-

1,166,779

SAYE 17/18- 15 September 2017

2.9 years

£1.33

-

556,296

556,296

 

 

 

1,166,779

556,296

1,723,075

 

 

 

 

 

 

CSOPS

 

 

 

 

 

CSOPS 16/17 - 20 December 2016

1.5 years

£1.31

946,433

-

946,433

CSOPS 17/18 - 3 October 2017

2.9 years

£1.65

-

581,162

581,162

 

 

 

946,433

581,162

1,527,595

 

 

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 period are detailed below:
 

 

SAR 17/18

CSOP 17/18

SAYE 17/18

Grant date

3 October 2017

15 September 2017

 

3 October 2017

 

 

 

 

Share price at date of grant

£1.58

£1.65

£1.66

Exercise price

£1.83

£1.65

£1.33

Volatility

24%

24%

24%

Expected life

3.3 years

3.3 years

3.3 years

Risk free rate

1%

1%

1%

Dividend yield

4%

4%

4%

 

 

 

 

Fair value per share

 

 

 

Market based performance condition

£0.12

£0.19

£0.33

Non-market based performance condition

-

-

-

 

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.

 

- Ends -


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Results for the six months ended 31 October 2017 - RNS